<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

      For the fiscal year ended December 31, 1999


|_|   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)

                     23/F., Hang Seng Causeway Bay Building
                    28 Yee Wo Street, Causeway Bay, Hong Kong
--------------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)

      Registrant's telephone number, including area code: 852-2866-2301

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

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

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

      As of March 31, 2000, the Company had 5,010,013 shares of Class A Common
Stock and 3,000,000 shares of Class B Common Stock issued and outstanding.

      The aggregate market value of the issuer's outstanding Class A Common
Stock held by non-affiliates on March 31, 2000, computed by reference to the
average of the closing bid and ask prices on March 31, 2000 of US$0.5625, was
US$1,036,132.

      Documents incorporated by reference: None.


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<PAGE>

                                     PART I.

            Cautionary Statement Pursuant to Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995:

            This Annual Report on Form 10-K for the fiscal year ended December
31, 1999 contains "forward-looking" statements within the meaning of the Federal
securities laws. These forward-looking statements include, among others,
statements concerning the Company's expectations regarding sales trends, gross
margin trends, operating costs, the availability of funds to finance capital
expenditures and operations, facility expansion plans, and other statements of
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. The forward-looking statements in this Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 are subject to risks and uncertainties that
could cause actual results to differ materially from those results expressed in
or implied by the statements contained herein.


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<PAGE>

ITEM 1. BUSINESS

OVERVIEW

            CBR Brewing Company, Inc., a Florida corporation (the "Company",
which term shall include, when the context so requires, its subsidiaries and
affiliates), is the parent of High Worth Holdings Ltd., a British Virgin Islands
corporation ("Holdings"). Since November 1994, Holdings has owned a 60% interest
in Zhaoqing Blue Ribbon High Worth Brewery Ltd., a Sino-foreign joint venture
("High Worth JV"), which, through its subsidiaries and affiliates, is engaged in
the production and sale of Pabst Blue Ribbon beer in the People's Republic of
China ("China" or the "PRC"). The other 40% interest in High Worth JV is owned
by Guangdong Blue Ribbon Group Co. Ltd. ("Guangdong Blue Ribbon") (see "ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"). Substantially all of the beer
currently sold by the Company is marketed under the Pabst Blue Ribbon label, and
is brewed under a sublicense agreement with Guangdong Blue Ribbon, which,
through an assignment and transfer, obtained its license from Pabst Brewing
Company ("Pabst US").

            All of the Company's business operations are located in the PRC. The
Chinese currency is the Renminbi ("RMB"). During the three years ended December
31, 1997, 1998 and 1999, the exchange rate has remained stable at approximately
US$1.00 to RMB 8.3.

DESCRIPTION OF BUSINESS

            The Company is engaged in the business of brewing, distributing and
marketing Pabst Blue Ribbon beer in China. As of December 31, 1999, the Company
owned effective interests of 60%, 24%, 33% and 9% in four brewing facilities
currently producing Pabst Blue Ribbon beer in China, all of which are managed by
the Company. The Company is also presently responsible for the marketing and
sale in China of Pabst Blue Ribbon beer produced by the four brewing facilities.

            China is currently ranked as the second largest beer producer and
consumer in the world behind the United States. The management of the Company
believes that Pabst Blue Ribbon beer is currently the leading foreign label sold
in China, both in number of units sold and total sales. Pabst Blue Ribbon is
considered a premium brand in China, along with such other labels as Tsingtao,
Carlsberg, Miller, Budweiser, Coors and Heileman.

            The Company produces Pabst Blue Ribbon beer in China to avoid import
tariffs that range as high as 120%. The majority of the production is mainly
concentrated in two breweries located at Zhaoqing City, which is approximately
100 miles from Hong Kong in the Guangdong Province of China. Pabst US provides
quality control assistance to the Company on a regular basis. The Company
markets Pabst Blue Ribbon beer in every province in China. The Company currently
maintains offices in Beverly Hills, California, Hong Kong and Zhaoqing City.

            High Worth JV holds certain licensing rights for Pabst Blue Ribbon
beer (see "PABST LICENSING ARRANGEMENTS AND TRADEMARKS") and also directly owns
100% of a Pabst Blue Ribbon brewing complex ("Zhaoqing Brewery"), and, through a
subsidiary, a 40% interest in Zhaoqing Blue Ribbon Brewery Noble Ltd., a
Sino-foreign joint venture ("Noble Brewery"). Noble Brewery owns a second Pabst
Blue Ribbon brewing complex that is also managed by Zhaoqing Brewery. A
subsidiary of Noble China, Inc., an unaffiliated company, owns the other 60%
interest in Noble Brewery (see "THE JOINT VENTURE COMPANIES").

            In addition, High Worth JV indirectly owns a 70% interest in
Zhaoqing Blue Ribbon Beer Marketing Company Limited, a PRC company (the
"Marketing Company"), which presently conducts the sales, advertising and
promotional efforts for the Company's production of Pabst Blue Ribbon beer in
China. The remaining 30% interest in the Marketing Company is directly owned by
Guangdong Blue Ribbon. Through its ownership in High Worth JV, Guangdong Blue
Ribbon also has a 28% indirect interest in the Marketing Company (see "MARKETING
AND


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OPERATIONS - SUMMARY OF OPERATIONS"), resulting in the Company owning a 42% net
interest in the Marketing Company.

            In January 1998, the Company, through High Worth JV, established a
joint venture company in Hubei Province, Zao Yang Blue Ribbon High Worth Brewery
Limited ("Zao Yang High Worth Brewery"), which operates a third Pabst Blue
Ribbon brewing complex in China and is managed by Zhaoqing Brewery. High Worth
JV owns a 55% interest, so that the Company has an effective interest of 33%.
Zao Yang Brewery, an unaffiliated company in Hubei Province, owns the other 45%
interest in Zao Yang High Worth Brewery (see "MARKETING AND OPERATIONS -
INVESTMENT IN NEW BREWERY" and "THE JOINT VENTURE COMPANIES").

            Effective December 31, 1997, the Company, through High Worth JV,
entered into a Settlement Agreement with Guangdong Blue Ribbon that will allow
High Worth JV to acquire a 51% interest in Sichuan Brewery, so that the Company
has an effective interest of 31%. Pursuant to an Equity Transfer Agreement
signed on January 19, 1999, High Worth JV received a 15% consideration-free
equity interest in Sichuan Brewery, equivalent to an effective interest of 9%.
Sichuan Brewery will be formally restructured into a new joint venture company
and will serve as the fourth Pabst Blue Ribbon brewing complex in China. High
Worth JV was also granted a three-year option to increase its equity interest to
51% at a fixed cost (see "PABST LICENSING ARRANGEMENT AND TRADEMARKS - SICHUAN
BREWERY").

            On June 5, 1999, a formal Joint Venture Agreement was signed among
Le Shan City E Mei Brewery (46.62%), High Worth JV (15.00%) and Wai Shun
Investment Limited (38.38%), an unaffiliated Hong Kong company, to form Sichuan
Blue Ribbon Brewery High Worth Ltd. ("Sichuan High Worth Brewery"). The total
registered and paid up capital of Sichuan High Worth Brewery is RMB 51,221,258.
High Worth JV's 15% equity interest is consideration-free but entitled to share
in the profits of Sichuan High Worth Brewery. The Joint Venture Agreement and
the relevant legal documents have been approved by the local government
authorities. Sichuan High Worth Brewery is currently producing Pabst Blue Ribbon
beer.

            On October 18, 1999, Holdings, through its wholly-owned subsidiary
incorporated in the British Virgin Islands, March International Group Limited
("March International"), signed a formal Joint Venture Agreement with Jilin
Province Juetai City Brewery (40%) and Jilin Province Chuang Xiang Zhi Yie Ltd.
(9%), both of which are unaffiliated PRC companies, to form Jilin Lianli (CBR)
Brewing Company Ltd. ("Jilin Lianli Brewery"). The total registered and paid up
capital of Jilin Lianli Brewery is RMB 25,000,000. March International will
contribute one new packaging line and the right to use the "Lianli" beer
trademark with a total value of RMB 12,750,000 as capital, and will receive a
51% effective interest in Jilin Lianli Brewery. The technical renovation of the
existing brewing equipment and the installation of the new packaging line is
expected to be completed in April 2000. The Joint Venture Agreement is subject
to approval by the local government, which is expected to be received when
formal operations commence in May 2000.

            The Company conducts a substantial portion of its purchases through
related parties, and has additional significant continuing transactions with
such parties (see "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").

PROPERTY AND PRODUCTION FACILITIES

ZHAOQING BREWERY

            Zhaoqing Brewery is situated on a site containing approximately
1,421,000 square feet and is three miles from Zhaoqing City, Guangdong Province.
Zhaoqing Brewery occupies the site pursuant to certificates of land use rights
issued by the local government. The land use rights certificates do not specify
a period for the use of the land, but normally it does not exceed 70 years.

            The original facilities of Zhaoqing Brewery were constructed between


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1978 and 1980 with annual production capacity based on old brewing technology of
approximately 50,000 metric tons or 425,000 barrels of beer. Prior to 1995,
Zhaoqing Brewery had produced domestic brands exclusively under various brand
names. In mid-1994, with the assistance of Pabst US, 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.
In early 1995, the production of all domestic brands ceased. Zhaoqing Brewery is
now producing substantially all of its beer production under the Pabst Blue
Ribbon label. 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 of beer by the end of 1995.

            Zhaoqing Brewery annually shuts down portions of the facility for a
short period of time during the low season, normally in December, to provide
regular scheduled maintenance. Zhaoqing Brewery has access to replacement parts
that can be manufactured by several local toolmakers in Zhaoqing.

NOBLE BREWERY

            Noble Brewery is situated on a site adjacent to Zhaoqing Brewery
containing approximately 1,453,000 square feet. Noble Brewery has land use
rights of 50 years ending in 2043.

            Noble Brewery consists of the original facilities constructed
between 1988 and 1990 by Pabst Blue Ribbon Brewery (Zhaoqing) Co. Ltd. ("Pabst
Zhaoqing"), the operator of the facilities prior to the establishment of Noble
Brewery. These facilities had an annual production capacity of approximately
80,000 metric tons or 680,000 barrels of beer. The second phase of brewing
facilities, which was completed in July 1994, has an annual production capacity
of approximately 120,000 metric tons or 1,020,000 barrels of beer. Pabst US
supplied the majority of the equipment for the development of both the first and
second phase of the brewing facilities, in addition to offering technical
assistance in its installation and maintenance. On an annual basis, Noble
Brewery shuts down portions of the facility for a short period of time during
the low season, normally in December, to provide regular scheduled maintenance.
Noble Brewery has access to replacement parts that can be manufactured by
several local toolmakers in Zhaoqing.

ZAO YANG HIGH WORTH BREWERY

            The original facilities of Zao Yang High Worth Brewery were
constructed between 1980 and 1985 with annual production capacity based on old
brewing technology of approximately 40,000 metric tons or 340,000 barrels of
beer.

            Zao Yang High Worth Brewery is situated on a site containing
approximately 753,000 square feet and is located within the vicinity of Zao Yang
City, Hubei Province. Zao Yang High Worth Brewery occupies the site pursuant to
a certificate of land use rights issued by the local government. The land use
rights are part of the assets acquired by Zao Yang High Worth Brewery from Zao
Yang Brewery.

            High Worth JV is responsible for transferring the technical know-how
and production techniques to brew Pabst Blue Ribbon beer to Zao Yang High Worth
Brewery, as well as assisting in the renovation of existing equipment, in order
to convert the brewery into a Pabst Blue Ribbon brewing complex.

            During April 1998, the technical renovation process to convert the
old brewing facilities of Zao Yang High Worth Brewery into a Pabst Blue Ribbon
brewing complex was completed. Zao Yang High Worth Brewery commenced the
production of Pabst Blue Ribbon beer in June 1998, and the Marketing Company
began purchasing Zao Yang High Worth Brewery's production of Pabst Blue Ribbon
beer for distribution. In addition, Zao Yang High Worth Brewery also produces
domestic brand beer under the brand name "Di Huang Quan" and sells directly to
the nearby regions.


                                       5
<PAGE>

SICHUAN HIGH WORTH BREWERY

            Sichuan High Worth Brewery is situated on a site containing
approximately 1,089,000 square feet and is located within the vicinity of Le
Shan City, Sichuan Province, which is approximately 160 kilometers from Chengdu,
the provincial capital of Sichuan Province. The original facilities of Sichuan
High Worth Brewery were constructed in 1988 with annual production capacity,
based on old brewing technology of approximately 20,000 metric tons or 170,000
barrels of beer. Prior to late 1996, the facilities were used exclusively to
produce beer under domestic local brand names. Guangdong Blue Ribbon acquired
the brewery as its branch and started to convert the facility into a Pabst Blue
Ribbon brewing complex in late 1996. In April 1997, Sichuan High Worth Brewery
commenced production of beer under the Pabst Blue Ribbon label, which is sold to
the Marketing Company for resale (see "PABST LICENSING ARRANGEMENT AND
TRADEMARKS - SICHUAN HIGH WORTH BREWERY").

JILIN LIANLI BREWERY

            The original facilities of Jilin Lianli Brewery were constructed
between 1980 and 1984 with annual production capacity based on old brewing
technology of approximately 20,000 metric tons or 170,000 barrels of beer. Prior
to the formation of the new joint venture company, the facilities were used to
produce domestic beer under the brand name "Tin Chi Quan".

            Jilin Lianli Brewery is situated on a site containing approximately
330,000 square feet and is located within the vicinity of Juetai City, Jilin
Province. Jilin Lianli Brewery occupies the site pursuant to a certificate of
land use rights issued by the local government. The land use rights are part of
the assets acquired by Jilin Lianli Brewery from Jilin Province Juetai City
Brewery.

            March International is responsible for transferring the technical
know-how and production techniques to brew high quality beer products to Jilin
Lianli Brewery, as well as assisting in the renovation of existing equipment, in
order to convert the brewery into a modern brewing complex. The management of
the Company expects that the technical renovation process to convert the old
brewing facilities of Jilin Lianli brewery into a modern brewing complex will be
completed in April 2000, and that operations will commence in May 2000.

MARKETING AND OPERATIONS

SUMMARY OF OPERATIONS

            Pursuant to the respective long-term purchase contracts signed with
all of the Pabst Blue Ribbon brewing complexes in China, the Marketing Company
began purchasing the output of beer from Noble Brewery in July 1995, Zhaoqing
Brewery in April 1995, Sichuan High Worth Brewery in April 1997 and Zao Yang
High Worth Brewery in June 1998 (see "PABST LICENSING ARRANGEMENTS AND
TRADEMARKS"). The Marketing Company is responsible for the distribution,
promotion and advertising of the Company's production of Pabst Blue Ribbon beer
in China. The Marketing Company is allowed to mark-up the prices of the Pabst
Blue Ribbon beer purchased or adjust the ex-factory prices as necessary in order
to adequately cover the selling, advertising, promotional, distribution and
administrative expenses incurred in selling these beer products to distributors
throughout China.

PABST BLUE RIBBON BEER

            Substantially all of the beer currently produced by Noble Brewery,
Zhaoqing Brewery and Sichuan High Worth Brewery is Pabst Blue Ribbon beer. Zao
Yang High Worth Brewery currently produces Pabst Blue Ribbon beer as well as "Di
Huang Quan" beer.

            There are three products in the portfolio of the Pabst Blue Ribbon
breweries: 11-degree light processed beer, 10-degree light processed beer, and
draught beer. The 11-degree light processed beer is the primary product of the


                                       6
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breweries, and is packaged in 946 ml., 640 ml. and 355 ml. bottles and 500 ml.
and 355 ml. cans. The 10-degree light processed beer is packaged in 640 ml.
bottles. The draught beer is sold only in kegs.

            Sales of the 11-degree light processed beer in 946 ml., 640 ml. and
355 ml. bottles and 500 ml. and 355 ml. cans accounted for approximately 4.6%,
52.1%, 2.1%, 0.1% and 39.7%, respectively, of the sales volume of the Company in
1999.

            Sales of the 11-degree light processed beer in 946 ml., 640 ml. and
355 ml. bottles and 500 ml. and 355 ml. cans accounted for approximately 4.8%,
32.8%, 0.9%, 0.1% and 32.0%, respectively, of the sales volume of the Company in
1998.

            The 10-degree light processed beer packaged in 640 ml. bottles for
Pabst Blue Ribbon beer was introduced by the Company in 1998, and its sales
accounted for approximately 27.7% of the sales volume of the Company in 1998.

            Although the sales volume of the 10-degree light processed Pabst
Blue Ribbon beer constituted a significant portion of total sales in 1998, the
contribution to overall operating profit was below management's expectations.
Accordingly, management decided to discontinue the 10-degree light processed
Pabst Blue Ribbon beer in 1999, as a result of a strategic reevaluation of the
Company's markets. Accordingly, the 10-degree light processed beer packaged in
640 ml. bottles for Pabst Blue Ribbon beer only accounted for approximately 0.1%
of the sales volume of the Company in 1999.

            During 1999, Sichuan High Worth Brewery produced only 11-degree
light processed Pabst Blue Ribbon beer, which was packaged only in 640 ml. glass
bottles. In 1999, the Marketing Company distributed 9,041 metric tons of Pabst
Blue Ribbon beer produced by Sichuan High Worth Brewery, which represented 4.7%
of the Company's total sales volume in 1999. In 1998, the Marketing Company
distributed 12,525 metric tons of Pabst Blue Ribbon beer produced by Sichuan
High Worth Brewery, which represented 5.4% of the Company's total sales volume
in 1998.

            During 1999, Zao Yang High Worth Brewery produced only 11-degree
light processed Pabst Blue Ribbon beer, which was packaged only in 640 ml. glass
bottles. In 1999, the Marketing Company distributed 4,716 metric tons of Pabst
Blue Ribbon beer produced by Zao Yang High Worth Brewery, which represented 2.5%
of the Company's total sales volume in 1999. In 1998, the Marketing Company
distributed 4,295 metric tons of Pabst Blue Ribbon beer produced by Zao Yang
High Worth Brewery, which represented 1.9% of the Company's total sales volume
in 1998.

            Pabst Blue Ribbon beer is marketed and sold as a premium beer in
establishments such as restaurants, bars, alcohol and tobacco companies and
retail stores. The Marketing Company will continue its efforts to expand the
distribution of these products in new markets in China, subject to the
limitations of the transportation network, the Company's ability to expand its
market share in these markets and the growth of the Chinese economy.

            The specifications and characteristics of the beers currently
produced by the breweries are set forth below:


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TYPE OF BEER                 PACKAGE                     GENERAL DESCRIPTION
------------                 -------                     -------------------

11-degree light processed    Can (500 ml. and 355 ml.)   11-degree malt
beer                         Bottle (946 ml., 640 ml.    content,
                             and 355 ml.)                alcohol content 3.4%
                                                         (w/w)

Draught beer                 Keg (30 liters)             11-degree malt
                                                         content,
                                                         alcohol content 3.4%
                                                         (w/w)

Note: w/w refers to weight by weight (i.e., measurement of alcoholic content of
beer by weight of beer).

            The Company's highest volume sales for Pabst Blue Ribbon beer have
been in the provinces of Guangdong, Fujian and Zhejiang. The Company utilizes a
network of regional distributors whose field sales force maintains customer
contact and promotes customer satisfaction. Sales of Pabst Blue Ribbon beer were
190,488 metric tons or approximately 1,619,000 barrels in 1999, a 17.9% decrease
over 1998. The Company believes that the decrease was attributable, in
substantial part, to the soft demand for foreign branded premium beer in China
and the elimination of a low margin product line as discussed above. Sales of
Pabst Blue Ribbon beer were 231,952 metric tons or approximately 1,972,000
barrels in 1998, a 2.5% increase from 1997.

DOMESTIC BRAND NAME BEER

            Prior to the end of 1994, Zhaoqing Brewery produced beer exclusively
under domestic brand names, such as "Zhaoqing beer", "Dinghu" beer and "Xile"
beer, all of which were non-premium beers which targeted customers in the low to
middle economic range. Production of these local brand beers was completely
discontinued in March 1995 when Zhaoqing Brewery commenced producing Pabst Blue
Ribbon beer on an exclusive basis. However, beer that does not meet Pabst Blue
Ribbon quality standards is generally packaged and distributed as local brand
beer.

            Zao Yang High Worth Brewery also produces domestic brand beer under
the name "Di Huang Quan".

            Prior to the formation of the new joint venture company, the
facilities of Jilin Lianli Brewery were used to produce domestic beer under the
brand name "Tin Chi Quan", which will continue to be one of the products of
Jilin Lianli Brewery when it commences formal operations in May 2000.

            Pabst Blue Ribbon beer is targeted to the premium beer market in
China while the domestic brand beer previously produced by Zhaoqing Brewery and
Zao Yang High Worth Brewery was targeted to the non-premium market.

            The following tables present information with respect to the
non-consolidated sales and volume of beer sold by Noble Brewery (which produces
Pabst Blue Ribbon beer exclusively), Zhaoqing Brewery and Zao Yang High Worth
Brewery in 1997, 1998 and 1999. All breweries producing Pabst Blue Ribbon beer
sold their products to the Marketing Company in 1997, 1998 and 1999 for resale.


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                                                                Net Sales
                              Net Sales       Volume Sold        per Ton
                              ---------       -----------       ---------
                              (RMB'000)      (metric tons)      (RMB'000)

1997:

Noble Brewery                   639,679           146,813             4.4

Zhaoqing Brewery

   Local Brands                   2,282             1,156             2.0

   Pabst Blue Ribbon            358,080            73,060             4.9

Marketing Company

   Pabst Blue Ribbon          1,181,273           226,262             5.2

   Non-alcoholic drinks           1,990               901             2.2

1998:

Noble Brewery                   584,470           143,236             4.1

Zhaoqing Brewery

   Local Brands                   3,608             1,635             2.2

   Pabst Blue Ribbon            292,333            71,611             4.1

Zao Yang High Worth Brewery

   Local Brands                   3,184             2,083             1.5

   Pabst Blue Ribbon             12,059             4,295             2.8

Marketing Company

   Pabst Blue Ribbon          1,114,215           231,952             4.8

1999:

Noble Brewery                   513,808           118,464             4.3

Zhaoqing Brewery

   Local Brands                   3,281             1,439             2.3

   Pabst Blue Ribbon            253,330            59,212             4.3

Zao Yang High Worth Brewery

   Local Brands                  15,039            12,299             1.2

   Pabst Blue Ribbon             16,677             4,716             3.5

Marketing Company

   Pabst Blue Ribbon            968,139           190,488             5.1


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<PAGE>

SEASONALITY

            The beer industry in China is seasonal. The Company's sales are
usually lowest in the months of October and November and highest in the months
of March through September.

LOCATION

            Noble Brewery and Zhaoqing Brewery are located adjacent to each
other in the City of Zhaoqing. The municipality of Zhaoqing is one of the major
municipal areas of Guangdong Province. It is strategically located at the lower
and middle reaches of the Zijiang River, 62 miles from Guangzhou, the provincial
capital, by road and 142 sea miles from Hong Kong by water. The area enjoys a
mild, sunny climate with an adequate amount of rainfall. The climate and soil
conditions provide an important base of agriculture and forestry for Guangdong
Province.

            Guangdong Province is the fifth most populous province in China with
a population of approximately 65,000,000, of whom over 7,000,000 are located in
the metropolitan Guangdong area. The Municipality of Zhaoqing covers a total
area of 8,500 square miles and has a population of approximately 5,700,000. The
metropolitan City of Zhaoqing has a population of approximately 400,000 and
covers an area of 254 square miles. Zhaoqing enjoys a well-developed
infrastructure, including transportation facilities and a reliable power,
communication and service infrastructure. The area contains extensive
agricultural activity and a large population base.

            Zao Yang High Worth Brewery is located in Hubei Province, which is
situated in the center of China. Zao Yang High Worth Brewery has immediate
access to the provincial highway network and is strategically positioned to
serve the surrounding provinces.

            Sichuan High Worth Brewery is located in Le Shan City, which is
approximately 160 kilometers from Chengdu, the provincial capital of Sichuan
Province. Sichuan Province is in the western region of China and is the most
populous province in China, with a population of approximately 110,000,000.
Sichuan High Worth Brewery has immediate access to the provincial highway
network and is strategically positioned to serve the surrounding cities.

            Jilin Lianli Brewery is located in Juetai City, which is
approximately 80 kilometers from Cheungchun, the provincial capital of Jilin
Province. Jilin Province is in the northern region of China with a population of
approximately 27,000,000. Jilin Lianli has immediate access to the provincial
highway network and is strategically positioned to serve the northeastern
provinces.

QUALITY CONTROL

            Rigorously applied quality control is critical to ensure a
consistently high quality standard for the products produced by the breweries.
In 1990, quality control experts were sent by Pabst US to Zhaoqing to teach
brewery personnel appropriate inspection techniques, quality control measures
and production procedures. Pabst US experts trained the brewery's personnel in
the specific brewing techniques required in order to meet the standards set by
Pabst US. An engineer from Pabst US is stationed in China to test random
production samples and perform quality control on a continuing basis. In
addition, the breweries send samples of their beer on a regular basis to Pabst
US in the United States for content examination and testing to ensure that
quality standards are adhered to on a consistent basis. Pabst US participated in
the conversion of the brewery facilities of Zhaoqing Brewery, Zao Yang High
Worth Brewery and Sichuan Brewery into Pabst Blue Ribbon brewing facilities and
provided technical assistance and training.

RAW MATERIALS

            The primary raw materials utilized in the brewing of beer are malt,
husked rice, hops and water. The aggregate cost of the primary raw materials


                                       10
<PAGE>

represents approximately 22% of the direct cost of production, excluding
depreciation, of Pabst Blue Ribbon beer and 22% of the domestic brand beers.
Cost of packaging represents approximately 55% of the total direct cost of
production, excluding depreciation, of Pabst Blue Ribbon beer and 45% of the
domestic brand beers.

            MALT: Virtually all of the malt utilized for producing Pabst Blue
Ribbon beer is purchased from regional malt manufacturers. The cost of malt
represented approximately 70% of the primary raw material cost in the direct
cost of production, excluding depreciation and packaging, of Pabst Blue Ribbon
beer and 66% of the domestic brand beers.

            HUSKED RICE: Husked rice is sourced from local and regional
suppliers. Given the extensive agricultural activity in China, management
believes that there is an abundant and reliable supply of rice to meet ongoing
production needs. The cost of husked rice represents approximately 17% of the
primary raw material cost in the direct cost of production, excluding
depreciation and packaging, of Pabst Blue Ribbon beer and 17% of the domestic
brand beers.

            HOPS: The hops utilized for producing Pabst Blue Ribbon beer are
acquired primarily from overseas suppliers through local importers. The cost of
hops represents approximately 8% of the primary raw material cost in the direct
cost of production, excluding depreciation and packaging, of Pabst Blue Ribbon
beer and 7% of the domestic brand beers.

            WATER: The breweries utilize local water sources and intensively
monitor the quality of the water used in the brewing process for compliance with
the Company's own stringent quality standards.

CONTAINERS

            All of the beer bottles required by the Company are supplied by
regional glass manufacturers. Currently, there is a recycling bottle program in
place and the Company uses both new and recycled bottles and new cans in
packaging its beer.

            American National Can (Zhaoqing) Company Limited ("American National
Can") supplies approximately 90% of the aluminum cans used by the breweries.
American National Can utilizes an automatic easy-open production line from Italy
and has a current annual output of 360 million cans. American National Can
produces cans of high quality that meet the ISO standard. The manufacturing
facility for American National Can is located within the same industrial complex
as the breweries. American National Can supplies cans pursuant to supply
contracts with each of the breweries that have no fixed expiration date.
American National Can has contracted to meet the can supply requirements of the
breweries at a pre-negotiated price. Guangdong Blue Ribbon has an equity
interest in American National Can.

TRANSPORTATION/DISTRIBUTION

            In view of the wide geographic market in China, the Company is
constantly reviewing the methods for distributing its malt beverages.

            TRANSPORTATION: During 1999, 35% of the Company's products sold were
shipped by rail tank cars from Zhaoqing to distributors throughout the Guangdong
Province, and 57% were shipped from Zhaoqing by truck (48%) and by boat (9%)
directly to distributors throughout China. The remaining 8% of beer products
sold were produced by Zao Yang High Worth Brewery and Sichuan High Worth Brewery
and were primarily distributed within the Hubei and Sichuan regional markets by
truck.

            Domestic brand beers made by Zhaoqing Brewery and Zao Yang High
Worth Brewery were primarily transported by trucks and shipped within the
regional markets.


                                       11
<PAGE>

            Transportation railcars and vehicles are insulated to keep malt
bverage products at proper temperatures until they are delivered to distributor
locations.

            DISTRIBUTION: Delivery of Pabst Blue Ribbon beer to retail markets
in Guangdong Province and to the rest of China is accomplished through a network
of regional distributors which sell to tobacco and alcohol companies, bars,
restaurants and retail stores. The Marketing Company has over 400 distributors
and sub-distributors throughout China. Customers with material transaction
volume are required to issue bills of exchange from their respective banks to
secure payment on the due date. The Marketing Company typically appoints only
one distributor in each region (except for a large region in which more than one
may be appointed) to ensure that such distributor devotes adequate effort and
resources to the development of a broad-based retail distribution network for
Pabst Blue Ribbon beer in that distributor's region. These distribution
arrangements include flexibility for the Marketing Company to replace
distributors or modify its arrangements with existing distributors. No single
distributor accounted for more than approximately 5% of 1999 barrel sales.

            In 1999, approximately RMB 74,700,000 was allocated to promotional
advertising for Pabst Blue Ribbon beer and approximately RMB 63,800,000 was
allocated to other specific promotional activities and incentives to
distributors. Advertising media includes television, radio, billboards,
magazines and newspapers. In addition, the Marketing Company provides its
distributors with promotional gift items, sales incentive bonuses and volume
discounts, and special lucky draw and specific promotional campaigns are held
during the year.

MARKETS AND COMPETITION

            With the influx of foreign branded beer into the China market, the
Company anticipates that competition among all premium beers will be increasing,
and additional marketing and advertising efforts will have to be made in order
to maintain the market leadership of Pabst Blue Ribbon beer.

            There is a considerable difference in the prices at which local or
regional beer is sold in China as compared to the price of foreign or premium
brands such as Pabst Blue Ribbon, San Miguel, Foster's or Carlsberg. Generally,
a 640 ml. bottle of local beer typically sells for 1-2 RMB (US$0.12 to US$0.24),
as compared to premium beers which sell for 4-6 RMB (US$0.48 to US$0.72).

            MARKETS: The beer market in China has experienced substantial growth
in rates of production and demand. However, the industry is largely fragmented
and highly regionalized. A key reason for the fragmented industry is the lack of
an effective transportation system and the regionalized market. Another reason
for the fragmented market is that local breweries are generally small in
capacity and lack the financial resources and capability to launch a national
distribution network and promotion program.

            Approximately 850 breweries exist in China, of which over 90% are
small local breweries that produce non-premium beer for local or regional
consumption. Certain Chinese taxes based on volume rather than sales price also
favor the higher-priced premium beer breweries.

            Due in part to the economic turmoil in Asia and the aftereffects,
the growth in China's economy has recently begun to decline. As a result, demand
for goods and services by Chinese consumers has been weakening, causing a
softening of the premium beer market in China. Management anticipates that the
market demand for high-priced foreign premium labels will be stagnant as
consumers shift to lower-priced beer products. The competition among major
Chinese breweries to maintain market share under the current economic conditions
is also expected to place continuing pressure on the Company's operating results
during 2000. Management has responded to changing market conditions by
broadening its product line and expanding distribution. The Company is taking
steps to maintain its premium beer market share and to develop a new range of


                                       12
<PAGE>

medium-priced products under separate labels to suit the market's changing
needs.

            COMPETITION: Of the brands comprising the premium sector, Tsingtao
and Pabst Blue Ribbon are the market leaders. Tsingtao is the largest brewer of
beer in China, producing approximately 800,000 metric tons or 6,800,000 barrels
of beer in 1999. Tsingtao is one of the best selling beers in China and the
largest brand exported from China. Other companies seeking market share in the
Chinese market include Carlsberg, Singha, San Miguel, Beck's, Lowenbrau,
Anheuser-Busch, Stroh's, Miller, Foster's, Coor's and Heileman. Sales for most
of these brands in China are substantially lower than sales of beer produced
under the Pabst Blue Ribbon and Tsingtao labels.

CAPITAL INVESTMENT

            In 1997, Noble Brewery spent approximately RMB 66,000,000 to acquire
new packaging equipment and machinery, and Zhaoqing Brewery spent approximately
RMB 5,000,000 for acquiring new equipment and renovating the existing machinery.

            In 1998, Zao Yang High Worth Brewery spent approximately RMB
40,000,000 to convert and renovate the existing old brewing facilities into a
Pabst Blue Ribbon brewing complex.

            In 1999, Zao Yang High Worth Brewery spent approximately RMB
2,000,000 to improve the production facilities of the existing brewing complex.
Zhaoqing Brewery and Noble Brewery each spent approximately RMB 5,000,000 during
1999 to improve and renew the production facilities of the existing brewing
complexes.

PRODUCT DEVELOPMENT

            The Company is continually engaged in product development programs,
and has developed various improvements in raw material selection, production
processes and packaging systems, as well as the development of innovative,
quality products.

            The Company's product development expenditures are primarily devoted
to new product development, brand development, the brewing process and
ingredients, brewing equipment, improved manufacturing techniques for packaging
supplies and environmental improvements in the Company's operational processes.
The focus of these programs is to improve the quality and value of its malt
beverage products while reducing costs through more efficient processing
techniques, equipment design and improved varieties of raw materials.

ENERGY

            The breweries in Zhaoqing use both heavy oil and electricity as
primary sources of energy. Heavy oil is used as the primary fuel in their steam
generation system and is supplied from regional sources. The breweries in
Sichuan, Zao Yang and Jilin use both coal and electricity as their major source
of energy.

            Electricity is supplied by the local Electricity Bureau. The
breweries have not experienced any energy supply problems to date. As an
alternative source of energy, the Company also has fuel oil and propane
available. Management of the Company does not anticipate any supply problems in
the future with respect to these natural resources.


                                       13
<PAGE>

EMPLOYEES

            As of December 31, 1999, there were approximately 2,103 employees
employed by Zhaoqing Brewery, Noble Brewery, Zao Yang High Worth Brewery and the
Marketing Company, categorized as follows:

                                                                       ZAO YANG
                                       ZHAOQING   NOBLE   MARKETING   HIGH WORTH
     FUNCTION                   TOTAL   BREWERY  BREWERY   COMPANY      BREWERY
     --------                   -----  --------  -------  ---------   ----------

(1)  Production                 1,139       355      523        -          261
(2)  Engineering, Technology
     and Quality Control          168        60       73        -           35
(3)  Management and
     Administration               301        43       70       152          36
(4)  Warehouse                    172        20       42        93          17
(5)  Others                       323       111      119        45          48
                                -----       ---      ---       ---         ---
     Total                      2,103       589      827       290         397
                                =====       ===      ===       ===         ===

            In 1999, labor costs (including the cost of benefits) accounted for
approximately 3.9%, 4.3% and 6.5% of the total costs of production for Noble
Brewery, Zhaoqing Brewery and Zao Yang High Worth Brewery, respectively. The
Company expects average wage rates of its employees will increase by
approximately 6% during 2000.

            Each full-time employee is a member of a local trade union. Labor
relations have remained positive and the breweries have not had any employee
strikes or major labor disputes. Unlike trade unions in western countries, trade
unions in most parts of China are organizations mobilized by the government and
the management of the enterprises.

PABST LICENSING ARRANGEMENTS AND TRADEMARKS

PABST TRADEMARKS IN CHINA

            The arrangements regarding the use of Pabst trademarks in China were
formalized in an agreement dated August 30, 1993 (the "License Agreement")
between Pabst US and Pabst Zhaoqing. Pabst Zhaoqing was wholly-owned at that
time by Zhaoqing Brewery, which was owned by Guangdong Blue Ribbon. The License
Agreement was for a period of fifteen years, from November 7, 1988 through
November 6, 2003. Under the terms of the License Agreement, Pabst Zhaoqing
obtained the exclusive right to produce and market products under Pabst
trademarks in China, the non-exclusive right to market such Pabst products in
other Asian countries except Hong Kong, Macau, Japan and South Korea, and the
right to sublicense the use of the Pabst trademarks to any other enterprise in
China, subject to approval of Pabst US. Royalties are payable quarterly to Pabst
US based on the volume (units) of beer produced.

            By an Assets Transferring Agreement dated May 20, 1994 among Pabst
Zhaoqing, Pabst US and Guangdong Blue Ribbon, all rights and duties under the
License Agreement were assigned and transferred from Pabst Zhaoqing to Guangdong
Blue Ribbon. Guangdong Blue Ribbon agreed to fulfill the obligation as
sublicensor under the License Agreement between Pabst Zhaoqing as sublicensor,
and Noble Brewery and High Worth JV as sublicensee, respectively, as described
below.

NOBLE BREWERY

            By a Sublicense Agreement dated October 12, 1993 (the "Noble
Sublicense Agreement") between Pabst Zhaoqing and Noble Brewery and approved by


                                       14
<PAGE>

Pabst US, Pabst Zhaoqing granted to Noble Brewery a sublicense to use
beer-related Pabst trademarks, the non-exclusive right to produce beer in
accordance with its production capacity under the sublicensed Pabst trademarks,
and the non-exclusive right to market such Pabst products in China and other
Asian countries except Hong Kong, Macau, Japan and South Korea. Royalties
calculated on the same basis as those payable to Pabst US are payable by Noble
Brewery to Pabst Zhaoqing. Under the terms of the Noble Sublicense Agreement,
Pabst Zhaoqing agreed that, except with respect to the enterprises of Guangdong
Blue Ribbon, it would not grant further sublicenses to any other enterprises in
Guangdong Province to use the Pabst trademarks thereby granted. At the time of
the Noble Sublicense Agreement, Zhaoqing Brewery was a member enterprise of
Guangdong Blue Ribbon.

HIGH WORTH JV/ZHAOQING BREWERY

            By a Sublicense Agreement dated May 6, 1994 (the "High Worth
Sublicense Agreement") between Pabst Zhaoqing and High Worth JV and approved by
Pabst US on September 18, 1994, Pabst Zhaoqing granted to High Worth JV a
sublicense to allow Zhaoqing Brewery to use Pabst trademarks to produce beer in
accordance with its production capacity under the sublicensed Pabst trademarks
and to market such Pabst products in China and other Asian countries except Hong
Kong, Macau, Japan and South Korea. With respect to the production of Pabst Blue
Ribbon beer in Guangdong Province, since Zhaoqing Brewery was a member
enterprise of Guangdong Blue Ribbon at the time of the Noble Sublicense
Agreement, Zhaoqing Brewery was entitled to produce Pabst Blue Ribbon beer in
Guangdong Province.

            Under the terms of the High Worth Sublicense Agreement, High Worth
JV and/or its affiliates have the sole right to be granted further sublicenses
by Pabst Zhaoqing for the use of the Pabst trademarks to produce beer in China
provided that they are located outside Guangdong Province. Further, Pabst
Zhaoqing covenanted that it would not grant further sublicenses with respect to
the Pabst trademarks to produce beer to any other enterprises except High Worth
JV or its affiliates. Accordingly, it is the position of the Company that,
through November 6, 2003, High Worth JV controls all future sublicensing for the
production of Pabst Blue Ribbon beer in China, which can be sold throughout
China and other Asian countries, excluding Hong Kong, Macau, Japan and South
Korea.

            Other terms of the High Worth Sublicense Agreement are the same as
in the License Agreement. Royalties are payable quarterly by High Worth JV to
Pabst Zhaoqing based on the volume (units) of beer produced.

SICHUAN HIGH WORTH BREWERY

            In late 1996, Guangdong Blue Ribbon established a wholly-owned
subsidiary in Le Shang City, Sichuan Province, PRC, and started converting an
existing brewery with an annual production capacity of 20,000 metric tons into a
Pabst Blue Ribbon brewing complex ("Sichuan Brewery"). Production and sale of
Pabst Blue Ribbon beer commenced in April 1997.

            Effective December 31, 1997, the Company, through High Worth JV,
entered into a Settlement Agreement with Guangdong Blue Ribbon that will allow
High Worth JV to acquire a 51% interest in Sichuan Brewery, so that the Company
would have an effective interest of 31%. Pursuant to an Equity Transfer
Agreement signed on January 19, 1999, High Worth JV received a 15%
consideration-free equity interest in Sichuan Brewery, so that the Company has
an effective interest of 9%. Sichuan Brewery will be formally restructured into
a new joint venture company and will serve as the fourth Pabst Blue Ribbon
brewing complex in China. High Worth JV was also granted a three-year option to
increase its equity interest to 51% at a fixed cost.

            On June 5, 1999, a formal Joint Venture Agreement was signed among
Le Shan City E Mei Brewery (46.62%), High Worth JV (15.00%) and Wai Shun
Investment Limited (38.38%), an unaffiliated Hong Kong company, to form Sichuan
Blue Ribbon Brewery High Worth Ltd. ("Sichuan High Worth Brewery"). The total
registered


                                       15
<PAGE>

and paid up capital of Sichuan High Worth Brewery is RMB 51,221,258. High Worth
JV's 15% equity interest is consideration-free but entitled to share in the
profits of Sichuan High Worth Brewery. High Worth JV is also required to
contribute a total of RMB 26,122,842 as capital if and when it elects to
exercise the 51% option. The restructuring into Sichuan High Worth Brewery, the
new joint venture agreement, the new memorandum of association, and other
relevant legal documents were approved by the local government in 1999. Sichuan
High Worth Brewery is currently producing Pabst Blue Ribbon beer under a letter
of consent granted by Guangdong Blue Ribbon. A formal sublicensing agreement
will be prepared and signed between Sichuan High Worth Brewery and Guangdong
Blue Ribbon with a royalty fee to be negotiated.

ZAO YANG HIGH WORTH BREWERY

            Pursuant to the terms of the Settlement Agreement and the High Worth
Sublicense Agreement, Guangdong Blue Ribbon granted a sublicense agreement to
Zao Yang High Worth Brewery on May 26, 1998 for the right to produce and sell
beer products under the Pabst Blue Ribbon label. Zao Yang High Worth Brewery is
required to pay royalty fees at the same rate as Pabst US charges Guangdong Blue
Ribbon plus a surcharge of RMB 25 per metric ton. Zao Yang High Worth Brewery is
obligated to meet the required quality standards for the production of Pabst
Blue Ribbon beer.

RECENT DEVELOPMENTS REGARDING PABST BLUE RIBBON TRADEMARK IN CHINA

            Noble China Inc., a public company listed on the Toronto Stock
Exchange, issued a press release on May 27, 1999 to announce that it had
acquired from Pabst Brewing Company the exclusive rights to brew and distribute
Pabst Blue Ribbon beer throughout China for a period of 30 years from 2003 to
2033. Noble China Inc. has issued subsequent press releases reiterating this
information. Although the Company to date has been unable to verify whether such
a license has in fact been granted to Noble China Inc., the terms of any such
license, and whether it is subject to any conditions, the Company believes that
some form of a license was granted to Noble China Inc. by Pabst Brewing Company.
Management has consulted with legal counsel regarding the legitimacy of the
purported license and the Company's potential responses. In addition, management
has consulted with Guangdong Blue Ribbon, the owner of the Pabst Blue Ribbon
trademark in China, regarding potential responses, and has met with
representatives of Noble China Inc. in an attempt to explore a potential
settlement.

            Management of the Company has requested that Guangdong Blue Ribbon
take appropriate action to protect its rights and its sub-licensees' rights to
utilize the Pabst Blue Ribbon trademark in China. The Company has been advised
that Guangdong Blue Ribbon is still evaluating the situation and has not yet
determined how it will respond to this matter. Once Guangdong Blue Ribbon has
responded, the Company expects to be in a position to evaluate and revise its
future business plan and strategy accordingly. The Company is currently unable
to predict the effect that this development may have on future operations.
However, if Noble China Inc. has obtained the exclusive right to brew and
distribute Pabst Blue Ribbon beer in China beginning in 2003, the inability of
the Company to obtain a sub-license from Noble China Inc. on acceptable terms
and conditions to allow the Company to continue to produce and distribute Pabst
Blue Ribbon beer in China would have a material adverse effect on the Company's
future results of operations, financial position and cash flows.

THE JOINT VENTURE COMPANIES

FORMATION OF THE JOINT VENTURE COMPANIES

            In 1980, Zhaoqing Brewery was initially established as a state-owned
enterprise to manufacture beer and non-alcoholic beverages. In 1992, Zhaoqing
Brewery became a member enterprise (affiliate) of Guangdong Blue Ribbon. In June
1993, Zhaoqing Brewery entered into a Joint Venture Agreement with Goldjinsheng
Holdings Ltd. ("Goldjinsheng") to form Noble Brewery (the "Noble


                                       16
<PAGE>

Joint Venture Agreement"), pursuant to which Goldjinsheng acquired a 60%
interest and Zhaoqing Brewery acquired a 40% interest. Goldjinsheng was a
wholly-owned subsidiary of Noble China Inc., a company listed on the Toronto
Stock Exchange. Upon formation of the joint venture, Noble Brewery consisted of
the beer production facilities and assets of Pabst Zhaoqing, then a subsidiary
of Zhaoqing Brewery, which were utilized to produce and distribute beer under
the Pabst Blue Ribbon brand name. The term of the joint venture is for 20 years,
which may be extended upon the agreement of the two joint venture partners and
approval from the applicable Chinese governmental agencies.

            In May 1994, Guangdong Blue Ribbon and Holdings entered into a Joint
Venture Agreement providing for the establishment of High Worth JV. The term of
the joint venture is 50 years, and is subject to extension by agreement of the
parties and approval from the government. Holdings contributed 60% of the
capital, which was used by High Worth JV to purchase Zhaoqing Brewery from
Guangdong Blue Ribbon, including its 40% interest in Noble Brewery. Holdings and
Guangdong Blue Ribbon then owned 60% and 40% interests, respectively, in High
Worth JV. All of the governmental approvals for the ownership transfer of
Zhaoqing Brewery to High Worth JV were completed in November 1994. Subsequently,
in December 1994, the Company acquired all of the shares of Holdings (see
"HISTORY").

            In January 1998, High Worth JV and Zao Yang Brewery entered into a
Joint Venture Agreement providing for the establishment of Zao Yang High Worth
Brewery. The term of the joint venture is 15 years, and is extendable by
agreement of the parties and approval from the government. Zao Yang High worth
Brewery has a total authorized capital investment of RMB 29,280,000, allocated
55% to High Worth JV and 45% to Zao Yang Brewery. The RMB 16,104,000 of capital
contributed by High Worth JV in 1998 was used by Zao Yang High Worth Brewery to
purchase the existing production facilities from Zao Yang Brewery. High Worth JV
was responsible for transferring the technical know-how and production
techniques to brew Pabst Blue Ribbon beer to Zao Yang High Worth Brewery, as
well as assisting in the renovation of existing equipment, in order to convert
the brewery into a Pabst Blue Ribbon brewing complex. All of the governmental
approvals for the ownership transfer of Zao Yang High Worth Brewery were
completed in April 1998.

            On October 18, 1999, Holdings, through its wholly-owned subsidiary
incorporated in the British Virgin Islands, March International, signed a formal
Joint Venture Agreement with Jilin Province Juetai City Brewery (40%) and Jilin
Province Chuang Xiang Zhi Yie Ltd. (9%), both of which are unaffiliated PRC
companies, to form Jilin Lianli Brewery. The total registered and paid up
capital of Jilin Lianli Brewery is RMB 25,000,000. March International will
contribute one new packaging line and the right to use the "Lianli" beer
trademark with a total value of RMB 12,750,000 as capital, and will receive a
51% effective interest in Jilin Lianli Brewery. The technical renovation of the
existing brewing equipment and the installation of the new packaging line is
expected to be completed in April 2000. The Joint Venture Agreement is subject
to approval by the local government, which is expected to be received when
formal operations commence in May 2000.

OPERATION OF THE JOINT VENTURE COMPANIES

            The establishment and activities of High Worth JV, Noble Brewery and
Zao Yang High Worth Brewery are governed by the joint venture law and
regulations of China and the applicable joint venture agreements. Holdings'
interest in the profits of High Worth JV is in the same proportion (i.e., 60%)
as its investment in High Worth JV; Zhaoqing Brewery's interest in the profits
of Noble Brewery is in the same proportion (i.e., 40%) as its investment in
Noble Brewery; High Worth JV's interest in the profits of Zao Yang High Worth
Brewery is in the same proportion (i.e., 55%) as its investment in Zao Yang High
Worth Brewery.

            Under the Noble Joint Venture Agreement, Noble Brewery is governed
by a board of directors, consisting of five individuals, three of whom,
including


                                       17
<PAGE>

the chairman, are nominated by Goldjinsheng, with the remaining two, including
the vice chairman, by Zhaoqing Brewery. The operation and management of Noble
Brewery is the responsibility of Zhaoqing Brewery. Accordingly, Zhaoqing Brewery
has the decision making authority on substantially all aspects of the daily
operations of Noble Brewery such as purchasing, production, sales and marketing,
finance and human resources. Goldjinsheng has the right to appoint staff to
participate in the accounting functions of Noble Brewery. All matters to be
approved by the board of directors require either unanimous vote or the vote of
four out of the five directors. Accordingly, no decision of the board can be
made without the approval of Zhaoqing Brewery's designee.

            Under the High Worth JV Joint Venture Agreement, High Worth JV is
governed by a board of directors consisting of seven individuals, four of whom
are appointed by Holdings and three of whom are appointed by Guangdong Blue
Ribbon. The board of directors controls the management and operation of High
Worth JV. Generally, votes on the board of directors are taken by majority vote,
except for the following matters relating to the existence and legal structure
of the joint venture, all of which require a unanimous vote: amendments to the
articles of association; termination or dissolution of the joint venture;
increase in, or transfer of, the registered capital of the joint venture;
establishment of subsidiaries or combination with other entities; and change in
the share structure. The general manager is appointed by the board of directors
and is responsible for carrying out the decisions of the board as well as for
the day-to-day management of High Worth JV.

            Zao Yang High Worth Brewery was formed as a Chinese limited company
with two joint venture owners. Pursuant to the Zao Yang High Worth Brewery Joint
Venture Agreement, Zao Yang High Worth Brewery is governed by a board of
directors consisting of five individuals, three of whom, including the chairman,
are nominated by High Worth JV, with the remaining two, including the
vice-chairman, by Zao Yang Brewery. Generally, votes on the board of directors
are taken by majority vote, except for the following matters relating to the
existence and legal structure of the joint venture, all of which require a
unanimous vote: amendment to the articles of association; termination or
dissolution of the joint venture; increase in, or transfer of, the registered
capital of the joint venture; establishment of subsidiaries or combination with
other entities; and change in the share structure. The general manager is
appointed by the board of directors and is responsible for carrying out the
decisions of the board as well as for the day-to-day management of Zao Yang High
Worth Brewery.

            Subsequent to the conclusion of the Settlement Agreement, a
Management Committee was formed under High Worth JV's board of directors to
serve as the central liaison and coordination body for the Pabst Blue Ribbon
beer business in China. Any future expansion and development of Pabst Blue
Ribbon beer production will be monitored by High Worth JV. The Company is
seeking expansion and cooperation opportunities to extend its brewing operation
to local breweries in other provinces outside of Guangdong Province.

            Jilin Lianli Brewery was formed as a sino-foreign joint venture
company. Pursuant to the relevant Joint Venture Agreement, Jilin Lianli Brewery
is governed by a board of directors consisting of five individuals, three of
whom, including the chairman, are nominated by March International, with the
remaining two, including the vice-chairman, by Juetai City Brewery. The
remaining terms of the Joint Venture Agreement are similar to those of Zao Yang
High Worth Brewery, as previously described.

GOLDJINSHENG AGREEMENT

            A provisional agreement, subject to the approval of the applicable
Chinese governmental agencies and the execution of separate definitive
agreements with respect to the various matters referred to below, was made among
Goldjinsheng, the owner of the remaining 60% interest in Noble Brewery, Zhaoqing
Brewery HC, Noble Brewery, High Worth JV and Guangdong Blue Ribbon on May 10,
1995 (the "Goldjinsheng Agreement") confirming that:


                                       18
<PAGE>

(a)   High Worth JV was entitled to brew and sell beer under the Pabst Blue
      Ribbon label produced in its brewing facilities up to a maximum annual
      production capacity of 100,000 tons.

(b)   High Worth JV and/or companies in which High Worth JV has an interest are
      entitled to be granted a sublicense from Guangdong Blue Ribbon with the
      right to produce and sell beer under the Pabst Blue Ribbon label in the
      Guangdong Province of China (an "Additional Facility") up to a maximum
      annual production capacity of 300,000 tons.

      In the event that High Worth JV desires to obtain a sublicense for an
      Additional Facility, Goldjinsheng has the right to purchase up to a 40%
      interest in such Additional Facility. The purchase price for such interest
      will be the actual cost of such Additional Facility multiplied by the
      percentage interest that Goldjinsheng elects to purchase.

(c)   A marketing company, owned 8% by Guangdong Blue Ribbon, 52% by High Worth
      JV and 40% by Goldjingsheng, will organize and coordinate the sale of
      Pabst Blue Ribbon beer produced by High Worth JV and Noble Brewery. High
      Worth JV and Noble Brewery will each create their own distribution company
      or division. The distribution company of High Worth JV will have the sole
      right to acquire 100% of the production of High Worth JV and 40% of the
      production of Noble Brewery, while the distribution company of Noble
      Brewery will have the sole right to acquire 60% of the production of Noble
      Brewery. The respective distribution companies will appoint the Marketing
      Company as their sole and exclusive agent to market Pabst Blue Ribbon beer
      in China. If the provisions as to ownership are implemented, the
      respective interests of Guangdong Blue Ribbon and the Company in the
      Marketing Company will be adjusted (see "MARKETING AND OPERATIONS --
      SUMMARY OF OPERATIONS").

            Subsequent to the signing of the Goldjinsheng Agreement, the
Company, Guangdong Blue Ribbon and Goldjinsheng have attempted to complete the
respective separate definitive agreements. In December 1996, Guangdong Blue
Ribbon and Goldjinsheng advised the Company that they intended to modify some of
the terms of the Goldjinsheng Agreement and to propose incorporating those
modifications in the respective separate definitive agreements. In addition, the
negotiation process was interrupted by the previously described Sichuan Brewery
issue in 1997 and 1998 and the Pabst trademark issue in 1999. The Company
believes that the delays in completing the separate definitive agreements will
not have a material effect on the validity of the terms and provisions contained
in the Goldjinsheng Agreement.

OPERATING IN CHINA

            Because the operations of the Company are based exclusively in
China, the Company is subject to rules and restrictions governing China's legal
and economic system as well as general economic and political conditions in that
country.

            INFLATION/ECONOMIC POLICIES. General economic conditions in China
could have a significant impact on the Company. The economy of China differs in
certain material respects from that of the United States, including its
structure, levels of development and capital reinvestment, growth rate,
government involvement, resource allocation, rate of inflation and balance of
payments position. Although the majority of China's productive assets are still
owned by the state, the adoption of an economic reform policy since 1978 has
resulted in the gradual reduction in the role of state economic plans and the
allocation of resources, pricing and management of such assets, with increased
emphasis on the utilization of market forces, and rapid growth in the Chinese
economy. The success of the Company depends in substantial part on the continued
economic growth of the Chinese economy.

            In the recent decade, the Chinese economy has experienced periods of
rapid economic growth as well as high rates of inflation, which in turn, has


                                       19
<PAGE>

resulted in the adoption by the Chinese government from time to time of various
corrective measures designed to regulate growth and contain inflation. Since
1993, the Chinese government has implemented an economic program to control
inflation, which has resulted in the tightening of working capital available to
Chinese state-owned enterprises, and in the slowing of the pace of economic
growth and general market consumption.

            However, the Asian financial crisis inhibited the growth and general
level of activity of the Chinese economy, thus reducing consumer demand in
China, which has had a negative impact on the Company's result of operations,
financial condition and cash flows. The speed and degree of recovery of the
Chinese economy depends in substantial part on an overall improvement in the
economic climate in Asia and the economic policies to be adopted by the central
government of China in 2000.

            CURRENCY MATTERS. The State Administration for Exchange Control
("SAEC"), under the authority of the People's Bank of China ("PBOC"), controls
the conversion of RMB into foreign currency. Prior to January 1, 1994, RMB could
be converted into foreign currency through the Bank of China or other authorized
institutions at official rates fixed daily by the SAEC. RMB could also be
converted at swap centers ("Swap Centers") open to Chinese enterprises and
foreign-funded Chinese enterprises, subject to SAEC approval of each foreign
currency trade, at exchange rates negotiated by the parties for each
transaction. Effective January 1, 1994, a unitary exchange rate system was
introduced in China, replacing the dual-rate system previously in effect. In
connection with the creation of a unitary exchange rate, the establishment of
the China Foreign Exchange Trading System inter-bank foreign exchange market and
the phasing out of the Swap Centers were announced. All Swap Centers were
formally closed effective December 1, 1998, and foreign-funded enterprises must
satisfy their foreign exchange requirements through licensed banks and financial
institutions at the prevailing exchange rates quoted by the People's Bank of
China.

            Effective July 1, 1996, the government of China began to take steps
to make its currency fully convertible on a "current account" basis. This will
allow foreign-funded enterprises, whether wholly-owned or joint ventures with
Chinese parties, to buy and sell foreign exchange in banks for purposes of
trade, services, debt repayment and profit repatriation. The "current account"
measures the flow of money into and out of a nation, including the net balance
on trade in goods and services, plus remittances.

            As a result of the recent Asian financial crisis, China has
tightened its foreign exchange controls. Although the central government of
China has repeatedly indicated that it does not intend to devalue its currency
in the near future, devaluation still remains a possibility. Should the central
government of China decide to devalue its currency, the Company does not believe
that such an action would have a detrimental effect on the Company's operations,
since the Company conducts virtually all of its business in China, and the sale
of its products is settled in RMB. As of December 31, 1999, the Company's only
significant USD denominated obligation, which would be more expensive to repay
in the event of a devaluation, is the advances from shareholders of RMB
36,719,200, which will be repaid at the discretion of the Company.

            The Company has historically relied on dividend distributions,
converted from RMB into USD, to fund its activities outside of China. The
Company does not expect that the recently tightened foreign exchange controls
will affect the ability of High Worth JV to continue to distribute such
dividends. However, in the event of a devaluation, High Worth JV could elect to
distribute dividends in RMB, which would then be converted into other currencies
at the then prevailing market rates.

            LEGAL SYSTEM. Since 1979, many laws and regulations dealing with
economic matters in general and foreign investment in particular have been
promulgated in China. The Chinese constitution adopted in 1989 authorizes
foreign investment, and guarantees the "lawful rights and interests" of foreign
investors in China. The trend of legislation over the past twelve years has


                                       20
<PAGE>

significantly enhanced the protection afforded foreign investment and allowed
for more active control by foreign parties of foreign investment enterprises in
China. There can be no assurance, however, that the current trend and economic
legislation toward promoting market reforms and experimentation will not be
slowed, curtailed or reversed, especially in the event of a change in
leadership, social or political disruption, or unforeseen circumstances
affecting China's political, economic or social life.

            Despite some progress in developing a legal system, China does not
have a comprehensive system of laws. The interpretation of Chinese laws may be
subject to policy changes reflecting domestic political factors. Enforcement of
existing laws may be uncertain and sporadic, and implementation and
interpretation may be inconsistent. The Chinese judiciary is relatively
inexperienced in enforcing the laws or terms of contracts, leading to a higher
than usual degree of uncertainty as to the outcome of litigation. Even where
adequate laws exist in China, it may be impossible to obtain swift and equitable
law enforcement, or to obtain enforcement of a judgment by a court of another
jurisdiction. As the Chinese legal system develops, the promulgation of new
laws, changes to existing laws, and the preemption of local regulations by
national laws may adversely affect foreign investors, such as the Company.

            The Company's activities in China may by law be subject, in some
cases, to administrative review and approval by various national, provincial and
local agencies of the Chinese government. While China has promulgated an
administrative procedural law permitting redress to the courts with respect to
certain administrative actions, this law appears to be largely untested.

            TAX MATTERS. The Company's operations in China are subject to four
types of taxes: Income Tax, Value Added Tax ("VAT"), Consumption Tax and other
Sales Tax.

            Noble Brewery and High Worth JV are governed by the Income Tax Law
of China concerning Foreign Investment Enterprises and Foreign Enterprises (the
"FIE Law"). Under the current FIE Law, Noble Brewery and High Worth JV are
exempt from payment of Income Tax for the first two taxation years in which
Noble Brewery and High Worth JV each become profitable. The Income Tax rate for
the following three years is reduced by 50% and is thereafter calculated at the
full rate. The last year of 50% tax exemption for High Worth JV is the year of
2000 while Noble Brewery's full rate tax commenced on January 1, 1999. The
current official Income Tax rate on profits for Noble Brewery is 27% (33% less a
6% temporary reduction provided as an economic incentive by the Chinese
government) and for High Worth JV is 33%, unless specifically exempted or
reduced by the local authorities.

            Zao Yang High Worth Brewery was established as a China joint venture
limited company and is subject to the Income Tax Law of China concerning a
Chinese limited company. The current official Income Tax rate on profits for Zao
Yang High Worth Brewery is 33%. However, local tax authorities may specifically
exempt or reduce the tax rate as an economic incentive.

            In addition to the FIE Law, which is computed on profits, Noble
Brewery, Zhaoqing Brewery and Zao Yang High Worth Brewery are also subject to
two kinds of turnover taxes for their respective sales, the VAT and Consumption
Tax. The applicable VAT rate is 17% for brewery products sold in China. The
amount of VAT liability is determined by applying the applicable tax rate to the
invoiced amount less VAT paid on purchases made with the relevant supporting
invoices. The Consumption Tax rate together with a government surcharge for
brewery products is approximately RMB 220 per metric ton. The Consumption Tax is
determined on the volume of sales within China.

            Currently, there are no withholding taxes imposed on dividends paid
by High Worth JV to Holdings.

            DISTRIBUTION OF PROFITS. Applicable Chinese laws and regulations
require that, before a Sino-foreign joint venture enterprise (such as High Worth


                                       21
<PAGE>

JV and Noble Brewery) distributes profits to investors, it must (1) satisfy all
tax liabilities; (2) provide for losses in previous years; and (3) make
allocations in proportions determined at the sole discretion of the Board of
Directors to a general reserve fund, an enterprise development fund and a staff
welfare and employee bonus fund. Distribution of profits by the joint ventures
to the Company and their other equity investors are required to be in proportion
to each party's respective investment in the joint venture.

REGULATIONS

            Central, provincial and local laws and regulations govern the
operations of the breweries. The central government and all provinces in which
the Company's malt beverage products are distributed regulate trade practices,
advertising and marketing practices, relationships with distributors and related
matters. Governmental entities also levy various taxes, license fees and other
similar charges and may require bonds to ensure compliance with applicable laws
and regulations.

HISTORY

            The Company was organized in the state of Florida as Video
Promotions, Inc. on April 20, 1988. The Company subsequently changed its name to
National Sweepstakes, Inc. and then to Natural Fuels, Inc. 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 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. The Class B Common Stock carries two votes per share but is
otherwise equivalent to the Class A Common Stock. In addition, the Company
issued an aggregate of 600,000 shares of the Company's Class A Common Stock to
various parties for consulting services in connection with the acquisition of
Holdings. At the time of the acquisition, Holdings owned a 60% interest in High
Worth JV. This transaction was accounted for as a recapitalization of Holdings
with Holdings as the acquirer (reverse acquisition).

            On November 22, 1994, the Company effected a 1-for-22 reverse stock
split in anticipation of this transaction.

            On March 15, 1995, the Company changed its name to CBR Brewing
Company, Inc.


                                       22
<PAGE>

ITEM 2. PROPERTIES

            The Company's major facilities are as follows:

FACILITY                      LOCATION                           PRODUCT
--------                      --------                           -------

Noble Brewery                 City of Zhaoqing on a site         Malt Beverages
                              containing approximately
                              135,000 square meters

Zhaoqing Brewery              City of Zhaoqing on a site         Malt Beverages
                              containing approximately
                              131,000 square meters

Zao Yang High Worth           City of Zao Yang on a site         Malt Beverages
Brewery (formed in            containing approximately
1998)                         70,000 square meters

Sichuan High Worth            City of Le Shan on a site          Malt Beverages
Brewery (formed in            containing approximately
mid-1999)                     100,000 square meters

Jilin Lianli Brewery          City of Juetai on a site           Malt Beverages
(operation expected by        containing approximately
May 2000)                     33,000 square meters

            The facilities of Noble Brewery and Zhaoqing Brewery are well
maintained and suitable for their respective operations. The facilities of Zao
Yang High Worth Brewery and Sichuan High Worth Brewery have been modernized and
new equipment has been added to convert them into Pabst Blue Ribbon beer
production complexes.

            In 1999, the Company estimates that Zhaoqing Brewery, Noble Brewery
and Zao Yang High Worth Brewery operated at approximately 60.1%, 59.2% and
85.1%, respectively, of their theoretical brewing capacities. Annual production
capacity can vary due to product mix, packaging mix, market demand and
seasonality.

ITEM 3. LEGAL PROCEEDINGS

            None.

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

            No matters were submitted to a vote of the Company's security
holders during the fourth quarter of the fiscal year ended December 31, 1999.


                                       23
<PAGE>

                                    PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information

            The Class A Common Stock of CBR Brewing Company, Inc. is traded on
the OTC Bulletin Board under symbol "CBRB". During 1998 and 1999, trading
activity in the Class A Common Stock was generally limited and sporadic, and
should not be deemed to constitute an established public trading market. There
is no trading market for the Class B Common Stock.

            The following table sets forth the range of closing prices of the
Company's Class A Common Stock as quoted during the periods indicated. Such
prices reflect prices between dealers in securities and do not include any
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions. The information set forth below was obtained from America Online,
Inc.

                                        High                 Low
                                        ----                 ---

Year Ended December 31, 1999:

Three Months Ended -

March 31, 1999                          $0.88               $0.25
June 30, 1999                            0.81                0.38
September 30, 1999                       0.56                0.38
December 31, 1999                        1.88                0.38

Year Ended December 31, 1998:

Three Months Ended -

March 31, 1998                          $8.00               $1.50
June 30, 1998                            6.38                3.75
September 30, 1998                       3.75                1.20
December 31, 1998                        1.75                0.75

(b) Holders

            As of March 31, 2000, the Company had 12 shareholders of record with
respect to its Class A Common Stock and three shareholders of record with
respect to its Class B Common Stock, excluding shares held in street name by
brokerage firms and other nominees who hold shares for multiple investors.

(c) Dividends

            Holders of Common Stock are entitled to receive dividends if, as and
when declared by the Board of Directors out of funds legally available therefor.
The Company has never paid cash dividends on its Common Stock and has no present
intention of paying cash dividends in the foreseeable future. It is the present
policy of the Board of Directors to retain all earnings to provide for the
future growth and development of the Company. However, such policy is subject to
change based on current industry and market conditions, as well as other factors
beyond the control of the Company.

            The Company's ability to pay dividends to its shareholders is
dependent on the Company receiving distributions through Holdings from its PRC
subsidiaries and affiliates, which generate all of the Company's earnings and
cash flows.

            Pursuant to the relevant laws and regulations of Sino-foreign joint
venture enterprises, the profits of High Worth JV, calculated pursuant to


                                       24
<PAGE>

generally accepted accounting principles in the PRC ("PRC GAAP"), are available
for distribution in the form of cash dividends to each equity investor, in
proportion to each investor's interest in the joint venture, after satisfaction
of all tax liabilities, provision for any losses in previous years, and
appropriations to reserve funds, as determined at the discretion of the board of
directors in accordance with PRC accounting standards and regulations. The
principal adjustments necessary to conform PRC GAAP financial statements to
financial statements prepared in accordance with generally accepted accounting
principles in the United States ("US GAAP") are the reclassification of certain
expense items from income appropriations to charges against income, adjustments
for sales, other income and purchases recognized on a cash basis, depreciation
charges, deferred taxation and revaluation of fixed assets.

            In accordance with the relevant laws and regulations in the PRC, the
profits available for distribution are based on PRC GAAP financial statements.
If High Worth JV has foreign currency available after meeting the operational
needs of its PRC subsidiaries, it may elect to make a profit distribution to
Holdings. Otherwise, it will be necessary to obtain approval from the State
Administration for Exchange Control and convert such distributions at licensed
banks and financial institutions.

            On November 23, 1998 and July 28, 1999, the Board of Directors of
High Worth JV declared separate dividend distributions of RMB 51,596,713. The
minority interest's 40% portion of the dividend is recorded as a liability at
the declaration date and is included in amounts due to related companies. The
dividends are distributed in installments in order to avoid any disruption to
the normal operating cash flow position of High Worth JV. During the years ended
December 31, 1999 and 1998, High Worth JV paid aggregate dividends to Guangdong
Blue Ribbon of RMB 20,638,685 and RMB 45,375,595, respectively.

(d) Sales of Unregistered Securities

            On March 2, 1998, the Company entered into a contract with Worldwide
Corporate Finance, a corporate financial consulting company, to provide
financial and business consulting services to the Company. The Company paid an
initial non-refundable retainer by issuing 10,000 shares of Class A Common
Stock, which was recorded as a charge to operations at their estimated fair
market value of RMB 240,700 (US$29,000). The shares of Class A Common Stock were
issued pursuant to Section 4(2) of the Securities Act of 1933, as amended, based
on the representations of the recipient.


                                       25
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

            The following financial data has been derived from the audited
consolidated financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
document. All amounts are in RMB. The exchange rate was approximately US$1.00 to
RMB 8.3 at December 31, 1997, 1998 and 1999.

                                           CBR Brewing Company, Inc.
(in RMB)                                        and Subsidiaries
                                           ------------------------
                                           Years Ended December 31,
                                ----------------------------------------------
                                     1999            1998              1997
                                -------------    -------------     -----------

Consolidated Statement
  of Income Data:

Sales, net of sales taxes         986,458,832    1,121,007,111    1,169,286,489
Gross profit                      218,202,956      193,523,991      208,326,796
Operating income (loss)              (410,012)     (24,070,401)      11,214,860
Net income                         23,655,102       21,391,510       30,762,902

Net income per common share              2.95             2.67             3.84
Cash dividends declared per
  common share                            -0-              -0-              -0-

                                              As of December 31,
                                ----------------------------------------------
                                     1999             1998            1997
                                -------------    -------------     -----------

Consolidated Balance
  Sheet Data:

Net working capital
  (deficiency)                   (160,971,900)    (192,019,443)    (102,725,259)
Total assets                      822,467,276      870,426,327      835,094,540
Long term liabilities              10,000,000        2,847,911       16,512,851
Advances from shareholders         36,719,200       50,267,705       73,617,552
Shareholders' equity              226,555,203      202,202,300      178,351,384

ITEM 7. 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, is engaged in the production and sale
of 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 its 40% interest in Noble Brewery.

            The acquisition of Zhaoqing Brewery, including its 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. Accordingly,
the Company's post-acquisition consolidated statements of income are presented
for the years ended December 31, 1997, 1998 and 1999.


                                       26
<PAGE>

            For accounting purposes, the acquisition of Holdings by the Company
has been treated as a recapitalization of Holdings with Holdings as the acquirer
(reverse acquisition).

            Through a Sublicense Agreement dated May 6, 1994 between Pabst
Zhaoqing and High Worth JV, High Worth JV acquired a sublicense to utilize Pabst
trademarks in conjunction with the production and marketing of beer in China and
other Asian countries except Hong Kong, Macau, Japan and South Korea. The
sublicense is subject to a prior License Agreement between Pabst US and Pabst
Zhaoqing, and a subsequent Assets Transferring Agreement among Pabst Zhaoqing,
Pabst US and Guangdong Blue Ribbon (see "ITEM 1. BUSINESS - PABST LICENSING
ARRANGEMENTS AND TRADEMARKS"). The License Agreement expires on November 6,
2003.

            Noble China Inc., a public company listed on the Toronto Stock
Exchange, issued a press release on May 27, 1999 to announce that it had
acquired from Pabst Brewing Company the exclusive rights to brew and distribute
Pabst Blue Ribbon beer throughout China for a period of 30 years from 2003 to
2033. Noble China Inc. has issued subsequent press releases reiterating this
information. Although the Company to date has been unable to verify whether such
a license has in fact been granted to Noble China Inc., the terms of any such
license, and whether it is subject to any conditions, the Company believes that
some form of a license was granted to Noble China Inc. by Pabst Brewing Company.
Management has consulted with legal counsel regarding the legitimacy of the
purported license and the Company's potential responses. In addition, management
has consulted with Guangdong Blue Ribbon, the owner of the Pabst Blue Ribbon
trademark in China, regarding potential responses, and has met with
representatives of Noble China Inc. in an attempt to explore a potential
settlement.

            Management of the Company has requested that Guangdong Blue Ribbon
take appropriate action to protect its rights and its sub-licensees' rights to
utilize the Pabst Blue Ribbon trademark in China. The Company has been advised
that Guangdong Blue Ribbon is still evaluating the situation and has not yet
determined how it will respond to this matter. Once Guangdong Blue Ribbon has
responded, the Company expects to be in a position to evaluate and revise its
future business plan and strategy accordingly. The Company is currently unable
to predict the effect that this development may have on future operations.
However, if Noble China Inc. has obtained the exclusive right to brew and
distribute Pabst Blue Ribbon beer in China beginning in 2003, the inability of
the Company to obtain a sub-license from Noble China Inc. on acceptable terms
and conditions to allow the Company to continue to produce and distribute Pabst
Blue Ribbon beer in China would have a material adverse effect on the Company's
future results of operations, financial position and cash flows.

            During February 1995, the Marketing Company was established to
conduct the distribution, marketing and promotion throughout China of the Pabst
Blue Ribbon beer produced by Zhaoqing Brewery and Noble Brewery. The Company
owns a 42% net interest in the Marketing Company. Zhaoqing Brewery and Noble
Brewery commenced selling their production of Pabst Blue Ribbon beer through the
Marketing Company in April 1995 and July 1995, respectively. Subsequently,
Sichuan High Worth Brewery and Zao Yang High Worth Brewery commenced selling
their production of Pabst Blue Ribbon beer through the Marketing Company in
April 1997 and June 1998, respectively. The consolidated financial statements
include the results of operations of the Marketing Company on a consolidated
basis commencing from April 1, 1995. The Company has a controlling interest in
the Marketing Company even though it has an effective interest of only 42%
because of the Company's 60% interest in High Worth JV and 70% interest in the
Marketing Company (through a subsidiary), and because the Company controls the
majority of the votes on the board of directors of the Marketing Company and the
subsidiary.

            In January 1998, the Company, through High Worth JV, established a
brewery in Hubei Province pursuant to a joint venture agreement in which the
Company acquired an effective interest of 33%. Zao Yang High Worth Brewery
commenced the production of Pabst Blue Ribbon beer in June 1998, at which time


                                       27
<PAGE>

the Marketing Company also began purchasing Zao Yang High Worth Brewery's
production of Pabst Blue Ribbon beer for distribution. The consolidated
financial statements include the results of operations of Zao Yang High Worth
Brewery on a consolidated basis commencing from January 13, 1998. The Company
has a controlling interest in Zao Yang High Worth Brewery even though it has an
effective interest of only 33% because of the Company's 60% interest in High
Worth JV and 55% interest in Zao Yang High Worth Brewery (through High Worth
JV), and because the Company controls the majority of the votes on the board of
directors of High Worth JV and Zao Yang High Worth Brewery.

            Prior to March 1995, Zhaoqing Brewery had produced exclusively
domestic brands of beer, and had an annual production capacity of 50,000 metric
tons or 425,000 barrels of beer. In late 1994, 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 the production of all domestic brand
beer and commenced exclusive production of Pabst Blue Ribbon beer. However, less
than 5% of beer production normally does not meet Pabst Blue Ribbon quality
standards and is packed and distributed as lower priced, local brand beer. With
the implementation of the new brewing technology and the purchase of additional
equipment during 1995, Zhaoqing Brewery reached its current full-scale annual
production capacity of 100,000 metric tons or 850,000 barrels of beer in late
1995.

            Noble Brewery has produced Pabst Blue Ribbon beer exclusively since
it commenced operations. Prior to 1994, Noble Brewery had an annual production
capacity of 80,000 metric tons or 680,000 barrels of beer. With the completion
of a second brewing facility in July 1994, Noble Brewery reached its full-scale
annual production capacity of 200,000 metric tons or 1,700,000 barrels of beer
in late 1994.

            In late 1996, Guangdong Blue Ribbon established a wholly-owned
subsidiary in Le Shang City, Sichuan Province, PRC, and started converting an
existing brewery with an annual production capacity of 20,000 metric tons into a
Pabst Blue Ribbon brewing complex ("Sichuan Brewery"). Production and sale of
Pabst Blue Ribbon beer commenced in April 1997.

            Effective December 31, 1997, the Company, through High Worth JV,
entered into a Settlement Agreement with Guangdong Blue Ribbon that will allow
it to acquire a 51% interest in Sichuan Brewery, so that the Company would have
an effective interest of 31%. Pursuant to an Equity Transfer Agreement signed on
January 19, 1999, High Worth JV received a 15% consideration-free equity
interest in Sichuan Brewery, so that the Company has an effective interest of
9%. Sichuan Brewery will be formally restructured into a new joint venture
company and will serve as the fourth Pabst Blue Ribbon brewing complex in China.
High Worth JV was also granted a three-year option to increase its equity
interest to 51% at a fixed cost.

            On June 5, 1999, a formal Joint Venture Agreement was signed among
Le Shan City E Mei Brewery (46.62%), High Worth JV (15.00%) and Wai Shun
Investment Limited (38.38%), an unaffiliated Hong Kong company, to form Sichuan
Blue Ribbon Brewery High Worth Ltd. ("Sichuan High Worth Brewery"). The total
registered and paid up capital of Sichuan High Worth Brewery was RMB 51,221,258.
High Worth JV's 15% equity interest is consideration-free but entitled to share
in the profits of Sichuan High Worth Brewery. The Joint Venture Agreement and
the relevant legal documents have been approved by the local government
authorities. Although Sichuan High Worth Brewery is currently producing Pabst
Blue Ribbon beer, the operating results of Sichuan High Worth Brewery are not
included in the Company's financial statements, except for any dividend income
that the Company receives.

            In June 1998, Zao Yang High Worth Brewery commenced the production
of Pabst Blue Ribbon beer after completing conversion of the existing facilities
into a Pabst Blue Ribbon brewing facility. Pursuant to the joint venture
agreement, Zao Yang High Worth Brewery is required to sell all of its beer
production to the Marketing Company for resale.


                                       28
<PAGE>

            On October 18, 1999, Holdings, through its wholly-owned subsidiary
incorporated in the British Virgin Islands, March International, signed a formal
Joint Venture Agreement with Jilin Province Juetai City Brewery (40%) and Jilin
Province Chuang Xiang Zhi Yie Ltd. (9%), both of which are unaffiliated PRC
companies, to form Jilin Lianli Brewery. The total registered and paid up
capital of Jilin Lianli Brewery was RMB 25,000,000. March International will
contribute one new packaging line and the right to use the "Lianli" beer
trademark with a total value of RMB 12,750,000 as capital, and will receive a
51% effective interest in Jilin Lianli Brewery. The technical renovation of the
existing brewing equipment and the installation of the new packaging line is
expected to be completed in April 2000. The Joint Venture Agreement is subject
to approval by the local government, which is expected to be received when
formal operations commence in May 2000.

            The Company conducts a substantial portion of its purchases through
related parties, and has additional significant continuing transactions with
such parties (see "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").

CONSOLIDATED RESULTS OF OPERATIONS:

YEARS ENDED DECEMBER 31, 1999 AND 1998:

SALES:

            For the year ended December 31, 1999, net sales were RMB
986,458,832, as compared to net sale of RMB 1,121,007,111 for the year ended
December 31, 1998. Approximately 98% and 99% of total sales in 1999 and 1998,
respectively, were from the sale of products with the Pabst Blue Ribbon brand
name.

            During the year ended December 31, 1999, net sales of beer products
decreased by RMB 134,548,279 or 12.0% to RMB 986,458,832, as compared to RMB
1,121,007,111 for the year ended December 31, 1998. The Company sold 204,226
metric tons of beer to distributors in 1999 as compared to 235,670 metric tons
of beer in 1998, a decrease of 13.3%. The decrease in net sales of beer products
during the year ended December 31, 1999 as compared to the year ended December
31, 1998 was primarily attributable to the decrease in volume of beer sold as a
result of a weakening in consumer demand for foreign branded premium beer in
China and the elimination of a low margin product line as discussed below.

            In response to changing market conditions and competitive pressures,
the Company introduced two new Pabst Blue Ribbon beer products during March
1998. The new products cost less to produce as a result of containing less malt
and having a lower alcoholic content, and were sold in newly-designed packaging.
Although the sale volume of these 10-degree light processed Pabst Blue Ribbon
beers constituted a significant portion of total sales in 1998, the contribution
to overall operating profit was below management's expectations. Accordingly, as
a result of a strategic reevaluation of the Company's markets, management
decided to discontinue the 10-degree beer in 1999, and attempted to replace such
sales with sales of the 11-degree light processed beer.

            During the year ended December 31, 1999, Zhaoqing Brewery sold
60,651 metric tons of beer, of which 59,212 metric tons (97.6%) were Pabst Blue
Ribbon beer and 1,439 metric tons (2.4%) were local brand beer. In 1999,
Zhaoqing Brewery sold all the Pabst Blue Ribbon beer produced to the Marketing
Company for resale, and sold the local brand beer to the distributors directly.
During the year ended December 31, 1998, Zhaoqing Brewery sold 73,246 metric
tons of beer to the Marketing Company, of which 71,611 metric tons (97.8%) were
Pabst Blue Ribbon beer and 1,635 metric tons (2.2%) were local brand beer. Total
beer sold by Zhaoqing Brewery decreased by 12,595 metric tons or 17.2% in 1999
as compared to 1998.

            During the years ended December 31, 1999 and 1998, Sichuan Brewery
sold 9,041 metric tons and 12,525 metric tons of beer, respectively, to the
Marketing Company, all of which was Pabst Blue Ribbon beer.


                                       29
<PAGE>

            During the year ended December 31, 1999, Zao Yang High Worth Brewery
sold 17,015 metric tons of beer, of which 4,716 metric tons (27.7%) were Pabst
Blue Ribbon beer and 12,299 metric tons (72.3%) were local brand beer. In 1999,
Zao Yang High Worth Brewery sold all the Pabst Blue Ribbon beer produced to the
Marketing Company for resale, and sold the local brand beer to the distributors
directly. During the year ended December 31, 1998, Zao Yang High Worth Brewery
sold 6,378 metric tons of beer to the Marketing Company, of which 4,295 metric
tons (67.3%) were Pabst Blue Ribbon beer and 2,083 metric tons (32.7%) were
local brand beer.

            The Marketing Company regulated the production of Pabst Blue Ribbon
beer by Zhaoqing Brewery, Noble Brewery, Sichuan Brewery and Zao Yang High Worth
Brewery during 1998 and 1999 in accordance with their respective production
capacities in order to balance warehouse inventory levels and accommodate
projected market demand.

GROSS PROFIT:

            For the year ended December 31, 1999, total gross profit was RMB
218,202,956 or 22.1% of total net sales, as compared to total gross profit of
RMB 193,523,991 or 17.3% of total net sales for the year ended December 31,
1998. Despite the decrease in sales, gross profit increased by RMB 24,678,965 to
RMB 218,202,956 in 1999 as compared to RMB 193,523,991 in 1998 as a result of
the increase in gross margin.

            Gross margin from beer sales increased to 22.1% in 1999 as compared
to 17.3% in 1998 as a result of a shift in the sales mix to higher margin
products and effective cost control measures.

            The Company expects that it will experience pressure on its gross
profit margin in 2000 as a result of a continuing softness in consumer demand in
China caused in part by the effect of the Asian financial crisis, and increasing
competition from foreign premium brand beers.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

            For the year ended December 31, 1999, selling, general and
administrative expenses were RMB 217,915,167 or 22.1% of net sales, consisting
of selling expenses of RMB 138,497,167 and general and administrative expenses
of RMB 79,418,000. Net of the allowance for doubtful accounts of RMB 24,235,137
recorded during 1999, general and administrative expenses were RMB 55,182,863.

            For the year ended December 31, 1998, selling, general and
administrative expenses were RMB 215,134,986 or 19.2% of net sales, consisting
of selling expenses of RMB 148,046,684 and general and administrative expenses
of RMB 67,088,302. Net of the allowance for doubtful accounts of RMB 15,367,012
recorded during 1998, general and administrative expenses were RMB 51,721,290.

            Selling expenses include costs relating to the advertising,
promotion, marketing and distribution of Pabst Blue Ribbon beer in China.
Selling expenses decreased by RMB 9,549,517 or 6.5% in 1999 as compared to 1998,
but increased as a percent of net sales, to 14.0% in 1999 from 13.2% in 1998.
Selling expenses decreased on an absolute basis in 1999 as compared to 1998 as a
result of the Company's implementation of effective cost control measures with
respect to advertising and promotional programs. Selling expenses increased as a
percent of net sales in 1999 as compared to 1998 as a result of a decrease in
net sales.

            Selling expenses are recognized through the consolidation of the
operations of the Marketing Company. The Marketing Company incurs such expenses
on behalf of all of the Pabst Blue Ribbon brewing facilities in China, even
though not all of such facilities' results of operations are reflected in the
Company's operating income. Although the Marketing Company is budgeted annually
to operate at break-even levels, based on agreed upon ex-factory prices that the
Marketing Company pays to the respective breweries to purchase their production
of Pabst Blue Ribbon beer, actual profitability, particularly on an interim
basis, is subject to substantial variability. As a result of these factors,


                                       30
<PAGE>

during the years ended December 31, 1999 and 1998, the Marketing Company
incurred an operating loss of RMB 41,639,000 and RMB 61,120,361, respectively,
which reduced consolidated operating income accordingly.

            General and administrative expenses consist of the management office
operating costs of Zhaoqing Brewery, the Marketing Company and Zao Yang High
Worth Brewery, 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. Excluding the allowance for doubtful accounts,
general and administrative expenses increased by RMB 3,461,573 or 6.7% in 1999
as compared to 1998, and as a percentage of net sales, to 5.6% in 1999 from 4.6%
in 1998. General and administrative expenses increased in 1999 as compared to
1998 as a result of an increase in personnel-related costs and the costs
associated with the administration of the Company's breweries in China.

            The allowance for doubtful accounts, which is calculated based
primarily on the age of outstanding accounts receivable, increased to 2.5% of
net sales in 1999 as compared to 1.4% of net sales in 1998 as a result of an
increase in the age of accounts receivable outstanding in 1999. However,
accounts receivable are typically outstanding for a longer period of time in
China than in the United States.

            On January 2, 1998, options to purchase 210,000 shares of Class A
Common Stock at an exercise price of US$3.87 per share were granted to four
directors and five employees, and options to purchase 70,000 shares of Class A
Common Stock at an exercise price of US$4.26 were granted to two directors, each
of whom possesses indirectly more than 10% of the total combined voting power of
all classes of common stock of the Company. From 50% to 70% of such stock
options vested on April 1, 1998, and the remaining portion of the stock options
vest in varying amounts through April 1, 2000. The stock options expire on dates
ranging from December 31, 2001 through December 31, 2005. The stock options
issued to non-employee directors were accounted for pursuant to Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Under SFAS 123, the fair value of stock options
issued to non-employees is calculated according to the Black-Scholes pricing
model and is amortized to expense over the vesting period. As a result, the
Company recognized RMB 2,218,706 and RMB 697,801 of compensation expense in 1998
and 1999, respectively.

            On March 2, 1998, the Company entered into a contract with Worldwide
Corporate Finance, a corporate financial consulting company, to provide
financial and business consulting services to the Company. The Company paid an
initial non-refundable retainer by issuing 10,000 shares of Class A Common
Stock, which was recorded as a charge to operations for the year ended December
31, 1998 at their estimated fair market value of RMB 240,700 (US$29,000). The
contract expired on August 18, 1998 without any additional compensation being
paid or owed to Worldwide Corporate Finance.

OPERATING INCOME:

            For the year ended December 31, 1999, the operating loss was RMB
410,012 or 0.1% of net sales. For the year ended December 31, 1998, the
operating loss was RMB 24,070,401 or 2.1% of net sales. The decrease in
operating loss is primarily attributable to the shift in the sales mix to higher
margin products and the Company's implementation of effective cost control
measures with respect to selling, general and administrative expenses. Although
sales decreased in 1999 as compared to 1998, the shift in sales mix to higher
margin products resulted in an increase in gross profit margin, which resulted
in a decrease in operating loss in 1999 as compared to 1998.

            The Marketing Company purchases Pabst Blue Ribbon beer at mutually
agreed ex-factory prices, and is only allowed to mark-up the cost of Pabst Blue
Ribbon beer purchased in order to adequately cover its selling, advertising,
promotional, distribution and administrative expenses incurred in selling to
distributors. The Marketing Company incurred certain excessive selling and
advertising expenses in 1998 and 1999 that were not fully compensated for in the


                                       31
<PAGE>

Marketing Company's intra-company pricing structure, resulting in the Marketing
Company incurring an operating loss of RMB 61,120,361 and RMB 41,639,000,
respectively, which reduced consolidated operating income accordingly.

INTEREST INCOME AND INTEREST EXPENSE:

            For the year ended December 31, 1999, interest income was RMB
3,090,081 as compared to interest income of RMB 2,687,218 for the year ended
December 31, 1998. The increase in interest income in 1999 of RMB 402,863 or
15.0% as compared to 1998 was primarily the result of an increase in average
bank balances during 1999.

            For the year ended December 31, 1999, interest expense, net of
amounts capitalized, was RMB 14,689,647, as compared to RMB 9,507,873 for the
year ended December 31, 1998. The increase in interest expense in 1999 of RMB
5,181,774 or 54.5% as compared to 1998 was primarily the result of an increase
in average bank borrowings during 1999.

INCOME TAXES:

            The two-year income tax holiday for High Worth JV expired on
December 31, 1997. During the three year period from 1998 to 2000, High Worth JV
is required to pay local income tax at half of the normal rate of 33% on its
profit as determined in accordance with PRC accounting standards applicable to
High Worth JV. Accordingly, for the year ended December 31, 1999, income tax
expense of RMB 5,444,091 was recorded. For the year ended December 31, 1998,
income tax expense of RMB 4,739,172 was recorded. Deferred income taxes are
based on the liability method prescribed by SFAS No. 109.

            The Company recorded deferred tax liabilities of RMB 4,413,000 for
the year ended December 31, 1996, which represented the temporary differences
between the time when dividends are declared by the Company's subsidiaries and
associated company and are received by the Company. As the Company had elected
to treat its subsidiaries and associated company as partnerships in 1997, High
Worth Holdings is the ultimate partner in these partnerships. The Company will
only be taxed when taxable distributions are received from High Worth Holdings.
High Worth Holdings has no current intention of making any income distributions,
and accordingly, the deferred tax liability of RMB 4,413,000 was reversed and
recorded as a reduction to income tax expense for the year ended December 31,
1998.

NET INCOME:

            For the year ended December 31, 1999, net income increased to RMB
23,655,102 (RMB 2.95 per share) or 2.4% of net sales, as compared to net income
of RMB 21,391,510 (RMB 2.67 per share) or 1.9% of net sales for the year ended
December 31, 1998.

YEARS ENDED DECEMBER 31, 1998 AND 1997:

SALES:

            For the year ended December 31, 1998, net sales were RMB
1,121,007,111, all of which were from the sale of beer. For the year ended
December 31, 1997, net sales were RMB 1,169,286,489, of which RMB 1,167,296,661
(99.8%) was from the sale of beer and RMB 1,989,828 (0.2%) was from the sale of
mineral water and non-carbonated soft drinks. Approximately 99% of total sales
in 1998 and 1997 were from products with the Pabst Blue Ribbon brand name.

            During the year ended December 31, 1998, net sales of beer products
decreased by RMB 46,289,550 or 4.0% to RMB 1,121,007,111, as compared to RMB
1,167,296,661 for the year ended December 31, 1997. The Company sold 235,670
metric tons of beer to distributors in 1998 as compared to 227,418 metric tons
of beer in 1997, an increase of 3.6%. The decrease in net sales of beer products
during the year ended December 31, 1998 as compared to the year ended


                                       32
<PAGE>

December 31, 1997 was primarily attributable to a shift in consumer demand to
lower priced beer products. As a result, during the year ended December 31, 1998
as compared to the year ended December 31, 1997, although the Company recorded a
3.6% increase in the volume of beer sold, it incurred a 4.0% decrease in sales,
reflecting a lower average sales price per metric ton of beer.

            Contributing to the decrease in sales revenues in 1998 was the
summer flooding in China, which impacted consumer demand, and, as a result of
flooded roads (particularly in the Hubei and Hunan Provinces), interfered with
the Company's ability to deliver beer to its distributors in the affected
provinces. The Asian financial turmoil in 1998 also resulted in a weakening in
customer demand for foreign branded premium beer in China.

            In response to changing market conditions and competitive pressures,
the Company introduced two new Pabst Blue Ribbon beer products during March
1998. The new products cost less to produce as a result of containing less malt
and having a lower alcoholic content, and were sold in newly designed packaging.
Although the sale volume of these 10-degree light processed Pabst Blue Ribbon
beers constituted a significant portion of total sales in 1998, the contribution
to overall operating profit was below management's expectations. Accordingly, as
a result of a strategic reevaluation of the Company's markets, management
discontinued the 10-degree beer in 1999.

            During the year ended December 31, 1998, Zhaoqing Brewery sold
73,246 metric tons of beer to the Marketing Company, of which 71,611 metric tons
(97.8%) were Pabst Blue Ribbon beer and 1,635 metric tons (2.2%) were local
brand beer. During the year ended December 31, 1997, Zhaoqing Brewery sold
74,216 metric tons of beer to the Marketing Company, of which 73,060 metric tons
(98.4%) were Pabst Blue Ribbon beer and 1,156 metric tons (1.6%) were local
brand beer. Total beer sold by Zhaoqing Brewery to the Marketing Company
decreased by 970 metric tons or 1.3% in 1998 as compared to 1997.

            During the years ended December 31, 1998 and 1997, Sichuan Brewery
sold 12,525 metric tons and 8,124 metric tons of beer, respectively, to the
Marketing Company, all of which was Pabst Blue Ribbon beer.

            During the year ended December 31, 1998, Zao Yang High Worth Brewery
sold 6,378 metric tons of beer to the Marketing Company, of which 4,295 metric
tons (67.3%) were Pabst Blue Ribbon beer and 2,083 metric tons (32.7%) were
local brand beer.

            The Marketing Company regulated the production of Pabst Blue Ribbon
beer by Zhaoqing Brewery, Noble Brewery, Sichuan Brewery and Zao Yang High Worth
Brewery during 1997 and 1998 in accordance with their respective production
capacities in order to balance warehouse inventory levels and accommodate
projected market demand.

GROSS PROFIT:

            For the year ended December 31, 1998, total gross profit was RMB
193,523,991 or 17.3% of total net sales, all of which was from beer sales. For
the year ended December 31, 1997, total gross profit was RMB 208,326,796 or
17.8% of total net sales, and consisted of gross profit from beer sales of RMB
208,269,171 or 17.8% of net sales of beer and gross profit from sales of mineral
water and non-carbonated soft drinks of RMB 57,625 or 2.9% of net sales of
mineral water and non-carbonated soft drinks. Gross profit from beer sales
decreased by RMB 14,745,180 to RMB 193,523,991 in 1998 as compared to RMB
208,269,171 in 1997 as a result of reduced sales and a shift in the sales mix.

            Gross margin from beer sales decreased to 17.3% in 1998 as compared
to 17.8% in 1997 as a result of a shift in the sales mix to lower margin
products in 1998 in response to changing market conditions.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:


                                       33
<PAGE>

            For the year ended December 31, 1998, selling, general and
administrative expenses were RMB 215,134,986 or 19.2% of net sales, consisting
of selling expenses of RMB 148,046,684 and general and administrative expenses
of RMB 67,088,302. Net of the allowance for doubtful accounts of RMB 15,367,012
recorded during 1998, general and administrative expenses were RMB 51,721,290.

            For the year ended December 31, 1997, selling, general and
administrative expenses were RMB 197,111,936 or 16.9% of net sales, consisting
of selling expenses of RMB 129,202,587 and general and administrative expenses
of RMB 67,909,349. Net of the allowance for doubtful accounts of RMB 5,314,858
recorded during 1997, general and administrative expenses were RMB 62,594,491.

            Selling expenses include costs relating to the advertising,
promotion, marketing and distribution of Pabst Blue Ribbon beer in China.
Selling expenses increased by RMB 18,844,097 or 14.6% in 1998 as compared to
1997, and as a percent of net sales, to 13.2% in 1998 from 11.0% in 1997.
Selling expenses increased in 1998 as compared to 1997, both on an absolute
basis and as a percent of sales, as a result of the Company's expanded
advertising and promotional program implemented in order to maintain and
stimulate consumer demand and maintain the market position of Pabst Blue Ribbon
beer in China, in an attempt to counteract softening consumer demand and
increasing competition from foreign premium brand beer.

            Selling expenses are recognized through the consolidation of the
operations of the Marketing Company. The Marketing Company incurs such expenses
on behalf of all of the Pabst Blue Ribbon brewing facilities in China, even
though not all of such facilities' results of operations are reflected in the
Company's operating income. Although the Marketing Company is budgeted annually
to operate at break-even levels, based on agreed upon ex-factory prices that the
Marketing Company pays to the respective breweries to purchase their production
of Pabst Blue Ribbon beer, actual profitability, particularly on an interim
basis, is subject to substantial variability. As a result of these factors,
during the year ended December 31, 1998, the Marketing Company incurred an
operating loss of RMB 61,120,361, which reduced consolidated operating income
accordingly.

            General and administrative expenses consist of the management office
operating costs of Zhaoqing Brewery, the Marketing Company and Zao Yang High
Worth Brewery, 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. Excluding the allowance for doubtful accounts,
general and administrative expenses decreased by RMB 10,873,201 or 17.4% in 1998
as compared to 1997, and as a percentage of net sales, to 4.6% in 1998 from 5.4%
in 1997. General and administrative expenses decreased in 1998 as compared in
1997 primarily as a result of effective cost control measures, and decreased
personnel-related costs and costs associated with the operation of a public
company.

            The allowance for doubtful accounts, which is calculated based
primarily on the age of outstanding accounts receivable, increased to 1.4% of
net sales in 1998 as compared to 0.5% of net sales in 1997 as a result of an
increase in the age of accounts receivable outstanding in 1998. However,
accounts receivable are typically outstanding for a longer period of time in
China than in the United States.

            On January 2, 1998, options to purchase 210,000 shares of Class A
Common Stock at an exercise price of US$3.87 per share were granted to four
directors and five employees, and options to purchase 70,000 shares of Class A
Common Stock at an exercise price of US$4.26 were granted to two directors, each
of whom possesses indirectly more than 10% of the total combined voting power of
all classes of common stock of the Company. From 50% to 70% of such stock
options vested on April 1, 1998, and the remaining portion of the stock options
vest in varying amounts through April 1, 2000. The stock options expire on dates
ranging from December 31, 2001 through December 31, 2005. The stock options
issued to non-employee directors were accounted for pursuant to Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based


                                       34
<PAGE>

Compensation" ("SFAS 123"). Under SFAS 123, the fair value of stock options
issued to non-employees is calculated according to the Black-Scholes pricing
model and is amortized to expense over the vesting period. As a result, the
Company recognized RMB 2,218,706 of compensation expense in 1998.

            On March 2, 1998, the Company entered into a contract with Worldwide
Corporate Finance, a corporate financial consulting company, to provide
financial and business consulting services to the Company. The Company paid an
initial non-refundable retainer by issuing 10,000 shares of Class A Common
Stock, which was recorded as a charge to operations at their estimated fair
market value of RMB 240,700 (US$29,000). The contract expired on August 18, 1998
without any additional compensation being paid or owed to Worldwide Corporate
Finance.

OPERATING INCOME:

            For the year ended December 31, 1998, operating loss was RMB
24,070,401 or 2.1% of net sales. For the year ended December 31, 1997, operating
income was RMB 11,214,860 or 1.0% of net sales. The decrease in operating income
is primarily attributable to the shift in the sales mix to lower margin
products, stagnant customer demand for premium beer products, increased selling,
general and administrative expenses, and the Marketing Company's operating loss.
The adjustment and regulation of production between Zhaoqing Brewery, Noble
Brewery, Sichuan Brewery and Zao Yang High Worth Brewery by the Marketing
Company also contributed to the decrease in operating income in 1998 as compared
to 1997. The Marketing Company purchases Pabst Blue Ribbon beer at mutually
agreed ex-factory prices, and is only allowed to mark-up the cost of Pabst Blue
Ribbon beer purchased in order to adequately cover its selling, advertising,
promotional, distribution and administrative expenses incurred in selling to
distributors. The Marketing Company incurred certain excessive selling and
advertising expenses in 1998 that were not fully compensated for in the
Marketing Company's intra-company pricing structure, resulting in the Marketing
Company incurring an operating loss of RMB 61,120,361, which reduced
consolidated operating income accordingly.

INTEREST INCOME AND INTEREST EXPENSE:

            For the year ended December 31, 1998, interest income was RMB
2,687,218 as compared to interest income of RMB 6,255,590 for the year ended
December 31, 1997. The decrease in interest income in 1998 of RMB 3,568,372 or
57.0% as compared to 1997 was primarily the result of a decrease in interest
income received from Guangdong Blue Ribbon.

            For the year ended December 31, 1998, interest expense, net of
amounts capitalized, was RMB 9,507,873, as compared to RMB 15,503,189 for the
year ended December 31, 1997. The decrease in interest expense in 1998 of RMB
5,995,316 or 38.7% as compared to 1997 was primarily the result of a decrease in
capital lease obligations, a decrease in interest rates on bank borrowings by
Zhaoqing Brewery, and a decrease in amounts due to related companies.

INCOME TAXES:

            The two-year income tax holiday for High Worth JV expired on
December 31, 1997. Commencing in 1998, High Worth JV is required to pay local
income tax at half of the normal rate of 33% on its profit as determined in
accordance with PRC accounting standards applicable to High Worth JV.
Accordingly, for the year ended December 31, 1998, income tax expense of RMB
4,739,172 was recorded. For the year ended December 31, 1997, no income tax
expense was provided, as Zhaoqing Brewery's operations in China were subject to
a 100% tax exemption in 1997. Deferred income taxes are based on the liability
method prescribed by SFAS No. 109.

            The Company recorded deferred tax liabilities of RMB 4,413,000 for
the year ended December 31, 1996, which represented the temporary differences
between the time when dividends are declared by the Company's subsidiaries and


                                       35
<PAGE>

associated company and are received by the Company. As the Company had elected
to treat its subsidiaries and associated company as partnerships in 1997, High
Worth Holdings is the ultimate partner in these partnerships. The Company will
only be taxed when taxable distributions are received from High Worth Holdings.
High Worth Holdings has no current intention of making any income distributions,
and accordingly, the deferred tax liability of RMB 4,413,000 was reversed and
recorded as a reduction to income tax expense for the year ended December 31,
1998.

NET INCOME:

            For the year ended December 31, 1998, net income decreased to RMB
21,391,510 (RMB 2.67 per share) or 1.9% of net sales, as compared to net income
of RMB 30,762,902 (RMB 3.84 per share) or 2.6% of net sales for the year ended
December 31, 1997.

NOBLE BREWERY:

YEARS ENDED DECEMBER 31, 1999 AND 1998:

SALES:

            For the year ended December 31, 1999, net sales were RMB
513,807,992, as compared to net sales of RMB 584,469,720 for the year ended
December 31, 1998.

            During the year ended December 31, 1999, Noble Brewery sold 118,464
metric tons of beer, almost all to the Marketing Company. During the year ended
December 31, 1998, Noble Brewery sold 143,236 metric tons of beer, almost all to
the Marketing Company. Total beer sold decreased by 24,772 metric tons or 17.3%
from 1998 to 1999, primarily as a result of the general softening of demand in
the beer market in China. In addition, as a result of the regulation of sales by
the Marketing Company, which purchases beer from the breweries in accordance
with their respective production capacities, the beer produced by Sichuan
Brewery and Zao Yang High Worth Brewery in 1999 had the effect of reducing Noble
Brewery's beer sales in 1999.

GROSS PROFIT:

            For the year ended December 31, 1999, gross profit was RMB
197,370,369 or 38.4% of net sales, as compared to gross profit of RMB
177,258,447 or 30.3% of net sales for the year ended December 31, 1998. The
increase in the gross profit margin of 8.1% in 1999 as compared to 1998 was a
result of a decrease in the cost of raw materials, effective cost control
measures, and the shift in sales mix to higher margin products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

            For the year ended December 31, 1999, selling, general and
administrative expenses were RMB 32,232,488 (6.3% of net sales), consisting of
selling expenses of RMB 4,395,587 and general and administrative expenses of RMB
27,836,901. Net of a write-back of allowance for doubtful accounts of RMB
6,080,775 for the year ended December 31, 1999, general and administrative
expenses were RMB 33,917,676. For the year ended December 31, 1998, selling,
general and administrative expenses were RMB 47,955,747 (8.2% of net sales),
consisting of selling expenses of RMB 3,707,837 and general and administrative
expenses of RMB 44,247,910. Net of an allowance for doubtful accounts of RMB
7,178,852 for the year ended December 31, 1998, general and administrative
expenses were RMB 37,069,058. Selling expenses consist of warehousing, storage
and freight costs.

            During 1995, the Marketing Company was established to market
throughout China the Pabst Blue Ribbon beer produced by Zhaoqing Brewery and


                                       36
<PAGE>

Noble Brewery. The Marketing Company assumed the responsibility for marketing
the Pabst Blue Ribbon beer produced by Noble Brewery during July 1995, and
incurred almost all of the 1998 and 1999 selling expenses.

            Selling expenses increased by RMB 687,750 or 18.5% in 1999 as
compared to 1998, and represented 0.9% of net sales in 1999 as compared to 0.6%
of net sales in 1998, as a result of an increase in warehousing and
transportation costs. General and administrative expenses decreased by RMB
16,411,009 or 37.1% in 1999 as compared to 1998, and represented 5.4% of net
sales in 1999 as compared to 7.6% of net sales in 1998. Excluding the allowance
for doubtful accounts, general and administrative expenses decreased by RMB
3,151,382 or 8.5% in 1999 as compared to 1998. General and administrative
expenses decreased in 1999 as compared in 1998 primarily as a result of
effective cost control measures.

OPERATING INCOME:

            For the year ended December 31, 1999, operating income was RMB
165,137,881 or 32.1% of net sales, as compared to operating income of RMB
129,302,700 or 22.1% of net sales for the year ended December 31, 1998.

INTEREST INCOME AND INTEREST EXPENSE:

            For the year ended December 31, 1999, interest income was RMB
1,650,372, as compared to interest income of RMB 2,406,192 for the year ended
December 31, 1998, due primarily to the average bank balance being lower in 1999
as compared to 1998 and as a result of lower average bank deposit interest rate.

            For the year ended December 31, 1999, interest expense was RMB
51,926, as compared to interest expense of RMB 73,506 for the year ended
December 31, 1998, as a result of lower average bank interest rate for
discounting bills receivable in 1999 as compared to 1998.

INCOME TAXES:

            For the year ended December 31, 1999, income tax expense was RMB
42,887,055, which consisted of RMB 40,587,055 for PRC income taxes and RMB
2,300,000 for deferred income taxes as a result of temporary timing differences
with respect to accelerated depreciation of property, plant and equipment. For
the year ended December 31, 1998, income tax expense was RMB 8,226,523, which
consisted of RMB 15,726,523 recorded for PRC income taxes and RMB 7,500,000
credited for deferred income taxes as a result of the reversal of the temporary
timing differences with respect to accelerated depreciation of property, plant
and equipment. The two year 100% income tax holiday and the three year 50%
income tax reduction period for Noble Brewery expired on December 31, 1995 and
December 31, 1998, respectively. Commencing in 1999, Noble Brewery is required
to pay local income tax at the full normal rate of 33% on its profit as
determined in accordance with PRC accounting standards applicable to Noble
Brewery.

NET INCOME:

            For the year ended December 31, 1999, net income was RMB 128,417,934
or 25.0% of net sales, as compared to RMB 126,228,058 or 21.6% of net sales for
the year ended December 31, 1998.

YEARS ENDED DECEMBER 31, 1998 AND 1997:

SALES:

            For the year ended December 31, 1998, net sales were RMB
584,469,720, as compared to net sales of RMB 639,678,595 for the year ended
December 31, 1997.


                                       37
<PAGE>

            During the year ended December 31, 1998, Noble Brewery sold 143,236
metric tons of beer, all to the Marketing Company. During the year ended
December 31, 1997, Noble Brewery sold 146,813 metric tons of beer, consisting of
146,148 metric tons to the Marketing Company and 665 metric tons to Guangdong
Blue Ribbon. Total beer sold decreased by 3,577 metric tons or 2.4% from 1997 to
1998, primarily as a result of the general softening of demand in the beer
market in China. In addition, as a result of the regulation of sales by the
Marketing Company, which purchases beer from the breweries in accordance with
their respective production capacities, the beer produced by Sichuan Brewery and
Zao Yang High Worth Brewery in 1998 had the effect of reducing Noble Brewery's
beer sales in 1998.

GROSS PROFIT:

            For the year ended December 31, 1998, gross profit was RMB
177,258,447 or 30.3% of net sales, as compared to gross profit of RMB
179,062,125 or 28.0% of net sales for the year ended December 31, 1997. The
increase in the gross profit margin of 2.3% in 1998 as compared to 1997 was a
result of a decrease in the cost of raw materials, effective cost control
measures, and the gross margin realized with respect to sales to the Marketing
Company.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

            For the year ended December 31, 1998, selling, general and
administrative expenses were RMB 47,955,747 (8.2% of net sales), consisting of
selling expenses of RMB 3,707,837 and general and administrative expenses of RMB
44,247,910. For the year ended December 31, 1997, selling, general and
administrative expenses were RMB 36,193,085 (5.7% of net sales), consisting of
selling expenses of RMB 3,692,522 and general and administrative expenses of RMB
32,500,563. Selling expenses consist of warehousing, storage and freight costs.

            During 1995, the Marketing Company was established to market
throughout China the Pabst Blue Ribbon beer produced by Zhaoqing Brewery and
Noble Brewery. The Marketing Company assumed the responsibility for marketing
the Pabst Blue Ribbon beer produced by Noble Brewery during July 1995, and
incurred almost all of the 1997 and 1998 selling expenses.

            Selling expenses increased by RMB 15,315 or 0.4% in 1998 as compared
to 1997, and represented 0.6% of net sales in 1998 as compared to 0.6% of net
sales in 1997, as a result of effective cost control measures and the
establishment of the Marketing Company to be responsible for all advertising and
promotional activities. General and administrative expenses increased by RMB
11,747,347 or 36.1% in 1998 as compared to 1997, and represented 7.6% of net
sales in 1998 as compared to 5.1% of net sales in 1997. During the year ended
December 31, 1998, Noble Brewery recorded an allowance for doubtful accounts of
RMB 7,178,852, as compared to crediting an allowance for doubtful accounts of
RMB 1,207,252 for the year ended December 31, 1997.

OPERATING INCOME:

            For the year ended December 31, 1998, operating income was RMB
129,302,700 or 22.1% of net sales, as compared to operating income of RMB
142,869,040 or 22.3% of net sales for the year ended December 31, 1997.

INTEREST INCOME AND INTEREST EXPENSE:

            For the year ended December 31, 1998, interest income was RMB
2,406,192, as compared to interest income of RMB 2,078,006 for the year ended
December 31, 1997, due primarily to the average bank balance being higher in
1998 as compared to 1997.

            For the year ended December 31, 1998, interest expense was RMB
73,506, as compared to interest expense of RMB 1,458,454 for the year ended
December 31, 1997, as a result of lower average bank borrowings in 1998 as
compared to 1997.

INCOME TAXES:


                                       38
<PAGE>

            For the year ended December 31, 1998, income tax expense was RMB
8,226,523, which consisted of RMB 15,726,523 recorded for PRC income taxes and
RMB 7,500,000 credited for deferred income taxes as a result of the reversal of
the temporary timing differences with respect to accelerated depreciation of
property, plant and equipment. For the year ended December 31, 1997, income tax
expense was RMB 21,331,616, which consisted of RMB 18,131,616 for PRC income
taxes and RMB 3,200,000 for deferred income taxes as a result of temporary
timing differences with respect to accelerated depreciation of property, plant
and equipment. The two-year income tax holiday for Noble Brewery expired on
December 31, 1995. Commencing in 1996, Noble Brewery was required to pay local
income tax at half the normal rate of 33% on its profit as determined in
accordance with PRC accounting standing standards applicable to Noble Brewery.

NET INCOME:

            For the year ended December 31, 1998, net income was RMB 126,228,058
or 21.6% of net sales, as compared to RMB 122,156,976 or 19.1% of net sales for
the year ended December 31, 1997.

CONSOLIDATED FINANCIAL CONDITION - DECEMBER 31, 1999:

LIQUIDITY AND CAPITAL RESOURCES:

            For the year ended December 31, 1999, the Company's operations
provided cash resources of RMB 81,062,020 as compared to RMB 106,715,553 for the
year ended December 31, 1998, primarily as a result of reduced cash flows with
respect to bills receivable, inventories, amounts due from related companies,
prepayments, deposits and other receivables, and amount due an associated
company, offset in part by an increase in cash flows from accounts receivable.
The Company's cash balance increased by RMB 19,543,874 to RMB 106,052,616 at
December 31, 1999, as compared to RMB 86,508,742 at December 31, 1998. The
Company's net working capital deficit decreased by RMB 31,047,543 to RMB
160,971,900 at December 31, 1999, as compared to RMB 192,019,443 at December 31,
1998, reflecting current ratios of 0.66:1 at December 31, 1999 as compared
0.64:1 at December 31, 1998.

            The Company recorded a provision for doubtful accounts of RMB
24,287,267 for the year ended December 31, 1999, as compared to RMB 15,367,012
for the year ended December 31, 1998. As of December 31, 1999 and 1998, the
allowance for doubtful accounts was RMB 59,834,318 and RMB 35,599,181,
respectively. As a percent of total accounts receivable, the allowance for
doubtful accounts was 55.1% and 23.8% at December 31, 1999 and 1998,
respectively. Accounts receivable decreased by RMB 40,824,405 or 27.3% to RMB
108,670,461 at December 31, 1999, as compared to RMB 149,546,996 at December 31,
1998. In addition, at December 31, 1999, bills receivable had increased by RMB
779,450 or 2.9% to RMB 27,333,650, as compared to RMB 26,554,200 at December 31,
1998. The increase in the provision for doubtful accounts in 1999 and the
allowance for doubtful accounts as a percent of total accounts receivable
reflects the economic difficulties experienced by the Chinese economy. The
Company is revising its credit acceptance and monitoring procedures in 2000 in
an attempt to reduce its exposure to uncollectible accounts receivable.

            The amounts due from related companies mainly represented receivable
balances from Guangdong Blue Ribbon and its affiliated companies. The amounts
due from related companies increased by RMB 6,577,883 or 36.4% to RMB 24,646,810
at December 31, 1999, as compared to RMB 18,068,927 at December 31, 1998. The
increase was primarily due to an increase in transaction volume with related
companies during the year. The amounts due from Guangdong Blue Ribbon and its
affiliates were short-term in nature and are expected to be paid during 2000.

            The amount due to an associated company decreased by RMB 23,823,273
or 10.9% to RMB 194,894,527 at December 31, 1999 as compared to RMB 218,717,800
at December 31, 1998, and represents the amounts due to Noble Brewery for its
sale of Pabst Blue Ribbon beer to the Marketing Company. The balance due to
Noble


                                       39
<PAGE>

Brewery decreased as a result of the decrease in volume of beer sold by Noble
Brewery to the Marketing Company during the year 1999.

            The amounts due to related companies, net of the amounts with
respect to the dividend payable of RMB nil at December 31, 1999 and RMB
15,638,685 at December 31, 1998, decreased by RMB 3,961,517 or 25.6% to RMB
11,535,893 at December 31, 1999, as compared to RMB 15,497,410 at December 31,
1998, and consisted primarily of payable balances resulting from purchases of
packaging materials.

            During the year ended December 31, 1999, the Company's secured bank
loans increased by RMB 5,836,788, reflecting new borrowings of RMB 68,350,000
and repayments of RMB 62,513,212. The bank loans bear interest at fixed rates
ranging from 8.4% to 9.6%, and are repayable within the next three years. A
substantial portion of the bank loans have been utilized to fund the expansion
and working capital requirements of Zhaoqing Brewery and Zao Yang High Worth
Brewery.

            During 1999, Noble Brewery declared and paid a dividend relating to
earnings for the year ended December 31, 1998, resulting in a dividend to High
Worth JV of RMB 41,513,883.

            On November 23, 1998 and July 28, 1999, the Board of Directors of
High Worth JV declared separate dividend distributions of RMB 51,596,713. The
minority interest's 40% portion of the dividend is recorded as a liability at
the declaration date and is included in amounts due to related companies. The
dividends were distributed by installments in order to avoid any disruption to
the normal operating cash flow position of High Worth JV. During the year ended
December 31, 1999 and 1998, High Worth JV paid aggregate dividends to Guangdong
Blue Ribbon of RMB 20,638,685 and RMB 45,375,595, respectively.

            In connection with the acquisition of High Worth JV, Oriental Win
Holdings Ltd. ("Oriental Win") advanced US$8,869,585 to Holdings during 1994.
The rights to collect US$8,000,000 of the advance were transferred from Oriental
Win to its shareholders in proportion to their respective shareholder interests
in August 1996 (West Coast Star Enterprises Ltd. - 60%; Mapesbury Limited - 20%;
Redcliffe Holdings Ltd. - 20%). The advances bear no interest and are repayable
at the discretion of the Company, with the shareholders having no right to
demand repayment. The Company has the option of offsetting or repaying the
advances or any part thereof by allotment of shares at par value in Holdings. On
September 8, 1998, the remaining rights to collect US$848,000 of the advances
were transferred from Oriental Win to its shareholders in proportion to their
respective shareholder interests, less US$21,585 repaid by Holdings on behalf of
Oriental Win. On November 26, 1998, Holdings partially repaid approximately
31.5% of the advances from shareholders, amounting to US$2,791,650. In May 1999,
Holdings partially repaid approximately 18.5% of the advances from shareholders,
amounting to US$1,632,350. As of December 31, 1999, the remaining advances from
such shareholders, West Coast Star Enterprises Ltd., Top Link Development
Limited (assigned by Mapesbury Limited in February 1998), and Redcliffe Holdings
Ltd., were approximately US$2,654,400, US$884,800 and US$884,800, respectively.
In conjunction with the assignment of the advances to Top Link Development
Limited, Mapesbury Limited also transferred its shares in the Company to Top
Link Development Limited. On December 22, 1998, Oriental Win was formally
dissolved by its shareholders.

            During the year ended December 31, 1999, Guangdong Blue Ribbon and
its affiliated companies provided the Company with raw materials financing
aggregating approximately RMB 11,500,000, which obligations are unsecured,
interest-free and repayable on demand.

            On January 13, 1998, High Worth JV entered into a joint venture
contract with Zao Yang Brewery in Hubei Province to establish Zao Yang High
Worth Brewery, with a total capital investment of RMB 29,280,000, allocated 55%
to High Worth JV and 45% to Zao Yang Brewery. High Worth JV was responsible for
transferring the technical know-how and production techniques to brew Pabst Blue
Ribbon beer to Zao Yang High Worth Brewery, as well as assisting in the


                                       40
<PAGE>

renovation of existing equipment, in order to convert the brewery into another
Pabst Blue Ribbon brewing complex. Zao Yang High Worth Brewery commenced
production of Pabst Blue Ribbon beer in June 1998. During the year ended
December 31, 1998, High Worth JV paid RMB 16,104,000, representing its 55%
capital investment in the joint venture.

            For the year ended December 31, 1999, additions to property, plant
and equipment aggregated RMB 7,902,604, which included approximately RMB
2,200,000 spent on renovation and continuous improvement of Zao Yang High Worth
Brewery. The Company anticipates that additional capital expenditures in
connection with the continuing improvement of production facilities at Zhaoqing
Brewery during 2000 will be approximately RMB 13,000,000, a portion of which is
expected to be financed through capital leases. The Company anticipates that
additional capital expenditures in connection with the continuous renovation and
improvement process of Zao Yang High Worth Brewery during 2000 will be
approximately RMB 2,000,000, a portion of which is expected to be financed by
new bank borrowings.

            The Company believes that it will be able to fund expected capital
expenditures with respect to the continuing development of its brewery
operations through internal cash flow and external resources.

            The Company anticipates that its operating cash flow, combined with
cash on hand, bank lines of credit, and other external credit sources, and the
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, 2000. In order to finance the continuing capital requirements of
the Company, the Company has been in negotiations to arrange additional
long-term bank loans or lease financing. In addition, accelerated development or
acquisition of additional brewing facilities or other support facilities may
require the use of long-term borrowings or equity financing by the Company.

YEAR 2000 ISSUE:

            The Year 2000 Issue results from the fact that certain computer
programs have been written using two digits rather than four digits to define
the applicable year. Computer programs that have sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions or engage in normal business activities.

            As of December 31, 1999, the Company had completed any required
modifications to its software to ensure that its software systems were Year 2000
compliant. The cost of such modifications was not significant.

            Since the date rollover on January 1, 2000, the Company has not
experienced any material adverse effect from the Year 2000 Issue. While the
primary risk to the Company with respect to the Year 2000 Issue continues to be
the ability of third parties to provide goods and services in a timely and
accurate manner, the Company has not experienced any such disruption to date.
The Company does not expect any remaining risks with respect to the Year 2000
Issue to have a material adverse effect on the Company.

INFLATION AND CURRENCY MATTERS:

            In the most recent decade, the Chinese economy has experienced
periods of rapid economic growth as well as relatively 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 to
Chinese business enterprises. The recent Asian financial crisis has resulted in
a general reduction in domestic production and sales, and a general tightening
of credit, throughout China. The success of the Company depends in substantial
part on the continued growth and development of the Chinese economy.


                                       41
<PAGE>

            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. The Company conducts virtually
all of its business in China and, accordingly, the sale of its products is
settled primarily in RMB. As a result, devaluation of the RMB against the USD
would adversely affect the Company's financial performance when measured in USD.
Although prior to 1994 the RMB experienced significant devaluation against the
USD, the RMB has remained fairly stable since then. In addition, the RMB is not
freely convertible into foreign currencies, and the ability to convert the RMB
is subject to the availability of foreign currencies. Effective December 1,
1998, all foreign exchange transactions involving the RMB must take place
through authorized banks or financial institutions in China at the prevailing
exchange rates quoted by the People's Bank of China.

            The Asian financial crisis inhibited the growth and general level of
activity of the Chinese economy, thus reducing consumer demand in China, which
had a negative impact on the Company's results of operations, financial
condition and cash flows. In addition, as a result of the Asian financial
crisis, China has tightened its foreign exchange controls. Although the central
government of China has repeatedly indicated that it does not intend to devalue
its currency in the near future, devaluation still remains a possibility. Should
the central government of China decide to devalue its currency, the Company does
not believe that such an action would have a detrimental effect on the Company's
operations, since the Company conducts virtually all of its business in China,
and the sale of its products is settled in RMB. As of December 31, 1999, the
Company's only significant USD-denominated obligation, which would be more
expensive to repay in the event of a devaluation, is the advances from
shareholders of RMB 36,719,200, which are repayable at the discretion of the
Company.

            The Company has historically relied on dividend distributions,
converted from RMB into USD, to fund its activities outside of China. The
Company does not expect that the recently tightened foreign exchange controls
will affect the ability of High Worth JV to continue to distribute such
dividends. However, in the event of a devaluation, High Worth JV could elect to
distribute dividends in RMB, which would then be converted into other currencies
at the then prevailing market rates.

            Although prior to 1994 the RMB experienced significant devaluation
against the USD, the RMB has remained fairly stable since then. The exchange was
approximately US$1.00 to RMB 8.3 at December 31, 1997, 1998 and 1999.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

            The Company does not have any market risk with respect to such
factors as commodity prices, equity prices, and other market changes that affect
market risk sensitive investments.

            With respect to foreign currency exchange rates, the Company does
not believe that a devaluation of the RMB against the USD would have a
detrimental effect on the Company's operations, since the Company conducts
virtually all of its business in China, and the sale of its products and the
purchase of raw materials and services is settled in RMB. The effect of a
devaluation of the RMB against the USD would be to reduce the Company's results
of operations, financial position and cash flows, when presented in USD (based
on a current exchange rate) as compared to RMB. Advances from shareholders, the
company's only significant USD-denominated obligation, would also be more
expensive to repay in the event of a devaluation.

            The Company does not have any interest rate risk, as the Company's
debt obligations are primarily short-term in nature, with fixed interest rates.

ENVIRONMENTAL MATTERS:


                                       42
<PAGE>

            Management believes that the Company complies with all national and
local environmental protection laws and regulations of the PRC. In 1997, 1998
and 1999, compliance with the provisions of all national and local environmental
laws and regulations did not have a material effect upon earnings, capital
expenditures or the competitive position of the Company.

NEW ACCOUNTING PRONOUNCEMENT:

            In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"), which is effective for financial statements for
all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No.
133 standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value. SFAS No. 133 also addresses the
accounting for hedging activities. The Company will adopt SFAS No. 133 for its
fiscal year beginning January 1, 2001. The Company has not yet determined the
impact, if any, on its financial position, results of operations or cash flows.


                                       43
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The financial statements and exhibits are listed at "ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K".

            Selected unaudited 1998 and 1999 quarterly financial information, in
RMB, is as follows:

                                              1999               1998
                                         --------------      -----------

THREE MONTHS ENDED MARCH 31:

Sales, net of sales taxes                   279,612,548      285,632,506
Gross profit                                 61,095,071       50,333,460
Operating income                              6,564,615        3,753,247
Net income                                    7,489,831        7,075,017
Net income per common share                        0.94             0.88

THREE MONTHS ENDED JUNE 30:

Sales, net of sales taxes                   278,247,626      338,427,719
Gross profit                                 60,476,682       61,146,379
Operating income                              2,394,218          712,444
Net income                                    7,709,992        8,610,308
Net income per common share                        0.96             1.07

THREE MONTHS ENDED SEPTEMBER 30:

Sales, net of sales taxes                   250,765,566      260,545,064
Gross profit                                 58,155,297       41,593,671
Operating income (loss)                       1,352,580       (4,370,018)
Net income                                    4,187,300        3,301,773
Net income per common share                        0.52             0.41

THREE MONTHS ENDED DECEMBER 31:

Sales, net of sales taxes                   177,833,092      236,401,822
Gross profit                                 38,475,906       40,450,481
Operating loss                              (10,721,425)     (24,166,074)
Net income                                    4,267,979        2,404,412
Net income per common share                        0.53             0.30

YEAR ENDED DECEMBER 31:

Sales, net of sales taxes                   986,458,832    1,121,007,111
Gross profit                                218,202,956      193,523,991
Operating loss                                 (410,012)     (24,070,401)
Net income                                   23,655,102       21,391,510
Net income per common share                        2.95             2.67

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

            None.


                                       44
<PAGE>

                                    PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The following tables and text sets forth the names and ages of all
directors and executive officers of the Company as of March 31, 2000, and their
positions and offices with the Company. The Board of Directors of the Company is
comprised of only one class. All of the directors will serve until the next
annual meeting of shareholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal.
Executive officers serve at the discretion of the Board of Directors, and are
appointed to serve until the first Board of Directors meeting following the
annual meeting of shareholders. There are no family relationships among
directors and executive officers. Also provided is a brief description of the
business experience of each director and executive officer during the past five
years and an indication of directorships held by each director in other
companies subject to the reporting requirements under the Federal securities
laws.

          In conjunction with the reorganization of the Company in 1994,
Oriental Win acquired a controlling interest in the Company, and received the
right to appoint a majority of the members of the Board of Directors for so long
as it held its shares. As a result of the distribution by Oriental Win to its
shareholders during August 1996 of all of the shares of Common Stock of the
Company that it owned, West Coast Star Enterprises Ltd. became the controlling
shareholder of the Company and acquired the right to appoint a majority of the
members of the Board of Directors for so long as it holds its shares.

                                    DIRECTORS
<TABLE>
<CAPTION>

                                        Date Elected
Name                     Age            as Director
----                     ---            ------------
<S>                      <C>            <C>
John Zhao Li             45             November 1994

Lee Tak Wong             43             September 1995

Jin-qiang Zhang          58             July 1997

Zi-shou Chen             59             July 1997

Deng-chen Yin            59             July 1997

Guang Wei Liang          37             March 1998

</TABLE>

                               EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
                                                              Date Elected
Name                     Age            Position               as Officer
----                     ---            --------              ------------
<S>                      <C>            <C>                   <C>
Jin-qiang Zhang          58             Chairman and          August 1997
                                        Chief Executive
                                        Officer

Zi-shou Chen             59             President             August 1997

John Zhao Li             45             Vice President        November 1994

Gary C.K. Lui            39             Chief Financial       April 1996
                                        Officer
</TABLE>

                                       45
<PAGE>

BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS:

JIN-QIANG ZHANG

          Mr. Zhang, Chairman, Chief Executive Officer and a director of the
Company, has over 30 years experience in manufacturing. Since the early 1980's,
Mr. Zhang has held senior management positions in several manufacturing
enterprises in China which were engaged principally in the electronics industry.
During the last past five years, he has participated extensively in syndication
financing, property development and project investment in China. He is currently
also the Chairman and General Manager of Shenzhen Huaqiang Holdings Limited. Mr.
Zhang is an officer and director of Shenzhen Huaqiang Enterprise Stock Company
Limited, a PRC public company listed on the Shenzhen Stock Exchange of China.

ZI-SHOU CHEN

          Mr. Chen, President and a director of the Company, has over 30 years
experience in the Chinese manufacturing sector. Since the early 1980's, Mr. Chen
has held senior management positions in several manufacturing enterprises in
China which were mainly engaged in the electronics industry. During the past
five years, he has participated extensively in syndication financing, property
development and project investment in China. He is currently a Director and
Vice-General Manager of Shenzhen Huaqiang Holdings Limited.

JOHN ZHAO LI

          Mr. Li, Vice President and a director of the Company, held a senior
management position with an international investment company in the United
States from 1992 to 1994. During this period, he was actively involved in
consulting for Pabst Zhaoqing with respect to the project management for the
development of the first and second phases of Noble Brewery. Mr. Li was
President of the Company from 1994 until July 31, 1997.

GUANG WEI LIANG

          Mr. Liang, a director of the Company, has over eight years experience
in the Chinese manufacturing sector. Mr. Liang received his Masters Degree in
Law from Wuhan University in China. Since 1980, he has held senior management
positions in several Chinese manufacturing enterprises which were mainly engaged
in the electronic industry. During the past two years, he has participated
extensively in syndication financing, project financing and project investment
in China. He is currently a Director and Vice-General Manager of Shenzhen
Huaqiang Holdings Limited.

LEE TAK WONG

          Mr. Wong, a Director of the Company, is a member of senior management
engaged in the investment planning and syndication business. During the last
five years, he has participated in brewery and soft drink investment projects in
China. He is currently a Director of Guang Yin International (Holdings) Limited.

DENG-CHEN YIN

          Mr. Yin, a director of the Company, has over 30 years experience in
manufacturing. Since the 1970's, Mr. Yin has held senior management positions in
several manufacturing enterprises in China which were engaged in the plastics
and electronics industry. During the past five years, he has participated in
many project investments in China. He is currently a Director of Shenzhen
Huaqiang Holdings Limited.

GARY C.K. LUI

                                       46
<PAGE>

          Mr. Lui, Chief Financial Officer of the Company, graduated from the
University of Hong Kong with Bachelor of Social Sciences Degree in 1987. After
graduation, he worked in the Hong Kong office of the Corporate Recovery Division
of Arthur Andersen & Co. for three years. In 1990, he joined a ship building
company listed in Hong Kong as the Group Assistant Financial Controller and was
the Financial Controller of the Group's major shipyard in Singapore. From 1992
to 1994, Mr. Lui was the General Manager of a private investment company with
extensive joint venture projects in Northeastern China. Prior to joining the
Company in 1995, Mr. Lui was the Project Controller of a Hong Kong-listed
investment company with major investments in Eastern China. Mr. Lui is currently
a member of the Association of Chartered Certified Accountants and the Hong Kong
Society of Accountants.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE:

          During the year ended December 31, 1999, the Company did not have any
class of equity securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, and accordingly, was not subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934, as
amended.


                                       47
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

          The following table sets forth the compensation paid by the Company to
its Chairman, President and to its three other most highly compensated executive
officers during the last three fiscal years.


                           SUMMARY COMPENSATION TABLE (US$)
<TABLE>
<CAPTION>

Name and                                                             Other
Principal                                                            Annual
Position                 Year        Salary          Bonus        Compensation
--------                 ----       --------        -------       ------------
<S>                      <C>        <C>             <C>           <C>
Jin-Qiang Zhang(1)       1999       $    nil        $97,067         $12,000
Chairman and Chief       1998            nil            nil           9,000
Executive Officer        1997            nil            nil           2,500

Zi-Shou Chen             1999       $139,100        $90,964         $12,000
President                1998        134,900         74,819           9,000
                         1997         54,167         16,917           2,500

John Zhao Li(2)          1999       $111,800        $63,253         $12,000
Vice President           1998        108,200         51,928           9,000
                         1997        118,000         40,600           6,000

Lee Tak Wong(3)          1999       $    nil        $   nil         $12,000
                         1998            nil         22,892           9,000
                         1997         56,000         31,100           6,000

Gary C.K. Lui            1999       $ 98,154        $ 8,179          $ nil
Chief Financial          1998         95,877          8,200            nil
Officer                  1997         92,895          7,750            nil

</TABLE>

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

(1)  Mr. Zhang was elected as Chief Executive Officer of the Company on May 29,
     1999. Mr. Zhang has continued as the Chairman and a director of the Company
     since that date.

(2)  Mr. Li was President of the Company until July 31, 1997. Mr. Li has
     continued as an officer and director of the Company subsequent to that
     date.

(3)  Mr. Wong was a Vice President of the Company until July 31, 1997. Mr. Wong
     has continued as a director of the Company subsequent to that date.

COMPENSATION AGREEMENTS:

          The Company has not entered into any long-term employment or
consulting agreements with its officers or directors.

BOARD OF DIRECTORS:

          During the year ended December 31, 1999, five meetings of the Board of
Directors were held. All directors attended at least 75% of all board meetings
for which they were eligible to attend. All directors receive compensation of
US$1,000 per month for serving on the Board of Directors, which aggregated
$72,000 during the year ended December 31, 1999. All directors are reimbursed
for any out-of-pocket expenses incurred in attending board meetings. On January
2, 1998 and September 30, 1999, a Compensation Committee and an Audit Committee
were established, respectively. As of December 31, 1999, members of the
Compensation Committee and Audit Committee consisted of Deng-chen Yin and
Lee-Tak Wong.

STOCK OPTION PLAN:

                                       48
<PAGE>

          The 1998 Stock Option Plan (the "Plan") was adopted by the majority of
the shareholders of the Company and approved by the Board of Directors on
January 2, 1998. The Plan is administered by the Compensation Committee and
contains the following major provisions:

(a)  The Plan provides for the issuance of incentive stock options ("ISOs") and
     nonqualified stock options ("NSOs") to purchase the Class A Common Stock of
     the Company. The Plan is intended to provide a means whereby employees may
     be given an opportunity to purchase shares of Class A Common Stock of the
     Company pursuant to (i) options which may qualify as ISOs under Section 422
     of the Internal Revenue Code of 1986, as amended, or (ii) NSOs which may
     not so qualify.

(b)  Options may be granted under the Plan from time to time to eligible persons
     to purchase an aggregate of up 800,000 shares of Class A Common Stock, and
     no more than 80,000 options may be granted to any one participant in any
     year.

(c)  All ISOs will have option exercise prices per option share equal to the
     fair market value of a share of Class A Common Stock on the date the option
     is granted, except that in the case of ISOs granted to any person
     possessing more than 10% of the total combined voting power of all
     classes of stock of the Company or any affiliate, the price will be not
     less than 110% of such fair market value.  The option exercise prices
     per option for NSO's shall be as determined by the Compensation
     Committee.


                                       49
<PAGE>

          A summary of all stock options granted pursuant to the Plan to
directors, officers and employees of the Company during the year ended December
31, 1998 is shown below. No options were granted during the year ended December
31, 1999. No options were exercised in 1998 or 1999.

<TABLE>
<CAPTION>
                                                    Annual
                       Options      Exercise        Vesting         Expiration
Participant            Granted       Price         Percentage           Date
-----------            -------      --------      -----------       ----------
<S>                    <C>          <C>           <C>               <C>
Jin-qiang Zhang         40,000       US$4.26       50%/25%/25%        12/31/01
Deng-chen Yin           30,000       US$4.26       50%/25%/25%        12/31/01
Zi-shou Chen            30,000       US$3.87       60%/20%/20%        12/31/05
Guang-wei Liang         30,000       US$3.87       60%/20%/20%        12/31/05
John Zhao Li            30,000       US$3.87       60%/20%/20%        12/31/05
Lee-tak Wong            30,000       US$3.87       60%/20%/20%        12/31/05
Chen Kai Cheng (1)      21,000       US$3.87       70%/15%/15%        12/31/05
Wong Yong (1)           21,000       US$3.87       70%/15%/15%        12/31/05
Gary C.K. Lui           21,000       US$3.87       70%/15%/15%        12/31/05
Clarence Yip            18,000       US$3.87       70%/15%/15%        12/31/05
Cilly Yeung              9,000       US$3.87       70%/15%/15%        12/31/05

</TABLE>
----------------

(1)  Chen Kai Cheng and Wong Yong resigned as officers of the Company on January
     31, 1999 and March 31, 1999, respectively, and pursuant to the Plan, the
     stock options previously granted to them were cancelled.

          The stock options issued to non-employee directors were accounted for
pursuant to Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). Under SFAS 123, the fair value of stock
options issued to non-employees is calculated according to the Black-Scholes
pricing model and is amortized to expense over the vesting period. As a result,
the Company recognized RMB 2,218,706 and RMB 697,801 of compensation expense in
1998 and 1999, respectively.

          During the year ended December 31, 1998, the Company granted stock
options to officers of the Company as follows:

<TABLE>
<CAPTION>
                         Number of   Percent of Options   Weighted
                          Options     Granted to Total    Exercise
Recipient                 Granted     Options Granted      Price
---------                ---------   ------------------   --------
<S>                      <C>         <C>                  <C>
Zi-shou Chen               30,000           10.7%          US$3.87
John Zhao Li               30,000           10.7%          US$3.87
Chen Kai Cheng (1)         21,000            7.5%          US$3.87
Wong Yong (1)              21,000            7.5%          US$3.87
Gary C.K. Lui              21,000            7.5%          US$3.87
                          -------           -----
Total                     123,000           43.9%
                          =======           ====
</TABLE>

(1)  Chen Kai Cheng and Wong Yong resigned as officers of the Company on January
     31, 1999 and March 31, 1999, respectively, and pursuant to the Plan, the
     stock options previously granted to them were cancelled.

                                       50
<PAGE>

     A summary of stock options granted to the Company's officers as of March
31, 2000 is shown below. No options were exercised during the years ended
December 31, 1998 and 1999 or the three months ended March 31, 2000.

<TABLE>
<CAPTION>
                      Number of                             Value of
                      Shares of                            Unexercised
                    Common Stock                          in-the-Money
                      Underlying                           Options at
                    Stock Options       Weighted       Fiscal Year-End (1)
                 ------------------     Exercise       -------------------
Recipient        Unvested    Vested      Price         Unvested     Vested
---------        --------    ------     --------       --------     ------
<S>              <C>         <C>        <C>            <C>          <C>
Zi-shou Chen          0      30,000     US$3.87        US$ nil      US$ nil
John Zhao Li          0      30,000     US$3.87        US$ nil      US$ nil
Gary C.K. Lui         0      21,000     US$3.87        US$ nil      US$ nil
                 ------      ------                    -------      -------
Total                 0      81,000                    US$ nil      US$ nil
                 ======      ======                    =======      =======

</TABLE>
-----------------------

(1) The dollar values are calculated by determining the difference between the
weighted average exercise price of the stock options and the market price for
the common stock of $.50 per share on December 31, 1999.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS:

         The current members of the Compensation Committee and Audit Committee
are Deng-chen Yin and Lee-tak Wong. Jin-qiang Zhang, Zi-shou Chen, Guang Wei
Liang and Deng-chen Yin are directors of the Company, and are also officers
and/or directors of Shenzhen Huaqiang Holdings Limited (see "ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT").

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION - YEAR ENDED DECEMBER
31, 1999:

          The Company's compensation program for its executive officers is
administrated and reviewed by the Compensation Committee of the Board of
Directors. Historically, executive compensation consisted of a combination of
base salary and discretionary bonuses. Individual compensation levels are
designed to reflect individual responsibilities, performance and experience, as
well as Company performance. The determination of discretionary bonuses is based
on various factors, including implementation of the Company's business plan,
acquisition of assets, development of corporate opportunities and completion of
financing.

          The Compensation Committee also believes that executives should have a
substantial equity ownership, both through direct share ownership and through
stock options, to provide long-term incentives which link executive compensation
to the Company's long-term performance and return to its shareholders. The
Company also believes that non-employee directors should have an equity interest
in the Company. In that regard, the Company has adopted the 1998 Stock Option
Plan.

          Effective July 1, 1998, the Compensation Committee increased the base
salary for all officers and employees of the Company by 6%. The compensation for
directors in relation to their office as a director has also been increased from
US$500 per month to US$1,000 per month. Effective June 1, 1998, the Committee
also approved an Occupational Retirement Pension Scheme for all the officers and
employees located in the Hong Kong office, in which the Company contributes
approximately 7% of the total salary of those officers and employees to a
pension policy administered by an insurance consulting firm. Effective January
1, 2000, the Compensation Committee increased the base salary for all
non-director officers and employees of the Company by 7.8%. The compensation

                                       51
<PAGE>

for directors in relation to their office as a director has also been increased
from US$1,000 per month to US$1,300 per month.

COMPARATIVE SHAREHOLDER RETURN PERFORMANCE GRAPH:

          The graph below compares the cumulative total shareholder return on
the Company's Common Stock against the cumulative total shareholder return on
the S & P Corporate - 500 Stock Index, the Nasdaq Composite Index and the
shareholder return on the stock of Tsingtao Brewery LDT ("TSGTF"), assuming that
US$100 was invested on January 1, 1996 in the Company's Common Stock and in the
stocks comprising the S & P Corporate - 500 Index, the Nasdaq Composite Index
and the stock of TSGTF, respectively, and also assuming the reinvestment of all
dividends. Tsingtao Brewery LDT is the largest producer of premium brand beer in
China, and its stock is traded in Hong Kong, China and on the OTC Bulletin
Board. The Company considers Tsingtao Brewery LDT as its peer group, as it is
the only other comparable publicly-traded beer company in China, considering
various factors such as industry profile, geographic market, revenues and
production capacity. The historical stock price performance of the Company's
Common Stock is not necessarily indicative of future price performance.

<TABLE>
<CAPTION>

Fiscal         S & P
Year          Corporate       Nasdaq         Tsingtao
Ended          - 500         Composite       Brewery        The
December       Stock          Stock            LDT         Company
31,            Index          Index          ("TSGTF")     ("CBRB")
--------      ---------      ---------       ---------     --------
<C>           <C>            <C>             <C>           <C>
1996            100            100             100            100
1997            131            122              60             38
1998            166            170              40             33
1999            193            306              63             17

</TABLE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          As used in this section, the term beneficial ownership with respect to
a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, as consisting of sole or shared voting power (including the power to
vote or direct the vote) and/or sole or shared investment power (including the
power to dispose of or direct the disposition of) with respect to the security
through any contract, arrangement, understanding, relationship or otherwise,
subject to community property laws where applicable.

          As of March 31, 2000, the Company had a total of 8,010,013 shares of
Common Stock issued and outstanding, consisting of 5,010,013 shares of Class A
Common Stock ($.0001 par value) and 3,000,000 shares of Class B Common Stock
($.0001 par value). The Class A Common Stock and Class B Common Stock are
identical, except that the Class A Common Stock has one vote per share and the
Class B Common Stock has two votes per share. Each share of Class B Common Stock
is convertible into one share of Class A Common Stock at the option of the
holder. All common share amounts reflect the 1-for-22 reverse stock split
effective November 22, 1994. There are no other classes of equity securities
outstanding.

          The following table sets forth, as of March 31, 2000: (a) the names
and addresses of each beneficial owner of more than five percent (5%) of the
Company's Common Stock known to the Company, the number of shares of Common
Stock beneficially owned by each such person, and the percent of the Company's
Common Stock so owned; and (b) the names and addresses of each director and
executive officer, the number of shares of Common Stock of the Company
beneficially owned, and the percent of the Company's Common Stock so owned, by
each such person, and by all directors and executive officers of the Company as
a group. Each such person has sole voting and investment power with respect to
the shares of Common Stock, except as otherwise indicated. Beneficial ownership

                                       52
<PAGE>

consists of a direct interest in the shares of Common Stock, except as otherwise
indicated.





                                       53
<PAGE>

<TABLE>
<CAPTION>
                                                               Percent of
                                                                Shares of
Name and Address                   Amount and Nature of       Common Stock
of Beneficial Owner                Beneficial Ownership        Outstanding
-------------------                --------------------      --------------
<S>                                <C>                       <C>
Shenzhen Huaqiang                        5,568,000(1)            69.5
  Holdings Limited
Shennan Zhong Road
Shenzhen City
People's Republic of China

Redcliffe Holdings Ltd.                  1,392,000(1)(2)         17.4
c/o Suite 2002, Fairmont House
8 Cotton Tree Drive
Hong Kong

Jin-qiang Zhang (11)                        40,000(3)(10)          .4

Zi-shou Chen (11)                           30,000(4)(10)          .3

John Zhao Li (11)                           30,000(5)(10)          .3

Lee-tak Wong (11)                           30,000(6)(10)          .3

Deng-chen Yin (11)                          30,000(7)(10)          .3

Guang-wei Liang (11)                        30,000(8)(10)          .3

Long-sheng Zhu                                -   (9)               -

Gary C.K. Lui (11)                          21,000(10)             .2

All Directors and                          211,000(10)            2.0
Executive Officers
as a Group (7 persons)

</TABLE>

(1)  Consists of 4,176,000 shares owned by West Coast Star Enterprises Ltd.
     ("West Coast") and 1,392,000 shares owned by Top Link Development Limited
     (including 3,168,000 shares of Class A Common Stock and 2,400,000 shares of
     Class B Common Stock), each of which is controlled by Shenzhen Huaqiang
     Holdings Limited ("SHHL"). On October 14, 1996, Oriental Win distributed to
     its shareholders a total of 6,960,000 shares of the Company's Common Stock,
     consisting of 3,960,000 shares of Class A Common Stock and 3,000,000 shares
     of Class B Common Stock, which represented Oriental Win's entire equity
     interest in the Company. The shareholders of Oriental Win received such
     shares in proportion to their respective shareholder interests in Oriental
     Win (West Coast - 60%; Mapesbury Limited - 20%; Redcliffe Holdings Ltd. -
     20%). In conjunction with the distribution of such shares by Oriental Win,
     the shareholders' agreement among Oriental Win, West Coast, Mapesbury
     Limited and Redcliffe Holdings Ltd. was terminated. In February 1998,
     Mapesbury Limited transferred its shares to Top Link Development Limited
     ("Top Link"). In December 1998, Oriental Win was formally dissolved by its
     shareholders. West Coast and Top Link are beneficially owned by SHHL, which
     is a state-owned enterprise in China.

(2)  Consists of 792,000 shares of Class A Common Stock and 600,000 shares of
     Class B Common Stock. Victor Choi, a former Director, is the beneficial
     owner of Silvercliff Venture Inc., which owns 50% of the capital stock of
     Redcliffe Holdings Ltd.

(3)  Jin-qiang Zhang owns 35% of the capital stock of West Coast on behalf of
     SHHL, but disclaims any beneficial interest in such shares.

(4)  Zi-shou Chen owns 15% of the capital stock of West Coast on behalf of SHHL,
     but disclaims any beneficial interest in such shares.

                                       54
<PAGE>

(5)  John Zhao Li owns 5% of the capital stock of West Coast, but disclaims any
     beneficial interest in such shares.

(6)  Lee-tak Wong owns 5% of the capital stock of West Coast, but disclaims any
     beneficial interest in such shares.

(7)  Deng-chen Yin owns 20% of the capital stock of West Coast on behalf of
     SHHL, but disclaims any beneficial interest in such shares.

(8)  Guang-wei Liang owns 32.5% of the capital stock of Top Link on behalf of
     SHHL, but disclaims any beneficial interest in such shares.

(9)  Long-sheng Zhu, a former Director, owns 10% of the capital stock of West
     Coast on behalf of SHHL, but disclaims any beneficial interest in such
     shares.

(10) Consists solely of immediately exercisable stock options.

(11) The address of each such person is c/o the Company, 23/F., Hang Seng
     Causeway Bay Building, 28 Yee Wo Street, Causeway Bay, Hong Kong.

CHANGES IN CONTROL:

          The Company is unaware of any contract or other arrangement, the
operation of which may at a subsequent date result in a change in control of the
Company.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SHAREHOLDER LOANS

          In connection with the acquisition of High Worth JV, Oriental Win
Holdings Ltd. ("Oriental Win") advanced US$8,869,585 to Holdings during 1994.
The rights to collect US$8,000,000 of the advance were transferred from Oriental
Win to its shareholders in proportion to their respective shareholder interests
in August 1996 (West Coast Star Enterprises Ltd. - 60%; Mapesbury Limited - 20%;
Redcliffe Holdings Ltd. - 20%). The advances bear no interest and are repayable
at the discretion of the Company, with the shareholders having no right to
demand repayment. The Company has the option of offsetting or repaying the
advances or any part thereof by allotment of shares at par value in Holdings. On
September 8, 1998, the remaining rights to collect US$848,000 of the advances
were transferred from Oriental Win to its shareholders in proportion to their
respective shareholder interests, less US$21,585 repaid by Holdings on behalf of
Oriental Win. On November 26, 1998, Holdings partially repaid approximately
31.5% of the advances from shareholders, amounting to US$2,791,650. In May 1999,
Holdings partially repaid approximately 18.5% of the advances from shareholders,
amounting to US$1,632,350. As of December 31, 1999, the remaining advances from
such shareholders, West Coast Star Enterprises Ltd., Top Link Development
Limited (assigned by Mapesbury Limited in February 1998), and Redcliffe Holdings
Ltd., were approximately US$2,654,400, US$884,800 and US$884,800, respectively.
In conjunction with the assignment of the advances to Top Link Development
Limited, Mapesbury Limited also transferred its shares in the Company to Top
Link Development Limited. On December 22, 1998, Oriental Win was formally
dissolved by its shareholders.

NOBLE BREWERY

          During the years ended December 31, 1998 and 1999, the Company
purchased for resale beer products from Noble Brewery aggregating RMB
621,380,760 and RMB 537,010,133, respectively.  As of December 31, 1998 and
1999, RMB 218,717,800 and RMB 194,894,527, respectively, was due to Noble
Brewery for the purchase of beer products, and was unsecured, interest-free and
repayable on demand.

                                       55
<PAGE>

GUANGDONG BLUE RIBBON

          Until July 31, 1997, Liu Yun Zhong and Niu Zi Hang were directors and
executive officers of the Company. Mr. Liu and Mr. Niu are the General Manager
and Deputy General Manager, respectively, of Guangdong Blue Ribbon. Guangdong
Blue Ribbon owns 40% of High Worth JV.

          During the years ended December 31, 1998 and 1999, the Company
purchased packaging materials from Guangdong Blue Ribbon and its affiliated
companies aggregating RMB 37,631,444 and RMB 29,840,747, respectively.

          During the years ended December 31, 1998 and 1999, the Company also
purchased for resale beer products from Sichuan High Worth Brewery aggregating
RMB 35,072,362 and RMB 21,458,166, respectively.

          During the years ended December 31, 1998 and 1999, the Company paid
RMB 6,886,720 and RMB 6,568,634, respectively, equivalent to US$11.70 per ton of
beer production, to Guangdong Blue Ribbon as a royalty fee for the right to use
the Pabst Blue Ribbon trademarks in China.

          During the years ended December 31, 1998 and 1999, the Company paid
Guangdong Blue Ribbon a management fee of RMB 3,780,000 and RMB nil,
respectively, pursuant to a three year agreement commencing January 1, 1996.

RELATED COMPANIES

          As of December 31, 1998 and 1999, the amount due from related
companies aggregated RMB 18,068,927 and RMB 24,646,810, respectively, and
consisted of amounts due from Guangdong Blue Ribbon and its affiliated companies
for trade deposits received on behalf of the Company and expenses paid on behalf
of Guangdong Blue Ribbon and its affiliated companies.

          As of December 31, 1998 and 1999, the Company owed an aggregate of RMB
31,100,000 and RMB 11,500,000, respectively, to related parties as follows:

          (a)  approximately RMB 11,300,000 and RMB 7,000,000, respectively, was
               due to companies affiliated with Guangdong Blue Ribbon for the
               purchase of raw materials, and was unsecured, interest-free and
               repayable on demand;

          (b)  approximately RMB 4,200,000 and RMB 4,500,000, respectively, was
               due to Sichuan High Worth Brewery for the purchase of beer
               products, and was unsecured, interest-free and repayable on
               demand; and

          (c)  approximately RMB 15,600,000 and RMB nil, respectively, was due
               to Guangdong Blue Ribbon, as a dividend payable by High Worth JV.


OTHER TRANSACTIONS

          On December 15, 1998, Holdings granted a one-year loan to Top Link
Development Limited of RMB 3,567,805 (US$429,856), with interest at 5% per
annum.

                                       56
<PAGE>

                                    PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


(a)  (1)  The following financial statements and exhibits are filed with and
          as a part of this report.


          Financial Statements

          CBR BREWING COMPANY, INC. AND SUBSIDIARIES

          Report of Independent Auditors
          - Deloitte Touche Tohmatsu

          Consolidated Balance Sheets
          - As of December 31, 1998 and 1999

          Consolidated Statements of Income
          - Years ended December 31, 1997, 1998 and 1999

          Consolidated Statements of Shareholders' Equity - Years ended December
          31, 1997, 1998 and 1999

          Consolidated Statements of Cash Flows - Years ended December 31, 1997,
          1998 and 1999

          Notes to Consolidated Financial Statements

          ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.

          Report of Independent Auditors
          - Deloitte Touche Tohmatsu

          Balance Sheets
          - As of December 31, 1998 and 1999

          Statements of Income
          - Years ended December 31, 1997, 1998 and 1999

          Statements of Equity
          - Years ended December 31, 1997, 1998 and 1999

          Statements of Cash Flows
          - Years ended December 31, 1997, 1998 and 1999

          Notes to Financial Statements

(a)  (2)  Financial Statement Schedules

          Schedules have been omitted because they are not required or are not
          applicable or the information required to be set forth therein either
          is not material or is included in the consolidated financial
          statements or the notes thereto.

(a)  (3)  Exhibits

          A list of exhibits required to be filed as part of this report is set
          forth in the Index to Exhibits, which immediately precedes such
          exhibits, and is incorporated herein by reference.

(b)  Reports on Form 8-K: The Company did not file any Current Reports on Form
     8-K during or related to the three months ended December 31, 1999.

                                       57
<PAGE>

                                  SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

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

Date:  April 7, 2000               By:  /s/ Zi-shou Chen
                                        ---------------------------------
                                        Zi-shou Chen
                                        President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Date:  April 7, 2000               By:  /s/ Zi-shou Chen
                                        ---------------------------------
                                        Zi-shou Chen
                                        President and Director

Date:  April 7, 2000               By:  /s/ John Zhao Li
                                        ---------------------------------
                                        John Zhao Li
                                        Vice President and Director

Date:  April 7, 2000               By:  /s/ Gary C. K. Lui
                                        ---------------------------------
                                        Gary C. K. Lui
                                        Chief Financial Officer

Date:  April 7, 2000               By:  /s/ Jin-qiang Zhang
                                        ---------------------------------
                                        Jin-qiang Zhang
                                        Chief Executive Officer and
                                          Director

Date:  April 7, 2000               By:  /s/ Lee-tak Wong
                                        ---------------------------------
                                        Lee-tak Wong
                                        Director

Date:  April 7, 2000               By:  /s/ Guang-wei Liang
                                        ---------------------------------
                                        Guang-wei Liang
                                        Director

Date:  April 7, 2000               By:  /s/ Deng-chen Yin
                                        ---------------------------------
                                        Deng-chen Yin
                                        Director

                                       58
<PAGE>

                      CBR BREWING COMPANY, INC.

                      Report and Financial Statements
                      For the year ended December 31, 1999

<PAGE>

CBR BREWING COMPANY, INC.

REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999

CONTENTS                                                                 PAGE(S)
--------                                                                 -------

REPORT OF INDEPENDENT AUDITORS....................................        F - 1

CONSOLIDATED BALANCE SHEETS.......................................        F - 2

CONSOLIDATED STATEMENTS OF INCOME.................................        F - 3

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY...................        F - 4

CONSOLIDATED STATEMENTS OF CASH FLOWS.............................        F - 5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS........................        F - 6

<PAGE>

REPORT OF INDEPENDENT AUDITORS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
CBR BREWING COMPANY, INC.

We have audited the accompanying consolidated balance sheets of CBR Brewing
Company, Inc. and its subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of CBR Brewing Company, Inc. and its
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.

We draw your attention to note 22 to the consolidated financial statements which
state that the Company is exposed to certain risks through its operations in the
People's Republic of China.


/s/ Deloitte Touche Tohmatsu
Hong Kong
March 31, 2000


                                     F-1

<PAGE>

                            CBR BREWING COMPANY, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       As of December 31,
                                                           ---------------------------------------
                                                            1999              1999            1998
                                                            ----              ----            ----
                                                             US$               RMB             RMB
                                                          (Note 3)
<S>                                                      <C>              <C>              <C>
                                ASSETS
Current assets:
  Cash and cash equivalents........................      12,777,424       106,052,616      86,508,742
  Accounts receivable, net of allowance for doubtful
    accounts of RMB59,834,318 and RMB35,599,181
    for 1999 and 1998, respectively (note 4).......       5,883,873        48,836,143     113,947,815
  Bills receivable (note 5)........................       3,293,211        27,333,650      26,554,200
  Inventories (note 6).............................       8,824,331        73,241,948      66,602,633
  Amounts due from related companies (note 17).....       2,969,495        24,646,810      18,068,927
  Prepayments, deposits and other receivables......       4,336,433        35,992,390      27,603,518
                                                        -----------       -----------     -----------
Total current assets...............................      38,084,767       316,103,557     339,285,835
Interest in an associated company (note 7).........      30,318,348       251,642,290     243,429,767
Property, plant and equipment, net (note 8)........      29,394,117       243,971,176     263,768,418
Other non-current assets...........................       1,295,212        10,750,253      23,942,307
                                                        -----------       -----------     -----------
Total assets.......................................      99,092,444       822,467,276     870,426,327
                                                        ===========       ===========     ===========

                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Bank borrowings (note 9).........................      13,902,505       115,390,788     119,554,000
  Capital lease obligations (note 10)..............         343,122         2,847,911       5,664,938
  Accounts payable.................................       4,712,907        39,117,124      40,398,992
  Accrued liabilities..............................      10,256,076        85,125,424      81,334,665
  Amounts due to related companies (note 17).......       1,389,867        11,535,893      31,136,095
  Amount due to an associated company (note 7).....      23,481,268       194,894,527     218,717,800
  Income taxes payable (note 11)...................       1,077,601         8,944,091       4,166,884
  Sales taxes payable (note 12)....................       2,315,626        19,219,699      30,331,904
                                                        -----------       -----------     -----------
Total current liabilities..........................      57,478,972       477,075,457     531,305,278
                                                        -----------       -----------     -----------
Long-term liabilities:
  Bank borrowings (note 9).........................       1,204,819        10,000,000            -
  Capital lease obligations (note 10)..............            -                 -          2,847,911
                                                        -----------       -----------     -----------
Total long-term liabilities........................       1,204,819        10,000,000       2,847,911
                                                        -----------       -----------     -----------
Minority interests.................................       8,688,845        72,117,416      83,803,133
                                                        -----------       -----------     -----------

Commitments and contingencies (note 22)

Shareholders' advances and shareholders' equity:

  Advances from shareholders (note 13).............       4,424,000        36,719,200      50,267,705
                                                        -----------       -----------     -----------

Shareholders' equity:
  Common stock
    - Class A, US$0.0001 par value, 90,000,000 shares
        authorized, 5,010,013 shares outstanding...             515             4,273           4,273
    - Class B, US$0.0001 par value, 10,000,000 shares
        authorized, 3,000,000 shares outstanding...             308             2,559           2,559
    Additional paid-in capital.....................      12,914,144       107,187,393     106,489,592
    General reserve and enterprise development funds      1,695,710        14,074,390      10,125,740
    Retained earnings..............................      12,685,131       105,286,588      85,580,136
                                                        -----------       -----------     -----------
Total shareholders' equity.........................      27,295,808       226,555,203     202,202,300
                                                        -----------       -----------     -----------
Total shareholders' advances and shareholders'
  equity...........................................      31,719,808       263,274,403     252,470,005
                                                        -----------       -----------     -----------
Total liabilities, shareholders' advances and
    shareholders' equity...........................      99,092,444       822,467,276     870,426,327
                                                        ===========       ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     F-2

<PAGE>

                           CBR BREWING COMPANY, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                     --------------------------------------------------------------
                                                                         1999           1999             1998             1997
                                                                         ----           ----             ----             ----
                                                                          US$            RMB              RMB              RMB
                                                                       (Note 3)
<S>                                                                  <C>            <C>              <C>              <C>
Sales:
Related parties (note 18a) .......................................            --               --               --        8,773,809
Unrelated parties ................................................   121,406,512    1,007,674,051    1,145,636,256    1,180,189,995
                                                                     -----------    -------------    -------------    -------------
                                                                     121,406,512    1,007,674,051    1,145,636,256    1,188,963,804
Sales taxes (note 12) ............................................     2,556,050       21,215,219       24,629,145       19,677,315
                                                                     -----------    -------------    -------------    -------------
Net sales ........................................................   118,850,462      986,458,832    1,121,007,111    1,169,286,489
Cost of sales, including inventory purchased from related
  companies of RMB588,309,046, RMB694,084,566 and RMB750,382,614
  in 1999, 1998 and 1997, respectively; and royalty fee paid to
  a related company of RMB6,568,634, RMB6,886,720 and RMB7,086,075
  in 1999, 1998 and 1997, respectively (note 17b to d) ...........    92,560,949      768,255,876      927,483,120      960,959,693
                                                                     -----------    -------------    -------------    -------------
Gross profit .....................................................    26,289,513      218,202,956      193,523,991      208,326,796
Selling, general and administrative expenses, including
  management fee paid to a related company of nil,
  RMB3,780,000 and RMB3,780,000 in 1999, 1998 and
  1997, respectively (note 17e) ..................................    26,254,840      217,915,167      215,134,986      197,111,936
Fair value of warrants, stock options and common stock
  issued for services rendered (note 18) .........................        84,072          697,801        2,459,406               --
                                                                     -----------    -------------    -------------    -------------
Operating (loss) income ..........................................       (49,399)        (410,012)     (24,070,401)      11,214,860
                                                                     -----------    -------------    -------------    -------------

Other income:
  Interest income, including interest income from
    a related company of nil, nil and RMB5,535,977
    in 1999, 1998 and 1997, respectively (note 17f) ..............       372,299        3,090,081        2,687,218        6,255,590
  Foreign exchange gains .........................................            --               --            2,841          177,396
  Others .........................................................        53,464          443,753        1,606,516        1,239,362
                                                                     -----------    -------------    -------------    -------------
Total other income ...............................................       425,763        3,533,834        4,296,575        7,672,348
                                                                     -----------    -------------    -------------    -------------

Other expense:
  Interest expense, including interest paid to related
    companies of nil, nil and RMB5,576,220 in 1999,
    1998 and 1997, respectively (note 17g) .......................     1,769,837       14,689,647        9,507,873       15,503,189
  Loss on disposal of property, plant and equipment ..............         1,255           10,419          189,872          743,788
  Others .........................................................        11,808           98,001        1,209,458          498,381
                                                                     -----------    -------------    -------------    -------------
Total other expenses .............................................     1,782,900       14,798,067       10,907,203       16,745,358
                                                                     -----------    -------------    -------------    -------------
(Loss) income before income taxes ................................    (1,406,536)     (11,674,245)     (30,681,029)       2,141,850
Income taxes (note 11) ...........................................       655,914        5,444,091          326,172               --
                                                                     -----------    -------------    -------------    -------------

(Loss) income before equity in earnings of an associated
  company ........................................................    (2,062,450)     (17,118,336)     (31,007,201)       2,141,850
Equity in earnings of an associated company ......................     5,991,133       49,726,406       55,160,690       52,426,546
                                                                     -----------    -------------    -------------    -------------
Income before minority interests .................................     3,928,683       32,608,070       24,153,489       54,568,396
Minority interests ...............................................     1,078,671        8,952,968        2,761,979       23,805,494
                                                                     -----------    -------------    -------------    -------------
Net income for the year ..........................................     2,850,012       23,655,102       21,391,510       30,762,902
                                                                     ===========    =============    =============    =============
Basic earnings per share .........................................          0.36             2.95             2.67             3.84
                                                                     ===========    =============    =============    =============
Diluted earnings per share .......................................          0.36             2.95             2.67             3.84
                                                                     ===========    =============    =============    =============

Weighted average number of shares of common stock
  outstanding
    - basic ......................................................     8,010,013        8,010,013        8,008,342        8,000,013
                                                                     ===========    =============    =============    =============
    - diluted ....................................................     8,010,013        8,010,013        8,008,342        8,000,013
                                                                     ===========    =============    =============    =============
</TABLE>

          See accompanying notes to consolidated financial statements

                                     F-3

<PAGE>

                           CBR BREWING COMPANY, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                              Common stock
                                           --------------------------------------------------
                                                    Shares                   Amount
                                                 outstanding      par value of US$0.0001 each
                                                 -----------      ---------------------------
                                            Class A       Class B     Class A    Class B
                                           ---------     ---------   --------   --------
                                                                        RMB        RMB

<S>                                        <C>           <C>         <C>        <C>
Balance at January 1, 1997 ...........     5,000,013     3,000,000      4,265      2,559
Net income ...........................            --            --         --         --
Appropriation ........................            --            --         --         --
                                           ---------     ---------   --------   --------
Balance at December 31, 1997 .........     5,000,013     3,000,000      4,265      2,559
Net income ...........................            --            --         --         --
Appropriation ........................            --            --         --         --
Fair value of warrants, stock options
  and common stock issued for services
  rendered ...........................        10,000            --          8         --
                                           ---------     ---------   --------   --------
Balance at December 31, 1998 .........     5,010,013     3,000,000      4,273      2,559
Net income ...........................            --            --         --         --
Appropriation ........................            --            --         --         --
Fair value of warrants, stock options
  and common stock issued for services
  rendered (note 19) .................            --            --         --         --
                                           ---------     ---------   --------   --------
Balance at December 31, 1999 .........     5,010,013     3,000,000      4,273      2,559
                                           =========     =========   ========   ========

Converted to US$Balance at
  December 31, 1999 ..................                               US$  515   US$  308
                                                                     ========   ========

<CAPTION>
                                              Additional                                         Total
                                               paid-in         Reserve         Retained       shareholders'
                                               capital          funds          earnings          equity
                                           --------------   -------------   --------------    -------------
                                                 RMB             RMB             RMB               RMB
                                                              (Note 15)       (Note 15)
<S>                                        <C>              <C>             <C>               <C>
Balance at January 1, 1997 ...........        104,030,194       4,823,561       38,727,903      147,588,482
Net income ...........................                 --              --       30,762,902       30,762,902
Appropriation ........................                 --       3,518,224       (3,518,224)              --
                                           --------------   -------------   --------------    -------------
Balance at December 31, 1997 .........        104,030,194       8,341,785       65,972,581      178,351,384
Net income ...........................                 --              --       21,391,510       21,391,510
Appropriation ........................                 --       1,783,955       (1,783,955)              --
Fair value of warrants, stock options
  and common stock issued for services
  rendered ...........................          2,459,398              --               --        2,459,406
                                           --------------   -------------   --------------    -------------
Balance at December 31, 1998 .........        106,489,592      10,125,740       85,580,136      202,202,300
Net income ...........................                 --              --       23,655,102       23,655,102
Appropriation ........................                 --       3,948,650       (3,948,650)              --
Fair value of warrants, stock options
  and common stock issued for services
  rendered (note 19) .................            697,801              --               --          697,801
                                           --------------   -------------   --------------    -------------
Balance at December 31, 1999 .........        107,187,393      14,074,390      105,286,588      226,555,203
                                           ==============   =============   ==============    =============

Converted to US$Balance at
  December 31, 1999 ..................     US$ 12,914,144   US$ 1,695,710   US$ 12,685,131    US$27,295,808
                                           ==============   =============   ==============    =============
</TABLE>

Holders of Class A common stock are entitled to one vote per share. Holders of
Class B common stock are entitled to two votes per share. Each share of Class B
common stock is convertible into one share of Class A common stock at the option
of the holders.

          See accompanying notes to consolidated financial statements

                                     F-4


<PAGE>

                           CBR BREWING COMPANY, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                               Year ended December 31,
                                                              ----------------------------------------------------------
                                                                  1999           1999            1998            1997
                                                                  ----           ----            ----            ----
                                                                   US$            RMB             RMB             RMB
<S>                                                            <C>            <C>             <C>            <C>
Cash flows from operating activities:
  Net income ..............................................     2,850,012      23,655,102      21,391,510     30,762,902
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Allowance for doubtful accounts .......................     2,926,177      24,287,267      15,367,012      5,314,858
    Depreciation and amortization .........................     4,925,480      37,881,481      25,153,217     21,463,723
    Fair value of warrants, stocks options and common stock
      issued for services rendered ........................        84,072         697,801       2,459,406             --
    Minority interests ....................................     1,078,671       8,952,968       2,761,979     23,805,494
    Equity in earnings of an associated company ...........    (5,991,133)    (49,726,406)    (55,160,690)   (52,426,546)
    Dividend received from an associated company ..........     5,001,673      41,513,883      46,728,178     34,413,511
    Deferred income taxes .................................            --              --      (4,413,000)            --
    Other, net ............................................         1,255          10,419          10,720        566,392
Changes in operating assets and liabilities:
  (Increase) decrease in -
  Accounts receivable .....................................     4,918,603      40,824,405      (8,847,894)    43,063,703
  Bills receivable ........................................       (93,910)       (779,450)      9,001,200      3,098,259
  Inventories .............................................      (799,917)     (6,639,315)     22,980,809     (2,033,606)
  Amounts due from related companies ......................      (792,516)     (6,577,883)     11,598,088      3,422,318
  Prepayments, deposits and other receivables .............    (1,010,707)     (8,388,872)     (3,585,607)    (6,238,007)
  Customer deposits .......................................            --              --      (6,680,000)   (52,323,600)
  Increase (decrease) in -
  Accounts payable and accrued liabilities ................       302,276       2,508,891      23,918,654     (6,392,243)
  Amount due to an associated company .....................    (2,870,274)    (23,823,273)      9,634,465     42,581,584
  Income taxes payable ....................................       575,567       4,777,207       3,906,884             --
  Sales taxes payable .....................................    (1,338,820)    (11,112,205)     (9,509,378)   (24,062,953)
                                                              -----------    ------------    ------------    -----------
Net cash provided by operating activities .................     9,766,509      81,062,020     106,715,553     65,015,789
                                                              -----------    ------------    ------------    -----------

Cash flows from investing activities:
  Purchases of property, plant and equipment ..............      (952,121)     (7,902,604)    (66,414,497)   (10,089,937)
  Proceeds from disposal of property, plant and
    equipment .............................................            --              --         494,820      1,756,704
  Increase in expenditure on non-current assets ...........            --              --      (9,244,507)   (14,697,800)
                                                              -----------    ------------    ------------    -----------
Net cash used in investing activities .....................      (952,121)     (7,902,604)    (75,164,184)   (23,031,033)
                                                              -----------    ------------    ------------    -----------

Cash flows from financing activities:
  New bank borrowings .....................................     8,234,940      68,350,000     114,554,000     28,500,000
  Repayment of bank borrowings ............................    (7,531,712)    (62,513,212)    (38,500,000)   (25,500,000)
  (Decrease) increase in amounts due to related companies .    (2,361,470)    (19,600,202)    (21,293,591)    15,433,346
  Repayment of advances from shareholders .................    (1,632,350)    (13,548,505)    (23,170,695)            --
  Payment of capital lease obligations ....................      (682,523)     (5,664,938)     (7,349,700)    (9,034,742)
  Payment of cash dividend to minority interests ..........    (2,486,589)    (20,638,685)    (45,375,595)   (15,000,000)
                                                              -----------    ------------    ------------    -----------
Net cash used in financing activities .....................    (6,459,704)    (53,615,542)    (21,135,581)    (5,601,396)
                                                              -----------    ------------    ------------    -----------
Net increase in cash and cash equivalents .................     2,354,684      19,543,874      10,415,788     36,383,360
Cash and cash equivalents at beginning of the year ........    10,422,740      86,508,742      76,092,954     39,709,594
                                                              -----------    ------------    ------------    -----------
Cash and cash equivalents at end of the year ..............    12,777,424     106,052,616      86,508,742     76,092,954
                                                              ===========    ============    ============    ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     F-5

<PAGE>

CBR BREWING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    ORGANIZATION AND PRINCIPAL ACTIVITIES

      CBR Brewing Company, Inc. (the "Company"), formerly 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 and its subsidiaries are collectively referred to as the
      "Group". At December 31, 1999, the Company's principal shareholder is
      Shenzhen Huaqiang Holdings Limited, incorporated in the PRC, which holds
      indirectly 63.2% of the outstanding Class A common stock and 80% of the
      outstanding Class B common stock.

      The Company is a holding company and its principal subsidiaries are
      engaged in the production and sale of beer products in the People's
      Republic of China ("PRC").

      On December 16, 1994, the Company issued 3,960,000 shares of Class A
      common stock and 3,000,000 shares of Class B common stock to Oriental Win
      Holdings Ltd. ("Oriental Win") and 240,000 shares of Class A common stock
      to Goldchamp Limited ("Goldchamp"), both of these companies and their
      shareholders being unrelated to the Company prior to becoming
      shareholders, in consideration for the entire issued share capital of High
      Worth Holdings Limited ("High Worth Holdings"). Upon completion of the
      share exchange on December 16, 1994, High Worth Holdings became a
      wholly-owned subsidiary of the Company.

      This transaction has been treated as a recapitalization of High Worth
      Holdings with High Worth Holdings as the acquirer (reverse acquisition).
      The historical financial statements prior to December 16, 1994 are those
      of High Worth Holdings.

      High Worth Holdings is a holding company formed solely to effect the
      acquisition of a 60% interest in Zhaoqing Blue Ribbon High Worth Brewery
      Ltd. ("High Worth Brewery"). High Worth Brewery is a Sino-foreign equity
      joint venture enterprise registered in the PRC on July 2, 1994 in which
      Guangdong Blue Ribbon Group Co., Ltd. ("Blue Ribbon Group"), an unrelated
      joint stock limited company incorporated in the PRC, and High Worth
      Holdings hold 40% and 60% interests, respectively. The investment in High
      Worth Brewery was partly financed by long-term, interest free advances
      from the shareholders (see note 13). The following is a summary of the
      acquisition undertaken by High Worth Holdings, through its subsidiary,
      High Worth Brewery, during the period ended December 31, 1994.

      On October 31, 1994, High Worth Brewery acquired a 100% interest in
      Zhaoqing Brewery, including Zhaoqing Brewery's 40% interest in Zhaoqing
      Blue Ribbon Brewery Noble Ltd. ("Blue Ribbon Noble"). The consideration
      for the acquisition of an effective 60% interest in Zhaoqing Brewery by
      High Worth Holdings through High Worth Brewery was approximately US$20
      million. Prior to the acquisition of the entire interest in Zhaoqing
      Brewery by High Worth Brewery, Zhaoqing Brewery was the wholly owned
      subsidiary of Blue Ribbon Group. Blue Ribbon Noble is a Sino-foreign
      equity joint venture enterprise registered in the PRC on October 8, 1993
      in which Goldjinsheng Holding Limited ("Goldjinsheng"), an unrelated
      party, and Zhaoqing Brewery hold 60% and 40% interests, respectively.
      Zhaoqing Brewery and Blue Ribbon Noble are both engaged in the production
      and sale of beer products in the PRC.

                                     F-6


<PAGE>

CBR BREWING COMPANY, INC.

1.    ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

      In April 1995, Zhaoqing Brewery ceased the production of Zhaoqing beer and
      started to produce Blue Ribbon beer. Pursuant to the terms of the
      sublicense agreement, Zhaoqing Brewery was granted by Blue Ribbon Group
      the right for the production and distribution of Blue Ribbon beer under
      Pabst trademarks in the PRC at a royalty fee of US$11.70 for each ton
      produced.

      Blue Ribbon Noble's principal product line is Blue Ribbon beer under Pabst
      trademarks which were granted by Blue Ribbon Group. Pursuant to the terms
      of the sublicense agreement, Blue Ribbon Noble was granted by Blue Ribbon
      Group the right in the PRC to use the two specific Pabst trademarks for
      the production, promotion, distribution and sale of beer under such
      trademarks. The production right of Blue Ribbon Noble is confined
      exclusively to the Guangdong Province only and it does not preclude High
      Worth Brewery's production right in Guangdong as described in notes 23(a)
      and 23(b). The sublicense agreement is valid until November 7, 2003. In
      consideration for the sublicense granted, Blue Ribbon Noble is committed
      to pay Blue Ribbon Group a royalty fee of US$0.10 for each carton of
      bottled or canned beer produced.

      On February 19, 1995, Zhaoqing Blue Ribbon Beer Marketing Company Limited
      ("Blue Ribbon Marketing") was registered as a limited company in the PRC
      and owned as to 70% by Zhaoqing Brewery and 30% by Blue Ribbon Group. Blue
      Ribbon Marketing was appointed as the sole distributor to conduct the
      distribution, marketing and promotion of all Pabst Blue Ribbon beer
      products produced by Zhaoqing Brewery and Blue Ribbon Noble. Blue Ribbon
      Marketing started to purchase beer products from Zhaoqing Brewery and Blue
      Ribbon Noble in April 1995 and July 1995, respectively. Its principal
      trading product is Blue Ribbon beer, which constitutes approximately 98%
      of the Group's sales. Prior to October 1997, Blue Ribbon Marketing was
      also engaged in the trading of mineral water and non-carbonated soft
      drinks purchased from Blue Ribbon Group and its group of companies.

      On April 5, 1995, CBR Finance (BVI) Ltd. (the "Finance Company"), which is
      wholly owned by the Company, was incorporated in the British Virgin
      Islands ("BVI"). The Finance Company has remained dormant since
      incorporation.

      In January 1996, Zhaoqing Brewery transferred all of its operating assets
      and liabilities to High Worth Brewery pursuant to the original Joint
      Venture Agreement, the Asset Transfer Agreement signed in May 1994, and
      the relevant government regulations. Subject to the completion of certain
      legal procedures and documentation, investments in Blue Ribbon Noble and
      the Blue Ribbon Marketing will be transferred to High Worth Brewery.
      Zhaoqing Brewery is currently acting as the nominee for High Worth Brewery
      with respect to the investments in Blue Ribbon Noble and Blue Ribbon
      Marketing.

      Upon the completion of the required procedures and documentation, all of
      the assets and liabilities formerly controlled by Zhaoqing Brewery will
      then be transferred to High Worth Brewery. During the three years ended
      December 31, 1999, the operating activities of Zhaoqing Brewery were part
      of High Worth Brewery. The consensus and approval from the local tax
      authority with respect to this transfer was obtained in 1996.

                                     F-7

<PAGE>

CBR BREWING COMPANY, INC.

1.    ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

      On January 13, 1998, High Worth Brewery entered into a joint venture
      contract with Zao Yang Brewery in Hubei Province to establish a new
      brewery. The new brewery is designated Zao Yang High Worth Brewery, with a
      total capital investment of RMB29,280,000, allocated 55% to High Worth
      Brewery and 45% to Zao Yang Brewery. High Worth Brewery is responsible for
      transferring the technical know-how and production techniques to brew
      Pabst Blue Ribbon beer to Zao Yang High Worth Brewery, as well as
      assisting in the renovation of existing equipment, in order to convert the
      brewery into another Pabst Blue Ribbon brewing complex. Zao Yang High
      Worth Brewery commenced the production of Pabst Blue Ribbon beer in June
      1998. Commencing June 1998, Blue Ribbon Marketing also began purchasing
      Zao Yang High Worth Brewery's production of Pabst Blue Ribbon beer for
      distribution.

      On January 20, 1998, Zhaoqing Brewery and Goldjinsheng entered into an
      agreement which calls for the interest of Goldjinsheng in Blue Ribbon
      Noble to be transferred to Linchpin Holdings Limited ("Linchpin"), a
      subsidiary of Noble China Inc., a company listed on the Toronto Stock
      Exchange. Upon receipt of approval from and registration by the relevant
      PRC authorities, Linchpin and High Worth Brewery will own 60% and 40%
      equity interests in Blue Ribbon Noble, respectively.

      Effective December 31, 1997, the Company, through High Worth Brewery,
      entered into a Settlement Agreement with Blue Ribbon Group that will allow
      it to acquire a 51% interest in Sichuan Brewery, equivalent to an
      effective interest of 31% held by the Company. Pursuant to an Equity
      Transfer Agreement signed on January 19, 1999, High Worth Brewery received
      a 15% consideration-free equity interest in Sichuan Brewery, equivalent to
      an effective interest of 9%. Sichuan Brewery will be formally restructured
      into a new joint venture company and will serve as the fourth Pabst Blue
      Ribbon brewing complex in the PRC. High Worth Brewery was also granted a
      three-year option to increase its equity interest to 51% at a fixed cost
      of RMB32,007,600.

      On June 5, 1999, a formal Joint Venture Agreement was signed among E Mei
      Brewery, High Worth Brewery and Wai Shun Investment Limited ("Wai Shun"),
      an unaffiliated Hong Kong company, to form Sichuan Blue Ribbon Brewery
      High Worth Ltd. ("Sichuan High Worth Brewery"). The business of Sichuan
      Brewery was transferred to Sichuan High Worth Brewery. The total
      registered and paid up capital of Sichuan high Worth Brewery was
      RMB51,221,258. High Worth Brewery's 15% equity interest is
      consideration-free but is entitled to share in the profits of Sichuan High
      Worth Brewery. The Joint Venture Agreement and the relevant legal
      documents have been approved by the local government authorities. Sichuan
      High Worth Brewery is currently producing Pabst Blue Ribbon beer.

      On October 18, 1999, High Worth Holdings, through its newly
      incorporated wholly owned subsidiary, March International Group Limited
      ("March International"), signed a formal Joint Venture Agreement with
      Jilin Province Juetai City Brewery (40%) and Jilin Province Chuang
      Xiang Zhi Yie Ltd. (9%), both of which are unaffiliated PRC companies,
      to form Jilin Lianli (CBR) Brewing Company Ltd. ("Jilin Lianli
      Brewery"). The total registered and paid up capital of Jilin Lianli
      Brewery was RMB25,000,000. March International will contribute one new
      packaging line and the right to use the "Lianli" beer trademark with a
      total value equivalent to RMB12,750,000 as capital, representing a 51%
      interest in Jilin Lianli Brewery, which is equivalent to an effective
      interest of 51% to the Company. The Joint Venture Agreement was
      provisionally approved by the local government in January 2000. March
      International is responsible for transferring the technical know-how
      and production techniques to brew high quality beer products to Jilin
      Lianli Brewery, as well as assisting in the renovation of existing
      equipment, in order to convert the brewery into a modern brewing
      complex. Subsequent to the improvement of the existing brewing
      equipment and the installation of the new packing line, it is expected
      that Jilin Lianli Brewery will commence operation by May 2000.

                                     F-8

<PAGE>

CBR BREWING COMPANY, INC.

2.    BASIS OF PRESENTATION

      The consolidated financial statements have been prepared in accordance
      with generally accepted accounting principles in the United States of
      America ("US GAAP"). This basis of accounting differs from that used in
      the preparation of the statutory financial statements of each relevant PRC
      subsidiary which are prepared in accordance with the accounting principles
      and relevant financial regulations established by the Ministry of Finance
      of the PRC.

      The major adjustments made to the relevant PRC statutory financial
      statements to conform with US GAAP include the following:

      o     The reclassification of certain expense items from income
            appropriations to charges against income;

      o     Adjustment for sales, other income and purchases recognized on a
            cash basis;

      o     Adjustment for depreciation charges;

      o     Adjustment for deferred taxation; and

      o     Adjustment for revaluation of property, plant and equipment.

      The consolidated financial statements have been prepared on a going
      concern basis notwithstanding that the Group has a net current liability
      position as of December 31, 1999 and 1998. The directors of the Company
      believe that its operating cash flow, combined with cash on hand, existing
      bank borrowings and other external credit sources, and the credit
      facilities provided by affiliates or related parties, are adequate to
      satisfy the Group's working capital requirements in the foreseeable
      future.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles of consolidation - The consolidated financial statements
      include the financial statements of the Company and its subsidiaries in
      which the Company has an effective controlling interest, including High
      Worth Holdings, High Worth Brewery, Zhaoqing Brewery, the Finance Company,
      March International, Blue Ribbon Marketing and Zao Yang High Worth
      Brewery. All material intercompany balances and transactions have been
      eliminated on consolidation. Investments in affiliates over which the
      Company exercises significant influence but does not have effective
      control and owns less than a 50% but greater than a 20% voting interest,
      including the 40% investment in Blue Ribbon Noble, are accounted for using
      the equity method.

      Cash and cash equivalents - Cash and cash equivalents include cash on
      hand, cash accounts, interest bearing saving accounts, and short-term bank
      deposits with original maturities of three months or less.

      Inventories - Inventories are stated at the lower of cost or market value.
      Cost, which comprises direct materials, direct labor costs and overhead
      associated with the manufacturing processes, is calculated using the
      first-in, first-out method.

                                     F-9

<PAGE>

CBR BREWING COMPANY, INC.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Property, plant and equipment - Property, plant and equipment is stated at
      cost less an allowance for depreciation and amortization. Depreciation and
      amortization are provided on the straight line method based on the
      estimated useful lives of the assets as follows:

      Land use rights.................................    50 years
      Buildings.......................................    50 years
      Plant, machinery and equipment..................    5 - 15 years
      Motor vehicles..................................    5 - 10 years

      According to the laws of the PRC, the title to all PRC land is retained by
      the PRC government. The land use rights, which represent the cost for the
      rights to use the land for premises granted by the State Land
      Administration Bureau, have no definite term of use. The land use rights
      are stated at cost and are amortized over 50 years on the same basis as
      the buildings.

      Construction in progress is stated at cost which comprises the direct
      costs of buildings, plant under construction and deposits and prepayments
      made on machinery pending installation. Cost comprises the direct cost of
      construction and finance expenses arising from borrowings used to finance
      the construction of buildings, plant and machinery until the construction,
      installation and testing are complete. No depreciation is provided until
      the relevant assets are available for commercial use.

      Leased assets - Leases that transfer substantially all the rewards and
      risks of ownership of assets to the Group are accounted for as capital
      leases. At the inception of a capital lease, the cost of the leased asset
      is capitalized at the present value of the minimum lease payments and
      recorded together with the obligation, excluding the interest element, to
      reflect the purchase and financing. Assets held under capital leases are
      included in property, plant and equipment and are depreciated over their
      estimated useful lives.

      Impairment of long-lived assets - The Company regularly reviews its
      long-lived assets for impairment whenever events or changes in the
      circumstances indicate that the carrying amount of an asset may not be
      recoverable based upon undiscounted cash flows expected to be produced by
      such assets over their expected useful lives.

      Income taxes - Income taxes are determined under the asset and liability
      method in accordance with Statement of Financial Accounting Standards
      ("SFAS") No. 109, "Accounting for Income Taxes". SFAS No. 109 requires
      deferred taxes be adjusted to reflect the tax rates at which future
      taxable amounts will be settled or recognized. The effects of tax rate
      changes on future deferred tax liabilities and deferred tax benefits, as
      well as other changes in income tax laws, are recognized in the
      consolidated statement of income in the period when such changes are
      enacted.

      Revenue recognition - Sales represent the invoiced value of goods sold,
      net of discounts. Sales and sales discounts are recognized upon delivery
      of goods to customers.

      Advertising expenses - Advertising expenses are charged to expense in the
      consolidated statements of income as incurred. Advertising expenses were
      RMB74,716,635, RMB68,082,791 and RMB63,185,906 for the years ended
      December 31, 1999, 1998 and 1997, respectively.

                                    F-10

<PAGE>

CBR BREWING COMPANY, INC.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Foreign currency translation - The financial records and the statutory
      financial statements of the Company's subsidiaries and associated company
      in the PRC are maintained in Renminbi. In preparing the financial
      statements, all foreign currency transactions are translated into Renminbi
      using the applicable rates of exchange for the respective periods.
      Monetary assets and liabilities denominated in foreign currencies have
      been translated into Renminbi using the rate of exchange prevailing at the
      balance sheet date. The resulting exchange gains or losses have been
      credited or charged to the consolidated statements of income in the period
      that they occur.

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

      Translation of amounts from RMB into US$ is for the convenience of the
      reader only and has been made at US$1.00 = RMB8.30. No representation is
      made that the Renminbi amounts could have been, or could be, converted
      into United States dollars at that rate or at any other rate.

      Stock option plan - The Company accounts for stock options issued to
      non-employee directors and consultants using the fair value method in
      accordance with SFAS No. 123, "Accounting for Stock-Based Compensation".
      Under the fair value method, compensation cost is measured at the grant
      date based on the value of the award and is recognized over the service
      period. The Company continues to follow Accounting Principles Board
      ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", in
      accounting for its stock options issued to employees. Pro forma
      disclosures of the effect on net income and earnings per share as if the
      Company had accounted for its employee stock options under the fair value
      method prescribed by SFAS No. 123 are shown in note 19.

      Earnings per share ("EPS") - EPS is determined in accordance with SFAS No.
      128, "Earnings Per Share". Basic EPS excludes the dilutive effects of
      options, warrants and convertible securities, if any, and is computed by
      dividing net income available to common stockholders by the weighted
      average number of common shares outstanding during the period. Diluted EPS
      is computed assuming the exercise or conversion of common equivalent
      shares, if dilutive, consisting of unissued shares under stock options,
      warrants and convertible debt instruments.

                                    F-11

<PAGE>

CBR BREWING COMPANY, INC.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Reconciliation of the basic and diluted EPS is as follows:

<TABLE>
<CAPTION>
                                                                   1999           1998
                                                                   ----           ----

      <S>                                                      <C>             <C>
      Net income............................................   RMB23,655,102   RMB21,391,510
                                                               -------------   -------------

      Basic EPS.............................................         RMB2.95         RMB2.67
                                                               -------------   -------------

      Basic weighted average common shares outstanding......       8,010,013       8,008,342
      Effect of dilutive securities:
        Warrants and options................................            -               -
                                                               -------------   -------------

      Diluted weighted average common and potential
        common shares outstanding...........................       8,010,013       8,008,342
                                                               -------------   -------------

      Diluted EPS...........................................         RMB2.95         RMB2.67
                                                               =============   =============
</TABLE>

      The common shares issuable upon exercise of the stock options were
      excluded from the calculation of diluted EPS since the exercise prices
      exceeded the average fair market value of the common stock during 1999 and
      1998.

      SFAS No. 128 did not have any impact for the EPS for the year ended
      December 31, 1997 because the Company did not have any dilutive securities
      outstanding.

      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 disclosures 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.

      Effects of recent accounting standards - In June 1998, the Financial
      Accounting Standards Board issued Statement of Financial Accounting
      Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and
      Hedging Activities". SFAS No. 133 establishes standards for derivative
      instruments embedded in other contracts, and for hedging activities, and
      requires that all derivatives be recognized either as assets or
      liabilities in the statement of financial position and be measured at
      fair value. SFAS No. 133 will be effective for the Company's year ending
      December 31, 2001. The Company has not yet determined the impact, if any,
      on its financial position, results of operations or cash flows.

                                    F-12

<PAGE>

CBR BREWING COMPANY, INC.

4.    ACCOUNTS RECEIVABLE

      Accounts receivable comprise:

                                                      1999           1998
                                                      ----           ----
                                                       RMB            RMB

      Accounts receivable - trade.................108,670,461    149,546,996
      Less: Allowance for doubtful accounts.......(59,834,318)   (35,599,181)
                                                  -----------    -----------

                                                   48,836,143    113,947,815
                                                  ===========    ===========

      Movement of allowance for doubtful accounts:

                                             1999         1998          1997
                                             ----         ----          ----
                                              RMB          RMB           RMB

      Balance as at January 1..........   35,599,181    20,232,169   14,921,542
      Provided during the year.........   24,287,267    15,367,012    5,314,858
      Written off during the year......      (52,130)         -          (4,231)
                                          ----------    ----------   ----------

      Balance as at December 31........   59,834,318    35,599,181   20,232,169
                                          ==========    ==========   ==========

5.    BILLS RECEIVABLE

      Bills receivable represent accounts receivable in the form of bills of
      exchange whose acceptances and settlements are handled by banks.

6.    INVENTORIES

                                                            1999         1998
                                                            ----         ----
                                                             RMB          RMB
        Inventories comprise:

        Raw materials.................................   27,586,428   24,853,642
        Work in progress..............................    8,972,212    5,436,138
        Finished goods................................   36,683,308   36,312,853
                                                         ----------   ----------

                                                         73,241,948   66,602,633
                                                         ==========   ==========

                                    F-13

<PAGE>

CBR BREWING COMPANY, INC.

7.    INTEREST IN AN ASSOCIATED COMPANY

<TABLE>
<CAPTION>
                                                                      1999          1998
                                                                      ----          ----
                                                                       RMB           RMB
      <S>                                                         <C>           <C>
      Unlisted investment, at cost.............................   209,361,595   209,361,595
      The Company's share of undistributed post acquisition
        earnings of an associated company......................    42,280,695    34,068,172
                                                                  -----------   -----------

                                                                  251,642,290   243,429,767
                                                                  ===========   ===========
</TABLE>

      The unlisted investment represents the Company's 40% equity interest in
      Blue Ribbon Noble held by a 60% owned subsidiary. Refer to note 1 for a
      description of its principal activities.

      Amount due to an associated company principally represented the balance
      arising from the purchases of beer products for resale. The balance is
      unsecured, interest-free and repayable on demand.

      The summarized information of Blue Ribbon Noble is presented below:

                                                   1999            1998
                                                   ----            ----
                                                    RMB             RMB
      Balance sheets

      Current assets .....................     413,158,436     391,127,106
      Property, plant and equipment ......     424,893,664     450,201,615
                                               -----------     -----------

      Total assets .......................     838,052,100     841,328,721
                                               ===========     ===========


      Current liabilities ................     153,958,740     185,013,326
      Deferred income taxes ..............       7,000,000       4,700,000
      Equity .............................     677,093,360     651,615,395
                                               -----------     -----------

      Total liabilities and equity .......     838,052,100     841,328,721
                                               ===========     ===========

      Statements of income

      Sales, net of sales taxes ..........     513,807,992     584,469,720
                                               ===========     ===========

      Gross profit .......................     197,370,369     177,258,447
                                               ===========     ===========

      Net income .........................     128,417,934     126,228,058
                                               ===========     ===========

      The Company's share of net income
        after the deduction of unrealized
        intercompany profit and other
        intercompany adjustments ........       49,726,406      55,160,690
                                               ===========     ===========

                                    F-14

<PAGE>

CBR BREWING COMPANY, INC.

8.    PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment comprises the following:

<TABLE>
<CAPTION>
                                                              1999            1998
                                                              ----            ----
                                                               RMB             RMB
      <S>                                                  <C>             <C>
      At cost:
        Land use rights and buildings .................    103,223,679      99,332,794
        Plant, machinery and equipment ................    226,906,842     221,954,727
        Motor vehicles ................................     13,033,404      13,137,599
        Construction in progress ......................      1,063,783       2,004,180
                                                          ------------    ------------

      Total ...........................................    344,227,708     336,429,300
        Less: Accumulated depreciation and amortization   (100,256,532)    (72,660,882)
                                                          ------------    ------------

                                                           243,971,176     263,768,418
                                                          ============    ============
</TABLE>

      Included in property, plant and equipment are assets acquired under
      capital leases with the following net book values:

<TABLE>
<CAPTION>
                                                              1999           1998
                                                              ----           ----
                                                               RMB           RMB
      <S>                                                 <C>            <C>
      At cost:
        Plant, machinery and equipment ................    33,747,792     33,747,792
        Less: Accumulated depreciation and amortization   (15,694,353)   (12,319,574)
                                                          -----------    -----------

                                                           18,053,439     21,428,218
                                                          ===========    ===========
</TABLE>

      Depreciation and amortization charges in respect of property, plant and
      equipment held under capital leases for each of the three years ended
      December 31, 1999 were RMB3,374,779.

9.    BANK BORROWINGS

                                                 1999            1998
                                                 ----            ----
                                                  RMB             RMB
      Bank borrowings comprise:

      Secured bank borrowings ............    125,390,788     119,554,000
      Less: Current portion ..............   (115,390,788)   (119,554,000)
                                             ------------    ------------

      Long-term portion, repayable in 2000     10,000,000              --
                                             ============    ============

      Certain assets of High Worth Brewery were collaterialized under a floating
      charge to secure the bank borrowings. The net book value of the property,
      plant and equipment and the carrying amounts of the other assets pledged
      to banks as of December 31, 1999 and 1998 amounted to RMB230,847,986 and
      RMB203,209,679, respectively, and nil and RMB218,027,265, respectively.
      There are no significant covenants or financial restrictions relating to
      the Company's short-term and long-term debt. The Company has no other
      lines of credit.

      The weighted average interest rates as of December 31, 1999 and 1998 were
      12.5% and 9.1% per annum, respectively.

                                    F-15

<PAGE>

CBR BREWING COMPANY, INC.

10.   CAPITAL LEASE OBLIGATIONS

      The capital lease obligations maturing subsequent to December 31, 1999
      are:

                                                                   RMB

      Total minimum lease payments .......................      2,927,420
      Less: Amount representing interest .................        (79,509)
                                                               ----------

      Present value of net minimum lease payments ........      2,847,911
      Less: current portion ..............................      2,847,911
                                                               ----------

      Long-term portion ..................................             --
                                                               ==========

11.   INCOME TAXES

      The components of (loss) income before income taxes, equity in earnings of
      an associated company and minority interests are as follows:

                                          Year ended December 31,
                                          -----------------------
                                     1999           1998           1997
                                     ----           ----           ----
                                      RMB            RMB            RMB

      United States of America    (2,306,612)    (8,479,076)    (4,957,917)
      British Virgin Islands      (6,215,272)    (4,854,533)    (5,707,886)
      PRC ....................    (3,152,361)   (17,347,420)    12,807,653
                                 -----------    -----------    -----------

                                 (11,674,245)   (30,681,029)     2,141,850
                                 ===========    ===========    ===========

      United States of America

      The Company is subject to taxes in the United States of America ("US"). In
      January 1997, the Internal Revenue Service enacted the entity
      classification regulations effective from January 1, 1997. Under the new
      tax regulations, the Company's PRC subsidiaries and associated company can
      elect to be treated as partnerships for US tax purposes, in contrast with
      the corporation entity treatment prior to January 1, 1997. The Company
      elected to treat its PRC subsidiaries and associated company as
      partnerships in 1997. For US tax purposes, a partnership is a flow-through
      entity (i.e., the partnership's income, deductions, gains and losses flow
      through to the partners in the partnership). High Worth Holdings is the
      ultimate partner in these partnerships. The Company will be taxed when
      income is recognized. As of December 31, 1999, the estimated tax loss
      of the Company available for carryforward in the U.S. is approximately
      RMB642,042.  The net operating loss carryforward will expire in 2013
      and 2014.

      The determination of the unrecognized deferred tax liability for temporary
      differences related to investments in foreign subsidiaries and foreign
      associated company is not practicable.

      PRC

      The Company's subsidiaries registered in the PRC are subject to Chinese
      income taxes at the applicable tax rate (currently 33%) on the taxable
      income as reported in their Chinese statutory financial statements in
      accordance with the relevant income tax laws applicable to foreign
      enterprises. Pursuant to the same income tax laws, the subsidiary, High
      Worth Brewery, and the associated company, Blue Ribbon Noble, are fully
      exempt from Chinese income tax for two years starting from the first
      profit making year, followed by a 50% exemption for the next three years.
      The 50% exemption for Blue Ribbon Noble and the tax holiday for High Worth
      Brewery commenced on January 1, 1996.

                                    F-16

<PAGE>

CBR BREWING COMPANY, INC.

11.   INCOME TAXES - continued

      PRC - continued

      Had these tax holidays and concessions not been available, the tax charge
      would have been higher by approximately RMB9,527,000, RMB8,605,000 and
      RMB20,800,000, representing RMB1.19, RMB1.07 and RMB2.60 per share for
      the years ended December 31, 1999, 1998 and 1997, respectively.

      These losses relate mainly to Blue Ribbon Marketing, which is allowed
      to mark-up the purchase cost of the Pabst Blue Ribbon beer or adjust the
      ex-factory prices as necessary in order to adequately cover the
      selling, advertising, promotional, distribution and administrative
      expenses incurred.  Blue Ribbon Marketing is not intended to contribute
      profits to the Group.  At December 31, 1999, tax losses available for
      carryforward in the PRC were RMB13,537,437, which can be carried
      forward for 5 years.

      British Virgin Islands

      The Company's subsidiaries incorporated in the British Virgin Islands
      ("BVI") are not taxed in BVI. Under current BVI laws, dividends and
      capital gains arising from the BVI subsidiaries' investments are not
      subject to income taxes, and no withholding tax is imposed on payments of
      dividends by the BVI subsidiaries to the Company.

      The provision for income taxes consists of the following:

                                                    Year ended December 31,
                                              ----------------------------------
                                                 1999        1998          1997
                                                 ----        ----          ----
                                                  RMB         RMB           RMB
      Current
        - PRC .............................   5,444,091    4,739,172          --
      Deferred
        - United States of America ........          --   (4,413,000)         --
                                              ---------   ----------    --------

                                              5,444,091      326,172          --
                                              =========   ==========    ========

      The reconciliation of effective income tax rates of the Group to the
      statutory income tax rate in the PRC is as follows:

                                                       Year ended December 31,
                                                    --------------------------
                                                    1999       1998       1997
                                                    ----       ----       ----

      Statutory tax rate .........................    33%        33%        33%
      Tax holidays and concessions ...............    82%        19%        --
      Profits not subject to tax..................    --         --     (1,054)%
      Losses in foreign jurisdiction exempt
        from tax..................................   (25)%      (14)%      164%
      Other expenses not deductible for tax
        purposes..................................   (58)%      (13)%       17%
      Change in valuation allowance...............   (79)%      (40)%      840%
      Reversal of tax on dividend declared by
        an associated company ....................    --         14%        --
                                                     ---        ---        ---
                                                     (47%)      (1%)        --
                                                     ===        ===        ===


      Deferred tax assets (liabilities) comprise the following:

                                                          1999          1998
                                                          RMB           RMB

      Deferred tax assets:
        Tax loss carryforward....................      14,179,479     9,129,131
        Accruals.................................      24,772,882    20,787,575
                                                      -----------   -----------
                                                       38,952,361    29,916,706
      Valuation allowance........................     (38,952,361)  (29,916,706)
                                                      -----------   -----------
      Net deferred tax assets....................               -             -
                                                      ===========   ===========

      Realization of the future tax benefits related to the deferred tax assets
      is dependent on many factors, including the Company's ability to generate
      taxable income within the net operating loss carryforward period.
      Management has considered these factors in reaching its conclusion as to
      the valuation allowance for financial reporting purposes. At December 31,
      1999 and 1998, valuation allowances have been established for the full
      amount of the tax loss carryforwards as it is more likely than not that
      the tax losses will not be realized.

                                    F-17

<PAGE>

CBR BREWING COMPANY, INC.

12.   SALES TAXES

      The Group is subject to three kinds of sales taxes, being value added tax
      ("VAT"), consumption tax and other sales taxes. The applicable VAT tax
      rate is 17% for beverage products sold in the PRC and nil for exported
      goods. The amount of VAT liability is determined by applying the
      applicable tax rate to the invoiced amount of goods sold less VAT paid on
      purchases made with the relevant supporting invoices. VAT is collected
      from customers by the Group on behalf of the PRC tax authorities and is
      therefore not charged to the consolidated statements of income. The
      applicable consumption tax rate in respect of brewery products sold by a
      brewing company is RMB220 per ton. No consumption tax is levied on
      wholesale trading of brewery products, on exported goods or on
      non-alcoholic beverage products. The other sales taxes are assessed as a
      percentage of consumption tax and VAT payable.

13.   ADVANCES FROM SHAREHOLDERS

      The advances, which were made in 1994 in connection with the acquisition
      of High Worth Brewery, bear no interest and are not repayable unless the
      Company obtains additional long-term debt or equity financing. Repayments
      of the advances are at the discretion of the Company and the shareholders
      have no right to demand repayment. The Company has the option of
      offsetting or repaying the advances or any part thereof by allotment of
      shares at par value in High Worth Holdings.

      The advances from the shareholders comprise:

<TABLE>
<CAPTION>
                                                                     1999         1998
                                                                     ----         ----
                                                                      RMB          RMB
<S>                                                              <C>          <C>
      Top Link Development Limited (1999: US$884,800; 1998:
        US$1,211,270) ........................................    7,344,000   10,054,000
      Redcliffe Holdings Limited (1999: US$884,800; 1998:
        US$1,211,270) ........................................    7,344,000   10,054,000
      West Coast Star Enterprises Limited (1999: US$2,654,400;
        1998: US$3,633,810) ..................................   22,031,000   30,160,000
                                                                 ----------   ----------

                                                                 36,719,000   50,268,000
                                                                 ==========   ==========
</TABLE>

                                    F-18

<PAGE>

CBR BREWING COMPANY, INC.

14.   FOREIGN CURRENCY EXCHANGE

      The People's Bank of China ("PBOC") and the State Exchange Administration
      Bureau jointly pronounced a new policy on foreign exchange transactions in
      the PRC. Commencing from December 1, 1998, foreign currency exchanges
      adjustment services for the foreign invested enterprises ("FIE"), which
      were previously provided by the SWAP centers within the PRC, will be
      cancelled. From this date onwards, FIEs can only transact foreign currency
      deals through those authorized banks in the PRC at the prevailing exchange
      rates quoted by the PBOC and, accordingly, all the SWAP centres presently
      established in the PRC will be closed.

      The current SWAP centre business was started by the PRC government in
      1980. FIEs could buy or sell foreign currencies at the SWAP centre at the
      market rates quoted by such centres. From December 1, 1998, FIEs can only
      buy or sell foreign currencies through the banks operated in the PRC at
      the prevailing exchange rates quoted by the PBOC. All these foreign
      currency transactions will then pass through the centralized banking
      system in the PRC. The exchange rates quoted by the banks will be the
      middle price of the bid price and ask price on the previous transaction
      date.

      The exchange rate of the RMB equivalent of US$1.00 as of December 31,
      1999, 1998 and 1997 was approximately RMB8.3.

15.   DISTRIBUTION OF PROFITS

      The Company's ability to pay dividends is primarily dependent on the
      Company receiving distributions from its PRC subsidiaries through High
      Worth Holdings.

      Pursuant to the relevant laws and regulations of Sino-foreign joint
      venture enterprises, the profits of High Worth Brewery, which are based on
      statutory financial statements, are available for distribution in the form
      of cash dividends after the PRC companies satisfy all tax liabilities,
      provide for losses in previous years, and make appropriations to reserve
      funds, as determined at the discretion of the board of directors in
      accordance with the PRC accounting standards and regulations.

      As stipulated by the relevant laws and regulations for enterprises
      operating in the PRC, Zhaoqing Brewery and Blue Ribbon Marketing are
      required to make annual appropriations to two reserve funds consisting of
      the statutory surplus and collective welfare funds. In accordance with the
      relevant PRC regulations and the companies' articles of association, the
      companies are required to allocate a certain percentage of their profits
      after taxation, as determined in accordance with the PRC accounting
      standards applicable to the companies, to the statutory surplus reserve
      until such reserve reaches 50% of the registered capital of the companies.
      Based on the business licences, the registered capital of Zhaoqing Brewery
      and Blue Ribbon Marketing is RMB33,670,000 and RMB10,000,000,
      respectively. Subject to certain restrictions as set out in the relevant
      PRC regulations and the companies' articles of association, the statutory
      surplus reserve may be distributed to equity holders in the form of bonus
      issues and/or dividends when such reserve exceeds 25% of the registered
      capital of the companies.

                                    F-19

<PAGE>

CBR BREWING COMPANY, INC.

15.   DISTRIBUTION OF PROFITS - continued

      No appropriations to these reserve funds were made by Zhaoqing Brewery and
      Blue Ribbon Marketing for 1999, 1998 and 1997, as Zhaoqing Brewery was
      acting as a nominee of High Worth Brewery from October 31, 1994 onwards
      and Blue Ribbon Marketing generated losses in those financial years.

      High Worth Brewery and Blue Ribbon Noble are also required to make
      appropriations to a general reserve fund, an enterprise development fund
      and an employee welfare and incentive fund, in which the percentage of
      annual appropriations are subject to the joint venture agreement. The
      employee welfare and incentive fund is charged to the statement of income.
      The other appropriations are accounted for as reserve funds in the balance
      sheet and are not available for distribution as dividends to the joint
      venture partners of the companies. Under the joint venture agreement, the
      board of directors shall determine the appropriations with regard to the
      economic situation of the companies. The percentage of annual
      appropriations to a general reserve fund, an enterprise development fund
      and an employee welfare and incentive fund of Blue Ribbon Noble for 1999
      has been determined by the board of directors and the appropriation has
      been reported in its statutory financial statements.

      As described in note 2 to the consolidated financial statements, the net
      income as reported in the US GAAP financial statements differs from that
      as reported in the statutory financial statements. In accordance with the
      relevant laws and regulations in the PRC, the profits available for
      distribution are based on the statutory financial statements. If the
      Company has foreign currency available after meeting its operational
      needs, the Company may make its profit distributions in foreign currency
      to the extent it is available. Otherwise, it will be necessary to obtain
      approval and convert such distributions at the exchange centers.

      On November 25, 1997, a first dividend totalling RMB55,375,595 was
      declared by High Worth Brewery and payable to Blue Ribbon Group, of which
      RMB15,000,000 was paid in 1997 and the remaining RMB40,375,595 was paid
      during 1998.

      On November 23, 1998, a second dividend totalling RMB20,638,685 was
      declared by High Worth Brewery and payable to Blue Ribbon Group, of which
      RMB5,000,000 was paid during 1998 and the remaining RMB15,638,685 was paid
      during 1999.

      On July 28, 1999, the Board of Directors of High Worth Brewery declared a
      third dividend distribution entitling High Worth Holdings to a dividend of
      approximately RMB31,000,000, which was based on PRC GaaP financial
      statements. The dividend has been distributed by installments in order to
      avoid any disruption to High Worth Brewery's normal operating cash flow
      position.

16.   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

      (a)   Interest paid during the years ended December 31, 1999, 1998 and
            1997 was RMB14,689,647, RMB9,507,873 and RMB15,503,189,
            respectively.

      (b)   In 1998, Zao Yang Brewery contributed RMB13,176,000 by means of
            property, plant and equipment to Zao Yang High Worth Brewery as
            capital contribution.

      (c)   Income tax paid during the years ended December 31, 1999, 1998 and
            1997 was RMB666,884, nil and nil, respectively.

                                    F-20

<PAGE>

CBR BREWING COMPANY, INC.

17.   RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

      (a)   Sales of beer products

            During the year ended December 31, 1997, sales to Blue Ribbon Group
            and its group of companies amounted to RMB8,773,809. No sales were
            made in 1999 or 1998.

      (b)   Purchases of packing materials

            During the years ended December 31, 1999, 1998 and 1997, the Group
            purchased packing materials from Blue Ribbon Group and its group of
            companies amounting to RMB29,840,747, RMB37,631,444 and
            RMB42,081,917, respectively.

      (c)   Purchases of beer products

            During the years ended December 31, 1999, 1998 and 1997, the Group
            purchased beer products from Blue Ribbon Noble amounting to
            RMB537,010,133, RMB621,380,760 and RMB675,247,962, respectively, for
            resale.

            During the years ended December 31, 1999, 1998 and 1997, the Group
            purchased beer products from Sichuan High Worth Brewery amounting to
            RMB21,458,166, RMB35,072,362 and RMB33,052,735, respectively, for
            resale.

      (d)   Royalty fee

            During the years ended December 31, 1999, 1998 and 1997, the royalty
            fee of RMB6,568,634, RMB6,886,720 and RMB7,086,075, respectively,
            was payable to Blue Ribbon Group in respect of the right to use
            Pabst trademarks in the PRC.

      (e)   Management fee

            The management fee paid to Blue Ribbon Group for years ended
            December 1999, 1998 and 1997 was nil, RMB3,780,000 and RMB3,780,000,
            respectively.

      (f)   Interest income

            Interest income from Blue Ribbon Group for the year ended December
            31, 1997 was RMB5,535,977. No interest income was receivable in 1999
            or 1998.

      (g)   Interest expense

            Interest expense for the year ended December 31, 1997 included
            RMB3,859,087 payable to Blue Ribbon Group and RMB1,717,133 payable
            to other related companies. No amounts were payable in 1999 or 1998.

      (h)   Amounts due from related companies

            The amounts due from related companies mainly represented receivable
            balances from Blue Ribbon Group and its group of companies. The
            balances with Blue Ribbon Group and its group of companies
            principally represented trade deposits received on behalf of the
            Group and expenses paid on their behalf. From December 31, 1998
            onwards, the balances with related companies are unsecured,
            interest-free and repayable on demand.

                                    F-21

<PAGE>

CBR BREWING COMPANY, INC.

17.   RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - continued

      (i)   Amounts due to related companies

            As of December 31, 1999 and 1998, the amounts due to related
            companies consist of payable balances to the following companies:

<TABLE>
<CAPTION>
                                                                   As of December 31,
                                                            ----------------------------------
                                                                1999                1998
                                                                ----                ----
                                                                 RMB                 RMB
                                                            (in millions)       (in millions)
<S>                                                             <C>                 <C>
            American National Can (Zhaoqing) Co., Ltd.
              ("American National Can") ...............          6.5                 9.4
            Blue Ribbon Beverage Co., Ltd. ("Beverage")           --                 1.8
            Blue Ribbon Group .........................           --                15.6
            Sichuan High Worth Brewery ................          4.5                 4.2
            Other subsidiaries and associated companies
              of Blue Ribbon Group ....................          0.5                 0.1
                                                                ----                ----

                                                                11.5                31.1
                                                                ====                ====
</TABLE>

            American National Can and Beverage are companies in which Blue
            Ribbon Group has equity interests.

            Sichuan High Worth Brewery is a company in which the Company had a
            9% effective interest.

            The balances with group companies of Blue Ribbon Group, represented
            the balances arising from the purchases of raw materials from them.

            The balances are unsecured, interest-free and repayable on demand as
            of the balance sheet date.

      (j)   Advances from shareholders

            The details are provided in note 13.

                                    F-22

<PAGE>

CBR BREWING COMPANY, INC.

18.   STOCK OPTION PLAN AND COMMON STOCK CHANGES

      Stock Option Plan -

      On January 2, 1998, the 1998 Stock Option Plan (the "Plan") was adopted by
      the majority of the shareholders of the Company and approved by the Board
      of Directors. The Plan provides for the granting of stock options from
      time to time to eligible persons to purchase an aggregate of up to 800,000
      shares of Class A Common Stock, as either incentive stock options ("ISOs")
      or nonqualified stock options ("NSOs"). The exercise price of all ISOs
      will be equal to the fair market value of a share of common stock on the
      date the option is granted, except that in the case of ISOs granted to any
      person possessing more than 10% of the total combined voting power of all
      classes of stock of the Company or any affiliate, the price will be not
      less than 110% of such fair market value.

      On January 2, 1998, options to purchase 210,000 shares of Class A Common
      Stock at an exercise price of US$3.87 per share were granted to four
      directors and five employees, and options to purchase 70,000 shares of
      Class A Common Stock at an exercise price of US$4.26 were granted to two
      directors, each of whom possesses indirectly more than 10% of the total
      combined voting power of all classes of common stock of the Company.
      Amounts varying from 50% to 70% of such stock options vested on April 1,
      1998, and the remainder stock vest in varying amounts through April 1,
      2000. The stock options expire on dates ranging from December 31, 2001
      through December 31, 2005.

      Option activity for the Plan is summarized as follows:

                                                           Outstanding
                                                             options
                                                             -------
                                                                Weighted average
                                                        Number   exercise price
                                                      of shares    per share
                                                      ---------    ---------

      Outstanding January 1, 1998...................        --       US$  --
      Granted ......................................   280,000          3.97
                                                       -------       -------

      Outstanding at December 31, 1998 .............   280,000          3.97
      Cancelled ....................................   (42,000)         3.87
                                                       -------       -------

      Outstanding at December 31, 1999 .............   238,000       US$3.98
                                                       =======       =======

                                    F-23

<PAGE>

CBR BREWING COMPANY, INC.

18.   STOCK OPTION PLAN AND COMMON STOCK CHANGES - continued

      Additional information on options outstanding at December 31, 1999 is as
      follows:

<TABLE>
<CAPTION>
                                                                         Options
                                                                     exercisable as
                                        Options outstanding          of December 31,
                                      as of December 31, 1999             1999
                                      -----------------------             ----
                                                       Weighted
                                                        average
                                                       remaining
                                    Number            contractual
      Exercise prices             outstanding        life (years)
      ---------------             -----------        ------------
      <S>                           <C>                  <C>            <C>
      US$4.26.................       70,000                 2            52,500
      US$3.87.................      168,000                 6           136,800
                                    -------             -----           -------

                                    238,000              4.82           189,300
                                    =======             =====           =======
</TABLE>

      At December 31, 1999 and 1998, 562,000 and 520,000 options, respectively,
      were available for future grant under the Plan.

      The stock options issued to non-employee directors were accounted for
      pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation". Under
      SFAS No. 123, the fair value of stock options is calculated according to
      the Black-Scholes pricing model with the following assumptions:

      Expected life of options......................................3 - 5 years
      Risk-free interest rate.......................................6.75%
      Expected volatility of underlying stock.......................100%
      Expected dividends............................................0%

      The total compensation expense for stock options issued to non-employee
      directors under the Plan recognized in the consolidated statements of
      income for the years ended December 31, 1999 and 1998 was RMB697,801 and
      RMB2,218,706, respectively. The Black-Scholes option pricing model
      requires the input of highly subjective assumptions, including the
      expected volatility of the Company's stock price. Because changes in
      subjective input assumptions can materially affect the fair value
      estimate, in management's opinion, the existing model does not necessarily
      provide a reliable single measure of the fair value of the stock options.

      The Company continues to follow APB No. 25 "Accounting for Stock Issued to
      Employees", in accounting for its stock options issued to officers and
      employees. The fair value of the options granted during the year was
      estimated on the date of grant using the Black-Scholes pricing model with
      the assumptions listed above. Had compensation costs for the grants been
      determined under SFAS No. 123, the Company would have recorded RMB637,067
      and RMB2,951,117 as additional compensation expense for the year ended
      December 31, 1999 and 1998, respectively, resulting in the pro forma net
      profit of RMB23,018,035 and RMB18,440,393 and earnings per share (basic
      and diluted) of RMB2.87 and RMB2.30, respectively.

                                    F-24

<PAGE>

CBR BREWING COMPANY, INC.

18.   STOCK OPTION PLAN AND COMMON STOCK CHANGES - continued

      Consulting Contract

      On March 2, 1998, the Company entered into a contract with Worldwide
      Corporate Finance, a corporate financial consulting company, to provide
      financial and business consulting services to the Company. The Company
      paid an initial non-refundable retainer by issuing 10,000 shares of Class
      A Common Stock, which were recorded as a charge to operations at their
      estimated fair market value of RMB240,700. The contract expired on August
      18, 1998 without any further compensation being paid to Worldwide
      Corporate Finance.

19.   RETIREMENT PLAN

      As stipulated by the PRC government regulations, High Worth Brewery and
      Blue Ribbon Marketing have defined contribution retirement plans for all
      their full-time staff. During the years ended December 31, 1999, 1998 and
      1997, the monthly contributions of both High Worth Brewery and Blue
      Ribbon Marketing for full-time employees were calculated at 14.6% and 2%,
      respectively, of the basic salaries of the full-time employees. The
      pension costs expensed by the PRC group companies during the years ended
      December 31, 1999, 1998 and 1997 amounted to RMB2,507,459, RMB3,437,961
      and RMB3,125,419, respectively.

      The Company did not have any retirement plan in operation until June 1,
      1998. The monthly contribution of the Company for full-time staff is at
      7% of the basic salary. The pension costs expensed by the Company were
      RMB177,919 and RMB114,211 in 1999 and 1998, respectively.

20.   FINANCIAL INSTRUMENTS

      The carrying amounts reported in the balance sheets at December 31, 1999
      and 1998 for current assets and current liabilities, qualifying as
      financial instruments approximate their fair values because of the short
      maturity of such instruments. Cash denominated in foreign currency has
      been translated at the applicable unified exchange rate.

      The fair value of the shareholders' advances is not able to be determined
      because no comparable borrowing terms are currently available.

                                    F-25

<PAGE>

CBR BREWING COMPANY, INC.

21.   CONCENTRATION OF RISKS

      The Company's operating assets and primary source of income and cash flows
      are its interest in subsidiaries and associated company in the PRC. The
      PRC economy has, for many years, been a centrally-planned economy,
      operating on the basis of annual, five-year and ten-year state plans
      adopted by central PRC governmental authorities which set out national
      production and development targets. The PRC government has been pursuing
      economic reforms since it first adopted its "open-door" policy in 1978.
      There is no assurance that the PRC government will continue to pursue
      economic reforms or that there will not be any significant change in its
      economic or other policies, particularly in the event of any change in the
      political leadership of, or the political, economic or social conditions
      in, the PRC. There is also no assurance that the Group will not be
      adversely affected by any such change in governmental policies or any
      unfavorable change in the political, economic or social conditions, the
      laws or regulations or the rate or method of taxation in the PRC.

      As many of the economic reforms which have been or are being implemented
      by the PRC government are unprecedented or experimental, they may be
      subject to adjustment or refinement which may have adverse effects on the
      Group. Further, through state plans and other economic and fiscal
      measures, it remains possible for the PRC government to exert significant
      influence on the PRC economy.

      The sale and distribution of products under the "Pabst Blue Ribbon"
      brandname in 1999, 1998 and 1997 accounted for 98%, 99% and 99% of the
      Group's turnover, respectively. The Group purchases Pabst Blue Ribbon beer
      from Blue Ribbon Noble and is heavily dependent on Blue Ribbon Noble.
      Stoppages of production and/or supply from Blue Ribbon Noble for reasons
      within or outside their control could affect the Group's operation,
      although so far the Group has never encountered any problems in securing
      adequate supplies from Blue Ribbon Noble.

      The Group currently uses foreign currency to pay for imported raw
      materials. In addition, the Group obtained foreign currency loans from
      shareholders to acquire the subsidiaries in the PRC and obtained foreign
      currency loans for working capital purposes.

      The Group's financial instruments that are exposed to concentration of
      credit risk consist primarily of cash and accounts receivable from
      customers. Cash is maintained with major banks in the PRC. The Group's
      business activity is with customers in the PRC. The Group periodically
      performs credit analysis and monitors the financial condition of its
      clients in order to minimize credit risk.

                                    F-26

<PAGE>

CBR BREWING COMPANY, INC.

22.   COMMITMENTS AND CONTINGENCIES

      Licensing and related matters

      Blue Ribbon Group entered into licensing arrangements with Pabst Brewing
      Company whereby Blue Ribbon Group was granted the exclusive right to
      produce and market products under four specific Pabst trademarks in the
      PRC, the non-exclusive right to market products in other Asian countries
      except Hong Kong, Macau, Japan and South Korea, and the right to
      sublicense the use of the trademarks to any other enterprise in the PRC.
      Pursuant to the terms of the sublicense agreement, High Worth Brewery was
      granted by Blue Ribbon Group the right in the Guangdong Province of the
      PRC to use two specific Pabst trademarks in its production, promotion,
      distribution and sale of beer under such trademarks. In addition, Blue
      Ribbon Group also granted the right to use two specific Pabst trademarks
      for the production, promotion, distribution and sale of beer to High Worth
      Brewery or those enterprises owned by High Worth Brewery which are located
      outside Guangdong Province in the PRC. The sublicense agreement is valid
      until November 6, 2003. In consideration for the sublicense granted, High
      Worth Brewery is committed to pay Blue Ribbon Group a royalty fee of
      US$11.70 for each ton produced.

      A provisional agreement, subject to governmental approval, was made on May
      10, 1995 among the Company and a subsidiary, the group companies of Noble
      China Inc., and Blue Ribbon Group to the effect that:

      (a)   High Worth Brewery was entitled to be granted from Blue Ribbon Group
            the right to brew and sell beer under the Pabst Blue Ribbon label
            produced in its brewing facilities up to a maximum production
            capacity of 100,000 tons per annum.

      (b)   High Worth Brewery and/or companies that High Worth Brewery has an
            interest in are entitled to be granted a sublicense from Blue Ribbon
            Group with the right to produce and sell beer under the Pabst Blue
            Ribbon label in the Guangdong Province of the PRC (an "Additional
            Facility") to a maximum production capacity of 300,000 tons per
            annum.

            In the event that High Worth Brewery desires to obtain a sublicense
            for an Additional Facility, Goldjinsheng has the right to purchase
            up to a 40% interest in such Additional Facility. The purchase price
            for such interest shall be the actual cost of such Additional
            Facility multiplied by the percentage interest that Goldjinsheng
            elects to purchase.

      (c)   A proposed new marketing company ("New Marketing Company"), owned 8%
            by Blue Ribbon Group, 52% by High Worth Brewery and 40% by
            Goldjinsheng, shall be formed to handle and organize the sales of
            Pabst Blue Ribbon beer produced by Zhaoqing Brewery and Blue Ribbon
            Noble. Zhaoqing Brewery and Blue Ribbon Noble will each create a
            separate distribution company or division of their own. The
            respective distribution companies will each appoint the New
            Marketing Company as their sole and exclusive agent to market Pabst
            Blue Ribbon beer in the PRC.

            Subsequent to the signing of the provisional agreement, the
            Company, Blue Ribbon Group and Goldjinsheng have attempted to
            complete the respective separate definitive agreements.  In
            December 1996, Blue Ribbon Group and Goldjinsheng advised the
            Company that they intended to modify some of the terms of the
            provisional agreement and to propose incorporating those
            modifications in the respective separate definitive agreements.
            In addition, the negotiation process was interrupted by the
            previously described Sichuan Brewery issue in 1997 and 1998 and
            the Pabst trademark issue in 1999.  The Company believes that the
            delays in completing the separate definitive agreements will not
            have a material effect on the validity of the terms and provisions
            contained in the provisional agreement.

                                    F-27

<PAGE>

CBR BREWING COMPANY, INC.

22.   COMMITMENTS AND CONTINGENCIES - continued

      Another agreement was made among Goldjinsheng, Blue Ribbon Group and Blue
      Ribbon Noble on May 10, 1995 to the effect that Blue Ribbon Noble agreed
      to pay Blue Ribbon Group a management fee of RMB2,035,000 per annum for a
      period of five years commencing January 1, 1995.

      An agreement was made between Blue Ribbon Group and High Worth Brewery on
      December 31, 1995 to the effect that High Worth Brewery agreed to pay Blue
      Ribbon Group a management fee of RMB3,780,000 per annum for a period of
      three years commencing on January 1, 1996 (see note 17(e)).

      In November 1997, Blue Ribbon Group advised the Company that it believed
      it had the right to brew Pabst Blue Ribbon beer in the PRC either by
      itself or through one or more of its affiliates. Blue Ribbon Group
      therefore established a wholly-owned subsidiary, Sichuan Brewery in E Mei
      Shan, Le Shang City, Sichuan Province of the PRC for the production of
      Pabst Blue Ribbon beer in 1998.

      On December 30, 1997, High Worth Brewery, Blue Ribbon Marketing, Blue
      Ribbon Group and Sichuan Brewery reached an out of court settlement
      ("Settlement Agreement"). The Settlement Agreement, signed by all parties
      involved and witnessed by the High Court of Guangdong Province, confirmed
      that:

      (i)   All parties agreed that High Worth Brewery will serve as the core
            organization for managing the production and operation of the Pabst
            Blue Ribbon beer business in the PRC. A management committee will be
            set up under the Board of Directors of High Worth Brewery to
            coordinate and manage the procurement, production, sales and future
            development of all Pabst Blue Ribbon beer producing enterprises in
            the PRC.

      (ii)  Blue Ribbon Marketing will act as the single entity to unify and
            coordinate all the sales of Pabst Blue Ribbon beer in the PRC. All
            of the Pabst Blue Ribbon beer products produced by High Worth
            Brewery, Blue Ribbon Noble and any other new joint ventures set up
            by High Worth Brewery will be marketed by Blue Ribbon Marketing
            according to the arrangement of the management committee.

      (iii) Sichuan Brewery will be restructured and renamed as Sichuan Blue
            Ribbon High Worth Brewery E Mei Limited ("Sichuan High Worth"). High
            Worth Brewery, Blue Ribbon Group and E Mei Brewery will own 51%, 20%
            and 29%, respectively, of the equity in Sichuan High Worth. The
            existing assets in Sichuan Brewery are to be revalued to determine
            the fair market value prior to the formal transfer of share equity.

      On December 31, 1998, Blue Ribbon Group transferred all of its equity
      interest in Sichuan Brewery to E Mei Brewery and Wai Shun, respectively.
      Wai Shun is an unaffiliated Hong Kong company.

                                    F-28

<PAGE>

CBR BREWING COMPANY, INC.

22.   COMMITMENTS AND CONTINGENCIES - continued

      On January 19, 1999, an Equity Transfer Agreement was signed by High Worth
      Brewery, E Mei Brewery and Wai Shun with the following major terms and
      provisions:

      (i)   High Worth Brewery has been granted, without payment of any
            consideration, a 15% equity interest in Sichuan Brewery. The 15%
            interest is non-transferable unless High Worth Brewery pays a
            subscription of RMB9,414,000 or subsequently exercises its option
            referred to in (ii) below. The remaining 55% and 30% interest in
            Sichuan Brewery are owned by E Mei Brewery and Wai Shun,
            respectively.

      (ii)  High Worth Brewery is granted a three-year option to increase its
            equity to 51% at a fixed cost.

      On June 5, 1999, a formal Joint Venture Agreement was signed among E Mei
      Brewery, High Worth Brewery and Wai Shun to form Sichuan Blue Ribbon
      Brewery High Worth Ltd. ("Sichuan High Worth Brewery"). The business of
      Sichuan Brewery was transferred to Sichuan High Worth Brewery. The total
      registered and paid up capital of Sichuan High Worth Brewery was
      RMB51,221,258. High Worth Brewery's 15% equity interest is
      consideration-free but is entitled to share in the profits of Sichuan High
      Worth Brewery. The Joint Venture Agreement and the relevant legal
      documents have been approved by local government authorities. Sichuan High
      Worth Brewery is currently producing Pabst Blue Ribbon beer.

      Noble China Inc., a public company listed on the Toronto Stock Exchange,
      issued a press release on May 27, 1999 to announce that it had acquired
      from Pabst Brewing Company the exclusive rights to brew and distribute
      Pabst Blue Ribbon beer throughout China for a period of 30 years from 2003
      to 2033. Noble China Inc. has issued subsequent press releases reiterating
      this information. Although the Company to date has been unable to verify
      whether such a license has in fact been granted to Noble China Inc., the
      terms of any such license, and whether it is subject to any conditions,
      the Company believes that some form of a license was granted to Noble
      China Inc. by Pabst Brewing Company. Management has consulted with legal
      counsel regarding the legitimacy of the purported license and the
      Company's potential responses. In addition, management has consulted with
      Guangdong Blue Ribbon, the owner of the Pabst Blue Ribbon trademark in
      China, regarding potential responses, and has met with representatives of
      Noble China Inc. in an attempt to explore a potential settlement.

      Management of the Company has requested that Guangdong Blue Ribbon take
      appropriate action to protect its rights and its sub-licensees' rights to
      utilize the Pabst Blue Ribbon trademark in China. The Company has been
      advised that Guangdong Blue Ribbon is still evaluating the situation and
      has not yet determined how it will respond to this matter. Once Guangdong
      Blue Ribbon has responded, the Company expects to be in a position to
      evaluate and revise its future business plan and strategy accordingly. The
      Company is currently unable to predict the effect that this development
      may have on future operations. However, if Noble China Inc. has obtained
      the exclusive right to brew and distribute Pabst Blue Ribbon beer in China
      beginning in 2003, the inability of the Company to obtain a sub-license
      from Noble China Inc. on acceptable terms and conditions to allow the
      Company to continue to produce and distribute Pabst Blue Ribbon beer in
      China would have a material adverse effect on the Company's future results
      of operations, financial position and cash flows.

                                    F-29

<PAGE>

CBR BREWING COMPANY, INC.

22.   COMMITMENTS AND CONTINGENCIES - continued

      Operating lease commitments

      The Group leases premises under various operating leases which do not
      contain any renewal and escalation clauses. Rental expense under operating
      leases was RMB1,851,307, RMB374,138 and RMB257,776 in 1999, 1998 and 1997,
      respectively.

      As of December 31, 1999, the Company was obliged under operating leases
      requiring minimum rentals as follows:

                                                                         RMB
      Year ending December 31,
      2000...........................................................  472,512
      2001...........................................................  196,880
                                                                       -------

                                                                       669,392
                                                                       =======

                                    F-30

<PAGE>





                        ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                        (Registered in the People's Republic of China)

                        Report and Financial Statements
                        For the year ended December 31, 1999



<PAGE>

ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
(Registered in the People's Republic of China)

REPORT AND FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

CONTENTS                                                                                                PAGES

<S>                                                                                                     <C>
REPORT OF INDEPENDENT AUDITORS............................................................              F - 1


BALANCE SHEETS............................................................................              F - 2


STATEMENTS OF INCOME......................................................................              F - 3


STATEMENTS OF EQUITY......................................................................              F - 4


STATEMENTS OF CASH FLOWS..................................................................              F - 5


NOTES TO FINANCIAL STATEMENTS.............................................................              F - 6

</TABLE>

                                   F-1

<PAGE>




REPORT OF INDEPENDENT AUDITORS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
CBR BREWING COMPANY, INC.

We have audited the accompanying balance sheets of Zhaoqing Blue Ribbon Brewery
Noble Ltd. as of December 31, 1999 and 1998, and the related statements of
income, equity and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of Zhaoqing Blue Ribbon Brewery Noble Ltd. as
of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles in the United States of
America.

We draw your attention to note 18 to the financial statements which state that
the Company is exposed to certain risks through its operations in the People's
Republic of China.



/s/ Deloitte Touche Tohmatsu
Hong Kong
March 31, 2000

                                   F-2

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      As of December 31,
                                                                      --------------------------------------------------
                                                                       1999                  1999                  1998
                                                                       ----                  ----                  ----
                                                                        US$                   RMB                   RMB
                                                                     (Note 3)
                                                        ASSETS
<S>                                                                  <C>                   <C>                   <C>
Current assets:
  Cash and cash equivalents.................................          10,652,927           88,419,292            93,849,941
  Accounts receivable, net of allowance for
    doubtful accounts of RMB2,137,528 and
    RMB2,218,303 for 1999 and 1998,
    respectively (note 4)...................................                -                    -                  185,954
  Bills receivable (note 5).................................           8,248,795           68,465,000            41,363,000
  Inventories (note 6)......................................           6,770,646           56,196,361            35,132,183
  Prepayments and deposits..................................             201,591            1,673,213             1,867,440
  Amounts due from related companies, net of allowance
    for doubtful accounts of Nil and RMB6,000,000
    for 1999 and 1998, respectively (note 15a)..............          23,904,165          198,404,570           218,728,588
                                                                     -----------          -----------           -----------

Total current assets........................................          49,778,124          413,158,436           391,127,106

Property, plant and equipment, net (note 7).................          51,192,008          424,893,664           450,201,615
                                                                     -----------          -----------           -----------

Total assets................................................         100,970,132          838,052,100           841,328,721
                                                                     ===========          ===========           ===========

<CAPTION>
                                                LIABILITIES AND EQUITY
<S>                                                                  <C>                   <C>                   <C>
Current liabilities:
  Accounts payable..........................................           1,661,704           13,792,141            34,908,825
  Accrued liabilities.......................................           4,203,994           34,893,148            42,274,479
  Employee welfare and incentive fund.......................           3,418,760           28,375,711            15,466,258
  Amounts due to related companies (note 15b)...............             911,579            7,566,108            13,491,827
  Sales taxes payable (note 9)..............................           1,684,897           13,984,644            57,675,414
  Income taxes payable (note 8).............................           6,668,312           55,346,988            21,196,523
                                                                     -----------          -----------           -----------

Total current liabilities...................................          18,549,246          153,958,740           185,013,326
                                                                     -----------          -----------           -----------

Long-term liabilities:
  Deferred income taxes (note 8)............................             843,373            7,000,000             4,700,000
                                                                     -----------          -----------           -----------

Commitments and contingencies (note 19)..............

Shareholders' equity:
Contributed capital.........................................          57,342,169          475,940,000           475,940,000
General reserve and enterprise development funds
  (note 12).................................................           3,907,102           32,428,949            26,762,766
Retained earnings (note 13).................................          20,328,242          168,724,411           148,912,629
                                                                     -----------          -----------           -----------

Total equity................................................          81,577,513          677,093,360           651,615,395
                                                                     -----------          -----------           -----------

Total liabilities and equity................................         100,970,132          838,052,100           841,328,721
                                                                     ===========          ===========           ===========
</TABLE>

               See accompanying notes to the financial statements

                                   F-3

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                            ----------------------------------------------------------
                                                            1999              1999             1998              1997
                                                            ----              ----             ----              ----
                                                             US$               RMB              RMB               RMB
                                                          (Note 3)
<S>                                                      <C>              <C>               <C>              <C>
Sales:
  Related parties (note 15c)...................          64,704,164       537,044,558       621,662,823      677,910,031
  Unrelated parties............................               7,540            62,589            39,574             -
                                                        -----------       -----------       -----------      -----------

                                                         64,711,704       537,107,147       621,702,397      677,910,031
Sales taxes (note 9)...........................          (2,807,127)      (23,299,155)      (37,232,677)     (38,231,436)
                                                        -----------       -----------       -----------      -----------

Net sales......................................          61,904,577       513,807,992       584,469,720      639,678,595
Cost of sales, including inventory purchased
  from related companies of RMB86,716,508,
  RMB87,441,651 and RMB92,468,404 in 1999,
  1998 and 1997, respectively, and royalty fee
  paid to a related company of RMB12,033,486,
  RMB13,882,131 and RMB14,317,306 in 1999,
  1998 and 1997, respectively (note 15c).......         (38,125,014)     (316,437,623)     (407,211,273)    (460,616,470)
                                                        -----------       -----------       -----------      -----------

Gross profit...................................          23,779,563       197,370,369       177,258,447      179,062,125
Selling, general and administrative expenses,
  including management fee paid to a related
  company of RMB2,035,000 in 1999, 1998 and
  1997 (note 15c)..............................          (3,883,433)      (32,232,488)      (47,955,747)     (36,193,085)
                                                        -----------       -----------       -----------      -----------

Operating income...............................          19,896,130       165,137,881       129,302,700      142,869,040
Interest income................................             198,840         1,650,372         2,406,192        2,078,006
Other income, including rental income received
  from a related company of RMB2,120,012 and
  RMB1,568,864 in 1999 and 1998,  respectively
  (note 15c) ..................................             550,441         4,568,662         2,819,195             -
Interest expense...............................              (6,256)          (51,926)          (73,506)      (1,458,454)
                                                        -----------       -----------       -----------      -----------

Income before income taxes.....................          20,639,155       171,304,989       134,454,581      143,488,592
Income taxes (note 8)..........................          (5,167,115)      (42,887,055)       (8,226,523)     (21,331,616)
                                                        -----------       -----------       -----------      -----------

Net income.....................................          15,472,040       128,417,934       126,228,058      122,156,976
                                                        ===========       ===========       ===========      ===========
</TABLE>

               See accompanying notes to the financial statements

                                   F-3


<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

                              STATEMENTS OF EQUITY

<TABLE>
<CAPTION>
                                                                        General
                                                                      reserve and
                                                                      enterprise
                                                  Contributed         development           Retained
                                                    Capital              funds              earnings             Equity
                                                    -------              -----              --------             ------
                                                      RMB                 RMB                  RMB                RMB
                                                   (Note 10)           (Note 12)            (Note 13)
<S>                                               <C>                 <C>                   <C>                 <C>
Balance at January 1, 1997.................          475,940,000          14,506,926         116,482,394        606,929,320
Net income for the year....................                 -                   -            122,156,976        122,156,976
Appropriation of:
  Reserve..................................                 -              6,536,953          (6,536,953)              -
  Dividend.................................                 -                   -            (86,033,779)       (86,033,779)
                                                     -----------          ----------         -----------        -----------

Balance at December 31, 1997...............          475,940,000          21,043,879         146,068,638        643,052,517
Net income for the year....................                 -                   -            126,228,058        126,228,058
Appropriation of:
  Reserve..................................                 -              5,718,887          (5,718,887)              -
  Dividend.................................                 -                   -           (117,665,180)      (117,665,180)
                                                     -----------          ----------         -----------        -----------

Balance at December 31, 1998...............          475,940,000          26,762,766         148,912,629        651,615,395
Net income for the year....................                 -                   -            128,417,934        128,417,934
Appropriation of:
  Reserve..................................                 -              5,666,183          (5,666,183)              -
  Dividend.................................                 -                   -           (102,939,969)      (102,939,969)
                                                     -----------          ----------         -----------        -----------

Balance at December 31, 1999...............          475,940,000          32,428,949         168,724,411        677,093,360
                                                     ===========          ==========         ===========        ===========

Translated to US$
Balance at December 31, 1999
  (note 3).................................           57,342,169           3,907,102          20,328,242         81,577,513
                                                     ===========          ==========         ===========        ===========
</TABLE>

               See accompanying notes to the financial statements

                                    F-5

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                              -----------------------------------------------------------
                                                               1999             1999             1998              1997
                                                               ----             ----             ----              ----
                                                                US$              RMB              RMB               RMB
                                                             (Note 3)
<S>                                                          <C>             <C>               <C>              <C>
Cash flows from operating activities:
Net income.......................................            15,472,040      128,417,934       126,228,058      122,156,976
Adjustments to reconcile net income to net cash
  provided by operating activities:
Depreciation and amortization....................             4,236,017       35,158,936        38,035,235       34,609,646
Deferred income taxes............................               277,108        2,300,000        (7,500,000)       3,200,000
Allowance for doubtful accounts..................              (732,623)      (6,080,775)        7,178,852       (1,207,252)
Changes in operating assets and liabilities:
(Increase) decrease in -
Accounts receivable..............................                32,136          266,729           991,442        6,074,263
Bills receivable.................................            (3,265,301)     (27,102,000)      (16,613,000)     (24,750,000)
Inventories......................................            (2,537,853)     (21,064,178)          724,815        4,720,953
Prepayments and deposits.........................                23,401          194,227        10,808,407       27,529,956
Amounts due from related companies...............             3,171,568       26,324,018        (7,649,067)     (40,728,721)
Increase (decrease) in -
Accounts payable and accrued liabilities.........            (3,433,496)     (28,498,015)      (13,538,730)      (3,387,934)
Employee welfare and incentive fund..............             1,555,356       12,909,453         3,558,018        5,690,931
Amounts due to related companies.................              (713,942)      (5,925,719)      (35,211,563)      19,416,572
Sales taxes payable..............................            (5,263,948)     (43,690,770)       (3,900,548)      11,032,665
Income taxes payable.............................             4,114,514       34,150,465        10,282,922       (2,121,820)
                                                            -----------      -----------       -----------      -----------

Net cash provided by operating activities........            12,934,977      107,360,305       113,394,841      162,236,235
                                                            -----------      -----------       -----------      -----------

Cash used in investing activities:
Purchases of property, plant and equipment.......            (1,186,866)      (9,850,985)      (23,537,127)     (65,828,674)
                                                            -----------      -----------       -----------      -----------

Cash flows from financing activities:
Repayment of bank loans..........................                  -                -           (1,500,000)     (12,000,000)
Dividend paid....................................           (12,402,406)    (102,939,969)     (116,820,447)     (86,033,779)
                                                            -----------      -----------       -----------      -----------

Cash used in financing activities................           (12,402,406)    (102,939,969)     (118,320,447)     (98,033,779)
                                                            -----------      -----------       -----------      -----------

Net decrease in cash and cash equivalents........              (654,295)      (5,430,649)      (28,462,733)      (1,626,218)
Cash and cash equivalents  at beginning of year..            11,307,222       93,849,941       122,312,674      123,938,892
                                                            -----------      -----------       -----------      -----------

Cash and cash equivalents at end of year.........            10,652,927       88,419,292        93,849,941      122,312,674
                                                            ===========      ===========       ===========      ===========
</TABLE>

               See accompanying notes to the financial statements

                                   F-6

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.       ORGANIZATION AND PRINCIPAL ACTIVITY

         Zhaoqing Blue Ribbon Brewery Noble Ltd. (the "Company") is a
         Sino-foreign equity joint venture enterprise registered in the People's
         Republic of China ("PRC") in October 1993 in which Goldjinsheng Holding
         Limited ("Goldjinsheng") and Zhaoqing Brewery hold 60% and 40%
         interests, respectively. The venture term of the Company is twenty
         years, which term may be extended upon mutual agreement of the joint
         venture parties and approval from the relevant PRC government
         authorities.

         Pursuant to the joint venture agreements and with the approval of the
         relevant PRC government authorities, the property, plant, equipment and
         the business of Pabst Blue Ribbon Brewery (Zhaoqing) Co. Ltd. ("Pabst
         Blue Ribbon"), an unrelated PRC owned enterprise, were disposed of to
         Zhaoqing Brewery and then to the Company as a capital contribution.
         Pabst Blue Ribbon is a subsidiary of the Blue Ribbon Group.

         Since commencement of business on November 6, 1993, the Company has
         principally been engaged in the production and sale of beer products in
         the PRC. The Company's principal product is Blue Ribbon beer produced
         and sold under non-exclusive Pabst trademarks which were granted by
         Guangdong Blue Ribbon Group Co., Ltd. ("Blue Ribbon Group") (see note
         19), an unrelated PRC owned enterprise. Malt, rice, hops, water and
         packing materials are the major raw materials in the production of Blue
         Ribbon beer. Effective July 1, 1995, all beer products produced by the
         Company were sold to Zhaoqing Blue Ribbon Beer Marketing Company
         Limited ("Blue Ribbon Marketing"), which was formed to promote and
         distribute beer products. Blue Ribbon Marketing is 70% owned by
         Zhaoqing Brewery, which acts as a nominee on behalf of Zhaoqing Blue
         Ribbon High Worth Brewery Ltd. ("High Worth Brewery") and 30% owned
         directly by Blue Ribbon Group. The Blue Ribbon Group also owns
         indirectly 28% of Blue Ribbon Marketing.

         Goldjinsheng is a wholly-owned subsidiary of Noble China Inc., a
         company listed on the Toronto Stock Exchange.

         Zhaoqing Brewery is a wholly-owned subsidiary of High Worth Brewery, a
         Sino-foreign equity joint venture enterprise registered in the PRC in
         which Blue Ribbon Group and High Worth Holdings Limited, a wholly owned
         subsidiary of CBR Brewing Company, Inc. ("CBR"), hold 40% and 60%
         interests, respectively.

         On January 20, 1998, Goldjinsheng and Zhaoqing Brewery entered into an
         agreement which stipulated that their respective interests in the
         Company will be transferred to Linchpin Holdings Limited ("Linchpin"),
         another wholly-owned subsidiary of Noble China Inc., and High Worth
         Brewery, respectively. Upon receipt of approval from and registration
         by the relevant authorities, Linchpin and High Worth Brewery will own
         60% and 40% equity interests in the Company, respectively.

                                   F-7


<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


2.       BASIS OF PRESENTATION

         The financial statements have been prepared in accordance with
         generally accepted accounting principles in the United States of
         America ("US GAAP"). This basis of accounting differs from that used in
         the preparation of the statutory financial statements of the Company
         which are prepared in accordance with the accounting principles and
         relevant financial regulations established by the Ministry of Finance
         of the PRC.

         The major adjustments made to the PRC statutory financial statements to
         conform with the accrual basis under US GAAP include the adjustments
         for sales, interest income and purchases recognized on a cash basis,
         depreciation and deferred taxation.


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Cash and cash equivalents - Cash and cash equivalents include cash on
         hand, cash accounts, interest bearing saving accounts, and short-term
         bank deposits with original maturities of three months or less.

         Inventories - Inventories are stated at the lower of cost or market
         value. Cost, which comprises direct materials, direct labor costs and
         overhead associated with the manufacturing processes, is calculated
         using the first-in, first-out method.

         Property, plant and equipment - Property, plant and equipment is stated
         at cost less an allowance for depreciation and amortization. Cost
         includes the fair value of property, plant and equipment transferred
         from Pabst Blue Ribbon.

         Depreciation and amortization are provided using the straight-line
         method to write off the cost of property, plant and equipment over the
         estimated useful lives as follows:

<TABLE>
         <S>                                                                    <C>
         Land use rights...................................................     20 years
         Buildings.........................................................     20 years
         Plant, machinery and equipment....................................     15 years
         Motor vehicles....................................................     10 years
         Leasehold improvement.............................................     5 years
</TABLE>

         Construction in progress is stated at cost which comprises the direct
         costs of buildings, plant under construction and deposits and
         prepayments made on machinery pending installation. Cost comprises the
         direct cost of construction and finance expenses arising from
         borrowings used to finance the construction of buildings, plant and
         machinery until the construction, installation and testing are
         complete. No depreciation is provided until the relevant assets are
         available for commercial use.

         According to the laws of the PRC, the title to all PRC land is retained
         by the PRC government. The land use rights represent the cost for the
         rights to use the land for premises granted by the State Land
         Administration Bureau. The land use rights are stated at cost and are
         amortized over the shorter of the venture term of the Company or the
         term of the land use right.

                                   F-8

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         Impairment of long-lived assets - The Company regularly reviews its
         property, plant and equipment for impairment whenever events or changes
         in circumstances indicate that the carrying amount of an asset may not
         be recoverable based upon undiscounted cash flows expected to be
         produced by such assets over their expected useful lives.

         Income taxes - Income taxes are determined under the asset and
         liability method in accordance with Statement of Financial Accounting
         Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). SFAS
         No. 109 requires deferred taxes be adjusted to reflect the tax rates at
         which future taxable amounts will be settled or recognized. The effects
         of tax rate changes on future deferred tax liabilities and deferred tax
         benefits, as well as other changes in income tax laws, are recognized
         in net earnings in the period when such changes are enacted.

         Revenue recognition - Sales represent the invoiced value of goods sold,
         net of returns and discounts. Sales and sales discounts are recognized
         upon delivery of goods to customers.

         Advertising expenses - Advertising expenses are charged to expense in
         the statements of income as incurred. Advertising expense was
         RMB701,504, RMB809,660 and RMB1,112,611, for the years ended December
         31, 1999, 1998 and 1997, respectively.

         Foreign currency translation - The financial records and the statutory
         financial statements of the Company are maintained in Renminbi. In
         preparing the financial statements, all foreign currency transactions
         are translated into Renminbi using the applicable rates of exchange for
         the respective periods. Monetary assets and liabilities denominated in
         foreign currencies have been translated into Renminbi using the rate of
         exchange prevailing at the balance sheet date. The resulting exchange
         gains or losses have been credited or charged to the statement of
         income in the period for which they occur.

         Translation of amounts from Renminbi ("RMB") into United States dollars
         ("US$") is for the convenience of the reader only and has been made at
         US$1.00 = RMB8.3. No representation is made that the Renminbi amounts
         could have been, or could be, converted into United States dollars at
         that rate or at any other rate.

         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 disclosures 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-9

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         Effects of recent accounting standards - In June 1998, the Financial
         Accounting Standards Board issued Statement of Financial Accounting
         Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
         and Hedging Activities". SFAS No. 133 establishes standards for
         derivative instruments embedded in other contracts, and for hedging
         activities, and requires that all derivatives be recognized either
         as assets or liabilities in the statement of financial position and
         be measured at fair value. SFAS No. 133 will be effective for the
         Company's year ending December 31, 2001. The Company has not
         determined the impact, if any, on its financial position, results of
         operations or cash flows.

4.       ACCOUNTS RECEIVABLE

         Accounts receivable comprise:
<TABLE>
<CAPTION>
                                                                                             1999                  1998
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                               <C>                   <C>
         Accounts receivables - trade...............................................        2,137,528             2,404,257
         Less: Allowance for doubtful accounts......................................       (2,137,528)           (2,218,303)
                                                                                            ---------             ---------

                                                                                                 -                  185,954
                                                                                            =========             =========
</TABLE>

         Movement of allowance for doubtful accounts:
<TABLE>
<CAPTION>
                                                                                1999              1998              1997
                                                                                ----              ----              ----
                                                                                 RMB               RMB               RMB
         <S>                                                                  <C>                <C>             <C>
         Balance as at January 1.....................................         2,218,303          1,039,451        2,246,703
         (Written back) provided during the year.....................           (80,775)         1,178,852       (1,207,252)
                                                                              ---------          ---------        ---------

         Balance as at December 31...................................         2,137,528          2,218,303        1,039,451
                                                                              =========          =========        =========
</TABLE>

         No amounts have been written off during the years presented.


5.       BILLS RECEIVABLE

         Bills receivable represent accounts receivable in the form of bills of
         exchange whose acceptances and settlements are handled by banks.

                                    F-10

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


6.       INVENTORIES
<TABLE>
<CAPTION>
                                                                                             1999                  1998
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                               <C>                   <C>
         Inventories comprise:

         Raw materials..............................................................       28,880,574            26,813,545
         Work in progress...........................................................        9,341,109             7,213,397
         Finished goods.............................................................       17,974,678             1,105,241
                                                                                           ----------            ----------

                                                                                           56,196,361            35,132,183
                                                                                           ==========            ==========
</TABLE>

7.       PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                             1999                  1998
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                             <C>                   <C>
         At cost:
           Land use rights and buildings............................................      180,674,140           180,614,940
           Plant, machinery and equipment...........................................      429,487,508           422,976,336
           Motor vehicles...........................................................        7,400,665             7,238,620
           Leasehold improvements...................................................        5,118,568                  -
           Construction in progress.................................................             -                2,000,000
                                                                                          -----------           -----------

           Total....................................................................      622,680,881           612,829,896
           Less: Accumulated depreciation and amortization..........................     (197,787,217)         (162,628,281)
                                                                                          -----------           -----------

                                                                                          424,893,664           450,201,615
                                                                                          ===========           ===========
</TABLE>

8.       INCOME TAXES

         The Company is governed by the Income Tax Laws of the PRC concerning
         Foreign Investment Enterprises and Foreign Enterprises and various
         rules and regulations (the "Income Tax Laws"). Pursuant to the Income
         Tax Laws, foreign investment enterprises engaging in a production
         business located in Zhaoqing are subject to income tax at the rate of
         27% on income as reported in its statutory financial statements.

         Pursuant to the Income Tax Laws, if the investor of a foreign
         investment enterprise reinvests its share of distributable profits from
         the enterprise, the investor is entitled to receive a tax refund of the
         income tax paid on the reinvested amount.

         With a tax concession obtained from the PRC tax authority, the Company
         is exempt from income taxes for the two financial years commencing with
         its first profitable year of operations, and thereafter with a 50%
         reduction for the next three financial years. For the years ended
         December 31, 1998 and 1997, current income taxes based on the 50%
         reduction rule were provided. For the year ended December 31, 1999,
         current income taxes were fully provided at the statutory rate as the
         tax concession period has expired.

                                    F-11

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


8.       INCOME TAXES - continued

         The aggregate income tax benefit from the tax exemption and reduction
         status for the years ended December 31, 1998 and 1997 amounted to
         approximately RMB19,500,000 and RMB22,300,000, respectively.

         The reconciliation of the effective income tax rate of the Company to
         the relevant statutory income tax rate in the PRC is as follows:
<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                                      -----------------------
                                                                              1999             1998              1997
                                                                              ----             ----              ----
         <S>                                                                  <C>             <C>               <C>
         Statutory tax rate...................................                27%              27%               27%
         Tax holiday..........................................                 -              (15%)             (15%)
         (Resolution) accrual of estimated tax
           adjustments........................................                 -               (6%)               3%
         Income exempted by tax authority.....................                (1%)              -                 -
                                                                             ------           ------            ------

         Effective tax rate...................................                26%               6%               15%
                                                                             ======           ======            ======
</TABLE>

         The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                                      -----------------------
                                                                              1999             1998              1997
                                                                              ----             ----              ----
                                                                               RMB              RMB               RMB
         <S>                                                               <C>                <C>              <C>

         Current..............................................             40,587,055         15,726,523       18,131,616
         Deferred.............................................              2,300,000         (7,500,000)       3,200,000
                                                                           ----------         ----------       ----------

                                                                           42,887,055          8,226,523       21,331,616
                                                                           ==========         ==========       ==========
</TABLE>

         There are no material temporary differences.

                                    F-12

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)


9. SALES TAXES

      The Company is subject to three kinds of sales taxes, being value added
      tax ("VAT"), consumption tax and other sales taxes. The applicable VAT
      rate is 17% for brewery products sold in the PRC and nil for exported
      goods. The amount of VAT liability is determined by applying the
      applicable VAT tax rate to the invoiced amount of goods sold less VAT paid
      on purchases made with the relevant invoices in support. VAT is collected
      from customers by the Company on behalf of the PRC tax authorities and is
      therefore not charged to the statement of income. The applicable
      consumption tax rate in respect of brewery products is RMB220 per ton. The
      consumption tax expensed to the statement of income is determined based on
      the volume of sales within the PRC territory. Exported goods are exempted.
      The other sales taxes are assessed as a percentage of consumption tax and
      VAT payable.

10. CONTRIBUTED CAPITAL

      The Company was registered with a capital of US$50,000,000. At the balance
      sheet date, a total of RMB475,940,000 was contributed by the joint venture
      parties.

11. FOREIGN CURRENCY EXCHANGE

      The People's Bank Of China ("PBOC") and the State Exchange Administration
      Bureau jointly pronounced a new policy on foreign currency exchange
      transactions in the PRC. Commencing from December 1, 1998, foreign
      currency exchanges adjustment services for the foreign invested
      enterprises ("FIE"), which were previously provided by the SWAP centers
      within the PRC, will be cancelled. From this date onwards, FIEs can only
      transact foreign currency deals though those authorized banks in the PRC
      at the prevailing exchange rates quoted by the PBOC and, accordingly, all
      the SWAP centers presently established in the PRC will be closed.

      The current SWAP center business was started by the PRC government in
      1980. FIEs could buy or sell foreign currencies at the SWAP center at the
      market rates quoted by such centers. From December 1, 1998, FIEs can only
      buy or sell foreign currencies through the banks operated in the PRC at
      the prevailing exchange rates quoted by the PBOC. All these foreign
      currency transactions will then pass through the centralized banking
      system in the PRC. The exchange rates quoted by the banks will be the
      middle price of the bid price and ask price on the previous transaction
      date.

      The exchange rate of the RMB equivalent of US$1.00 as of December 31,
      1999, 1998 and 1997 was approximately RMB8.30.

                                    F-13

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

12. GENERAL RESERVE AND ENTERPRISE DEVELOPMENT FUNDS

      As stipulated by the relevant laws and regulations for foreign investment
      enterprises, the Company is required to make appropriations to a general
      reserve fund, an enterprise development fund and an employee welfare and
      incentive fund, in which the percentages of annual appropriations are
      subject to the joint venture agreement. The employee welfare and incentive
      fund is charged to the statement of income. The other appropriations are
      accounted for as reserve funds in the balance sheet and are not available
      for distribution as dividends to the joint venture partners of the
      Company. Under the joint venture agreement, the board of directors shall
      determine the appropriations with regard to the economic situation of the
      Company. The percentages of annual appropriations to a general reserve
      fund, an enterprise development fund and an employee welfare and incentive
      fund for 1999 have already been determined by the board of directors, and
      the appropriations have been reported in the statutory financial
      statements.

13. RETAINED EARNINGS

      As described in note 2, the net income as reported in the US GAAP
      financial statements differs from that as reported in the PRC statutory
      financial statements. In accordance with the relevant laws and regulations
      for Sino-foreign equity joint venture enterprises, the profits available
      for distribution are based on the statutory financial statements. If the
      Company has foreign currency available after meeting its operational
      needs, the Company may make profit distributions in foreign currency to
      the extent it is available. Otherwise, it will be necessary to convert
      such distributions at an exchange center. As of December 31, 1999 and
      1998, the retained earnings calculated according to PRC GAAP available for
      distribution amounted to approximately RMB101,991,000 and RMB102,940,000,
      respectively.

14. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

      Interest paid during the years ended December 31, 1999, 1998 and 1997 was
      RMB51,926, RMB73,506 and RMB1,458,454, respectively. Income tax paid for
      the years ended December 31, 1999, 1998 and 1997 was RMB6,436,590,
      RMB5,443,601 and RMB20,253,436, respectively.

                                    F-14

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

15. RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

      (a)   Amounts due from related companies

            The amounts receivable from related companies mainly represented the
            receivable balances from companies of the Blue Ribbon Group,
            Goldjinsheng and Blue Ribbon Marketing amounting to approximately
            RMB3,196,000, RMB38,000 and RMB195,171,000, respectively, for 1999
            and RMB5,011,000, RMB634,000 and RMB219,083,000, respectively, for
            1998.

            The balances with Blue Ribbon Group and Goldjinsheng principally
            represented expenses paid by the Company on their behalf.

            The balance with Blue Ribbon Marketing was operating in nature and
            principally represented accounts receivable from sales of finished
            goods. An allowance for doubtful accounts amounting to nil and
            RMB6,000,000 has been maintained in 1999 and 1998, respectively.

            The amounts receivable from related companies are unsecured,
            interest-free and repayable on demand.

      (b)   Amounts due to related companies

            As of December 31, 1999 and 1998, the amounts due to related
            companies principally represented balances arising from the
            purchases of raw materials from American National Can (Zhaoqing)
            Co., Ltd. and Zhaoqing Blue Ribbon Carton Manufacturing Co. in which
            Blue Ribbon Group has equity interests.

            The balances are unsecured, interest-free and repayable on demand.

                                    F-15

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

15. RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - continued

      (c)   Related party transactions

            The Company had transactions with companies in which Blue Ribbon
            Group or High Worth Brewery have equity interests. The significant
            transactions are summarized below:

<TABLE>
<CAPTION>
                                                      Year ended December 31,
                                                      -----------------------
                                                 1999          1998          1997
                                                 ----          ----          ----
                                                  RMB           RMB           RMB
<S>                                           <C>           <C>           <C>
Sales of beer products to
  Blue Ribbon Marketing................       537,010,133   621,380,760   675,247,962
  Blue Ribbon Group....................             3,014       282,063     2,662,069
  American National Can (Zhaoqing)
    Co., Ltd...........................            31,411            --            --

Purchases of raw materials from
  American National
    Can (Zhaoqing) Co., Ltd............        77,642,936    65,363,737    71,436,977
  Zhaoqing Blue
    Ribbon Carton Manufacturing Co.....         9,034,659    17,196,043    21,031,427
  Blue Ribbon Marketing................                --     4,720,679            --
  High Worth Brewery...................            38,913       161,192            --

Royalty fee paid to Blue
  Ribbon Group.........................        12,033,486    13,882,131    14,317,306

Management fee paid to
  Blue Ribbon Group....................         2,035,000     2,035,000     2,035,000

Rental income received from
  Blue Ribbon Marketing................         2,120,012     1,568,864            --
                                              ===========   ===========   ===========
</TABLE>

16. RETIREMENT PLAN

      As stipulated by the PRC government regulations, the Company has defined
      contribution retirement plans for all its full-time employees. The Company
      and its employees are required to contribute to the PRC insurance
      companies organized by the PRC government which are responsible for the
      payment of pension benefits to retired employees. The monthly
      contributions of the Company and the full-time employees were calculated
      at 14.6% and 2%, respectively, of the basic salaries of the full-time
      employees. The pension costs expensed by the Company for the years ended
      December 31, 1999, 1998 and 1997 amounted to RMB1,076,919, RMB936,232 and
      RMB847,516, respectively.

                                    F-16

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

17. FINANCIAL INSTRUMENTS

      The carrying amounts reported in the balance sheet for current assets and
      current liabilities qualifying as financial instruments approximate their
      fair values because of the short maturity of such instruments.

18. CONCENTRATION OF RISKS

      The Company's operating assets and primary source of income and cash flows
      are in the PRC. The PRC economy has, for many years, been a
      centrally-planned economy, operating on the basis of annual, five-year and
      ten-year state plans adopted by central PRC governmental authorities which
      set out national production and development targets. The PRC government
      has been pursuing economic reforms since it first adopted its "open-door"
      policy in 1978. There is no assurance that the PRC government will
      continue to pursue economic reforms or that there will not be any
      significant changes in its economic or other policies, particularly in the
      event of any change in the political leadership of, or the political,
      economic or social conditions in, the PRC. There is also no assurance that
      the Company will not be adversely affected by any such change in
      government policies or any unfavorable change in the political, economic
      or social conditions, the laws or regulations or the rate or method of
      taxation in the PRC.

      As many of the economic reforms which have been or are being implemented
      by the PRC government are unprecedented or experimental, they may be
      subject to adjustment or refinement which may have adverse effects on the
      Company. Further, through state plans and other economic and fiscal
      measures, it remains possible for the PRC government to exert significant
      influence on the PRC economy.

      All the Company's revenues are wholly derived from the sale of Pabst Blue
      Ribbon beer.

      The Company sold almost 100% of its products to Blue Ribbon Marketing in
      1999, 1998 and 1997, respectively, and is heavily dependent on the sales
      to the related company.

      The financial instruments that are exposed to concentration of credit risk
      consist primarily of cash and accounts receivable from related companies.
      Cash is maintained with major banks in the PRC. The Company's business
      activity is with related companies in the PRC. The Company periodically
      performs credit analysis and monitors the financial condition of its
      customers and related companies in order to minimize credit risk.

                                    F-17

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

19. COMMITMENTS AND CONTINGENCIES

      Blue Ribbon Group entered into licensing arrangements with Pabst Brewing
      Company whereby Blue Ribbon Group was granted the exclusive right to
      produce and market products under four specific Pabst trademarks in the
      PRC, the non-exclusive right to market such products in other Asian
      countries except Hong Kong, Macau, Japan and South Korea, and the right to
      sublicense the use of the trademarks to any other enterprise in the PRC.

      Pursuant to the terms of the sublicense agreement, the Company was granted
      by Blue Ribbon Group the right to use the two specific Pabst trademarks
      for the production, promotion, distribution and sale of beer under such
      trademarks. The production right of the Company is confined exclusively
      for the Guangdong Province only and it does not preclude High Worth
      Brewery's production rights in Guangdong as described in (a) and (b)
      below.

      The sublicense agreement is valid until November 7, 2003. In consideration
      for the sublicense granted, the Company is committed to pay Blue Ribbon
      Group a royalty fee of US$0.10 for each carton of bottled or canned beer
      produced (see note 15c).

      A provisional agreement, subject to governmental approval, was made on May
      10, 1995 among CBR and a subsidiary, the group companies of Noble China
      Inc., and Blue Ribbon Group to the effect that:

      (a)   High Worth Brewery was entitled to be granted from Blue Ribbon Group
            the right to brew and sell beer under the Pabst Blue Ribbon label
            produced in its brewing facilities up to a maximum production
            capacity of 100,000 tons per annum.

      (b)   High Worth Brewery and/or companies that High Worth Brewery has an
            interest in are entitled to be granted a sublicense from Blue Ribbon
            Group with the right to produce and sell beer under the Pabst Blue
            Ribbon label in the Guangdong Province of the PRC (an "Additional
            Facility") to a maximum production capacity of 300,000 tons per
            annum.

            In the event that High Worth Brewery desires to obtain a sublicense
            for an Additional Facility, Goldjinsheng has the right to purchase
            up to a 40% interest in such Additional Facility. The purchase price
            for such interest shall be the actual cost of such Additional
            Facility multiplied by the percentage interest that Goldjinsheng
            elects to purchase.

                                    F-18

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                 (Registered in the People's Republic of China)

19. COMMITMENTS AND CONTINGENCIES - continued

      (c)   A proposed new marketing company ("New Marketing Company"), owned 8%
            by Blue Ribbon Group, 52% by High Worth Brewery and 40% by
            Goldjinsheng, shall be formed to handle and organize the sales of
            Pabst Blue Ribbon beer produced by Zhaoqing Brewery and the Company.
            Zhaoqing Brewery and the Company will each create a separate
            distribution company or division of their own. The respective
            distribution companies will appoint the New Marketing Company as
            their sole and exclusive agent to market Pabst Blue Ribbon beer in
            the PRC.

      Another agreement was made on May 10, 1995 among Goldjinsheng, Blue Ribbon
      Group and the Company to the effect that the Company agreed to pay Blue
      Ribbon Group management fees of RMB2,035,000 per annum for a period of
      five years commencing January 1, 1995 (see note 15c).

      For contingencies related to concentration of risks, see note 18.

                                    F-19

<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number         Description of Document
-------        ------------------------

2.1     (P)    Share Exchange Agreement, dated November 1994, with Amendment
               among the Company, Oriental Win and Holdings.(1)

3(i).1  (P)    Articles of Incorporation and Amendments.(2)

3(i).2  (P)    Certificate of Amendment of Articles of Incorporation.(3)

3(ii)   (P)    Bylaws.(2)

10.1           (P) Joint Venture Agreement dated June 10, 1993 between Zhaoqing
               Brewery and Goldjinsheng regarding Noble Brewery with amendments,
               with English translation.(3)

10.2    (P)    Joint Venture Agreement dated May 6, 1994 between Guangdong Blue
               Ribbon and Holdings, as supplemented by Supplementary Joint
               Venture Agreement dated September 5, 1994 among Holdings,
               Guangdong Blue Ribbon and Star Quality Ltd. regarding Zhaoqing
               High Worth, with English translation.(3)

10.3    (P)    Assets Transferring Agreement dated September 6, 1994 among
               Guangdong Blue Ribbon, Zhaoqing Brewery and High Worth JV
               regarding High Worth JV, with English translation.(3)

10.4    (P)    Agreement on License of Transferring and Using the registered
               trademarks of Pabst Blue Ribbon dated August 30, 1993, between
               Pabst Zhaoqing and Pabst US, with English translation.(3)

10.5    (P)    Agreement on Quality of Pabst Beer dated August 30, 1993 between
               Pabst Zhaoqing and Pabst US, with English translation.(3)

10.6    (P)    Power of Attorney between Pabst US and Pabst Zhaoqing, dated
               August 30, 1993.(3)

10.7    (P)    Sublicense Agreement on Using the Registered Trademarks of Pabst
               Blue Ribbon dated October 12, 1993 between Pabst Zhaoqing and
               Noble Brewery, with English translation.(3)

10.8    (P)    Sublicense on Using the Registered Trademarks of Pabst Blue
               Ribbon dated May 6, 1994 between Pabst Zhaoqing and High Worth
               JV, with English translation.(3)

10.9    (P)    Transferring Agreement dated May 20, 1994 among Pabst
               Zhaoqing, Pabst US and Guangdong Blue Ribbon, with English
               Translation.(3)

10.10   (P)    Deed dated December 5, 1994 between Oriental Win and Holdings
               regarding the Shareholder Loan, with supplementary
               documentation.(3)

10.11          Long Term Purchase Agreement dated April 1, 1995 between the
               Marketing Company and Zhaoqing Brewery (English
               Translation).(4)

10.12          Long Term Purchase Agreement dated July 11, 1995 between the
               Marketing Company and Noble Brewery (English Translation).(4)

10.13   (C)    1998 Stock Option Plan.(5)

<PAGE>

Exhibit
Number         Description of Document
--------       ------------------------

10.14          Joint Venture Agreement dated January 13, 1998 between High
               Worth JV and Zao Yang Brewery regarding Zao Yang High Worth
               Brewery (English Translation).(5)

10.15          Joint Venture Agreement dated October 18, 1999 between March
               International Group Limited, Jilin Province Juetai City Brewery
               and Jilin Province Chuang Xiang Zhi Yie Ltd. regarding Jilin
               Lianli Brewery (English Translation).(6)

21             Subsidiaries of the Company.(6)

23             Consent of Independent Auditors.(6)

27    (E)      Financial Data Schedule.(6)

----------

(1)   Filed as an Exhibit to the Company's Current Report on Form 8-K filed on
      December 30, 1994, and incorporated herein by reference.

(2)   Filed as Exhibits to the Company's Registration Statement No. 33-26617A on
      Form S-18 dated January 19, 1989, and incorporated herein by reference.

(3)   Filed as Exhibits to the Company's Annual Report on Form 10-K for the
      fiscal year ended December 31, 1994, and incorporated herein by reference.

(4)   Filed as Exhibits to the Company's Annual Report on Form 10-K for the
      fiscal year ended December 31, 1996, and incorporated herein by reference.

(5)   Filed as Exhibits to the Company's Annual Report on Form 10-K for the
      fiscal year ended December 31, 1997, and incorporated herein by reference.

(6)   Filed herein.

(P)   Indicates that the document was originally filed with the Securities and
      Exchange Commission in paper form and that there have been no changes or
      amendments to the document which would require filing of the document
      electronically with this Annual Report on Form 10-K.

(C)   Indicates compensatory plan, agreement or arrangement.

(E)   Indicates electronic filing only.