<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, 1997
                               -----------------

[ ]  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                          (I.R.S. Employer
  of incorporation or organization)                     Identification Number)

                        433 NORTH CAMDEN DRIVE, SUITE 1200
                          BEVERLY HILLS, CALIFORNIA 90210
 --------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)

     Registrant's telephone number, including area code:  (310) 274-5172
                                                          --------------
     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, 1998, 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.

<PAGE>

     The aggregate market value of the issuer's outstanding voting common 
stock (Class A) held by non-affiliates on March 31, 1998, computed by 
reference to the average closing bid and ask prices on March 31, 1998 of 
$6.00 and $7.75, respectively, was $7,218,839.

     Documents incorporated by reference:  None.

     The total number of sequential pages in this report is 168.

     The exhibit index is located on pages 62.

                                       2
<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 year ended December 31, 
1997 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, 1997 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.

ITEM 1.   BUSINESS

          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 "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 a 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").  The exchange rate was 
U.S.$1.00 to RMB 8.32 at December 31, 1995, RMB 8.32 at December 31, 1996 and 
RMB 8.30 at December 31, 1997.

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, 1997, the 
Company owned effective interests of 60% and 24% in two brewing facilities 
currently producing Pabst Blue Ribbon beer in China, both 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 two 
brewing facilities. 

          China is currently ranked as the second largest beer producer in the
world behind the United States.  The management of the Company believes

<PAGE>

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%.  Production is concentrated in 
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").  High 
Worth JV also owns 100% of a PRC holding company ("Zhaoqing Brewery HC").  
Zhaoqing Brewery HC owns a 40% interest in Zhaoqing Blue Ribbon Brewery Noble 
Ltd., a Sino-foreign joint venture ("Noble Brewery"), which in turn owns a 
second Pabst Blue Ribbon brewing complex that is also managed by Zhaoqing 
Brewery. Goldjinsheng Holdings Ltd., a wholly owned subsidiary of Noble 
China, Inc., an unaffiliated company, owns the other 60% interest in Noble 
Brewery.  See "THE JOINT VENTURE COMPANIES".  

          In addition, Zhaoqing Brewery HC 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 OPERATIONS -Summary of Operations"), resulting in the Company 
owning a 42% net interest in the Marketing Company.

          In January 1996, Zhaoqing Brewery HC transferred all of its 
operating assets and liabilities to High Worth JV 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, the investments in Noble Brewery and the 
Marketing Company currently held by Zhaoqing Brewery HC will be transferred 
to High Worth JV. Zhaoqing Brewery HC is currently acting as the nominee for 
High Worth JV with respect to the investments in Noble Brewery and the 
Marketing Company.  In the following text, "Zhaoqing Brewery" refers to the 
brewing complex, which was transferred to High Worth JV in January 1996, and 
"Zhaoqing Brewery HC" refers to the PRC entity that previously owned the 
brewing complex from November 1994 through December 1995.

          In January 1998, the Company, through High Worth JV, established a 
brewery in Hubei Province pursuant to a joint venture agreement in which High 
Worth JV acquired a 55% interest in Zao Yang Blue Ribbon High Worth Brewery 
Ltd. ("Zao Yang High Worth Brewery") equivalent to an effective interest of 
33%.  See "ADDITION OF NEW BREWERY".

                                       2
<PAGE>

          Effective December 31, 1997, the Company, through High Worth JV, 
entered into a Settlement Agreement that will allow it to acquire a 51% 
interest in Sichuan Brewery, equivalent to an effective interest of 31%.  See 
"SICHUAN BREWERY".

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

          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 
1,421,492 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 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 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 exclusively domestic brands 
under the names Zhaoqing beer, Dinghu beer and Xile beer.  In the middle of 
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, and 
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 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 and scheduled maintenance.  Zhaoqing Brewery has access to 
replacement parts that can be manufactured by several local toolmakers in 
Zhaoqing city. 

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 the year 2043.

                                       3
<PAGE>

          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 per year.  The 
second phase of brewing facilities, which was completed in July 1994, has a 
production capacity of approximately 120,000 metric tons or 1,020,000 barrels 
of beer per year. Pabst US supplied the majority of the equipment in 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 and 
scheduled maintenance.  Noble Brewery has access to replacement parts that 
can be manufactured by several local toolmakers in Zhaoqing.


ZAO YANG HIGH WORTH BREWERY

          On January 13, 1998, High Worth JV entered into a joint venture 
contract with Zao Yang Brewery in Hubei Province to establish a new brewery 
with an initial annual production capacity of 40,000 metric tons or 340,000 
barrels of beer.  The new brewery will be designated Zao Yang Blue Ribbon 
High Worth Brewery Ltd. ("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.

          Subject to the approval by the Zao Yang City Government and upon 
the issuance of a business registration certificate from the local Business 
Registration Bureau, Zao Yang High Worth Brewery will initially commence 
production of a locally branded beer under the name "Di Huang Quan".  This 
trademark will be transferred from Zao Yang Brewery to Zao Yang High Worth 
Brewery once the joint venture commences operation.  High Worth JV is 
responsible for transferring the technical know-how and production technique 
of brewing Pabst Blue Ribbon beer to Zao Yang High Worth Brewery, which may 
take approximately six to nine months.

          Zao Yang High Worth Brewery is situated on a site containing 
approximately 752,688 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 right is part of the assets acquired by Zao Yang High Worth 
Brewery from Zao Yang 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 per annum.  

          High Worth JV, pursuant to the joint venture agreement, will assist 
Zao Yang High Worth Brewery in modernizing its brewing technology and 
renovating its existing equipment in order to convert the brewery into 
another Pabst Blue Ribbon beer brewing complex.

                                       4
<PAGE>

SICHUAN BREWERY

          Sichuan 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 
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 beer brewing complex in late 1996.  In April 1997, Sichuan Brewery 
commenced to produce beer under the Pabst Blue Ribbon label, which was sold 
to the Marketing Company for resale.


MARKETING AND OPERATIONS

SUMMARY OF OPERATIONS

          The Company's distribution and marketing operations are conducted 
by the Marketing Company.  The Marketing Company began purchasing the output 
of beer from Noble Brewery in July 1995, Zhaoqing Brewery in April 1995 and 
Sichuan Brewery in April 1997 (See "PABST LICENSING ARRANGEMENTS AND 
TRADEMARKS") and is responsible for its distribution throughout China.  The 
Marketing Company is also responsible for the promotion and advertising of 
the Company's production of Pabst Blue Ribbon beer in China.

          Pursuant to the long term purchase contracts signed between the 
Marketing Company, on the one hand, and Zhaoqing Brewery and Noble Brewery in 
April 1995 and July 1995, respectively, on the other hand, the Marketing 
Company is required to purchase all the Pabst Blue Ribbon beer produced by 
Zhaoqing Brewery and Noble Brewery at mutually agreed ex-factory prices.  The 
Marketing Company also signed a long term purchase contract with Guangdong 
Blue Ribbon in April 1995 pursuant to which the Marketing Company is required 
to purchase all products labelled Blue Ribbon produced by Guangdong Blue 
Ribbon including non-carbonated soft drinks and mineral water.  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.

PABST BLUE RIBBON BEER

          Substantially all of the beer now produced by both Noble Brewery 
and Zhaoqing Brewery is Pabst Blue Ribbon Beer.  There are two products in 
Pabst Blue Ribbon brand breweries' portfolio:  11-degree light processed beer 
and draught beer.  The 11-degree light processed beer is packaged in 946 ml., 
640 ml. and 355 ml. bottles and 500 ml. and 355 ml. cans and is the primary 
product of the breweries.  The draught beer is sold only in kegs.

                                       5
<PAGE>

          The 946 ml. glass bottle and 500 ml. can packages for Pabst Blue 
Ribbon beer were introduced by Zhaoqing Brewery in 1996, and by Noble Brewery 
in 1997.

          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 
7.2%, 59.9%, 0.9%, 0.5% and 29.5%, respectively, of the sales volume of the 
Company in 1997.

          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 
7.1%, 60.0%, 1.8%, 0.1% and 28.7% respectively, of the sales volume of the 
Company in 1996.

          Sichuan Brewery during 1997 produced only 11-degree light processed 
Pabst Blue Ribbon beer, which was only packed in 640 ml glass bottles.  In 
1997, the Marketing Company distributed 8,124 metric tons of Pabst Blue 
Ribbon beer produced by Sichuan Brewery, which represented 3.6% of the 
Company's total sales volume in 1997.

          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, primarily in urban centers all over China.  Management 
anticipates that the breweries will continue to expand the distribution of 
these products in new China markets, 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 produced by the 
breweries are set out below:


 TYPE OF BEER                 PACKAGE                   GENERAL DESCRIPTION

 11-degree light processed    Can (500 ml. & 355 ml.)   11-degree malt
 beer                         Bottle (946 ml., 640 ml.  content,
                              & 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).

          BRAND PERFORMANCE:  The 11-degree light processed beer is the 
biggest selling beer in the Company's Pabst Blue Ribbon beer portfolio, 
accounting for approximately 98.0% of the Company's production in 1997 and 
97.7% of the Company's production in 1996.

                                       6
<PAGE>

          The 11-degree light processed beer is a beverage that offers 
Chinese consumers an attractive alternative to their traditional malt-based 
beverage. This product was sold in 32 provinces in China in 1996 and 1997.

          SALES:  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 non-exclusive regional distributors whose field 
sales force maintains customer contact and satisfaction.  Sales of Pabst Blue 
Ribbon beer were 226,262 metric tons or approximately 1,923,227 barrels in 
1997, a 1.4% decrease over 1996.  The Company believes that the decrease was 
attributable, in substantial part to widespread flooding in China in 1997 
which affected the distribution of the Company's products.  Sales of Pabst 
Blue Ribbon beer were 229,540 metric tons or approximately 1,951,090 barrels 
in 1996, a 22% increase over 1995.

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.  Sales of domestic brand beer were 
approximately 33,000 metric tons or 280,500 barrels in 1994, almost the same 
as in 1993.  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.

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

          The following tables present information with respect to the sales 
and volume of beer sold by Noble Brewery (which produces Pabst Blue Ribbon 
beer exclusively) and by Zhaoqing Brewery in 1996 and 1997.  In February 
1995, the Marketing Company was established to conduct the distribution, 
marketing and promotion of the Company's production of Pabst Blue Ribbon beer 
throughout China.
<TABLE>
<CAPTION>
                                                                Net Sales
    1996                      Net Sales       Volume Sold        per Ton
    ----                      ---------       -----------       ---------
                              (RMB'000)      (metric tons)      (RMB'000)
<S>                           <C>            <C>                <C>
Noble Brewery                   655,317           154,435             4.2

Zhaoqing Brewery

   Local Brands                   5,666             2,526             2.2

   Pabst Blue Ribbon            367,213            80,913             4.5

Marketing Company

   Pabst Blue Ribbon          1,173,060           229,540             5.1

                                       7
<PAGE>

   Non-alcoholic drinks          75,186            30,687             2.5
</TABLE>
<TABLE>
<CAPTION>
                                                                Net Sales
    1997                      Net Sales       Volume Sold        per Ton
    ----                      ---------       -----------       ---------
                              (RMB'000)      (metric tons)      (RMB'000)
<S>                          <C>             <C>               <C>
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
</TABLE>

          During 1997 the Marketing Company distributed 8,124 metric tons of 
Pabst Blue Ribbon beer produced by Sichuan Brewery.

SEASONALITY

          The beer industry in China is seasonal.  The Company's sales are 
usually at their 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, 
reliable power, communication and service infrastructure.  The area contains 
extensive agricultural activity and a large population base.

                                       8
<PAGE>

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


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.  In addition, 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 Zhaoqing 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 to Pabst Blue Ribbon beer and provided 
technical assistance and training.


RAW MATERIALS

          The breweries use all-natural ingredients in their brewing process. 
The primary raw materials utilized are mainly malt, husked rice, hops and 
water. The aggregate cost of the primary raw materials represents 
approximately 21% 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 61% of the total direct cost of 
production, excluding depreciation, of Pabst Blue Ribbon beer and 52% of the 
domestic brand beers.

          MALT:  Virtually all of the malt utilized for producing Pabst Blue 
Ribbon beer is purchased from regional malt manufacturers, primarily 
Guangzhou Malting Company, an unaffiliated company.  Guangzhou Malting 
Company imports the barley used in producing the malt from suppliers in 
Australia, Canada and Europe.  Malt for domestic brand beer was sourced from 
other domestic suppliers. The cost of malt represented approximately 76% of 
the primary raw material cost in the direct cost of production, excluding 
depreciation and packaging, of Pabst Blue Ribbon beer and 68% for the 
domestic brand beers.

          HUSKED RICE:  Husked rice is grown on irrigated farmland under 
contractual agreements with a variety of local farmers in the Zhaoqing 
region. Given the extensive agricultural activity in the region, management 
believes

                                       9
<PAGE>

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 19% of the domestic 
brand beers.

          HOPS:  The hops utilized for producing Pabst Blue Ribbon beer are 
acquired primarily from one supplier in the United States through a local 
importer.  The cost of hops represents approximately 5% of the primary raw 
material cost in the direct cost of production, excluding depreciation and 
packaging, of Pabst Blue Ribbon beer and 6% of the domestic brand beers.

          WATER:  The breweries utilize naturally filtered water from deep 
underground wells adjacent to the brewery facilities that tap the Beriling 
Shan water source.  The pristine water quality and composition were primary 
factors in choosing this particular water source.  Specifically, the Beriling 
Shan water source contains a relatively low mineral content making it very 
suitable for brewing the particular types of beers produced by the breweries. 
The breweries intensively monitor the quality of the water used in the 
brewing process for compliance with the Company's own stringent quality 
standards.  The breweries have recently expanded their water system to ensure 
an adequate supply so as to meet all of their present requirements.  However, 
the breweries continue to add water reservoir capacity to provide for 
long-term strategic growth plans and to sustain brewing operations in the 
event of a prolonged drought.

CONTAINERS

          Zhaoqing Brewery used six types of containers for its beer in 1997: 
946 ml. bottles, 640 ml. bottles, 355 ml. bottles, 500 ml. and 355 ml. 
aluminum cans and, for its draught beer, beer kegs.  In 1997, approximately 
36.2% of Zhaoqing Brewery's products were packaged in aluminum cans and 61.7% 
were packaged in glass bottles.  The remainder of the malt beverages sold in 
1997, representing 2.1% of production, were packaged in stainless steel kegs. 
In 1997, Zhaoqing Brewery's domestic brand beers were primarily packaged in 
640 ml. bottles.  The cost of aluminum and glass containers represents the 
single largest cost element in the production and packaging of Zhaoqing 
Brewery's beer.

          Noble Brewery used five types of containers for its beer in 1997: 
946 ml. bottles, 640 ml. bottles, 355 ml. bottles and 355 ml. aluminum cans 
and, for its draught beer, beer kegs.  In 1997, approximately 28.9% of Noble 
Brewery's products were packaged in aluminum cans and 69.0% were packaged in 
glass bottles.  The remainder of the malt beverages sold in 1997, 
representing 2.1% of production, were packaged in stainless steel kegs.  The 
cost of aluminum and glass containers represents the single largest cost 
element in the production and packaging of Noble Brewery's beer.

          To date, all of the beer bottles required by the Company have been
supplied by four unaffiliated 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.  The primary supplier of 

                                      10
<PAGE>

glass bottles to the Company is Guangdong Glass Factory in Guangzhou, with 
the balance of the bottle requirements being sourced from Zhaoqing Glass 
Factory, Shenzhen Hua Jing Glass Ltd. and Zhanjiang Glass Factory, which are 
located in an adjacent province.  In addition, a variety of other bottle 
manufacturers are located in the Guangdong Province and neighboring 
provinces, and represent an easily available alternative source of supply of 
bottles.  As a result of both Zhaoqing Brewery and Noble Brewery maintaining 
a bottle recycling program in 1996 and 1997, the containers represented a 
much smaller proportion of the overall cost.

          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 current annual output is 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 agreed to meet the can supply 
requirements of the breweries at a pre-negotiated price.

TRANSPORTATION/DISTRIBUTION

          In view of the single location of Zhaoqing and Noble breweries and 
the wide geographic market in China, the Company is constantly reviewing the 
methods of distributing its malt beverages.

          TRANSPORTATION:  During 1997, 42% of the Company's products sold 
were shipped by rail tank cars from Zhaoqing to distributors throughout the 
Guangdong Province.  The railcars assigned to the breweries by the shipping 
railroads are specially built and insulated to maintain temperature control 
en route.

          The remaining 58% of the Company's volume is shipped by truck (51%) 
and boat (7%) directly to distributors.  Transportation vehicles are 
insulated to keep malt beverage products at proper temperatures until they 
are delivered to distributor locations.

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

          The production of beer by Sichuan Brewery was primarily distributed 
within the Sichuan regional market by trucks. 

          DISTRIBUTION:  Delivery of Pabst Blue Ribbon beer to retail markets 
in Guangdong Province and the rest of China is accomplished through a network 
of non-exclusive regional distributors which sell to tobacco and alcohol 
companies, bars, restaurants and retail stores.  The Marketing Company has 
over 400 distributors throughout China.  During 1995 and 1996, the Marketing 
Company generally required a 50% cash deposit from its customers as security, 
based on the volume of their order flow.  However, for those customers 
located in Guangdong Province, the deposit policy had been replaced 

                                      11
<PAGE>

by cash-on-delivery or pre-approved credit terms.  Commencing January 1, 
1997, as a result of more intensive competition from the breweries in China, 
the Marketing Company abolished the customer deposit requirement except for 
certain new customers which are required to make a cash deposit as security.  
Customers with material transaction volume are required to issue bills of 
exchange from their respective banks to secure payment on the due date.  As a 
matter of policy, each regional distributor works on a non-exclusive basis.  
The breweries typically appoint 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 the 
flexibility for the breweries to replace distributors, or reach different 
arrangements with existing distributors, if it is in their best interest.  No 
single distributor accounted for more than approximately 5% of 1997 barrel 
sales.

          In order to ensure the highest product quality, distributors must 
maintain proper rotation of the products at retail accounts and are required 
to replace the Company's malt beverage products at their own expense if sales 
to consumers have not occurred within the prescribed time period.

          In 1997, approximately RMB 63,000,000 was allocated to promotional 
advertising for Pabst Blue Ribbon beer and approximately RMB 63,700,000 was 
allocated to other specific promotional activities and incentives to 
distributors.  Advertising media include television, radio, billboards, 
magazines and newspapers.  In addition, the breweries provide their 
distributors with promotional gift items, sales incentive bonuses and volume 
discounts, and special lucky draw and specific promotional campaigns are held 
during the year.  Pabst Blue Ribbon beer has also been featured in beer 
festivals organized by the National Beer Industry Cooperative District 
Organizations in major, highly populated urban centers such as Beijing, 
Shanghai and Guangzhou.


MARKETS AND COMPETITION

          With the recent influx of foreign branded beer into the China 
markets, the Company anticipates that competition among all premium beers 
will grow and more marketing and advertising efforts will have to be utilized 
in order to maintain its market leadership.

          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 beer or the San Miguel, Foster's or 
Carlsberg brands.  Generally, a 640 ml. bottle of local beer typically sells 
for 1-2 RMB ($0.12 U.S. to $0.24 U.S.), compared to premium beers which sells 
for 4-6 RMB ($0.48 U.S. to $0.72 U.S.).

          MARKETS:  The beer market in China is experiencing tremendous 
growth in rates of production and demand.  However, the industry is largely 
fragmented and highly regionalized.  A key reason for the fragmented market 
is the lack of an effective transportation system.  China's system of 
highways is in an early stage of development, and combined with heavy 
traffic, makes it 

                                      12
<PAGE>

inefficient to distribute beer over long distances.  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, over 90% of which are 
small local breweries that produce non-premium beer for local or regional 
consumption.  However, certain Chinese taxes based on volume rather than 
sales price favor the higher priced premium beer breweries.

          To the extent the Chinese economy is constrained by the actions of 
the central government of China to reduce inflation and slow growth rates, 
the demand for the Company's premium beer products may be constrained.  
Recent development of the beer market tends towards the lower priced beer 
product, especially when restructured state owned enterprises have released 
their surplus work force, which then has less disposable income for premium 
beer consumption. The Company is taking steps to maintain its premium beer 
market share and to develop a new range of lower-priced products to suit the 
market's changing needs.

          COMPETITION:  Of the brands comprising the premium sector, Tsing 
Tao and Pabst Blue Ribbon are the market leaders.  Tsing Tao is the largest 
brewer of  beer in China, producing approximately 400,000 metric tons or 
3,400,000 barrels of beer in 1997.  Tsing Tao is one of the best selling 
beers in China and the largest Chinese exported brand.  It is sold in 32 
countries and is China's largest exported beer to the United States.  
However, the Company has been able to attract distributors from Tsing Tao due 
to the faster growth rate of Pabst Blue Ribbon beer as well as by offering 
higher margins.  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 Tsing Tao labels.


CAPITAL EXPANSION

          In 1994, the Company launched an expansion program to increase 
brewing capacity to fulfill projected volume requirements for the foreseeable 
future. Noble Brewery spent approximately RMB 216,300,000 in 1994 to 
construct the second phase brewing facilities and RMB 5,000,000 to perform 
routine maintenance in all plants and to make incremental capital upgrades to 
all production facilities.  Zhaoqing Brewery spent approximately RMB 
30,800,000 in 1994 to convert the facilities to produce Pabst Blue Ribbon 
beer and RMB 1,700,000 to perform routine maintenance.  In order to expand 
the annual production capacity from 50,000 metric tons to 100,000 metric 
tons, Zhaoqing Brewery commenced its expansion program in early 1995 and had 
completed all major equipment installation by the end of 1995.  Zhaoqing 
Brewery spent approximately RMB 139,800,000 in 1995 and early 1996 for this 
expansion program.

          In 1997, Noble Brewery spent approximately RMB 66,000,000 to 
acquire new packaging equipment and machinery, and Zhaoqing Brewery spent 

                                      13
<PAGE>

approximately RMB 5,000,000 for acquiring new equipment and renovating the 
existing machinery. 


INVESTMENT IN NEW BREWERY

          Pursuant to the joint venture agreement relating to Zao Yang High 
Worth Brewery, High Worth JV will contribute a total of RMB 16,104,000 as its 
capital contribution to Zao Yang High Worth Brewery, which will be payable in 
four installments through October 1998 to obtain 55% of the assets previously 
owned by Zao Yang Brewery.  All the revalued assets and liabilities of Zao 
Yang Brewery will be injected into Zao Yang High Worth Brewery upon 
completion of approval procedures. 

          The Joint Venture Agreement also provides that loans of RMB 
29,280,000 and RMB 16,000,000 from financial institutions will be arranged by 
Zao Yang High Worth Brewery in order to meet the funding requirements for 
equipment renovation and working capital, respectively.  If Zao Yang High 
Worth Brewery is unable to borrow the necessary amounts, High Worth JV and 
Zao Yang Brewery are obligated to contribute additional funds to Zao Yang 
High Worth Brewery in proportion to their respective interests.  

          On February 12, 1998, the Board of Directors of High Worth JV 
agreed that, with the approval of Zao Yang Brewery, Zao Yang High Worth 
Brewery may be changed into a joint stock company in which High Worth JV will 
reduce its equity interest to 51%, Zao Yang Brewery to 24%, with the 
remaining 25% to be allocated to the management and employees of Zao Yang 
High Worth Brewery.  This proposed change is subject to approval from the 
local management.


RESEARCH AND DEVELOPMENT

          The Company is continually engaging in research and development 
programs and has developed various improvements in raw materials, processes 
and packaging systems and in the development of innovative, quality products.

          The Company's research and development expenditures are primarily 
devoted to new product development, its 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 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.

                                      14
<PAGE>

          Electricity is supplied by the Zhaoqing City Electricity Bureau. 
Since the breweries are one of the larger employers in the region, the 
breweries are given priority in obtaining electricity.  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.


EMPLOYEES

          There are approximately 1,610 employees employed by Zhaoqing 
Brewery, Noble Brewery and the Marketing Company, as of December 31, 1997, 
categorized as follows:
<TABLE>
<CAPTION>
                                                    ZHAOQING   NOBLE  MARKETING
          FUNCTION                           TOTAL   BREWERY  BREWERY  COMPANY
          --------                           -----  --------  ------- ---------
     <S>                                    <C>    <C>       <C>     <C>
     (1)  Production                          859       351       508       --
     (2)  Engineering, Technology
          and Quality Control                 135        62        73       --
     (3)  Management and
          Administration                      199        43        70       86
     (4)  Warehouse                           154        22        42       90
     (5)  Others                              263       115       103       45
                                            -----       ---       ---      ---

                                            1,610       593       796      221
                                            -----       ---       ---      ---
                                            -----       ---       ---      ---
</TABLE>

          In 1997, labor costs (including the cost of benefits) accounted for 
approximately 3.2% and 4.5% of the total costs of production for Noble 
Brewery and Zhaoqing Brewery, respectively.  The Company expects average wage 
rates of the employees will increase by approximately 10% in 1998.

          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 the 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 in turn was owned by 
Guangdong Blue Ribbon.  The License Agreement was for a period of fifteen 
years from November 7, 1988. 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 

                                      15
<PAGE>

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 between 
Pabst Zhaoqing, Pabst US and Guangdong Blue Ribbon, all rights and duties of 
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, which are 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 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, 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.

                                      16
<PAGE>

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

SICHUAN 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.

          In order to facilitate the efficient distribution and sale of Pabst 
Blue Ribbon beer in China, the Company and Guangdong Blue Ribbon agreed at 
that time to coordinate the sales of Pabst Blue Ribbon beer in an orderly 
manner.  In April 1997, the Marketing Company and Sichuan Brewery entered 
into a Memorandum of Understanding which required Sichuan Brewery to sell all 
of its production of Pabst Blue Ribbon beer to the Marketing Company at 
mutually agreed ex-factory prices, and granted the Marketing Company the 
right to regulate production of Pabst Blue Ribbon beer to reflect market 
demand.

          Since the Marketing Company is only allowed to mark-up the cost of 
Pabst Blue Ribbon beer purchased in order to adequately cover the selling, 
advertising, promotional, distribution and administrative expenses incurred 
in selling to distributors, the sale of the Sichuan Brewery's production by 
the Marketing Company did not have a material effect on the Company's 
consolidated results of operations.  In 1997, Sichuan Brewery's production 
amounted to 13,430 metric tons, of which the Marketing Company distributed 
8,124 metric tons, representing 3.6% of the Company's total 1997 sales volume.

          In early October 1997, Sichuan Brewery advised the Marketing 
Company that it intended to commence selling its production of Pabst Blue 
Ribbon beer directly and that it would therefore cease selling its production 
of Pabst Blue Ribbon beer to the Marketing Company, effective immediately.

          In late October 1997, High Worth JV and the Marketing Company 
instituted formal legal proceedings against Guangdong Blue Ribbon and Sichuan 
Brewery.  A Statement of Claims was filed with the High Court of Guangdong 
Province in which Guangdong Blue Ribbon and Sichuan Brewery were named as the 
first and second defendant, respectively.  The Statement of Claims asserted 
that the defendants violated the terms of the Sublicensing Agreement signed 
between High Worth JV and Guangdong Blue Ribbon and breached the Long Term 
Sales Contracts signed between Marketing Company and Guangdong Blue Ribbon.  

          With the liaison efforts of the Guangdong Provincial Government and 
Zhaoqing City Government, High Worth JV, Marketing Company, Guangdong Blue 
Ribbon and Sichuan Brewery reached an out-of-court settlement on December 30, 
1997("Settlement Agreement").  The Settlement Agreement, signed by all 
parties involved and witnessed by the High Court of Guangdong Province, 
included the following terms and provisions:

(a)  High Worth JV will serve as the core organization for managing the 
     production and operation of the Pabst Blue Ribbon beer business in the 

                                      17
<PAGE>

     PRC. A Management Committee will be set up under the Board of Directors 
     of High Worth JV to liaise, coordinate and manage the procurement, 
     production, sale and future development of all Pabst Blue Ribbon beer 
     producing enterprises. 

(b)  The Marketing Company will act as the entity to unify and coordinate all 
     sales of Pabst Blue Ribbon beer in the PRC.  All of the Pabst Blue 
     Ribbon beer products produced by High Worth JV, Noble Brewery and any 
     other new joint ventures set up by High Worth JV will be distributed by 
     the Marketing Company under the coordination of the Management Committee.

(c)  The sales and marketing of Blue Ribbon mineral waters and non-carbonated 
     soft drinks will be handled by Guangdong Blue Ribbon upon confirmation 
     by the Board of Directors of the Marketing Company.

(d)  Sichuan Brewery will be restructured and renamed Sichuan Blue Ribbon 
     High Worth Brewery E Mei Limited ("Sichuan High Worth Brewery").  High 
     Worth JV, Guangdong Blue Ribbon and E Mei Brewery will own equity 
     interests in Sichuan High Worth Brewery of 51%, 20% and 29%, 
     respectively.  E Mei Brewery is the local brewery in Sichuan, which 
     leased its brewing facilities to Guangdong Blue Ribbon to form the 
     Sichuan Brewery.  The existing assets in Sichuan Brewery will be 
     revalued to derive their fair market value prior to the completion of 
     the formal restructuring, which is expected to be completed by the 
     middle of 1998.

     On February 12, 1998, the Board of Directors of High Worth JV resolved 
     that the new equity structure for Sichuan High Worth Brewery should be 
     revised to reflect 60% owned by High Worth JV and 40% owned by E Mei 
     Brewery.  The Board of Directors further resolved that if agreed by the 
     respective parties, Sichuan High Worth Brewery may be converted into a 
     joint stock company in which the equity interests of High Worth JV and E 
     Mei Brewery will be reduced to 51% and 24%, respectively, with the 
     remaining 25% allocated to the management and employees of Sichuan High 
     Worth Brewery. All the above proposed changes will be subject to 
     approval by the local government.

(e)  Guangdong Blue Ribbon committed to sublicense the right to use the Pabst 
     Blue Ribbon trademark to all new breweries to be established by High 
     Worth JV in the future.  Any new brewery will pay a royalty fee at the 
     same rate as Pabst US charges Guangdong Blue Ribbon plus a surcharge of 
     RMB 25 per metric ton.  All other terms and conditions will be the same 
     as the License Agreement. 

(f)  All legal costs incurred with regard to this proceeding will be equally 
     shared by the plaintiffs and defendants.

ZAO YANG HIGH WORTH BREWERY

          Pursuant to the terms of the Settlement Agreement and the High Worth
Sublicense Agreement, Guangdong Blue Ribbon is committed to grant a sublicense
agreement to Zao Yang High Worth Brewery for the right to produce 

                                      18
<PAGE>

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.  The 
granting of this sublicense is subject to confirmation by Pabst US, and Zao 
Yang High Worth Brewery meeting the required production standards for the 
production of Pabst Blue Ribbon beer.


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 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, the then subsidiary of Zhaoqing Brewery, which were utilized to 
produce and distribute beer under the Pabst Blue Ribbon brand name.  Zhaoqing 
Brewery continued to produce beer under local brands in its separate facility.

          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.  Zhaoqing Brewery produced and distributed beer 
under local brands at the time of this transaction.  Subsequently, in 
December 1994, the Company acquired all of the shares of Holdings (See 
"BUSINESS DEVELOPMENT").

OPERATION OF THE JOINT VENTURE COMPANIES

          The establishment and activities of High Worth JV and Noble 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.

          With regard to Noble Brewery, pursuant to the Noble Joint Venture 
Agreement, 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.  Under the Noble Joint 
Venture Agreement, Noble Brewery is governed by a board of directors 

                                      19
<PAGE>

consisting of five individuals, three of whom, including 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 may 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 board decision can be 
made without the approval of Zhaoqing Brewery's designee.

          With regard to High Worth JV, pursuant to 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 Sichuan Brewery Settlement 
Agreement, a Management Committee has been set up 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 the 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 into other provinces with local 
breweries outside of Guangdong Province.

                                      20
<PAGE>

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, Noble Brewery, High Worth JV and Guangdong Blue Ribbon on 
May 10, 1995 (the "Goldjinsheng Agreement") confirming that:

(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 
     production capacity of 100,000 tons per annum.

(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 the PRC ("Additional Facility") to a maximum 
     production capacity of 300,000 tons per annum.

     In the event that High Worth JV desires to obtain a sublicense for any 
     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 handle and organize the sales of 
     Pabst Blue Ribbon beer produced by High Worth JV and Noble Brewery.  
     High Worth JV and Noble Brewery will each create a separate distribution 
     company or division of their own.  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 the PRC.  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.  
Although the negotiation process was interrupted by the Sichuan Brewery 
issue, the Company anticipates that these discussions will be resumed in 1998.

                                      21
<PAGE>

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 is 
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 in the Chinese economy.

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

          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.  In the year ended December 31, 1993, as much as 80% by 
value of all foreign exchange transactions in China took place through the 
Swap Centers. The exchange rate quoted by the Bank of China differed 
substantially from that available in the Swap Centers.  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. However, the Swap Centers were retained, and 
foreign-funded enterprises have been permitted to satisfy foreign exchange 
requirements through the Swap Centers.

          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 

                                      22
<PAGE>

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.

          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 guaranties the "lawful rights and interests" of 
foreign investors in China.  The trend of legislation over the past twelve 
years has 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 become profitable.  The Income Tax rate 
for the following three years is reduced by 50% and is thereafter calculated 
at the full rate.  The 100% tax exemption for High Worth JV and the 50% tax 
exemption for Noble Brewery commenced on January 1, 1996.  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.

                                      23
<PAGE>

          Zao Yang High Worth Brewery is 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 invoices in support.  The Consumption Tax rate together with a 
government surcharge for brewery products is 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 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.


BUSINESS DEVELOPMENT

          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 

                                      24
<PAGE>

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 the transaction.

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


ITEM 2.   PROPERTIES

          The Company's major facilities are set forth below:

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 Brewery (to           City of Le Shanon on a site        Malt Beverages
be changed to Sichuan         containing approximately
High Worth Brewery            100,000 square meters
in mid-1998)

          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 will be modernized and new equipment will be 
added to convert it into another Pabst Blue Ribbon beer producing complex.

          In 1997, the Company estimates that Zhaoqing Brewery and Noble 
Brewery operated at approximately 74% and 73%, respectively, of their 
theoretical brewing capacities.  Annual production capacity can vary due to 
product mix, packaging mix and seasonality.

                                      25
<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

          In late October 1997, High Worth JV and the Marketing Company 
instituted formal legal proceedings against Guangdong Blue Ribbon and Sichuan 
Brewery.  A Statement of Claims was filed with the High Court of Guangdong 
Province in which Guangdong Blue Ribbon and Sichuan Brewery were named as the 
first and second defendant, respectively.  The Statement of Claims asserted 
that the defendants violated the terms of the Sublicensing Agreement signed 
between High Worth JV and Guangdong Blue Ribbon and breached the Long Term 
Sales Contract signed between Marketing Company and Guangdong Blue Ribbon.  A 
Settlement Agreement was entered into on December 30, 1997.  See ITEM 1 
"PABST LICENSING ARRANGEMENTS AND TRADEMARKS - Sichuan Brewery".


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, 1997.


                                      PART  II.

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

          The Class A Common Stock of CBR Brewing Company, Inc. is listed for 
trading on the OTC Bulletin Board under the symbol CBRB.  During 1995, 1996 
and 1997, there was extremely limited trading activity.

          The approximate number of security holders of record of the Class A 
Common Stock at March 31, 1998 was 10.

          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 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.

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

                                      26
<PAGE>

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 make a profit distribution 
to Holdings. Otherwise, it will be necessary to obtain approval and convert 
such distributions at the exchange centers.  At December 31, 1997, the 
Company's distributable profits were approximately RMB 65,972,000.

          On November 25, 1997, the Board of Directors of High Worth JV 
declared the first dividend distribution in which Holdings was entitled, of 
approximately RMB 83,000,000 which was based on PRC GAAP financial 
statements.  The dividend will be distributed in installments in order to 
avoid any disruption to High Worth JV's normal operating cash flow position.  
During the year ended December 31, 1997, Holdings received a total of RMB 
10,000,000 as a partial dividend distribution. 


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 US$1.00 to RMB 
8.32 at December 31, 1995, RMB 8.32 at December 31, 1996 and RMB 8.30 at 
December 31, 1997.
<TABLE>
<CAPTION>
                                             CBR Brewing Company, Inc.
(in RMB)                                          and Subsidiaries
                                             ------------------------
                                             Years Ended December 31,
                                ----------------------------------------------
                                     1997            1996              1995   
                                -------------    -------------     -----------
<S>                            <C>              <C>               <C>
Consolidated Statement
  of Income Data:

Sales, net of sales taxes       1,169,286,489    1,233,277.624     566,786,939
Gross profit                      208,326,796      194,138,432      71,133,533
Operating income                   11,214,860       25,325,483       6,458,405
Net income                         30,762,902       20,211,809      19,625,968

Net income per common share              3.84             2.53            2.45
Cash dividends declared per
  common share                            -0-              -0-             -0-
</TABLE>

                                      27
<PAGE>

<TABLE>
<CAPTION>
                                                As of December 31,            
                                ----------------------------------------------
                                     1997             1996            1995    
                                -------------    -------------     -----------
<S>                            <C>              <C>               <C>
Consolidated Balance
  Sheet Data:
 
Net working capital
  (deficiency)                   (102,725,259)     (83,554,409)    (97,555,553)
Total assets                      835,094,540      826,502,148     746,898,874
Long term liabilities              16,512,851       15,862,549      24,897,291
Advances from shareholders         73,617,552       73,794,948      73,794,948
Shareholders' equity              178,351,384      147,588,482     127,376,673
</TABLE>


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 Zhaoqing Brewery's 40% interest in Noble Brewery.

          The acquisition of Zhaoqing Brewery, including Zhaoqing Brewery's 
40% interest in Noble Brewery, has been accounted for under the purchase 
method of accounting.  The consolidated financial statements include the 
results of operations of Zhaoqing Brewery on a consolidated basis and Noble 
Brewery under the equity method of accounting for investments commencing 
October 31, 1994. Accordingly, the Company's post-acquisition consolidated 
statements of income are presented for the years ended December 31, 1995, 
1996 and 1997. 

          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).  

          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 and the 
mineral water and non-carbonated soft drinks produced by Guangdong Blue 
Ribbon under the Blue Ribbon brand name.  Zhaoqing Brewery HC owns a 70% 
interest and Guangdong Blue Ribbon owns a direct 30% interest and an indirect 
28% interest in the Marketing Company.  As a result, 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.  Sichuan Brewery 
commenced selling its production of Pabst Blue Ribbon beer through the 
Marketing Company in April 1997 (See ITEM 1. BUSINESS - SICHUAN BREWERY).  
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 

                                      28
<PAGE>

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 Zhaoqing Brewery HC), and 
because the Company controls the majority of the votes on the board of 
directors of the Marketing Company and Zhaoqing Brewery HC.

          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 at the end of 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 January 1996, Zhaoqing Brewery HC transferred all of its 
operating assets and liabilities to High Worth JV 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, the investments in Noble Brewery and the 
Marketing Company will be transferred to High Worth JV.  Zhaoqing Brewery HC 
is currently acting as the nominee for High Worth JV with respect to the 
investments in Noble Brewery and the Marketing Company.

          Upon the completion of the required procedures and documentation, 
all of the assets and liabilities formerly controlled by Zhaoqing Brewery 
will have been transferred to High Worth JV.  During 1996 and 1997, the 
operating activities of Zhaoqing Brewery were part of High Worth JV.  The 
consensus and approval from the local tax authority was obtained during 
January 1996.  In the following text, "Zhaoqing Brewery" refers to the 
brewing complex, which was transferred to High Worth JV in January 1996, and 
"Zhaoqing Brewery HC" refers to the PRC entity that previously owned the 
brewing complex from November 1994 through December 1995.

          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.  

                                      29
<PAGE>

          In 1997, Sichuan Brewery's production amounted to 13,430 metric 
tons and the Marketing Company has distributed 8,124 metric tons for Sichuan 
Brewery in 1997, which represented 3.6% of the Company's total 1997 sales 
volume.

          In 1998, Zao Yang High Worth Brewery will commence production of 
Pabst Blue Ribbon beer after the completion of converting the existing 
facilities into a Pabst Blue Ribbon beer brewing facility.  Pursuant to the 
joint venture agreement, Zao Yang High Worth Brewery is committed to sell all 
its beer products to the Marketing Company for resale.

CONSOLIDATED RESULTS OF OPERATIONS:

          Zhaoqing Brewery and Noble Brewery commenced distribution of their 
production of Pabst Blue Ribbon beer through the Marketing Company during 
April 1995 and July 1995, respectively.  The commencement of the Marketing 
Company's operations, which are presented on a consolidated basis, resulted 
in a significant change in the Company's operating structure and income 
statement presentation during 1995.  Accordingly, a comparison of results of 
operations for the years ended December 31, 1996 and 1997 to results of 
operations for the year ended December 31, 1995 is not necessarily meaningful.

          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")

YEARS ENDED DECEMBER 31, 1997 AND 1996:

SALES:

          For the year ended December 31, 1997, net sales, all of which were 
conducted through the Marketing Company, were RMB 1,169,286,489, of which RMB 
1,167,296,661 (99.8%) was from the sale of 227,418 metric tons of beer and 
RMB 1,989,828 (0.2%) was from the sale of mineral water and non-carbonated 
soft drinks.  During the year ended December 31, 1997, the Marketing Company 
purchased for resale RMB 675,247,962 and RMB 33,052,735 of beer products from 
Noble Brewery and Sichuan Brewery, respectively, and nil of mineral water and 
non-carbonated soft drinks from Guangdong Blue Ribbon.  Approximately 99% of 
total sales in 1997 were from products with the Pabst Blue Ribbon brand name.

          For the year ended December 31, 1996, net sales, all of which were 
conducted through the Marketing Company, were RMB 1,233,277,624 of which RMB 
1,158,091,595 (93.9%) was from the sale of 232,066 metric tons of beer and 
RMB 75,186,029 (6.1%) was from the sale of mineral water and non-carbonated 
soft drinks.  During the year ended December 31, 1996, the Marketing Company 
purchased for resale RMB 695,150,225 of beer products from Noble Brewery and 
RMB 69,166,604 of mineral water and non-carbonated soft drinks from Guangdong 
Blue Ribbon.  Approximately 99% of total sales in 1996 were from products 
with the Pabst Blue Ribbon brand name.

          Net sales decreased by RMB 63,991,135 or 5.2% in 1997 as compared to
1996, as a result of the Company's elimination of the sales of mineral 

                            30
<PAGE>

water, non-carbonated soft drinks and red wine in 1997.  During 1996, the 
Company sold mineral water, non-carbonated soft drinks and red wine, which 
were purchased from Guangdong Blue Ribbon.  The Company discontinued the sale 
of mineral water, non-carbonated soft drinks and red wine in late 1996.  
During the year ended December 31, 1997, net sales of beer products increased 
by RMB 9,205,066 or 0.8% to RMB 1,167,296,661, as compared to RMB 
1,158,091,595 for the year ended December 31, 1996.  The Company sold 227,418 
metric tons of beer to distributors in 1997 as compared to 232,066 metric 
tons of beer in 1996.  The slight increase in net sales of beer products in 
1997 as compared to 1996 was primarily attributable to a shift in the sales 
mix to higher value products in 1997. 

          During the year ended December 31, 1997, Zhaoqing Brewery sold 
74,216 metric tons of beer to the Marketing Company, of which 1,156 metric 
tons (1.6%) were local brand beer and 73,060 metric tons (98.4%) were Pabst 
Blue Ribbon beer.  The 1,156 metric tons of local brand beer were produced 
throughout 1997. During the year ended December 31, 1996, Zhaoqing Brewery 
sold 83,439 metric tons of beer to the Marketing Company, of which 2,526 
metric tons (3.0%) were local brand beer and 80,913 metric tons (97.0%) were 
Pabst Blue Ribbon beer. Total beer sold by Zhaoqing Brewery to the Marketing 
Company decreased by 9,223 metric tons or 11.1% from 1996 to 1997.

          The Marketing Company regulates the production of Pabst Blue Ribbon 
beer by Zhaoqing Brewery and Noble Brewery in accordance with their 
respective production capacities in order to balance warehouse inventory 
levels and accommodate projected market demand.  As a result of heavy rains 
in China during the three months ended September 30, 1997, which caused 
widespread flooding and washed out many roads, the Company's ability to ship 
its beer products to distributors was significantly impaired during this 
period.  In addition, the Company believes that the widespread flooding also 
caused a temporary decrease in consumer's discretionary income available to 
purchase the Company's products. In 1997, the production by Sichuan Brewery 
also represented sales volume of 8,124 metric tons.  As a result of these 
factors, total beer sold by Zhaoqing Brewery and Noble Brewery to the 
Marketing Company decreased during the year ended December 31, 1997 as 
compared to the year ended December 31, 1996, as the Company reduced 
production to correspond to lower demand in an effort to avoid excessive 
finished goods inventory.

GROSS PROFIT:

          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.  For the 
year ended December 31, 1996, total gross profit was RMB 194,138,432 or 15.7% 
of total net sales, and consisted of gross profit from beer sales of RMB 
188,204,326 or 16.3% of net sales of beer and gross profit from sales of 
mineral water, non-carbonated soft drinks and red wine of RMB 5,934,106 or 
7.9% of net sales of mineral water, non-carbonated soft drinks and red wine. 

                                      31
<PAGE>

          Gross margin from beer sales increased to 17.8% in 1997 as compared 
to 16.3% in 1996 as a result of a shift in the sales mix to slightly higher 
margin products in 1997 in response to changing market conditions, as well as 
the effect of cost control measures.

          The Company expects that it will experience pressure on its gross 
profit margin in 1998 as a result of the following factors:  a continuing 
softening of consumer demand in China caused in substantial part by the 
central government of China's regulatory controls and economic policies, and 
increasing competition from foreign premium brand beers.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

          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.

          For the year ended December 31, 1996, selling, general and 
administrative expenses were RMB 168,812,949 or 13.7% of net sales, 
consisting of selling expenses of RMB 103,460,671 and general and 
administrative expenses of RMB 65,352,278.  Net of the allowance for doubtful 
accounts of RMB 9,914,114 recorded during 1996, general and administrative 
expenses were RMB 55,438,164.

          Selling expenses include costs relating to the advertising, 
promotion, marketing and distribution of Pabst Blue Ribbon beer in China.  
Selling expenses increased by RMB 25,741,916 or 24.9% in 1997 as compared to 
1996, and as a percent of net sales, to 11.0% in 1997 from 8.4% in 1996.  
Selling expenses increased in 1997 as compared to 1996, both on an absolute 
basis and as a percentage of sales, as a result of the increase in selling 
expenses in 1997 related to beer products exceeding the reduction in selling 
expenses related to mineral water, non-carbonated soft drinks and red wine, 
which products the Company sold in 1996 but is not selling in 1997.  During 
1997, the Company implemented a substantially expanded advertising and 
promotional program to stimulate consumer demand, provide distributor 
incentives and to maintain the market position of Pabst Blue Ribbon beer in 
China as a result of softening consumer demand and increasing competition 
from foreign premium brand beer.

          General and administrative expenses include the costs associated 
with the operation of the Company's management and 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 7,156,327 or 12.9% in 1997 as compared to 1996, and 
as a percentage of net sales, to 5.4% in 1997 from 4.5% in 1996.  General and 
administrative expenses increased in 1997 as compared in 1996 primarily as a 
result of increased personnel and personnel related costs.

          The allowance for doubtful accounts, which is calculated based 
primarily on the age of outstanding accounts receivable, decreased to 0.5% of

                                      32
<PAGE>

net sales in 1997 as compared to 0.8% of net sales in 1996 as a result of a 
reduction in the age of accounts receivable outstanding in 1997.  However, 
accounts receivable are typically outstanding for a longer period of time in 
China than in the United States.

OPERATING INCOME:

          For the year ended December 31, 1997, operating income was RMB 
11,214,860 or 1.0% of net sales.  For the year ended December 31, 1996, 
operating income was RMB 25,325,483 or 2.1% of net sales.  The decrease in 
operating income is primarily attributable to the elimination of the sales of 
mineral water, non-carbonated soft drinks and red wine, reduction in sales 
tonnage and increased selling, general and administrative expenses.  The 
adjustment and regulation of production between Zhaoqing Brewery and Noble 
Brewery by the Marketing Company also contributed to the decrease in 
operating income in 1997 as compared to 1996.  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 1997 
that were not fully compensated for in the Marketing Company's intra-company 
pricing structure. Accordingly, the Marketing Company has reduced the price 
that it pays for Pabst Blue Ribbon beer by 3% in 1998, which is expected to 
benefit the Company's consolidated results of operations in 1998 and 
subsequent periods.

INTEREST INCOME AND INTEREST EXPENSE:

          For the year ended December 31, 1997, interest income was RMB 
6,255,590 as compared to interest income of RMB 6,119,470 for the year ended 
December 31, 1996.  The increase in interest income in 1997 of RMB 136,120 or 
2.2% as compared to 1996 was primarily the result of an increase of RMB 
1,554,699 in interest earned on amounts due from Guangdong Blue Ribbon during 
1997.

          For the year ended December 31, 1997, interest expense, net of 
amounts capitalized, was RMB 15,503,189, as compared to RMB 20,767,252 for 
the year ended December 31, 1996.  The decrease in interest expense in 1997 
of RMB 5,264,063 or 25.3% as compared to 1996 was primarily the result of a 
decrease in customer deposits, a decrease in capital lease obligations, a 
decrease in interest rates on bank borrowings by Zhaoqing Brewery, and a 
decrease of RMB 4,655,308 in interest paid on amounts due to Guangdong Blue 
Ribbon and other related companies.

INCOME TAXES:

          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 1996 and 1997.  With respect to the Company's estimated 
United States Federal income tax liability for the distributed earnings of 
High Worth JV, no income tax expense was provided due to the Company's 
election in 1997 to treat High Worth JV as a partnership for United States 
Federal income tax purposes.

                                      33
<PAGE>

NET INCOME:

          For the year ended December 31, 1997, net income increased to RMB 
30,762,902 (RMB 3.84 per share) or 2.6% of net sales, as compared to net 
income of RMB 20,211,809 (RMB 2.53 per share) or 1.6% of net sales for the 
year ended December 31, 1996.

YEARS ENDED DECEMBER 31, 1996 AND 1995:

SALES:

          For the year ended December 31, 1996, net sales, almost all of 
which were conducted through the Marketing Company, were RMB 1,233,277,624, 
of which RMB 1,158,091,595 (93.9%) was from the sale of 232,066 metric tons 
of beer and RMB 75,186,029 (6.1%) was from the sale of mineral water and 
non-carbonated soft drinks.  During the year ended December 31, 1996, the 
Marketing Company purchased for resale RMB 695,150,225 of beer products from 
Noble Brewery and RMB 69,166,604 of mineral water and non-carbonated soft 
drinks from Guangdong Blue Ribbon.  Approximately 99% of total sales in 1996 
were from products with the Pabst Blue Ribbon brand name.

          For the year ended December 31, 1995, net sales, consisting of 
sales both by Zhaoqing Brewery directly and through the Marketing Company, 
were RMB 566,786,939, of which RMB 504,500,315 (89.0%) was from the sale of 
107,015 metric tons of beer and RMB 62,286,624 (11.0%) was from the sale of 
mineral water and non-carbonated soft drinks.  During the year ended December 
31, 1995, the Marketing Company purchased for resale RMB 327,805,406 of beer 
product from Noble Brewery and RMB 61,708,086 of mineral water and 
non-carbonated soft drinks from Guangdong Blue Ribbon.  Approximately 95% of 
total sales in 1995 were from products with the Pabst Blue Ribbon brand name. 

          For the year ended December 31, 1996, Zhaoqing Brewery sold 83,439 
metric tons of beer, of which 2,526 metric tons (3.0%) were local brand beer 
and 80,913 metric tons (97.0%) were Pabst Blue Ribbon beer.  The 2,526 metric 
tons of local brand beer were produced throughout 1996.  During the year 
ended December 31, 1995 Zhaoqing Brewery sold 45,708 metric tons of beer, of 
which 11,388 metric tons (24.9%) were local brand beer and 34,320 metric tons 
(75.1%) were Pabst Blue Ribbon beer.  Total beer sold increased by 37,731 
metric tons or 82.5% from 1995 to 1996 as a result of increase in production 
capacity.

GROSS PROFIT:

          For the year ended December 31, 1996, gross profit was RMB 
194,138,432 or 15.7% of net sales, as compared to RMB 71,133,533 or 12.6% of 
net sales for the year ended December 31, 1995.  The increase in the gross 
profit margin of 3.1% on an absolute basis or 24.6% in 1996 as compared to 
1995 was a result of a change in the product mix, an increase in sales unit 
volume, an increase in sales prices, the introduction of a bottle recycling 
program during 1996, and production of Pabst Blue Ribbon beer throughout 1996.

                                      34
<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

          For the year ended December 31, 1996, selling, general and 
administrative expenses were RMB 168,812,949 (13.7% of net sales), consisting 
of selling expenses of RMB 103,460,671 and general and administrative 
expenses of RMB 65,352,278.  For the year ended December 31, 1995, selling, 
general and administrative expenses were RMB 64,675,128 (11.4% of net sales), 
consisting of selling expenses of RMB 32,821,498 and general and 
administrative expenses of RMB 31,853,630.

          Selling expenses include costs relating to the advertising, 
promotion, marketing and distribution of Pabst Blue Ribbon beer in China.  
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 Zhaoqing Brewery and Noble Brewery during April 1995 
and July 1995, respectively, and incurred most of the 1995 and almost all of 
the 1996 selling expenses.  General and administrative expenses include the 
costs associated with the operation of the Company's executive offices, and 
the legal and accounting costs associated with the operation of a public 
company.

          Selling expenses increased by RMB 70,639,173 or 215.2% in 1996 as 
compared to 1995, and represented 8.4% of net sales in 1996 as compared to 
5.8% of net sales in 1995, as a result of increased marketing and promotion 
costs incurred during 1996 to support increased marketing efforts 
necessitated by the increased production capacity of Zhaoqing Brewery and 
Noble Brewery.  General and administrative expenses increased by RMB 
33,498,648 or 105.2% in 1996 as compared to 1995, and represented 5.3% of net 
sales in 1996 as compared to 5.6% of net sales in 1995.  During the year 
ended December 31, 1996, the Company recorded an allowance for doubtful 
accounts of RMB 9,914,114, as compared to an allowance for doubtful accounts 
of RMB 5,600,000 for the year ended December 31, 1995.

OPERATING INCOME:

          For the year ended December 31, 1995, operating income was RMB 
25,325,483 or 2.1% of net sales, as compared to operating income of RMB 
6,458,405 or 1.1% of net sales for the year ended December 31, 1995.

INTEREST INCOME AND INTEREST EXPENSE:

          For the year ended December 31, 1996, interest income was RMB 
6,119,470.  There was no interest income for the year ended December 31, 
1995. The increase in interest income in 1996 as compared to 1995 is 
primarily the result of interest earned on amounts due from Guangdong Blue 
Ribbon during 1996.

          For the year ended December 31, 1996, interest expense, net of 
amounts capitalized, was RMB 20,767,252, as compared to RMB 3,236,058 for the 
year ended December 31, 1995.  The increase in interest expense in 1996 as 
compared to 1995 is primarily the result of amounts borrowed from Guangdong 
Blue Ribbon, increased borrowings by Zhaoqing Brewery and the amounts 
borrowed 

                                      35
<PAGE>

from related companies that are controlled by beneficial shareholders of the 
Company.

INCOME TAXES:

          For the year ended December 31, 1996, income tax expense was RMB 
4,721,444.  Although the Company's operations in China were subject to a 100% 
tax exemption in 1995 and 1996, deferred income taxes of RMB 308,444 were 
recorded with respect to the Company's operations in China, and RMB 4,413,000 
were recorded with respect to the Company's estimated United States Federal 
income tax liability resulting from earnings distributed as dividends by 
Noble Brewery in 1997.  For the year ended December 31, 1995, income tax 
expense was RMB 1,000,000, which represented deferred income taxes as a 
result of temporary timing differences with respect to accelerated 
depreciation of property, plant and equipment. 

NET INCOME:

          For the year ended December 31, 1996, net income was RMB 20,211,809 
(RMB 2.53 per share) or 1.6% of net sales, as compared to net income of RMB 
19,625,968 (RMB 2.45 per share) or 3.5% of net sales for the year ended 
December 31, 1995.

NOBLE BREWERY

Years Ended December 31, 1997 and 1996:

SALES:

          For the year ended December 31, 1997, net sales were RMB 
639,678,595, consisting of 146,148 metric tons of beer sold to the Marketing 
Company for resale and 665 metric tons of beer sold to Guangdong Blue Ribbon. 
 For the year ended December 31, 1996, net sales were RMB 655,316,991, 
consisting of 154,435 metric tons of beer sold to the Marketing Company for 
resale.

          During the year ended December 31, 1997, Noble Brewery sold 146,813 
tmetric tons of beer, as compared to 154,435 metric tons of beer sold during 
the year ended December 31, 1996.  Total beer sold decreased by 7,622 metric 
tons or 4.9% from 1996 to 1997 as a result of the regulation of sales by the 
Marketing Company, which purchases beer from the two breweries in accordance 
with their respective production capacities, reduction in sales tonnage, and 
the production by Sichuan Brewery in 1997.

GROSS PROFIT:

          For the year ended December 31, 1997, gross profit was RMB 
179,062,125 or 28.0% of net sales, as compared to gross profit of RMB 
145,150,002 or 22.1% of net sales for the year ended December 31, 1996.  The 
increase in the gross profit margin of 5.9% on an absolute basis or 26.7% in 
1997 as compared to 1996 was a result of a change in the product mix, the 
decrease in cost of raw materials, cost control measures, and the Marketing 

                                      36
<PAGE>

Company handling the distribution of all of the Company's production of Pabst 
Blue Ribbon beer throughout 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

          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.  For the year ended December 31, 1996, selling, general 
and administrative expenses were RMB 38,937,354 (5.9% of net sales), 
consisting of selling expenses of RMB 6,057,013 and general and 
administrative expenses of RMB 32,880,341.  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 most of the 1995 and almost all of the 1996 and 1997 
selling expenses. 

          Selling expenses decreased by RMB 2,364,491 or 39.0% in 1997 as 
compared to 1996, and represented 0.6% of net sales in 1997 as compared to 
0.9% of net sales in 1996, as a result of effective cost controls and the 
establishment of the Marketing Company to be responsible for all the 
advertising and promotional activities.  General and administrative expenses 
decreased by RMB 379,778 or 1.2% in 1997 as compared to 1996, and represented 
5.1% of net sales in 1997 as compared to 5.0% of net sales in 1996.  During 
the year ended December 31, 1997, Noble Brewery credited allowance for 
doubtful accounts of RMB 1,207,252, as compared to providing an allowance for 
doubtful accounts of RMB 1,459,963 for the year ended December 31, 1996.

OPERATING INCOME:

          For the year ended December 31, 1997, operating income was RMB 
142,869,040 or 22.3% of net sales, as compared to operating income of RMB 
106,212,648 or 16.2% of net sales for the year ended December 31, 1996.

INTEREST INCOME AND INTEREST EXPENSE:

          For the year ended December 31, 1997, interest income was RMB 
2,078,006, as compared to interest income of RMB 3,901,929 for the year ended 
December 31, 1996, due mainly to the fact that the amount of the average 
monthly bank balance was lower in 1997.  Also, starting from the last quarter 
of 1997, the Marketing Company commenced to assign and endorse short term 
bills receivable to Noble Brewery and High Worth JV in order to facilitate 
the two breweries to arrange their own financing, resulting in lower interest 
income from bank deposits in 1997 for Noble Brewery.

          For the year ended December 31, 1997, interest expense was RMB 
1,458,454, as compared to interest expense of RMB 3,450,585 for the year 
ended December 31, 1996, as a result of lower borrowings.

                                      37
<PAGE>

INCOME TAXES:

          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.  For the year ended December 31, 1996, income tax expense was RMB 
16,535,421, which consisted of RMB 13,053,421 for PRC income taxes and RMB 
3,500,000 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 is 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, 1997, net income was RMB 
122,156,976 or 19.1% of net sales, as compared to RMB 90,128,571 or 13.8% of 
net sales for the year ended December 31, 1996.

Years Ended December 31, 1996 and 1995:

SALES:

          During the year ended December 31, 1996, Noble Brewery sold 154,435 
metric tons of beer, as compared to 161,200 metric tons of beer sold during 
the year ended December 31, 1995.  Total beer sold decreased by 6,765 metric 
tons or 4.2% from 1995 to 1996 as a result of the regulation of sales by the 
Marketing Company, which purchases beer from the two breweries in accordance 
with their respective production capacities.

          For the year ended December 31, 1996, net sales were RMB 
655,316,991, consisting of 154,435 metric tons of beer sold to the Marketing 
Company for resale.  For the year ended December 31, 1995, net sales were RMB 
681,724,168, consisting of 161,200 metric tons of beer sold, including RMB 
327,805,406 of beer sold to the Marketing Company for resale.

GROSS PROFIT:

          For the year ended December 31, 1996, gross profit was RMB 
145,150,002 or 22.1% of net sales, as compared to gross profit of RMB 
155,864,163 or 22.9% of net sales for the year ended December 31, 1995.  The 
decrease in the gross profit margin of 0.8% on an absolute basis or 3.4% in 
1996 as compared to 1995 was a result of a change in the product mix, the 
increase in cost of raw materials, and the Marketing Company handling the 
distribution of all of the Company's production of Pabst Blue Ribbon beer 
throughout 1996. 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

          For the year ended December 31, 1996, selling, general and 
administrative expenses were RMB 38,937,354 (5.9% of net sales), consisting 
of 

                                      38
<PAGE>

selling expenses of RMB 6,057,013 and general and administrative expenses of 
RMB 32,880,341.  For the year ended December 31, 1995, selling, general and 
administrative expenses were RMB 60,819,562 (8.9% of net sales), consisting 
of selling expenses of RMB 31,794,779 and general and administrative expenses 
of RMB 29,024,783.  Selling expense consists of warehousing, storage and 
freight costs, and, in 1995, also included advertising, promotion, marketing 
and distribution costs prior to the Marketing Company commencing the 
distribution of Noble Brewery's production in July 1995.

          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 most of the 1995 and almost all of the 1996 selling 
expenses.

          Selling expenses decreased by RMB 25,737,766 or 80.9% in 1996 as 
compared to 1995, and represented to 0.9% of net sales in 1996 as compared to 
4.7% of net sales in 1995, as a result of the establishment of the Marketing 
Company in 1995.  General and administrative expenses increased by RMB 
3,855,558 or 13.3% in 1996 as compared to 1995, and represented 5.0% of net 
sales in 1996 as compared to 4.2% of net sales in 1995.  During the year 
ended December 31, 1996, Noble Brewery recorded an allowance for doubtful 
accounts of RMB 1,459,963, as compared to an allowance for doubtful accounts 
of RMB 786,740 for the year ended December 31, 1995.

OPERATING INCOME:

          For the year ended December 31, 1996, operating income was RMB 
106,212,648 or 16.2% of net sales, as compared to operating income of RMB 
95,044,601 or 13.9% of net sales for the year ended December 31, 1995.

INTEREST INCOME AND INTEREST EXPENSE:

          For the year ended December 31, 1996, interest income was RMB 
3,901,929, as compared to interest income of RMB 3,846,001 for the year ended 
December 31, 1995.

          For the year ended December 31, 1996, interest expense was RMB 
3,450,585, as compared to interest expense of RMB 2,240,015 for the year 
ended December 31, 1995, as a result of higher borrowings.

INCOME TAXES:

          For the year ended December 31, 1996, income tax expense was RMB 
16,535,421, which consisted of RMB 13,053,421 for PRC income taxes and RMB 
3,500,000 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, 1995, income tax expense was RMB 
2,200,000, which represented the deferred income taxes as a result of 
temporary timing differences with respect to accelerated depreciation of 
property, plant and equipment.  During 1996 and 1995, Noble Brewery was 
subject to a 50% and 100% tax exemption, respectively.

                                      39
<PAGE>

NET INCOME:

          For the year ended December 31, 1996, net income was RMB 90,128,571 
or 13.8% of net sales, as compared to RMB 94,450,587 or 13.9% of net sales 
for the year ended December 31, 1995.

CONSOLIDATED FINANCIAL CONDITION - DECEMBER 31, 1997:

LIQUIDITY AND CAPITAL RESOURCES

          For the year ended December 31, 1997, the Company's operations 
provided cash resources of RMB 65,015,789.  The major components of the cash 
provided from operations in 1997 were the decrease of RMB 43,063,703 in 
accounts receivable, the dividends received from an associated company of RMB 
34,413,511, and the increase of RMB 42,581,584 in amount due to an associated 
company.  The Company's cash balance increased by RMB 36,383,360 to RMB 
76,092,954 at December 31, 1997, as compared to RMB 39,709,594 at December 
31, 1996.  The Company's net working capital deficit increased by RMB 
19,170,850 to 102,725,259 at December 31, 1997, as compared to RMB 83,554,409 
at December 31, 1996.  As a result, the Company's current ratio decreased 
slightly to 0.79:1 at December 31, 1997 as compared 0.82:1 at December 31, 
1996.

          Net of an allowance for doubtful accounts of RMB 5,314,858 for the 
year ended December 31, 1997, accounts receivable decreased by RMB 43,063,703 
or 22.5% to RMB 120,466,933 at December 31, 1997, as compared to RMB 
168,845,494 at December 31, 1996, as a result of a change in credit policy by 
the Marketing Company implemented in 1997.  Commencing January 1, 1997, as a 
result of more intensive competition from other premium brand beers in China, 
the Marketing Company abolished the customer deposit requirement except for 
certain new customers which are required to make a cash deposit as security 
for their purchases.  Customers with material transaction volume are required 
to issue bills of exchange from their respective banks to secure part or all 
of the payment on the due date.  The Marketing Company has also provided 
extended credit terms to certain distributors that meet minimum financial 
criteria.  The Marketing Company has implemented tighter credit control 
aiming at reducing the total balance of accounts receivable.  At December 31, 
1997, bills receivable had decreased by RMB 3,098,259 or 8.0% to RMB 
35,555,400, as compared to RMB 38,653,659 at December 31, 1996. 

          The amounts due from related companies mainly represented 
receivable balances from Guangdong Blue Ribbon and its affiliated companies.  
The amounts due from related companies decreased by RMB 3,422,318 or 10.3% to 
RMB 29,667,015 at December 31, 1997, as compared to RMB 33,089,333 at 
December 31, 1996.  The decrease was primarily due to the increase in 
payments by Guangdong Blue Ribbon and the increase in transaction volume with 
other related companies under normal operating levels during the year.  The 
amounts due from Guangdong Blue Ribbon and its affiliates were short term in 
nature and are expected to be paid in 1998.

          The Company's accounts payable decreased by RMB 9,448,385 or 31.7% and
accrued liabilities increased by RMB 3,056,142 or 4.1% to an aggregate of RMB
97,815,003 at December 31, 1997 as compared to RMB 104,207,246 at December 31,
1996.  The decrease in accounts payable was primarily due to the increase 

                                      40
<PAGE>

in payments to suppliers in 1997, and the increase in accrued expenses was a 
result of the expansion of production and operating activities.

          Customer deposits decreased by RMB 52,323,600 or 88.7% to RMB 
6,680,000 at December 31, 1997, as compared to RMB 59,003,600 at December 31, 
1996, as a result of the change in credit policy implemented by the Marketing 
Company in 1997 in response to the changing market environment.  Since the 
Company pays interest on customer deposits, the decrease in customer deposits 
outstanding during 1997 has also contributed to a decrease in interest 
expense in 1997 as compared to 1996.

          The amount due to an associated company increased by RMB 42,581,584 
or 25.6% to RMB 209,083,335 at December 31, 1997 as compared to RMB 
166,501,751 at December 31, 1996, and represents the amounts due to Noble 
Brewery from its sale of Pabst Blue Ribbon beer to the Marketing Company.  
The balance due to Noble Brewery increased as a result of the extended credit 
terms provided by the Marketing Company to certain distributors, which in 
turn caused a commensurate increase in the amount due to Noble Brewery, 
reflecting the lengthened collection cycle.

          The amounts due to related companies increased by RMB 15,433,346 or 
72.3% to RMB 36,791,001 at December 31, 1997, as compared to RMB 21,357,655 
at December 31, 1996, and consist primarily of payable balances resulting 
from increases in purchases of packaging materials. 

          During the year ended December 31, 1997, the Company's secured bank 
loans increased by RMB 3,000,000.  The bank loans bear interest at rates 
ranging from 11.1% to 12.1%, 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.

          During 1997, Noble Brewery declared and paid a dividend relating to 
earnings for the year ended December 31, 1996, resulting in a dividend to 
Zhaoqing Brewery HC of RMB 34,413,511.

          On November 25, 1997, the Board of Directors of High Worth JV 
declared the first dividend distribution, in which Holdings was entitled, of 
approximately RMB 83,000,000.  The dividend will be distributed by 
installments in order to avoid any disruption to High Worth JV's normal 
operating cash flow position.  During the year ended December 31, 1997, 
partial dividends of RMB 15,000,000 and RMB 10,000,000 were distributed to 
Guangdong Blue Ribbon and Holdings, respectively.

          In connection with the acquisition of High Worth JV, 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 shareholdings interests in 
August 1996 (West Coast Star Enterprises Ltd. - US$4,800,000; Mapesbury 
Limited -US$1,600,000;  Redcliffe Holdings Ltd. - US$1,600,000).  The 
advances 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 
advance 

                                      41
<PAGE>

or part thereof by allotment of shares at par value in Holdings.  As of 
December 31, 1997, advances from such shareholders, West Coast Star 
Enterprises Ltd., Mapesbury Limited, Redcliffe Holdings Ltd. and Oriental 
Win, were approximately RMB 39,800,000, RMB 13,300,000, RMB 13,300,000 and 
RMB 7,200,000, respectively.

          In February 1998, Mapesbury Limited advised the Company that the 
right to collect its right to RMB 13,300,000 advance was assigned to Top Link 
Development Limited.  Mapesbury Limited also transferred its shares in the 
Company to Top Link Development Limited. 

          During the year ended December 31, 1997, Guangdong Blue Ribbon and 
its affiliated companies provided the Company with raw materials financing 
aggregating RMB 19,500,000, which obligations are unsecured, interest free 
and repayable on demand.  In addition, during the year ended December 31, 
1997, companies beneficially owned by Guangdong Blue Ribbon and directors of 
the Company provided loans in the form of advances to the Company aggregating 
RMB 17,300,000, which obligations are unsecured, bear interest at 12% per 
annum and are repayable on demand.

          For the year ended December 31, 1997, additions to property, plant 
and equipment aggregated RMB 10,089,937.  The Company anticipates that 
additional capital expenditures in connection with the continuing expansion 
and improvement of production facilities at Zhaoqing Brewery during the year 
1998 will be approximately RMB 20,000,000, a portion of which is expected to 
be funded by lease financing.

          Guangdong Blue Ribbon had previously provided and committed to 
provide Zhaoqing Brewery with a line of credit, or to otherwise arrange 
financing, sufficient to finance the purchase of new machinery and equipment 
in connection with the planned expansion of Zhaoqing Brewery to an annual 
production capacity of 100,000 metric tons of beer.  Because of the 
previously described activities of Guangdong Blue Ribbon with respect to the 
Sichuan Brewery, and since the expansion of Zhaoqing Brewery was completed 
during early part of 1997, the Company does not anticipate that Guangdong 
Blue Ribbon will provide or need to provide any additional funds or advances 
to finance the continuing development of Zhaoqing Brewery in the near future. 
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, 1998.  In order to finance the continuing capital 
requirements of the Company, the Company has begun 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 borrowing or equity financing by 
the Company.

                                      42
<PAGE>

INFLATION AND CURRENCY MATTERS:

          In recent years, 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 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 success of the Company depends in 
substantial part on the continued growth and development of the Chinese 
economy.

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

          Zhaoqing Brewery and Noble Brewery conduct virtually all of their 
business in China and, accordingly, the sale of their products are settled 
primarily in RMB.  As a result, devaluation of the RMB against the USD would 
adversely affect their financial performance when measured in USD, and could 
have material adverse effects upon the results of operations and financial 
condition.  In addition, a significant portion of revenues will need to be 
converted into USD on a continuing basis to meet foreign currency 
obligations. Although prior to 1994 the RMB experienced significant 
devaluation against the USD, the RMB has remained fairly stable during 1995, 
1996 and 1997.  The exchange rate quoted by Bank of China was US$1.00 to RMB 
8.32 at December 31, 1995, RMB 8.32 at December 31, 1996, and RMB 8.30 at 
December 31, 1997.

ENVIRONMENTAL MATTERS:

          Management believes that the Company complies with all national and 
local environmental protection laws and regulations of the PRC.  In 1997, 
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.


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 1996 and 1997 Quarterly Financial Information, in RMB 
(unaudited):
<TABLE>
<CAPTION>
                                                1997            1996    
                                            -----------      -----------
THREE MONTHS ENDED MARCH 31:
<S>                                        <C>              <C>
Sales, net of sales taxes                   310,895,516      277,531,766
Gross profit                                 54,721,601       43,507,222

                                      43
<PAGE>

Operating income                              6,177,923        6,953,738
Net income                                    9,197,766        3,671,837
Net income per common share                        1.14              .46
 
THREE MONTHS ENDED JUNE 30:

Sales, net of sales taxes                   331,145,259      353,658,873
Gross profit                                 63,563,031       55,699,266
Operating income                             14,270,056       10,476,677
Net income                                    9,706,636        5,000,557
Net income per common share                        1.21              .63

THREE MONTHS ENDED SEPTEMBER 30:

Sales, net of sales taxes                   284,987,371      300,905,499
Gross profit                                 42,119,668       44,986,152
Operating income                                674,477        7,666,083
Net income                                    5,952,987        3,989,207
Net income per common share                        0.74              .50

THREE MONTHS ENDED DECEMBER 31:

Sales, net of sales taxes                   242,258,343      301,181,486
Gross profit                                 47,922,496       49,945,792
Operating income (loss)                      (9,907,596)         228,985
Net income                                    5,905,513        7,550,208
Net income per common share                        0.75              .94

YEAR ENDED DECEMBER 31:

Sales, net of sales taxes                 1,169,286,489    1,233,277,624
Gross profit                                208,326,796      194,138,432
Operating income                             11,214,860       25,325,483
Net income                                   30,762,902       20,211,809
Net income per common share                        3.84             2.53
</TABLE>

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

          Effective November 22, 1996, the Company dismissed Ernst & Young as 
the Company's independent accountants, and engaged Deloitte Touche Tohmatsu 
as the Company's new independent accountants.  Prior to the engagement of 
Deloitte Touche Tohmatsu, the Company did not consult with that firm 
regarding the application of accounting principles to a specified 
transaction, either completed or proposed, or the type of audit opinion that 
might be rendered on the Company's financial statements.  Deloitte Touche 
Tohmatsu were the independent accountants for Noble Brewery. 

          The decision to change accountants was approved by the Company's 
Board of Directors. 

                                      44
<PAGE>

          None of the reports by Ernst & Young on such financial statements 
contained an adverse opinion or a disclaimer of opinion, or were qualified or 
modified as to uncertainty, audit scope or accounting principles. 

          During the ten months ended October 31, 1994, the two months ended 
December 31, 1994, the year ended December 31, 1995 and the period from 
January 1, 1996 through November 22, 1996, there were no disagreements with 
Ernst & Young on any matter of accounting principles or practices, financial 
statement disclosure or auditing scope or procedure, which disagreements, if 
not resolved to the satisfaction of Ernst & Young would have caused Ernst & 
Young to make reference to the subject matter of the disagreements in 
connection with the firm's reports on the Company's financial statements. 


                                      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, 1998, 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. 

                                      45
<PAGE>

                                         DIRECTORS
<TABLE>
<CAPTION>
                                        Date Elected
Name                     Age            as Director 
----                     ---            ------------
<S>                     <C>            <C>
John Zhao Li             43             November 1994
 
Lee Tak Wong             41             September 1995
 
Jin-qiang Zhang          56             July 1997
 
Zi-shou Chen             57             July 1997
 
Deng-chen Yin            57             July 1997
 
Guang Wei Liang          35             March 1998
</TABLE>
<TABLE>
<CAPTION>
                                   EXECUTIVE OFFICERS

                                                              Date Elected
Name                     Age            Position(s)            as Officer 
----                     ---            -----------           ------------
<S>                     <C>            <C>                   <C>
Jin-qiang Zhang          56             Chairman              August 1997

Zi-shou Chen             57             President             August 1997

John Zhao Li             43             Vice President        November 1994

Casey K.C. Chen          47             Vice President        December 1996

Gary C.K. Lui            37             Chief Financial       April 1996
                                        Officer
</TABLE>

BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS

JIN-QIANG ZHANG

          Mr. Zhang, Chairman 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 Managing Director of Shenzhen Huaqiang Holdings Limited.

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.  

                                      46
<PAGE>

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 
Master 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 the 
Secretary of Shenzhen Huaqiang Holdings Limited.

CASEY KAI CHENG CHEN 

          Mr. Chen, Vice President of the Company, received his Master's 
Degree majoring in Corporate Accounting from the Research Institute of Fiscal 
Science in Beijing, China, and a Master's Degree in Business Administration 
majoring in Finance from the University of Rochester, New York.  Mr. Chen has 
been an auditor and financial consultant in both the United States and China. 
 He practiced as a CPA in China and was Vice President of China Consultants 
of Accounting and Financial Management, Inc., a leading accounting firm in 
China. 

                                      47
<PAGE>

GARY CHUN KIN LUI 

          Mr. Lui, Chief Financial Officer of the Company, graduated from the 
University of Hong Kong with a degree of Bachelor of Social Sciences 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 ship yard 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. 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE:

          During the year ended December 31, 1997, 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. 


ITEM 11.  EXECUTIVE COMPENSATION

          The following table sets forth the compensation paid by the Company 
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>
John Zhao Li(1)          1997       $118,000        $40,600          $6,000
President/Vice           1996       $140,000        $27,644          $6,000
President                1995       $101,266        $ 6,010          $6,000

Lee Tak Wong(2)          1997       $ 56,000        $31,100          $6,000
Vice President           1996       $135,951        $27,644          $6,000
                         1995          --           $ 6,010          $2,000
</TABLE>
----------------------

(1)  Mr. Li was President of the Company until July 31, 1997.  Mr Li 
     continues an officer and director of the Company.

(2)  Mr. Wong was a Vice President of the Company until July 31, 1997.  Mr. 
     Wong continues as a director of the Company.

                                      48
<PAGE>

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, 1997, nine meetings of the Board 
of Directors were held.  All directors receive compensation of US$500 per 
month for serving on the Board of Directors, which aggregated $36,000 during 
the year ended December 31, 1997.  All directors are reimbursed for any 
out-of-pocket expenses incurred in attending board meetings.  The Company had 
no audit, nominating, or compensation committees, or committees performing 
similar functions, during the year ended December 31, 1997.  On January 2, 
1998, a Compensation Committee was set up with Zhang Jin-qiang and Wong Lee 
Tak as the committee members.  

STOCK OPTION PLAN: 

          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 stock of the 
     Company. The Plan is intended to provide a means whereby employees may 
     be given an opportunity to purchase shares of stock of the Company 
     pursuant to (i) options which may qualify as ISOs under Section 422 of 
     the Inland 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 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>

          Details of the options granted on January 2, 1998 to the existing 
directors, officers and employees of the Company are as follows: 
<TABLE>
<CAPTION>
                                          Annual       Earliest
                   Options   Exercise     Vesting      Exercise      Expiration
Participant        Granted    Price      Percentage      Date           Date  
-----------        -------   --------    ----------    --------      ----------
<S>               <C>       <C>        <C>             <C>           <C>
Zhang Jin-qiang    40,000    US$4.26    50%/25%/25%     4/1/98        12/31/01
Yin Deng Chen      30,000    US$4.26    50%/25%/25%     4/1/98        12/31/01
Chen Zi-shou       30,000    US$3.87    60%/20%/20%     4/1/98        12/31/05
Liang Guang Wei    30,000    US$3.87    60%/20%/20%     4/1/98        12/31/05
John Li Zhao       30,000    US$3.87    60%/20%/20%     4/1/98        12/31/05
Wong Lee Tak       30,000    US$3.87    60%/20%/20%     4/1/98        12/31/05

Chen Kai Cheng     21,000    US$3.87    70%/15%/15%     4/1/98        12/31/05
Wong Yong          21,000    US$3.87    70%/15%/15%     4/1/98        12/31/05
Gary Lui           21,000    US$3.87    70%/15%/15%     4/1/98        12/31/05
Clarence Yip       18,000    US$3.87    70%/15%/15%     4/1/98        12/31/05
Cilly Yeung         9,000    US$3.87    70%/15%/15%     4/1/98        12/31/05
</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, 1998, 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, 1998:  (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 number of shares of Common Stock 
of the Company beneficially owned, and the percentage of the Company's Common 
Stock so owned, by each director, and by all directors and officers of the 
Company as a group.  Each such person has sole voting and investment power 

                                      50
<PAGE>

with respect to the shares of Common Stock, except as otherwise indicated.  
Beneficial ownership consists of a direct interest in the shares of Common 
Stock, except as otherwise indicated.
<TABLE>
<CAPTION>
                                                               Percent of   
Name and Address                   Amount and Nature of       Resale Shares  
of Beneficial Owner                Beneficial Ownership      of Common Stock 
-------------------                --------------------      ---------------
<S>                               <C>                       <C>
West Coast Star                       4,176,000(1)(2)             52.1%
Enterprises Ltd.
c/o Room 2302, Chinachem
Hollywood Centre
No. 1 Hollywood Road
Central, Hong Kong

Top Link Development Limited          1,392,000(1)(3)              17.4%
c/o Room 2302, Chinachem
Hollywood Centre
No. 1 Hollywood Road
Central, Hong Kong

Redcliffe Holdings Ltd.               1,392,000(1)(4)              17.4%
25/F., Wyndham Place
40-44 Wyndham Street
Central, Hong Kong

Shenzhen Huaqiang                        5,568,000(5)              69.5%
Holdings Limited
Shennan Zhong Road
Shenzhen City
The People's Republic of China

Jin-qiang Zhang                                  0(6)                --

Zi-shou Chen                                     0(7)                --

John Zhao Li                                     0(8)                --

Lee Tak Wong                                     0(9)                --

Deng-chen Yin                                   0(10)                --

Long-sheng Zhu                                  0(11)                --

All Directors and                               0(12)                --
Executive Officers
as a Group
(18 persons)
</TABLE>
-------------------

(1)  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 

                                      51
<PAGE>

     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 87% interest in 
     the Company. The shareholders of Oriental Win received such shares in 
     proportion to their respective shareholder interests in Oriental Win 
     (West Coast Star Enterprises Ltd. - 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 Star Enterprises Ltd. ("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")

(2)  Consists of 2,376,000 shares of Class A Common Stock and 1,800,000 
     shares of Class B Common Stock.

(3)  Consists of 792,000 shares of Class A Common Stock and 600,000 shares of 
     Class B Common Stock.  Top Link is beneficially owned by Shenzhen 
     Huaqiang Holdings Limited ("SHHL"), which is a state-owned enterprise in 
     China.

(4)  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.

(5)  Consists of 4,176,000 shares owned by West Coast Star Enterprises Ltd. 
     and 1,392,000 shares owned by Top Link Development Limited, each of 
     which is controlled by SHHL.

(6)  Mr. Zhang owns 35% of the capital stock of West Coast on behalf of SHHL 
     and disclaims any beneficial ownership of such shares.

(7)  Mr. Chen owns 15% of the capital stock of West Coast on behalf of SHHL 
     and disclaims any beneficial ownership of such shares.

(8)  Mr. Li is a minority shareholder of West Coast, but disclaims any 
     beneficial ownership of such shares.  Mr. Li owns 5% of the capital 
     stock of West Coast.

(9)  Mr. Wong is a minority shareholder of West Coast, but disclaims any 
     beneficial ownership of such shares.  Mr. Wong owns 5% of the capital 
     stock of West Coast.

(10) Mr. Yin owns 20% of the capital stock of West Coast on behalf of SHHL 
     and disclaims any beneficial ownership of such shares.

(11) Mr. Zhu, a former Director, owns 10% of the capital stock of West Coast 
     on behalf of SHHL and disclaims any beneficial ownership of such shares.

(12) See footnotes (6) through (11)

                                      52
<PAGE>

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 
advanced US$8,869,585 to Holdings during 1994.  The right to collect 
US$8,000,000 of the advance was transferred from Oriental Win to its 
shareholders in proportion to their respective shareholdings interests in 
August 1996 (West Coast Star Enterprises Ltd. - US$4,800,000; Mapesbury 
Limited - US$1,600,000; Redcliffe Holdings Ltd. - US$1,600,000).  The 
advances 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 
advance or part thereof by the issuance of shares at par value in Holdings.  
As of December 31, 1997, advances from such shareholders, West Coast Star 
Enterprises Ltd., Mapesbury Limited, Redcliffe Holdings Ltd. and Oriental 
Win, were approximately RMB 39,800,000, RMB 13,300,000, RMB 13,300,000 and 
RMB 7,200,000, respectively.

          In February 1998, Mapesbury Limited advised the Company that the right
to collect the RMB 13,300,000 advances from shareholders was assigned to Top
Link Development Limited.  Mapesbury Limited also transferred its shares in the
Company to Top Link Development Limited.

NOBLE BREWERY

          During the years ended December 31, 1996 and 1997, the Company 
purchased for resale beer products from Noble Brewery aggregating RMB 
695,150,225 and RMB 675,247,962, respectively.  As of December 31, 1996 and 
1997, RMB 166,501,751 and RMB 209,083,335, respectively, was due to Noble 
Brewery for the purchase of beer products, and was unsecured, interest free 
and repayable on demand.

GUANGDONG BLUE RIBBON

          Until July 31, 1997, Liu Yun Zhong and Niu Zi Hang were directors 
and executive officers of the Company.  Messrs. Liu and 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, 1996 and 1997, the Company 
purchased packaging materials from Guangdong Blue Ribbon and its affiliated 
companies aggregating RMB 44,778,187 and RMB 42,081,917, respectively.

                                      53
<PAGE>

          During the years ended December 31, 1996 and 1997, the Company sold 
beer products to Guangdong Blue Ribbon aggregating RMB 6,169,170 and RMB 
8,773,809, respectively.

          During the years ended December 31, 1996 and 1997, the Company 
purchased for resale mineral water and non-carbonated soft drinks from 
Guangdong Blue Ribbon and its affiliated companies aggregating RMB 69,166,604 
and nil, respectively.

          During the year ended December 31, 1997, the Company also purchased 
for resale beer products from Sichuan Brewery, an affiliate of Guangdong Blue 
Ribbon, aggregating RMB 33,052,735.

          During the years ended December 31, 1996 and 1997, the Company paid 
RMB 7,945,874 and RMB 7,086,075, 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 the Guangdong Province of China.

          During the years ended December 31, 1996 and 1997, the Company paid 
Guangdong Blue Ribbon a management fee of RMB 3,780,000 and RMB 3,780,000, 
respectively, pursuant to a three year agreement commenced on January 1, 1996.

          As of December 31, 1996 and 1997, the amount due from related 
companies aggregated RMB 33,089,333 and RMB 29,667,015, 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.  
Included in the net amounts due from related companies at December 31, 1996 
and 1997 is RMB 27,500,000 and RMB 16,600,000, respectively, which bore 
interest at 15% and 20% per annum during 1996 and 1997, respectively, and RMB 
38,200,000 and RMB 42,900,000, respectively, which bore interest at 10% and 
20% per annum during 1996 and 1997, respectively, due from Guangdong Blue 
Ribbon.  The remaining amounts due from Guangdong Blue Ribbon and its 
affiliated companies are unsecured, interest-free and repayable on demand.

          As of December 31, 1996 and 1997, the Company owed an aggregate of 
RMB 21,400,000 and RMB 77,100,000, respectively, to related parties as 
follows:

          (a)  RMB 11,400,000 and RMB 19,500,000, 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)  RMB 3,100,000 and RMB 3,600,000, respectively, was due to 
Wealth Guide Development Limited, a company affiliated with Guangdong Blue 
Ribbon, as an advance, and was unsecured, bears interest at 12% per annum, 
and is repayable on demand.

          For the year ended December 31, 1997, interest expense with respect 
to the above obligations relating to Guangdong Blue Ribbon and its affiliated 
companies was RMB 3,859,087 and to the other related parties was 

                                      54
<PAGE>

RMB 1,717,133. For the year ended December 31, 1997, interest income from 
Guangdong Blue Ribbon was RMB 5,535,977.

          For the year ended December 31, 1996, interest expense with respect 
to the above obligations relating to Guangdong Blue Ribbon and its affiliated 
companies was RMB 9,282,985 and to the other related parties was RMB 948,543.

          As of December 31, 1997, RMB 40,300,000 was due to Guangdong Blue 
Ribbon, representing a dividend payable by High Worth JV.

OTHER TRANSACTIONS

          As of December 31, 1996 and 1997, RMB 5,700,000 and RMB 7,100,000, 
respectively, was due to Evermoni Trading Limited, a company beneficially 
owned by Wong Lee Tak, a director of the Company, as an advance, and was 
unsecured, bears interest at 12% per annum, and is repayable on demand.

          As of December 31, 1996 and 1997, RMB 1,200,000 and RMB 1,400,000, 
respectively, was due to Trade Link Investment Limited, a company 
beneficially owned by Victor Choi, a former director of the Company, as an 
advance, and was unsecured, bears interest at 12% per annum, and is repayable 
on demand.

          As of December 31, 1996 and 1997, RMB nil and RMB 2,300,000, 
respectively, was due to Champers Investment Limited, a company beneficially 
owned by Wong Lee Tak, a director of the Company, as an advance, and was 
unsecured, non-interest bearing, and is repayable on demand.

          As of December 31, 1996 and 1997, RMB Nil and RMB 2,900,000, 
respectively, was due to Bilibest Industries Limited, a company controlled by 
the Company's shareholders, as an advance, and was unsecured, bears interest 
at 12% per annum, and is repayable on demand.


                                       PART IV.

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

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

          (1)  Financial Statements                                Page No. (s)
                                                                   ------------
               CBR BREWING COMPANY, INC.                                63

               Report of Independent Auditors                           65
                 Deloitte Touche Tohmatsu
                 Ernst & Young

               Consolidated Balance Sheets                              67
               - As of December 31, 1996 and 1997

               Consolidated Statements of Income                        70
               - Years ended December 31, 1995, 1996 and 1997

                                      55
<PAGE>

               Consolidated Statements of Shareholders' Equity          72
               - Years ended December 31, 1995, 1996 and 1997

               Consolidated Statements of Cash Flows                    73
               - Years ended December 31, 1995, 1996 and 1997

               Notes to Consolidated Financial Statements               75

               ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.                 111

               Report of Independent Auditors                          113
                 Deloitte Touche Tohmatsu
                 Ernst & Young

               Balance Sheets                                          115
               - As of December 31, 1996 and 1997

               Statements of Income                                    117
               - Years ended December 31, 1995, 1996 and 1997

               Statements of Equity                                    118
               - From January 1, 1995 through December 31, 1997

               Statements of Cash Flows                                119
               - Years ended December 31, 1995, 1996 and 1997

               Notes to Financial Statements                           120

          (2)  Exhibits

<TABLE>
<CAPTION>
Exhibit No.    Description of Document
-----------    -----------------------
<S>            <C>
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).

</TABLE>

                                      56
<PAGE>

<TABLE>
<CAPTION>
Exhibit No.    Description of Document
-----------    -----------------------
<S>            <C>
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          1998 Stock Option Plan.

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).

21             Subsidiaries of the Company.

27             Financial Data Schedule (electronic filing only)

</TABLE>

(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.

                                      57
<PAGE>

(2)  Filed as Exhibits to the Company's Registration Statement No. 33-26617A 
     on Form S-18 filed 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.

(P)  Indicates that 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 Form 10-K.

(b)  No Reports on Form 8-K were filed during or related to the three months  
     ended December 31, 1997.

                                      58
<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 10, 1998              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 10, 1998              By: /s/ Zi-shou Chen                
                                      ---------------------------------
                                         Zi-shou Chen
                                         President and Director

Date:  April 10, 1998              By: /s/ John Zhao Li                
                                      ---------------------------------
                                         John Zhao Li
                                         Vice President and Director
 
Date:  April 10, 1998              By: /s/ Gary C. K. Lui              
                                      ---------------------------------
                                         Gary C. K. Lui
                                         Chief Financial Officer
 
Date:  April 10, 1998              By: /s/ Lee-tak Wong                
                                      ---------------------------------
                                         Lee-tak Wong
                                         Director
 
Date:  April 10, 1998              By: /s/ Jin-qiang Zhang             
                                      ---------------------------------
                                         Jin-qiang Zhang
                                         Director

Date:  April 10, 1998              By: /s/ Guang-wei Liang             
                                      ---------------------------------
                                         Guang-wei Liang
                                         Director
 
Date:  April 10, 1998              By: /s/ Deng-chen Yin               
                                      ---------------------------------
                                         Deng-chen Yin
                                         Director

                                      59
<PAGE>


                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>

Exhibit             Description                                  Sequential
Number              of Document                                  Page Numbers
------              -----------                                  ------------
<S>                 <C>                                          <C>
10.13               1998 Stock Option Plan.                            135

10.14               Joint Venture Agreement dated                      145
                    January 13, 1998 between High Worth JV
                    and Zao Yang Brewery regarding Zao Yang
                    High Worth Brewery (English Translation).

21                  Subsidiaries of the Company.                       167

27                  Financial Data Schedule                            168
                    (electronic filing only)

</TABLE>

<PAGE>







                            CBR BREWING COMPANY, INC.

                        Reports and Financial Statements
                      For the year ended December 31, 1997


<PAGE>

CBR BREWING COMPANY, INC.


REPORTS AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>

CONTENTS                                                                 PAGE(S)
--------                                                                 -------
<S>                                                                      <C>
REPORT OF INDEPENDENT AUDITORS ..................................         F - 1

REPORT OF PREDECESSOR AUDITORS ..................................         F - 2

CONSOLIDATED BALANCE SHEETS .....................................         F - 3

CONSOLIDATED STATEMENTS OF INCOME ...............................         F - 5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY .................         F - 7

CONSOLIDATED STATEMENTS OF CASH FLOWS ...........................         F - 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ......................         F - 10

</TABLE>




                                        2
<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, 1997 and
         1996, and the related consolidated statements of income, shareholders'
         equity and cash flows for the years then ended. These financial
         statements are the responsibility of the Company's management. Our
         responsibility is to express an opinion on these financial statements
         based on our 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, 1997 and 1996,
         and the results of their operations and their cash flows for the years
         then ended in conformity with accounting principles generally accepted
         in the United States of America.

         We draw your attention to notes 14 and 21 to the consolidated financial
         statements which state that the Company is exposed to foreign currency
         exchange risk and other risks through its operations in the People's
         Republic of China.


                                                   /s/ Deloitte Touche Tohmatsu

         Hong Kong
         March 31, 1998

                                      F - 1

<PAGE>

         REPORT OF PREDECESSOR AUDITORS


         To the shareholders of
         CBR Brewing Company, Inc.


         We have audited the accompanying consolidated balance sheet of CBR
         Brewing Company, Inc. and its subsidiaries as of December 31, 1995, the
         related consolidated statement of income, changes in shareholders'
         equity and cash flows for the year then ended. These financial
         statements are the responsibility of CBR Brewing Company, Inc.'s
         management. Our responsibility is to express an opinion on these
         financial statements based on our audit.

         We conducted our audit in accordance with generally accepted auditing
         standards 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 audit provides a
         reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
         present fairly, in all material respects, the consolidated financial
         position of CBR Brewing Company, Inc. and its subsidiaries as of
         December 31, 1995 and the consolidated result of their operations and
         their cash flows for the year then ended in conformity with generally
         accepted accounting principles in the United States of America.



                                                              /s/ Ernst & Young

         Hong Kong
         March 28, 1996

                                      F - 2
<PAGE>


                            CBR BREWING COMPANY, INC.

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                        AS OF DECEMBER 31,
                                                                        ------------------------------------------------
                                                                         1996                  1997                1997
                                                                         ----                  ----                ----
                                                                          RMB                   RMB                 US$
                                                                                                                 (Note 3)

                                     ASSETS
<S>                                                                   <C>                    <C>                   <C>
Current assets:

  Cash and cash equivalents...................................         39,709,594            76,092,954            9,167,826
  Accounts receivable, net of allowance for doubtful
    accounts of RMB14,921,542 and RMB20,232,169
    for 1996 and 1997, respectively (note 4)..................        168,845,494           120,466,933           14,514,088
  Bills receivable (note 5)...................................         38,653,659            35,555,400            4,283,783
  Inventories (note 6)........................................         87,549,836            89,583,442           10,793,186
  Amounts due from related companies (note 18)................         33,089,333            29,667,015            3,574,339
  Prepayments, deposits and other receivables.................         17,779,904            24,017,911            2,893,724
                                                                      -----------           -----------          -----------

  Total current assets........................................        385,627,820           375,383,655           45,226,946
Interest in an associated company (note 7)....................        216,984,220           234,997,255           28,312,922
Property, plant and equipment, net of accumulated
  depreciation and amortization of RMB26,410,498
  and RMB47,874,221 for 1996 and 1997,
  respectively (note 8).......................................        223,890,108           210,015,830           25,303,112
Other non-current assets......................................               -               14,697,800            1,770,819
                                                                      -----------           -----------          -----------

Total assets..................................................        826,502,148           835,094,540          100,613,799
                                                                      -----------           -----------          -----------
                                                                      -----------           -----------          -----------

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Bank borrowings (note 9)....................................         40,500,000            35,500,000            4,277,108
  Capital lease obligations (note 10).........................          9,034,742             7,349,698              885,506
  Accounts payable............................................         29,791,878            20,343,493            2,451,023
  Accrued liabilities.........................................         74,415,368            77,471,510            9,333,917
  Customer deposits...........................................         59,003,600             6,680,000              804,819
  Amounts due to related companies (note 18)..................         21,357,655            77,166,596            9,297,181
  Amount due to an associated company (note 7)................        166,501,751           209,083,335           25,190,763
  Income taxes payable (note 11)..............................            260,000               260,000               31,325
  Sales taxes payable (note 12)...............................         63,904,235            39,841,282            4,800,154
  Deferred tax liabilities (note 11)..........................          4,413,000             4,413,000              531,687
                                                                      -----------           -----------          -----------

Total current liabilities.....................................         469,182,229           478,108,914          57,603,483
                                                                       -----------           -----------         -----------
Long-term liabilities:
  Bank borrowings (note 9)....................................                -                8,000,000             963,855
  Capital lease obligations (note 10).........................          15,862,549             8,512,851           1,025,645
                                                                       -----------           -----------         -----------

Total long-term liabilities...................................          15,862,549            16,512,851           1,989,500
                                                                       -----------           -----------         -----------

Minority interests............................................         120,073,940            88,503,839          10,663,113
                                                                       -----------           -----------         -----------

Commitments and contingencies (notes 14, 21 and 23)
 Shareholders' advances and shareholders' equity:
  Advances from shareholders (note 13)........................          73,794,948            73,617,552               8,869,585
                                                                       -----------           -----------             -----------
Common stock
  - Class A, US$0.0001 par value, 90,000,000 shares
      authorized, 5,000,013 shares outstanding................               4,265                 4,265                     514
  - Class B, US$0.0001 par value, 10,000,000 shares
      authorized, 3,000,000 shares outstanding................               2,559                 2,559                     308
  Additional paid-in capital..................................         104,030,194           104,030,194              12,533,758
  General reserve and enterprise development funds............           4,823,561             8,341,785               1,005,034
  Retained earnings...........................................          38,727,903            65,972,581               7,948,504
                                                                       -----------           -----------             -----------

Total shareholders' equity....................................         147,588,482           178,351,384              21,488,118
                                                                       -----------      ----------------        ----------------
</TABLE>


<TABLE>
<CAPTION>
                            CBR BREWING COMPANY, INC.

<S>                                                                   <C>                   <C>                     <C>
Total shareholders' advances and shareholders'
  equity......................................................         221,383,430           251,968,936              30,357,703
                                                                       -----------           -----------             -----------
Total liabilities, shareholders' advances and
    shareholders' equity......................................         826,502,148           835,094,540             100,613,799
                                                                       -----------           -----------             -----------
                                                                       -----------           -----------             -----------
</TABLE>


      See accompanying notes to the consolidated financial statements
















                                      F - 3
<PAGE>

                            CBR BREWING COMPANY, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                                                   ----------------------
                                                                1995             1996             1997              1997
                                                                ----             ----             ----              ----
                                                                 RMB              RMB              RMB               US$
                                                                                                                  (Note 3)
<S>                                                          <C>           <C>                <C>                    <C>
Sales, including sales to related companies of
  RMB6,169,170 and RMB8,773,809 in 1996 and 1997,
  respectively (note 18a)............................        580,260,386   1,255,940,985      1,188,963,804          143,248,651
Sales taxes (note 12)................................         13,473,447      22,663,361         19,677,315            2,370,761
                                                             -----------   -------------      -------------          -----------

Net sales............................................        566,786,939   1,233,277,624      1,169,286,489          140,877,890
Cost of sales, including inventory purchased
  from related companies of RMB417,171,460, 
  RMB809,095,016 and RMB750,382,614 in
  1995, 1996 and 1997, respectively; and 
  royalty fee paid to a related company
  of RMB3,454,067 , RMB7,945,874 and 
  RMB7,086,075 in 1995, 1996 and 1997,
  respectively
  (note 18b to e)....................................        495,653,406   1,039,139,192        960,959,693          115,778,276
                                                             -----------   -------------      -------------          -----------

Gross profit.........................................         71,133,533     194,138,432        208,326,796           25,099,614
Selling, general and administrative expenses,
  including management fee paid to a related
  company of RMB3,780,000 in 1996 and 1997
  (note 18f).........................................         64,675,128     168,812,949        197,111,936           23,748,426
                                                             -----------   -------------      -------------          -----------

Operating income.....................................          6,458,405      25,325,483         11,214,860            1,351,188
                                                             -----------   -------------      -------------          -----------

Other income:
  Interest income, including interest income from
    a related company of RMB3,981,278 and 
    RMB5,535,977 in 1996 and 1997, respectively
    (note 18g).......................................               -          6,119,470          6,255,590              753,686
  Foreign exchange gains.............................          1,614,652         119,907            177,396               21,373
  Others.............................................               -            695,244          1,239,362              149,321
                                                             -----------   -------------      -------------          -----------

  Total other income.................................          1,614,652       6,934,621          7,672,348              924,380
                                                             -----------   -------------      -------------          -----------

Other expenses:
  Interest expense, including interest paid to related
    companies of RMB3,419,571, RMB10,231,528 and
    RMB5,576,220 in 1995, 1996 and 1997, respectively
    (note 18h)......................................          3,236,058      20,767,252         15,503,189            1,867,854
  Loss on disposal of property, plant and
    equipment........................................          1,001,788            -               743,788               89,613
  Others.............................................               -               -               498,381               60,046
                                                             -----------   -------------      -------------          -----------

  Total other expenses...............................          4,237,846      20,767,252         16,745,358            2,017,513
                                                             -----------   -------------      -------------          -----------

Income before income taxes...........................          3,835,211      11,492,852          2,141,850              258,055
Income taxes (note 11)...............................          1,000,000       4,721,444               -                    -
                                                             -----------   -------------      -------------          -----------

Income before equity in earnings of an associated
  company............................................          2,835,211       6,771,408          2,141,850              258,055
Equity in earnings of an associated company..........         34,213,058      34,039,622         52,426,546            6,316,451
                                                             -----------   -------------      -------------          -----------
</TABLE>

                                      F - 4
<PAGE>


                            CBR BREWING COMPANY, INC.
<TABLE>
<CAPTION>

<S>                                                           <C>             <C>                <C>                    <C>
Income before minority interests.....................         37,048,269      40,811,030         54,568,396            6,574,506
Minority interests...................................         17,422,301      20,599,221         23,805,494            2,868,132
                                                             -----------   -------------      -------------          -----------

Net income for the year..............................         19,625,968      20,211,809         30,762,902            3,706,374
                                                             -----------   -------------      -------------          -----------
                                                             -----------   -------------      -------------          -----------

Net income per share.................................               2.45            2.53               3.84                 0.46
                                                             -----------   -------------      -------------          -----------
                                                             -----------   -------------      -------------          -----------

Average number of shares outstanding.................          8,000,013       8,000,013          8,000,013            8,000,013
                                                             -----------   -------------      -------------          -----------
                                                             -----------   -------------      -------------          -----------

</TABLE>

      See accompanying notes to the consolidated financial statements

                                      F - 5

 
 



<PAGE>


                           CBR BREWING COMPANY, INC.


               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                             COMMON STOCK
                                                             ------------

                                                SHARES                  AMOUNT            
                                              OUTSTANDING     PAR VALUE OF US$0.0001 EACH  ADDITIONAL
                                         -------------------  ---------------------------   PAID-IN       RESERVE     RETAINED
                                         CLASS A     CLASS B      CLASS A     CLASS B       CAPITAL        FUNDS      EARNINGS
                                         -------     -------      -------     -------       -------        -----      --------
                                                                    RMB         RMB           RMB           RMB          RMB
                                                                                                         (Note 15)    (Note 15)
<S>                                     <C>        <C>           <C>        <C>           <C>             <C>       <C>
Balance at January 1, 1995............  5,000,013  3,000,000      4,265      2,559        104,030,194      219,062     3,494,625
Net income............................       -          -          -          -                 -            -        19,625,968
Appropriation.........................       -          -          -          -                 -        1,940,551    (1,940,551)
                                        ---------  ---------     ------     ------        ------------  ----------   -----------

Balance at December 31, 1995..........  5,000,013  3,000,000      4,265      2,559        104,030,194    2,159,613    21,180,042
Net income............................       -          -          -          -                 -            -        20,211,809
Appropriation.........................       -          -          -          -                 -        2,663,948    (2,663,948)
                                        ---------  ---------     ------     ------        ------------  ----------   -----------

Balance at December 31, 1996..........  5,000,013  3,000,000      4,265      2,559        104,030,194    4,823,561    38,727,903
Net income............................       -          -          -          -                 -            -        30,762,902
Appropriation.........................       -          -          -          -                 -        3,518,224    (3,518,224)
                                        ---------  ---------     ------     ------        ------------  ----------   -----------

Balance at December 31, 1997..........  5,000,013  3,000,000      4,265      2,559        104,030,194    8,341,785    65,972,581
                                        ---------  ---------     ------     ------        ------------  ----------   -----------
                                        ---------  ---------     ------     ------        ------------  ----------   -----------


Converted to US$
Balance at December 31, 1997 (note 3).  5,000,013  3,000,000     US$514     US$308      US$12,533,758 US$1,005,034  US$7,948,504
                                        ---------  ---------     ------     ------      ------------- ------------  ------------
                                        ---------  ---------     ------     ------        ------------  ----------   -----------

</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.

On March 31, 1995, the Company changed the authorized share capital of Class A
common stock from 95,000,000 shares to 90,000,000 shares and Class B common
stock from 5,000,000 shares to 10,000,000 shares.

         See accompanying notes to the consolidated financial statements

                                      F - 6

<PAGE>


                            CBR BREWING COMPANY, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                              -----------------------------------------------------------
                                                                1995             1996             1997              1997
                                                                ----             ----             ----              ----
                                                                 RMB              RMB              RMB               US$
<S>                                                         <C>              <C>               <C>             <C>
Cash flows from operating activities:

  Net income.........................................        19,625,968       20,211,809        30,762,902       3,706,374
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Allowance for doubtful accounts..................         5,600,000        9,914,114         5,314,858         640,344
    Depreciation and amortization....................         9,459,519       18,703,203        21,463,723       2,585,991
    Foreign exchange gains...........................        (1,737,759)        (119,907)         (177,396)        (21,373)
    Loss on disposal of property, plant and equipment.        1,001,788            -               743,788          89,613
    Minority interests...............................        17,422,301       20,599,221        23,805,494       2,868,132
    Equity in earnings of an associated company......       (34,213,058)     (34,039,622)      (52,426,546)     (6,316,451)
    Dividend received from an associated company.....        28,644,569       39,797,878        34,413,511       4,146,206
    Deferred income taxes............................         1,000,000        4,461,444             -               -
    Income taxes payable.............................               -            260,000             -               -

Changes in operating assets and liabilities:
  (Increase) decrease in accounts receivable.........      (163,350,396)     (20,081,964)       43,063,703       5,188,398
  (Increase) decrease in bills receivable............               -        (38,653,659)        3,098,259         373,284
  Increase in inventories............................       (40,728,195)     (30,711,035)       (2,033,606)       (245,012)
  (Increase) decrease in amounts due from related
    companies........................................       (46,411,779)      13,322,446         3,422,318         412,327
  Increase in prepayments, deposits and other
    receivables......................................        (5,297,981)     (10,356,743)       (6,238,007)       (751,567)
  Increase (decrease) in customer deposits...........       119,863,548      (64,814,026)      (52,323,600)     (6,304,048)
  Increase (decrease) in accounts payable and accrued
    liabilities......................................        27,746,442       47,928,065        (6,392,243)       (770,149)
  Increase in amount due to an associated company....       154,185,606       12,316,145        42,581,584       5,130,311
  Increase(decrease) in sales taxes payable..........        14,414,744       30,670,338       (24,062,953)     (2,899,151)
                                                           ------------      -----------       -----------      ----------

Net cash provided by operating activities............       107,225,317       19,407,707        65,015,789       7,833,227
                                                           ------------      -----------       -----------      ----------

Cash flows from investing activities:
  Purchases of property, plant and equipment.........       (89,365,441)     (46,786,402)      (10,089,937)     (1,215,655)
  Proceeds from disposal of property, plant and
    equipment........................................           413,679        1,501,355         1,756,704         211,651
  Expenditure on non-current assets..................               -              -           (14,697,800)     (1,770,819)
                                                           ------------      -----------       -----------      ----------
  Net cash used in investing activities..............       (88,951,762)     (45,285,047)      (23,031,033)     (2,774,823)
                                                           ------------      -----------       -----------      ----------
Cash flows from financing activities:
  New bank borrowings................................        22,574,400       48,500,000        28,500,000       3,433,735
  New loans for leased assets........................        21,250,000            -                 -               -
  Contribution by minority interests.................               -          3,000,000             -               -
  Increase in amounts due to related companies.......        13,199,030        2,727,970        15,433,346       1,859,439
  Repayment of bank borrowings.......................       (16,595,000)     (40,574,400)      (25,500,000)     (3,072,289)
  Repayment of other borrowings......................        (5,000,000)           -                 -                -
  Payment of capital lease obligations...............        (3,651,607)      (5,514,941)       (9,034,742)     (1,088,523)
  Payment of cash dividend to minority interests.....               -              -           (15,000,000)     (1,807,229)
                                                           ------------      -----------       ------------     ---------
  Net cash provided by (used in) financing activities.       31,776,823       8,138,629         (5,601,396)       (674,867)
                                                           ------------      -----------       ------------     ----------
</TABLE>


                                      F - 7

<PAGE>

                            CBR BREWING COMPANY, INC.
<TABLE>
<S>                                                          <C>             <C>                <C>             <C>
Net increase (decrease) in cash and cash equivalents.         50,050,378     (17,738,711)        36,383,360      4,383,537
Cash and cash equivalents at beginning of the year...          7,397,927      57,448,305         39,709,594      4,784,289
                                                              ----------     -----------       ------------     -----------

Cash and cash equivalents at end of the year.........         57,448,305      39,709,594         76,092,954      9,167,826
                                                              ----------     -----------       ------------     -----------
                                                              ----------     -----------       ------------     -----------
</TABLE>

          See accompanying notes to the consolidated financial statements









                                      F - 8
<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".

         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 were 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 Star Quality Limited ("Star Quality"), Guangdong
         Blue Ribbon Group Co., Ltd. ("Blue Ribbon Group"), a joint stock
         limited company incorporated in the PRC and High Worth Holdings held
         38%, 2% and 60% interests, respectively. Star Quality and Blue Ribbon
         Group are not connected with the Group. During the year ended December
         31, 1995, Star Quality transferred its 38% interest to Blue Ribbon
         Group. Accordingly, Blue Ribbon Group and High Worth Holdings hold 40%
         and 60% interests, respectively. Apart from the investment in High
         Worth Brewery which was partly financed by a long-term, interest free
         advance from Oriental Win (see note 13), High Worth Holdings has no
         other significant assets and liabilities. 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

                                     F - 10
<PAGE>

CBR BREWING COMPANY, INC.

         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 - 11

<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 line of product 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
         however 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 99% of the Group's sales. Prior to
         October 1996, 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. ("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 the
         Blue Ribbon Noble and the 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 1996 and 1997,
         the operating activities of Zhaoqing Brewery were part of High Worth

                                     F - 12

<PAGE>

CBR BREWING COMPANY, INC.

         Brewery.  The consensus and approval from the local tax authority 
         with respect to this transfer were obtained in 1996.

                                     F - 13

<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:

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

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

         Adjustment for depreciation charges;

         Adjustment for deferred taxation; and

         Adjustment for revaluation of fixed assets.

         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, 1996 and 1997. The Company
         believes 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 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, Finance Company
         and Blue Ribbon Marketing. 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.

         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. Sales returns are recognized upon
         receipt of goods returned from customers.

                                     F - 14

<PAGE>

CBR BREWING COMPANY, INC.

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

                                     F - 15
<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. The amount of finance expenses capitalized is the interest
         cost which could theoretically have been avoided if the expenditure on
         the qualifying asset had not been made. No depreciation is provided
         until the relevant assets have been put into commercial use.

         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.

         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.

         ADVERTISING EXPENSES - Advertising expenses are charged to expense in
         the consolidated statements of income as incurred.

         INCOME TAXES - Income taxes are determined under the liability method
         in accordance with Statement of Financial Accounting Standards No.109,
         "Accounting for Income Taxes" ("SFAS 109"). SFAS 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.

                                     F - 16

<PAGE>

CBR BREWING COMPANY, INC.

         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.

                                     F - 17

<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, quoted by the
         Zhaoqing Foreign Exchange Adjustment Center (the "swap center") for the
         respective periods. Monetary assets and liabilities denominated in
         foreign currencies have been translated into Renminbi using the rate of
         exchange quoted by the swap center 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 for
         which 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 the swap center rate as quoted by the
         People's Bank of China on December 31, 1997 of 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.

         EARNINGS PER SHARE - Earnings per share is based on the net income and
         the average number of shares of common stock issued and outstanding
         during each of the years.

         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.

4.       ACCOUNTS RECEIVABLE

         Accounts receivable comprise:
<TABLE>
<CAPTION>
                                                             1996             1997
                                                             ----             ----
                                                              RMB              RMB
         <S>                                              <C>              <C>
         Accounts receivable -- trade.................    183,767,036       140,699,102
         Less: Allowance for doubtful accounts........    (14,921,542)     (20,232,169)
                                                          -----------       -----------
                                                          168,845,494       120,466,933
                                                          -----------       -----------
                                                          -----------       -----------
</TABLE>

                                     F - 18

<PAGE>


CBR BREWING COMPANY, INC.

         Movement of allowance for doubtful accounts:

<TABLE>
<CAPTION>
                                                      1995           1996            1997
                                                      ----           ----            ----
                                                       RMB            RMB             RMB
         <S>                                         <C>            <C>            <C>
         Balance as at January 1.................         -         5,600,000      14,921,542
         Provided during the year................    5,600,000      9,914,114       5,314,858
         Written off during the year.............         -          (592,572)        (4,231)
                                                     ---------     ----------      ----------
         Balance as at December 31...............    5,600,000     14,921,542      20,232,169
                                                     ---------     ----------      ----------
                                                     ---------     ----------      ----------
</TABLE>


                                     F - 19

<PAGE>

CBR BREWING COMPANY, INC.

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

<TABLE>
<CAPTION>
                                                            1996             1997
                                                            ----             ----
                                                             RMB              RMB
         <S>                                              <C>              <C>
         Inventories comprise:
         Raw materials...............................     30,935,530       26,189,345
         Work in progress............................      6,224,036        7,164,153
         Finished goods..............................     50,390,270       56,229,944
                                                          ----------       ----------
                                                          87,549,836       89,583,442
                                                          ----------       ----------
                                                          ----------       ----------
</TABLE>

7.       INTEREST IN AN ASSOCIATED COMPANY

<TABLE>
<CAPTION>
                                                                          1996            1997
                                                                          ----            ----
                                                                           RMB             RMB
         <S>                                                           <C>             <C>
         Unlisted investment, at cost..............................    209,361,595     209,361,595
         The Group's share of undistributed post acquisition
           earnings of an associated company.......................      7,622,625      25,635,660
                                                                       -----------     -----------
                                                                       216,984,220     234,997,255
                                                                       -----------     -----------
                                                                       -----------     -----------
</TABLE>

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

         Upon the acquisition of Blue Ribbon Noble by the Group on October 31,
         1994, the Group's share of the underlying net assets of the associated
         company of RMB229 million exceeded the Group's investment of RMB209
         million by approximately RMB20 million. This difference is being
         amortized to income over 20 years.

         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.

                                     F - 20

<PAGE>


CBR BREWING COMPANY, INC.

7.       INTEREST IN AN ASSOCIATED COMPANY - continued

         The summarized information of Blue Ribbon Noble is presented below:

<TABLE>
<CAPTION>
                                                                        1996             1997
                                                                        ----             ----
                                                                         RMB              RMB
         <S>                                                         <C>             <C>
         BALANCE SHEETS

         Current assets.........................................     388,296,705      415,031,288
         Property, plant and equipment..........................     433,480,695      464,699,723
                                                                     -----------      -----------
         Total assets...........................................     821,777,400      879,731,011
                                                                     -----------      -----------
                                                                     -----------      -----------
         Current liabilities....................................     205,848,080      224,478,494
         Deferred income taxes..................................       9,000,000       12,200,000
         Equity.................................................     606,929,320      643,052,517
                                                                     -----------      -----------
         Total liabilities and equity...........................     821,777,400      879,731,011
                                                                     -----------      -----------
                                                                     -----------      -----------
         STATEMENTS OF INCOME

         Sales, net of sales taxes..............................     655,316,991      639,678,595
                                                                     -----------      -----------
                                                                     -----------      -----------
         Gross profit...........................................     145,150,002      179,062,125
                                                                     -----------      -----------
                                                                     -----------      -----------
         Net income.............................................      90,128,571      122,156,976
                                                                     -----------      -----------
                                                                     -----------      -----------
         The Group's share of net income after the
           deduction of unrealized intercompany profit..........      34,039,622       52,426,546
                                                                     -----------      -----------
                                                                     -----------      -----------
</TABLE>

                                     F - 21
<PAGE>

CBR BREWING COMPANY, INC.

8.       PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment comprise the following:

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                             <C>                   <C>
         At cost:

           Land use rights and buildings........................................           74,276,962            79,256,063
           Plant, machinery and equipment.......................................          166,921,345           167,032,181
           Motor vehicles.......................................................            5,213,923             8,795,547
           Construction in progress.............................................            3,888,376             2,806,260
                                                                                          -----------           -----------

             Total..............................................................          250,300,606           257,890,051
           Less: Accumulated depreciation and amortization......................          (26,410,498)          (47,874,221)
                                                                                          -----------           -----------

                                                                                          223,890,108           210,015,830
                                                                                          -----------           -----------
                                                                                          -----------           -----------
</TABLE>

         Depreciation and amortization charges in respect of property, plant and
         equipment for the years ended December 31, 1995, 1996 and 1997 were
         RMB9,459,519, RMB18,703,203 and RMB21,463,723, respectively.

         Interest capitalized in construction in progress for the year ended
         December 31, 1995 was RMB7,595,604.

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

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                              <C>                   <C>
         At cost:
           Plant, machinery and equipment.......................................           33,747,792            33,747,792
           Less: Accumulated depreciation and amortization......................           (5,570,016)           (8,944,795)
                                                                                           ----------            ----------

                                                                                           28,177,776            24,802,997
                                                                                           ----------            ----------
                                                                                           ----------            ----------
</TABLE>

         Depreciation and amortization charges in respect of property, plant and
         equipment held under capital leases for the years ended December 31,
         1995, 1996 and 1997 were RMB2,065,532, RMB3,374,779 and RMB3,374,779,
         respectively.


                                     F - 22
<PAGE>

CBR BREWING COMPANY, INC.

9.       BANK BORROWINGS

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                             <C>                   <C>
         Bank borrowings comprise:

         Secured bank borrowings................................................           40,500,000            43,500,000
         Less: Current portion..................................................          (40,500,000)          (35,500,000)
                                                                                           ----------            ----------

         Long-term portion                                                                       -                8,000,000
                                                                                           ----------            ----------
                                                                                           ----------            ----------
</TABLE>

         The weighted average interest rates as of December 31, 1996 and 1997
         was 11.3% and 10.1% per annum, respectively, for the secured bank
         loans.

         There are no significant covenants or financial restrictions relating
         to the Company's short-term debt. Details of assets pledged by the
         Company are described in note 22.

10.      CAPITAL LEASE OBLIGATIONS

         The capital lease obligations maturing during each of the years in the
         three year period subsequent to the balance sheet date are:

<TABLE>
<CAPTION>
                                                                                                          1997
                                                                                                          ----
                                                                                                           RMB
         <S>                                                                                            <C>
         Year ending December 31,
           1998..............................................................................             8,450,307
           1999..............................................................................             6,222,914
           2000..............................................................................             2,928,458
                                                                                                         ----------

         Total minimum lease payments........................................................            17,601,679
         Less: Amount representing interest..................................................            (1,739,130)
                                                                                                         ----------

         Present value of minimum lease payments.............................................            15,862,549
         Less: Current portion...............................................................            (7,349,698)
                                                                                                         ----------

         Long-term portion...................................................................             8,512,851
                                                                                                         ----------
                                                                                                         ----------
</TABLE>


                                     F - 23
<PAGE>

CBR BREWING COMPANY, INC.

11.      INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                                    -----------------------
                                                                        1995                 1996                  1997
                                                                        ----                 ----                  ----
                                                                         RMB                  RMB                   RMB
         <S>                                                           <C>                <C>                 <C>
         United States of America.............................               -             (7,420,000)          (10,665,803)
         PRC..................................................          3,835,211          18,912,852            12,807,653
                                                                        ---------         -----------          ------------

                                                                        3,835,211          11,492,852             2,141,850
                                                                        ---------          ----------            ----------
                                                                        ---------          ----------            ----------
</TABLE>

         United States of America

         The Company is subject to taxes in the United States of America. 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
         or 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 taxable distributions are received from High Worth
         Holdings. High Worth Holdings has no present intention to make any
         income distributions in the foreseeable future.

         The determination of 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.

         Had these tax holidays and concessions not been available, the tax
         charge would have been higher by approximately RMB6,300,000,
         RMB14,080,000 and RMB20,800,000 representing RMB0.79, RMB1.76 and
         RMB2.60 per share before minority interests, for the years ended
         December 31, 1995, 1996 and 1997, respectively.


                                     F - 24
<PAGE>

CBR BREWING COMPANY, INC.

         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 subsidiary's investments are not
         subject to income taxes, and no withholding tax is imposed on payments
         of dividends by the BVI subsidiaries to the Company.


















                                     F - 25
<PAGE>


CBR BREWING COMPANY, INC.

11.      INCOME TAXES - continued

         The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                                    -----------------------
                                                                        1995                 1996                  1997
                                                                        ----                 ----                  ----
                                                                         RMB                  RMB                   RMB
        <S>                                                            <C>                  <C>                  <C>
         Current
           - PRC..............................................              -                 260,000                 -
                                                                       ---------            ---------            ---------

         Deferred
           - United States of America.........................              -               4,413,000                 -
           - PRC..............................................         1,000,000               48,444                 -
                                                                       ---------            ---------            ---------

                                                                       1,000,000            4,461,444                 -
                                                                       ---------            ---------            ---------

                                                                       1,000,000            4,721,444                 -
                                                                       ---------            ---------            ---------
                                                                       ---------            ---------            ---------
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31,
                                                                                    -----------------------
                                                                        1995                 1996                  1997
                                                                        ----                 ----                  ----
         <S>                                                          <C>                 <C>                     <C>
         Statutory tax rate...................................           33%                  33%                    33%
         Tax holiday..........................................          (33%)                (30%)                  (33%)
         Accelerated depreciation allowances
           during the tax exemption period....................           26%                    -                      -
         Tax on dividend declared by an
           associated company.................................             -                  36%                      -
         Reversal of deferred tax asset arising
           from the revaluation of property,
           plant and equipment................................             -                   1%                      -
         Difference in tax rate...............................             -                   1%                      -
                                                                        ----                 ----                   ----

                                                                         26%                  41%                      -
                                                                        ----                 ----                   ----
                                                                        ----                 ----                   ----
</TABLE>

         Deferred income taxes are based on the liability method prescribed by
         Statement of Financial Accounting Standards No. 109. The Group's
         deferred tax liabilities for the year ended December 31, 1996
         represented the temporary differences with respect of the time when
         dividends are declared by the Company's subsidiaries and associated
         company are received by the Company. The Group's share of dividends
         declared by the Company's associated company from its retained earnings
         at December 31, 1996 in January 1997 amounted to approximately
         RMB20,648,000.


                                     F - 26
<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

         In connection with the acquisition of High Worth Brewery, Oriental Win
         advanced US$8,869,585 to the High Worth 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
         shareholdings interests in August 1996 (West Coast Star Enterprises
         Ltd.: US$4,800,000; Mapesbury Limited: US$1,600,000; Redcliffe Holdings
         Ltd.: US$1,600,000). During 1997, the advance of US$1,600,000 and the
         shareholding interests of Mapesbury Limited were assigned to Top Link
         Development Limited. The advances 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 advance or part
         thereof by allotment of shares at par value in High Worth Holdings.

         As of December 31, 1997, advances from the respective shareholders,
         namely Top Link Development Limited, Redcliffe Holdings Ltd., West
         Coast Star Enterprises Ltd., and Oriental Win were approximately
         RMB13,300,000 (US$1,600,000), RMB13,300,000 (US$1,600,000),
         RMB39,800,000 (US$4,800,000) and RMB7,200,000 (US$900,000),
         respectively.

                                     F - 27


<PAGE>


CBR BREWING COMPANY, INC.

14.      FOREIGN CURRENCY EXCHANGE

         The Renminbi is not freely convertible into foreign currencies. Prior
         to January 1, 1994, all foreign exchange transactions involving
         Renminbi in the PRC took place either through the Bank of China or
         other institutions authorized to buy and sell foreign currencies, or at
         the approved swap centers in the PRC. The swap centers are institutions
         which are administered by the State Administration of Foreign Exchange
         and its branches. The exchange rates used for transactions through the
         Bank of China and other authorized institutions were set by the PRC
         government, through the State Administration of Foreign Exchange, from
         time to time. The exchange rates available at a swap center are
         determined largely by supply and demand based on foreign currency and
         Renminbi requirements of enterprises operating or doing businesses in
         the PRC.

         On January 1, 1994, the PRC government abolished the dual exchange rate
         system, comprising the official rates and swap center rates, and
         introduced a single rate of exchange as quoted by the People's Bank of
         China. The unified exchange rate is quoted at levels similar to those
         quoted by the swap centers. However, the unification of exchange rates
         does not imply full convertibility of Renminbi into United States
         dollars or other foreign currencies. All foreign exchange transactions
         continue to take place either through the Bank of China or other
         institutions authorized to buy and sell foreign currencies or the swap
         centers at the exchange rates quoted by the People's Bank of China. In
         April 1994, the National Foreign Exchange Trading Center in Shanghai
         (the "exchange center") commenced operations. Enterprises operating in
         the PRC can enter into exchange transactions at the exchange center
         through the Bank of China or other authorized institutions. Payments
         for imported materials and remittances of earnings outside the PRC are
         subject to the availability of foreign currency which are dependent on
         the foreign currency denominated earnings of each relevant PRC company
         within the Group or must be arranged through the exchange center.
         Approval for exchange at the exchange center is granted to enterprises
         in the PRC for valid reasons such as purchases of imported materials
         and remittances of earnings. While conversion of Renminbi into United
         States dollars or other foreign currencies can generally be effected at
         the exchange center, there is no guarantee that it can be effected at
         all times.

         Effectively July 1, 1996, the PRC government 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, 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.

         The unified exchange rate of the RMB equivalent of US$1.00 as of
         December 31, 1995, 1996 and 1997 was RMB8.32, RMB8.32 and RMB8.30,
         respectively.

                                     F - 28

<PAGE>

CBR BREWING COMPANY, INC.

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 their 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.

         The percentage of annual appropriations to statutory surplus and
         collective welfare funds of Zhaoqing Brewery for 1994 were 10% and 5%,
         respectively, on the profits reported in its statutory financial
         statements. No appropriations to these reserve funds were made by
         Zhaoqing Brewery and Blue Ribbon Marketing for 1995, 1996 and 1997 as
         Zhaoqing Brewery was acting as a nominee of High Worth Brewery from
         October 31, 1994 onwards and Blue Ribbon Marketing made 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 regarding 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 1997 has been determined by
         the board of directors and the appropriation has been reported in its
         statutory financial statements.

         Respective appropriations in High Worth Brewery for 1997 have not yet
         been determined by its board of directors and were not reported in its
         statutory financial statements.

                                     F - 29

<PAGE>

CBR BREWING COMPANY, INC.

15.      DISTRIBUTION OF PROFITS - continued

         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 Group has foreign currency available after meeting
         its operational needs, the Group 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. At December 31, 1995, 1996 and 1997, the Group's
         distributable profits amounted to approximately RMB21,180,000,
         RMB38,727,000 and RMB65,972,000, respectively.

         On November 25, 1997, the Board of Directors of High Worth Brewery
         declared the first dividend distribution under which High Worth
         Holdings was entitled to a dividend of approximately RMB83,000,000,
         which was based on PRC GAAP financial statements. The dividend will be
         distributed by installments in order to avoid any disruption to High
         Worth Brewery's normal operating cash flow position. During the year
         ended December 31, 1997, High Worth Holdings received a total of
         RMB10,000,000 as the partial dividend distribution.

16.      SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

         (a)      Interest paid, net of capitalized interest, during the years
                  ended December 31, 1995, 1996 and 1997, was RMB6,886,576,
                  RMB20,767,252 and RMB15,503,189, respectively.

         (b)      Dividends totalling RMB55,375,595 were declared by High Worth
                  Brewery and payable to Blue Ribbon Group, of which
                  RMB15,000,000 was paid out during the year. Included in
                  amounts due to related companies, as set out in note 18(j), is
                  the remaining dividend payable to Blue Ribbon Group as at
                  December 31, 1997.

17.      ADVERTISING EXPENSES

         The Group incurred advertising expenses of RMB18,793,663, RMB65,475,345
         and RMB63,185,906 for the years ended December 31, 1995, 1996 and 1997,
         respectively.

                                     F - 30

<PAGE>

CBR BREWING COMPANY, INC.

18.      RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

         (a)      Sales of beer products

                  During the years ended December 31, 1996 and 1997, sales to
                  Blue Ribbon Group and its group of companies amounted to
                  RMB6,169,170 and RMB8,773,809, respectively.

         (b)      Purchases of packing materials

                  During the years ended December 31, 1995, 1996 and 1997, the
                  Group purchased packing materials from Blue Ribbon Group and
                  its group of companies amounting to RMB27,657,968,
                  RMB44,778,187 and RMB42,081,917, respectively.

         (c)      Purchases of non-alcoholic beverage

                  During the years ended December 31, 1995 and 1996, the Group
                  purchased non-alcoholic beverage from Blue Ribbon Group and
                  its group of companies amounting to RMB61,708,086 and
                  RMB69,166,604, respectively, for resale.

         (d)      Purchases of beer products

                  During the years ended December 31, 1995, 1996 and 1997, the
                  Group purchased beer products from Blue Ribbon Noble amounting
                  to RMB327,805,406, RMB695,150,225 and RMB675,247,962,
                  respectively, for resale.

                  During the year ended December 31, 1997, the Group purchased
                  beer products from Blue Ribbon Group Sichuan Er Mei Shan
                  Brewery ("Sichuan Brewery") amounting to RMB33,052,735 for
                  resale.

         (e)      Royalty fee

                  During the years ended December 31, 1995, 1996 and 1997, the
                  royalty fee of RMB3,454,067, RMB7,945,874 and RMB7,086,075,
                  respectively, was payable to Blue Ribbon Group in respect of
                  the right to use Pabst trademarks in the Guangdong Province of
                  the PRC.

         (f)      Management fee

                  Management fee paid to Blue Ribbon Group for the years ended
                  December 1996 and 1997 was RMB3,780,000 for each year.

                                     F - 31

<PAGE>

CBR BREWING COMPANY, INC.

         (g)      Interest income

                  Interest income from the Blue Ribbon Group for the years ended
                  December 31, 1996 and 1997 was RMB3,981,278 and RMB5,535,977,
                  respectively.

                                     F - 32


<PAGE>


CBR BREWING COMPANY, INC.

18.      RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - continued

         (h)      Interest expense

                  Interest expense for the years ended December 31, 1995, 1996
                  and 1997 included RMB3,091,364, RMB9,282,985 and RMB3,859,087,
                  respectively, payable to Blue Ribbon Group and RMB328,207,
                  RMB948,543 and RMB1,717,133, respectively, payable to other
                  related companies, related to the advances which are more
                  fully disclosed in (i) and (j) below.

         (i)      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. Included in the
                  net amounts due from Blue Ribbon Group at December 31, 1996
                  and 1997 are RMB27,500,000 and RMB16,600,000, respectively,
                  payable to the Group, which bore interest of 15% per annum for
                  the year 1996 and at 20% per annum during 1997, but were
                  interest free as at December 31, 1997. Amounts also include an
                  amount due from the Blue Ribbon Group as at December 31, 1996
                  and 1997 of RMB38,200,000 and RMB42,900,000, respectively,
                  which bore interest at 10% per annum for the year 1996 and at
                  20% per annum during 1997, but was interest free as at
                  December 31, 1997. Save as aforementioned, the remaining
                  balances with the group companies of the Blue Ribbon Group are
                  unsecured, interest-free and repayable on demand.

                                     F - 33

<PAGE>


CBR BREWING COMPANY, INC.

18.      RELATED PARTY TRANSACTIONS AND ARRANGEMENTS - continued

         (j)      Amounts due to related companies

                  As of December 31, 1997, the amounts due to related companies
                  consist of payable balances to the following companies:
<TABLE>
<CAPTION>

                                                                                                 AS OF DECEMBER 31,
                                                                                             -------------------------
                                                                                             1996                 1997
                                                                                             ----                 ----
                                                                                              RMB                  RMB
                                                                                         (in million)         (in million)
                  <S>                                                                        <C>                  <C>
                  American National Can (Zhaoqing) Co., Ltd.
                    ("American National Can")                                                 4.8                  10.5
                  Blue Ribbon Beverage Co., Ltd. ("Beverage")                                 1.8                   1.8
                  Blue Ribbon Group                                                             -                  40.3
                  Blue Ribbon Mineral Water Factory ("Mineral Water")                         4.2                     -
                  Sichuan Brewery                                                               -                   4.9
                  Champers Investment Limited ("Champers")                                      -                   2.3
                  Evermoni Trading Limited ("Evermoni")                                       5.7                   7.1
                  Bilibest Industries Limited ("Bilibest")                                      -                   2.9
                  Trade Link Investment Limited ("Trade Link")                                1.2                   1.4
                  Wealth Guide Development Limited ("Wealth Guide")                           3.1                   3.6
                  Other subsidiaries and associated companies
                    of Blue Ribbon Group                                                      0.6                   2.4
                                                                                             ----                  ----
                                                                                             21.4                  77.2
                                                                                             ----                  ----
                                                                                             ----                  ----
</TABLE>

                  American National Can, Beverage, Mineral Water, and Sichuan
                  Brewery are companies in which Blue Ribbon Group has equity
                  interests.

                  Evermoni and Champers are beneficially owned by Wong Lee Tak
                  who is a director of the Company. Bilibest is controlled by
                  the shareholders of West Coast Star Enterprises Limited. Trade
                  Link is beneficially owned by Victor Choi who is a former
                  director of the Company. Wealth Guide is beneficially owned by
                  Blue Ribbon Group.

                  The balances with group companies of Blue Ribbon Group, except
                  Wealth Guide, represented the balances arising from the
                  purchases of raw materials from them. The balances are
                  unsecured, interest-free and repayable on demand.

                  The balance with Blue Ribbon Group amounted to RMB40,300,000
                  being the dividend payable by High Worth Brewery.

                  The balances with Champers, Evermoni, Bilibest, Trade Link and
                  Wealth Guide are advances in nature. The amounts due to such
                  related companies are unsecured, bear interest at 12% per
                  annum, as of December 31, 1996 and 1997 and are repayable on
                  demand.

                                     F - 34


<PAGE>

 

CBR BREWING COMPANY, INC.

         (k)      Advances from shareholders

                  Reference is made to note 13.

                                     F - 35

 
 

 


<PAGE>


CBR BREWING COMPANY, INC.

19.      RETIREMENT PLAN

         The Company, High Worth Holdings and the Finance Company do not have
         any retirement plans in operation. High Worth Brewery did not have any
         retirement plans in operation until December 31, 1995, the date when
         transfer of the legal ownership of the brewery facilities and all
         assets and liabilities held by Zhaoqing Brewery to High Worth Brewery
         was approved by the PRC Government. The application to the PRC
         Government for the legal title transfer of a 70% interest in Blue
         Ribbon Marketing and a 40% interest in Blue Ribbon Noble is still in
         progress.

         As stipulated by the PRC government regulations, High Worth Brewery,
         Zhaoqing Brewery and Blue Ribbon Marketing have defined contribution
         retirement plans for all their permanent staff. Zhaoqing Brewery and
         its staff are required to contribute to PRC insurance companies
         organized by the PRC government which are responsible for the payments
         of pension benefits to retired staff. During the year ended December
         31, 1997, the monthly contributions of both High Worth Brewery and Blue
         Ribbon Marketing for permanent staff were calculated at 14.6% and 2%,
         respectively, of the basic salary of the permanent staff. The pension
         costs expensed by the Group during the years ended December 31, 1995,
         1996 and 1997 amounted to RMB706,566, RMB3,236,633 and RMB3,125,419,
         respectively.

20.      FINANCIAL INSTRUMENTS

         The carrying amounts reported in the balance sheets at December 31,
         1996 and 1997 for current assets and current liabilities, except for
         bank loans, 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 carrying values and estimated fair values of bank loans, based on
         the borrowing rates for borrowings with similar terms and average
         maturities are RMB40,500,000 and RMB40,500,000, respectively, at
         December 31, 1996, and RMB43,500,000 and RMB43,500,000, respectively,
         at December 31, 1997. The fair value of the shareholders' advances is
         not able to be determined because no comparable borrowing terms are
         currently available.

                                     F - 36

 
 

 

<PAGE>


CBR BREWING COMPANY, INC.

21.      CONCENTRATION OF RISKS

         The Group'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 1996 and 1997 accounted for 94% and 99%, respectively of
         the Group's turnover. 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. For the risks
         relating to foreign currency, please refer to note 14.

         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.

22.      PLEDGE OF ASSETS

         Certain assets of High Worth Brewery were collaterialized under
         floating charge to secure 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, 1997 amounted to
         RMB181,560,188 and

                                     F - 37

<PAGE>


CBR BREWING COMPANY, INC.

         RMB203,209,679, respectively. The net book value of property, plant and
         equipment and the carrying amounts of the other assets pledged to banks
         as of December 31, 1996 amounted to RMB193,594,443 and RMB203,209,679,
         respectively.

                                     F - 38

 
 

 


<PAGE>


CBR BREWING COMPANY, INC.

23.      COMMITMENTS AND CONTINGENCIES

         As of December 31, 1997, the Group was committed to capital
         expenditures of RMB1,142,304. The Group had no capital commitments as
         of December 31, 1996.

         Blue Ribbon Group entered into licensing arrangements with Pabst
         Brewery 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 7, 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
         among CBR Brewing Company, Inc. and its subsidiary, the group companies
         of Noble China Inc., a company incorporated in Canada, and Blue Ribbon
         Group on May 10, 1995 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 ("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 any 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 as to 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. Each of Zhaoqing
                  Brewery and Blue Ribbon Noble will 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.

                                     F - 39

<PAGE>


CBR BREWING COMPANY, INC.

23.      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.

         As of December 31, 1997, the Group was committed to pay an operating
         leases in respect of rental expenses of RMB942,370. As of December 31,
         1996, the Group had no operating lease commitments.

         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 18(f)).

         In November, 1996, 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 Er Mei Shan, Le Shang City, Sichuan Province of the PRC for the
         production of Pabst Blue Ribbon beer in 1997.

         In April 1997, the Sichuan Brewery commenced the production and sale of
         Pabst Blue Ribbon beer. In the same month, in order to facilitate the
         efficient distribution and sale of Pabst Blue Ribbon beer in the PRC,
         the Blue Ribbon Marketing and the Sichuan Brewery entered into a
         Memorandum of Understanding. The Memorandum of Understanding requires
         the Sichuan Brewery to sell all of its production of Pabst Blue Ribbon
         beer to the Blue Ribbon Marketing at mutually agreed ex-factory prices,
         and grants Blue Ribbon Marketing the right to regulate production to
         reflect market demand. In signing the Memorandum of Understanding, the
         Company does not consent to, or waives any rights with respect to, Blue
         Ribbon Group's assertion that Blue Ribbon Group has the right to brew
         Pabst Blue Ribbon beer in the PRC either by itself or through one or
         more of its affiliates.

         In early October 1997, the Sichuan Brewery advised Blue Ribbon
         Marketing it intends to commence selling its production of Pabst Blue
         Ribbon beer directly and that it will cease selling its production of
         Pabst Blue Ribbon beer to Blue Ribbon Marketing.

         In late October 1997, High Worth Brewery and Blue Ribbon Marketing
         instituted formal legal proceedings against Blue Ribbon Group and
         Sichuan Brewery. A Statement of Claims was filed with the High Court of
         Guangdong Province in which Blue Ribbon Group and Sichuan Brewery were
         named as the first and second defendant respectively. Both defendants
         were accused of the violation of the Sublicensing Agreement signed
         between High Worth Brewery and Blue Ribbon Group and the breach of
         Sales Contracts signed between Blue Ribbon Marketing and Blue Ribbon
         Group.

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

                                     F - 40

<PAGE>


CBR BREWING COMPANY, INC.

         (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.

                                     F - 41

 
 


<PAGE>


CBR BREWING COMPANY, INC.

23.      COMMITMENTS AND CONTINGENCIES - continued

         (ii)     Blue Ribbon Marketing should 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 should be marketed by
                  Blue Ribbon Marketing according to the arrangement of the
                  management committee.

         (iii)    The sales and marketing of Blue Ribbon mineral waters and
                  non-carbonated soft drinks will be handled by Blue Ribbon
                  Group upon confirmation by the Board of Directors of Blue
                  Ribbon Marketing.

         (iv)     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.

         (v)      Blue Ribbon Group committed to sublicense the right to use the
                  Pabst Blue Ribbon trademarks to all new breweries to be
                  established by High Worth Brewery in the future. The new
                  brewery will pay royalty fee at the same rate as Pabst US
                  charges Guangdong Blue Ribbon plus a surcharge of RMB25 per
                  metric ton. All other terms and conditions will be the same as
                  in the License Agreement.

         All legal costs incurred in respect of this proceeding will be shared
         equally by the plaintiffs and defendants.

24.      POST BALANCE SHEET EVENTS

         (a)      On January 13, 1998, High Worth Brewery entered a joint
                  venture contract with Zao Yang Brewery to establish a new
                  brewery in Hubei Province with an initial annual production
                  capacity of 40,000 metric tons of beer. The new brewery, with
                  a total capital investment of RMB29,280,000, will be named
                  "Zao Yang Blue Ribbon High Worth Brewery Ltd." ("Zao Yang High
                  Worth"), which will be owned 55% by High Worth Brewery with
                  the remaining 45% owned by Zao Yang Brewery.

                  Pursuant to the joint venture agreement, High Worth Brewery
                  will contribute a total of RMB16,104,000 as its capital
                  contribution to Zao Yang High Worth. The sum will be paid in
                  four instalments to obtain 55% of the assets of Zao Yang
                  Brewery which will be injected into Zao Yang High Worth upon
                  completion of approval procedures. Zao Yang Brewery will
                  contribute the remaining 45% of the assets as their capital
                  contribution.

                  The joint venture agreement also provides that external loans
                  of RMB29,280,000 and RMB16,000,000 from financial institutions
                  should be solicitated by Zao Yang High Worth

                                     F - 42

 
<PAGE>


CBR BREWING COMPANY, INC.

                  in order to meet the funding requirements for equipment
                  renovation and working capital, respectively. If Zao Yang High
                  Worth is unable to borrow such amount, High Worth Brewery and
                  Zao Yang Brewery shall contribute additional funds to Zao Yang
                  High Worth in proportion to their respective interests.

                                     F - 43

 
 

 


<PAGE>


CBR BREWING COMPANY, INC.

24.      POST BALANCE SHEET EVENTS - continued

                  Subject to the approval by the Zao Yang City Government and
                  upon the issuance of the business registration certificate by
                  the local Business Registration Bureau, Zao Yang High Worth
                  will initially commence production of a locally branded beer -
                  "Di Huang Quan". This trademark will be transferred from Zao
                  Yang Brewery to Zao Yang High Worth once the joint venture
                  commences operations. High Worth Brewery is responsible for
                  the transfer of the technical know-how and production
                  technique of brewing Pabst Blue Ribbon beer to Zao Yang High
                  Worth, which is expected to take approximately six to nine
                  months.

         (b)      On February 12, 1998, the Board of Directors of High Worth
                  Brewery resolved that if agreed by Zao Yang Brewery, Zao Yang
                  High Worth may be changed into a joint stock company in which
                  High Worth Brewery will reduce its equity interest to 51%, Zao
                  Yang Brewery to 24% and the remaining 25% will be taken up by
                  the management and employee of Zao Yang High Worth. The above
                  proposed change is subject to approval from the local
                  management.

         (c)      On February 12, 1998, the Board of Directors of High Worth
                  Brewery further resolved that the new shareholding structure 
                  for Sichuan High Worth should be revised to 60% owned by High
                  Worth Brewery and 40% owned by E Mei Brewery.  The Board also 
                  resolved that if agreed by the parties concerned, Sichuan High
                  Worth may also be changed into a joint stock company in which 
                  High Worth Brewery will reduce its equity interest to 51%,
                  E Mei Brewery to 24% and the remaining 25% will be taken up 
                  by the management and employees of Sichuan High Worth.  All 
                  the above proposed changes are subject to approval from the 
                  local government.

         (d)      On January 2, 1998, the Shareholders voted to adopt the 1998
                  Stock Option Plan ("the Plan") and granted options to purchase
                  210,000 shares of Class A common stock at an exercise price of
                  US$3.87 per share to four directors and five employees and
                  70,000 shares of Class A common stock at US$4.26 per share 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.

         (e)      On January 20, 1998, Goldjinsheng and Zhaoqing Brewery has
                  entered into an agreement which stipulated that their
                  respective interests in the Blue Ribbon Noble will be
                  transferred to Linchpin Holdings Limited, 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 Holdings Limited and
                  High Worth Brewery will own 60% and 40% equity interests of
                  the Blue Ribbon Noble respectively.

         (f)      On March 2, 1998, the Company entered a contract with a
                  corporate financial consulting company which will provide
                  financial and business consulting services to the Company. The
                  remuneration is in the form of non-cash compensation. A total
                  of 50,000 shares of the Company's Class A common stock will be
                  issued to the financial consulting company based on the
                  pre-defined scope of services performed. In addition, warrants
                  to purchase in aggregate a total of 150,000 shares of Class A
                  common stock will also be issued, which

                                     F - 44

<PAGE>


CBR BREWING COMPANY, INC.

                  will be divided into three equal portions with exercise prices
                  of US$3.50, US$4.50 and US$5.50 per share, respectively.

                                     F - 45

<PAGE>

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

                       Reports and Financial Statements

                     For the year ended December 31, 1997


<PAGE>

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

REPORTS AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------

<TABLE>
<CAPTION>

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


REPORT OF PREDECESSOR AUDITORS ...............................            F - 2


BALANCE SHEETS ...............................................            F - 3


STATEMENTS OF INCOME .........................................           F - 5


STATEMENTS OF EQUITY .........................................            F - 6


STATEMENTS OF CASH FLOWS .....................................            F - 7


NOTES TO FINANCIAL STATEMENTS ................................            F - 8

</TABLE>

                                        2

<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, 1997 and 1996, and the related
         statements of income, equity and cash flows for the years then ended.
         These financial statements are the responsibility of the Company's
         management. Our responsibility is to express an opinion on these
         financial statements based on our 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, 1997 and 1996, and the results of
         its operations and its cash flows for the years then ended in
         conformity with generally accepted accounting principles in the United
         States of America.

         We draw your attention to notes 12 and 20 to the financial statements
         which state that the Company is exposed to foreign exchange risk and
         other risks through its operations in the People's Republic of China.

                                                   /s/ Deloitte Touche Tohmatsu

         Hong Kong
         March 31, 1998

                                      F - 1

<PAGE>

         REPORT OF PREDECESSOR AUDITORS

         To the shareholders of 
         CBR Brewing Company, Inc.

         We have audited the accompanying balance sheet of Zhaoqing Blue Ribbon
         Brewery Noble Ltd. as of December 31, 1995 and the related statement of
         income, equity and cash flows for the year then ended. The financial
         statements are the responsibility of Zhaoqing Blue Ribbon Brewery Noble
         Ltd.'s management. Our responsibility is to express an opinion on these
         financial statements based on our audit.

         We conducted our audit in accordance with generally accepted auditing
         standards in the United State 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 audit provides a
         reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
         fairly, in all material respects, the financial position of Zhaoqing
         Blue Ribbon Brewery Noble Ltd. as of December 31, 1995 and the result
         of its operation and its cash flows for the year then ended in
         conformity with generally accepted accounting principles in the United
         States of America.

                                                              /s/ Ernst & Young

         Hong Kong
         March 28, 1996

                                      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,
                                                                                     -------------------
                                                                       1996                  1997                  1997
                                                                       ----                  ----                  ----
                                                                        RMB                   RMB                   US$
                                                                                                                  (Note 3)
                                     ASSETS
<S>                                                                  <C>                  <C>                         <C>
Current assets:
  Cash and cash equivalents.................................         123,938,892          122,312,674                 14,736,467
  Accounts receivable, net of allowance for
    doubtful accounts of RMB2,246,703 and
    RMB1,039,451 for 1996 and 1997,
    respectively (note 4)...................................           7,223,259            2,356,248                    283,885
  Bills receivable (note 5).................................                -              24,750,000                  2,981,928
  Inventories (note 6)......................................          40,577,951           35,856,998                  4,320,120
  Prepayments and deposits..................................          40,205,803           12,675,847                  1,527,210
  Amounts due from related companies (note 17a).............         176,350,800          217,079,521                 26,154,159
                                                                ----------------     ----------------              -------------
Total current assets........................................         388,296,705          415,031,288                 50,003,769

Property, plant and equipment, net of accumulated
  depreciation and amortization of RMB89,983,400
  and RMB124,593,046 for 1996 and 1997,
  respectively (notes 7 and 21).............................         433,480,695          464,699,723                 55,987,919
                                                                ----------------     ----------------           ----------------
Total assets................................................         821,777,400          879,731,011                105,991,688
                                                                ----------------     ----------------           ----------------
                                                                ----------------     ----------------           ----------------

                             LIABILITIES AND EQUITY

Current liabilities:
  Bank loans (note 8).......................................          13,500,000            1,500,000                    180,723
  Accounts payable..........................................          58,293,169           45,976,545                  5,539,342
  Accrued liabilities.......................................          34,972,066           43,900,756                  5,289,248
  Employee welfare and incentive fund.......................           6,217,309           11,908,240                  1,434,728
  Amounts due to related companies (note 17b)...............          29,286,818           48,703,390                  5,867,878
  Sales taxes payable (note 10).............................          50,543,297           61,575,962                  7,418,791
  Income taxes payable (note 9).............................          13,035,421           10,913,601                  1,314,892
                                                                ----------------     ----------------           ----------------
Total current liabilities...................................         205,848,080          224,478,494                 27,045,602
                                                             ----------------     ----------------           ----------------
Long term liabilities:
  Deferred income taxes (note 9)............................           9,000,000           12,200,000                  1,469,880
                                                                ----------------     ----------------           ----------------
Commitments and contingencies
  (notes 12, 20 and 22)
Equity:
Contributed capital.........................................         475,940,000          475,940,000                 57,342,169
General reserve and enterprise development funds
  (note 13).................................................          14,506,926           21,043,879                  2,535,407
Retained earnings (note 14).................................         116,482,394          146,068,638                 17,598,630
</TABLE>
                                      F - 3

<PAGE>

                     ZHAOQING BLUE RIBBON BREWERY NOBLE LTD.
                     ---------------------------------------
                 (Registered in the People's Republic of China)
<TABLE>
<CAPTION>
                                                                ----------------     ----------------           ----------------
<S>                                                                  <C>                  <C>                         <C>
Total equity................................................         606,929,320          643,052,517                 77,476,206
                                                                ----------------     ----------------           ----------------
Total liabilities and equity................................         821,777,400          879,731,011                105,991,688
                                                                ----------------     ----------------           ----------------
                                                                ----------------     ----------------           ----------------
</TABLE>

               See accompanying notes to the financial statements

                                      F - 4

<PAGE>


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


                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>       
                                                                             YEAR ENDED DECEMBER 31,
                                                                             -----------------------
                                                           1995              1996              1997              1997
                                                           ----              ----              ----              ----
                                                            RMB               RMB               RMB               US$
<S>                                                     <C>               <C>               <C>               <C>
                                                                                                               (Note 3)

Sales, including sales to related companies of
  RMB327,805,406, RMB695,150,225 and
  RMB677,910,031 in 1995, 1996 and 1997,
  respectively (note 17c)......................         724,233,282       695,150,225       677,910,031       81,675,907
Sales taxes (note 10)..........................         (42,509,114)      (39,833,234)      (38,231,436)      (4,606,197)
                                                        -----------       -----------       -----------      -----------

Net sales......................................         681,724,168       655,316,991       639,678,595       77,069,710
Cost of sales, including inventory purchased
  from related companies of RMB91,355,485, 
  RMB117,344,580 and RMB92,468,404 in 1995, 
  1996 and 1997, respectively, and royalty 
  fee paid to a related company of 
  RMB15,434,144, RMB15,106,029 and 
  RMB14,317,306 in 1995,
  1996 and 1997, respectively (note 17c).......        (525,860,005)     (510,166,989)     (460,616,470)     (55,495,960)
                                                        -----------       -----------       -----------      -----------
Gross profit...................................         155,864,163       145,150,002       179,062,125       21,573,750
Selling, general and administrative expenses,
  including management fee paid to a related
  company of RMB2,035,000 in 1995, 1996 and
  1997 (note 17c)..............................         (60,819,562)      (38,937,354)      (36,193,085)      (4,360,613)
                                                        -----------       -----------       -----------      -----------

Operating income...............................          95,044,601       106,212,648       142,869,040       17,213,137
Interest income................................           3,846,001         3,901,929         2,078,006          250,362
Interest expense...............................          (2,240,015)       (3,450,585)       (1,458,454)        (175,717)
                                                        -----------       -----------       -----------      -----------

Income before income taxes.....................          96,650,587       106,663,992       143,488,592       17,287,782
Income taxes (note 9)..........................          (2,200,000)      (16,535,421)      (21,331,616)      (2,570,074)
                                                        -----------       -----------       -----------      -----------

Net income.....................................          94,450,587        90,128,571       122,156,976       14,717,708
                                                        -----------       -----------       -----------      -----------
                                                        -----------       -----------       -----------      -----------
</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 EQUITY

<TABLE>
<CAPTION>

                                                                        General
                                                                      reserve and
                                                                      enterprise
                                                 Contributed          development          Retained
                                                   Capital               Funds             Earnings                  Equity
                                                -------------         ------------       -------------           -------------
                                                     RMB                  RMB                RMB                      RMB
                                                  (Note 11)             (Note 13)          (Note 14)
<S>                                             <C>                     <C>                <C>
Balance at January 1, 1995...................     475,940,000           4,199,788          113,381,337             593,521,125
Net income for the year .....................            -                      -           94,450,587              94,450,587
Appropriation of:
  Reserve....................................            -              5,527,483           (5,527,483)                   -
  Dividend...................................            -                      -          (71,611,420)            (71,611,420)
                                                -------------         ------------       -------------           -------------
Balance at December 31, 1995.................     475,940,000           9,727,271          130,693,021             616,360,292
Net income for the year......................            -                      -           90,128,571              90,128,571
Appropriation of:
  Reserve....................................            -              4,779,655           (4,779,655)                   -
  Dividend...................................            -                      -          (99,559,543)            (99,559,543)
                                                -------------         ------------       -------------           -------------
Balance at December 31, 1996.................     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
                                                -------------         ------------       -------------           -------------
                                                -------------         ------------       -------------           -------------

Converted to US$
Balance at December 31, 1997
  (note 3)...................................   US$57,342,169        US$2,535,407        US$17,598,630           US$77,476,206
                                                -------------        -------------       -------------           -------------
                                                -------------        -------------       -------------           -------------

</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)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                                             -----------------------
                                                              1995            1996             1997              1997
                                                              ----            ----             ----              ----
                                                               RMB             RMB              RMB               US$
                                                                                                               (Note 3)
<S>                                                      <C>               <C>              <C>              <C>
Cash flows from operating activities
Net income.......................................        94,450,587        90,128,571       122,156,976      14,717,708

Adjustments to reconcile net income to net cash 
 provided by operating activities:
Depreciation and amortization....................        30,115,484        36,630,493        34,609,646       4,169,837
Deferred income taxes............................         2,200,000         3,500,000         3,200,000         385,542
Allowance for doubtful accounts..................           786,740         1,459,963        (1,207,252)       (145,452)

Changes in operating assets and liabilities:
Accounts receivable..............................        97,194,303        (7,626,399)        6,074,263         731,839
Bills receivable.................................              -                 -          (24,750,000)     (2,981,928)
Inventories......................................        20,043,860        (7,552,072)        4,720,953         568,790
Prepayments and deposits.........................       (11,461,759)      (11,363,578)       27,529,956       3,316,862
Amounts due from related companies...............       (77,218,250)       (7,725,219)      (40,728,721)     (4,907,075)
Accounts payable and accrued liabilities.........         7,276,109        32,685,096        (3,387,934)       (408,185)
Employee welfare and incentive fund..............         5,527,483        (3,509,962)        5,690,931         685,654
Deposits received from customers.................       (61,464,582)             -                 -               -
Amounts due to related companies.................         9,504,527         2,288,496        19,416,572       2,339,346
Sales taxes payable..............................        39,759,438       (28,473,956)       11,032,665       1,329,237
Income taxes payable.............................              -           13,035,421        (2,121,820)       (255,640)
                                                        -----------       -----------       -----------      ----------

Net cash provided by operating activities........       156,713,940       113,476,854       162,236,235      19,546,535
                                                        -----------       -----------       -----------      ----------

Cash flows from investing activities
Purchases of property, plant and equipment.......       (31,927,658)       (8,089,333)      (65,828,674)     (7,931,166)
Proceeds from disposals of property,
  plant and equipment............................         1,749,823              -                 -               -
                                                        -----------       -----------       -----------      ----------

Net cash used in investing activities............       (30,177,835)       (8,089,333)      (65,828,674)     (7,931,166)
                                                        -----------       -----------       -----------      ----------
Cash flows from financing activities
New bank loans...................................        13,500,000              -                 -               -
Repayment of bank loans..........................       (17,200,000)             -          (12,000,000)     (1,445,783)
Dividend paid....................................       (71,611,420)      (99,494,695)      (86,033,779)    (10,365,516)
                                                        -----------       -----------       -----------      ----------

Net cash used in financing activities............       (75,311,420)      (99,494,695)      (98,033,779)    (11,811,299)
                                                        -----------       -----------       -----------      ----------
Net increase (decrease) in cash and cash
  quivalents.....................................        51,224,685         5,892,826        (1,626,218)       (195,930)
Cash and cash equivalents  at beginning of year..        66,821,381       118,046,066       123,938,892      14,932,397
                                                        -----------       -----------       -----------      ----------
Cash and cash equivalents at end of year.........       118,046,066       123,938,892       122,312,674      14,736,467
                                                        -----------       -----------       -----------      ----------
                                                        -----------       -----------       -----------      ----------
</TABLE>

               See accompanying notes to the financial statements

                                      F - 7

<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 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
         22), 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 from 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% 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 in 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.


                                      F - 8
<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

         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. Sales returns are recognized upon
         receipt of goods returned from customers.

         INVENTORIES - Inventories are stated at the lower of cost or market
         value. Cost, which comprises direct materials, direct labor costs and
         overheads 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
         their 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
</TABLE>


                                      F - 9
<PAGE>

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

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

         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.

         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.

         ADVERTISING EXPENSES - Advertising expenses are charged to expense in
         the statements of income as incurred.

         INCOME TAXES - Income taxes are determined under the liability method
         in accordance with Statement of Financial Accounting Standards No. 109,
         "Accounting for Income Taxes" ("SFAS 109"). SFAS 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.

         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.

         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,
         quoted by the Zhaoqing Foreign Exchange Adjustment Center (the "swap
         center") for the respective periods. Monetary assets and liabilities
         denominated in foreign currencies have been translated into Renminbi
         using the rate of exchange quoted by the swap center 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
         the swap center rate as quoted by the People's Bank of China on
         December 31, 1997 of 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.

         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 - 10
<PAGE>

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

4.       ACCOUNTS RECEIVABLE

         Accounts receivable comprise:

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                              <C>                  <C>
         Accounts receivables - trade...............................................       9,469,962             3,395,699
         Less: Allowance for doubtful accounts......................................       (2,246,703)           (1,039,451)
                                                                                          -----------           -----------
                                                                                           7,223,259             2,356,248
                                                                                          -----------           -----------
                                                                                          -----------           -----------
</TABLE>

         Movement of allowance for doubtful accounts:

<TABLE>
<CAPTION>
                                                                                1995              1996                1997
                                                                                ----              ----                ----
                                                                                 RMB               RMB                 RMB
         <S>                                                                <C>              <C>                 <C>
         Balance as at January 1.....................................              -               786,740           2,246,703
         Provided (written back) during the year.....................           786,740          1,459,963          (1,207,252)
                                                                            -----------      -------------       -------------
         Balance as at December 31...................................           786,740          2,246,703           1,039,451
                                                                            -----------      -------------       -------------
                                                                            -----------      -------------       -------------

</TABLE>

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

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                           <C>                   <C>
         Inventories comprise:

         Raw materials..............................................................       30,136,756            24,305,088
         Work in progress...........................................................        8,247,938             9,036,356
         Finished goods.............................................................        2,193,257             2,515,554
                                                                                       --------------        --------------
                                                                                           40,577,951            35,856,998
                                                                                       --------------        --------------
                                                                                       --------------        --------------
</TABLE>


                                     F - 11
<PAGE>


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

7.       PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                             1996                  1997
                                                                                             ----                  ----
                                                                                              RMB                   RMB
         <S>                                                                          <C>                   <C>
         At cost:
           Land use rights and buildings............................................      162,700,681           179,287,307
           Plant, machinery and equipment...........................................      354,772,134           403,042,842
           Motor vehicles...........................................................        5,991,280             6,962,620
                                                                                       --------------         -------------
           Total....................................................................      523,464,095           589,292,769
           Less: Accumulated depreciation and amortization..........................      (89,983,400)         (124,593,046)
                                                                                       --------------         -------------
                                                                                          433,480,695           464,699,723
                                                                                       --------------         -------------
                                                                                       --------------         -------------
</TABLE>


8.       BANK LOANS

         The short-term bank loan as at December 31, 1997 was collaterized by
         certain property, plant and equipment of the Company, bore fixed
         interest rates of 12.3% in 1996 and 11.1% in 1997 and is wholly
         repayable in 1998. The weighted average interest rates as of December
         31, 1996 and 1997 are 12.3% and 11.1% per annum, respectively.

         There are no significant covenants or financial restrictions relating
         to the Company's short-term bank borrowings. Details of assets pledged
         by the Company are described in note 21.

9.       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. Based on its local
         statutory financial statements, the Company has attained its first
         profitable year of operations for the financial year ended December 31,
         1993. As the Company only earned profits for two months in 1993, the
         Company has applied for an extension of the tax holiday period to 1995
         which was approved by the PRC tax authority. Accordingly, no current
         income taxes were provided by the Company for the years ended December
         31, 1994 and 1995. For the years ended December 31, 1996 and 1997,
         current income taxes based on the 50% reduction rule were provided.


                                     F - 12
<PAGE>

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

         The aggregate income tax benefit from the tax exemption and reduction
         status for the years ended December 31, 1995, 1996 and 1997 amounted to
         approximately RMB26,100,000, RMB16,000,000 and RMB22,300,000,
         respectively.




















                                     F - 13
<PAGE>


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

9.       INCOME TAXES - continued

         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,
                                                                            ---------------------------------------
                                                                            1995             1996              1997
                                                                            ----             ----              ----
         <S>                                                                <C>              <C>               <C>
         Statutory tax rate...................................               27%              27%               27%
         Tax holiday..........................................              (27%)            (15%)             (15%)
         Accelerated depreciation allowances..................                3%               4%                3%
         Change in tax rate...................................               (1%)               -                 -
                                                                          ---------        ---------         ---------
         Effective tax rate...................................                2%              16%               15%
                                                                          ---------        ---------         ---------
                                                                          ---------        ---------         ---------
</TABLE>

         The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                              ---------------------------------------
                                                                              1995             1996              1997
                                                                              ----             ----              ----
                                                                               RMB              RMB               RMB
         <S>                                                                <C>               <C>              <C>
         Current..............................................                   -            13,035,421       18,131,616
         Deferred.............................................              2,200,000          3,500,000        3,200,000
                                                                        -------------     --------------   --------------
                                                                            2,200,000         16,535,421       21,331,616
                                                                        -------------     --------------   --------------
                                                                        -------------     --------------   --------------
</TABLE>

         The provision for deferred income taxes is based on the liability
         method prescribed by Statement of Financial Accounting Standards No.
         109. The Company's temporary differences mainly represented the
         accelerated depreciation allowances provided on property, plant and
         equipment.

10.      SALES TAXES

         Effective from January 1, 1994, 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 vicinity. Exported goods are exempted. The other sales taxes
         are assessed as a percentage of consumption tax and VAT payable.

                                     F - 14

<PAGE>


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

11.      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.

                                     F - 15


<PAGE>

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

12.      FOREIGN CURRENCY EXCHANGE

         The Renminbi is not freely convertible into foreign currencies. Prior
         to January 1, 1994, all foreign exchange transactions involving
         Renminbi in the PRC took place either through the Bank of China or
         other institutions authorized to buy and sell foreign currencies, or at
         the approved swap centers in the PRC. The swap centers are institutions
         which are administered by the State Administration of Foreign Exchange
         and its branches. The exchange rates used for transactions through the
         Bank of China and other authorized institutions were set by the PRC
         government, through the State Administration of Foreign Exchange, from
         time to time. The exchange rates available at a swap center are
         determined largely by supply and demand based on foreign currency and
         Renminbi requirements of enterprises operating or doing businesses in
         the PRC.

         On January 1, 1994, the PRC government abolished the dual exchange rate
         system, comprising the official rates and the swap center rates, and
         introduced a single rate of exchange as quoted by the People's Bank of
         China. The unified exchange rate is quoted at levels similar to those
         quoted by the swap centers. However, the unification of exchange rates
         does not imply full convertibility of Renminbi into United States
         dollars or other foreign currencies. All foreign exchange transactions
         continue to take place either through the Bank of China or other
         institutions authorized to buy and sell foreign currencies or the swap
         centers at the exchange rates quoted by the People's Bank of China. In
         April 1994, the National Foreign Exchange Trading Center in Shanghai
         (the "exchange center") commenced operations. Enterprises operating in
         the PRC can enter into exchange transactions at the exchange center
         through the Bank of China or other authorized institutions. Payments
         for imported materials and remittances of earnings outside the PRC are
         subject to the availability of foreign currency which are dependent on
         the foreign currency denominated earnings of the Company or must be
         arranged through the exchange center. Approval for exchange at the
         exchange center is granted to enterprises in the PRC for valid reasons
         such as purchases of imported materials and remittances of earnings.
         While conversion of Renminbi into United States dollars or other
         foreign currencies can generally be effected at an exchange center,
         there is no guarantee that it can be effected at all times.

         Effective July 1, 1996, the PRC government 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, to buy and sell foreign currencies 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.

         The unified exchange rates of the RMB equivalent of US$1.00 as of
         December 31, 1995, 1996 and 1997 were RMB8.32, RMB8.32 and RMB8.30,
         respectively.

                                     F - 16


<PAGE>


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

13.      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 1997 have already
         been determined by the board of directors and the appropriations have
         been reported in the statutory financial statements.

14.      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, 1996 and 1997, the retained earnings available for
         distribution amounted to approximately RMB86,034,000 and
         RMB117,665,000, respectively.

15.      ADVERTISING EXPENSES

         The Company incurred advertising expenses of RMB25,517,797,
         RMB3,298,054 and RMB1,112,611 for the years ended December 31, 1995,
         1996 and 1997, respectively.

16.      SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

         Interest paid during the years ended December 31, 1995, 1996 and 1997
         was RMB2,240,015, RMB3,450,585 and RMB1,458,454, respectively. Income
         tax paid for the year ended December 31, 1997 was RMB20,253,436. No
         income tax was paid during 1995 and 1996.

                                     F - 17

<PAGE>


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

17.      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, High Worth Brewery, Goldjinsheng and Blue Ribbon
                  Marketing amounting to approximately RMB9,100,000, RMB200,000,
                  RMB100,000 and RMB167,000,000, respectively, for 1996 and
                  RMB6,900,000, nil, RMB500,000 and RMB209,600,000,
                  respectively, for 1997.

                  The balances with Blue Ribbon Group, High Worth Brewery 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.

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

         (b)      Amounts due to related companies

                  As of December 31, 1996 and 1997, 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 - 18

<PAGE>


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


17.      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 summarised below:

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                              ---------------------------------------
                                                                              1995             1996              1997
                                                                              ----             ----              ----
                  <S>                                                       <C>               <C>              <C>
                  Sales of beer products to
                    Blue Ribbon Marketing...................                327,805,406       695,150,225      675,247,962

                  Sales of beer products to
                    Blue Ribbon Group.......................                       -                 -           2,662,069

                  Purchases of raw materials
                    from American National
                    Can (Zhaoqing) Co., Ltd.................                 78,818,909        94,037,194       71,436,977

                  Purchases of raw materials
                    from Zhaoqing Blue
                    Ribbon Carton
                    Manufacturing Co........................                 12,536,576        23,307,386       21,031,427

                  Royalty fee paid to Blue
                    Ribbon Group............................                 15,434,144        15,106,029       14,317,306

                  Management fee paid to
                    Blue Ribbon Group.......................                  2,035,000         2,035,000        2,035,000
</TABLE>

18.      RETIREMENT PLAN

         As stipulated by the PRC government regulations, the Company has
         defined contribution retirement plans for all its permanent staff. The
         Company and its staff 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 staff. Prior to June 30, 1994,
         the monthly contribution of the Company was calculated at 9.3% of the
         basic salary of the permanent staff and the monthly contribution of
         each permanent staff was RMB2. Effective from July 1, 1994, the monthly
         contributions of the Company and the permanent staff were calculated at
         14.6% and 2%, respectively, of the basic salary of the permanent staff.
         The pension costs expensed by the Company for the years ended December
         31, 1995, 1996 and 1997 amounted to RMB472,371, RMB337,760 and
         RMB847,516, respectively.

                                     F - 19

<PAGE>

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

19.      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.

20.      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 1996 and 1997, respectively, and is heavily dependent on the sales
         to the related company.

         The Company currently uses foreign currency to pay for imported raw
         materials and dividend payments. For details of foreign currency risks,
         please refer to note 12.

         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 - 20

<PAGE>

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


21.      PLEDGE OF ASSETS

         Land use rights and buildings and certain plant, machinery and
         equipment of the Company with an aggregate net book value amounting to
         RMB138,497,516 and RMB4,963,826 as at December 31, 1996 and 1997,
         respectively, were collateralized to secure bank borrowings of
         RMB13,500,000 and RMB1,500,000, respectively.

22.      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 however 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.

         A provisional agreement, subject to governmental approval, was made
         among CBR and its subsidiary, the group companies of Noble China Inc.,
         and Blue Ribbon Group on May 10, 1995 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 ("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 any 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 - 21

<PAGE>

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


22.      COMMITMENTS AND CONTINGENCIES - continued

         (c)      A proposed new marketing company ("New Marketing Company"),
                  owned as to 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. Each of Zhaoqing Brewery and
                  the Company will 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 among Goldjinsheng, Blue Ribbon Group and
         the Company on May 10, 1996 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 17(c).

         The Company had commitments of approximately RMB32,010,000 and
         RMB5,700,000 for capital expenditure in respect of property, plant and
         equipment at December 31, 1996 and 1997, respectively.

         During the year, certain allegations were raised against the Company by
         the former chairman and CEO of Noble China Inc. concerning
         irregularities on the financial statements of the Company in previous
         years. As the allegations were not further substantiated despite the
         request of the Company, the directors of the Company are of the opinion
         that the allegations were of no substance and, accordingly, have not
         resulted and will not result in any material adverse effect to the
         Company.

         For contingencies relates to foreign currency exchange risk and
         concentration of risks, see notes 12 and 20.

23.      POST BALANCE SHEET EVENT

         On January 20, 1998, Goldjinsheng and Zhaoqing Brewery has entered into
         an agreement which stipulated that their respective interests in the
         Company will be transferred to Linchpin Holdings Limited, 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 Holdings Limited and High Worth Brewery
         will own 60% and 40% equity interests of the Company respectively.

                                     F - 22