SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C.  20549

                                   REPORT ON FORM 10-KSB

      |X|  Annual Report pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934

      For the fiscal year ended March 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 No.      0-21079


                                  PERRY'S MAJESTIC BEER, INC.
                  (Exact name of registrant as specified in its charter)

              Delaware                                      11-3314168
      (State of or other jurisdiction         (IRS Employer Identification No.)
      of incorporation or organization)

           38 West 32nd Street
           Suite 801
           New York, New York                    10001
            (Address of Principal            (Zip Code)
             Executive Officers)

Registrant's telephone number, including area code: (212) 564-2260

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

Securities registered pursuant to Section 12(g) of the Act:


                       Common Stock, par value $.0001 per share
                                      (Title of Class)



<PAGE>




      Indicate by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Sections 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 the Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 
10-KSB or any amendment to this Form 10-KSB.           [X]

      Issuer's revenues for its most recent fiscal year were $891,225.

      The aggregate  market value of the voting stock held by non- affiliates of
the  Registrant,  computed by reference to the closing price of such stock as of
June 18, 1997, was approximately $3,941,106.

Number of shares  outstanding  of the issuer's  Common Stock as of June 18, 1997
was 3,708,335.


                           DOCUMENTS INCORPORATED BY REFERENCE:


<PAGE>



                                    PART I

Item 1.  BUSINESS.

General

      Perry's Majestic Beer, Inc., a Delaware  corporation (the "Company"),  was
formed in  December,  1995.  On March 29,  1996,  the  Company  entered  into an
agreement to acquire Riverosa Company, Inc. ("Riverosa"), a New York corporation
which was formed in  November  1993.  (References  to the Company  includes  the
operations  of  Riverosa).  The Company is engaged in the  marketing and sale of
microbrewed  beers and ales.  Since June 1993, the Company has sold and marketed
its flagship brand, Perry's Majestic Beer ("Perry's"), which is distinguished by
its use of organically grown barley and hops. The Company's business strategy is
to establish  presence in the craft-brewed  beer market by creating and offering
high  quality  full-flavored  all  organic  beers and other beers  and/or  ales.
Presently,  the Company's Perry's beers are produced under contract with Hoboken
Brewing  Company,  a brewery  located in Hoboken,  New Jersey,  which  produces,
bottles and labels  Perry's  using the  Company's  name and logo.  The Company's
products are  distributed in the New York  metropolitan  area under an exclusive
distribution  agreement with Mootch & Muck, Inc. ("Mootch & Muck"), a subsidiary
of  the  Company's  former  parent  company,  Bev-Tyme,  Inc.  ("Bev-Tyme"),   a
distributor  of  various  beverages,  beers and  related  products.  Perry's  is
presently distributed in New York City and is sold in restaurants, supermarkets,
beer and soda  stores,  and  retail  outlets.  The  Company  expects  to sign up
additional distributors,  primarily on the east coast of the United States, over
the next six (6) to twelve (12) months.  In September 1996, the Company acquired
the Post Road  Beer  brand and other  assets  from the Old  Marlborough  Brewing
Company,  Inc. The Company redesigned the labels, six packs, and cartons for the
existing beer style:  Post Road Pale Ale. The new  packaging  was  introduced in
Massachusetts  in January 1997. The Company  introduced Post Road India Pale Ale
in January 1997 and its first  seasonal  beer,  Post Road Summer Brew,  in April
1997.  The Post Road brand and all other  Perry's  brands will be managed by the
existing  management,  with the addition of one brand manager in the New England
Region.  Post Road is currently  distributed  in two states,  Massachusetts  and
Rhode Island.  The Company expects to sign-up  additional  distributors over the
next six (6) to twelve (12)  months.  Post Road brand beers are  produced at the
Catamount Brewing Company, Inc., located in White River Junction, Vermont.

      In March 1997, the Company entered into an agreement to acquire all of the
outstanding stock of Orchard Annie, Inc., a manufacturer of natural applesauces.
The Company expects to introduce its first four flavors of applesauce during the
second  quarter under the brand name  Quigley's.  Quigley's  will be produced by
Leroux Creek Foods,  Inc., located in Hotchkiss,  Colorado.  The Quigley's brand
will be managed by the Company's existing management.

      On October 26,  1995,  Bev-Tyme,  Inc.  entered into a letter of intent to
acquire  Riverosa  for the sum of  $250,000.  In January  1996,  Bev-Tyme,  Inc.
assigned  its rights under the letter of intent to the  Company,  which  entered
into a definitive  agreement with Riverosa on March 29, 1996,  pursuant to which
the Company  agreed to pay the sum of $250,000 to acquire  Riverosa.  An initial
payment of $150,000 was made by the Company on March 21, 1996,  with the balance
payable  pursuant to the terms of a  promissory  note issued  March 29, 1996 and
payable upon the earlier of (i) one year or


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(ii) the closing of the Company's  initial public  offering (the "Initial Public
Offering").  The balance was paid in full in August  1996.  The $150,000 for the
initial  payment to Riverosa  was obtained by the Company as a result of capital
contributions by the shareholders and the March 1996 Bridge Loans. (See "Certain
Transactions".)  As of April 4, 1996, and as amended in November 1996,  February
1997,  and  March  1997 the  Company  entered  into a five  (5) year  employment
agreement with Mark Butler, former President of Riverosa,  pursuant to which Mr.
Butler  serves as the  Company's  Vice  President  of Sales and Chief  Operating
Officer and was elected to the  Company's  Board of  Directors.  The  employment
agreement,  as amended,  provides for Mr.  Butler to receive a salary of $25,000
per annum until the  closing of the  Initial  Public  Offering,  and  thereafter
$50,000 per annum until November 1, 1996, and thereafter $75,000 per annum until
March 10, 1997, and thereafter $110,000 per annum. The employment agreement,  as
amended,  also provides for payment of an annual bonus at the sole discretion of
the Company's  Board of Directors.  In addition,  on each of March 31, 1998, and
March 31, 1999, the Company  agreed,  pursuant to the employment  agreement,  as
amended,  to grant Mr.  Butler an option to  purchase  100,000  shares of Common
Stock  exercisable  at fair market value on the date of issuance.  Further,  the
employment  agreement,  as amended provides that the Company issue to Mr. Butler
200,000 shares of the Company's  Common Stock on February 11, 1997.  Such shares
were issued in February 1997. In March 1997, Mr.  Butler's  salary was increased
to $110,000 per annum in accordance with his employment agreement, as amended.

      In March  1996,  the  Company  issued to  Bev-Tyme  500,000  shares of its
convertible  Series A  Preferred  Stock and  7,000,000  shares  of its  Series B
Preferred Stock for $150,000 and 400,000 shares of Bev-Tyme's Series C Preferred
Stock.  On July 30, 1996, the Company  completed its Initial Public  Offering of
583,335 shares of Common Stock at a price of $6.00 per share, and the concurrent
offering of  securities  by certain  selling  securityholders.  The net proceeds
realized from the Initial  Public  Offering were  approximately  $2,500,000.  In
October 1996 Bev-Tyme sold all of its shares of Series A Preferred  Stock in the
Company  for an  aggregate  purchase  price of  $250,000.  On June 13,  1997 the
Company  exercised its right  pursuant to a Promissory  Note for $100,000  dated
April 17, 1997 made by Bev-Tyme, and reacquired its 7,000,000 shares of Series B
Preferred Stock held by Bev-Tyme in full satisfaction of the Note payable.

      Perry's  Majestic Beer is brewed with  organically  grown barley  imported
from Canada and organically  grown hops imported from Germany.  It is a Pale Ale
style beer whose characteristics showcase the quality aspects of superior barley
flavor and hop. In keeping with its organic character,  Perry's utilizes a 10-12
week brewing  process that  introduces  no  herbicides,  chemical  pesticides or
inorganic  fertilizers  in the  growing  of the  barley or hops.  No  artificial
ingredients are added during the brewing or bottling stages.

      The  Company's  executive  offices are  currently  located at 38 West 32nd
Street,  Suite 801, New York,  New York 10001 and its telephone  number is (212)
564-2260. The Company's fiscal year end is March 31.


<PAGE>



Recent Developments

      On April 17,  1997,  the Company  loaned to  Bev-Tyme  the sum of $100,000
pursuant to the terms of a Promissory  Note issued in connection with that loan.
Bev-Tyme was required to repay the entire  principal  plus interest on or before
April 16, 1998.  The Company  retained  the right,  in its sole  discretion,  to
reacquire the 7,000,000 shares of the Company's Series B Preferred Stock held by
Bev-Tyme in full satisfaction of the Note or to receive payment of the principal
plus  accrued  interest.  On June 13,  1997 the Company  exercised  its right to
reacquire the 7,000,000 shares of the Company's Series B Preferred Stock held by
Bev-Tyme in full satisfaction of the Note payable.

      In March 1997, the Company entered into an agreement to acquire all of the
issued and outstanding stock of Orchard Annie, Inc., a corporation  wholly-owned
and controlled by Mark Butler, the Vice President-Sales, Chief Operating Officer
and a director of the Company.  The aggregate purchase price was $66,000 and the
issuance  of 50,000  shares of Common  Stock of the  Company in June  1997.  The
50,000  shares  of  Common  Stock  have not yet  been  issued.  Pursuant  to the
purchase,  the  Company  acquired  all  rights to produce  and market  Quigley's
Applesauce,  a line of premium, 100% natural,  single-served sized apple sauces.
The Agreement further provided for the payment to Mr. Butler of royalty payments
equal to $0.50 per case of Quigley's  Applesauce for the first 500,000 cases and
$0.25 per case  thereafter  during  the  period of  fifteen  (15) years from the
closing date.

      On September 20, 1996,  the Company  acquired the operating  assets of Old
Marlborough Brewing Company, Inc. ("Old Marlborough"),  a Massachusetts producer
of microbrewed beer and ale. The acquisition  included all rights to produce and
market  Post  Road  Pale  Ale,  a  microbrewed  product  distributed  throughout
Massachusetts.  The  aggregate  purchase  price was $85,513 and the  issuance of
25,000  shares of Common Stock of the Company.  The Company also paid $86,700 to
reacquire  the  distribution  rights for Post Road.  In  addition,  the  Company
entered  into a four (4) year  employment  agreement  with  Austin J.  Moran,  a
principal of Old Marlborough, pursuant to which Mr. Moran serves as a manager of
the Company and receives an annual salary of $50,000 for the first year, $55,000
for the second year, $60,000 for the third year and $65,000 for the fourth year.
The Agreement  provides  further that, as additional  consideration,  on each of
August 31, 1997,  August 31, 1998 and August 31, 1999,  the Company  shall grant
Mr.  Moran  options to purchase  20,000  shares of the  Company's  Common  Stock
exercisable at $6.00 per share, for a period of four (4) years.

Industry Overview

      The Company  participates in the specialty beer segment of the $50 billion
domestic  beer  market.  Specialty  beers  are  generally  brewed  according  to
traditional  German or English recipes and tend to be more  full-bodied and more
bitter or tart in taste than massed produced domestic beers. As a result,  these
amber lagers and ales,  stouts,  porters,  bocks,  German recipe wheat beers and
seasonal  brews tend to be more  flavorful  and fresher  tasting.  The  domestic
specialty beer segment grew at a compound  annual rate of  approximately  37% in
the five years ended  December  31, 1994,  while volume in the overall  domestic
beer market has remained  relatively flat. The Company believes that this growth
in the specialty beer segment has resulted from several factors.  Specialty beer
"made in small  batches"  from "all  natural  ingredients"  is better  than mass
produced domestic and imported


<PAGE>



products,  particularly  powerful in light of the trend  among large  brewers to
minimize  costs through the use of lower cost adjuncts.  The increased  consumer
demand for specialty beers allows for a price premium  relative to mass produced
beers.

      The Microbrewery Industry.

      The revival of small local  breweries,  commonly known as  microbreweries,
began in the late 1970s and early 1980s.  Several  national trends have combined
to create favorable  conditions  permitting the microbrewery  industry to emerge
and grow. First,  domestic breweries  consolidated into the remaining industrial
breweries which resulted in a narrowing of the types of  domestically-  produced
beer available to consumers.  This trend has benefited the microbrewery industry
which produces many different  types of beer  representing  an expansion of beer
choices.  Second,  consumers  have  placed  increasing  emphasis  on health  and
nutrition as a principal element of contemporary  lifestyle and have become more
focused on the health concerns and abuse relating to the consumption of alcohol.
As a result,  consumers  are reducing  their level of  consumption  of alcoholic
beverages but are increasing the quality of alcoholic beverages they consume.

      Due in  part  to its  growth,  the  microbrewing  industry  has  undergone
significant  change and is now more  accurately  referred to as the "craft beer"
industry. The craft beer industry has been broken into four industry subgroups -
regional specialty  breweries,  contract brewing  companies,  microbreweries and
brewpubs.  Together these four subgroups comprise what was previously  described
as the  microbrewing  industry.  The IBS  defines  each of  these  subgroups  as
follows:

      Regional Specialty Brewery. A brewery which produces between 15,000 and 
1,000,000 barrels of beer per year.

      Contract Brewing Company. A business that does not brew its own beer, 
but markets and sells beer brewed to its specifications by an existing brewery.

      Microbrewery.  A  brewery  that  produces  less  than  15,000  barrels  of
hand-crafted beer per year principally for distribution to restaurants,  taverns
and retail  stores,  and in some cases for direct sale to consumers  for on-site
consumption or take-out in small containers.

      Brewpub.  A restaurant/brewery that sells at least 50% of its beer
production to consumers for on-site consumption or take-out in small containers.

      Product Diversity and Quality

      The Company intends to continue to expand its product line with additional
beers designed to appeal to varying consumer preferences.  The Company currently
markets its organically  brewed Perry's Majestic Beer and Post Road brand beers.
The Company  intends to establish a selection of year-round  and seasonal  beers
that will attract  consumers  to  specialty  beers and allow them to explore new
tastes. In this regard, the Company has already introduced Post Road Summer Brew
and India  Pale Ale.  Perry's  Majestic  Beer is brewed for the  Company,  under
contract with a non-affiliated third party, using organic ingredients,  and uses
no additives, adjuncts or preservatives in the brewing


<PAGE>



process. Post Road is brewed by a non-affiliated third party located in Vermont.
Perry's Majestic Beer presently utilizes organic barley imported from Canada and
organic  hops from  Germany.  The  Organic  Growers and Buyers  Association  and
Organic Crop  Improvement  Association  regularly  inspect and certify  growers,
storage silos,  transport  companies,  malting  houses,  and breweries to assure
purity of ingredients.  Before farms are certified as organic they must not have
used any  herbicides  or  pesticides  for three years.  Post Road  utilizes high
quality  domestic  hops and barley in its  brewing  process.  In  addition,  the
Company has  diversified its product lines by acquiring the right to produce and
market  Quigley's  Applesauces,  made of  apples  and  fruits  and  all  natural
flavorings.  Quigley's  will be  produced  by a  non-affiliated  third  party in
Colorado and distributed  through a similar  distribution system as its two beer
lines allowing for product synergy and efficiency.

      Competition

      The  beer  industry  is  highly   competitive   and  the  Company  expects
competition  in the craft beer segment of the industry to increase.  The Company
will compete with large domestic and foreign  industrial  breweries,  as well as
microbreweries  and brewpubs that produce high quality ale and lager beers.  All
industrial   breweries  and  many  microbreweries  have  significantly   greater
resources than the Company.

      Domestic  beer  production  is  dominated  by  large  American  industrial
breweries,  such as Anheuser-Busch,  Inc., Miller Brewing Company, Stroh Brewery
Co., G. Heilman Brewing Co., Pabst Brewing Co. and Adolph Coors Co. all of which
have greater financial,  production,  distribution and marketing  resources than
the Company. The major domestic breweries accounted for approximately 94% of the
beer produced in the United States in 1994.  The large  domestic beer  producers
generally offer a homogeneous selection of beers designed for mass appeal. These
beers,  principally light- bodied lagers and pilsners, are brewed using low cost
mass  production  techniques,  lower cost  adjuncts,  such as rice and corn, and
relatively  less hops.  In contrast to the  substantial  growth in the specialty
beer segment in recent years,  over the last ten (10) years,  overall  growth in
the domestic  beer market has been  relatively  low,  with volume  growing at an
annual rate of less than 1% since 1984. Adult per capita annual beer consumption
in the United States has declined from 36 gallons in 1978 to 32 gallons in 1994.
The Company  believes that this low growth rate and reduced beer consumption can
be attributed to a variety of factors,  including increased concern about health
consequences of consuming alcoholic beverages; safety consciousness and concerns
about  drinking and  driving;  a trend toward a diet  including  lighter,  lower
caloric beverages such as diet soft drinks, juices and sparkling water products;
the increased activity of anti-alcohol  consumer  protection groups; an increase
in the minimum drinking age from 18 to 21 years in all states; the general aging
of the  population;  and increased  federal and state excise taxes.  The growing
consumer  trend  towards  moderation  in  alcohol   consumption  has  benefitted
specialty beers by resulting in beer drinkers'  selective  consumption of one or
two better tasting beers per sitting.

      In response to the recent significant  growth in the craft-beer  industry,
several  domestic  industrial  breweries  are  currently  producing  products to
compete with microbrewery  products. The Company believes that consumers will be
attracted  to  locally  produced  craft  beers  more  so than  industrial  beers
"dressed-up" to look like local  craft-beers,  due to many consumers'  desire to
drink regional craft-beers and craft-beers produced by "smaller" breweries.



<PAGE>



      Within the microbrewing  industry, the Company believes that its principal
competitors will be microbreweries located in the Northeast Region of the United
States, such as Boston Beer Company, the producer of Samuel Adams Beers.

      The terms craft brewer and micro-brewer  are usually used  interchangeably
by consumers and within the industry to mean a small,  independent  brewer whose
predominant  product  is brewed  with only  traditional  brewing  processes  and
ingredients.  Craft brewers include contract brewers, small regional brewers and
brewpubs.  Craft beers are full-flavored  beers brewed with quality hops, malted
barley,  yeast and water without  adjuncts such as rice,  corn or stabilizers or
water  dilution used to lighten beer for mass  production  and  consumption.  In
response to increased  consumer demand for more flavorful  beers,  the number of
craft brewed beers has increased dramatically. Currently there are more than 500
craft brewers. In addition to the many independent brewers and contract brewers,
the three major brewers  (Anheuser-Busch,  Incorporated,  Miller Brewing Co. and
Coors Brewing Co.) have all entered this  fast-growing  market,  either  through
developing  their own  specialty  beers or by acquiring or forming  partnerships
with existing craft brewers.

      The Company  competes  directly  with  regional  craft brewers such as The
Boston Beer  Company,  Sierra  Nevada  Brewing  Company,  Redhook  Ale  Brewery,
Incorporated and Anchor Brewing  Company,  other contract brewers such as Pete's
Brewing Company,  foreign brewers such as Heineken,  Molson,  Corona, Amstel and
Becks,  and other regional craft brewers and brewpubs.  The Company also expects
competition  by niche beers  produced by affiliates  of certain  major  domestic
brewers  such as  Anheuser-Busch,  Incorporated,  Miller  Brewing  Co. and Coors
Brewing Co.

      Quigley's applesauce is a single serve, all natural,  applesauce which the
Company  anticipates  introducing in July 1997.  Applesauce is primarily sold in
glass jars  (pints and  quarts)  or in four (4) ounce  servings  sold on grocery
shelves  in  multi  packs.  Quigley's  is  being  produced  in  a  single-serve,
individually identified container similar to yogurt and the Company is aiming to
sell its products in refrigerators in delis,  supermarkets,  colleges,  schools,
food service  accounts,  vending machines and other retail outlets as opposed to
current applesauces which are primarily sold on grocery shelves.




<PAGE>



      Government Regulation

      The  Company's  business is highly  regulated by federal,  state and local
laws and  regulations,  federal and state laws and regulations  govern licensing
requirements,  trade and pricing  practices,  permitted  and required  labeling,
advertising,  promotion and marketing practices, relationships with distributors
and related matters.  For example,  federal and state regulators require warning
labels and signage on the Company's  products.  The Company believes that it has
obtained all regulatory  permits and licenses  necessary to operate its business
in the states where the  Company's  products are  currently  being  distributed.
Failure  on the part of the  Company  to  comply  with  federal,  state or local
regulations  could  result  in the  loss  or  revocation  or  suspension  of the
Company's  licenses,  permits or approvals and accordingly could have a material
adverse  effect  on the  Company's  business.  Governmental  entities  also levy
various taxes,  license fees and other similar  charges and may require bonds to
ensure  compliance with applicable laws and  regulations.  The Company must also
comply with numerous federal, state and local environmental protection laws. The
Company is operating  within  existing laws and  regulations or is taking action
aimed at assuring compliance  therewith.  The Company does not expect compliance
with such laws and  regulations  to  materially  affect  the  company's  capital
expenditures, earnings or competitive position.

      The  federal  government  and  each of the  states  levy  excise  taxes on
alcoholic beverages,  including beer. The federal excise tax is currently $18.00
per barrel ($1.30 per case of 24-12 oz.  containers)  and the state excise taxes
range from  $23.80  per barrel to $1.24 per  barrel.  Federal  excise  taxes are
typically  included in the price charged to retailers by the  distributors.  All
excise taxes are  ultimately  passed on to the consumer.  It is possible that in
the future the rate of excise  taxation  could be  increased by both the federal
government and a number of state governments.  Further increases in excise taxes
on beer,  if  enacted,  could  materially  and  adversely  affect the  Company's
financial condition and results of operations.  There is a small brewers federal
excise tax credit  that  grants  each  brewing  company  with  production  under
2,000,000 barrels a year an $11.00 credit per barrel on its first 60,000 barrels
produced annually. The Company is currently able to take advantage of a $660,000
annual credit pursuant to this  exemption.  Although the Company is not aware of
any plans by the federal  government to reduce or eliminate  this small brewer's
credit or by federal or state  authorities  to increase the excise tax rate, and
such change could have a material adverse effect on the Company.

      Certain states, including California,  Connecticut, Delaware, Iowa, Maine,
Massachusetts,  Michigan,  New York,  Oregon and Vermont,  and a small number of
local  jurisdictions,  have  adopted  restrictive  beverage  packaging  laws and
regulations that require deposits on beverage containers.  Congress and a number
of additional state or local  jurisdictions  may adopt a similar  legislation in
the future,  and in such event, the Company may be required to incur significant
expenditures  in order to comply with such  legislation.  Changes to federal and
state  excise  taxes  on  beer  production,   federal  and  state  environmental
regulations,  including laws relating to packaging and waste  discharge,  or any
other federal and state laws or regulations which affect the Company's  products
could materially adversely affect the Company's results of operations.

      The  Company is  required  to have its  Quigley's  products  analyzed by a
laboratory  approved  by the  Food  and  Drug  Administration  (the  "FDA")  for
certification  of  its  ingredients.  The  information  is  then  listed  on its
nutritional fact panel that appears on all of the Quigley's products.



<PAGE>



      Sales, Distribution and Marketing

  The Company intends to distribute and sell its beer products directly to beer 
distributors  who will sell  directly to retail  establishments  such as grocery
stores,  convenience stores, bars,  restaurants and other retail establishments.
Quigley's will be sold through  beverage,  dairy, food distributors and, in some
instances,  diversified  beer  distributors  who sell to delis,  grocery stores,
convenience stores and other retailers.

      The Company's  beers are currently  distributed  in three (3) states.  The
Company  distributes  its  products in the New York  metropolitan  area  through
Mootch & Muck, a subsidiary of the Company's former parent,  Bev-Tyme,  Inc. The
Company intends to enter into similar distribution  arrangements  covering other
areas of the United  States with  primary  focus on the east coast of the United
States.  The  Company  distributes  Post  Road  beer  in  Massachusetts  through
Commonwealth Wine and Spirits, Inc. and Commercial Distributors  Company,  Inc
and in Rhode Island through  Johnson  Brothers of Rhode Island, Inc.The Company
has not  entered  into any  other  distribution  arrangements  and  there  can
be no assurance that the Company will be able to enter into distribution
arrangements with other local distributors on terms satisfactory to the
Company or at all.

      The  Company's  marketing  efforts  include  advertising  in regional  and
craft-beer publications,  local media outlets (i.e. newspapers and radio) and at
local craft-beer conventions and microbrew tasting events.

Suppliers

      The  Company  purchases  its  barley  and hops for its beers  from  Briess
Malting and Hop Union. The Company has no written agreement with these suppliers
and is aware of other  suppliers for  ingredients of equal quality at comparable
pricing.  Ingredients for Quigley's are purchased  through various apple growers
in the southwest and western United States.

Contract Brewing

      The Company  believes that contract  brewing gives it economic  advantages
through  lower  capital  and  overhead   costs  per  barrel  and  through  lower
transportation  costs than if it owned a single  brewery  to  produce  its beer.
Presently, Perry's Beer is produced under contract with Hoboken Brewing Company,
Inc., a brewery located in Hoboken, New Jersey, which  produces, bottles and 
labels Perry's using the Company's name and  logo.  The contract 
provides for a term of one (1) year and for the brewing of the beer in 
accordance  with the  Company's formula. The Company's formula remains the
exclusive property of the Company and is exclusive to the private label Perry's
Majestic Beer. The Company must place production  orders  not  less  than 
thirty  (30)  days  prior to  delivery  and production must be made in minimum 
lots of forty (40)  barrels.  Although  the Company's  beer is presently 
brewed at Hoboken,  there can be no assurance that this  brewery  will 
continue to provide  services to the  Company. The Company previously had a
contract with  Frankenmuth,  another  brewing company which was
terminated due to the destruction of the brewery in a tornado.  In the event the
Company is unable to continue its relationship with Hoboken for any reason,  the
Company would have to enter into a  relationship  with another  brewery which is
able to produce organic beer to the Company's  standards.  Post Road brand beers
are brewed at the Catamount Brewing Company,


<PAGE>



Inc.  ("Catamount") located in White River Junction, Vermont.The  Company  does
not have any  written  agreement  with ssatamount for  brewing its
Post Road beers.  The  Company  must give  Catamount
thirty  (30)  days'  notice,  although  there are no minimum  lot  requirements.
Although the Company believes that there are other such brewing facilities which
would be available,  there can be no assurance  that the Company will be able to
enter into such an agreement with another brewing facility, or to do so on terms
which are similarly favorable.

Distribution

      The Company  currently  distributes  its Perry's beers in one (1) state in
the United States.  The Company currently  distributes its Post Road beer in two
(2) states in the United States.  The Company  expects to distribute its Perry's
Majestic  and  Post  Road  beers  through  an  additional  six  (6) to ten  (10)
distributors  in the next six (6) to twelve (12) months.  The Company intends to
distribute  Quigley's  through six (6) to eight (8)  distributors  by the end of
fiscal 1998.

Alcohol Beverage Regulation and Taxation

      The manufacture and sale of alcoholic  beverages is a highly regulated and
taxed  business.  The Company's  operations  may be subject to more  restrictive
regulations  and  increased  taxation by federal,  state and local  governmental
entities than are those of non-alcohol  related businesses.  Federal,  state and
local laws and regulations govern the production and distribution of beer. These
laws and regulations govern permitting,  licensing,  trade practices,  labeling,
advertising,  marketing, distributor relationships and related matters. Federal,
state and local governmental  entities also levy various taxes, license fees and
other similar charges and may require bonds to ensure compliance with applicable
laws and regulations.  Failure by the Company to comply with applicable federal,
state or local laws and regulations could result in penalties,  fees, suspension
or revocation of permits, licenses or approvals. There can be no assurances that
other or more restrictive laws or regulations will not be enacted in the future.

Licenses and Permits

      The  Company  purchases  beer from two  contract  brewers  and sells it to
distributors pursuant to a federal wholesaler's basic permit issued to Riverosa.
The Company has made  application  to have that permit issued in the name of the
Company.  Brewery and wholesale  operations  require various federal,  state and
local  licenses,  permits and  approvals.  In  addition,  some  states  prohibit
wholesalers  and/or  retailers  from holding an interest in any supplier such as
the Company.  Violation of such regulations can result in the loss or revocation
of existing licenses by the wholesale,  retailer and/or  suppliers.  The loss or
revocation of any existing licenses, permits or approvals, failure to obtain any
additional  or new  licenses,  permits  or  approvals  or the  failure to obtain
approval for the transfer of any existing  permits or licenses,  including those
required  as a result of the  recapitalization,  could have a  material  adverse
effect on the  ability of the Company to conduct  its  business.  On the federal
level,  brewers are  required  to file with the Bureau of  Alcohol,  Tobacco and
Firearms  ("ATF")  an  amended  Brewer's  Notice  every time there is a material
change in the  brewing  process or brewing  equipment,  change in the  brewery's
location,  change  in the  brewery's  management  or a  material  change  in the
brewery's  ownership.  Brewers  must seek ATF  approval  of an amended  Brewer's
Notice prior to the change taking place.  Wholesalers  must notify ATF within 30
days of any change in the wholesaler's  operations,  change in the wholesalers's
location, change in the wholesaler's management or a material


<PAGE>



change in the wholesaler's  ownership.  The Company's  operations are subject to
audit and  inspection by ATF at any time.  The Company has never been audited or
inspected by ATF.

      On the state and local level, some jurisdictions  merely require notice of
any material change in the operations, management or ownership of a permittee or
licensee.  Some  jurisdictions  require  advance  approvals and require that new
licenses,  permits or approvals must be applied for and obtained in the event of
a change in the management or ownership of the permittee or licensees. State and
local laws and regulations  governing the sale of beer within a particular state
by an out-of-state brewer or wholesaler vary from locale to locale.

      ATF  permits  and  brewer's  registrations  can be  suspended,  revoked or
otherwise adversely affected for failure to pay tax, to keep proper accounts, to
pay fees, to bond premises,  to abide by federal alcohol beverage production and
distribution  regulations and to notify ATF of any change (as described  above),
or if holders of 10% or more of the Company's equity  securities are found to be
of questionable character. Permits, licenses and approvals from state regulatory
agencies can be revoked for many of the same reasons.

      The  Company is  required  to have its  Quigley's  products  analyzed by a
laboratory  approved  by the  FDA  for  certification  of its  ingredients.  The
information is then listed on its nutritional  fact panel that appears on all of
the Quigley's products.

      Because of the many and various state and federal licensing and permitting
requirements,  there is a risk  that one or more  regulatory  authorities  could
determine  that the  Company  has not  complied  with  applicable  licensing  or
permitting  regulations  or does not maintain the approvals  necessary for it to
conduct business within their jurisdictions.  There can be no assurance that any
such regulatory action would not have a material adverse effect upon the Company
or its operating results.

Taxation

      The  federal  government  and  each of the  states  levy  excise  taxes on
alcoholic  beverages,  including  beer.  The  federal  excise  tax is $18.00 per
barrel.  For  brewers  producing  no more  than  2,000,000  barrels  of beer per
calendar  year the  federal  excise tax is $7.00 per barrel on the first  60,000
barrels of beer removed for  consumption  or sale during a calendar year. As the
brewer of record of its beers,  the Company has been able to take  advantage  of
this reduced tax on the first 60,000  barrels of its beer  produced.  Individual
states also impose excise taxes on alcoholic beverages in varying amounts, which
have also been subject to change. The state excise taxes are usually paid by the
Company's distributors.

      Congress and state  legislatures  routinely  consider various proposals to
impose  additional  excise taxes on the production and distribution of alcoholic
beverages,  including  beer,  in  connection  with various  governmental  budget
balancing or funding  proposals.  Further  increases in excise taxes on beer, if
enacted, could result in a general reduction of malt beverage sales.

Trademarks

      The Company has applied for U.S. Trademark Registration for Post Road and 
Quigley's and has obtained US. Trademark Registration for Perry's Majestic. 
 The Company regards its trademarks as having substantial value and as being an 
important factor in the marketing of its products.
 


<PAGE>



The Company is not aware of any  infringing  uses that could  materially  affect
its current  business or any prior claim to the  trademarks  that would  prevent
the Company from using such trademarks in its business. The Company's  policy
is to pursue  registration of its marks whenever possible and to oppose
vigorously any infringements on its marks.

Management and Employees

      As of June 20, 1997, the Company employed a total of 6 employees on a full
time basis.

      The Company has  experienced  no work stoppages and considers its employee
relations to be satisfactory.  The Company's  employees are not represented by a
labor union.

Conflict of Interests

      It is  anticipated  that Mootch & Muck,  a subsidiary  of  Bev-Tyme,  will
continue to distribute a significant percentage of the Company's products, at or
near  present  levels.  Robert  Sipper,  Bev-  Tyme's  President  and a Bev-Tyme
director,  is  Chief  Executive  Officer  of the  Company  and a  member  of the
Company's  Board of  Directors.  Because of the identity of certain  management,
certain  conflicts of interest may occur  between the Company and  Bev-Tyme.  In
such instances, any member of the Board of Directors who is also a member of the
Bev-Tyme  Board of Directors may be precluded  from  participating  in corporate
decisions.  Although  the Board of  Directors of the company has not adopted any
written policy on this matter,  the Delaware  Corporation Law contains  specific
provisions governing such conflicts.

Product Liability Insurance

      The Company, like other manufacturers of products that are ingested, faces
inherent  risk of exposure to product  liability  claims if, among other things,
the use of its products  results in an injury.  The Company  currently  does not
have any product liability insurance. There can be no assurance that the Company
will be able to obtain product  liability  insurance on terms  acceptable to the
Company or at all and once obtained  there can be no assurance  that the Company
will be able to maintain such insurance coverage. Moreover, the amount and scope
of any  coverage  may be  inadequate  to protect the Company in the event that a
product liability claim is successfully asserted against the Company.



<PAGE>



Item 2.  PROPERTIES.

      The Company operates its executive  offices at 38 West 32nd Street,  Suite
801, New York, New York 10001 pursuant to a three (3) year lease dated as of May
1, 1997  which  provides  for a monthly  rent of $1,200  and five  percent  (5%)
increases on each of June 1, 1998 and June 1, 1999.

Item 3. LEGAL PROCEEDINGS.

      Except as set forth below,  management is not aware of any material  legal
proceedings pending against the Company.

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

      No matters were submitted to a vote of the holders of the Company's Common
Stock during the last quarter of its fiscal year ended March 31, 1997.



<PAGE>



                                    PART II

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


      The Company's Common Stock commenced  trading on the OTC Bulletin Board on
the  effectiveness  of the Company's  Initial  Public  Offering on July 31, 1996
under the symbol "PYMB".  The Common Stock is regularly quoted and traded on the
OTC Bulletin Board.

      The  following  table  indicates  the  high  and  low bid  prices  for the
Company's Common Stock for the period from July 31, 1996 to March 31, 1997 based
upon  information  supplied by the NASDAQ system.  Prices  represent  quotations
between   dealers  without   adjustments   for  retail  markups,   markdowns  or
commissions, and may not represent actual transactions.


                            Common Stock1

Year Ended March 31,
1997                 High          Low
Second Quarter       $11.250       $6.000
Third Quarter        $9.188        $4.00
Fourth Quarter       $7.0000       $5.000



1     Commenced trading on July 31, 1996.

      On June 18, 1997, the closing price of the Common Stock as reported on the
OTC  Bulletin  Board  was  $1.0625.  As  of  June  18,  1997,  the  Company  had
approximately 44 holders of record of its shares of Common Stock.


<PAGE>



Item 6:

PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



OVERVIEW

Perry's  Majestic Beer, Inc. [the "Company" or "Perry's"] was formed in December
of 1995.  There were no  operations  prior to the  formation  of Perry's for the
period  December  1995 to March 1996 nor any revenue or expense  activities  for
Perry's through March 31, 1996. The primary  activities for Perry's prior to the
proposed acquisition of Riverosa Company,  Inc.  ["Riverosa"] were investing and
financing  activities  through  March  31,  1996  [See  "Liquidity  and  Capital
Resources"].  In March of 1996, the Company entered into an agreement to acquire
Riverosa,  which was  formed in  November  of 1993.  Riverosa was engaged in the
manufacture  and  distribution  of  microbrewed  beers and ales.  Management  of
Riverosa  consisted  of Mark  Butler  and Ron  Zagha.  Mark  Butler  is the Vice
President  of the Company and Robert J. Sipper is the  President  of the Company
and will be responsible for the management functions of the Company.

In  September  1996,  the  Company  acquired  the Post Road Beer brand and other
assets from the Old Marlborough Brewing Company, Inc. The Company redesigned the
labels,  six packs,  and boxes for the existing beer style: Post Road Pale Ale.
The new packaging was introduced in  Massachusetts in January 1997.
The Company  introduced Post Road India Pale Ale in January 1997 and its first
seasonal  beer,  Post Road Summer Brew,  in April 1997. The Post Road brand 
and all other  Perry's brands will be managed  by the  existing  management,  
with the  addition  of one brand manager in the New England  Region.
The Company  expects to sign-up  additional distributors  over the next 6-12
months.  Post Road brand beers are produced at the Catamount Brewing
Company, Inc., located in White River Junction, Vermont.

In March 1997, the Company acquired all the outstanding  stock of Orchard Annie,
Inc., a manufacturer of natural applesauces.  The Company expects to introduce
its first four flavors of  applesauce  during the third  quarter under the brand
name Quigleys.  Quigleys will be produced by Lereoux Creek Foods,  Inc., located
in  Hotchkiss,  Colorado.  The Quigleys  brand will be managed by the  Company's
existing management.

Bev-Tyme, Inc. ["Bev-Tyme"], the Company's former controlling shareholder and
parent, through its wholly owned subsidiary, shall be the distributor for
Perry's in New York City.  Besides Robert J. Sipper, who is the President
and Chief Executive Officer of Bev-Tyme, Inc. it is not anticipated that any 
other employees of Bev-Tyme or its subsidiaries will be involved with the 
Company's operations.  It is anticipated that the two companies will be
run independently of each other.

The Board of Directors of Perry's  consist of three people,  two of whom have no
interest [not an employee,  officer or director] in Bev-Tyme.  Accordingly,  all
potential conflicts of interest shall be decided by an impartial Board.

Results of Operations

The Company had a loss from  operations  of $708,315  and a net loss of $698,291
for the year ended March 31, 1997.


<PAGE>



PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------


Results of Operations [Continued]

The sales for the Company for the year ended March 31, 1997 were  $891,225.  The
Company  believes its  distributor  base will increase during 1997 and 1998. The
Company  intends to introduce at least one new style beer within the next twelve
months and launch its newly  acquired  brand  Quigley's all natural  applesauce.
Emphasis will be placed on building sales volume in bars and restaurants as well
as retail and  supermarket  outlets.  The Company  will  attempt to increase its
distribution base by adding new distributors throughout the United States and by
designing targeted incentive and price promotions.

The Company  incurred a gross profit of $13,609 and a gross loss of $100,400 for
the year and quarter ended March 31, 1997, respectively. The Company experienced
a gross loss in the  fourth  quarter as a result of  start-up  costs  related to
production of Post Road and Perry's beer brands.

The Company's selling,  general and  administrative  expenses for the year ended
March 31, 1997 were $721,924.

The  Company's   interest  expense  for  the  year  ended  March  31,  1997  was
approximately  $7,000.  The interest  expense was  attributable  to the $150,000
bridge  loans and the $100,000  acquisition  note for  Riverosa,  both repaid in
August of 1996.

Liquidity and Capital Resources

Perry's had working capital at March 31, 1997 of $1,571,790.  For the year ended
March  31,  1997,  the  Company  utilized  approximately  $560,000  in cash  for
operating activities.  The Company utilized  approximately $266,000 in investing
activities  for the  acquisition  of Riverosa  and the Old  Marlborough  Brewing
Company,  Inc.'s  Post Road  brand,  as well as for the  acquisition  of Orchard
Annie, Inc. as of March 31, 1997. The Company generated  $2,364,886 in cash from
financing activities for the year ended March 31, 1997, primarily resulting from
the  Company's  initial  public  offering  which  resulted  in net  proceeds  of
$2,475,086 in July 1996. The $150,000  bridge loans from the seven  unaffiliated
lenders  were  repaid at the close of the initial  public  offering on August 4,
1996. In addition,  the Company  repaid the $100,000 note payable as part of its
acquisition of Riverosa. The cash and cash equivalents balance at March 31, 1997
was $1,521,203.

In April of 1996 and as amended in March 1997,  the Company  entered into a five
[5] year  employment  agreement  with Mark Butler  pursuant to which Mr.  Butler
serves as the Company's Vice President of Sales. The agreement  provides for Mr.
Butler to  receive a salary of  $25,000  per  annum until the closing of the 
initial public offering offering and  thereafter  $50,000 per annum until
November 1, 1996 and thereafter $ 75,000 per annum until March 1997, and
thereafter $110,000 per annum. In addition,  on each of March 31, 1998, and
March 31, 1999, the Company has agreed to grant Mr. Butler an option to
purchase  100,000 shares of common stock exercisable at fair market value on 
the date of issuance.

Also in April of 1996 and as amended in March 1997,  the Company  entered into a
five [5] year  employment  agreement  with Robert  Sipper  pursuant to which Mr.
Sipper  serves as the  Company's  President  and Chief  Executive  Officer.  The
agreement  provides for Mr. Sipper to receive a salary of $52,000 per annum.  In
October of 1996, Mr. Sipper  exercised his option pursuant to his agreement,  to
transfer his Bev-Tyme salary of $106,650 to Perry's and subsequently voluntarily
reduced his salary to $120,000 until Mr. Sipper gives notice that his full
salary should be reinstated.

During February 1997, Perry's issued a total of 400,000 shares of Perry's common
stock to two officers as consideration for extending their employment agreements
through 2001.




<PAGE>



PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
------------------------------------------------------------------------------



Liquidity and Capital Resources [Continued]

In August of 1996,  the  Company  entered  into a letter of intent to  acquire a
brewery for $50,000. In September 1996, the Company finalized its acquisition of
the assests of Old Marlborough Brewing Company, Inc. The total  purchase  price
was $85,531 of which $35,513 was for inventory and equipment.
In addition,  the Company paid $86,700 to repurchase  distribution 
Rights for Post Road. In February 1997, the Company issued  25,000  shares
of common  stock  valued at  approximately  $214,000  as additional
consideration for the acquisition of Old Marlborough.

The Company  anticipates  that the net proceeds of  $2,475,086  from the initial
public  offering in August of 1996 along with  anticipated  cash to be generated
from operating  activities  will be sufficient to satisfy its cash  requirements
for at least  the next  twelve  [12]  months  and  enable  it to  market  and to
advertise  its  existing  products  and to expand its markets  for all  products
throughout the United States with a primary focus on the East Coast.

New Authoritative Pronouncements

The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 125, "Accounting for Transfers
 and Servicing of Financial Assets and Extinguishment of Liabilities.
"  SFAS No. 125 is effective for transfers and servicing of financial assets
and extinguishment of liabilities occurring after December 31, 1996. 
Earlier application is not allowed.The provisions of SFAS No. 125 must be 
applied prospectively; retroactive application is prohibited.Adoption on 
January 1, 1997 is not expected to have a material impact on the Company. 
 The FASB deferred some provisions of SFAS No. 125, which are not expected to 
be relevant to the Company.

The  FASB  issued  SFAS No.  128,  "Earnings  Per  Share,"  and  SFAS  No.  129,
"Disclosure of Information  about Capital  Structure" in February 1997. SFAS No.
128  simplifies  the  earnings  per  share  ["EPS"]  calculations   required  by
Accounting Principles Board ["APB"] Opinion No. 15, and related interpretations,
by replacing the  presentation  of primary EPS with a presentation of basic EPS.
SFAS No. 128  requires  dual  presentation  of basic and diluted EPS by entities
with complex capital structures.  Basic EPS includes no dilution and is computed
by dividing  income  available to common  stockholders  by the  weighted-average
number of common  shares  outstanding  for the period.  Diluted EPS reflects the
potential  dilution of securities that could share in the earnings of an entity,
similar  to the  fully  diluted  EPS of APB  Opinion  No.  15.  SFAS No.  128 is
effective for financial  statements issued for periods ending after December 15,
1997,  including  interim periods;  earlier  application is not permitted.  When
adopted,  SFAS No. 128 will require  restatement  of all  prior-period  EPS data
presented;  however,  the Company has not sufficiently  analyzed SFAS No. 128 to
determine  what effect SFAS No. 128 will have on its  historically  reported EPS
amounts.

SFAS No. 129 does not change any previous  disclosure  requirements,  but rather
consolidates existing disclosure requirements for ease of retrieval.

Impact of Inflation

The Company does not believe that inflation has had a material adverse effect on
sales or  income  during  the  past  periods.  Increases  in  supplies  or other
operating costs could adversely affect the Company's  operations;  however,  the
Company  believes it could increase prices to offset increases in costs of goods
sold or other operating costs.


<PAGE>



PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


INDEX TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------



                                  Page to Page


Item 7:  Financial Statements

Independent Auditor's Report.................................    F-1

Balance Sheet as of March 31, 1997...........................    F-2....F-3

Statement of Operations for the year ended March 31, 1997
[None for March 31, 1996]....................................    F-4

Statements of Stockholders' Equity for the years ended
March 31, 1997 and 1996......................................    F-5

Statements  of Cash Flows for the year ended  March 31,  1997 and for the period
from inception [December 1995] to March 31, 1996 F-6....F-7

Notes to Financial Statements................................    F-8....F-15





                         . . . . . . . . . . . . . . .


<PAGE>



                          INDEPENDENT AUDITOR'S REPORT


The Board of Directors and Stockholders of
  Perry's Majestic Beer, Inc.
  New York, New York


            We have audited the  accompanying  balance sheet of Perry's Majestic
Beer,  Inc.  as of  March  31,  1997,  the  related  statements  of  operations,
stockholders' equity, and cash flows for the year then ended, and the statements
of stockholders'  equity and cash flows for the period from inception  [December
1995] to March 31, 1996. 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  generally  accepted
auditing  standards.  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 referred to above present
fairly,  in all material  respects,  the financial  position of Perry's Majestic
Beer,  Inc. as of March 31, 1997, and the results of its operations and its cash
flows for the year then ended,  and its cash flows for the period from inception
[December  1995] to March  31,  1996,  in  conformity  with  generally  accepted
accounting principles.







                                          MOORE STEPHENS, P.C.
                                          Certified Public Accountants.

Cranford,  New Jersey
June 6, 1997
[Except for Note 16A,
for which the date is
June 13, 1997]

                                       F-1

<PAGE>

<TABLE>


Item 7:

PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


BALANCE SHEET AS OF MARCH 31, 1997.
------------------------------------------------------------------------------



<S>                                                                    <C>  

Assets:
Current Assets:
  Cash and Cash Equivalents                                             $ 1,521,203
  Accounts Receivable [Net of Allowance of $4,000]                          137,535
  Accounts Receivable - Related Party                                         5,072
  Inventory                                                                 104,496
  Due from Officer                                                            9,337
  Accrued Interest Receivable                                                 4,813
                                                                        -----------

  Total Current Assets                                                    1,782,456

Non-Current Assets:
  Investment in Bev-Tyme, Inc. - Related Party [7]                        1,431,440
                                                                        -----------

Property and Equipment - Net                                                 32,260
                                                                        -----------

Other Assets:
  Goodwill -[Net of Accumulated Amortization of $75,606]                    434,456
  Other Intangible Assets - Net                                             213,550
  Related Party Receivable                                                   76,300
                                                                        -----------

  Total Other Assets                                                        724,306

  Total Assets                                                          $ 3,970,462
                                                                        ===========





See Notes to Financial Statements.
</TABLE>

                                        F-2

<PAGE>

<TABLE>


PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


BALANCE SHEET AS OF MARCH 31, 1997.
------------------------------------------------------------------------------



<S>                                                                    <C> 

Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                                      $   194,542
  Payroll Taxes Payable                                                      16,124
                                                                        -----------

  Total Current Liabilities                                                 210,666
                                                                            -------
Commitments and Contingencies [14]                                               --
                                                                           --------
Stockholders' Equity:
  Preferred  Stock,  $.001 Par Value Per Share,  15,000,000  Blank Check  Shares
   Authorized,  Convertible  Class A - Issued and  Outstanding,  500,000 Shares;
   Non-Convertible Class B - Issued and Outstanding, 7,000,000 Shares [Aggregate
   Liquidation Preferences $170,000]                                           7,500

  Common Stock - $.0001 Par Value, Authorized 25,000,000 Shares,
   Issued and Outstanding, 3,708,335 Shares                                     370

  Additional Paid-in Capital                                              7,331,277

  Unrealized Holding [Loss] on Available for Sale Investment               (568,560)
                                                                           --------
  Retained Earnings [Deficit]                                              (698,291)

  Total                                                                   6,072,296
  Less:  Deferred Compensation                                           (2,312,500)
                                                                           --------
  Total Stockholders' Equity                                              3,759,796
                                                                           --------
  Total Liabilities and Stockholders' Equity                            $ 3,970,462
                                                                        ===========


See Notes to Financial Statements.

                                        F-3
</TABLE>

<PAGE>

<TABLE>


PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997.
------------------------------------------------------------------------------




<S>                                                                   <C>  

Sales - Net                                                             $   891,225

Cost of Goods Sold                                                          877,616
                                                                           --------
  Gross Profit                                                               13,609
                                                                            -------    
Selling, General and Administrative Expenses:
  Selling, Advertisement and Promotion                                       69,355
  General and Administrative Expenses                                       430,793
  Amortization of Deferred Compensation                                     137,500
  Amortization of Goodwill and Distribution Rights                           84,276
                                                                        -----------

  Total Selling, General and Administrative Expenses                        721,924
                                                                        -----------

  [Loss] from Operations                                                   (708,315)
                                                                           --------
Other [Income] Expense:
  Interest Expense                                                            6,998
  Interest Income                                                           (17,022)

  Other [Income] - Net                                                      (10,024)
                                                                        -----------

  [Loss] Before Income Taxes                                               (698,291)

Provision for Income Taxes                                                       --  
                                                                           --------
  Net [Loss]                                                            $  (698,291)
                                                                        ===========

  Net [Loss] Per Share                                                  $     (0.24)
                                                                        ===========

  Weighted Average Number of Shares                                       2,965,869



See Notes to Financial Statements.

                                        F-4

<PAGE>

</TABLE>

<TABLE>

PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


STATEMENTS OF STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------


                                                                                                 Unrealized
                                                                                                  Holding
                                                                                                  [Loss] on
                                                                  Additional Retained             Available   Total
                              Preferred Stock     Common Stock      Paid-in  Earnings Deferred    For Sale  Stockholders'
                             Shares     Amount  Shares    Amount    Capital  [Deficit]Compensation Investment Equity
<S>                          <C>       <C>      <C>      <C>      <C>       <C>        <C>       <C>      <C> 

Common Stock Issuedfor Cash -
  January 1996                    --   $    --  2,500,000$    250 $  49,750 $     --   $     -- $      -- $ 50,000

500,000 Convt. Shares of
 Series A and
  7,000,000 Shares of 
Series B 
  Preferred Stock Issued
 for Cash and
  Invst. in Bev-Tyme,Inc.     7,500,000 7,500       --        --  2,142,500       --         --        -- 2,150,000
                               -------- -------  -------  -------- --------- --------   -------- --------- ---------

  Balance - March 31, 1996    7,500,000 7,500  2,500,000      250 2,192,250       --         --       --  2,200,000

Net Proceeds from Public
  Offering of Common Stock        --        --  583,335        58 2,475,028       --         --        -- 2,475,086

Unrealized Holding [Loss]on 
Available
  for Sale Investment as of 
March 31,
  1997 [7]                        --        --       --        --        --       --         --   (568,560)(568,560)

Employment Agreements -
  February 11, 1997               --        --  400,000        40 1,999,960       --   (2,000,000)     --       --

Consulting Agreement -
  February 11, 1997               --        --  200,000        20   449,980       --   (450,000)       --       --

Purchase of Old Marlborough       --        --   25,000         2   214,059       --         --        --     214,061

Amortization of Deferred
 Compensation                     --       --       --       --        --         --   137,500   --           137,500

Net [Loss] for the year
 ended
  March 31, 1997                  --        --       --        --        --   (698,291)        --        --   (698,291)
                           ---------   -------  -------  -------- --------- --------   --------    ---------   --------

  Balance - March 31, 1997 7,500,000   $ 7,500  3,708,335 $    370 $7,331,277 $(698,291) $(2,312,500)$568,560)$3,759,796
                           =========   =======  ========= ======== =========== ========  =========== ========  =========



See Notes to Financial Statements.



                                          F-5
</TABLE>

<PAGE>


<TABLE>

PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------

                                                                      For the Period
                                                                      from Inception
                                                                         [December
                                                          Year ended      1995] to
                                                           March 31,     March 31,
                                                            1 9 9 7        1 9 9 6
<S>                                                     <C>           <C>  

Operating Activities:
  Net [Loss]                                             $  (698,291)   $        --
                                                         -----------    -----------
  Adjustments to Reconcile Net [Loss] to Net Cash
   [Used for] Provided by Operating Activities
   Depreciation and Amortization                              86,802             --
   Deferred Compensation Expense                             137,500             --

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                    (138,607)            --
     Related Party Receivable                                (76,298)            --
     Accrued Interest                                         (4,814)            --
     Inventory                                               (77,335)

   Increase [Decease] in:
     Accounts Payable                                        194,542             --
     Payroll Taxes Payable                                    16,124             --
                                                         -----------    -----------

   Total Adjustments                                         137,914             --
                                                         -----------    -----------

  Net Cash - Operating Activities                           (560,377)            --
                                                         -----------    -----------

Investing Activities:
  Acquisition of Riverosa                                         --       (150,000)
  Purchase of Warehouse Equipment                            (26,436)            --
  Acquisition of Old Marlborough Brewery, Inc.'s Post
  Road Brand                                                 (85,513)           --
  Payments for Distribution Rights                           (86,700)            --
  Payments for Label and Packaging Design                    (68,173)            --
  Acquisition of Orchard Annie, Inc.                         (67,348)            --
  Due from Officer                                            (9,336)            --
                                                         -----------    -----------

  Net Cash - Investing Activities                           (343,506)      (150,000)
                                                         -----------    -----------

Financing Activities:
  Proceeds from Bridge Loan                                   60,000         90,000
  Proceeds from Issuance of Preferred Stock to Bev-Tyme       75,000         75,000
  Payment of Bridge Loan Obligation                         (150,000)            --
  Repayment of Note                                         (100,000)            --
  Proceeds of Public Offering - Net of Offering Costs      2,475,086             --
  Proceeds from Sale of Common Stock                           4,800         45,200
                                                         -----------    -----------

  Net Cash - Financing Activities                          2,364,886        210,200
                                                         -----------    -----------

  Net Increase in Cash and Cash Equivalents                1,461,003         60,200

Cash and Cash Equivalents - Beginning of Years                60,200             --
                                                         -----------    -----------

  Cash and Cash Equivalents - End of Years               $ 1,521,203    $    60,200
                                                         ===========    ===========

See Notes to Financial Statements.

                                        F-6
</TABLE>

<PAGE>


<TABLE>

PERRY'S MAJESTIC BEER, INC.
------------------------------------------------------------------------------


STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------



                                                                       For the Period
                                                                       from Inception
                                                                         [December
                                                          Year ended      1995] to
                                                           March 31,     March 31,
                                                            1 9 9 7        1 9 9 6

<S>                                                      <C>           <C>  

Supplemental Disclosures of Cash Flow Information:
  Cash paid for the years for:
   Interest                                              $     6,998    $        --
   Income Taxes                                          $        --    $        --

Supplemental Schedule of Non-Cash Investing and Financing Activities:
During the fourth quarter of 1997, Perry's issued a total of 400,000 shares of
Perry's  common  stock to two  officers as  consideration  for  extending  their
employment  agreements  to five years [See Note 14].  Deferred  compensation  of
$2,000,000  was recorded and will be amortized to over five years as 
compensation expense. Compensation  expense of $100,000  was  recorded  for the
three months ended March 31, 1997 for this transaction.In addition,an additional
200,000 shares of Perry's common stock were issued for a three year consulting 
agreementfor  services  valued  at  $450,000.The  Company  recorded  $37,500
for  the amortization of the deferred consulting services under this agreement.

  In February of 1997,  Perry's also issued 25,000 shares of common stock valued
at approximately  $214,000 as additional  consideration  for the purchase of Old
Marlborough Brewing Co., Inc.'s Post Road brand.



See Notes to Financial Statements.
</TABLE>

                                        F-7

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------


[1] Organization and Nature of Business

Perry's  Majestic  Beer,   Inc.,  a  Delaware   corporation  [the  "Company"  or
"Perry's"],  was formed in December  1995.  The Company's  main office is in New
York, New York.  There were no revenue or expense  activities  through March 31,
1996.  The Company  became a subsidiary  of Bev-Tyme,  Inc. as of March 29, 1996
[See Note 7]. In March of 1996, the Company entered into an agreement to acquire
Riverosa  Company,  Inc. which was formed November 1993, and began marketing and
selling throughout the metropolitan New York City area microbrewed  organic beer
under the trade name Perry's Majestic Beer [See Note 6].

During  the year  ended  March 31,  1997,  Perry's  has  continued  to expand by
purchasing Old Marlborough Brewing Company, Inc.'s Post Road Microbeer brand and
other assets,  and Orchard Annie,  Inc., a manufacturer  of natural  applesauce.
Post Road brand beer is distributed in Massachusetts [See Note 6].

[2] Summary of Significant Accounting Policies

[A] Cash and Cash  Equivalents - The Company's  policy is to classify all highly
liquid  investments  with a maturity of three  months or less when  purchased as
cash equivalents.

[B] Use of Estimates - The  preparation  of financial  statements  in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period.
Actual results could differ from those estimates.

[C]  Goodwill  - Amounts  paid in excess of the  estimated  value of net  assets
acquired of Riverosa  and Old  Marlborough  are  charged to  goodwill.  Goodwill
relates to revenues  the Company  anticipates  realizing  in future  years.  The
Company has decided to amortize its  goodwill  over a period of up to five years
under the straight-line  method. The Company's policy is to evaluate the periods
of goodwill  amortization  to determine  whether later events and  circumstances
warrant  revised  estimates  of useful  lives.  The Company  will also  evaluate
whether the  carrying  value of goodwill has become  impaired by  comparing  the
carrying  value of goodwill to the value of  projected  undiscounted  cash flows
from  acquired  assets or  businesses.  Impairment is recognized if the carrying
value of goodwill  is less than the  projected  undiscounted  cash flow from the
acquired assets or business.

[D] Inventories - Inventories  are stated at the lower of cost or market.  Cost,
which  includes  purchases,  freight,  raw  materials,  direct labor and factory
overhead, is determined on the first-in, first-out basis.

[E] Property and  Equipment - Property and  equipment are stated at cost and are
depreciated  over  its  estimated  useful  life  of  5  years.  Depreciation  is
calculated using the straight-line method.

[F] Advertising  Expense - Advertising  costs are expensed as incurred.  For the
year ended March 31, 1997 advertising costs were approximately $22,700.

[G] Intangibles - The Company acquired various intangible assets during the year
ended March 31, 1997. The Company amortizes intangible assets over 5 years under
the straight-line method [See Note 5].

[H] Risk  Concentrations - Financial  instruments  that potentially  subject the
Company to  concentrations  of credit risk include cash and cash equivalents and
accounts  receivable  arising from its normal business  activities.  The Company
places  its  cash  and cash  equivalents  with  high  credit  quality  financial
institutions located in the New York metropolitan area.

The  Company  maintains  cash  and  cash  equivalent  balances  at  a  financial
institution in New York. Accounts at this institution are insured by the Federal
Deposit Insurance  Corporation up to $100,000.  At March 31, 1997, the Company's
uninsured cash balance totaled $1,391,440.

                                       F-8

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #2
------------------------------------------------------------------------------



[2] Summary of Significant Accounting Policies [Continued]

[H] Risk  Concentrations  [Continued]  - The  Company  performs  certain  credit
evaluation procedures and does not require collateral. The Company believes that
credit risk is limited  because the Company  routinely  assesses  the  financial
strength of its customers, and based upon factors surrounding the credit risk of
its  customers,  establishes an allowance for  uncollectible  accounts and, as a
consequence,  believes that its accounts  receivable credit risk exposure beyond
such  allowances is limited.  The Company  established an allowance for doubtful
accounts  at March 31,  1997 of $4,000.  The  Company  believes  any credit risk
beyond this amount would be negligible.

With respect to purchases  of inventory  for the year ended March 31, 1997,  the
Company  purchased  inventory from four suppliers which comprised  approximately
63% of the Company's total cost of sales.  The Company  believes there are other
suppliers available to meet the Company's needs.

As of March 31, 1997, the Company distributes its products primarily through two
wholesale distributors for resale to retailers. One distributor accounts for 25%
of the  Company's  sales.  Accordingly,  the  Company  is  dependent  upon these
distributors  to sell the  Company's  products  and to  assist  the  Company  in
promoting market acceptance of, and creating demand for the Company's  products.
There are  other  distributors  available  to meet the  Company's  needs and the
Company is discussing doing business with these distributors.

Certain of the  Company's  purchases and sales were made by the parent on behalf
of the Company. In addition,  all of the Company's inventory is maintained,  but
segregated  at the parent's  location and no  additional  costs are incurred for
this  arrangement.  Purchases  and  sales  made by the  parent  on behalf of the
Company amounted to approximately $480,000 and $650,000,  respectively,  for the
year ended March 31, 1997.

[I] Stock  Issued to  Employees - The Company  adopted  Statement  of  Financial
Accounting Standards ["SFAS"] No. 123, "Accounting for Stock-Based Compensation"
on April 1, 1996 for  financial  note  disclosure  purposes and will continue to
apply the intrinsic value method of Accounting  Principles Board ["APB"] Opinion
No. 25,  "Accounting  for Stock Issued to  Employees"  for  financial  reporting
purposes.

[J] Revenue Recognition - Revenue is recognized at the time products are shipped
and title passes.

[K] Net [Loss] Per Share - The net loss per share is computed  by  dividing  the
net loss by the weighted average number of shares outstanding during the period.
Shares  issuable  upon the exercise of stock  options  granted and the effect of
convertible  securities are excluded from the computation  because the effect on
the net loss per share would be anti-dilutive.

[L] Impairment - Certain  long-term  assets of the Company are reviewed at least
annually as to whether their  carrying  value has become  impaired,  pursuant to
guidance  established  in  Statement of  Financial  Standards  ["SFAS"] No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of."  Management  considers  assets to be impaired if the  carrying
value  exceeds  the  future   projected  cash  flows  from  related   operations
[undiscounted and without interest  charges].  If impairment is deemed to exist,
the assets will be written down to fair value or projected discounted cash flows
from  related   operations.   Management  also   re-evaluates   the  periods  of
amortization to determine whether  subsequent  events and circumstances  warrant
revised estimates of useful lives.

[M] Income Taxes - The Company  accounts for income tax expense and  liabilities
under the asset and  liability  method.  Deferred  income taxes are provided for
temporary  differences  between  financial  and income tax  reporting,  relating
principally to depreciation, deferred compensation and amortization.



                                       F-9

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #3
------------------------------------------------------------------------------




[3] Inventories

The  Company's  inventory  consists of finished  goods of $73,443 and  packaging
materials of $31,053.  The finished goods inventory is pledged as part of a loan
entered into by the parent, Bev-Tyme, Inc.

[4] Plant and Equipment and Depreciation

Plant and equipment and accumulated depreciation are as follows:

Warehouse Equipment                            $    7,350
Kegs                                                8,395
Storage Equipment                                  19,041
                                               ----------

Total - At Cost                                    34,786
Less:  Accumulated Depreciation                     2,526

  Net                                          $   32,260
  ---                                          ==========

Depreciation expense for the year ended March 31, 1997 was $2,526.

[5] Other Intangible Assets

Other intangible assets and accumulated amortization are as follows:

                                               Accumulated
                                      Cost    Amortization      Net

Label and Packaging Design          $  68,172  $       --  $   68,172
Orchard Annie Concept                  67,348          --      67,348
Distribution Rights                    86,700       8,670      78,030
                                    ---------  ----------  ----------

  Totals                            $ 222,220  $    8,670  $  213,550
  ------                            =========  ==========  ==========

Amortization expense for the year ended March 31, 1997 was $8,670.

[6] Acquisitions

[A]  Riverosa - On March 29,  1996,  the Company  entered  into an  agreement to
acquire  all of the  stock of  Riverosa  Company,  Inc.  for  $250,000  of which
$150,000 in cash was put into escrow as of March 31, 1996 and a note payable was
issued for  $100,000.  The note was payable with  interest of 8% and was paid in
August of 1996 with proceeds from the Company's  initial  public  offering.  The
combination  is accounted for by the purchase  method.  Goodwill of $246,000 was
recorded and will be amortized over five years under the  straight-line  method.
Amortization  of goodwill of $49,200 was  recorded  for the year ended March 31,
1997.

Interest expense on this note for the year ended March 31, 1997 was $2,667.

                                      F-10

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #4
------------------------------------------------------------------------------


[6] Acquisitions [Continued]

[B] Old Marlborough  Brewing Co., Inc. ["Old  Marlborough"] - In August of 1996,
the Company entered into a letter of intent to acquire Old  Marlborough  Brewing
Co.,  Inc.'s  Post Road  microbeer  brand and other  assets.  The  Company  paid
$172,213,  of which  $35,513 was for  inventory and equipment and $86,700 was to
repurchase  distribution  rights.  In February  1997,  the Company issued 25,000
shares  of  common  stock  valued  at   approximately   $214,000  as  additional
consideration  for the acquisition of Old Marlborough.  Goodwill of $264,062 was
recorded and will be amortized over five years under the  straight-line  method.
For the year ended March 31, 1997, amortization of goodwill was $26,406.

[C] Orchard Annie,  Inc. - In March 1997,  Perry's  entered into an agreement to
acquire all of the stock of Orchard  Annie,  Inc.,  an all  natural  apple sauce
company for approximately $67,000 in cash. Additionally, Perry's agreed to issue
50,000 shares of Perry's  common stock in the second  quarter of 1997 and to pay
an officer of the Company who was also the sole  shareholder  of Orchard  Annie,
Inc.  a royalty  payment of $0.50 per case for each of the first  500,000  cases
sold and $0.25 per case thereafter for a period of fifteen years.

[7] Investment - Related Party

On March 29, 1996, the Company issued to Bev-Tyme,  Inc. [a public  corporation]
500,000 shares of convertible  Class A Preferred  Stock and 7,000,000  shares of
non-convertible Class B Preferred Stock for 400,000 shares of Series C Preferred
Stock of Bev-Tyme,  Inc.  [valued at $2,000,000 at March 31, 1996] and $150,000.
Each  share of Series C  Preferred  Stock pays an annual  dividend  of $0.50 per
share  and is  convertible  at the  option  of the  holder  into 1.8  shares  of
Bev-Tyme,  Inc. common stock As of March 31, 1996, $75,000 of cash was collected
and the balance of $75,000 was received on April 4, 1996.  Each share of Class A
Preferred  Stock may be  convertible  by the holder into one [1] share of Common
Stock.  Each share of Class A Preferred  Stock and Class B  Preferred  Stock has
attached to it the right to vote on all matters submitted to the Company.

In October of 1996, Bev-Tyme, Inc. sold the 500,000 shares of Convertible Class 
A Preferred Stock.

On April 19, 1996, the Company lent $75,000 to Bev-Tyme,  Inc., which was repaid
September  9, 1996.  Interest  income for this loan for the year ended March 31,
1997 was $2,338.

The  investment in Bev-Tyme,  Inc. is classified as "available  for sale" and is
presented at estimated fair value. In January 1997,  Perry's received a dividend
of 524,000  shares of Bev-Tyme  common stock on the investment of 400,000 shares
of Bev-Tyme Series C Preferred Stock. As of March 31, 1997, the Company recorded
a net  unrealized  holding  loss of $568,560 to reflect the change in the market
value of  Bev-Tyme,  Inc.'s  Series C Preferred  Stock and the annual  $0.50 per
share dividend which was paid in Bev-Tyme common stock.

[8] Income Taxes

Income tax at the federal  statutory rate reconciled to the Company's  effective
rate is as follows:

                                                March 31,
                                                 1 9 9 7

Federal Statutory Rate                             (34.0)%
Non-Deductible Expenses                             (7.2)
Net Operating Loss For
  Which No Tax Benefit was Received                 41.2
                                                --------

  Effective Rate                                      --%
                                                 --------
The Company has a net operating loss carryforward of approximately  $485,000 all
of which will expire in 2012.

                                      F-11

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #5
------------------------------------------------------------------------------



[8] Income Taxes [Continued]

The major  components  of  deferred  income tax assets  and  liabilities  are as
follows:

                                                 March 31,
                                                  1 9 9 7
                                                  -------
Deferred Tax Liabilities
  Accelerated Depreciation                      $  (1,994)
                                                =========

Deferred Tax Assets:
  Net Operating Loss                            $ 219,248
  Excess Book Amortization Over Tax                10,233
  Reserves                                          1,800
  Unrealized Holding Loss                         255,852
  Deferred Compensation                            61,875
                                                ---------

  Total                                         $ 549,008
                                                =========

Net Deferred Tax Asset:
  Before Valuation Allowance                    $ 547,014
  Valuation Allowance                             547,014
                                                ---------

  Net Deferred Income Tax Asset                 $      --
  -----------------------------                 =========

The Company recorded a valuation allowance of $547,014,  an increase of $547,014
over the preceding year, due to the  uncertainty  that the Company will generate
income  in  the  future   sufficient   to  fully  or  partially   utilize  these
carryforwards.

[9] 1996 Stock Options

[A] In March  1996,  the Board of  Directors  of the  Company  adopted,  and the
stockholders of the Company approved the adoption of the 1996 Stock Option Plan.
The maximum number of shares of common stock with respect to which awards may be
granted pursuant to the 1996 Plan is initially 2,000,000 shares.

No options are outstanding under this plan.

[B] In connection  with the initial public  offering,  the Company issued to its
underwriter in July 1996 an option to purchase  58,333 shares of common stock at
a  purchase  price of $7.20  per  share  exercisable  commencing  July  1997 and
expiring July 2001.



                                      F-12

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #6
------------------------------------------------------------------------------



[10] Common Stock

[A] In January  1996,  the Company  issued  2,500,000  shares of common stock to
seven [7]  parties for a total  consideration  of  $50,000.  At March 31,  1996,
$45,200 was collected and the balance of $4,800 was received April 4, 1996.

[B] The Company's  registration  statement for 583,335 shares of common stock at
$6.00 per share  was  declared  effective  in July of 1996 and net  proceeds  of
approximately $2,475,000 were received in August of 1996.

[11] Bridge Loan

On March 31, 1996, the Company  borrowed an aggregate of $150,000 from seven [7]
unaffiliated lenders [the "Bridge Lenders"]. In exchange for making loans to the
Company, each Bridge Lender received a promissory note [the "Bridge Note"]. Each
of the Bridge Notes bears  interest at the rate of eight percent [8%] per annum.
The Bridge Notes were paid at the closing of the initial public  offering of the
Company's  securities  in August  of 1996.  As of March 31,  1996,  $90,000  was
received in cash from the bridge loan and  $60,000 was  received  April 4, 1996.
The  principal  balance of $150,000  and  interest for $4,208 was paid August 5,
1996.

[12] New Authoritative Pronouncements

The Financial Accounting Standards Board ["FASB"] has issued Statement of 
Financial Accounting Standards ["SFAS"] No. 125, "Accounting for Transfers
 and Servicing of Financial Assets and Extinguishment of Liabilities.
"  SFAS No. 125 is effective for transfers and servicing of financial assets
and extinguishment of liabilities occurring after December 31, 1996. 
 Earlier application is not allowed. The provisions of SFAS No. 125 must 
be applied prospectively; retroactive application is prohibited.
Adoption on January 1, 1997 is not expected to have a material impact on the
 Company. The FASB deferred some provisions of SFAS No. 125, which are not
 expected to be relevant to the Company.

The  FASB  issued  SFAS No.  128,  "Earnings  Per  Share,"  and  SFAS  No.  129,
"Disclosure of Information  about Capital  Structure" in February 1997. SFAS No.
128  simplifies  the  earnings  per  share  ["EPS"]  calculations   required  by
Accounting Principles Board ["APB"] Opinion No. 15, and related interpretations,
by replacing the  presentation  of primary EPS with a presentation of basic EPS.
SFAS No. 128  requires  dual  presentation  of basic and diluted EPS by entities
with complex capital structures.  Basic EPS includes no dilution and is computed
by dividing  income  available to common  stockholders  by the  weighted-average
number of common  shares  outstanding  for the period.  Diluted EPS reflects the
potential  dilution of securities that could share in the earnings of an entity,
similar  to the  fully  diluted  EPS of APB  Opinion  No.  15.  SFAS No.  128 is
effective for financial  statements issued for periods ending after December 15,
1997,  including  interim periods;  earlier  application is not permitted.  When
adopted,  SFAS No. 128 will require  restatement  of all  prior-period  EPS data
presented;  however,  the Company has not sufficiently  analyzed SFAS No. 128 to
determine  what effect SFAS No. 128 will have on its  historically  reported EPS
amounts.

SFAS No. 129 does not change any previous  disclosure  requirements,  but rather
consolidates existing disclosure requirements for ease of retrieval.

[13] Financial Instruments

For certain instruments, including cash and cash equivalents, trade receivables,
related party payables,  and trade payables,  it was estimated that the carrying
amount  approximated fair value for the majority of these instruments because of
their short maturities.

                                      F-13

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #7
------------------------------------------------------------------------------



[14] Commitments and Contingencies

[A]  Employment  Agreements - As of March 31, 1997, the Company has 3 employment
agreements  with  executives  of the Company that expire  between the years 2000
through 2001. The annual commitments for compensation aggregate between $285,000
and $250,000,  respectively.  In addition, the Company has agreed to grant to an
executive  20,000  common stock  options each year as a bonus for the next three
years,  exercisable  at $6.00 per share for a period of four years.  The Company
has also agreed to grant to another  executive  100,000  common stock options on
each of March 31, 1998 and March 31, 1999,  exercisable  at fair market value at
date of grant.

During February 1997, Perry's issued a total of 400,000 shares of Perry's common
stock to two officers as consideration for extending their employment agreements
through 2001. As a result of this agreement, deferred compensation of $2,000,000
was recorded and related amortization of $100,000 was expensed.

[B] Consulting  Agreements - In February 1997,  Perry's issued 200,000 shares of
Perry's  common stock to a consultant for services to be performed over the next
three  years.  This  agreement  was valued at $450,000  and recorded as deferred
compensation.  Amortization of $37,500 was recorded as amortization  expense for
the year ended March 31, 1997.

[C] Royalty  Agreements - In connection  with the  acquisition of Orchard Annie,
Inc., the Company has agreed to pay a royalty payment of $0.50 per case for each
of the first  500,000 cases sold and $0.25 per case  thereafter  for a period of
fifteen years.

[15] Leases

[A]  Future  minimum   payments  under   non-cancelable   operating  leases  for
transportation equipment are as follows at March 31, 1997:


1998                                $   3,540
1999                                    3,540
2000                                    1,475
2001                                       --
2002                                       --
Thereafter                                 --
                                    ---------

  Total Minimum Lease Payments      $   8,555
                                        =====
[B] Rent  expense for the year ended  March 31,  1997 was  $4,880.  For the year
ended March 31, 1997, there was no lease  agreement.  Rent of $750 was paid on a
monthly  basis to an  officer  of the  Company  for use of  office  space.  This
arrangement was terminated in June of 1997.

[16] Subsequent Events

[A] Related Party Receivable - On April 17, 1997, the Company loaned to Bev-Tyme
$100,000 in the form of a  promissory  note.  Bev-Tyme was required to repay the
entire principal plus interest on or before April 16, 1998. The Company retained
the  right to  convert  the  promissory  note into the  7,000,000  shares of the
Company's  Series B Preferred  Stock held by  Bev-Tyme.  On June 13,  1997,  the
Company  exercised its right to convert the  promissory  note into the 7,000,000
shares of the Company's  Series B Preferred Stock held by Bev-Tyme.  As a result
of this transaction, Perry's is no longer a subsidiary of Bev-Tyme, although the
two companies continue to share some common management.

                                      F-14

<PAGE>



PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #8
------------------------------------------------------------------------------



[16] Subsequent Events [Continued]

[B] Options  Granted - In June of 1997,  the Board of Directors  issued  500,000
options for common stock to certain  officers,  directors  and  consultants  for
future services at an exercise price of $0.875 share.

[C] Rental  Agreement - In May of 1997,  the Company  entered  into a three year
lease for office space with monthly rent of $1,200.

[D]  Consulting  Agreement  - On  May  23,  1997,  the  Company  entered  into a
consulting  agreement  whereby the Consultant agrees to provide the Company with
consulting  services in connection  with financial  management and other general
consulting as required by the Company. In consideration for these services,  the
Company  issued  in June of 1997 an  option to  purchase  100,000  shares of the
Company's  common stock at an exercise  price of $0.875 per share[see Note 16B].
 In addition, the agreement also calls for a per diem payment of $300.






                      . . . . . . . . . . . . . . . . . . .

                                      F-15

<PAGE>



Item 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
              ON ACCOUNTING AND FINANCIAL DISCLOSURE.

  None.

                                    PART III

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

Directors and Executive Officers

        The names and ages of the directors,  executive officers and significant
employees, and promoters of the Company are set forth below.

      Name              Age         Position Held

Robert Sipper            43      President, Chief Executive Officer, Chief
                                 Financial Officer, Principal Accounting Officer
                                 and Director

Mark Butler             45       Vice President-Sales and Secretary and Director

Matthew Harriton        32       Director

Background of Executive Officers and Directors

      Robert Sipper has been Chief Executive Officer and Chief Financial Officer
of the  Company  since March 1, 1996.  He has served as a director of  Bev-Tyme,
Inc. since November 1993 and Chief Executive  Officer and President of Bev-Tyme,
Inc.  since  January,  1994.  He graduated  with a J.D.  degree from Vermont Law
School in 1978 and  entered  private  practice.  He was  associated  with Dubbs,
Leopold, Davis & DePodwin,  Attorneys at Law from 1979-1981. He became a partner
in the law firm of Leopold & Sipper,  Attorneys at Law, from 1981 to March 1989.
In March,  1989,  Mr.  Sipper left the private  practice of law and became Chief
Operating Officer/Executive Vice President of Mootch & Muck, a position he holds
today,  which was the master Evian  distributor for the  Metropolitan New York -
New Jersey  territory as well as the  distributor  of many other  beverages  and
selected  specialty foods. Mr. Sipper  established a subdistributor  network for
Evian and other products in this territory.  In 1990, Mr. Sipper  negotiated the
sale of  Mootch & Muck's  Evian  Master  Distributor  Agreement  to  Canada  Dry
Bottling Company of New York.

      Mark Butler has been President, Vice President - Sales and Secretary of
 Riverosa since January 1990.  Mr. Butler was appointed to the Company's 
Board of Directors on April 1, 1996.  He  has been the Vice President-Sales
and Chief Operating Officer of the Company since April 4, 1996.  Mr. Butler
was President of Mill Hill Associates, a company which brokers various 
beverages to wholesaler and distributor networks from January 1990 to October
1996.  From April 1988 to January 1990, Mr. Butler was National Sales
 Manager for Snapple Beverage Co.  From February 1986 to March 1988, he was
National Sales Manager for Glenville Importers. From November 1984 to January
1986, Mr. Butler was National Sales Manager of American Natural Beverage Corp.
 From September 1980 to October 1984, he was president of Newport-Cambridge 
Provisions which distributed beverages, including exclusive


<PAGE>





distribution of Soho Natural Soda in New England.  Mr. Butler received a degree 
in English / Business Administration and Economics from Western State College 
of Colorado.

      Matthew L. Harriton,  has served on the Company's Board of Directors since
January  3,  1996.  Mr.  Harriton  is the  Chief  Financial  Officer  of  Embryo
Development  Corporation.  Embryo  Development  Corporation  is a public company
which trades on NASDAQ and which  specializes  in  developing  and  distributing
medical devices. Prior to joining Embryo Development Corporation, Mr. Harriton's
professional  experience  included  positions  at  CIBC  Wood  Gundy  Securities
Corporation as an associate  from June 1994 to December 1995,  Coopers & Lybrand
as a senior  associate  from  December  1990 to May 1994,  and The First  Boston
Corporation as a senior accountant from June 1986 to June 1988.  Through private
investments  Mr. Harriton has been involved with the start-up and development of
several restaurants located in Manhattan. Mr. Harriton also serves as a director
of Decor Group,  Inc., a public  company which trades on the OTC Bulletin  Board
and is involved in the home decorating  industry.  Mr. Harriton also serves as a
director of Superior Supplements, Inc., a public company which trades on the OTC
Bulletin  Board  and  which  manufactures  and  sells  dietary  supplements  and
specialty nutritional supplements in bulk tablet, capsule and powder form. He is
a graduate of Lehigh  University and received his M.B.A.  from Duke University's
Fuqua School of Business

      There are no family  relationships among any of the directors or executive
officers  of the  Company.  Each  director of the Company is entitled to receive
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors  of the Company.  The members of the Board of Directors  meet at least
quarterly during the Company's fiscal year, and at such other times duly called.


      In June 1997, the Company issued to certain employees and directors of the
Company options to purchase an aggregate of 300,000 shares of Common Stock at an
exercise price of $0.875 per share.None of such options have been exercised.

      Compliance with Section 16(a) of
      The Securities Exchange Act of 1934

      Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  the
Company's  directors and executive  officers,  and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities,  to file
with the Securities  and Exchange  Commission  initial  reports of ownership and
reports of changes in ownership of common stock and other equity  securities  of
the Company.  Officers,  directors and greater than ten percent shareholders are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) forms they file.

      Except as provided below, to the Company's knowledge,  based solely on its
review of the copies of such reports  furnished  to the Company  during the year
ended March 31, 1997,  all Section 16(a) filing  requirements  applicable to its
officers,  directors  and  greater  than  ten  percent  beneficial  owners  were
satisfied.


<PAGE>

<TABLE>


ITEM 10. EXECUTIVE COMPENSATION.

      The  following  table  sets  forth  the  compensation  paid  to the  Named
Executive Officers for the fiscal year ending March 31, 1997.

                           Summary  Compensation Table

                            Annual  Compensation Awards           Long-Term Compensation
                            ---------------------------           ----------------------
        (a)                (b)     (c)      (d)                       (e)              (f)
<S>                        <C>     <C>     <C>                       <C>           <C>


                                          Other Annual               Restricted   Stock Option
Name and Principal Position Year  Salary  Compensation                 Award       Grants

Robert Sipper, President   1997   $98,249   $ -0-                      -0-                -0-
    Chief Executive Officer

Mark Butler                1997   $54,230   $ -0-                      -0-                -0-
  Vice President - Sales


      The following table sets forth certain information with respect to options
granted during the last fiscal year to the Company's Chief Executive Officer and
the other executive officers named in the above Summary Compensation Table.

</TABLE>




                       Option/SAR Grants In Last Fiscal Year

                     Number of Securities
                        Underlying     Percent of Total     Exercise or
                       Options/SARS    Options/SARS            Base
                                         Granted to           Price
Name                    Granted (#)   Employees in Fiscal Year ($/Sh)  Exp. Date
Robert Sipper                   -0-(1)          0%              $-0-          --


Mark Butler                     -0-(1)          0%              $-0-          --
----------------------------
(1)   Options are exercisable for shares of Common Stock.

      The following table sets forth certain information with respect to options
exercised  during the last fiscal year by the Company's Chief Executive  Officer
and the executive  officers named in the Summary  Compensation  Table,  and with
respect  to  unexercised  options  held by such  persons  at the end of the last
fiscal year:


<TABLE>

Aggregate Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End 
Option/SAR Values

                      Shares                       Number of Securities    Value of Unexercised in the
                    Acquired on    Value Realized  Underlying Unexercised     Money Options/SARs at
       Name        Exercise (#)(1)    $            Options/SARS at FY-End (#)     FY-End ($) (2)
       ----        ---------------   ---     --------------------------    ---------------
<S>                   <C>            <C>      <C>           <C>             <C>            <C>
                    
                                                Exercisable Unexercisable    Exercisable  Unexercisable 
                            
                       
   Robert Sipper      -0-             -0-         ---                ---      $    -0-    $  -0-
 Mark Butler per      -0-             -0-         ---                ---      $    -0-    $  -0- 
                      
</TABLE>

<PAGE>
      Each   director  of  the   Company  is  entitled  to  receive   reasonable
out-of-pocket  expenses incurred in attending meetings of the Board of Directors
of the Company.  The members of the Board of Directors  meet at least  quarterly
during the Company's fiscal year, and at such other times duly called.

Employment Agreements

      As of April 4, 1996, and as amended in November  1996,  February 1997, and
March 1997, the Company entered into a five (5) year  employment  agreement with
Mark Butler  pursuant to which Mr. Butler serves as the Company's Vice President
of Sales and Chief  Operating  Officer and was elected to the Company's Board of
Directors.  The  employment  agreement,  as amended,  provides for Mr. Butler to
receive a salary of $25,000 per annum  until the  closing of the Initial  Public
Offering,  and  thereafter  $50,000  per  annum  until  November  1,  1996,  and
thereafter  $75,000 per annum until March 10, 1997, and thereafter  $110,000 per
annum.  The employment  agreement,  as amended,  also provides for payment of an
annual bonus at the sole  discretion  of the Company's  Board of  Directors.  In
addition,  on each of March 31, 1998,  and March 31, 1999,  the Company  agreed,
pursuant to the employment agreement,  as amended, to grant Mr. Butler an option
to purchase  100,000 shares of Common Stock  exercisable at fair market value on
the date of issuance.  Further,  the employment  agreement,  as amended provides
that the Company issue to Mr.  Butler  200,000  shares of the  Company's  Common
Stock on February 11, 1997.  Such shares were issued in February  1997. In March
1997, Mr. Butler's salary was increased to $110,000 per annum in accordance with
his employment agreement, as amended.

      As of April 4, 1996 and as  amended  on  February  1,  1997,  the  Company
entered into a five (5) year employment agreement with Robert Sipper pursuant to
which Mr. Sipper serves as the Company's  President and Chief Executive Officer.
The agreement  provides for Mr. Sipper to receive a salary of $50,000 per annum.
In October 1996,  Mr. Sipper  exercised  his option  pursuant to the  employment
agreement  to transfer  his  Bev-Tyme  salary of $106,650  to the  Company.  Mr.
Sipper's  salary was  subsequently  reduced  voluntarily  to $120,000  until Mr.
Sipper gives notice that his full salary should be reinstated.


<PAGE>



Stock Option Plans and Agreements

      In March 1996,  the Board of  Directors  of the Company  adopted,  and the
stockholders  of the  Company  approved  the  adoption  of,  the 1996 Stock Plan
(hereinafter called the "1996 Plan"). The purpose of the 1996 Plan is to provide
an incentive and reward for those executive  officers and other key employees in
a position  to  contribute  substantially  to the  progress  and  success of the
Company,  to closely align the interests of such employees with the interests of
stockholders  of the  Company by linking  benefits to stock  performance  and to
retain the services of such employees,  as well as to attract new key employees.
In furtherance of that purpose, the 1996 Plan authorizes the grant to executives
and other key employees of the Company and its  subsidiaries  of stock  options,
restricted stock,  deferred stock, bonus shares,  performance  awards,  dividend
equivalent  rights,  limited  stock  appreciation  rights and other  stock-based
awards,  or any  combination  thereof.  The 1996  Plan is  expected  to  provide
flexibility   to  the   Company's   compensation   methods,   after  giving  due
consideration to competitive conditions and the impact of federal tax laws.

      The maximum  number of shares of Common Stock with respect to which awards
may be granted pursuant to the 1996 Plan is initially 2,000,000 shares. To date,
300,000 options have been granted under the 1996 Plan. Shares issuable under the
1996 Plan may be either treasury shares or authorized but unissued  shares.  The
number of shares available for issuance will be subject to adjustment to prevent
dilution in the event of stock splits,  stock  dividends or other changes in the
capitalization of the Company.

      The 1996 Plan will be administered  by a committee  consisting of not less
than two (2) members of the Board of Directors  who are  "disinterested"  within
the  meaning of Rule  16b-3  promulgated  under the  Exchange  Act and  "outside
directors"  within the meaning of Section 162(m) of the Code (including  persons
who may be deemed outside directors by virtue of any transitional rule which may
be adopted by the Internal Revenue Service implementing such Section). The Board
will  determine  the persons to whom  awards will be granted,  the type of award
and, if applicable,  the number of shares to be covered by the award. During any
calendar  year, no person may be granted under the 1996 Plan awards  aggregating
more than 100,000 shares (which number shall be subject to adjustment to prevent
dilution  in the event of stock  splits,  stock  dividends  or other  changes in
capitalization of the Company).

      Types of Awards

      Stock Options. Options granted under the 1996 Plan may be "incentive stock
options" ("Incentive  Options") within the meaning of Section 422 of the Code or
stock  options which are not incentive  stock options  ("Non-Incentive  Options"
and, collectively with Incentive Options, hereinafter referred to as "Options").
The persons to whom  Options  will be granted,  the number of shares  subject to
each Option granted,  the prices at which Options may be exercised  (which shall
not be less than the fair market  value of shares of Common Stock on the date of
grant), whether an Option will be an Incentive Option or a Non-Incentive Option,
the time or times and the extent to which Options may be exercised and all other
terms and conditions of Options will be determined by the Committee.

      Each  Incentive  Option shall  terminate no later than ten (10) years from
the date of grant,  except as provided  below with respect to Incentive  Options
granted to 10% Stockholders (as hereinafter defined). No Incentive Option may be
granted  at any  time  after  October  2006.  Each  Non-Incentive  Option  shall
terminate not later than fifteen (15) years from the date of grant. The exercise
price at which the shares may be purchased  may not be less than the Fair Market
Value of shares of Common  Stock at the time the  Option is  granted,  except as
provided below with respect to Incentive  Options  granted to 10%  Stockholders.
Options granted to executive  officers may not be exercised at any time prior to
six (6) months after the date of grant.


<PAGE>



      The exercise price of an Incentive  Option granted to a person  possessing
more than 10% of the total  combined  voting power of all shares of stock of the
Company or a parent or subsidiary of the Company ("10% Stockholder") shall in no
event be less than 110% of the Fair  Market  Value of the  shares of the  Common
Stock at the time the  Incentive  Option is  granted.  The term of an  Incentive
Option  granted to a 10%  Stockholder  shall not exceed  five (5) years from the
date of grant.

      The exercise  price of the shares to be purchased  pursuant to each Option
shall be paid (i) in full in cash, (ii) by delivery (i.e.,  surrender) of shares
of the Company's  Common Stock owned by the optionee at the time of the exercise
of the Option,  (iii) in  installments,  payable in cash,  if  permitted  by the
Committee or (iv) any combination of the foregoing.  The stock-for-stock payment
method permits an optionee to deliver one (1) or more shares of previously owned
Common Stock of the Company in  satisfaction of the exercise price of subsequent
Options. The optionee may use the shares obtained on each exercise to purchase a
larger  number  of  shares  on the next  exercise.  (The  foregoing  assumes  an
appreciation in value of previously  acquired shares).  The result of the stock-
for-stock  payment method is that the optionee can generally avoid immediate tax
liability with respect to any appreciation in the value of the stock utilized to
exercise the Option.

      Shares received by an optionee upon exercise of a Non-Incentive Option may
not be sold or otherwise  disposed of for a period  determined by the Board upon
grant of the Option, which period shall be not less than six (6) months nor more
than three (3) years from the date of acquisition of the shares (the "Restricted
Period"),  except that,  during the Restricted Period (i) the optionee may offer
the shares to the Company and the Company may, in its discretion, purchase up to
all the  shares  offered  at the  exercise  price  and  (ii)  if the  optionee's
employment   terminates   during  the  Restricted   Period  (except  in  limited
instances),  the optionee,  upon written  request of the Company,  must offer to
sell the shares to the Company at the  exercise  price within seven (7) business
days. The Restricted  Period shall terminate in the event of a Change in Control
of the  Company  (as  defined),  or at the  discretion  of the Board.  After the
Restricted  Period,  an optionee wishing to sell must first offer such shares to
the Company at the Fair Market Value.

      Limited  Stock  Appreciation  Rights.  The  Committee  is  authorized,  in
connection  with any Option  granted under the 1996 Plan, to grant the holder of
such Option a limited stock appreciation right ("LSAR"), entitling the holder to
receive, within sixty (60) days following a Change in Control, an amount in cash
equal to the difference  between the exercise price of the Option and the market
value of the Common Stock on the  effective  date of the Change in Control.  The
LSAR may be  granted  in tandem  with an Option  or  subsequent  to grant of the
Option.  The LSAR will only be  exercisable  to the extent the related Option is
exercisable and will terminate if and when the Option is exercised.

      Restricted and Deferred  Stock.  An award of restricted  stock or deferred
stock may be  granted  under  the 1996  Plan.  Restricted  stock is  subject  to
restrictions on transferability  and other restrictions as may be imposed by the
Committee at the time of grant. In the event that the holder of restricted stock
ceases to be employed by the Company during the applicable  restrictive  period,
restricted stock that is at the time subject to restrictions  shall be forfeited
and reacquired by the Company.  Except as otherwise provided by the Committee at
the time of grant,  a holder of restricted  stock shall have all the rights of a
stockholder  including,  without limitation,  the right to vote restricted stock
and the right to recover  dividends  thereon.  An award of deferred  stock is an
award that  provides  for the  issuance of stock upon  expiration  of a deferral
period  established  by the  Committee.  Except as otherwise  determined  by the
Committee,  upon  termination of employment of the recipient of the award during
the  applicable  deferral  period,  all  stock  that is at the time  subject  to
deferral  shall be forfeited.  Until such time as the stock which is the subject
of the  award  is  issued,  the  recipient  of the  award  has  no  rights  as a
stockholder.



<PAGE>



      Dividend  Equivalent Awards. A dividend equivalent gives the recipient the
right to receive cash or other  property  equal in value to the  dividends  that
would be paid if the  recipient  held a  specified  number  of  shares of Common
Stock.  A dividend  equivalent  right may be granted as a  component  of another
award or as a free standing award.

      Bonus Shares and other Share Based Awards.  The 1996 Plan  authorizes  the
Committee to grant shares as a bonus, or to grant shares or other awards in lieu
of  obligations  of the Company to pay cash under  other  plans or  compensatory
arrangements,  upon such terms as shall be determined by the Committee. The 1996
Plan also  authorizes  the  Committee to grant other forms of awards based upon,
payable  in,  or  otherwise  related  in  whole  or in part  to,  Common  Stock,
including,  without limitation,  convertible or exchangeable debentures or other
debt securities,  other rights convertible or exchangeable into shares, purchase
rights for shares, awards contingent upon performance of the Company, and awards
valued by  reference  to the book  value of  shares  of  Common  Stock or awards
determined by reference to the value of securities  of, or the  performance  of,
specified subsidiaries.




<PAGE>



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT.


      The following  table sets forth as of June 18, 1997,  certain  information
with respect to the beneficial  ownership of Common Stock and Preferred Stock by
each person or entity known by the Company to be the  beneficial  owner of 5% or
more of such shares, each officer and director of the Company,  and all officers
and directors of the Company as a group:





                          Shares of     Percentage                  Percentage
Name and Address of       Common       (%) of       Shares of      (%) of Total
Beneficial Owner (1)       Stock         Common       Preferred      Combined
                           Owned         Stock        Stock          Vote
Robert Sipper              300,000(2)     7.9           0.0             2.7
Hartley T. Bernstein(3)    300,000(4)     7.9           0.0             2.7
Matthew Harriton           100,000(5)     2.6           0.0             0.9
Mark Butler                300,000(6)     7.9           0.0             2.7
All officers and  directors
as a group (three (3)
persons)                      700,000     18.4          0.0             0.0

(1)   The address of each Stockholder shown above except as otherwise indicated
      is c/o Perry's Majestic Beer, Inc., 38 West 32nd Street, Suite 801,
      New York, New York 10001.

(2)   Includes 100,000 shares of Common Stock underlying an option to purchase 
      100,000 shares of Common Stock of the Company.

(3)   The address of Hartley T. Bernstein is 950 Third Avenue, New York, 
      New York 10022.  Mr. Bernstein is a consultant to the Company and
      partner in the firm of Bernstein & Wasserman, LLP, counsel to the Company.

(4)   Includes 100,000 shares of Common  Stock underlying an option to purchase 
      100,000 shares of Common Stock of the Company.

(5)   Includes 100,000 shares of Common Stock underlying an option to purchase 
      100,000 shares of Common Stock of the Company.

(6)   Includes  100,000 shares of Common Stock  underlying an option to purchase
      100,000  shares of Common  Stock of the Company.  Does not include  50,000
      shares  of  Common  Stock  to be  issued  to Mr.  Butler  in June  1997 in
      connection  with  the  Company's  acquisition  of all of  the  issued  and
      outstanding stock of Orchard Annie, Inc.




<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      On October 26,  1995,  Bev-Tyme,  Inc.  entered into a letter of intent to
acquire  Riverosa  for the  sum of  $250,000.  As  part  of that  understanding,
Bev-Tyme  agreed that  Riverosa or its  successors  would enter into a three (3)
year employment  agreement with Mark Butler at an annual salary of $25,000 year,
subject  to  appropriate  increase  in the  event  Riverosa  (or it  successors)
successfully completed an initial public offering of its securities resulting in
net  proceeds  in excess of  $2,000,000.  The  Employment  Agreement  would also
provide for an annual bonus as well as stock options based upon performance.  In
January 1996,  Bev-Tyme,  Inc. assigned its rights under the letter of intent to
the Company,  which entered into a definitive  agreement  with Riverosa on March
29,  1996,  pursuant to which the  Company  agreed to pay the sum of $250,000 to
acquire Riverosa. As of April 4, 1996, and as amended in November 1996, February
1997,  and March  1997,  the  Company  entered  into a five (5) year  employment
agreement with Mark Butler  pursuant to which Mr. Butler serves as the Company's
Vice  President  of Sales and Chief  Operating  Officer  and was  elected to the
Company's Board of Directors. The employment agreement, as amended, provides for
Mr.  Butler to receive a salary of $25,000  per annum  until the  closing of the
Initial  Public  Offering,  and  thereafter  $50,000 per annum until November 1,
1996,  and  thereafter  $75,000 per annum until March 10, 1997,  and  thereafter
$110,000 per annum.  The  employment  agreement,  as amended,  also provides for
payment of an annual  bonus at the sole  discretion  of the  Company's  Board of
Directors.  In  addition,  on each of March 31, 1998,  and March 31,  1999,  the
Company agreed,  pursuant to the employment agreement,  as amended, to grant Mr.
Butler an option to purchase 100,000 shares of Common Stock  exercisable at fair
market value on the date of issuance.  Further,  the  employment  agreement,  as
amended  provides  that the Company issue to Mr.  Butler  200,000  shares of the
Company's Common Stock on February 11, 1997. Such shares were issued in February
1997. In March 1997, Mr.  Butler's salary was increased to $110,000 per annum in
accordance with his employment  agreement,  as amended.  The Agreement  provides
further  that Mark  Butler,  one of the  principal  shareholders  of Riverosa be
appointed  to the  Company's  board of  directors  on April 1, 1996.  A contract
deposit of $150,000 was paid into escrow upon execution of the agreement and the
balance of $100,000 was paid pursuant to a promissory note bearing interest at a
rate of 12 percent (12%) per year on the closing of the Initial Public Offering.

      Prior to the  acquisition of Riverosa,  Bev-Tyme,  through its subsidiary,
acted as a distributor  of Perry's  Majestic  Beer. In January 1996, the Company
issued an aggregate of 2,500,000 shares of its common stock to seven (7) parties
for total  consideration  of  $50,000.  These  shareholders  are Robert  Sipper,
Hartley  Bernstein,  Matthew  Harriton,  Marketing  Specialities,  Inc.,  Ulster
Investments  and Judith Pace.  Robert  Sipper is a Director and President of the
Company and of Bev-Tyme.  Matthew Harriton is a Director of the Company. Hartley
Bernstein is a consultant  to the Company and a member of Bernstein & Wasserman,
LLP,  counsel to the  Company.  In March 1996,  the  Company  issued to Bev-Tyme
500,000 shares of convertible  Series A Preferred Stock and 7,000,000  shares of
Series B Preferred  Stock for $150,000 and 400,000  shares of Series C Preferred
Stock of  Bev-Tyme.  Each share of  Bev-Tyme  Series C  Preferred  Stock pays an
annual dividend of $.50 per share and is convertible at the option of the holder
into 1.8 shares of Bev-Tyme Common Stock.  The Bev-Tyme Series C Preferred Stock
has the right to vote on all matters  presented to Bev-Tyme  shareholders at the
rate of 1.8 votes per  share and is  redeemable  at a price of $.05 per share so
long as the  closing  bid price of the  Bev-Tyme  Common  Stock has  equaled  or
exceeded $20.00 per share for twenty (20)  consecutive  days. The Company issued
these shares in January 1996 and March 1996


<PAGE>



in order to generate funds to acquire  Riverosa,  produce and market its product
prior to the Initial Public Offering, and pay the expenses of the Initial Public
Offering. Each share of the Company's Class A Preferred Stock issued to Bev-Tyme
is convertible into one (1) share of Common Stock and is entitled to one vote on
all  corporate  matters.  The Class B Preferred  Stock issued to Bev-Tyme is not
convertible.  Each share of Class B  Preferred  Stock is entitled to one vote on
all  corporate  matters.  Each share of the  Bev-Tyme  Series C Preferred  Stock
issued  to the  Company  is  convertible  into 18  shares  of  common  stock and
possesses  one vote on all  corporate  matters.  On April 17,  1997 the  Company
loaned  Bev-Tyme the sum of $100,000  pursuant to the terms of a Promissory Note
issued in connection  with that loan.  Bev-Tyme was required to repay the entire
principal  plus interest on or before April 16, 1998.  The Company  retained the
right in its sole  discretion  to reacquire  7,000,000  shares of the  Company's
Series B Preferred Stock held by Bev-Tyme or to receive payment of the principal
and accrued  interest.  On June 13,  1997,  the Company  exercised  its right to
reacquire the 7,000,000 shares of the Company's Series B Preferred Stock held by
Bev-Tyme in full satisfaction of the Note payable.

      In March,  1996, the Company  borrowed an aggregate of $150,000 from seven
(7) unaffiliated lenders (the "Bridge Lenders"). In exchange for making loans to
the Company,  each Bridge Lender received a promissory note (the "Bridge Note").
Each of the Bridge  Notes bears  interest at the rate of eight  percent (8%) per
annum. The Bridge Notes were paid at the closing of the Company's Initial Public
Offering  including all accrued  interest.  The Bridge  Lenders were granted the
right to receive a total of  3,000,000  Class A  Warrants.  The  Bridge  Lenders
subsequently  waived  their right to receive  the Class A Warrants.  The Company
entered into the bridge financing  transactions  because it required  additional
financing  and no other  sources of financing  were  available to the Company at
that time. The proceeds from the bridge  financing  transaction,  in part,  were
used in the initial $150,000 payment of the acquisition of Riverosa.

      On April 19,  1996,  the Company  made a loan of $75,000 to Bev-Tyme at an
interest  rate of 8% per  annum.  All  principal  and  interest  was  repaid  on
September 9, 1996.

      On July 30, 1996,  the Company  completed its Initial  Public  Offering of
583,335 shares of Common Stock at $6.00 per share,  and the concurrent  offering
of  securities  by certain  selling  securityholders.  The net  proceeds  of the
offering were approximately $2,500,000.

      On September 20, 1996,  the Company  acquired the operating  assets of Old
Marlborough Brewing Company, Inc. ("Old Marlborough"),  a Massachusetts producer
of microbrewed beer and ale. The acquisition  included all rights to produce and
market  Post  Road  Pale  Ale,  a  microbrewed  product  distributed  throughout
Massachusetts.  The  aggregate  purchase  price was $85,513 and the  issuance of
25,000  shares of Common Stock of the Company.  The Company also paid $86,700 to
reacquire  the  distribution  rights for Post Road.  In  addition,  the  Company
entered  into a four (4) year  employment  agreement  with  Austin J.  Moran,  a
principal of Old Marlborough, pursuant to which Mr. Moran serves as a manager of
the Company and receives an annual salary of $50,000 for the first year, $55,000
for the second year, $60,000 for the third year and $65,000 for the fourth year.
The Agreement  provides  further that, as additional  consideration,  on each of
August 31, 1997,  August 31, 1998 and August 31, 1999,  the Company  shall grant
Mr.  Moran  options to purchase  20,000  shares of the  Company's  Common  Stock
exercisable at $6.00 per share, for a period of four (4) years.



<PAGE>



      In October  1996,  Bev-Tyme  sold all of its shares of Class A Convertible
Preferred Stock in the Company to The Skyes Corp. for a total  consideration  of
$250,000.

      On January 1, 1997, the Company  entered into a consulting  agreement with
Hartley T.  Bernstein,  a partner in the firm of  Bernstein  &  Wasserman,  LLP,
counsel to the Company,  pursuant to which Mr.  Bernstein  agreed to provide the
Company with consulting services in connection with acquisitions,  divestitures,
joint ventures and other strategic business initiatives in consideration for the
issuance to Mr.  Bernstein of 200,000 shares of the Company's  Common Stock. The
consulting  agreement was amended on June 4, 1997 to provide for the issuance of
100,000 options to purchase 100,000 shares of common stock exercisable at $0.875
per share in consideration for the extension of the term of the agreement for an
additional one year period.

      In January 1997,  the Company was paid a dividend of 1.31 shares of common
stock for each share of the 400,000 Series C Preferred Stock of Bev-Tyme held by
the Company as of December 27, 1996  (convertible  into 720,000 shares of Common
Stock of Bev-Tyme).

      In March 1997, the Company entered into an agreement to acquire all of the
issued and outstanding stock of Orchard Annie, Inc., a corporation  wholly-owned
and controlled by Mark Butler, the Vice President-Sales, Chief Operating Officer
and a director of the Company.  The aggregate purchase price was $66,000 and the
issuance  of 50,000  shares of Common  Stock of the  Company in June  1997.  The
50,000  shares of Common Stock have not been issued.  Pursuant to the  purchase,
the Company  acquired all rights to produce and market Quigley's  Applesauce,  a
line of premium,  100% natural,  single-served sized apple sauces. The Agreement
further  provided  for the payment to Mr.  Butler of royalty  payments  equal to
$0.50 per case of Quigley's Applesauce for the first 500,000 cases and $0.25 per
case thereafter during the period of fifteen (15) years from the closing date.

      On April 17,  1997,  the Company  loaned to  Bev-Tyme  the sum of $100,000
pursuant to the terms of a Promissory  Note issued in connection with that loan.
Bev-Tyme was required to repay the entire  principal  plus interest on or before
April 16, 1998.  The Company  retained  the right,  in its sole  discretion,  to
reacquire  7,000,000  shares of the Company's  Series B Preferred  Stock held by
Bev-Tyme in full satisfaction of the Note or to receive payment of the principal
plus  accrued  interest.  On June 13,  1997 the Company  exercised  its right to
reacquire the 7,000,000 shares of the Company's Series B Preferred Stock held by
Bev-Tyme in full satisfaction of the Note payable.

      In June 1997,  the  Company  issued an  aggregate  of  500,000  options to
purchase  500,000  shares of Common Stock  exercisable at $0.875 per share for a
period of 10 years. Each of Robert Sipper, the Company's President, Mark Butler,
the Company's Vice President-Sales, Matthew Harriton, a director of the Company,
Hartley T.  Bernstein,  a consultant  to the Company and a member of Bernstein &
Wasserman, LLP, counsel to the Company, and The Falcon Management Company, Inc.,
a consultant to the Company, received 100,000 options.

      On May 23,  1997,  the Company  entered into a  consulting  agreement  The
Falcon Management Company,  Inc. ("Falcon"),  pursuant to which Falcon agreed to
provide the  Company  with  consulting  services in  connection  with  financial
management, accounting controls, inventory management, product costing and other
general consulting as required by the Company in consideration for the


<PAGE>



issuance  to Falcon of an option to  purchase  100,000  shares of the  Company's
Common Stock at an exercise  price of $0.875 per share and a per diem payment of
$300.

General

      The Company  believes that material  affiliated  transactions  between the
Company and its directors,  officers,  principal  shareholders or any affiliates
thereof  have  been and will be in the  future on terms no less  favorable  than
could be obtained from unaffiliated third parties.




<PAGE>



ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K

Item  a.          EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Financial Statements.

      The following financial statements are included in Part II, Item 7:

Index to Financial Statements

Report of Independent Certified Public Accountants                F-1

Balance Sheet as of March 31, 1997                                F-2 - F-3

Statement of Operations for the year ended
 March 31, 1997 [None for March 31, 1996]                         F- 4

Statement of Stockholders' Equity for the years
  ended March 31, 1997 and 1996                                   F-5

Statements  of Cash Flows for the year ended  March 31,  1997 and for the period
from inception [December 1995] to March 31, 1996 F-6 -F-7

Notes to financial statements                                     F-8 - F-15

(a) (2Exhibits

      A list and  description  of exhibits  filed as part of this Form 10-KSB is
provided in the attached Exhibit Index.

Item 27.    Exhibits.

1.01*       Form of Underwriting Agreement.

1.02*       Form of Selected Dealers Agreement.

3.01*       Certificate of Incorporation of the Company.

3.02*       Amendment of Certificate of Incorporation.

3.03*       By-Laws of the Company.

3.04*       Form of Certificate of Designation of Series A Preferred Stock.

3.05*       Form of Certificate of Designation of Series B Preferred Stock.

4.01*       Specimen Certificate for shares of Common Stock.



<PAGE>



4.02*       Specimen Certificate for Class A Redeemable Common Stock
            Purchase Warrant.

4.03*       Form of Warrant Agreement by and among the Company and
            American Stock Transfer & Trust Company.

4.04*       Form of Underwriter's Unit Purchase Option.

10.01*      Bridge Loan Agreements and Related Promissory Notes.

10.02*      1996 Stock Plan.

10.03*      agreeement by and between the Company and Riverosa dated 
            March 31,1996.

10.04*      Form of Financial Consulting Agreement by and between the Company 
            and VTR Capital, Inc.

10.05*      Agreement by and between the Company and Frankenmuth Brewery.

10.06*      Agreement by and between the Company and Hoboken Brewing Company
            dated July 15, 1996.

10.07*      Employment Agreement by and between the Company and Robert J. Sipper
            dated April 4, 1996.

10.08*     Employment Agreement by and between the Company and Mark Butler dated
              April 4, 1996.

10.09       Asset Purchase Agreement by and between the Company and Old
            Marlborough Brewing Company, Inc. dated September 20, 1996.

10.10       Consulting Agreement by and between the Company and Hartley T.
            Bernstein dated January 1, 1997.

10.11       Stock Purchase Agreement by and between the Company and 
            Mark Butler dated  March 15 , 1997.

10.12       Amendment No. 1 to Employment Agreement by and between the Company
            and Robert J. Sipper dated February 3, 1997.

10.13       Amendment No. 1 to Employment Agreement by and between the
            Company and Mark Butler dated November 1, 1996.

10.14       Amendment No. 2 to Employment Agreement by and between the Company
            and Mark Butler dated February 3, 1997.

10.15       Amendment  No. 3 to Employment Agreement by and between the 
            Company and Mark Butler dated March 10, 1997.



<PAGE>



10.16       Employment Agreement by and between the Company and A.J. Moran dated
            September 17, 1996.

10.17       Promissory Note made by Bev-Tyme, Inc. dated April 17, 1997.

10.18       Consulting Agreement by and between the Company and The Falcon 
            Management Company, Inc. dated May 23, 1997.

10.19       Amendment to Consulting Agreement by and between the Company and
            Hartley T. Bernstein dated June 4, 1997.

*     Incorporated by reference to Registrant's Registration Statement on
      Form SB-2, and amendments thereto,
      Registration No. 333-3458 declared effective on July 30, 1996.

(b)   Reports on Form 8-K.

            None.


<PAGE>
                    SIGNATURES

   In accordance  with Section 13 or 15(d) of the Exchange  Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
executed on this 27 day of June, 1997.

                                                  PERRY'S MAJESTIC BEER, INC.


                             By:/s/Robert J. Sipper
                              Robert J. Sipper
                              President, Chief Executive Officer,
                              Chief Financial Officer and Chief
                              Principal Accounting Officer


   In  accordance  with the  Exchange  Act,  this  report has been signed by the
following persons on behalf of the registrant in the capacities and on the dates
indicated

Signature                       Title                       Date
                                                               

/s/Robert J. Sipper             Chief Executive Officer,    June 27, 1997
Robert J. Sipper                Chief Financial Officer,
                                Principal Accounting Officer
                                and Director


/s/Mark Butler                  Vice President - Sales,     June 27, 1997
----------------------------
Mark Butler                     Secretary and Director


 /s/Matthew Harriton            Director                    June 27, 1997
Matthew Harriton


                                         7


                            ASSET PURCHASE AGREEMENT


     ASSET  PURCHASE  AGREEMENT,  dated  September  20,  1996 by and between Old
Marlborough Brewing Company,  Inc., a Massachusetts  corporation (the "Seller"),
and Perry's Majestic Beer, Inc. a Delaware corporation (the "Buyer").

                               W I T N E S E T H :

     WHEREAS, Seller is engaged in the business among other things, of 
     manufacturing, marketing and distributing beer; and

     WHEREAS,  the  Seller  wishes  to sell,  and the Buyer  wishes to  purchase
certain of the assets from Seller.

     NOW, THEREFORE,  in consideration of the mutual terms, conditions and other
agreements set forth herein, the Seller and the Buyer hereby agree as follows:

                                    ARTICLE I

                        PURCHASE OF THE PURCHASED ASSETS;
                       PURCHASE PRICE; CLOSING ADJUSTMENTS


     1.1 Purchase of the Assets.  Subject to the terms and  conditions set forth
in this Agreement, the Seller agrees that, on the Closing Date, the Seller shall
sell, transfer,  assign, convey and deliver to the Buyer, and Buyer agrees that,
on the Closing Date,  Buyer shall purchase,  acquire and accept from the Seller,
those assets  owned,  used and held by the Seller,  as set forth on Schedule 1.1
(collectively, the "Assets"), free and clear of all Liens.

     1.2  No Assumed Liabilities.  The Buyer shall not assume nor be responsible
for any liabilities or obligations of the Seller or any of its Affiliates
(the "Non-Assumed Liabilities").

     1.3 Purchase Price for the Assets. In consideration  for the Assets,  Buyer
shall (i) pay to the Seller  $50,000  (the  "Purchase  Price")  at  Closing  (as
defined  herein);  (ii) issue to Seller  25,000  shares of Common Stock of Buyer
(the  "Shares")  and (iii)  enter into an  employment  agreement  with Austin J.
Moran, in substantially  the form annexed hereto as Exhibit 1.3 (the "Employment
Agreement").

     1.4 Limitations on Assignment;  Further  Assurance.  To the extent that the
assignment  of any  contracts to be assigned to the Buyer,  as provided  herein,
shall require the consent of another party  thereto,  this  Agreement  shall not
constitute  an  agreement to assign the same if an  attempted  assignment  would
constitute a breach thereof; provided,  however, that the Assets are transferred
hereunder  subject to the Liens  disclosed  on  Schedule  2.2(a).  To the extent
required,  the Seller agrees that it will use all  reasonable  efforts to obtain
the written  consent of all necessary  parties to the assignment of the Buyer of
all assigned  contracts.  If any such consent is not obtained,  the Seller shall
use all reasonable efforts to obtain the same and will cooperate with the Buyer,
as appropriate,  in any reasonable  arrangement designed by the Buyer to provide
to the Buyer, as appropriate, the benefits thereunder and the Buyer shall assume
all correlative obligations to effectuate such arrangement.


<PAGE>



                                   ARTICLE II

                                     CLOSING

     2.1 The Closing.  (a) The consummation of the transactions  contemplated by
this Agreement (the "Closing") shall be simultaneous  with the execution of this
Agreement at the offices of Bernstein & Wasserman,  LLP, 950 Third  Avenue,  New
York, NY 10022.

     (b) At the  Closing,  the Seller  shall  execute and deliver or cause to be
executed and delivered to the Buyer, all documents and instruments  necessary to
transfer to the Buyer, all of the right, title and interest of the Seller in and
to the Assets, including, without limitation:

          (i)  the Assignment Agreement in the form annexed hereto as
               Exhibit 2.1(i), signed by the Seller;

          (ii) documents reflecting assignment of all patents, licenses and
                trademarks included  among the purchased Assets;

         (iii) the Bill of Sale and Certificates of Title, as applicable,
                signed by the Seller; and

     (c)  At the Closing, the Buyer shall:

               execute and deliver to the Seller the Assignment Agreement; and

              (deliver to the Seller the (a) Purchase Price, (b) the Shares and 
              (c) the Employment Agreement.

     2.2  Additional Actions to be Taken on the Closing Date.

     (a) Liens/Consents. Except as provided on Schedule 2.2(a), the Seller shall
have  satisfied  and  discharged  all Liens on the Assets and provided the Buyer
with  evidence  of such  satisfaction  and  discharge  as well as all  necessary
consents  to  transfer  or assign  the  Assets to Buyer,  in form and  substance
satisfactory to the Buyer.

     (b) Consents.  The Buyer shall have received  consents to the  transactions
contemplated by this Agreement  signed by all of the  shareholders of Seller and
its Board of Directors.

     (c) Bulk  Sales  Act.  In the  event  that it is  determined  by a court of
competent  jurisdiction  that  Article  6 of  the  Uniform  Commercial  Code  is
applicable to this transaction, Seller agrees to indemnify Buyer from any Losses
incurred by Buyer arising out of or resulting  from the failure of the Seller to
comply with Article 6 of the Uniform Commercial Code of Massachusetts.

     (d) Taxes.  Except as provided on Schedule 2.2(a), all taxes relating to or
affecting  the Seller shall be paid in full,  or reserved for, as of the Closing
Date.

                                        2

<PAGE>




                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                                 OF THE SELLER

 The Seller represents and warrants to the Buyer as follows:

     3.1 Organization  and  Qualification.  The Seller is a corporation  validly
existing and in good standing under the laws of the State of  Massachusetts  and
has all requisite  corporate  power and authority to (a) own,  lease and operate
its  properties  and assets as they are now owned,  leased and  operated and (b)
carry  on its  business  as  now  presently  conducted  and  as  proposed  to be
conducted.  The Seller is duly qualified to do business in each  jurisdiction in
which  the  nature  of its  business  or  properties  makes  such  qualification
necessary.

     3.2 Validity  and  Execution  of  Agreement.  The Seller has the full legal
right,  capacity and power and all  requisite  corporate  authority and approval
required  to enter  into,  execute  and  deliver  this  Agreement  and any other
agreement  or  instrument   contemplated   hereby,  and  to  perform  fully  its
obligations  hereunder  and  thereunder.  The  shareholders  of Seller have each
approved the  transactions  contemplated  pursuant to this Agreement and each of
the other agreements required to be entered into pursuant hereto by Seller. This
Agreement and such other  agreements and instruments have been duly executed and
delivered by Seller and each  constitutes  the valid and binding  obligation  of
Seller enforceable against it in accordance with its terms.

     3.3 No Conflict.  Neither the execution and delivery of this  Agreement nor
the  performance  by the Seller of the  transactions  contemplated  hereby  will
violate  or  conflict  with  (a) any of the  provisions  of its  Certificate  of
Incorporation or By-Laws or other  organizational  documents of the Seller;  (b)
except as  provided  on  Schedule  2.2(a) or result in the  acceleration  of, or
entitle  any  party  to  accelerate  the  maturity  or the  cancellation  of the
performance of any obligation  under, or result in the creation or imposition of
any Lien in or upon the Assets or constitute a default (or an event which might,
with the passage of time or the giving of notice, or both, constitute a default)
under  any  contract,  (c) any  order,  judgment,  regulation  or  ruling of any
governmental  or regulatory  body to which the Seller is a party or by which any
of its property or assets may be bound or affected or with any  provision of any
law,  rule,  regulation,  order,  judgment,  or  ruling of any  governmental  or
regulatory body applicable to the Seller.

     3.4  Litigation.  Except  as  set  forth  on  Schedule  3.4,  there  are no
outstanding orders, judgments, injunctions, investigations, awards or decrees of
any court,  governmental or regulatory body or arbitration tribunal by which the
Seller, or any of its securities,  assets, properties or business are bound, and
which would adversely affect the Assets.  There are no actions,  suits,  claims,
investigations, legal, administrative or arbitral proceedings pending or, to the
best knowledge of the Seller,  threatened (whether or not the defense thereof or
liabilities  in respect  thereof are covered by insurance)  against or affecting
the Seller,  or any of its assets or properties,  that,  individually  or in the
aggregate,  could, if determined adversely to the Seller, reasonably be expected
to have a material  adverse effect on the Assets,  nor, to the best knowledge of
the Seller,  are there any facts which could reasonably be expected to give rise
to any such action,  suit,  claim,  investigation  or legal,  administrative  or
arbitral proceeding.

                                        3

<PAGE>



     3.5 The Assets.  Except as noted on Schedules 1.2, the Seller owns outright
and has good  and  marketable  title to all of the  Assets  (both  tangible  and
intangible  set forth on  Schedules  1.2),  free and clear of any lien,  pledge,
hypothecation,  mortgage,  security interest claim, lease, charge, option, right
of first refusal,  easement,  servitude or other encumbrance (the "Liens").  The
Assignment  Agreement and such other  conveyancing  documents as shall have been
executed and delivered to the Buyer will convey good and marketable title to the
Assets, free and clear of any Liens.

     3.6 Intangible Property.  Schedule 3.6 sets forth all patents,  trademarks,
service marks, trade names, copyrights,  logos and the like and franchises,  all
applications for any of the foregoing,  and all permits,  grants and licenses or
other rights held or owned by, or running to or from the Seller, relating to the
Assets (collectively,  the "Intangible  Property"),  true and complete copies of
which have been delivered or made available to the Buyer.  All of the Intangible
Property is included  among the Assets.  To the best of Seller's  knowledge,  no
patent,  invention,  trademark,  service  mark or trade name of any other Person
infringes upon, or is infringed upon by, any of the Intangible  Property and the
Seller has not received any notice of any claim of  infringement,  either within
the last twelve months or which is material, of any other Person with respect to
any of the  Intangible  Property  or any  process  or  confidential  information
relating thereto, and the Seller does not know, of any basis for any such charge
or claim. All of the Intangible  Property is valid and in good standing.  Seller
has a right to sell all of the Intangible  Property to Buyer and the sale of the
Intangible Property shall not operate in any way to adversely affect any patent,
license,  trademark,  tradename,  invention or service mark  included  among the
Intangible  Property.  The  Seller  has  not  received  any  notice  or  inquiry
indicating, or claiming, that the manufacture,  sale or use of any of the assets
conveyed  herewith  infringes  upon the  patent or other  intellectual  property
rights of any other Person. Except for such consents as may be required by those
contracts  set forth in Schedule  3.12,  no approval or consent of any person is
needed so that the  interest  of the  Seller in the  Intangible  Property  shall
continue to be in full force and effect and  enforceable by the Buyer  following
the consummation of the transactions contemplated hereby.

     3.7 Inventory.  The finished  products  inventory of the Seller relating to
Assets to be conveyed  herein  (the  "Inventory")  is or was,  prior to the sale
thereof, in good and merchantable  condition and suitable and usable or saleable
in the ordinary course of business, without mark-down or other discount, for the
purposes for which  intended.  The Seller is not aware of any  material  adverse
condition affecting the supply of materials available to the Seller.

     3.8  Undisclosed  Liabilities.  Except as set forth on  Schedule  1.2,  the
Seller does not have any, direct or indirect,  indebtedness,  liability,  claim,
loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate
or  inchoate,  liquidated  or  unliquidated,   secured  or  unsecured,  accrued,
absolute,   contingent  or  otherwise  which  does  or  may  affect  the  Assets
(collectively, the "Liabilities").

     3.9 Tax Matters.  Except as disclosed in Schedule  1.2, (a) all Tax Returns
required to be filed with respect to the Seller  relating to the  Division  have
been duly filed and were in all material respects true, complete and correct and
filed on a timely  basis,  (b) the Seller  has paid all Taxes  that are due,  or
claimed  or  asserted  by  the  IRS  or  any  other  taxing  authority  ("Taxing
Authority")  to be due from  the  Seller  for the  periods  covered  by such Tax
Returns or Seller has duly and fully provided reserves adequate to pay all Taxes
in the Financials, (c) the Seller has complied in all material respects with all
applicable laws relating to withholding of Taxes  (including  withholding  Taxes
pursuant to Sections

                                        4

<PAGE>




1441 and 1442 of the Internal  Revenue  Service ("IRS") Code of 1986, as amended
(the "Code") and similar  provisions  under any other  applicable  laws) and the
payment thereof over to the Taxing Authorities (d) the Income Tax returns of the
Seller has not been audited or examined by any the Taxing  Authority  (including
the IRS) for any period for which the applicable  statute of limitations  period
has not yet expired and no statute of  limitations  for any such period has been
extended.

     3.10 Contracts and Other  Agreements.  Schedule 3.12 sets forth all written
agreements  (and, to the best knowledge of the Seller,  any oral agreements) and
arrangements to which (i) the Seller is a party and which affect the Assets,  or
(ii) by or to which any of the Assets are bound or  subject  (collectively,  the
"Assigned Agreements").

     3.11 Interest with Affiliates.  No Affiliate of the Seller has any interest
           in any of the Assets.

     3.12 Employees.  The Seller is not a party to, and there does not otherwise
exist,  any agreements  with any labor  organization,  collective  bargaining or
similar  agreement  with respect to employees of the Seller,  which would affect
the Division or the Assets. The Seller is in compliance in all material respects
with  its  obligations  under  all  Federal,   state,  and  local  statutes  and
ordinances,   executive  orders,   regulations  and  common  law  governing  its
employment practices with respect to the Seller.

     3.13  Environmental  Matters.  The  Seller  is  not  in  violation  of,  or
delinquent in respect to, any  Environmental  Law which violation or delinquency
would have a Material  Adverse  Effect and the Seller has  obtained all permits,
licenses  and  other  authorizations  required  under  the  Environmental  Laws.
Schedule  3.15  includes  a  list  of  all  such  permits,  licenses  and  other
authorizations.

     3.14 Licenses, Permits and Government Approvals.  Seller has no knowledge 
of any requirement to maintain any governmental permits, licenses, registrations
 and other governmental consents (federal, state and local) with respect to
 the Assets.

     3.15 Compliance with Laws.  Seller has no knowledge of any requirement that
Seller comply with any applicable federal, state and local laws, regulations and
ordinances or any requirement of any  governmental or regulatory  body, court or
arbitrator  affecting  the Assets the  failure to comply with which could have a
material  adverse  effect  the  Assets.  Neither  the  Seller  nor  any  of  its
representatives,  agents, employees or Affiliates has made or agreed to make any
payment to any Person which would be unlawful.  Seller has obtained all required
federal and state regulatory approvals to permit the manufacture and sale of the
Products. Seller has obtained all requisite approvals from all federal and state
regulatory authorities,  including,  but not limited to the United States Bureau
of Alcohol,  Tobacco and  Firearms  ("ATF"),  and all  appropriate  state liquor
authorities,  for the Products and has not been  notified by any such  authority
that it is in violation of any rules, regulations or other laws relating to such
approval.

                                        5

<PAGE>



     3.16  Products.   Except  as  disclosed  on  Schedule  3.16  there  are  no
statements,  citations or decisions by any  governmental or regulatory body that
any product ("Product")  manufactured,  marketed,  distributed,  sold, leased or
serviced that would  otherwise be included  among the Assets is  defective,  has
been sold without  government  approval or fails to meet in any material respect
any standards  promulgated by any such  governmental or regulatory  body.  There
have been no recalls  ordered by any such  governmental  or regulatory body with
respect to any  Product.  To the best of  Seller's  knowledge,  there is no fact
relating  to any  Product  that may  impose  upon the  Seller (or the Buyer upon
consummation  of the  transactions  contemplated  hereby) a duty to  recall  any
Product or a duty to warn customers of a defect in any Product.

     3.17  Shareholders  of Seller.  Except as set forth in  Schedule  3.17,  no
shareholder,  officer,  director or employee of Seller or any  Affiliate  of any
such persons is engaged,  directly or indirectly, in any business which competes
with, or after the Closing will compete with, the Assets.

     3.18 Disclosure. To the best of Seller's knowledge, neither this Agreement,
nor any Schedule or Exhibit to this Agreement  contains an untrue statement of a
material  fact or  omits a  material  fact  necessary  to  make  the  statements
contained  herein  or  therein  not  misleading.   All  statements,   documents,
certificates  or other items  prepared or supplied by the Seller with respect to
the transactions  contemplated hereby are true, correct and complete and contain
no untrue statement of a material fact or omit a material fact necessary to make
the statements contained therein not misleading.

     3.19  Survival.  All of the  representations  and  warranties of the Seller
contained  herein  shall  survive the Closing Date until the date upon which the
liability to which any claim relating to any such  representation or warranty is
barred by any applicable statutes of limitations.


                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants to the Seller as follows:

     4.1  Organization  and  Qualification.  The Buyer is a corporation  validly
existing and in good standing  under the laws of the State of Delaware,  and has
all requisite  corporate  power and authority to (a) own,  lease and operate its
properties  and assets as they are now owned,  leased and operated and (b) carry
on its business as now presently  conducted and is duly qualified to do business
in each  jurisdiction  in which the nature of its business or  properties  makes
such qualification necessary.

     4.2  Validity  and  Execution  of  Agreement.  The Buyer has the full legal
right,  capacity and power and all  requisite  corporate  authority and approval
required  to enter  into,  execute  and  deliver  this  Agreement  and any other
agreement  or  instrument   contemplated   hereby,  and  to  perform  fully  its
obligations  hereunder and  thereunder.  The board of directors of the Buyer has
approved the  transactions  contemplated by this Agreement and each of the other
agreements  required  to be entered  into  pursuant  hereto by the  Buyer.  This
Agreement and such other  agreements and instruments have been duly executed and
delivered by the Buyer and each constitutes the valid and binding  obligation of
the Buyer enforceable against it in accordance with its terms.

                                        6

<PAGE>




     4.3 No Conflict.  Neither the execution and delivery of this  Agreement nor
the performance by the Buyer of the  transactions  contemplated  herein will (a)
violate  or  conflict  with  any  of  the  provisions  of  its   Certificate  of
Incorporation or By-Laws or other  organizational  documents;  or (b) violate or
conflict  with any  provision of any law,  rule,  regulation,  order,  judgment,
decree  or  ruling  of any  court or  federal,  state or local  Governmental  or
Regulatory Body applicable to the Buyer.

     4.4  Survival.  All of the  representations  and  warranties  of the  Buyer
contained  herein  shall  survive the Closing Date until the date upon which the
liability to which any claim relating to any such  representation or warranty is
barred by any applicable statutes of limitations.


                                    ARTICLE V

                              CONDITIONS TO CLOSING

     5.1  At Closing, there shall not be:

     (a) Any change in the condition,  financial or otherwise, of the Assets, of
Seller,  other than  changes in the ordinary  course of business  which have not
been either in any case or in the aggregate materially adverse;

          (b)  Any act outside the ordinary course of business which materially 
adversely affects the Assets;

          (c)  Any  damage,  destruction  or  loss  of any of  the  Assets,  not
adequately compensated by insurance, materially adversely affecting the business
or prospects of Seller;

          (d) Any waiver by Seller of any right of substantial  value,  material
default under the terms of any contract,  agreement or other instrument to which
it is a party or by which it is bound;

          (e) Any sale,  lease,  transfer,  or other  disposition or mortgage or
pledge,  of any Asset,  nor shall there be imposed or suffered to be imposed any
lien,  claim,  charge,  security  interest or other  restriction  of any kind or
nature whatsoever on any Asset, except as set forth on Schedule 2.2(a).

     5.2  Except as set forth on Schedule 2.2(a) hereto:

     (a) There are no actions, suits or proceedings pending,  threatened against
or affecting  Seller which might  result in any material  adverse  change in the
licenses, business, operations, properties or assets or the condition, financial
or  otherwise,  of  Seller,  or in  any  way  involving  this  Agreement  or the
transactions contemplated hereby;

     (b)  Seller does not know of, and has no reasonable grounds to know of, any
basis for any such action or proceeding;






                                        7

<PAGE>



     (c) There is no order or decree of any court or agency  directed  to Seller
arising out of any judicial, or quasi-judicial, proceeding before any such court
or agency with respect to Seller being in default;

     (d)  Seller  has  complied  in  all  material   respects   with  all  laws,
regulations,  rules,  ordinances,  decrees  or orders of any  court,  government
(federal, state or local),  department,  commission,  board, agency, official or
other regulatory, administrative or governmental authority.

                                   ARTICLE VI

                                 INDEMNIFICATION

     6.1  Indemnification.  (a) The Seller agrees to indemnify,  defend and hold
harmless  the  Buyer  and  its  respective   directors,   officers,   employees,
shareholders,  and any  Affiliates of the  foregoing,  and their  successors and
assigns  (collectively,  the "Buyer Group") from and against any and all losses,
liabilities  (including punitive or exemplary damages and fines or penalties and
any interest thereon),  expenses (including reasonable fees and disbursements of
counsel and  expenses of  investigation  and  defense),  claims,  Liens or other
obligations of any nature  whatsoever  (hereinafter  individually,  a "Loss" and
collectively,  "Losses")  suffered or incurred by the Buyer Group,  which, arise
out of,  result  from or relate to, (i) or any breach of any  representation  or
warranty  of the  Seller  contained  in  Article  III and (ii) any breach of any
covenant or agreement of the Seller  contained in this Agreement or in any other
document contemplated by this Agreement.

     (b) The Buyer agrees to indemnify,  defend and hold harmless the Seller and
its directors,  officers, employees, and shareholders, and any Affiliates of the
foregoing,  and their successors and assigns from and against any and all Losses
suffered or incurred by them which, directly or indirectly, arise out of, result
from or relate to (i) any inaccuracy in or any breach of any  representation  or
warranty  of the  Buyer  contained  in  Article  IV and (ii) any  breach  of any
covenant or agreement of the Buyer  contained in this  Agreement or in any other
document contemplated by this Agreement.

     6.2 Method of Asserting Claims. The party making a claim under this Article
VI is referred to as the  "Indemnified  Party" and the party  against  whom such
claims are asserted  under this  Article VI is referred to as the  "Indemnifying
Party".  All claims by any  Indemnified  Party  under  this  Article VI shall be
asserted and resolved in accordance  with the terms and  provisions set forth in
Sections 5.2(a)-(c) below.

     (a) In the event that any claim or demand for which an  Indemnifying  Party
would be liable to an Indemnified  Party hereunder is asserted against or sought
to be collected from such Indemnified  Party by a third party,  said Indemnified
Party shall with reasonable  promptness notify in writing the Indemnifying Party
of such claim or demand,  specifying  the nature of the specific  basis for such
claim or demand,  and the amount or the estimated  amount  thereof to the extent
then  feasible  (which  estimate  shall not be conclusive of the final amount of
such claim and demand; any such notice,  together with any notice given pursuant
to Section  5.2(b) hereof,  collectively  being the "Claim  Notice");  provided,
however,  that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the  Indemnified  Party  except to the extent the rights of the
Indemnifying Party is actually prejudiced.  The Indemnifying Party, upon request
of the  Indemnified  Party,  shall  retain  counsel  (who  shall  be  reasonably
acceptable to the  Indemnified  Party) to represent the Indemnified  Party,  and
shall  pay the fees and  disbursements  of such  counsel  with  regard  thereto,
provided,  further, that any Indemnified Party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party designating
such counsel, to retain counsel, whose fees and expenses shall be at the expense
of the Indemnifying Party, to file any motion, answer or other pleading and

                                        8

<PAGE>



take such other action which it reasonably  shall deem  necessary to protect its
interests  or those  of the  Indemnifying  Party  until  the  date on which  the
Indemnified  Party receives such notice from the Indemnifying  Party.  After the
Indemnifying  Party shall retain such counsel,  the Indemnified Party shall have
the right to retain its own  counsel,  but the fees and expenses of such counsel
shall be at the expense of such  Indemnified  Party unless (i) the  Indemnifying
Party and the  Indemnified  Party shall have mutually agreed to the retention of
such counsel or (ii) the named  parties of any such  proceeding  (including  any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and  representation  of both parties by the same counsel would be  inappropriate
due to actual or potential  differing  interests  between them. The Indemnifying
Party shall not, in connection  with any  proceedings or related  proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the  Indemnified  Party  (except to the extent  the  Indemnified  Party
retained  counsel to protect its (or the  Indemnifying  Party's) rights prior to
the  selection of counsel by the  Indemnifying  Party).  The  Indemnified  Party
agrees to cooperate  with the  Indemnifying  Party and its counsel in contesting
any claim or demand which the Indemnifying Party defends. No claim or demand may
be  settled  by an  Indemnifying  Party or,  where  permitted  pursuant  to this
Agreement,  by an Indemnified Party without the consent of the Indemnified Party
in the first case or the consent of the  Indemnifying  Party in the second case,
which consent shall not be unreasonably  withheld,  unless such settlement shall
be accompanied by a complete release of the Indemnified  Party in the first case
or the  Indemnifying  Party in the second case, or, where permitted  pursuant to
this Agreement,  by an Indemnified  Party without the consent of the Indemnified
Party in the first case or the consent of the  Indemnifying  Party in the second
case.

     (b) In the event any  Indemnified  Party  shall  have a claim  against  any
Indemnifying  Party  hereunder  which does not  involve a claim or demand  being
asserted  against  or  sought  to be  collected  from it by a third  party,  the
Indemnified  Party shall send a Claim  Notice with  respect to such claim to the
Indemnifying  Party. If the Indemnifying  Party does not dispute such claim, the
amount of such claim shall be paid to the  Indemnified  Party within twenty (20)
days of receipt of the Claim Notice.

     (c) So long as any right to indemnification exists pursuant to this Article
VI, the  affected  parties  each agree to retain all books,  records,  accounts,
instruments  and  documents  reasonably  related  to the Claim  Notice.  In each
instance,  the Indemnified Party shall have the right to be kept informed by the
Indemnifying Party and its legal counsel with respect to all significant matters
relating to any legal  proceedings.  Any information or documents made available
to any party hereunder,  which  information is designated as confidential by the
party providing such information and which is not otherwise  generally available
to the public,  or which  information  is not otherwise  lawfully  obtained from
third  parties  or not  already  within the  knowledge  of the party to whom the
information  is  provided  (unless  otherwise  covered  by  the  confidentiality
provisions of any other agreement among the parties hereto, or any of them), and
except as may be required by applicable  law or requested by third party lenders
to such  party,  shall not be  disclosed  to any third  Person  (except  for the
representatives of the party being provided with the information, in which event
the party being provided with the information shall request its  representatives
not to disclose any such information which it otherwise required hereunder to be
kept confidential).

                                        9

<PAGE>



                                   ARTICLE VII

                      POST-CLOSING COVENANTS OF THE PARTIES

     7.1 Tax Matters.  With respect to the Assets,  the Seller shall  provide to
Buyer on demand such  information  as shall  reasonably be requested by Buyer to
enable Buyer to prepare and file timely Buyer's federal,  state and local income
Tax Returns and all forms, schedules and attachments related thereto.

     7.2  Non-Competition.  The Seller and Austin J. Moran and their  respective
Affiliates  acknowledge  that the  Seller's  ownership of the Assets has brought
Seller in close contact with certain  confidential affairs not readily available
to the public,  and (c) the Buyer  would not  purchase  the Assets,  but for the
agreements  and  covenants  of Seller and Austin J.  Moran,  who agree that they
shall not,  directly or  indirectly,  for a period of one (1) year following the
Closing  Date,  (i) engage in the  wholesale or retail sale of liquor within the
State of  Massachusetts,  (ii) become  affiliated  in business  with any person,
having such a business as a partner,  shareholder,  principal,  agent,  trustee,
consultant,  lender  or in  any  other  relationship  or  capacity,  except  for
investments  by the Seller in securities  traded on a national stock exchange or
the  over-the-counter  market  which do not exceed five (5) percent of the total
outstanding  shares of such  securities  or (iii)  take any action  outside  the
ordinary  course of business  which could have a material  adverse effect on the
Assets of the Buyer  following the Closing Date.  If any court  determines  that
this covenant,  or any part thereof, is unenforceable because of the duration of
such provision or the area covered  thereby,  such court shall have the power to
reduce the duration or area of such  provision  and, in its reduced  form,  such
provision shall then be enforceable and shall be enforced.

     7.3  Confidentiality.  From and after the Closing Date,  the Seller and its
shareholders  shall not disclose or furnish to any other  Person,  except to the
extent required by law or by order of any court or governmental  agency, (a) any
information  which  is not  generally  known  in the  industry  relating  to any
license, patent, process,  technique, or procedure transferred to Buyer pursuant
hereto or used in connection with the Assets,  (b) any information  which is not
generally known in the industry  relating to the operations or financial  status
of the Buyer which is not specifically a matter of public record,  (c) any trade
secrets in connection with the Assets.

     7.4  Infringement  and  Litigation.  In the event of acts by a third  party
which the Buyer believes  constitutes an  infringement  of any Patent that is or
may be issued on the  Inventions,  and in the event  Buyer  decides  to bring an
action  relating  thereto,  the  Seller  at the cost of the  Buyer  shall  fully
cooperate and shall provide reasonable  assistance as requested,  with the Buyer
in connection with the prosecution of such suit, including participating therein
as a plaintiff if so requested by the Buyer.


                                       10

<PAGE>



                                  ARTICLE VIII

                                  MISCELLANEOUS

     8.1 Sales and Transfer  Taxes.  All required  filings under any  applicable
Federal,  state,  foreign  or local  sales  tax,  stamp tax or  similar  laws or
regulations  shall be made in a timely  manner by the Buyer and, at the Closing,
Buyer shall  deliver to Seller  either (a) proof of the payment of any sales tax
assessed  pursuant to such filings or (b) statements of no sales tax due, as the
case may be. The parties agree that any and all  transfer,  sales or stamp taxes
and any similar taxes or  assessments  imposed on the transfer of the Assets and
the Assumed  Liabilities in accordance with the terms of this Agreement shall be
borne equally by the Buyer and Seller.

     8.2  Post-Closing  Further  Assurances.  At any time and from  time to time
after the Closing  Date at the  request of either  party,  and  without  further
consideration,  the other party will execute and deliver, or cause the execution
and  delivery  of,  such  other  instruments  of  sale,  transfer,   conveyance,
assignment and  confirmation  and take or cause to be taken such other action as
the party  requesting  the same may  reasonably  deem  necessary or desirable in
order to transfer,  convey and assign more  effectively to the requesting  party
all of the property and rights intended to be conveyed to such party pursuant to
the provisions of this Agreement.

     8.3  Notices.  All  notices,  requests,  demands  and other  communications
required or  permitted  to be given  hereunder  shall be in writing and shall be
given personally, telegraphed, telefaxed, sent by facsimile transmission or sent
by prepaid air courier, same day or overnight messenger or certified, registered
or express mail,  postage prepaid.  Any such notice shall be deemed to have been
given (a) when received, if delivered in person,  telegraphed,  telexed, sent by
facsimile  transmission  and confirmed in writing within three (3) Business Days
thereafter  or sent by prepaid air courier,  same day or overnight  messenger or
(b)  three  (3)  Business  Days  following  the  mailing  thereof,  if mailed by
certified first class mail, postage prepaid,  return receipt  requested,  in any
such case as follows (or to such other  address or addresses as a party may have
advised the other in the manner provided in this Section 8.3):

          If to Seller, to:

          Old Marlborough Brewing Company

          Attn: Austin J. Moran
          Telephone Number (508) 465-5248
          Telecopier Number (508) 465-5248

          with copies to:

          Charles H. Cremens & Assoc.
          19 Beacon Street
          Boston, MA  02108
          Telephone Number (617) 523-8326
          Telecopier Number (617) 523-5226

          If to Buyer to:

          Perry's Majestic Beer, Inc.
          134 Morgan Avenue

                                       11

<PAGE>



          Brooklyn, NY  11237
          Attn: Robert Sipper
          Telephone Number (718) 894-4300
          Telecopier Number (718) 894-5050

          with copies to:

          Bernstein & Wasserman, LLP
          950 Third Avenue
          New York, NY  10022
          Attn:  Hartley T. Bernstein, Esq.
          Telephone Number (212) 826-0730
          Telecopier Number (212) 371-4730

     8.4  Publicity.  No  publicity  release  or  announcement  concerning  this
Agreement or the transactions  contemplated hereby shall be made without advance
approval thereof by the Buyer and the Seller.

     8.5 Entire Agreement. This Agreement (including the Exhibits and Schedules)
and the agreements,  certificates and other documents delivered pursuant to this
Agreement  contain the entire  agreement  among the parties  with respect to the
transactions  described herein,  and supersede all prior agreements,  written or
oral, with respect thereto.

     8.6 Waivers and  Amendments.  This  Agreement  may be amended,  superseded,
canceled,  renewed or extended,  and the terms  hereof may be waived,  only by a
written  instrument signed by the parties hereto or, in the case of a waiver, by
the party  waiving  compliance.  No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.

     8.7  Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
 principles of conflicts of law.

     8.8 Binding Effect; No Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, assigns and
legal  representatives.  This Agreement is not assignable except by operation of
law and any other purported assignment shall be null and void.

     8.9 Variations in Pronouns.  All pronouns and any variations  thereof refer
to the  masculine,  feminine or neuter,  singular or plural,  as the context may
require.

     8.10 Counterparts.  This Agreement may be executed by the parties hereto in
separate counterparts,  each of which when so executed and delivered shall be an
original,  but all such counterparts shall together  constitute one and the same
instrument.  Each  counterpart  may  consist of a number of copies  hereof  each
signed by less than all, but together signed by all of the parties hereto.

     8.11 Exhibits and Schedules.  The Exhibits and Schedules are a part of this
Agreement  as if fully set forth  herein.  All  references  herein to  Sections,
subsections,  clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.

                                       12

<PAGE>





     8.12 Effect of Disclosure on Schedules.  Any item disclosed on any Schedule
shall  only be  deemed  to be  disclosed  in  connection  with (a) the  specific
representation and warranty to which such Schedule is expressly referenced,  (b)
any specific  representation and warranty which expressly  cross-references such
Schedule  and (c) any  specific  representation  and warranty to which any other
Schedule  to this  Agreement  is  expressly  referenced  if such other  Schedule
expressly cross-references such Schedule.

     8.13 Headings.  The headings in this agreement are for reference only,
and shall not affect the interpretation of this Agreement.

     8.14  Severability  of  Provisions.  If any provision or any portion of any
provision of this Agreement or the  application of such provision or any portion
thereof to any Person or circumstance,  shall be held invalid or  unenforceable,
the remaining  portion of such  provision  and the remaining  provisions of this
Agreement,  or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby.

     8.15 Brokers.  Each party hereto  represents and warrants that no broker or
finder is entitled to any  brokerage  or finder's fee or other  commission  from
such party,  based on  agreements,  arrangements  or  undertakings  made by such
party, in connection with the transactions contemplated hereby.

     8.16 Cessation of Use. From and after the Closing, Seller shall not use any
of the Assets or Intangible  Property or any trade names or trade dress,  on any
of its products or in relation to its other businesses.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                          Old Marlborough Brewing Company

                                          By:/s/ Austin Moran
                                              Name: Austin Moran
                                             Title: President


                                          Perry's Majestic Beer, Inc.

                                              By:/s/ Robert Sipper

                                             Name: Robert Sipper
                                             Title:      President

                                       13

<PAGE>




                            PERRY'S MAJESTIC BEER, INC.
                                 134 MORGAN AVENUE
                                 BROOKLYN, NY 11237




                January 1, 1997

Hartley T. Bernstein
Bernstein & Wasserman, LLP
950 Third Avenue
10th Floor
New York, NY 10022
                              Re: Consulting Agreement

Dear Mr. Bernstein:

     This  Agreement  is to  confirm  our  understanding  with  respect  to  the
rendering by you (the  "Consultant") of certain  consulting  services to Perry's
Majestic Beer, Inc. ("Perry's"), upon the terms and conditions set forth below.

     1.  Payment by Perry's.  As full and total  consideration  for the services
provided  by you to Perry's,  Perry's  hereby  issues to you  200,000  shares of
Perry's  common  stock,  par value $.0001 per share,  (the "Common  Stock").  In
addition,  Perry's agrees to register such shares for sale to the public as soon
as practicable. The term of this Agreement shall be for three (3) years from the
date hereof.

     2.   Consultant's Obligations.   From time to time the Consultant agrees to
provide Perry's with such consulting services as requested by Perry's in
 connection with acquisitions,divestitures, joint ventures and other strategic
 business initiatives.

     3. Confidential  Information Consultant  acknowledges that all information,
documents,   customer  lists,  patents,   trademarks,   copyrights,   materials,
specifications,  business strategies or any other ideas which directly relate to
the  business  of Perry's  (referred  to herein as  "Confidential  Information")
whether  prepared  or  generated  by  Consultant,  or Perry's  pursuant  to this
Agreement or otherwise in the possession or knowledge of Consultant prior to the
date hereof or coming into possession or knowledge of Consultant during the term
of this  Agreement  shall be the  exclusive,  confidential  property of Perry's,
except  to  the  extent   expressly   authorized   in  writing  by  Perry's  for
dissemination.  From  the  date of this  Agreement  through  and  including  the
twenty-fourth month following the termination of this Agreement or any extension
thereof (the  "Restricted  Period"),  Consultant  shall not disclose any of such
Confidential Information to any third party without the prior written consent of
Perry's and shall take all  reasonable  steps and actions  necessary to maintain
the confidentiality of such Confidential Information.
     4.   Status as Independent Contractor.  Consultant's engagement pursuant
           to this



<PAGE>




Agreement shall be as independent contractor and not as an employee,  officer or
other agent of Perry's.  Neither party to this Agreement shall represent or hold
itself out to be the  employer  or  employee  of the other.  Consultant  further
acknowledges  that  the  compensation  provided  herein  is a  gross  amount  of
compensation  and that  Perry's  will not withhold  from such  compensation  any
amounts  respective income taxes,  social security payments or any other payroll
taxes.  All such income  taxes and  payments  shall be made or  provided  for by
Consultant  and Perry's shall have no  responsibility  or duties  regarding such
matters.

     5.  Miscellaneous.  This  Agreement  shall be governed by and  construed in
accordance  with the internal laws of the State of New York,  without  regard to
principles of conflicts of law, and the parties  irrevocably agree to submit any
controversy  or claim  arising out of or relating to this  Agreement  to binding
arbitration  conducted in the State of New York, City of New York, in accordance
with the rules of the American  Arbitration  Association in New York City.  This
Agreement may be executed simultaneously in counterparts,  each of which will be
deemed to be an original but all of which  together will  constitute one and the
same  instrument.  The invalidity or  unenforceability  of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement,  which shall remain in full force and effect.  This Agreement
contains  the entire  understanding  of the parties  hereto with  respect to its
subject matter.  This Agreement may be amended only by a written instrument duly
executed by the parties.

     If this Agreement  accurately reflects your understanding of our agreement,
kindly sign the  enclosed  copy of this letter on the space  provided  below and
return it to me at your earliest convenience.

                                          Very truly yours,

                                          PERRY'S MAJESTIC BEER, INC.

                                          /s/ Robert Sipper
                                          Robert Sipper
                                          President

Agreed to and Accepted as of
the Date First Written Above:

/s/ Hartley T. Bernstein
Hartley T. Bernstein



<PAGE>




                           STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of this 15th day
of  March  1997,  by  and  between  Perry's  Majestic  Beer,  Inc.,  a  Delaware
corporation, (the "Purchaser" or "Perry's") and Mark Butler (the "Seller").

     WHEREAS,  Seller is the owner of 200  shares  of  common  stock of  Orchard
Annie,  Inc., a New York corporation  ("Orchard  Annie"),  comprising all of the
issued and outstanding capital stock (the "Shares") of Orchard Annie; and

     WHEREAS, Seller desires to sell to the Purchaser, and the Purchaser desires
to purchase from Seller,  the Shares,  on the terms and  conditions set forth in
this Agreement;

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  terms,
covenants and  conditions  hereinafter  contained,  the parties  hereto agree as
follows:

     1.   Purchase of the Shares.

     1.1  Subject to and on the terms and conditions hereof, in reliance on the
 mutualrepresentations and warranties of the parties, Seller agrees to sell 
and deliver the Shares to the  Purchaser,and thePurchaser  agrees to purchase
 the Shares from Seller on the date of the Closing
 (as that term is defined herein).

     1.2 In consideration for the Shares, the Purchaser agrees to deliver to the
Seller at the Closing:  (i) $66,000 in  immediately  available  funds;  and (ii)
50,000  shares of common stock of Perry's  Majestic  Beer,  Inc. to be issued no
later than June 30, 1997 (the  "Perry's  Shares")  (collectively,  the "Purchase
Price").

     1.3  The  Shares  and  the   Perry's   Shares   shall  be  fully  paid  and
non-assessable   and  shall  be  free  and  clear  of  any  and  all  contracts,
commitments,  agreements,  liens,  claims or  encumbrances of any kind or nature
whatsoever whether or not of record.

     2.   The Closing.

     2.1 The closing of the transactions  provided for herein  ("Closing") shall
be held at the offices of  Bernstein & Wasserman,  LLP on June 30,  1997,  or at
such other time and place as the parties shall agree.

     2.2  At the Closing:

          (a) Seller shall deliver to the Purchaser certificates  evidencing the
     Shares duly  endorsed  in blank with  signature  guaranteed,  or with stock
     power attached, duly endorsed in blank with signature guaranteed;




<PAGE>




          (b) The Purchaser  shall deliver to Seller (i) $66,000 in  immediately
     available funds; (ii) a certificate  evidencing the Perry's Shares and duly
     issued;  and (iii) executed copies of resolutions of the board of directors
     of Perry's  authorizing the execution and performance of this Agreement and
     the  issuance of the  Perry's  Shares,  certified  to by the  secretary  of
     Perry's that such resolutions were duly and validly adopted; and

          (c) The Purchaser  shall receive a certificate  from the Office of the
     Secretary of State of New York,  dated within five days before the Closing,
     certifying that the records of such state  regarding  Orchard Annie reflect
     neither a Certificate of Dissolution,  a court order declaring dissolution,
     a merger or consolidation which terminated its existence, nor suspension of
     its corporate  powers,  rights and privileges,  and that in accordance with
     the records of such state,  such  corporation is authorized to exercise all
     of its corporate powers, rights and privileges in such state.

     3. Royalty Payments. As and for further consideration for the Shares, for a
period of fifteen (15) years from the date of the Closing (the "Royalty Period")
Seller shall receive from Purchaser  royalty payments equal to $.50 per case for
each of the first 500,000 cases of Quigley's  Orchard  Deluxe  Applesauces  sold
during the Royalty Period and $.25 per case for each case sold thereafter during
the Royalty Period (the Royalty Payments").  Such Royalty Payments shall be made
to Seller on a  quarterly  basis and  within  sixty (60) days of the end of each
fiscal  quarter of  Purchaser.  Upon  receipt of a written  request from Seller,
Purchaser  shall make an  accounting  of Royalty  Payments  available  to Seller
within  thirty  (30) days of such  request.  At the  conclusion  of the  Royalty
Period, Seller shall not be entitled to any additional Royalty Payments.

     4.  Representations  and  Warranties  of Seller.  As an  inducement  to the
Purchaser  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated  hereby,  Seller  represents and warrants to the Purchaser that the
following  are true and  correct  as at the  date  hereof  and as of the date of
Closing:

     4.1 Seller is the sole owner of, and has good and marketable  title to, the
Shares, free and clear of any and all contracts, commitments, agreements, liens,
claims  or  encumbrances  whether  or not of  record  and has the  absolute  and
unrestricted right and capacity to sell the Shares as provided herein.

     4.2 The authorized capital stock of Orchard Annie consists of 200 shares of
common  stock and 200 are issued and  outstanding  and no shares of common stock
are held by Orchard  Annie in its  treasury.  All of the issued and  outstanding
shares of common stock are validly issued, fully paid and non-assessable.  There
are no securities  outstanding  which are  convertible  into or  exchangeable or
exercisable  for any shares of common stock of Orchard  Annie,  and there are no
outstanding  or authorized  subscriptions,  options,  warrants,  calls,  rights,
commitments or other agreements of any character to issue,  sell or transfer any
shares of the capital stock of Orchard Annie or any securities  convertible into
or  evidencing  the right to  subscribe  for any shares of the capital  stock of
Orchard Annie. The Shares  constitute all of the issued and outstanding  capital
stock of Orchard Annie.  There are no outstanding  debt securities or promissory
notes of Orchard Annie.




<PAGE>




     4.3 Orchard Annie is a corporation duly organized,  validly existing and in
good  standing  under  the laws of the State of New York,  and is  qualified  to
conduct  business  in all  jurisdictions  where the  nature of its  assets  and,
requires  such  qualifications  and has the full power and  authority  to own or
lease its property and operate its business.

     4.4 Seller has full power and  authority  to  execute,  deliver and perform
this  Agreement,   Seller  is  not  a  party  to  any  agreement,   contract  or
understanding  pursuant  to  which  Seller  is or may be  obligated  to sell the
Shares,  or any part  thereof,  to any person or entity other than the Purchaser
pursuant  to the  provisions  hereof,  and  none of the  terms,  conditions  and
provisions hereof conflict with, result in a breach of the terms,  conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration,  termination or cancellation of any agreement, corporate
charter or by-law to which Seller or Orchard Annie is a party.

     4.5  Attached  hereto as Exhibits A and B are true,  correct  and  complete
copies of the Articles of Incorporation  and By-Laws of Orchard Annie,  together
with all amendments thereto.

     4.6  Since the date of this Agreement and prior to Closing, 
          there shall not be:

          (a) Any  change  in the  condition,  financial  or  otherwise,  of the
          assets,  liabilities or business of Orchard Annie,  other than changes
          in the ordinary  course of business  which have not been either in any
          case or in the aggregate materially adverse;

           (b) Any act outside the ordinary course of business which 
               materially adversely affects
               the business of Orchard Annie;

          (c) Any  damage,  destruction  or loss of any of the assets of Orchard
     Annie,  not  adequately  compensated  by  insurance,  materially  adversely
     affecting the business or prospects of Orchard Annie;

          (d) Any  declaration  of, or  payment  of, any  dividend  or any other
     distribution with respect to Seller's common stock by Orchard Annie, or the
     purchase or redemption by any of Orchard Annie of any of its stock;

          (e) Any waiver by  Orchard  Annie of any right of  substantial  value,
     material  default  under  the  terms of any  contract,  agreement  or other
     instrument to which it is a party or by which it is bound;

          (f) Any sale,  lease,  transfer,  or other  disposition or mortgage or
     pledge,  of any asset or  property  of Orchard  Annie,  nor shall  there be
     imposed  or  suffered  to be  imposed  any lien,  claim,  charge,  security
     interest or other restriction of any kind or nature whatsoever on any asset
     or property of Orchard Annie.

     4.7   Except as set forth on Exhibit C hereto:




<PAGE>




          (a) There are no actions,  suits or  proceedings  pending,  threatened
     against or  affecting  Orchard  Annie  which might  result in any  material
     adverse change in the licenses, business, operations,  properties or assets
     or the condition,  financial or otherwise,  of Orchard Annie, or in any way
     involving this Agreement or the transactions contemplated hereby;

          (b)   Seller does not know of, and has no reasonable ground to 
                know of, any basis for  any such action or proceeding;

          (c) There is no order or decree  of any  court or agency  directed  to
          Orchard  Annie  arising  out  of  any  judicial,   or  quasi-judicial,
          proceeding  before  any such court or agency  with  respect to Orchard
          Annie being in default;

          (d) Orchard Annie has complied in all material respects with all laws,
          regulations,  rules,  ordinances,  decrees  or  orders  of any  court,
          government (federal, state or local), department,  commission,  board,
          agency,  official or other regulatory,  administrative or governmental
          authority.

     4.8 Orchard Annie files tax returns based on tax years ended December 31 in
each  year.  Orchard  Annie has duly  filed on a timely  basis  all tax  returns
required  to be filed by it, has paid all taxes  shown to be due and  payable on
such  returns  and has paid all  assessments  and  reassessments,  and all other
taxes, governmental charges,  penalties,  interests and fines due and payable by
it on or  before  the date  hereof  and which are  claimed  by any  governmental
authority  to be due and  owing  and  adequate  installments  have been paid and
adequate provisions have been made on its Financial Statements for taxes payable
for the current  fiscal  year for which tax  returns are not yet  required to be
filed. To the best of the knowledge of the Seller, there are no actions,  suits,
proceedings,  investigations  or claims  threatened or pending  against  Orchard
Annie with respect to taxes,  governmental  charges or  assessments or any other
matters under  discussion  with any  governmental  authority  relating to taxes,
governmental charges or assessments asserted by any such authority.

     4.9 Orchard Annie is not a party to any contract, agreement or lease of any
kind, except as set forth on Exhibit D hereto.  Except as expressly indicated on
Exhibit  D  hereto,  each  contract,  agreement  or lease  listed  on  Exhibit D
(collectively,  the "Contracts")  constitutes a valid and binding  obligation of
Orchard Annie and, to the best  knowledge of Seller,  the other parties  thereto
(subject to bankruptcy, insolvency,  reorganization or other laws relating to or
affecting the  enforcement of creditors'  right  generally) is in full force and
effect,  and (except as set forth on Exhibit D) will  continue in full force and
effect  immediately after the Closing,  in each case without breaching the terms
thereof or resulting in the  forfeiture or  impairment of any rights  thereunder
and without the  consent,  approval or act of, or the making of any filing with,
any person or entity.  Orchard Annie has fulfilled and performed in all material
respects its obligations  under each of the Contracts and, to the best knowledge
of  Seller,  no  party  to any of such  Contracts  has  materially  breached  or
defaulted  thereunder,  and no event has  occurred  and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
 would constitute such a default or breach by Orchard Annie or any other party.




<PAGE>




     4.10  Exhibit E contains a true and  complete  list of all assets  owned by
Orchard  Annie,  all of which assets are in good  condition  and such assets and
their uses conform in all material  respects to all applicable  laws,  rules and
regulations  and,  except as set forth therein,  Orchard Annie owns and has good
and marketable title to all of such property and assets, tangible or intangible,
free and clear of all contracts of sale,  liens,  mortgages,  pledges,  security
interests, charges, restrictions, prior assignments,  encumbrances and claims of
every kind.

     4.11 A complete  and  correct  list of all  employees  who work for Orchard
Annie is set forth on Exhibit F attached hereto.

     4.12 Orchard Annie holds all necessary and appropriate licenses and permits
from  appropriate  governmental  departments,  bodies or agencies to conduct the
business now carried on by it, and such  licenses  have been validly  issued and
are in good  standing,  and there is no  threatened  or  pending  action by such
departments,  bodies or agencies  to revoke the same or any other  action of any
type which would prevent or hinder Orchard Annie from conducting  business which
it now conducts. Orchard Annie has complied with all rules, laws and regulations
of the appropriate governmental departments,  bodies and agencies in the conduct
of its business.

     4.13 To the  best of  Seller's  knowledge,  there  has not been  filed  any
petition or application, nor has any proceeding been commenced by or against, or
with respect to any of the assets of, Orchard Annie under Title 11 of the United
States  Code or any other law,  domestic or  foreign,  relating  to  bankruptcy,
reorganization,  compromise,  arrangement,  insolvency,  readjustment of debt or
creditors'  rights, and neither Orchard Annie nor Seller has made any assignment
for the benefit of creditors.

     4.14  Except as set forth on any  exhibit  hereto,  there have not been nor
will  there be from the date  hereof to the date of  Closing,  any  transactions
between Orchard Annie or Seller.

     4.15 Seller's execution and delivery of this Agreement, the consummation of
the  transactions  contemplated  herein and the compliance by Seller with any of
the provisions hereof, will not:

          (a)  result in the creation of any encumbrance of any kind or nature 
               whatsoever upon
               the Shares;

          (b)  constitute  a breach of or a def ault (with or without the giving
     of notice or lapse of time or both) under any of the terms,  conditions  or
     provisions of any note, bond, mortgage,  indenture, deed of trust, license,
     agreement or any other  instrument or obligation to which Seller is a party
     or which Seller or the Shares may be bound or effected; or

          (c)  violate any law or regulation applicable to Seller or the Shares.

     4.16 Neither this Agreement nor any documents,  certificates  or statements
furnished  to the  Purchaser  by or on behalf of Seller in  connection  herewith
contains any untrue  statement  of a material  fact or omits to state a material
fact necessary in order to make the statements  contained herein and therein not
misleading. There is no fact known to Seller which materially adversely affects,
or in the future may



<PAGE>




materially  adversely affect,  the business,  properties,  assets,  prospects or
financial  condition  of  Orchard  Annie  which  has not been set  forth in this
Agreement and the Exhibits hereto.

     5.  Representations  and Warranties of The  Purchaser.  As an inducement to
seller  to  enter  into  this  Agreement  and  to  consummate  the  transactions
contemplated  hereby,  the Purchaser  represents and warrants to Seller that the
following  are true and  correct as of the date hereof and as of the date of the
Closing:

     5.1 The Purchaser is a corporation duly organized,  validly existing and in
good  standing  under the laws of the State of Delaware  and is  qualified to do
business in the State of New York.

     5.2 The Purchaser has an authorized  capitalization of 25,000,000 shares of
capital stock. As of the Purchaser most recent Form 10-QSB filed with the United
States  Securities  and Exchange  Commission  for the period ended  December 31,
1997,  there are presently  issued and  outstanding  3,083,335  shares of common
stock of the Purchaser.

     5.3 All of the shares of the  Purchaser is common stock issued to date have
been duly authorized and validly issued and are fully paid and nonassessable.

     5.4 The execution and  performance  of this  Agreement and the issuance and
delivery of the Perry's  Shares in accordance  with the  provisions  hereof have
been duly  authorized  by all  necessary  corporate  action  and this  Agreement
constitutes  a  valid,  binding  and  enforceable  obligation  of the  Purchaser
subject, as to enforceability, to the effect of:

          (a)  any applicable bankruptcy, insolvency, moratorium or similar laws
                affecting creditors' rights generally, and

          (b)  general principles of equity (regardless of whether
               considered in a proceeding in equity or at law).

     5.5 The execution and performance of this Agreement and compliance with the
provisions hereof by the Purchaser will not violate,  with or without the giving
of notice or the passage of time,  any applicable law or regulation and will not
conflict  with,  or result in the breach of,  any of the  terms,  conditions  or
provisions of, or constitute a default  under,  any corporate  charter,  by-law,
indenture,  mortgage,  agreement or other  instrument  to which the Purchaser is
bound.

     5.6 There are no actions, suits or proceedings pending,  threatened against
or affecting the Purchaser, at law or in equity, or before any federal, state or
municipal  agency or authority which might result in any material adverse change
in the licenses, business operations, properties or assets, or in the condition,
financial or otherwise,  of the Purchaser or in any way involving this Agreement
or the transactions contemplated hereby.

     5.7 Neither this  Agreement nor any documents,  certificates  or statements
furnished to the Seller by or on behalf of the Purchaser in connection  herewith
contains any untrue statement of a material



<PAGE>




fact or omits to state a material fact necessary in order to make the statements
contained  herein  and  therein  not  misleading.  There is no fact known to the
Purchaser,  which materially  adversely affects, or in the future may materially
adversely  affect,  the  business,  properties,  assets,  prospects or financial
condition of the Purchaser which has not been set forth in this Agreement or the
Exhibits hereto.

     6.   Pre-Closing Covenants of Seller. Seller covenants and agrees that from
          and after the date hereof to the date of Closing:

     6.1 Neither Seller nor Orchard Annie will sell, pledge, encumber, assign or
transfer,  or enter  into any  agreement,  commitment,  instrument  or  contract
pursuant to which any right, title or interest may be sold, pledged, encumbered,
assigned or transferred in or to the Shares.

     6.2 Seller and Orchard  Annie shall  continue to conduct the  business  and
affairs of Orchard Annie in the ordinary  course of business and shall not enter
into any agreement, commitment, instrument or contract or take any action out of
the ordinary course of business with respect to Orchard Annie, including without
limitation:

          (a)  Declare,  or pay,  any  dividend or any other  distribution  with
     respect to the stock of Orchard  Annie,  or  purchase or redeem any of such
     stock;

          (b) Sell or issue, or enter into any contract, instrument or agreement
     pursuant to which  Orchard  Annie might be obligated to sell or issue,  any
     common stock or any other security;

          (c) Enter  into any  mortgage,  indenture,  pledge or other  contract,
     instrument or agreement, or take, suffer or permit any action to be taken,,
     as the result of which any lien,  claim,  charge or encumbrance of any kind
     or nature whatsoever would be established or created with respect to any of
     the assets of Orchard Annie;

          (d)   Borrow any money, or enter into any contract, commitment or
                agreement to   borrow any money on behalf of Orchard Annie; and

          (e) Pay, or enter into any  contract,  commitment  or agreement to pay
     any  compensation,  bonus or  commission  or any benefit of any kind to any
     officer of Orchard Annie.

     6.3 Seller shall  cooperate fully with the Purchaser in connection with the
Purchaser's  inspection,  examination  or review of any and all of the business,
properties or condition, financial or otherwise, of Orchard Annie.

     6.4 Seller shall proceed diligently to participate and cooperate in efforts
to  obtain  any and all  required  consents,  acquiescence,  authorizations  and
approvals  of the  transactions  contemplated  hereby  required  of any party or
governmental  agency or  authority  to be had and  obtained  under any  statute,
ordinance, interpretation, regulation or ruling.,




<PAGE>




     6.5  Seller  shall  promptly  give  written  notice to the  Purchaser  upon
becoming  aware of (a) any fact which,  if known on the date hereof,  would have
been required to be set forth or disclosed  pursuant to this Agreement,  and (b)
any  impending  or  threatened  breach  in any  material  respect  of any of the
representations  and warranties  contained in this Agreement and with respect to
the latter shall use all reasonable efforts to remedy the same.

     6.6 Seller will cooperate fully and will take all  appropriate  actions and
execute  any  documents,  instruments  or  conveyances  of any  kind  or  nature
whatsoever which may be reasonably  necessary to carry out any of the provisions
of this Agreement, both prior to and after the Closing.

     6.7 As soon as practicable,  Seller will use his best efforts to obtain the
resignation effective upon the Closing of each director of Orchard Annie.

     7.  Pre-Closing  Covenants of The  Purchaser.  The Purchaser  covenants and
agrees  that,  from and  after  the date  hereof  to the  date of  Closing,  the
Purchaser shall continue to conduct the business and affairs of the Purchaser in
the  ordinary  course  of  business  and shall  not  enter  into any  agreement,
commitment, instrument or contract or take any action out of the ordinary course
of business with respect to the Purchaser.

     8. Post-Closing Representations, Covenants and Agreements of Seller. Seller
represents, covenants and agrees:

     8.1 He is  acquiring  the  Perry's  Shares  hereunder  solely  for  his own
account,  for  investment,  and not with a view to the  distribution  or  resale
thereof.  Seller  represents  and warrants  that he has no present  intention of
selling or distributing  any of the Perry's Shares to be acquired  hereunder and
that he is not under any present  necessity or constraint to dispose of any such
shares to satisfy any existing or contemplated debt or undertaking.

     8.2   Seller confirms his understanding, and agrees, that:

          (a)  Certificates for the Perry's Shares to be issued and delivered to
          them hereunder will bear substantially the following legend:

          "The  securities  represented  by this  Certificate  were  acquired on
          without  registration under the Securities Act of 1933, as amended. No
          transfer,  sale or  distribution  of these  securities or any interest
          therein may be made except under an effective  registration  statement
          under said Act covering such  securities  unless the  Corporation  has
          received an opinion of counsel  satisfactory  to it that such transfer
          or sale does not require registration under said Act."

          (b)  Seller  shall be bound by the terms of the  foregoing  legend and
          agrees that appropriate  restrictions on transfer will be noted on the
          Purchaser's corporate records.




<PAGE>




     9. Conditions Precedent to Obligations of The Purchaser. The obligations of
the Purchaser to complete the transactions provided for herein shall be subject,
at its election,  to the  fulfillment,  performance or occurrence prior to or at
the  Closing,  to  the  Purchaser's  reasonable  satisfaction,  of  each  of the
following conditions:

     9.1 Each  representation  and  warranty  made by Seller  contained  in this
Agreement and in any Exhibit or document  delivered  pursuant to the  provisions
hereof  shall be true and  correct at and as at the time of  Closing  and Seller
shall have delivered a certificate, dated the Closing Date, to such effect.

     9.2 Seller shall have  performed  and  complied  with all  obligations  and
conditions  required by this Agreement to be performed or complied with prior to
or at the Closing.

     9.3 Any and all necessary consents, acquiescences,  authorizations, permits
or approvals of any governmental authority required to be obtained in connection
with the consummation of the  transactions  contemplated by this Agreement shall
have been duly  obtained  and there  shall  have been full  compliance  with the
provisions of any and all applicable laws or regulations.

     9.4 All actions,  proceedings,  instruments and documents required to carry
out the  transactions  contemplated  by this Agreement  shall be satisfactory to
counsel for the Purchaser.

     9.5 No injunction, stay or restraining order shall be in effect prohibiting
the consummation of the transactions contemplated by this Agreement.

          9.6 Seller shall have delivered to the Purchaser an opinion of counsel
to Seller,  dated the date of Closing,  that  provisions of Section 4 herein are
true and correct and that counsel does not know of any litigation, proceeding or
governmental  investigation,  pending or  threatened,  against  Seller or of any
incumbrance of any kind or nature upon any of the Shares.

         9.7 All resignations from directors and officers of Orchard Annie shall
have been delivered to purchaser.

         10.   Conditions Precedent to Obligations of Seller. The obligations of
Seller to complete the transaction contemplated by this Agreement is subject
 to the performance or occurrence prior to or at the Closing of each of the 
following conditions:

         10.1 Each  representation  and warranty  made by The  Purchaser in this
Agreement  or in any Exhibit or document  delivered  pursuant to this  Agreement
shall be true and correct at the time of Closing and at all times after the date
hereof to the time of Closing.

         10.2 The Purchaser  shall perform and comply with all  obligations  and
conditions  required by this  Agreement to be performed and complied with by the
Purchaser prior to or at the Closing.

         10.3 No  injunction,  stay or  restraining  order  shall  be in  effect
prohibiting the consummation of the transactions contemplated by this Agreement.



<PAGE>




         11.  Post-Closing  Representations,  Covenants  and  Agreements  of The
Purchaser. The Purchaser represents,  warrants,  covenants and agrees that it is
acquiring the Shares  hereunder  solely for its own account,  for investment and
not with a view to the distribution or resale thereof.  The Purchaser represents
that it has no present  intention of selling or disposing of such securities and
that it is not aware of any circumstances  presently in existence under which it
would intend, or be constrained, to dispose of such shares;

         12.  Nature  and  Survival  of  Representations  and  Warranties.   All
statements  contained in this Agreement or in any Exhibit or document  delivered
in connection with this Agreement shall be deemed representations and warranties
by  such  party  hereunder.  All  representations  and  warranties  made in this
Agreement or pursuant hereto shall survive the Closing.

         13.  Indemnification by Seller. Seller hereby covenants and agrees with
the Purchaser that,  regardless of any  investigation  made at any time by or on
behalf of the Purchaser or any information the Purchaser may have and regardless
of  the  Closing  hereunder,  Seller  shall  indemnify  the  Purchaser  and  its
directors,  officers,  employees and affiliates and each of their successors and
assigns  (individually  a  "Buyer  Indemnified  Party")  and  hold  each of them
harmless  from,  against  and in respect of any and all costs,  losses,  claims,
liabilities,  fines,  penalties,  damages and expenses (including interest which
may be imposed in connection  therewith,  court costs and fees and disbursements
of  counsel)  incurred  by any of them  resulting  from or in any  manner or way
whatsoever  arising  out of (a) any  misrepresentation,  breach of  warranty  or
nonfulfillment  of any  agreement,  covenant or obligation by the Seller made in
this  Agreement  (including  without  limitation,  any Exhibit  hereto or in any
certificate or instrument  delivered in connection  herewith),  any taxes of any
kind whatsoever,  or expenses,  interest or penalty relating thereto,  including
those that arise out of or result f rom the transactions  contemplated from this
Agreement,  other than taxes  relating to the conduct of the business of Orchard
Annie after the  Closing) the  operation  and conduct of the business of Orchard
Annie prior to the Closing.

         If, by reason of the claim of any third  party  relating  to any of the
matters relating to indemnification  under this Section 13, a lien,  attachment,
garnishment  or  execution  is placed upon any of the  property or assets of any
Buyer  Indemnified  Party,  Seller  shall  promptly  furnish an  indemnity  bond
reasonably satisfactory to the indemnified party to obtain the prompt release of
such lien, attachment, garnishment or execution.

         If the facts  giving  rise to any  indemnification  shall  involve  any
actual  claim or demand by any third party  against a Buyer  Indemnified  Party,
Seller  shall be entitled to notice of and  entitled  (without  prejudice to the
right of any Buyer  Indemnified  Party to participate at his own expense through
counsel of his own  choosing)  to defend or  prosecute  such  claim at  Seller's
expense and through  counsel of Seller's  choosing if he gives written notice of
his intention to do so no later than the time by which the interest of the Buyer
Indemnified  Party would be materially  prejudiced as the result of such party's
indemnified failure to have received such notice; provided, however, that if the
defendants  in any action shall include both a Buyer  Indemnified  Party and the
Seller,  and the Buyer  Indemnified  Party shall have reasonably  concluded that
counsel   selected  by  Seller  has  a  conflict  of  interest  because  of  the
availability of different or additional defenses to the Buyer Indemnified Party,
the Buyer  Indemnified  Party shall have the right to select separate counsel to
participate in the defense of such action on such party's behalf, at the expense



<PAGE>




of Seller.  The Buyer  Indemnified Party shall cooperate fully in the defense of
such claim and shall make available to Seller  pertinent  information  under his
control  relating  thereto,  but  shall be  entitled  to be  reimbursed  for all
expenses and costs incurred by him in connection therewith.

         14.   Termination. This Agreement may be terminated by the written
 authorization of theparties or by giving notice in accordance with the terms 
 hereof for the giving of notice at any time prior     
to Closing:

               (a)  By The Purchaser:

               (i) if Seller or Orchard Annie is in default in the performance
                   on any of their obligations hereunder;

               (ii)  if any  condition  or  obligation  for the  benefit  of the
Purchaser hereunder has not been fulfilled and it is not reasonably possible for
such condition to be fulfilled prior to the Closing; or

               (iii) if it is established that the business of Orchard Annie, as
presently  conducted,  does not  substantially  conform in all material respects
with applicable laws and regulations.

                (b)  By Seller:

               (i) if The Purchaser shall default in the performance of 
     any of its obligations to Seller hereunder; or

               (ii) if any condition or obligation  for the benefit of Seller or
Orchard Annie has not been fulfilled and it is not reasonably  possible for such
condition to be fulfilled prior to the Closing.


         15.  Entire  Agreement.  This  Agreement  and any document  referred to
herein constitutes the entire Agreement among the parties hereto with respect to
the subject matter hereof and  supersedes all prior written or oral  warranties,
representations,   inducements,   understandings,   commitments,  agreements  or
contracts.  No amendment to or  modification  of the terms or conditions  hereof
shall be binding  unless it is in writing and signed by the party  against  whom
the amendment or modification is charged.

         16.   Benefit.  This Agreement shall be binding upon and shall inure to
the benef it of the parties hereto and their respective successors in interest. 
 This Agreement may not be assigned by either party hereto without the prior
 express written consent of the other party.

         17.  Notices.  Any notice  required or permitted to be given under this
Agreement  shall be in writing  and shall be given by  personal  delivery  or by
depositing the same with the United States Post Office,  by registered or certif
ied mail, postage prepaid, return receipt requested, and addressed:

               If to The Purchaser:



<PAGE>




               Perry's Majestic Beer, Inc.
               134 Morgan Avenue
               Brooklyn, NY  11237



               If to Seller:

          Mark Butler:

               101 West 75th Street
               New York, NY 10023


         Any notice mailed in accordance  with the  provisions of this Agreement
shall be  deemed  given or  effective  on the third  day  following  the date of
mailing.  Any party to this Agreement may change the address to which notices to
such party shall be given by giving a proper notice hereunder.

         18. Severability.  Whenever possible,  each paragraph of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law. If any paragraph of this Agreement  shall be  unenforceable  or
invalid under  applicable law, such paragraph  shall be ineffective  only to the
extent and duration of such  unenforceability  or  invalidity  and the remaining
substance of such paragraph and the remaining paragraphs of this Agreement shall
in such event continue to be binding and in full force and effect.

         19.  Waivers.  No failure by any party to exercise  any of such party's
rights  hereunder  or to insist  upon  strict  compliance  with  respect  to any
obligation hereunder,  and no custom or practice of the parties at variance with
the terms  hereof,  shall  constitute  a waiver  by any  party to  demand  exact
compliance with the terms hereof.  Waiver by any party of any particular default
by any other party shall not affect or impair such party's  rights in respect of
any subsequent default of the same or of a different nature, nor shall any delay
or omission of any party to exercise any rights  arising from any default by any
other  party  affect or impair  such  party's  rights as to such  default or any
subsequent default.

         20.   Governing Law.  This Agreement shall be governed by and construed
and enforced in all respects in accordance with the laws of the State of without
 reference to its conflicts of laws rules or principles.

         21. Multiple Counterparts.This Agreement may be executed in one or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same agreement.

         22.   Expenses.  Whether or not the transactions contemplated by this
               Agreement are consummated, each of Seller and he Purchaser shall
pay their own respective fees and expenses incident to the negotiation,
 preparation, execution and performance of this Agreement.



<PAGE>




         23.   Headings and Certain Terms.  The headings of sections herein are 
inserted for convenience of reference only and are not intended to be a part
 hereof or to affect the meaning or interpretation of this Agreement,
 and the plural and singular forms are used interchangeably.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

                                    PERRY'S MAJESTIC BEER, INC.



                                    By:/s/ Robert Sipper
                                        Name:  Robert Sipper
                                        Title:    President


                                    /s/ Mark Butler
                                    Mark Butler



<PAGE>




                       AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

      This  Amendment  No.1  dated  as of  February  3,  1997  to  that  certain
Employment  Agreement  (this  "Amendment"),  dated as of April 4,  1996,  by and
between Perry's Majestic Beer, Inc., a Delaware corporation (the "Company"), and
Robert Sipper (the "Executive").

                               W I T N E S S E T H :

      WHEREAS,   the  Company  and  the  Executive  entered  into  that  certain
Employment Agreement dated as of April 4, 1996 (the "Agreement"); and

      WHEREAS,  the Company and the  Executive  desire to amend the Agreement to
effect the changes provided for herein.

      NOW,  THEREFORE,  in  consideration  of the premises and mutual  covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
the parties hereto agree as follows:

      1.    Effective as of the date hereof, the Agreement is hereby amended by 
            replacing paragraph 1 with the following:

             The Corporation  employs Executive and Executive hereby accepts the
            employment  as the  President  and Chief  Executive  Officer  of the
            Corporation commencing on the date hereof through March 31, 2001.

      2.  Effective as of the date hereof,  the  Agreement is hereby  amended by
deleting  the  existing  paragraph  3.4 and  replacing  paragraph  3.4  with the
following:

   Effective immediately, in addition to the Executive's salary, Executive shall
   be  entitled  to  the  following  in  consideration   for  the  extension  of
   Executive's term of employment to March 31, 2001, as set forth in paragraph 1
   above.


   A) The Company shall issue to Executive 200,000 shares of the
Company's common stock, par value $.0001 per share (the "Common
Stock").

   B) Although subsequent to the Company's initial public offering,  the Company
is under no obligation to file a registration statement under the Securities Act
for the sale or transfer of any shares of the  Company's  Common Stock which are
awarded to Executive  under this paragraph  (the  "Consideration  Shares"),  the
Company agrees, at its sole cost and expense, that:



                            29

<PAGE>




      (i) If at any time subsequent to the Company's initial public offering and
during the term of this Agreement,  the Company determines to file with the U.S.
Securities  and  Exchange   Commission  ("SEC")  a  registration   statement  in
connection  with the proposed  issuance for cash of any of the Company's  Common
Stock (a "Company  Offering"),  the  Company  will give  written or  telegraphic
notice of its  determination to Executive at least twenty (20) days prior to the
anticipated  filing date. Upon the written request of Executive given within ten
(10) days after the  receipt of any such notice  from the  Company,  the Company
will,  subject to the limitations set forth below, use its best efforts to cause
such number of the  Consideration  Shares as are set  specified  in such written
request of Executive to be included in such registration statement to the extent
necessary,  to permit  the sale or other  disposition  by the  Executive  of the
Consideration Shares.

      (ii) If a Company  is  proposed  to be  underwritten  in whole or in part,
whether or not on a firm  commitment or best efforts  basis,  the  Consideration
Shares shall be included at Executive's  request per the Company and Executive's
notice  requirements  described in subparagraph  (b)(i) of this paragraph in the
Company  Offering on the same terms and conditions as the Company's Common Stock
otherwise being sold through the underwriter(s),  provided,  however, that if in
the  opinion  of the  managing  underwriter(s)  of such  Company  Offering,  the
inclusion of the Securities would interfere with the successful marketing of the
Company's  Common  Stock by the  Company,  then the  Executive  shall reduce the
amount of the Consideration Shares to be included in the Company Offering to the
extend   necessary  to  comply  with  the   recommendation   of  such   managing
underwriter(s).

      (iii) If and whenever the Company is required by this  paragraph to effect
the  registration  of the  Consideration  Shares under the  Securities  Act, the
Company will use all reasonable  efforts (and a determination  that such efforts
have been employed  shall be  conclusively  made by a letter to such effect from
counsel to the Company) to:

            (a) Prepare and file with the  Commission a  registration  statement
      with respect to the  Consideration  Shares and to cause such  registration
      statement  to  become  effective  at the  earliest  possible  time and (by
      preparing  and  filing  with  the  Commission   such  amendments  to  such
      registration statement and supplements to the prospectus contained therein
      as may be necessary) to remain  effective  during the period  required for
      the distribution of the Consideration  Shares covered by such registration
      statement.



                             2

<PAGE>




            (b)  Enter  into  a  written  underwriting  agreement  in  form  and
      substance  reasonably   satisfactory  to  the  Company  and  the  managing
      underwriter(s)  if a Company  Offering  is to be  underwritten  sole or in
      part, whether or not on a firm commitment or best efforts basis.

            (c) Furnish to the Executive,  in connection with a Company Offering
      in which the Executive is participating  such reasonable  number of copies
      of the registration statement,  preliminary  prospectus,  final prospectus
      and other documents as may reasonably be requested;

            (d)  Register  or  qualify  the   Consideration   Shares  under  the
      securities  or "blue  sky" laws of such  jurisdictions  within  the United
      States as the Company and the managing underwriter(s)  reasonably request,
      provided  that the  Company  shall not be  required  to consent to general
      service of process for all  purposes in any  jurisdiction  where it is not
      then qualified to do business as a foreign corporation;

            (e) Notify the  Executive  promptly  after the Company shall receive
      notice thereof,  of the time when such  registration  statement has become
      effective  or a  supplement  to any  prospectus  forming  a part  of  such
      registration statement has been filed.

            (f)  Notify  the  Executive,  during  any  period  during  which the
      Consideration  Shares may be distributed pursuant to a registered offering
      and a prospectus relating to such registration statement is required to be
      delivered  under the  Securities  Act, of the  happening of any event as a
      result of which the prospectus included in such registration statement, as
      then in effect,  includes an untrue  statement of a material fact or omits
      to state a material  fact  required to be stated  therein or  necessary to
      make the statements  therein, in light of the circumstances then existing,
      not misleading,  and at the request of the Executive,  prepare and furnish
      to the  Executive a reasonable  number of copies of a supplement  to or an
      amendment of such  prospectus  as may be  necessary so that as  thereafter
      delivered to the purchasers of such Consideration  Shares, such prospectus
      shall not include an untrue  statement of a material fact or omit to state
      a material  fact  required to be stated  therein or  necessary to make the
      statement  therein,  in  light of the  circumstances  then  existing,  not
      misleading; and



                             3

<PAGE>




            (g) Furnish,  at the request of the Executive,  on the date that the
      Consideration  Shares are delivered to the  underwriter(s)  pursuant to an
      Underwritten  Offering, (i) an opinion, dated such date of the independent
      counsel  representing  the Company for the purposes of such  registration,
      addressed to the  underwriter(s)  and to the  Executive to the effect that
      such registration  statement has become effective under the Securities Act
      and  that  to the  best  knowledge  of  such  counsel  (A) no  stop  order
      suspending the effectiveness  thereof has been instituted or is pending or
      contemplated under the Securities Act; (B) the registration statement, the
      related prospectus,  and each amendment or supplement thereto, as of their
      respective  effective or issue dates,  complied as to form in all material
      respects with the  requirements  of the  Securities Act and the applicable
      rules and  regulations  of the  Commission  thereunder  (except  that such
      counsel need express no opinion as to any  statistical or other  numerical
      data or financial statements and notes related thereto contained therein);
      and (C) in connection with the preparation of the registration  statement,
      the related prospectus,  and each amendment or supplement thereto,  (i) no
      facts have come to the  attention  of such counsel or that would lead such
      counsel  to  believe  that  either  the  registration   statement  or  the
      prospectus, or any amendment or supplement thereto, as of their respective
      effective or issue  dates,  contained  any untrue  statement of a material
      fact or omitted to state a material fact required to be stated  therein or
      necessary to make the  statement  therein,  in light of the  circumstances
      under which they were made, not misleading  (except that such counsel need
      express  no  opinion  as to any  statistical  or other  numerical  data or
      financial statements and the notes related thereto contained therein), and
      (ii)  such  counsel  did  not  become  aware  of  any  pending   legal  or
      governmental proceeding applying to the Company which was not disclosed in
      the  registration  statement  or  the  prospectus,  or  any  amendment  or
      supplement  thereto,  which might or have material adverse effect upon the
      business or financial  condition of the Company,  (iii) any other opinions
      that the underwriters  may reasonably  request,  and (iv) a letter,  dated
      such  date,  from  the  independent  public  accountants  of the  Company,
      addressed to the  underwriter(s)  and to the Executive,  stating that they
      are independent  public  accountants  within the meaning of the Securities
      Act and the rules and regulations of the Commission thereunder and that in
      the  opinion  of such  accountants,  the  financial  statements  and other
      financial data of the Company  included in the  registration  statement or
      the prospectus, or any amendment or supplement


                             4

<PAGE>




      thereto, as of their respective  effective or issue dates,  complied as to
      form in all material respects with the applicable accounting  requirements
      of the  Securities  Act and the rules and  regulations  of the  Commission
      thereunder.

   3. This Amendment  shall be governed by and construed in accordance  with the
laws of the State of New York, without regard to principles of conflicts of law.

   4. Except as otherwise  specifically  set forth herein,  all of the terms and
provisions of the Existing Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.



                                    PERRY'S MAJESTIC BEER, INC.



                                    By:/s/ Mark Butler
                                         Name: Mark Butler
                                       Title: Vice-President Sales and Director


                                    /s/ Robert Sipper
                                    Robert Sipper


                                      5


<PAGE>




                    AMENDMENT NO.1 TO EMPLOYMENT AGREEMENT

   This Amendment  No.1 dated as of November 1, 1996 to that certain  Employment
Agreement (this "Amendment"),  dated as of April 4, 1996, by and between Perry's
Majestic Beer, Inc., a Delaware corporation (the "Corporation"), and Mark Butler
(the "Executive").

                            W I T N E S S E T H :

   WHEREAS,  the  Corporation  and  the  Executive  entered  into  that  certain
Employment Agreement dated as of April 4, 1996 (the "Agreement"); and

   WHEREAS,  the Corporation and the Executive  desire to amend the Agreement to
effect the changes provided for herein.

   NOW,  THEREFORE,  in  consideration  of the  premises  and  mutual  covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
the parties hereto agree as follows:

   1. Effective as of the date hereof, the Agreement is hereby amended by adding
the following  paragraph to the end of Section 3:

As consideration for Butler's  agreement to provide his services to the Company,
the Company hereby agrees:

   (i)To  pay to  Butler's  minimum  salary of  $25,000  per annum for each year
during  the term  hereof;  provided,  however,  that in the  event  the  Company
completes  a public  offering  of its  securities  pursuant to which the Company
receives  net proceeds in excess of  $2,000,000,  the annual  salary  payable to
Butler  during the Term shall be  increased  to $75,000  per annum.  Such salary
shall be payable by the Company on a bi-weekly basis;

   2. This Amendment  shall be governed by and construed in accordance  with the
laws of the State of New York, without regard to principles of conflicts of law.




<PAGE>




   3. Except as otherwise  specifically  set forth herein,  all of the terms and
provisions of the Existing Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.


                                    PERRY'S MAJESTIC BEER, INC.


                                    By:/s/ Robert Sipper
                                          Name: Robert Sipper
                                          Title: President


                                    /s/ Mark Butler
                                    Mark Butler





                                      2

<PAGE>




                    AMENDMENT NO.2 TO EMPLOYMENT AGREEMENT

   This Amendment  No.2 dated as of February 3, 1997 to that certain  Employment
Agreement  (this  "Amendment"),  dated as of April 4,  1996,  as  amended by and
between Perry's Majestic Beer, Inc., a Delaware corporation (the "Corporation"),
and Mark Butler (the "Executive").

                            W I T N E S S E T H :

   WHEREAS,  the  Corporation  and  the  Executive  entered  into  that  certain
Employment  Agreement  dated as of April 4, 1996, as amended (the  "Agreement");
and

   WHEREAS,  the Corporation and the Executive  desire to amend the Agreement to
effect the changes provided for herein.

   NOW,  THEREFORE,  in  consideration  of the  premises  and  mutual  covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
the parties hereto agree as follows:

   1. Effective as of the date hereof, the Agreement is hereby amended by
      replacing paragraph 1 with the following:

      The  Corporation  employs  Executive  and  Executive  hereby  accepts  the
      employment as the Executive Vice President of the  Corporation  commencing
      on the date hereof through March 31, 2001.

   2. Effective as of the date hereof, the Agreement is hereby amended by adding
      the following paragraph to the end of Section 3:

As further  consideration for Butler's  agreement to provide his services to the
Company and in  consideration  for the  extension of the term of his  employment
hereunder, the Company hereby agrees:

   (i)To pay to Butler a bonus at the sole discretion of the board of
directors;

   (iiThe Company shall issue to Butler  200,000 shares of the Company's  common
stock,  par value $.0001 per share (the "Common  Stock"),  on February 11, 1997.
Such Common Stock shall have the same registration  rights as the Option Shares,
which are set forth in Section 4 of this agreement.
   3. This Amendment  shall be governed by and construed in accordance  with the
laws of the State of New York, without regard to principles of conflicts of law.




<PAGE>




   4. Except as otherwise  specifically  set forth herein,  all of the terms and
provisions of the Existing Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.


                                    PERRY'S MAJESTIC BEER, INC.


                                    By:/s/ Robert Sipper
                                          Name: Robert Sipper
                                          Title: President


                                    /s/ Mark Butler
                                    Mark Butler


                                      2

<PAGE>




                    AMENDMENT NO.3 TO EMPLOYMENT AGREEMENT
   This  Amendment  No.3 dated as of March 10, 1997 to that  certain  Employment
Agreement  (this  "Amendment"),  dated as of April 4, 1996,  as amended,  by and
between Perry's Majestic Beer, Inc., a Delaware corporation (the "Corporation"),
and Mark Butler (the "Executive").

                            W I T N E S S E T H :

   WHEREAS,  the  Corporation  and  the  Executive  entered  into  that  certain
Employment  Agreement  dated as of April 4, 1996, as amended (the  "Agreement");
and

   WHEREAS,  the Corporation and the Executive  desire to amend the Agreement to
effect the changes provided for herein.

   NOW,  THEREFORE,  in  consideration  of the  premises  and  mutual  covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
the parties hereto agree as follows:

   1.  Effective  as of the date  hereof,  the  Agreement  is hereby  amended by
deleting  the  paragraph  at the end of  Section  3 and  replacing  it with  the
following:

      As  consideration  for  Butler's  agreement  to waive his right to receive
      100,000  options on March 31,  1997 and in  recognition  of his efforts on
      behalf of the Company, the Company hereby agrees:

            (i)   To pay to Butler a minimum salary of $110,000 per annum.
  Such salary shall be payable by the Company on a bi-weekly basis;

   2. Effective as the date hereof,  the Agreement is hereby amended by deleting
the words "March 31, 1997" from the first line of the first paragraph of Section
4.

      In exchange  for the  consideration  set fort herein,  Butler  agrees that
      during the term of this  agreement,  he shall not work,  advise or consult
      for any other beer company/business.

   3. This Amendment  shall be governed by and construed in accordance  with the
laws of the State of New York, without regard to principles of conflicts of law.




<PAGE>




   4. Except as otherwise  specifically  set forth herein,  all of the terms and
provisions of the Existing Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.


                                    PERRY'S MAJESTIC BEER, INC.


                                    By:/s/ Robert Sipper
                                          Name: Robert Sipper
                                          Title: President


                                    /s/ Mark Butler
                                    Mark Butler








                                      2

<PAGE>




                             EMPLOYMENT AGREEMENT


   EMPLOYMENT  AGREEMENT,  dated as of September 17, 1996, by and between Austin
J. Moran, Jr., an individual residing at _______________________________("Moran"
or the "Employee") and Perry's Majestic Beer, Inc., having offices at 134 Morgan
Avenue, Brooklyn, NY 11237 (the "Company").
   WHEREAS, the Company is desirous of engaging the employment services of Moran
and Moran is  desirous  of  providing  his  employment  services  to  Company in
connection  with the  day-to-day  operations  of the  Company  with  respect  to
manufacturing, production and marketing of the Company's products.
   NOW,  THEREFORE,  in consideration of mutual premises and covenants contained
herein, the parties hereto agree as follows:
   1. The Company  hereby  agrees to employ Moran and Moran hereby  agrees to be
employed as the Company's Vice  President-Post  Road Division.  Moran shall have
the duties commensurate with such title.
   2.  The term of this  Agreement  shall be for the  period  of four (4)  years
commencing  on the date first set forth above (the  "Term").  Each twelve  month
period during the term of this Agreement (i.e. September 1996 to September 2000)
is sometimes hereinafter referred to as a "Contract Year." The territory covered
by this Agreement shall be every place where the Company presently does business
or may do business during the term hereof.
   3. As consideration for Moran's agreement to provide his services to the
 Company, the Company hereby agrees to pay to Moran a minimum salary of $50,000 
for the First contract year, $55,000 for



<PAGE>




the Second  contract year,  $60,000 for the Third contract year, and $65,000 for
the Fourth contract year.
   4. As additional  consideration,  on each of August 31, 1997, August 31, 1998
and August 31, 1999, the Company shall deliver to Employee an option to purchase
20,000 of the Company's Common Stock  exercisable at a price of $6.00 per share,
for a period of four (4) years.
      Although  the  Company  is  under  no  obligation  to file a  registration
statement under the Securities Act for the sale or transfer of any shares of the
Company's  Common  Stock  which  underlie  the options to be awarded to Employee
under this paragraph 4 (the "Option  Share"),  the Company  agrees,  at its sole
cost and expense, that:
      (a) If at any  time  during  the  term  of  this  Agreement,  the  Company
determines to file with the U.S.  Securities and Exchange  Commission  ("SEC") a
registration  statement in connection with the proposed issuance for cash of any
of the  Company's  Common  Stock (a "Company  Offering"),  the Company will give
written or telegraphic  notice of its  determination to Employee at least twenty
(20) days  prior to the  anticipated  filing  date.  Subject  to the  Employee's
exercise  of the  options  granted in this  paragraph  4  pursuant  to the terms
hereof,  and upon the  written  request of Employee  given  within ten (10) days
after the receipt of any such notice from the Company, the Company will, subject
to the limitations set forth below, use its best efforts to cause such number of
the Option Shares as are set specified in such written request of Employee to be
included in such registration  statement to the extent necessary,  to permit the
sale or other disposition by the Employee of the Option Shares.
      (b) If a  Company  is  proposed  to be  underwritten  in whole or in part,
whether on a firm  commitment or best efforts basis,  the Option Shares shall be
included  at  Employee's   request  per  the  Company  and   Employee's   notice
requirements described in subparagraph (a) of this paragraph 4 in


                                      2

<PAGE>




the Company  Offering on the same terms and  conditions as the Company's  Common
Stock otherwise being sold through the underwriter(s),  provided,  however, that
if in the opinion of the managing  underwriter(s) of such Company Offering,  the
inclusion of the Securities would interfere with the successful marketing of the
Company's Common Stock by the Company, then the Employee shall reduce the amount
of the  Option  Shares to be  included  in the  Company  Offering  to the extent
necessary to comply with the recommendation of such managing underwriter(s).
      (c) If and whenever the Company is required by this  paragraph 4 to effect
the registration of the Option Shares under the Securities Act, the Company will
use all  reasonable  efforts  (and a  determination  that such efforts have been
employed shall be  conclusively  made by a letter to such effect from counsel to
the Company) to:
            (i) Prepare and file with the  Commission a  registration  statement
      with respect to the Option Shares and to cause such registration statement
      to become  effective at the earliest  possible  time and (by preparing and
      filing with the Commission such amendments to such registration  statement
      and supplements to the prospectus  contained  therein as may be necessary)
      to remain effective during the period required for the distribution of the
      Option Shares covered by such registration statement.
            (ii)  Enter  into a  written  underwriting  agreement  in  form  and
      substance  reasonably   satisfactory  to  the  Company  and  the  managing
      underwriter(s)  if a Company  Offering  is to be  underwritten  sole or in
      part, whether or not on a firm commitment or best efforts basis.
            (iii) Furnish to the Employee, in connection with a Company Offering
      in which the Employee is participating such reasonable number of copies of
      the registration statement,  preliminary prospectus,  final prospectus and
      other documents as may reasonably be requested;


                                      3

<PAGE>




            (iv)  Register or qualify the Option Share under the  securities  or
      "blue sky" laws of such  jurisdictions  within  the  United  States as the
      Company and the managing underwriter(s)  reasonably request, provided that
      the Company shall not be required to consent to general service of process
      for all purposes in any jurisdiction  where it is not then qualified to do
      business as a foreign corporation;
            (v) Notify the Employee  promptly  after the Company  shall  receive
      notice thereof,  of the time when such  registration  statement has become
      effective  or a  supplement  to any  prospectus  forming  a part  of  such
      registration statement has been filed.
   5. Employee shall be entitled to four (4) weeks paid vacation during the term
hereof.  Additionally,  Employee  shall be entitled to all health and  insurance
benefits and any other employee  benefit plans afforded by the Company to all of
its  employees.  In addition,  the Company  shall  provide  Moran with term life
insurance in the amount of $100,000  during the term of the Agreement;  provided
that the  Company  shall not  incur an annual  expense  greater  than  $1,000 in
connection with maintaining  such policy.  The Company shall have the right, but
not the  obligation,  to take out "key- man"  insurance  on  Employee.  Employee
agrees to consent to and make himself  available  for any physical  examinations
required by any insurance company chosen by Company in connection with Company's
procurement of any such "key-man" insurance during the term hereof.
   6. (a) During the Term hereof,  Employee agrees to be employed by the Company
and as such,  shall devote his best efforts to advance the interests of Company.
The foregoing  proscription  shall not prohibit Employee from making any passive
investments  in any  corporations,  or being a limited  partner  in any  limited
partnership.


                                      4

<PAGE>




      (b) Except in the course of the performance of his duties  hereunder,  for
no less than four (4) years after the execution hereof,  whether or not employed
by the Company, and for one (1) year after the expiration or termination of this
Agreement,  Employee agrees that he shall not, directly or indirectly,  alone or
as a  member  of a  partnership,  or  as  an  employee,  officer,  director,  or
shareholder of any other corporation,  be engaged in or concerned with any other
duties or pursuits within the  Commonwealth of  Massachusetts  (the "Non Compete
Territory")  that may compete  directly or indirectly  in any manner  whatsoever
with the Company's business at the date of the expiration or termination hereof,
except with the prior written consent of Company,  which consent may be withheld
by Company in its sole and absolute discretion. The foregoing proscription shall
not prohibit  Employee from making any passive  investments in any corporations,
or being a limited  partner in any limited  partnership  or from engaging in the
sale of beer or ale at a retail level.
   7.  Employee  acknowledges  and agrees  that his  services  to be provided to
Company  hereunder are of a unique and extraordinary  character,  and to replace
the services of Employee would cause the Company great hardship. Accordingly, in
the event of a breach or  threatened  breach by the  Employee of the  provisions
herein,  including  but not limited to  Sections 6 and 7 hereof,  in addition to
Company's other remedies hereunder,  Company shall be entitled to a temporary or
permanent  injunction  restraining  Employee from  violation of any of the terms
hereof.  Nothing herein contained shall be construed as prohibiting Company from
pursuing  any and all  other  remedies  available  to it for any such  breach or
threatened breach.
   8. Any financial  advice,  memoranda,  customer  list or other  documentation
which Employee  becomes aware of during the term of this Agreement  shall not be
disclosed to any  third-party  or person for any reason  whatsoever  without the
express, prior written approval of Company, which


                                      5

<PAGE>




may  be  withheld  by  Company  in  its  absolute  discretion.  It is  expressly
acknowledged   and  agreed  by  Employee   that  Company   shall  be  furnishing
proprietary,   confidential  product,  financial,   marketing,   organizational,
customer  and other  data  relating  to the  business  of  Company  (hereinafter
referred to, together with the advice,  memoranda and documentation  referred to
in the preceding sentence as "confidential information") during the term hereof.
Confidential  information  includes  not  only  original  information,  but also
information  transferred  orally,  in writing or by any other means  whether now
known or hereafter devised.  All confidential  information which Employee learns
of during the term hereof and all confidential  information  given by Company to
Employee  will  be  considered  non-public  and  shall  be  retained  as such by
Employee.   Confidential  information  shall  be  used  by  Employee  solely  in
connection with his duties hereunder and for no other purpose  whatsoever.  Upon
the  termination  of this Agreement for any reason,  Employee shall  immediately
deliver  to  Company  all  copies  of any  confidential  information  and  other
materials  delivered  to  Employee by Company and all  abstracts  and  summaries
thereof prepared by Employee.  Employee shall not have the right to disclose any
confidential information to any third-person or entity for any reason whatsoever
upon the expiration or termination of this Agreement.
      Notwithstanding  the  foregoing,  Employee  shall  not be  deemed  to have
breached  the   aforementioned   confidentiality   obligation  if  Employee  can
sufficiently  evidence to the Company  and its counsel by written  records  that
with respect to any of the Confidential Information, it:
            (i)   was at the time of the disclosure by the Company to Employee,
 in the public domain;


                                      6

<PAGE>




            (ii) has,  subsequent  to  disclosure  by the  Company to  Employee,
      become  part of the public  domain,  through no fault,  act or omission of
      Employee, directly or indirectly, in violation of such obligation;
            (iii) was, at the time of the disclosure by the Company to Employee,
      in Employee's  possession  and was not otherwise  directly or  indirectly,
      acquired from the Company;
            (iv) was received by Employee  from any third party,  provided  that
      such  information  was not  obtained  by said third party from the Company
      improperly,  directly or indirectly,  and was not improperly  disclosed by
      the third party to Employee.
   9. It is  expressly  understood  that the services of Employee are unique and
accordingly, Employee may not assign any of his rights or obligations hereunder.
Company  shall have the right to assign its  rights and  obligations  hereunder,
provided,  however,  that Company  shall remain liable for all  compensation  to
Employee hereunder.
   10.(a)  Termination by Company for Cause.
      (i) This  Agreement  and the Term may be  terminated  "for  cause"  by the
   Company. If the Company determines that "cause" exists for termination of the
   Employee's  employment,  written notice thereof must be given to the Employee
   describing  the state of affairs or facts deemed by the Company to constitute
   such cause.  The Employee  shall have 45 days after receipt of such notice to
   cure the  reason  constituting  cause if he does so,  the Term  shall  not be
   terminated for the cause specified in the notice.  During such 45 day period,
   the Term shall  continue  and the  Employee  shall  continue  to receive  his
   salary,  expenses and benefits  pursuant to this Agreement.  If such cause is
   not cured to the Company's reasonable satisfaction within such 45 day period,
   the Employee may then be immediately  terminated by the Company. For purposes
   of this paragraph, the words


                                      7

<PAGE>




   "for  cause" or "cause"  shall be limited  to: (A) actions on the part of the
   Employee  which  constitute  gross  negligence  or willful  misconduct in the
   performance or  non-performance of the Employee's duties that have the effect
   of materially injuring the reputation,  business or business relationships of
   the Company; or (B) the conviction of the Employee (including a conviction on
   a nolo  contendere  plea) of any  felony,  or of any crime or  offense  which
   involves  property or money of the Company or moral  turpitude (but excluding
   any  convictions  prior  to the  date  of  this  Agreement);  (C)  Employee's
   incarceration  following any conviction which restricts or limits the ability
   of the Employee to provide his duties hereunder; or (D) Employee's failure to
   make timely payments upon any of the liabilities set forth on Schedule 2.2(a)
   to the Asset  Purchase  Agreement  dated  September  20,  1996  between  Olde
   Marlborough Brewing Company, Inc. and Perry's Majestic Beer, Inc.
      (ii) In the event the Agreement and the Term are terminated by the Company
   for cause, the Employee's entire right to salary and benefits hereunder shall
   cease upon such termination.
   (b) Termination by Company Without Cause.
      (i) The Company  shall have the right to terminate  the  Agreement and the
   Term without cause on thirty (30) days' written notice to the Employee.
      (ii) In the event the Agreement and the Term are terminated without cause,
   the  Company  shall  continue  to  pay  to  Employee  the  amount   remaining
   outstanding  under  paragraph 3 hereof,  as such payments  become due and the
   Company shall  immediately  deliver to Employee any stock options which would
   have been delivered to him over the balance of the Term.
   (c)  Voluntary Termination by the Employee.


                                      8

<PAGE>




      (i) The  Employee  shall  have the  right  to  voluntarily  terminate  the
   Agreement and the Term upon thirty (30) days' written  notice to the Company,
   in which  event,  the  Employee  shall no longer be  entitled  to any salary,
   future option awards or benefits hereunder.
   (d)  Termination for Disability.
      (i)  Should  the  Employee  be absent  from  work as a result of  personal
   injury,  sickness  or other  disability  for any  continuous  period  of time
   exceeding 180 days, and if after  reasonable  accommodation,  the Employee is
   still unable to perform his duties  hereunder,  the Agreement and Term may be
   terminated by the Company,  upon written notice given to the Employee because
   of the Employee's permanent disability.
      (ii) In the event the Agreement and the Term are terminated for Employee's
   permanent disability, then following such termination, (A) the Employee shall
   continue to be entitled to salary for a period of ninety (90) days thereafter
   and (B) Employee shall  continue to receive his stock option awards  pursuant
   to  paragraph  4, which  provision  shall  survive any such  termination  for
   permanent disability. (e) Termination upon Death.
      If not earlier  terminated,  this  Agreement and the Term shall  terminate
   upon the death of the  Employee  and the  Company  shall  pay the  Employee's
   estate  the  following:  (i) his salary for a period of one year and (ii) the
   remainder of the stock  option to have been  awarded to Employee  pursuant to
   paragraph 4. 11.Each of the parties  hereto  represents,  warrants and agrees
   that it has the full right, power and
authority to enter into this Agreement,  and upon the full execution hereof this
Agreement  shall be a valid and  binding  and  enforceable  against  each of the
parties in accordance with its terms.


                                      9

<PAGE>




   12.Each of the  parties  hereto  expressly  acknowledges  and agrees that all
representations,  warranties  and  agreements  made by both  parties  hereunder,
except  with  respect  to  the  Company's   obligation  to  compensate  Employee
subsequent to the expiration or termination hereof, shall survive the expiration
or termination of this Agreement.
   13.This  Agreement,  including  any exhibits and  schedules  hereto and other
documents and certificates  delivered  pursuant to the terms hereof,  sets forth
the entire  agreement and  understanding of the parties hereto in respect of the
subject matter contained herein,  and supersede all prior agreements,  promises,
covenants, arrangements, communications,  representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto.
   14.All notices requested and other communication  required herein shall be in
writing and shall be deemed to be duly given and  delivered by either  certified
or registered mail,  return receipt requested with postage prepaid or by private
overnight mail service (e.g., Federal Express).
      If to Employee:

      Austin J. Moran, Jr.


      With copy to:




      Attn:


      If to Company:

      Perry's Majestic Beer, Inc.
      134 Morgan Avenue
      Brooklyn, NY  11237

      With copy to:


                                      10

<PAGE>




      Bernstein & Wasserman
      950 Third Avenue, 10th Floor
      New York, NY  10022
      Attn:  Hartley T. Bernstein, Esq.
   Or in each case to such other person who addresses any party shall furnish to
the other party in writing.
   15.The  remedies  provided  herein shall be cumulative and shall not preclude
Company from  asserting any other rights or seeking any other  remedies  against
Employee.
   16.If in any jurisdiction, any provision of this Agreement or its application
to any party or circumstance is restricted,  prohibited or  unenforceable,  such
provision shall, as to such  jurisdiction,  be ineffective only to the extent of
such  restriction,  prohibition or  unenforceability  without  invalidating  the
remaining provisions hereof and without affecting the validity or enforceability
of such provision in any other  jurisdiction or its application to other parties
or circumstances.
   17.No party  hereto shall make or issue,  or cause to be made or issued,  any
announcement or written statement  concerning this Agreement or the transactions
contemplated   hereby  for   dissemination   to  customers,   suppliers,   sales
representatives  or  employees  or the  general  public  prior to the  execution
hereof.
   18.This  Agreement and the legal  relations among the parties hereto shall be
governed by and constructed in accordance with the laws of the State of New York
without  regard to its  conflicts of law  doctrine.  Each of the parties  hereto
irrevocably consents to the jurisdiction of the Federal and State Courts located
in the State of New York.
   19.This  Agreement may be executed  simultaneously in one or more original or
facsimile  counterparts,  each of which shall be deemed an original,  but all of
which together shall constitute one and the same instrument.


                                      11

<PAGE>




   IN WITNESS WHEREOF,  the parties have executed this Agreement on the 17th day
of September 1996.
                        PERRY'S MAJESTIC BEER, INC.


                        By:/s/ Robert Sipper
                              Robert Sipper
                              Chief Executive Officer



                         /s/ Austin J. Moran, Jr.
                              Austin J. Moran, Jr.


                                      12

<PAGE>













                                    April 17, 1997


Mr. Robert Sipper
President
Bev-Tyme, Inc.
134 Morgan Avenue
Brooklyn, NY  11237

                  Re:   Loan

Dear Mr. Sipper:

   This letter summarizes our agreement as follows:

   1. Loan. Upon the execution of this letter, the undersigned  ("Lender") shall
loan (the "Loan") one hundred thousand dollars  ($100,000) to Bev-Tyme,  Inc., a
Delaware corporation (the "Company"), pursuant to the terms of a promissory note
(the  "Note") in the  amount of  $100,000  payable  on April 16,  1998 (the "Due
Date") which may be exchanged,  at the sole option of Lender, at any time before
the Due Date for 7,000,000 shares of Series B Preferred Stock of the Lender (the
"Series B Preferred Stock") which are held by the Company.  The form of the Note
is  attached  hereto as  Exhibit A.  Concurrently,  with the  execution  of this
letter, the Company shall execute and deliver the Note to Lender.

   2. Delivery of Series B Preferred  Stock.  Upon the exercise by Lender of its
right to exchange the Note for the Series B Preferred  Stock,  the Company shall
deliver to Lender  certificates  evidencing  the Series B  Preferred  Stock duly
endorsed in blank with signature guaranteed,  or with stock power attached, duly
endorsed in blank with signature guaranteed.

   3.  Governing  Law;  Jurisdiction  and  Venue.  Regardless  of the  place  of
execution  or  performance,  this letter and the Notes shall be governed by, and
construed in accordance  with,  the laws of the State of New York without giving
effect to such State's conflicts of laws provisions.  Each of the parties hereto
irrevocably  consents  to the  jurisdiction  and venue of the  federal and state
courts located in the State of New York, County of New York.



<PAGE>




   Please  acknowledge your consent to the foregoing terms by countersigning the
enclosed  duplicate copy of this letter and returning it to us together with the
Notes.

                              Very truly yours,

                              PERRY'S MAJESTIC BEER, INC.


                              By:/s/ Mark Butler
                                    Mark Butler, Executive Vice President



AGREED TO AND ACKNOWLEDGED:

BEV-TYME, INC.


By:/s/ Robert Sipper
      Robert Sipper, President



<PAGE>



                                 PROMISSORY NOTE 
 $100,000 
                                                             April 17, 1997
                                                     New York, New York


   FOR  VALUE  RECEIVED,  BEV-TYME,  INC.,  a  Delaware  corporation  ("Maker"),
promises  to pay to Perry's  Majestic  Beer,  Inc.  ("Holder")  at such place as
Holder may  designate  in  writing,  the  entire  principal  sum of one  hundred
thousand dollars ($100,000), together with interest at the rate of eight percent
(8%) per annum, on April 16, 1998 (the "Due Date"),  at which time all principal
and interest shall be due and owing.

   At any time prior to the Due Date,  at the sole  option of Holder,  this Note
may be exchanged for 7,000,000 shares of Series B Preferred Stock of Holder (the
"Series B Preferred  Stock") held by Maker.  In the event that Holder  exercises
its option to exchange this Note for the Series B Preferred  Stock,  Maker shall
forthwith deliver to Holder certificates evidencing the Series B Preferred Stock
duly endorsed in blank with signature guaranteed,  or with stock power attached,
duly endorsed in blank with signature  guaranteed.  Holder shall upon receipt of
said certificates deliver this Note marked "canceled" to Maker.

   All payments of principal and interest  hereunder  shall be payable in lawful
money of the United States.

   Maker  shall be in  default  hereunder,  at the  option of  Holder,  upon the
occurrence of any of the following events:  (i) the failure by Maker to make any
payment of principal or interest when due hereunder, and such failure shall have
continued  for a period of more than ten (10) days after notice and a reasonable
opportunity  to cure;  (ii) the entering into of a decree or order by a court of
competent  jurisdiction  adjudicating  Maker a bankrupt or the  appointing  of a
receiver  or  trustee  of  Maker  upon the  application  of any  creditor  in an
insolvency or bankruptcy  proceeding or other  creditor's suit; (iii) a court of
competent   jurisdiction   approving   as  properly   filed,   a  petition   for
reorganization or arrangement  filed against Maker under the Federal  bankruptcy
laws and such decree or order not being vacated  within  thirty (30) days;  (iv)
the  pendency of any  bankruptcy  proceeding  or other  creditors'  suit against
Maker; (v) a petition or answer seeking  reorganization or arrangement under the
Federal  bankruptcy  laws with  respect  to Maker;  (vi) an  assignment  for the
benefit of  creditors by Maker;  (vii) Maker  consents to the  appointment  of a
receiver  or  trustee  in  an  insolvency  or  bankruptcy  proceeding  or  other
creditors' suit;  (viii) the existence of any uncured event of default under the
terms of any  instrument  in writing  evidencing  a debt to  someone  other than
Holder,  provided,  that Maker is not  contesting  in good faith by  appropriate
proceedings  such uncured  event of default;  (ix) the existence of any judgment
against,  or any  attachment  of property of Maker;  or (x) any other  condition
which, in the good faith  determination of Holder,  would materially  impair the
timely repayment of this Note.




<PAGE>



   Upon the occurrence of any event or condition of default hereunder, or at any
time  thereafter,  Holder at his option may accelerate the maturity of this Note
and declare all of the  indebtedness  or any portions  thereof to be immediately
due and payable, together with accrued interest thereon, and payment thereof may
be enforced by suit or other process of law.

   If this Note is not paid when due,  whether at maturity  or by  acceleration,
Maker  agrees to pay all  reasonable  costs of  collection  and such costs shall
include without  limitation all costs,  attorneys' fees and expenses incurred by
Holder hereof in connection  with any  insolvency,  bankruptcy,  reorganization,
arrangement or similar  proceedings  involving Holder, or involving any endorser
or guarantor  hereof,  which in any way affects the exercise by Holder hereof of
its rights and remedies under this Note.

   Presentment, demand, protest, notices of protest, dishonor and non-payment of
this Note and all notices of every kind are hereby waived.

   The terms "Maker" and "Holder" shall be construed to include their respective
heirs, personal representatives, successors, subsequent holders and assigns.

   Regardless of the place of execution or performance, this letter and the Note
shall be governed by, and construed in accordance with, the laws of the State of
New York without  giving  effect to such state's  conflicts of laws  provisions.
Each of the parties hereto irrevocably consents to the jurisdiction and venue of
the federal  and state  courts  located in the State of New York,  County of New
York.

                                                   BEV-TYME, INC.


                              By: /s/ Robert Sipper
                                     Robert Sipper
                                     President


                                        2

<PAGE>



                            PERRY'S MAJESTIC BEER, INC.
                                 134 MORGAN AVENUE
                                 BROOKLYN, NY 11237



                                                 May 23, 1997

The Falcon Management Company, Inc.
92 Park Avenue
Port Washington, New York 11050
Attn: Robert Schildkraut

                              Re: Consulting Agreement

Dear Mr. Schildkraut:

   This Agreement is to confirm our understanding  with respect to the rendering
by you (the  "Consultant")  of certain  consulting  services to Perry's Majestic
Beer, Inc. ("Perry's"), upon the terms and conditions set forth below.

   1.  Payment by  Perry's.  As full and total  consideration  for the  services
provided by you to Perry's,  Perry's  hereby  grants to you the right and option
(the  "Option") to purchase  one hundred  thousand  (100,000)  shares of Perry's
common stock, par value $.0001 per share,  adjusted to reflect any stocks splits
or  reverse  splits,  at an  exercise  price of $0.875  per share  (the  "Option
Shares").The Option shall be exercisable for a period of four (4) years from the
date of  vesting.  The Option  Shares  granted to  Consultant  pursuant  to this
Paragraph 1 hereof shall vest upon execution of this Agreement.
  In addition,  Perry's shall pay Consultant a per diem amount of $300. The term
of this Agreement shall be for three (3) years from the date hereof.

   2. Method of Exercise. Each exercise of an option granted hereunder, shall be
by means of a notice of exercise (the "Notice of Exercise") delivered to Perry's
specifying the number of Option Shares to be purchased.  Within five (5) days of
receiving the Notice of Exercise,  the Company shall  schedule a closing,  which
shall be no more than five (5) days later.  At the  closing,  the Company  shall
deliver  the  Option  Shares to the  Consultant  with the  appropriate  transfer
documents and  Consultant  shall pay to the Company the full  purchase  price of
such exercised  Option Shares either in cash or by check payable to the order of
"Perry's  Majestic Beer,  Inc." All Option Shares issued pursuant to such option
shall be fully paid and nonassessable and shall not be subject to any liens.

   3.  Stockholder  Rights.  Neither the Consultant nor any other person legally
entitled  to  exercise  the  Option  shall be  entitled  to any of the rights or
privileges  of a  stockholder  of the Company with respect to any common  shares
issuable  upon any  exercise  of the  Option  unless  and  until  the  Option is
exercised.




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   4.  Consultant's  Obligations.  From  time to time the  Consultant  agrees to
provide  Perry's  with such  consulting  services  as  requested  by  Perry's in
connection with financial management, accounting controls, inventory management,
product costing and other general consulting as required by the Company.

   5.  Confidential  Information  Consultant  acknowledges that all information,
documents,   customer  lists,  patents,   trademarks,   copyrights,   materials,
specifications,  business strategies or any other ideas which directly relate to
the  business  of Perry's  (referred  to herein as  "Confidential  Information")
whether  prepared  or  generated  by  Consultant,  or Perry's  pursuant  to this
Agreement or otherwise in the possession or knowledge of Consultant prior to the
date hereof or coming into possession or knowledge of Consultant during the term
of this  Agreement  shall be the  exclusive,  confidential  property of Perry's,
except  to  the  extent   expressly   authorized   in  writing  by  Perry's  for
dissemination.  From  the  date of this  Agreement  through  and  including  the
twenty-fourth month following the termination of this Agreement or any extension
thereof (the  "Restricted  Period"),  Consultant  shall not disclose any of such
Confidential Information to any third party without the prior written consent of
Perry's and shall take all  reasonable  steps and actions  necessary to maintain
the confidentiality of such Confidential Information.

   6. Status as Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent contractor and not as an employee,  officer or
other agent of Perry's.  Neither party to this Agreement shall represent or hold
itself out to be the  employer  or  employee  of the other.  Consultant  further
acknowledges  that  the  compensation  provided  herein  is a  gross  amount  of
compensation  and that  Perry's  will not withhold  from such  compensation  any
amounts  respective income taxes,  social security payments or any other payroll
taxes.  All such income  taxes and  payments  shall be made or  provided  for by
Consultant  and Perry's shall have no  responsibility  or duties  regarding such
matters.

   7.  Miscellaneous.  This  Agreement  shall be  governed by and  construed  in
accordance  with the internal laws of the State of New York,  without  regard to
principles of conflicts of law, and the parties  irrevocably agree to submit any
controversy  or claim  arising out of or relating to this  Agreement  to binding
arbitration  conducted in the State of New York, City of New York, in accordance
with the rules of the American  Arbitration  Association in New York City.  This
Agreement may be executed simultaneously in counterparts,  each of which will be
deemed to be an original but all of which  together will  constitute one and the
same  instrument.  The invalidity or  unenforceability  of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement,  which shall remain in full force and effect.  This Agreement
contains  the entire  understanding  of the parties  hereto with  respect to its
subject matter.  This Agreement may be amended only by a written instrument duly
executed by the parties.




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   If this Agreement  accurately  reflects your  understanding of our agreement,
kindly sign the  enclosed  copy of this letter on the space  provided  below and
return it to me at your earliest convenience.

                              Very truly yours,


                              PERRY'S MAJESTIC BEER, INC.


                              /s/ Robert Sipper
                              Robert Sipper
                              President


Agreed to and Accepted as of
the Date First Written Above:

THE FALCON MANAGEMENT COMPANY, INC.


/s/ Robert Schildkraut
Robert Schildkraut



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                       AMENDMENT NO.1 TO CONSULTING AGREEMENT

   This Amendment No.1 to that certain Consulting  Agreement (this "Amendment"),
dated January 1, 1997, by and between  Perry's  Majestic Beer,  Inc., a Delaware
corporation (the "Company"), and Hartley T. Bernstein (the "Consultant").

                               W I T N E S S E T H :

   WHEREAS,  the Company and the Consultant entered into that certain Consulting
Agreement dated January 1, 1997 (the "Agreement"); and

   WHEREAS,  the Company and the  Consultant  desire to amend the  Agreement  to
effect the changes provided for herein.

   NOW,  THEREFORE,  in  consideration  of the  premises  and  mutual  covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
the parties hereto agree as follows:

   1.  Effective  as of the date  hereof,  the  Agreement  is hereby  amended by
extending the term of the Agreement by one (1) additional year in  consideration
for the issuance of options to purchase  100,000 shares of the Company's  Common
Stock,  par value  $.0001  per share  (the  "Options").  Such  Options  shall be
exercisable  immediately,  in whole or in part,  for a period  of five (5) years
from the date hereof, at an exercise price of $.875 per share.

   2. This Amendment  shall be governed by and construed in accordance  with the
laws of the State of New York, without regard to principles of conflicts of law.

   3. Except as otherwise  specifically  set forth herein,  all of the terms and
provisions of the Existing Agreement shall remain in full force and effect.

      IN WITNESS WHEREOF,  the parties have executed this Amendment this 4th day
of June, 1997.




                                    PERRY'S MAJESTIC BEER, INC.


                                    By: /s/ Robert Sipper
                                            Name:Robert Sipper
                                            Title:President

                                        /s/ Hartley T. Bernstein  
                                            Hartley T. Bernstein


                                         6

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