UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549
                                    ---------

                                   FORM 10-QSB

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

For the quarter ended     September 30, 1997    Commission File Numbe    0-21079

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

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

            38 West 32nd Street, Suite 801
            New York, New York                                 10001
            (Address of principal executive offices)        (Zip code)

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the  Securities  and  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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of November 13, 1997 was 3,708,335


<PAGE>



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



                                                              Page to Page
Item 1.  Financial Statements

   Balance Sheet as of September 30, 1997 [Unaudited].......... 1.....

   Statements of Operations for the three and six months ended
   September 30, 1997 and 1996 [Unaudited]..................... 2.....

   Statement of Stockholders' Equity for the six months ended
   September 30, 1997 [Unaudited].............................. 3.....

   Statements of Cash Flows for the six months ended
   September 30, 1997 and 1996 [Unaudited]..................... 4.....

   Notes to Financial Statements [Unaudited]................... 5..... 12

Item 2.  Managements' Discussion and Analysis of the Financial
         Condition and Results of Operations...................13......15

Signature......................................................16......





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


<PAGE>



Item 1:

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


BALANCE SHEET AS OF SEPTEMBER 30, 1997.
[UNAUDITED]
------------------------------------------------------------------------------


Assets:
Current Assets:
  Cash and Cash Equivalents                                         $   843,593
  Accounts Receivable - Net                                             116,825
  Inventory                                                             132,908
  Prepaid Insurance                                                       9,079
                                                                    -----------

  Total Current Assets                                                1,102,405

Property and Equipment - Net                                             90,258
                                                                    -----------

Other Assets:
  Goodwill - [Net of Accumulated Amortization of $128,349]              385,081
  Other Intangible Assets - Net                                         259,320
  Other Assets                                                           20,943
                                                                    -----------

  Total Other Assets                                                    665,344
  Total Assets                                                      $ 1,858,007
                                                                    ===========

Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                                  $   127,730
  Accrued Expenses                                                       25,137
  Payroll Taxes Payable                                                  12,215
                                                                    -----------

  Total Current Liabilities                                             165,082

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  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                                          7,231,277

  Retained Earnings [Deficit]                                        (1,526,222)

  Total                                                               5,712,925
  Less: Deferred Compensation                                        (2,020,000)
        Treasury Stock [7,000,000 Shares of Non-Convertible
        Class B Preferred]                                           (2,000,000)

  Total Stockholders' Equity                                          1,692,925

  Total Liabilities and Stockholders' Equity                        $ 1,858,007
                                                                    ===========

The Accompanying Notes are an Integral Part of These Financial Statements.

                                         1

<PAGE>



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


STATEMENTS OF OPERATIONS
[UNAUDITED]
------------------------------------------------------------------------------
<TABLE>


                                        Three months ended         Six months ended
                                           September 30,             September 30,
                                           -------------             -------------
                                       1 9 9 7      1 9 9 6      1 9 9 7       1 9 9 6
                                       -------      -------      -------       -------

<S>                                  <C>          <C>           <C>          <C>        
Sales - Net                          $   148,726  $   154,125   $  447,051   $   409,418

Cost of Goods Sold                        99,214      117,797      333,558       327,138
                                     -----------  -----------   ----------   -----------

  Gross Profit                            49,512       36,328      113,493        82,280
                                     -----------  -----------   ----------   -----------

Selling, General and Administrative
  Expenses:
  Selling, Advertisement and
   Promotion                               51,057           --       95,371            --
  General and Administrative
   Expenses                               199,200       75,539      350,555       117,133
  Amortization of Deferred
   Compensation                           146,250           --      292,500            --
  Amortization of Goodwill and
   Distribution Rights                     41,048        8,200       77,662         8,200
                                      -----------  -----------   ----------   -----------

  Total Selling, General and
   Administrative Expenses               437,555        83,739      816,088       125,333
                                     -----------   -----------   ----------   -----------

Loss on Related Party Receivable              --            --      149,743            --
                                     -----------   -----------   ----------   -----------

  [Loss] Income from Operations         (388,043)      (47,411)    (852,338)      (43,053)
                                     -----------   -----------   ----------   -----------

Other [Income] Expense:
  Interest Expense                            --         2,046           --         6,998
  Interest Income                        (11,330)       (1,154)     (24,407)       (2,338)
                                     -----------   -----------   ----------   -----------

  Other [Income] Expense - Net           (11,330)          892      (24,407)        4,660
                                     -----------   -----------   ----------   -----------

  [Loss] Income Before Income
   Taxes                                (376,713)      (48,303)    (827,931)      (47,713)

Provision for Income Taxes                    --            --           --            --
                                     -----------   -----------   ----------   -----------

  Net [Loss] Income                  $  (376,713)$     (48,303)  $ (827,931)  $   (47,713)
                                     ===========   ===========   ==========   ===========

  Weighted Average Number of
   Shares                              3,708,335     2,855,073    3,708,335     2,678,507
                                     ===========   ===========   ==========   ===========

  Net [Loss] Income Per Share        $      (.10)  $      (.02)        (.22)         (.02)
                                     ===========   ===========   ==========   ===========

</TABLE>


The Accompanying Notes are an Integral Part of These Financial Statements.

                                         2

<PAGE>



PERRY'S MAJESTIC BEER, INC.
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STATEMENT OF STOCKHOLDERS' EQUITY
[UNAUDITED]
------------------------------------------------------------------------------
<TABLE>


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

<S>                           <C>        <C>    <C>       <C>  <C>        <C>          <C>          <C>       <C>        <C>      
Balance - April 1, 1997       7,500,000  $7,500 3,708,335 $370 $7,331,277   $(698,291) $(2,312,500) (568,560)         -- $3,759,796

Exchange of Promissory Note
 Receivable for 7,000,000 
 Shares of Series B
 Preferred of the Company [7]        --      --        --   --   (100,000)         --           --   568,560  (2,000,000)(1,531,440)
 
Amortization of Deferred
  Compensation                       --      --        --   --         --          --      292,500        --           --   292,500

Net [Loss] for the six months
  ended September 30, 1997           --      --        --   --         --    (827,931)          --        --           --  (827,931)
                              ---------  ------ --------- ---- ---------- -----------  -----------  -------- ------------ ---------

Balance - September 30, 1997  7,500,000  $7,500 3,708,335 $370 $7,231,277 $(1,526,222) $(2,020,000)       -- $(2,000,000)$1,692,925
                              =========  ====== ========= ==== ========== ===========  ===========  ======== =========== ==========

</TABLE>


The Accompanying Note are an Integral Part of These Financial Statements.



                                           3

<PAGE>



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


STATEMENTS OF CASH FLOWS
[UNAUDITED]
------------------------------------------------------------------------------
<TABLE>


                                                              Six months ended
                                                                 September 30,
                                                             1 9 9 7       1 9 9 6
                                                             -------       -------

<S>                                                        <C>          <C>         
  Net Cash - Operating Activities                          $ (436,349)  $  (202,877)
                                                           ----------   -----------

Investing Activities:
  Purchase of Kegs                                            (41,470)           --
  Purchase of Furniture and Fixtures                          (25,835)           --
  Payments for Label and Packaging Design                     (70,688)           --
  Payments for Post Road Brand                                 (3,268)           --
  Acquisition of Old Marlborough Brewing                           --      (160,513)
  Riverosa Acquisition                                             --      (100,000)
  Loan to Bev-Tyme, Inc.                                           --       (75,000)
  Repayment of Loan to Bev-Tyme                                    --        75,000
                                                           ----------   -----------

  Net Cash - Investing Activities                            (141,261)     (260,513)
                                                           ----------   -----------

Financing Activities:
  Proceeds from Sale of Preferred Stock to Bev-Tyme, Inc.          --        75,000
  Loan Receivable from Bev-Tyme, Inc.                        (100,000)           --
  Proceeds from Sale of Common Stock - Stock Subscription          --         4,800
  Proceeds from Bridge Loans                                       --        60,000
  Payment of Bridge Loan Obligation                                --      (150,000)
  Proceeds of Public Offering - Net of Offering Costs              --     2,475,086
                                                           ----------   -----------

  Net Cash - Financing Activities                            (100,000)    2,464,886
                                                           ----------   -----------

  Net [Decrease] Increase in Cash and Cash Equivalents       (677,610)    2,001,496

Cash and Cash Equivalents - Beginning of Periods            1,521,203        60,200
                                                           ----------   -----------

  Cash and Cash Equivalents - End of Periods               $  843,593   $ 2,061,696
                                                           ==========   ===========

Supplemental Disclosures of Cash Flow Information:
  Cash paid for the periods for:
   Interest                                                $       --   $     6,998
   Income Taxes                                            $       --   $        --
</TABLE>

Supplemental Disclosures of Non-Cash Investing and Financing Activities:
   On June 13, 1997, the Company  converted a promissory  note  receivable  from
Bev-Tyme, Inc. ["Bev- Tyme"] for $100,000, in consideration for 7,000,000 shares
of the Company's  Series B Preferred  Stock held by Bev-Tyme.  Treasury stock of
$2,000,000  was recorded and the  unrealized  loss and  investment  in Bev- Tyme
eliminated.  As a result of this transaction,  Perry's is no longer a subsidiary
of Bev-Tyme effective July 1, 1997 for accounting purposes. As a corporation, it
was a separate legal entity even when it was a subsidiary.




The Accompanying Notes are an Integral Part of These Financial Statements.

                                         4

<PAGE>



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



[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 and
ceased as a  subsidiary  on June 13,  1997  [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.  Perry's Majestic is distributed in New York City, North
Carolina, Ohio and Florida [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 and
applesauce blends.  Post Road brand beer is distributed in Massachusetts,  Rhode
Island, Connecticut and Maine [See Note 6].

Perry's  is no longer a  subsidiary  of  Bev-Tyme,  although  the two  companies
continued to have some common  management  through July 17, 1997.  However,  for
accounting purposes Perry's was treated as a subsidiary of Bev-Tyme through June
30, 1997. As a  corporation,  it was a separate  legal entity even when it was a
subsidiary.

[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] Basis of Reporting - The accompanying  unaudited  financial  statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial  information and with the instructions to Form 10-QSB and Item
310(b)of Regulation S-B. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  such statements include all
adjustments  which  are  considered  necessary  in  order  to make  the  interim
financial statements not misleading.

[D]  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.

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



                                        5

<PAGE>



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



[2] Summary of Significant Accounting Policies [Continued]

[F] Property and  Equipment - Property and  equipment are stated at cost and are
depreciated  over its  estimated  useful life of 3 to 5 years.  Depreciation  is
calculated using the straight-line method.

[G] Advertising  Expense - Advertising costs are expensed as used in promotional
programs with new distributors and customers and adjusted to actual at year end.
For  the  six  months  ended   September  30,  1997,   advertising   costs  were
approximately $37,450.

[H]  Intangibles  - The Company has  acquired  various  intangible  assets.  The
Company amortizes  intangible assets over 5 years under the straight-line method
[See Note 5].

[I] 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 September  30,  1997,  the
Company's uninsured cash balance totaled approximately $649,000.

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 September 30, 1997 of $4,000.
The Company believes any credit risk beyond this amount would be negligible.

With respect to purchases of inventory  for the six months ended  September  30,
1997,  the  Company  purchased  inventory  from  one  supplier  which  comprised
approximately  85% of the Company's  total cost of sales.  The Company  believes
there are other suppliers available to meet the Company's needs.

As of September 30, 1997, the Company distributes its products primarily through
fourteen  wholesale  distributors  for  resale  to  retailers.  One  distributor
accounts for 76% of the Company's sales.  Accordingly,  the Company is dependent
upon this  distributor to sell the Company's  products and to assist the Company
in  promoting  market  acceptance  of, and  creating  demand  for the  Company's
products in its territory.  The Company  believes  there are other  distributors
available  to meet the  Company's  needs and the  Company  is  discussing  doing
business with these  distributors who distribute in territories other than those
currently covered.

[J] 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.

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

[L] 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.

                                        6

<PAGE>



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



[2] Summary of Significant Accounting Policies [Continued]

[M] 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.

[N] 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.

[3] Inventories

The  Company's  inventory  consists of raw  materials,  packaging  and  finished
products of $132,908.

[4] Plant and Equipment and Depreciation

Plant and equipment and accumulated depreciation are as follows:

Furniture and Fixtures                         $   18,566
Warehouse Equipment                                10,219
Kegs                                               49,864
Storage Equipment                                  19,941
Leasehold Improvements                              3,500
                                               ----------

Total - At Cost                                   102,090
Less:  Accumulated Depreciation                    11,832

  Net                                          $   90,258
  ---                                          ==========

Depreciation expense for the six months ended September 30, 1997 was $9,304.

[5] Other Intangible Assets

Other intangible assets and accumulated amortization are as follows:

                                               Accumulated
                                      Cost    Amortization      Net

Label and Packaging Design          $ 138,861  $    9,514  $  129,347
Orchard Annie Concept                  67,348       6,735      60,613
Distribution Rights                    86,700      17,340      69,360
                                    ---------  ----------  ----------

  Totals                            $ 292,909  $   33,589  $  259,320
  ------                            =========  ==========  ==========

Amortization expense for the six months ended September 30, 1997 was $24,909.



                                        7

<PAGE>



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



[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 $24,600  was  recorded  for the six months  ended
September 30, 1997.

[B] Old  Marlborough  Brewing Co., Inc.  ["Old  Marlborough"]  - In September of
1996,  the  Company  acquired  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 six months ended September
30, 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  from an  officer  of the  Company  for  approximately  $67,000 in cash.
Additionally,  Perry's agreed to issue 50,000 shares of common stock to the same
officer in connection  with the sale.  These shares will be issued in the second
quarter  of 1997  and the  fair  value  of these  shares  will be  allocated  to
intangible  assets.  The combination is accounted for by the purchase method. In
addition,  the Company agreed 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.  For the six months ended September 30, 1997,  royalty expense
was $1,591.

[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.

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.



                                        8

<PAGE>



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



[7] Investment - Related Party [Continued]

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  converted the
promissory note receivable from Bev-Tyme,  Inc. ["Bev-Tyme"] for $100,000,  into
the 7,000,000 shares of the Company's Series B Preferred Stock held by Bev-Tyme.
Treasury stock of $2,000,000 was recorded as the stock has not been canceled and
the unrealized loss and investment in Bev-Tyme has been eliminated.  The 400,000
shares of Series C  Preferred  of Bev-Tyme  and the  524,000  shares of Bev-Tyme
common stock received as a dividend on the investment in Bev-Tyme are still held
by Perry's and are accounted for with no value on the financial statements. As a
result of the June 13, 1997  transaction,  Perry's is no longer a subsidiary  of
Bev-Tyme,  although the two companies  continued to have some common  management
through July 7, 1997. However,  for accounting purposes Perry's was treated as a
subsidiary of Bev-Tyme through June 30, 1997.

[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.

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                 $      --
  -----------------------------                 =========

                                        9

<PAGE>



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



[8] Income Taxes [Continued]

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] 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.

[C] 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 per share,  which  represents  fair market value at the
time of issuance.

[D] On September 23, 1997,  the Board of Directors  issued  300,000  options for
common stock to certain  officers and directors at an exercise price of $.50 per
share which represents fair market value at the time of issuance.

[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.

                                       10

<PAGE>



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



[12] New Authoritative Pronouncements [Continued]

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.

The FASB has issued SFAS No. 130, "Reporting Comprehensive Income."  SFAS No. 
130 is effective for fiscal years beginning after December 15, 1997.  Earlier 
application is permitted.  Reclassification of financial statements for earlier 
periods provided for comparative purposes is required.  SFAS No. 130 is not 
expected to have a material impact on the Company.

The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise 
and Related Information."  SFAS No. 131 changes how operating segments are 
reported in annual financial statements and requires the reporting of selected 
information about operating segments in interim financial reports issued to 
shareholders.  SFAS No. 131 is effective for periods beginning after 
December 15, 1997, and comparative information for earlier years is to be 
restated.  SFAS No. 131 need not be applied to interim financial statements in 
the initial year of its application.  SFAS No. 131 is not expected to have a 
material impact on the Company.

[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.

[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 $237,500  was  expensed for the six
months ended September 30, 1997.

                                       11

<PAGE>



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



[14] Commitments and Contingencies [Continued]

[A]  Employment  Agreements  [Continued]  - On July 7,  1997,  Robert J.  Sipper
resigned as President and Chief Financial  Officer of Bev-Tyme,  Inc. as well as
resigning as Vice President and Chief Operating Officer of Mootch and Muck, Inc.
Subsequently, Mr. Sipper resigned from the Bev-Tyme Board of Directors.

[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. On June 4,1997,  this agreement was amended extending the period of
service one additional  year. This agreement was valued at $450,000 and recorded
as deferred  compensation.  Amortization of $55,000 was recorded as amortization
expense for the six months ended September 30, 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.  Royalty  expense of $1,591 was recorded for the six months ended
September 30, 1997.

[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.  In addition,
the agreement also calls for a per diem payment of $300.

[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 six months ended September 30, 1997 was $3,940. 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.

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



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

                                       12

<PAGE>



Item 2:

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. A winter seasonal beer, Post Road Snowshoe
ale has been  introduced  in  November  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
and Windsor, Vermont.

In March 1997, the Company acquired all the outstanding  stock of Orchard Annie,
Inc., a manufacturer of natural  applesauces.  The Company  introduced its first
four flavors of applesauce  under the brand name Quigleys.  Quigleys is produced
by Lereoux Creek Foods, Inc., located in Hotchkiss, Colorado. The Quigleys brand
will be managed by the Company's existing management.  As of September 30, 1997,
the Company has entered into  arrangements with three brokers to sell Quigley's.
Additionally,  there is currently four  distributors  of Quigley's.  The Company
expects to add more distributors and brokers over the next 6-12 months.

RESULTS OF OPERATIONS

The Company had a loss from  operations  of $852,338  and a net loss of $827,931
for the six  months  ended  September  30,  1997.  The  Company  had a loss from
operations of $43,053 and net loss of $47,713 for the six months ended September
30, 1996. The loss from  operations in the six month period ended  September 30,
1997 was primarily due to an  insufficient  gross profit to support the selling,
general and administrative expenses of approximately $446,000 in addition to the
amortization  of deferred  compensation  of  $292,500.  For the six months ended
September  30,  1996,  the Company had just begun its  operations  and  incurred
approximately $117,000 of selling, general and administrative expenses.



                                       13

<PAGE>



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



RESULTS OF OPERATIONS [CONTINUED]

The net sales for the Company for the six months ended  September  30, 1997 were
$447,051 as compared to $409,418  for the six months ended  September  30, 1996.
Sales  decreased  for the three months ended  September 30, 1997 compared to the
three months ended September 30, 1996 by approximately $150,000 primarily due to
the Company  discontinuing  sales of brands not  produced by the  Company.  Such
other brands which previously had been sold by Perry's,  during which period the
Company  was a  subsidiary  of  Bev-Tyme,  Inc.,  are now being sold by a former
affiliate,  Mootch & Muck. As of June 13, 1997,  the Company only sells products
it produces. The Company believes its distributor base will increase during 1997
and 1998.  The Company  intends to introduce at least two new style beers within
the next twelve months and launch its newly acquired brand Quigley's all natural
applesauce.  The Company  began  shipping its  Quigley's  products in June 1997.
Emphasis  will be placed on building  sales  volume in food  service and gourmet
shops 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 had a gross  profit of  $113,493  as compared to a gross  profit of
$82,280 for the six months ended September 30, 1997 and 1996, respectively.  The
Company's  gross  profit  for the three  months  ended  September  30,  1997 was
approximately  32% as compared to a three month gross profit at June 30, 1997 of
approximately  21%.  This  increase  is  primarily  attributable  to the Company
selling its proprietary products only.

The Company's selling,  general and  administrative  expenses for the six months
ended  September  30, 1997 and 1996 were  $816,088 and  $125,739,  respectively.
Selling,  general and administrative expenses for the six months ended September
30, 1997 increased approximately 16% over the prior six months ended.
This increase was primarily due to increased promotional activities.

For  the  three  months  ended   September   30,  1997   selling,   general  and
administrative  expenses increased  approximately  $50,000 over the three months
ended June 30, 1997. This was primarily attributable to

LIQUIDITY AND CAPITAL RESOURCES

Perry's had working  capital at  September  30,  1997 of  $937,323.  For the six
months ended  September  30,  1997,  the Company  utilized  $436,349 in cash for
operating  activities as compared to $202,877 for the six months ended September
30, 1996.  The use of cash for  operations is primarily due to the Company's net
loss of $827,931. The Company utilized $141,261 in cash for investing activities
for the purchase of kegs,  furniture  and  equipment and for label and packaging
design for new beer styles.  The Company utilized $100,000 in cash for financing
activities for the six months ended September 30, 1997 for a loan to Bev-Tyme on
April 13,  1997 and the  subsequent  reacquisition  of the  Company's  7,000,000
non-convertible Class B Preferred Stock, as settlement in full of the promissory
note, on June 13, 1997.







                                       14

<PAGE>



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



LIQUIDITY AND CAPITAL RESOURCES [CONTINUED]

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 $237,500  was  expensed for the six
months ended September 30, 1997.

On July 7, 1997, Robert J. Sipper resigned as President and Chief Financial 
Officer of Bev-Tyme, Inc. as well as resigning as Vice President and Chief 
Operating Officer of Mootch and Muck, Inc. Subsequently, Mr. Sipper resigned 
from the Bev-Tyme Board of Directors.

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. 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. On
June 4,1997,  this  agreement  was amended  extending  the period of service one
additional  year. This agreement was valued at $450,000 and recorded as deferred
compensation.  Amortization of $55,000 was recorded as amortization  expense for
the six months ended September 30, 1997.

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 from an officer of the
Company for approximately $67,000 in cash. Additionally, Perry's agreed to issue
50,000 shares of common stock to the same officer in  connection  with the sale.
These shares will be issued in the second  quarter of 1997 and the fair value of
these  shares  will be  allocated  to  intangible  assets.  The  combination  is
accounted for by the purchase method. In addition,  the Company agreed 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.  For the six
months ended September 30, 1997, royalty expense was $1,591.

In May of 1997,  the Company  entered  into a three year lease for office  space
with monthly rent of $1,200.

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. In addition,  the agreement also calls for a
per diem payment of $300.

On September 23, 1997, the Board of Directors  issued 300,000 options for common
stock to  certain  officers  and  directors  at a  purchase  price of $.50 which
represents fair market value at the time of issuance.

The Company  anticipates  that its current cash position along with  anticipated
cash to be generated from operating activities will be sufficient to satisfy its
cash  requirements for at least the twelve 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.





                                       15

<PAGE>



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



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.

The FASB has issued SFAS No. 130, "Reporting Comprehensive Income."  SFAS No. 
130 is effective for fiscal years beginning after December 15, 1997.  Earlier 
application is permitted.  Reclassification of financial statements for earlier 
periods provided for comparative purposes is required.  SFAS No. 130 is not 
expected to have a material impact on the Company.

The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise 
and Related Information."  SFAS No. 131 changes how operating segments are 
reported in annual financial statements and requires the reporting of selected 
information about operating segments in interim financial reports issued to 
shareholders.  SFAS No. 131 is effective for periods beginning after 
December 15, 1997, and comparative information for earlier years is to be 
restated.  SFAS No. 131 need not be applied to interim financial statements in 
the initial year of its application.  SFAS No. 131 is not expected to have a 
material impact on the Company.

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.

                                       16

<PAGE>


SIGNATURE
------------------------------------------------------------------------------




Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereon duly authorized.


                                       PERRY'S MAJESTIC BEER, INC.




November 13, 1997                By:/s/ Robert J. Sipper
                                    --------------------
                                    Robert J. Sipper, President, Chief Executive
                                    Officer, Chief Financial Officer and Chief
                                    Principal Accounting Officer

                                       17

<PAGE>