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              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 March 31, 1997

              Commission File Number  33-82208-LA

                       BAYHAWK ALES, INC.

        (Exact name of registrant as specified in charter)

        Delaware                         33-0606860
 (State or other jurisdiction of     (I.R.S. Employer
 incorporation or organization)    Identification Number)

                 _______________________________

                   2000 Main Street - Suite A
                    Irvine, California 92714
                          (714) 442-7565

      (Address, including Zip code, and telephone number,
    including area code, of registrant's principal executive
                              offices)

____________________________________________________________

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

Transitional Small Business Disclosure Format       
                                 [  ] YES         [X] NO

      Number of shares of common stock outstanding as of 
                        March 31, 1997:

                2,200,814 shares, $.001 par value
============================================================
                        BAYHAWK ALES, INC.


                       INDEX TO FORM 10-QSB

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Part I - FINANCIAL INFORMATION

The information included herein is unaudited.  However, such 
information reflects all adjustments (consisting solely of 
normal, recurring adjustments) which are, in the opinion of 
the Company's management, necessary for a fair presentation 
of the results of operations for the interim periods.  The 
interim financial information and notes thereto should be 
read in conjunction with the Company's latest annual report 
on Form 10-KSB/A.  The results of operations for the three 
months ended March 31, 1997 are not necessarily indicative of 
results to be expected for the entire year.


Item 1 -- Financial Statements

Balance Sheet - March 31, 1997 and December 31, 1996. . . 

Statement of Operations - Three Months Ended 
March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . 

Statement of Cash Flows - Three Months Ended 
   March 31, 1997 and 1996 . . . . . . . . . . . . . . . .

Notes to Financial Statements. . . . . . . . . . . . . . .

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

Part II - OTHER INFORMATION

Item 6 -- Exhibits and Reports on Form 8-K . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . .



Item 1 -- Financial Statements


                           BAYHAWK ALES, INC. 
                 
                             Balance Sheet

                                     March 31, 
                                       1997       December 31, 
ASSETS                              (unaudited)       1996
                                   -----------    -----------
Current assets:
   Cash                              $20,843         $40,954  
   Accounts receivable                56,739          64,349  
   Inventories                        31,705          23,692 
   Other current assets, net           2,707               - 
                                    ---------       ---------
   Total current assets              111,994         128,995  

 Property and equipment, net         789,985         802,798  
                                   ----------      ----------
Total assets                        $901,979        $931,793  
                                   ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                  $39,844          $36,798  
   Accrued liabilities                22,329           16,780  
   Container deposits                 29,623           19,339  
   Payable to parent and 
    affiliated companies, net        304,193          291,586  
                                    ---------        ---------
   Total current liabilities         395,989          364,503  

Shareholders' equity:
    Common stock, $.001 par 
     value - 10,000,000 shares 
     authorized, 2,200,814 and
     2,200,814 shares outstanding      2,201            2,201  
   Additional paid-in capital      1,427,982        1,427,982  

Accumulated deficit                 (924,193)        (862,893) 
                                    ---------        ---------
Total shareholders' equity           505,990          567,290  

Total liabilities and 
  shareholders' equity              $901,979         $931,793  
                                    =========        =========



                      BAYHAWK ALES, INC. 
                 
                   Statement of Operations
                         (unaudited)


                              Three Months Ended March 31, 
                                    1997          1996
                                  --------        --------
Gross revenues                    $92,652         $55,928  
Less: excise taxes                 (5,451)         (4,862)  
                                  --------        --------
Net revenues                       87,201          51,066  

Cost of revenues                   88,110          93,834  
                                  --------        --------

Gross deficit                        (909)        (42,768) 

 Selling, general and 
   administrative expenses         60,598          66,646  
                                  --------       ---------
Loss from operations              (61,507)       (109,414) 

Interest income                       207           3,046  
Interest expense                        -           4,628  
                                 ---------      ----------
Net loss                         $(61,300)      $(110,996)
                                 =========      ========== 

Net loss per common share          $(0.03)         $(0.05)
                                 =========      ==========
Weighted average number of
common shares outstanding       2,200,814       2,200,814 
                                ---------       --------- 




                           BAYHAWK ALES, INC. 
                  
                         Statement of Cash Flows

                                    Three Months Ended March 31, 
                                         1997           1996
                                       ---------     ----------
Cash flows from operating 
activities:
   Net loss                            $(61,300)     $(110,996) 
   Reconciliation of net loss
    to net cash provided by 
    operating activities:
    Depreciation and amortization        12,813         15,253  
    Changes in assets and liabilities:
     Accounts receivable                  7,610        (27,538) 
     Inventories                         (8,013)         4,943  
     Other current assets                (2,707)        (7,074) 
     Accounts payable                     3,046          8,555  
     Accrued liabilities and 
       container deposits                15,833          1,123  
     Payables to parent and 
       affiliated companies              12,607          13,985 
                                         
                                       ---------      ----------
   Net cash used for operating
     activities                         (20,111)       (101,749) 

Cash flows from investing activities:
   Purchases of property and equipment        -          (3,584) 
                                       ---------      ----------   
Net cash used for investing activities        -          (3,584) 

Cash flows from financing activities:
   Increase in stock offering costs           -          (4,263) 
                                       ---------      ----------   
Net cash used for financing
   activities                                 -          (4,263) 
                                       ---------      ----------               
Net decrease in cash and cash 
   equivalents                          (20,111)       (109,596) 

Cash and cash equivalents:
   Beginning of period                   40,954         302,247  
                                       ---------      ----------   
   End of period                        $20,843        $192,651  
                                       =========      ==========





                        BAYHAWK ALES, INC.

                   NOTES TO FINANCIAL STATEMENTS
             

BASIS OF PRESENTATION

The Company's financial statements enclosed herein are 
unaudited and, because of the seasonal nature of the 
business and the varying schedule of its special sales 
efforts, these results are not necessarily indicative of the 
results to be expected for the entire year.  In the opinion 
of management, the interim financial statements reflect all 
adjustments, consisting of only normal recurring items which 
are necessary for a fair presentation of the results for the 
periods presented.  The accompanying financial statements 
have been prepared in accordance with GAAP and SEC 
guidelines applicable to interim financial information which 
require management to make certain estimates and 
assumptions.  These estimates and assumptions affect
 the reported amounts of assets and liabilities, the 
disclosure of contingent assets and liabilities as of the 
date of the financial statements, and the reported amounts 
of revenues and expenses during the period.  Actual results 
could differ from those estimates.  The accompanying 
financial statements and related notes should be read in 
conjunction with the financial statements and notes thereto 
included in the Company's Annual Report on Form 10-KSB/A.

The Company has recorded significant losses in the  quarter 
ended March 31, 1997 and during the prior year, has negative 
working capital of $283,995, and has limited access to 
capital with which to fund future operations.  There can be 
no assurance that the Company will produce and sell its 
products on a profitable basis to sustain operations.  Such 
factors, among others, raise substantial doubt as to its 
ability to continue as a going concern.  During the quarter 
ended March 31, 1997 the Company entered into an investment 
agreement to be merged with other affiliated companies and 
convert its stock into shares of a new publicly traded 
entity as discussed in the Pending Consolidation note below.


Inventories

Inventories consist of the following:

                                March 31,       December 31,
                                  1997              1996    
                             -------------      ------------
Raw materials                $      24,921             9,969
Work-in-process                      3,500             3,484
Finished goods                       3,284            10,239
                             -------------      ------------
                             $      31,705            23,692
                             =============      ============


                      BAYHAWK ALES, INC.

            NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Property and Equipment

Property and Equipment consists of the following:

                               March 31,        December 31,
                                 1997               1996    
                             -------------      ------------
Leasehold improvements       $     277,546      $    277,546
Equipment                          634,523           634,040
Office furniture and equipment       4,161             4,644
                             -------------      ------------

                                   916,230           916,230

Less accumulated depreciation     (126,245)         (113,432)
                            --------------     -------------

                             $     789,985      $    802,798
                            ==============     =============


Shareholders' Equity

The Company is authorized to issue 10 million shares of its 
common stock.  Each share of common stock entitles the 
holder to one vote.  At its discretion, the Board of 
Directors may declare dividends on share of common stock, 
although the Board does not anticipate paying dividends in 
the foreseeable future.  In February 1994, the Company 
received $100,000 from WVI in exchange for 1,249,811 shares 
of unregistered common stock.

During 1995, the Company sold 948,633 shares of its common 
stock at $1.65 per share, pursuant to a Regulation A public 
offering filed with the Securities and Exchange Commission.  
Cash proceeds from this offering, net of offering expenses 
of approximately $235,000, aggregated $1,326,273.


Net Loss Per Share
Net loss per common share is calculated based on the 
weighted average number of common shares and common share 
equivalents outstanding during the three month periods ended 
March 31, 1997 and 1996.  Outstanding options to purchase 
shares of the Company's common shares have not been included 
in the calculations as their effect would be anti-dilutive.

Stock Incentive and Stock Grant Plans
During 1994, the Board of Directors established a pool of 
250,000 shares of the Company's common stock for a stock 
incentive plan for issuance to employees, consultants, 
directors, and consultants of the Company pursuant to the 
exercise of stock options granted under the plan or stock 
grants or stock sales.  Administration of the plan, 
including determination of the number of shares to be 
issued, the term of exercise of any option, the option 
exercise price, and type of options to be granted, lies with 
the Board of Directors or a duly authorized committee of the 
Board of Directors.

No compensation expense has been recorded as a result of 
granting any of the options as all such options were granted 
with an exercise price equal to the market price on the date 
of grant.  

As of March 31, 1997, options for a total of 75,000 shares 
have been awarded, net of cancellations.  Options have 
vesting periods ranging from five years to ten years.  
Exercise prices range from $1.20 per share to $1.73 per 
share with a weighted average exercise price per share of 
$1.37.  No options have been exercised through March 31, 
1997.  Subsequent to March 31, 1997 all options were repriced
to $1.75 per share.

No compensation expense has been recorded as a result of 
granting any of the options as all such options were granted 
with an exercise price equal to the market price on the date 
of grant.

Options granted by the Company are expected to be converted 
to options of the new company expected to be formed in the 
consolidation of the Company and its affiliates at the same 
conversion rate as the conversion of common stock 
discussed in the Pending Consolidation note.

Income Taxes
No benefit for income taxes was recognized for the quarters 
ended March 31, 1997 and 1996 in the accompanying statement 
of operations as there can be no assurance that the Company 
will generate taxable income in the future against which 
such benefits could be realized. 

At March 31, 1997, the Company had a net operating loss 
carryforward aggregating approximately $900,000 for federal 
income tax purposes, which may be used to offset future 
taxable income, if any.  The annual utilization of this 
carryforward may be limited if the Company undergoes the 
ownership change anticipated by management (see Pending 
Consolidation note ) or fails to meet continuity of business 
requirements defined by the Internal Revenue Code.  The 
Company's net operating loss carryforwards beginning 
expiring in 2010.

Related Parties

Nature of related parties
The Company's president, Jim Bernau, partially owns and 
controls Willamette Valley Vineyards (WVV), a winery in Oregon, 
and Willamette Valley Inc., and Nor'Wester Brewing Company, 
Inc.(Nor'Wester), a microbrewery in Oregon; as well as WVI.  
Additionally, Mr. Bernau is the president of each of the following 
subsidiaries of WVI: Aviator Ales, Inc. (AAI); Mile High Brewing 
Company (MHBC); Bayhawk Ales, Inc. (BAI); and North Country Brewing 
Company, Inc. (NCBCI); development stage companies located in 
Washington, Colorado and California, respectively.  As a result of 
certain arrangements between the Company and its affiliates, as well 
as the Mr. Bernau's positions with and/or ownership interests 
in each of these companies, inherent conflicts of interest exist with 
respect to the pricing of services, the sharing of resources and allocation 
of the Company president's time.

Related Party Transactions

The Company purchased management and administrative services 
from WVI at a total cost of $9,609 and $7,275 for the three 
months ended March 31, 1997 and 1996, respectively.  WVI 
contracts for certain of these services under a general 
services agreement between WVI and Nor'Wester.

Strategic Alliance and Cooperative Brewing Agreements
The Company has entered into a Strategic Alliance (the 
"Alliance") with AAI, Nor'Wester, MHBC, NCBCI, and WVI.  
Nor'Wester, AAI, MHBC, and BAI are individually referred to 
as a "Cooperative Brewer."  The purpose of the Alliance is 
to promote and support the growth of all of the Alliance 
members by increasing production at each Cooperative 
Brewer's facility and supporting the entry of Nor'Wester 
products into new markets.  To achieve this goal, each 
Cooperative Brewer agreed to cooperatively brew Nor'Wester's 
products, and to support the entry of these products into 
new markets by facilitating Nor'Wester's access to the 
Cooperative Brewer's network of distributors.  During 
January, 1997, AAI and MHBC ceased cooperative brewing of 
Nor'Wester beers.

As a result of the administrative services purchased and loans 
provided by WVI and the loan received from Nor'Wester, the Company 
has advances and loans payable to affiliates of $304,193 at 
March 31, 1997.  Because management expects these advances and 
loan will eventually be eliminated when the proposed merger occurs, 
as discussed in the Pending Consolidation note, these advances have 
been classified as current payables to affiliates at March 31, 1997.


BAYHAWK ALES, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Commitments
The Company has entered into a fifteen-year operating lease 
arrangement with two five-year optional renewal terms for 
its production facility in Irvine, California.  Annual 
payments under the lease are $36,000 (totaling approximately 
$468,000 over the term of the lease), plus common area 
charges.

Proposed Merger and Investment by UBA
During the quarter ended March 31, 1997, the Company, along 
with its affiliates (Nor'Wester, WVI, MHBC and BAI) entered 
into an investment agreement with United Breweries of 
America, Inc. (UBA), an entity controlled by the UB Group of 
Bangalore, India.  The agreement provides for Nor'Wester, 
WVI, AAI, MHBC and BAI to merge into a company to be known 
as United Craft Brewers (UCB).  This proposed merger will 
result in the issuance of newly registered shares of UCB 
common stock in exchange for shares of Nor'Wester, WVI and 
its subsidiaries.  The merger and share exchange will 
require approval by the Boards of Directors and shareholders 
of each of the entities.  Following the merger, all 
shareholders in the Nor'Wester /WVI alliance will hold 
shares in UCB, a company which is intended to be listed for 
trading on the Nasdaq National Market system under the 
symbol ALES.  Proposed exchange ratios for each of the 
entities are as follows, based on an average closing price 
of $2.63 for Nor'Wester's common stock for the 20 trading 
days immediately preceding execution of the merger:

   Company             Exchange
                       Ratio
   Nor'Wester          1.00000:1
   WVI                 1.99159:1
   AAI                 2.98739:1
   BAI                 1.99159:1
   MHBC                2.98739:1


Following the proposed merger, UBA has proposed to invest 
$8.63 million in exchange for a 45% equity interest in the 
new entity, UCB.  Of the $8.63 million proposed investment 
by UBA, $2.75 million is in the form of bridge loans 
conditionally available to Nor'Wester during the 
consolidation phase.  As of March 31, 1997, $1.5 million has 
already been loaned to Nor'Wester, the majority of which has 
been advanced to North Country.  At closing, it is 
anticipated that the bridge loans will be converted into 
shares of UCB and the remaining $5.88 million cash 
investment will be made directly in shares of UCB.

All principal and interest related to the bridge loans is 
secured by the assets of North Country Joint Venture, the 
Company's wholly-owned subsidiary, and by the Company's 
ownership interest in North Country Joint Venture.  
Repayment of all principal and interest is guaranteed 
personally by the Company's president.

The closing of the proposed investment remains subject to 
(i) approval by the shareholders of each of the companies, 
(ii) achievement of certain operating results at each of the 
breweries, (iii) maintenance of certain operating conditions 
and covenants, including that there shall be no material 
adverse change in the businesses of the affiliated breweries 
taken as a whole, (iv) approval by federal and state liquor 
control agencies, (v) registration with the U.S. Securities 
and Exchange Commission of UCB shares to be exchanged in the 
merger, (vi) extension of Nor'Wester's $1 million revolving 
line of credit through September 30, 1997 and the lender 
shall have waived any defaults under the line of credit 
agreement and the line of credit shall have been converted 
to a term loan and (vii) such other customary conditions for 
transactions of this type.

Immediately following the proposed investment by UBA, UBA 
would own 45% and the Company's president would own 10% of 
UCB.  The public shareholders of Nor'Wester, WVI, and 
subsidiaries would own the remaining 45% of UCB.

Impact of Recent Accounting Prounouncements

In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 128 "Earnings Per Share" ("SFAS 128") and Statement of
Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure" ("SFAS 129")which are 
effective for fiscal years ending after December 15, 1997. 
The Company believes the implementation of these statements
will not have a material effect on its results of operations
or financial statement disclosures.

Subsequent Events

Subsequent to March 31, 1997, in light of lower than 
anticipated 1996 operating results, lower than anticipated 
first quarter 1997 sales and other operating results and 
adverse conditions with the craft beer industry in general, 
representatives of UBA and management and the investment 
bankers of the affiliated companies are in the process of 
renegotiating the terms of the UBA investment discussed in 
the Proposed Merger note.  The renegotiation will reflect a 
significantly lower valuation for the affiliate companies, a 
reduction in the total amount of cash to be invested by UBA 
to $5.5 million and a reduction of UBA's percentage 
ownership position in UCB to 40% following consolidation.  
It is anticipated that the $2.75 million bridge loan will 
not be reduced.  The existing shareholders in the affiliated 
companies would retain a 60% interest in UCB.  The exact 
distribution of ownership interests among shareholders of 
the affiliated companies has not yet been determined.  
Management will soon seek Board approval by each of the 
affiliated companies of any renegotiated terms.  Failure of 
the parties to reach a mutually agreeable renegotiated 
investment agreement could lead to a loss of the bridge 
loans and the remainder of the UBA investment which would 
materially and adversely affect the Company's financial 
condition and results of operations.  There can be no 
assurance that the proposed merger will be completed or that 
the Company will obtain the capital needed to sustain 
operations.


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

Forward-Looking Information

This Management's Discussion and Analysis of Financial 
Condition and Results of Operations and other sections of 
this Form 10-QSB contains forward-looking information within 
the meaning of the Private Securities Litigation Reform Act 
of 1995.  This forward-looking information involves risks 
and uncertainties that are based on current expectations, 
estimates and projections about the Company's business, 
management's beliefs and assumptions made by management.  
Words such as "expects," "anticipates," "intends," "plans," 
"believes," "seeks," "estimates" and variations of such 
words and similar expressions are intended to identify such 
forward-looking information.  Therefore, actual outcomes and 
results may differ materially from what is expressed or 
forecasted in such forward-looking information due to 
numerous factors, including, but not limited to, 
availability of financing for operations, successful 
performance of internal operations, impact of competition, 
changes in distributor relationship or performance, 
successful completion of the planned consolidation of the 
Affiliated Companies, and other risks detailed below as well 
as those discussed elsewhere in this Form 10-QSB.  In 
addition, such statements could be affected by general 
industry and market conditions and growth rates, and general 
domestic economic conditions.  


Results of Operations

Three Months Ended March 31, 1997

Gross Revenues
Gross revenues from beer and retail products totaled $92,652 
for the quarter ended March 31, 1997 and $55,928 for the 
quarter ended March 31, 1996, an increase of 66%.  The 
increase in revenues is primarily a result of increased 
share in Southern and Northern California beer markets.  This 
increase in sales, however, is not sufficient for the Company to 
become self-sustaining in the near term.

The Company's brewery currently has an annual production 
capacity of 10,000 barrels.  The Company sold 745 
barrels and 602 barrels during the quarter ended March 
31, 1997 and 1996 respectively.


Excise Taxes 
Excise taxes were $5,451 (5.9% of gross revenues) for the three 
months ended March 31, 1997 compared to $4,862 (8.7% of gross 
revenues) for the same period in 1996.  

Cost of Revenues
Cost of goods revenues totaled $88,110 (101% of net revenues) 
for the quarter ended March 31, 1997 compared to $93,834 (184% 
of net revenues) for the quarter ended March 31, 1996.  The 
high cost of goods sold as a percentage of net revenues for each
of the respective quarters is due primarily to the disproportionate 
cost of production for goods sold during periods when the facility 
was operating at less than its maximum designed capacity.

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses 
decreased to $60,598 (69% of net revenues) for the quarter 
ended March 31, 1997 from $66,646 (130% of net revenues) for 
the quarter ended March 31, 1996.  The decrease in SG&A 
expenses is primarily attributable to cost cutting measures designed
to lower selling, general and administrative expenses in light of 
continued operating losses.


Liquidity and Capital Resources

Cash and cash equivalents decreased $20,111 to $20,843 at 
March 31, 1997 from December 31, 1996.  The decrease is 
primarily a result of operating losses incurred during the 
quarter.

The Company's working capital deficit was $283,995 at March 
31, 1997 and $235,508 at December 31, 1996. The decrease in 
working capital reflects the use of funds to support the Company's 
operations, including efforts to expand its markets.  The Company's 
cash and cash equivalents have decreased by 49% ($20,111) from December 
31, 1996 to March 31, 1997 primarily as a result of payments to trade 
creditors and payment of payroll related expenses.  At March 31, 1997 
the Company had payables to affiliates of $304,193 which comprise 77% 
of the Company's current liabilities.  The payables are classified as 
current because management expects to pay these in cash or eliminate them 
in consolidation upon the anticipated closing of the investment 
transaction with UBA discussed below.

The Company made no capital investments during the quarter 
ended March 31, 1997.

The Company's management believes that projected income from 
operations is not sufficient to meet the Company's cash 
needs over the next twelve months.  The Company's 
independent accountants expressed substantial doubt as to 
the Company's ability to continue as a going concern in 
their report on the Company's 1996 financial statements.

In September 1996, to address the liquidity and capital 
resources concerns of the Company and certain of its 
affiliated breweries, the Company's parent WVI and its 
affiliate Nor'Wester,entered into a non-binding letter of intent 
with The UB Group of Bangalore, India setting forth the proposed 
terms of The UB Group's possible investment of $9.0 million in 
cash and certain intangible consideration including the 
grant of an exclusive right to manufacture The UB Group's 
Kingfisher brand beer for sale in North America and The UB 
Group's provision of certain management and technical 
services to the alliance of craft breweries controlled by 
WVI and the Company.  Under the terms of the letter of 
intent, The UB Group's investment would be made in the 
resulting entity following a proposed consolidation of the 
Craft Brewing Alliance comprised of Nor'Wester and 
Nor'Wester's subsidiary, North Country Joint Venture, 
located in Saratoga Springs, New York.; WVI and WVI's 
subsidiaries-- Mile High Brewing Company, Inc., located in 
Denver Colorado, Bayhawk Ales, Inc., located in Irvine, 
California, and Aviator Ales, Inc. located in Woodinville, 
Washington.  

The closing of the possible investment remains subject to 
(i) The UB Group's completion of satisfactory due diligence, 
(ii) negotiation and execution of a definitive investment 
agreement between the parties, (iii) approval by the boards 
of directors and shareholders of each of the Company, WVI, 
Nor'Wester and their respective subsidiaries, (iv) 
registration with the U.S. Securities and Exchange 
Commission of shares in the resulting entity following 
consolidation which will be exchanged in the merger, and (v) 
such other customary conditions for transactions of this 
type.

Following execution of the letter of intent, The UB Group 
has provided the WVI/Nor'Wester alliance of craft breweries 
with bridge loans in the amount of $1,900,000 through May 15,
1997 to sustain and grow their brewing operations.  The UB 
Group has also indicated it may, at its discretion to provide 
additional bridge loans or guarantees on bank loans in such 
amounts and at such times as are necessary to sustain the breweries' 
operations until completion of the planned consolidation and 
closing of the investment.  There can be no assurances that 
additional bridge loans will be made by The UB Group, that 
an equity investment by The UB Group will ultimately be made 
or, if made, the final terms of such investment.

Subsequent to March 31, 1997, in light of lower than 
anticipated 1996 operating results, lower than anticipated 
first quarter 1997 sales and other operating results and 
adverse conditions with the craft beer industry in general, 
representatives of UBA and management and the investment 
bankers of the affiliated companies are in the process of 
renegotiating the terms of the UBA investment discussed 
above.  The renegotiation will reflect a significantly lower 
valuation for the affiliate companies, a reduction in the 
total amount of cash to be invested by UBA to $5.5 million 
and a reduction of UBA's percentage ownership position in 
UCB to 40% following consolidation.  It is anticipated that 
the $2.75 million bridge loan will not be reduced.  The 
existing shareholders in the affiliated companies would 
retain a 60% interest in UCB.  The exact distribution of 
ownership interests among shareholders of the affiliated 
companies has not yet been determined.  Management will soon 
seek Board approval by each of the affiliated companies of 
any renegotiated terms.  Failure of the parties to reach a 
mutually agreeable renegotiated investment agreement could 
lead to a loss of the bridge loans and the remainder of the 
UBA investment which would materially and adversely affect 
the Company's financial condition and results of operations.  
There can be no assurance that the proposed merger will be 
completed or that the Company will obtain the capital needed 
to sustain operations.

If, for any reason, the proposed consolidation and 
investment does not occur, alternative sources of debt 
financing and/or equity capital would have to be developed.  
There can be no assurance that such debt financing or 
capital will be available or, if available, under terms and 
conditions acceptable to the Company.  The Company's 
inability to obtain additional capital would result in a 
material adverse effect on the Company's business and 
results of operations.


PART II.  OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K.

 (a) Exhibit 1 - Definitive Investment Agreement press 
release dated January 30, 1997.

(b) Reports on Form 8-K:

On January 30, 1997, the Company filed a Form 8-K in connection 
with its execution of a definitive investment agreement with 
United Breweries of America, Inc., an affiliate of the UB 
Group of Bangalore, India.  Under terms of the agreement, 
UBA will invest approximately $9 million in cash in exchange 
for a 45% equity interest in a new entity comprised of the 
consolidated businesses of Nor'Wester, North Country Brewing 
Company, LLC., Willamette Valley, Inc., Microbreweries 
across America and its affiliates - Aviator Ales, Inc., 
Bayhawk Ales, Inc., Mile High Brewing Company, Inc.  The 
Form 8-K set forth the terms and conditions of the proposed 
investment as outlined in the letter of intent ,and included 
as exhibits copies of the letter of intent dated September 26, 
1996 and a January 30, 1997 press release relating to the matter.

Exhibit 1


                            SIGNATURES


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


BAYHAWK ALES, INC.



Date:   May 20, 1997  	By _____________________
                        Dave Voorhies
                        General Manager



SIGNATURES


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


BAYHAWK ALES, INC.




Date:  May 20, 1997     By /s/ Dave Voorhies
                        Dave Voorhies
                        General Manager