============================================================
              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 June 30, 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 
                        June 30, 1997:

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


                       INDEX TO FORM 10-QSB

============================================================
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 six 
months ended June 30, 1997 are not necessarily indicative of 
results to be expected for the entire year.


Item 1 -- Financial Statements

Balance Sheet - June 30, 1997 and December 31, 1996. . . 

Statement of Operations - Three Months Ended and Six 
Months Ended June 30, 1997 and 1996 . . . . . .  . . . . 

Statement of Cash Flows - Three Months Ended and Six 
Months Ended June 30, 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

<TABLE>
                             BAYHAWK ALES, INC.
                       (A Development Stage Company)

                              Balance Sheet
<CAPTION>
                                      June 30,
                                        1997            December 31,
ASSETS                               (unaudited)            1996
                                    -------------       ------------
<S>                                 <C>                 <C>
Current assets:
Cash and cash equivalents           $     28,604        $    40,954 
Accounts receivable                       73,945             64,349 
Inventories                               21,351             23,692 
Other current assets, net                 20,648                  - 
                                    -------------       ------------
Total current assets                     144,548            128,995 

Property and equipment, net              781,100            802,798 
                                    -------------       ------------
Total assets                        $    925,648        $   931,793 
                                    =============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable                    $     39,935        $    36,798 
Accrued liabilities                       22,467             16,780 
Container deposits                        47,159             19,339 
Payable to parent and affiliated 
companies, net                           336,312            291,586 
                                    -------------       ------------
Total current liabilities                445,873            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 

Deficit accumulated during the 
  development stage                     (950,408)          (862,893)
                                    -------------       ------------
Total shareholders' equity               479,775            567,290 

Total liabilities and shareholders' 
  equity                            $    925,648        $   931,793 
                                    ============        ============
</TABLE>



<TABLE>

                                     BAYHAWK ALES, INC.
                               (A Development Stage Company)

                                  Statement of Operations
                                       (unaudited)

<CAPTION>
                           Three Months Ended June 30     Six Months Ended June 30,
                               1997          1996             1997          1996
                           ------------  ------------     ------------  ------------
<S>                        <C>           <C>              <C>           <C>
Gross revenues             $   102,297   $   184,178      $   194,950   $   240,106 
Less: excise tax                 9,556        20,333           20,602        25,195 
                           ------------  ------------     ------------  ------------
Net revenues                    92,741       163,845          174,348       214,911 

Cost of sales                   63,651       113,697          146,167       207,532 
                           ------------  ------------     ------------  ------------

Gross profit (deficit)          29,090        50,148           28,181         7,379 

Selling, general and
   administrative expenses      55,427       112,281          116,024       178,927 
                           ------------  ------------     ------------  ------------

Loss from operations           (26,337)      (62,133)         (87,843)     (171,548)

Interest income                    121         1,318              328         4,364 
Interest expense                   -          (6,806)             -         (11,433)
                           ------------  ------------     ------------  ------------

Net income (loss)          $   (26,216)  $   (67,621)     $   (87,515)  $  (178,617)
                           ============  ============     ============  ============

Net loss per common share  $     (0.01)  $     (0.03)     $     (0.04)  $     (0.08)
                           ============  ============     ============  ============

Weighted average number of
common shares outstanding    2,200,814     2,200,814        2,200,814     2,200,681 
                           ============  ============     ============  ============
</TABLE>


                             BAYHAWK ALES, INC.
                       (A Development Stage Company)

                          Statement of Cash Flows

<TABLE>
<CAPTION>
                                        Six Months Ended June 30,
                                         1997               1996
                                    -------------       ------------
<S>                                 <C>                 <C>
Cash flows from operating activities:
Net loss                            $    (87,515)       $  (178,617)
Reconciliation of net loss to 
   net cash provided
   by operating activities:
   Depreciation and amortization          21,698             29,027 
   Changes in assets and liabilities:
      Accounts receivable                 (9,596)           (88,026)
      Inventories                          2,341            (21,148)
      Other current assets               (20,648)                93 
      Other non-current assets               -              (25,625)
      Accounts payable                     3,137             53,385 
      Accrued liabilities and
        container deposits                33,507             33,886 
                                    -------------       ------------

Net cash used for operating 
   activities                            (57,076)          (197,025)

Cash flows from investing activities:
Purchases of property and equipment          -              (12,208)
Sale of asset                                -               74,250 
                                    -------------       ------------

Net cash used for investing
   activities                                -               62,042 

Cash flows from financing activities:
Stock offering costs                         -              (17,067)
Net proceeds from stock offerings            -               12,804 
Borrowings from (repayments to) 
   parent and affiliated company          44,726            (56,216)
                                    -------------       ------------

Net cash (used) provided by 
   financing activities                   44,726            (60,479)
                                    -------------       ------------

Net increase (decrease) in cash 
   and cash equivalents                  (12,350)          (195,462)

Cash and cash equivalents:
Beginning of period                       40,954            302,247 
                                    -------------       ------------

End of period                       $     28,604        $   106,785 
                                    =============       ============
</TABLE>



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 is a development stage company established to 
produce and sell hand-crafted ales in the State of 
California.  From the date inception (February 14, 1994) 
trough March 31, 1997, the Company's efforts have been 
directed primarily toward organizing and issue a public 
offering of shares of its common stock, building and 
equipping its brewery, and developing a marketable beer.

The accompanying financial statement have been prepared 
assuming the Company will continue as a going concern.  The 
Company is a development stage company which has a limited 
and unprofitable operating history, has negative working 
capital of $283,995 and has limited access to capital 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 other, 
raise substantial doubt as to the Company's ability to 
continue as a going concern.

In light of significant losses and negative working capital 
the Company has developed and is implementing plans for the 
continuation of the business.  In particular, the Company 
has taken steps to:  (i) reduce or eliminate cooperative 
brewing arrangements which proved to be inefficient and 
costly;  (ii) eliminate national roll-out programs in favor 
of stepped-up regional sales and marketing efforts; (iii) 
negotiate with past due creditors which could involve 
extended terms and payment plans; (iv) hire and retain high-
quality employees familiar with the brewing industry, (v) 
use available bridge loans from a proposed investor (see 
Proposed Merger note) to fund operations until new 
strategies result in positive cash flows and improved 
profitability, and; (vi) use proceeds from the disposition 
of duplicative and/or under utilized assets created by the 
proposed merger.  Management believes these plans will 
result in the Company sustaining operations as a going 
concern for the next 12 months.

As part of the plan, 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 Proposed Merger note.

Inventories

Inventories consist of the following:

                               June 30,          December 31
                                1997                1996    
                              -----------        -----------
Raw Materials                 $   10,528          $   9,969
Work-in-process                    6,300              3,484
Finished goods                     2,725              4,672
Retail inventory                   1,798              5,567
                              -----------        -----------
                              $   21,351          $  23,692
                              ===========        ===========

Property and Equipment

Property and Equipment consists of the following:

                               June 30,          December 31
                                1997                1996    
                              -----------        -----------
Leasehold improvements        $  277,546          $ 277,546
Equipment                        634,040            634,040
Office furniture and equipment     4,644              4,644
                              -----------        -----------
                              $  916,230          $ 916,230
Less accumulated depreciation   (135,130)          (113,432)
                              -----------        -----------
                              $  781,100          $ 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.  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, 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.

As of June 30, 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 and 
were repriced during the second quarter of 1997 to $1.75 per 
share.  As of June 30, 1997 no options had been exercised.

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 six 
months or three months ended June 30, 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 June 30, 1997, the Company had a net operating loss 
carryforward aggregating approximately $950,000 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 Proposed 
Merger 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, Willamette Valley Inc. (WVI) and Nor'Wester Brewing 
Company, Inc.(Nor'Wester), a microbrewery in Oregon.  
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 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 Mr. Bernau's time.

Related Party Transactions

The Company purchased management and administrative services 
from WVI at a total cost of $7,039 and $12,825 for the six 
months ended June 30, 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 
$336,312 at June 30, 1997.  Because management expects these 
advances and loan will eventually be eliminated when the 
proposed merger occurs, as discussed in the Proposed Merger 
note, these advances have been classified as current 
payables to affiliates at June 30, 1997.

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

In light of lower than anticipated 1996 operating results, 
lower than anticipated first quarter 1997 sales and other 
operating results and adverse conditions within the craft 
beer industry in general, representatives of UBA and 
management and the investment bankers of the affiliated 
companies re-negotiated the terms of the original UBA 
investment discussed in Form 10KSB/A for the year ended 1996 
and Form 10QSB/A for the quarter ended March 31, 1997.  The 
renegotiation reflects 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.  The Company and its affiliates 
(Nor'Wester, WVI, AAI and MHB) 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.  Shares of Nor'Wester, 
WVI, AAI, BAI, and MHB outstanding at the effective time of 
each merger (other than shares of Aviator common stock, 
Bayhawk common stock and Mile High common stock owned by 
WVI) will be converted into the right to receive 0.3333333, 
0.0785714, 0.0523809, 0.0785714 and 0.0523809 shares, 
respectively, of UCB common stock.

Impact of Recent Accounting Pronouncements

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

Final adoption of the Proposed Merger and Investment is 
subject to approval by shareholder vote scheduled to take 
place at the Company's annual shareholder meeting on August 
25, 1997, shareholder approval by vote for each of the 
Company's affiliates (Nor'Wester, WVI, AAI and MHB) also 
scheduled to be held on August 25, 1997 and other closing 
conditions contained within the Investment Agreement.


Item 2 -- Management's Discussion and Analysis of Financial
          Condition and Results of 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 June 30, 1997 Compared to Three Months 
Ended June 30, 1996

Gross Revenues

Gross revenues from beer and retail products totaled 
$102,297 for the quarter ended June 30, 1997 compared to 
gross revenues of $184,178 during the same quarter in 1996, 
resulting in a 44% decline in gross revenues. The drop in 
gross revenues is primarily due to the elimination of 
brewing activity under the cooperative brewing agreement 
between the Company and Nor'Wester and fewer sales of its 
own products in the Southern and Northern California beer 
markets.  The overall sales performance during the quarter 
ended June 1997 gives question to Bayhawk's ability to 
become self-sustaining in the near term.

Bayhawk's brewery currently has an annual production capacity of 10,000 
barrels. Bayhawk sold 667 barrels and 1,605 barrels during the quarter 
ended June 30, 1997 and 1996 respectively.

Excise Taxes

Excise taxes were $9,556 (9% of gross revenues) for the three months 
ended June 30, 1997 compared to $20,333 (11% of gross revenues) for the 
same period in 1996.

Cost of Revenues

Cost of goods sold totaled $63,651 (69% of net revenues) for the three 
months ended June 30, 1997 compared to $113,697 (69% percent of net 
revenues) for the three months ended June 30, 1996.  The cost of goods 
sold percentage continues to reflect the disproportionate cost of 
production for goods sold during a period when the facility was 
operating at less than its maximum designed capacity.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses decreased to 
$55,427 (60% of net revenues) for the three months ended June 30, 1997 
from $112,281 (68% of net revenues) for the three months ended June 30, 
1996.  SG&A expenses reflect operating management and administrative 
services provided by Bayhawk's parent, WVI, as well as direct charges 
such as the general manager's salary and advertising expenses. The 
decrease in SG&A expenses is primarily attributable to implementation of 
expense controls and reduction of staff in an effort to minimize SG&A 
expenses.

Six Month Ended June 30, 1997 compared to Six Months Ended 
June 30, 1996

Gross Revenues

Gross revenues from beer and retail products totaled $194,950 for the 
year ended June 30, 1997 compared to gross revenues of $240,106 for the 
year ended June 30, 1996, resulting in a 19% decline in gross revenues.  
The drop in gross revenues is primarily due to the elimination of 
brewing activity under the cooperative brewing agreement between the 
Company and Nor'Wester and fewer sales of its own products in the 
Southern and Northern California beer markets.  The overall sales 
performance for the year ended June 1997 gives question to Bayhawk's 
ability to become self-sustaining in the near term.

Excise Taxes

Excise taxes were $20,602 (11% of gross revenues) for the six months 
ended June 30, 1997 compared to $25,195 (11% of gross revenues) for the 
same period in 1996.

Cost of Revenues

Cost of goods sold totaled $146,167 (84% of net revenues) for the six 
months ended June 30, 1997 compared to $207,532 (97% percent of net 
revenues) for the six months ended June 30, 1996.  The cost of goods 
sold percentage continues to reflect the disproportionate cost of 
production for goods sold during a period 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 
$116,024 (67% of net revenues) for the six months ended June 30, 1997 
from $178,927 (83% of net revenues) for the six months ended June 30, 
1996.  SG&A expenses reflect operating management and administrative 
services provided by Bayhawk's parent, WVI, as well as direct charges 
such as the general manager's salary and advertising expenses. The 
decrease in SG&A expenses is primarily attributable to implementation of 
expense controls and reduction of staff in an effort to minimize SG&A 
expenses.

Net Loss

Net loss was $87,515 for the six months ended June 30, 1997 
from $178,617 for the six months ended June 30, 1996 as a 
result of the individual line items discussed above.

Liquidity and Capital Resources

Bayhawk had cash and cash equivalents at June 30, 1997, and 
June 30, 1996 of $28,604 and $40,954, respectively. Changes 
in cash and cash equivalents for the six months ended June 
30, 1997, primarily consisted of cash used in operating 
activities of $57,076 offset by borrowings from affiliates 
of $44,726.

Bayhawk's working capital deficit at June 30, 1997 and June 
30, 1996 was $301,125 and $235,508, respectively. At June 
30, 1997, the current ratio was .32:1 and .35:1, 
respectively. 

Accounts payable at June 30, 1997 and June 30, 1996 were 
$39,935 and 36,798, respectively. 

At June 30, 1997, Bayhawk had payables to WVI and to other affiliated 
companies of $336,312 which accounts for 75% of Bayhawk's current 
liabilities.  The payables to affiliates consist primarily of advances 
by WVI to construct Bayhawk's brewery.  Management expects that the 
payables to affiliates will be eliminated upon completion of the 
Consolidation. 

On November 30, 1995, Bayhawk issued a note to WVI for the balance of 
funds loaned by WVI to construct, equip and operate Bayhawk's brewery. 
The note, which had a principal balance of $250,188 at June 30, 1997 is 
secured by all of Bayhawk's assets.  Because of the pending 
Consolidation, management does not expect to repay the loan or advances. 
Instead, the loan and advances are being considered in determining the 
purchase price and stock conversion ratios being used in the 
Consolidation. 

Bayhawk requires significant capital to continue its operations. 
However, Bayhawk has very little capital resources, has insufficient 
operating results to obtain a bank line of credit and WVI, Bayhawk's 
parent, does not currently have adequate resources to support Bayhawk's 
operations. Bayhawk's management believes that current working capital 
together with projected income from operations is not sufficient to meet 
the cash needs of Bayhawk's operating subsidiaries through the end of 
1997. Bayhawk's independent accountants expressed substantial doubt as 
to Bayhawk's ability to continue as a going concern in their report on 
Bayhawk's 1996 consolidated financial statements. 

To address recent losses and the need for working capital, Bayhawk and 
its parent, WVI, have developed and are in the process of implementing 
plans designed to sustain operations until profitability is reached. In 
particular, Bayhawk has taken steps to: (i) implement a more focused 
marketing and sales plan designed to increase sales on a regional basis; 
(ii) significantly reduce or eliminate cooperative brewing arrangements 
with affiliates which proved to be inefficient and costly; (iii) 
negotiate with past-due creditors for extended terms and payment plans 
and to allow for the possibility of obtaining debt financing; (iv) hire 
and retain highly qualified employees familiar with the brewing 
industry; (v) use bridge loans from UBA to fund operations until the 
Investment closes; and (vi) sell duplicate and/or under utilized assets 
created by the Consolidation for cash. 

While management believes these plans will sustain Bayhawk's operations 
through June 30, 1998, no assurance can be given that these plans will 
provide the necessary revenue and profits to sustain Bayhawk's through 
that period.  If, for any reason, the 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 Bayhawk. Bayhawk's inability to obtain additional capital 
would result in a material adverse effect on Bayhawk's business and 
results of operations. 

Furthermore, assuming the Investment closes, UCB will be dependent upon 
the receipt of additional debt or equity financing to sustain operations 
of the Company until revenues are sufficiently increased and costs 
controlled to enable them to achieve positive cash flow and 
profitability. No assurance can be given that additional debt or equity 
financing will be available on terms acceptable to UCB or at all. 
Failure to obtain additional financing would have a material adverse 
effect on the operations and financial condition of the Company.


PART II.  OTHER INFORMATION


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

   (a) Exhibits: None.

   (b) No reports were filed on Form 8-K during the quarter 
which this report is filed.


                            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:   August 14, 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:  August 14, 1997     By /s/ Dave Voorhies
                        Dave Voorhies
                        General Manager