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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For The Fiscal Year Ended October 31, 1996
                         Commission File Number 1-12119

                  AMERICAN CRAFT BREWING INTERNATIONAL LIMITED

        (Exact Name of Registration business as Specified in Its Charter)

             Bermuda                                  72-1323940
 (Jurisdiction of incorporation)        (I.R.S. Employer Identification Number)

          ONE GALLERIA BOULEVARD, SUITE 1714, METAIRIE, LOUISIANA 70001
          (Address, including zip code, of Principal Executive Offices)

                                 (504) 849-2739
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

             COMMON STOCK:                     REDEEMABLE COMMON STOCK
             Boston Stock Exchange             PURCHASE WARRANTS:
                                               Boston Stock Exchange

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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

           Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by reference in Part III of this 10-K or any amendment
to this Form 10-K. |X|

           The aggregate market value of the voting stock held by non-affiliates
of the Registrant on December 31, 1996,  based on the closing price on that date
of $2.375 on the Nasdaq SmallCap Market was $4,262,830.50.*

           The number of shares outstanding of the registrant's  common stock as
of January 21, 1996 was 3,696,876.

                       DOCUMENTS INCORPORATED BY REFERENCE

           Portions  of  the  registrant's   Proxy  Statement  relating  to  the
Registrant's  1997 Annual Meeting of Stockholders  are incorporated by reference
into Part III of this Report.

* The  aggregate  market  value of the voting stock held by  non-affiliates  was
estimated  by  excluding  only those  shares  held by  directors,  officers  and
principal shareholders filing Schedules 13D and/or 13G.

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL.  American Craft Brewing International Ltd. ("AmBrew International",  or
"the  Company")  owns and  operates  the South China  Brewery  (the "South China
Brewery"),  Hong Kong, the first of a series of  American-style  micro-breweries
the Company  intends to  establish  in selected  locations  in the Pacific  Rim,
Europe  and  Mexico.  The South  China  Brewery  produces  fresh,  high-quality,
preservative-free,      hand-crafted      beers      using      state-of-the-art
American-manufactured brewing equipment.  Hand-crafted beers are distinguishable
by their full flavor, which results from traditional brewing styles. The Company
believes that  American-style  micro-brewing  has growth  potential in other key
world markets and that the South China Brewery is a model that can be adapted to
other markets.

           The American-style  micro-brewery concept has developed over the past
ten years into the  fastest  growing  segment  of the  American  beer  industry.
American-style  micro-breweries  produce  less than  15,000  barrels per year of
hand-crafted beers in a variety of styles. The Company believes that the growing
demand for micro-brewed beers in the United States is part of a broader shift in
preferences   on  the  part  of  a  certain   segment  of  consumers  away  from
mass-produced products and toward high-quality, distinctive foods and beverages.
While  craft  beers  account  for  less  than 2% of  total  United  States  beer
consumption,  sales  volume  of these  beers  grew by 50%  during  1995.  AmBrew
International  believes  that the demand for craft  beers is not  limited to the
United  States and is  committed to the  production  of a variety of craft beers
designed to appeal to a growing number of consumers in global markets.

           The  Company's  senior  management  has  extensive  experience in the
international  beverage  alcohol  industry.  The Company  expects to utilize its
management's  experience to identify new markets receptive to the American-style
micro-brewery  concept and to seek out strategic  local partners to co-invest in
new micro-breweries in such markets. The Company plans to establish and operate,
either through wholly-owned  subsidiaries or through majority-owned or otherwise
Company-controlled  joint venture  arrangements with strategic local partners, a
series of  micro-breweries  similar in concept to the South China  Brewery.  The
Company   expects  that  these  partners  will  use  their  knowledge  of  local
regulations  and markets to facilitate the  establishment  and acceptance of the
Company's   micro-breweries  and  their  products.  In  pursuing  its  expansion
strategy,  the Company  will move into both  markets  dominated  by  mass-market
breweries and markets in which high-quality beer producers will be the Company's
primary  competition.  In markets where mass produced  beers are sold to a broad
consumer profile, AmBrew International intends to develop craft beers as locally
produced premium product  alternatives.  In markets in which there are already a
number of  traditional  high-quality  beer  producers,  the  Company  intends to
produce distinctive micro-brewed products for niche market segments.

           In December,  1996, the Company entered into a joint venture,  Celtic
Brew LLC, a New York limited  liability  company,  with its Irish joint  venture
partner,  Aidan  McGuinness,  to  establish  and  operate  the  Dublin,  Ireland
expansion  brewery.  In January,  1997,  the Company  entered  into a lease with
Corporation Calfik, a company  wholly-owned by Federico G. Cabo Alvarez,  one of
AmBrew International's  directors and principal shareholders,  to lease a 21,443
square foot facility near the  Mexico-United  States border at which the Company
intends  to  operate  the  Tecate  expansion  brewery  through  a  wholly  owned
subsidiary.  In  addition,  the  Company  has  signed a letter of intent  with a
Chinese restaurant group, United Restaurants of Gallery, to form a joint venture
to establish and operate an expansion brewery in Shanghai.  The Company has also
identified  the  following  additional  locations  in  which  it is  considering
establishing   expansion  breweries  during  1997,  subject  to  more  extensive
feasibility studies:   Budapest,  Prague, Singapore, the United Kingdom, Warsaw,
Zurich and additional sites in Ireland.


                                      -2-
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           The Company  has placed an order with Micro Brew  Systems  Co.,  Ltd.
("Micro Brew Systems") to purchase twenty micro-brewing  systems manufactured by
JV  Northwest,  Ltd.  of  Portland,  Oregon  ("JVNW")  and has  made a  $200,000
non-refundable  deposit to secure  manufacturing  space for the twenty  systems,
which  deposit  can be  applied  to the  purchase  price of any of the first ten
systems  after ten systems are in  production.  The Company has made  additional
down  payments  of  $164,017  and  $176,064,  respectively,  for the  systems in
production for the Dublin and Tecate expansion  breweries.  The Company has also
entered  into an  agreement  with Micro Brew  Systems to  identify  and  conduct
feasibility   studies  on  potential  future  sights,  and  to  act  as  project
consultants.

AMERICAN-STYLE MICRO-BREWERIES AND THE BREWING INDUSTRY

           American-style  micro-breweries  produce  small  quantities of fresh,
high-quality,  preservative-free,  hand-crafted  beers. In 1995,  craft brewers,
both regional and micro, comprised the only growing segment of the United States
beer market.  According to the Association of Brewers of Boulder,  Colorado, 830
new  breweries  have been  established  in the  United  States  since  1980:  17
"regional  craft  breweries"  (breweries  producing  between  15,000 and 500,000
barrels per year);  280  micro-breweries  (breweries  producing less than 15,000
barrels for off-premise sale); and 533 brew pubs (brewery  restaurants that sell
mostly on premise).

           AmBrew  International  believes  that it can take  advantage  of this
micro-brewery  market niche  opportunity by selling  high-quality,  hand-crafted
beer in certain  international  markets just as United States micro-brewers have
done in domestic  markets.  While craft beers  account for less than 2% of total
United States beer consumption,  sales volume of these beers grew by 50% in 1995
and had a compounded  annual growth rate of approximately  47% during the period
from 1985 through 1995.

SOUTH CHINA BREWERY

           The Company  exported  the  American-style  micro-brewery  concept by
establishing  the South China Brewery in Hong Kong in June 1995. The South China
Brewery produces its specialty products with a  state-of-the-art,  company-owned
brewing system using traditional brewing methods. For the year ended October 31,
1996, the South China Brewery operated at approximately 35% of brewing capacity.
A head brewer and two  assistants  brew all of the South China  Brewery's  beer.
With only four other employees,  the South China Brewery  produces,  distributes
and markets  three  full-flavored,  craft beers  marketed  under the South China
Brewery's own brand names, Crooked Island Ale, Dragon's Back India Pale Ale, and
Stonecutter's  Lager.  The South China  Brewery also custom brews ales for local
Hong Kong establishments, in accordance with their individual specifications, to
market  under  their own labels.  The South China  Brewery is designed to permit
small and economical production runs of differentiated  products to meet special
tastes or other custom requirements, and for sale in niche markets.

PROPOSED EXPANSION MARKETS

           Two expansion breweries for the Dublin and Tecate sites are currently
under  development and  manufacturing  has begun at JVNW,  supplier of the South
China Brewery equipment,  on the brewing equipment to be installed at the Dublin
and the Tecate sites. The Company plans to establish and operate, either through
wholly-owned    subsidiaries    or   through    majority-owned    or   otherwise
Company-controlled  joint venture  arrangements with strategic local partners, a
series of  state-of-the-art,  American-style  micro-breweries.  The  Company  is
currently  considering  the following  locations:  Budapest,  Prague,  Shanghai,


                                      -3-
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Singapore,  the United Kingdom,  Warsaw, Zurich and additional sites in Ireland.
AmBrew  International  is  actively  reviewing  sites for  additional  expansion
breweries the Company plans to open in 1997.

           Dublin. In December,  1996, the Company entered into a joint venture,
Celtic  Brew LLC, a New York  limited  liability  company,  with its Irish joint
venture partner, Aidan McGuinness,  to establish and operate the Dublin, Ireland
expansion  brewery.  Mr.  McGuinness  is the owner of  Premier  Worldwide  Beers
(Ireland) Ltd. and Premier  Worldwide Beers PLC of Croydon,  England,  importers
and distributors of beers and other beverages in Ireland and the United Kingdom.
Under  the  terms  of the  Operating  Agreement,  AmBrew  International  and Mr.
McGuinness  have agreed to make initial  capital  contributions  of $600,000 and
$400,000,  respectively, to the joint venture. Celtic Brew will lease a recently
built 3,800 square feet facility  specifically designed for the micro-brewery in
Enfield,  county  Meath,  approximately  40  miles  west of  Dublin  on the main
east-west  roadway  from Dublin to Galway.  Celtic  Brew is a  prototype  AmBrew
20-barrel  brewery  designed to have an annual  capacity of 70,000 cases,  to be
expanded as the need arises.  Additional  fermentation and bright beer tanks are
incorporated  into the Celtic Brew facility to allow for a larger  percentage of
lager  production.  Initial  packaging  will be in 30 and 50 liters kegs for the
draft  markets both in Ireland and the United  Kingdom.  A bottling and labeling
line  will  also  be  operating  for  both  the  domestic  and  export  markets.
Fabrication  has begun on the  micro-brewery  system,  forecast to be shipped in
February,  1997. The projected start-up date for Celtic Brew LLC is March, 1997.
The General  Manager has been appointed and is currently  working at the brewery
location.  Micro Brew Systems and the Company's  local partner are continuing to
interview  candidates  for the  positions of Head Brew Master and all  necessary
ancillary staff.

           Tecate. In January,  1997, the Company entered into a five-year lease
with  Corporation  Calfik,  a company,  owned by AmBrew  International  director
Federico  G. Cabo  Alvarez,  to lease  21,443  square  feet of space in  Tecate,
Mexico. Tecate is located in Baja California Norte,  approximately one mile from
the  California-Mexican  border.  The Tecate brewery will be wholly-owned by the
Company.  The leased site is large enough to allow for further  expansion as the
need arises. The Tecate expansion brewery will be known as Cerveceria Rio Bravo.
Cerveceria Rio Bravo will have an annual  brewing  capacity of 200,000 cases per
year,  approximately  three times the size of the South China Brewery prototype.
Additional   fermentation   and   bright  beer   tanks   and   brewing   vessels
are  incorporated  into the  Cerveceria  Rio Bravo  plan to allow for the larger
capacity.  A kegging,  bottling and labeling line will be operating for both the
domestic and export market.  The Company expects that the strategic  location of
Cerveceria   Rio  Bravo  will  provide  an  ideal  location  from  which  AmBrew
International  can distribute  its products into northern  Mexico and the United
States. The projected start-up date for Cerveceria Rio Bravo is May, 1997.

           Shanghai. The Company has visited a prospective site for the Shanghai
expansion  brewery,  has  signed a letter  of intent  with a Chinese  restaurant
group,  United Restaurants of Gallery,  to form a joint venture to establish and
operate this  expansion  brewery and has commenced  work on a  preliminary  site
layout.

           With the  exception  of the Tecate  expansion  brewery,  the  Company
currently  expects  strategic  local  partners  to  invest  in  minority  equity
interests in the proposed  expansion  breweries.  The Company expects to utilize
its  management's  extensive  experience in the  international  beverage alcohol
industry to seek out additional  strategic local partners for such co-investment
purposes.  Additionally,  the  Company  intends to  obtain,  if  possible,  debt
financing so that the expected  aggregate  equity  investment  in each  brewery,
other  than   Cerveceria  Rio  Bravo,   is   approximately   50%  of  the  total
capitalization.  The Company  believes that third party financing in conjunction
with the net proceeds of the Company's  initial public offering (the "Offering")
will be necessary to enable the Company to establish all six of the breweries it
is considering establishing in 1997.

                                       -4-
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           The Company  expects to achieve  economies of scale with its proposed
breweries  through volume  discounts on equipment and  ingredient  purchases and
reduction of brewery start-up expenses.  The Company has entered into a contract
with Micro Brew Systems to purchase  brewing  equipment  manufactured by JVNW at
favorable  prices  and  terms for  volume  purchases.  For each of the  proposed
breweries,  the  Company  will  conduct a  feasibility  study  covering  brewery
licensing,  taxation  and local  operating  costs and will conduct a head brewer
search.  In addition,  the Company  expects to utilize its  experience  with the
South China Brewery to speed the process from start-up to profitable  operations
at the proposed breweries.

           Successful  expansion  will  require  management  of various  factors
associated  with  the  construction  of new  facilities  in  geographically  and
politically  diverse locations.  Factors include site selection,  local land use
requirements,   obtaining  governmental  permits  and  approvals,   adequacy  of
municipal infrastructure,  environmental uncertainties, possible cost estimation
errors or overruns, additional financing,  construction delays, weather problems
and other factors, many of which are beyond the Company's control.  There can be
no assurance that the Company will be successful in  establishing  and operating
additional breweries.

AMBREW USA

           In  December,  1996,  the Company  purchased  95% of the  outstanding
capital  stock of Atlantis  Import  Company  Incorporated,  now AmBrew USA,  for
approximately $100,000 plus an agreement to pay certain royalties in the future.
AmBrew USA  currently  imports  into the United  States  several  brands of beer
brewed by other producers.  The Company expects to use AmBrew USA to import into
the United  States and  distribute  beer  produced at its  expansion  breweries.
AmBrew USA is scheduled  to begin  importing  beer from the South China  Brewery
during the first half of 1997 and will import other expansion  brewery  products
as they become available.

BREWING OPERATIONS

           The Company's beer is prepared from barley,  grain,  hops,  yeast and
water.  Distinctive styles of beer depend upon how the barley is malted, the use
of hops  and the  proportions  of the  ingredients,  among  other  factors.  The
following describes the production process used at the South China Brewery.  The
Company  intends to utilize  the same type and scale of  equipment  at the other
breweries and to generally pattern future brewery  operations on the South China
Brewery.

           Brewing Process.  The South China Brewery's products are crafted from
pale and  specialty  malted  barley  produced in Great  Britain by  high-quality
malters.  The South China Brewery acquires its hops from  micro-brewery  quality
sources  in the  United  States.  The first  step in the South  China  Brewery's
brewing  process is to crack malted  barley in a roller mill  (milled  barley is
called  grist) and store it in a grist case.  Hot water  (called  "liquor")  and
grist are mixed in a mash/lauter  tun producing the mash. A sweet,  clear liquid
(called "wort") is filtered out of the mash and  transferred to the kettle.  The
wort is brought to a rolling  boil in the  kettle.  Some hops are added early to
provide bitterness;  other hops (finishing hops) are put in later to give a fine
aroma.  The hot wort is cooled to termination  temperature  (about  40(degree)F)
through a heat  exchanger.  The cold liquor tank  provides the water to cool the
wort in the heat exchanger and the resulting  heated water is transferred to the
hot liquor tank for use in the next brew. The cooled wort is then transferred to
the fermentation  tanks  ("unitanks"),  yeast is added and fermentation  begins.
Fermentation  is the  process by which  yeast  transforms  the sweet wort into a
flavor solution containing alcohol and carbon dioxide.  After fermentation,  the
beer is aged to develop  its final  smooth  taste.  The  fermentation  and aging
process can last 14 days for ales and 21 days and longer for lagers.

                                      -5-
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           The conditioned  product is filtered and stored in a bright beer tank
where  it is  carbonated  and  then  packaged.  Packaged  beer  is  stored  in a
refrigerated   walk-in  cooler  and  delivered  in  refrigerated   vehicles  and
containers.

           Quality Control.  The South China Brewery employs an experienced head
brewer who hand  crafts all of the  brewery's  beer.  The  Company  will seek to
employ a  similarly  qualified  head  brewer at each of the  Company's  proposed
breweries  by  conducting  a head  brewer  personnel  search  for each  proposed
brewery. The Company plans to monitor production and exercise quality control at
each of its  breweries.  Each  brewery  will have  equipment  for on-site  yeast
propagation,  to monitor product quality,  to test products and to measure color
and bitterness.  The breweries will also utilize  independent  laboratories  for
further product  analysis.  The Company's  policy is to meet the highest quality
standards, with the goal of assuring the purity and safety of each of its beers.
The quality of the South China  Brewery  product is of such a high standard that
one of its specialty brew products was recognized  globally. A specialty product
made for Delaney's was awarded the Gold Medal Award in the English Style Special
Bitter category at the World Beer Cup  International  Competition  held in Vail,
Colorado in June 1996.

           Management  believes  that its ability to engage in constant  product
innovation  and its  control  over  product  quality  are  critical  competitive
advantages.  Accordingly,  the  Company  does not hire third  parties to perform
contract brewing of any of its products,  and plans to operate its own breweries
in each of the proposed initial expansion locations and at any subsequent sites.
In addition,  AmBrew  International  believes  that its ownership of a number of
micro-breweries  will enable it to shift  production  among breweries  giving it
greater  operating  flexibility  while reducing the risk of producing all of its
products at a single  location.  This strategy  would also permit the Company to
produce  its brands  that  achieve  widespread  market-acceptance  at any of its
proposed breweries for local consumption.

PRODUCTS

           The South China Brewery produces three styles of full-flavored  craft
beers  using  traditional   brewing  methods,   high  quality   ingredients  and
state-of-the-art   American-manufactured  brewing  equipment  that  the  Company
intends to replicate at each of its proposed breweries.  The Company's beers are
marketed on the basis of freshness and distinctive  flavor  profiles.  The South
China Brewery  distributes  its products in kegs and glass bottles.  The bottles
are  freshness-dated  for the  benefit of  consumers.  For the fiscal year ended
October 31, 1996,  approximately  87.5% of the South China  Brewery's sales were
generated by sales of kegged products. For the fourth quarter, approximately 90%
of the South China Brewery's sales were generated by sales of kegged products.

           Proprietary  Brands.  The South China Brewery  produces three branded
products,  each  with its own  distinctive  combination  of  flavor,  color  and
clarity.

           Crooked Island Ale. The flagship brand, Crooked Island Ale, accounted
           for approximately 20.1% of sales during the fiscal year ended October
           31, 1996 and accounted for approximately 19.6% of the Company's sales
           during the fourth  quarter.  This ale is  produced  from pale  malted
           barley from Great  Britain and hops from the United  States.  Crooked
           Island Ale is a light,  golden ale with a fresh  clean nose and crisp
           finish.  It is brewed light,  with all the flavor and uniqueness of a
           full-bodied  ale. The Company  believes  that this ale's  distinctive
           malt flavor comes from a careful balance of bittering and aroma hops.
           Crooked Island Ale is available in both kegs and bottles.

           Dragon's  Back India Pale Ale.  Brewed to  reflect  the  essence of a
           traditional oak barrel British India pale ale, Dragon's Back gets its
           amber hue from a blend of premium British malted barley.  This ale is


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           heavily hopped maintaining all of the qualities of the quintessential
           cask ale. Currently, Dragon's Back is brewed for distribution only in
           kegs.  Dragon's Back accounted for  approximately  10.1% of sales for
           the  fiscal  year  ended   October  31,   1996  and   accounted   for
           approximately 30.2% of sales during the fourth quarter.

           Stonecutter's   Lager.  The  third  and  newest  proprietary  product
           produced  by the South  China  Brewery  is the  Company's  number one
           growth  product.  Stonecutter's  Lager is produced using only premium
           British malt and the highest  quality  European and American hops. It
           has a clean,  refreshing flavor with just a hint of the Saaz hop used
           in  traditional  Czech  pilseners.  The  beer's  body is light with a
           pleasant  golden hue.  Stonecutter's  Lager was introduced in August,
           1996 and it is sold in both  bottles  and kegs.  Stonecutter's  Lager
           accounted for  approximately  1.9% of sales for the fiscal year ended
           October 31, 1996 and for approximately  13.4% of sales for the fourth
           quarter.  Sales  of  Stonecutter's  Lager  almost  equaled  sales  of
           Dragon's Back India Pale Ale during November and December of 1996.

           Specialty  Brewing.  In addition to its branded  products,  the South
China  Brewery  custom  brews  ales  for  local  Hong  Kong  establishments,  in
accordance with their individual product  specifications,  to market under their
own labels.  The South China Brewery currently  produces specialty brews for two
customers,  Iconic America,  formerly known as Dabeers Distributors Limited, and
Delaney's  (Wanchai) Limited,  owners of Delaney's Irish Pub ("Delaney's").  The
Company's  contracts  with these  customers will expire in August and September,
1997,  respectively.  While  the  Company  has no reason  to  believe  that such
contracts will not be renewed,  there is no assurance that either  contract will
be renewed or renewed on  favorable  terms.  AmBrew  International  retains  the
proprietary rights to the recipes of its specialty brewed beers.

           For the fiscal year ended October 31, 1996,  specialty  brewing sales
accounted for  approximately  67.5% of sales. For the fourth quarter,  specialty
brewing sales accounted for approximately 34% of sales.  Sales to Iconic America
accounted  for 42.9% of sales  during  fiscal year 1996 and 20.5% for the fourth
quarter then ended.  Sales to Delaney's  accounted for 24.6% of sales for fiscal
1996 and 13.5% of sales for the fourth quarter then ended.

           The Company  believes that  continual  development of new products is
the  hallmark  of  micro-breweries.  In an effort to be  responsive  to  varying
consumer  style and flavor  preferences,  the South China Brewery is continually
engaged in the development and testing of new products.  The South China Brewery
currently has the  capability  of producing all the distinct  styles of beer and
has a  single  production  batch  size of 260  cases.  The  Company  intends  to
construct the proposed breweries with similar  versatility.  The Company intends
to expand sales by entering into additional  specialty brewing arrangements with
local bar, club, hotel, restaurant and airline partners in Hong Kong and in each
of the locales of the proposed breweries.

BREWING FACILITIES

           The South China Brewery.  The South China Brewery's  brewing facility
is located in Aberdeen,  Hong Kong, on the south side of the island. The Company
believes,  based on its experience in the industry, that the South China Brewery
is the first and only independent  micro-brewery  established outside the United
States using state-of-the-art, American-made brewing equipment. The selection of
this site enabled the South China Brewery to be located near its primary markets
in the Hong Kong  Central  district and Kowloon,  while not  incurring  the high
lease costs of downtown Hong Kong. The primary  operations are in a 3,600 square
foot space on the second floor of a twenty-three  story building.  An additional
2,000 square foot storage facility for dry package goods (bottles, caps, labels)
is also located in the same building.  Both the brewing facility and the storage
facility are leased.

                                      -7-
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           The Hong Kong 20-barrel brewery is an adaptable facility that is able
to produce nine different products simultaneously.  The capacity of this brewery
can be increased by 50% with the addition of fermentation  tanks at an installed
cost of  approximately  $150,000.  The  configuration  and space of the  brewery
allows the Company to achieve this 50% expansion with no  modification to either
the facility or equipment  currently  installed.  For these  reasons,  the South
China Brewery will serve as a prototype for the proposed  breweries allowing the
Company to modify the basic  configuration  at each location to achieve  optimum
brewery capacity and capability.

EQUIPMENT

           The equipment for the Company's breweries was designed and fabricated
by JVNW.  JVNW was  established  in 1981 and is  considered  one of the premiere
fabricators of micro-brewery systems. The Company's  state-of-the-art  equipment
allows the head brewer to control the  brewing  process to achieve a  consistent
hand-crafted,  high-quality  product.  The Company  entered into a contract with
Micro Brew Systems (a distributor of JVNW brewing  equipment) to purchase twenty
micro-brewing systems for use in its proposed expansion breweries. The first two
systems will be delivered to their respective sites in the first half of 1997.

           The  prototype  plant is a  20-barrel  system  which means that it is
capable of brewing 20 barrels of product with each brewing cycle. Twenty barrels
(each  barrel is 31  gallons)  equates to  approximately  260 cases of 24 355-ml
bottles or 75 30-liter kegs. Annual capacity is approximately  70,000 cases. The
10 fermentation  vessels allow the plant to make different  products at the same
time.

           The breweries also utilize several pieces of ancillary equipment such
as a boiler to make steam for  heating  the hot  liquor and  boiling in the brew
kettle, a glycol refrigeration unit to provide cooling for the cold liquor tank,
fermentation  tanks and a bright beer tank,  fixed and movable pumps to transfer
the  liquid,  filters,  soft  piping,  for  transferring  liquid to and from the
fermentation tanks, and labeler, bottling equipment and kegging equipment.

SALES AND MARKETING

           The South China Brewery  markets its products by educating  consumers
as to the  distinctive  qualities of its products and by  emphasizing  localized
promotions   designed  to  enhance  the  South  China  Brewery's   word-of-mouth
reputation. The Company intends to adopt sales and marketing strategies targeted
for each individual local market it serves,  but generally will seek to identify
its  products  with local  markets.  Management  believes  that by locating  the
proposed  breweries  in  proximity  to the  local  markets  they  serve,  AmBrew
International will be able to enjoy distinct competitive  advantages,  including
consumer  identification with the Company's brands and enhanced familiarity with
local consumer tastes.  By pursuing this strategy,  the Company believes that it
will be able to develop its  reputation  and  prestige as a local craft  brewer,
while  selectively  introducing  new and  existing  products  into new  regional
markets.

           The South China Brewery devotes  considerable effort to the promotion
of on-premise  consumption at participating pubs and restaurants,  and currently
engages in limited  media  advertising.  Among  other  things,  the South  China
Brewery  participates in and sponsors cultural and community events, local music
and other  entertainment  venues,  local festivals and cuisine events, and local
professional  sporting events in Hong Kong. The Company  believes that educating
retailers  about the  freshness  and quality of its products  will in turn allow
retailers to assist in educating  consumers.  The Company  considers  on-premise
product sampling and education to be among its most effective tools for building
brand identity with consumers and  establishing  word-of-mouth  reputation.  The
South China Brewery achieves additional  on-premise  marketing through a variety
of other point-of-sale tools, such as tap handles,  coasters,  table tents, neon
signs, banners,  posters and menu guidance. The South China Brewery also markets
its products through sales and giveaways of T-shirts, polo shirts, baseball


                                      -8-
<PAGE>

<PAGE>

hats and glasses. Sales of merchandise could develop as an independent source of
revenue for the Company.  In addition,  the South China  Brewery  offers  guided
tours of its facility to further increase consumer awareness of its products and
is considering offering tasting sessions. Plans are currently underway to expand
the rolls of the guided  facility tours and to make  merchandising  an important
added marketing tool.

           The South China Brewery distributes its own products and does not use
independent  distributors.  To expand  distribution of proprietary  brands,  the
South China  Brewery has  recently  hired two local sales  representatives.  The
Company is continuously  reevaluating its distribution  strategy for each market
as its business develops.

           The Company  also  expects  that AmBrew USA will begin to import into
the United  States  beer  produced  in the  expansion  breweries.  AmBrew USA is
scheduled to begin  importing beer from the South China Brewery during the first
half of 1997 and will import  other  expansion  brewery  products as they become
available.

COMPETITION

           Hong Kong.  The beer industry is intensely  competitive.  While there
are no other  craft  brewers  in Hong Kong,  the South  China  Brewery  competes
directly with premium import beers as well as with mass-produced  beers marketed
by a number of much larger  producers.  Some larger United States beer producers
are marketing  their beers in the United States as craft beers.  There can be no
assurance  that,  in the future,  the  Company  will not face  competition  from
mass-produced  beer  marketed  internationally  as craft  beer.  Similarly,  the
Company  may  face  competition  from  brewers  or other  investors  who wish to
establish American-style micro-breweries in Hong Kong or in other areas in which
the Company plans to locate breweries.

           Ireland. The Company has identified one established  micro-brewery in
the city of Kildare.  The Company has also  identified one  micro-brewery  under
construction in Dublin.  The Company believes that the established  distribution
network  provided by the Company's  local partner,  Mr. Aidan  McGuinness,  will
enable it to compete effectively in the Irish market for micro-brewed beers.

           Tecate. The Company is not aware of any other  micro-breweries in the
area of the Tecate expansion brewery site. The Company does not believe that the
products produced by the Cerveceria Rio Bravo will be in direct competition with
mass-produced Mexican beers.

SUPPLIERS

           The  South  China  Brewery  purchases  all of its pale and  specialty
malted barley from a single British supplier and its premium-quality select hops
from a single United States supplier.  The South China Brewery maintains its own
yeast  supply.  The South China Brewery  purchases  its case boxes,  bottles and
crowns each from a single supplier and maintains  multiple  competitive  sources
for its supply of labels.  While the South China Brewery  believes that multiple
sources of supply are available for all of its  ingredients  and raw  materials,
there can be no assurance  that  political,  economic or other  factors will not
limit or restrict the availability of supplies.  The Company expects that future
breweries will adopt similar practices for obtaining supplies.

           As with  most  agricultural  products,  the  supply  and price of raw
materials  used to produce  the  Company's  beers can be affected by a number of
factors  beyond the  control of the  Company,  such as frosts,  droughts,  other
weather conditions,  economic factors affecting growing decisions, various plant
diseases and pests.  If any of the foregoing were to occur,  no assurance can be
given  that such  condition  would not have an adverse  effect on the  Company's
business, financial condition and results of operation.

                                      -9-
<PAGE>

<PAGE>

GOVERNMENT REGULATION

           Hong Kong Regulations.  The South China Brewery was granted a brewery
license  pursuant  to  the  Dutiable  Commodities  Ordinance  and  the  Dutiable
Commodities Regulations (Chapter 109 of the Laws of Hong Kong) which will expire
on June 6, 1997. The renewal application is a simple formality and does not have
to be submitted  until 30 days before the current license  expires.  The renewal
application  will be  submitted  in a timely  manner.  The  license is  annually
renewable,  and  there is no  reason  to  expect  that the  license  will not be
renewed.

           The South  China  Brewery is  required  to comply  with the terms and
conditions of a license for the  environmental  discharge  originating  from the
South China Brewery in the Western  Buffer Water Control Zone of Hong Kong which
has  been  obtained  pursuant  to  Section  20 of the  Water  Pollution  Control
Ordinance  (Chapter  358 of the Laws of Hong Kong) which will expire on February
28, 1997. The renewal  application is a simple formality and does not have to be
submitted  until  30 days  before  the  current  license  expires.  The  renewal
application  will be  submitted  in a timely  manner.  The  license is  annually
renewable and there is no reason to expect that the license will not be renewed.

           The  South  China  Brewery's  premises  are  connected,  directly  or
indirectly,  to a  communal  drain or a  communal  sewer  which is vested in and
maintained  by the Hong Kong  government,  and produces  trade  effluent that is
discharged into a communal drain or communal sewer.  Accordingly the South China
Brewery, in addition to a sewer charge, pays to the Hong Kong government a trade
effluent  surcharge under the Sewage Services Ordinance (Chapter 463 of the laws
of Hong Kong).

           Other Regulations. The Company will conduct a preliminary feasibility
study for each of the proposed expansion brewery locations including analyses of
brewery licensing requirements and other local operating costs. In addition, the
Company will seek the assistance  and expertise of local joint venture  partners
in complying with local  regulatory  requirements.  The Company intends to apply
for any licenses  required at the Tecate and Dublin sites,  but no such licenses
have yet been issued.

INSURANCE

           The South China Brewery maintains a public liability insurance policy
(coverage limit  approximately  $1.3 million) to protect against damage to third
party  property.  In  addition,  the South  China  Brewery  maintains a total of
$800,000 in commercial all risks coverage and approximately $390,000 of business
interruption   coverage.   The  South  China  Brewery  also  maintains  employee
compensation  insurance as required by local law. The Company  plans to purchase
comparable  insurance,  and  any  additional  insurance  necessitated  by  local
conditions or regulations, for each of the proposed breweries.

INTELLECTUAL PROPERTY

           The Company  regards the  trademarks it adopts and uses in connection
with  the sale of its  products  as  having  substantial  value  and as being an
important  factor in the marketing of its products.  The Company's  policy is to
pursue  registration of the trademarks it adopts and uses in connection with the
sale  of  its  products  whenever   possible,   and  to  oppose  vigorously  any
infringement of its marks. The Company has applied to register the marks CROOKED
ISLAND ALE and DRAGON'S BACK INDIA PALE ALE in Hong Kong, China and Taiwan.  The
mark  STONECUTTER'S  LAGER has not been  registered,  but plans are  underway to
submit the  registration  application  during the first quarter of 1997 for Hong
Kong,  China and Taiwan.  The CROOKED  ISLAND ALE  application  was accepted for
registration  in  Taiwan,  and is  pending in Hong  Kong.  The  application  was
rejected in China because of its  similarity  to a prior  registered  mark;  the
Company has appealed this rejection which is still pending.  The Company has not
yet received a



                                      -10-
<PAGE>

<PAGE>

status report on the DRAGON'S BACK INDIA PALE ALE  applications.  The Company is
not aware of any  infringing  uses of its trademarks by third parties that could
materially affect its current business.

           AmBrew  International  has  applied to  register  the  trademark  for
CROOKED  ISLAND ALE and plans to file an  application  to register the trademark
for STONECUTTER'S LAGER with the United States Patent and Trademark Office.

           While  it  has  not   obtained   patents  on  its   recipes,   AmBrew
International  believes  that it is not  standard  practice  in the  industry to
obtain such patents.

EMPLOYEES

           As of January 28, 1996, the Company and its subsidiaries  have twelve
full-time  employees.  The Company's future success will depend, in part, on its
ability to continue to attract,  retain and motivate highly qualified  marketing
and  managerial  personnel.  Each of James L. Ake,  Executive Vice President and
Chief  Operating  Officer  of  the  Company,  Steve  Armstrong,  Executive  Vice
President and General  Manager of AmBrew USA and Ted Miller,  Head Brewer at the
South China Brewery have employment agreements. Dean McGuinness, General Manager
of Celtic  Brew does not  currently  have an  employment  contract.  None of the
Company's employees are represented by a collective  bargaining  agreement,  nor
has the South China Brewery experienced work stoppages.  The South China Brewery
believes that relations with its employees are satisfactory.

LEASES

           The South China Brewery  leases brewing and storage space in the Vita
Tower at 29 Wong Chuk Hang,  Aberdeen,  Hong Kong at a current  monthly  rent of
$8,200. The leases expire in September, 1997, and April, 1998, respectively. The
South China Brewery has the option to extend each of the leases six years beyond
their original term at a rent to be agreed upon by the parties.

           The  Dublin  area  expansion   brewery  lease  is  undergoing   final
negotiations.

           The Tecate  expansion  brewery  leases  brewing and storage  space of
21,443 square feet from Corporacion  Calfik at a current monthly rent of $6,625.
The lease term is five years with yearly  incremental  rent increases  ending on
September 12, 2001.

ITEM 2.     PROPERTIES

           The Company has a 20-barrel brewing system with additional  ancillary
systems  needed to package the product  located at the brewery in Hong Kong. The
Company  has  also  made  a  non-refundable  $200,000  down  payment  on  twenty
additional  brewing systems,  and has made $340,081  additional down payments on
two systems in production for the Dublin and Tecate expansion  breweries.  There
are no known encumbrances on any of the Company's property.

ITEM 3.    LEGAL PROCEEDINGS

           The South China Brewery is not involved in any material pending legal
proceedings  and is not  aware  of any  material  legal  proceedings  threatened
against it.

                                      -11-
<PAGE>

<PAGE>

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

                     (a) At the first annual  general  meeting of the Company on
June 5, 1996, the following  resolutions were adopted by the affirmative vote of
1,200,000  shares,  par value  $0.01 per  share,  of the  Company,  such  shares
constituting  all of the issued and  outstanding  shares of capital stock of the
Company on such date:

                     (i) that the Bye-Laws,  in the form incorporated  herein by
                     reference as Exhibit 3.2, was approved;

                     (ii) that the  number of  directors  of the  Company be not
                     less than two nor more than ten;

                     (iii) that the  following  directors  be elected  until the
                     second annual  general  meeting  of  the  Company  or until
                     their  respective successors are elected or appointed:

                                 Pierre William Harriston Bordeaux
                                 Federico G. Cabo Alvarez
                                 David K. Haines
                                 Norman H. Brown, Jr.
                                 John F. Beaudette
                                 Wyndam H. Carver
                                 Joseph Heid
                                 John D. Campbell
                                 Tonesan Amissah-Furbert;

                     (iv) that the Board of Directors be  authorized to fill any
                     vacancy on the Board as and when it deems fit;

                     (v) that Arthur Andersen & Co. be appointed auditors of the
                     Company to hold office until the close of the second annual
                     general meeting;

                     (vi) that the 1,200,000 shares,  par value $0.01 per share,
                     originally issued  at  the  provisional  directors' meeting
                     held  on  June  5,  1996  be classified as shares of common
                     stock; and

                     (vii) that the  authorized  share capital of the Company be
                     increased  from   $12,000   to  $105,000  by  the  creation
                     of 8,800,000  shares of Common  Stock,  and 500,000  shares
                     of preferred  stock,  par value $0.01 per share.

                     (b) On July 18, 1996, the sole  stockholder of the Company,
Mr.  Bordeaux,  executed a written  consent  approving the Company's  1996 Stock
Option Plan in the form incorporated herein by reference as Exhibit 10.1.

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

           The  Company  effected  the  Offering  of Common  Stock (the  "Common
Stock") and  Redeemable  Common Stock  Purchase  Warrants  (the  "Warrants")  on
September  11, 1996,  at prices to the public of $5.50 and $0.10,  respectively.
Since that date,  the  Company's  Common Stock and  Warrants  have traded on the
Boston Stock Exchange (the "BSE") and the Nasdaq SmallCap  Market  ("SmallCap").
The  Common  Stock and  Warrants  trade  under  the  symbols  "BRW" and  "BRWW",
respectively, on the BSE and under the symbols "ABREF" and "ABRWF", respectively
on SmallCap. The table below sets forth


                                      -12-
<PAGE>

<PAGE>


the high and low sales prices for the of the Company's  Common Stock as reported
on SmallCap for that portion of the fourth quarter in which the Company's  stock
was publicly traded:

Fiscal Year Ended October 31, 1996              High                   Low
                                                ----                   ---
                                               $5.50                  $3.375


           As of January  23,1997,  there  were 46 record  holders of the Common
Stock.

           Holders of common stock are entitled to receive such dividends as the
Board of  Directors  may,  from  time to  time,  declare  out of  funds  legally
available for payment of dividends.  To date,  the Company has neither  declared
nor paid any dividends on the  Company's  common  stock.  The Company  currently
intends to retain  its  earnings  to support  operations  and  expansion  of its
business and,  therefore,  does not anticipate  paying any cash dividends in the
foreseeable future.

ITEM 6.    SELECTED FINANCIAL DATA

           The selected  financial  data for the fiscal years ended  October 31,
1996 and 1995,  have been derived  from the  consolidated  financial  statements
included  elsewhere in this filing  which have been  audited by Arthur  Andersen
LLP,  independent  public  accountants,  whose report  thereon is also  included
elsewhere in this filing.  The selected financial data set forth below should be
read in  conjunction  with  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations" and the consolidated  financial  statements
and notes thereto included elsewhere in this filing.

<TABLE>
<CAPTION>

SUMMARY OF OPERATIONS                             1996                    1995
                                                  ----                    ----
<S>                                            <C>                     <C>        
Net sales                                       $   427,750             $    63,707
Cost of sales                                     (104,473)                (38,960)
                                                ----------              ----------
   Gross profit                                     323,277                  24,747
Selling, general and administrative
   expenses                                       (685,541)               (292,888)
Interest expense, net                             (303,408)                (17,838)
Other expenses, net                                   (283)                 (2,265)
                                                ----------              ----------
   Loss before income taxes                       (665,955)               (288,244)
Income tax benefit                                   36,405                  47,560
                                                ----------              ----------
   Net loss                                     $ (629,550)             $ (240,684)
                                                ==========              ==========
Net loss per common share                       $    (0.28)             $    (0.12)
Weighted average number of shares
outstanding(1)                                   2,232,448               2,071,422

</TABLE>


<TABLE>
<CAPTION>

                                                        October 31, 1996
                                                        ----------------
   BALANCE SHEET DATA:
<S>                                                        <C>       
   Total current assets                                    $6,016,226
   Total assets                                            $7,001,306
   Total current liabilities                               $  254,872
   Total long-term liabilities                             $   17,364
   Total liabilities                                       $  272,236
   Total shareholders' equity                              $6,729,070
</TABLE>

--------
(1)  The weighted average common shares outstanding during the periods were
     computed on the basis that the Share Exchange, the Share Split and the
     Merger (defined below in Item 8) had been consummated prior to the years
     presented. Average common equivalent shares for common stock warrants have
     not been included, as the computation would not be dilutive. For the year
     ended October 31, 1995, the effect, using the treasury stock method, of
     shares issued to the holders of the Bridge Notes were included in the
     computation assuming such issuance had been made prior to the period
     presented.


                                      -13-
<PAGE>

<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

           Unless otherwise  indicated,  the following  discussion addresses the
Company's consolidated financial condition and results of operations,  including
the Hong Kong brewing and distribution subsidiaries, South China Brewing Company
Limited  ("South  China")  and  SCBC  Distribution   Company  Limited  ("SCBC"),
respectively.  On May 31,  1996,  the  stockholders  of  South  China  and  SCBC
exchanged  substantially all of the issued and outstanding shares of South China
and SCBC for 23,750 shares of capital stock of Craft Brewing Holdings Limited, a
British Virgin Islands Company  ("Craft"),  in a transaction  accounted for as a
reorganization  of  companies  under  common  control  in a manner  similar to a
pooling  of  interests.   On  July  30,  1996,  Craft  amalgamated  into  AmBrew
International  in a transaction  accounted  for as a pooling of  interests.  The
officers  and  directors  of AmBrew  International  remained in office after the
amalgamation.  South  China and SCBC are  collectively  referred to as the South
China  Brewery.   This  discussion  should  be  read  in  conjunction  with  the
Consolidated   Financial   Statements.   In   addition,   the   period-to-period
presentation  set forth under  "--Results of Operations" will not necessarily be
indicative of future  results and future net losses can be expected as increased
expenses  are  incurred  in  connection  with  the  establishment  of  expansion
breweries  that the Company  proposes to establish and operate,  either  through
wholly-owned    subsidiaries    or   through    majority-owned    or   otherwise
Company-controlled joint venture arrangements with strategic local partners.

           With the exception of historical  information,  the matters discussed
herein  are  "forward  looking  statements"  within the  meaning of the  Private
Litigation  Reform Act of 1995. Such forward  looking  statements are subject to
risks, uncertainties and other factors which could differ materially from future
results  implied  by  such  forward  looking  statements.  Potential  risks  and
uncertainties  include,  but  are not  limited  to,  the  Company's  ability  to
establish  and  operate  additional  breweries  on  a  timely  basis,  increased
acceptance by consumers of the Company's  brands and  development by the Company
of new  brands of beer and the  Company's  ability  to  finance  any  additional
capital expenditures once the proceeds of the Offering have been committed.

RESULTS OF OPERATIONS

           The Company  completed  its first full year of  operations on October
31, 1996. The Company commenced  operations in June of 1995. The following table
sets forth  certain line items from the  Company's  consolidated  statements  of
operations  expressed  as a  percentage  of net sales for the fiscal years ended
October  31,  1996 and  1995.  Because  of the  limited  duration  and  scope of
activities during fiscal 1995, the information reveals substantial change.

<TABLE>
<CAPTION>
                                                               Twelve Months Ended           
                                                  October 31, 1996            October 31, 1995
                                                  ----------------            ----------------
<S>                                                   <C>                           <C>   
Net sales                                             100.0%                        100.0%
Cost of sales                                          24.4%                         61.2%
Gross profit                                           75.6%                         38.8%
Selling, general & administrative expenses            160.3%                        459.7%
Operating loss                                         84.7%                        420.9%
Interest expense, net                                  70.9%                           28%
Net loss                                              147.2%                        377.8%
</TABLE>


                                      -14-
<PAGE>

<PAGE>

           Net Sales.  For the years  ended  October 31, 1996 and 1995 net sales
were $427,750 and $63,707, respectively. The growth in net sales was due in part
to  increased  awareness  of and  acceptance  by  consumers  of the South  China
Brewery's  products,  but largely reflects the limited duration and scope of the
Company's  operations in fiscal 1995.  The South China Brewery  introduced a new
proprietary  brand,  Stonecutter's  Lager,  in the third  quarter  of 1996,  and
continued to market its existing  proprietary brands and custom brewed products.
Sales of the South China Brewery's proprietary brands accounted for 32.5% of the
Company's net sales and 67.5% of net sales were  attributable to sales of custom
brewed  products.  In  September,  1995,  the South China  Brewery  entered into
contracts  for the brewing and supply of custom brewed ales for  consumption  in
two Hong Kong pubs. Both of the custom brewing  agreements have been renewed and
extend into 1997. The South China Brewery had net sales of $72,043 for the three
months ended October 31, 1996. Despite the overall increase in net sales for the
fiscal year, net sales  decreased in the fourth  quarter  because Iconic America
decreased its monthly  purchases in the fourth  quarter.  Iconic America has not
resumed its prior level of purchases. Sales to Iconic America account  for 42.9%
of annual net sales. For the first quarter of 1997, the Company expects that the
South China Brewery will continue to experience an operating  loss. The  Company
is actively  seeking  additional  customers  and other opportunities to increase
revenues from the South China Brewery.

           Cost of Sales.  The South China Brewery's cost of sales for the years
ended October 31, 1996 and 1995 was $104,473, or 24.4% of sales, and $38,960, or
61.2% of sales,  respectively.  The decline in the cost of sales  percentage  is
largely due to the efficiencies resulting from sales of kegged products and more
efficient use of brewing equipment.  Sales of kegged products  represented 87.5%
of sales for the year ended October 31, 1996.

           Selling,  General and Administrative  Expenses.  Selling, general and
administrative  expenses  for the years  ended  October  31,  1996 and 1995 were
$685,541 and $292,888,  respectively. Of the selling, general and administrative
expenses for the year ended  October 31,  1996,  $498,815 is  attributed  to the
South  China  Brewery.  The  balance  of  $186,726  is  attributable  to  AmBrew
International's  corporate  office  expenses.  Because the South  China  Brewery
functioned at only 35% of capacity and since personnel at the brewery handle all
of the brewery's general and administrative  functions,  the level of expense is
high  relative to sales.  The  Company's  selling,  general  and  administrative
expenses,  including salary,  marketing,  and other operational  expenses,  will
increase as the proposed expansion breweries are established.

           Net  Interest  Expense.  Net  interest  expense  for the years  ended
October 31,  1996 and 1995 was  $303,408  and  $17,838,  respectively.  Interest
expense for fiscal 1996 included a non-cash charge of $265,000  representing the
original  issue  discount  related to the  repayment  of the Bridge  Notes.  The
remainder of the increase in interest  expense  resulted from bank loans payable
and a note payable to BPW Holding LLC, a shareholder of the Company.

LIQUIDITY AND CAPITAL RESOURCES

           Effective September 11, 1996, the Company completed an initial public
offering of 1,580,000  shares of common  stock at $5.50 per share and  1,580,000
warrants  at  $0.10  per  warrant   generating   net  proceeds  of   $6,506,880.
Additionally,  the  exercise  of  the  Underwriter's  over-allotment  option  to
purchase  236,000  warrants  generated  net  proceeds of  $20,532.  Prior to the
Offering,  the Company funded its operations and capital  requirements through a
combination of private sales of equity,  borrowings  from a shareholder and from
an  institutional  lender  supported  by a guarantee  and letters of credit from
shareholders  and  cash  flow  from  operations.  Net  cash  used  in  operating
activities  for the years  ended  October  31,  1996 and 1995 was  $511,708  and
$297,869, respectively.

                                      -15-
<PAGE>

<PAGE>

           The Company's  material  commitments for future capital  expenditures
relate  primarily  to the  financing of the proposed  expansion  breweries.  The
Company  has placed an order for twenty  micro-brewery  systems  with Micro Brew
Systems and made a $200,000 non-refundable deposit on the equipment. The Company
has paid an additional down payment of $340,081 on two systems in production for
the Dublin and Tecate  expansion  breweries.  The Company used proceeds from the
Offering to pay the deposit and the  additional  down  payments.  The Company is
required to pay the  remaining  balance for each  micro-brewery  system to Micro
Brew Systems  under the terms of the contract as the  equipment is completed and
ready for shipment.

           At October  31,  1996,  the South China  Brewery  had  capital  lease
obligations of $17,179, $17,179, and $6,025, respectively, for each of the three
years ending October 31, 1999 relating to its delivery vehicles.  At October 31,
1996, the South China Brewery had $88,903 in operating  lease  commitments  over
the two year  period  ending  October 31, 1998  relating  to its  warehouse  and
brewery  facility.  In addition,  the Company has an additional  operating lease
commitment  over the  five-year  period  ending  September  11, 2001 of $417,323
relating to its warehouse and brewery  facility in Tecate.  On November 20, 1996
the Company signed a lease for its Corporate  office with a term of three years.
Monthly lease  payments are $1,957,  with rent dates  commencing on November 15,
1996.  The Company has  committed  to make an initial  capital  contribution  of
$600,000  to  Celtic  Brew LLC,  the  Company's  joint  venture  for the  Dublin
expansion  brewery.  In addition to the capital  requirements  to establish  the
expansion breweries,  the Company has an annual fixed salary expense of $172,000
related to various employment agreements with its employees.

           Approximately  $4,000,000  of the net proceeds from the Offering were
invested  by  the   Company  in  tax  exempt   interest-bearing   accounts   and
approximately  $1,758,447  were invested in taxable  interest-bearing  accounts,
pending   investment  in  the  Company's   operations.   At  January  28,  1997,
approximately  $4,000,000  remains invested in such accounts and the balance has
been invested in operations.  The Company  expects to be able to finance,  using
its own  funds,  funds  provided  by joint  venture  partners  and  third  party
financing,  if available,  up to six expansion breweries in 1997,  including the
Tecate and Dublin breweries. The Company expects that it will require additional
external financing in 1998 to establish  additional  expansion  breweries and to
meet  working  capital  requirements.  The  Company  may  seek  such  additional
financing in the form of  additional  equity  financing or borrowed  funds.  The
Company has not yet begun to  investigate  the  potential  availability  of such
additional financing whether in the form of debt or equity.

           In May 1996,  Craft issued $370,000  principal amount of Bridge Notes
bearing an interest rate of 12% to certain investors in Singapore and Hong Kong.
Pursuant to the terms of the Bridge  Notes,  these  investors  received  116,876
shares of common stock and bridge warrants entitling such investors to purchase,
in the  aggregate,  up to 116,876  shares of common stock  commencing six months
from the date thereof at 150% of the initial public offering price per Share. In
connection with the Offering,  and pursuant to the terms of Bridge Notes held by
Long-Term Partners, Long-Term Partners was paid the sum of $125,193 representing
principal and interest.

           On March 31, 1995,  the South China  Brewery  borrowed  $565,000 from
Hibernia  National  Bank.  The Hibernia Loan was evidenced by a promissory  note
with  principal  payments due on September 30, 1996 and March 31, 1997 bearing a
Citibank prime plus 0.5% interest rate. Prior to the Offering, the amount due on
the Hibernia Loan had been reduced to $452,000 through  principal  repayments by
the  Company.  The South  China  Brewery  borrowed  $65,000  from a  shareholder
evidenced by a limited recourse promissory note dated March 5, 1996 due ten days
after the date of the  Offering  bearing an interest  rate of 5.5%.  The Company
used  $452,000  and $8,569 of the net  proceeds  from the  Offering to repay the
principal and interest due, respectively, on the


                                      -16-
<PAGE>

<PAGE>

Hibernia Loan. The Company also used $65,000 and $4,091, respectively,  from the
net proceeds of the Offering to repay the principal and accrued  interest on the
shareholder loan.

           The Company  believes  that its working  capital will provide it with
sufficient capital resources and liquidity to meet its foreseeable needs.

ITEM 8.    FINANCIAL STATEMENTS

          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
                          INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                                           PAGE
                                                                                                                           ----

<S>                                                                                                                         <C>
Report of Independent Public Accountants..................................................................................  18

Consolidated Balance Sheets, as of October 31, 1996 and 1995..............................................................  19

Consolidated Statements of Operations for the Years Ended October 31, 1996, 1995 and 1994.................................  20

Consolidated Statements of Shareholders' Equity for the Years Ended October 31, 1996,
1995 and 1994.............................................................................................................  21

Consolidated Statements of Cash Flows for the Years Ended October 31, 1996, 1995 and 1994.................................  22

Notes to Consolidated Financial Statements................................................................................  23
</TABLE>



                                      -17-
<PAGE>

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To  the  Board  of  Directors  and   Shareholders   of  American  Craft  Brewing
International Limited:

           We have  audited  the  accompanying  consolidated  balance  sheets of
American  Craft  Brewing  International  Limited  (a  Bermuda  corporation)  and
subsidiaries  as of October  31,  1996 and 1995,  and the  related  consolidated
statements of  operations,  shareholders'  equity and cash flows for each of the
three years in the period ended October 31, 1996. These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

           We  conducted  our  audits  in  accordance  with  generally  accepted
auditing  standards.  Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

           In our opinion,  the consolidated  financial  statements  referred to
above  present  fairly,  in all material  respects,  the  financial  position of
American Craft Brewing  International Limited and subsidiaries as of October 31,
1996 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended  October 31,  1996,  in  conformity  with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

January 24, 1997
Houston, Texas



                                      -18-
<PAGE>

<PAGE>





          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                         AS OF OCTOBER 31, 1996 AND 1995
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>

                                                                          1996             1995
                                                                          ----             ----
<S>                                                                    <C>            <C>        
ASSETS
Current assets:
      Cash and cash equivalents                                        $ 5,780,672    $   102,248
      Accounts receivable, net of allowance for doubtful accounts of
          $1,500 and $556                                                   73,581         21,680
      Inventories                                                           35,508         22,922
      Prepaids and other current assets                                    126,465            391
                                                                       -----------    -----------
                Total current assets                                     6,016,226        147,241
Equipment and capital leases, net                                          663,830        634,767
Rental, utility and other deposits                                         235,749         35,174
Deferred tax assets                                                         85,501         49,096
                                                                       -----------    -----------
                Total assets                                           $ 7,001,306    $   866,278
                                                                       ===========    ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

      Long-term bank loan, current portion                             $    --        $   113,000
      Capital lease obligations, current portion                            12,858         13,284
      Accounts payable and accrued liabilities                             242,014         39,294
      Shareholders' loans                                                     --           85,638
                                                                       -----------    -----------
                Total current liabilities                                  254,872        251,216
Long-term bank loan, net of current portion                                   --          395,500
Capital lease obligations, net of current portion                           17,364         30,221
                                                                       -----------    -----------
                Total liabilities                                          272,236        676,937

Commitments and Contingencies

Shareholders' equity:
      Preferred stock, $0.01 par, 500,000 shares authorized,
           none issued                                                        --             --
      Common  stock, $0.01 and $0.13 par, 10,000,000 and 11,000
          shares authorized, 3,696,876 and 5,000 shares issued and
          outstanding, respectively                                         36,969            645
      Common stock warrants, 2,090,876 outstanding                         181,906           --
      Additional paid-in capital                                         7,388,205           --
      Subscription monies received in advance                                 --          437,156
      Accumulated deficit                                                 (878,010)      (248,460)
                                                                       -----------    -----------
                Total shareholders' equity                               6,729,070        189,341
                                                                       -----------    -----------
                Total liabilities and shareholders' equity             $ 7,001,306    $   866,278
                                                                       ===========    ===========

</TABLE>


   The accompanying notes are an integral part of these financial statements.



                                      -19-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

<TABLE>
<CAPTION>

                                                                      1996                      1995                       1994
                                                                      ----                      ----                       ----
<S>                                                              <C>                       <C>                         <C>        
Net sales                                                          $  427,750                $   63,707                 $     ----
Cost of sales                                                        (104,473)                  (38,960)                      ----
                                                                     ---------                  -------                 ----------
     Gross profit                                                     323,277                    24,747                       ----
Selling, general and administrative expenses                         (685,541)                 (292,888)                    (9,312)
Interest expense, net                                                (303,408)                  (17,838)                      ----
Other expenses, net                                                      (283)                   (2,265)                      ----
                                                                   ----------                ----------                 ----------
     Loss before income taxes                                        (665,955)                 (288,244)                    (9,312)
Income tax benefit                                                     36,405                    47,560                      1,536
                                                                   ----------                ----------                 ----------
     Net loss                                                      $ (629,550)               $ (240,684)                $   (7,776)
                                                                   ==========                ==========                 ===========
Net loss per common share                                          $    (0.28)               $    (0.12)                $     ----
                                                                   ==========                ==========                 ===========
Weighted average number of shares outstanding                       2,232,448                 2,071,422                  2,071,422
                                                                   ==========                ==========                 ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.



                                      -20-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
                                                                     Common 
                                                       Common         stock          Additional    Subscription monies   Accumulated
                                                        stock        warrants      paid-in capital  received in advance   deficit
                                                   ------------    ------------    --------------- --------------------  -----------
<S>                                                 <C>            <C>            <C>                <C>              <C>           
   Balance as of August 31, 1993                    $      --       $      --       $      --        $      --        $      --   
   Issuance of common stock                                   1            --              --               --               --
   Subscription monies received in advance                 --              --              --            224,119             --
   Net loss                                                --              --              --               --             (7,776)
                                                    -----------     -----------     -----------      -----------      -----------
   Balance as of October 31, 1994                             1            --              --            224,119           (7,776)
   Issuance of common stock                                 644            --              --               --               --
   Subscription monies received in advance                 --              --              --            213,037             --
   Net loss                                                --              --              --               --           (240,684)
                                                    -----------     -----------     -----------      -----------      -----------
   Balance as of October 31, 1995                           645            --              --            437,156         (248,460)
   Subscription monies received in advance                 --              --              --            117,659             --
   Issuance of common stock and capitalization of
        subscription monies received                         13            --           554,802         (554,815)            --
   Effect of the Share Exchange and the Share
        Split  (See Note 1)                              19,342            --           (19,342)            --               --
   Issuance of common stock, net of initial public
        offering expenses                                15,800            --         6,339,874             --               --
   Issuance of common stock warrants                       --           171,738            --               --               --
   Issuance of common stock  and common stock
        warrants to holders of Bridge Notes
        (See Note 8)                                      1,169          10,168         512,871             --               --
   Net loss                                                --              --              --               --           (629,550)
                                                    -----------     -----------     -----------      -----------      -----------
   Balance as of October 31, 1996                   $    36,969     $   181,906     $ 7,388,205      $      --        $  (878,010)
                                                    ===========     ===========     ===========      ===========      ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                      -21-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>

                                                                                      1996              1995                 1994
                                                                                      ----              ----                 ----
<S>                                                                               <C>                <C>                <C>         
Cash flows from operating activities:

   Net loss                                                                       $  (629,550)       $  (240,684)       $    (7,776)
   Adjustments to reconcile net loss to net cash used in
        operating activities:
        Depreciation                                                                   68,455             21,997               --
        Deferred income tax benefit                                                   (36,405)           (47,560)            (1,536)
        Non-cash interest expense                                                     274,208               --                 --
        Increase in operating assets:
        Accounts receivable, net                                                      (51,901)           (21,680)              --
        Inventories                                                                   (12,586)           (22,922)              --
        Prepaids and other current assets                                            (126,074)              (391)              --
        Rental, utility and other deposits                                           (200,575)           (25,741)            (9,433)
        Increase in operating liabilities:
        Accounts payable and accrued liabilities                                      202,720             39,112                182
                                                                                  -----------        -----------        -----------
Net cash used in operating activities                                                (511,708)          (297,869)           (18,563)

Cash flows from investing activities:
        Purchases of  equipment                                                       (97,518)          (595,037)           (10,295)

Cash flows from financing activities:

        Proceeds from bank loan                                                          --              565,000               --
        Repayment of bank loan                                                       (508,500)           (56,500)              --
        Repayment of capital lease obligations                                        (13,283)            (7,927)              --
        Proceeds from bridge notes                                                    370,000               --                 --
        Repayment of bridge notes                                                    (120,000)              --                 --
        Proceeds from shareholders' loans                                              18,000             83,148              2,490
        Repayment of shareholders' loans                                             (103,638)              --                 --
        Subscription monies received in advance                                       117,659            213,037            224,119
        Proceeds from issuance of common stock and common stock
            warrants                                                                7,610,817                644                  1
        Stock issuance costs paid                                                  (1,083,405)              --                 --
                                                                                  -----------        -----------        -----------
   Net cash provided by financing activities                                        6,287,650            797,402            226,610
                                                                                  -----------        -----------        -----------
   Increase (decrease) in cash and cash equivalents                                 5,678,424            (95,504)           197,752
   Cash and cash equivalents at beginning of period                                   102,248            197,752               --
                                                                                  -----------        -----------        -----------
   Cash and cash equivalents at end of period                                     $ 5,780,672        $   102,248        $   197,752
                                                                                  ===========        ===========        ===========
Supplemental disclosures to statements of cash flows:

   Cash interest paid                                                             $    50,335        $    29,166        $      --
   Conversion of bridge notes to common stock and bridge
        warrants                                                                  $   250,000        $      --          $      --
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                      -22-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

1.    ORGANIZATION AND PRINCIPAL ACTIVITIES

ORGANIZATION

           American  Craft  Brewing  International  Limited,  a Bermuda  company
("AmBrew International" or the "Company"),  was incorporated on June 5, 1996. On
July 30, 1996,  American Craft Brewing  International  Limited, a British Virgin
Islands  company  formerly known as Craft Brewing  Holdings  Limited  ("Craft"),
amalgamated into AmBrew  International (the "Merger").  AmBrew  International is
the surviving  company and its officers and  directors  remained in office after
the amalgamation.  On May 31, 1996, Craft acquired its entire interests in South
China Brewing Company Limited ("South  China"),  a company  incorporated in Hong
Kong  and  formerly  known  as  Forever  Smooth  Investments  Limited,  and SCBC
Distribution  Company Limited, a company  incorporated in Hong Kong and formerly
known as Arizona Limited ("SCBC," and collectively  with South China, the "South
China  Brewery"),  through the exchange (the "Share  Exchange") of substantially
all of the issued and  outstanding  shares of capital  stock of South  China and
SCBC by the  stockholders  thereof for 23,750  shares of capital stock of Craft.
This Share Exchange had the effect of consolidating ownership of the South China
Brewery's  operating  companies  into  Craft.  The  Merger  had  the  effect  of
transferring  all of the assets  (including the capital stock of South China and
SCBC) and  liabilities  of Craft to  AmBrew  International,  a  company  without
material  assets or liabilities  prior to the Merger.  Concurrent with the Share
Exchange,  Craft issued 1,250  shares of capital  stock to certain  investors in
Hong Kong.  Effective as of June 19, 1996, Craft  consummated an  eighty-for-one
share split (the "Share Split") (as a result 2,000,000 shares were outstanding),
which  has  been  reflected  retroactively  in  the  accompanying   consolidated
statements of operations. Effective September 11, 1996, the Company completed an
initial  public  offering of 1,580,000  shares of its common stock and 1,580,000
redeemable  common stock purchase  warrants at initial public offering prices of
$5.50 and $0.10, respectively.

           Unless  otherwise   required  by  the  context,   the  terms  "AmBrew
International"  and the "Company"  include American Craft Brewing  International
Limited and its subsidiaries. Details of these companies are:

<TABLE>
<CAPTION>

                                                     Country and Date
               Name                                  of Incorporation            Principal Activities
               ----                                  ----------------            ---------------------
<S>                                                  <C>                         <C>
American Craft Brewing International                 Bermuda
   Limited                                           June 5, 1996                Holding company
                                                     
South China Brewing Company Limited                  Hong Kong
                                                     May 26, 1994                Production of beer

SCBC Distribution Company Limited                    Hong Kong
                                                     August 31, 1993             Distribution of beer

</TABLE>


                                      -23-
<PAGE>

<PAGE>


          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)


PRINCIPAL ACTIVITIES

           AmBrew International is a holding company, which owns all the capital
stock of the South China Brewery's  operating  companies:  South China and SCBC.
The South China Brewery operates a micro-brewery in Hong Kong for the production
of beer and ale and  distributes  these  products to customers in Hong Kong. The
South China Brewery  started to build its production  facilities in October 1994
and  commenced  commercial  operations  in June  1995.  The  Company  intends to
establish a series of American-style  micro-breweries  in selected  locations in
the Pacific Rim, Europe and Mexico.  The first two of these expansion  breweries
are in process  and will be  located in the  Dublin,  Ireland  area and  Tecate,
Mexico.

2.    BASIS OF PRESENTATION

           The Merger was accounted for as a  reorganization  of companies under
common  control on a historical  cost basis in a manner  similar to a pooling of
interests because AmBrew  International had the same  shareholdings  immediately
after the  Merger  that  Craft had  immediately  before  the  Merger.  The Share
Exchange was also  accounted for as  reorganizations  of companies  under common
control in a manner similar to a pooling of interests because Craft had the same
shareholdings immediately after the Share Exchange that South China and SCBC had
immediately before the Share Exchange.

           The  consolidated  balance  sheet as of  October  31,  1995,  and the
consolidated  statements of operations  for the years ended October 31, 1995 and
1994  incorporate  the  financial  statements  of the South China  Brewery.  The
consolidated  financial statements as of and for the year ended October 31, 1996
incorporate  the financial  statements of American  Craft Brewing  International
Limited and the South China  Brewery.  All  material  intercompany  balances and
transactions have been eliminated in consolidation.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.    INVENTORIES

           Inventories are stated at the lower of cost, on a first-in  first-out
basis,  or market.  Costs of  work-in-process  and finished goods include direct
materials, direct labor and production overhead.

B.    EQUIPMENT AND CAPITAL LEASES

           Equipment and capital leases are recorded at cost.  Depreciation  for
financial reporting purposes is provided utilizing the straight-line method over
the estimated useful lives of the assets as follows: brewing equipment-20 years;
furniture and equipment-4  years; and motor vehicles  (capital  leases)-4 years.
Leasehold improvements are amortized utilizing the straight-line method over the
terms of the leases or the estimated useful lives of the improvements, whichever
is shorter. All ordinary repair and maintenance costs are expensed as incurred.



                                      -24-
<PAGE>

<PAGE>


          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

C.    SALES

           Sales  represent the invoiced  value of goods  supplied to customers.
Sales are recognized upon delivery of goods and passage of title to customers.

D.    INCOME TAXES

           The  Company  accounts  for  income  taxes  under the  provisions  of
Statement of Financial  Accounting  Standards  ("SFAS") No. 109,  which requires
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences  of events that have been included in the  financial  statements or
tax returns.  Deferred  income taxes are provided  using the  liability  method.
Under  the  liability  method,  deferred  income  taxes are  recognized  for all
significant  temporary differences between the tax and financial statement bases
of assets and liabilities.

E.    OPERATING LEASES

           Operating leases represent those leases under which substantially all
the risks and rewards of ownership of the leased assets remain with the lessors.
Rental  payments  under   operating   leases  are  charged  to  expense  on  the
straight-line basis over the period of the relevant leases.

F.    FOREIGN CURRENCY TRANSLATION

           The translation of financial  statements of foreign subsidiaries into
United States  dollars is performed for balance sheet accounts using the closing
exchange  rate in effect at the  balance  sheet date and for revenue and expense
accounts using an average exchange rate during each reporting period.  Gains and
losses  resulting from  translation,  if any, will be included  in shareholders'
equity  separately as cumulative  translation  adjustments.  For the years ended
October  31,  1996,  1995 and  1994,  aggregate  losses  from  foreign  currency
transactions included in the results of operations were not material.

G.    NET LOSS PER COMMON SHARE

           Net loss per common share is computed by dividing the net loss by the
weighted average common shares outstanding during the periods, on the basis that
the  Share  Exchange,  the  Share  Split  and the  Merger  (See Note 1) had been
consummated  prior to the years presented.  Average common equivalent shares for
common stock warrants have not been included,  as the  computation  would not be
dilutive.  For the years ended October 31, 1995 and 1994, the effect,  using the
treasury  stock  method,  of the issuance of shares to the holders of the Bridge
Notes (See Note 8) were included in the  computation  assuming such issuance had
been made prior to the periods presented.

H.    USE OF ESTIMATES

           The preparation of financial  statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

                                      -25-
<PAGE>

<PAGE>

          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

I.    CASH AND CASH EQUIVALENTS

           For purposes of the consolidated  balance sheets and the consolidated
statements of cash flows,  the Company  considers all investments  with original
maturities of three months or less to be cash equivalents.

J.    FAIR VALUE OF FINANCIAL INSTRUMENTS

           The   Company's   financial   instruments   consist  of  cash,   cash
equivalents,  trade  receivables  and trade  payables.  The book values of these
instruments are considered to be representative of their respective fair values.

K.    RECENTLY ISSUED ACCOUNTING STANDARDS

           SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived  Assets to be Disposed Of", was issued in March 1995. The Company
will adopt SFAS No. 121 in the first quarter of fiscal 1997 and based on current
circumstances,  does not believe that such adoption will have a material  effect
on its financial position or results of operations.

           SFAS No. 123, "Accounting for Stock-Based  Compensation",  was issued
in October  1995.  As  permitted  by SFAS No.  123,  the  Company  will elect to
continue  accounting  for stock  option  grants in  accordance  with  Accounting
Principles Board Opinion No. 25, and accordingly, will recognize no compensation
expense for stock  options  granted,  as the stock option plan requires that the
exercise price be equal to or greater than fair value at the date of grant.  The
pro forma disclosures  required by SFAS No. 123 will be made in the footnotes to
the fiscal 1997 consolidated financial statements.

4.    INVENTORIES

           Inventories are composed of the following:
<TABLE>
<CAPTION>
                                                              1996                    1995
                                                              ----                    ----
<S>                                                          <C>                     <C>    
      Raw materials                                          $ 31,451                $16,682
      Work-in-process and finished goods                        4,057                  6,240
                                                            ---------              ---------
                                                             $ 35,508                $22,922
                                                             ========                =======
</TABLE>




                                      -26-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)


5.    EQUIPMENT AND CAPITAL LEASES

           Equipment and capital leases are composed of the following:

<TABLE>
<CAPTION>
                                                        1996             1995
                                                        ----             ----
<S>                                                  <C>              <C>      
Equipment:

           Leasehold improvements                    $  54,316        $  52,123
           Brewing equipment                           563,577          522,869
           Furniture and equipment                      79,834           25,216
Capital leases:

           Motor vehicles                               56,556           56,556
                                                     ---------        ---------
                                                       754,283          656,764
Less: Accumulated depreciation

           Equipment                                   (71,602)         (17,284)
           Capital leases                              (18,851)          (4,713)
                                                     ---------        ---------
                                                     $ 663,830        $ 634,767
                                                     =========        =========
</TABLE>

6.    LONG-TERM BANK LOAN

           The long-term bank loan was evidenced by a promissory note, bearing a
variable  interest rate equal to the U.S.  Citibank prime rate plus 0.5%,  which
was 9.25% per annum as of  October  31,  1995.  The bank loan was  secured  by a
letter of credit of $315,000  provided by two  directors  of the Company who are
also  shareholders  of the  Company  and a  guarantee  of  $250,000  given  by a
shareholder of the Company. The debt was extinguished with the proceeds from the
initial public offering.

7.    SHAREHOLDERS' LOANS

           During the year ended October 31, 1995,  South China borrowed $65,000
from BPW Holding Limited,  a shareholder of the Company.  The loan was evidenced
by a limited recourse promissory note dated March 5, 1996, bearing interest at a
rate of 5.5%  per  annum  and was due ten days  after  the  consummation  of the
initial  public  offering of the  Company's  common  stock.  For the years ended
October 31, 1996,  1995 and 1994,  interest  expense paid to the shareholder was
$4,091, $813, and $0,  respectively.  The loan was repaid with proceeds from the
initial public offering.

           The remaining  balance of the  shareholders'  loans as of October 31,
1995 was unsecured,  non-interest  bearing and without  repayment  terms.  These
shareholders' loans were paid in full during fiscal 1996.

8.    BRIDGE NOTES

           In May 1996, the Company issued $370,000  principal  amount of bridge
notes  bearing  interest at a rate of 12% per annum which  increased  to 14% per
annum at September 1, 1996.  Holders of $250,000 principal amount of these notes
converted such notes and interest  payable  thereon,  upon  consummation  of the
initial public  offering,  into 94,255 shares of the Company's common stock. The
holder of the remaining  $120,000  principal  amount of such notes was repaid in
cash and received at no additional  cost 22,621  shares of the Company's  common
stock, upon  consummation of the initial public offering.  The note holders also
each  received  a warrant  entitling  such  holder to  purchase  for a period of
eighteen  months,  that number of shares of common  stock of the



                                      -27-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

Company  as  such  holder  received  upon  consummation  of the  initial  public
offering, at a price of $8.25 per share (the "Bridge Warrants"). Included in the
consolidated  statement of operations  for the year ended October 31, 1996, is a
non-cash  interest charge of $265,000  representing  the original issue discount
related to the repayment of these notes.

9.    SHAREHOLDERS' EQUITY

           As of October 31, 1995,  the amount of common  stock  recorded in the
consolidated  balance sheet  represents the aggregate amount of the common stock
of the  subsidiaries  of the Company at that date.  As of October 31, 1996,  the
amount of common stock recorded in the consolidated balance sheet represents the
common stock of the Company  after the Share  Exchange,  the Share Split and the
initial public offering.

           The Board of Directors is  authorized,  without  further  shareholder
approval, to issue up to 500,000 shares of preferred stock in one or more series
and to fix the  rights,  preferences,  privileges  and  restrictions  granted or
imposed upon unissued  shares of preferred stock and to fix the number of shares
constituting any series and designations of such series.

           The Company has issued  warrants  under several  separate  agreements
which expire between 1998 and 2001. As of October 31, 1996, a total of 2,090,876
shares of common  stock has been  reserved  for  issuance  upon the  exercise of
common stock warrants.  Other than the Representative's  Warrants and the Bridge
Warrants  (See Note 8), each warrant  allows the holder to purchase one share of
common stock,  subject to adjustment upon the occurrence of certain events.  The
Representative's  Warrants also allow for the purchase of common stock warrants.
Each Bridge  Warrant  entitles  the holder to purchase  that number of shares of
common stock as such holder  received upon  consummation  of the initial  public
offering.  The warrants are recorded at their  estimated fair values at the date
of issuance and were issued in  connection  with the  Company's  initial  public
offering.  Beginning in 1998,  certain  warrants are redeemable  under specified
conditions and at the Company's discretion.

           The number of warrants outstanding,  warrant holders, exercise prices
and redemption prices are as follows:
<TABLE>
<CAPTION>

Number of Shares Issuable
    Under Warrants                                                                           Company
    Outstanding at                                                Exercise Price           Redemption
    October 31, 1996                 Warrant Holders                Per Share           Price Per Warrant
    ----------------                 ---------------                ---------           -----------------
<S>                              <C>                                <C>                 <C> 
       1,580,000                  Publicly held                       $6.875            $0.10
         236,000                  Publicly held                       $6.875            $0.10
         158,000                  Underwriter's Representative        $7.700            Not Redeemable
         116,876                  Bridge Note holders                 $8.250            Not Redeemable
       ---------
       2,090,876
</TABLE>



                                      -28-
<PAGE>

<PAGE>


          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)


           The   exercise   price   for   common   stock   warrants   under  the
Representative's  Warrants  is $0.14 and such  warrants  entitle  the  holder to
purchase one share of common stock at an exercise price of $11.34 per share.

10.   INCOME TAXES

           The Company and its  subsidiaries  are subject to income  taxes on an
entity basis on income arising in or derived from the tax  jurisdiction in which
they are domiciled and operate. AmBrew International is exempted from income tax
in Bermuda  until  2016.  The Hong Kong  subsidiaries  are  subject to Hong Kong
profits tax at a rate of 16.5%.

The significant components of the income tax benefit are:
<TABLE>
<CAPTION>

                                                     1996      1995      1994
                                                     ----      ----      ----
<S>                                                  <C>       <C>       <C>  
Current                                          $  --       $  --       $  --
Deferred - Operating loss carryforwards           36,405      47,560       1,536
                                                 -------     -------     -------
                                                 $36,405     $47,560     $ 1,536
                                                 =======     =======     =======
</TABLE>

           The  reconciliation  of the United States  federal income tax rate to
the effective income tax rate based on the loss before income tax benefit stated
in the consolidated statements of operations is as follows:

<TABLE>
<CAPTION>
                                                        1996      1995      1994
                                                        ----      ----      ----
<S>                                                    <C>       <C>       <C>    
United States federal income tax rate                  (35.0%)   (35.0%)   (35.0%)
Aggregate  effect of  different  tax rates in
     foreign jurisdictions                               6.1%     18.5%     18.5%
Losses for which no benefit is recognized               23.4%      --        --
                                                        ----      ----      ----
Effective income tax rate                               (5.5%)   (16.5%)   (16.5%)
                                                        =====     =====     =====
</TABLE>

           The major  component of deferred  tax assets  relates to the tax loss
carryforwards.  As of October  31,  1996 and 1995,  tax losses of  approximately
$220,636 and $298,000, respectively, can be carried forward indefinitely.

11.    COMMITMENTS AND CONTINGENCIES

A.    CAPITAL COMMITMENTS

           As of October 31, 1996 and 1995 the Company had purchase commitments,
net of deposits,  for the purchase of equipment and  furniture of  approximately
$729,881 and $19,000, respectively.

B.    LEASE COMMITMENTS

           The Company leases various facilities under  noncancelable  operating
leases which expire at various dates through 2001. Rental expenses for the years
ended October 31, 1996, 1995 and 1994 were  approximately  $84,695,  $67,000 and
$0,  respectively.  Future minimum rental payments as of October 31, 1996, under
agreements  classified as operating leases with noncancelable terms in excess of
one year are as follows:

                                      -29-
<PAGE>

<PAGE>




          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)


   Payable during the following periods:

<TABLE>
      <S>                                      <C>
        Fiscal 1997                            $172,832
        Fiscal 1998                             116,948
        Fiscal 1999                             110,315
        Fiscal 2000                              89,500
        Fiscal 2001                              87,083
                                              ---------
                                               $576,678
</TABLE>

12.   LEGAL PROCEEDINGS

           The Company is not involved in any material pending legal proceedings
and is not aware of any material legal proceedings threatened against it.

13.   OPERATING RISK

A.    BUSINESS RISK

           The South  China  Brewery  commenced  operations  in June  1995.  Its
operations  are  subject  to all the  risks  inherent  in an  emerging  business
enterprise.  These include, but are not limited to, high expense levels relative
to production,  complications  and delays  frequently  encountered in connection
with the  development and  introduction of new products,  the ability to recruit
and retain  accomplished  management  personnel,  competition  from  established
breweries,  the need to expand  production and  distribution  and the ability to
establish and sustain product quality.

B.    CONCENTRATION OF CREDIT RISK

           A substantial  portion of the South China Brewery's sales are made to
a small number of customers on an open account basis and generally no collateral
is required. The five largest accounts receivable comprised 73% and 41% of total
accounts  receivable as of October 31, 1996 and 1995,  respectively.  Details of
individual customers accounting for more than 10% of the Company's sales for the
years ended October 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
                                                   PERCENTAGE OF NET SALES
                                                   -----------------------
                                                   1996                1995
                                                   ----                ----
<S>                                               <C>                 <C>
Iconic America Limited, formerly DaBeers
Distributors Limited                               42.9%               27.1%
                                                   =====               =====
Delaney's (Wanchai) Limited                        24.6%               10.5%
                                                   =====               =====

</TABLE>


                                      -30-
<PAGE>

<PAGE>



          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

           The Company  performs  ongoing credit  evaluation of each  customer's
financial condition.  It maintains reserves for potential credit losses and such
losses in the aggregate have not exceeded management's projections.

C.    CONCENTRATION OF SUPPLIERS

           The South China Brewery relies upon a single supplier (other than for
labels)  for each of the raw  materials  used to make  and  package  its  beers.
Although  to date the South  China  Brewery  has been  able to  obtain  adequate
supplies of these  ingredients  and other raw  materials in a timely manner from
these  sources,  if the South  China  Brewery  were  unable  to obtain  adequate
supplies of ingredients or other raw materials,  delays or reductions in product
shipments  could  occur  which  would have an adverse  effect on the South China
Brewery's business,  financial condition and results of operations. As with most
agricultural products, the supply and price of raw materials used to produce the
South China Brewery's beers can be affected by factors beyond the control of the
South China Brewery, such as drought, frost, other weather conditions,  economic
factors affecting growing decisions, various plant diseases and pests. If any of
the foregoing were to occur,  the Company's  business,  financial  condition and
results of operations would be adversely affected.

D.    POLITICAL RISK

           A  substantial  portion of the  Company's  assets are located in Hong
Kong. As a result, the Company's  business,  financial  condition and results of
operations may be influenced by the political  situation in Hong Kong and by the
general state of the Hong Kong economy.  On July 1, 1997,  sovereignty over Hong
Kong will be  transferred  from the United  Kingdom to the People's  Republic of
China, and Hong Kong will become a Special Administrative Region of China.

14.   STOCK OPTION PLAN

           On July 18, 1996 the  Company's  shareholders  adopted the 1996 Stock
Option Plan (the "Plan").  Under the Plan, a committee of the Board of Directors
may grant options to eligible  employees  (including  officers and directors) of
the  Company.  Under  the terms of the Plan,  the per  share  exercise  price of
options  granted  under the Stock  Option  Plan may not be less than 100% of the
fair  market  of a share of the  Company's  common  stock on the date of  grant.
Options  will be  exercisable  during the period  specified  by the Stock Option
Committee, except that options will be immediately exercisable in the event of a
change in  control  of the  Company  and in the  event of  certain  mergers  and
reorganizations  of the  Company.  A total of  300,000  shares of the  Company's
common stock have been  authorized and reserved for issuance under the Plan. The
Company has granted no stock options under the Plan.

15.   SUBSEQUENT EVENTS

           Subsequent to October 31, 1996, the following events took place:

           a. In November 1996 the Company moved into its new corporate  offices
located at One Galleria Blvd., Suite 1714, Metairie, LA 70001.

                                      -31-
<PAGE>

<PAGE>


          AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                  (AMOUNTS EXPRESSED IN UNITED STATES DOLLARS)

           b. In December,  1996, the Company  purchased 95% of the  outstanding
capital  stock of Atlantis  Import  Company  Incorporated,  now AmBrew USA,  for
approximately $100,000. AmBrew USA currently imports several brands of beer into
the  United  States  and the  Company  expects  to use  AmBrew USA as a possible
vehicle  through which to import and distribute  into the United States products
from its expansion  breweries.  AmBrew USA is scheduled to begin  importing beer
from the South China Brewery during the first half of 1997 and will import other
expansion brewery products as they become available.

           c. The Company has entered  into an agreement  with a local  partner,
Mr.  Aidan  McGuinness,  and has  selected  the site for the first  Dublin  area
expansion brewery which will be located in Enfield, County Meath,  approximately
40 miles  west of Dublin.  The  building  that will  house the Dublin  expansion
brewery  is owned by the  McGuinness  family and the lease is  undergoing  final
negotiations.  Work has also been completed on the site layout. A deposit in the
amount of $164,017 was paid to JV Northwest  for the  micro-brewery  system that
will be placed at this sight.  The  equipment  is  scheduled to ship in February
1997. The name of this expansion brewery is Celtic Brew LLC.

           d.  The  Company  has  selected  the site  for the  Tecate  expansion
brewery, signed on January 6,  1997 a five  year  lease  that  is  effective  on
September  11, 1996 with  multiple  options to extend and has commenced  work on
a preliminary  site  layout.  The  building  is  being  leased  from Corporacion
Calfik, a company owned by a director and principal shareholder of  the Company.
The Tecate expansion  brewery  will  be  known  as  Cerveceria  Rio  Bravo.  The
micro-brewery, located approximately one  mile  from  the  Mexican/United States
border,  will  be  wholly-owned and operated  by  the Company. A deposit  in the
amount  of  $176,064  has  been  paid to  JV  Northwest  for  the  micro-brewery
system  that will be  placed  at this  sight.  The  equipment  is  scheduled  to
ship in March 1997.

           e.  The  Company  is  continuously  investigating   opportunities  to
establish  expansion  breweries  and  plans  to  complete  six   such  expansion
breweries  during  fiscal  1997  and  has  signed  a  letter  of   intent   with
a Chinese  restaurant  group,  United  Restaurants  of Gallery,  to form a joint
venture to establish and operate an expansion brewery in Shanghai.

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

                     None.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

           The  information  required  by  Item  10 is  hereby  incorporated  by
reference from the  Registrant's  Proxy Statement for the 1997 Annual Meeting of
Stockholders  (the  "1997 Proxy  Statement")  under  the  caption  "Election  of
Directors."


                                      -32-
<PAGE>

<PAGE>

ITEM 11.   EXECUTIVE COMPENSATION

           The  information  required  by  Item  11 is  hereby  incorporated  by
reference  from  the  1997  Proxy   Statement   under  the  caption   "Executive
Compensation."



                                      -33-
<PAGE>

<PAGE>




ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The  information  required  by  Item  12 is  hereby  incorporated  by
reference from the 1997 Proxy Statement under the caption "Security Ownership of
Certain Beneficial Owners and Management."

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           The  information  required  by  Item  13 is  hereby  incorporated  by
reference   from  the  1997  Proxy   Statement   under  the   caption   "Certain
Transactions."

                                     PART IV

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

           (a)       The Following documents are filed as part of this report:

1.         Financial  Statements  at Item 8 of this report.  All  schedules  are
           omitted because they were not required or the required information is
           included in the Financial Statements and Notes thereto.

2.         The  following  exhibits  are filed as part of this  report or hereby
           incorporated  by  reference  to  exhibits  previously  filed with the
           Commission:

           2.1 -    Plan and  Agreement of  Amalgamation  between  Craft and the
                    Company*
           3.1 -    Memorandum of Amalgamation of the Company **
           3.2 -    Bye-Laws of the Company**
           4.1 -    Specimen common stock certificate**
           4.2 -    Warrant Agreement between the Company,  National  Securities
                    Corporation ("National Securities") and the Bank of New York
                    (including   form  of  Redeemable   Common  Stock   Purchase
                    Warrant)*
           4.3 -    Representative's  Warrant  Agreement between the Company and
                    National  Securities  (including  form  of  Representative's
                    Warrant)  (incorporated  by  reference to Exhibit 4.3 of the
                    Registration Statement)*
           10.1 -   1996 Stock Option Plan of the Company **
           10.2 -   Agreement  of Lease  between  Ping Ping  Investment  Company
                    Limited  ("Ping  Ping") and South China dated as of December
                    12, 1994 **
           10.3 -   Agreement  of Lease  between Ping Ping and South China dated
                    as of May 1, 1995**
           10.4 -   Agreement  of Lease  between  the  Company  and  Corporation
                    Calfik dated as of January 6, 1997***
           10.5 -   Management  Agreement and Performance Guaranty between South
                    China and Lunar Holdings Limited dated as of April 1, 1995**
           10.5 -   Distributors  Limited Brewing  Contract  between South China
                    and DaBeers  Distributors  Limited  ("DaBeers")  dated as of
                    September 23, 1995**


                                      -34-
<PAGE>

<PAGE>

           10.6 -   Brewing   Agreement   between   South  China  and  Delaney's
                    (Wanchai) Limited dated as of September 20, 1995**
           10.7 -   Employment Agreement, dated as of June 14, 1996, between the
                    Company and James L. Ake*
           10.8 -   Employment  Agreement,  dated as of April 27, 1995,  between
                    Edward Cruise Miller and South China**
           10.9 -   Ratification and Exchange Agreement,  dated May 31, 1996, by
                    and among South China,  SCBC,  Craft and each of the persons
                    listed on the signature page hereto*
           10.10 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Mark Youds*
           10.11 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and John Arvanitis*
           10.12 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Mark Gallagher*
           10.13 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Harry Allen Friedberg*
           10.14 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Micro Brew Systems Co., Ltd*
           10.15 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Noah Schaffer*
           10.16 -  Bridge  Financing  Purchase  Agreement,  dated as of May 31,
                    1996, between the Company and Long-Term Partners Ltd*
           10.17 -  Forms of Bridge Financing Convertible Notes (including forms
                    of Bridge Financing Warrants attached thereto)**
           10.18 -  Novation Agreement, dated as of October 3, 1996, among SCBC,
                    DaBeers and Iconic America Limited ("Iconic")*
           10.19 -  Brewing Agreement, dated as of October 3, 1996, between SCBC
                    and Iconic*
           10.20 -  Operating Agreement of Celtic Brew LLC***
           27.0  -  Financial Data Schedule***

(b)  Reports on Form 8-K:
     None
*    Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the  quarterly  period  ended  July 31,  1996  (file  no.  1-12119)
**   Incorporated by reference to the Company's  registration  statement on Form
     S-1 (file no. 333-6033)
***  Filed herewith.



                                      -35-
<PAGE>

<PAGE>



                                    SIGNATURE

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

                                            AMERICAN CRAFT BREWING
                                            INTERNATIONAL LIMITED
  
                                                      /s/ JAMES L. AKE
Date:  January 28, 1997                     ___________________________________
                                            James L. Ake
                                            Executive Vice President,
                                            Chief Operating Officer
                                            and Secretary


                                                /s/ PETER W. H. BORDEAUX
                                            __________________________________
                                            Peter W. H. Bordeaux, Director


                                              /s/ FEDERICO G. CABO ALVAREZ
                                            __________________________________
                                            Federico G. Cabo Alvarez, Director


                                            __________________________________
                                            Norman H. Brown, Director

                                                /s/  JOHN F. BEAUDETTE
                                            __________________________________
                                            John F. Beaudette, Director


                                                  /s/ WYNDHAM H. CARVER
                                            __________________________________
                                            Wyndham H. Carver, Director


                                                   /s/ DAVID K. HAINES
                                            __________________________________
                                            David K. Haines, Director

                                               /s/   JOSEPH E. HEID
                                            __________________________________
                                            Joseph E. Heid, Director

                                      -36-

<PAGE>