<PAGE>

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

                                  FORM 1O-KSB

[X] ANNUAL REPORT UNDER  SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
               For the fiscal year ended December 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE
               SECURITIES EXCHANGE ACT OF 1934
               For the transition period from ________ to ________

                        Commission File Number : 0-25986

            WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
               (Name of small business issuer in its charter)

                OREGON                                      93-1131247
     (State or other jurisdiction                        (I.R.S.Employer
   of incorporation or organization)                    Identification No.)

                              66 SE MORRISON STREET
                             PORTLAND, OREGON  97214
               (Address of principal executive offices and zip code)
                                 (503) 231-7616
                           (Issuer's telephone number)

       SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:   NONE
          SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
                           COMMON STOCK, NO PAR VALUE
                                (Title of Class)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB.  [ ]

Issuer's revenues for its most recent fiscal year were $3,869,304.
The aggregate market value of voting stock held by non-affiliates of the
registrant: Not applicable The number of shares outstanding of the
Registrants Common Stock as of February 28, 1997 was 4,860,996 shares.

The index to exhibits appears on page 25 of this document.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

                      DOCUMENTS INCORPORATED BY REFERENCE
None.

<PAGE>

              WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
                                FORM 10-KSB INDEX


                                    PART I
                                                                   Page

 Item 1.      Description of Business                                     2

 Item 2.      Description of Property                                     7

 Item 3.      Legal Proceedings                                           8

 Item 4.      Submission of Matters to a Vote of Security                 8
              Holders

                                   PART II

 Item 5.      Market for  Common Equity and Related  Stockholder          8
              Matters

 Item 6.      Management's Discussion  and Analysis  or Plan  of          9
              Operation

 Item 7.      Financial Statements                                       16

 Item 8.      Changes in and Disagreements  with Accountants  on
              Accounting and Financial Disclosure                        16

                                   PART III

 Item 9.      Directors, Executive Officers, Promoters and
              Control Persons; Compliance with Section 16(a) of          16
              the Exchange Act

 Item 10.     Executive Compensation                                     20

 Item 11.     Security Ownership of Certain Beneficial Owners
              and Management                                             21

 Item 12.     Certain Relationships and Related Transactions             22

 Item 13.     Exhibits and Reports on Form 8-K                           25

              Signatures                                                 28


                                       1

<PAGE>

                                         PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------

GENERAL
Willamette Valley, Inc. Microbreweries Across America (the "Company" or
"WVI"), an Oregon Corporation, was organized in 1993 to establish a series of
microbreweries throughout the United States using a consumer-owned
capitalization plan and certain marketing strategies and other trade secrets
developed by James W. Bernau, its founder, President and Chairperson of its
Board of Directors.  As of December 31, 1996, the Company had established and
capitalized three separate subsidiaries. Two of which have constructed and
are now operating their own microbrewery.  The third had constructed and
operated a microbrewery, but it is currently operating on a limited contract
brewing basis and its assets are held for sale.  Each microbrewery is
designed to produce and sell high quality ales and/or lager beers marketed
under a locally-based brand name developed specifically for that
microbrewery's target market.  The initial success of each microbrewery is
dependent primarily upon the respective subsidiary's ability to successfully
penetrate the subsidiary's local craft beer market by producing and selling
high quality beer.  One additional wholly owned subsidiary, North Country
Brewing Company, Inc. ("North Country Brewing") is not currently capitalized
and is not operating in any capacity.

The three subsidiary microbreweries (collectively, the "Microbreweries") are:
Aviator Ales, Inc. (formerly known as Seattle Brewing Company) ("Aviator
Ales") which has established a microbrewery in Woodinville, Washington about
20 miles northeast of Seattle (the "Seattle Brewery");  Bayhawk Ales, Inc.
(formerly known as Orange County Brewing Company) ("Bayhawk Ales"), which has
established a microbrewery in Irvine, California (the "Southern California
Brewery") and Mile High Brewing Company ("Mile High Brewing"), which had
established a microbrewery in Denver, Colorado (the "Denver Brewery").  Mile
High Brewing is currently not operating, other than brewing modest amounts of
beer under contract to another microbrewery.  Mile High Brewing's assets are
currently being held for sale.   A fourth brewery, located in Saratoga
Springs, New York (the "Saratoga Springs Brewery"), began operating in
December 1996. The Saratoga Springs Brewery is owned and operated by North
Country Joint Venture, LLC ("North Country LLC").  North Country LLC was
originally a joint venture between the Company's wholly owned subsidiary,
North Country Brewing and Nor'Wester Brewing Company, Inc. ("North Country")
producer of Nor'Wester beer and an affiliate of the Company ("Nor'Wester").
As of October 31, 1996, North Country LLC became a 100 percent owned
subsidiary of Nor'Wester (see Item 12. "Certain Relationships and Related
Transactions - North Country Joint Venture Agreement and Termination
Thereof").

The Company currently holds the following ownership interests in each of its
subsidiaries: Aviator Ales -- 51%; Mile High Brewing -- 51%;  Bayhawk Ales --
57%; and North Country Brewing -- 100%. See also "Management's Discussion and
Analysis - Subsequent Events."

EXISTING SUBSIDIARIES

AVIATOR ALES, INC.
Aviator Ales was formed in February 1994 for the purpose of establishing and
operating microbreweries in the greater Seattle, Washington area.  Aviator
Ales raised approximately $2.87 million in gross proceeds through a
self-underwritten public stock offering completed


                                       2

<PAGE>

in September 1994.  Proceeds from the offering were used to build and operate
the Seattle Brewery which began producing beer in September 1995.  Aviator
Ales is publicly owned, with approximately 3,500 shareholders.

BAYHAWK ALES, INC.
Bayhawk Ales was formed in February 1994 for the purpose of establishing and
operating one or more breweries in California.  Utilizing funds borrowed from
the Company, Bayhawk Ales has constructed a 17 barrel showcase microbrewery
capable of producing 10,000 barrels of beer annually (the "Southern
California Brewery").  The Southern California Brewery is located in an
approximately 2,000 square foot leased facility adjacent to the McCormick &
Schmick's Seafood Restaurant in Irvine, California.  The brewery was opened
to the public in December 1994, began brewing beer in January 1995.  Bayhawk
Ales raised approximately $1.4 million in gross proceeds through a
self-underwritten public stock offering completed in December 1995.  Proceeds
from the offering were used to operate the microbrewery and repay a
substantial portion of the funds borrowed from the Company.  Bayhawk Ales is
publicly owned, with approximately 1,270 shareholders.

MILE HIGH BREWING COMPANY, INC.
Mile High Brewing was formed in June 1994 for the purpose of establishing and
operating breweries in Colorado.  Mile High Brewing raised approximately $2.5
million in gross proceeds through a self-underwritten public stock offering
completed in September 1994.  Proceeds from the offering were used to build
and operate the Denver Brewery which began producing beer in August 1995.
Mile High Brewing is publicly-owned, with approximately 2,600 shareholders.
The Company owns 51% of the outstanding shares of Mile High Brewing.  Mile
High Brewing is currently not operating, other than brewing modest amounts of
beer under contract to another microbrewery.

NORTH COUNTRY BREWING COMPANY, INC.
North Country Brewing was formed in May 1995 for the purpose of establishing
and operating microbreweries in the State of New York.  North Country Brewing
and Nor'Wester, pursuant to a Joint Venture Agreement, created North Country
Joint Venture, LLC, to construct, own and operate a microbrewery in Saratoga
Springs, New York.  Upon the failure of North Country Brewing to make its
planned $2.55 million capital contribution to the joint venture in September
1996, however, Nor'Wester became the sole owner of North Country Joint
Venture, LLC, which is the sole owner of the Saratoga Springs brewery (see
Item 12. "Certain Relationships and Related Transactions - North Country
Joint Venture Agreement and Termination Thereof").

STRATEGY
In January 1996, the Company and its subsidiaries, Aviator Ales, Mile High
Brewing and Bayhawk Ales, established a strategic alliance (the "Alliance")
with Nor'Wester Brewing Company, Inc. ("Nor'Wester").  The Alliance is
created through a Strategic Alliance Agreement among the Alliance members, a
General Services Agreement between the Company and Nor'Wester and separate
Cooperative Brewing Agreements between the Nor'Wester and each of Aviator
Ales, Mile High Brewing and Bayhawk Ales (the "Cooperative Brewers"). For a
more complete description of the agreements under the Alliance, see Item 12
"Certain Relationships and Related Transactions."


                                       3

<PAGE>

The initial purpose of the Alliance was to develop a national market for the
Nor'Wester brand.  As Nor'Wester and some of its competitors attempted to
expand their brands nationally, Nor'Wester learned that a national marketing
strategy for the Nor'Wester brand is currently not cost effective.  Consumers
have shown strong support for craft beers brewed in or near their local
markets and the Company believes the appropriate strategy is to develop and
protect strong local craft beer brands.  The Company further believes that
this strategy can be strengthened through the Affiliated Companies' ability
to build a network of breweries each producing their own brand with local
appeal while benefiting from operating efficiencies, the decrease in
production, marketing and distribution costs and the increase in the ability
of the Affiliated Companies to finance growth and provide shareholders with a
liquid market for their shares.  Once these local brands are established, the
Affiliated Companies may expand the distribution of one or more of their beer
styles into additional selected markets.

To implement this new strategy, the Boards of Directors of the Affiliated
Companies have elected to consolidate their entities under a single entity,
United Craft Breweries, Inc. ("UCB").  Furthermore, on January 30, 1997 the
Affiliated Companies entered into a definitive investment agreement with
United Breweries of America, Inc. ("UBA") for the purpose of funding
operations until the consolidation is completed and provide for future growth
thereafter.  For additional information, see "Management's Discussion and
Analysis - Subsequent Events."

Should the proposed consolidation occur, the Cooperative Brewing Agreements,
the Strategic Alliance Agreement and the General Services Agreement will
terminate.

THE INDUSTRY
The craft brewing segment of the United States brewing industry is comprised
of regional craft brewers such as the Company (i.e. brewers that produces
between 15,000 and 1,000,000 barrels a year), contract brewers (i.e.
companies that formulate and market products brewed by third-party
mass-production brewers), microbrewers (i.e. brewers that produce under
15,000 barrels of craft beer a year) and brewpubs (i.e. a combination
restaurant and brewery which produces principally for on-site consumption).
Craft beers are full-flavored beers, brewed in traditional European brewing
styles with quality hops, malted barley, yeast and water.

Beginning in California, Oregon and Washington and more recently in the New
England states, Colorado and other regions across the country, regional craft
brewers, contract brewers, microbrewers, and brewpubs emerged to form the
craft beer industry.  Certain craft brewers, such as the Company, have been
able to grow from microbrewers into regional craft brewers by increasing the
size of their breweries, while maintaining traditional European brewing
methods. Contract brewers, who generally do not have their own brewing
facilities, have taken advantage of demand by retaining industrial brewers to
perform contract brewing at otherwise underutilized industrial brewing
facilities.  Industrial brewers have also sought to appeal to this demand for
craft beers by introducing their own fuller-flavored specialty beers or by
acquiring or forming partnerships with existing craft brewers.


                                       4

<PAGE>

PRODUCTION
The level of production at each microbrewery depends on (i) the size of the
microbrewery's target market, (ii) the strategy identified to penetrate the
microbrewed beer market in the microbrewery's specified market, and (iii) the
amount of money raised in the microbrewery's public offering. The current
annual production capacity of the Seattle Brewery, the Southern California
Brewery and the Denver Brewery is approximately 57,000 barrels, 10,000
barrels and 39,000 barrels, respectively. The maximum annual production
capacity that could be achieved at the Seattle Brewery, the Southern
California Brewery and the Denver Brewery by adding additional equipment
within the existing structure is approximately 125,000 barrels, 10,000
barrels and 60,000 barrels, respectively.

PRODUCTS
Each microbrewery is designed to brew selected, high quality grains and hops
into ales and/or lager beers.  The particular beer styles produced by
microbrewery are dependent on local taste, climate, ethnic influences and
lifestyles. Quality in the ingredients and the brewing process is the primary
guiding principle in the development and production of each microbrewery's
products.  Each microbrewery is equipped with a superior and efficient
brewhouse that utilizes modern electronic temperature controls in the
fermentation and conditioning tanks, and each microbrewery employs a
brewmaster experienced in producing high quality microbrewed beer.  Products
by microbrewery are as follows:

AVIATOR ALES: Aviator brand: Amber Ale, India Pale Ale, Honey Brown Ale, Hefe
Weizen, Porter and a variety of seasonal ales.  Nor'Wester brand:  Deadeye Rye
and Maple Brown Ale.

BAYHAWK ALES:  Honey Blond, Amber Ale, California Cerveza, Hefe Weizen and
Chocolate Porter.

MILE HIGH BREWING COMPANY:  No longer in production.

RAW MATERIALS
Raw materials used by the Microbreweries consist primarily of malted grains,
hops, brewers' yeast and water filtered through activated charcoal filters.
The Microbreweries typically purchase all of their malted barley and wheat
from a single supplier (Aviator Ales purchases from Great Western Malting Co.
and Bayhawk Ales purchases from Briess Malting Co.), although several
comparable, alternative suppliers exist. Each Microbrewery typically selects
the variety and grower of its high-quality Pacific Northwest hops, and
purchases them through two major brokers.  Each Microbrewery currently
cultivates its own yeast supply and multiple competitive sources of supply
for most packaging materials, such as bottles, labels, six-pack carriers,
crowns and shipping cases are available to the Microbreweries

DISTRIBUTION
Each microbrewery markets its products under a locally-based brand name
developed specifically for that microbrewery.  Each sells its draft beers
directly to consumers visiting the respective microbrewery and through
wholesale distribution to pubs, taverns, and restaurants.  Once the
microbrewery establishes sufficient presence in the draft beer market, it
will either obtain a bottling line or contract for bottling services to
enable it to market bottled ales and lager beers through restaurants, taverns
and retail stores.  Each


                                       5

<PAGE>

microbrewery will directly distribute its products and/or engage local
distributors, depending on the strategy identified to best penetrate the
microbrewed beer market in the particular microbrewery's specified market.
Each microbrewery is responsible, in part, for developing and maintaining
independent distributors for its bottled products.

COMPETITION
The craft beer segment is highly fragmented and competitive, especially in
the Pacific Northwest, which the Company believes is one of the most
developed craft beer markets in terms of number of breweries and consumer
awareness.  The Company's breweries compete primarily with other craft
brewers, contract brewers, producers of imported beers and mass-market
industrial brewers.  The principal means of competition in the craft beer
segment are product quality, taste, consistency and freshness, brand and
product differentiation, distribution methods and area coverage, promotional
methods, packaging, development of new products and, to a lesser extent,
pricing.

The craft beer industry has become saturated with numerous brands each
comprised of several beer styles.  As a result, growth rates are slowing,
especially in the Pacific Northwest where there are many brands vying for
available shelf space and taps.  The industry is also facing a loss of shelf
space, and therefore sales, to the industrial brewers, who have created
fuller-flavor specialty beers and are threatening to withdraw their business
from distributors who also distribute brewery brands.

The Company expects competition among craft brewers to continue to increase,
possibly resulting in decreases in market share, growth rates and product
prices.

Many of the Company's competitors in the craft beer segment, including
Pyramid Breweries, Redhook Ale Brewery, Widmer Brewing, Full Sail Brewing,
Sierra Nevada Brewing, Boston Beer Company and Anchor Brewing, have greater
financial and other resources than the Company.

RESEARCH AND DEVELOPMENT
To meet varying consumer style and flavor preferences, the Microbreweries
continually engage in the development and testing of new products.  The
Microbreweries pilot brew small batches of new products for sampling at the
breweries, as well as in community tastings.  The Microbreweries also perform
numerous tastings and surveys with their distributors and consumers on beer
styles and brand imagery.

REGULATION AND DRAM SHOP LIABILITY
The Company's business is highly regulated at federal, state and local
levels. Various permits, licenses and approvals necessary to the Company's
brewery operations and the sale of alcoholic beverages are required from
various agencies, including the U.S. Treasury Department, Bureau of Alcohol,
Tobacco and Firearms (the "BATF"); the United States Department of
Agriculture; the United States Food and Drug Administration; state alcohol
regulatory agencies in the states in which the Company sells its products;
and state and local health, sanitation, safety, fire and environmental
agencies.  In addition, the beer industry is subject to substantial federal
and state excise taxes.

Management believes that the Company's subsidiaries currently have all
licenses, permits and approvals necessary for their current operations and
are in material compliance with all


                                       6

<PAGE>

applicable government regulations.  However, existing permits or licenses
could be revoked if the Company's subsidiaries were to fail to comply with
the terms of such permits or licenses, and additional permits or licenses
could, in the future, be required for the Company's subsidiaries existing or
expanded operations.  If licenses, permits or approvals necessary for the
subsidiaries' brewery operations were unavailable or unduly delayed, or if
any such permits or licenses were revoked, the subsidiaries' ability to
conduct their business could be substantially and adversely affected.

The serving of alcoholic beverages to a person known to be intoxicated may,
under certain circumstances, result in the server being held liable to third
parties for injuries caused by the intoxicated customer.  The Company has
addressed this concern by establishing early closing hours and employee
training and designated-driver programs.  In addition, the Company's
subsidiaries have obtained host liquor and legal liquor liability insurance
coverage and intends to continue such coverage if it remains available at a
reasonable cost.  Future increases in premiums could make it prohibitive for
the Company to maintain adequate insurance coverage.  Any large uninsured
damage awards against the Company could have a material adverse affect on the
Company's business and financial condition.

TRADEMARKS
The Company has no significant trademarks, as they are held at the subsidiary
level.

EMPLOYEES
At December 31, 1996, the Company had a total of 23 full time and 2 part time
employees, including 10 full time employees at Aviator Ales, 6 full time
employees and 1 part time employee at Mile High Brewing and 5 full time
employees and 1 part time employee at Bayhawk Ales, the Company's majority
owned subsidiaries.  None of the Company's employees are covered by
collective bargaining agreements, there have been no work stoppages and the
Company believes that relations with its employees are adequate.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company shares leased space in Portland, Oregon with Nor'Wester.
Nor'Wester leases 12,200 square feet of space.  Nor'Wester's lease expires on
January 31, 1997, with a renewal option for up to an additional 18 years.

Aviator Ales has executed a 20-year lease for the Seattle Brewery that runs
until August 1, 2015, with the right to renew the lease for two additional
terms of ten years each.  The leased facility comprises approximately 19,000
square feet in Woodinville, Washington, and the Company also has an option on
additional adjacent space of approximately 10,000 square feet that is
exercisable between years 2 and 5 of the current lease.  The Company has
constructed the Seattle Brewery with sufficient leasehold improvements to
enable it to grow to a maximum annual brewing capacity of 125,000 barrels
(current brewing capacity is approximately 57,000 barrels).  To reach maximum
capacity, additional brewing equipment, fermentation and conditioning tanks
must be purchased and installed, and an option to lease additional space
adjacent to the existing facility must be exercised.  The Company also has
purchased a high-speed Krones bottling line and labeler.

The Denver Brewery, owned and operated by Mile High Brewing, is located in an
approximately 14,200 square foot leased facility in lower downtown Denver,
Colorado.  Mile


                                        7

<PAGE>

High Brewing has executed a 15 year lease with the right to renew for two
additional terms of five years each.  The Denver Brewery has a maximum annual
production capacity of 60,000 barrels.  The Denver Brewery also has a high
speed Krones bottling line capable of bottling 100 twelve-ounce bottles of
beer per minute.  The Company's assets are currently being held for sale and
Mile High Brewing intends to assign the lease to the purchaser of the assets.

The Southern California Brewery of Bayhawk Ales is located in an
approximately 2,000 square foot leased facility adjacent to the McCormick &
Schmick's Seafood Restaurant in Irvine, California. The lease for the
Southern California Brewery expires January 2015, with the right to renew the
lease for two additional terms of five years each.  The Southern California
Brewery includes a 17-barrel brewhouse and 50-barrel fermenters designed for
a maximum annual production capacity of 10,000 barrels.  The Southern
California Brewery produces only draft beer since it does not have adequate
space to house a bottling line.

ITEM 3.  LEGAL PROCEEDINGS

One of the Company's subsidiaries, Mile High Brewing, dba Timberline Brewpub,
and Mr. John Carter, a Vice President of Mile High Brewing, are defendants in
a suit filed by United Glassware and China Company on November 5, 1996 in the
District Court, City and County of Denver, Colorado.  The suit claims that
the defendants owe $54,700 on an alleged promissory note for materials
supplied to Mile High Brewing.  The suit is seeking damages in the sum of
$54,700 in principal and unspecified amounts for interest and attorney fees.
Mile High Brewing has asserted vigorous defenses and filed certain
counterclaims.

From time to time, the Company's subsidiaries become involved in ordinary,
routine or regulatory legal proceedings incidental to their businesses.

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

No matters were submitted to a vote of the Company's shareholders during the
quarter ended December 31, 1996.


                                   PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no public trading market for the Company's Common Stock.  The
approximate number of shareholders of record on December 31, 1996  was 1,783.
There were no cash dividends declared or paid in fiscal years 1996 or 1995.
The Company does not anticipate declaring such dividends in the foreseeable
future.


                                       8

<PAGE>

The Company and each of its subsidiaries issued the following number of
unregistered shares of their Common Stock at various times throughout 1996 to
employees and distributors of each respective Company:

          COMPANY NAME                    NUMBER OF SHARES
          ---------------------           -----------------
          WVI                                   10,200
          Aviator Ales                           1,500
          Bayhawk Ales                           2,370
          Mile High Brewing                      3,620

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

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


                                       9

<PAGE>

RESULTS OF OPERATIONS
The following table reflects selected data from the Company's statements of
operations stated as a percentage of net sales and management services
revenue:

                                            YEAR ENDED DECEMBER 31,
                                         ----------------------------
                                            1996              1995
                                         ---------         ----------
 Gross sales                               102.6 %            48.1  %
 Less excise taxes                           5.4               2.1
                                         ---------         ----------
 Net sales of beer and related
 products                                   97.2              46.0
 Management services to
 affiliated companies                        2.8              54.0
                                         ---------         ----------
 Total sales                               100.0             100.0
 Cost of beer and related
 products sold                             107.2              50.8
 Cost of management services
 provided                                    2.8              47.1
                                         ---------         ----------
 Total cost of sales                       110.0              97.9
 Selling, general and
 administrative expenses                    57.6             179.6
                                         ---------         ----------
 Operating income (loss)                  (67.7)           (177.5)
                                         ---------         ----------
 Income (loss) before income
 taxes                                   (124.9)           (163.0)
                                         ---------         ----------
 Net income (loss)                        (61.7) %         (109.9) %

GROSS SALES.  Brewery revenues of the Company's subsidiaries include sales of
beer as well as retail merchandise such as T-shirts and caps.  Net revenues
from brewery operations and retail products increased 574 percent in 1996,
totaling $3,759,504 for the year ended December 31, 1996 compared to $557,714
for the year ended December 31, 1995.  The increase is primarily attributable
to a full year of revenues for Aviator Ales and Mile High Brewing which
commenced their brewing operations in the third quarter of 1995 and the
addition of the sale of $1,351,267 of beer under the Cooperative Brewing
Agreements during 1996.  Mile High Brewing ceased operations in the fourth
quarter of 1996 due to its inability to successfully penetrate its market.

The Microbreweries operated at the following capacity during 1996 and 1995:

                                                       Barrels Produced
                                                       ----------------
                                  Current
                                 Capacity
                              (No. of Barrels
 Brewery                         per Year)           1996               1995
-------------------------    ----------------    ---------           ---------
 Aviator Ales                         57,000        9,742                574
 Bayhawk Ales                         10,000        3,658              1,360
 Mile High Brewing(1)                 39,000        9,932                658

(1) Mile High Brewing ceased production of its own products in November 1996
    and is currently producing limited quantities of beer pursuant to a
    contract brewing arrangement with a third party.

Competition for market share with each of the Microbreweries' markets has
increased due to the level of market saturation by competing companies,
especially in the Northwest where there are many brands vying for available
shelf space.  The industry is also facing a loss of shelf space, and
therefore sales, to the industrial brewers, who are threatening to withdraw
their business from distributors who also distribute microbrewery brands.


                                      10

<PAGE>

Specifically, during 1996, Aviator Ales experienced significant competition
from one competitor who began selling its Hefe Weizen beer in bottles into
the same channels of distribution as Aviator Ales.  This resulted in a
decline in market share for Aviator Ales and for Nor'Wester, an affiliated
company.  To date, Aviator Ales has been unable to regain this market share.

COST OF BREWERY REVENUES.  The cost of brewery revenues represents 107
percent of revenues for 1996 and 51 percent for 1995, reflecting the
disproportionate cost of production for goods sold during a period when the
breweries are operating at less than their maximum designed capacity, as well
as start-up costs such as recipe testing.  In addition, the margin on beer
brewed cooperatively for Nor'Wester under the cooperative Brewing Agreements
is substantially less than the Microbreweries' own products.  All of the
breweries commenced operations during 1995 and Mile High Brewing ceased
production of its own products during the fourth quarter of 1996.

REVENUES AND COSTS RELATED TO MANAGEMENT SERVICES.  Revenues from management
services provided to affiliated companies totaled $109,800 and $653,776 for
the years ended December 31, 1996 and 1995, respectively.  Cost of management
services provided for the same periods was 100 percent and 87 percent of such
revenues, respectively.  Revenues from management services represent the
Company's cost in 1996 and cost plus a certain mark-up in 1995.  The
Company's cost includes all direct labor and other direct costs as well as a
portion of the Company's general and administrative costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses ("SG&A") totaled $2.23 million and $2.18 million for
the year ended December 31, 1996 and 1995, respectively. SG&A reflect
management and administrative costs incurred on behalf of the Company and its
subsidiaries. The increase in SG&A is primarily a result of increased periods
of operations for the Microbreweries and increased shipping costs as the
Company's Microbreweries introduced their products into surrounding states.
During the third quarter of 1996, the selling and administrative staff was
restructured, thus decreasing such expenses during the later part of 1996,
partially offsetting the increase.

INTEREST INCOME AND INTEREST EXPENSE.  Interest income totaled $33,605 and
$185,284 for the years ended December 31, 1996 and 1995, respectively, as a
result of interest earned on the Company's consolidated cash balances.
Interest expense of $68,406 and $9,300 was incurred during 1996 and 1995,
respectively, on the long-term debt for the purchase of land in Woodinville,
Washington and for capital equipment lease obligations.

OTHER.  Other expense, net of $422,788 includes $444,845 related to the write
off of legal and accounting fees related to the Aviator Ales' and Mile High
Brewings' discontinued public stock offerings.


                                      11

<PAGE>

NET LOSS.  Net loss was $2.4 million in 1996 compared to $1.3 million in
1995, as a result of the individual line items discussed above.

LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $1.0 million to $90,492 at December 31,
1996 from $1.1 million at December 31, 1995.  The $90,492 in cash and cash
equivalents at December 31, 1996 is all held by the Company's subsidiaries.
Amounts held by each of the Company's subsidiaries have been earmarked for
use in developing the respective subsidiary's brewery and are not available
for use by the Company in developing new breweries.  The decrease is
primarily a result of $1.4 million net cash used by operating activities less
$398,744 in capital expenditures plus $773,023 in net cash provided by
financing activities which includes $849,871 in advances from affiliates.

Advances from affiliates increased $900,000 to $1.6 million at December 31,
1996 from $700,000 at December 31, 1995.  This increase resulted primarily
from advances by Nor'Wester to support Aviator Ales and Mile High Brewing,
each of which was engaged to cooperatively brew Nor'Wester's beer and each of
which reported operating losses for the year ended December 31, 1996.

Working capital decreased to a deficit of $3.0 million at December 31, 1996
from a surplus of $1.4 million at December 31, 1995.   The current ratio
decreased to .18:1 at December 31, 1996 from 3.02:1 at December 31, 1995.

Accounts payable were $1.5 million at December 31, 1996 compared to $406,797
at December 31, 1995. At December 31, 1996 and currently, the Company was
past due on $1.1 million and $1.4 million, respectively, of its accounts
payable.

The Company established a reserve of $338,000 for the planned sale and
disposition of the assets of Mile High Brewing.

The Company believes that current working capital together with projected
income from operations are not sufficient to meet the Company's cash needs
over the next twelve months.

SUBSEQUENT EVENTS
PENDING CONSOLIDATION, BRIDGE LOANS, SUBSEQUENT INVESTMENT AND RENEGOTIATION OF
THE TERMS
On January 30, 1997, the Company, Nor'Wester, Aviator Ales, Mile High Brewing
and Bayhawk Ales (together the "Affiliated Companies"), entered into a
definitive Investment Agreement (the "Investment Agreement") with United
Breweries of America, Inc. ("UBA").  Under the terms of the Investment
Agreement, UBA has agreed to invest $8.63 million in the form of bridge loans
and cash at closing in exchange for a 45% equity interest in the consolidated
businesses of the Affiliated Companies.  UBA, an affiliate of The UB Group of
Bangalore, India, was formed for the purpose of investing in the U.S. craft
beer industry. The UB Group is a diversified multi-national corporation whose
major operations consist of the production and sale of beer and spirits
through affiliated companies which operate in 20 countries on four
continents.


                                      12

<PAGE>

Under the terms of the Investment Agreement, the Affiliated Companies have
each agreed to consolidate under the ownership of a new entity, United Craft
Brewers, Inc. ("UCB").  UCB will serve as a holding company for companies
which operate each of the five affiliated breweries--the Portland Brewery,
the Saratoga Springs Brewery, the Seattle Brewery, the Denver Brewery and the
Southern California Brewery.  The proposed consolidation is a condition to
receipt of UBA's investment which will be made directly in UCB.

CONSOLIDATION.  Under the proposed consolidation each of the Affiliated
Companies will become a wholly-owned subsidiary of UCB pursuant to a merger
and share exchange by which newly registered shares of UCB will be issued in
exchange for outstanding shares of the Affiliated Companies based on the
share exchange rates described below.  The merger and share exchange has been
unanimously approved by the Boards of Directors of each of the Affiliated
Companies but remains subject to approval by shareholders of each Affiliated
Company.  Following completion of the consolidation, shareholders of each
Affiliated Company will hold shares in UCB, which is intended to be listed
for trading on the Nasdaq National Market System under the symbol "ALES".
The consolidation is primarily an administrative step designed to simplify
the ownership structure of the Affiliated Companies, increase the operating
efficiencies of each brewery, decrease the production, marketing and
distribution costs of each brewery, increase the ability of the combined
breweries to finance operations and possible growth and provide all
shareholders with a liquid market for their shares.

The outstanding shares of each of the Affiliated Companies will be exchanged
for shares in UCB according to the following exchange ratios which are based
on the average closing price of Nor'Wester's Common Stock for the 20 trading
days immediately preceding January 30, 1997, the date of execution of the
Investment Agreement:

 COMPANY                       EXCHANGE RATIO
--------------------         ------------------
 Nor'Wester                          1:1
 WVI                              1.99159:1
 Aviator Ales                     2.98739:1
 Bayhawk Ales                     1.99159:1
 Mile High Brewing                2.98739:1

BRIDGE LOANS.  Under the Investment Agreement, UBA is obligated to provide
Nor'Wester with up to $2.75 million in bridge loans as interim financing
during the consolidation phase.  Advances under the bridge loan are expected
to be used by Nor'Wester to help cover operating expenses and pay existing
creditors of the Affiliated Companies until closing of the investment, at
which time the balance of UBA's $8.6 million investment is expected to be
made.  Of the $2.75 million, $1.5 million has already been advanced and spent
as of the date of this report. All bridge loans are made pursuant to a Credit
Agreement between Nor'Wester and UBA, the principal terms of which are as
follows:

     (1)  The bridge loans will be made at times and in amounts mutually
     determined by UBA and Nor'Wester based on a periodic review of the cash
     flow needs and creditor demands of the Affiliated Companies;


                                      13

<PAGE>

     (2)  Interest on the bridge loan accrues at 11.25% per annum and is
     payable to UBA in cash at closing of UBA's investment.

     (3)  All principal and interest is secured by the assets of North Country
     Joint Venture, LLC (owner and operator of the Saratoga Springs Brewery)
     and by Nor'Wester's ownership interest in the joint venture LLC.
     Repayment of all principal and interest is guaranteed personally by Jim
     Bernau.

     (4)  As a condition to each advance under the bridge loan, neither Jim
     Bernau nor any of the Affiliated Companies shall be in breach of any
     representation, warranty or covenant under the credit documents or the
     Investment Agreement and there shall not be any "material adverse effect"
     in the businesses of the Affiliated Companies as a whole.

     (5)  Unless converted at closing, all advances under the bridge loan
     mature 60 days after termination of the Investment Agreement or the
     occurrence of certain events of default under the credit documents
     (including the breach by an Affiliated  Company or Mr. Bernau of any
     representation, warranty or covenantunder the Investment Agreement),
     except that the bridge loan becomes due immediately if a "material
     adverse effect" occurs in the businesses of the Affiliated Companies as a
     whole or there is a breach by any Affiliated Company or Mr. Bernau of any
     representation, warranty or covenant under the credit documents.

INVESTMENT.  Following completion of the consolidation and assuming all
closing conditions have been met as required under the Investment Agreement,
UBA will invest an additional $5.88 million in cash combined with the
anticipated conversion of the $2.75 million bridge loan in exchange for a 45
percent equity interest in UCB.

Closing of the proposed investment remains subject to (i) approval by the
shareholders of each of the Affiliated Companies, (ii) achievement of certain
aggregate operating results by the breweries, (iii) maintenance of certain
operating conditions and covenants, including that there shall be no
"material adverse change" in the businesses of the Affiliated Companies taken
as a whole, (iv) approval by the U.S. Bureau of Alcohol, Tobacco and Fire
Arms and applicable state liquor control commissions, (v) registration with
the U.S. Securities and Exchange Commission of the UCB shares to be exchanged
in the consolidation; (vi) extension of Nor'Wester's $1.0 million line of
credit through September 30, 1997, the bank shall have waived any defaults
under the line of credit agreement and the line of credit shall have been
converted to a term loan and (vii) such other customary conditions for
transactions of this type.

As a further condition to UBA's investment, Jim Bernau has agreed to transfer
to UBA 1,124,195 of the UCB shares he receives in the consolidation (or
approximately 46% of his total UCB shares at consolidation).  This transfer,
for which Mr. Bernau will receive no cash consideration, is being done
principally to provide UBA with the necessary equity interest in UCB (45%) to
cause UBA to make the investment.

Following completion of the consolidation and closing of UBA's investment, the
approximate ownership interests in UCB will be as follows: (i) UBA -- 45.0%,
(ii) Jim Bernau -- 10%, and (iii) the public shareholders of each Affiliated
Company will own the following


                                      14

<PAGE>

interests:  Nor'Wester--21.6%, WVI--7.1%, Aviator Ales--6.7%, Mile High
Brewing--5.9%, and Bayhawk Ales--3.7%.  The initial Board of Directors of UCB
will be composed of 7 members consisting of (i) one person appointed by Jim
Bernau, (ii) four persons appointed by UBA (one of whom shall be Vijay
Mallya, Chairman of The UB Group, who shall be chairman) and (iii) two
outside Directors who shall be mutually satisfactory to Jim Bernau and UBA.
The initial Board will serve until the next regular meeting of shareholders.
At that time, UBA, with its 45% interest, will be in a position to
effectively elect all members of the Board of Directors and thereby control
UCB and in turn its subsidiary breweries.

Subject to completion or waiver of all closing conditions, closing of UBA's
investment will occur as soon as practicable following approval of the
consolidation by the shareholders of each of the Affiliated Companies which
is currently expected to occur in or about July 1997.  In the event that the
investment is not closed by August 31, 1997, either party may terminate the
transaction and repayment of any outstanding bridge loan is due 60 days
thereafter.

While the Company is dependent upon the receipt of further loans under the
credit facility and closing of the UBA investment, the Company does not
control the business or operations of the other Affiliated Companies and can
not assure that it or another Affiliated Company will not violate one or more
covenants in the Investment Agreement or that a closing condition will not be
met. Accordingly, there can be no assurance that the Company will receive
further bridge loan amounts or that the investment will ultimately close or
will close on the terms set forth in the Investment Agreement.

RENEGOTIATION OF THE TERMS OF THE UBA INVESTMENT.  In light of lower than
anticipated 1996 results, lower than anticipated first quarter 1997 sales and
other operating results and adverse conditions within the craft beer industry
in general, representatives of UBA and management and the investment bankers
of the Affiliated Companies are in the process of renegotiating the terms of
the UBA investment.  The renegotiation will reflect a significantly lower
valuation for the Affiliated Companies, a reduction in the amount of cash to
be invested by UBA to $5.5 million and a reduction of UBA's percentage
ownership position in UCB to 40% following the consolidation.  It is not
anticipated that the $2.75 million bridge loan amount will be reduced.  The
existing shareholders in the Affiliated Companies would retain a 60% interest
in UCB.  The exact distribution of ownership interests among shareholders of
the Affiliated Companies has not yet been determined.  Management will soon
seek Board approval by each of the Affiliated Companies of any renegotiated
terms.  Failure of the parties to reach a mutually agreeable renegotiated
Investment Agreement could lead to a loss of the bridge loans and the
remainder of the UBA investment which would materially and adversely affect
the Company's financial condition and results of operations.

If for any reason, the Company and its subsidiaries are unable to pay past due
creditors and finance working capital requirements through an investment by
UBA,
alternative methods of financing would have to be obtained.  No assurance can
be
given that alternative methods of financing would be obtained.  No assurance
can
be given that alternative methods of financing would be available on terms
acceptable to the Company or its subsidiaries, or at all.  Having to develop
alternative means of financing would likely slow development of the existing
breweries and such alternative financing may be costly.


                                      15

<PAGE>

The inability of the Company and its subsidiaries to obtain additional
capital would adversely affect the Company's business and results of
operations.

ITEM 7.  FINANCIAL STATEMENTS

The information required by this item begins on page F-1 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

None.


                                   PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

DIRECTORS
The names and ages of the Company's Directors are as follows:

 NAME                    AGE       POSITION(S) WITH COMPANY     DIRECTOR SINCE
-------------------------------------------------------------------------------
 James W. Bernau         43        Chairperson of the Board,          1993
                                   President and Secretary
 Ron Brigham             44        Director                            1995
 Carol Fischer           43        Director                            1995
 Carl F. Flipper         49        Director                            1995
 Earl Littrell           54        Director                            1995
 Donald E. Voorhies      73        Director                            1995

Mr. Bernau has been President and Chairperson of the Board of Directors of
the Company since its inception in December 1993.  He is also President and
Chairperson of the Board of Directors for five other public companies and has
held these positions since the dates indicated: Willamette Valley Vineyards,
Inc. ("WVV") since May 1988, Nor'Wester Brewing Company, Inc. since December
1992 and of three other subsidiaries of WVI, Aviator Ales, Inc. and Bayhawk
Ales, Inc. since February 1994.  Mr. Bernau also serves as one of the three
Managers of the North Country Joint Venture LLC, a wholly owned subsidiary of
Nor'Wester.  Mr. Bernau began this alliance of consumer/investor owned
companies by first co-founding WVV in 1988 with Donald Voorhies.  From 1981
to September 1989, Mr. Bernau was Director of the Oregon Chapter of the
National Federation of Independent Businesses (NFIB), an association of
15,000 independent businesses in Oregon.  While at NFIB, his responsibilities
primarily involved communicating with association members and lobbying the
Oregon state legislature regarding issues impacting the members.

Mr. Brigham has been a Director of the Company since April 1995.  Mr. Brigham
has served as a District Manager for Coffee People, Inc., an Oregon-based
specialty coffee retailer.  From 1985 to 1994 he served as Area Supervisor
for NIPI, Inc. dba McDonald's Restaurants of Eugene-Springfield, Oregon.


                                      16

<PAGE>

Ms. Fischer has been a Director of the Company since April 1995.  Since 1987,
Ms. Fischer has been employed as the Public Affairs Director of Marion
County, Oregon.  Ms. Fischer serves as the President of the Board of
Directors for the Girl Scouts of Santiam Council, treasurer and board member
of the National Association of County Information Officers, executive
committee member of the National Association of County Governmental Affairs
Officials and on the Board of the Oregon Student Lobby Foundation.  Ms.
Fischer has a B. S. degree in Political Science and English from Oregon State
University and she completed the graduate program for Senior Executives in
Local Government at Harvard University's Kennedy School of Public
administration in 1994.

Mr. Flipper has served as a Director of the Company since April 1995.  From
1992 to 1995, Mr. Flipper served as President and Executive Director of the
Oregon Enterprise Forum ("OEF"), a private-sector, non-profit organization
dedicated to promoting the development of emerging growth companies located
in Oregon.  Mr. Flipper also serves as a regional manager of Northwest
Capital Network, a service company matching entrepreneurs with private
investors.  Prior to 1992, Mr. Flipper worked for the Entrepreneurial
Services Division of Deloitte & Touche, certified pubic accountants, in its
Chicago office.  Mr. Flipper has worked extensively to promote minority
employment and minority business development.  Mr. Flipper serves on the
Board of Directors for the National Economic Development and Law Center.  He
has also held faculty appointments at the University of Idaho and Lewis &
Clark State College.

Mr. Littrell has served as a Director of the Company since April 1995.  Mr.
Littrell has been a professor of Accounting and Information Sciences at
Willamette University's Atkinson Graduate School of Management since 1976.
In addition to his teaching duties, Mr. Littrell is a co-founder of OC3,
Inc., a publishing company that specializes in preparing candidates for the
CMA and CIA exams.  Mr. Littrell is the past-President of the Pacific
Northwest Council of the Institute of Management Accountants and was a member
of the IMA's national Board of Directors from 1985-1987 and 1990-1991.  Mr.
Littrell has authored numerous articles on the subject of accounting.  Mr.
Littrell, a Stanford University  undergraduate, obtained his Ph.D. in
Accounting from the University of oregon.  He is a Certified Management
Accountant.

Mr. Voorhies has served as a Director of the Company since April 1995.  Mr.
Voorhies has also served as Vice President and Director of Willamette Valley
Vineyards, Inc. since its inception in 1988.  Mr. Voorhies also serves as a
member of the Board of Directors of Nor'Wester and Bayhawk Ales, Inc.  From
1981 to 1995, Mr. Voorhies owned and operated a 30-acre vineyard, Salem Hills
Vineyard, which he developed from raw land purchased in 1981.  Prior to his
retirement in 1983, Mr. Voorhies was employed by General Electric Company as
Sales Manager of the Lighting Products Division for the Pacific Northwest
Region.  Mr. Voorhies holds a B.S. in Electrical Engineering from University
of California at Berkeley.  Mr. Voorhies currently serves as a liaison
between the Oregon Wine Growers Association and the Oregon Wine Advisory
Board.


                                      17

<PAGE>

EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages and positions of the executive officers and key management of
the Company and its subsidiaries are as follows:

 NAME               AGE    CURRENT POSITION(S) WITH COMPANY             SINCE
-------------------------------------------------------------------------------
 James W. Bernau     43    Chairperson of the Board, President and       1993
                           Secretary

 Mark Anderson       43    National   Sales   Manager   and  Southeast   1996
                           Regional Leader

 John Carter         28    Vice President -  Mile High Brewing Company   1996
                           and Rocky Mountain/Midwest Regional Leader

 E. J. Harkins       39    Vice  President - North Country Brewery and   1996
                           Northeast Regional Leader

 Gordon Herzog       38    Chief Financial Officer                       1997

 Yashpal Singh       51    Executive Vice President of Operations        1997

 David B. Voorhies   47    Vice  President -  Bayhawk  Ales,  Inc. and   1994
                           Southwest Regional Leader

 Dustin Wyant        27    Vice  President  -  Aviator Ales,  Inc. and   1995
                           Northwest Regional Leader


For a description of the business background of Mr. Bernau, see "Directors"
above.

Mr. Anderson joined the Company in January 1996 as the Southeast Regional
Leader and was promoted during 1996 to National Sales Manager and Southeast
Regional Leader.  Prior to joining the Company, Mr. Anderson was the owner
and President of Asa Beverage Brokers, a company specializing in establishing
distribution channels for craft beer and wine.  From 1990 to 1994, Mr.
Anderson was the Southeast Sales Manager for Barton Beers, Inc., selling
primarily imported beers throughout nine states.  From 1979 to 1994, Mr.
Anderson was a Sales Manager for National Distributing Company, a liquor,
wine and beer distributor.

Mr. Carter joined the Company in September 1996 as General Manager.  From
1994 until 1996, Mr. Carter served as Regional Sales Manager of Southern and
Northern California for the Nor'Wester/WVI Alliance.  From 1991 until 1994,
Mr. Carter served as a manager in the hospitality industry while also
attending school. Mr. Carter has a B.A. from Oregon State University and has
completed everything except his thesis for his Master of Arts, also from
Oregon State University.

Mr. Harkins joined the Company in January 1996 as the Northeast Regional
Sales Leader.  Mr. Harkins is also Vice President, North Country Brewing.
Mr. Harkins has over 15 years of beverage industry experience, with his most
recent position prior to joining the Company being General Sales Manager for
Great State Beverages of Manchester, NH, one of the premier beverage
distributors in the United States.  Mr. Harkins has participated in numerous
industry related seminars and has also been recognized by numerous suppliers
for excellence.

Mr. Herzog joined the Company in March 1997 as Chief Financial Officer.  From
1990 to April 1996 Mr. Herzog was the Senior Vice President and Controller for
Alliance Broadcasting L.P. ("Alliance"), a holding company that owned  radio
stations in major markets around the country.  Since April 1996, Mr. Herzog has
been retained by the seller of Alliance on a consulting basis to wind down the
business of Alliance following the sale of


                                      18

<PAGE>


all of its assets.  Mr. Herzog earned a B.S. degree in Finance and Accounting
from Southern Oregon State College in 1986.

Mr. Singh became Executive Vice President of Operations for the Company in
March 1997. From 1994 to date, Mr. Singh has been Senior Vice President,
Operations for United Breweries Ltd., in Bangalore, India, an affiliate of
The UB Group. From 1990 to 1994, Mr. Singh served in various capacities at
Kalyani Brewery of United Breweries Ltd., most recently as Chief Executive.
In addition, in 1992, Mr. Singh became Chief Executive of Jupiter Breweries
and Industries Ltd.  Mr. Singh holds degrees in Chemistry, Botany and Zoology
from Punjab University in India.  Mr. Singh is a member of the Master Brewers
Association of America.

Mr. Voorhies joined the Company in 1995 as its Southwest Regional Leader.
Mr. Voorhies joined Bayhawk Ales in December 1994 and serves as its General
Manager and Chief Operating Officer on  a full-time basis. He is responsible
for overseeing Bayhawk's operations, including production, marketing and
sales. Prior to joining Bayhawk, Mr. Voorhies spent 22 years as a civil
engineer managing the design and construction of numerous complex building
projects for organizations such as Honeywell, Johnson Controls and the
Washington Public Power Supply System, among others.  From April 1990 to
December 1994, Mr. Voorhies served as  Project Manager for Creegan and
D'Angelo Consulting Engineers, a design project management consulting firm
based in Fairfield, California.  In addition to bringing significant
management experience to the Company, Mr. Voorhies has been a home brewer for
over 5 years.  Mr. Voorhies received his B.S. in Civil Engineering from
Washington State University.  He is a registered professional engineer in
both California and Washington.

Mr. Wyant joined the Company in 1995 as its Northwest Regional Leader.  Mr.
Wyant also serves as Vice President - Aviator Ales, Inc.   Mr. Wyant is also
a Director and Vice Chairperson of the Aviator Ales Board of Directors.  From
January 1994 to January 1995, Mr. Wyant served as Retail Manager for
Nor'Wester and Willamette Valley Vineyards ("WVV").  During 1993, Mr. Wyant
was an independent sales representative for WVV.  From 1990 to 1992, Mr.
Wyant was obtaining his commerce degree at the University of Virginia and
Bath University in England.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and Directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. Executive officers, Directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons, the Company believes that, for the fiscal year
ended December 31, 1996, all executive officers, Directors and greater than
10% shareholders complied with all applicable filing requirements, except in
one instance, Mr. John Carter, a Vice President of Mile High Brewery, failed
to timely file a Statement of Initial Beneficial Ownership on Form 3.


                                      19

<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and other executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively, the "named executive officers")
for fiscal years 1996, 1995 and 1994.

                       SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                            Annual Compensation
 Name and Principal
 Position (A)             Year    Employer                           Salary($)    Bonus($)
--------------------    ------    --------------------------------  -----------  -----------
<S>                     <C>      <C>                               <C>          <C>

 James W. Bernau (B)      1996    Willamette Valley, Inc.                  --           --
  Chairperson of the      1996    All affiliated companies except      86,093           --
  Board, President and            Willamette Valley, Inc.
  Secretary               1995    Willamette Valley, Inc.              13,600       10,882
                          1995    All affiliated companies except      82,400           --
                                  Willamette Valley, Inc.
                          1994    Willamette Valley, Inc.              13,100        8,682
                          1994    All affiliated companies except      70,400           --
                                  Willamette Valley, Inc.
</TABLE>

   (A) Other than Mr. Bernau, no other individuals earned more than $100,000 in
       1996, 1995 or 1994.

   (B) Mr. Bernau serves as the President of the Company, WVV, Nor'Wester,
       Aviator Ales, Bayhawk Ales, Mile High Brewing and North Country.  Each
       of these companies pays a pro rata portion of Mr. Bernau's monthly
       salary based on the amount of time which Mr. Bernau has devoted to the
       respective company's business in that month.

STOCK OPTION GRANTS
No stock options were granted to Mr. Bernau during 1996.

OPTION EXERCISES AND HOLDINGS
No options were exercised by Mr. Bernau during 1996 and no options are held
by Mr. Bernau at December 31, 1996.

COMPENSATION OF DIRECTORS OF THE COMPANY
Directors of the Company are not compensated for acting in such capacity.


                                      20

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of February 28, 1997 as to (i)
each person who is known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock, (ii) each Director of the Company, (iii)
each of the executive officers named in the Summary Compensation Table above
and (iv) all Directors and executive officers as a group. Except as otherwise
noted, the Company believes the persons listed below have sole investment and
voting power with respect to the Common Stock owned by them.

                                                    COMMON STOCK
--------------------------------------  ---------------------------------------
                                            SHARES
                                         BENEFICIALLY          APPROXIMATE
          NAME AND ADDRESS                 OWNED (1)         PERCENTAGE OWNED
--------------------------------------  ---------------------------------------
  James W. Bernau (2)                      3,018,444               62.1%
   8800 Enchanted Way SE
   Turner, Oregon  97392

  James F. Hensel (2)                        335,982                6.9%
   2911 SW Orchard Hill Place
   Lake Oswego, Oregon  97035

  Donald E. Voorhies (3)                      21,000                   *
   1715 Wickshire Ct.
   Salem, Oregon  97302

  Carol Fischer (4)                               50                   *
   160 Wilson Street SE
   Salem, Oregon  97302

  Ron Brigham                                     --                  --
   16887 NW Richard's Court
   Sherwood, Oregon  97104

  Carl F. Flipper                                 --                  --
   2538 NE Killingsworth, Apt 4
   Portland, Oregon  97211
  Earl Littrell                                   --                  --
   2737 Vick Avenue NW
   Salem Oregon 97304

  All Directors and executive officers
   as a group (12 persons) (5)             3,052,494               62.7%


--------------------------
Less than 1%


                                      21

<PAGE>

(1) Applicable percentage of ownership is based on 4,860,996 shares of
    Common Stock outstanding as of February 28, 1997.  Beneficial
    ownership is determined in accordance with the rules of the Securities and
    Exchange Commission.
(2) As a condition to registering shares for the 1994 offering under Oregon
    Securities Laws, the Company's founders agreed to place in escrow all
    3,353,826 shares they beneficially owned prior to the offering.  These
    shares will be released upon the Company's reaching certain performance
    milestones.  Unless released pursuant to those milestones, the shares shall
    remain in escrow until released in 25 percent increments on October 31 of
    the years 2000 through 2003.  The shares have the same rights and
    privileges of all outstanding shares except rights relating to
    transferability and liquidation.
(3) Mr. Voorhies also owns 10,010 shares of Common Stock of the Company's
    subsidiary, Mile High Brewing Company and 15,000 shares of Common Stock
    of the Company's subsidiary, Bayhawk Ales.
(4) Ms. Fischer also owns 450 shares of Common Stock of the Company's
    subsidiary, Aviator Ales.
(5) Includes 10,000 shares subject to options exercisable within 60 days of
    February 28, 1997.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GENERAL
Each of Nor'Wester, Aviator Ales, Bayhawk Ales and Mile High is affiliated
with the Company in that James W. Bernau, the Company's founder, President
and Chairperson of the Board of Directors, is also President and Chairperson
of the Board of Directors of each such affiliated company.  Mr. Bernau is
also a significant equity owner of each affiliated company either directly,
as in the case of  Nor'Wester, in which Mr. Bernau owns approximately 25% of
the outstanding capital stock, or indirectly through his controlling interest
in WVI (62%), which in turn owns a controlling interest in each of Aviator
Ales (51%), Bayhawk Ales (57%) and Mile High Brewing (51%). As a result of
certain arrangements between the Company and its affiliates, as well as Mr.
Bernau's positions and/or ownership interests in each of these companies,
inherent conflicts of interest exist with respect to the pricing of services,
the sharing of resources and the allocation of the Company's president's
time.

STRATEGIC ALLIANCE
In January 1996, the Company established a strategic alliance with Aviator
Ales, Mile High Brewing, Bayhawk Ales and Nor'Wester (the "Alliance").  The
Alliance is created through a Strategic Alliance Agreement among the Alliance
members, a General Services Agreement between the Company and Nor'Wester and
separate Cooperative Brewing Agreements between Nor'Wester and each of
Aviator Ales, Mile High Brewing and Bayhawk Ales (the "Cooperative Brewers").

The terms of the Strategic Alliance Agreement, the Cooperative Brewing
Agreements and the General Services Agreement are four years, unless earlier
terminated under limited circumstances.  However, due to the fact that
Nor'Wester's Portland Brewery is not currently operating at capacity as well
as the fact that Nor'Wester has changed its strategy and is not currently
attempting to develop other regional markets for its products, the
Cooperative Brewing Agreement is not being utilized.  Certain other aspects
of the Strategic Alliance Agreement are also not being utilized due to
industry and individual company circumstances that have changed since the
Strategic Alliance Agreement was put in place.


                                      22

<PAGE>

In addition, should the consolidation occur as described under "Subsequent
Events", all such agreements will terminate.

Details of the agreements are as follows (although, as indicated, many of the
terms are no longer applicable):

STRATEGIC ALLIANCE AGREEMENT.  Under the terms of the Strategic Alliance
Agreement, each Alliance member has agreed to (i) support the expansion of
the Nor'Wester's products into the Alliance member's market by cooperatively
brewing Nor'Wester's beer and facilitating Nor'Wester's access to local
distributors; (ii) employ at least one Nor'Wester trained brewer at all times
during the term of the Agreement; and (iii) use the services, expertise and
personnel available within the Alliance before obtaining such resources from
outside sources.  The Strategic Alliance Agreement does not preclude an
Alliance member from promoting its products in markets served by other
Alliance members.  The Agreement provides that no Alliance member will use
the proprietary information or technology of another Alliance member to
produce any beer with a flavor profile or appearance of such other Alliance
member's beer.  With the consent of all Alliance members, additional entities
owning and/or operating brewing facilities may be added as parties to the
Alliance.

COOPERATIVE BREWING AGREEMENTS.  Under the terms of the Cooperative Brewing
Agreements, each of the Cooperative Brewers has agreed to produce
Nor'Wester's beer, in the amounts and packaged as specified in firm orders
submitted by the Nor'Wester on a periodic basis.  All orders made by
Nor'Wester are subject to certain volume limits.  The Cooperative Brewer's
production of Nor'Wester beer must comply with Nor'Wester's specifications
concerning recipes, quality control procedures, flavor profile and
appearance.  Nor'Wester has a right to reject beer not meeting its
specifications. Pricing for the purchase of beer produced under Cooperative
Brewing Agreements are at the lesser of cost plus 10% or Nor'Wester's average
cost of production at its Portland Brewery, plus a mark-up of 10%.  The
Agreement provides that no Alliance Member will use the proprietary
information or technology of another Alliance Member to produce any beer with
a flavor profile or appearance that is substantially similar to such Alliance
Member's beer.

GENERAL SERVICES AGREEMENT.  The General Services Agreement requires that the
WVI perform for Nor'Wester and WVI's subsidiaries certain services relating
to (i) human resources support; (ii) stock transfer and (iii) investor
relations. Under the General Services Agreement, Nor'Wester is to provide WVI
and its subsidiaries certain services relating to (i) accounting and finance
support; (ii) sales and marketing management; (iii) executive services; and
(iv) production management; (v) point of sale and advertising services; and
(vi) centralization and coordination among the Alliance members of certain
operational and purchasing matters.  Nor'Wester, in turn subcontracts with
WVV for point of sale and advertising services and certain sales and
marketing management support services.


                                      23

<PAGE>

The Company was charged $169,425 by Nor'Wester for such services during 1996.
Amounts charged by the Company to its affiliates and subsidiaries during 1996
are as follows:

 Company Name                              Amount
-------------------------------         -------------
 Nor'Wester                               $ 85,575
 Aviator Ales                               55,125
 Bayhawk Ales                               20,175
 Mile High Brewing                          56,025
 North Country Brewing                      25,650
 Willamette Valley Vineyards                24,225
                                        -------------
                                          $266,775
                                        -------------
                                        -------------

AMOUNTS OWED TO NOR'WESTER
In 1995 and 1996, Nor'Wester loaned or advanced funds to Aviator Ales and
Mile High Brewing for purchases of capital assets and for working capital
needs. Nor'Wester also paid certain bills on behalf of the Company, Aviator
Ales, Mile High Brewing and Bayhawk Ales and provided these companies with
services under the General Services Agreement.  As a result, at December 31,
1996, WVI and its subsidiaries owed the following amounts to Nor'Wester: the
Company-$196,324, Aviator Ales-$570,090, Mile High Brewing-$703,446, and
Bayhawk Ales-$72,179. These amounts are unsecured, do not bear interest, are
payable on Nor'Wester's demand and are reflected as "payables to affiliated
company" on the Company's balance sheet.

NORTH COUNTRY JOINT VENTURE AGREEMENT AND TERMINATION THEREOF
On January 1, 1996, Nor'Wester and North Country Brewing, a wholly owned
subsidiary of the Company, entered into an Operating Agreement which details
the respective rights and obligations of the owners in a joint venture to
develop, own and operate a brewery in Saratoga Springs, New York (the "North
Country Joint Venture").  Nor'Wester's initial contribution to the North
Country Joint Venture consisted of (i) $3,500,000 in cash; (ii) deposits
toward the purchase of equipment with a value of approximately $500,000;
(iii) use of Nor'Wester's beer recipes pursuant to a licensing agreement
between Nor'Wester and the North Country Joint Venture.  North Country
Brewing's initial contribution consisted of (i) an unsecured, non-interest
bearing $2,550,000 promissory note payable by North Country to the North
Country Joint Venture on or before the completion of North Country Brewing's
planned self-underwritten public stock offering or October 1, 1996, whichever
occurs first; (ii) use of North Country Brewing's beer recipes pursuant to a
licensing agreement between the North Country Joint Venture and North Country
Brewing; and (iii) North Country Brewing's brewery development efforts
consisting of a business and operating plan for the Saratoga Springs Brewery,
a lease agreement for the facility in which the brewery will be established,
and a local brand name and imagery.  Nor'Wester's and North Country Brewing's
capital accounts with the North Country Joint Venture were credited with
$4,000,000 and $2,550,000, respectively, upon formation.

North Country Brewing's public offering was canceled in September 1996 and
North Country Brewing did not pay the $2,550,000 due under the note.
Accordingly, on October 1, 1996, North Country Brewing withdrew from the
North Country Joint Venture Agreement and transferred its interest to
Nor'Wester.  Concurrently, Nor'Wester executed a promissory note payable to
WVI evidencing the purchase price for North Country Brewing's


                                      24

<PAGE>

membership interest in the amount of $192,358, which amount represents WVI's
out of pocket development expenses to establish the Saratoga Springs Brewery
and to develop North Country Brewing's beer recipes and brand imagery.

ARMS-LENGTH TRANSACTIONS
The Company believes that the transactions set forth above were made on terms
no less favorable to the Company than could have been obtained from
unaffiliated third parties.  All future transactions between the Company and
its officers, directors, principal shareholders and affiliates will be
approved by a majority of the independent outside members of the Company's
Board of Directors who do not have an interest in the transactions, and will
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits included herein:

        Exhibit
        Number      Description
        -------     -----------
        3.1         Articles of Incorporation of the Company (1)
        3.2         Bylaws of the Company (1)
        10.1        Technology Transfer Agreement between James W. Bernau and
                    the Company dated December 2, 1993 (1)
        10.2        Director Indemnity Agreement between the Company and
                    James W. Bernau dated December 29, 1993 (1)
        10.3        1993 Stock Incentive Plan (incorporated by reference from
                    the Company's Regulation A Offering Statement on Form 1-A
                    (File No. 24S-3022))
        10.4        Founder's Escrow Agreement among the Company, James W.
                    Bernau and First Interstate Bank of Oregon, N.A.
                    (incorporated by reference from the Company's Regulation
                    A Offering Statement on Form 1-A (File No. 24S-3022))
        10.5        Proceeds Escrow Agreement between the Company and First
                    Trust Oregon (incorporated by reference from the Company's
                    Regulation A Offering Statement on Form 1-A
                    (File No. 24S-3022))
        10.6        Management Agreement between Mile High Brewing Company and
                    the Company (incorporated by reference from the Regulation A
                    Offering Statement on Form 1-A for Mile High Brewing Company
                    (File No. 24D-3811))
        10.7        Licensing Agreement between Mile High Brewing Company and
                    the Company (incorporated by reference from the Regulation A
                    Offering Statement on Form 1-A for Mile High Brewing Company
                    (File No. 24D-3811))
        10.8        Bottling Agreement between Mile High Brewing Company and the
                    Company (incorporated by reference from the Regulation A
                    Offering Statement on Form 1-A for Mile High Brewing Company
                    (File No. 24D-3811))


                                      25

<PAGE>

        Exhibit
        Number       Description
      -----------   -------------
        10.9         Management Agreement between Aviator Ales, Inc. (formerly
                     known as Seattle Brewing Company) and the Company dated
                     June 25, 1994 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Aviator Ales, Inc.
                     (formerly known as Seattle Brewing Company)
                     (File No. 33-81536-LA))
        10.10        Licensing Agreement between Aviator Ales, Inc. (formerly
                     known as Seattle Brewin1g Company) and the Company dated
                     June 25, 1994 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Aviator Ales, Inc.
                     (formerly known as Seattle Brewing Company)
                     (File No. 33-81536-LA))
        10.11        Bottling Agreement between Aviator Ales, Inc. (formerly
                     known as Seattle Brewing Company) and the Company dated
                     June 25, 1994 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Aviator Ales, Inc.
                     (formerly known as Seattle Brewing Company)
                     (File No. 33-81536-LA))
        10.12        Founder's Escrow Agreement among Aviator Ales, Inc.
                     (formerly known as Seattle Brewing Company), the Company
                     and First Interstate Bank of Oregon, N.A. dated June 25,
                     1994 (incorporated by reference from the Registration
                     Statement on Form SB-2 for Aviator Ales, Inc. (formerly
                     known as Seattle Brewing Company) (File No. 33-81536-LA))
        10.13        Management Agreement between Bayhawk Ales, Inc. (formerly
                     known as Orange County Brewing Company) and the Company
                     dated February 14, 1995 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Bayhawk Ales, Inc.
                     (formerly known as Orange County Brewing Company)
                     (File No. 33-82208-LA))
        10.14        Licensing Agreement between Bayhawk Ales, Inc. (formerly
                     known as Orange County Brewing Company) and the Company
                     dated February 14, 1995 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Bayhawk Ales, Inc.
                     (formerly known as Orange County Brewing Company)
                     (File No. 33-82208-LA))
        10.15        Bottling Agreement between Bayhawk Ales, Inc. (formerly
                     known as Orange County Brewing Company) and the Company
                     dated February 14, 1995 (incorporated by reference from the
                     Registration Statement on Form SB-2 for Bayhawk Ales, Inc.
                     (formerly known as Orange County Brewing Company)
                     (File No. 33-82208-LA))
        10.16        Sublease between Southern California Plan II, Inc. and the
                     Company dated January 25, 1994 (incorporated by reference
                     from the Registration Statement on Form SB-2 for Bayhawk
                     Ales, Inc. (formerly known as Orange County Brewing
                     Company) (File No. 33-82208-LA))
        10.17        Assignment of Sublease between the Company and Bayhawk
                     Ales, Inc. (formerly known as Orange County Brewing
                     Company) dated May 25, 1994 (incorporated by reference from
                     the Registration Statement on Form SB-2 for Bayhawk Ales,
                     Inc. (formerly known as Orange County Brewing Company)
                     (File No. 33-82208-LA))


                                      26

<PAGE>

        Exhibit
        Number       Description
       ---------    ---------------
        10.18        Management Agreement between North Country Brewing Company
                     and the Company dated June 1, 1995 (incorporated by
                     reference from the Registration Statement on Form SB-2 for
                     North Country Brewing Company (File No. 33-93968-NY))
        10.19        Letter of Intent between North Country Brewing Company and
                     Stewart's Ice Cream Co., Inc. to enter into a lease
                     agreement (incorporated by reference from the Registration
                     Statement on Form SB-2 for North Country Brewing Company
                     (File No. 33-93968-NY))
        10.20        Licensing Agreement between North Country Brewing Company
                     and the Company dated June 1, 1995 (incorporated by
                     reference from the Registration Statement on Form SB-2 for
                     North Country Brewing Company (File No.33-93968-NY))
        10.21        General Services Agreement dated January 1, 1996 between
                     the Company and Willamette Valley Brewing Company
                     (incorporated by reference from the Registration Statement
                     on Form SB-2 (Amendment No. 2) for Willamette Valley
                     Brewing Company (File No. 33-98976))
        10.22        Strategic Alliance Agreement dated January 1, 1996 among
                     the Company, Willamette Valley Brewing Company, Aviator
                     Ales, Inc., Mile High Brewing Company, Bayhawk Ales, Inc.
                     and North Country Brewery, Inc. (incorporated by reference
                     from the Registration Statement on Form SB-2 (Amendment
                     No. 2) for Willamette Valley Brewing Company
                     (File No. 33-98976))
        10.23        Promissory Note and Security Agreement dated November 30,
                     1995 relating to $347,000 loan to Bayhawk Ales, Inc. 10.24
                     Membership Termination Agreement dated February 27, 1997,
                     between the Company and Willamette Valley, Inc.
                     Microbreweries Across America, North Country Brewing
                     Company, Inc. and North Country Joint Venture, LLC.
        10.24        Membership Termination Agreement dated February 27,
                     1997, between the Company, Nor'Wester Brewing Company,
                     Inc., North Country Brewing Company, Inc. and North
                     Country Joint Venture, LLC.
        10.25        Investment Agreement dated as of January 30, 1997 by and
                     among Nor'Wester Brewing Company, Inc., North Country Joint
                     Venture, LLC, Willamette Valley, Inc. Microbreweries Across
                     America, Aviator Ales, Inc., Bayhawk Ales, Inc., Mile High
                     Brewing Company, Inc., James W. Bernau and United Breweries
                     of America, Inc., which includes the Credit Agreement
                     between Nor'Wester Brewing Company, Inc. and United
                     Breweries of America, Inc.
        21           Subsidiaries of the Registrant
        27           Financial Data Schedule

(1) Incorporated by reference from the Company's Regulation A Offering Statement
    on Form 1-A (File No. 24s-3022)

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the quarter ended
December 31, 1996.


                                      27
<PAGE>

SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated:   March 25, 1997                 WILLAMETTE VALLEY, INC. MICROBREWERES
                                        ACROSS AMERICA

                                        By:/s/ JAMES W. BERNAU
                                        James W. Bernau
                                        Chairperson of the Board, President
                                        and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in their capacities on March 25, 1997:

Signature                            Title
------------                         ------

/s/JAMES W. BERNAU                   Chairperson of the Board, President
------------------                   and Secretary
James W. Bernau                      (Principal Executive Officer and Principal
                                     Financial and Accounting Officer)


/s/ RONALD G. BRIGHAM                Director
---------------------
Ronald G. Brigham


/s/ CAROL FISCHER                    Director
---------------------
Carol Fischer


/s/ CARL F. FLIPPER                  Director
---------------------
Carl F. Flipper


/s/ EARL K. LITTRELL                 Director
---------------------
Earl K. Littrell


/s/ DONALD E. VOORHIES               Director
---------------------
Donald E. Voorhies


                                      28
<PAGE>


WILLAMETTE VALLEY, INC.
MICROBREWERIES ACROSS
AMERICA AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


Report of Independent Accountants..........................................F-1

Consolidated Balance Sheet.................................................F-3

Consolidated Statement of Operations.......................................F-4

Consolidated Statement of Shareholders' Equity.............................F-5

Consolidated Statement of Cash Flows.......................................F-6

Notes to Consolidated Financial Statements.................................F-7


<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Willamette Valley, Inc. Microbreweries across America
(A Development Stage Company)


In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of shareholders' equity and of cash
flows present fairly, in all material respects, the financial position of
Willamette Valley, Inc. Microbreweries across America (a development stage
company) and its subsidiaries at December 31, 1996 and 1995 and the results
of their operations and their cash flows for each of the two years in the
period ended December 31, 1996 and for the period from inception (December 2,
1993) through December 31, 1996, in conformity with generally accepted
accounting principles.  These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits.  We conducted our audits of
these statements in accordance with generally accepted auditing standards
which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As discussed in Note 1 to the financial
statements, the Company is a development stage company which has only a
limited and unprofitable operating history, has negative working capital of
$2,979,750 and has limited access to capital with which to fund future
operations.  Subsequent to December 31, 1996, the management of Mile High
Brewing Company (MHBC), a majority-owned subsidiary of the Company,
formalized and approved a plan to sell the operating assets of MHBC.
Accordingly, the assets have been reported at estimated fair market value at
December 31, 1996 and management has recorded an impairment loss of
$1,306,879 in the accompanying statement of operations for the year ended
December 31, 1996.  Such factors, among others, raise substantial doubt about
its ability to continue as a going concern.

As discussed in Note 11 to the financial statements, the Company and its
subsidiaries entered into an investment agreement to be merged with an
affiliated company and convert their stock into shares of a new publicly
traded entity.


                                      F-1

<PAGE>

To the Board of Directors and Shareholders of
Willamette Valley, Inc. Microbreweries across America
(A Development Stage Company)
Page 2


Willamette Valley, Inc. Microbreweries across America is a member of a group
of affiliated companies and, as disclosed in the financial statements, has
extensive transactions and relationships with members of the group.  Because
of these relationships, it is possible that the terms of these transactions
are not the same as those that would result from transactions among wholly
unrelated parties.




PRICE WATERHOUSE LLP

Portland, Oregon
March 21, 1997, except as to Note 12 which is as of March 24, 1997


                                      F-2

<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------

                                                          DECEMBER 31,
                                                     1996             1995
                                                 ------------     ------------

ASSETS
Current assets:
   Cash and cash equivalents                     $    90,492      $ 1,117,134
   Accounts receivable                               211,078          123,026
   Receivables from affiliates (Note 8)                   --          198,569
   Inventories (Note 2)                              349,870          368,656
   Prepaid expenses and other current assets           8,170          215,712
                                                 ------------     ------------
      Total current assets                           659,610        2,023,097

Property and equipment, net  (Notes 3 and 4)       5,124,746        5,460,152
Deposits for the purchase of equipment                    --           51,000
Other non-current assets                                  --          161,177
                                                 ------------     ------------
Total assets                                     $ 5,784,356      $ 7,695,426
                                                 ------------     ------------
                                                 ------------     ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt and
      capital lease obligations (Note 4)         $    73,328      $    19,522
   Accounts payable                                1,470,891          406,797
   Accrued liabilities                               149,650          220,870
   Container deposits                                 34,922               --
   Reserve for impairment loss (Note 12)             338,000               --
   Payable to affiliated companies (Note 8)        1,572,569           22,698
                                                 ------------     ------------
      Total current liabilities                    3,639,360          669,887

Long-term debt and capital lease obligations
   (Note 4)                                          298,888          108,415
Advance from affiliate (Note 8)                           --          700,000
Deferred rent (Note 9)                                70,103           91,328
                                                 ------------     ------------
                                                   4,008,351        1,569,630
                                                 ------------     ------------
Minority interest                                    142,585        1,871,191
                                                 ------------     ------------
Commitments (Note 9)

Shareholders' equity (Note 6):
   Common stock, $.01 par value,
      10,000,000 shares authorized,
      4,860,996 and 4,850,796 shares
      issued and outstanding                          48,610           48,508
   Additional paid-in capital                      5,453,712        5,686,386
   Deficit accumulated during development
      stage                                       (3,868,902)      (1,480,289)
                                                 ------------     ------------
      Total shareholders' equity                   1,633,420        4,254,605
                                                 ------------     ------------
Total liabilities and shareholders' equity       $ 5,784,356      $ 7,695,426
                                                 ------------     ------------
                                                 ------------     ------------

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


                                    F-3


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------------------------------------------------

                                                                   CUMULATIVE
                                                                  AMOUNTS FROM
                                                                   INCEPTION
                                                                  (DECEMBER 2,
                                              YEAR ENDED            1993) TO
                                             DECEMBER 31,         DECEMBER 31,
                                           1996         1995          1996
                                      ------------  ------------  ------------

Revenues:
   Gross sales of beer and related
      retail products (Note 10)       $ 3,967,975   $   582,908   $ 4,594,582
   Less excise taxes                     (208,471)      (25,194)     (233,665)
                                      ------------  ------------  ------------
Net sales                               3,759,504       557,714     4,360,917

Management services to affiliated
   companies (Note 8)                     109,800       653,776       893,190
                                      ------------  ------------  ------------
                                        3,869,304     1,211,490     5,254,107
                                      ------------  ------------  ------------
Cost of sales:
   Cost of beer and related
      retail products                   4,148,847       615,518     4,787,853
   Management services to
      affiliated companies (Note 8)       109,800       570,507       799,527
                                      ------------  ------------  ------------
                                        4,258,647     1,186,025     5,587,380
                                      ------------  ------------  ------------
Gross (deficit) margin                   (389,343)       25,465      (333,273)

Selling, general and administrative
   expenses (Note 8)                    2,229,018     2,176,410     4,715,974
                                      ------------  ------------  ------------
Loss from operations                   (2,618,361)   (2,150,945)   (5,049,247)

Loss on asset impairment               (1,306,879)                 (1,306,879)
Interest income/(expense)                 (34,801)      175,984       224,589
Other expense                            (422,788)           --      (422,789)
                                      ------------  ------------  ------------
Loss before income taxes and
   minority interest in losses of
   consolidated subsidiary companies   (4,382,829)   (1,974,961)   (6,554,326)

Income taxes (Note 5)                          --            --            --
                                      ------------  ------------  ------------
Loss before minority interest in
   losses of consolidated
   subsidiary companies                (4,382,829)   (1,974,961)   (6,554,326)

Minority interest in losses of
   consolidated subsidiary companies    1,994,216       644,119     2,685,424
                                      ------------  ------------  ------------
Net loss as a development stage
   company                            $(2,388,613)  $(1,330,842)  $(3,868,902)
                                      ------------  ------------  ------------
                                      ------------  ------------  ------------

Net loss per common share             $     (0.49)  $     (0.27)  $     (1.07)
                                      ------------  ------------  ------------
                                      ------------  ------------  ------------
Weighted average number of common
   shares outstanding                   4,852,513     4,850,796     3,602,166
                                      ------------  ------------  ------------
                                      ------------  ------------  ------------

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


                                     F-4

<PAGE>


<TABLE>
<CAPTION>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
PERIOD FROM INCEPTION (DECEMBER 2, 1993) TO DECEMBER 31, 1996
---------------------------------------------------------------------------------------------------------------------------------

                                                                                                      DEFICIT
                                                                                                    ACCUMULATED
                                                                     ADDITIONAL       COMMON          DURING
                                             COMMON STOCK             PAID-IN         STOCK         DEVELOPMENT
                                         SHARES        AMOUNT         CAPITAL       SUBSCRIPTION       STAGE            TOTAL
                                        ---------     --------      -----------     ------------    -----------      -----------
<S>                                    <C>           <C>           <C>              <C>            <C>              <C>
Balances, December 2, 1993                     --     $     --      $        --      $      --      $        --      $        --

WVI common stock subscription           3,353,826       33,538           77,573       (111,111)                               --
                                        ---------     --------      -----------      ---------      -----------      -----------

Balances, December 31, 1993             3,353,826       33,538           77,573       (111,111)              --               --

Proceeds from WVI common stock
   issuance to founders                        --           --               --        111,111               --          111,111

Net proceeds from WVI common stock
   offerings                            1,496,970       14,970        2,164,607             --               --        2,179,577

Interest in net proceeds from
   offerings of majority-owned
   subsidiary company                          --           --        2,611,633             --               --        2,611,633

Net loss                                                                                               (149,447)        (149,447)
                                        ---------     --------      -----------      ---------      -----------      -----------
Balances, December 31, 1994             4,850,796       48,508        4,853,813             --         (149,447)       4,752,874

Interest in net proceeds from
   offerings of majority-owned
   subsidiary company                          --           --          832,573             --               --          832,573

Net loss                                       --           --               --             --       (1,330,842)      (1,330,842)
                                        ---------     --------      -----------      ---------      -----------      -----------
Balances, December 31, 1995             4,850,796       48,508        5,686,386             --       (1,480,289)       4,254,605

Shares granted to employees                10,200          102           20,298             --               --           20,400

Decrease in interest in
   majority-owned subsidiary
   company                                     --           --         (252,972)            --               --         (252,972)

Net loss                                       --           --               --             --       (2,388,613)      (2,388,613)
                                        ---------     --------      -----------      ---------      -----------      -----------

Balance, December 31, 1996              4,860,996     $ 48,610      $ 5,453,712      $      --      $(3,868,902)     $ 1,633,420
                                        ---------     --------      -----------      ---------      -----------      -----------
                                        ---------     --------      -----------      ---------      -----------      -----------


                             The accompanying notes are an integral part of these financial statements.
</TABLE>

                                                            F-5
<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------------------------------------------------

                                                                   CUMULATIVE
                                                                  AMOUNTS FROM
                                                                   INCEPTION
                                                                  (DECEMBER 2,
                                              YEAR ENDED            1993) TO
                                             DECEMBER 31,         DECEMBER 31,
                                           1996         1995          1996
                                      ------------  ------------  ------------
Cash flows from operating activities:
   Net loss                           $(2,388,613)  $(1,330,842)  $(3,868,902)
   Minority interest in losses of
      consolidated subsidiary
      companies                        (1,994,216)     (644,119)   (2,685,423)
Reconciliation of net loss to net
 cash used by operating activities:
   Depreciation                           441,154       217,672       667,862
   Deferred rent                           22,152        91,328       113,480
   Write-down of assets due to
      impairment loss                   1,306,879            --     1,306,879
   Shares of WVI and subsidiary
      company granted to
      employees                            33,782        10,870        44,652
   Changes in assets and
         liabilities:
      Accounts receivable                 (88,052)     (119,393)     (211,078)
      Receivables from affiliates         198,569      (190,640)           --
      Other receivables                        --        32,813            --
      Inventories                        (167,914)     (343,984)     (536,570)
      Prepaid expenses and other
         current assets                   207,542      (208,908)       (8,170)
      Accounts payable                  1,064,094       281,145     1,470,891
      Accrued liabilities and
         container deposits               (36,298)       41,859       184,572
                                      ------------  ------------  ------------
   Net cash used by operating
     activities                        (1,400,921)   (2,162,199)   (3,521,807)
                                      ------------  ------------  ------------
Cash flows from investing activities:
   Deposits for equipment                      --       (40,000)      (51,000)
   Purchases of property and
      equipment, net of disposals        (398,744)   (4,524,871)   (5,995,776)
   Purchase of other non-current
      assets                                   --      (146,583)     (161,172)
                                      ------------  ------------  ------------
Net cash used by investing
   activities                            (398,744)   (4,711,454)   (6,207,948)
                                      ------------  ------------  ------------
Cash flows from financing activities:
   Increase in advances and other
      payables to affiliates              849,871       722,698     1,572,569
   Principal payments on capital
      lease obligations                   (76,848)      (11,041)      (87,889)
   Deferred stock offering costs               --            --
   Proceeds from WVI and subsidiary
      company stock offerings                  --     1,462,443     8,335,567
                                      ------------  ------------  ------------
Net cash provided by financing
   activities                             773,023     2,174,100     9,820,247
                                      ------------  ------------  ------------
Net (decrease) increase in cash
   and cash equivalents                (1,026,642)   (4,699,553)       90,492
Cash and cash equivalents at
   beginning of period                  1,117,134     5,816,687            --
                                      ------------  ------------  ------------
Cash and cash equivalents at
   end of period                      $    90,492   $ 1,117,134   $    90,492
                                      ------------  ------------  ------------
                                      ------------  ------------  ------------

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


                                     F-6


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

    ORGANIZATION AND OPERATIONS
    Willamette Valley, Inc. Microbreweries across America (WVI) is a
    development stage company formed on December 2, 1993 to establish a
    series of microbreweries throughout the United States using a
    consumer-owned capitalization plan and certain marketing strategies.
    Each microbrewery will produce and sell high-quality ales marketed under
    a label developed specifically for each microbrewery.  WVI plans to
    establish each microbrewery as a subsidiary and expects to retain control
    and a substantial interest in each microbrewery following completion of
    the microbrewery's initial public offering.  As of December 31, 1996, WVI
    has established four microbreweries, three of which have raised capital
    in public offerings of their stock and have begun producing beer.  In
    July 1994, WVI began providing management services to its subsidiaries
    and to other affiliated companies (see Note 8).

    The company was organized under the laws of the State of Delaware.  From
    the date of inception (December 2, 1993) through December 31, 1996, WVI's
    efforts have been directed primarily toward organizing and issuing a
    public offering of shares of its common stock and providing support to
    its subsidiaries in their efforts to raise additional capital and to
    build and equip their breweries.

    WVI is a development stage company which has only a limited and
    unprofitable operating history, has negative working capital of
    $2,979,750 and has limited access to capital with which to fund future
    operations.  There can be no assurance that WVI or its subsidiaries will
    produce and sell its products on a profitable basis to sustain
    operations.  Such factors, among others, raise substantial doubt as to
    the Company's ability to continue as a going concern.

    In addition, management expects the Company and its subsidiaries to be
    merged with its affiliate breweries during 1997 and for all of the
    Company's common stock and the common stock of its subsidiaries to be
    converted into shares of a new public company.  The Company currently has
    no source of capital other than the proposed investor discussed in
    Note 11.

    USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The
    accompanying financial statements have been prepared in accordance with
    generally accepted accounting principles which require management to make
    certain estimates and assumptions.  These estimates and assumptions
    affect the reported amounts of assets and liabilities, the disclosure of
    contingent assets and liabilities as of the date of the financial
    statements, and the reported amounts of revenues and expenses during the
    reporting period.  Actual results could differ from those estimates.

    PRINCIPLES OF CONSOLIDATION The consolidated financial statements include
    the accounts of WVI and its four subsidiaries, Aviator Ales, Inc. (AAI);
    Mile High Brewing Company (MHBC); Bayhawk Ales, Inc. (BAI); and North
    Country Brewing Company Inc. (NCBCI) (collectively, "the Company").  All
    significant intercompany accounts and transactions have been eliminated
    in consolidation.

                                      F-7

<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNT POLICIES (CONTINUED)

    MINORITY INTEREST The minority interest represents the minority
    shareholders' share of the equity and net losses of AAI, MHBC, and BAI.
    The minority shareholders' interests in AAI, MHBC, and BAI are
    approximately 49%, 49% and 43%, respectively, at December 31, 1996.  The
    minority shareholders' interests in AAI, MHBC, and BAI were approximately
    35%, 49%, and 43%, respectively, at December 31, 1995.  There is no
    minority interest in the accounts of NCBCI as it is a wholly owned
    subsidiary of WVI.

    INVENTORIES Inventories are stated at the lower of cost (first-in,
    first-out basis) or market.  Cost includes the purchase price of
    materials, direct labor and an allocation of indirect production costs.

    PROPERTY AND EQUIPMENT Property and equipment are stated at cost and are
    depreciated over their estimated useful lives using the straight-line
    method, beginning at the time the assets are placed in operation, as
    follows:

        Leasehold improvements                           5-15 years
        Machinery and equipment                          5-15 years

    Expenditures for repairs and maintenance are charged to expense as
    incurred, and expenditures for additions and betterments are capitalized.
    Leasehold improvements are depreciated over the shorter of the life of
    the asset or the lease.

    OTHER NONCURRENT ASSETS
    The Company has capitalized the fees and related legal costs of
    organization which are included in other noncurrent assets in the
    accompanying balance sheet.  These items were written off in 1996 based
    on the proposed merger described in Note 11 as these intangible
    assets no longer have future value.

    INCOME TAXES
    The Company accounts for income taxes using the asset and liability
    approach prescribed by Statement of Financial Accounting Standards No.
    109, "Accounting for Income Taxes."  Under this approach, deferred income
    taxes are calculated for the expected future tax consequences of
    temporary differences between the book basis and tax basis of the
    Company's assets and liabilities.  WVI will file a consolidated tax
    return with NCBCI; AAI, MHBC, and BAI will file stand-alone federal and
    state tax returns.

    REVENUE RECOGNITION

    The Company recognizes revenue upon the delivery of its products to its
    customers.  Sales are recorded as trade accounts receivable and no
    collateral is required.  Management service revenues are recorded as
    provided and are billed on a monthly basis.

                                      F-8


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    OTHER EXPENSE
    Other expense consists primarily of costs incurred by the Company's
    subsidiaries related to attempted public stock offerings.  These
    offerings were not successful, and the related costs have been recorded
    as other expenses in the accompanying statement of operations.

    NET LOSS PER COMMON SHARE
    Net loss per common share is calculated based on the weighted average
    number of common shares outstanding after giving effect to shares granted
    to employees throughout the periods presented.  No common stock
    equivalents with a dilutive effect were outstanding during the periods
    presented.  Shares held in escrow are included in the weighted average
    number of common shares outstanding.

    STATEMENT OF CASH FLOWS
    The Company considers short-term investments which are highly liquid, are
    readily convertible into cash, and have original maturities of fewer than
    three months to be cash equivalents for the purposes of cash flows.  For
    the year ended December 31, 1996, the Company paid no income taxes and
    paid interest of $72,180.  For the year ended December 31, 1995, the
    Company paid no income taxes and paid interest of approximately $9,300.
    During 1995, the Company obtained $88,000 of equipment under capital
    lease obligations; these non-cash transactions have been excluded from
    the accompanying statement of cash flows.  The minority interest in
    subsidiary companies includes adjustments related to the stock offerings
    of the subsidiary companies; such non-cash adjustments are not included
    in the accompanying statement of cash flows.

    FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS
    Except as discussed in Note 8 under advances from affiliates, the fair
    market values of the Company's recorded financial instruments materially
    approximate the respective recorded balances, as the recorded assets and
    liabilities are stated at amounts expected to realized or paid, or carry
    interest rates commensurate with current rates for instruments with a
    similar duration and degree of risk.

    STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123
    The Company adopted Statement of Financial Accounting Standards No. 123
    (SFAS 123), "Accounting for Stock-Based Compensation" in 1996.  SFAS 123
    was issued by the Financial Accounting Standards Board in October 1995,
    and allows companies to choose whether to account for stock-based
    compensation under the current intrinsic method as prescribed in
    Accounting Principles Board Opinion Number 25 (APB 25) or use the fair
    value method prescribed in SFAS 123.  The Company plans to continue to
    follow the provisions of APB 25.  The impact of adoption has not had a
    significant effect on the Company's financial position or results of
    operations.

    RECLASSIFICATIONS
    Certain reclassifications have been made to the 1995 financial statements
    to conform with 1996 presentation.  These reclassifications have no
    impact on previously reported results of operations or common
    shareholders' equity.

                                      F-9


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------

2. INVENTORIES

   Inventories consist of:

                                                          DECEMBER 31,
                                                   1996               1995
                                                ----------         ----------

   Raw materials                                $  190,114         $   76,042
   Work-in-process                                  38,898             71,267
   Finished goods                                   76,858            181,974
   Retail inventory                                 44,000             39,373
                                                ----------         ----------
                                                $  349,870         $  368,656
                                                ----------         ----------
                                                ----------         ----------


3. PROPERTY AND EQUIPMENT

   Property and equipment consist of:

                                                          DECEMBER 31,
                                                   1996              1995
                                                ----------        ----------

   Land and improvements                        $2,480,139        $2,196,516
   Brewery equipment                             3,838,112         3,112,557
   Office furniture and equipment                  166,267           313,756
   Vehicles                                         40,740            41,223
   Construction in progress                         53,460            20,175
                                                ----------        ----------
                                                 6,578,718         5,684,227

   Less accumulated depreciation                  (621,731)         (224,075)
   Impairment loss                                (832,241)              --
                                                ----------        ----------
                                                $5,124,746        $5,460,152
                                                ----------        ----------
                                                ----------        ----------


   At December 31, 1996 property and equipment includes $88,000 of equipment
   held under capital leases with related accumulated amortization aggregating
   $10,909.


4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

   Long-term debt consists of a $50,000 note payable to an individual, issued
   in connection with the purchase of land in the state of Washington. The
   note bears interest at 9% and requires quarterly interest payments. The
   note is secured by the land and is payable in a lump sum in June 1999.


                                      F-10


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------

4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)

   The Company has entered into certain capital lease obligations related to
   the acquisition of equipment including a bottling line for use at MHBC.
   These leases bear interest at rates ranging from 9% - 15% and require
   monthly payments of principal and interest. The leases are secured by the
   equipment and mature in 1998 and 2000.

   Future minimum payments under the Company's capital lease obligations are
   as follows:

                                        PRINCIPAL    INTEREST        TOTAL
                                       ----------   ----------   -----------

   1997                                $   73,328   $   31,660   $   104,988
   1998                                    78,153       23,280       101,433
   1999                                    83,539       14,538        98,077
   2000                                    87,196        5,227        92,423
                                       ----------   ----------   -----------
                                       $  322,216   $   74,705   $   396,921
                                       ----------   ----------   -----------
                                       ----------   ----------   -----------

5. INCOME TAXES

   Pre-tax loss was attributable to operations entirely within the United
   States. For the periods ended December 31, 1996 and 1995, there were no
   current or deferred provisions for income taxes.

   The benefit for income taxes differs from the amount of income taxes
   determined by applying the U.S. statutory graduated federal rate due to
   the following:

                                                    YEAR ENDED DECEMBER 31,
                                                    1996              1995
                                                ----------         ----------

   Statutory graduated federal rate                  34.0%              34.0%
   State taxes, net of federal benefit                4.4                4.4
   Reserve of net deferred tax asset                (38.4)             (38.4)
                                                ----------         ----------
                                                      -- %               -- %
                                                ----------         ----------
                                                ----------         ----------


   Deferred tax assets (liabilities) consist of:

                                                         DECEMBER 31,
                                                    1996              1995
                                               -----------        -----------

   Federal and state net operating loss
      carryforwards                            $ 3,705,000        $   704,000
   Expenses not currently deductible               468,000             28,000
   Fixed assets                                   (175,000)           (70,000)
   Deferred tax asset valuation allowance       (3,998,000)          (662,000)
                                               -----------        -----------
                                               $       --         $       --
                                               -----------        -----------
                                               -----------        -----------



                                        F-11

<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

5.  INCOME TAXES (CONTINUED)

    As of December 31, 1996, WVI and its subsidiaries had net operating loss
    carryforwards aggregating approximately $6 million for federal and state
    purposes, which may be used to offset future taxable income, if any.


6.  SHAREHOLDERS' EQUITY

    WVI
    WVI is authorized to issue 10,000,000 shares of its common stock.  Each
    share of common stock entitles the holder to one vote.  In December 1993,
    WVI received $111,111 in stock subscriptions from its founding
    shareholders in exchange for 3,353,826 shares of unregistered common
    stock.  The cash was received in 1994.

    In connection with WVI's initial stock offering under Oregon securities
    laws, WVI agreed to place in escrow 2,301,076 of its shares of WVI's
    common stock.  These shares will be released from escrow to WVI's
    founders where WVI satisfies one or more certain earnings requirements or
    establishes a bona fide over-the-counter trading market for its common
    stock and maintains a bid price equal to or greater than a stipulated
    benchmark price for 26 or more consecutive weeks.  Unless released
    pursuant to these conditions, the 2,301,076 shares shall remain in escrow
    until unconditionally released in 25% increments on July 31, 2001, 2002,
    2003, and 2004.  The shares, while in escrow, entitle WVI's founders to
    the same rights and privileges as all other shareholders of common stock,
    except for certain rights relating to transferability and liquidation.

    During 1994, WVI sold 1,496,970 shares of its common stock at $1.65 per
    share pursuant to a Regulation A public offering filed with the U.S.
    Securities and Exchange Commission (SEC).  Cash proceeds from this
    offering, net of offering expenses of $290,424, aggregated $2,179,577
    during 1994.

7.  STOCK INCENTIVE PLAN

    WVI has adopted a 1993 Stock Incentive Plan (the "Plan") and has reserved
    591,851 shares of its common stock thereunder.  The Plan provides for the
    grant of incentive stock options to employees of the Company and
    non-qualified stock options, stock sales and stock grants to employees,
    directors and consultants of the Company at fair market value.  During
    1996, the Company granted 10,200 shares to employees.  The $20,400 value
    of these shares is included in selling, general and administrative
    expenses in the accompanying statement of operations.

    During 1995, 122,500 options were granted under the plan at an exercise
    price of $2.00 per share which approximated fair market value at the date
    of grant.  These options vest ratably over ten years.  Of these, 41,500
    were subsequently canceled.  In 1996, an additional 70,000 options were
    granted at an exercise price of $1.95, which approximates fair market
    value at the date of grant.  Of these,

                                      F-12

<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

7.  STOCK INCENTIVE PLAN (CONTINUED)

    15,000 and 40,000 options vest ratably over ten and five years,
    respectively, beginning one year after the date of grant.  The remaining
    15,000 options were subsequently canceled.  As of December 31, 1996,
    there were no options exercised, vested options were 18,000, and options
    outstanding were 185,000.

    The Company has elected to account for its stock-based compensation under
    Accounting Principles Board Opinion 25.  The Company has determined that
    the pro forma effects of applying SFAS 123 would not have a material
    effect on the results of operations for 1996 and 1995.  This
    determination was made using the Black-Scholes option pricing model.  The
    weighted average assumptions used for stock option grants for 1996 and
    1995 were a risk-free interest rate of 6.78% and 7.11%, respectively, an
    expected dividend yield of 0% and 0%, respectively, an expected life of
    6.66 years and 10 years, respectively, and an expected volatility of 57%
    and 54%, respectively.  The weighted average fair value of stock options
    granted in 1996 and 1995 was $1.20 and $1.46, respectively.

    Options were assumed to be exercised upon vesting for purposes of this
    valuation.  Adjustments are made for options forfeited prior to vesting.
    For the years ended December 31, 1996 and 1995, the total value of the
    options granted was computed to be $65,960 and $116,520, respectively,
    which would be amortized on a straight-line basis over the vesting period
    of the options.

    Note that all options granted by the Company are expected to be converted
    to options of the new company expected to be formed at the same
    conversion rate as the conversion of common stock as discussed in Note 11.

    AAI, MHBC, and BAI each have similar stock incentive plans and each of
    these subsidiaries has granted options thereunder.

8.  RELATED PARTIES

    NATURE OF RELATED PARTIES
    WVI's president partially owns and controls Willamette Valley Vineyards
    (WVV), a winery in Oregon, and Nor'Wester Brewing Company, Inc.
    (Nor'Wester), a microbrewery in Oregon.  WVI's president is also the
    president of AAI, MHBC, BAI, and NCBCI.  As a result of certain
    arrangements between WVI and its affiliates, as well as WVI's president's
    positions with and/or ownership interests in each of these companies,
    inherent conflicts of interest exist with respect to the pricing of
    services, the sharing of resources and the allocation of the president's
    time.

    RELATED PARTY TRANSACTIONS
    From January through June of 1994, WVV provided the Company with
    management services on a cost-plus-fee basis.  These services consisted
    of accounting, marketing, administrative, and stock transfer services.
    The cost of such services aggregated approximately $77,000, of which
    approximately $4,000 was included in 1994 selling, general and
    administrative expenses, and

                                      F-13

<PAGE>


WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

8.  RELATED PARTIES (CONTINUED)

    approximately $73,000 was charged directly to additional paid-in capital
    as a component of stock offering cost.  Beginning in July 1994, such
    management services were performed by WVI's employees.  From July through
    December 1994, and for the year ended December 31, 1995, WVI charged WVV
    and Nor'Wester for these services on a cost-plus basis.  The revenues and
    costs related to these services are shown separately as management
    services in the accompanying consolidated statement of operations.

    In September 1995, MHBC paid for certain brewing equipment which was
    ultimately shipped to Nor'Wester for approximately $53,000.  As a result
    of this transaction, MHBC was owed approximately $52,000 from Nor'Wester
    at December 31, 1995.

    In 1996, WVI began contracting for certain management services under a
    general services agreement between WVI, WVV and Nor'Wester.

    STRATEGIC ALLIANCE AND COOPERATIVE BREWING AGREEMENTS
    In December 1995, WVI's subsidiaries entered into a Strategic Alliance
    (the "Alliance") with Nor'Wester.  Nor'Wester, AAI, MHBC, BAI, NCBCI, and
    WVI are collectively referred to as "Alliance members," and AAI, MHBC,
    and BAI are collectively referred to as the "Cooperative Brewers" and
    individually referred to as a "Cooperative Brewer."  The purpose of the
    Alliance is to promote and support the growth of all of the Alliance
    members by increasing production at each Cooperative Brewer's facility
    and supporting the entry of Nor'Wester products into new markets.  To
    achieve this goal, each Cooperative Brewer agreed to cooperatively brew
    Nor'Wester's products, and to support the entry of these products into
    new markets by facilitating Nor'Wester's access to the network of
    distributors.  The terms of the Strategic Alliance Agreement and the
    Cooperative Brewing Agreements are four years, unless earlier terminated
    under limited circumstances, which include material breach in the case of
    the Cooperative Brewing Agreements.  The Agreements are subject to
    renewal.  Pricing for the purchase of beer produced under the Cooperative
    Brewing Agreement is at the lesser of cost plus 10% or Nor'Wester's
    average cost of production at its Nor'Wester Brewery, plus a mark-up of
    10%.  The Agreement provides that no Alliance member will use the
    proprietary information or technology of another Alliance member to
    produce any beer with a flavor profile or appearance that is
    substantially similar to such Alliance member's beer.  With the consent
    of all Alliance members, additional parties may be added to the Alliance.

    Under the terms of the Cooperative Brewing Agreements, the Company's
    subsidiaries will produce Nor'Wester beer, in the amounts and packaging
    as specified in firm orders submitted by Nor'Wester on a periodic basis.
    The Company's production of Nor'Wester beer must comply with
    specifications concerning recipes, quality control procedures, flavor
    profile and appearance.  Nor'Wester has a right to reject beer not
    meeting its specifications.

                                      F-14


<PAGE>


WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

8.  RELATED PARTIES (CONTINUED)

    Nor'Wester has acquired certain specified brewing equipment for the
    subsidiaries' use in producing Nor'Wester's beer.  To the extent that
    this equipment is not needed for the production of Nor'Wester beers, the
    subsidiaries may, upon notice to Nor'Wester, use this equipment to
    produce their own beer subject to the payment of an agreed-upon lease
    fee.  Certain brewing equipment acquired by Nor'Wester was purchased by
    the Company in 1995.

    The Cooperative Brewing Agreement requires that the Cooperative Brewer
    maintain the equipment supplied by Nor'Wester, that Nor'Wester insure
    this equipment, and that the Cooperative Brewer and Nor'Wester each
    indemnify the other for damages and losses in connection with the
    Agreement.  Nor'Wester may, at its cost, remove or replace its equipment
    at any time if market conditions or other circumstances make such action
    desirable to Nor'Wester.

    ADVANCES FROM AFFILIATE
    In connection with the Cooperative Brewing Agreement with Nor'Wester
    described above, Nor'Wester advanced $250,000 each to AAI and MHBC in
    December 1995 for the purchase of ingredients and packaging materials for
    the subsidiaries' initial production of Nor'Wester's products.  These
    advances are unsecured and do not bear interest.  Because management
    plans to merge the Company into a new Company (see Note 11), management
    believes these advances will be paid partially in 1997, and the remainder
    will be considered in the conversions of the companies' shares into
    shares of the new Company expected to be formed.  In 1996, Nor'Wester
    advanced an additional $350,000 and $500,000 respectively, to AAI and
    MHBC.  An additional $50,000 was advanced directly to WVI.

9.  COMMITMENTS

    WVI's subsidiaries have entered into agreements with several independent
    distributors for the distribution of the Company's products.  These
    agreements contain normal distribution provisions and are cancelable by
    either the subsidiaries or the distributors.

    The Companies have entered into operating lease arrangements for
    equipment and facilities.  Approximate future minimum lease payments are
    as follows:

       YEAR ENDING
       DECEMBER 31,
       ------------

          1997                                        $     260,000
          1998                                              264,000
          1999                                              269,000
          2000                                              276,000
          2001                                              293,000
          Thereafter                                      3,630,000
                                                       ------------
                                                       $  4,992,000
                                                       ------------
                                                       ------------

                                      F-15


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

9.  COMMITMENTS (CONTINUED)

    The terms of certain of the leases allowed for no lease payments to be
    made during the initial months of the lease term, and contain escalating
    payments.  The Company is recording lease expense on the straight-line
    method over the lease term; accordingly, deferred rent has been recorded
    in the accompanying balance sheet.  Rent expense during 1996 and 1995
    related to these leases aggregated approximately $312,000 and $194,000,
    respectively, and is allocated between cost of sales and selling, general
    and administrative expenses in the accompanying statement of operations.

10. SIGNIFICANT CUSTOMERS

    Virtually all of the Company's products are sold in the states of
    Colorado, Washington, and California.  Sales to distributors in the
    Pacific Northwest were 21% of gross beer sales in 1996.  Sales to the
    Company's two largest customers for the years ended December 31, 1996 and
    1995 totaled 25% and 42%, respectively.

11. PROPOSED MERGER AND INVESTMENT FROM UBA

    Subsequent to December 31, 1996, the Company along with its subsidiaries
    (AAI, MHBC and BAI) and affiliate (Nor'Wester) entered into an investment
    agreement with United Breweries of America, Inc. (UBA), an entity
    controlled by the UB Group of Bangalore, India.  The agreement provides
    for Nor'Wester, WVI, AAI, MHBC and BAI to consolidate into a company to
    be known as United Craft Brewers, Inc. (UCB).  This merger will result in
    the issuance of newly registered shares of UCB common stock in exchange
    for shares of Nor'Wester, WVI and its subsidiaries.  The merger and share
    exchange will require approval by the Boards of Directors and
    shareholders of each of the entities.  Following consolidation, all
    shareholders in the Nor'Wester/WVI alliance will hold shares in UCB, a
    company which is intended to be listed for trading on the Nasdaq National
    Market system under the symbol ALES.  Proposed exchange ratios for each
    of the entities are as follows, based on an average closing price of
    $2.63 for Nor'Wester's common stock for the 20 trading days immediately
    preceding execution of the merger:

         COMPANY                                  EXCHANGE RATIO
       -----------                              -------------------
       Nor'Wester                                               1:1
       WVI                                                1.99159:1
       AAI                                                2.98739:1
       BAI                                                1.99159:1
       MHBC                                               2.98739:1

    Following the merger, UBA has proposed to invest $8.63 million in
    exchange for a 45% equity interest in the new entity, UCB.  Of the $8.63
    million proposed investment by UBA, $2.75 million is in the form of
    bridge loans conditionally available to Nor'Wester during the
    consolidation phase.  As of March 21, 1997, $1,500,000 has already been
    loaned to Nor'Wester, the majority of which has

                                      F-16


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

11. PROPOSED MERGER AND INVESTMENT FROM UBA (CONTINUED)

    been advanced to North Country.  At closing, it is anticipated that the
    bridge loans will be converted into shares of UCB and the remaining $5.88
    million cash investment will be made directly in shares of UCB.

    The closing of the proposed investment remains subject to (i) approval by
    the shareholders of each of the companies, (ii) achievement of certain
    operating results at each of the breweries, (iii) maintenance of certain
    operating conditions and covenants, including that there shall be no
    material adverse change in the businesses of the affiliated breweries
    taken as a whole, (iv) approval by federal and state liquor control
    agencies, (v) registration with the U.S. Securities and Exchange
    Commission of UCB shares to be exchanged in the merger, (vi) extension of
    the Company's $1 million revolving line of credit through September 30,
    1997 (see Note 4); and the lender shall have waived any defaults under
    the line of credit agreement and the line of credit shall have been
    converted to a term loan (see Note 5), and (vii) such other customary
    conditions for transactions of this type.

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

12. SUBSEQUENT EVENTS

    In light of lower than anticipated 1996 results, lower than anticipated
    first quarter 1997 sales and other operating results and adverse
    conditions within the craft beer industry in general, representatives of
    UBA and management and the investment bankers of the affiliated companies
    are in the process of renegotiating the terms of the UBA investment
    discussed in Note 11.  The renegotiation will reflect a significantly
    lower valuation for the affiliate companies, a reduction in the total
    amount of cash to be invested by UBA to $5.5 million and a reduction of
    UBA's percentage ownership position in UCB to 40% following the
    consolidation.  It is anticipated that the $2.75 million bridge loan
    amount will not be reduced.  The existing shareholders in the affiliated
    Companies would retain a 60% interest in UCB.  The exact distribution of
    ownership interests among shareholders of the affiliated companies has
    not yet been determined.  Management will soon seek Board approval by
    each of the affiliated companies of any renegotiated terms.  Failure of
    the parties to reach a mutually agreeable renegotiated investment
    agreement could lead to a loss of the bridge loans and the remainder of
    the UBA investment which would materially and adversely affect the
    Company's financial condition and results of operations. There can be no
    assurance that the proposed merger will be completed or that the Company
    and its subsidiaries will obtain the capital needed to sustain operations.

    IMPAIRMENT OF MHBC ASSETS
    Subsequent to December 31, 1996, the management of MHBC decided to sell
    the operating assets of MHBC.  No definitive agreement has been reached,
    but management has received an offer of approximately $2 million in
    exchange for all of MHBC's property and equipment at the brewery and
    assumption of the facility lease.  Based on this plan, MHBC has recorded
    a partial write-down of operating brewery assets to their estimated fair
    market value.  The Company based its analysis on

                                      F-17


<PAGE>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

12. SUBSEQUENT EVENTS (CONTINUED)

    Statement of Financial Accounting Standards No. 121 (SFAS 121),
    "Accounting for the Impairment of Long-Lived Assets to be Disposed Of,"
    which establishes standards to identify and measure impairment of
    long-lived assets.  Management's best estimate of this write-down, based
    on the present offer, is $968,879.  In addition, management estimated the
    cost to dispose of the assets to be $50,000, and this amount is recorded
    in the financial statements as of December 31, 1996, as part of the
    reserve for impairment loss.  While management searches for potential
    buyers, MHBC is operating on a limited basis as a contract brewer for a
    local brewery.  Revenues related to contract brewing are not sufficient
    to cover the fixed costs to operate the brewery.  Accordingly, a reserve
    for losses from operations of the impaired assets in the amount of
    $288,000 is also recorded as part of the reserve for impairment loss.

                                      F-18


<PAGE>



<TABLE>
<CAPTION>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------------------------------------

13. CONSOLIDATING INFORMATION

   The following presents the consolidating balance sheet and statement of operations of the Company.

                                                               WVI CONSOLIDATING BALANCE SHEET
                                                                     DECEMBER 31, 1996
                                  ----------------------------------------------------------------------------------------------
                                                                                                                        WVI
                                      WVI           BAL           AAI          MHBC        NCBCI     ELIMINATIONS   CONSOLIDATED
                                  -----------   ----------    -----------   -----------   ---------  ------------   ------------
<S>                              <C>           <C>           <C>           <C>           <C>         <C>           <C>
   ASSETS
   Cash and cash equivalents      $        --   $    40,954   $    19,218   $    30,320   $      --   $        --   $    90,492
   Accounts receivable                     --        64,349        61,529        85,200          --            --       211,078
   Receivables from affiliates             --                          --            --          --            --            --
   Inventories                             --        23,692       326,178            --          --            --       349,870
   Prepaid and other current
      assets                               --                          --         8,170          --            --         8,170
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
      Total current assets                 --       128,995       406,925       123,690          --            --       659,610

   Property and equipment              63,556       802,798     2,258,392     2,000,000          --                   5,124,746
   Investment in affiliates           300,000            --            --            --          --      (300,000)           --
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

                                  $   363,556   $   931,793   $ 2,665,317   $ 2,123,690   $      --   $  (300,000)  $ 5,784,356
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

   LIABILITIES AND SHAREHOLDERS' EQUITY
   Current portion of long-term
      debt and capital lease
      obligations                 $        --   $        --   $     4,058   $    69,270   $      --   $        --   $    73,328
   Accounts payable                     9,859        36,798       607,570       816,664          --            --     1,470,891
   Accrued liabilities                 59,721        16,780        44,516        15,633      13,000            --       149,650
   Container deposits                      --        19,339        15,583            --          --            --        34,922
   Reserve for impairment loss                                                  338,000                        --       338,000
   Payables to affiliated
      companies (Note 8)           (1,556,471)      291,586       881,012     1,834,547     121,895            --     1,572,569
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
      Total current liabilities    (1,486,891)      364,503     1,552,739     3,074,114     134,895            --     3,639,360

   Long-term debt and capital
      lease obligations                    --            --        57,664       241,224          --            --       298,888
   Deferred rent                           --            --        70,103            --          --            --        70,103
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
         Total liabilities         (1,486,891)      364,503     1,680,506     3,315,338     134,895            --     4,008,351
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

   Minority interest                       --            --            --            --          --       142,585       142,585
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
   Shareholders' equity:
      Common stock                     48,610         2,201         5,332         4,694          --       (12,227)       48,610
      Additional paid-in capital    2,261,734     1,427,982     2,582,553     2,252,274          --    (3,070,831)    5,453,712
      Deficit accumulated during
         development stage           (459,897)     (862,893)   (1,603,074)   (3,448,616)   (134,895)    2,640,473    (3,868,902)
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                    1,850,447       567,290       984,811    (1,191,648)   (134,895)     (442,585)    1,633,420
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

                                  $   363,556   $   931,793   $ 2,665,317   $ 2,123,690   $      --   $  (300,000)  $ 5,784,356
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
</TABLE>


                                                                           F-19

<PAGE>


<TABLE>
<CAPTION>

WILLAMETTE VALLEY, INC. MICROBREWERIES ACROSS AMERICA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------------------------------------

13. CONSOLIDATING INFORMATION (CONTINUED)

                                                               WVI CONSOLIDATING BALANCE SHEET
                                                                     DECEMBER 31, 1996
                                  ----------------------------------------------------------------------------------------------
                                                                                                                        WVI
                                      WVI           BAL           AAI           MHBC        NCBCI     ELIMINATIONS   CONSOLIDATED
                                  -----------   ----------    -----------   -----------   ---------   ------------   ------------
<S>                              <C>           <C>           <C>           <C>           <C>         <C>           <C>
   Revenues:
      Gross sales                 $        --   $   461,549   $ 1,905,511   $ 1,600,915   $      --   $        --   $ 3,967,975
      Less excise taxes                    --       (41,611)      (81,434)      (85,426)         --            --      (208,471)
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
         Net sales                         --       419,938     1,824,077     1,515,489          --            --     3,759,504

      Management services             266,775            --            --            --          --      (156,975)      109,800
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                      266,775       419,938     1,824,077     1,515,489          --      (156,975)    3,869,304
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

   Cost of sales:
      Cost of goods sold                            364,450     1,879,062     1,905,335          --            --     4,148,847
      Management services             266,775            --            --            --          --      (156,975)      109,800
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                      266,775       364,450     1,879,062     1,905,335          --      (156,975)    4,258,647
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
   Gross (deficit) margin                  --        55,488       (54,985)     (389,846)         --            --      (389,343)
   Selling, general and
      administrative expenses         247,285       339,766       851,352       790,615          --            --     2,229,018
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

   Income (loss) from operations     (247,285)     (284,278)     (906,337)   (1,180,461)         --            --    (2,618,361)

   Impairment loss                         --            --            --    (1,306,879)         --            --    (1,306,879)
   Interest income (expense)           16,261       (11,606)       (1,498)      (37,958)         --            --       (34,801)
   Other expense                      (86,108)        4,342      (249,871)     (194,974)    103,823            --      (422,788)
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
   Income (loss) before income
      taxes and minority
      interest                       (317,132)     (291,542)   (1,157,706)   (2,720,272)    103,823            --    (4,382,829)

   Income taxes                            --            --            --            --          --            --            --

   Minority interest                       --            --            --            --          --     1,994,216     1,994,216
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------

   Net loss                       $  (317,132)  $  (291,542)  $(1,157,706)  $(2,720,272)  $ 103,823   $ 1,994,216   $(2,388,613)
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
                                  -----------   -----------   -----------   -----------   ---------   -----------   -----------
</TABLE>


                                                                           F-20