<PAGE>

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

                                  FORM 1O-KSB/A

[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>


     Items 6, 7, and 12 of the Annual Report on Form 10-KSB for Willamette 
Valley, Inc. Microbreweries Across America are hereby amended to read in 
their entirety as follows:

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. 


                                       2

<PAGE>

RESULTS OF OPERATIONS 
The following table reflects selected data from the Company's statements of 
operations stated as a percentage of net revenues:

                                           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 
                                        ---------         ----------
Net revenues                              100.0             100.0 
Cost of beer and related 
products sold                             107.2              50.8 
Cost of management services 
to affiliated companies                     2.8              47.1 
                                        ---------         ----------
Total cost of sales                       110.0              97.9 
Selling, general and 
administrative expenses                    57.6             179.6 
Impairment loss                            26.3                --
Write-off of stock offering costs          11.9                --
                                        ---------         ----------
Operating income (loss)                 (105.9)           (177.5) 
                                        ---------         ----------
Loss before income taxes
and minority interest                   (111.6)           (163.0) 
                                        ---------         ----------
Net loss                                 (63.7)%          (109.9)%


GROSS REVENUES.  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 in 1996 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 $1,375,000 of beer under the Cooperative 
Brewing Agreements during 1996.  Mile High Brewing ceased normal 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. 


                                      3

<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 net 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 and entered 
into a limited contract brewing agreement.

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 years 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. 


                                      4

<PAGE>
IMPAIRMENT LOSS.  Mile High ceased operations in 1996, and subsequent to 
December 31, 1996, Mile High began looking for opportunities for contract 
brewing or to dispose of all of its assets. Mile High wrote off the value 
of its inventory to $0, and wrote down the value of its equipment to $2 
million as of December 31, 1996. In addition, Mile High management estimated 
costs to sell the assets to be $50,000. Accordingly, Mile High has recorded 
an estimated impairment loss of $1,018,879.

WRITE-OFF OF STOCK OFFERING COSTS. Consists of costs related to the write off 
of legal and accounting fees related to Aviator's  and Mile High's 
discontinued public offerings.

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 WVI'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 expenses of $183,316 relate primarily to costs associated with 
transferring partial ownership of North County Joint Venture, LLC from North 
Country Brewing Company, Inc. to Nor'Wester.

NET LOSS.  Net loss was $2.5 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 $1.6 million net cash used by operating activities, 
$398,744 in capital expenditures, plus $995,520 in net cash provided by 
financing activities which includes $1,072,368 in advances from affiliates.

Advances from affiliates increased $1.1 million to $1.8 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 $2.9 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 has established a reserve of $50,000 at December 31, 1996 for
the potential sale and disposition of the assets of Mile High.

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.  

                                      5
<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;


                                      6

<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 


                                      7

<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.  

                                      8

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

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


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                           CERTAIN TRANSACTIONS
GENERAL

Each of Nor'Wester, Aviator, Bayhawk and Mile High is affiliated with WVI in 
that James W. Bernau, WVI'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 (51%), Bayhawk (57%) and Mile High 
(51%). As a result of certain arrangements between WVI 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 WVI's President's 
time.

LOANS AND ADVANCES TO AND FROM AFFILIATES

BAYHAWK BRIDGE LOAN. During 1994 and 1995, WVI loaned $1,353,823 to Bayhawk, 
a subsidiary of WVI, to construct, equip and operate Bayhawk's brewery 
pending completion of Bayhawk's direct public stock offering completed in 
December 1995 (the "Bayhawk Bridge Loan"). In 1995 and 1996, Bayhawk repaid 
$1,103,635 of loan principal. In January 1996, the loan was converted to a 
promissory note issued to WVI. The note bears interest at 8% beginning on 
January 1, 1996, provides for payments $4,600 principal and interest per 
month, and is unsecured. As of December 31, 1996, $250,188 was owed on the 
note.

MILE HIGH BRIDGE LOAN. During 1995, WVI loaned $800,000 to Mile High, a 
subsidiary of WVI, to pay for leasehold improvements, purchase capital assets 
and fund the working capital needs of Mile High's brewery (the "Mile High 
Bridge Loan"). The Mile High Bridge Loan was to be repaid from the proceeds 
of Mile High's planned second direct public stock offering which commenced in 
May 1996 but was terminated in October 1996 as a result of the planned 
Consolidation and investment by UBA. In October 1996, the loan was converted 
to an 18 month installment note issued to WVI. The note bears interest at 
10%, provides for monthly principal and interest payments of $5,300, and is 
unsecured. As of December 31, 1996, no payments had been made on the note.

LOANS AND ADVANCES FROM NOR'WESTER. In 1995 and 1996, Nor'Wester 
loaned and advanced $350,000 to each of Aviator and Mile High for working 
capital needs and for the purchase of brewing ingredients and raw materials 
to brew Nor'Wester beer under Nor'Wester's Cooperative Brewing Agreements 
with Aviator and Mile High entered into as part of the Alliance. In 1996, 
Nor'Wester also loaned $150,000 to Mile High to help pay for the construction 
of Mile High's pub. In addition, in 1995 and 1996, in support of the creation 
and development of the Alliance, Nor'Wester paid certain bills on behalf of 
WVI, Aviator, Mile High and Bayhawk and provided certain of these companies 
with services under the General Services Agreement also entered into as part 
of the Alliance. These advances are unsecured and do not bear interest.

LOANS AND ADVANCES TO AFFILIATES. During 1996, WVI advanced $240,000 
to Aviator and $186,364 to Mile High. These loans were made to purchase 
capital assets and support the working capital needs of Aviator's and Mile 

                                      9
<PAGE>

High's respective breweries. In addition, in 1995 and 1996, WVI paid certain 
bills on behalf of Nor'Wester, Aviator, Mile High and Bayhawk and provided 
certain of these companies with services under the General Services Agreement 
also entered into as part of the Alliance. These advances are unsecured and 
do not bear interest. For a description of the purposes and terms of the 
Alliance see "Strategic Alliance" below.

PAYMENTS TO AND FROM AFFILIATES. The following table represents net amounts 
received by WVI from (or paid by WVI to) its affiliates in 1995 and 1996 in 
connection with the repayment of loans/advances, other than the Bayhawk 
Bridge Loan, or in payment of services associated with creating and 
supporting the Alliance:
 
                                                    AMOUNTS RECEIVED
                                                         (PAID)
                                                 ----------------------
COMPANY NAME                                        1996        1995
------------                                     ----------  ----------
Nor'Wester.....................................  $  146,364  $  507,511
                                                               (516,620)
Aviator........................................      37,000     219,920
Bayhawk........................................      16,565      34,995
Mile High......................................      10,000     257,286
North Country..................................      93,044      62,466
                                                 ----------  ----------
      Total....................................  $  302,973  $  565,558
                                                 ----------  ----------
                                                 ----------  ----------

AMOUNTS OWED TO AND DUE FROM AFFILIATES AT DECEMBER 31, 1996. As a result of 
the above-described transactions, at December 31, 1996, WVI and its 
subsidiaries owed the following amounts to Nor'Wester: WVI--$418,821, 
Aviator--$570,090, Mile High--$703,446, Bayhawk--$72,179. These amounts are 
unsecured, do not bear interest, are payable on Nor'Wester's demand and are 
reflected as "payable to affiliated companies" on WVI's balance sheet. 
Further, as a result of the above-described transactions, other than the 
Bayhawk Bridge Loan and the Mile High Bridge Loan, at December 31, 1996, WVI 
was owed the following amounts from its affiliates: Aviator--$276,012, 
Bayhawk--$7,760, and Mile High--$313,806. These amounts are unsecured, do not 
bear interest and are payable on WVI's demand. At December 31, 1996, WVI was 
owed $250,188 by Bayhawk on the Bayhawk Bridge Loan and $800,000 by Mile High 
on the Mile High Bridge Loan. None of the foregoing amounts are reflected on 
WVI's balance sheet as they have been eliminated in the process of 
consolidating the financial statements of WVI and its subsidiaries. 

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.


                                      10
<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. 


                                      11
<PAGE>

The Company was charged $169,425 by Nor'Wester for services under the General 
Services Agreement during 1996. Amounts charged under the General Services 
Agreement 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 
                                        -------------
                                        -------------


NORTH COUNTRY JOINT VENTURE AGREEMENT AND TERMINATION THEREOF

    On January 1, 1996, Nor'Wester and North Country Brewing, a wholly owned 
subsidiary of WVI 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, noninterest 
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 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 

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


                                      12
<PAGE>

SIGNATURES 
In accordance with the requirements of the Securities and the Exchange Act of 
1934, the registrant this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

Dated:   May 14, 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 May 14, 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


                                        13
<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 
$2,914,247 and has limited access to capital with which to fund future 
operations. Management's plans in regard to these matters are also described 
in Note 1.  The financial statements do not include any adjustments that 
might result from the outcome of this uncertainty.  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 or to pursue contract brewing 
opportunities.  Accordingly, the assets have been reported at estimated fair 
value at December 31, 1996 and management has recorded an impairment loss of 
$1,018,879 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 12 to the financial statements, the Company and its
subsidiaries entered into an investment agreement subsequent to December 31,
1996 to be merged with other affiliated companies 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.

As discussed in Note 14 to the financial statements, the Company has restated
its 1996 financial statements to revise the Company's share of the net losses
sustained for the period from January 1, 1996 to September 30, 1996 by North
Country Joint Venture, LLC, which was sold by the Company in October 1996 to
Nor'Wester Brewing Company, Inc., an affiliated company, and to reduce the
impairment loss by the amount of future estimated operating losses included
therein relating to a contract brewing arrangement of Mile High Brewing Company,
a majority-owned subsidiary of the Company. Such losses will be recorded in 1997
as incurred.




PRICE WATERHOUSE LLP

Portland, Oregon
March 21, 1997, except as to Notes 13 and 14,
which are as of March 24, 1997


                                         F-2


<PAGE>

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

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                1996                 1995
                                                                          ---------------     ---------------
                                                                        (RESTATED - NOTE 14)
<S>                                                                       <C>                 <C>
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 (Notes 2 and 11)                                                    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 11)                                    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 11)                                            50,000                   -
  Payable to affiliated companies (Note 8)                                      1,795,066              22,698
                                                                          ---------------     ---------------
     Total current liabilities                                                  3,573,857             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
                                                                          ---------------     ---------------
                                                                                3,942,848           1,569,630
                                                                          ---------------     ---------------
Minority interest                                                                 283,706           1,871,191
                                                                          ---------------     ---------------
Commitments (Notes 9, 12 and 13)
Shareholders' equity (Notes 6, 7, 12 and 13):
  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                                 (3,944,520)         (1,480,289)
                                                                          ---------------     ---------------
     Total shareholders' equity                                                 1,557,802           4,254,605
                                                                          ---------------     ---------------
Total liabilities and shareholders' equity                                $     5,784,356     $     7,695,426
                                                                          ---------------     ---------------
                                                                          ---------------     ---------------

</TABLE>
 
      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
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                                 CUMULATIVE
                                                                                                AMOUNTS FROM
                                                                                                  INCEPTION
                                                                                                 (DECEMBER 2,
                                                                      YEAR ENDED                   1993) TO
                                                                      DECEMBER 31,               DECEMBER 31,
                                                               1996                1995              1996
                                                          -------------      -------------      --------------
                                                        (RESTATED-NOTE 14)                    (RESTATED-NOTE 14)
<S>                                                     <C>                  <C>              <C>
Revenues:
  Gross sales of beer and related retail products
    (Notes 8 and 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
Impairment loss (Note 11)                                     1,018,879                  -          1,018,879
Write-off of stock offering costs (Note 6)                      461,969                  -            461,969
                                                          -------------      -------------      -------------
Loss from operations                                         (4,099,209)        (2,150,945)        (6,530,095)
Interest income (expense)                                       (34,801)           175,984            224,589
Other expense                                                  (183,316)                 -           (183,316)
                                                          -------------      -------------      -------------
Loss before income taxes and minority interest
  in losses of consolidated subsidiary companies             (4,317,326)        (1,974,961)        (6,488,823)

Income taxes (Note 5)                                                 -                  -                  -
                                                          -------------      -------------      -------------
Loss before minority interest in losses of
  consolidated subsidiary companies                          (4,317,326)        (1,974,961)        (6,488,823)
Minority interest in losses of consolidated
  subsidiary companies                                        1,853,095            644,119          2,544,303
                                                          -------------      -------------      -------------

Net loss as a development stage company                   $  (2,464,231)     $  (1,330,842)        (3,944,520)
                                                          -------------      -------------      -------------
                                                          -------------      -------------      -------------

Net loss per common share                                 $       (0.51)     $       (0.27)     $       (1.10)
                                                          -------------      -------------      -------------
                                                          -------------      -------------      -------------

Weighted average number of common shares
  outstanding                                                 4,852,513          4,850,796          3,602,166
                                                          -------------      -------------      -------------
                                                          -------------      -------------      -------------

</TABLE>

 
      The accompanying notes are an integral part of these financial statements.
                                         F-4


<PAGE>

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
--------------------------------------------------------------------------------
 

<TABLE>
<CAPTION>
                                                                                                     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 ($0.03 per share)                   -              -              -        111,111              -        111,111

Net proceeds from WVI common stock
  offerings ($1.65 per share)             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                                          -              -              -              -     (2,464,231)    (2,464,231)
                                        -----------   ------------   ------------   ------------   ------------   ------------

Balance, December 31, 1996
  (Restated - Note 14)                    4,860,996   $     48,610   $  5,453,712   $          -   $ (3,944,520)  $  1,557,802
                                        -----------   ------------   ------------   ------------   ------------   ------------
                                        -----------   ------------   ------------   ------------   ------------   ------------

</TABLE>
 
      The accompanying notes are an integral part of these financial statements.
                                         F-5

<PAGE>

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


<TABLE>
<CAPTION>
                                                                                                      CUMULATIVE
                                                                                                     AMOUNTS FROM
                                                                                                      INCEPTION
                                                                                                     (DECEMBER 2,
                                                                                     YEAR ENDED        1993) TO
                                                                                     DECEMBER 31,     DECEMBER 31,
                                                                   1996                1995               1996
                                                            ---------------     ---------------     ---------------
                                                          (RESTATED - NOTE 14)                    (RESTATED - NOTE 14)
<S>                                                       <C>                   <C>               <C>
Cash flows from operating activities:
   Net loss                                                 $    (2,464,231)    $    (1,330,842)    $    (3,944,520)
   Minority interest in losses of consolidated
     subsidiary companies                                        (1,853,095)           (644,119)         (2,544,303)
Reconciliation of net loss to net cash used by
  operating activities:
   Depreciation                                                     441,154             217,672             667,863
   Deferred rent                                                     22,152              91,328             113,480
   Impairment loss                                                1,018,879                   -           1,018,879
   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                         (1,623,418)         (2,162,199)         (3,744,304)
                                                            ---------------     ---------------     ---------------
Cash flows from investing activities:
   Deposits for equipment                                           (51,000)            (40,000)            (51,000)
   Purchases of property and equipment, net of disposals           (347,744)         (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          1,072,368             722,698           1,795,066
   Principal payments on capital lease obligations                  (76,848)            (11,041)            (87,889)
   Proceeds from WVI and subsidiary company
     stock offerings                                                      -           1,462,443           8,335,567
                                                            ---------------     ---------------     ---------------
Net cash provided by financing activities                           995,520           2,174,100          10,042,744
                                                            ---------------     ---------------     ---------------

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
                                                            ---------------     ---------------     ---------------
                                                            ---------------     ---------------     ---------------

</TABLE>
 
      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 $2,914,247
    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.

    Subsequent to December 31, 1996, the Company and its subsidiaries entered
    into an investment agreement 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 12.

    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>

1.  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING 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.

    On March 4, 1996, the board of directors of WVI authorized WVI to
    contribute 2,129,871 of its 4,845,455 shares in AAI to AAI for no
    consideration in contemplation of a stock offering.  AAI has retired these
    shares.  This transaction reduced WVI's ownership in AAI from approximately
    65% to approximately 51%.

    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 as described in Note 12 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.


                                         F-8


<PAGE>

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

    REVENUE RECOGNITION
    The Company recognizes revenue upon the shipment 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.

    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 approximate
    the respective recorded balances, as the recorded assets and liabilities
    are stated at amounts expected to be realized or paid, or carry interest
    rates commensurate with current rates for instruments with a similar
    duration and degree of risk.

    LONG-LIVED ASSETS
    Effective January 1, 1996 the Company adopted Statement of Financial
    Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
    Assets and for Long-Lived Assets to be Disposed Of" (FAS 121).  Under FAS
    121, property is carried at cost unless estimated future undiscounted cash
    flows from the operation of such property are less than cost in which case
    the carrying value is reduced to fair value (see Note 11).


                                         F-9


<PAGE>

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

    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 has selected 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 (see Note 7).

    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 shareholders' equity.


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
                                       ------------   ------------
                                       ------------   ------------


                                         F-10


<PAGE>

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.

    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
                        ------------   ------------   ------------
                        ------------   ------------   ------------


                                         F-11


<PAGE>

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:
<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                                                     1996           1995
                                                                ------------   ------------
         <S>                                                    <C>            <C>
         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)
                                                                ------------   ------------
                                                                $          -   $          -
                                                                ------------   ------------
                                                                ------------   ------------

</TABLE>

    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.
    However, based on the estimated current fair market value of each entity
    included in the proposed consolidation (see Note 13) the net loss
    carryforward may be limited.


6.  SHAREHOLDERS' EQUITY

    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 3,353,826 of its shares of common
    stock.  These shares will be released from escrow to WVI's founders when
    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

                                         F-12


<PAGE>

6.  SHAREHOLDERS' EQUITY (CONTINUED)

    these conditions, the 3,353,826 shares shall remain in escrow until
    unconditionally released in 25% increments on October 31, 2000, 2001, 2002,
    and 2003.  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.  Based on the
    ownership change anticipated by management described in Note 12, the shares
    will not be released from escrow, and all shares will be converted to
    shares of the new Company.

    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.

    During 1996 AAI and MHBC attempted their second direct public offerings to
    sell common stock.  The offerings have failed to raise the minimum escrow
    amounts, and AAI is no longer soliciting investors, and MHBC has elected to
    terminate its offering and return funds held in escrow to investors.
    Accordingly, the costs of $461,969 related to these offerings have been
    expensed in the current year.


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 1994, the Company granted a total of 125,000 options under the Plan
    at an exercise price of $1.65 per share which approximated fair market
    value at the date of grant.

    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, 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.


                                         F-13


<PAGE>

7.  STOCK INCENTIVE PLAN (CONTINUED)

    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 12.

    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
    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

                                         F-14


<PAGE>

8.  RELATED PARTIES (CONTINUED)

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

    In September 1995, MHBC paid for certain brewing equipment which was
    ultimately sold 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.

    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 Cooperative Brewers' 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.  Each
    Cooperative Brewer'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.

    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.


                                         F-15


<PAGE>

8.  RELATED PARTIES (CONTINUED)

    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.

    Cooperative brewing revenues totaled $1,375,000, which is 36% of the
    Company's net revenues.  Because of the pricing terms surrounding
    cooperative brewing discussed above and the fact that the Company's costs
    to produce beer were higher than Nor'Wester's costs to produce beer,
    cooperative brewing sales resulted in significant negative gross margins
    for the Company.  In addition, a significant portion of the beer brewed by
    the Company and sold to Nor'Wester was determined to be unusable.
    Subsequent to December 31, 1996, the cooperative brewing agreement was
    canceled with the consent of all Alliance members.

    ADVANCES FROM AFFILIATES
    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. In 1996, Nor'Wester
    advanced an additional $100,000 and $250,000 respectively, to AAI and MHBC.
    An additional $50,000 was advanced directly to WVI.  Because management
    plans to merge the Company into a new Company (see Note 12), 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.

    These advances remain outstanding as a current payable although the
    cooperative brewing agreement has been terminated.  Because these advances
    will eventually be eliminated when the proposed merger occurs, as discussed
    in Notes 12 and 13, these advances have been classified as current at
    December 31, 1996.


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:

                                         F-16


<PAGE>

9.  COMMITMENTS (CONTINUED)

          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
                                                 ---------------
                                                 ---------------

    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.

    In addition, due to the nature of the industry the Company operates in, the
    Company is exposed to certain hazards and liability risks resulting from
    brewery operations which could impact the Company negatively.


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 (excluding cooperative brewing) for the years ended December 31,
    1996 and 1995 totaled 25% and 42%, respectively.


11. IMPAIRMENT OF MHBC ASSETS

    Subsequent to December 31, 1996, the management of MHBC developed a plan to
    sell all of the operating assets of MHBC or to pursue contract brewing
    opportunities.  Accordingly, and pursuant to SFAS 121, such assets were
    reduced to their estimated fair value as of December 31, 1996.
    Management's estimate of this write-down of approximately $969,000 is based
    on a pending offer from an unaffiliated buyer.  In addition, management
    estimates the cost to dispose of the assets to be approximately $50,000,
    and this amount is recorded in the financial statements as of December 31,
    1996 as part of the impairment loss.  While management searches for other
    potential buyers, MHBC is operating on a limited basis as a contract brewer
    for a local brewery and is looking for other contract brewing
    opportunities.  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.

                                         F-17


<PAGE>

12. 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 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 (see Note 13).

    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, and (vi) 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
    (see Note 13).

                                         F-18


<PAGE>

13. 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 12.  The renegotiation will reflect a significantly lower valuation
    and a change in the exchange ratios 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.


14. RESTATEMENT OF FINANCIAL STATEMENTS

    The accompanying 1996 consolidated financial statements have been restated
    to revise the Company's share of the net losses sustained for the period
    from January 1 to September 30, 1996 by North Country Joint Venture, LLC,
    which was sold by the Company in October 1996 to Nor'Wester, an affiliated
    company.

    In addition, the accompanying 1996 consolidated financial statements have
    been restated to reduce the impairment loss by the amount of future
    estimated operating losses initially included therein relating to a
    contract brewing arrangement of MHBC.  Such losses will be recorded by MHBC
    in 1997 as incurred.  The effects of these restatements on the consolidated
    financial statements are summarized below:


                                         F-19


<PAGE>

14. RESTATEMENT OF FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                           AS OF AND FOR THE YEAR ENDED
                                                                 DECEMBER 31, 1996
                                                           AS PREVIOUSLY
                                                              REPORTED     AS RESTATED
                                                           -------------  -------------
         <S>                                               <C>            <C>
         Consolidated balance sheet:
              Reserve for impairment loss                  $     338,000  $      50,000
              Payables to affiliated companies                 1,572,569      1,795,066
              Minority interest                                  142,585        283,706
              Deficit accumulated during the
                development stage                             (3,868,902)    (3,944,520)

         Consolidated statement of operations:
              Impairment loss                                  1,306,879      1,018,879
              Other expense                                     (422,788)      (183,316)
              Minority interest in losses of consolidated
                subsidiary companies                           1,944,216      1,853,095
              Net loss                                        (2,388,613)    (2,464,231)
              Net loss per share                                   (0.49)         (0.51)

</TABLE>
 
                                         F-20


<PAGE>

15. CONSOLIDATING INFORMATION

    The following presents the consolidating balance sheet and statement of
    operations of the Company.
 
<TABLE>
<CAPTION>
                                                                WVI CONSOLIDATING BALANCE SHEET
                                                                     DECEMBER 31, 1996
                             ------------------------------------------------------------------------------------------------
                                                                    (RESTATED - NOTE 14)
                                                                                                                     WVI
                                  WVI           BAI          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, net       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
Impairment loss                                      -                      50,000                           -        50,000
Payables to affiliated
  companies                   (1,333,974)      291,586       881,012     1,834,547       121,895             -     1,795,066
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
   Total current liabilities  (1,264,394)      364,503     1,552,739     2,786,114       134,895             -     3,573,857

Long-term debt and capital
  lease obligations                    -             -        57,664       241,224             -             -       298,888
Deferred rent                          -             -        70,103             -             -             -        70,103
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
Total liabilities             (1,264,394)      364,503     1,680,506     3,027,338       134,895             -     3,942,848
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
Minority interest                      -             -             -             -             -       283,706       283,706
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
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             (682,394)     (862,893)   (1,603,074)   (3,160,616)     (134,895)    2,499,352    (3,944,520)
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
                               1,627,950       567,290       984,811      (903,648)     (134,895)     (583,706)    1,557,802
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
                             $   363,556   $   931,793   $ 2,665,317   $ 2,123,690   $         -   $  (300,000)  $ 5,784,356
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
</TABLE>
 
                                         F-21


<PAGE>

15. CONSOLIDATING INFORMATION (CONTINUED)
 
<TABLE>
<CAPTION>
                                                        WVI CONSOLIDATING STATEMENT OF OPERATIONS
                                                                YEAR ENDED DECEMBER 31, 1996
                             ------------------------------------------------------------------------------------------------
                                                                   (RESTATED - NOTE 14)
                                                                                                                     WVI
                                 WVI           BAI           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
Impairment loss                        -             -             -     1,018,879             -             -     1,018,879
Write-off of stock offering
  costs                                -             -       249,871       212,098             -             -       461,969
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
Income (loss) from operations   (247,285)     (284,278)   (1,156,208)   (2,411,438)            -             -    (4,099,209)

Interest income (expense)         16,261       (11,606)       (1,498)      (37,958)            -                     (34,801)
Other expense                   (308,605)        4,342             -        17,124       103,823                    (183,316)
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
Income (loss) before income
  taxes and minority interest   (539,629)     (291,542)   (1,157,706)   (2,432,272)      103,823             -    (4,317,326)

Income taxes                           -             -             -             -             -             -             -

Minority interest                      -             -             -             -             -     1,853,095     1,853,095
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
  Net loss                   $  (539,629)  $  (291,542)  $(1,157,706)  $(2,432,272)  $   103,823   $ 1,853,095   $(2,464,231)
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------
                             -----------   -----------   -----------   -----------   -----------   -----------   -----------

</TABLE>
 
                                         F-22