UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549
                                    ---------

                                   FORM 10-QSB

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the quarter ended     September 30, 1996    Commission File Number 33-53748C

                         BEV-TIME, INC. AND SUBSIDIARIES
             (Exact name of registrant as specified in its charter)

               Delaware                                      36-3769323
            (State or other jurisdiction of              (I.R.S. Employer
            incorporation or organization)              Identification No.)

            134 Morgan Avenue
            Brooklyn, New York                                 11237
            (Address of principal executive offices)        (Zip code)

Registrant's telephone number, including area code:       (718) 894-4300
                                                        ----------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                              Yes   X      No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of November 19, 1996, was 924,221.


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BEV-TYME, INC. AND SUBSIDIARIES
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INDEX
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                                                             Page to Page
PART I

Item 1.  Financial Statements

   Consolidated Balance Sheet - Assets as of September 30, 1996
   [Unaudited]................................................. 1

   Consolidated Balance Sheet - Liabilities and Stockholders' Equity -
   as of September 30, 1996 [Unaudited]........................ 2

   Consolidated Statements of Operations for the three and nine months
   ended September 30, 1996 and 1995 [Unaudited]............... 3

   Consolidated Statement of Stockholders' Equity for the nine months
   ended September 30, 1996 [Unaudited]........................ 4

   Consolidated Statements of Cash Flows for the nine months
   ended September 30, 1996 and 1995 [Unaudited]............... 5.....  6

   Notes to Consolidated Financial Statements [Unaudited]...... 7..... 17

Item 2.  Managements' Discussion and Analysis of the Financial
         Condition and Results of Operations...................18......23

Signature......................................................24





                         . . . . . . . . . . . . . . .



<PAGE>



Item 1.  Financial Statements
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BEV-TYME, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996.
[UNAUDITED]
------------------------------------------------------------------------------


<S>                                                                    <C>  

Assets:
Current Assets:
  Cash                                                                  $ 2,078,640
  Accounts Receivable - Net                                               1,021,079
  Inventory                                                                 706,318
  Prepaid Expenses                                                          122,380
                                                                        -----------

  Total Current Assets                                                    3,928,417

Property and Equipment - Net                                                887,618
                                                                        -----------

Other Assets:
  Restricted Cash                                                             5,127
  Security Deposits                                                          18,476
  Goodwill - Net                                                          2,876,936
  Other Assets                                                              303,862
                                                                        -----------

  Total Other Assets                                                      3,204,401

  Total Assets                                                          $ 8,020,436
                                                                        ===========



See Notes to Consolidated Financial Statements.

                                         1
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BEV-TYME, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996.
[UNAUDITED]
------------------------------------------------------------------------------



<S>                                                                     <C>    

Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable                                                      $ 1,669,967
  Accrued Expenses                                                          275,113
  Payroll and Corporate Income Taxes Payable                                 33,981
  Notes Payable                                                             236,544
                                                                        -----------

  Total Current Liabilities                                               2,215,605

Long-Term Debt:
  Notes Payable                                                             343,646

Commitments and Contingencies [12]                                               --

Stockholders' Equity:
  Series C Convertible Preferred Stock - Authorized 5,800,000 Shares,
   Par Value of $.0001, 2,252,225 Shares Issued of which 400,000
   are Deemed to be Treasury Shares [3C]                                        225

  Common Stock - Authorized 75,000,000 Shares, 924,221 Shares
   Issued and Outstanding, Par Value of $.0001                                   92

  Additional Paid-in Capital                                             22,856,457

  Accumulated [Deficit]                                                 (11,807,276)

  Total                                                                  11,049,498
  Less:Treasury Stock [3C]                                               (2,000,000)
       Deferred Compensation                                             (3,588,313)

  Total Stockholders' Equity                                              5,461,185

  Total Liabilities and Stockholders' Equity                            $ 8,020,436
                                                                        ===========



See Notes to Consolidated Financial Statements.

                                         2
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BEV-TYME, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
------------------------------------------------------------------------------


                                   Three months ended         Nine months ended
                                      September 30,              September 30,
                                      -------------              -------------
                                   1 9 9 6      1 9 9 5     1 9 9 6        1 9 9 5
                                   -------      -------     -------        -------
<S>                             <C>          <C>           <C>          <C>

Sales - Net                     $ 5,774,192  $ 3,992,913   $13,195,897  $ 9,591,236

Cost of Goods Sold                5,012,435    3,352,404   10,877,481     7,878,250
                                -----------  -----------   ----------   -----------

  Gross Profit                      761,757      640,509    2,318,416     1,712,986
                                -----------  -----------   ----------   -----------

Selling, General and Administrative
  Expenses:
  Selling, Advertising and
  Promotion                         432,133      338,425    1,000,435       872,450
  Amortization of Goodwill          112,659      108,146      321,577       279,746
  General and Administrative 
  Expenses                           1,014,814   438,404    2,271,220     1,556,891
  Amortization of Financing Costs        --           --           --       386,650
  Amortization of Consulting
  Services                            590,000   1,174,250    1,287,187     1,174,250
                                     ------- -----------   ----------   -----------

  Total Selling, General and
   Administrative Expenses        2,149,606    2,059,225    4,880,419     4,269,987
                                -----------  -----------   ----------   -----------

  [Loss] from Operations         (1,387,849)  (1,418,716)  (2,562,003)   (2,557,001)
                                -----------  -----------   ----------   -----------

Other [Income] Expense:
  Interest Expense                    8,119        5,452       36,227        27,749
  Interest Income                        --           --         (125)           --
                                -----------  -----------   ----------   -----------

  Other Expense - Net                 8,119        5,452       36,102        27,749
                                -----------  -----------   ----------   -----------

  [Loss] Before Provision for
   Income Taxes                  (1,395,968)  (1,424,168)  (2,598,105)   (2,584,750)

Provision for Income Taxes               --           --           --            --
                                -----------  -----------   ----------   -----------

  Net [Loss]                    $(1,395,968) $(1,424,168)  $(2,598,105) $(2,584,750)
                                ===========  ===========   ===========  ===========

  Net [Loss] Per Share          $     (1.51) $     (3.10)  $    (3.22)  $     (6.18)
                                ===========  ===========   ==========   ===========

  Weighted Average Number
   of Shares                        924,221      458,776      807,823       418,263
                                ===========  ===========   ==========   ===========



See Notes to Consolidated Financial Statements.

                                         3
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
[UNAUDITED]
------------------------------------------------------------------------------


                                             Series C ConvertibAdditional                                       Total
                              Common Stock      Preferred Stock    Paid-in  AccumulatedTreasury    Deferred    Stockholders'
                              Shares   Amount   Shares   Amount*   Capital   [Deficit]   Stock     Compensation    Equity
<S>                             <C>       <C>    <C>        <C>    <C>          <C>          <C>        <C>             <C> 

  Balance - December 31, 1995
              [18A]              458,776   46     1,352,225  135  $ 13,362,257   $(8,938,721) --  $      (1,155,000)     3,268,717

Stock Issuance for Acquisition of
  Perry's Majestic Beer  [3C]     --       --       400,000   40     1,999,960  --            (2,000,000)      --       --

Stock Issued for Distributor 
Rights and Services in
 April 1996[3D]                   80,000     8       --       --      868,292  --         --               (850,000)      18,300

Options Issued - Deferred 
Consulting Costs - 
February 1996 [8F]                    --       --       --       --   600,000        --         --         (600,000)      --

Exercise of Stock Options for 
 Series C Preferred Stock [8G][10H}   --       --  500,000     50      999,950        --         --       --              1,000,000

Options Issued for 1997 Services
  in August 1996 [8H]                 --       --       --       --   2,187,500        --            --    (2,187,500)    --

Common Stock Dividend to Holders
  of Series C Preferred Stock -
  January 1996 [10I]              270,445      27       --       --   270,423   (270,450)        --       --       --

Consulting Agreement - April 1996
 [10L]                             40,000        4   --       --      24,996        --         --           (25,000)      --

Consulting Agreement - April 1996
               [10J]                35,000         3   --       --    32,997        --         --            (33,000)      --

Financing Costs - April 1996 
[10K]                               40,000        4       --       --  24,996        --         -            (25,000)      --

Proceeds from Public Offering - 
Perry's                              --       --       --            2,485,086  --        --       --                    2,485,086

Amortization of Deferred 
Compensation Costs - Nine 
months ended
  September 30, 1996              --       --       --       --          --        --         --             1,287,187   1,287,187

Net [Loss] for the 
nine months   ended 
September 30, 1996               --       --       --       --          --  (2,598,105)       --       --   (2,598,105)
                             -------  -------  -------  -------  ---------- ---------- --------- -------- ---------- -------------

  Balance -
  September 30, 1996
   [Unaudited]                  924,221  $   92  2,252,225 $  225  $22,856,457 $ (11,807,276) (2,000,000)  (3,588,313)    5,461,185
                                =========  ==== = ========== ====== ===========  ============    =========  ===========   ==========

</TABLE>

* No allocation  has been made to par value for the  preferred  stock because of
the insignificant dollar amounts.



See Notes to Consolidated Financial Statements.

                                         4

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CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
------------------------------------------------------------------------------


                                                               Nine months ended
                                                                 September 30,
                                                              1 9 9 6      1 9 9 5
                                                              -------      -------
<S>                                                       <C>           <C> 

Operating Activities:
  Net [Loss]                                               $(2,598,105) $(2,584,750)
                                                           -----------  -----------
  Adjustments to Reconcile Net [Loss] to Net Cash
   [Used for] Operating Activities:
   Depreciation                                                94,500        71,700
   Amortization of Intangibles                                     --       386,650
   Amortization of Goodwill                                   331,577       279,746
   Compensation Expense on Issuance of Options                     --     1,174,250
   Amortization of Deferred Compensation Costs              1,287,187            --

  Changes in Assets and Liabilities:
   [Increase] Decrease in Assets:
     Accounts Receivable                                     (316,209)     (360,042)
     Inventory                                                 74,620      (230,252)
     Prepaid Expenses                                          31,575       190,224
     Other Assets                                            (275,491)           --

   Increase [Decrease] in Liabilities:
     Accounts Payable and Accrued Expenses                   (361,039)      441,455
     Payroll and Corporate Income Taxes Payable              (220,718)           --
                                                           ----------   -----------

   Total Adjustments                                          646,002     1,953,731
                                                           ----------   -----------

  Net Cash - Operating Activities - Forward                (1,952,103)     (631,019)
                                                           ----------   -----------

Investing Activities:
  Old Marlborough Acquisition                                (160,513)           --
  Equipment Acquisitions                                     (143,681)     (253,162)
  Riverosa Acquisition [3C]                                  (250,000)           --
  Acquisition of Subsidiary - Net of Cash Acquired                 --      (526,562)
                                                           ----------   -----------

  Net Cash - Investing Activities - Forward                  (554,194)     (779,724)
                                                           ----------   -----------

Financing Activities:
  Proceeds from Bridge Loan                                   150,000            --
  Proceeds from Loan Payable                                  138,750        50,000
  Payments of Capital Lease Obligations                       (45,906)       (5,890)
  Repayments of Note Payable - Related Parties                     --       (45,000)
  Proceeds of Note Payable - Related Parties                       --        45,000
  Payment of Bridge Loan Obligation                          (150,000)     (180,000)
  Proceeds from Sale of Common Stock                           50,000            --
  Exercise of Options and Proceeds from Stock Subscription  2,350,000            --
  Payments of Loan Payable                                   (277,707)      (50,000)
  Repayment of Shareholder - Loan Payable                    (259,000)           --
  Proceeds of Public Offering - Net of Offering Costs       2,475,086     1,759,969
  Payments of Notes Payable - Bank                                 --      (171,558)
                                                           ----------   -----------

  Net Cash - Financing Activities - Forward                $4,431,223   $ 1,402,521


See Notes to Consolidated Financial Statements.

                                         5
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CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
------------------------------------------------------------------------------


                                                               Nine months ended
                                                                 September 30,
                                                              1 9 9 6      1 9 9 5
                                                              -------      -------
<S>                                                        <C>          <C>

  Net Cash - Operating Activities - Forwarded              $(1,952,103) $  (631,019)

  Net Cash - Investing Activities - Forwarded                (554,194)     (779,724)

  Net Cash - Financing Activities - Forwarded               4,431,223     1,402,521
                                                           ----------   -----------

  Net Increase [Decrease] in Cash                           1,924,926        (8,222)

Cash - Beginning of Periods                                   153,714        68,377
                                                           ----------   -----------

  Cash - End of Periods                                    $2,078,640   $    60,155
                                                           ==========   ===========

Supplemental Disclosures of Cash Flow Information:
  Cash paid for the periods for:
   Interest                                                $   36,227   $    27,749
   Income Taxes                                            $   12,104   $    23,965



See Notes to Consolidated Financial Statements.

                                         6
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<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
------------------------------------------------------------------------------



[1] Basis of Presentation

The  accompanying  interim  financial  statements  are  unaudited  and have been
prepared in accordance  with the  requirements of Regulation S-B and Form 10-QSB
and,  therefore,  do not  include  all  information  and  footnotes  required by
generally  accepted  accounting  principles;  however,  in  the  opinion  of the
management  of  the  Company,  the  interim  financial  statements  include  all
adjustments  which  are  necessary  in  order  to  make  the  interim  financial
statements not misleading.  The results of operations for any interim period are
not  necessarily  indicative of the results for the full year.  These  financial
statements  should be read in  conjunction  with the  financial  statements  and
notes, thereto, contained in the annual report on Form 10-KSB for the year ended
December 31, 1995.

[2] General Information and Summary of Significant Accounting Policies

General and Organization - New Day Beverage Co. was an Illinois corporation 
originally established in April 1991 and maintained its principal place of
 business in Chicago, Illinois.  In August of 1992, New Day Beverage Co.
 changed its name to New Day Beverage, Inc. and changed its state of 
incorporation to Delaware and in February 1994, relocated its principal place
 of business to Brooklyn, New York.On January 11, 1996, the Company changed its
 name to Bev-Tyme, Inc.

Bev-Tyme,  Inc.  ["Bev-Tyme"],  is engaged in the  business  of  developing  and
marketing  beverage products and is also engaged in the business of distributing
and selling beverage and snack products to grocery stores,  supermarket  chains,
restaurants  and  corporate  cafeterias.  In 1995,  the Company  also  commenced
distributing  beer and other malt beverages.  The Company markets  beverages and
snack  products  to retail  grocery  stores,  supermarket  chains,  restaurants,
corporate cafeterias and wholesale distributors,  a substantial portion of which
is concentrated in the New York City metropolitan area.

Principles of Consolidation - The consolidated  financial statements include the
accounts  of  Bev-Tyme  and  each  of  its   majority-owned   subsidiaries  [the
"Company"]. Material intercompany transactions and balances have been eliminated
in consolidation. See Note 3 entitled "Acquisitions" for further information.

Cash and Cash  Equivalents - Cash  equivalents  are comprised of certain  highly
liquid debt investments with a maturity of three months or less when purchased.

Inventories  -  Inventories  are  stated  at the  lower of cost or  market  [net
realizable  value].  Cost,  which includes  purchases,  freight,  raw materials,
direct labor and factory  overhead,  is determined  on the  first-in,  first-out
basis.  Management evaluates inventory  obsolescence and impairment on a monthly
basis.

Property  and  Equipment  - Property  and  equipment  are stated at cost and are
depreciated  over its estimated  useful life of 5 to 10 years.  Depreciation  is
calculated using the straight-line method.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at 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.

Options and Warrants - Options and warrants  issued to employees are  recognized
in accordance with the intrinsic value method.

                                        7

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
------------------------------------------------------------------------------



[2]General Information and Summary of Significant Accounting Policies 
[Continued]

Goodwill - Amounts paid for securities of newly-acquired  subsidiaries in excess
of the fair value of the net assets of such  subsidiaries  have been  charged to
goodwill.  Goodwill is related to revenues the Company anticipates  realizing in
future years. These revenues are highly dependent upon current management of the
subsidiaries  whose  employment  contracts cover periods up to seven years.  The
Company has decided to amortize  its  goodwill  over a period of up to ten years
under the straight-line method. In 1994, the Company changed its estimate of the
useful life of goodwill from seven to ten years because of the increased term of
the employment  contracts and the increase in  consolidated  sales.  Accumulated
amortization  at September 30, 1996 was $1,158,869.  The Company's  policy is to
evaluate the periods of goodwill  amortization to determine whether later events
and  circumstances  warrant revised  estimates of useful lives. The Company also
evaluates  whether  the  carrying  value of  goodwill  has  become  impaired  by
comparing the carrying value of goodwill to the value of projected  undiscounted
cash flows from acquired  assets or businesses.  Impairment is recognized if the
carrying  value of goodwill is less than the  projected  undiscounted  cash flow
from the acquired assets or business.

Risk Concentrations - Financial instruments that potentially subject the Company
to   concentrations  of  credit  risk  include  cash  equivalents  and  accounts
receivable arising from its normal business  activities.  The Company places its
cash and cash  equivalents  with  high  credit  quality  financial  institutions
located in the New York metropolitan area.

The Company  maintains  cash  balances at a financial  institution  in New York.
Accounts  at this  institution  are  insured by the  Federal  Deposit  Insurance
Corporation up to $100,000.  At September 30, 1996, the Company's uninsured cash
balance totaled $1,878,640.

The Company performs certain credit  evaluation  procedures and does not require
collateral.  The Company  believes  that credit risk is limited due to the large
number of entities  comprising  the Company's  customer  base. In addition,  the
Company routinely  assesses the financial  strength of its customers,  and based
upon  factors  surrounding  the credit  risk of its  customers,  establishes  an
allowance for  uncollectible  accounts and, as a consequence,  believes that its
accounts receivable credit risk exposure beyond such allowances is limited.  The
Company  established  an allowance for doubtful  accounts at September 30, 1996,
which amounted to approximately  $180,000.  The Company believes any credit risk
beyond this amount would be negligible.

With  respect  to  purchases  of  inventory  for each of the nine  months  ended
September 30, 1996 and 1995, the Company purchased  inventory from two suppliers
which comprised  approximately 23% and 9%, respectively,  of the Company's total
cost of sales.

Revenue Recognition - Revenue is recognized at the time products are shipped and
title passes.

Net [Loss] Per Share - The net loss per share is computed  by  dividing  the net
loss by the weighted  average  number of shares  outstanding  during the period.
Shares  issuable  upon the exercise of stock  options  granted and the effect of
convertible  securities are excluded from the computation  because the effect on
the net loss per common share would be anti-dilutive.

[3] Acquisitions

[A] Mootch & Muck, Inc. - In March 1994, the Company  acquired the remaining 49%
interest  in Mootch & Muck,  Inc.,  subject to  obtaining  certain  governmental
approvals,  in exchange  for 600,000  newly  issued  shares of common  stock and
$250,000  payable at the Company's  option in cash or common stock over a period
of sixteen [16] months.



                                        8

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
[UNAUDITED]
------------------------------------------------------------------------------



[3] Acquisition [Continued]

[A] Mootch & Muck,  Inc.  [Continued] - In addition,  the seller was entitled to
receive  an  additional  200,000  shares  of  common  stock if the  subsidiaries
reported  positive  earnings  before  the  payment  of taxes for the year  ended
December  31,  1994,  and an  additional  200,000  shares of common stock if the
Company  reported not less than $100,000 in earnings before the payment of taxes
for the year ended  December 31, 1995. On October 28, 1994,  the Company  issued
50,676  shares of common  stock as payment of  $150,000  due and owing under the
debt to the seller,  a director of the Company.  Under the terms of the original
agreement,  in the event that the seller sold such shares and received less than
$150,000  from the proceeds  therefrom,  the Company was  obligated to issue the
seller a  sufficient  number of  additional  shares of common  stock so that the
aggregate  proceeds from both sales was not less than $150,000.  On February 13,
1995,  the Company and the seller  amended  their  agreement  so that the seller
would  receive  shares of Series C  Preferred  Stock  and the  Company  would be
relieved  from all of its  obligations  to make  future  payments to the seller.
Under the amended  agreement,  the Company issued to the seller 83,333 shares of
Series C Preferred Stock and the seller has released the Company from all of its
obligations  to make  payments  in the  future.  Further,  in the event that the
seller receives  within two years  following the effective date  aggregate,  net
proceeds in excess of $250,000, the seller will deliver such amount in excess of
$250,000 to the Company and  surrender  for  cancellation  all of the  remaining
shares held  thereby,  if any. In  connection  with the  Company  acquiring  the
remaining 49% interest in the subsidiaries, the Company was obligated to pay the
seller $250,000 at the Company's option in cash or common stock over a period of
16 months.

There was approximately  $1,870,000 of additional  goodwill recorded as a result
of this transaction.

[B] Sclafani  Beer & Soda  Distributors,  Inc.  ["SB&S"] - On June 2, 1995,  the
Company purchased the assets and assumed certain  liabilities of Sclafani Beer &
Soda  Distributors,  Inc.  ["SBS"] for $500,000 in cash,  200,000  shares of the
Company's  common  stock  valued at market  value or  $31,250,  and  options  to
purchase 75,000 shares of the Company's common stock valued at $11,720. Goodwill
of approximately $450,000 was recognized for this acquisition.

[C] Perry's  Majestic  Beer,  Inc. - On March 29,  1996,  the  Company  acquired
500,000 shares of convertible  Class A Preferred  Stock and 7,000,000  shares of
non-convertible   Class  B  Preferred  Stock  of  Perry's  Majestic  Beer,  Inc.
["Perry's"]  [valued  at  $2,000,000]  in  exchange  for  400,000  shares of the
Company's Series C Preferred Stock and $150,000.  The 400,000 shares of Series C
Preferred are presented as treasury stock. Each share of Class A Preferred Stock
may be convertible by the Company into one [1] share of Common Stock. Each share
of Class A Preferred  Stock and Class B Preferred  Stock has  attached to it the
right  to  vote  on all  matters  submitted  to the  Company.  Perry's  filed  a
registration  statement  for 583,335  shares of common stock at $6.00 per share.
The  proceeds  from this  offering  were  approximately  $2,500,000.  The bridge
lenders waived their rights to warrants for 3,000,000  shares of common stock as
recorded in their  original  agreement  with Perry's.  Minority  interest is not
represented on the balance sheet because the amount is deemed immaterial.

Also on March 29, 1996,  Perry's entered into an agreement to acquire all of the
stock of Riverosa  Company,  Inc. for $250,000 of which $150,000 in cash was put
into escrow as of March 31, 1996 and a note payable was issued for $100,000. The
note was payable  with  interest of 8% was paid in August of 1996 with  proceeds
from the Company's initial public offering

In August of 1996, Perry's entered into a letter of intent to acquire a brewery.
In September 1996, the Company  finalized its acquisition of the Old Marlborough
Brewery.  The  total  purchase  price  was  $160,513  of which  $35,513  was for
inventory and equipment and $75,000 was for distribution rights.



                                        9

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
[UNAUDITED]
------------------------------------------------------------------------------


[3] Acquisition [Continued]

[D]  Acquisition - On April 29, 1996,  the Company  entered into an agreement to
acquire  certain  assets and assume  certain  leases for  twenty-two  trucks and
eighteen sales people. Simultaneously with this transaction, the Company entered
into an  agreement  with a company to be an exclusive  distributor.  The Company
issued 30,000 shares of the Company's common stock at an estimated fair value of
$18,300 and paid cash of $200,000 for this  agreement.  The Company also entered
into two employment  agreements  whereby the two individuals were issued a total
of 50,000 shares of the Company's  common stock and options for 300,000 Series C
Preferred  Stock,  subject  to an  increasing  number  of shares  under  certain
circumstances,  exercisable at $1.50 per share. A total of $850,000 was recorded
as a  deferred  compensation  cost in April  of 1996  for the fair  value of the
50,000 shares of common stock and the 300,000 Series C Preferred  Stock Options.
For  the  nine  months  ended   September  30,  1996,  the  Company   recognized
compensation expense of $159,625.

[4] Inventories

Inventories as of September 30, 1996 consisted of the following:

Raw Materials                               $   16,249
Finished Goods                                 690,069
                                            ----------

  Total                                     $  706,318
  -----                                     ==========

The  Company's  inventory  consists  primarily  of finished  goods.  The Company
evaluates inventory obsolescence and impairment on a monthly basis.

[5] Plant and Equipment and Depreciation and Amortization

Plant  and  equipment  and  accumulated  depreciation  and  amortization  as  of
September 30, 1996 are as follows:

Warehouse Equipment                            $  243,901
Office Equipment                                  672,734
Leasehold Improvements                             41,046
Transportation Equipment                        1,208,858
                                               ----------

Total - At Cost                                 2,166,539
Less:  Accumulated Depreciation                 1,278,921

  Net                                          $  887,618
  ---                                          ==========

Depreciation  expense for the nine months ended  September 30, 1996 and 1995 was
$94,500 and $71,700, respectively.

[6] Debt

Debt as of September 30, 1996 consisted of the following:

Note Payable                                                         $ 260,111
Bank notes payable in monthly installments of principal and
  interest at rates ranging from 8.5% to 13.9% per annum,
  maturing October 1996 through September 2000 [A]                     320,079
                                                                     ---------

Total                                                                  580,190
Less:  Current Portion                                                 236,544

  Non-Current Portion                                                $ 343,646
  -------------------                                                =========

                                       10

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
[UNAUDITED]
------------------------------------------------------------------------------



[6] Debt [Continued]

[A] Collateralized by transportation equipment.

Maturities  of the bank notes and loan payable as of  September  30, 1996 are as
follows:

September 30,
   1996                                     $ 236,544
   1997                                       117,282
   1998                                       104,872
   1999                                        84,660
   2000                                        36,832
                                            ---------

   Total                                    $ 580,190
   -----                                    =========

[7] Income Taxes

No  provision  for  income  taxes  has  been  made  for  1996  and  1995  in the
accompanying  consolidated  financial  statements  because the Company  incurred
losses for both financial reporting and income tax purposes.  As of December 31,
1995,  the  Company  had a net  operating  loss  carryforward  of  approximately
$7,600,000  that is  scheduled  to  expire  between  2007 and 2008.  Future  tax
benefits  related  to  those  losses  have  not been  recognized  because  their
realization is not assured.

In 1993, the Company adopted the method of accounting for income taxes pursuant
 to Financial Accounting Standards No. 109, "Accounting for Income Taxes"
 ["SFAS No. 109"].  SFAS No. 109 requires the asset and  liability method
 for financial accounting and reporting for income taxes. The impact of adopting
 SFAS No. 109 was not significant to the Company's financial position or results
 of operations.

[8] Stock Option Plans, Stock Options and Warrants

[A]  Directors'  Stock Options - In November of 1995, the Company issued options
to purchase  525,000  shares of the  Company's  Series C  Preferred  Stock at an
exercise price of $2.00 per share to seven  directors.  The Company  recorded in
1995 a deferred consulting cost of $1,155,000 which represents the fair value of
the options  issued.  For the nine months ended  September 30, 1996, the Company
recorded compensation expense of $866,250 [See Note 18B].

[B] As of December 31, 1995,  525,000  common stock  options that were issued in
August of 1994 are  outstanding  and have  vested  to  directors,  officers  and
employees  of the  Company at an exercise  price of $.69 per share.  The Company
also issued in 1995,  300,000  common stock  options that vest in May of 1996 to
directors,  officers and employees of the Company at an exercise  price of $2.00
per share.

[C] Incentive  Stock Option Plan - In November of 1992, the Company  adopted the
"Incentive  Stock Option  Plan".  The total number of shares that may be granted
under  this plan is 75,000  shares.  The  Company  issued  incentive  options to
purchase an aggregate of 60,000 shares of common stock  exercisable at $1.00 per
share for a period of four years commencing in August 1994.

[D]  Non-Qualified  Stock Option Plan -In November of 1992, the Company  adopted
the  "Non-Qualified  Stock Option Plan".  The total number of shares that may be
granted under this plan is 125,000 shares. In August of 1994, the Company issued
an aggregate of 25,000  non-qualified  options that are  exercisable at 1.00 per
share for a period of four years commencing in August 1994.



                                       11

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
[UNAUDITED]
------------------------------------------------------------------------------



[8] Stock Option Plans, Stock Options and Warrants [Continued]

[E] Options to  Underwriter  - In June 1993,  for a purchase  price of $50,  the
underwriters  of the public  offering  acquired  an option to  purchase up to an
aggregate of 50,000 units for a five-year  period expiring in February 1998. The
Company has agreed to register, at its expense, under the Securities Act, on one
occasion, the option and/or the underlying securities covered by the option upon
certain conditions.

[F]  Consulting  Agreement - In February of 1996,  the Company issued options to
purchase 300,000 shares of the Company's Series C Preferred Stock at an exercise
price of $2.00 per share to a consultant  to assist,  the Company in  connection
with acquisitions,  divestitures,  joint ventures,  and other strategic business
initiatives.  The Company recorded a deferred consulting cost of $600,000, which
represents  the  difference  between the option  price and the fair value of the
preferred stock at the time of grant to account for these future  services.  For
the nine months ended  September  30, 1996,  the Company  recorded  compensation
expense of $225,000. These options were exercised in 1996.

[G]  Exercise of Series C Preferred  Stock  Options - In March of 1996,  150,000
Series C Preferred Options were exercised at $2.00 per share whereby the Company
received proceeds of $300,000. In the second quarter of 1996, a total of 350,000
Series C stock  options  were  exercised  by  consultants  whereby  proceeds  of
$700,000 were received by the Company.

[H] Options to Officers,  Directors and Employees - In August 1996,  the Company
issued to certain  officers,  directors  and  employees  options to  purchase an
aggregate of 630,000 shares of Series C Preferred  Stock at an exercise price of
$1.00 per share and 700,000  shares of common stock at an exercise price of $.25
per share for  services to be rendered in 1997.  None of such  options have been
exercised.  The Company  recorded  deferred  compensation  cost of $2,187,500 in
August of 1996 for the excess of the estimated  fair value of these options over
the exercise price and will record the expense over the period of service.

[9] Bridge Financing

On November 30, 1994, the Company borrowed an aggregate of $200,000. In exchange
for making a loan to the Company,  the bridge  lenders  received two  promissory
notes: one note in the aggregate principal amount of $180,000 and the other note
in the  aggregate  principal  amount of $20,000.  Each of the bridge notes bears
interest at the rate of eight percent [8%] per annum.  The $180,000 bridge loans
were due and payable upon the earlier of (i) May 1, 1995, or (ii) the closing of
the proposed  public  offering of the Company's  securities.  The $20,000 bridge
loans were due on  December 1, 1995.  In  addition,  each bridge  lender had the
right to convert a  convertible  bridge note into a number of units  ["preferred
bridge  units"]  equal to the total dollar  amount loaned to the Company by such
bridge  lender;  provided,  however,  that one  bridge  lender may  convert  his
convertible  bridge note into the total dollar amount loaned to the Company plus
an  additional   50,000  preferred  bridge  units  because  such  bridge  lender
surrendered 1,000,000 warrants exercisable for 1,000,000 shares of common stock.
In February,  the bridge lenders converted the convertible  bridge notes into an
aggregate of 250,000 preferred bridge units. Each unit is identical to the units
being  offered in the proposed  public  offering.  One bridge  lender who loaned
$65,000 to the Company  rescinded  1,000,000  warrants  that were  received in a
private placement on February 2, 1994.  Further,  the Company agreed to register
such units in the first  registration  statement filed by the Company  following
the date of the loan. The cost of obtaining this bridge  financing was $580,000,
which  represents the fair value for the bridge units issued.  As a result,  the
Company expensed $386,650 and $193,350 in 1995 and 1994, respectively, as bridge
financing  costs.  In May of 1995,  the Company was granted an extension for the
maturity of the principal bridge notes until the earlier of (i) June 15, 1995 or
(ii) the closing of the public  offering.  These bridge notes were repaid on May
23, 1995, the date of the closing of the public offering.



                                       12

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7
[UNAUDITED]
------------------------------------------------------------------------------



[9] Bridge Financing [Continued]

On March 31,  1996,  Perry's  borrowed an  aggregate  of $150,000  from nine [9]
unaffiliated  lenders  [the "Bridge  Lenders"].  In exchange for making loans to
Perry's, each Bridge Lender received a promissory note [the "Bridge Note"]. Each
of the Bridge Notes bears  interest at the rate of eight percent [8%] per annum.
The Bridge  Notes were repaid at the  closing of the public  offering of Perry's
securities in August of 1996.

[10] Stockholders' Equity

[A] Registration  Statement for Units - Series C Redeemable Preferred Stock - On
May 15, 1995, the Company completed a secondary public offering for sale 460,000
units, each consisting of one share of Series C Convertible Preferred Stock, par
value  $.0001 per share and two Series C  Redeemable  Preferred  Stock  purchase
warrants. Each share of Series A Preferred Stock is convertible at the option of
the  holder,  at any time after May 15,  1996,  into 18 shares of the  Company's
common stock.  The Series C Warrants entitle the holder to purchase one share of
Series C Preferred Stock at an exercise price of $6.00 per share through May 15,
2000 and may be redeemed by the Company under certain conditions.  To date, none
of the Preferred  Stock  Warrants have been  exercised or redeemed.  The Company
realized net proceeds of $1,688,787 after deducting,  the underwriters  discount
and other costs of the offering.

[B]  Registration  Statement  for  Common  Stock - On  February  11,  1994,  the
Securities and Exchange Commission  declared effective a Registration  Statement
filed by the Company for the purposes of registering  2,025,720 shares of common
stock,  which included shares of common stock  underlying  certain stock options
and  1,600,000  warrants  and the common  stock  issuable  upon  exercise of the
warrants.  The Company did not receive any  proceeds as a result of this filing.
The  Registration  Statement  included  1,201,800 and 100,000,  shares of common
stock and warrants, respectively, which were outstanding as of December 31, 1993
and 675,000 and  1,500,000  shares of common  stock and  warrants,  respectively
issued by the Company  subsequent to December 31, 1993. On February 2, 1994, the
Company engaged in a private placement of 1,500,000  unregistered warrants, at a
price of $.25 per warrant.  Each warrant  entitles the holders to acquire shares
of common  stock at a price of $6.00 per share for a period  expiring in January
1996 [See Notes 2 and 8].

[C]  Series  B -  Preferred  Stock - In  September  1992,  the  Company  sold to
unaffiliated  parties four units, each unit consisting of twenty-five  shares of
the  Company's  Series B  Preferred  Stock at a price of $25,000  per unit.  The
Series B Preferred  Stock had an annual  dividend rate of 5%. In accordance with
its terms,  the holders of all of the Series B Preferred  Stock  converted their
shares  into an  aggregate  of 100,000  common  shares and  100,000  warrants in
February 1993, which were registered in February 1994 [See Note 9B].

[D] Debt to Equity Conversions - On February 10, 1994, the Company issued 75,000
shares of common  stock valued at $2.70 per share to the law firm of Bernstein &
Wasserman in  consideration  for certain legal services  performed  during 1993.
Hartley T. Bernstein, a director of the Company, is a partner of the law firm.

On  October  28,  1994,  the  Company  issued  50,676  shares of  common  stock,
representing a $150,000  installment  payment on the $250,000  stockholder  note
payable [See Note 2A].

In February 1995, the bridge lenders converted the convertible bridge notes into
an aggregate of 250,000 preferred bridge units.

In February 1995, the Company issued 117,225 shares of Series C Preferred  Stock
to a stockholder in exchange for his cancellation of certain indebtedness of the
Company in the aggregate principal amount of $201,675.  This stockholder is also
an officer and director of the Company.



                                       13

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8
[UNAUDITED]
------------------------------------------------------------------------------



[10] Stockholders' Equity [Continued]

[E] Authorized Shares - In November of 1995, stockholders of the Company adopted
an amendment to the  Company's  certificate  of  incorporation  authorizing  the
increase of the number of authorized  shares of Preferred  Stock from  3,000,000
shares to 6,000,000 shares, of which 5,800,000 shares are the Series C Preferred
Stock. In November 1995, the  stockholders  also approved and consented to amend
the  Company's   certificate  of  incorporation  by  increasing  the  number  of
authorized shares of common stock from 15,000,000 shares to 75,000,000 shares.

[F]  Consulting  Agreements  - In March  1995,  the Company  entered  into three
one-year consulting agreements with three unaffiliated  individuals and issued a
total of 700,000  shares of the  Company's  common stock.  In 1995,  the Company
recorded  an  expense  of  $196,000  for  these  consulting  agreements,   which
approximates the fair value of the stock issued.

[G] Series C Preferred Stock - In May 1995, the Company granted 525,000 Series C
Preferred  Stock Options to directors,  officers and employees of the Company at
an exercise  price of $2.00 per share and,  accordingly,  recorded an expense of
$1,076,250.  In October  1995,  525,000  Series C Preferred  Stock  Options were
exercised  and  the  Company  recorded  a  stock   subscription   receivable  of
$1,050,000, which was paid in January and February of 1996.

[H] Exercise of Preferred  Stock  Options - In March of 1996,  150,000  Series C
Preferred Options were exercised at $2.00 per share whereby the Company received
proceeds of $300,000.  In the second quarter of 1996, 350,000 Series C Preferred
stock options were  exercised by consultants  whereby  proceeds of $700,000 were
received by the Company.

[I] Stock  Dividend - On January 2, 1996,  the Company  issued to the holders of
record of the Series C Preferred Stock as of December 24, 1995 a dividend of two
shares of the Company's common stock.

[J] Consulting  Fees - Stock  Issuance - On March 29, 1996, in conjunction  with
the acquisition  agreement with Perry's [See Note 3C] the Company entered into a
two year consulting  agreement with the former principal of Perry's to assist in
developing and enhancing the  distribution of other beers and ales. As a part of
the  consulting  agreement he was issued 35,000  shares of the Company's  common
stock on April 11, 1996. A deferred compensation cost of $33,000 was recorded in
April of 1996 for the estimated fair value of these shares. Compensation expense
of $6,187 was recorded for the nine months ended September 30, 1996.

[K] Loan - On April 23,  1996,  the  Company  received a  $150,000  loan from an
individual  whereby the Company  issued 40,000  shares of the  Company's  common
stock. The loan was repaid in May of 1996. A deferred  financing cost of $25,000
was recorded and  expensed for the  estimated  fair value of these shares in the
quarter ended June 30, 1996.

[L] Consulting Agreement - On April 5, 1996, the Company entered into a two year
agreement with a consultant to assist the expansion of the  distribution  of its
products to restaurants  and the food service  industry by issuing 40,000 shares
of Company's common stock. A deferred  compensation cost of $25,000 was recorded
in April of 1996 for the estimated  fair value of these shares and  compensation
expense of $4,625 was recorded for the nine months ended September 30, 1996.

[M] Reverse Stock Split - On July 16, 1996,  the Company's  common  stockholders
approved a one-for- ten reverse stock split. The financial  statements have been
adjusted retroactively for the reverse stock split.





                                       14

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9
[UNAUDITED]
------------------------------------------------------------------------------



[11] Related Party Transactions

Loan Payable-  Stockholder - In February 1995, the Company received $45,000 from
a related  party.  This loan was repaid in June 1995.  In December of 1995,  the
Company received an additional $309,000 from the related party, of which $50,000
was repaid in 1995 and the balance of $259,000  was repaid in January  1996 with
interest at 5.75%.

[12] Employment Agreements

As of December 31, 1995, the Company has four employment  agreements with senior
executives  of the Company that expire in various  years  through 2009 for total
base  annual   compensation  of   approximately   $435,000  subject  to  certain
adjustments  plus  bonuses of options  for Series C  Preferred  Stock and common
stock.

[13] Commitments and Contingencies

[A] The Company has entered into various  operating  lease  agreements  to lease
office space and  warehouse  space with initial terms ranging from less than one
to five years.  Rent expense for the years ended  December 31, 1995 and 1994 was
$246,925 and  $262,750,  respectively.  This lease  expired in February of 1996.
Commencing  March of 1996, the Company revised the nature of this agreement to a
month-to-month arrangement for $20,500 a month.

In  addition,  the Company has  non-cancelable  operating  leases for office and
warehouse equipment. Obligations under these leases for the periods through 2000
are as follows:

1996                                     $  121,419
1997                                        104,420
1998                                         45,827
1999                                         13,672
2000                                          9,039
                                         ----------

  Total                                  $  294,377
  -----                                  ==========

[B] The Company has minimum volume  commitments on several of their distribution
contracts  with  vendors,  whereby  the vendor has the  option to  terminate  an
agreement if certain volume targets are not met.

[C] Brewing Agreement - In November 1992, Perry's  stockholders  entered into an
agreement,  on behalf of  Perry's,  with a brewery to brew and bottle beer under
the  private  label of "Perry's  Majestic."  As part of the  agreement,  Perry's
agrees to provides the brewery, at its own expense,  all the necessary packaging
materials  to allow the brewer to  manufacture  the product in  accordance  with
federal and state regulations.

The  agreement  automatically  renews  annually.  Either party may terminate the
agreement by giving four month prior written notice to the other party.

[D] Consulting Agreement - On April 5, 1996, the Company entered into a two year
agreement with a consultant to assist the expansion of the  distribution  of its
products to restaurants  and the food service  industry by issuing 40,000 shares
of Company's common stock. A deferred  compensation cost of $25,000 was recorded
in April of 1996 for the  estimated  fair  value of these  shares.  Compensation
expense of $4,625 was recorded for the nine months ended September 30, 1996.





                                       15

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #10
[UNAUDITED]
------------------------------------------------------------------------------


[14] Going Concern

The Company incurred net losses of $3,826,230 and $1,192,542,  respectively, for
the years ended December 31, 1995 and 1994.  These factors create an uncertainty
about the  Company's  ability to  continue  as a going  concern.  The  financial
statements do not include any adjustments that might be necessary if the Company
is  unable  to  continue  as a going  concern.  The  Company  intends  to pursue
additional  equity financing as a vehicle for financing future operations and to
secure debt financing from related and unrelated  entities.  The continuation of
the Company as a going concern is dependent upon the success of these plans.

[15] Litigation

The  Company  is  subject  to  litigation  in the  normal  course  of  business.
Management  believes that such litigation will not have a material effect on the
Company's financial position, results of operations or cash flows.

[16] New Authoritative Pronouncement

The FASB has also issued SFAS No. 115,  "Accounting  for Certain  Investments in
Debt and Equity  Securities," which the Company adopted on January 1, 1995. SFAS
No. 115  requires  management  to classify  its  investments  in debt and equity
securities as trading,  held-to-maturity,  and/or available-for-sale at the time
of purchase and to reevaluate such determination at each balance sheet date. The
Company does not anticipate that it will have many investments that will qualify
as  trading  or  held-to-maturity  investments.  Debt  securities  for which the
Company  does  not  have the  intent  or  ability  to hold to  maturity  will be
classified  as  available-for-sale,   along  with  most  investments  in  equity
securities.  Securities  available-for-sale are to be carried at fair vale, with
any  unrealized  holding  gains and losses,  net of tax,  reported in a separate
component of shareholders' equity until realized.

The Financial  Accounting Standards Board ["FASB"] issued Statement of Financial
Accounting  Standards  ["SFAS"]  No.  121,  Accounting  for  the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in March of 1995.
SFAS No. 121 establishes  accounting  standards for the impairment of long-lived
assets, certain identifiable  intangibles,  and goodwill related to those assets
to be held  and  used,  and  for  long-lived  assets  and  certain  identifiable
intangibles  to be disposed  of. The Company  adopted SFAS No. 121 on January 1,
1996.  Adoption of SFAS No. 121 did not have a material  impact on the Company's
financial  statements.  In the future,  if the sum of the expected  undiscounted
cash flows is less than the carrying  amount of the asset,  an  impairment  loss
would be recognized.

The FASB has also issued SFAS No. 123 "Accounting for Stock-Based Compensation,"
in October 1995.  SFAS No. 123 uses a fair value based method of recognition for
stock options and similar equity  instruments  issued to employees as contrasted
to the  intrinsic  valued based method of  accounting  prescribed  by Accounting
Principles  board  ["APB"]Opinion  No.  25,  "Accounting  for  Stock  Issued  to
Employees."  The  recognition  requirements  of SFAS No. 123 are  effective  for
transactions  entered into in fiscal  years that begin after  December 15, 1995.
The Company will continue to apply Opinion No. 25 in recognizing its stock based
employee arrangements. The disclosure requirements of SFAS No. 123 are effective
for financial statements for fiscal years beginning after December 15, 1995. The
Company  adopted the disclosure  requirements  on January 1, 1996. SFAS 123 also
applies to  transactions  in which an entity  issues its equity  instruments  to
acquire  goods  or  services  from  non-employees.  Those  transactions  must be
accounting for based on the fair value of the consideration received or the fair
value of the equity instrument  issued,  whichever is more reliably  measurable.
This requirement is effective for  transactions  entered into after December 15,
1995. The adoption of SFAS No. 123 could have a material impact on the Company's
financial statements.



                                       16

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #11
[UNAUDITED]
------------------------------------------------------------------------------



[17] Fair Value of Financial Instruments

Effective  December  31,  1995,  the  Company  adopted  Statement  of  Financial
Accounting Standards ["SFAS"] No. 107, "Disclosure About Fair Value of Financial
Instruments" which requires  disclosing fair value to the extent practicable for
financial instruments which are recognized or unrecognized in the balance sheet.
The fair value of the financial  instruments disclosed herein is not necessarily
representative  of the amount that could be  realized  or settled,  nor does the
fair value amount  consider the tax  consequences  of realization or settlement.
The following table summarizes financial instruments by individual balance sheet
classifications as of September 30, 1996:

                                                Carrying      Fair
                                                Amount       Value

Long-Term Debt                                $   343,646 $   343,646

In assessing the fair value of financial instruments, the Company used a variety
of methods and assumptions,  which were based on estimates of market  conditions
and risks  existing at that time.  For certain  instruments,  including cash and
cash equivalents, trade receivables, related party payables, and trade payables,
it was assumed that the carrying amount approximated fair value for the majority
of these  instruments  because  of their  short  maturities.  The fair  value of
long-term debt is estimated based on discounting  expected cash flows at current
rates at which the Company could borrow funds with similar remaining maturities.

[18] Subsequent Events

[A] Loan Payable - In October of 1996, the Company received a $250,000 loan with
8% interest from an unaffiliated party. This loan is due in one year. The lender
received warrants for 100,000 shares of the Company's common stock.

[B]  Exercise of Series C Preferred  Stock  Options - In October and November of
1996,  the Company  received  $750,000  from the  exercise  of 375,000  Series C
Preferred Stock Options.





                      . . . . . . . . . . . . . . . . . . .

                                       17

<PAGE>



Item 2:

BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

The following  discussion of the Company's  financial  condition as of September
30, 1996 and results of operations for the nine months ended  September 30, 1996
and 1995,  includes  Bev-Tyme,  Inc.  and its  subsidiaries  [collectively,  the
"Company"] and should be read in  conjunction  with the  Consolidated  Financial
Statements and Notes appearing elsewhere in this 10-QSB.

Business Structure

Bev-Tyme,  Inc.  ["Bev-Tyme"],  is engaged in the  business  of  developing  and
marketing  beverage products and is also engaged in the business of distributing
and selling beverage and snack products to grocery stores,  supermarket  chains,
restaurants  and  corporate  cafeterias.  In 1995,  the Company  also  commenced
distributing beer and other malt beverages.  Because of increased competition in
the "New Age" beverage  market and  continuing  operating  losses related to the
sale of its SunSprings(TM) beverage products, the Company increased its focus on
its beverage and snack food distribution.

In June 1995,  the Company  purchased the net assets of SB&S,  another  beverage
distributor,  which  will  increase  its  current  customer  distribution  base,
territory and enable the Company to commence distribution of beer and other malt
beverages.  The Company  acquired  the net assets of SB&S for  $500,000 in cash,
20,000  shares of the  Company's  common  stock valued at $31,250 and options to
purchase 7,500 shares of the Company's common stock.

On March 29, 1996, the Company  acquired  500,000 shares of convertible  Class A
Preferred Stock and 7,000,000 shares of non-convertible  Class B Preferred Stock
of Perry's  Majestic Beer, Inc.  ["Perry's"]  [valued at $2,000,000] in exchange
for 400,000 shares of the Company's Series C Preferred Stock and $150,000.  Each
share of Class A Preferred  Stock may be convertible by the Company into one [1]
share of  Common  Stock.  Each  share of Class A  Preferred  Stock  and  Class B
Preferred Stock has attached to it the right to vote on all matters submitted to
the Company. Perry's filed a registration statement for 583,335 shares of common
stock at $6.00 per share.  The proceeds from this  offering  were  approximately
$2,500,000.

Also on March 29, 1996,  Perry's entered into an agreement to acquire all of the
stock of Riverosa  Company,  Inc. for $250,000 of which $150,000 in cash was put
into escrow as of March 31, 1996 and a note payable was issued for $100,000. The
note was payable  with  interest of 8% was paid in August of 1996 with  proceeds
from the Company's initial public offering

In August of 1996, Perry's entered into a letter of intent to acquire a brewery.
In September 1996, the Company  finalized its acquisition of the Old Marlborough
Brewery.  The  total  purchase  price  was  $160,513  of which  $35,513  was for
inventory and equipment and $75,000 was for distribution rights.

As a result of the Company's  recurring  losses from  operations,  the Company's
auditors  believed there was  substantial  doubt about the Company's  ability to
continue  as a going  concern at December  31,  1995 and issued a going  concern
qualification to their report dated March 21, 1996.

Results of Operations

For the nine  months  ended  September  30,  1996,  the  Company had a loss from
operations of $2,562,003 and a net loss of $2,598,105 as compared to a loss from
operations of $1,387,849  and a net loss of $1,395,968 for the nine months ended
September 30, 1995.

                                       18

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

Results of Operations [Continued]

For the nine months ended  September 30, 1996,  the  Company's  gross profit was
$2,318,416 or 17% as compared to  $1,712,986  or 17% in 1995.  The change in the
gross  profit   percentage  for  the  three  months  ended   September  1996  of
approximately  3% was  attributable  to a change in the  Company's  product mix,
primarily  resulting from the beers and malt  beverages.  The Company intends to
de-emphasize  the sale of  common  beer and  increase  the  focus on the sale of
imported and microbrewed  beers.  Additionally,  the Company  liquidated a large
amount of its "closeout" products in 1995 and does not anticipate a large amount
of closeouts in 1996.

For the nine months ended  September 30, 1996 and 1995,  the Company's net sales
were $13,195,897 and $9,591,236, respectively. This represents an improvement of
approximately  $3,600,000  or 37%. This  improvement  is primarily the result of
increased volume  resulting from an increase in the Company's  customer base and
to a smaller  degree new products  available  for sale.  In the  September  1996
quarter,  the Company  scaled back its area of  distribution  to  Manhattan  and
sections of Brooklyn and Queens.

Selling,  advertising and promotion  expense for the nine months ended September
30,  1996 and 1995  amounted  to  $1,000,435  and  $872,450,  respectively,  and
primarily consisted of salesmen's salaries,  commissions and related expenses of
the companies' distribution sales force.

General and administrative expenses for the nine months ended September 30, 1996
were  $2,271,220  or 17% of net sales as  compared to  $1,556,891  or 16% of net
sales in 1995. The Company  incurred  amortization  of consulting  costs for the
nine months needed September 30, 1996 of approximately  $1,287,187.  This is the
result of the Company compensating consultants with stock and options instead of
cash payments.  As of September 30, 1996, the unamortized balance resulting from
all options and shares granted for services is  approximately  $3,600,000.  This
will be  amortized  in future  periods  and will  reduce  the net  income of the
Company.

The change in the elements of revenues and expenses  reflect the Company's shift
to primarily focusing on the distribution of beverage products,  rather than the
manufacturing  and  marketing  of its  SunSprings(TM)  products.  Subsequent  to
September 30, 1996, the Company commenced a drastic cutback program of operating
expenses that should  improve the results of operations in future  periods.  The
Company laid off 70 employees in the September 1996 quarter.

Because  of the  Company's  severe  cash  shortages  and  numerous  unsuccessful
attempts at finding traditional debt financing,  the Company entered into bridge
financing  which resulted in a total  non-cash  financing cost $386,650 in 1995.
This  represented  the fair value  assigned  to the  Bridge  Units  issued  upon
conversion of the Convertible  Bridge Notes.  The effective annual interest rate
on these Bridge Loans was approximately 300%.

Interest  expense relates  primarily to commercial  loans on the  transportation
equipment.

Liquidity and Capital Resources

For the nine months ended September 30, 1996, the Company utilized $1,952,103 in
operating  activities.  This  utilization was primarily  attributable to the net
loss  of   approximately   $2,598,105   and  the  decrease  in   liabilities  of
approximately $600,000.

The Company utilized  approximately  $554,000 from net investing  activities for
the nine months ended September 30, 1996. This was primarily attributable to the
acquisition of the net assets of Riverosa for approximately $250,000, and of Old
Marlborough  of  $160,000  as well  as the  purchase  of  capital  equipment  of
approximately $144,000.

                                       19

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

Liquidity and Capital Resources [Continued]

The Company generated approximately $4,400,000 from net financing activities for
the nine months ended September 30, 1996. This was primarily attributable to the
sale of common  stock for $50,000 and the  exercise of Series C Preferred  Stock
Options  for  $1,300,000  and  the  collection  of the  stock  subscription  for
$1,050,000 on the Series C Preferred Stock Options exercised in 1995.

At September 30, 1996, the Company had a working capital of $1,712,812
 reflecting primarily the excess cash, accounts receivable and inventory over
 accounts payable and accrued expenses. The Company's cash balance at September 
30, 1996 was $2,078,640.

For the nine months ended September 30, 1995, the Company utilized approximately
$631,000 in operating activities,  utilized  approximately $780,000 in investing
activities and generated approximately $1,400,000 in net financing activities.

In November and  December  1994,  the Company  borrowed an aggregate of $200,000
from certain lenders [the "Bridge Lenders"]. In exchange for making loans to the
Company,  each Bridge  Lender  received  two [2]  promissory  notes [the "Bridge
Notes"].  Certain Bridge Notes are in the aggregate principal amount of $180,000
[the  "Principal  Bridge Notes"] and the other Bridge Notes are in the aggregate
principal amount equal to $20,000 [the "Convertible Bridge Notes"].  Each of the
Bridge Notes bears  interest at the rate of eight  percent  [8%] per annum.  The
Principal  Bridge  Notes were due and  payable  upon the earlier of (i) June 15,
1995, or (ii) the closing of the Offering.  The Convertible Bridge Notes are due
and payable on December 1, 1995.  In addition,  each Bridge Lender had the right
to convert a  Convertible  Bridge Note into a number of units  ["Bridge  Units"]
equal to the total dollar  amount  loaned to the Company by such Bridge  Lender;
provided,  however,  that one Bridge Lender may convert its  Convertible  Bridge
Note into the total  dollar  amount  loaned to the  Company  plus an  additional
50,000  Bridge Units  because such Bridge Lender  surrendered  100,000  warrants
exercisable  for 100,000  shares of Common Stock.  In February  1995, the Bridge
Lenders  converted  the  Convertible  Bridge  Notes into an aggregate of 250,000
Bridge Units at a conversion  price of $.10 per Bridge Unit. The Company entered
into the bridge financing  transactions because it required additional financing
and no other  sources of financing  were  available to the Company at that time.
The  conversion  price to the  Bridge  Lenders  is  significantly  less than the
offering price of the Units offered hereby because of the risk  associated  with
the repayment of the Bridge Loans.  Further, the Company agreed to register such
Bridge Units in the first registration  statement filed by the Company following
the date of the loan. The bridge notes were repaid on May 23, 1995, the close of
the Public Offering.

On May 15,  1995,  the Company  completed a secondary  public  offering for sale
460,000 units,  each  consisting of one share of Series C Convertible  Preferred
Stock,  par value $.0001 per share and two Series C Redeemable  Preferred  Stock
purchase warrants.  Each share of Series C Preferred Stock is convertible at the
option of the  holder,  at any time  after May 15,  1996,  into 18 shares of the
Company's common stock. The Series C Warrants entitle the holder to purchase one
share of  Series C  Preferred  Stock at an  exercise  price of $6.00  per  share
through  May  15,  2000  and  may be  redeemed  by  the  Company  under  certain
conditions. To date, none of the Preferred Stock Warrants have been exercised or
redeemed.  The Company realized net proceeds of $1,688,787 after deducting,  the
underwriters discount and other costs of the offering.

In May 1995, the Company  granted  525,000  Series C Preferred  Stock Options to
directors,  officers and employees of the Company at an exercise  price of $2.00
per share and, accordingly,  recorded an expense of $1,076,250. In October 1995,
525,000 Series C Preferred Stock Options were exercised and the Company recorded
a stock  subscription  receivable of  $1,050,000,  which was paid in January and
February of 1996.



                                       20

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

Liquidity and Capital Resources [Continued]

In November 1995, the Company issued to the directors of the Company options to
 purchase an aggregate of 300,000 shares of Series C Preferred Stock at an
 exercise price of $2.00 per share.  None of such options have been exercised.

In February  1996,  the Company  engaged a  consultant  to assist the Company in
connection with acquisitions,  divestitures,  joint ventures and other strategic
business  initiatives.   In  exchange  for  services  to  be  performed  by  the
consultant,  the Company  issued  options to purchase  an  aggregate  of 300,000
shares of Series C Preferred Stock at an exercise price of $2.00 per share.

On March 29, 1996, the Company  acquired  500,000 shares of convertible  Class A
Preferred Stock and 7,000,000 shares of non-convertible  Class B Preferred Stock
of Perry's  Majestic Beer, Inc.  ["Perry's"]  [valued at $2,000,000] in exchange
for 400,000 shares of the Company's  Series C Preferred Stock and $150,000.  The
400,000 shares of Series C Preferred are presented as treasury stock. Each share
of Class A Preferred  Stock may be convertible by the Company into one [1] share
of Common  Stock.  Each share of Class A  Preferred  Stock and Class B Preferred
Stock has  attached  to it the  right to vote on all  matters  submitted  to the
Company. In August of 1996, Perry's filed a registration  statement on Form SB-2
which was declared effective by the Securities and Exchange Commission.  Perry's
realized net proceeds of approximately $2,548,009 in August of 1996.

Also on March 29, 1996,  Perry's entered into an agreement to acquire all of the
stock of Riverosa  Company,  Inc. for $250,000 of which $150,000 in cash was put
into escrow as of March 31, 1996 and a note payable was issued for $100,000. The
note was payable with  interest of 8% and was paid at the closing of the Perry's
initial public offering.

In March of 1996, 150,000 Series C Preferred Options were exercised at $2.00 per
share whereby the Company received  proceeds of $300,000.  In the second quarter
of 1996, a total of 350,000 Series C stock options were exercised by consultants
whereby proceeds of $700,000 were received by the Company.

In October and November of 1996, the Company received $750,000 from the exercise
of 375,000 Series C Preferred Stock Options.

In August 1996, the Company issued to certain officers,  directors and employees
options to purchase an aggregate of 630,000  shares of Series C Preferred  Stock
at an exercise price of $1.00 per share and 700,000 shares of common stock at an
exercise  price of $.25 per share for  services to be rendered in 1997.  None of
such options have been exercised. A deferred compensation cost for the excess of
the fair value of the shares  over the  exercise  price will be  recorded in the
period ended September 30, 1996. This will have a significant negative impact on
the net income of the Company.

In October of 1996,  the Company  received a $250,000 loan with 8% interest from
an  unaffiliated  party.  This  loan is due in one  year.  The  lender  received
warrants for 100,000 shares of the Company's common stock.



                                       21

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

Liquidity and Capital Resources [Continued]

The  Company  intends  to pursue  outside  financing  as a  vehicle  to meet its
short-term  working  capital   requirements.   This  pursuit  may  include  loan
negotiations with lending  institutions and negotiations with receivable factors
for the  financing of the  Company's  accounts  receivable.  The Company has not
established any sources of financings and has no lines of credit available.  The
Company's cash requirements  have been and will continue to be significant.  The
Company  anticipates,  based on its  current  plans to expand  its  distribution
business.  In the event that these  plans  change or costs of  operations  prove
greater than anticipated, the Company could be required to modify its operations
or seek additional financing sooner than anticipated.  However,  there can be no
assurance  that  additional  financing  will be available  to the  Company.  The
absence of such  additional  financing or the lack of  availability  of funds on
terms  favorable  to the  Company  could have a material  adverse  effect on the
business and operations of the Company. Due to the low current fair market value
of the shares of common stock,  it most likely will be difficult for the Company
to attract purchasers of such shares.

The Company's  long-term  liquidity  requirements may be significant in order to
continue to implement its business plan, expand its product base and establish a
distribution  network.  In the event that those  plans  change,  or the costs or
development of operations prove greater than  anticipated,  the Company could be
required  to modify  its  operations,  liquidate  inventory  or seek  additional
financing.  The  Company  has no  current  arrangements  with  respect  to  such
additional  financing,  and  there  can be no  assurance  that  such  additional
financing, if available, will be on terms acceptable to the Company.

New Authoritative Accounting Pronouncements

The FASB has also issued SFAS No. 115,  "Accounting  for Certain  Investments in
Debt and Equity  Securities," which the Company adopted on January 1, 1995. SFAS
No. 115  requires  management  to classify  its  investments  in debt and equity
securities as trading,  held-to-maturity,  and/or available-for-sale at the time
of purchase and to reevaluate such determination at each balance sheet date. The
Company does not anticipate that it will have many investments that will qualify
as  trading  or  held-to-maturity  investments.  Debt  securities  for which the
Company  does  not  have the  intent  or  ability  to hold to  maturity  will be
classified  as  available-for-sale,   along  with  most  investments  in  equity
securities.  Securities  available-for-sale are to be carried at fair vale, with
any  unrealized  holding  gains and losses,  net of tax,  reported in a separate
component of shareholders' equity until realized.

The Financial  Accounting Standards Board ["FASB"] issued Statement of Financial
Accounting  Standards  ["SFAS"]  No.  121,  Accounting  for  the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in March of 1995.
SFAS No. 121 establishes  accounting  standards for the impairment of long-lived
assets, certain identifiable  intangibles,  and goodwill related to those assets
to be held  and  used,  and  for  long-lived  assets  and  certain  identifiable
intangibles  to be disposed  of. The Company  adopted SFAS No. 121 on January 1,
1996.  Adoption of SFAS No. 121 did not have a material  impact on the Company's
financial  statements.  In the future,  if the sum of the expected  undiscounted
cash flows is less than the carrying  amount of the asset,  an  impairment  loss
would be recognized.

                                       22

<PAGE>



BEV-TYME, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS  OF OPERATIONS
------------------------------------------------------------------------------



Nine months  ended  September  30,  1996  compared  with the nine  months  ended
September 30, 1995

New Authoritative Accounting Pronouncements [Continued]

The FASB has also issued SFAS No. 123 "Accounting for Stock-Based Compensation,"
in October 1995.  SFAS No. 123 uses a fair value based method of recognition for
stock options and similar equity  instruments  issued to employees as contrasted
to the  intrinsic  valued based method of  accounting  prescribed  by Accounting
Principles  board  ["APB"]Opinion  No.  25,  "Accounting  for  Stock  Issued  to
Employees."  The  recognition  requirements  of SFAS No. 123 are  effective  for
transactions  entered into in fiscal  years that begin after  December 15, 1995.
The Company will continue to apply Opinion No. 25 in recognizing its stock based
employee arrangements. The disclosure requirements of SFAS No. 123 are effective
for financial statements for fiscal years beginning after December 15, 1995. The
Company  adopted the disclosure  requirements  on January 1, 1996. SFAS 123 also
applies to  transactions  in which an entity  issues its equity  instruments  to
acquire  goods  or  services  from  non-employees.  Those  transactions  must be
accounting for based on the fair value of the consideration received or the fair
value of the equity instrument  issued,  whichever is more reliably  measurable.
This requirement is effective for  transactions  entered into after December 15,
1995. The adoption of SFAS No. 123 could have a material impact on the Company's
financial statements.

Impact of Inflation

The Company does not believe that inflation has had a material adverse effect on
sales or  income  during  the  past  periods.  Increases  in  supplies  or other
operating costs could adversely affect the Company's  operations;  however,  the
Company  believes it could increase prices to offset increases in costs of goods
sold or other operating costs.


                                       23

<PAGE>


SIGNATURE
------------------------------------------------------------------------------




Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report on Form  10-QSB/A to be signed on its
behalf by the undersigned thereon duly authorized.



                                          BEV-TYME, INC.



November 19, 1996                         By: /s/ Robert J. Forst
                                             --------------------
                                              Robert J. Forst
                                              Chief Financial Officer

                                       24

<PAGE>