<PAGE>
PERRY'S MAJESTIC BEER, INC.
583,335 SHARES OF COMMON STOCK,
PAR VALUE $.0001 PER SHARE, AND
OFFERING PRICE PER SHARE--$6.00
------------------------
Perry's Majestic Beer, Inc., a Delaware corporation (the 'Company' or
'Perry's') is offering 583,335 shares of Common Stock ('Common Stock'), par
value $.0001 per share (the 'Shares'). See 'Risk Factors' and 'Description of
Securities.' The Risk Factor section begins on page 7 of this Prospectus.
------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
OFFERED HEREBY AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE 'DILUTION'
AND 'RISK FACTORS.'
------------------------
The Company has applied for inclusion of the Common Stock on the OTC
Bulletin Board, although there can be no assurances that an active trading
market will develop even if the securities are accepted for quotation. While the
Company applied for inclusion of its Common Stock on the NASDAQ SmallCap Market
on April 13, 1996, the application was denied by the NASDAQ staff and Listing
Qualifications Committee. The Company has appealed the NASDAQ decision. See
'Risk Factors--Lack of Prior Market for Common Stock; No Assurance of Public
Trading Market' and 'Penny Stock Regulations May Impose Certain Restrictions on
Marketability of Securities.' THE COMPANY ANTICIPATES THAT THE SECURITIES
OFFERED HEREBY WILL BE QUALIFIED FOR SALE BY THE COMPANY IN A LIMITED NUMBER OF
STATES. SEE 'RISK FACTORS--CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE SALE OF SHARES.'
Prior to this Offering, there has been no public market for the Common
Stock. It is currently anticipated that the initial public offering price will
be $6.00 per Share. The price of the Shares has been determined by negotiations
between the Company and VTR Capital, Inc., the representative (the
'Representative') of the underwriters of this Offering (the 'Underwriters'), and
does not necessarily bear any relationship to the Company's assets, book value,
net worth or results of operations or any other established criteria of value.
For additional information regarding the factors considered in determining the
initial public offering price of the Shares, see 'Risk Factors--No Prior Public
Market; Possible Volatility of Stock Price,' 'Description of Securities' and
'Underwriting.'
The registration statement of which this Prospectus forms a part also covers
the sale of 2,500,000 shares of Common Stock. These securities may be sold from
time to time directly by the Selling Securityholders or, alternatively, through
underwriters, dealers or agents. The distribution of securities by the Selling
Securityholders may be effected in one or more transactions that take place in
the over-the-counter market, including ordinary broker's transactions, privately
negotiated transactions or through sales to one or more broker-dealers for
resale of such shares as principals, at prices prevailing at the time of such
sales, at prices related to such prevailing market price or at negotiated
prices. The Company will not receive any of the proceeds on the sale of the
securities by the Selling Securityholders. The resale of the securities of the
Selling Securityholders are subject to Prospectus delivery and other
requirements of the Securities Act of 1933, as amended (the 'Act'). Sales of
such securities or the potential of such sales at any time may have an adverse
effect on the market prices of the securities offered hereby. See 'Selling
Securityholders' and 'Risk Factors--Shares Eligible for Future Sale May
Adversely Affect the Market.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share......................................... $6.00 $0.60 $5.40
Total............................................. $3,500,010 $350,001 $3,150,009
</TABLE>
(1) Does not reflect additional compensation to be received by the Underwriters
in the form of: (i) a non-accountable expense allowance of $105,000, (ii) a
two (2) year financial advisory and investment banking agreement providing
for fees of $3,000 per month payable in advance at the closing of this
Offering, and (iii) an option to purchase 58,333 Shares at $7.20 per Share
(the 'Representative's Share Purchase Option'), exercisable for a period of
four (4) years, commencing one (1) year from the effective date of this
Offering. The Company and the Representative have agreed to indemnify each
other against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the 'Act'). The Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and is therefore unenforceable. See
'Underwriting.'
(2) Before deducting expenses of the Offering payable by the Company estimated
at $602,000, including the Representative's non-accountable expense
allowance and the financial advisory fee referred to in Footnote (1),
registration fees, transfer agent fees, NASD fees, Blue Sky filing fees and
expenses, legal fees and expenses, and accounting fees and expenses. See
'Use of Proceeds' and 'Underwriting.'
------------------------
The Shares are offered by the Representative on a 'firm commitment' basis,
when, as and if delivered to and accepted by the Representative, and subject to
prior sale, allotment and withdrawal, modification of the offer with notice,
receipt and acceptance by the Representative named herein and subject to its
right to reject orders in whole or in part and to certain other conditions. It
is expected that the delivery of the certificates representing the securities
and payment therefor will be made at the offices of the Representative on or
about August 5, 1996.
VTR CAPITAL, INC.
INVESTMENT BANKERS
THE DATE OF THIS PROSPECTUS IS JULY 30, 1996
<PAGE>
AVAILABLE INFORMATION
The Company does not presently file reports and other information with the
Securities and Exchange Commission (the 'Commission'). However, following
completion of this Offering, the Company intends to furnish its stockholders
with annual reports containing audited financial statements examined and
reported upon by its independent public accounting firm and such interim
reports, in each case as it may determine to furnish or as may be required by
law. After the effective date of this Offering, the Company will be subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') and in accordance therewith will file reports, proxy
statements and other information with the Commission.
Reports and other information filed by the Company can be inspected and
copied at the public reference facilities maintained at the Commission at Room
1024, 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a Web site on the Internet (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission through the
Electronic Data Gathering, Analysis, and Retrieval System (EDGAR). The Company
has filed with the Commission a registration statement on Form SB-2 (herein
together with all amendments and exhibits referred to as the 'Registration
Statement') under the Act of which this Prospectus forms a part. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. For further information reference is made to the
Registration Statement.
IN CONNECTION WITH THIS OFFERING, THE REPRESENTATIVE MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE OTC BULLETIN BOARD OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
A SIGNIFICANT AMOUNT OF THE SHARES TO BE SOLD IN THIS OFFERING (WHICH
AMOUNT MAY BE ALL, OR SUBSTANTIALLY ALL, OF THE SHARES) MAY BE SOLD TO CUSTOMERS
OF THE UNDERWRITERS. THIS MAY AFFECT THE MARKET FOR AND LIQUIDITY OF THE
COMPANY'S SECURITIES IN THE EVENT THAT ADDITIONAL BROKER-DEALERS DO NOT MAKE A
MARKET IN THE COMPANY'S SECURITIES, OF WHICH THERE CAN NO ASSURANCE. SUCH
CUSTOMERS SUBSEQUENTLY MAY ENGAGE IN TRANSACTIONS FOR THE SALE OR PURCHASE OF
THE COMMON STOCK THROUGH AND/OR WITH THE REPRESENTATIVE.
ALTHOUGH IT HAS NO OBLIGATION TO DO SO, THE REPRESENTATIVE MAY FROM TIME TO
TIME ACT AS A MARKET MAKER AND OTHERWISE EFFECT TRANSACTIONS IN THE COMPANY'S
SECURITIES. THE REPRESENTATIVE, IF IT PARTICIPATES IN THE MARKET, MAY BECOME A
DOMINATING INFLUENCE IN THE MARKET FOR THE COMMON STOCK. HOWEVER, THERE IS NO
ASSURANCE THAT THE REPRESENTATIVE WILL OR WILL NOT CONTINUE TO BE A DOMINATING
INFLUENCE. THE PRICES AND LIQUIDITY OF THE SECURITIES OFFERED HEREUNDER MAY BE
SIGNIFICANTLY AFFECTED BY THE DEGREE, IF ANY, OF THE REPRESENTATIVE'S
PARTICIPATION IN SUCH MARKET. SEE 'RISK FACTORS--LACK OF PRIOR MARKET FOR COMMON
STOCK; NO ASSURANCE OF PUBLIC TRADING MARKET.' THE REPRESENTATIVE MAY
DISCONTINUE SUCH ACTIVITIES AT ANY TIME OR FROM TIME TO TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information (including financial
statements and notes thereto) contained in this Prospectus and is qualified in
its entirety by the more detailed information appearing elsewhere herein. In
addition, unless otherwise indicated to the contrary, all information appearing
herein (i) does not give effect to (a) 58,333 shares of Common Stock issuable
upon exercise of the Representative's Share Purchase Option; and (b) employee
stock options. See 'Description of Securities,' 'Certain Transactions,'
'Underwriting,' and 'Management--Stock Option Plans and Agreements.' Each
prospective investor is urged to read this Prospectus in its entirety.
THE COMPANY
Perry's Majestic Beer, Inc., a Delaware corporation (the 'Company'), was
formed in December, 1995. On March 29, 1996, the Company entered into an
agreement to acquire Riverosa Company, Inc. ('Riverosa'), a New York corporation
which was formed in November 1993. (References to the Company includes the
operations of Riverosa). The Company is engaged in the marketing and sale of
microbrewed beers and ales. Since June 1993, the Company has sold and marketed
its flagship brand, Perry's Majestic Beer ('Perry's'), which is distinguished by
its use of organically grown barley and hops. The Company's business strategy is
to establish presence in the craft-brewed beer market by creating and offering
high quality full-flavored all organic beers and other beers and/or ales.
Presently, the Company's products are produced under contract with Hoboken
Brewing Company, a brewery located in Hoboken, New Jersey, which produces,
bottles and labels Perry's using the Company's name and logo. The Company's
products are distributed in the New York metropolitan area under an exclusive
distribution agreement with Mootch & Muck, Inc. ('Mootch & Muck'), a subsidiary
of the Company's parent company, Bev-Tyme, Inc. ('Bev-Tyme'), a distributor of
various beverages, beers and related products. Perry's is presently distributed
to distributors in ten (10) states and sold in restaurants, supermarkets, beer
and soda stores and retail outlets.
On October 26, 1995, Bev-Tyme, Inc. entered into a letter of intent to
acquire Riverosa for the sum of $250,000. The letter of intent followed several
months of preliminary discussions between Mark Butler, President of Riverosa and
Robert Sipper, President of Bev-Tyme, in the course of which terms were agreed
upon which were incorporated in the letter of intent. In January 1996, Bev-Tyme,
Inc. assigned its rights under the letter of intent to the Company, which
entered into a definitive agreement with Riverosa on March 29, 1996, pursuant to
which the Company agreed to pay the sum of $250,000 to acquire Riverosa. An
initial payment of $150,000 was made by the Company on March 21, 1996, with the
balance payable pursuant to the terms of a promissory note issued March 29, 1996
and payable upon the earlier of (i) one year or (ii) the closing of this
offering. As of April 4, 1996, the Company entered into a three (3) year
employment agreement with Mark Butler, pursuant to which Mr. Butler serves as
President of the Company and will receive an annual salary of $25,000 per year,
to be increased to $50,000 per year upon completion of the Company's initial
public offering. The $150,000 utilized for this acquisition was obtained by the
Company as a result of capital contributions by the shareholders and the March
1996 Bridge Loans. (See 'Certain Transactions'.) The Agreement provides further
that, as additional consideration, on each of March 31, 1997, March 31, 1998 and
March 31, 1999, the Company shall deliver to Mr. Butler options to purchase
100,000 shares of the Company's Common Stock at fair market value on the date of
issuance. Further, the agreement provides that the Company will pay Butler an
additional annual bonus at the sole discretion of the Board of Directors.
Perry's Majestic Beer is brewed with organically grown barley imported from
Canada and organically grown hops imported from Germany. It is a Vienna style
lager beer whose characteristics showcase the quality aspects of superior barley
flavor, distinguished by deep copper color and a malt flavor. In keeping with
its organic character, Perry's utilizes a 10-12 week brewing process that
introduces no herbicides, chemical pesticides or inorganic fertilizers in the
growing of the barley or hops. No additives, artificial ingredients or
preservatives are added during the brewing or bottling stages.
3
<PAGE>
The Company anticipates that it will utilize proceeds from this offering to
expand the market for Perry's, develop new beers and ales and to establish and
operate a brewpub/restaurant and microbrewery in the New York metropolitan area.
The Company maintains its executive offices at 134 Morgan Avenue, Brooklyn,
New York 11237 telephone number (718) 894-4300.
SEE 'RISK FACTORS' FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered by the Company......... 583,335 Shares at a price of $6.00 per Share. See 'Description of
Securities.' Concurrently with this Offering, the Company is
registering 2,500,000 shares of Common Stock on behalf of certain
Selling Securityholders. See 'Selling Securityholders' and 'Certain
Transactions.'
Securities Outstanding Prior
to the Offering:
Common Stock............................ 2,500,000 Shares
Series A Preferred Stock................ 500,000 Shares
Series B Preferred Stock................ 7,000,000 Shares
Securities Outstanding Subsequent
to the Offering:
Common Stock............................ 3,083,335 Shares
Series A Preferred Stock................ 500,000 Shares
Series B Preferred Stock................ 7,000,000 Shares
Use of Proceeds........................... The net proceeds to the Company from the sale of the 583,335 Shares
offered hereby, after deducting Offering expenses (including the
$72,000 financial advisory fee), are estimated to be $2,548,009. The
net proceeds are expected to be applied for the following purposes:
repayment of certain indebtedness, establishment and operation of
brewpub/restaurant and microbrewery, expansion of the Company's
product development, distribution, marketing and advertising efforts
and working capital. See 'Use of Proceeds.'
Risk Factors.............................. Limited Operating History and Going Concern Report; Establishment of
Company's Operations; Dependence on Offering Proceeds; Possible Need
for Additional Financing; Competition; Product Concentration;
Dependence on Recent Product Introductions; Dependence Upon Single
Product; Dependence on Distributors; Consumer Concentration; Control
by Bev-Tyme, Inc.; Development of New Products; Need to Manage
Product Introductions; Construction of Brewpub/Restaurant; Dependence
on Certain Suppliers; Trends in Consumer Preferences and Spending;
Protection of Trademarks, Copyrights and Other Proprietary
Information; Risk of Third Party Claims of Infringement; Government
Regulation; Public Attitudes Toward Alcohol Consumption; Growth of
the Microbrewery Industry; Lack of Demand for Microbrewed Beer;
Dependence on Contract Beer; Absence of Manufacturing Facilities;
Product Liability; Shortages of Supply; Seasonality; Dependence on
Bev-Tyme, Inc. and Mootch & Muck; Dependence on Key Personnel;
Limited Personnel; Broad Discretion in Application of Proceeds; No
Prior Public Market;
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Possible Volatility of Stock Price; Lack of Prior Market for Common
Stock; No Assurance of Public Trading Market; Nasdaq Requirements;
Penny Stock; Additional Requirements on Broker-Dealer Sales of
Securities; Current Prospectus and State Blue Sky Registration in
connection with the sale of Shares; Representative's Share Purchase
Option; Possible Adverse Effects of Ownership of Preferred Stock by
Bev-Tyme, Inc.; 'Penny' Stock Regulations May Impose Certain
Restrictions on Marketability of Securities; Dilution; Equity
Securities Sold Previously at Below Offering Price; Bridge Loans; No
Dividends; Shares Eligible for Future Sale May Adversely Affect the
Market; Federal Income Tax Consequences; Conflicts of Interest,
Anti-Takeover Effect of General Corporation Law of Delaware. An
investment in the securities offered hereby involves a high degree of
risk and immediate substantial dilution of the book value of the
Common Stock and should be considered only by persons who can afford
the loss of their entire investment. See 'Dilution' and 'Risk
Factors.'
OTC Bulletin
Board Symbol............................ Common Stock--PYMB
</TABLE>
5
<PAGE>
SUMMARY FINANCIAL INFORMATION
The selected historical balance sheet data presented below are derived from
financial statements of the Company, which have been audited by Moore Stephens,
P.C. independent accountants, whose reports are included elsewhere herein. There
have been no revenue or expense activities through March 31, 1996. The data set
forth below should be read in conjunction with and is qualified in its entirety
by the Company's financial statements, related notes and Management's Discussion
and Analysis of Financial Condition and Results of Operations. See 'Financial
Statements,' and 'Management's Discussion and Analysis of Financial Condition
and Results of Operations.' The following summary balance sheet data has been
summarized from the Company's financial statements included elsewhere in this
Prospectus. The information should be read in conjunction with the financial
statements and the related notes thereto. See 'Financial Statements.'
SUMMARY BALANCE SHEET DATA
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
HISTORICAL(1)(2)(3) PRO FORMA(4)
------------------- ------------
<S> <C> <C>
Working Capital (Deficit).............. $ (50,000) 2,498,009
Total Assets........................... $ 2,450,000 4,748,009
Total Liabilities...................... $ 250,000 --
Retained Earnings...................... -- --
Stockholders' Equity................... $ 2,200,000 4,748,009
</TABLE>
- ------------------
(1) Does not include the sale of 583,335 shares of Common Stock, offered hereby.
(2) Gives effect to issuance of 7,500,000 shares of Series B Preferred Stock
(including 500,000 shares of Series A Preferred Stock and 7,000,000 shares
of Series B Preferred Stock) to Bev-Tyme, Inc. ('BevTyme') in exchange for
400,000 shares of Preferred Stock of Bev-Tyme and $150,000.
(3) Gives effect to the bridge loan of $150,000 in March, 1996.
(4) Reflects approximate net proceeds of the 583,335 shares of Common Stock
offered hereby of $2,548,009 at the assumed initial public offering price of
$6.00 and the repayment of indebtedness totaling $250,000.
6
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY
INVESTORS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. Prospective
purchasers, prior to making an investment, should carefully consider the
following risks and speculative factors, as well as other information set forth
elsewhere in this Prospectus, associated with this Offering, including the
information contained in the Financial Statements herein.
1. Limited Operating History and Going Concern Report. As a result of the
Company's current financial condition, the Company's independent auditors have
issued a going concern report on the Company's financial statement for the
period December 1995 (inception) to March 31, 1996. The Company's ability to
continue in the normal course of business is dependent upon successful
completion of its planned public offering of securities to raise capital and the
success of future operations. These uncertainties raise substantial doubt about
its ability to continue as a going concern. There can be no assurance that the
Company will not incur net losses in the future. The Company was organized in
December of 1995 and on March 25, 1996 entered into a contract to acquire
Riverosa. Riverosa has marketed Perry's Majestic Beer since July 1993. The
Company's prospects must be considered in light of the risks, expenses, and
difficulties frequently encountered by a small business in a highly competitive
industry. As of March 31, 1996, the Company had a working capital deficit of
$(50,000). In addition, the sales for Riverosa for the years ended December 31,
1994 and 1995 were $195,095 and $81,185, respectively representing a decrease of
$113,214. Sales for the three months ended March 31, 1996 and 1995 were $24,136
and $19,430 respectively. Like any relatively new business enterprise operating
in a specialized and intensely competitive market, the Company is subject to
many business risks which include, but are not limited to, unforeseen marketing
and promotional expenses, unforeseen negative publicity, competition, product
liability and lack of operating experience. Many of the risks may be
unforeseeable or beyond the control of the Company. There can be no assurance
that the Company will successfully implement its business plan in a timely or
effective manner, or that management of the Company will be able to market and
sell enough beer to generate sufficient revenues and continue as a going
concern. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations,' 'Business,' 'Use of Proceeds,' 'Certain Transactions'
and 'Financial Statements.'
2. Establishment of Company's Operations. The Company has devoted
substantially all its efforts since inception to establishing its business and
has generated minimal revenues. The Company is dependent upon the proceeds of
this Offering in order for it to expand its operations and establish its own
brewing facility. The likelihood of success must be considered in light of the
problems, experiences, difficulties, complications and delays frequently
encountered in various degrees in connection with the operation and development
of new businesses. The Company has one product which has achieved only limited
sales and must surmount a number of hurdles before it can expand its operations.
The most significant of these are obtaining financing, which is expected to be
satisfied through the Offering, identifying a location for its
brewpub/restaurant, establishing and equipping the brewpub, establishing a
market for its products, implementing the Company's advertising and marketing
campaigns and repaying indebtedness owed to the Bridge Lenders. See 'Use of
Proceeds.' The Company must also develop and implement systems, standards and
procedures for every aspect of its operation. There can be no assurance that the
Company will be able to complete all of these items in a timely manner, or at
all, in order to allow the Company to commence operations. See 'Business.'
3. Dependence on Offering Proceeds; Possible Need for Additional
Financing. The Company is dependent on the proceeds from this Offering to
generate cash for the establishment of a brewpub/restaurant, which is estimated
to be approximately $1,000,000 and expansion of its product lines and marketing
efforts, which is estimated to be approximately $600,000. The Company
anticipates, based on its currently proposed plans, that the proceeds of this
Offering, together with funds generated from operations, will be sufficient to
satisfy its anticipated cash requirements for approximately twelve (12) months
following the consummation of this Offering. In the event that these plans
change, or the costs of development of operations prove greater than
anticipated, the Company could be required to modify its operations, curtail its
expansion or seek additional financing sooner than currently anticipated. 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. See 'Use of Proceeds.'
7
<PAGE>
4. Shares Eligible for Immediate Sale May Adversely Affect the Market; Lack
of any Restrictions on Sale of Company's Outstanding Common Stock. All of the
Company's currently outstanding shares of Common Stock are being registered
concurrently under the Registration Statement of which this Prospectus forms a
part. Immediately prior to the Effective Date, the Company will have 2,500,000
shares of its Common Stock issued and outstanding and 500,000 shares of Common
Stock issuable upon conversion of the Series A Preferred Stock, of which
2,500,000 shares are being registered under the Registration Statement of which
this Prospectus forms a part. THE SHARES BEING REGISTERED ARE NOT SUBJECT TO ANY
RESTRICTION ON RESALE BY THE COMPANY OR THE REPRESENTATIVE. As a result, those
shares may be sold immediately after the public offering. The Company has been
advised by the Selling Securityholders that they have no present intentions
regarding the timing and amount of sales of these shares.
However, prospective investors should be aware that the possibility of
sales may, in the future, have a depressive effect on the price of the Company's
Common Stock in any market which may develop, and therefore, the ability of any
investor to market his shares may be dependent directly upon the number of
shares that are offered and sold. Affiliates of the Company may sell their
shares during a favorable movement in the market price of the Company's Common
Stock which may have a depressive effect on its price per share. See
'Description of Securities.'
5. Competition. The beer industry, in general, and the craft brewing
segment of the beer industry, in particular, is highly competitive. The Company
expects competition and the number of competitors in the craft brewing segment
to increase. The principal competitive factors affecting the market for the
Company's beers include product quality and taste, packaging, brand recognition,
price and distribution capabilities. There can be no assurance that the Company
will be able to compete successfully against current and future competitors
based on these and other factors. The Company competes with a variety of
domestic and international brewers, many of whom have substantially greater
financial, production, distribution and marketing resources and have achieved a
higher level of brand recognition than the Company. The Company anticipates
increased competition in the specialty beer segment from the major domestic
brewers such as Anheuser-Busch Companies, Inc., Miller Brewing Co. and Adolph
Coors Co., each of whom has introduced and is marketing fuller flavored beers
designed to compete directly in the specialty beer segment. These large domestic
brewers dominate the overall domestic beer market and the Company expects that
certain of these companies, with their superior financial resources and
established distribution networks, will seek further participation in the
speciality beer segment through the acquisition of equity positions in, or the
formation of distribution alliances with, small specialty brewers. The Company
also faces and will continue to face increasing competition from import
specialty beer companies such as Bass PLC, Cerveceria Modelo, S.A. (brewer of
Corona Extra), Guinness PLC, Cerveceria Moctezuma, S.A. (brewer of Dos Equis)
and Heineken N.V. and existing domestic specialty brewers such as The Boston
Beer Company, Inc., Redhook Ale Brewery, Incorporated, Sierra Nevada Brewing Co.
and Anchor Brewing Co. Recent growth in the sales of specialty beers is expected
to result in increased competition in the segment, including a continuing
proliferation of microbrewers and efforts by micro and regional brewers to
expand their production capacity. Increased competition could result in price
reductions, reduced profit margins and loss of market share, all of which would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company's products also compete generally with
other alcoholic beverages, including products offered in other segments of the
beer industry and low alcohol products. The Company competes with other beer and
beverage companies not only for consumer acceptance and loyalty but also for
shelf and tap space in retail establishments and for marketing focus by the
Company's distributors and their customers, all of which also distribute and
sell other beers and alcoholic beverage products. Finally, there can be no
assurance that the recent growth in consumer demand for speciality beers will
continue, or even if such growth continues, that consumers will choose the
Company's beer. See 'Business--Competition.'
6. Product Concentration; Dependence on Recent Product Introductions;
Dependence Upon Single Product. The sale of Perry's Majestic Beer has accounted
for all of the Company's sales since inception. The Company believes that the
sale of Perry's Majestic Beer will continue to account for most sales for the
foreseeable future. Therefore, the Company's future operating results,
particularly in the near term, are significantly dependent upon the continued
market acceptance of Perry's Majestic Beer. There can be no assurance that
Perry's Majestic Beer or other beers developed by the Company will achieve
market acceptance. The Company has not test marketed any new products so it is
unable to anticipate any level of public acceptance.
8
<PAGE>
Initial sales for a new beer may be caused by the interest of distributors and
retailers to have the latest product on hand for potential future sale to
consumers. As a result, initial stocking orders for, or sales of, a newly
introduced beer may not be indicative of market acceptance and long term
consumer demand. A decline in the demand for any of the Company's beers as a
result of competition, changes in consumer tastes and preferences, government
regulation or other factors would have a material adverse effect on the
Company's business, operating results and financial condition. In addition,
there can be no assurance that the Company will be successful in developing,
introducing and marketing additional new beers that will sustain sales growth in
the future. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' and 'Business.'
7. Dependence on Distributors; Consumer Concentration. The Company
distributes its products primarily through wholesale distributors, including
Mootch & Muck, for resale to retailers. Accordingly, the Company is dependent
upon these distributors to sell the Company's products and to assist the Company
in promoting market acceptance of, and creating demand for, the Company's
products. There can be no assurance that the Company's distributors will devote
the resources necessary to provide effective sales and promotion support to the
Company. The Company believes that its future growth and success will continue
to depend in large part upon its ability to expand distribution and enter into
distribution agreements. If any of the Company's distributors were to
discontinue selling, or decrease the level of orders for, the Company's
products, the Company's business would be adversely affected in the areas
serviced by such distributors until the Company retained replacements. There can
be no assurance, however, that the Company would be able to replace a
significant distributor in a timely manner or at all in the event it were to
discontinue selling the Company's products. In addition, there is always a risk
that the Company's distributors will give higher priority to the products of
other beverage companies, including products directly competitive with the
Company's beers, thus reducing their efforts to sell the Company's products. If
any of the Company's significant distributors were to experience financial
difficulties, or otherwise become unable or unwilling to promote or sell the
Company's beers, the Company's results of operations would be adversely
affected. In addition, in some states, the Company's relationship with its
distributors may be affected by laws that restrict enforceability of some
contract terms, especially those related to the Company's right to terminate the
services of its distributors. Accordingly, the Company's ability to change
distributors in certain states may be adversely impacted by such laws. See
'Business--Sales, Distribution and Marketing.'
8. Control by Bev-Tyme, Inc. Prior to this Offering, Bev-Tyme, Inc. owned
500,000 shares of the Company's issued and outstanding Convertible Series A
Preferred Stock and 7,000,000 shares of the Company's Non-Convertible Series B
Preferred Stock, representing 75% of the Company's outstanding securities. Each
share of Series A Preferred Stock may be convertible by the holder into one (1)
share of Common Stock. Each share of Series A Preferred Stock and Series B
Preferred Stock possesses one vote on all matters submitted to the Company's
shareholders for their vote. After this offering, Bev-Tyme, Inc. will own 100%
of the outstanding preferred stock. See 'Principal Stockholders.' Since holders
of Common Stock do not have any cumulative voting rights and directors are
elected by a majority vote, Bev-Tyme, Inc. is in a position to control the
election of directors as well as the affairs of the Company. In the event
Bev-Tyme, Inc. were to convert and sell all of its shares of the Company's
Series A Preferred Stock, Bev-Tyme would continue to own one hundred (100%)
percent of the Series B Preferred Stock, representing 66% of the voting shares
of the Company, and would thereby be in a position to continue to control the
election of directors and officers of the Company. Consequently, Bev-Tyme could
affect the ability of the Company to sell assets, engage in a merger or business
combination or enter into other transactions without the approval of minority
shareholders. In addition, Robert Sipper, one of the Company's Board of
Directors, is also a member of Bev-Tyme's Board of Directors. Such control could
also preclude an unsolicited acquisition of the Company and consequently,
adversely affect the market price of the Common Stock. See 'Description of
Securities.'
9. Development of New Products; Need to Manage Product Introductions. The
specialty beer market is highly competitive and characterized by changing
consumer preferences and continuous introduction of new products. The Company's
goal is to introduce new products on a timely and regular basis to maintain
distributor and retailer interest and to appeal to varying consumer preferences.
The Company believes that its future growth will depend, in part, on its ability
to anticipate changes in consumer preferences and develop and introduce, in a
timely manner, new beers that adequately address such changes. There can be no
assurance that the Company will be successful in developing, introducing and
marketing new products on a timely and regular basis. If the
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Company is unable to introduce new products or if the Company's new products are
not successful, the Company's sales may be adversely affected as consumers seek
competitive products. In addition, the introduction or announcement of new beers
by the Company could result in reduction of sales of the Company's existing
beers, requiring the Company to manage carefully product introductions in order
to minimize disruption in sales of existing beers. There can be no assurance
that the introduction of new product offerings by the Company will not cause
distributors, retailers and consumers to reduce purchases or consumption of
existing Company products. Such reduction of purchases or consumption could have
a material adverse effect on the Company's business, operating results and
financial condition. See 'Business.'
10. Construction of Brewpub/Restaurant. The Company intends to use a
substantial portion of the proceeds of this offering to construct a
brewpub/restaurant in the New York metropolitan area. The Company has never
constructed or operated its own brewery or brewpub and will face various
organizational challenges typically associated with commissioning a new brewery
and initiating production. The construction of a new brewery could place
significant strain on the Company's management, operations and resources and
result in diversion of management attention from the day to day operation of the
Company's business. The successful construction of such a brewery will require
careful management of various factors associated with the construction of a new
brewery, including site selection, zoning, environmental uncertainties,
receiving governmental permits, possible cost estimation errors or overruns,
construction delays, equipment delays or shortages, production start-up problems
and other factors, many of which are beyond the Company's control. Furthermore,
the Company's construction of its own brewery will result in new fixed and
operating expenses. If revenue levels do not increase sufficiently, or if
sufficient transportation and other cost savings do not result to offset these
new expenses, the Company's operating results will be materially adversely
impacted in future periods. There can be no assurance that the Company will not
encounter unforeseen difficulties as construction and production begin at the
brewpub facility, which could have a material adverse effect on the Company's
business, operating results and financial condition. See 'Business--Brewpub.'
11. Dependence upon Certain Suppliers. Under the Company's custom brewing
contract with Hoboken Brewing Company, the Company relies upon Hoboken Brewing
Company to source and purchase the ingredients and raw materials used to make
and package the Company's beers. Although to date adequate supplies of these
ingredients and materials have been available, delays or reductions in product
shipments could occur which would have a material adverse effect on the
Company's business, financial condition and results of operations. As with most
agricultural products, the supply and price of raw materials used to produce the
Company's beers can be affected by a number of factors beyond the control of the
Company, such as frosts, droughts, other weather conditions, economic factors
affecting growing decisions, import tariffs, various plant diseases, pests and
acts of God. To the extent that any of the foregoing affects the ingredients
used to produce the Company's beers, the Company's results of operations would
be materially and adversely affected. In addition, the Company's results of
operations are dependent upon its ability to accurately forecast its need for
ingredients which may be perishable. Any failure by the Company to accurately
forecast its requirements of raw materials could result in the Company either
being unable to meet higher than anticipated demand for its products or
producing excess inventory, either of which may adversely affect the Company's
results of operations. See 'Business--Custom Brewing.'
12. Trends in Consumer Preferences and Spending. The speciality beer
segment of the domestic beer market has grown dramatically over the past decade.
The Company believes that one factor in such growth has been consumer demand for
more flavorful beers offered in a wider variety of styles. No assurance can be
given however that consumer demand for specialty beers will continue in the
future. The Company's success also depends upon a number of factors related to
the level of discretionary consumer spending, including the general state of the
economy, federal and state tax laws and consumer confidence in future economic
conditions. Changes in consumer spending can affect both the quantity and the
price of the Company's products and may therefore affect the Company's operating
results. For example, reduced consumer confidence and spending may result in
reduced demand for the Company's products, limitations on its ability to
increase or maintain prices and increases in required levels of selling,
advertising and promotional expenses.
13. Protection of Trademarks, Copyrights and Other Proprietary Information;
Risk of Third Party Claims of Infringement. The Company considers its
trademarks, particularly the 'Perry's Majestic' brand name, beer recipes and
product package, advertising and promotion design and artwork to be of
considerable value and
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critical to its business. The Company relies on a combination of trade secret,
copyright and trademark laws and nondisclosure and other arrangements to protect
its proprietary rights. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy or obtain and use information
that the Company regards as proprietary. There can be no assurance that the
steps taken by the Company to protect its proprietary information will prevent
misappropriation of such information and such protections may not preclude
competitors from developing confusing similar brand names or promotional
materials or developing products with taste and other qualities similar to the
Company's beers. While the Company believes that its trademarks, copyrights and
recipes do not infringe upon the proprietary rights of third parties, there can
be no assurance that the Company will not receive future communications from
third parties asserting that the Company's trademarks, copyrights and recipes
infringe, or may infringe, the proprietary rights of third parties. The
potential for such claims will increase as the Company introduces new beers or
increases distribution in recently entered geographic areas. Any such claims,
with or without merit, could be time-consuming, result in costly litigation and
diversion of management personnel, cause product distribution delays or require
the Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company or at all. In the event of a successful claim of infringement
against the Company and failure or inability of the Company to license the
infringed or similar proprietary information, the Company's business, operating
results and financial condition could be materially adversely affected. See
'Business--Trademarks.'
14. Government Regulation. The Company's business is highly regulated by
federal, state and local laws and regulations. The Company must comply with
extensive laws and regulations regarding such matters as state and regulatory
approval and licensing requirements, trade and pricing practices, permitted and
required labeling, advertising, promotion and marketing practices, relationships
with distributors and related matters. For example, federal and state regulators
require warning labels and signage on the Company's products. The Company
believes that it has obtained all regulatory permits and licenses necessary to
operate its business in states where the Company's products are currently being
distributed. Riverosa maintains a Federal Basic Wholesalers Permit with the U.S.
Bureau of Alcohol, Tobacco and Firearms. The Company has made application to
assume such permit in the Company's name. Failure on the part of the Company to
comply with federal, state or local regulations could result in the loss or
revocation or suspension of the Company's licenses, permits or approvals and
accordingly could have a material adverse effect on the Company's business. In
addition, changes to federal and state excise taxes on beer production, federal
and state environmental regulations, including laws relating to packaging and
waste discharge, or any other laws or results of operations. The federal
government and each of the states levy excise taxes on alcoholic beverages,
including beer. The federal government currently imposes an excise tax of $18.00
per barrel on every barrel of beer produced for consumption in the United
States. There is, however, a small brewers excise tax credit that grants each
brewing company with annual production under 2,000,000 barrels an $11.00 credit
per barrel on its first 60,000 barrels produced annually. The Company has not
yet applied for the required state permits, licenses and bonds to operate the
proposed brewpub/restaurant. The Company does not intend to apply for these
necessary licenses and permits until after the completion of the facility (of
which there can be no assurance). Although the Company does not expect to
encounter any difficulties in obtaining the necessary permits, licenses and
bonds, the application and approval process to obtain these items will not
commence until after the facility is operational (of which there can be no
assurance). Failure to obtain such permits, licenses and bonds would prevent the
Company from engaging in any brewing operations. In addition, there can be no
assurance that the Company's future brewery operations will not become subject
to more restrictive regulation or increased taxation by Federal or state
agencies, which may adversely affect the future operations, revenues and
potential profitability of the Company. Additionally, from time to time,
Congress and many state legislatures may consider proposals to impose additional
excise taxes on the production and sale of alcoholic beverages, including beer.
Any increase in the taxes imposed upon beer can be expected to have an adverse
impact on overall sales of such products. See 'Business--Governmental
Regulation.'
15. Public Attitudes Toward Alcohol Consumption. In recent years, there
has been an increase in the level of health-consciousness in the United States
and considerable debate has occurred concerning alcohol related social problems,
such as alcoholism and drunk driving. In addition, a number of anti-alcohol
groups are advocating increased governmental action on a variety of fronts
unfavorable to the beer industry, including the legislation of new labeling or
packaging requirements and restrictions on advertising and promotion that could
adversely affect the sale of the Company's products. Restrictions on the sale
and consumption of beer or increases in the retail cost of beer due to increased
government regulations, taxes or otherwise, could materially
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adversely affect the Company's business, financial condition and results of
operations. Congress and many state legislatures are considering various
proposals to impose additional excise taxes on the production and sale of
alcoholic beverages, including beer. Some of the excise tax rates being
considered are substantial. Any increase in the taxes imposed on beer can be
expected to have an adverse impact on overall sales of such products, and may
materially adversely affect the Company's result of operations. See
'Business--Governmental Regulation.'
16. Growth of the Microbrewery Industry; Lack of Demand for Microbrewed
Beer. There can be no assurance that the demand for microbrewed beer will
continue to grow at the present rate or at all. To meet the increasing demand
for microbrewed beer, new microbreweries, like the Company, are being developed
and existing microbreweries are significantly increasing their production
capacities. If the demand for microbrewed beer does not keep up with increases
in supply, the Company will face heightened competition. See 'Business--
Industry Overview.'
17. Dependence on Contract Beer; Absence of Manufacturing Facilities. The
Company anticipates having its products produced by a contract brewery for the
foreseeable future and will continue to utilize a contract brewery after the
Company's brewpub becomes operational. Although the Company's beer is presently
brewed at Hoboken Brewing Company ('Hoboken'), there can be no assurance that
this brewery will continue to provide services to the Company. The Company
entered into a one (1) year written agreement with Hoboken on July 15, 1996
pursuant to which Hoboken brews Perry's Majestic Beer. The Hoboken agreement
provides, in pertinent part, that the customer will provide certain ingredients
and labels and Hoboken will provide brewing, filling and packaging services,
together with certain necessary ingredients. The agreement runs on a year to
year basis, and may be terminated by either party on six (6) months written
notice after the first year of production. In the event the Company is unable to
continue its relationship with Hoboken for any reason, the Company would have to
enter into a relationship with another brewery which is able to produce organic
beer to the Company's standards. See 'Business--Contract Brewing.'
18. Product Liability. The Company's future brewing and brewpub/restaurant
operations could subject the Company to the risk of product liability claims.
The Company currently does not have product liability insurance. There can be no
assurance that the Company will be able to obtain product liability insurance on
terms acceptable to the Company or at all and once obtained there can be no
assurance that the Company will be able maintain such insurance coverage.
Moreover, the amount and scope of any coverage may be inadequate to protect the
Company in the event that a product liability claim is successfully asserted
against the Company. See 'Business.'
19. Shortages of Supply. Shortages or increased costs of fuel, water, raw
materials (certain of which will be obtained from foreign suppliers) or power,
or allocations by suppliers or governmental authorities could restrict the
operations of the Company's proposed brewpub, or otherwise materially and
adversely affect the ability of the Company to produce and market its proposed
beer products. The Company does not anticipate entering into any long-term
contracts for its suppliers of foreign malt. See 'Business.'
20. Seasonality. Sales of beer in general are seasonal in nature and are
at their highest level in the second and third calendar quarters and at their
lowest in the first and fourth calendar quarters. This seasonality is expected
to have a significant impact on the Company's operations on a quarter to quarter
basis, particularly if delays in the Offering or construction of the proposed
brewpub result in delays to brewery operations. See 'Business--Sales and
Distribution.'
21. Dependence on Bev-Tyme, Inc. and Mootch & Muck. The Company is
dependent upon its parent, Bev-Tyme, Inc., and Mootch & Muck for distribution of
the Company's beers in the New York metropolitan area. Distribution by Mootch &
Muck presently accounts for approximately three and seven tenths percent (3.7%)
of the Company's revenues. Historically, Mootch & Muck has been responsible for
approximately three to four percent (3% to 4%) of Riverosa's revenues. Although
the Company believes that other avenues of distribution will be available, there
can be no assurance that the Company would be able to obtain new suppliers in
the event that Mootch & Muck was no longer able to distribute products for the
Company. Even if the Company is able to develop alternative distribution
sources, there can be no assurance that it can do so without material delay or
on a cost effective basis at prices similar to those paid to Mootch & Muck. As a
result, any interruption or
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discontinuance of distribution by Mootch & Muck could result in considerable
expense, delay the Company's operations and ability to deliver products, and
have a material adverse effect on the Company.
22. Dependence on Key Personnel; Lack of Experience. The Company is
substantially dependent on the continued services of Robert Sipper, the
Company's Chief Executive Officer, and Mark Butler, the Company's President.
None of the Company's current management has experience in brewery construction
and operation or in the launching and operation of retail eating and drinking
facilities. Therefore, there can be no assurances that the Company will be
successful in the construction and operation of the brewpub. The Company has
entered into a three (3) year employment agreement with Mr. Sipper and a three
(3) year employment agreement with Mr. Butler. Mr. Sipper will devote such time
as is necessary to the discharge of his responsibilities to the Company,
consistent with his continuing obligations to Bev-Tyme. Mr. Butler will devote
his full time to the business of the Company. Should Mr. Sipper and Mr. Butler
not be able to continue as officers of the Company, its prospects could be
adversely affected and, as a result, the loss of either Mr. Sipper or Mr. Butler
could materially adversely affect the Company's operations. The Company
currently does not maintain key personnel life insurance for any of its
employees. See 'Management.'
23. Limited Personnel. At present the Company employs only two (2) full
time personnel. There can be no assurance that the Company will be able to
identify suitable additional employees, or do so in a timely economically
acceptable basis in the future.
24. Investment in Bev-Tyme Preferred Stock. The Company's assets include
400,000 shares of Series C Preferred Stock of Bev-Tyme Inc. owned by the Company
and valued by the Company's auditors at $2,000,000. The Bev-Tyme shares were
received by the Company as partial consideration for Bev-Tyme's acquisition of
an equity interest in the Company. The Company has obtained a resolution from
the board of directors of Bev-Tyme to register the shares as soon as reasonably
possible, without any restriction upon their sale. In addition, the Company's
Board of Directors has resolved to the sell the shares following such
registration and thereby generate additional cash for the Company. During the
past year, Bev-Tyme Class C Preferred Stock has traded consistently at prices
ranging from approximately $4.00 to $8.00 per share, with volume that the
Company believes would support the Company's ability to liquidate the shares
over a reasonably short period of time. Recently, the Bev-Tyme Class C Preferred
Stock has had a fair market value of approximately $4.75 per share.
Nevertheless, there can be no assurance that the Company will be able to sell
the Bev-Tyme Preferred Stock in the foreseeable future and its value is highly
dependent upon the factors not within the control of the Company.
25. Broad Discretion in Application of Proceeds. While the Company
presently intends to use the net proceeds of this Offering as described in the
'Use of Proceeds' section of this Prospectus, management of the Company has
broad discretion to adjust the application and allocation of the net proceeds of
this Offering in order to address changed circumstances and opportunities. As
reflected in the 'Use of Proceeds' section approximately $1,000,000 or 39.2% of
the net proceeds will be allocated to construction of the Company's brewpub,
$613,000 or 24.1% will be allocated to marketing or advertising, $250,000 or
9.8% will be used to repay certain indebtedness and the balance for working
capital. These expenditures are subject to reallocation at the discretion of the
Company's Board of Directors. As a result of the foregoing, the success of the
Company will be substantially dependent upon the discretion and judgment of the
management of the Company with respect to the application and allocation of the
net proceeds hereof. Pending use of such proceeds, the net proceeds of this
Offering will be invested by the Company in short-term, low risk marketable
securities. See 'Use of Proceeds.'
26. No Prior Public Market; Possible Volatility of Stock Price. Prior to
this Offering, there has been no public market for the Common Stock. The initial
public offering price of the Common Stock was determined by negotiation between
the Company and the representatives of the Representative, and may not be
indicative of the market price for such securities in the future, and does not
necessarily bear any relationship to the Company's assets, book value, net worth
or results of operations of the Company or any other established criteria of
value. Among the factors considered in determining the price of the Common Stock
were the history of and prospects for the industry in which the Company
competes, estimates of the business potential of the Company, the present state
of the development of the Company's business, the Company's financial condition,
an assessment of the Company's management, the general condition of the
securities markets at the time of this Offering, and the demand for similar
securities of comparable companies. There is, however, no relationship
whatsoever between the offering price of the Common Stock and the Company's net
worth, projected earnings, book value, or any
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other objective criteria of value on the other. See 'Underwriting' for a
discussion of the factors considered in determining the initial public offering
price. See 'Underwriting--Determination of Public Offering Price,' 'Description
of Securities' and 'Financial Statements.'
27. Lack of Prior Market for Common Stock; No Assurance of Public Trading
Market. Prior to this Offering, no public trading market existed for the Common
Stock. There can be no assurances that a public trading market for the Common
Stock will develop or that a public trading market, if developed, will be
sustained. Although the Company anticipates that upon completion of this
Offering, the Common Stock will be eligible for inclusion on The OTC Bulletin
Board, no assurance can be given that the Common Stock will be listed on The OTC
Bulletin Board as of the Effective Date. Consequently, there can be no assurance
that a regular trading market for the Common Stock, other than the pink sheets,
will develop after the completion of this Offering. If a trading market does in
fact develop for the Common Stock offered hereby, there can be no assurance that
it will be maintained. If for any reason the Common Stock is not listed on The
OTC Bulletin Board or a public trading market does not develop, purchasers of
the Common Stock may have difficulty in selling their securities should they
desire to do so. In any event, because certain restrictions may be placed upon
the sale of securities at prices under $5.00, unless such securities qualify for
an exemption from the 'penny stock' rules, such as a listing on The Nasdaq Small
Cap Market, some brokerage firms will not effect transactions in the Company's
securities and it is unlikely that any bank or financial institution will accept
such securities as collateral, which could have an adverse effect in developing
or sustaining any market for the Common Stock. See 'Risk Factors--Penny Stock
Regulations May Impose Certain Restrictions on Marketability of Securities.'
Although it has no legal obligation to do so, the Representative from time
to time may act as a market maker and may otherwise effect and influence
transactions in the Company's securities. However, there is no assurance that
the Representative will continue to effect and influence transactions in the
Company's securities. The prices and liquidity of the Company's securities may
be significantly affected by the degree, if any, of the Representative's
participation in the market. The Representative may voluntarily discontinue such
participation at any time. Further, the market for, and liquidity of, the
Company's securities may be adversely affected by the fact that a significant
amount of the Common Stock may be sold to customers of the Representative.
Pursuant to an alternate prospectus certain Selling Shareholders may offer
for sale 2,500,000 shares of Common Stock. (See 'Selling Stockholders'). None of
these securities are subject to any lockup or restriction upon their sale after
registration. Consequently, such securities may be sold by the holders thereof
at any time subsequent to their registration pursuant to a then current
prospectus.
28. Nasdaq Requirements; Penny Stock; Additional Requirements on
Broker-Dealer Sales of Securities. The Company's Common Stock is not presently
included for trading on the Nasdaq system, and there can be no assurances that
the Company will ultimately qualify for inclusion within that system. In order
for an issuer to be included in the Nasdaq system, it is required to have total
assets of at least $4,000,000, capital and surplus of at least $2,000,000, a
minimum price per share of not less than $3.00, have publicly-held shares with a
market value of at least $1,000,000 as well as certain other criteria. In
addition to quantitative standards the staff of Nasdaq may also consider other
factors including but not limited to the nature and scope of a company's
operations in conjunction with any and all conditions and/or circumstances
surrounding an entity's operations. The Company's initial application for
inclusion in the Nasdaq system was denied. While the Company met the
quantitative criteria described above for inclusion on the Nasdaq system, the
Company's application for listing on the Nasdaq Small Capital Market was denied
based upon the staff's concerns relating to the nature of the Company's assets
and its Bridge Financing. The Staff considered the offered financing costs and
the investment in the Bev-Tyme Preferred Stock to be restricted in nature and
not contributing to the future operations of the Company. The Listing
Qualifications Committee affirmed the Staff's decision. The Company has appealed
from that decision. No assurance can be given that the Common Stock of the
Company will ever qualify for inclusion on the Nasdaq system and qualification
for inclusion is not a prerequisite to proceeding with the Offering. Until the
Company's shares qualify for inclusion in the Nasdaq system, the Company's
securities will be traded in the over-the-counter markets through the 'pink
sheets' or on the OTC Bulletin Board. The Securities and Exchange Commission has
adopted regulations which generally define 'penny stock' to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price less than $5.00 per share, subject to certain exceptions. During
such periods when the Company's Common Stock does not qualify for inclusion on
the Nasdaq Small-Cap Market, the Common Stock may become subject to rules that
impose additional sales practice requirements
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on broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prepared by the
Securities and Exchange Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. In addition, certain broker-dealers are
precluded from acting as market makers for non NASDAQ securities and these
securities may be ineligible for margin loans. Consequently, the rule may affect
the ability of broker-dealers to sell the Company's securities and may also
affect the ability of shareholders to sell the securities in the secondary
market.
29. Current Prospectus and State Blue Sky Registration in Connection with
Sale of Shares. The Company will be able to issue the securities offered hereby
and shares of its Common Stock upon the exercise of the Representative's Share
Purchase Option only if (i) there is a current prospectus relating to the Common
Stock issuable upon the exercise of the Share Purchase Option under an effective
registration statement filed with the Securities and Exchange Commission, and
(ii) such Common Stock is then qualified for sale or exempt therefrom under
applicable state securities laws of the jurisdictions in which the various
holders of the Share Purchase Option reside. There can be no assurance, however,
that the Company will be successful in maintaining a current registration
statement. After a registration statement becomes effective, it may require
updating by the filing of a post-effective amendment. A post-effective amendment
is required (i) anytime after nine (9) months subsequent to the Effective Date
when any information contained in the prospectus is over sixteen (16) months
old, (ii) when facts or events have occurred which represent a fundamental
change in the information contained in the registration statement, or (iii) when
any material change occurs in the information relating to the plan or
distribution of the securities registered by such registration statement. The
Company anticipates that this Registration Statement will remain effective for
at least nine (9) months following the date of this Prospectus or until April
30, 1996, assuming a post-effective amendment is not filed by the Company. The
Company intends to qualify the sale of shares in a limited number of states. The
Company anticipates that the securities offered hereby will be qualified for
sale by the Company, as of the effective date, in the states of New York,
Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii,
Illinois, Louisiana, Maryland, Rhode Island and Utah. See 'Description of
Securities.'
30. Representative's Share Purchase Option. In connection with this
Offering, the Company will sell to the Representative, for nominal
consideration, an option to purchase an aggregate of 58,333 shares (the
'Representative's Share Purchase Option'). The Representative's Share Purchase
Option will be exercisable commencing one year from the Effective Date of this
Offering and ending four (4) years from such date, at an exercise price of $7.20
per Representative's Share (the 'Representative's Shares'). The holders of the
Representative's Share Purchase Option will have the opportunity to profit from
a rise in the market price of the Common Stock, if any, without assuming the
risk of ownership. The Company may find it more difficult to raise additional
equity capital if it should be needed for the business of the Company while the
Representative's Share Purchase Option is outstanding. At any time when the
holders thereof might be expected to exercise them, the Company would probably
be able to obtain additional capital on terms more favorable than those provided
by the Representative's Share Purchase Option. See 'Dilution' and
'Underwriting.'
31. Possible Adverse Effects of Ownership of Preferred Stock by
Bev-Tyme. The Company's Certificate of Incorporation, as amended, authorizes
the issuance of a maximum of 10,000,000 shares of Preferred Stock on terms that
may be fixed by the Company's Board of Directors without further stockholder
action. 500,000 shares of Class A Preferred Stock and 7,000,000 shares of Class
B Preferred Stock have been issued by the Company to Bev-Tyme. Pursuant to the
Certificate of Designation, each share of preferred stock possesses one vote on
all matters upon which common shareholders are entitled to vote. Although the
Preferred Stock does not possess any dividend rights, ownership of the Preferred
Stock will continue to afford Bev-Tyme voting control over the
15
<PAGE>
affairs of the Company since Bev-Tyme will hold a majority of all outstanding
voting shares of the Company. Any transfer of the Preferred Stock by Bev-Tyme
could result in a change of control of the Company. See 'Description of
Securities--Preferred Stock.'
32. 'Penny Stock' Regulations May Impose Certain Restrictions on
Marketability of Securities. The Securities and Exchange Commission (the
'Commission') has adopted regulations which generally define 'penny stock' to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Since the securities offered hereby will be offered at a market
price of $6.00 per share, such securities will initially be exempt from the
definition of 'penny stock.' If the securities offered hereby become offered at
a market price of less than $5.00 per share, and do not qualify for another
exemption from the Penny Stock regulations, the Company's securities may become
subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the Commission relating to the penny stock
market. The broker-dealer must also disclose the commission payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the 'penny stock' rules may
restrict the ability of broker-dealers to sell the Company's securities and may
affect the ability of purchasers in this Offering to sell the Company's
securities in the secondary market and the price at which such purchasers can
sell any such securities.
33. Dilution; Equity Securities Sold Previously at Below Offering Price;
Bridge Loans. Upon completion of this Offering, without giving effect to the
exercise of the Representative's Share Purchase Option, the net tangible book
value per share of the Company's Common Stock will be $1.54. At the initial
public offering price of $6.00 per share, investors in this Offering will
experience an immediate dilution of approximately $4.46 or 74% in net tangible
book value per share and existing investors will experience an increase of
approximately $.66 per share. The present stockholders of the Company have
acquired their respective equity interest at costs substantially below the
public offering price. Accordingly, to the extent that the Company incurs
losses, the public investors will bear a disproportionate risk of such losses.
In March, 1996, the Company borrowed an aggregate of $150,000 from seven (7)
unaffiliated lenders (the 'Bridge Lenders'). In exchange for making loans to the
Company, 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 are due and payable upon the earlier of (i) July 31, 1996 or
(ii) the closing of an initial underwritten public offering of the Company's
securities. The Company intends to use a portion of the proceeds of this
Offering to repay the Bridge Lenders. See 'Use of Proceeds.' 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.
See 'Bridge Financing' and 'Underwriting.'
34. No Dividends. The Company has never paid any dividends on its Common
Stock since its inception and does not intend to pay dividends on its Common
Stock in the foreseeable future. Any earnings which the Company may realize in
the foreseeable future will be retained to finance the growth of the Company.
See 'Dividend Policy.'
35. Federal Income Tax Consequences. The Company has obtained no ruling
from the Internal Revenue Service and no opinion of counsel with respect to the
federal income tax consequences of this offering. Consequently, investors must
evaluate for themselves the income tax implications which attach to their
purchase and subsequent sale of the securities offered hereunder.
16
<PAGE>
36. Conflicts of Interest. After this Offering, Bev-Tyme will continue to
own 100% of the outstanding Preferred Stock. In addition, at present, Bev-Tyme
distributes the Company's products. It is anticipated that Bev-Tyme will
continue to distribute a significant percentage of the Company's products, at or
near present levels as well as provide administrative and support services, and
that the Company will continue to operate its executive offices and distribution
at facilities leased and managed by Bev-Tyme. In addition, Bev-Tyme's director
and President, Robert Sipper, is a member of the Company's Board of Directors
and Chief Executive Officer of the Company. Because of Bev-Tyme's ownership
interest in the Company, the identity of certain management and Bev-Tyme's role
as a significant distributor for the Company, certain conflicts of interest may
occur between the Company and Bev-Tyme. In such instances, members of the Board
of Directors who are also members of the Bev-Tyme Board of Directors, or the
entire Bev-Tyme Board of Directors, may be precluded from participating in
corporate decisions. Although the Board of Directors of the Company has not
adopted any written policy on this matter, the Delaware Corporation Law contains
specific provisions governing such conflicts.
37. Anti-Takeover Effect of General Corporation Law of Delaware. The
Company is governed by the provisions of Section 203 of the General Corporation
Law of Delaware, an anti-takeover law enacted in 1988. As a result of Section
203, potential acquirors of the company may be discouraged from attempting to
effect acquisition transactions with the Company, thereby possibly depriving
holders of the Company's securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions. See 'Description of Securities.'
17
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 583,335 shares offered
hereby, are estimated to be $2,548,009 (after deducting approximately $350,000
in underwriting discounts, other expenses of this Offering estimated to be
$602,000, which includes the Representative's non-accountable expense allowance
of $105,000 and a $72,000 financial consulting fee payable to the Representative
at the closing) (but not considering any exercise of the Representative's Share
Purchase Option). The Company, based upon all currently available information,
intends to utilize such proceeds approximately as follows:
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
AMOUNT PERCENTAGE(%)
OF NET OF NET
PROCEEDS PROCEEDS
----------- -------------
<S> <C> <C>
Construction of Brewpub(1).................... $1,000,000 39.2%
Marketing and Advertising(2).................. 613,000 24.1%
Repayment of Certain Indebtedness(3).......... 250,000 9.8%
Working Capital(4)............................ 685,009 26.9%
----------- -----
Total......................................... $2,548,009 100%
----------- -----
----------- -----
</TABLE>
- ------------------
(1) The Company will lease and build-out suitable space in the New York
metropolitan area to be developed and operated as a brewpub/restaurant and
microbrewery.
(2) New marketing and advertising materials and a marketing campaign will be
created to promote the Company's products.
(3) Represents the repayment of Bridge Loans in the aggregate principal amount
of $150,000 and the payment of the promissory note in the principal amount
of $100,000 to Riverosa. The Bridge Loans were made by seven (7)
unaffiliated parties. The Bridge Loans are due and payable upon the earlier
of July 31, 1996 or the closing of the Company's initial public offering and
bear interest at the rate of 8% per annum. The proceeds of the Bridge Loans
were used for working capital and as a source of funds to pay expenses
associated with this Offering. See 'Bridge Financing.' See 'Certain
Transactions.'
(4) To be used for general operating and overhead expenses and the funding of
inventory.
THE COMPANY IS UNABLE TO FURTHER ITEMIZE THE USE OF PROCEEDS AT THIS TIME
SINCE THE ALLOCATION OF EXPENSES TO CONSTRUCTION OF THE BREWPUB WILL DEPEND
PRINCIPALLY ON THE LOCATION OF THE FACILITY, THE SQUARE FOOTAGE OF THE LEASED
PREMISES, THE ALLOCATION OF SPACE BETWEEN THE RESTAURANT AND BREWERY, THE NATURE
OF THE RESTAURANT FACILITY AND THE SPACE ALLOCATED TO THE BREWERY. SIMILARLY,
THE COMPANY HAS NOT AT THIS TIME SPECIFIED THE ADVERTISING AND MARKETING
RESOURCES THAT WILL BE UTILIZED.
The amounts set forth above are estimates. Should a reapportionment or
redirection of funds be determined to be in the best interests of the Company,
the actual amount expended to finance any category of expenses may be increased
or decreased by the Company's Board of Directors, at its discretion. Although
the Company does not intend to utilize any portion of the proceeds for payment
of officers' salaries, it is possible that portions of working capital may be
utilized for that purpose dependent upon revenues.
The Company believes that the proceeds of this Offering will enable the
Company to increase its annual revenues through the expansion of its business
and development of product lines. As a result, the Company believes that the net
proceeds of this Offering, together with increased revenues generated from
operations, will be sufficient to conduct the Company's operations for at least
twelve (12) months. The terms of the underwriting agreement between the Company
and the Representative restrict the Company from entering into any acquisition
or merger of the Company or obtaining additional capital financing without the
prior approval of the Representative, for the issuance of additional equity
securities for a period of one (1) year, in either public or private offerings,
which approval may not be unreasonably withheld. The underwriting agreement does
not prevent the Company from seeking bank financing, although there can be no
assurance that such financing will be available on commercially reasonable
terms. See 'Risk Factors--Dependence on Offering Proceeds; Possible Need for
Additional Financing.'
To the extent that the Company's expenditures are less than projected the
resulting balances will be retained and used for general working capital
purposes. Conversely, to the extent that such expenditures require the
utilization of funds in excess of the amounts anticipated, additional financing
may be sought from other sources, such as debt financing from financial
institutions, although there can be no assurance that such additional financing,
if available, will be on terms acceptable to the Company. See 'Risk
Factors--Dependence on Offering Proceeds; Possible Need For Additional
Financing.' The net proceeds of this Offering that are not expended immediately
may be deposited in interest-bearing accounts or invested in government
obligations or certificates of deposit.
18
<PAGE>
DILUTION
At March 31, 1996, the Company had outstanding an aggregate of 2,500,000
shares of Common Stock having an aggregate net tangible book value of $2,200,000
or $.88 per share, giving effect to the issuance of 7,500,000 Preferred Shares
for $2,150,000. Net tangible book value per share consists of total assets less
intangible assets and liabilities, divided by the total number of shares of
Common Stock outstanding. The shares of capital stock described above do not
include any securities subject to any outstanding warrants or options.
After giving effect to the sale of 583,335 shares of Common Stock by the
Company with net proceeds of $2,548,009, the pro forma net tangible book value
of the Common Stock would have been $4,748,009 or approximately $1.54 per share.
This represents an immediate increase in pro forma net tangible book value of
$.66 per share to the present stockholders and an immediate dilution of $4.46
per share (74%) to the public purchasers. The following table illustrates the
dilution which investors participating in this Offering will incur and the
benefit to current stockholders as a result of this Offering:
<TABLE>
<S> <C> <C>
Public offering price of Shares of Common Stock
offered hereby(1).......................................................... $6.00
Net tangible value per share............................................... $ .88
Increase per share attributable to Shares offered hereby................... $ .66
Pro Forma net tangible book value per share after Offering................. $1.54
Dilution of net tangible book value per share to purchasers
in this Offering(2)..................................................... $4.46
</TABLE>
- ------------------
(1) Before deduction of underwriting discounts, commissions, fees and Offering
expenses.
(2) Assuming no exercise of the Representative's Share Purchase Option. See
'Underwriting' and 'Description of Securities.'
The following table shows the number and percentage of shares of Common
Stock purchased and acquired, and the amount and percentage of consideration and
average price per share paid, by existing stockholders as of March 31, 1996 and
to be paid by purchasers pursuant to this Offering (based upon the anticipated
public offering price of $6.00 per Share before deducting underwriting discounts
and commissions and estimated Offering expenses).
<TABLE>
<CAPTION>
SHARES OF AGGREGATE
COMMON PERCENT CASH PERCENT OF AVERAGE
STOCK OF EQUITY CONSIDERATION TOTAL CASH PRICE PER
PURCHASED OWNED PAID CONSIDERATION SHARE
--------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
New Stockholders....................... 583,335 19% $ 3,500,010 99% $6.00
Existing Stockholders.................. 2,500,000 81% $ 50,000 1% .02
--------- --- ------------- --- ---------
Total.................................. 3,083,335 100% $ 3,550,010 100% $1.15
--------- --- ------------- --- ---------
--------- --- ------------- --- ---------
</TABLE>
The foregoing table gives effect to the sale of the Common Stock offered
hereby but without giving effect to the exercise of the Representative's Share
Purchase Option, or any securities issuable upon the exercise of any outstanding
options.
19
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996 and as adjusted gives effect to the sale of 583,335 shares of
Common Stock offered hereby and the application of net proceeds therefrom. The
table is not adjusted to give effect to the exercise of the Representative's
Share Purchase Option or any other outstanding options. This table should be
read in conjunction with the Financial Statements of the Company, including the
notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTED(1)
---------- -----------
<S> <C> <C>
Bridge and Notes Payable.............................................................. $ 250,000 $ --
---------- -----------
Stockholders' Equity:
Common Stock, $.0001 par value per share,
25,000,000 shares authorized, 2,500,000 issued and outstanding
and (3,083,335 shares outstanding as adjusted)................................... 250 308
Additional paid in capital common................................................... 49,750 2,597,701
Preferred Stock, $.0001 par value per share, 15,000,000 shares authorized, 7,500,000
issued and outstanding(2)........................................................ 7,500 7,500
Additional paid-in capital preferred(2)............................................. 2,142,500 2,142,500
Retained Earnings................................................................... -- (--)
---------- -----------
TOTAL STOCKHOLDERS' EQUITY............................................................ 2,200,000 4,748,009
---------- -----------
TOTAL CAPITALIZATION.................................................................. $2,450,000 $ 4,748,009
---------- -----------
---------- -----------
</TABLE>
- ------------------
(1) As Adjusted balance sheet reflects the sale of 583,335 shares of Common
Stock offered hereby and the anticipated application of the net proceeds of
$2,548,009 therefrom, after deducting estimated Offering expenses of
$602,000 and the repayment of the Riverosa acquisition note of $100,000 and
the bridge notes of $150,000 payable with the proceeds of the Offering.
(2) The Bev-Tyme preferred stock was received as partial consideration for
Bev-Tyme's acquisition of an equity interest in the Company. The Company
valued the 400,000 shares of Series C Preferred Stock of Bev-Tyme, Inc. at
its fair value of $2,000,000 or $5.00 per share, which was based upon market
value. The 500,000 shares of convertible Class A preferred stock and the
7,000,000 shares of non-convertible Class B preferred stock issued by the
Company was based upon this valuation of $2,000,000 utilized for the
preferred stock received from Bev-Tyme, Inc.
20
<PAGE>
DIVIDEND POLICY
Holders of the Company's Preferred Stock or Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out of funds
legally available therefore. The Company has not in the past and does not
currently anticipate the declaration or payment of any dividends in the
foreseeable future. The Company intends to retain earnings, if any, to finance
the development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors, such as general
economic conditions. Therefore, there can be no assurance that any dividends of
any kind will ever be paid.
BRIDGE FINANCING
In March 1996, the Company borrowed an aggregate of $150,000 from seven (7)
unaffiliated lenders (the 'Bridge Lenders'); Ulster Investments, Ltd.; First
National Fund Corp., Michael Yordy, Harold Yordy, Dune Holdings, Inc., MD
Funding, Inc. and John Pasquale. In exchange for making loans to the Company,
each Bridge Lender received a promissory note (the 'Bridge Notes') in the amount
of the loan. Each of the Bridge Notes bears interest at the rate of eight
percent (8%) per annum. The Bridge Notes are due and payable upon the earlier of
(i) July 31, 1996 or (ii) the closing of an initial underwritten public offering
of the Company's securities. The Company intends to use a portion of the
proceeds of this Offering to repay the Bridge Lenders. See 'Use of Proceeds.' In
addition, the Bridge Lenders were granted the right to receive an aggregate of
3,000,000 Class A Warrants. The Bridge Lenders subsequently waived the right to
receive the Class A Warrants. 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. There are no arrangements,
agreements or undertakings between Bridge Lenders and management under which the
Bridge Lenders may directly or indirectly participate in or influence the
management of the Company's affairs. See 'Certain Transactions' and
'Underwriting.'
21
<PAGE>
SELECTED FINANCIAL INFORMATION
The selected historical balance sheet data presented below are derived from
financial statements of the Company, which have been audited by Moore Stephens,
P.C. independent accountants, whose reports are included elsewhere herein. There
have been no revenue or expense activities through March 31, 1996. The data set
forth below should be read in conjunction with, and is qualified in its entirety
by, the Company's financial statements, related notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations. See
'Financial Statements' and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.' The following summary balance sheet data
has been summarized from the Company's financial statements included elsewhere
in this Prospectus. The information should be read in conjunction with the
financial statements and the related notes thereto. See 'Financial Statements.'
SUMMARY BALANCE SHEET DATA
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
HISTORICAL(1)(2)(3) PRO FORMA(4)
------------------- ------------
<S> <C> <C>
Working Capital (Deficit).............. $ (50,000) 2,498,009
Total Assets........................... $ 2,450,000 4,748,009
Total Liabilities...................... $ 250,000 --
Retained Earnings...................... -- (1,500,000)
Stockholders' Equity................... $ 2,200,000 4,748,009
</TABLE>
- ------------------
(1) Does not include the sale of 583,335 shares of Common Stock offered hereby.
(2) Gives effect to issuance of 7,500,000 shares of Series B Preferred Stock
(including 500,000 shares of Series A Preferred Stock and 7,000,000 shares
of Series B Preferred Stock) to Bev Tyme, Inc. ('Bev Tyme') in exchange for
400,000 shares of Preferred Stock of Bev Tyme.
(3) Gives effect to the bridge loan of $150,000 in March 1996.
(4) Reflects approximate net proceeds of the 583,335 shares offered hereby of
$2,548,009 at the assumed initial public offering price of $6.00 per Share
and the repayment of indebtedness totaling $250,000.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Perry's Majestic Beer, Inc. [the 'Company' or 'Perry's'] was formed in
December of 1995. There have been no operations prior to the formation of
Perry's for the period December 1995 to March 1996 nor any revenue or expense
activities for Perry's through March 31, 1996. The primary activities for
Perry's prior to the acquisition of Riverosa Company, Inc. ['Riverosa'] have
been investing and financing activities [See 'Liquidity and Capital Resources'].
In March of 1996, the Company entered into an agreement to acquire Riverosa,
which was formed in November of 1993. Riverosa is engaged in the manufacture and
distribution of microbrewed beers and ales. Management of Riverosa consisted of
Mark Butler and Ron Zagha. Mark Butler is the Vice President of the Company and
Robert J. Sipper is the President of the Company and will be responsible for the
management functions of the Company.
Bev Tyme, who is the Company's controlling shareholder and parent, through
its wholly owned subsidiary, shall be the distributor of Perry's Majestic Beer,
in New York City. Besides Robert J. Sipper, who is the President and Chief
Executive Officer of Bev Tyme, Inc. and the Company, and Robert Forst, the Chief
Financial Officer of Bev Tyme, it is not anticipated that any other employees of
Bev Tyme or its subsidiaries will be involved with the Company's operations. It
is anticipated that the two companies will be run independently of each other.
The Board of Directors of Perry's consist of three people, two of whom have
no interest (not an employee, officer or director) in Bev Tyme. Accordingly all
potential conflicts of interest shall be decided by an impartial Board.
PERRY'S MAJESTIC BEER, INC.
Perry's had a working capital deficit at March 31, 1996 of $50,000. Perry's
had no operations prior to the formation of Perry's for the period December 1995
to March 1996 nor any revenue or expense activities for Perry's through March
31, 1996. Therefore, no cash was generated or utilized for operating activities.
The Company utilized $150,000 in investing activities for the acquisition of
Riverosa as of March 31, 1996 and will expend another $100,000 in the next few
months for the balance owed on the note resulting from the acquisition. The
Company generated $210,000 in cash from financing activities for the period
ended March 31, 1996 resulting from the sale of preferred stock to Bev-Tyme,
Inc. with cash proceeds of $75,000 [balance of $75,000 received in April of
1996], the sale of common stock with cash proceeds of $45,200 [balance of $4,800
received in April of 1996] and proceeds from bridge loans of $90,000 [the
balance of $60,000 received in April of 1996]. The $150,000 bridge loans from
the seven unaffiliated lenders have an interest rate of 8% per annum. These
loans are to be repaid the earlier of July 31, 1996 or the close of the proposed
public offering. The cash balance at March 31, 1996 was $60,200.
The Company anticipates that the net proceeds from the proposed public
offering will generate approximately $2,548,009. The Company anticipates that
along with cash generated from Riverosa's operating activities, the net proceeds
from the proposed public offering will be sufficient to satisfy its cash
requirements for the next twelve [12] months and enable it to market and
advertise its products, expand the market as well as to develop a
brewpub/restaurant and microbrewery in the New York metropolitan area [See 'Use
of Proceeds'].
23
<PAGE>
PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RIVEROSA COMPANY, INC.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1995
Riverosa had a net [loss] of $(7,351) for the three months ended March 31,
1996 as compared to net income of $138 for the three months ended March 31,
1995. This is primarily the result of an increase in selling, general and
administrative expenses.
Riverosa's sales increased for the three months ended March 31, 1996 to
$24,136 as compared to sales of $19,430 for the three months ended March 31,
1995. This increase of $4,706, or 24%, represents the effect of the Company's
1995 efforts to expand its distribution base.
Riverosa's gross profit as an overall percentage of sales, however,
decreased for the three months ended March 31, 1996 to $4,746 or 20% from $4,484
or 23% for the three months ended March 31, 1995. This is primarily attributable
to the increase in the pricing of the cost of ingredients to manufacture the
products and not being able to buy the ingredients at bulk prices.
Selling, general and administrative expenses for the three months ended
March 31, 1996 and 1995 were $11,347 and $2,535, respectively. This represents
an increase of approximately $9,000 which is primarily attributable to the sales
incentive contest, beer festivals and trade shows, and the design incentive
programs incurred in 1996 in an attempt to increase sales.
The operating ratios of Riverosa may not be indicative of results in the
future. The Company intends to engage in various activities such as public
relations, advertising, aggressive promotions and the hiring of account managers
which Riverosa did not have. Such activities are likely to increase expenses at
a rate faster than the increase of revenues for a period of time. The Company
believes that the increase of expenses will be significantly less than the
amount provided for working capital from the proceeds of this Offering. All of
these activities may affect the gross profit percentage and general and
administrative percentages.
FOR THE THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1995
Interest expense on the officers' loan payable decreased from $2,320 to
$750 for the three months ended March 31, 1996 compared to the three months
ended March 31, 1995 as a result of the pay down of the officers loans by
approximately $72,000 in 1995. No payments have been made in 1996 on these loans
with a balance of $29,634.
FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31,
1994
Riverosa had a net [loss] of $(4,724) for the year ended December 31, 1995
as compared to a net income of $14,861 for the year ended December 31, 1994.
This is primarily the result of a decrease in sales and gross profit in 1995.
The sales for Riverosa Company, Inc. for the years ended December 31, 1995
and 1994 were $81,185 and $195,095, respectively, a decrease of approximately
$114,000 or 58% in 1995. During 1993 and the early part of 1994, Riverosa had an
intensive marketing campaign to enter the marketplace for acceptance of its
products. Despite such efforts, sales decreased in 1994 and again in 1995
because the marketing efforts had not yet achieved the hoped for results within
that time period. The Company does not anticipate this trend in decreasing sales
to continue because it believes its marketing efforts have now enabled the
Company's product to achieve greater recognition and acceptance, and its
customers base is increasing in 1996. The Company intends to introduce at least
one new style beer within the next twelve months and explore changing the label
of the bottle. Emphasis will be placed on building businesses in bars and
restaurants as well as retail and supermarket outlets.
24
<PAGE>
The Company will attempt to increase its distribution base by adding new
distributors and design incentive and price promotion programs.
Riverosa experienced a decline in the gross profit from 31% to 25% for 1995
from 1994. The reason for this decrease of 6% in gross profit is primarily the
result of an increase in the costs of the ingredients to manufacture the
products and the Company's inability to purchase ingredients at bulk prices. The
Company believes it will not be able to improve its gross profit until
sufficient working capital is available. When the company has improved working
capital it will be in a position to purchase products more competitively, with
cheaper pricing and therefore take advantage of payment discounts, and this
should improve its gross profit.
Riverosa's selling, general and administrative expenses for the years ended
December 31, 1995 and 1994 were approximately $17,500 and $31,400, respectively,
a decrease of approximately $14,000 or 44%. The reason for the decrease in these
expenses was that 1994 included start up costs of approximately $12,000 for the
marketing and distributing campaign of its products which were not repeated in
1995. The Company plans on hiring an advertising public relations firm in 1996
to build upon the uniqueness of an organic beer.
Riverosa's interest expense for the years ended December 31, 1995 and 1994
were approximately $8,500 and $10,200, respectively. The decrease of $1,700 in
interest expense was attributable to the repayment of officers loans during the
year ended December 31, 1995 of approximately $72,000.
LIQUIDITY AND CAPITAL RESOURCES
FOR THE THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1995
At March 31, 1996, Riverosa had working capital of approximately $3,000.
This represents a decrease of approximately $7,000 in working capital from
December of 1995. This is primarily attributable to the net loss of $7,351 and
cash of $5,213 used for operations for the three months ended March 31, 1996.
Riverosa's cash balance at March 31, 1996 was approximately $44,000.
At March 31, 1995, Riverosa had cash of approximately $52,000 after
generating approximately $10,000 from operations and utilizing $15,500 in
repayment of officers loans.
It is anticipated that the Registrant will not rely upon Bev Tyme as a
capital source nor will Bev Tyme rely on the Company as a capital source.
FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31,
1994
The Riverosa Company, Inc. at December 31, 1995 had working capital of
approximately $15,000. During the years ended December 31, 1995 and 1994, the
Company generated cash of approximately $52,000 and $29,000, respectively, from
operations. During the year ended December 31, 1995, the Company repaid
officers' loans of approximately $72,000. The two officers of Riverosa, Ronald
Zagha and Marc Butler, each contributed in 1993 approximately $51,000 to be
utilized for working capital purposes. These monies were evidenced by notes with
interest of 10% per annum. The balance of these notes at December 31, 1995 and
March 31, 1996 were $29,634. At December 31, 1995, Riverosa's cash balance was
$38,782.
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BUSINESS
GENERAL
Perry's Majestic Beer, Inc., a Delaware corporation (the 'Company'), was
formed in December, 1995. On March 29, 1996, the Company entered into an
agreement to acquire Riverosa Company, Inc. ('Riverosa'), a New York
corporation, which was formed in November 1993. (References to the Company
includes the operations of Riverosa). See 'Certain Transactions.' The Company is
engaged in the marketing and sale of microbrewed beers and ales. Since June
1993, the Company has sold and marketed its flagship brand, Perry's Majestic
Beer ('Perry's'), which is distinguished by its use of organically grown barley
and hops. The Company's business strategy is to establish presence in the
craft-brewed beer market by creating and offering high quality full-flavored all
organic beers and other beers and/or ales. Presently, the Company's products are
produced under contract with Hoboken Brewing Company, a brewery located in
Hoboken, New Jersey, which produces, bottles and labels Perry's using the
Company's name and logo. The Company's products are distributed in the New York
metropolitan area under an exclusive distribution agreement with Mootch & Muck,
Inc. ('Mootch & Muck'), a subsidiary of the Company's parent company, Bev-Tyme,
Inc. ('Bev-Tyme'), a distributor of various beverages, beers and related
products. Perry's is presently distributed to retailers in ten stores and sold
in restaurants, supermarkets, beer and soda sales and retail outlets.
Perry's Majestic Beer is brewed with organically grown barley imported from
Canada and organically grown hops imported from Germany. It is a Vienna style
lager beer whose characteristics showcase the quality aspects of superior barley
flavor, distinguished by deep copper color and a big malt palette. In keeping
with its organic character, Perry's utilizes a 10-12 week brewing process that
introduces no herbicides, chemical pesticides or inorganic fertilizers in the
growing of the barley or hops. No additives, artificial ingredients or
preservatives are added during the brewing or bottling stages.
The Company anticipates that it will utilize proceeds from this offering to
expand the market for Perry's, develop new beers and ales and to establish and
operate a brewpub/restaurant and microbrewery in the New York metropolitan
area.
INDUSTRY OVERVIEW
According to the Institute for Brewery Studies ('IBS'), total beer
consumption in the United States in 1994 was approximately 6.2 billion gallons.
The production and sale of beer in the United States is dominated by major
domestic breweries, such as Adolph Coors Co., Anheuser-Busch, Inc. and Miller
Brewing Co. The major domestic breweries accounted for approximately 94% of the
beer consumed in the United States in 1994, imported beer accounted for
approximately 5% of consumption with domestic craft breweries (including
regional specialty breweries, contract brewing companies, microbreweries and
brewpubs) accounting for approximately 1%.
The Company participates in the specialty beer segment of the $50 billion
domestic beer market. Specialty beers are generally brewed according to
traditional German or English recipes and tend to be more full-bodied and more
bitter or tart in taste than mass-produced domestic beers. As a result, these
amber lagers and ales, stouts, porters, bocks, German recipe wheat beers and
seasonal brews tend to be more flavorful and fresher tasting. The domestic
specialty beer segment grew at a compound annual rate of approximately 37% in
the five years ended December 31, 1994, while volume in the overall domestic
beer market has remained relatively flat. The Company believes that this growth
in the specialty beer segment has resulted from several factors. Specialty beer
'made in small batches' from 'all natural ingredients' is better than mass
produced domestic and imported products, particularly powerful in light of the
trend among large brewers to minimize costs through the use of lower cost
adjuncts. The increased consumer demand for specialty beers allows for a price
premium relative to mass produced beers. This price premium results in high
profit margins throughout the distribution channel motivating distributors and
retailers to carry and promote products of the specialty beer segments.
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THE MICROBREWERY INDUSTRY
The revival of small local breweries, commonly known as microbreweries,
began in the late 1970s and early 1980s. Several national trends have combined
to create favorable conditions permitting the microbrewery industry to emerge
and grow. First, domestic breweries consolidated into the remaining industrial
breweries which resulted in a narrowing of the types of domestically-produced
beer available to consumers. This trend has benefited the microbrewery industry
which produces many different types of beer representing an expansion of beer
choices. Second, consumers have placed increasing emphasis on health and
nutrition as a principal element of contemporary lifestyle and have become more
focused on the health concerns and abuse relating to the consumption of alcohol.
As a result, consumers are reducing their level of consumption of alcoholic
beverages but are increasing the quality of alcoholic beverages they consume.
Due in part to its growth, the microbrewing industry has undergone
significant change and is now more accurately referred to as the 'craft beer'
industry. The craft beer industry has been broken into four industry
subgroups--regional specialty breweries, contract brewing companies,
microbreweries and brewpubs. Together there four subgroups comprise what was
previously described as the microbrewing industry. The IBS defines each of these
subgroups as follows:
Regional Specialty Brewery. A brewery which produces between 15,000 and
1,000,000 barrels of beer per year.
Contract Brewing Company. A business that does not brew its own beer, but
markets and sells beer brewed to its specifications by an existing brewery.
Microbrewery. A brewery that produces less than 15,000 barrels of
hand-crafted beer per year principally for distribution to restaurants, taverns
and retail stores, and in some cases for direct sale to consumers for on-site
consumption or take-out in small containers.
Brewpub. A restaurant/brewery that sells at least 50% of its beer
production to consumers for on-site consumption or take-out in small containers.
The microbrewing industry is currently experiencing growth. According to
the IBS, the amount of beer produced by microbreweries in the United States in
1994 grew by 50% from the amount produced in 1993 for a total of 2.5 million
barrel sales. Microbrewed beers' share of the total United States beer market
increased from approximately 0.9% in 1993 to approximately 1.3% in 1994.
PRODUCT DIVERSITY AND QUALITY
The Company intends to continue to expand its product line with additional
beers designed to appeal to varying consumer preferences. The Company currently
markets its organically brewed Perry's Majestic Beer. The Company intends to
establish a selection of year-round and seasonal beers that will attract
consumers to specialty beers and allow them to explore new tastes. In this
regard, the Company intends to introduce an ale and/or non-alcoholic beer within
one year after the completion of this offering. In the future the Company may
also explore the development of non-organic beers. Perry's Majestic Beer is
brewed for the Company, under contract with a non-affiliated third party, using
organic ingredients, and uses no additives, adjuncts or preservatives in the
brewing process. Perry's Majestic Beer presently utilizes organic barley
imported from Canada and organic hops from Germany. The Organic Growers and
Buyers Association and Organic Crop Improvement Association regularly inspect
and certify growers, storage silos, transport companies, malting houses, and
breweries to assure purity of ingredients. Before farms are certified as organic
they must not have used any herbicides or pesticides for three years.
BREWPUB
The Company has initiated efforts to identify a suitable location for its
brewpub in the City of New York. The Company has been reviewing various sites
looking for a suitable location. The Company's efforts are focused at present in
Manhattan, although no specific location has yet been identified. The Company
believes that the site must be located in an area which attracts people seeking
nighttime entertainment. In addition, the Company will evaluate the lease terms
of the potential sites and the amount of construction costs which may be
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paid by the landlord. The size of that facility will depend in significant part
upon its location, the proposed lease terms and the nature of the restaurant
facility which it will include. Once a specific location is identified the
Company will be able to project the brewing capacity of that location as well as
itemized costs. The Company has not begun the design of its brewery facility and
has not entered into any contract or commitment in connection with its
construction. The Company anticipates that the brewpub will utilize up-to-date
brewery and packaging technology. The Company's cost estimate for acquiring and
equiping the brewpub is based upon a budget of $500,000 for brewing equipment,
$150,000 for restaurant equipment and $350,000 for construction. The Company
believes it will open the brewpub within twelve (12) months of the date of this
prospectus.
COMPETITION
The beer industry is highly competitive and the Company expects competition
in the craft beer segment of the industry to increase. The Company will compete
with large domestic and foreign industrial breweries, as well as microbreweries
and brewpubs that produce high quality ale and lager beers. All industrial
breweries and many microbreweries have significantly greater resources than the
Company.
Domestic beer production is dominated by large American industrial
breweries, such as Anheuser-Busch, Inc., Miller Brewing Company, Stroh Brewery
Co., G. Heilman Brewing Co., Pabst Brewing Co. and Adolph Coors Co. all of which
have greater financial, production, distribution and marketing resources than
the Company. The major domestic breweries accounted for approximately 94% of the
beer produced in the United States in 1994. The large domestic beer producers
generally offer a homogeneous selection of beers designed for mass appeal. These
beers, principally light-bodied lagers and pilsners, are brewed using low cost
mass production techniques, lower cost adjuncts, such as rice and corn, and
relatively less hops. In contrast to the substantial growth in the specialty
beer segment in recent years, over the last ten (10) years, overall growth in
the domestic beer market has been relatively low, with volume growing at an
annual rate of less than 1% since 1984. Adult per capita annual beer consumption
in the United States has declined from 36 gallons in 1978 to 32 gallons in 1994.
The Company believes that this low growth rate and reduced beer consumption can
be attributed to a variety of factors, including increased concern about health
consequences of consuming alcoholic beverages; safety consciousness and concerns
about drinking and driving; a trend toward a diet including lighter, lower
caloric beverages such as diet soft drinks, juices and sparkling water products;
the increased activity of anti-alcohol consumer protection groups; an increase
in the minimum drinking age from 18 to 21 years in all states; the general aging
of the population; and increased federal and state excise taxes. The growing
consumer trend towards moderation in alcohol consumption has benefitted
specialty beers by resulting in beer drinkers' selective consumption of one or
two better tasting beers per sitting.
In response to the recent significant growth in the craft-beer industry,
several domestic industrial breweries are currently producing products to
compete with microbrewery products, such as Anheuser-Busch Elk Mountain and Red
Wolf beers and Miller--Red Dog beer and Miller Reserve Amber Ale 100% Barley
Draft. The Company believes that consumers will be attracted to locally produced
craft beers more so than industrial beers 'dressed-up' to look like local
craft-beers, because 'imitation' craft-beers generally lack the freshness and a
distinctive taste of a craft-beer.
Within the microbrewing industry, the Company believes that its principal
competitors will be microbreweries located in the Northeast Region of the United
States, such as Boston Beer Company, the producer of Samuel Adams Beers, and
brewpubs that produce high quality products. According to the IBS, there are at
least seven (7) brewpubs in the New York, New Jersey, Connecticut Tri-State area
and approximately forty (40) microbreweries in the Northeast Region (including
fifteen (15) which commenced operations in 1994), all of which will be in
competition with the Company.
The terms craft brewer and micro-brewer are usually used interchangeably by
consumers and within the industry to mean a small, independent brewer whose
predominant product is brewed with only traditional brewing processes and
ingredients. Craft brewers include contract brewers, small regional brewers and
brewpubs. Craft beers are full-flavored beers brewed with quality hops, malted
barley, yeast and water without adjuncts such as rice, corn or stabilizers or
water dilution used to lighten beer for mass production and consumption. In
response to increased consumer demand for more flavorful beers, the number of
craft brewed beers has increased dramatically. Currently there are more than 500
craft brewers. In addition to the many independent brewers and
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contract brewers, the three major brewers (Anheuser-Busch, Incorporated, Miller
Brewing Co. and Coors Brewing Co.) have all entered this fast-growing market,
either through developing their own specialty beers or by acquiring or forming
partnerships with existing craft brewers.
The Company competes directly with regional craft brewers such as The
Boston Beer Company, Sierra Nevada Brewing Company, Redhook Ale Brewery,
Incorporated and Anchor Brewing Company, other contract brewers such as Pete's
Brewing Company, foreign brewers such as Heineken, Molson, Corona, Amstel and
Becks, and other regional craft brewers and brewpubs. The Company also expects
competition by niche beers produced by affiliates of certain major domestic
brewers such as Anheuser-Busch, Incorporated, Miller Brewing Co. and Coors
Brewing Co. See 'Risk Factors--Competition.'
GOVERNMENT REGULATION
The Company's business is highly regulated by federal, state and local laws
and regulations, federal and state laws and regulations govern licensing
requirements, trade and pricing practices, permitted and required labeling,
advertising, promotion and marketing practices, relationships with distributors
and related matters. For example, federal and state regulators require warning
labels and signage on the Company's products. The Company believes that is has
obtained all regulatory permits and licenses necessary to operate its business
in the states where the Company's products are currently being distributed.
Failure on the part of the Company to comply with federal, state or local
regulations could result in the loss or revocation or suspension of the
Company's licenses, permits or approvals and accordingly could have a material
adverse effect on the Company's business. Governmental entities also levy
various taxes, license fees and other similar charges and may require bonds to
ensure compliance with applicable laws and regulations. The Company must also
comply with numerous federal, state and local environmental protection laws. The
Company is operating within existing laws and regulations or is taking action
aimed at assuring compliance therewith. The Company does not expect compliance
with such laws and regulations to materially affect the Company's capital
expenditures, earnings or competitive position.
The federal government and each of the states levy excise taxes on
alcoholic beverages, including beer. The federal excise tax is currently $18.00
per barrel ($1.30 per case of 24-12 oz. containers) and the state excise taxes
range from $23.80 per barrel to $1.24 per barrel. Federal excise taxes are
typically included in the price charged to retailer by the distributors. All
excise taxes are ultimately passed on to the consumer. It is possible that in
the future the rate of excise taxation could be increased by both the federal
government and a number of state governments. Further increases in excise taxes
on beer, if enacted, could materially and adversely affect the Company's
financial condition and results of operations. There is a small brewers federal
excise tax credit that grants each brewing company with production under
2,000,000 barrels a year an $11.00 credit per barrel on its first 60,000 barrels
produced annually. The Company is currently able to take advantage of up to a
$660,000 annual credit pursuant to this exemption. Although the Company is not
aware if any plans by the federal government to reduce or eliminate this small
brewer's credit or by federal or state authorities to increase the excise tax
rate, and such change could have a material adverse effect on the Company.
Certain states, including California, Connecticut, Delaware, Iowa, Maine,
Massachusetts, Michigan, New York, Oregon and Vermont, and a small number of
local jurisdictions, have adopted restrictive beverage packaging laws and
regulations that require deposits on beverage containers. Congress and a number
of additional state or local jurisdictions may adopt a similar legislation in
the future, and in such event, the Company may be required to incur significant
expenditures in order to comply with such legislation. Changes to federal and
state excise taxes on beer production, federal and state environmental
regulations, including laws relating to packaging and waste discharge, or any
other federal and state laws or regulations which affect the Company's products
could materially adversely affect the Company's results of operations.
SALES, DISTRIBUTION AND MARKETING
The Company intends to distribute and sell its products directly to beer
distributors who will sell directly to retail establishments such as grocery
stores and convenience stores and to bars and restaurants. The Company also
intends to market its products through a brewpub/restaurant it intends to
construct.
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The Company has initiated efforts to identify a suitable location for its
brewpub in the City of New York. The Company's efforts are focused at present in
Manhattan, although no specific location has yet been identified. The size of
that facility will depend in significant part upon its location, the proposed
lease terms and the nature of the restaurant facility which it will include.
Once a specific location is identified the Company will be able to project the
brewing capacity of that location as well as itemized costs. The Company has not
begun the design of its brewery facility and has not entered into any contract
or commitment in connection with its construction. The Company anticipates that
the brewpub will utilize up-to-date brewery and packaging technology.
The Company distributes its products in the New York metropolitan area
through Mootch & Muck, a subsidiary of the Company's parent, Bev-Tyme, Inc. The
Company intends to enter into similar regional distribution arrangements
covering other areas of the United States. The Company has not entered into any
other written distribution arrangements and there can be no assurance that the
Company will be able to enter into distribution arrangements with other local
distributors on terms satisfactory to the Company or at all.
The Company's beers are presently distributed in 14 states: New York, New
Jersey, Massachusetts, Rhode Island, California, Arizona, Ohio, Michigan,
Florida, Georgia, North Carolina, Maryland, Virginia and Illinois.
The Company's marketing efforts will include advertising in regional and
national craft-beer publications, local media outlets (i.e. newspapers) and at
local craft-beer conventions and microbrew tasting events.
SUPPLIERS
The Company purchases its barley and hops from Briess Malting and Hop
Union. The Company has no written agreement with the suppliers.
CONTRACT BREWING
The Company believes that contract brewing gives it economic advantages
through lower capital and overhead costs per barrel and through lower
transportation costs than if it owned a single brewery to produce its beer.
Presently, the Company's products are produced under contract with Hoboken
Brewing Company, a brewery located in Hoboken, New Jersey, which produces,
bottles and labels Perry's using the Company's name and logo. The contract
provides for a term of one (1) year and for the brewing of the beer in
accordance with the Company's formula. The Company's formula remains the
exclusive property of the Company and is exclusive to the private label Perry's
Majestic Beer. The Company must place production orders not less than thirty
(30) days prior to delivery and production must be made in minimum lots of forty
(40) barrels. Although the Company's beer is presently brewed at Hoboken, there
can be no assurance that this brewery will continue to provide services to the
Company. The Company previously had a contract with Frankenmuth, another brewing
company which was terminated due to the destruction of the brewery in a tornado.
In the event the Company is unable to continue its relationship with Hoboken for
any reason, the Company would have to enter into a relationship with another
brewery which is able to produce organic beer to the Company's standards.
Although the Company believes that there are other such brewing facilities which
would be available, and the Company anticipates brewing a portion of its
products at its proposed brewpub facility, there can be no assurance that the
Company will be able to enter into such an agreement with another brewing
facility, or to do so on terms which are similarly favorable.
DISTRIBUTION
The Company distributes Perry's in ten (10) states in the United States.
The Company distributes its beer through a network of over ten (10)
distributors.
ALCOHOL BEVERAGE REGULATION AND TAXATION
The manufacture and sale of alcoholic beverages is a highly regulated and
taxed business. The Company's operations may be subject to more restrictive
regulations and increased taxation by federal, state and local governmental
entities than are those of non-alcohol related businesses. Federal, state and
local laws and regulations govern the production and distribution of beer. These
laws and regulations govern permitting, licensing, trade practices, labeling,
advertising, marketing, distributor relationships and related matters. Federal,
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state and local governmental entities also levy various taxes, license fees and
other similar charges and may require bonds to ensure compliance with applicable
laws and regulations. Failure by the Company to comply with applicable federal,
state or local laws and regulations could result in penalties, fees, suspension
or revocation of permits, licenses or approvals. There can be no assurances that
other or more restrictive laws or regulations will not be enacted in the future.
See 'Risk Factors--Government Regulation; Taxation.'
LICENSES AND PERMITS
The Company purchases beer from one or more contract brewers and sells it
to distributors or retailers pursuant to a federal wholesaler's basic permit
issued to Riverosa. The Company has made application to have that permit issued
in the name of the Company. Brewery and wholesale operations require various
federal, state and local licenses, permits and approvals. In addition, some
states prohibit wholesalers and/or retailers from holding an interest in any
supplier such as the Company. Violation of such regulations can result in the
loss or revocation of existing licenses by the wholesale, retailer and/or
suppliers. The loss or revocation of any existing licenses, permits or
approvals, failure to obtain any additional or new licenses, permits or
approvals or the failure to obtain approval for the transfer of any existing
permits or licenses, including those required as a result of the
recapitalization, could have a material adverse effect on the ability of the
Company to conduct its business. On the federal level, brewers are required to
file with the Bureau of Alcohol, Tobacco and Firearms ('ATF') an amended
Brewer's Notice every time there is a material change in the brewing process or
brewing equipment, change in the brewery's location, change in the brewery's
management or a material change in the brewery's ownership. Brewers must seek
ATF approval of an amended Brewer's Notice prior to the change taking place.
Wholesalers must notify ATF within 30 days of any change in the wholesaler's
operations, change in the wholesalers's location, change in the wholesaler's
management or a material change in the wholesaler's ownership. The Company's
operations are subject to audit and inspection by ATF at any time. The Company
has never been audited or inspected by ATF.
On the state and local level, some jurisdictions merely require notice of
any material change in the operations, management or ownership of a permittee or
licensee. Some jurisdictions require advance approvals and require that new
licenses, permits or approvals must be applied for and obtained in the event of
a change in the management or ownership of the permittee or licensees. State and
local laws and regulations governing the sale of beer within a particular state
by an out-of-state brewer or wholesaler vary from locale to locale.
ATF permits and brewer's registrations can be suspended, revoked or
otherwise adversely affected for failure to pay tax, to keep proper accounts, to
pay fees, to bond premises, to abide by federal alcohol beverage production and
distribution regulations and to notify ATF of any change (as described above),
or if holders of 10% or more of the Company's equity securities are found to be
of questionable character. Permits, licenses and approvals from state regulatory
agencies can be revoked for many of the same reasons.
Because of the many and various state and federal licensing and permitting
requirements, there is a risk that one or more regulatory authorities could
determine that the Company has not complied with applicable licensing or
permitting regulations or does not maintain the approvals necessary for it to
conduct business within their jurisdictions. There can be no assurance that any
such regulatory action would not have a material adverse effect upon the Company
or its operating results.
TAXATION
The federal government and each of the states levy excise taxes on
alcoholic beverages, including beer. The federal excise tax is $18.00 per
barrel. For brewers producing no more than 2,000,000 barrels of beer per
calendar year the federal excise tax is $7.00 per barrel on the first 60,000
barrels of beer removed for consumption or sale during a calendar year. As the
brewer of record of its beers, the Company has been able to take advantage of
this reduced tax on the first 60,000 barrels of its beer produced. Individual
states also impose excise taxes on alcoholic beverages in varying amounts, which
have also been subject to change. The state excise taxes are usually paid by the
Company's distributors.
Congress and state legislatures routinely consider various proposals to
impose additional excise taxes on the production and distribution of alcoholic
beverages, including beer, in connection with various governmental
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budget balancing or funding proposals. Further increases in excise taxes on
beer, if enacted, could result in a general reduction of malt beverage sales.
TRADEMARKS
The Company has obtained U.S. Trademark Registration for Perry's Majestic.
The Company regards its trademark as having substantial value and as being an
important factor in the marketing of its products. The Company is not aware of
any infringing uses that could materially affect its current business or any
prior claim to the trademarks that would prevent the Company from using such
trademarks in its business. The Company's policy is to pursue registration of
its marks whenever possible and to oppose vigorously any infringements on its
marks.
MANAGEMENT AND EMPLOYEES
As of July 15, 1996, the Company employed a total of 2 employees on a full
time basis.
The Company has experienced no work stoppages and considers its employee
relations to be satisfactory. The Company's employees are not represented by a
labor union.
CONFLICT OF INTERESTS
After this Offering, Bev-Tyme will continue to own 100% of the Company's
outstanding shares of Preferred Stock. It is anticipated that Mootch & Muck will
continue to distribute a significant percentage of the Company's products, at or
near present levels and that the Company will continue to operate its executive
offices and distribution facilities leased and managed by Bev-Tyme. In addition,
Robert Sipper, Bev-Tyme's President and a Bev-Tyme director, is Chief Executive
Officer of the Company and a member of the Company's Board of Directors. Because
of Bev-Tyme's ownership interest in the Company and the identity of certain
management, certain conflicts of interest may occur between the Company and
Bev-Tyme. In such instances, any member of the Board of Directors who is also a
member of the Bev-Tyme Board of Directors may be precluded from participating in
corporate decisions. Although the Board of Directors of the Company has not
adopted any written policy on this matter, the Delaware Corporation Law contains
specific provisions governing such conflicts.
LIABILITY INSURANCE
The Company, like other manufacturers of products that are ingested, faces
inherent risk of exposure to product liability claims if, among other things,
the use of its products results in an injury. The Company currently does not
have any product liability insurance. There can be no assurance that the Company
will be able to obtain product liability insurance on terms acceptable to the
Company or at all and once obtained there can be no assurance that the Company
will be able maintain such insurance coverage. Moreover, the amount and scope of
any coverage may be inadequate to protect the Company in the event that a
product liability claim is successfully asserted against the Company.
LITIGATION
There is no material litigation pending or threatened against the Company
nor are there any such proceedings to which the Company is a party.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names and ages of the directors, executive officers and significant
employees, and promoters of the Company are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Robert Sipper................................... 42 President, Chief Executive Officer, Chief
Financial Officer, Principal Accounting
Officer and Director
Mark Butler..................................... 44 Vice President--Sales and Secretary and Director
Matthew Harriton................................ 31 Director
</TABLE>
BACKGROUND OF EXECUTIVE OFFICERS AND DIRECTORS
Robert Sipper has been Chief Executive Officer and Chief Financial officer
of the Company since March 1, 1996. He has served as a director of Bev-Tyme,
Inc. since November 1993 and Chief Executive Officer and President of Bev-Tyme,
Inc. since January, 1994. He graduated with a J.D. degree from Vermont Law
School in 1978 and entered private practice. He was associated with Dubbs,
Leopold, Davis & DePodwin, Attorneys at Law from 1979-1981. He became a partner
in the law firm of Leopold & Sipper, Attorneys at Law, from 1981 to March 1989.
In March, 1989, Mr. Sipper left the private practice of law and became Chief
Operating Officer/Executive Vice President of Mootch & Muck, a position he holds
today, which was the master Evian distributor for the Metropolitan New York-New
Jersey territory as well as the distributor of many other beverages and selected
specialty foods. Mr. Sipper established a subdistributor network for Evian and
other products in this territory. In 1990, Mr. Sipper negotiated the sale of
Mootch & Muck's Evian Master Distributor Agreement to Canada Dry Bottling
Company of New York.
Mark Butler has been President, Vice President--Sales and Secretary of
Riverosa since January 1990. Mr. Butler was appointed to the Company's Board of
Directors on April 4, 1996. Mr. Butler is also President of Mill Hill
Associates, a company which brokers various beverages to wholesaler and
distributor networks. From April 1988 to January 1990, Mr. Butler was National
Sales Manager for Snapple Beverage Co. From February 1986 to March 1988, he was
National Sales Manager for Glenville Importers. From November 1984 to January
1986, Mr. Butler was National Sales Manager of American Natural Beverage Corp.
From September 1980 to October 1984, he was president of Newport-Cambridge
Provisions which distributed beverages, including exclusive distribution of Soho
Natural Soda in New England. Mr. Butler received a degree in English/Business
Administration and Economics from Western State College of Colorado.
Matthew L. Harriton, age 31, has served on the Company's Board of Directors
since January 3, 1996. Mr. Harriton is the Chief Financial Officer of Embryo
Development Corporation. Embryo Development Corporation is a public company
which trades on NASDAQ and which specializes in developing and distributing
medical devices. Prior to joining Embryo Development Corporation, Mr. Harriton's
professional experience included positions at CIBC Wood Gundy Securities
Corporation from June 1994 to December 1995, Coopers & Lybrand from September
1990 to May 1994, and The First Boston Corporation from June 1986 to June 1988.
Through private investments Mr. Harriton has been involved with the start-up and
development of several restaurants located in Manhattan. Mr. Harriton also
serves as a director of Decor Group, Inc., a privately held company involved in
the home decorating industry. He is a graduate of Lehigh University and received
his M.B.A. from Duke University's Fuqua School of Business.
EXECUTIVE COMPENSATION
No cash or other compensation was paid or accrued by the Company to or on
behalf of the Company's Chief Executive Officer or any of the other executive
officers of the Company since its formation. Each director of the Company is
entitled to receive reasonable out-of-pocket expenses incurred in attending
meetings of the Board of
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Directors of the Company. The members of the Board of Directors intend to meet
at least quarterly during the Company's fiscal year, and at such other times
duly called.
EMPLOYMENT AGREEMENTS
As of April 4, 1996, the Company entered into a three (3) year employment
agreement with Mark Butler pursuant to which Mr. Butler serves as the Company's
Vice President of Sales. The agreement provides for Mr. Butler to receive a
salary of $25,000 per annum until the closing of this offering and thereafter
$50,000 per annum. In addition, on each of March 31, 1997, March 31, 1998, and
March 31, 1999, the Company has agreed to grant Mr. Butler an option to purchase
100,000 shares of Common Stock exercisable at fair market value on the date of
issuance.
As of April 1996, the Company entered into a three (3) year employment
agreement with Robert Sipper pursuant to which Mr. Sipper serves as the
Company's President. The agreement provides for Mr. Sipper to receive a salary
of $50,000 per annum.
1996 STOCK PLAN
In March 1996, the Board of Directors of the Company adopted, and the
stockholders of the Company approved the adoption of, the 1996 Stock Plan
(hereinafter called the '1996 Plan'). The purpose of the 1996 Plan is to provide
an incentive and reward for those executive officers and other key employees in
a position to contribute substantially to the progress and success of the
Company, to closely align the interests of such employees with the interests of
stockholders of the Company by linking benefits to stock performance and to
retain the services of such employees, as well as to attract new key employees.
In furtherance of that purpose, the 1996 Plan authorizes the grant to executives
and other key employees of the Company and its subsidiaries of stock options,
restricted stock, deferred stock, bonus shares, performance awards, dividend
equivalent rights, limited stock appreciation rights and other stock-based
awards, or any combination thereof. The 1996 Plan is expected to provide
flexibility to the Company's compensation methods, after giving due
consideration to competitive conditions and the impact of federal tax laws. The
Company anticipates that the Stockholders will be requested to approve the
adoption of the 1996 Plan in the near future.
The maximum number of shares of Common Stock with respect to which awards
may be granted pursuant to the 1996 Plan is initially 2,000,000 shares. Shares
issuable under the 1996 Plan may be either treasury shares or authorized but
unissued shares. The number of shares available for issuance will be subject to
adjustment to prevent dilution in the event of stock splits, stock dividends or
other changes in the capitalization of the Company.
The 1996 Plan will be administered by a committee consisting of not less
than two (2) members of the Board of Directors who are 'disinterested' within
the meaning of Rule 16b-3 promulgated under the Exchange Act and 'outside
directors' within the meaning of Section 162(m) of the Code (including persons
who may be deemed outside directors by virtue of any transitional rule which may
be adopted by the Internal Revenue Service implementing such Section). The Board
will determine the persons to whom awards will be granted, the type of award
and, if applicable, the number of shares to be covered by the award. During any
calendar year, no person may be granted under the 1996 Plan awards aggregating
more than 100,000 shares (which number shall be subject to adjustment to prevent
dilution in the event of stock splits, stock dividends or other changes in
capitalization of the Company).
TYPES OF AWARDS
Stock Options. Options granted under the 1996 Plan may be 'incentive stock
options' ('Incentive Options') within the meaning of Section 422 of the Code or
stock options which are not incentive stock options ('Non-Incentive Options'
and, collectively with Incentive Options, hereinafter referred to as 'Options').
The persons to whom Options will be granted, the number of shares subject to
each Option granted, the prices at which Options may be exercised (which shall
not be less than the fair market value of shares of Common Stock on the date of
grant), whether an Option will be an Incentive Option or a Non-Incentive Option,
the time or times and the extent to which Options may be exercised and all other
terms and conditions of Options will be determined by the Committee.
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<PAGE>
Each Incentive Option shall terminate no later than ten (10) years from the
date of grant, except as provided below with respect to Incentive Options
granted to 10% Stockholders (as hereinafter defined). No Incentive Option may be
granted at any time after October 2006. Each Non-Incentive Option shall
terminate not later than fifteen (15) years from the date of grant. The exercise
price at which the shares may be purchased may not be less than the Fair Market
Value of shares of Common Stock at the time the Option is granted, except as
provided below with respect to Incentive Options granted to 10% Stockholders.
Options granted to executive officers may not be exercised at any time prior to
six (6) months after the date of grant.
The exercise price of an Incentive Option granted to a person possessing
more than 10% of the total combined voting power of all shares of stock of the
Company or a parent or subsidiary of the Company ('10% Stockholder') shall in no
event be less than 110% of the Fair Market Value of the shares of the Common
Stock at the time the Incentive Option is granted. The term of an Incentive
Option granted to a 10% Stockholder shall not exceed five (5) years from the
date of grant.
The exercise price of the shares to be purchased pursuant to each Option
shall be paid (i) in full in cash, (ii) by delivery (i.e., surrender) of shares
of the Company's Common Stock owned by the optionee at the time of the exercise
of the Option, (iii) in installments, payable in cash, if permitted by the
Committee or (iv) any combination of the foregoing. The stock-for-stock payment
method permits an optionee to deliver one (1) or more shares of previously owned
Common Stock of the Company in satisfaction of the exercise price of subsequent
Options. The optionee may use the shares obtained on each exercise to purchase a
larger number of shares on the next exercise. (The foregoing assumes an
appreciation in value of previously acquired shares). The result of the
stock-for-stock payment method is that the optionee can generally avoid
immediate tax liability with respect to any appreciation in the value of the
stock utilized to exercise the Option.
Shares received by an optionee upon exercise of a Non-Incentive Option may
not be sold or otherwise disposed of for a period determined by the Board upon
grant of the Option, which period shall be not less than six (6) months nor more
than three (3) years from the date of acquisition of the shares (the 'Restricted
Period'), except that, during the Restricted Period (i) the optionee may offer
the shares to the Company and the Company may, in its discretion, purchase up to
all the shares offered at the exercise price and (ii) if the optionee's
employment terminates during the Restricted Period (except in limited
instances), the optionee, upon written request of the Company, must offer to
sell the shares to the Company at the exercise price within seven (7) business
days. The Restricted Period shall terminate in the event of a Change in Control
of the Company (as defined), or at the discretion of the Board. After the
Restricted Period, an optionee wishing to sell must first offer such shares to
the Company at the Fair Market Value.
Limited Stock Appreciation Rights. The Committee is authorized, in
connection with any Option granted under the 1996 Plan, to grant the holder of
such Option a limited stock appreciation right ('LSAR'), entitling the holder to
receive, within sixty (60) days following a Change in Control, an amount in cash
equal to the difference between the exercise price of the Option and the market
value of the Common Stock on the effective date of the Change in Control. The
LSAR may be granted in tandem with an Option or subsequent to grant of the
Option. The LSAR will only be exercisable to the extent the related Option is
exercisable and will terminate if and when the Option is exercised.
Restricted and Deferred Stock. An award of restricted stock or deferred
stock may be granted under the 1996 Plan. Restricted stock is subject to
restrictions on transferability and other restrictions as may be imposed by the
Committee at the time of grant. In the event that the holder of restricted stock
ceases to be employed by the Company during the applicable restrictive period,
restricted stock that is at the time subject to restrictions shall be forfeited
and reacquired by the Company. Except as otherwise provided by the Committee at
the time of grant, a holder of restricted stock shall have all the rights of a
stockholder including, without limitation, the right to vote restricted stock
and the right to recover dividends thereon. An award of deferred stock is an
award that provides for the issuance of stock upon expiration of a deferral
period established by the Committee. Except as otherwise determined by the
Committee, upon termination of employment of the recipient of the award during
the applicable deferral period, all stock that is at the time subject to
deferral shall be forfeited. Until such time as the stock which is the subject
of the award is issued, the recipient of the award has no rights as a
stockholder.
Dividend Equivalent Awards. A dividend equivalent gives the recipient the
right to receive cash or other property equal in value to the dividends that
would be paid if the recipient held a specified number of shares of
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Common Stock. A dividend equivalent right may be granted as a component of
another award or as a free standing award.
Bonus Shares and Other Share Based Awards. The 1996 Plan authorizes the
Committee to grant shares as a bonus, or to grant shares or other awards in lieu
of obligations of the Company to pay cash under other plans or compensatory
arrangements, upon such terms as shall be determined by the Committee. The 1996
Plan also authorizes the Committee to grant other forms of awards based upon,
payable in, or otherwise related in whole or in part to, Common Stock,
including, without limitation, convertible or exchangeable debentures or other
debt securities, other rights convertible or exchangeable into shares, purchase
rights for shares, awards contingent upon performance of the Company, and awards
valued by reference to the book value of shares of Common Stock or awards
determined by reference to the value of securities of, or the performance of,
specified subsidiaries.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date of this
Prospectus with respect to the beneficial ownership of the outstanding shares of
the Company's Common Stock by (i) any holder of more than five percent (5%) of
the outstanding shares; (ii) the Company's officers and directors; and (iii) the
directors and officers of the Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE PERCENTAGE
(%) OF (%) OF (%) OF
SHARES OF COMMON COMMON TOTAL
NAME AND COMMON STOCK STOCK SHARES OF COMBINED
ADDRESS OF STOCK BEFORE AFTER PREFERRED VOTE BEFORE
BENEFICIAL OWNER(1) OWNED OFFERING OFFERING STOCK OFFERING
- -------------------------------------------------- --------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Robert Sipper..................................... 120,000 4.8 3.9 0 1.2
Marketing Specialities, Inc....................... 1,470,000 58.8 47.4 0 14.7
Hartley T. Bernstein(2)........................... 500,000 20.0 16.1 0 5.0
Bev-Tyme, Inc.(3)................................. 0.0 0 0 7,500,000 75.0
Matthew Harriton.................................. 50,000 2.0 1.6 0.0 0.0
Mark Butler....................................... 0.0 0.0 0.0 0.0 0.0
All officers and directors as a group
(three (3) persons)............................. 170,000 6.8 5.5 0 0
</TABLE>
- ------------------
(1) The address of each Stockholder shown above except as otherwise indicated is
c/o Perry's Majestic Beer, Inc., 134 Morgan Avenue, Brooklyn, New York.
(2) The address of Hartley T. Bernstein is 950 Third Avenue, New York, New York
10022. Mr. Bernstein is a partner in the firm of Bernstein & Wasserman, LLP,
which firm is passing upon certain legal matters in connection with this
offering for the Company.
(3) Includes 500,000 shares of Series A Preferred Stock and 7,000,000 shares of
Series B Preferred Stock.
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<PAGE>
CERTAIN TRANSACTIONS
On October 26, 1995, Bev-Tyme, Inc. entered into a letter of intent to
acquire Riverosa for the sum of $250,000. As part of that understanding,
Bev-Tyme agreed that Riverosa or its successors would enter into a three (3)
year employment agreement with Mark Butler at an annual salary of $25,000 year,
subject to appropriate increase in the event Riverosa (or it successors)
successfully completed an initial public offering of its securities resulting in
net proceeds in excess of $2,000,000. The Employment Agreement would also
provide for an annual bonus as well as stock options based upon performance. In
January 1996, Bev-Tyme, Inc. assigned its rights under the letter of intent to
the Company, which entered into a definitive agreement with Riverosa on March
29, 1996, pursuant to which the Company agreed to pay the sum of $250,000 to
acquire Riverosa. As of April 4, 1996, the Company entered into a three (3) year
employment agreement with Mr. Butler pursuant to which he will receive an annual
salary of $25,000 per year to be increased to $50,000 per year upon completion
of the Company's initial public offering. The Agreement also provides for
payment of an annual bonus based at the sole discretion of the Company's Board
of Directors. Further, the Agreement provides that Mr. Butler will receive
options to purchase 100,000 shares of the Company's stock on each of March 31,
1997, March 31, 1998 and March 31, 1999, at fair market value as of the date of
issuance. The Agreement provides further that Mark Butler, one of the principal
shareholders of Riverosa was appointed to the Company's board of directors on
April 1, 1996. A contract deposit of $150,000 was paid into escrow upon
execution of the agreement and the balance of $100,000 is payable pursuant to a
promissory note bearing interest at a rate of 12 percent (12%) per year. The
promissory note is payable upon the earlier of (i) one year from the date of
issuance or (ii) the closing of the Company's initial public offering.
Prior to the acquisition, Bev-Tyme, through its subsidiary, acted as a
distributor of Perry's Majestic Beer. In January 1996, the Company issued an
aggregate of 2,500,000 shares of its common stock to seven (7) parties for total
consideration of $50,000. These shareholders are Robert Sipper, Hartley
Bernstein, Matthew Harriton, Marketing Specialities, Inc., Ulster Investments
Ltd. and Judith Pace. Robert Sipper is a Director and President of the Company
and of Bev-Tyme. Matthew Harriton is a Director of the Company. Hartley
Bernstein is a Director of Bev-Tyme and a member of Bernstein & Wasserman, LLP,
counsel to the Company. In March 1996, the Company issued to Bev-Tyme 500,000
shares of convertible Series A Preferred Stock and 7,000,000 shares of Series B
Preferred Stock for $150,000 and 400,000 shares of Series C Preferred Stock of
Bev-Tyme. Each share of Bev-Tyme Series C Preferred Stock pays an annual
dividend of $.50 per share and is convertible at the option of the holder into
1.8 shares of Bev-Tyme Common Stock. The Bev-Tyme Series C Preferred Stock has
the right to vote on all matters presented to Bev-Tyme shareholders at the rate
of 1.8 votes per share and is redeemable at a price of $.05 per share so long as
the closing bid price of the Bev-Tyme Common Stock has equaled or exceeded
$20.00 per share for twenty (20) consecutive days. The Company issued these
shares in January 1996 and March 1996 in order to generate funds to acquire
Riverosa, produce and market its product prior to this Offering, and pay the
expenses of this Offering. Each share of the Company's Class A Preferred Stock
issued to Bev-Tyme is convertible into one (1) share of Common Stock and is
entitled to one vote on all corporate matters. The Class B Preferred Stock
issued to Bev-Tyme is not convertible. Each share of Class B Preferred Stock is
entitled to one vote on all corporate matters. Each share of the Bev-Tyme Series
C Preferred Stock issued to the Company is convertible into 18 shares of common
stock and possesses one vote on all corporate matters. As a result of the
foregoing transactions, Bev-Tyme currently owns seventy-five percent (75%) of
the Company's voting stock.
In March, 1996, the Company borrowed an aggregate of $150,000 from seven
(7) unaffiliated lenders (the 'Bridge Lenders'). In exchange for making loans to
the Company, 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 are due and payable upon the earlier of (i) July 31,
1996 or (ii) the closing of an initial underwritten public offering of the
Company's securities. The Company intends to use a portion of the proceeds of
this Offering to repay the Bridge Lenders. See 'Use of Proceeds.' The Bridge
Lenders were granted the right to receive a total of 3,000,000 Class A Warrants.
The Bridge Lenders subsequently waived their right to receive the Class A
Warrants. 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. See 'Bridge Financing' and 'Underwriting.'
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<PAGE>
DESCRIPTION OF SECURITIES
The Company is offering 583,335 shares of Common Stock, par value $.0001
per share.
COMMON STOCK
The Company is authorized to issue up to 25,000,000 shares of Common Stock,
of which 2,500,000 shares will be issued and outstanding as of the date of this
Prospectus. All of the issued and outstanding shares of Common Stock will be
fully paid, validly issued and non-assessable.
Subject to the rights of holders of Preferred Stock, if any, holders of
shares of Common Stock of the Company are entitled to share equally on a per
share basis in such dividends as may be declared by the Board of Directors out
of funds legally available therefor. There are presently no plans to pay
dividends with respect to the shares of Common Stock. See 'Dividend Policy.'
Upon liquidation, dissolution or winding up of the Company, after payment of
creditors and the holders of any senior securities of the Company, including
Preferred Stock, if any, the assets of the Company will be divided pro rata on a
per share basis among the holders of the shares of Common Stock. The Common
Stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the Common Stock and the Common Stock is not subject to call. The holders of
Common Stock do not have any pre-emptive or other subscription rights.
Holders of shares of Common Stock are entitled to cast one (1) vote for
each share held at all stockholders' meetings including the annual meeting, for
all purposes, including the election of directors. The Common Stock does not
have cumulative voting rights.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 15,000,000 shares of
'blank check' Preferred Stock, whereby the Board of Directors of the Company
shall have the authority, without further action by the holders of the
outstanding Common Stock, to issue shares of Preferred Stock from time to time
in one or more classes or series, to fix the number of shares constituting any
class or series and the stated value thereof, if different from the par value,
and to fix the term of any such series or class, including dividend rights,
dividend rates, conversion or exchange rights, voting rights, rights and terms
of redemption (including sinking fund provisions), the redemption price and the
liquidation preference of such class or series. As of the date of this
Prospectus, there are 500,000 shares of Series A Preferred Stock and 7,000,000
shares of Series B Preferred Stock issued and outstanding. The Company has
agreed with the Representative that it will not issue any additional shares of
preferred stock for a period of twelve (12) months from the date of this
Prospectus without the prior written consent of the Representative.
SERIES A PREFERRED STOCK
Designation and Amount; Par Value. The shares of such series are
designated as Series A Preferred Stock and the number of shares constituting
such series is 500,000, 500,000 of which are issued and outstanding prior to the
Effective Date of the Offering. The Series A Preferred Stock has $.0001 par
value per share.
Dividends. Holders of the Series A Preferred Stock do not have any right
to the payment of any dividend.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, each share
of Series A Preferred Stock shall have a liquidation preference of $.20 plus
unpaid annual dividends that have accrued to date of payment, if any.
Voting Rights. Each holder of Series A Preferred Stock shall be entitled
to one (1) vote per share on all matters presented to the stockholders of the
Company.
Conversion Rights. Each share of Series A Preferred Stock may be converted
into one (1) share of the Company's Common Stock at the option of the holder.
Rank. The shares of Series A Preferred Stock rank senior to all series of
preferred stock and the Common Stock in all respects.
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<PAGE>
SERIES B PREFERRED STOCK
Designation and Amount; Par Value. The shares of such series are
designated as Series B Preferred Stock and the number of shares constituting
such series is 7,000,000, 7,000,000 of which are issued and outstanding prior to
the Effective Date of the Offering. The Series B Preferred Stock has $.0001 par
value per share.
Dividends. Holders of the Series B Preferred Stock do not have any right
to the payment of any dividend.
Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, each share
of Series B Preferred Stock shall have a liquidation preference of $.01 plus
unpaid annual dividends that have accrued to date of payment, if any.
Voting Rights. Each holder of Series B Preferred Stock shall be entitled
to one (1) vote per share on all matters presented to the stockholders of the
Company.
Rank. The shares of Series B Preferred Stock rank senior to all series of
preferred stock and the Common Stock in all respects except to the Series A
Preferred Stock.
DELAWARE ANTI-TAKEOVER LAW
The Company is governed by the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law enacted in 1988. In general,
the law prohibits a Delaware public corporation from engaging in a 'business
combination' with an 'interested stockholder' for a period of three (3) years
after the date of the transaction in which the person became an interested
stockholder, unless it is approved in a prescribed manner. As a result of
Section 203, potential acquirors of the Company may be discouraged from
attempting to effect acquisition transactions with the Company, thereby possibly
depriving holders of the Company's securities of certain opportunities to sell
or otherwise dispose of such securities at above-market prices pursuant to such
transactions.
LIMITATION ON LIABILITY OF DIRECTORS
In connection with the Offering, the Representative has agreed to indemnify
the Company, its directors, and each person who controls it within the meaning
of Section 15 of the Securities Act with respect to any statement in or omission
from the registration statement or the Prospectus or any amendment or supplement
thereto if such statement or omission was made in reliance upon information
furnished in writing to the Company by the Representative specifically for or in
connection with the preparation of the registration statement, the prospectus,
or any such amendment or supplement thereto.
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of the performance of their duties as directors and
officers provided that this provision shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of stockholders or otherwise.
Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the Delaware General Corporation Law.
The effect of the foregoing is to require the Company to the extent
permitted by law to indemnify the officers and directors of the Company for any
claim arising against such persons in their official capacities if such person
acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the
39
<PAGE>
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
The Company does not currently have any liability insurance coverage for
its officers and directors.
COMMISSION POLICY
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and other agents of the Company, the Company
has been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
TRANSFER AGENT & REGISTRAR
The transfer agent and registrar for the Company's securities is American
Stock Transfer & Trust Company (the 'Transfer Agent').
FEDERAL INCOME TAX CONSEQUENCES
The Company has obtained no ruling from the Internal Revenue Service (the
'IRS') with respect to these consequences, and there can be no assurance that
the IRS will agree with the conclusions herein or that a challenge, if made,
will not be successful. This discussion does not address all aspects of U.S.
federal income taxation, and does not discuss considerations applicable to a
holder who is, with respect to the United States, a nonresident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust, but does discuss all material federal income tax consequences. This
discussion also does not consider specific facts and circumstances that may be
relevant to a particular holder's tax position. The information is based on
provisions of the Code, existing regulations thereunder and judicial decisions,
and the IRS's current administrative rules, practices and interpretations of
law, all as in effect on the date hereof and all of which are subject to change
or modification. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT SUCH INVESTOR'S
OWN TAX ADVISOR WITH RESPECT TO THE INDIVIDUAL U.S. FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF HOLDING AND DISPOSING OF THE COMMON STOCK, AS WELL
AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
CONSEQUENCES TO HOLDERS OF COMMON STOCK
Sale. Upon the sale of Common Stock to an unrelated party other than the
Company, the holder will recognize gain or loss measured by the difference
between the amount realized and the holder's adjusted tax basis in the share.
Such gain or loss generally will be capital gain or loss if the share of Common
Stock is a capital asset in the hands of the holder (i.e. property generally
held for investment). This gain or loss will be a long-term capital gain or loss
if the shares of Common Stock was held for more than one year. An individual
holder's capital gains are potentially subject to a reduced tax rate if the
share of Common Stock were held for more than one year, while his other capital
losses are deductible annually only to the extent of the capital gains plus
$3,000. If a share of Common Stock is redeemed by the Company, the holder will
generally recognize income or loss equal to the difference between the holder's
tax basis in the share of Common Stock and the redemption price; provided that
the receipt of cash from the Company is not treated under the Internal Revenue
Code as a dividend.
Under Section 1202 of the Code, certain noncorporate holders who hold
(either directly or through a partnership, 'S' corporation or regulated
investment company) certain stock that is acquired directly from an issuing
corporation for more than five years may exclude from gross income 50%(subject
to certain maximum exclusions) of any gain realized on the sale or exchange of
such stock, However, this exclusion is available only if the stock is'qualified
small business stock.' In order to be qualified small business stock, the
company issuing stock must have 'aggregate gross assets' of less than
$50,000,000 immediately after the issuance of the stock and otherwise be
classified as a 'qualified small business' throughout the period the stock is
held by a shareholder. The Company has represented that its aggregate gross
assets will be less than $50,000,000 at the time the shares are issued.
Nonetheless, it is not possible to determine whether the Common Stock issued
hereunder will be qualified small business stock at the time of its sale or
exchange by a holder.
40
<PAGE>
This uncertainty is due in part to the lack of Treasury Regulations or IRS
authority interpreting the qualified small business stock rules, including the
requirement that 80% of the Company's assets (by value) be used in the 'active
conduct of a qualified trade or business.' This requirement is violated if,
among other things, (i) the Company's business 'involves the performance of
services in the field of health' or has as its principal asset the reputation or
skill of its employees, (ii) more than 10% of the value of the Company's net
assets are attributable to corporate stock or securities held for investment
other than to finance research and experimentation in a qualified trade or
business or to meet the Company's reasonable working capital needs within the
next two years, or (iii) the total value of the corporate stock or securities
owned by the Company exceeds 50% of the total value of its assets (regardless of
whether such stock or securities are required for present or future research and
experimentation or working capital needs). The Company believes that it meets
these requirements.
Furthermore, certain parts of the qualified small business stock rules
(including the 'active conduct of a qualified trade or business' requirement,
but not including, the $50,000,000 aggregate gross asset requirement) apply
throughout the holding period of the Common Stock. Subsequent actions or events
(such as an increase in the Company's overall percentage of investment assets, a
decline in the value of its other assets, or the Company's redemption of shares
of stock within two years of the issuance of the Common Stock) may prevent the
Common Stock from qualifying. Finally, it is possible that Congress will
eliminate the qualified small business stock at the time of its sale or other
disposition, and holders should consult their tax advisors at that time to
determine to what extent this is the case.
The Company believes that the foregoing discussion considers all the
material tax issues applicable to any investment in the Shares (other than any
such issues that arise out of an investor's particular circumstances, and that
do not apply to all investors, such as, for example, the ownership by an
investor of other shares of Common Stock) and that, in the event of a challenge
by the IRS it is more likely than not (i.e. the likelihood is greater than 50%)
that the tax consequences will be determined as described herein.
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<PAGE>
SELLING SECURITYHOLDERS
The registration statement of which this Prospectus forms a part also
covers the sale of 2,500,000 shares of Common Stock held by securityholders of
the Company, 120,000 of which are held by Robert Sipper, hereinafter
collectively referred to as the 'Selling Securityholders.' The shares of Common
Stock being registered on behalf of Selling Securityholders constitute 100% of
such outstanding shares prior to the Offering and 81% of the outstanding shares
of Common Stock upon completion of the Offering. The Company will not receive
any of the proceeds on the sale of the securities by the Selling
Securityholders. The resale of the securities of the Selling Securityholders are
subject to Prospectus delivery and other requirements of the Securities Act of
1933, as amended (the 'Act'). Sales of such securities or the potential of such
sales at any time may have an adverse effect on the market prices of the
securities offered hereby. See 'Risk Factors--Shares Eligible for Future Sale
May Adversely Affect the Market.'
<TABLE>
<CAPTION>
SHARES OF
COMMON SHARES OF SHARES OF PERCENT OF
STOCK COMMON STOCK COMMON
OWNED STOCK OWNED STOCK
BEFORE OFFERED AFTER AFTER
NAME OFFERING HEREBY OFFERING OFFERING
- ----------------------------------------------------------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C>
Robert Sipper.................................................... 120,000 120,000 0 0
Ulster Investments Ltd........................................... 120,000 120,000 0 0
Hartley Bernstein................................................ 500,000 500,000 0 0
First National Fund Corp......................................... 120,000 120,000 0 0
Matthew Harriton................................................. 50,000 50,000 0 0
Marketing Specialities, Inc...................................... 1,470,000 1,470,000 0 0
Judith Pace...................................................... 120,000 120,000 0 0
--------- --------- --------- -----
Total............................................................ 2,500,000 2,500,000 0 0
--------- --------- --------- -----
--------- --------- --------- -----
</TABLE>
The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The securities
offered by the Selling Securityholders may be sold by one or more of the
following methods, without limitations: (a) a block trade in which a broker or
dealer so engaged will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (c) ordinary brokerage transactions
and transactions in which the broker solicits purchasers, and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Securityholders may
arrange for other brokers or dealers to participate. The Selling Securityholders
and intermediaries through whom such securities are sold may be deemed
'underwriters' within the meaning of the Act with respect to the securities
offered, and any profits realized or commissions received may be deemed
underwriting compensation.
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a Prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
Offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for sales purchased from the
Selling Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and the proposed selling price to the public.
Sales of securities by the Selling Securityholder or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities offered hereby.
42
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Underwriters, as set forth below and for whom VTR
Capital, Inc. is the representative, have agreed to purchase from the Company
583,335 Shares offered hereby from the Company on a 'firm commitment' basis, if
any are purchased.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- -------------------------------------------------------------------------------------- ----------------
<S> <C>
VTR Capital, Inc...................................................................... 291,668
Investor Associates, Inc.............................................................. 291,667
</TABLE>
The Underwriters have advised the Company that it proposes to offer the
Shares to the public at $6.00 per Share as set forth on the cover page of this
Prospectus and that it may allow to certain dealers who are NASD members
concessions not to exceed $.60 per Share, of which not in excess of $.30 per
Share may be reallowed to other dealers who are members of the NASD. After the
initial public offering, the public offering price, concession and reallowance
may be changed by the Underwriters.
The public offering price of the Shares was arbitrarily determined by
negotiations between the Company and the Representative and do not necessarily
relate to the assets, book value or results of operations of the Company or any
other established criteria of value.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Representative against certain liabilities in connection
with the Registration Statement, including liabilities arising under the Act.
Insofar as indemnification for liabilities arising under the Act may be provided
to officers, directors or persons controlling the Company, the Company has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy and is therefore unenforceable.
The Company has agreed to pay to the Representative a non-accountable
expense allowance of three percent (3%) of the aggregate Offering price of the
Shares offered hereby.
The Company has agreed to sell to the Representative, or its designees, for
an aggregate purchase price of $58, an option (the 'Representative's Share
Purchase Option') to purchase up to an aggregate of 58,333 Shares. The
Representative's Share Purchase Option shall be exercisable during a four (4)
year period commencing one (1) year from the Effective Date. The
Representative's Share Purchase Option may not be assigned, transferred, sold or
hypothecated by the Representative until twelve (12) months after the Effective
Date of this Prospectus, except to officers or directors of the Representative
or to selling group members in this Offering. Any profits realized upon the sale
of the Shares issuable upon exercise of the Representative's Share Purchase
Option may be deemed to be additional underwriting compensation. The exercise
price of the Shares issuable upon exercise of the Representative's Share
Purchase Option during the period of exercisability shall be one hundred twenty
percent (120%) of the initial public offering price of the Shares. The exercise
of the Representative's Share Purchase Option and the number of shares covered
thereby are subject to adjustment in certain events to prevent dilution. For the
life of the Representative's Share Purchase Option, the holders thereof are
given, at a nominal cost, the opportunity to profit from a rise in the market
price of the Company's Common Stock with a resulting dilution in the interest of
other stockholders. The Company may find it more difficult to raise capital for
its business if the need should arise while the Representative's Share Purchase
Option is outstanding. At any time when the holders of the Representative's
Share Purchase Option might be expected to exercise it, the Company would
probably be able to obtain additional capital on more favorable terms.
If the Company enters into a transaction (including a merger, joint
venture, equity financing, debt financing, or the acquisition of another entity)
introduced to the Company by the Representative, the Company has agreed to pay
the Representative a finder's fee equal to five percent (5%) of the first
$4,000,000 of consideration involved in the transaction, ranging in $1,000,000
increments down to two percent (2%) of the excess, if any, over $6,000,000.
Upon the closing of the sale of the Shares offered hereby, the Company will
enter into a two (2) year financial advisory and investment banking agreement
with the Representative, pursuant to which the Company will be obligated to pay
the Representative $72,000 in advance upon the closing of the Offering, for
financial and investment advisory services to the Company. Under the agreement,
the Representative has agreed to assist the Company (i) in reviewing its
financial performance and preparing annual budgets; (ii) in determining its
financial
43
<PAGE>
needs and developing strategies for identifying appropriate financial sources;
(iii) in developing strategies for possible acquisitions of complementary
businesses, products or services; and (iv) in providing general consultations
regarding planning and business strategies, structuring of transactions,
investment of funds and raising additional capital.
The Company has agreed not to issue any securities for a period of twelve
(12) months from the Effective Date, without the prior written consent of the
Representative.
The foregoing is a summary of certain provisions of the Underwriting
Agreement and Representative's Share Purchase Option which have been filed as
exhibits hereto.
DETERMINATION OF PUBLIC OFFERING PRICE
Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price for the Shares has been determined by
negotiations between the Company and the Representative. Among the factors
considered in the negotiations were the market price of the Company's Common
Stock, an analysis of the areas of activity in which the Company is engaged, the
present state of the Company's business, the Company's financial condition, the
Company's prospects, an assessment of management, the general condition of the
securities market at the time of this Offering and the demand for similar
securities of comparable companies. The public offering price of the Shares does
not necessarily bear any relationship to assets, earnings, book value or other
criteria of value applicable to the Company.
The Company anticipates that the Common Stock will be listed for quotation
on The OTC Bulletin Board under the symbol, PYMB, but there can be no assurances
that an active trading market will develop, even if the securities are accepted
for quotation. The Representative intends to make a market in all of the
publicly-traded securities of the Company.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon for
the Company by Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY 10022.
Bernstein & Wasserman, LLP, has served, and continues to serve, as counsel to
the Representative in matters unrelated to this Offering. Certain legal matters
will be passed upon for the Representative by Cohn & Birnbaum P.C., 100 Pearl
Street, Hartford, CT 06103. See 'Management' and 'Principal Stockholders.'
EXPERTS
Certain of the financial statements of the Company included in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Moore Stephens,
P.C. independent certified public accountants, whose reports thereon appear
elsewhere herein and in the Registration Statement.
ADDITIONAL INFORMATION
This Prospectus constitutes part of a Registration Statement on Form SB-2
filed by the Company with the Securities and Exchange Commission (the
'Commission') under the Securities Act and omits certain information contained
in the Registration Statement. Reference is hereby made to the Registration
Statement and to its exhibits for further information with respect to the
Company and the Common Stock offered hereby. Statements contained herein
concerning provisions of documents are necessarily summaries of such documents,
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
The Registration Statement, including the exhibits thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at: 450 Fifth Street, Washington, D.C. 20549; and at the offices of
the Commission located at 7 World Trade Center, New York, NY 10048; and copies
of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, Washington, D.C. 20549 at prescribed rates.
44
<PAGE>
PERRY'S MAJESTIC BEER, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE TO PAGE
------------
<S> <C>
Pro Forma Combined Financial Statements
Introduction....................................................................................... F-2
Notes to the Pro Forma Financial Statements........................................................ F-3
Balance Sheet--March 31, 1996...................................................................... F-4
Statement of Operations--For the Year Ended December 31, 1995...................................... F-5
Statement of Operations--For the Three Months Ended March 31, 1996................................. F-6
PERRY'S MAJESTIC BEER, INC.
Independent Auditor's Report....................................................................... F-7
Balance Sheet as of March 31, 1996................................................................. F-8
Statement of Stockholders' Equity from Inception (December 1995) through the
Period ended March 31, 1996...................................................................... F-9
Statement of Cash Flows from Inception (December 1995) through the
Period ended March 31, 1996...................................................................... F-10
Notes to Financial Statements...................................................................... F-11 - F-12
RIVEROSA COMPANY, INC.
Independent Auditor's Report....................................................................... F-13
Balance Sheet as of December 31, 1995 (Audited) and March 31, 1996 (Unaudited)..................... F-14
Statements of Operations for the years ended December 31, 1995 and 1994 (Audited) and the three
month ended March 31, 1996 and 1995 (Unaudited).................................................. F-15
Statements of Stockholders' Equity for the two years ended December 31, 1995 (Audited) and for the
three months ended March 31, 1996 and 1995 (Unaudited)........................................... F-16
Statements of Cash Flows for the years ended December 31, 1995 and 1994 (Audited) and for the three
months ended March 31, 1996 and 1995 (Unaudited)................................................. F-17
Notes to Financial Statements...................................................................... F-18 - F-20
</TABLE>
F-1
<PAGE>
PERRY'S MAJESTIC BEER, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS [UNAUDITED]
The following pro forma combined balance sheet as of March 31, 1996, and
the pro forma combined statements of operations for the year ended December 31,
1995 and for the three months ended March 31, 1996 give effect to Perry's
Majestic Beer, Inc. [the 'Company'] acquiring the stock of a beverage business,
Riverosa Company, Inc. ['Riverosa'] on March 31, 1996.
The pro forma information is based on the historical financial statements
of Perry's Majestic Beer, Inc. and Riverosa Company, Inc. giving effect to the
transaction under the purchase method of accounting and the assumptions and
adjustments in the accompanying notes to the pro forma financial statements.
The acquisition will be accounted for using the purchase method. The pro
forma balance sheet assumes the transaction was effective on the balance sheet
date. The pro forma statements of operations give effect to these transactions
as if they had occurred at the beginning of the fiscal year presented. The
historical statements of operations will reflect the effects of these
transactions from the date on which they occurred. There were no revenue or
expense activities for the period ended March 31, 1996 for Perry's Majestic
Beer, Inc. The pro forma combined statements are based on the historical
financial statements of Perry's Majestic Beer, Inc. and Riverosa Company, Inc.
Financial statements of Riverosa, Inc. are presented for the same periods that
Perry's would be required to furnish.
F-2
<PAGE>
PERRY'S MAJESTIC BEER, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS [UNAUDITED]
(A) To reflect allocation for the acquisition of Riverosa Company, Inc. with
annual amortization of goodwill of approximately $50,000 (quarterly amount
of $12,500).
Goodwill will be amortized over five years.
Goodwill is computed as follows:
<TABLE>
<S> <C>
Cash.............................................................................................. $150,000
Notes Payable..................................................................................... 100,000
--------
Cost of Acquisition............................................................................... 250,000
Estimated Value of Riverosa Net Assets Acquired................................................... 3,576
--------
Goodwill.......................................................................................... $246,424
--------
--------
</TABLE>
(B) To record annual employment contract of $25,000 (three months of $6,250).
(C) To record annual interest expense of $8,000 on $100,000 note payable at 8%
(three months of $2,000).
F-3
<PAGE>
PERRY'S MAJESTIC BEER, INC.
PRO FORMA COMBINED BALANCE SHEET AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS
-----------------------------------
PERRY'S
MAJESTIC RIVEROSA
BEER, INC. COMPANY, INC.
MARCH 31, MARCH 31, PRO FORMA
1996 1996 ADJUSTMENTS COMBINED
---------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash........................ $ 60,200 $43,995 $ -- $ 104,195
Accounts Receivable......... -- 4,941 -- 4,941
Stock Subscription
Receivable............... 4,800 -- -- 4,800
Notes Receivable............ 135,000 -- -- 135,000
Inventory................... -- 9,460 -- 9,460
------------- ---------- ----------- ----------
Total Current Assets.......... 200,000 58,396 -- 258,396
------------- ---------- ----------- ----------
Investments................... 2,250,000 -- (250,000)(A) 2,000,000
------------- ---------- ----------- ----------
Other Assets:
Goodwill.................... -- -- 246,424(A) 246,424
Surety Bonds................ -- 575 -- 575
------------- ---------- ----------- ----------
Total Other Assets............ -- 575 246,424 246,999
------------- ---------- ----------- ----------
Total Assets.................. $ 2,450,000 $58,971 $ (3,576) $2,505,395
------------- ---------- ----------- ----------
------------- ---------- ----------- ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current Liabilities:
Accounts Payable and Accrued
Expenses................. $ -- $20,361 $ -- $ 20,361
Notes Payable............... 250,000 -- -- 250,000
Officers' Loan Payable...... -- 29,634 -- 29,634
Income Taxes Payable........ -- 5,400 -- 5,400
------------- ---------- ----------- ----------
Total Current Liabilities..... 250,000 55,395 -- 305,395
------------- ---------- ----------- ----------
Stockholders' Equity:
Common Stock................ 250 1,000 (1,000)(A) 250
Preferred Stock............. 7,500 -- -- 7,500
Additional Paid-in
Capital.................. 2,192,250 -- -- 2,192,250
Retained Earnings........... -- 2,576 (2,576)(A) --
------------- ---------- ----------- ----------
Total Stockholders' Equity.... 2,200,000 3,576 (3,576) 2,200,000
------------- ---------- ----------- ----------
Total Liabilities and
Stockholders' Equity........ $ 2,450,000 $58,971 $ (3,576) $2,505,395
------------- ---------- ----------- ----------
------------- ---------- ----------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
F-4
<PAGE>
PERRY'S MAJESTIC BEER, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS
--------------------------------
PERRY'S MAJESTIC
BEER, INC.
FOR THE PERIOD
DECEMBER 1995 RIVEROSA
(DATE OF COMPANY, INC.
INCEPTION) FOR THE
THROUGH YEAR ENDED
MARCH 31, DECEMBER 31, PRO FORMA
1996 1995 ADJUSTMENTS COMBINED
---------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Sales--Net.................................................. $ -- $81,185 $ -- $ 81,185
Cost of Goods Sold.......................................... -- 61,057 -- 61,057
---------------- ------------- ----------- ---------
Gross Profit.............................................. -- 20,128 -- 20,128
---------------- ------------- ----------- ---------
Selling, General and 50,000(A)
Administrative Expenses................................... -- 17,494 25,000(B) 92,494
---------------- ------------- ----------- ---------
Income (Loss) from Operations............................. -- 2,634 (75,000) (72,366)
---------------- ------------- ----------- ---------
Other (Income) Expense:
Interest Expense.......................................... -- 8,499 8,000(C) 16,499
Interest Income........................................... -- (1,141) -- (1,141)
---------------- ------------- ----------- ---------
Other Expense--Net........................................ -- 7,358 8,000 15,358
---------------- ------------- ----------- ---------
(Loss) Before Income Taxes................................ -- (4,724) (83,000) (87,724)
Provision for Income Taxes.................................. -- -- -- --
---------------- ------------- ----------- ---------
Net (Loss)................................................ $ -- $(4,724) $ (83,000) $(87,724)
---------------- ------------- ----------- ---------
---------------- ------------- ----------- ---------
Number of Shares.......................................... 2,500,000 2,500,000
---------------- ---------
---------------- ---------
Net (Loss) Per Share...................................... $ -- $ (.04)
---------------- ---------
---------------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
F-5
<PAGE>
PERRY'S MAJESTIC BEER, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS
--------------------------------
PERRY'S MAJESTIC
BEER, INC.
FOR THE PERIOD
DECEMBER 1995 RIVEROSA
(DATE OF COMPANY, INC.
INCEPTION) FOR THE THREE
THROUGH MONTHS ENDED
MARCH 31, MARCH 31, PRO FORMA
1996 1996 ADJUSTMENTS COMBINED
---------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Sales--Net.................................................. $ -- $24,136 $ -- $ 24,136
Cost of Goods Sold.......................................... -- 19,390 -- 19,390
---------------- ------------- ----------- ---------
Gross Profit.............................................. -- 4,746 -- 4,746
---------------- ------------- ----------- ---------
Selling, General and Administrative Expenses................ 12,500(A)
-- 11,347 6,250(B) 30,097
---------------- ------------- ----------- ---------
Income (Loss) from Operations............................. -- (6,601) (18,750) (25,351)
---------------- ------------- ----------- ---------
Other (Income) Expense:
Interest Expense.......................................... -- 750 2,000(C) 2,750
Interest Income........................................... -- -- -- --
---------------- ------------- ----------- ---------
Other Expense--Net........................................ -- 750 2,000 2,750
---------------- ------------- ----------- ---------
(Loss) Before Income Taxes................................ -- (7,351) (20,750) (28,101)
Provision for Income Taxes.................................. -- -- -- --
---------------- ------------- ----------- ---------
Net (Loss)............................................. $ -- $(7,351) $ (20,750) $(28,101)
---------------- ------------- ----------- ---------
---------------- ------------- ----------- ---------
Number of Shares....................................... 2,500,000 2,500,000
---------------- ---------
---------------- ---------
Net (Loss) Per Share................................... $ -- $ (.01)
---------------- ---------
---------------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
F-6
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders of
Perry's Majestic Beer, Inc.
New York, New York
We have audited the accompanying balance sheet of Perry's Majestic Beer, Inc. as
of March 31, 1996, and the related statements of stockholders' equity, and cash
flows for the period from inception (December 1995) through March 31, 1996.
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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Perry's Majestic Beer, Inc. as
of March 31, 1996, and its cash flows for the period from inception to March 31,
1996, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company had no revenue or expense operations and has
negative working capital. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 7. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
MORTENSON AND ASSOCIATES, P.C.
Certified Public Accountants.
Cranford, New Jersey
April 4, 1996
F-7
<PAGE>
PERRY'S MAJESTIC BEER, INC.
BALANCE SHEET AS OF MARCH 31, 1996
<TABLE>
<S> <C>
ASSETS:
Current Assets:
Cash.............................................................................................. $ 60,200
Subscription Receivable(1B)....................................................................... 4,800
Note Receivable--Related Party(3)................................................................. 75,000
Note Receivable--Bridge Loan(6)................................................................... 60,000
------------
Total Current Assets.............................................................................. 200,000
------------
Non-Current Assets:
Investment in Riverosa(2)......................................................................... 250,000
Investment in Bev-Tyme, Inc.--Preferred Stock--Related Party(3)................................... 2,000,000
------------
Total Non-Current Assets.......................................................................... 2,250,000
------------
Total Assets...................................................................................... $ 2,450,000
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Bridge Loan Payable(6)............................................................................ $ 150,000
Note Payable Acquisition(2)....................................................................... 100,000
------------
Total Current Liabilities......................................................................... 250,000
------------
Commitments and Contingencies..................................................................... --
------------
Stockholders' Equity:
Preferred Stock, $.001 Par Value Per Share, 15,000,000 Blank Check Shares Authorized, Convertible
Class A--Issued and Outstanding, 500,000 Shares; Non-Convertible Class B-- Issued and
Outstanding, 7,000,000 Shares(3)............................................................... 7,500
Additional Paid-in Capital--Preferred Stock(3).................................................... 2,142,500
Common Stock--$.0001 Par Value, Authorized 25,000,000 Shares, Issued and Outstanding, 2,500,000
Shares(1B)..................................................................................... 250
Additional Paid-in Capital--Common Stock(1B)...................................................... 49,750
Retained Earnings................................................................................. --
------------
Total Stockholders' Equity........................................................................ 2,200,000
------------
Total Liabilities and Stockholders' Equity........................................................ $ 2,450,000
------------
------------
</TABLE>
See Notes to Financial Statements.
F-8
<PAGE>
PERRY'S MAJESTIC BEER, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
------------------ ------------------ PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------ --------- ------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance--January 1, 1996................ -- $ -- -- $ -- $ -- $ -- $ --
Common Stock Issued for Cash............ -- -- 2,500,000 250 49,750 -- 50,000
500,000 Shares of Series A and 7,000,000
Shares of Series B Preferred Stock
Issued for Cash and Investment in
Bev-Tyme, Inc. (Series C Preferred)... 7,500,000 7,500 -- -- 2,142,500 -- 2,500,000
Balance--March 31, 1996................. 7,500,000 $7,500 2,500,000 $250 $2,192,250 $ -- $ 2,200,000
--------- ------ --------- ------ ---------- ---------- -------------
--------- ------ --------- ------ ---------- ---------- -------------
</TABLE>
See Notes to Financial Statements.
F-9
<PAGE>
PERRY'S MAJESTIC BEER, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (DECEMBER 1995) THROUGH MARCH 31, 1996
<TABLE>
<S> <C>
Net Cash--Operating Activities..................................................................... $ --
---------
Investing Activities:
Partial Payment on Acquisition of Riverosa Company................................................. (150,000)
---------
Financing Activities:
Proceeds from Sale of Preferred Stock to Bev-Tyme, Inc............................................. 75,000
Proceeds from Sale of Common Stock................................................................. 45,200
Proceeds from Bridge Loans......................................................................... 90,000
---------
Net Cash--Financing Activities..................................................................... 210,200
---------
Net Increase in Cash............................................................................... 60,200
Cash--Beginning of Period............................................................................ --
---------
Cash--End of Period................................................................................ $ 60,200
---------
---------
Supplemental Disclosures of Cash Flow Information:
Cash paid for the period for:
Interest........................................................................................ $ --
Income Taxes.................................................................................... $ --
</TABLE>
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
None.
See Notes to Financial Statements.
F-10
<PAGE>
PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Nature of Operations--Perry's Majestic Beer, Inc., a Delaware
corporation (the 'Company' or 'Perry's'), was formed in December 1995. There
have been no revenue or expense activities through March 31, 1996. The Company
became a subsidiary of Bev-Tyme, Inc. as of March 29, 1996 (See Note 3).
(B) Capital Stock--In January 1996, the Company issued 2,500,000 shares of
common stock to seven (7) parties for a total consideration of $50,000. At March
31, 1996, $45,200 was collected and the balance of $4,800, received April 4,
1996, is reflected as a stock subscription receivable.
(C) Earnings Per Share--The number of shares to be used for earnings per
share calculation purposes will be based on the number of shares issued and
outstanding for the period presented. Convertible Preferred Stock shares are not
included because their effect is anti-dilutive.
(D) Cash Equivalents--The Company's policy is to classify all highly liquid
debt instruments purchased with an initial maturity of three months or less to
be cash equivalents. There were no cash equivalents at March 31, 1996.
(E) 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.
(F) Goodwill--Amounts paid in excess of the estimated value of net assets
acquired of Riverosa have been charged to goodwill. Goodwill is related to
revenues the Company anticipates realizing in future years. The Company has
decided to amortize its goodwill over a period of up to five years under the
straight-line method. 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.
(2) BUSINESS COMBINATION
On March 29, 1996, the Company 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 is payable with interest of 8% and is due upon the earlier of one year
from the date of issuance or the closing of the Company's initial public
offering.
(3) INVESTMENT--RELATED PARTY
On March 29, 1996, the Company issued to Bev-Tyme, Inc. (a public
corporation) 500,000 shares of convertible Class A Preferred Stock and 7,000,000
shares of non-convertible Class B Preferred Stock for 400,000 shares of Series C
Preferred Stock of Bev-Tyme, Inc. (valued at $2,000,000) and $150,000. As of
March 31, 1996, $75,000 of cash was collected and the balance of $75,000, which
was received on April 4, 1996, is reflected as a note receivable on the
financial statements as of March 31, 1996. Each share of Class A Preferred Stock
may be convertible by the holder 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.
The investment in Bev-Tyme, Inc. is classified as 'available for sale' and
is presented at estimated fair value.
(4) 1996 STOCK OPTION PLAN
In March 1996, the Board of Directors of the Company adopted, and the
stockholders of the Company approved the adoption of the 1996 Stock Option Plan.
The maximum number of shares of common stock with respect to which awards may be
granted pursuant to the 1996 Plan is initially 2,000,000 shares.
F-11
<PAGE>
PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) PROPOSED PUBLIC OFFERING
The Company is filing a registration statement for 583,335 shares of common
stock at $6.00 per share. The anticipated net proceeds from this offering are
approximately $2,548,009.
(6) BRIDGE LOAN
On March 31, 1996, the Company borrowed an aggregate of $150,000 from seven
(7) unaffiliated lenders (the 'Bridge Lenders'). In exchange for making loans to
the Company, 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 are due an payable upon the earlier of (i) July 31, 1996
and (ii) the closing of an initial underwritten public offering of the Company's
securities. The Company intends to use a portion of the proceeds of this
offering to repay the Bridge Lenders. As of March 31, 1996, $90,000 was received
in cash from the bridge loan and $60,000, received April 4, 1996, is reflected
on the financial statements as a note receivable at March 31, 1996.
(7) GOING CONCERN
As shown in the accompanying financial statements, the Company did not
generate cash from operations and had negative working capital for the period
ended March 31, 1996. 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 acquired Riverosa Company, Inc. for $250,000 (See
Note 2), and is pursuing a public offering of common stock as a vehicle for
financing future operations (See Note 5). The continuation of the Company as a
going concern is dependent upon the success of these plans.
(8) NEW AUTHORITATIVE PRONOUNCEMENTS
The Financial Accounting Standards Board ('FASB') issued Statement of
Financial Accounting Standards ('SFAS') No. 123, 'Accounting for Stock-Based
Compensation,' in October 1995. SFAS No. 123 uses a fair value based method of
accounting for stock options and similar equity instruments 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
Company has not decided if it will adopt SFAS No. 123 or continue to apply APB
Opinion No. 25 for financial reporting purposes. SFAS No. 123 will have to be
adopted for financial note disclosure purposes in any event. The accounting
requirements of SFAS No. 123 are effective for transactions entered into in
fiscal years that begin after December 15, 1995; the disclosure requirements of
SFAS No. 123 are effective for financial statements for fiscal years beginning
after December 15, 1995.
(9) FINANCIAL INSTRUMENTS
The carrying amount of cash, notes receivable and payable approximates fair
value because of their short maturities.
(10) SUBSEQUENT EVENTS (UNAUDITED)
On April 4, 1996, the Company entered into a three (3) year employment
agreement with Mark Butler pursuant to which Mr. Butler serves as the Company's
Vice President of Sales. The agreement provides for Mr. Butler to receive a
salary of $25,000 per annum and upon the close of the proposed public offering,
a salary of $50,000 per annum. The employment agreement also provides for an
annual bonus as well as stock options based upon performance.
On April 19, 1996, Perry's Majestic Beer, Inc. lent $75,000 to Bev-Tyme,
Inc.
F-12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders of
Riverosa Company, Inc.
New York, New York
We have audited the accompanying balance sheet of Riverosa Company, Inc. as of
December 31, 1995, and the related statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended December
31, 1995. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Riverosa Company, Inc. as of
December 31, 1995, and the consolidated results of their operations and their
cash flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has incurred a net loss as a result of a
significant decrease in sales. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 7. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
MORTENSON AND ASSOCIATES, P.C.
Certified Public Accountants.
Cranford, New Jersey
April 1, 1996
F-13
<PAGE>
RIVEROSA COMPANY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current Assets:
Cash...................................................... $43,995 $ 38,782
Accounts Receivable....................................... 4,941 --
Inventory................................................. 9,460 11,175
----------- ------------
Total Current Assets...................................... 58,396 49,957
Other Asset:
Surety Bonds.............................................. 575 575
----------- ------------
Total Assets.............................................. $58,971 $ 50,532
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable and Accrued Expenses..................... $20,361 $ 4,571
Officers' Loan Payable.................................... 29,634 29,634
Income Taxes Payable...................................... 5,400 5,400
----------- ------------
Total Current Liabilities.............................. 55,395 39,605
----------- ------------
Commitments and Contingencies(5)............................ -- --
----------- ------------
Stockholders' Equity:
Common Stock--200 Shares, Authorized Issued and
Outstanding; No Par Value, $5.00 Stated Value.......... 1,000 1,000
Retained Earnings......................................... 2,576 9,927
----------- ------------
Total Stockholders' Equity.................................. 3,576 10,927
----------- ------------
Total Liabilities and Stockholders' Equity.................. $58,971 $ 50,532
----------- ------------
----------- ------------
</TABLE>
See Notes to Financial Statements.
F-14
<PAGE>
RIVEROSA COMPANY, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------------- -------------------
1996 1995 1995 1994
----------- ----------- ------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales--Net.................................................. $24,136 $19,430 $81,185 $195,095
Cost of Goods Sold.......................................... 19,390 14,946 61,057 133,250
----------- ----------- ------- --------
Gross Profit.............................................. 4,746 4,484 20,128 61,845
----------- ----------- ------- --------
Selling, General and Administrative Expenses:
Selling, Advertising and Promotion........................ 7,283 530 3,187 8,023
General and Administrative Expenses....................... 4,064 2,005 14,307 23,347
----------- ----------- ------- --------
Total Selling, General and Administrative Expenses........ 11,347 2,535 17,494 31,370
----------- ----------- ------- --------
(Loss) Income from Operations............................. (6,601) 1,949 2,634 30,475
----------- ----------- ------- --------
Other (Income) Expense:
Interest Expense--Related Party........................... 750 2,320 8,499 10,214
Interest Income........................................... -- (509) (1,141) --
----------- ----------- ------- --------
Other Expenses--Net....................................... 750 1,811 7,358 10,214
----------- ----------- ------- --------
(Loss) Income Before Provision for Income Taxes........... (7,351) 138 (4,724) 20,261
Provision for Income Taxes.................................. -- -- -- 5,400
----------- ----------- ------- --------
Net (Loss) Income......................................... $(7,351) $ 138 $(4,724) $ 14,861
----------- ----------- ------- --------
----------- ----------- ------- --------
</TABLE>
See Notes to Financial Statements.
F-15
<PAGE>
RIVEROSA COMPANY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS AMOUNT
------ ------ -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993................................ 200 $1,000 $ (210) $ 790
Net Income for the year ended December 31, 1994........... -- -- 14,861 14,861
------ ------ -------- -------------
Balance at December 31, 1994................................ 200 1,000 14,651 15,651
Net (Loss) for the year ended December 31, 1995........... -- -- (4,724) (4,724)
------ ------ -------- -------------
Balance at December 31, 1995................................ 200 1,000 9,927 10,927
Net (Loss) for the three months ended March 31, 1996
(Unaudited)............................................ -- -- (7,351) (7,351)
------ ------ -------- -------------
Balance at March 31, 1996 (Unaudited)....................... 200 $1,000 $ 2,576 $ 3,576
------ ------ -------- -------------
------ ------ -------- -------------
</TABLE>
See Notes to Financial Statements.
F-16
<PAGE>
RIVEROSA COMPANY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------------- -------------------
1996 1995 1995 1994
----------- ----------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating Activities:
Net (Loss) Income......................................... $(7,351) $ 138 $ (4,724) $14,861
----------- ----------- -------- -------
Adjustments to Reconcile Net (Loss) Income to Net Cash
Provided by Operating Activities:
Bad Debt Expense....................................... -- 400 1,500 --
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable.................................. (4,941) 10,400 40,420 9,898
Inventory............................................ 1,715 6,003 18,539 5,870
Other Assets......................................... -- -- -- (100)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses................ 15,790 (7,000) (3,391) (7,295)
Income Taxes Payable................................. -- -- 5,400
----------- ----------- -------- -------
Total Adjustments...................................... 12,564 9,803 57,068 13,773
----------- ----------- -------- -------
Net Cash--Operating Activities............................ 5,213 9,941 52,344 28,634
----------- ----------- -------- -------
Financing Activities:
Repayment of Officers' Loan Payable....................... -- (15,500) (71,502) --
----------- ----------- -------- -------
Net Increase (Decrease) in Cash and Cash Equivalents...... 5,213 (5,559) (19,158) 28,634
Cash and Cash Equivalents--Beginning of Period.............. 38,782 57,940 57,940 29,306
----------- ----------- -------- -------
Cash and Cash Equivalents--End of Period.................. $43,995 $ 52,381 $ 38,782 $57,940
----------- ----------- -------- -------
----------- ----------- -------- -------
Supplemental Disclosures of Cash Flow Information:
Cash paid for the period for:
Interest............................................... $ -- $ -- $ 8,499 $10,214
Income Taxes........................................... $ -- $ -- $ -- $ --
</TABLE>
See Notes to Financial Statements.
F-17
<PAGE>
RIVEROSA COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General and Organization--Riverosa Company, Inc. (the 'Company') a New York
Corporation, was founded in November of 1992. The Company coordinates the
manufacturing and distributing of microbrewed beers and ales to customers
throughout the United States, but primarily in the New York metropolitan area.
Cash and Cash Equivalents--The Company classifies all highly liquid debt
instruments purchased with an initial maturity of three months or less to be
cash equivalents.
Inventory--Inventory is stated at the lower of cost or market (net
realizable value). Cost is comprised of packaging materials and includes
purchases and freight, and are determined on the first-in, first-out (FIFO)
basis.
Risk Concentrations--Financial instruments that potentially subject the
Company to concentrations of credit risk include cash and cash equivalents and
accounts receivable arising from its normal business activities. The Company
places its cash and cash equivalents with a high credit quality financial
institution. The Company's cash and cash equivalents have not been subject to
credit risk beyond insured amounts.
The Company routinely assesses the financial strength of its customers, and
based upon factors surrounding the credit risk of its customers, has established
an allowance for uncollectible accounts amounting to $1,500 at December 31,
1995, and, as a consequence, believes that its accounts receivable credit risk
exposure beyond this allowance is limited.
The Company currently facilitates the manufacture and distribution of its
products from one contract brewery. Although there are a limited number of
breweries, management believes that other suppliers could provide similar beers
on comparable terms. A change in brewery, however, could cause delay in
distribution and a possible loss of sales, which would affect operating results
adversely.
The Company relies on other wholesale distributors for resale of its
product to retailers. As a result, the Company faces the risk that their
distributors may face financial hardship. In addition, the Company is dependent
upon the distributor to provide the resources necessary to promote the Company's
product. The Company currently is highly dependent upon Bev-Tyme, Inc. for
distribution of the Company's beers (See Note 8). Although management believes
that other distributors are available, any material delays would affect
operating results adversely. To mitigate these risks, the Company continues to
explore opportunities to expand its distribution base.
The sale of Perry's Majestic Beer products have accounted for all of the
Company's sales since inception and the Company believes the sale of Perry's
products will continue to account for most of its sales in the foreseeable
future. As a result, the Company's future operating results are highly dependent
upon market acceptance of Perry's beer. In addition, as the sale of beer is
seasonal in nature, the results of the Company's operations may vary from
quarter to quarter.
Revenue Recognition--Revenue is recognized at the time products are shipped
and title passes.
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.
F-18
<PAGE>
RIVEROSA COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(2) INCOME TAXES
The components of the provisions for income tax are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
<S> <C> <C>
CURRENT:
Federal................................................ $ -- $2,800
State and Local........................................ -- 3,800
Benefit of Net Operating Loss Carryforward............. -- (1,200)
------ ------
Total Current.......................................... -- 5,400
------ ------
DEFERRED:
Federal................................................ -- --
State.................................................. -- --
------ ------
Total Deferred......................................... -- --
------ ------
Total Provision for Income Taxes....................... $ -- $5,400
------ ------
------ ------
</TABLE>
The Company's effective income tax is different from what would be expected
if the federal statutory rate were applied to income from continuing operations
primarily because of state taxes and the use of operating loss benefits.
(3) OFFICERS' LOAN PAYABLE
Loans to officers are payable on demand with interest payable at 10% per
annum.
(4) FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents and trade payables
approximates fair value because of their short maturities. The carrying amount
of officers' loan payable approximates its fair market value.
(5) COMMITMENTS AND CONTINGENCIES
(A) Related Party--The Company operated in space owned by one of the
Company's shareholders and as a result has not incurred rent expense for the
year ended December 31, 1995 and 1994.
(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, the Company's stockholders entered
into an agreement, on behalf of the Company, with a brewery to brew and bottle
beer under the private label of 'Perry's Majestic.' As part of the agreement,
the Company 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) Significant Customer--In 1995, there were four customers who accounted
for 64% of the revenues. These customers which included Bev-Tyme, Inc. (See Note
8) and three other customers were 15%, 24%, 14% and 11% of 1995 revenues,
respectively.
F-19
<PAGE>
RIVEROSA COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(5) COMMITMENTS AND CONTINGENCIES--(CONTINUED)
In 1994, there were two customers who accounted for 44% of the Company's
revenues. These customers which included Bev-Tyme, Inc. (See Note 8) and one
other customer were 31% and 13% of 1994 revenues, respectively.
(6) NEW AUTHORITATIVE PRONOUNCEMENTS
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 established 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. SFAS No. 121 is effective for financial
statements issued for fiscal years beginning after December 15, 1995. Adoption
of SFAS No. 121 is not expected to have a material impact on the Company's
financial statements.
(7) GOING CONCERN
As shown in the accompanying financial statements, the Company incurred a
net loss of approximately $5,000 for the year ended December 31, 1995 as a
result of a significant decrease in sales. 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 has been acquired by
Perry's Majestic Beer, Inc., which intends to pursue a public offering as a
vehicle for financing future operations to expand the distribution base of its
products. The continuation of the Company as a going concern is dependent upon
the success of these plans.
(8) SUBSEQUENT EVENTS
On March 29, 1996, the Company entered into an agreement to be acquired by
Perry's Majestic Beer, Inc. for $250,000.
Also on March 29, 1996, Perry's Majestic Beer, Inc. issued preferred stock
to Bev-Tyme, Inc. (a public corporation) for 400,000 shares of Series C
Preferred Stock of Bev-Tyme, Inc. and $150,000.
F-20
<PAGE>
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Prospectus Summary............................. 3
The Company.................................. 3
The Offering................................. 4
Summary Financial Information.................. 6
Risk Factors................................... 7
Use of Proceeds................................ 18
Dilution....................................... 19
Capitalization................................. 20
Dividend Policy................................ 21
Selected Financial Data........................ 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 23
Business....................................... 26
Management..................................... 33
Principal Stockholders......................... 36
Certain Transactions........................... 37
Description of Securities...................... 38
Federal Income Tax Consequences................ 40
Selling Securityholders........................ 42
Underwriting................................... 43
Legal Matters.................................. 44
Experts........................................ 44
Additional Information......................... 44
Financial Statements........................... F-1
</TABLE>
------------------------
UNTIL OCTOBER 28, 1996 (90 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
583,335 SHARES OF COMMON STOCK,
PAR VALUE $.0001 PER SHARE
PERRY'S MAJESTIC BEER, INC.
------------------------
PROSPECTUS
------------------------
VTR CAPITAL, INC.
JULY 30, 1996
------------------------------------------------------
<PAGE>
PROSPECTUS
PERRY'S MAJESTIC BEER, INC.
2,500,000 SHARES OF COMMON STOCK
------------------------
This Prospectus relates to the sale of 2,500,000 shares of Common Stock,
owned by certain selling securityholders, hereinafter collectively referred to
as the 'Selling Securityholders.' The Company will not receive any of the
proceeds on the sale of the securities by the Selling Securityholders. The
shares being registered on behalf of the Selling Securityholders constitute 100%
of such outstanding shares prior to the Offering and 81% of the outstanding
shares of Common Stock upon completion of the Offering. The resale of the
securities of the Selling Securityholders are subject to Prospectus delivery and
other requirements of the Securities Act of 1933, as amended (the 'Act'). Sales
of such securities or the potential of such sales at any time may have an
adverse effect on the market prices of the securities offered hereby. See
'Selling Securityholders' and 'Risk Factors--Shares Eligible for Future Sale May
Adversely Affect the Market.'
The Company has applied for inclusion of the Common Stock on The OTC
Bulletin Board, although there can be no assurances that an active trading
market will develop even if the securities are accepted for quotation. See 'Risk
Factors-- Lack of Prior Market for Common Stock; No Assurance of Public Trading
Market.'
The Common Stock offered by this Prospectus may be sold from time to time
by the Selling Securityholders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Securityholders. The
distribution of the securities by the Selling Securityholders may be effected in
one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with sales of such securities.
The Selling Securityholders and intermediaries through whom such securities
may be sold may be deemed 'underwriters' within the meaning of the Securities
Act of 1933, as amended (the 'Act'), with respect to the securities offered and
any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Act.
The Company will not receive any of the proceeds from the sale of the
securities by the Selling Securityholders. All costs incurred in the
registration of the securities of the Selling Securityholders are being borne by
the Company. See 'Selling Securityholders.'
------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
OFFERED HEREBY AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD
THE LOSS OF THEIR ENTIRE INVESTMENT. SEE 'DILUTION' AND 'RISK FACTORS.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JULY 30, 1996
ALT-1
<PAGE>
COMPANY OFFERING
On the date of this Prospectus, a Registration Statement under the Act with
respect to an underwritten public offering (the 'Offering') of 583,335 shares of
Common Stock, par value $.0001, per share ('Shares') by the Company was declared
effective by the Securities and Exchange Commission ('SEC'), and the Company
commenced the sale of shares offered thereby. Sales of securities under this
Prospectus by the Selling Securityholders or even the potential of such sales
may have an adverse effect on the market price of the Company's securities.
SELLING SECURITYHOLDERS
The registration statement of which this Prospectus forms a part also
covers the sale of 2,500,000 shares of Common Stock held by security holders of
the Company, 120,000 of which are held by an officer of the Company collectively
referred to as the 'Selling Securityholders.' The shares being registered on
behalf of the Selling Securityholders constitute 100% of such outstanding shares
prior to the Offering and 81% of the outstanding shares of Common Stock upon
completion of the Offering. The Company will not receive any of the proceeds on
the sale of the securities by the Selling Securityholders. The resale of the
securities of the Selling Securityholders are subject to Prospectus delivery and
other requirements of the Securities Act of 1933, as amended (the 'Act'). Sales
of such securities or the potential of such sales at any time may have an
adverse effect on the market prices of the securities offered hereby. See 'Risk
Factors--Shares Eligible for Future Sale May Adversely Affect the Market.'
Accordingly, an additional 2,500,000 shares of Common Stock will become
transferrable at such time.
The following table sets forth the holders of the shares of Common Stock
which are being offered by the Selling Securityholders and the number of shares
owned before the Offering, the number of shares being offered and the number of
shares and the percentage of the class to be owned after the Offering is
complete.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON COMMON SHARES OF PERCENT OF
STOCK OWNED STOCK STOCK OWNED COMMON
BEFORE OFFERED AFTER STOCK AFTER
NAME OFFERING HEREBY OFFERING OFFERING
- ------------------------------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Robert Sipper........................ 120,000 120,000 0 0
Ulster Investments Ltd. ............. 120,000 120,000 0 0
Hartley Bernstein.................... 500,000 500,000 0 0
First National Fund Corp............. 120,000 120,000 0 0
Matthew Harriton..................... 50,000 50,000 0 0
Marketing Specialities, Inc.......... 1,470,000 1,470,000 0 0
Judith Pace.......................... 120,000 120,000 0 0
----------- --------- ----------- -----
Total................................ 2,500,000 2,500,000 0 0
----------- --------- ----------- -----
----------- --------- ----------- -----
</TABLE>
42
<PAGE>
PLAN OF DISTRIBUTION
The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The securities
offered by the Selling Securityholders may be sold by one or more of the
following methods, without limitations: (a) a block trade in which a broker or
dealer so engaged will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (c) ordinary brokerage transactions
and transactions in which the broker solicits purchasers, and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Securityholders may
arrange for other brokers or dealers to participate. The Selling Securityholders
and intermediaries through whom such securities are sold may be deemed
'underwriters' within the meaning of the Act with respect to the securities
offered, and any profits realized or commissions received may be deemed
underwriting compensation.
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a Prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
Offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for sales purchased from the
Selling Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and the proposed selling price to the public.
Sales of securities by the Selling Securityholders or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities offered hereby. See 'Company Offering.'
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon for
the Company by Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY 10022.
Bernstein & Wasserman, LLP, has served, and continues to serve, as counsel to
the Representative in matters unrelated to this Offering. Certain legal matters
will be passed upon for the Representative by Cohn & Birnbaum P.C., 100 Pearl
Street, Hartford, CT 06103. See 'Management' and 'Principal Stockholders.'
EXPERTS
Certain of the financial statements of the Company included in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Moore Stephens,
P.C. independent certified public accountants, whose reports thereon appear
elsewhere herein and in the Registration Statement.
ADDITIONAL INFORMATION
This Prospectus constitutes part of a Registration Statement on Form SB-2
filed by the Company with the Securities and Exchange Commission (the
'Commission') under the Securities Act and omits certain information contained
in the Registration Statement. Reference is hereby made to the Registration
Statement and to its exhibits for further information with respect to the
Company and the Common Stock offered hereby. Statements contained herein
concerning provisions of documents are necessarily summaries of such documents,
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
The Registration Statement, including the exhibits thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at: 450 Fifth Street, Washington, D.C. 20549; and at the offices of
the Commission located at 7 World Trade Center, New York, NY 10048; and copies
of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, Washington, D.C. 20549 at prescribed rates.
43
<PAGE>
------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Prospectus Summary............................. 3
The Company.................................. 3
The Offering................................. 4
Summary Financial Information.................. 6
Risk Factors................................... 7
Use of Proceeds................................ 18
Dilution....................................... 19
Capitalization................................. 20
Dividend Policy................................ 21
Selected Financial Data........................ 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 23
Business....................................... 26
Management..................................... 33
Principal Stockholders......................... 36
Certain Transactions........................... 37
Description of Securities...................... 38
Federal Income Tax Consequences................ 40
Company Offering............................... 42
Plan of Distribution........................... 43
Legal Matters.................................. 43
Experts........................................ 43
Additional Information......................... 43
Financial Statements........................... F-1
</TABLE>
2,500,000 SHARES OF COMMON STOCK
PERRY'S MAJESTIC BEER, INC.
------------------------
PROSPECTUS
------------------------
VTR CAPITAL, INC.
JULY 30, 1996
------------------------------------------------------
</TEX>
