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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-QSB
_________________________
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarter Ended June 30, 1997
Commission File Number 33-81536-LA
Aviator Ales, INC.
(Exact name of registrant as specified in charter)
Delaware 33-0606860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
_______________________________
14316 NE 203rd Street
Woodinville, Washington 980724
(206) 487-0717
(Address, including Zip code, and telephone number,
including area code, of registrant's principal executive
offices)
____________________________________________________________
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
[ X] YES [ ] NO
Transitional Small Business Disclosure Format
[ ] YES [X] NO
Number of shares of common stock outstanding as of
June 30, 1997:
5,331,775 shares, $.001 par value
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AVIATOR ALES, INC.
INDEX TO FORM 10-QSB
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Part I - FINANCIAL INFORMATION
The information included herein is unaudited. However, such
information reflects all adjustments (consisting solely of
normal, recurring adjustments) which are, in the opinion of
the Company's management, necessary for a fair presentation
of the results of operations for the interim periods. The
interim financial information and notes thereto should be
read in conjunction with the Company's latest annual report
on Form 10-KSB/A. The results of operations for the six
months ended June 30, 1997 are not necessarily indicative of
results to be expected for the entire year.
Item 1 -- Financial Statements
Balance Sheet - June 30, 1997 and December 31, 1996. . .
Statement of Operations - Three Months Ended and Six
Months Ended June 30, 1997 and 1996 . . . . . . . . . .
Statement of Cash Flows - Three Months Ended and Six
Months Ended June 30, 1997 and 1996 . . . .. . . . . . .
Notes to Financial Statements. . . . . . . . . .. . . . .
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . .
Part II - OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . .
Item 1 -- Financial Statements
AVIATOR ALES, INC.
(A Development Stage Company)
Balance Sheet
<TABLE>
<S> <C> <C>
June 30,
1997 December 31,
ASSETS (unaudited) 1996
------------- ------------
Current Assets:
Cash and cash equivalents $ - $ 19,218
Accounts receivable 147,236 61,529
Inventories 249,797 326,178
Marketing supplies 37,317 -
Other current assets, net 14,060 -
------------- ------------
Total current assets 448,410 406,925
Property and equipment, net 2,197,001 2,258,392
------------- ------------
Total assets $ 2,645,411 $ 2,665,317
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligation $ 4,058 $ 4,058
Accounts payable 641,118 607,570
Accrued liabilities 63,865 44,516
Container deposits 22,019 15,583
Payable to parent and affiliated companies,
net 1,074,576 881,012
------------- ------------
Total current liabilities 1,805,636 1,552,739
Mortgage note payable and capital lease
obligation 55,573 57,664
Deferred rent 87,102 70,103
------------- ------------
Total liabilities 1,948,311 1,680,506
Commitments
Shareholders' equity:
Common stock, $.001 par value - 10,000,000
shares authorized, 5,331,775 and 5,331,775
shares outstanding 5,332 5,332
Additional paid-in capital 2,582,553 2,582,553
Deficit accumulated during the development
stage (1,890,785) (1,603,074)
------------- ------------
Total shareholders' equity 697,100 984,811
Total liabilities and shareholders' equity $ 2,645,411 $ 2,665,317
=============== ============
</TABLE>
AVIATOR ALES, INC.
(A Development Stage Company)
Statement of Operations
(unaudited)
[CAPTION]
<TABLE>
Three Months Ended June 30, Six Months Ended June 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ---------- ----------
Gross sales $ 291,501 $ 472,136 $ 590,133 $ 746,241
Less: excise taxes 19,024 22,611 34,509 37,966
---------- ---------- ---------- ----------
Net Sales 272,477 449,525 555,624 708,275
Cost of sales 308,018 495,225 606,774 824,865
---------- ---------- ---------- ----------
Gross deficit (35,541) (45,700) (51,150) (116,590)
Selling, general and
administrative expenses 147,272 188,327 238,819 345,346
---------- ---------- ---------- ----------
Loss from operations (182,813) (234,027) (289,969) (461,936)
Other income (expense):
Other income (expense) 6,273 360 6,067 2,292
Interest expense (1,760) (1,125) (3,809) (2,250)
---------- ---------- ---------- ----------
4,513 (765) 2,258 42
Net loss $(178,300) $(234,792) $(287,711) $(461,894)
========== ========== ========== ==========
Net loss per common share $ (0.03) $ (0.04) $ (0.05) $ (0.08)
========== ========== ========== ==========
Weighted average number of
common shares outstanding 5,331,775 5,330,275 5,331,775 6,040,259
========== ========== ========== ==========
</TABLE>
AVIATOR ALES, INC.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
[CAPTION]
<TABLE>
Six Months Ended June 30,
<S> <C> <C>
1997 1996
------------- -------------
Cash flows from operating activities:
Net loss $ $ (287,711) $ (461,894)
Reconciliation of net loss to net cash
used for operating activities:
Depreciation and amortization 79,029 77,458
Deferred rent 16,999 16,999
Changes in assets and liabilities:
Accounts receivable (85,707) (176,577)
Inventories 76,381 (41,211)
Marketing supplies (37,317) -
Other current assets (14,060) 17,447
Other non-current assets - 1,065
Accounts payable 33,548 186,356
Accrued liabilities 19,349 35,775
Container deposits 6,436 -
------------- -------------
Net cash used for operating activities (193,053) (344,582)
Cash flows from investing activities:
Purchases of property and equipment (17,638) (225,774)
Sale of asset - 55,000
------------- -------------
Net cash used for investing activities (17,638) (170,774)
Cash flows from financing activities:
Payment on long-term debt (2,091) -
Advances from affiliated company 193,564 384,778
Deferred stock offering costs - (68,006)
------------- -------------
Net cash provided by financing activities 191,473 316,772
------------- -------------
Net decrease in cash and cash equivalents (19,218) (198,584)
Cash and cash equivalents:
Beginning of period 19,218 226,401
------------- -------------
End of period $ - $ 27,817
============= =============
</TABLE>
BASIS OF PRESENTATION
The Company's financial statements enclosed herein are unaudited and,
because of the seasonal nature of the business and the varying schedule
of its special sales efforts, these results are not necessarily
indicative of the results to be expected for the entire year. In the
opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items which are
necessary for a fair presentation of the results for the periods
presented. The accompanying financial statements have been prepared in
accordance with GAAP and SEC guidelines applicable to interim financial
information which require management to make certain estimates and
assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities as of the date of the financial statements, and the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates. The accompanying financial
statements and related notes should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB/A.
The Company is a development stage company established to produce and
sell hand-crafted ales in the State of California. From the date
inception (February 14, 1994) trough June 30, 1997, the Company's
efforts have been directed primarily toward organizing and issue a
public offering of shares of its common stock, building and equipping
its brewery, and developing a marketable beer.
The accompanying financial statement have been prepared assuming the
Company will continue as a going concern. The Company is a development
stage company which has a limited and unprofitable operating history,
has negative working capital of $1,357,226 and has limited access to
capital to fund future operations. There can be no assurance that the
Company will produce and sell its products on a profitable basis to
sustain operations. Such factors, among other, raise substantial doubt
as to the Company's ability to continue as a going concern.
In light of significant losses and negative working capital the Company
has developed and is implementing plans for the continuation of the
business. In particular, the Company has taken steps to: (i) reduce or
eliminate cooperative brewing arrangements which proved to be
inefficient and costly; (ii) eliminate national roll-out programs in
favor of stepped-up regional sales and marketing efforts; (iii)
negotiate with past due creditors which could involve extended terms and
payment plans; (iv) hire and retain high-quality employees familiar with
the brewing industry, (v) use available bridge loans from a proposed
investor (see Proposed Merger note) to fund operations until new
strategies result in positive cash flows and improved profitability,
and; (vi) use proceeds from the disposition of duplicative and/or under
utilized assets created by the proposed merger. Management believes
these plans will result in the Company sustaining operations as a going
concern for the next 12 months.
As part of the plan, the Company entered into an investment agreement to
be merged with other affiliated companies and convert its stock into
shares of a new publicly traded entity as discussed in the Proposed
Merger note.
Inventories
Inventories consist of the following:
June 30, December 31
1997 1996
----------- -----------
Raw Materials $ 134,220 $ 180,145
Work-in-process 41,489 35,414
Finished goods 47,063 72,186
Retail inventory 27,025 38,433
----------- -----------
$ 249,797 $ 326,178
=========== ===========
Property and Equipment
Property and Equipment consists of the following:
June 30, December 31
1997 1996
----------- -----------
Leasehold improvements $ 695,486 $ 695,486
Equipment 1,727,067 1,708,998
Office furniture and equipment 35,970 36,400
----------- -----------
$2,458,523 $2,440,884
Less accumulated depreciation (261,522) (182,492)
----------- -----------
$2,197,001 $2,258,392
=========== ===========
Shareholders' Equity
The Company is authorized to issue 10 million shares of its common
stock. Each share of common stock entitles the holder to one vote. At
its discretion, the Board of Directors may declare dividends on share of
common stock, although the Board does not anticipate paying dividends in
the foreseeable future. In February 1994, the Company received $100,000
from WVI in exchange for 4,845,455 shares of unregistered common stock.
In March 1996, 2,129,871 of those shares were contributed back to the
Company for no consideration and subsequently retired.
Net Loss Per Share
Net loss per common share is calculated based on the
weighted average number of common shares and common share
equivalents outstanding. Outstanding options to purchase
shares of the Company's common shares have not been included
in the calculations as their effect would be anti-dilutive.
Stock Incentive and Stock Grant Plans
During 1994, the Board of Directors established a pool of 250,000 shares
of the Company's common stock for a stock incentive plan for issuance to
employees, directors and consultants of the Company pursuant to the
exercise of stock options granted under the plan or stock grants or
stock sales. Administration of the plan, including determination of the
number of shares to be issued, the term of exercise of any option, the
option exercise price, and type of options to be granted, lies with the
Board of Directors or a duly authorized committee of the Board of
Directors.
As of June 30, 1997, options for a total of 138,000 shares have been
awarded, net of cancellations. Options have vesting periods ranging
from five years to ten years.
No compensation expense has been recorded as a result of granting any of
the options as all such options were granted with an exercise price
equal to the market price on the date of grant.
Options granted by the Company are expected to be converted to options
of the new company expected to be formed in the consolidation of the
Company and its affiliates at the same conversion rate as the conversion
of common stock discussed in the Pending Consolidation note.
Income Taxes
No benefit for income taxes was recognized for the six months or three
months ended June 30, 1997 and 1996 in the accompanying statement of
operations as there can be no assurance that the Company will generate
taxable income in the future against which such benefits could be
realized.
At June 30, 1997, the Company had a net operating loss carryforward
aggregating approximately $2 million for federal income tax purposes,
which may be used to offset future taxable income, if any. The annual
utilization of this carryforward may be limited if the Company undergoes
the ownership change anticipated by management (see Proposed Merger
note) or fails to meet continuity of business requirements defined by
the Internal Revenue Code. The Company's net operating loss
carryforwards beginning expiring in 2010.
Related Parties
Nature of related parties
The Company's president, Jim Bernau, partially owns and controls
Willamette Valley Vineyards (WVV), a winery in Oregon, Willamette Valley
Inc. (WVI) and Nor'Wester Brewing Company, Inc.(Nor'Wester), a
microbrewery in Oregon. Additionally, Mr. Bernau is the president of
each of the following subsidiaries of WVI: Aviator Ales, Inc. (AAI);
Mile High Brewing Company (MHBC); Bayhawk Ales, Inc. (BAI); and North
Country Brewing Company, Inc. (NCBCI); development stage companies
located in Washington, Colorado and California, respectively. As a
result of certain arrangements between the Company and its affiliates,
as well as Mr. Bernau's positions with and/or ownership interests in
each of these companies, inherent conflicts of interest exist with
respect to the pricing of services, the sharing of resources and
allocation of the Mr. Bernau's time.
Related Party Transactions
The Company purchased management and administrative services from WVI at
a total cost of $28,192 and $26,275 for the three months ended June 30,
1997 and 1996, respectively. WVI contracts for certain of these
services under a general services agreement between WVI and Nor'Wester.
Strategic Alliance and Cooperative Brewing Agreements The Company has
entered into a Strategic Alliance (the "Alliance") with BAI, Nor'Wester,
MHBC, NCBCI, and WVI. Nor'Wester, AAI, MHBC, and BAI are individually
referred to as a "Cooperative Brewer." The purpose of the Alliance is
to promote and support the growth of all of the Alliance members by
increasing production at each Cooperative Brewer's facility and
supporting the entry of Nor'Wester products into new markets. To
achieve this goal, each Cooperative Brewer agreed to cooperatively brew
Nor'Wester's products, and to support the entry of these products into
new markets by facilitating Nor'Wester's access to the Cooperative
Brewer's network of distributors. During January, 1997, AAI and MHBC
ceased cooperative brewing of Nor'Wester beers.
As a result of the administrative services purchased and loans provided
by WVI and the loan received from Nor'Wester, the Company has advances
and loans payable to affiliates of $1,074,576 at June 30, 1997. Because
management expects these advances and loan will eventually be eliminated
when the proposed merger occurs, as discussed in the Proposed Merger
note, these advances have been classified as current payables to
affiliates at June 30, 1997.
Commitments
The Company has entered into a twenty-year operating lease arrangement
with optional renewal terms for its production facility in Woodinville,
Washington. Annual payments under the lease are $117,000 (totaling
approximately $2,665,000 over the term of the lease), plus common area
charges.
Proposed Merger and Investment by UBA
In light of lower than anticipated 1996 operating results, lower than
anticipated first quarter 1997 sales and other operating results and
adverse conditions within the craft beer industry in general,
representatives of UBA and management and the investment bankers of the
affiliated companies renegotiated the terms of the original UBA
investment discussed in Form 10KSB/A for the year ended 1996 and Form
10QSB/A for the quarter ended March 31, 1997. The renegotiation
reflects a significantly lower valuation for the affiliate companies, a
reduction in the total amount of cash to be invested by UBA to $5.5
million and a reduction of UBA's percentage ownership position in UCB to
40% following consolidation. The Company and its affiliates
(Nor'Wester, WVI, AAI and MHB) entered into an investment agreement with
United Breweries of America, Inc. (UBA), an entity controlled by the UB
Group of Bangalore, India. The agreement provides for Nor'Wester, WVI,
AAI, MHBC and BAI to merge into a company to be known as United Craft
Brewers (UCB). This proposed merger will result in the issuance of
newly registered shares of UCB common stock in exchange for shares of
Nor'Wester, WVI and its subsidiaries. The merger and share exchange
will require approval by the Boards of Directors and shareholders of
each of the entities. Following the merger, all shareholders in the
Nor'Wester /WVI alliance will hold shares in UCB, a company which is
intended to be listed for trading on the Nasdaq National Market system
under the symbol ALES. Shares of Nor'Wester, WVI, AAI, BAI, and MHB
outstanding at the effective time of each merger (other than shares of
Aviator common stock, Bayhawk common stock and Mile High common stock
owned by WVI) will be converted into the right to receive 0.3333333,
0.0785714, 0.0523809, 0.0785714 and 0.0523809 shares, respectively, of
UCB common stock.
Impact of Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board("FASB")
issued Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" ("SFAS 128") and Statement of Financial Accounting Standards No.
129, "Disclosure of Information about Capital Structure" ("SFAS
129")which are effective for fiscal years ending after December 15,
1997. The Company believes the implementation of these statements will
not have a material effect on its results of operations or financial
statement disclosures.
Subsequent Events
Final adoption of the Proposed Merger and Investment is subject to
approval by shareholder vote scheduled to take place at the Company's
annual shareholder meeting on August 25, 1997, shareholder approval by
vote for each of the Company's affiliates (Nor'Wester, WVI, BAI and MHB)
also scheduled to be held on August 25, 1997 and other closing
conditions contained within the Investment Agreement.
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information
This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this Form 10-QSB contains
forward-looking information within the meaning of the Private Securities
Litigation Reform Act of 1995. This forward-looking information
involves risks and uncertainties that are based on current expectations,
estimates and projections about the Company's business, management's
beliefs and assumptions made by management. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and
variations of such words and similar expressions are intended to
identify such forward-looking information. Therefore, actual outcomes
and results may differ materially from what is expressed or forecasted
in such forward-looking information due to numerous factors, including,
but not limited to, availability of financing for operations, successful
performance of internal operations, impact of competition, changes in
distributor relationship or performance, successful completion of the
planned consolidation of the Affiliated Companies, and other risks
detailed below as well as those discussed elsewhere in this Form 10-QSB.
In addition, such statements could be affected by general industry and
market conditions and growth rates, and general domestic economic
conditions.
Results of Operations
Three Months Ended June 30, 1997 Compared to Three Months
Ended June 30, 1996
Gross Revenues
Gross revenues from beer and retail products totaled $291,501 for the
quarter ended June 30, 1997 compared to gross revenues of $472,136
during the same quarter in 1996, resulting in a 38% decline in gross
revenues. The drop in gross revenues is primarily due to the elimination
of brewing activity under the cooperative brewing agreement between the
Company and Nor'Wester and fewer sales of its own products in its own
beer markets. The overall sales performance during the quarter ended
June 1997 gives question to Aviator's ability to become self-sustaining
in the near term.
Aviator's brewery currently has an annual production capacity of 57,000
barrels. Aviator sold 1,422 barrels and 2,870 barrels during the
quarter ended June, 1997 and 1996 respectively.
Excise Taxes
Excise taxes were $19,024 (7% of gross revenues) for the three months
ended June 30, 1997 compared to $22,611 (5% of gross revenues) for the
same period in 1996.
Cost of Revenues
Cost of goods sold totaled $308,018 (113% of net revenues) for the three
months ended June 30, 1997 compared to $495,225 (110% percent of net
revenues) for the three months ended June 30, 1996. The cost of goods
sold percentage continues to reflect the disproportionate cost of
production for goods sold during a period when the facility was
operating at less than its maximum designed capacity.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses decreased to
$147,272 (54% of net revenues) for the three months ended June 30, 1997
from $188,327 (42% of net revenues) for the three months ended June 30,
1996. SG&A expenses reflect operating management and administrative
services provided by Aviator's parent, WVI, as well as direct charges
such as the general manager's salary and advertising expenses. The
decrease in SG&A expenses is primarily attributable to implementation of
expense controls and reduction of staff in an effort to minimize SG&A
expenses.
Six Month Ended June 30, 1997 compared to Six Months Ended
June 30, 1996
Gross Revenues
Gross revenues from beer and retail products totaled $590,133 for the
year ended June 30, 1997 compared to gross revenues of $746,241 for the
year ended June 30, 1996, resulting in a 21% decline in gross revenues.
The drop in gross revenues is primarily due to the elimination of
brewing activity under the cooperative brewing agreement between the
Company and Nor'Wester and fewer sales of its own products in it's own
beer markets. The overall sales performance for the year ended June
1997 gives question to Aviator's ability to become self-sustaining in
the near term.
Aviator sold 7,656 barrels and 4,140 barrels during the six months ended
June, 1997 and 1996 respectively.
Excise Taxes
Excise taxes were $34,509 (6% of gross revenues) for the six months
ended June 30, 1997 compared to $37,966 (5% of gross revenues) for the
same period in 1996.
Cost of Revenues
Cost of goods sold totaled $606,774 (110% of net revenues) for the six
months ended June 30, 1997 compared to $824,865 (116% percent of net
revenues) for the six months ended June 30, 1996. The cost of goods
sold percentage continues to reflect the disproportionate cost of
production for goods sold during a period when the facility was
operating at less than its maximum designed capacity.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses decreased to
$238,819 (43% of net revenues) for the six months ended June 30, 1997
from $345,346 (49% of net revenues) for the six months ended June 30,
1996. SG&A expenses reflect operating management and administrative
services provided by Aviator's parent, WVI, as well as direct charges
such as the general manager's salary and advertising expenses. The
decrease in SG&A expenses is primarily attributable to implementation of
expense controls and reduction of staff in an effort to minimize SG&A
expenses.
Net Loss
Net loss was $287,711 for the six months ended June 30, 1997 from
$461,894 for the six months ended June 30, 1996 as a result of the
individual line items discussed above.
Liquidity and Capital Resources
Aviator had cash and cash equivalents at June 30, 1997, December 31,
1997 and June 30, 1996 of $0 and $19,218 and $27,817, respectively.
Changes in cash and cash equivalents for the six months ended June 30,
1997 primarily consisted of cash used in operating activities of
$193,053, limited fixed asset purchases of $17,638 offset by borrowings
from affiliates of $193,564. Changes in cash and cash equivalents for
the six months ended December 31, 1996 were due primarily to uses of
cash in operations and purchases of brewing equipment offset by
borrowings from affiliates.
Aviator's working capital deficit at June 30, 1997, December 31, 1996
and June 30, 196 was $1,356,956, $1,145,814 and $262,671, respectively.
Current ratios for the same periods were .25:1, .26:1 and .69:1,
respectively.
Accounts payable at June 30, 1997, December 31, 1996 and June 30, 1996
was $641,118, $607,570 and $388,668, respectively. At June 30, 1997,
accounts payable amounts past due were $1,349,565.
At June 30, 1997, December 31, 1997 and June 30, 1996, Aviator had
payables to WVI and to other affiliated companies of $1,074,576,
$881,012 and $662,889. The payables to affiliates consist primarily of
advances by WVI and Nor'Wester to construct Aviator's brewery and
support ongoing operations. Management expects that the payables to
affiliates will be eliminated upon completion of the Consolidation.
Aviator requires significant capital to continue its operations.
However, Aviator has very little capital resources, has insufficient
operating results to obtain a bank line of credit and WVI, Aviator's
parent, does not currently have adequate resources to support Aviator's
operations. Aviator's management believes that current working capital
together with projected income from operations is not sufficient to meet
the cash needs of Aviator's operating subsidiaries through the end of
1997. Aviator's independent accountants expressed substantial doubt as
to Aviator's ability to continue as a going concern in their report on
Aviator's 1996 consolidated financial statements.
To address recent losses and the need for working capital, Aviator and
its parent, WVI, have developed and are in the process of implementing
plans designed to sustain operations until profitability is reached. In
particular, Aviator has taken steps to: (i) implement a more focused
marketing and sales plan designed to increase sales on a regional basis;
(ii) significantly reduce or eliminate cooperative brewing arrangements
with affiliates which proved to be inefficient and costly; (iii)
negotiate with past-due creditors for extended terms and payment plans
and to allow for the possibility of obtaining debt financing; (iv) hire
and retain highly qualified employees familiar with the brewing
industry; (v) use bridge loans from UBA to fund operations until the
Investment closes; and (vi) sell duplicate and/or under utilized assets
created by the Consolidation for cash.
While management believes these plans will sustain Aviator's operations
through June 30, 1998, no assurance can be given that these plans will
provide the necessary revenue and profits to sustain Aviator's through
that period. Aviator is highly dependent upon the receipt of additional
amounts from UBA under the bridge loan and closing of the Investment.
No assurance can be given that UBA will loan Aviator further amounts
under the bridge loan or that the Investment will close. If, for any
reason, the Investment does not occur, alternative sources of debt
financing and/or equity capital would have to be developed. There can be
no assurance that such debt financing or capital will be available or,
if available, under terms and conditions acceptable to Aviator.
Aviator's inability to obtain additional capital would result in a
material adverse effect on Aviator's business and results of operations.
Furthermore, assuming the Investment closes, UCB will be dependent upon
the receipt of additional debt or equity financing to sustain operations
of the Company until revenues are sufficiently increased and costs
controlled to enable them to achieve positive cash flow and
profitability. No assurance can be given that additional debt or equity
financing will be available on terms acceptable to UCB or at all.
Failure to obtain additional financing would have a material adverse
effect on the operations and financial condition of the Company.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None.
(b) No reports were filed on Form 8-K during the quarter
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIATOR ALES, INC.
Date: August 14, 1997 By _____________________
Dusty Wyant
General Manager
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIATOR ALES, INC.
Date: August 14, 1997 By /s/ Dusty Wyant
Dusty Wyant
General Manager
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations
filed as part of the quarterly report on form 10-QSB and is qualified in
its entirety by reference to such report on form 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 147236
<ALLOWANCES> 0
<INVENTORY> 249797
<CURRENT-ASSETS> 448410
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