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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 33-82208-LA
BAYHAWK 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)
_______________________________
2000 Main Street - Suite A
Irvine, California 92714
(714) 442-7565
(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:
2,200,814 shares, $.001 par value
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BAYHAWK 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
<TABLE>
BAYHAWK ALES, INC.
(A Development Stage Company)
Balance Sheet
<CAPTION>
June 30,
1997 December 31,
ASSETS (unaudited) 1996
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,604 $ 40,954
Accounts receivable 73,945 64,349
Inventories 21,351 23,692
Other current assets, net 20,648 -
------------- ------------
Total current assets 144,548 128,995
Property and equipment, net 781,100 802,798
------------- ------------
Total assets $ 925,648 $ 931,793
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,935 $ 36,798
Accrued liabilities 22,467 16,780
Container deposits 47,159 19,339
Payable to parent and affiliated
companies, net 336,312 291,586
------------- ------------
Total current liabilities 445,873 364,503
Shareholders' equity:
Common stock, $.001 par value
- 10,000,000 shares authorized,
2,200,814 and 2,200,814 shares
outstanding 2,201 2,201
Additional paid-in capital 1,427,982 1,427,982
Deficit accumulated during the
development stage (950,408) (862,893)
------------- ------------
Total shareholders' equity 479,775 567,290
Total liabilities and shareholders'
equity $ 925,648 $ 931,793
============ ============
</TABLE>
<TABLE>
BAYHAWK ALES, INC.
(A Development Stage Company)
Statement of Operations
(unaudited)
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenues $ 102,297 $ 184,178 $ 194,950 $ 240,106
Less: excise tax 9,556 20,333 20,602 25,195
------------ ------------ ------------ ------------
Net revenues 92,741 163,845 174,348 214,911
Cost of sales 63,651 113,697 146,167 207,532
------------ ------------ ------------ ------------
Gross profit (deficit) 29,090 50,148 28,181 7,379
Selling, general and
administrative expenses 55,427 112,281 116,024 178,927
------------ ------------ ------------ ------------
Loss from operations (26,337) (62,133) (87,843) (171,548)
Interest income 121 1,318 328 4,364
Interest expense - (6,806) - (11,433)
------------ ------------ ------------ ------------
Net income (loss) $ (26,216) $ (67,621) $ (87,515) $ (178,617)
============ ============ ============ ============
Net loss per common share $ (0.01) $ (0.03) $ (0.04) $ (0.08)
============ ============ ============ ============
Weighted average number of
common shares outstanding 2,200,814 2,200,814 2,200,814 2,200,681
============ ============ ============ ============
</TABLE>
BAYHAWK ALES, INC.
(A Development Stage Company)
Statement of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (87,515) $ (178,617)
Reconciliation of net loss to
net cash provided
by operating activities:
Depreciation and amortization 21,698 29,027
Changes in assets and liabilities:
Accounts receivable (9,596) (88,026)
Inventories 2,341 (21,148)
Other current assets (20,648) 93
Other non-current assets - (25,625)
Accounts payable 3,137 53,385
Accrued liabilities and
container deposits 33,507 33,886
------------- ------------
Net cash used for operating
activities (57,076) (197,025)
Cash flows from investing activities:
Purchases of property and equipment - (12,208)
Sale of asset - 74,250
------------- ------------
Net cash used for investing
activities - 62,042
Cash flows from financing activities:
Stock offering costs - (17,067)
Net proceeds from stock offerings - 12,804
Borrowings from (repayments to)
parent and affiliated company 44,726 (56,216)
------------- ------------
Net cash (used) provided by
financing activities 44,726 (60,479)
------------- ------------
Net increase (decrease) in cash
and cash equivalents (12,350) (195,462)
Cash and cash equivalents:
Beginning of period 40,954 302,247
------------- ------------
End of period $ 28,604 $ 106,785
============= ============
</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 March 31, 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 $283,995 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 $ 10,528 $ 9,969
Work-in-process 6,300 3,484
Finished goods 2,725 4,672
Retail inventory 1,798 5,567
----------- -----------
$ 21,351 $ 23,692
=========== ===========
Property and Equipment
Property and Equipment consists of the following:
June 30, December 31
1997 1996
----------- -----------
Leasehold improvements $ 277,546 $ 277,546
Equipment 634,040 634,040
Office furniture and equipment 4,644 4,644
----------- -----------
$ 916,230 $ 916,230
Less accumulated depreciation (135,130) (113,432)
----------- -----------
$ 781,100 $ 802,798
=========== ===========
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 1,249,811 shares
of unregistered common stock.
During 1995, the Company sold 948,633 shares of its common
stock at $1.65 per share, pursuant to a Regulation A public
offering filed with the Securities and Exchange Commission.
Cash proceeds from this offering, net of offering expenses
of approximately $235,000, aggregated $1,326,273.
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 75,000 shares
have been awarded, net of cancellations. Options have
vesting periods ranging from five years to ten years and
were repriced during the second quarter of 1997 to $1.75 per
share. As of June 30, 1997 no options had been exercised.
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 $950,000 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 $7,039 and $12,825 for the six
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 AAI, 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
$336,312 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 fifteen-year operating lease
arrangement with two five-year optional renewal terms for
its production facility in Irvine, California. Annual
payments under the lease are $36,000 (totaling approximately
$468,000 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 re-negotiated 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, AAI 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
$102,297 for the quarter ended June 30, 1997 compared to
gross revenues of $184,178 during the same quarter in 1996,
resulting in a 44% 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 the Southern and Northern California beer
markets. The overall sales performance during the quarter
ended June 1997 gives question to Bayhawk's ability to
become self-sustaining in the near term.
Bayhawk's brewery currently has an annual production capacity of 10,000
barrels. Bayhawk sold 667 barrels and 1,605 barrels during the quarter
ended June 30, 1997 and 1996 respectively.
Excise Taxes
Excise taxes were $9,556 (9% of gross revenues) for the three months
ended June 30, 1997 compared to $20,333 (11% of gross revenues) for the
same period in 1996.
Cost of Revenues
Cost of goods sold totaled $63,651 (69% of net revenues) for the three
months ended June 30, 1997 compared to $113,697 (69% 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
$55,427 (60% of net revenues) for the three months ended June 30, 1997
from $112,281 (68% of net revenues) for the three months ended June 30,
1996. SG&A expenses reflect operating management and administrative
services provided by Bayhawk'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 $194,950 for the
year ended June 30, 1997 compared to gross revenues of $240,106 for the
year ended June 30, 1996, resulting in a 19% 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 the
Southern and Northern California beer markets. The overall sales
performance for the year ended June 1997 gives question to Bayhawk's
ability to become self-sustaining in the near term.
Excise Taxes
Excise taxes were $20,602 (11% of gross revenues) for the six months
ended June 30, 1997 compared to $25,195 (11% of gross revenues) for the
same period in 1996.
Cost of Revenues
Cost of goods sold totaled $146,167 (84% of net revenues) for the six
months ended June 30, 1997 compared to $207,532 (97% 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
$116,024 (67% of net revenues) for the six months ended June 30, 1997
from $178,927 (83% of net revenues) for the six months ended June 30,
1996. SG&A expenses reflect operating management and administrative
services provided by Bayhawk'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 $87,515 for the six months ended June 30, 1997
from $178,617 for the six months ended June 30, 1996 as a
result of the individual line items discussed above.
Liquidity and Capital Resources
Bayhawk had cash and cash equivalents at June 30, 1997, and
June 30, 1996 of $28,604 and $40,954, respectively. Changes
in cash and cash equivalents for the six months ended June
30, 1997, primarily consisted of cash used in operating
activities of $57,076 offset by borrowings from affiliates
of $44,726.
Bayhawk's working capital deficit at June 30, 1997 and June
30, 1996 was $301,125 and $235,508, respectively. At June
30, 1997, the current ratio was .32:1 and .35:1,
respectively.
Accounts payable at June 30, 1997 and June 30, 1996 were
$39,935 and 36,798, respectively.
At June 30, 1997, Bayhawk had payables to WVI and to other affiliated
companies of $336,312 which accounts for 75% of Bayhawk's current
liabilities. The payables to affiliates consist primarily of advances
by WVI to construct Bayhawk's brewery. Management expects that the
payables to affiliates will be eliminated upon completion of the
Consolidation.
On November 30, 1995, Bayhawk issued a note to WVI for the balance of
funds loaned by WVI to construct, equip and operate Bayhawk's brewery.
The note, which had a principal balance of $250,188 at June 30, 1997 is
secured by all of Bayhawk's assets. Because of the pending
Consolidation, management does not expect to repay the loan or advances.
Instead, the loan and advances are being considered in determining the
purchase price and stock conversion ratios being used in the
Consolidation.
Bayhawk requires significant capital to continue its operations.
However, Bayhawk has very little capital resources, has insufficient
operating results to obtain a bank line of credit and WVI, Bayhawk's
parent, does not currently have adequate resources to support Bayhawk's
operations. Bayhawk's management believes that current working capital
together with projected income from operations is not sufficient to meet
the cash needs of Bayhawk's operating subsidiaries through the end of
1997. Bayhawk's independent accountants expressed substantial doubt as
to Bayhawk's ability to continue as a going concern in their report on
Bayhawk's 1996 consolidated financial statements.
To address recent losses and the need for working capital, Bayhawk and
its parent, WVI, have developed and are in the process of implementing
plans designed to sustain operations until profitability is reached. In
particular, Bayhawk 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 Bayhawk's operations
through June 30, 1998, no assurance can be given that these plans will
provide the necessary revenue and profits to sustain Bayhawk's through
that period. 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 Bayhawk. Bayhawk's inability to obtain additional capital
would result in a material adverse effect on Bayhawk'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.
BAYHAWK ALES, INC.
Date: August 14, 1997 By _____________________
Dave Voorhies
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.
BAYHAWK ALES, INC.
Date: August 14, 1997 By /s/ Dave Voorhies
Dave Voorhies
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> 28604
<SECURITIES> 0
<RECEIVABLES> 73945
<ALLOWANCES> 0
<INVENTORY> 21351
<CURRENT-ASSETS> 144548
<PP&E> 916230
<DEPRECIATION> 135130
<TOTAL-ASSETS> 925648
<CURRENT-LIABILITIES> 445873
<BONDS> 0
0
0
<COMMON> 2201
<OTHER-SE> 479775
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