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

FORM 10-Q

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

For the quarterly period ended September 30, 2003


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

For the transition period from __________ to ____________


Commission File Number: 33-26617A


CBR BREWING COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

British Virgin Islands --
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)


23/F., Hang Seng Causeway Bay Building
28 Yee Wo Street, Causeway Bay, Hong Kong
------------------------------------------------------------
(Address of principal executive offices, including Zip Code)


Registrant's telephone number, including area code: 852-2866-2301


Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

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. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). [ ]

As of September 30, 2003, the Company had 5,010,013 shares of Class A
Common Stock and 3,000,000 shares of Class B Common Stock issued and
outstanding.

Documents incorporated by reference: None


1

CBR BREWING COMPANY, INC. AND SUBSIDIARIES


INDEX



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets - September 30, 2003 (Unaudited)
and December 31, 2002

Consolidated Statements of Operations (Unaudited) - Three
Months and Nine Months Ended September 30, 2003 and 2002

Consolidated Statements of Cash Flows (Unaudited) - Nine
Months Ended September 30, 2003 and 2002

Notes to Consolidated Financial Statements (Unaudited) - Three
Months and Nine Months Ended September 30, 2003 and 2002


Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations


Item 3. Quantitative and Qualitative Disclosures about Market Risk


Item 4. Controls and Procedures


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K


SIGNATURES


2



CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


September 30, 2003 December 31, 2002
-------------------------- ------------------------
RMB USD RMB USD
------------ ------------ ----------- -----------
(Unaudited) (Unaudited)

ASSETS
Current assets:
Cash 55,003,889 6,626,975 117,075,072 14,105,430
Accounts receivable, net 50,078,685 6,033,577 114,641,020 13,812,171
Bills receivable 2,990,420 360,292 500,000 60,241
Inventories (Note 3) 50,908,135 6,133,510 54,180,017 6,527,713
Amounts due from related
companies (Note 4) 40,163,686 4,838,998 4,647,971 559,997
Income taxes receivable - - 1,927,759 232,260
Prepayments and deposits 9,230,026 1,112,052 9,212,093 1,109,891
Other receivables 54,683,267 6,588,345 11,109,615 1,338,508
------------ ------------ ----------- -----------

Total current assets 263,058,108 31,693,749 313,293,547 37,746,211

Interest in an associated company
(Note 5) 114,423,763 13,785,996 213,760,312 25,754,254

Property, plant and equipment, net
(Note 6) 673,863 81,188 64,186,910 7,733,362
------------ ------------ ----------- -----------

Total assets 378,155,734 45,560,933 591,240,769 71,233,827
============ ============ =========== ===========



(continued)


3



CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)


September 30, 2003 December 31, 2002
--------------------------- ---------------------------
RMB USD RMB USD
------------- ------------ ------------- ------------
(Unaudited) (Unaudited)

LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Bank borrowings 128,302,945 15,458,186 130,818,717 15,761,291
Accounts payable 16,983,588 2,046,215 18,182,253 2,190,633
Accrued advertising expenses 59,649,245 7,186,656 55,478,622 6,684,171
Accrued other liabilities 100,820,416 12,147,038 102,288,435 12,323,908
Amounts due to related companies
(Note 4) 1,560 188 1,560 188
Amount due to an associated company
(Note 8) 267,461,362 32,224,260 298,379,194 35,949,300
Sales taxes payable 32,716,145 3,941,704 27,693,120 3,336,520
------------- ------------ ------------- ------------

Total current liabilities 605,935,261 73,004,247 632,841,901 76,246,011
------------- ------------ ------------- ------------

Long-term liabilities:
Bank borrowings 155,260 18,706 155,260 18,706
------------- ------------ ------------- ------------

Total long-term liabilities 155,260 18,706 155,260 18,706
------------- ------------ ------------- ------------

Minority interests (Note 10) - - - -
------------- ------------ ------------- ------------

Contingencies (Note 1 and 6)

Common stock:
-Class A, no par value
(2002: US$0.0001 par value),
90,000,000 shares authorized,
5,010,013 shares outstanding - - 4,273 515
-Class B, no par value
(2002: US$0.0001 par value),
10,000,000 shares authorized,
3,000,000 shares outstanding - - 2,559 308
Additional paid-in capital 107,368,677 12,935,985 107,361,845 12,935,162
General reserve and enterprise
development funds 18,735,220 2,257,255 18,735,220 2,257,255
Deficit (354,038,684) (42,655,260) (167,860,289) (20,224,130)
------------- ------------ ------------- ------------

Total shareholders' deficiency (227,934,787) (27,462,020) (41,756,392) (5,030,890)
------------- ------------ ------------- ------------


Total liabilities and shareholders'
deficiency 378,155,734 45,560,933 591,240,769 71,233,827
============= ============ ============= ============



See accompanying notes to the consolidated financial statements.


4



CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Nine Months
Ended Ended
Three Months Ended Nine Months Ended September 30, September 30,
September 30, 2003 September 30, 2003 2002 2002
--------------------------- --------------------------- ----------------------------
RMB USD RMB USD RMB (1) (2) RMB (1) (2)
------------- ------------ ------------- ------------ ------------- -------------

Sales 151,999,192 18,313,156 345,961,871 41,682,153 130,471,756 474,880,867
Sales taxes (5,500,185) (662,673) (14,270,582) (1,719,347) (4,784,662) (15,619,077)
------------- ------------ ------------- ------------ ------------- -------------

Net sales 146,499,007 17,650,483 331,691,289 39,962,806 125,687,094 459,261,790
Cost of sales, including net inventory
transferred from an associated
company of RMB 21,397,828 and
RMB 56,063,607 for the three months
and nine months ended September 30,
2003, respectively, and RMB 13,529,348
and RMB 41,784,234 for the three and
nine months ended September 30, 2002,
respectively; inventory purchased from
related companies of RMB 94,805,532
and RMB 164,567,238 for the three
months and nine months ended
September 30,2003, respectively, and
RMB 58,667,365 and RMB 221,247,110
for the three months and nine months
ended September 30, 2002, respectively;
and royalty fee paid to a related
company of RMB 1,248,102 and
RMB 2,704,546 for the three months
and nine months ended September 30,
2003, respectively, and RMB 695,553
and RMB 2,523,108 for the three months
and nine months ended September 30,
2002,respectively (Note 4) (122,766,124) (14,791,099) (237,113,714) (28,567,917) (102,006,200) (339,377,662)
------------- ------------ ------------- ------------ ------------- -------------

Gross profit 23,732,883 2,859,384 94,577,575 11,394,889 23,680,894 119,884,128

Selling, general and administrative
expenses (15,275,426) (1,840,412) (110,319,610) (13,291,519) (36,426,389) (145,288,943)
Impairment of property, plant and
equipment (Note 6) - - (65,250,000) (7,861,446) (42,000,000) (124,000,000)
Gain on disposal of property, plant
and equipment - - - - 94,950 94,950
------------- ------------ ------------- ------------ ------------- -------------

Operating income (loss) 8,457,457 1,018,972 (80,992,035) (9,758,076) (54,650,545) (149,309,865)
Interest income 41,748 5,030 203,568 24,526 170,848 426,120
Interest expense (1,890,336) (227,752) (6,053,379) (729,321) (1,605,381) (5,928,483)
------------- ------------ ------------- ------------ ------------- -------------

Income (loss) before income taxes,
minority interests and equity in
(loss) earnings of an associated
company 6,608,869 796,250 (86,841,846) (10,462,871) (56,085,078) (154,812,228)
Income taxes - - - - - (325,894)
------------- ------------ ------------- ------------ ------------- -------------

Income (loss) before minority interests
and equity in (loss) earnings of an
associated company 6,608,869 796,250 (86,841,846) (10,462,871) (56,085,078) (155,138,122)
Minority interests (Note 10) - - - - - (18,553,467)
------------- ------------ ------------- ------------ ------------- -------------

Income (loss) before equity in (loss)
earnings of an associated company 6,608,869 796,250 (86,841,846) (10,462,871) (56,085,078) (173,691,589)
Equity in (loss) earnings of an
associated company 5,071,627 611,039 (99,336,549) (11,968,259) (16,375,619) (30,931,977)
------------- ------------ ------------- ------------ ------------- -------------

Net income (loss) for the period 11,680,496 1,407,289 (186,178,395) (22,431,130) (72,460,697) (204,623,566)
============= ============ ============= ============ ============= =============

Net income (loss) per common share
(Note 2)
- basic and diluted 1.46 0.18 (23.24) (2.80) (9.05) (25.55)
============= ============ ============= ============ ============= =============

Weighted average number of common
shares outstanding
- basic and diluted 8,010,013 8,010,013 8,010,013 8,010,013 8,010,013 8,010,013
============= ============ ============= ============ ============= =============


(1) The provisions of Emerging Issues Task Force ("EITF") No. 01-9, "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of
the Vendor's Products)", were adopted during 2002. The adoption of EITF No.
01-9 resulted in the reclassification of certain sales incentives
previously classified as selling expenses to a reduction from sales in
2002. Prior period amounts have been reclassified to conform to the current
period presentation; this reclassification had no effect on the Company's
operating results. The amount of sales incentives recorded as a deduction
from sales in accordance with EITF No. 01-9 was RMB 6,947,167 and RMB
22,463,605 for the three months and nine months ended September 30, 2002,
respectively.


5

(2) In early 2003, the Company conducted a subsequent test and review of its
previous assumptions and calculations adopted with respect to the estimates
of those impairment charges recorded in its quarterly reports for the three
months ended June 30, 2002 and September 30, 2002. The Company determined
that some of the assumptions made in the calculations of those impairment
charges should be revised to include land use rights, buildings and
construction in progress. As a result, the provision for impairment for the
three months ended June 30, 2002 with respect to Zhaoqing Brewery should
have been RMB 82,000,000 instead of RMB 40,000,000. The provision for
impairment for the three months ended September 30, 2002 with respect to
Zao Yang High Worth Brewery should have been RMB 42,000,000 instead of RMB
29,000,000. Accordingly, as a result of these revisions, the Company's
provision for impairment has been restated as RMB 82,000,000 and RMB
82,000,000 for the three months and six months ended June 30, 2002,
respectively; and as RMB 42,000,000 and RMB 124,000,000 for the three
months and nine months ended September 30, 2002, respectively.





See accompanying notes to the consolidated financial statements.


6



CBR BREWING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
--------------------------- -------------------
RMB USD RMB (1)
------------- ------------ -------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (186,178,395) (22,431,130) (204,623,566)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Allowance for doubtful accounts 4,600,000 554,217 21,000,000
Depreciation and amortization 2,261,934 272,520 19,297,598
Impairment of property, plant and equipment 65,250,000 7,861,446 124,000,000
Gain on disposal of property, plant and
equipment - - (94,950)
Minority interests - - 18,553,467
Equity in loss of an associated company 99,336,549 11,968,259 30,931,977

Changes in operating assets and liabilities:
(Increase) decrease in -
Accounts receivable 59,962,335 7,224,378 (22,490,341)
Bills receivable (2,490,420) (300,051) (13,034,300)
Inventories 3,271,882 394,203 (6,545,724)
Amounts due from related companies (8,575,092) (1,033,143) (1,456)
Income taxes receivable 1,927,759 232,260 (1,927,759)
Prepayments and deposits (17,933) (2,161) (482,061)
Other receivables (43,573,652) (5,249,837) (22,218,720)
Increase (decrease) in -
Accounts payable (1,198,665) (144,418) (6,081,484)
Accrued liabilities 302,604 36,458 42,646,499
Amount due to an associated company (30,917,832) (3,725,040) 50,128,082
Sales taxes payable 5,023,025 605,184 (7,654,120)
------------- ------------ -------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (31,015,901) (3,736,855) 21,403,142
------------- ------------ -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance to related party (46,940,623) (5,655,497) -
Repayment of advance to related party 20,000,000 2,409,639 -
Purchases of property, plant and equipment (1,598,887) (192,637) (7,154,141)
Proceeds from disposal of property, plant and
and equipment - - 130,000
------------- ------------ -------------------
NET CASH USED IN INVESTING ACTIVITIES (28,539,510) (3,438,495) (7,024,141)
------------- ------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
New bank borrowings 91,750,000 11,054,217 85,000,000
Repayment of bank borrowings (94,265,772) (11,357,322) (79,669,717)
Advance from a related company - - 11,000,000
Decrease in amounts due to related companies - - (4,019,980)
Dividend received from an associated company - - 30,204,416
Payment of cash dividend to minority interest - - (16,435,000)
------------- ------------ -------------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (2,515,772) (303,105) 26,079,719
------------- ------------ -------------------
Net increase (decrease) in cash (62,071,183) (7,478,455) 40,458,720
Cash and cash equivalents at beginning of period 117,075,072 14,105,430 71,366,480
------------- ------------ -------------------

Cash and cash equivalents at end of period 55,003,889 6,626,975 111,825,200
============= ============ ===================

(1) Certain of the prior year's amounts have been revised to conform with the changes made in the consolidated
statements of operations.



See accompanying notes to the consolidated financial statements.


7

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


1. ORGANIZATION AND PRINCIPAL ACTIVITIES

CBR Brewing Company, Inc. ("CBR") was originally incorporated on April 20, 1988
under the laws of the State of Florida. At December 31, 2001, CBR's principal
shareholder was Shenzhen Huaqiang Holdings Limited ("Huaqiang"), which held
indirectly 63.2% of the outstanding Class A common stock and 80% of the
outstanding Class B common stock. Effective January 10, 2002, Zhaoqing City Lan
Wei Alcoholic Beverage (Holdings) Limited ("Lan Wei") acquired from Huaqiang all
of its equity interest in CBR. Lan Wei is a company controlled by the City of
Zhaoqing, which is located in Guangdong Province, People's Republic of China
(the "PRC" or "China").

In February 2002, Lan Wei acquired additional Class A common shares representing
an approximate 7.2% equity interest in CBR from a third party in a private
transaction. As part of this transaction, Lan Wei also acquired Huaqiang's 19.6%
equity interest in Noble China Inc., a Canadian public company.

Effective February 28, 2003, CBR reincorporated from the State of Florida in the
United States to the British Virgin Islands ("BVI") by merging into its
wholly-owned BVI subsidiary, High Worth Holdings Ltd ("Holdings"). This
off-shore reincorporation was for tax planning purposes, since all of CBR's
assets and operations are currently located in China and are expected to
continue to be located outside the United States in the future. The
reincorporation had no effect on CBR's current business operations in China. On
March 3, 2003, Holdings changed its name to CBR Brewing Company, Inc.
(hereinafter referred to as the "Company", which term shall include, when the
context so requires, its subsidiaries and affiliates).

The Agreement and Plan of Merger related to the reincorporation dated January
24, 2003 was approved by a majority of shareholders of each class of common
stock outstanding as of December 31, 2002. Holdings was the surviving
corporation subsequent to the merger and possesses all of the rights,
privileges, powers and franchises and is subject to all the restrictions,
disabilities and duties of the dissolved Florida corporation. Each Class A share
of the Florida corporation was converted into one fully paid and non-assessable
(with no par value) Class A share of capital stock of the BVI corporation and
each Class B share of the Florida corporation was converted into one fully paid
and non-assessable (with no par value) Class B share of capital stock of the BVI
corporation. The surviving BVI corporation assumed and continued the reporting
obligations of the dissolved Florida corporation under the new OTC Bulletin
Board trading symbol "CBRAF" and the consolidated operations of the Company
continued without interruption.

The Company is a holding company and its principal subsidiaries are engaged in
the production and sale of beer in the PRC. Substantially all of the beer
currently sold by the Company is marketed under the Pabst Blue Ribbon label and
was brewed under a sub-license agreement with Guangdong Blue Ribbon Group Co.,
Ltd. ("Guangdong Blue Ribbon") that expired on November 7, 2003, which, through
an assignment and transfer, obtained its license from Pabst Brewing Company
("Pabst").

Prior to the reincorporation, the Company's wholly-owned subsidiary, Holdings,
was a holding company that was formed solely to effect the acquisition of a 60%
interest in Zhaoqing Blue Ribbon High Worth Brewery Ltd. ("High Worth JV"). High
Worth JV is a Sino-foreign equity joint venture enterprise that was registered
in the PRC on July 2, 1994 in which Guangdong Blue Ribbon, a joint stock limited
company incorporated in the PRC, and Holdings hold 40% and 60% interests,
respectively.


8

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


1. ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

On October 31, 1994, High Worth JV acquired a 100% interest in Zhaoqing Brewery
("Zhaoqing Brewery"), including Zhaoqing Brewery's 40% interest in Zhaoqing Blue
Ribbon Brewery Noble Ltd. ("Noble Brewery"). On September 26, 2003, Noble
Brewery changed its name to Zhaoqing Blue Ribbon Brewery Ltd. (hereinafter,
"Blue Ribbon Brewery" and "Noble Brewery" are used interchangeably). Prior to
the acquisition of the entire interest in Zhaoqing Brewery by High Worth JV,
Zhaoqing Brewery was a wholly-owned subsidiary of Guangdong Blue Ribbon. Noble
Brewery is a Sino-foreign equity joint venture enterprise which was registered
in the PRC on October 8, 1993, in which Goldjinsheng Holding Limited
("Goldjinsheng"), an unrelated party at that time, and Zhaoqing Brewery hold 60%
and 40% interests, respectively. Zhaoqing Brewery and Noble Brewery are both
engaged in the production and sale of beer products in the PRC.

Through a Sub-license Agreement dated May 6, 1994 (the "Old License Agreement")
between Pabst Zhaoqing, the then subsidiary of Guangdong Blue Ribbon, and High
Worth JV, High Worth JV acquired a sub-license to utilize Pabst trademarks in
conjunction with the production and marketing of beer in China and other Asian
countries except Hong Kong, Macau, Japan and South Korea. The sub-license was
subject to a prior License Agreement between Pabst and Pabst Zhaoqing, and a
subsequent Assets Transferring Agreement among Pabst Zhaoqing, Pabst and
Guangdong Blue Ribbon. The Old License Agreement was scheduled to expire on
November 7, 2003.

In April 1995, Zhaoqing Brewery ceased the production of Zhaoqing beer and
commenced the production of Pabst Blue Ribbon beer. Pursuant to the terms of a
sub-license agreement which also expired on November 7, 2003, Guangdong Blue
Ribbon granted Zhaoqing Brewery the right to produce and distribute Pabst Blue
Ribbon beer under Pabst trademarks in the PRC at a royalty fee of US$11.70 for
each metric ton produced.

Pursuant to the terms of a sub-license agreement, Guangdong Blue Ribbon granted
Noble Brewery the right in the PRC to use two specific Pabst trademarks for the
production, promotion, distribution and sale of beer under such trademarks.
However, the production right of Noble Brewery was confined exclusively to the
Guangdong Province and it did not preclude High Worth JV's production right in
Guangdong. The sub-license agreement was valid through November 7, 2003. In
consideration for the sub-license granted, Noble Brewery was obligated to pay
Guangdong Blue Ribbon a royalty fee of US$0.10 for each carton of bottled or
canned beer produced.

On February 19, 1995, Zhaoqing Blue Ribbon Beer Marketing Company Limited (the
"Marketing Company") was registered as a limited company in the PRC, and was
owned 70% by Zhaoqing Brewery and 30% by Guangdong Blue Ribbon. The Marketing
Company was appointed as the sole distributor to conduct the distribution,
marketing and promotion of all Pabst Blue Ribbon beer products produced by
Zhaoqing Brewery and Noble Brewery. The Marketing Company commenced the purchase
of beer products from Zhaoqing Brewery and Noble Brewery in April 1995 and July
1995, respectively.

In January 1996, Zhaoqing Brewery transferred all of its operating assets and
liabilities to High Worth JV pursuant to the original Joint Venture Agreement,
the Asset Transfer Agreement signed in May 1994, and the relevant government
regulations. Subject to the completion of certain legal procedures and
documentation, investments in Noble Brewery and the Marketing Company will be
transferred to High Worth JV. Zhaoqing Brewery is currently acting as the
nominee for High Worth JV with respect to the investments in Noble Brewery and
the Marketing Company.


9

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


1. ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

Upon the completion of the required procedures and documentation, all of the
assets and liabilities formerly controlled by Zhaoqing Brewery will then be
transferred to High Worth JV. Since January 1996, the operating activities of
Zhaoqing Brewery have been part of High Worth JV. Although all necessary
documents have been submitted to the relevant departments for approval, the
Company was informed that due to a restrictive court order obtained by one of
the creditors of Guangdong Blue Ribbon, any transfer of equity related to
companies in which Guangdong Blue Ribbon has direct or indirect interest is
temporarily prohibited until the court order is released. Accordingly, Zhaoqing
Brewery shall continue to act as the nominee for High Worth JV with respect to
the investment in Blue Ribbon Brewery and the Marketing Company.

On January 13, 1998, High Worth JV entered into a joint venture contract with
Zao Yang Brewery in Hubei Province to establish a new brewery. The new brewery
was designated Zao Yang Blue Ribbon High Worth Brewery Limited ("Zao Yang High
Worth Brewery"), with a total capital investment of RMB 29,280,000, allocated
55% to High Worth JV and 45% to Zao Yang Brewery. Zao Yang High Worth Brewery
commenced the production of Pabst Blue Ribbon beer in June 1998 based on a
sub-license granted by Guangdong Blue Ribbon which was expired on November 7,
2003. Commencing June 1998, the Marketing Company also began purchasing Zao Yang
High Worth Brewery's production of Pabst Blue Ribbon beer for distribution.

In November 2002, High Worth JV and Zao Yang Brewery agreed to contribute
additional capital of RMB 24,444,500 into Zao Yang High Worth Brewery in
proportion to their respective equity interests of 55% and 45%. High Worth JV
has contributed RMB 13,444,500 through a deduction from its intercompany balance
due from Zao Yang High Worth Brewery and Zao Yang Brewery has made a cash
contribution of RMB 11,000,000 effective December 31, 2002 (see Note 9).

On January 20, 1998, Zhaoqing Brewery and Goldjinsheng entered into an agreement
which calls for Goldjinsheng's interest in Noble Brewery to be transferred to
Linchpin Holdings Limited ("Linchpin"), a wholly-owned subsidiary of Noble China
Inc. In March 1999, approval from the relevant PRC authorities for the
registration of the Linchpin transfer was obtained. Linchpin and Zhaoqing
Brewery currently own 60% and 40% equity interests in Noble Brewery,
respectively.

NOBLE CHINA INC. - Noble China Inc. is the 60% shareholder of Noble Brewery.
Noble China Inc. publicly reported that in May 1999 it entered into a license
agreement with Pabst (the "Noble China License Agreement") granting it the right
to utilize the Pabst Blue Ribbon trademarks in connection with the production,
distribution and sale of beer in China for 30 years commencing upon expiration
of the Old License Agreement.

During 2002, Noble China Inc. publicly reported that it was experiencing severe
financial difficulties, was unable to meet its financial commitments and was
insolvent, and was considering various courses of action.


10

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


1. ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

On September 24, 2002, a press release by Noble China Inc. announced that one of
its three directors had resigned on September 20, 2002, and that the remaining
two directors intended to resign. On November 12, 2002, Noble China Inc. held a
meeting of shareholders to elect a new Board of Directors to consist of three
members; three candidates nominated by Lan Wei, a company controlled by the City
of Zhaoqing, the major shareholder of the Company, were elected to the Board of
Directors.

On March 24, 2003, the Board of Directors of the Company and High Worth JV
approved a short-term loan of approximately RMB 47,000,000 from High Worth JV to
Lan Wei, a company controlled by the City of Zhaoqing that is the controlling
shareholder of the Company. The loans bear interest at 3.9% per annum. Of such
amount, RMB 20,000,000 was to be invested in businesses affiliated with Lan Wei
that sell beverage containers to the Company and approximately RMB 27,000,000
was to be used to facilitate the reorganization or restructuring of Noble China
Inc. (see Note 4(f)). Lan Wei repaid the RMB 20,000,000 loan in June 2003. The
RMB 27,000,000 loan was originally scheduled to be repaid not later than
December 31, 2003, but it is expected that the repayment date will be extended
to March 31, 2004.

On September 24, 2003, Noble China Inc. filed a Plan of Compromise and
Arrangement (as amended, the "Plan") with the Ontario Superior Court of Justice
(the "Court") which contemplated the settlement of Noble China, Inc.'s
debentures for a cash payment of CN$6,000,000, the termination of the Noble
China License Agreement, the transfer of Noble China Inc.'s ownership interest
in Linchpin Holdings Limited, which owns a 60% interest in Noble Brewery, to an
entity controlled by the City of Zhaoqing, and a new license agreement to be
entered into between an entity controlled by the City of Zhaoqing and Pabst
which will allow for sub-licenses to be granted to Zhaoqing Brewery, Noble
Brewery and the Marketing Company to continue to produce, distribute and market
Pabst Blue Ribbon beer in China. Mega Gain Investment Co., Ltd., a wholly-owned
subsidiary of Lan Wei, provided the consideration to fund the Plan.

The Company has the option to have the RMB 27,000,000 loan repaid in cash or by
the transfer to the Company of any assets that Lan Wei acquires in conjunction
with the reorganization of Noble China Inc. with a fair value equivalent to the
loan amount. Pursuant to a Manufacturing License Agreement dated September 5,
2003 (the "IUP License Agreement") between Pabst and Inno Up Limited ("IUL"), an
affiliate of the City of Zhaoqing, Pabst granted to IUL the exclusive right to
produce, market and distribute Pabst beer in China (excluding Hong Kong) with
the right to sub-license. The initial term is ten years with the right of IUL to
extend for two additional ten year terms (subject to meeting certain minimum
manufacturing and royalty requirements). The IUL License Agreement provides for
minimum annual royalties and production requirements. The IUL License Agreement
is subject to, among other things, the entry of an order by the Court approving
the termination of the Noble China License Agreement and the entering into of
the IUL License Agreement.

On November 18, 2003, the Court granted an order (a) approving the Plan, (b)
terminating the Noble China License Agreement, and (c) authorizing the IUL
License Agreement. It is anticipated that IUL will enter into sub-license
agreements with Noble Brewery, Zhaoqing Brewery and the Marketing Company with
respect to the continued manufacture, distribution and sale of Pabst beer in
China.


11

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - The unaudited consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The unaudited consolidated financial statements
include the results of operations of Zhaoqing Brewery, the Marketing Company and
Zao Yang High Worth Brewery on a consolidated basis and Noble Brewery under the
equity method of accounting for investments. The unaudited consolidated
financial statements include the Marketing Company, as the Company has effective
control of the Marketing Company through its board of directors.

COMMENTS - The accompanying consolidated financial statements are unaudited, but
in the opinion of the management of the Company, contain all adjustments, which
include normal recurring adjustments, necessary to present fairly the Company's
financial position at September 30, 2003, its results of operations for the
three months and nine months ended September 30, 2003 and 2002, and its cash
flows for the nine months ended September 30, 2003 and 2002. The consolidated
balance sheet as of December 31, 2002 is derived from the Company's audited
financial statements.

Certain information and footnote disclosures normally included in financial
statements that have been prepared in accordance with accounting principles
generally accepted in the United State of America have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission,
although management of the Company believes that the disclosures contained in
these financial statements are adequate to make the information presented herein
not misleading. These unaudited interim consolidated financial statements should
be read in conjunction with the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, as filed with the Securities and Exchange Commission.

The results of operations for the three months and nine months ended September
30, 2003 are not necessarily indicative of the results of operations to be
expected for the full fiscal year ending December 31, 2003.

GOING CONCERN - The accompanying unaudited consolidated financial statements
have been prepared assuming that the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The carrying amounts of assets and liabilities
presented in the accompanying unaudited consolidated financial statements do not
purport to represent the realizable or settlement values. The Company has
experienced decreased sales and a net loss for the past three years, incurred
significant losses during the nine months ended September 30, 2003, and has a
net working capital deficiency of RMB 342,877,153 as of September 30, 2003.
Although the Company expects to be able to renew its sub-license to produce and
distribute Pabst Blue Ribbon beer after November 7, 2003, in view of the
persistent decrease in sales and continuing operating losses, the related
expected future cash flows to be generated from the sales of Pabst Blue Ribbon
beer at the estimated reduced level of distribution are expected to be negative.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The Company's predecessor independent certified public
accountants, in their independent auditors' report on the consolidated financial
statements as of and for the year ended December 31, 2002, have reported that
there is substantial doubt about the Company's ability to continue as a going
concern.


12

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

During 2002, the Company experienced reduced net sales as a result of intense
competition, reduced cash flows and diminished working capital. The Company
expects that these pressures will continue for the remainder of 2003 and into
2004, resulting in continued net losses.

The Company has implemented an overhaul of its operations and marketing programs
through the efforts of the management committee. With the pooling of the
resources of Zhaoqing Brewery, Noble Brewery and the Marketing Company, the
Company implemented a large scale restructuring plan in 2001 in which almost
one-third of the work force was eliminated. Although effective control of the
Company changed on January 22, 2002 and a new management team was appointed to
operate the Company in 2002, the Company anticipates that the restructuring and
internal consolidation programs will continue if it is unable to regain
profitability in the near future.

In 2002, the Company implemented a series of new sales programs to launch
various newly developed or modified local brand beers into the market, including
brands such as "Lanli", "Lancheng", "Lanshi", "Xile" and "Zhaopi". Together with
the local brand beer "Di Huang Quan" produced by Zao Yang High Worth Brewery,
the Company intends to increase its marketing efforts with respect to these new
local brands in order to meet the increasing market demand for local discount
beers.

In January 2003, the Company reorganized its marketing teams by reducing the
number of branch offices from 15 to 6. Management believes that the reduction in
branch offices will enhance the implementation of its marketing strategies
through clearer responsibilities and allow its sales force to more effectively
attempt to arrest the decline in sales volume. However, the operating results
for the three months ended March 31, 2003 reflected a substantial decline in
sales. In May 2003, the Deputy Vice President of Marketing resigned. Commencing
in July 2003, employee compensation at Zhaoqing Brewery, Noble Brewery and the
Marketing Company was revised to correlate with sales targets. Performance below
the sales target will cause a salary reduction for all staff to a maximum of
approximately 30%. The Company will consider more severe restructuring
alternatives if it is unable to reduce its losses in the near future.

In order to mitigate the continuing decline in sales, management of the Company,
in discussions with the leading officials of Zhaoqing City as well as the
supervising governmental departments, decided to engage Zhaoqing City Industrial
Project Development Limited to conduct a marketing research program in order to
refine the Company's existing marketing strategies, to reorganize the marketing
teams, to improve the promotional means, to expand the sales channels and to
educate sales personnel to achieve higher morale. The program covers the
Company's geographical markets in China and is expected to be finished by the
end of 2004. The costs of this refinement program were RMB 33,000,000, to be
shared by High Worth JV and Blue Ribbon Brewery in a 1:2 ratio, respectively.
Effective November 11, 2003, a new company named Zhaoqing Lan Wei Alcoholic
Beverages Marketing Company Limited ("Lan Wei Marketing") was incorporated for
the purpose of consolidating all of the sales of local brand beers (effective
January 1, 2004) so that the marketing teams can focus on the specific beer
market segments, and to utilize Lan Wei's local business influence. Lan Wei
Marketing is owned 50% by Lan Wei, 25% by High Worth JV and 25% by Blue Ribbon
Brewery. Management of Lan Wei Marketing, including the accounting and finance
personnel, will be appointed and controlled by the Marketing Company, but will
be functionally independent.


13

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company anticipates that its operating cash flows, combined with cash on
hand, bank lines of credit, and other external credit sources, and the credit
facilities provided by affiliates or related parties, are adequate to satisfy
the Company's working capital requirements through December 31, 2003. However,
if the foregoing assumptions prove to be inaccurate, the Company's cash flow may
be adversely affected, which would negatively impact the ability of the Company
to conduct operations at current levels and continue as a going concern.

USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, including those related to interest in an
associated company, allowance for doubtful accounts, impairment of assets and
income taxes, 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.

FOREIGN CURRENCY TRANSLATION - The financial records and the statutory financial
statements of the Company's subsidiaries and associated company in the PRC are
maintained in Renminbi, the functional currency and the currency of the PRC. In
preparing the financial statements, all foreign currency transactions are
translated into Renminbi using the applicable rates of exchange for the
respective periods. Monetary assets and liabilities denominated in foreign
currencies have been translated into Renminbi using the rate of exchange
prevailing at the balance sheet date. Foreign currency exchange gains or losses
are included in the unaudited consolidated statements of operations.

Prior to the reincorporation, in 2002, the Company's share capital was
denominated in United States dollars ("US$") and for reporting purposes, the US$
share capital amounts have been translated into Renminbi ("RMB") at the
applicable rates prevailing on the transaction dates. Effective March 1, 2003,
the Company transferred its share capital to additional paid-in capital and
recorded no par value for both of the Company's common stock in Class A and
Class B subsequent to the reincorporation.

Translation of amounts from RMB into US$ is for the convenience of the reader
only and has been made at US$1.00 = RMB8.30. No representation is made that the
Renminbi amounts could have been, or could be, converted into United States
dollars at that rate or at any other rate.

REVENUE RECOGNITION - Sales represent the invoiced value of goods sold, net of
discounts. Sales and sales discounts are recognized when goods are delivered to
customers, the sales amount is determinable and collectibility is reasonably
assured.

The provisions of Emerging Issues Task Force (EITF) Issue No. 01-9 "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor's Products)", were adopted during 2002. The adoption of EITF No. 01-9
resulted in the reclassification of certain sales incentives previously
classified as selling expenses to reductions from sales. Prior year amounts have
been reclassified to conform to the current year's presentation. These changes
had no effect on the Company's operating results. The amount of sales incentives
included as a deduction from sales in accordance with EITF No. 01-9 was RMB
8,687,862 and RMB 22,682,714 for the three months and nine months ended
September 30, 2003, respectively; and RMB 6,947,167 and RMB 22,463,605 for the
three months and nine months ended September 30, 2002, respectively.


14

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

COMPREHENSIVE INCOME - The Company reports comprehensive income in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income". Comprehensive income is defined to include all changes in
equity during a period from non-owner sources. Comprehensive income (loss)
equaled the net loss for the three months and nine months ended September 30,
2003 and 2002.

NET INCOME (LOSS) PER COMMON SHARE ("EPS") - Basic EPS excludes the dilutive
effects of stock options, warrants and convertible securities, if any, and is
computed by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS reflects the potential dilution that would occur if securities or other
contracts to issue common stock, such as convertible preferred stock, warrants
to purchase common stock and common stock options, were exercised or converted
into common stock.

At September 30, 2003, potentially dilutive securities representing 105,000
shares of common stock were outstanding, consisting of stock options to purchase
30,000 shares exercisable at $3.87 per share and 75,000 shares exercisable at
$0.72 per share. At September 30, 2002, potentially dilutive securities
representing 200,000 shares of common stock were outstanding, consisting of
stock options to purchase 60,000 shares exercisable at $3.87 per share, and
140,000 shares exercisable at $0.72 per share. For the three months ended
September 30, 2003 and 2002, common shares issuable upon exercise of outstanding
stock options were excluded from the calculation of diluted EPS since the
exercise prices exceeded the average fair market value of the common stock for
all periods presented, and thus would have been anti-dilutive. Accordingly,
basic and diluted EPS are the same for all periods presented.

RECENT ACCOUNTING PRONOUNCEMENTS - In August 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligations". SFAS No. 143 addresses the
diverse accounting practices for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. The
Company adopted SFAS No. 143 effective January 1, 2003. The adoption of SFAS No.
143 did not have a significant effect on the Company's financial statement
presentation or disclosures.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
SFAS No. 145 rescinds the provisions of SFAS No. 4 that requires companies to
classify certain gains and losses from debt extinguishments as extraordinary
items, eliminates the provisions of SFAS No. 44 regarding transition to the
Motor Carrier Act of 1980 and amends the provisions of SFAS No. 13 to require
that certain lease modifications be treated as sale leaseback transactions. The
provisions of SFAS No. 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier application is
encouraged. The adoption of SFAS No. 145 did not have a significant effect on
the Company's financial statement presentation or disclosures.


15

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Such costs covered by
SFAS No. 146 include lease termination costs and certain employee severance
costs that are associated with a restructuring, discontinued operation, plant
closing, or other exit or disposal activity. SFAS No. 146 replaces the previous
accounting guidance provided by the EITF No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS No. 146 is to be
applied prospectively to exit or disposal activities initiated after December
31, 2002. The adoption of SFAS No. 146 did not have a significant effect on the
Company's financial statement presentation or disclosures.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Acquisitions of Financial Institutions, Except Transactions Between or
More Mutual Enterprises". The Company does not expect that SFAS No. 147 will
have any effect on its financial statement presentation or disclosures.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such as standby
letters of credit. It also clarifies that at the time a company issues a
guarantee, the company must recognize an initial liability for the fair market
value of the obligations it assumes under that guarantee and must disclose that
information in its interim and annual financial statements. The initial
recognition and measurement provisions of FIN 45 apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company implemented
the disclosure provisions of FIN 45 in its December 31, 2002 consolidated
financial statements, and the measurement and recording provisions of FIN No. 45
effective January 1, 2003.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation", to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. SFAS No. 148 is effective for fiscal years beginning after December 15,
2002. The interim disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning after December 15,
2002. The adoption of SFAS No. 148 did not have a significant effect on the
Company's financial statement presentation or disclosures.


16

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities (and Interpretation of ARB No. 51)" ("FIN 46"). FIN
46 requires that the primary beneficiary in a variable interest entity
consolidate the entity even if the primary beneficiary does not have a majority
voting interest. The consolidation requirements of FIN 46 are required to be
implemented for any variable interest entity created on or after January 31,
2003. In addition, FIN 46 requires disclosure of information regarding
guarantees or exposures to loss relating to any variable interest entity
existing prior to January 31, 2003 in financial statements issued after January
31, 2003. The implementation of the provisions of FIN 46 effective January 31,
2003 did not have any effect on the Company's consolidated financial statement
presentation or disclosures.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS No. 149 amends and
clarifies under what circumstances a contract with an initial net investment
meets the characteristics of a derivative and when a derivative contains a
financing component. The clarification provisions of SFAS No. 149 require that
contracts with comparable characteristics be accounted for similarly. SFAS No.
149 is effective for contracts entered into or modified after June 30, 2003. The
adoption of SFAS No. 149 did not have a significant effect on the Company's
financial statement presentation or disclosures.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. SFAS No. 150 requires that an issuer classify a
financial instrument that is within its scope as a liability (or an asset in
some circumstances) because that financial instrument embodies an obligation of
the issuer. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003 and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS No. 150 is to be
implemented by reporting the cumulative effect of a change in accounting
principle for financial instruments created before the issuance date of SFAS No.
150 and still existing at the beginning of the interim period of adoption.
Restatement is not permitted. The adoption of SFAS No. 150 did not have a
significant effect on the Company's financial statement presentation or
disclosures.


3. INVENTORIES

Inventories consisted of the following at September 30, 2003 and December 31,
2002:



September 30, 2003 December 31, 2002
----------------------- -----------------------
RMB USD RMB USD
---------- ----------- ----------- ----------
(Unaudited) (Unaudited)

Raw materials 28,727,057 3,461,091 28,130,712 3,389,243
Work in progress 4,601,459 554,393 4,169,690 502,372
Finished goods 17,579,619 2,118,026 21,879,615 2,636,098
---------- ----------- ----------- ----------
50,908,135 6,133,510 54,180,017 6,527,713
========== =========== =========== ==========



17

4. RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

(a) Management arrangement

During December 2000, the Company and Noble China signed a memorandum
pursuant to which a management committee was established to coordinate and
enhance the operations of Zhaoqing Brewery, Noble Brewery and the Marketing
Company. Effective January 1, 2001, the management, marketing, production
and operations of Zhaoqing Brewery, Noble Brewery and the Marketing Company
were pooled together under a newly-created management entity named "Blue
Ribbon Enterprises" to improve coordination of human resources, financial,
production and marketing activities. Zhaoqing Brewery, Noble Brewery and
the Marketing Company each remain as legally distinct entities. Under this
arrangement:

- Certain administrative expenses of the Marketing Company, Zhaoqing
Brewery and Noble Brewery, as well as the total production volume of
Zhaoqing Brewery and Noble Brewery and the related direct variable
costs incurred for beer production of the two breweries, were pooled
and re-allocated among Zhaoqing Brewery and Noble Brewery at a 1 to 2
ratio, respectively, in proportion to each brewery's respective
production capacities. In order to maximize production efficiencies at
the present reduced levels of sales volume, Noble Brewery is currently
producing all of the beer sold by both Zhaoqing Brewery and Noble
Brewery.

- Certain direct selling expenses and advertising expenses incurred by
the Marketing Company relating to the sale of beer products from the
two breweries are allocated among Zhaoqing Brewery and Noble Brewery
at a 1 to 2 ratio, respectively, either through intercompany transfer
pricing adjustment or direct absorption.

The administrative, direct selling and advertising expenses of the Marketing
Company and the direct variable costs incurred for beer production of the two
breweries were allocated at cost. This pooled management structure is expected
to achieve greater efficiency and improved operating profitability. It is not
expected that this pooled management structure will be changed subsequent to the
reorganization of Noble China Inc.

Under the new management team, the Company implemented a restructuring program
that eliminated the positions of a total of 538 employees, of which 313 were
from Zhaoqing Brewery, 177 were from Noble Brewery and 48 were from the
Marketing Company. Severance payments to these employees from Zhaoqing Brewery
and the Marketing Company totaled RMB 20,396,494 and RMB 1,912,742,
respectively. As a result, the Company recorded restructuring costs of RMB
22,309,236 for the year ended December 31, 2001. In addition, severance payments
to the employees of Noble Brewery were RMB 8,729,830, of which RMB 3,491,932 was
included in the equity in (loss) earnings of an associated company for the year
ended December 31, 2001.

(b) Sales of raw materials

The Company sold raw materials, packaging materials and beer products of RMB
9,955,451 and RMB 19,504,504 to Noble Brewery during the nine months ended
September 30, 2003 and 2002, respectively. These transactions were carried out
at cost between the parties.


18

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


4. RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (continued)

(c) Purchases of beer products

During the nine months ended September 30, 2003 and 2002, the Company purchased
beer products for resale from Noble Brewery amounting to RMB 164,567,238 and RMB
221,247,110, respectively, and received an allocation of sales incentives (as
defined in EITF No. 01-9) from Noble Brewery of RMB nil and RMB 1,635,093,
respectively. The transactions were carried out at agreed terms between the
parties.

During the nine months ended September 30, 2003 and 2002, the Company purchased
RMB 66,019,058 and RMB 61,288,738 of beer products from Noble Brewery,
respectively, pursuant to the management arrangement re-allocating the total
production volume at a 1 to 2 ratio among Zhaoqing Brewery and Noble Brewery
(see Note 4(a)). This amount represents the direct variable cost of producing
these beer products.

(d) Royalty fee

For the nine months ended September 30, 2003 and 2002, a royalty fee of RMB
2,704,546 and RMB 2,523,108, respectively, was payable to Guangdong Blue Ribbon
for the right to use the Pabst trademarks in the PRC.

(e) Amounts due from related companies

Net of the advance to related party (see Note 4(f)), the amounts due from
related companies primarily represent receivable balances from Guangdong Blue
Ribbon and its group of companies resulting from routine inter-company business
transactions. The amounts are unsecured, interest-free and repayable on demand.

On May 10, 2003, approximately RMB 7,086,000 due from Guangdong Blue Ribbon was
converted into a short-term loan due and payable in one year, with interest at
5.6% per annum.

(f) Advance to related party and loan receivable

During the three months ended March 31, 2002, the Company loaned RMB 5,500,000
to Zao Yang High Worth Brewery. The loan was unsecured, with interest at 3.6%
per annum and was repayable on December 31, 2002. During the three months ended
March 31, 2002, Zao Yang High Worth Brewery advanced RMB 5,500,000 to Guangdong
Blue Ribbon. The advance to Guangdong Blue Ribbon was unsecured, with no
agreed-upon interest and no fixed date of repayment. During the three months
ended September 30, 2002, both of these loans were repaid in full.

On March 24, 2003, the Board of Directors of the Company and High Worth JV
approved a short-term loan of approximately RMB 47,000,000 from High Worth JV to
Lan Wei, a company controlled by the City of Zhaoqing that is the controlling
shareholder of the Company. The loans bear interest at 3.9% per annum. Of such
amount, RMB 20,000,000 was to be invested in businesses affiliated with Lan Wei
that sell beverage containers to the Company and approximately RMB 27,000,000
was to be used to facilitate the reorganization or restructuring of Noble China
Inc.

Lan Wei repaid the RMB 20,000,000 loan in June 2003. The RMB 27,000,000 loan was
originally scheduled to be repaid not later than December 31, 2003, but it is
expected that the repayment date will be extended to March 31, 2004.


19

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


4. RELATED PARTY TRANSACTIONS AND ARRANGEMENTS (continued)

The Company has the option to have the RMB 27,000,000 loan repaid in cash or by
the transfer to the Company of any assets that Lan Wei acquires in conjunction
with the reorganization of Noble China Inc. with a fair value equivalent to the
loan amount.

(g) Amounts due to related companies

As of September 30, 2003 and December 31, 2002, the amounts due to related
companies consist of amounts payable to Guangdong Blue Ribbon and its group of
companies of RMB 1,560 and RMB 1,560, respectively. The amounts payable to group
companies of Guangdong Blue Ribbon arose from the purchases of raw materials.
The amounts are unsecured, interest-free and repayable on demand.


5. INTEREST IN AN ASSOCIATED COMPANY

The investment consists of the Company's 40% equity interest in Noble Brewery,
which is held by a 60% owned subsidiary. The condensed unaudited statements of
operations of Noble Brewery for the three months and nine months ended September
30, 2003 and 2002 are as follows:



Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, 2003 September 30, 2003 September 30, 2002 September 30, 2002
------------------------ --------------------------- ---------------------------------------
RMB USD RMB USD RMB RMB
----------- ----------- ------------- ------------ ------------------- ------------------

Net sales 87,935,274 10,594,611 149,551,237 18,018,221 69,194,831 219,612,017
=========== =========== =========== ============= =================== ==================
Net income (loss) 13,208,085 1,591,336 (252,163,250) (30,381,114) (46,764,046) (124,404,942)
=========== =========== =========== ============= =================== ==================
The Company's
share of net
income (loss)
after adjustment
of unrealized
intercompany
profit and other
intercompany
adjustments(2)(3) 5,071,627 611,039 (99,336,549) (11,968,259) (29,375,619) (43,931,977)
=========== =========== =========== ============= =================== ==================


(1) The provisions of Emerging Issues Task Force ("EITF") No. 01-9, "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of
the Vendor's Products)", were adopted during 2002. The adoption of EITF No.
01-9 resulted in the reclassification of certain sales incentives
previously classified as selling expenses to a reduction from sales. Prior
period amounts have been reclassified to conform to the current period
presentation; this reclassification had no effect on the Company's
operating results. The amount of sales incentives recorded as a deduction
from sales in accordance with EITF No. 01-9 was RMB 536,781 and RMB
1,635,093 for the three months and nine months ended September 30, 2002,
respectively.

(2) As at September 30, 2003 and 2002, the balance of the amounts due to Noble
Brewery was RMB 267,461,362 and RMB 260,933,300, respectively. During the
nine months ended September 30, 2003 and 2002, Noble Brewery recorded an
allowance for doubtful accounts of RMB 3,100,000 and RMB 12,700,000,
respectively, with respect to amounts receivable from the Company. The
provision for doubtful accounts was eliminated, together with the
unrealized profit on inventory of the Company, as intercompany adjustments
when the Company recorded its equity in the results of operations of Noble
Brewery based on the equity method of accounting.

(3) The Company's share of net income of an associated company of RMB 5,071,627
for the three months ended September 30, 2003 and the share of net loss of
an associated company of RMB 99,336,549 during the nine months ended
September 30, 2003 included RMB nil and RMB 87,840,000, respectively, with
respect to impairment charges recorded by the associated company.



20

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


5. INTEREST IN AN ASSOCIATED COMPANY (continued)

The following is summarized balance sheet information of Noble Brewery:



September 30, 2003 December 31, 2002
-------------------------- ------------------------
RMB USD RMB USD
------------ ------------ ----------- -----------
(Unaudited) (Unaudited)

Current assets (1) 249,556,343 30,067,030 251,868,373 30,345,587
Property, plant and equipment 2,938,112 353,989 226,776,229 27,322,437
Restricted bank deposits 36,032,396 4,341,253 36,032,396 4,341,253
------------ ------------ ----------- -----------
Total assets 288,526,851 34,762,272 514,676,998 62,009,277
============ ============ =========== ==========

Current liabilities 163,114,596 19,652,360 137,101,494 16,518,252
Equity 125,412,255 15,109,912 377,575,504 45,491,025
------------ ------------ ----------- -----------
Total liabilities and equity 288,526,851 34,762,272 514,676,998 62,009,277
============ ============ =========== ==========

(1) Net of allowances on amounts receivable from the Company of RMB 166,575,000 and
RMB 163,475,000 as of September 30, 2003 and December 31, 2002, respectively.


During the three months ended March 31, 2003, as a result of an unexpected
substantial decrease in sales, continuing operating losses and the outbreak of
SARS in China, Noble Brewery conducted an evaluation of the carrying value of
its land use right, property and building, plant and equipment and construction
in progress, as well as the related estimated future cash flows, which included
the assumption that there was a probability of (1) 40%; (2) 40%; and (3) 20%;
that Noble Brewery will: (1) continue to produce Pabst Blue Ribbon beer after
November 7, 2003 exclusively; (2) continue to produce Pabst Blue Ribbon beer
after November 7, 2003 jointly with Zhaoqing Brewery in a 2:1 ratio,
respectively; and (3) not be able to renew its sub-license agreement and switch
to produce local brand beer. As a result of this evaluation, Noble Brewery
recorded a provision for impairment of its land use right, property and
building, plant and equipment, office equipment and construction in progress of
RMB 219,600,000 for the three months ended March 31, 2003. Included in the
impairment charges were amounts related to purchase commitments for production
equipment, which have been recorded as accrued expense and a reduction of
prepaid amounts of RMB 2,600,000. Due to the continued weak sales and operating
losses, the related expected future cash flows to be generated from the sales of
Pabst Blue Ribbon beer at the reduced level of distribution are expected to be
negative. The effect of Noble Brewery successfully obtaining a renewal of the
sub-license is expected to have little impact on the recoverability of the
assets. As a result of these impairment charges, the majority of the assets of
Noble Brewery were fully written down. Accordingly, during the three months
ended September 30, 2003, no further provision for impairment was recorded.

On April 3, 2002, Noble Brewery was served with a preservation order from the
High Court of Shandong Province freezing a portion of its bank accounts with
aggregate balances of approximately RMB 35,700,000, in connection with
litigation between Noble China Inc., Shandong Noble Brewery Ltd. and China Coast
Property Development Ltd., with respect to Noble China Inc.'s 1994 investment in
Shandong Shouguang Brewery Co. Ltd. China Coast Property Development Ltd. is
asserting a total claim against Noble China Inc. of approximately RMB
53,100,000. Through September 30, 2003, Noble China Inc. owned a 60% interest in
Noble Brewery through its wholly-owned subsidiary, Linchpin.


21

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


5. INTEREST IN AN ASSOCIATED COMPANY (continued)

On July 19, 2002, Noble China Inc. announced that the Shandong Court ruled
against it and ordered it to pay claims of US$3,999,988 and RMB 20,000,000 plus
legal costs of RMB 541,210, and interest from June 21, 2001 within one month of
the judgment. The litigation was related to a claim by China Coastal Development
Ltd. Noble China Inc. appealed the Shandong Court's decision to the Supreme
Court of the PRC, which was accepted on November 4, 2002, and a hearing on this
matter is still pending.

The court order specified that a total of RMB 53,100,000 was to be retained by
Noble Brewery pending resolution of the litigation. Accordingly, in addition to
the RMB 35,700,000 of funds frozen, Noble Brewery will also be obligated to
withhold potential dividend distributions or equity interests due to Linchpin of
RMB 17,400,000. Noble Brewery has engaged legal counsel in the PRC to file a
challenge to the court order, which has been unsuccessful to date.

As a consequence of the preservation order, the remaining cash not affected by
such court order has been transferred either to High Worth JV or the Marketing
Company in trust and is being held on behalf of Noble Brewery for the purpose of
funding the operations of Noble Brewery. During the three months and nine months
ended September 30, 2003, High Worth JV and the Marketing Company have utilized
all the cash held in trust for Noble Brewery for the purchase of raw materials
and settlement of the expenses on behalf of Noble Brewery. As a result, as of
September 30, 2003, High Worth JV and the Marketing Company did not hold any
cash in trust for Noble Brewery.

Management of Noble Brewery believes that Noble Brewery's operations will not be
impaired as a result of the court order freezing a portion of its bank accounts,
and that Noble Brewery has adequate working capital resources to fund its
operating requirements in the near term. If the foregoing assumptions prove to
be inaccurate, Noble Brewery's cash flow may be adversely affected, which would
negatively impact the ability of Noble Brewery to conduct operations at current
levels and continue as a going concern.

In May 2002, Noble Brewery declared a dividend distribution of RMB 75,511,040,
of which RMB 30,204,416 has been paid to High Worth JV, while the dividend
payable to Linchpin amounting to RMB 45,306,624 can only be remitted to Linchpin
when the preservation order is released and approval from the Foreign Exchange
Bureau is obtained.

On July 19, 2002, Noble China Inc. announced that the Shandong Court ruled
against it and ordered it to pay the amount of claims in the sum of US$3,999,988
and RMB 20,000,000 plus legal costs of RMB 541,210, and interest from June 21,
2001 within one month of the judgment. Noble China Inc. appealed the Shandong
Court's decision to the Supreme Court of the PRC, which was accepted by the
Supreme Court on November 4, 2002, a hearing for which is still pending.

On September 29, 2002, the Shandong Court issued a new preservation order to
those banks where Noble Brewery kept its previously frozen funds, requesting
that they extend the period of preservation for an additional six months until
March 23, 2003.

On March 21, 2003, the Shandong Court further extended its Preservation Order
for an additional six months to September 23, 2003. On September 15, 2003 and
September 18, 2003, the Shandong Court and the Supreme Court, respectively,
issued an order to extend the preservation for an additional six months to March
15, 2004.


22

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


5. INTEREST IN AN ASSOCIATED COMPANY (continued)

At September 30, 2003, given the various issues discussed above, the Company
conducted an evaluation on the carrying value of its investment in Noble
Brewery, taking into consideration the related amounts due to Noble Brewery, its
operations and the working capital resources of Noble Brewery, and determined
that a write down of the investment in Noble Brewery was not necessary. However,
if the circumstances related to the recoverability of the Company's investment
in Noble Brewery change adversely in the future, the Company may be required to
write down the value at that time.


6. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

During the three months ended March 31, 2003, as a result of an unexpected
substantial decreases in sales, continuing operating losses, the outbreak of
SARS in China, working capital deficiency and various business issues, the
Company conducted an evaluation of the carrying value of its land use right,
property and building, plant and equipment, office equipment and motor vehicles
and construction in progress, the accrued capital commitment with respect to the
purchase of production assets, and the related expected future cash flows. As a
result of this evaluation, for the three months ended March 31, 2003, the
Company recorded a provision for impairment charges of RMB 50,400,000, RMB
8,050,000 and RMB 6,800,000 for Zhaoqing Brewery, the Marketing Company and Zao
Yang High Worth Brewery, respectively.

These impairment charges aggregating RMB 65,250,000 were based on certain
assumptions regarding the Company's future cash flows and other factors used to
determine the fair value of its land use rights, property and building, office
equipment and motor vehicles, plant and equipment, construction in progress,
including the assumptions that some of the local brand beers developed and
produced by Zao Yang High Worth Brewery will be shifted to Zhaoqing Brewery and
Noble Brewery for production and distribution; and that, as a result of Lan
Wei's efforts, Zhaoqing Brewery will be granted a sub-license jointly with Noble
Brewery to produce Pabst Blue Ribbon beer after the old sub-license expires on
November 7, 2003, with a production ratio of 1 to 2, respectively. Included in
the impairment charges were amounts related to purchase commitments for
production equipment of RMB 2,400,000, which have been recorded as accrued
expense. As a result of the persistent decrease in sales and continuing
operating losses, the related expected future cash flows to be generated from
the sales of Pabst Blue Ribbon beer at the estimated reduced level of
distribution are expected to be negative. Accordingly, the effect on the Company
of being able to obtain a sub-license for the production and distribution of
Pabst Blue Ribbon beer in China subsequent to November 7, 2003 may not have a
material impact on the recoverability of the assets. As a result of the
aforementioned factors, a provision for impairment was provided for a majority
of the assets of Zhaoqing Brewery, the Marketing Company and Zao Yang High Worth
Brewery, and no further impairment charges were recorded at September 30, 2003.


23

CBR BREWING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002


7. BANK BORROWINGS

As at December 31, 2002, a bank loan of RMB 30,104,000 granted to Zao Yang High
Worth Brewery, which expired on September 30, 2002, was pending for completion
of the official loan renewal agreement. Zao Yang High Worth Brewery has
continued to pay the interest that is accruing on the loan, and the bank has not
made a demand for repayment. The renewal agreement, without a specific date of
repayment and guaranteed by High Worth JV, had been approved and signed by the
relevant bank and was returned to Zao Yang High Worth Brewery in May 2003. The
loan has been recorded as a current liability and is payable on demand.


8. AMOUNT DUE TO AN ASSOCIATED COMPANY

The amount due to an associated company represents amounts payable to Noble
Brewery. Commencing in 2001, these obligations resulted from the sale of beer
products by Noble Brewery to the Marketing Company as well as from the sale of
raw materials to Zhaoqing Brewery by Noble Brewery and other recurring
intercompany transactions. As of September 30, 2003 and December 31, 2002, the
amount due to an associated company was RMB 267,461,362 and RMB 298,379,194,
respectively, which was unsecured, interest-free and repayable on demand.


9. ADVANCE FROM RELATED PARTY

During the three months and nine months ended September 30, 2002, Zao Yang High
Worth Brewery received an advance of RMB nil and RMB 11,000,000, respectively,
from its local partner, Zao Yang Brewery, which is the 45% shareholder of Zao
Yang High Worth Brewery. The loan was unsecured, without interest and had no
fixed term of repayment. This advance has been utilized to fund the working
capital requirements of Zao Yang High Worth Brewery. This advance was
subsequently converted into additional capital of Zao Yang High Worth Brewery in
2002 (see Note 1).


10. MINORITY INTERESTS

As a result of the substantial operating losses incurred by the Company during
the year ended December 31, 2002 and the nine months ended September 30, 2003,
and the cumulative effect of paying dividends based on distributable earnings
calculated in accordance with PRC accounting standards, which were higher than
the distributable earnings determined under accounting principles generally
accepted in the United States of America, the minority interests at September
30, 2003 reflected a debit balance of RMB 73,885,039. Since the minority
interest parties have no legal obligation to fund these obligations to the
Company, the debit balance of RMB 73,885,039 was charged to operations during
the nine months ended September 30, 2003. The Company expects to continue to
charge to operations any future debit balances of the minority interest parties.


24

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:

This Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2003 contains "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, including statements that include the
words "believes", "expects", "anticipates", or similar expressions. These
forward-looking statements include, among others, statements concerning the
Company's expectations regarding sales trends, gross margin trends, operating
costs, the availability of funds to finance capital expenditures and operations,
facility expansion plans, competition, and other statements of expectations,
beliefs, future plans and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. The
forward-looking statements in this Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003 involve known and unknown risks,
uncertainties and other factors that could the cause actual results, performance
or achievements of the Company to differ materially from those expressed in or
implied by the forward-looking statements contained herein.

Summary of Business Operations and Corporate Structure:

The Company produces principally Pabst Blue Ribbon beer for distribution
throughout China. In general, the beer market in China is experiencing a steady
overall growth rate, although the growth in the Company's beer sales has been
hindered by the general softening in demand for its premium beers and the keen
competitive environment in the Chinese beer market.

The Company's brewing facilities and primary operating entities are as
follows:

ZHAOQING BREWERY: The original facilities of Zhaoqing Brewery were
constructed between 1978 and 1980 with annual production capacity based on old
brewing technology of 50,000 metric tons or 425,000 barrels of beer. With the
implementation of the new brewing technology and the purchase of additional
equipment, Zhaoqing Brewery reached an annual production capacity of 100,000
metric tons or 850,000 barrels by the end of 1995. During March 1995, Zhaoqing
Brewery discontinued production of all domestic brands and commenced exclusive
production of Pabst Blue Ribbon beer on a full-scale basis. However, beer that
does not meet Pabst Blue Ribbon quality standards is generally packaged and
distributed as local brand beer.

NOBLE BREWERY: The original facilities of Noble Brewery were constructed
between 1988 and 1990 with annual production capacity of approximately 80,000
metric tons or 680,000 barrels of beer. During July 1994, a second brewing
facility was completed, which increased annual production capacity by an
additional 120,000 metric tons or 1,020,000 barrels of beer. The second brewing
facility commenced full-scale production during late 1994. Noble Brewery has
produced Pabst Blue beer exclusively since it commenced operations. In 2002,
Noble Brewery also commenced production of various newly developed local brand
beers in order to meet the needs of the lower to medium-priced market segment.

ZAO YANG HIGH WORTH BREWERY: The original facilities of Zao Yang High Worth
Brewery were constructed between 1980 and 1985 with annual production capacity
based on old brewing technology of approximately 40,000 metric tons or 340,000
barrels of beer. Zao Yang High Worth Brewery commenced the production of Pabst
Blue Ribbon beer in June 1998, and the Marketing Company began purchasing Zao
Yang High Worth Brewery's production of Pabst Blue Ribbon beer for distribution.
In addition, Zao Yang High Worth Brewery also produces domestic brand beer under
the brand name "Di Huang Quan" and sells directly to distributors in nearby
regions.


25

MARKETING COMPANY: During February 1995, the Marketing Company was
established to conduct the distribution, marketing and promotion throughout
China of the Pabst Blue Ribbon beer produced by the Company's breweries. The
Company owns a 42% net interest in the Marketing Company. The consolidated
financial statements include the results of operations of the Marketing Company
on a consolidated basis, as the Company has effective control of the board of
directors of the Marketing Company.

The Company conducts a substantial portion of its purchases through related
parties, and has additional significant continuing transactions with such
parties.

Overview:

During 2002 the Company experienced decreased net sales and a net loss for
the third successive year, diminished working capital, and intense competition.
The Company expects that these pressures will continue in 2003, resulting in net
losses for the short-term. The Company has implemented an overhaul of its
operations and marketing programs through the efforts of the management
committee. With the pooling of the resources of Zhaoqing Brewery, Noble Brewery
and the Marketing Company, the Company implemented a large scale restructuring
plan in 2001 in which almost one-third of the work force was eliminated.
Although effective control of the Company changed on January 22, 2002 and a new
management team has been appointed to operate the Company in 2002, the Company
anticipates that the consolidation plan will continue.

In 2002, the Company implemented a series of new sales programs to launch
various newly developed or modified local brand beers into the market, including
brands such as "Lanli", "Lancheng", "Lanshi", "Xile" and "Zhaopi". Together with
the local brand beer "Di Huang Quan" produced by Zao Yang High Worth Brewery,
the Company intends to increase its marketing efforts with respect to these new
local brands in order to meet the increasing market demand for local discount
beers.

In January 2003, the Company reorganized its marketing teams by reducing
the number of branch offices from 15 to 6. Management believes that the
reduction in branch offices will enhance the implementation of its marketing
strategies through clearer responsibilities and allow its sales force to more
effectively attempt to arrest the decline in sales volume. However, the
operating results for the three months ended March 31, 2003 reflected a
substantial decline in sales. In May 2003, the Deputy Vice President of
Marketing resigned. Commencing in July 2003, employee compensation at Zhaoqing
Brewery, Noble Brewery and the Marketing Company was revised to correlate with
sales targets. Performance below the sales target will cause a salary reduction
for all staff to a maximum of approximately 30%. The Company will consider more
severe restructuring alternatives if it is unable to reduce its losses in the
near future.

In order to mitigate the continuing decline in sales, management of the
Company, in discussions with the leading officials of Zhaoqing City as well as
the supervising governmental departments, decided to engage Zhaoqing City
Industrial Project Development Limited to conduct a marketing research program
in order to refine the Company's existing marketing strategies, to reorganize
the marketing teams, to improve the promotional means, to expand the sales
channels and to educate sales personnel to achieve higher morale. The program
covers the Company's geographical markets in China and is expected to be
finished by the end of 2004. The costs of this refinement program were RMB
33,000,000, to be shared by High Worth JV and Blue Ribbon Brewery in a 1:2
ratio, respectively. Effective November 11, 2003, a new company named Zhaoqing
Lan Wei Alcoholic Beverages Marketing Company Limited ("Lan Wei Marketing") was
incorporated for the purpose of consolidating all of the sales of local brand
beers (effective January 1, 2004) so that the marketing teams can focus on the
specific beer market segments, and to utilize Lan Wei's local business
influence. Lan Wei Marketing is owned 50% by Lan Wei, 25% by High Worth JV and
25% by Blue Ribbon Brewery. Management of Lan Wei Marketing, including the
accounting and finance personnel, will be appointed and controlled by the
Marketing Company, but will be functionally independent.


26

The accompanying unaudited consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The carrying amounts of assets and liabilities
presented in the accompanying unaudited consolidated financial statements do not
purport to represent the realizable or settlement values. The Company has
suffered recurring operating losses and had a working capital deficit at
December 31, 2002 and September 30, 2003. The Company's predecessor independent
certified public accountants, in their independent auditors' report on the
consolidated financial statements as of and for the year ended December 31,
2002, have expressed substantial doubt about the Company's ability to continue
as a going concern.

During the three months ended March 31, 2003, as a result of an unexpected
substantial deceases in sales, continuing operating losses, the outbreak of SARS
in China, working capital deficiency and various business issues, the Company
conducted a re-evaluation of the carrying value of its land use right, property
and building, office equipment and motor vehicles, plant and equipment,
construction in progress, and the accrued capital commitment with respect to the
purchase of production assets and the related expected future cash flows. As a
result of this evaluation, for the three months ended March 31, 2003, the
Company recorded a provision for impairment charges of RMB 50,400,000, RMB
8,050,000 and RMB 6,800,000 for Zhaoqing Brewery, the Marketing Company and Zao
Yang High Worth Brewery, respectively.

These impairment charges aggregating RMB 65,250,000 were based on certain
assumptions regarding the Company's future cash flows and other factors used to
determine the fair value of its land use rights, property and building, office
equipment and motor vehicles, plant and equipment, construction in progress,
including the assumptions that some of the local brand beers developed and
produced by Zao Yang High Worth Brewery will be shifted to Zhaoqing Brewery and
Noble Brewery for production and distribution; and that, as a result of Lan
Wei's efforts, Zhaoqing Brewery will be granted a sub-license jointly with Noble
Brewery to produce Pabst Blue Ribbon beer after the old sub-license expires on
November 7, 2003, with a production ratio of 1 to 2, respectively. Included in
the impairment charges were amounts related to the purchase commitments for
production equipment of RMB 2,400,000, which have been recorded as accrued
expense. As a result of the persistent decrease in sales and continuing
operating losses, the related expected future cash flows to be generated from
the sales of Pabst Blue Ribbon beer at the estimated reduced level of
distribution are expected to be negative. Accordingly, the effect on the Company
of being able to obtain a sub-license for the production and distribution of
Pabst Blue Ribbon beer in China subsequent to November 7, 2003 may not have a
material impact on the recoverability of the assets. As a result of the
aforementioned factors, a provision for impairment was provided for a majority
of the assets of Zhaoqing Brewery, the Marketing Company and Zao Yang High Worth
Brewery, and no further impairment charges were recorded at September 30, 2003.

In addition, during the three months March 31, 2003, Noble Brewery also
recorded a provision for impairment of land use right, property and building,
office equipment, plant and equipment and construction in progress of RMB
219,600,000, as a result of its reassessment of the fair value of its property,
plant and equipment based on the related expected cash flows. Included in the
impairment charges were amounts related to the purchase commitments for
production equipment, which have been recorded as an accrued expense and a
reduction of prepaid amounts of RMB 2,600,000. Due to the continued decrease in
sales and operating losses, the related expected future cash flows to be
generated from the sales of Pabst Blue Ribbon beer at the estimated reduced
level of distribution are expected to be negative. Accordingly, the effect of
Noble Brewery successfully obtaining a renewal of the sub-license is expected to
have little impact on the recoverability of the assets. As a result of these
impairment charges, the majority of assets of Noble Brewery have been fully
written down.


27

Accordingly, during the three months ended September 30, 2003, no further
provision for impairment was recorded for Zhaoqing Brewery, Noble Brewery, Zao
Yang High Worth Brewery and the Marketing Company.

The Company anticipates that its operating cash flow, combined with cash on
hand, bank lines of credit, and other external credit sources, and the credit
facilities provided by affiliates or related parties, are adequate to satisfy
the Company's working capital requirements through December 31, 2003. If the
foregoing assumptions prove to be inaccurate, the Company's cash flow may be
adversely affected, which would negatively impact the ability of the Company to
conduct operations at current levels and continue as a going concern.

Licensing Arrangements:

Through a Sub-license Agreement dated May 6, 1994 (the "Old License
Agreement") between Pabst Zhaoqing, the then subsidiary of Guangdong Blue
Ribbon, and High Worth JV, High Worth JV acquired a sub-license to utilize Pabst
trademarks in conjunction with the production and marketing of beer in China and
other Asian countries except Hong Kong, Macau, Japan and South Korea. The
sub-license was subject to a prior License Agreement between Pabst Brewing
Company ("Pabst") and Pabst Zhaoqing, and a subsequent Assets Transferring
Agreement among Pabst Zhaoqing, Pabst and Guangdong Blue Ribbon. The Old License
Agreement was scheduled to expire on November 7, 2003.

Noble China Inc. is the 60% shareholder of Noble Brewery. Noble China Inc.
publicly reported that in May 1999 it entered into a license agreement with
Pabst (the "Noble China License Agreement") granting it the right to utilize the
Pabst Blue Ribbon trademarks in connection with the production, distribution and
sale of beer in China for 30 years commencing upon expiration of the Old License
Agreement.
During 2002, Noble China Inc. publicly reported that it was experiencing severe
financial difficulties, was unable to meet its financial commitments and was
insolvent, and was considering various courses of action.

On September 24, 2003, Noble China Inc. filed a Plan of Compromise and
Arrangement (as amended, the "Plan") with the Ontario Superior Court of Justice
(the "Court") which contemplated the settlement of Noble China, Inc.'s
debentures for a cash payment of CN$6,000,000, the termination of the Noble
China License Agreement, the transfer of Noble China Inc.'s ownership interest
in Linchpin Holdings Limited, which owns a 60% interest in Noble Brewery, to an
entity controlled by the City of Zhaoqing, and a new license agreement to be
entered into between an entity controlled by the City of Zhaoqing and Pabst
which will allow for sub-licenses to be granted to Zhaoqing Brewery, Noble
Brewery and the Marketing Company to continue to produce, distribute and market
Pabst Blue Ribbon beer in China. Mega Gain Investment Co., Ltd., a wholly-owned
subsidiary of Lan Wei, a company controlled by the City of Zhaoqing ("Lan Wei"),
provided the consideration to fund the Plan.

Pursuant to a Manufacturing License Agreement dated September 5, 2003 (the
"IUP License Agreement") between Pabst and Inno Up Limited ("IUL"), an affiliate
of the City of Zhaoqing, Pabst granted to IUL the exclusive right to produce,
market and distribute Pabst beer in China (excluding Hong Kong) with the right
to sub-license. The initial term is ten years with the right of IUL to extend
for two additional ten year terms (subject to meeting certain minimum
manufacturing and royalty requirements). The IUL License Agreement provides for
minimum annual royalties and production requirements. The IUL License Agreement
is subject to, among other things, the entry of an order by the Court approving
the termination of the Noble China License Agreement and the entering into of
the IUL License Agreement.

On November 18, 2003, the Court granted an order (a) approving the Plan,
(b) terminating the Noble China License Agreement, and (c) authorizing the IUL
License Agreement. It is anticipated that IUL will enter into sub-license
agreements with


28

Noble Brewery, Zhaoqing Brewery and the Marketing Company with respect to the
continued manufacture, distribution and sale of Pabst beer in China.

Loan to Lan Wei:

On March 24, 2003, the Board of Directors of the Company and High Worth JV
approved a short-term loan of approximately RMB 47,000,000 from High Worth JV to
Lan Wei. The loans bear interest at 3.9% per annum. Of such amount, RMB
20,000,000 was to be invested in businesses affiliated with Lan Wei that sell
beverage containers to the Company and approximately RMB 27,000,000 was to be
used to facilitate the reorganization of Noble China Inc. as referred to above.
Lan Wei repaid the RMB 20,000,000 loan in June 2003. The RMB 27,000,000 loan was
originally scheduled to be repaid not later than December 31, 2003, but it is
expected that the repayment date will be extended to March 31, 2004. The Company
has the option to have the RMB 27,000,000 loan repaid in cash or by the transfer
to the Company of any assets that Lan Wei acquires in conjunction with the
reorganization of Noble China Inc. with a fair value equivalent to the loan
amount.

Coordination of Marketing Activities:

During December 2000, the Company and Noble China Inc. signed a memorandum
pursuant to which a management committee was established to coordinate and
enhance the operations of Zhaoqing Brewery, Noble Brewery and the Marketing
Company. Effective January 1, 2001, the management, marketing, production and
operations of Zhaoqing Brewery, Noble Brewery and the Marketing Company were
pooled together under a newly-created management entity named "Blue Ribbon
Enterprises" in order to achieve improved coordination of human, financial,
production and marketing activities. Zhaoqing Brewery, Noble Brewery and the
Marketing Company each remain as legally distinct entities.

Critical Accounting Policies:

The Company prepares its consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Management periodically evaluates the estimates and judgments made,
including those related to interest in an associated company, income taxes,
impairment of assets and allowance for doubtful accounts. Management bases their
estimates and judgments on historical experience and on various factors that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates as a result of different assumptions or conditions.

The following critical accounting policies affect the more significant
judgments and estimates used in the preparation of the Company's consolidated
financial statements.

Interest in an Associated Company:

The Company accounts for its 40% interest in Noble Brewery using the equity
method of accounting. At September 30, 2003, the total value of the Company's
interest in Noble Brewery was RMB 114,423,763, representing 30.3% of the
Company's total assets. At December 31, 2002, the total value of the Company's
interest in Noble Brewery was RMB 213,760,312, representing 36.2% of the
Company's total assets. The net sales of Noble Brewery for the nine months ended
September 30, 2003 decreased by RMB 70,060,780 or 31.9% to RMB 149,551,237, as
compared to RMB 219,612,017 for the nine months ended September 30, 2002. During
the three months ended March 31, 2003, because of unexpected substantial
reduction in sales and continued operating losses, Noble Brewery conducted an
evaluation of the carrying value of its land use right, property


29

and building, office equipment, plant and equipment and construction in
progress, based on the related estimated future cash flows. As a result of this
calculation, Noble Brewery recorded a provision for impairment of land use
right, property and building, office equipment, plant and equipment and
construction in progress of RMB 219,600,000.

Income Taxes:

The Company records a valuation allowance to reduce its deferred tax assets
to the amount that is more likely than not to be realized. In the event the
Company was to determine that it would be able to realize its deferred tax
assets in the future in excess of its recorded amount, an adjustment to the
deferred tax asset would be credited to operations in the period such
determination was made. Likewise, should the Company determine that it would not
be able to realize all or part of its deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to operations in the
period such determination was made.

Impairment of Assets:

The Company's long-lived assets include a land use right, property and
building, plant and equipment as well as construction in progress. At September
30, 2003, the net residual value of the land use right, property and building,
office equipment and motor vehicles, plant and equipment and construction in
progress was RMB 673,863, which accounted for 0.2% of the Company's total
assets. At December 31, 2002, the net value of property, plant and equipment was
RMB 64,186,910, which accounted for 10.9% of the Company's total assets. In
assessing the impairment of the land use right, property and building, plant and
equipment and construction in progress, the Company makes assumptions regarding
the estimated future cash flows and other factors to determine the fair value of
the respective assets.

During the nine months ended September 30, 2003, as a result of an
unexpected substantial deceases in sales, continuing operating losses, the
outbreak of SARS in China, working capital deficiency, and various business
issues, the Company conducted a re-evaluation of the carrying value of its land
use right, property and building, office equipment and motor vehicles, plant and
equipment, construction in progress, the accrued capital commitment with respect
to the purchase of production assets, and the related expected future cash
flows. As a result of this evaluation, for the nine months ended September 30,
2003, the Company recorded a provision for impairment charges of RMB 50,400,000,
RMB 8,050,000 and RMB 6,800,000 for Zhaoqing Brewery, the Marketing Company and
Zao Yang High Worth Brewery, respectively.

In addition, during the nine months September 30, 2003, Noble Brewery also
recorded a provision for impairment of land use right, property and building,
office equipment, plant and equipment and construction in progress of RMB
219,600,000, as a result of its reassessment of the fair value of its property,
plant and equipment and the related expected future cash flows.

Allowance for Doubtful Accounts:

The Company uses the allowance method to account for uncollectible accounts
receivable. The Company periodically adjusts the allowance for doubtful accounts
based on management's continuing review of accounts receivable. This analysis by
management is based on prior years' experience, as well as an analysis of
current economic and business trends. Management expects to continue to update
the allowance for doubtful accounts during 2003.

The Company records a full allowance for accounts receivable that have been
outstanding in excess of 365 days. For accounts receivable that have been
outstanding for 365 days or less, the Company determines an appropriate
allowance based on individual circumstances.


30

Consolidated Results of Operations:

Three Months Ended September 30, 2003 and 2002 -

Sales: During the three months ended September 30, 2003, net sales of beer
products increased by RMB 20,811,913 or 16.6% to RMB 146,499,007, as compared to
RMB 125,687,094 for the three months ended September 30, 2002. The Company sold
49,127 metric tons of beer to distributors in 2003 as compared to 42,133 metric
tons of beer in 2002, an increase of 16.6%. The increase in net sales of beer
products during the three months ended September 30, 2003 as compared to the
three months ended September 30, 2002 was primarily due to the increase in
volume of beer sold, which was attributable to the general rebound of
consumption following the successful suppression of severe acute respiratory
syndrome in China, the overall refinement and rationalization of marketing and
selling strategies, and the lowering of the selling price for some of the Pabst
Blue Ribbon beer products in order to encourage distributors to enhance their
respective promotional activities. During the three months ended September 30,
2003 and 2002, approximately 85.1% and 81.6% of net sales, respectively, were
generated by the sale of products under the Pabst Blue Ribbon brand name.

Gross Profit: For the three months ended September 30, 2003, gross profit
was RMB 23,732,883 or 16.2% of total net sales, as compared to gross profit of
RMB 23,680,894 or 18.8% of total net sales for the three months ended September
30, 2002. Gross margin from beer sales decreased to 16.2% in 2003 as compared to
18.8% in 2002 as a result of the lowering of the selling price for some of the
Pabst Blue Ribbon beer products, as well as the lower profit margin from local
brand beers.

The Company expects that it will continue to experience pressure on its
gross profit in the near term due to a continuing softness in consumer demand
for Pabst Blue Ribbon beer in China, which the Company believes is attributable
to a change in the demand for Pabst Blue Ribbon beer in China caused by the
increasing competition from other foreign premium brand beers and other major
local brewers.

Selling, General and Administrative Expenses: For the three months ended
September 30, 2003, selling, general and administrative expenses were RMB
15,275,426 or 10.4% of net sales, consisting of selling expenses of RMB
5,250,656 and general and administrative expenses of RMB 10,024,770. Selling
expense for the three months ended September 30, 2003 is net of a reduction of
RMB 13,000,000 relating to the overaccrual of certain promotional and incentive
marketing activities originally recorded in 2001. Accordingly, including this
adjustment, total selling expenses incurred for the three months ended September
30, 2003 were RMB 18,250,656 or 19.3% of net sales. Net of an allowance for
doubtful accounts of RMB 1,000,000 for the three months ended September 30,
2003, general and administrative expenses were RMB 9,024,770.

For the three months ended September 30, 2002, selling, general and
administrative expenses were RMB 36,426,389 or 29.0% of net sales, consisting of
selling expenses of RMB 19,801,501 and general and administrative expenses of
RMB 16,624,888. Net of an allowance for doubtful accounts of RMB 7,719,115 for
the three months ended September 30, 2002, general and administrative expenses
were RMB 8,905,773.

Selling expenses include costs relating to the advertising, promotion,
marketing and distribution of Pabst Blue Ribbon beer and other local brand name
beers in China. Selling expenses decreased slightly by RMB 1,550,845 or 7.8% in
2003 as compared to 2002, and decreased as a percent of net sales, to 12.5% in
2003 from 15.8% in 2002. Selling expenses decreased in 2003 as compared to 2002,
both on an absolute basis and as a percentage of sales, as a result of a change
in the Company's marketing strategy to lower the selling price for some of its
Pabst Blue Ribbon beer products to encourage distributors to enhance their
respective promotional activities in


31

different geographical sales regions. By lowering the selling price, the Company
was able to reduce amounts expended for selling expenses.

For the three months ended September 30, 2003 and 2002, certain promotional
and sales incentives provided to distributors for their specific promotional
activities amounting to RMB 8,687,862 and RMB 6,947,167, respectively, have been
accounted for as a reduction in net sales, pursuant to EITF 01-9, "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor's Products)".

Selling expenses are recognized through the consolidation of the operations
of the Marketing Company. The Marketing Company incurs such expenses on behalf
of all of the Pabst Blue Ribbon brewing facilities in China, even though not all
of the results of operations of such facilities are reflected in the Company's
operations. Although the Marketing Company is budgeted annually to operate at
break-even levels, based on agreed upon ex-factory prices that the Marketing
Company pays to the breweries to purchase their production of Pabst Blue Ribbon
beer, actual profitability, particularly on an interim basis, is subject to
substantial variability. Under the pooled management arrangement, operating
losses arising from unbudgeted selling and advertising expenses incurred by the
Marketing Company are being reallocated back to Zhaoqing Brewery and Noble
Brewery in proportion to their respective production capacities commencing July
1, 2001. The Company expects that the reallocation of these unbudgeted selling
and advertising expenses will allow the Marketing Company to operate at
approximately breakeven levels during 2003, excluding the allowance for doubtful
accounts. These reallocated costs are reflected in the operating results of
Zhaoqing Brewery and Noble Brewery. As a result of these factors, during the
three months ended September 30, 2003, the Marketing Company recorded operating
income of RMB 8,448,079 (caused by reduced depreciation expense resulting from
the fully written down fixed assets and the reversal of the overaccrual for
selling expenses of RMB 13,000,000), as compared to an operating loss of RMB
6,627,282 for the three months ended September 30, 2002, which reduced
consolidated operating results accordingly.

General and administrative expenses consist of the management office
operating costs of Zhaoqing Brewery, the Marketing Company and Zao Yang High
Worth Brewery, the costs associated with the operation of the Company's
executive offices, and the legal and accounting and other costs associated with
the operation of a public company. Excluding the allowance for doubtful
accounts, general and administrative expenses increased slightly by RMB 118,997
or 1.3% in 2003 as compared to 2002, and as a percentage of net sales, decreased
to 6.2% in 2003 from 7.1% in 2002, respectively. The slight increase in general
and administrative expenses in absolute term was attributable to the increase in
other personnel expenditures, while the general and administrative expenses
decreased as a percentage of net sales was primarily due to the increase in net
sales.

The allowance for doubtful accounts, which is calculated based primarily on
the age of outstanding accounts receivable, decreased to 0.7% of net sales in
2003 as compared to 6.1% of net sales in 2002. However, accounts receivable are
typically outstanding for a longer period of time in China than in the United
States.

Impairment of Property, Plant and Equipment: As majority of the assets of
Zhaoqing Brewery, the Marketing Company and Zao Yang High Worth Brewery were
fully written down during the three months ended March 31, 2003, no further
provision for impairment was recorded during the three months ended September
30, 2003.

During the three months ended September 30, 2002, due to a further decrease
in sales, the Company re-evaluated the carrying value of its property, plant and
equipment, as well as the related estimated cash flows. As a result of this
re-evaluation, the Company recorded an impairment charge of RMB 29,000,000 with
respect to Zao Yang High Worth Brewery for the three months ended September 30,
2002. However, in early 2003, the Company conducted a subsequent test and review
of its previous assumptions and calculation adopted with respect to the
estimates of those


32

impairment charges recorded for the three months ended September 30, 2002. The
Company determined that certain of the assumptions made in the calculations of
these impairment estimations should be revised to include land use rights,
buildings and construction in progress. As a result, the provision for
impairment for the three months ended September 30, 2002 with respect to Zao
Yang High Worth Brewery should have been recorded as RMB 42,000,000, instead of
RMB 29,000,000. Accordingly, as a result of these revisions, the Company's
provision for impairment has been restated as RMB 42,000,000 for the three
months ended September 30, 2002.

Operating Income (Loss): For the three months ended September 30, 2003,
operating income was RMB 8,457,457 or 5.8 % of net sales. For the three months
ended September 30, 2002, operating loss was RMB 41,650,545 or 33.1% of net
sales. The decrease in operating loss in 2003 as compared to 2002 is primarily
attributable to the absence of a provision for impairment of property, plant and
equipment in 2003.

Interest Expense: For the three months ended September 30, 2003, interest
expense increased by RMB 284,955 or 17.7% to RMB 1,890,336, as compared to RMB
1,605,381 for the three months ended September 30, 2002.

Income Taxes: Commencing in 2001, the Company is required to pay local
income tax at the full normal rate of 33% on its profit as determined in
accordance with PRC accounting standards applicable to the Company. Income tax
expenses for the three months ended September 30, 2003 and 2002 was RMB nil and
RMB nil, respectively.

Net Income (Loss): Net income was RMB 11,680,496 for the three months ended
September 30, 2003, as compared to net loss RMB 72,460,697 for the three months
ended September 30, 2002.

Nine Months Ended September 30, 2003 and 2002 -

Sales: During the nine months ended September 30, 2003, net sales of beer
products decreased by RMB 127,570,501 or 27.8% to RMB 331,691,289, as compared
to RMB 459,261,790 for the nine months ended September 30, 2002. The Company
sold 108,556 metric tons of beer to distributors in 2003 as compared to 122,663
metric tons of beer in 2002, a decrease of 11.5%. The decrease in net sales of
beer products during the nine months ended September 30, 2003 as compared to the
nine months ended September 30, 2002 was primarily due to the decrease in volume
of beer sold, which was attributable to the impact caused by the reorganization
of the marketing teams and a change in marketing strategies including the
reduction in sales branch offices; the outbreak of severe acute respiratory
syndrome in China; and in general, reduced demand for Pabst Blue Ribbon beer as
a result of increasing competition from foreign and local premium brands; as
well as the lowering of the selling price for some of the Pabst Blue Ribbon beer
products in order to encourage distributors to enhance their respective
promotional activities. In addition, the decrease in net sales was also
attributable to an increased proportion of local brand beers, which are sold at
lower prices. During the nine months ended September 30, 2003 and 2002,
approximately 83.7% and 90.5% of net sales, respectively, were generated by the
sale of products under the Pabst Blue Ribbon brand name.

Gross Profit: For the nine months ended September 30, 2003, gross profit
was RMB 94,577,575 or 28.5% of total net sales, as compared to gross profit of
RMB 119,884,128 or 26.1% of total net sales for the nine months ended September
30, 2002. Gross margin from beer sales increased to 28.5% in 2003 as compared to
26.1% in 2002 primarily due to the reduction in production costs in relation to
the fixed depreciation charges resulting from the full written down and
impairment of production assets during the first quarter of 2003.

The Company expects that it will continue to experience pressure on its
gross profit in the near term due to a continuing softness in consumer demand
for Pabst Blue Ribbon beer in China, which the Company believes is attributable
to a change


33

in the demand for Pabst Blue Ribbon beer in China caused by the increasing
competition from other foreign premium brand beers and other major local
brewers.

Selling, General and Administrative Expenses: For the nine months ended
September 30, 2003, selling, general and administrative expenses were RMB
110,319,610 or 33.3% of net sales, consisting of selling expenses of RMB
77,283,583 and general and administrative expenses of RMB 33,036,027. Selling
expense for the nine months ended September 30, 2003 is net of a reduction of
RMB 13,000,000 relating to the overaccrual of certain promotional and incentive
marketing activities originally recorded in 2001. Accordingly, including this
adjustment, total selling expenses incurred for the nine months ended September
30, 2003 were RMB 90,283,583 or 37.2% of net sales. Net of an allowance for
doubtful accounts of RMB 4,600,000 for the nine months ended September 30, 2003,
general and administrative expenses were RMB 28,436,027.

For the nine months ended September 30, 2002, selling, general and
administrative expenses were RMB 145,288,943 or 31.6% of net sales, consisting
of selling expenses of RMB 100,714,613 and general and administrative expenses
of RMB 44,574,330. Net of an allowance for doubtful accounts of RMB 21,000,000
for the nine months ended September 30, 2002, general and administrative
expenses were RMB 23,574,330.

Selling expenses include costs relating to the advertising, promotion,
marketing and distribution of Pabst Blue Ribbon beer and other local brand name
beers in China. Selling expenses decreased by RMB 10,431,030 or 10.4% in 2003 as
compared to 2002, but increased as a percent of net sales, to 27.2% in 2003 from
21.9% in 2002. Selling expenses decreased in absolute terms but increased as a
percent of net sales in 2003 as compared to 2002 due primarily to the
substantial decrease in net sales as well as the lowering of the selling price
for some of the Pabst Blue Ribbon beer products to encourage distributors to
enhance their respective promotional activities in different geographical sales
regions. By lowering the selling price, the Company was able to reduce amounts
expended for selling expenses.

For the nine months ended September 30, 2003 and 2002, certain promotional
and sales incentives provided to distributors for their specific promotional
activities amounting to RMB 22,682,714 and RMB 22,463,605, respectively, have
been accounted for as a reduction in net sales, pursuant to EITF 01-9,
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)".

Selling expenses are recognized through the consolidation of the operations
of the Marketing Company. The Marketing Company incurs such expenses on behalf
of all of the Pabst Blue Ribbon brewing facilities in China, even though not all
of the results of operations of such facilities are reflected in the Company's
operations. Although the Marketing Company is budgeted annually to operate at
break-even levels, based on agreed upon ex-factory prices that the Marketing
Company pays to the breweries to purchase their production of Pabst Blue Ribbon
beer, actual profitability, particularly on an interim basis, is subject to
substantial variability. Under the pooled management arrangement, operating
losses arising from unbudgeted selling and advertising expenses incurred by the
Marketing Company are being reallocated back to Zhaoqing Brewery and Noble
Brewery in proportion to their respective production capacities commencing July
1, 2001. The Company expects that the reallocation of these unbudgeted selling
and advertising expenses will allow the Marketing Company to operate at
approximately breakeven levels during 2003, excluding the allowance for doubtful
accounts. These reallocated costs are reflected in the operating results of
Zhaoqing Brewery and Noble Brewery. As a result of these factors, during the
nine months ended September 30, 2003 and 2002, the Marketing Company incurred
operating losses of RMB 2,255,021 (including an impairment charge of RMB
8,050,000 and the reversal of the overaccrual for selling expenses of RMB
13,000,000) and RMB 19,814,948, respectively, which reduced consolidated
operating results accordingly.


34

General and administrative expenses consist of the management office
operating costs of Zhaoqing Brewery, the Marketing Company and Zao Yang High
Worth Brewery, the costs associated with the operation of the Company's
executive offices, and the legal and accounting and other costs associated with
the operation of a public company. Excluding the allowance for doubtful
accounts, general and administrative expenses increased by RMB 4,861,697 or
20.6% in 2003 as compared to 2002, and as a percentage of net sales, increased
to 8.6% in 2003 from 5.1% in 2002, respectively, primarily as a result of the
legal and professional fees incurred for the reincorporation of the Company to
BVI and the increase in other personnel expenditures.

The allowance for doubtful accounts, which is calculated based primarily on
the age of outstanding accounts receivable, decreased to 1.4% of net sales in
2003 as compared to 4.6% of net sales in 2002. However, accounts receivable are
typically outstanding for a longer period of time in China than in the United
States.

Impairment of Property, Plant and Equipment: During the nine months ended
September 30, 2003, as a result of an unexpected substantial deceases in sales,
continuing operating losses, the outbreak of SARS in China, working capital
deficiency and various business issues, the Company conducted a re-evaluation of
the carrying value of its land use right, property and building, office
equipment and motor vehicles, plant and equipment as well as construction in
progress, and the accrued capital commitment with respect to the purchase of
production assets and the related expected future cash flows. As a result of
this evaluation, for the nine months ended September 30, 2003, the Company
recorded a provision for impairment charges of RMB 50,400,000, RMB 8,050,000 and
RMB 6,800,000, for Zhaoqing Brewery, the Marketing Company and Zao Yang High
Worth Brewery, respectively.

These impairment charges aggregating RMB 65,250,000 were based on certain
assumptions regarding the Company's future cash flows and other factors used to
determine the fair value of its land use rights, property and building, office
equipment and motor vehicles, plant and equipment, and construction in progress,
including the assumptions that some of the local brand beers developed and
produced by Zao Yang High Worth Brewery will be shifted to Zhaoqing Brewery and
Noble Brewery for production and distribution; and that, as a result of Lan
Wei's efforts, Zhaoqing Brewery will be granted a sub-license jointly with Noble
Brewery to produce Pabst Blue Ribbon beer after the old sub-license expires on
November 7, 2003, with a production ratio of 1 to 2, respectively. Included in
the impairment charges were amounts related to the purchase commitments for
production equipment of RMB 2,400,000, which have been recorded as accrued
expense. As a result of the persistent decrease in sales and continuing
operating losses, the related expected future cash flows to be generated from
the sales of Pabst Blue Ribbon beer at the estimated reduced level of
distribution are expected to be negative. Accordingly, the effect of the Company
being able to obtain a sub-license for the production and distribution of Pabst
Blue ribbon beer in China subsequent to November 7, 2003 may not have a material
impact on the recoverability of those impaired assets. As a result of the
aforementioned factors, a provision for impairment was provided for a majority
of the assets of Zhaoqing Brewery, the Marketing Company and Zao Yang High Worth
Brewery, and no further impairment charges were recorded at September 30, 2003.

During the nine months ended September 30, 2002, as a result of the
uncertainty regarding sub-license, reduced sales, continuing operating losses
and various legal and business issues, the Company conducted an evaluation of
the carrying value of its property, plant and equipment, as well as the related
expected future cash flows. As a result of this evaluation, the Company recorded
a provision for impairment of RMB 40,000,000 with respect to the property, plant
and equipment of Zhaoqing Brewery and RMB 29,000,000 with respect to Zao Yang
High Worth Brewery for the nine months ended September 30, 2002. However, in
early 2003, the Company conducted a subsequent test and review of its previous
assumptions and calculation adopted with respect to the estimates of those
impairment charges recorded for the nine months ended September 30, 2002. The
Company determined that some of the assumptions made in the calculations of
these impairment estimations should be revised to include land use rights,


35

buildings and construction in progress. As a result, the provision for
impairment for the nine months ended September 30, 2002 with respect to Zhaoqing
Brewery and Zao Yang High Worth Brewery should have been recorded as RMB
82,000,000 and RMB 42,000,000, instead of RMB 40,000,000 and RMB 29,000,000,
respectively. Accordingly, as a result of these revisions, the Company's
provision for impairment has been restated as RMB 124,000,000 for the nine
months ended September 30, 2002.

Operating Loss: For the nine months ended September 30, 2003, operating
loss was RMB 80,992,035 or 24.4% of net sales. For the nine months ended
September 30, 2002, the operating loss was RMB 149,309,865 or 32.5% of net
sales. The operating loss decreased in absolute term and as a percentage to net
sales in 2003 as compared to 2002, as a result of the decrease in the provision
for impairment of property, plant and equipment in 2003.

Interest Expense: For the nine months ended September 30, 2003, interest
expense increased slightly by RMB 124,896 or 2.1% to RMB 6,053,379, as compared
to RMB 5,928,483 for the nine months ended September 30, 2002. Interest expense
increased in 2003 as compared to 2002 as a result of a increase in the average
bank borrowings.

Income Taxes: Commencing in 2001, the Company is required to pay local
income tax at the full normal rate of 33% on its profit as determined in
accordance with PRC accounting standards applicable to the Company. Income tax
expenses for the nine months ended September 30, 2003 and 2002 was RMB nil and
RMB 325,894, respectively.

Net Loss: Net loss was RMB 186,178,395 for the nine months ended September
30, 2003, as compared to net loss RMB 204,623,566 for the nine months ended
September 30, 2002.

Noble Brewery:

Three Months Ended September 30, 2003 and 2002 -

Sales: For the three months ended September 30, 2003 and 2002, net sales
were RMB 87,935,274 and RMB 69,194,831, respectively. The increase in net sales
by RMB 18,740,443 or 27.1% in 2003 as compared to 2002 was due to the increase
in volume of beer sold, which was attributable to the general rebound of
consumption following the successful suppression of severe acute respiratory
syndrome in China, the overall refinement and rationalization of marketing and
selling strategies, and the lowering of the selling price for some of the Pabst
Blue Ribbon beer products in order to encourage distributors in enhance their
respective promotional activities.

During the three months ended September 30, 2003, Noble Brewery sold 26,351
metric tons of beer to the Marketing Company, as compared to 21,819 metric tons
of beer sold to the Marketing Company during the three months ended September
30, 2002. Total beer sold by Noble Brewery to the Marketing Company increased by
4,532 metric tons or 20.8% in 2003 as compared to 2002.

Gross Profit: For the three months ended September 30, 2003, gross profit
was RMB 32,095,464 or 36.5% of net sales, as compared to gross profit of RMB
9,132,913 or 13.2% of net sales for the three months ended September 30, 2002.
The increase in gross profit in 2003 as compared to 2002 was primarily
attributable to the increase in net sales and the reduction in production costs
in relation to the fixed depreciation expenses as a result of the full written
down and impairment of production assets in 2003.

Selling, General and Administrative Expenses: For the three months ended
September 30, 2003, selling, general and administrative expenses totaled RMB
18,971,827 or 21.6% of net sales, consisting of selling expenses of RMB
12,554,058 and general and administrative expenses of RMB 6,417,769. Net of an
allowance for doubtful accounts of RMB 700,000 for the three months ended
September 30, 2003, general and administrative expenses were RMB 5,717,769. For
the three months ended


36

September 30, 2002, selling, general and administrative expenses totaled RMB
20,168,158 or 29.1% of net sales, consisting of selling expenses of RMB
10,975,488 and general and administrative expenses of RMB 9,192,670. Selling
expenses consist of warehousing, storage and freight costs. Net of an allowance
for doubtful accounts of RMB 5,200,000 for the three months ended September 30,
2002, general and administrative expenses were RMB 3,992,670.

For the three months ended September 30, 2003 and 2002, certain promotional
and sales incentives provided to distributors for their specific promotional
activities amounting to RMB nil and RMB 536,781, respectively, have been
accounted for as a reduction in net sales, pursuant to EITF 01-9, "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor's Products)".

Impairment of Property, Plant and Equipment: As the majority of the assets
of Noble Brewery have been fully written down during the three months ended
March 31, 2003, no further provision for impairment was recorded during the
three months ended September 30, 2003.

During the three months ended September 30, 2002, as a result of further
reduced sales and continuing operating losses, Noble Brewery conducted an
evaluation of the carrying value of its property, plant and equipment, as well
as the related estimated future cash flows. As a result of this evaluation,
Noble Brewery recorded an additional provision for impairment of plant,
machinery and equipment of RMB 36,5000,000 at September 30, 2002.

Operating Income (Loss): For the three months ended September 30, 2003,
operating income was RMB 13,123,637 or 14.9% of net sales. For the three months
ended September 30, 2002, operating loss was RMB 47,535,245 or 68.7% of net
sales.

Income Taxes: Commencing in 1999, Noble Brewery is required to pay local
income tax at the full normal rate of 33% (less a special temporary reduction of
6% granted by the Tax Authority) on its profit as determined in accordance with
PRC accounting standards applicable to Noble Brewery. Accordingly, for the three
months ended September 30, 2003, income tax expense was RMB nil, as compared to
the income tax refund of RMB 771,199 for the three months ended September 30,
2002.

Net Income (Loss): Net income was RMB 13,208,085 for the three months ended
September 30, 2003, as compared to net loss of RMB 46,764,046 for the three
months ended September 30, 2002.

Nine Months Ended September 30, 2003 and 2002 -

Sales: For the nine months ended September 30, 2003 and 2002, net sales
were RMB 149,551,237 and RMB 219,612,017, respectively. The decrease in net
sales by RMB 70,060,780 or 31.9% in 2003 as compared to 2002 was primarily
attributable to the share of significant loss of the Marketing Company due to
the reallocation of these unbudgeted selling and advertising expenses as well as
the decrease in volume of beer sold.

During the nine months ended September 30, 2003, Noble Brewery sold 58,934
metric tons of beer to the Marketing Company, as compared to 66,461 metric tons
of beer sold to the Marketing Company during the three months ended September
30, 2002. Total beer sold by Noble Brewery to the Marketing Company decreased by
7,527 metric tons or 11.3% in 2003 as compared to 2002.

Gross Profit: For the nine months ended September 30, 2003, gross profit
was RMB 17,033,606 or 11.4% of net sales, as compared to gross profit of RMB
43,574,423 or 19.8% of net sales for the nine months ended September 30, 2002.
The decrease in gross profit in 2003 as compared to 2002 was attributable to the
share of significant loss of Marketing Company and the substantial decrease in
sales which was below the critical break-even marginal sales volume, partially
offset by the


37

reduction in production costs due to the decrease in fixed depreciation expenses
resulting from the full written down of fixed assets.

Selling, General and Administrative Expenses: For the nine months ended
September 30, 2003, selling, general and administrative expenses totaled RMB
47,044,763 or 31.5% of net sales, consisting of selling expenses of RMB
25,637,658 and general and administrative expenses of RMB 21,407,105. Net of an
allowance for doubtful accounts of RMB 3,100,000 for the nine months ended
September 30, 2003, general and administrative expenses were RMB 18,307,105. For
the nine months ended September 30, 2002, selling, general and administrative
expenses totaled RMB 65,455,269 or 29.8% of net sales, consisting of selling
expenses of RMB 36,667,193 and general and administrative expenses of RMB
28,788,076. Selling expenses consist of warehousing, storage and freight costs.
Net of an allowance for doubtful accounts of RMB 12,700,000 for the nine months
ended September 30, 2002, general and administrative expenses were RMB
16,088,076.

For the nine months ended September 30, 2003 and 2002, certain promotional
and sales incentives provided to distributors for their specific promotional
activities amounting to RMB nil and RMB 1,635,093, respectively, have been
accounted for as a reduction in net sales, pursuant to EITF 01-9, "Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor's Products)".

Impairment of Property, Plant and Equipment: During the nine months ended
September 30, 2003, as a result of an unexpected substantial decrease in sales
and continuing operating losses and the outbreak of SARS in China, Noble Brewery
conducted an evaluation of the carrying value of its land use right, property
and building, office equipment, plant and equipment and construction in
progress, and the related estimated future cash flows. As a result of this
evaluation, Noble Brewery recorded a provision for impairment of its land use
right, property and building, plant and equipment, office equipment and
construction in progress of RMB 219,600,000 for the nine months ended September
30, 2003. Included in the impairment charges were amounts related to the
purchase commitments for production equipment, which have been recorded as
accrued expense and a reduction of prepaid amounts of RMB 2,600,000. Due to the
continued decrease in sales and operating losses, the related expected future
cash flows to be generated from the sales of Pabst Blue Ribbon beer at the
estimated reduced level of distribution are expected to be negative.
Accordingly, the effect of Noble Brewery successfully obtaining a renewal of the
sub-license is expected to have little impact on the recoverability of the
assets. As a result of these impairment charges, the majority of assets of Noble
Brewery have been fully written down.

During the nine months ended September 30, 2002, as a result of reduced
sales and continuing operating losses, Noble Brewery conducted an evaluation of
the carrying value of its property, plant and equipment, as well as the related
estimated future cash flows. As a result of this evaluation, Noble Brewery
recorded a provision for impairment of plant, machinery and equipment of RMB
101,500,000 at September 30, 2002.

Operating Loss: For the nine months ended September 30, 2003, operating
loss was RMB 249,611,157 or 166.9% of net sales. For the nine months ended
September 30, 2002, operating loss was RMB 123,380,846 or 56.2% of net sales.

Income Taxes: Commencing in 1999, Noble Brewery is required to pay local
income tax at the full normal rate of 33% (less a special temporary reduction of
6% granted by the Tax Authority) on its profit as determined in accordance with
PRC accounting standards applicable to Noble Brewery. Accordingly, for the nine
months ended September 30, 2003, income tax expense was RMB 1,479,103, as
compared to RMB 1,024,096 for the nine months ended September 30, 2002.


38

Net Loss: Net loss was RMB 252,163,250 for the nine months ended September
30, 2003, as compared to net loss of RMB 124,404,942 for the nine months ended
September 30, 2002.

Consolidated Financial Condition - September 30, 2003:

Liquidity and Capital Resources:

Operating. For the nine months ended September 30, 2003, the Company's
operations utilized cash resources of RMB 31,015,901. For the nine months ended
September 30, 2002, the Company's operations provided cash resources of RMB
21,403,142. The Company's operations utilized cash resources in 2003 as compared
to generating cash resources in 2002 primarily as a result of a reduction in
cash generated by changes in operating assets and liabilities. The Company's
cash balance decreased by RMB 62,071,183 to RMB 55,003,889 at September 30,
2003, as compared to RMB 117,075,072 at December 31, 2002. The Company's net
working capital deficit increased by RMB 23,328,799 to RMB 342,877,153 at
September 30, 2003, as compared to RMB 319,548,354 at December 31, 2002,
resulting in a current ratio at September 30, 2003 of 0.43:1, as compared to
0.50:1 at December 31, 2002.

Net of an allowance for doubtful accounts of RMB 4,600,000 for the nine
months ended September 30, 2003, accounts receivable decreased by RMB 59,962,335
or 52.3% to RMB 50,078,685 at September 30, 2003, as compared to RMB 114,641,020
at December 31, 2002, which was attributable to the substantial decrease in net
sales resulting in reduced level of accounts receivable.

The amount due from related companies increased by RMB 35,515,715 to RMB
40,163,686 at September 30, 2003, as compared to RMB 4,647,971 at December 31,
2002, primarily as a result of the RMB 26,940,623 advanced to Lan Wei as
described below. Amounts due from Guangdong Blue Ribbon and its group of
companies generally arise from routine intercompany business transactions, which
are unsecured, interest-free and repayable on demand. On May 10, 2003,
approximately RMB 7,086,000 due from Guangdong Blue Ribbon was converted into a
short-term loan due and payable in one year, with interest at 5.6% per annum.

The Company's other receivables increased by RMB 43,573,652 or 392.2% to
RMB 54,683,267 at September 30, 2003, as compared to RMB 11,109,615 at December
31, 2002. The increase in other receivables was primarily due to an increase in
prepayments related to advertising and promotional programs scheduled by the
Marketing Company for subsequent periods as well as the reshuffling project with
respect to sales and marketing strategies.

The amount due to an associated company decreased by RMB 30,917,832 or
10.4% to RMB 267,461,362 at September 30, 2003, as compared to RMB 298,379,194
at December 31, 2002, and represents the amounts due to Noble Brewery from its
sale of Pabst Blue Ribbon beer to the Marketing Company and from its sale of raw
materials (which were purchased under the new pooled management structure) to
Zhaoqing Brewery as well as other balances arising from recurring intercompany
transactions. These obligations are unsecured, interest-free and repayable on
demand. The repayment schedule for these obligations generally reflects the
collection period for accounts receivable generated by beer sales and normal
trade credit terms for raw material purchases.

Investing. For the nine months ended September 30, 2002, additions to
property, plant and equipment aggregated RMB 1,598,887, which includes
approximately RMB 700,000 and RMB 900,000 for renovation and continuous
improvement of Zao Yang High Worth Brewery and Zhaoqing Brewery, respectively.
The Company anticipates that additional capital expenditures in connection with
the continuing improvement of production facilities at Zao Yang High Worth
Brewery and Zhaoqing Brewery during the remainder of 2003 will be approximately
RMB 8,000,000. The Company believes that it will be able to fund the expected
capital expenditures through internal cash flow and external resources.


39

On March 24, 2003, the Board of Directors of the Company and High Worth JV
approved a short-term loan of RMB 46,940,623 from High Worth JV to Lan Wei, a
company controlled by the City of Zhaoqing that is the controlling shareholder
of the Company. The loans bear interest at 3.9% per annum. Of such amount, RMB
20,000,000 was to be invested in businesses affiliated with Lan Wei that sell
beverage containers to the Company and RMB 26,940,623 was to be used to
facilitate the reorganization or restructuring of Noble China Inc. Lan Wei
repaid the RMB 20,000,000 loan in June 2003. The RMB 26,940,623 was originally
scheduled to be repaid not later than December 31, 2003, but it is expected that
the repayment date will be extended to March 31, 2004. The Company will have the
option to have the RMB 26,940,623 loan repaid in cash or by the transfer to the
Company of any assets that Lan Wei may acquire in conjunction with the
reorganization of Noble China, Inc. with a fair value equivalent to the loan
amount.

During the past few years, Lan Wei has invested substantial capital in
Noble China, Inc. and the Company, and has also used its relationships to
arrange for substantial bank financing for the Company, in order to facilitate
the strategic development of the Pabst Blue Ribbon beer business in China. Lan
Wei believes that a successful reorganization or restructuring of Noble China,
Inc. is in the long-term interest of the Company and Noble Brewery, as it will
assure such entities the long-term right to produce and distribute Pabst Blue
Ribbon beer in China.

Financing. During the nine months ended September 30, 2003, the Company's
secured bank loans decreased by RMB 2,515,772, reflecting new borrowings of RMB
91,750,000 and repayments of RMB 94,265,772. The bank loans bear interest at
fixed rates ranging from 5.6% to 6.2%, and are repayable within the next two
years. A substantial portion of the bank loans have been utilized to fund the
working capital requirements of Zhaoqing Brewery and Zao Yang High Worth
Brewery.

As at December 31, 2002, a bank loan of RMB 30,104,000 granted to Zao Yang
High Worth Brewery, which expired on September 30, 2002, was pending for
completion of the official loan renewal agreement. Zao Yang High Worth Brewery
has continued to pay the interest that is accruing on the loan, and the bank has
not made a demand for repayment. The renewal agreement, without a specific date
of repayment and guaranteed by High Worth JV, had been approved and signed by
the relevant bank and was returned to Zao Yang High Worth Brewery in May 2003.
The loan has been recorded as a current liability and is payable on demand.

During the nine months ended September 30, 2002, Zao Yang High Worth
Brewery received an advance of RMB 11,000,000 from its local partner, Zao Yang
Brewery, which is the 45% shareholder of Zao Yang High Worth Brewery. The
advance was unsecured, without interest and had no fixed term of repayment. This
advance has been utilized to fund the working capital requirements of Zao Yang
High Worth Brewery. This advance was subsequently converted into additional
capital of Zao Yang High Worth Brewery in 2002.

During the nine months ended September 30, 2002, the Company loaned RMB
5,500,000 to Zao Yang High Worth Brewery. The loan was unsecured, with interest
at 3.6% per annum and repayable on December 31, 2002. During the nine months
ended September 30, 2002, Zao Yang High Worth Brewery advanced RMB 5,500,000 to
Guangdong Blue Ribbon. The advance was unsecured, without interest and had no
fixed date of repayment. Both of these loans were repaid in full in 2002.

The Company anticipates that its operating cash flow, combined with cash on
hand, bank lines of credit, and other external credit sources, and the credit
facilities provided by its principal shareholder and affiliates or related
parties, are adequate to satisfy the Company's working capital requirements
through December 31, 2003. If the foregoing assumptions prove to be inaccurate,
the Company's cash flow may be adversely affected, which would negatively impact
the ability of the Company to conduct operations at current levels and continue
as a going concern.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not have any market risk with respect to such factors as
commodity prices, equity prices, and other market changes that affect market
risk sensitive investments.

With respect to foreign currency exchange rates, the Company does not
believe that a devaluation or fluctuation of the RMB against the USD would have
a detrimental effect on the Company's operations, since the Company conducts
virtually all of its business in China, and the sale of its products and the
purchase of raw materials and services is settled in RMB. The effect of a
devaluation or fluctuation of the RMB against the USD would affect the Company's
results of operations, financial position and cash flows, when presented in USD
(based on a current exchange rate) as compared to RMB.

As the Company's debt obligations are primarily short-term in nature, with
fixed interest rates, the Company does not have any risk from an increase in
interest rate. However, to the extent that the Company arranges new borrowings
in the future, an increase in interest rates would cause a commensurate increase
in the interest expense related to such borrowings.


ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated and
communicated to the Company's management, including its principal executive and
financial officers, as appropriate, to allow timely decisions regarding required
disclosure.

The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including its principal executive and
financial officers, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based upon and as of the date of that evaluation, the Company's
principal executive and financial officers concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports the Company files and submits under the
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.

(b) Changes in Internal Controls

There were no changes in the Company's internal controls or in other
factors that could have significantly affected those controls subsequent to the
date of the Company's most recent evaluation.


41

PART II. OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits

A list of exhibits required to be filed as part of this report is set forth
in the Index to Exhibits, which immediately precedes such exhibits, and is
incorporated herein by reference.

(b) Reports on Form 8-K

Three Months Ended September 30, 2003: A Current Report on Form 8-K dated
July 4, 2003, was filed to report the termination of Deloitte Touche
Tohmatsu and the retention of Grobstein, Horwath & Company LLP as the
Company's independent accountants.




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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



CBR BREWING COMPANY, INC.
-------------------------
(Registrant)



Date: November 18, 2003 By: /s/ DA-QING ZHENG
-----------------------------
Da-qing Zheng
Chairman of the Board and
Chief Executive Officer
(Duly authorized officer)



Date: November 18, 2003 By: /s/ GARY C.K. LUI
-----------------------------
Gary C.K. Lui
Vice President and Chief
Financial Officer
(Principal financial officer)


43



INDEX TO EXHIBITS



Exhibit
Number Description of Document
- ------ -----------------------


31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 -
Da-qing Zheng

31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 -
Gary C.K. Lui

32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





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