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 July 31, 1996
or
[ ] 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 1-12119
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
(Exact name of registrant as specified in its charter)
Bermuda 72-123940
- -------------------------------- --------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
One Galleria Boulevard, Metairie, Louisiana 70001
- ----------------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 849-2739
Indicate by a 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_____ No X
Number of shares of common stock outstanding
at September 16, 1996: 3,696,876
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
FORM 10-Q
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited):
Consolidated Balance Sheets -
July 31, 1996 and October 31, 1995
Consolidated Statements of Operations -
Three and nine months ended July 31, 1996 and 1995
Consolidated Statements of Cash Flows -
Nine months ended July 31, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited)
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURE
-2-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in United States Dollars)
JULY 31, OCTOBER 31,
1996 1995
----------- -----------
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash $ 57,433 $ 102,248
Accounts receivable, less allowance
for doubtful accounts of $1,766 and $556 82,720 21,680
Inventories 31,268 22,922
Other current assets 24,362 391
Total current assets 195,783 147,241
---------- ----------
Rental, utility & other deposits 35,749 35,174
Deferred tax assets 61,925 49,096
Equipment & capital leases, net 656,385 634,767
Deferred stock issuance costs 593,174 --
---------- ----------
Total assets $1,543,016 $ 866,278
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term bank loan, current portion $ 452,000 $ 113,000
Capital lease obligations, current portion 12,858 13,284
Accrued liabilities 419,720 39,294
Bridge notes 370,000 --
Shareholders' loans 65,000 85,638
---------- ----------
Total current liabilities 1,319,578 251,216
Long-term bank loan -- 395,500
Capital lease obligations 21,223 30,221
---------- ----------
Total liabilities 1,340,801 676,937
---------- ----------
Commitments
Shareholders' equity:
Preferred stock, $0.01 par, 500,000 shares
authorized, none issued -- --
Common stock, $0.01 par and $0.13 par, 10,000,000
shares and 11,000 shares authorized, 2,000,000
and 5,000 shares issued and outstanding, 20,000 645
respectively
Additional paid-in capital 535,032 --
Subscription monies received in advance -- 437,156
Accumulated deficit (352,817) (248,460)
---------- ----------
Total shareholders' equity 202,215 189,341
---------- ----------
Total liabilities and shareholders' equity $1,543,016 $ 866,278
========== ==========
The accompanying notes are an integral part of these financial statements.
-3-
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in United States Dollars)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------- ---------------------
JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995
-------- -------- -------- --------
Net Sales $110,954 $ 6,755 $355,707 $ 6,755
Cost of Sales 31,692 8,845 74,747 8,845
--------- --------- --------- ---------
Gross profit 79,262 (2,090) 280,960 (2,090)
Selling, general and administrative expenses 153,932 184,415 361,026 281,457
Interest expense, net 11,178 13,865 36,086 15,644
Other expenses, net 146 1,128 1,034 1,128
--------- --------- --------- ---------
Loss before income taxes (85,994) (201,498) (117,186) (300,319)
Income tax benefit 7,682 33,248 12,829 49,553
--------- --------- --------- ---------
Net loss ($ 78,312) ($168,250) ($104,357) ($250,766)
========= ========= ========= =========
Net loss per common share ($0.04) $(0.08) ($0.05) ($0.12)
========= ========= ========= =========
Weighted average number of shares outstanding 2,071,422 2,071,422 2,071,422 2,071,422
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
-4-
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in United States Dollars)
(Unaudited)
Nine Months Ended
---------------------------------
July 31, July 31,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($104,357) ($250,766)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 48,335 3,739
Deferred income taxes (12,829) (49,553)
Increase in operating assets:
Accounts receivable, net (61,040) (3,155)
Inventories (8,346) (36,451)
Other current assets (23,971) (457)
Rental, utility and other deposits (575) (25,741)
Increase in operating liabilities:
Accrued liabilities 41,287 25,450
--------- ---------
Net cash used in operating activities (121,496) (336,934)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (69,953) (467,866)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank loan - 565,000
Repayment of bank loan (56,500) -
Repayment of capital lease obligations (9,424) (4,067)
Proceeds from bridge notes 370,000 -
Proceeds from shareholders' loans - 37,893
Repayment of shareholders' loans (20,638) -
Proceeds from issuance of stock 117,231 8,345
Stock issuance costs (254,035) -
--------- ---------
Net cash provided by financing activities 146,634 607,171
--------- ---------
Decrease in cash (44,815) (197,629)
Cash at beginning of period 102,248 197,752
--------- ---------
Cash at end of period $57,433 $123
========= =========
SUPPLEMENTAL DISCLOSURES TO STATEMENTS OF CASH FLOWS:
Interest $36,421 $ 1,407
========= ==========
The accompanying notes are an integral part of these financial statements.
-5-
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts expressed in United States Dollars)
(Unaudited)
1. Basis for Preparation of the Consolidated Financial Statements
The consolidated financial statements have been prepared by American
Craft Brewing International Limited ("AmBrew International") and its
subsidiaries (collectively, the "Company"), without audit, with the exception of
the October 31, 1995 consolidated balance sheet. The financial statements
include consolidated balance sheets, consolidated statements of operations and
consolidated statements of cash flows. In the opinion of management, all
adjustments, which consist of normal recurring adjustments, necessary to present
fairly the financial position, results of operations and cash flows for all
periods have been made.
These financial statements should be read in conjunction with the
consolidated financial statements as of and for the fiscal year ended October
31, 1995, and the footnotes thereto included in the Company's Form S-1 as filed
with the Securities and Exchange Commission on September 10, 1996, as
supplemented by the prospectus, dated as of September 11, 1996, filed by the
Company pursuant to Rule 424(b) of Regulation C of the Securities and Exchange
Commission's rules and regulations (the "Form S-1").
2. Basis of Presentation
The consolidated balance sheet as of October 31, 1995, the consolidated
statements of operations for the three-month and nine-month periods ended July
31, 1995, and the consolidated statement of cash flows for the nine months ended
July 31, 1995 incorporate the financial statements of the South China Brewery
(as defined in the Form S-1). The consolidated financial statements as of and
for the periods ended July 31, 1996 incorporate the financial statements of
AmBrew International (previously Craft, as defined in the Form S-1) and the
South China Brewery.
3. Net Loss per Common Share
Net loss per common share is computed by dividing net loss by 2,071,422,
the weighted average common shares outstanding during the periods, on the basis
that the Share Exchange, the Share Split and the Merger (each as defined in the
Form S-1) had been consummated prior to the periods presented, plus 71,422
shares which represent the effect, using the treasury stock method, of shares
issued to the holders of the Bridge Notes (as defined in the Form S-1) assuming
such issuance had been made prior to the periods presented.
-6-
4. Inventories
JULY 31, OCTOBER 31,
1996 1995
----------------- --------------
(UNAUDITED) (AUDITED)
Raw materials $24,462 $16,682
Work-in-process and finished goods 6,806 6,240
------- -------
$31,268 $22,922
======= =======
5. Shareholders' Equity
As of July 31, 1996, the common stock recorded in the consolidated
balance sheet represents the common stock of the Company as of that date giving
effect to the Share Exchange, Share Split and Merger. As of October 31, 1995,
the common stock recorded in the consolidated balance sheet represents the
common stock of the subsidiaries of the Company as of that date.
The Board of Directors is authorized, without further stockholder
approval, to issue up to 500,000 shares of "blank check" preferred stock in one
or more series and to fix the rights, preferences, privileges and restrictions
granted or imposed upon unissued shares of preferred stock and to fix the number
of shares constituting any series and designations of such series.
6. Stock Option Plan
On July 18, 1996, the Stock Option Plan was adopted by the Company's
Board of Directors and approved by its shareholders. The Company has reserved
300,000 authorized but unissued shares of common stock for issuance under the
plan. Under the terms of the Stock Option Plan, a committee of the Board of
Directors may grant options to eligible individuals that will allow the holders
of the options to purchase shares of common stock at the fair market value on
the date the options are granted.
7. Subsequent Events
Subsequent to July 31, 1996, the following events took place:
a. On September 16, 1996, the Company completed an initial public
offering of 1,580,000 shares of its common stock and 1,580,000 redeemable common
stock purchase warrants at initial public offering prices of $5.50 and $0.10,
respectively. The net proceeds from this offering, after underwriters' discounts
and commissions and other expenses, were $7,590,285. At July 31, 1996, deferred
stock issuance costs of $593,174 were recorded as a long-term asset in the
accompanying consolidated balance sheet. An additional $110,234 of such costs
were incurred subsequent to July 31, 1996. The proceeds to be recorded as an
increase to shareholders' equity will be net of these amounts. A portion of the
proceeds were used to retire $120,000 principal amount of Bridge Notes, $452,000
principal amount of the bank loan, $65,000 principal of the shareholder's loan
from BPW (as defined in the Form S-1) and various stock issuance costs, all as
reflected in the unaudited pro forma condensed consolidated balance sheet in
Note 8. In addition, 116,876 shares of
-7-
common stock and 116,876 redeemable common stock purchase warrants were issued
to the Bridge Note holders.
b. On September 16, 1996, the 158,000 Representative's Warrants (as
defined in the Form S-1) were sold to the Representative (as defined in the Form
S-1) for nominal consideration. These warrants allow the holder to purchase from
the Company up to 158,000 shares of common stock and/or 158,000 warrants. The
Representative's Warrants are not exercisable until September 16, 1997.
c. On September 17, 1996, the Company made a non-refundable deposit of
$200,000 for the purchase of twenty brew systems.
8. Pro Forma Consolidated Financial Statements (Unaudited)
The following unaudited pro forma consolidated financial statements have
been prepared on the basis described below. The unaudited pro forma condensed
consolidated balance sheet as of July 31, 1996, has been prepared to give effect
to the following events as if such events had occurred on July 31, 1996: (i) the
aforementioned subsequent event a, (ii) the repayment of the Company's bank loan
of $452,000 and the shareholder's loan from BPW of $65,000, (iii) the repayment
of $120,000 principal amount of Bridge Notes and the issuance of common stock
and Bridge Warrants (as defined in the Form S-1) to the holder of such Bridge
Notes, (iv) the conversion of $250,000 principal amount of Bridge Notes into
common stock and the issuance of Bridge Warrants to the holders of such Bridge
Notes and (v) the payment of $339,139 of accrued stock issuance costs. The
unaudited pro forma consolidated statement of operations for the nine months
ended July 31, 1996, has been prepared to give effect to the following events as
if such events had occurred on November 1, 1995: (i) the aforementioned
subsequent event a, (ii) the accrual of salary payable to the Company's
Executive Vice President, Chief Operating Officer and Secretary at an annual
rate of $72,000 as if such salary had become payable on and after November 1,
1995, and (iii) the elimination of interest expense payable for the period in
respect of the bank loan and shareholder's loan as if such loans had been repaid
on November 1, 1995.
The pro forma condensed financial statements are unaudited and have been
prepared using the historical financial statements of the Company, and are
qualified entirely by reference to, and should be read in conjunction with, such
historical financial statements. The pro forma financial statements are provided
for informational and comparative purposes only. The pro forma adjustments are
based on available financial information and certain estimates and assumptions.
The pro forma financial statements do not purport to be indicative of the
results of operations and financial position of the Company had such
transactions in fact occurred on November 1, 1995 or July 31, 1996,
respectively, or during the period presented or during any future period.
Unaudited pro forma condensed balance sheet as of July 31, 1996:
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
-------------- --------------- ---------------
Total current assets $ 195,783 $7,480,051 (1) $6,699,695
(517,000) (2)
-8-
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
(120,000) (3)
(339,139) (4)
Total assets $1,543,016 $7,480,051 (1) $7,453,754
(517,000) (2)
(120,000) (3)
(339,139) (4)
(593,174) (5)
Total current liabilities $1,319,578 $(517,000) (2) $93,439
(120,000) (3)
(250,000) (6)
(339,139) (4)
Total liabilities $1,340,801 $(517,000) (2) $114,662
(120,000) (3)
(250,000) (6)
(339,139) (4)
Total shareholders' equity $202,215 $7,480,051 (1) $7,339,092
250,000 (6)
(593,174) (5)
265,000 (7)
(265,000) (7)
Unaudited pro forma statement of operations for the nine months ended July 31,
1996:
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
Net sales $ 355,707 $ 355,707
Cost of sales 74,747 74,747
---------- ----------
Gross profit 280,960 280,960
Selling, general and
administrative expenses 361,026 44,300 (8) 405,326
Interest expense, net 36,086 265,000 (7) 266,036
(35,050) (9)
Other expenses, net 1,034 1,034
---------- ----------
Loss before income taxes (117,186) (391,436)
Income tax benefit 12,829 (2,893) (9) 9,936
---------- ----------
Net loss $ (104,357) $ (381,500)
========== ===========
Net loss per common share $(0.05) $(0.10)
========== ===========
Weighted average number
-9-
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
of shares outstanding 2,071,422 3,696,876 (10)
========= =========
Notes to unaudited pro forma financial statements:
(1) Represents the proceeds from the initial public offering of 1,580,000 shares
of the Company's common stock and 1,580,000 redeemable common stock purchase
warrants, net of underwriting discounts and commissions and offering expenses,
and net of stock issuance costs incurred by the Company subsequent to July 31,
1996.
(2) Represents the repayment of the bank loan of $452,000 and the shareholder's
loan from BPW of $65,000 with the proceeds of the initial public offering.
(3) Represents the repayment of $120,000 principal amount of the Bridge Notes
with the proceeds of the initial public offering.
(4) Represents the payment of accrued stock issuance costs with the proceeds of
the initial public offering.
(5) Represents the charging of deferred stock issuance costs against the
proceeds of the initial public offering.
(6) Represents the conversion of $250,000 principal amount of the Bridge Notes
into shares of common stock.
(7) Represents the recognition of a non-recurring, non-cash interest expense of
$265,000 representing the original issue discount relating to the Bridge Notes.
(8) Represents the additional salary expense payable to the Company's Executive
Vice President, Chief Operating Officer and Secretary at an annual rate of
$72,000.
(9) Represents elimination of interest expense as a result of the repayment of
the bank loan and shareholder's loan from BPW.
(10) The pro forma weighted average shares outstanding includes the weighted
average shares outstanding during the period, as if the Share Exchange, Share
Split and Merger had been consummated at November 1, 1995, and the 1,580,000
shares issued in the initial public offering and the 116,876 shares issued in
connection with the satisfaction of the Bridge Notes, as if those issuances
occurred on November 1, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Unless otherwise indicated, the following discussion addresses
the financial condition and results of the Company's Hong Kong brewing and
distribution subsidiaries, South China Brewing Company Limited ("South China")
and SCBC Distribution Company Limited ("SCBC"), respectively. On May 31, 1996,
the stockholders of South China and SCBC exchanged substantially all of the
issued and outstanding shares of South China and SCBC for 23,750 shares of
capital stock of Craft Brewing Holdings Limited, a British Virgin Islands
Company ("Craft"), in a transaction accounted for as a reorganization of
companies under common control in a manner similar to a
-10-
pooling of interests. On July 30, 1996, Craft amalgamated into AmBrew
International in a transaction accounted for as a pooling of interests. The
officers and directors of AmBrew International remained in office after the
amalgamation. South China and SCBC are collectively referred to as the South
China Brewery. This discussion should be read in conjunction with the Unaudited
Consolidated Financial Statements. In addition, the period-to-period
presentation set forth under "--Results of Operations" will not necessarily be
indicative of future results and future net losses can be expected as increased
expenses are incurred in connection with the establishment of expansion
breweries that the Company proposes to establish and operate, either through
wholly-owned subsidiaries or through majority-owned or otherwise
Company-controlled joint venture arrangements with strategic local partners.
With the exception of historical information, the matters
discussed herein are "forward looking statements" within the meaning of the
Private Litigation Reform Act of 1995. Such forward looking statements are
subject to risks, uncertainties and other factors which could differ materially
from future results implied by such forward looking statements. Potential risks
and uncertainties include, but are not limited to, the Company's ability to
establish and operate additional breweries on a timely basis, increased
acceptance by consumers of the Company's brands and development by the Company
of new brands of beer and the Company's ability to finance any additional
capital expenditures once the proceeds of its recent initial public offering of
securities (the "Offering") have been committed.
RESULTS OF OPERATIONS
The South China Brewery commenced operations in June 1995 and has
not experienced a full fiscal year of operations. The first sales of the South
China Brewery's products occurred in July 1995. For comparison purposes, the
following presentation compares the nine months ended October 31, 1995 with the
nine months ended July 31, 1996. The following table sets forth for the periods
indicated certain line items from the South China Brewery's combined and the
Company's consolidated statements of operations expressed as a percentage of net
sales for each of the nine months ended October 31, 1995 and July 31, 1996,
respectively:
NINE MONTHS ENDED
--------------------------------
October 31, July 31,
1995 1996
----------- --------
Net Sales 100.0% 100.0%
Cost of Sales 61.2% 21.0%
Gross Profit 38.8% 79.0%
Selling, general & administrative expenses 410.7% 101.5%
Operating loss 371.9% 22.5%
-11-
Interest expense, net 31.5% 10.1%
Net loss 339.8% 29.3%
Net Sales. For the nine months ended October 31, 1995 and July
31, 1996, the South China Brewery had net sales of $63,707 and $355,707,
respectively. The growth in sales resulted from an increased awareness of and
acceptance by consumers of the South China Brewery's brands Dragon's Back India
Pale Ale and Crooked Island Ale, the first micro-brewed beers produced and sold
in Hong Kong. In addition, in September 1995, the South China Brewery entered
into contracts for the brewing and supply of custom brewed ales for consumption
in two Hong Kong pubs. Both of these contracts expired in September 1996. The
Company has renewed one of the contracts and is in the process of negotiating
renewal of the second contract. Custom brew sales have accounted for 70% of
all of the South China Brewery's sales for the nine months ending July 31, 1996
though the Company expects that sales of the South China Brewery's brands will
continue to increase relative to its custom brew sales.
The South China Brewery had net sales of $110,954 for the three
months ended July 31, 1996. Third quarter sales declined from levels experienced
in the first two quarters due to the temporary closure for renovation of one of
the South China Brewery's Hong Kong pub customers and to seasonally lower
volumes during the Hong Kong summer months, as well as other factors.
Cost of Sales. The South China Brewery's cost of sales for the
nine months ended October 31, 1995 and July 31, 1996 was $38,960 and $74,747,
respectively. The improvement in gross profit percentage was due to the lower
cost of kegged products relative to bottled products, as the South China Brewery
has increased sales of kegged products during the nine months ended July 31,
1996, and to more efficient use of brewery equipment.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the nine months ended October 31, 1995 and July
31, 1996 were $261,653 and $361,026, respectively. This increase in expenses was
in part due to increased salary expense which increased during the nine months
ended July 31, 1996 over the nine months ended October 31, 1995 by $49,382 due
to the fact that the South China Brewery did not commence operations until June
1995 and the hiring of an office manager and an additional sales representative.
The Company's selling, general and administrative expenses, including salary,
marketing and other operational expenses, will increase as the proposed
expansion breweries are established.
Results for the three months ended July 31, 1996, reflect
additional advertising and marketing costs relating mainly to the promotion
of a new brand, Stonecutter's Lager.
-12-
Net Interest Expense. Net interest expense for the nine months
ended October 31, 1995 and July 31, 1996 was $20,093 and $36,086, respectively.
The Company's net interest expense should decrease in the future as
approximately $637,000 of the proceeds of the Offering was utilized to retire
certain notes issued by the Company.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1996, the Company had total current assets of
$195,783, consisting of $57,433 in cash on hand, $82,720 in accounts receivable,
net, $31,268 in inventories, and $24,362 in other current assets. Substantially
all of the South China Brewery's sales are made to a small number of customers
on an open account basis and generally no collateral is required. At July 31,
1996, the South China Brewery's five largest accounts receivable accounted for
81% of its total accounts receivable as of such date.
At July 31, 1996, the Company had total liabilities of
$1,340,801, of which $1,319,578 were current liabilities, and a working capital
deficit of $1,123,795.
At July 31, 1996, the South China Brewery had fixed capital lease
obligations of $34,081 relating to its delivery vehicles: $12,858 due during the
year ended July 31, 1997, $12,858 due during the year ended July 31, 1998 and
$8,365 due during the year ended July 31, 1999. At July 31, 1996, the South
China Brewery had $13,865 in operating lease commitments over the two year
period ending July 31, 1998 relating to its warehouse and brewery facility.
During May 1996, the predecessor of the Company issued $370,000
principal of convertible notes bearing an interest rate of 12% per annum to
certain investors in Hong Kong and Singapore and maturing September 1, 1997 (the
"Bridge Notes"). Pursuant to the terms of the Bridge Notes, the holders of
$250,000 principal amount of these Notes converted the principal amount and
accrued interest on such notes into an aggregate of 94,255 shares of Common
Stock, par value $0.01 per share (the "Common Stock") upon the consummation of
the Offering. The holder of the remaining $120,000 principal amount of Bridge
Notes was repaid the entire principal amount plus interest of $5,193.42 and
received 22,621 shares of Common Stock. The Bridge Note holders received an
aggregate of 116,876 warrants entitling them to purchase, in the aggregate, up
to 116,876 shares of Common Stock, commencing March 11, 1997 and terminating
March 11, 2002, at $8.25 per share.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the first annual general meeting of the Company on June 5,
1996, the following resolutions were adopted by the affirmative vote of
1,200,000 shares, par value $0.01 per share, of the Company, such shares
constituting all of the issued and outstanding shares of capital stock of the
Company on such date:
(i) that the Bye-Laws, in the form filed hereto as Exhibit 3.2,
were approved;
-13-
(ii) that the number of directors of the Company be not less than
two nor more than ten;
(iii) that the following directors be elected until the second
annual general meeting of the Company or until their respective
successors are elected or appointed:
Pierre William Harriston Bordeaux
Federico G. Cabo Alvarez
David K. Haines
Norman H. Brown, Jr.
John F. Beaudette
Wyndam H. Carver
Joseph Heid
John D. Campbell
Tonesan Amissah-Furbert;
(iv) that the Board of Directors be authorized to fill any
vacancy on the Board as and when it deems fit;
(v) that Arthur Andersen & Co. be appointed auditors of the
Company to hold office until the close of the second annual
general meeting;
(vi) that the 1,200,000 shares, par value $0.01 per share,
originally issued at the provisional directors' meeting held on
June 5, 1996 be classified as shares of common stock; and
(vii) that the authorized share capital of the Company be
increased from $12,000,000 to $ 105,000,000 by the creation of
8,800,000 shares of Common Stock, and 500,000 shares of preferred
stock, par value $0.01 per share.
(b) On July 18, 1996, the sole stockholder of the Company, Mr.
Bordeaux, executed a written consent approving the Company's 1996 Stock Option
Plan in the form filed hereto as Exhibit 10.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 - Plan and Agreement of Amalgamation between Craft and the
Company.*
3.1 - Memorandum of Amalgamation of the Company (incorporated by
reference to Exhibit 3.1 of the Company's registration
statement on Form S-1 (file no. 333-6033) (the "Registration
Statement").
-14-
3.2 - Bye-Laws of the Company (incorporated by reference to Exhibit
3.2 of the Registration Statement).
4.1 - Specimen common stock certificate (incorporated by reference to
Exhibit 4.1 of the Registration Statement).
4.2 - Warrant Agreement between the Company, National Securities
Corporation ("National Securities") and the Bank of New York
(including form of Redeemable Common Stock Purchase Warrant).*
4.3 - Representative's Warrant Agreement between the Company and
National Securities (including form of Representative's
Warrant) (incorporated by reference to Exhibit 4.3 of the
Registration Statement).*
10.1 - 1996 Stock Option Plan of the Company (incorporated by
reference to Exhibit 10.1 of the Registration Statement).
10.2 - Agreement of Lease between Ping Ping Investment Company Limited
("Ping Ping") and South China dated as of December 12, 1994
(incorporated by reference to Exhibit 10.2 of the Registration
Statement).
10.3 - Agreement of Lease between Ping Ping and South China dated as
of May 1, 1995 (incorporated by reference to Exhibit 10.3 of
the Registration Statement).
10.4 - Management Agreement and Performance Guaranty between South
China and Lunar Holdings Limited dated as of April 1, 1995
(incorporated by reference to Exhibit 10.4 of the Registration
Statement).
10.5 - Distributors Limited Brewing Contract between South China and
DaBeers Distributors Limited ("DaBeers") dated as of September
23, 1995 (incorporated by reference to Exhibit 10.5 of the
Registration Statement).
10.6 - Brewing Agreement between South China and Delaney's (Wanchai)
Limited dated as of September 20, 1995 (incorporated by
reference to Exhibit 10.6 of the Registration Statement).
10.7 - Employment Agreement, dated as of June 14, 1996, between the
Company and James L. Ake.*
10.8 - Employment Agreement, dated as of April 27, 1995, between
Edward Cruise Miller and South China (incorporated by reference
to Exhibit 10.12 of the Registration Statement).
10.9 - Ratification and Exchange Agreement, dated May 31, 1996, by and
among South China, SCBC, Craft and each of the persons listed
on the signature page hereto.*
-15-
10.10 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Mark Youds.*
10.11 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and John Arvanitis.*
10.12 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Mark Gallagher.*
10.13 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Harry Allen Friedberg.*
10.14 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Micro Brew Systems Co., Ltd.*
10.15 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Noah Schaffer.*
10.16 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Long-Term Partners Ltd.*
10.17 - Forms of Bridge Financing Convertible Notes (including forms of
Bridge Financing Warrants attached thereto) (incorporated by
reference to Exhibit 10.11 of the Registration Statement).
10.18 - Novation Agreement, dated as of October 3, 1996, among SCBC,
DaBeer and Iconic America Limited ("Iconic").*
10.19 - Brewing Agreement, dated as of October 3, 1996, between SCBC
and Iconic.*
27.0 - Financial Data Schedule.*
*filed herewith
(b) Reports on Form 8-K:
None
STATEMENT OF DIFFERENCE
Section mark is expressed as.... 'ss'
-16-
SIGNATURE
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.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
Date: October 24, 1996 /s/ James L. Ake
----------------
James L. Ake
Executive Vice President,
Chief Operating Officer
and Secretary (principal
executive and financial officer)
-17-