CBR Brewing Company, Inc.

The Company is engaged in the business of brewing, distributing and marketing Pabst Blue Ribbon beer and other local beer in China. As of December 31, 2002, the Company owned effective interests of 60%, 24% and 33% in three brewing facilities mainly producing Pabst Blue Ribbon beer in China, all of which are managed by the Company. The Company is also presently responsible for the marketing and sale in China of Pabst Blue Ribbon beer produced by the three brewing facilities. In 2000, the Company owned an effective interest of 9% in a fourth brewing facility. However during April 2001, as a result of continuing operating losses and adverse market conditions, the Company conducted discussions with its partner, resulting in an agreement to withdraw from the fourth brewing facility. In 2000, the Company, through Holdings, also owned a 51% effective interest in a fifth brewing facility producing local brand beer, but the production and operation of this brewery was formally terminated in December 2000. The Company wrote off its investment in this brewery during 2001.

China is currently ranked as the second largest beer producer and consumer in the world behind the United States. The Company produces Pabst Blue Ribbon beer in China under a sub-license expiring on November 7, 2003. The majority of the beer production is concentrated in two breweries located in the City of Zhaoqing, which is approximately 100 miles from Hong Kong in the Guangdong Province of China. Pabst US provides quality control assistance to the Company on a regular basis. The Company markets Pabst Blue Ribbon beer in all major provinces in China. The Company currently maintains offices in Beverly Hills, California, Hong Kong and the City of Zhaoqing.

High Worth JV holds certain licensing rights for Pabst Blue Ribbon beer and also directly owns 100% of a Pabst Blue Ribbon brewing complex ("Zhaoqing Brewery"), and, through a subsidiary, a 40% interest in Zhaoqing Blue Ribbon Brewery Noble Ltd., a Sino-foreign joint venture ("Noble Brewery"). Noble Brewery owns a second Pabst Blue Ribbon brewing complex that is also managed by Zhaoqing Brewery. A subsidiary of Noble China, Inc., a Canadian public company, owns the other 60% interest in Noble Brewery.

High Worth JV also indirectly owns a 70% interest in Zhaoqing Blue Ribbon Beer Marketing Company Limited, a PRC company (the "Marketing Company"), which conducts the sales, advertising and promotional efforts for the Company's production of Pabst Blue Ribbon beer in China, resulting in the Company owning a 42% net interest in the Marketing Company. The remaining 30% interest in the Marketing Company is directly owned by Guangdong Blue Ribbon. Through its ownership in High Worth JV, Guangdong Blue Ribbon also has a 28% indirect interest in the Marketing Company.

In January 1998, the Company, through High Worth JV, established a joint venture company, Zao Yang Blue Ribbon High Worth Brewery Limited ("Zao Yang High Worth Brewery"), which is located in Hubei Province, is the third Pabst Blue Ribbon brewing complex in China and is managed by Zhaoqing Brewery. High Worth JV owns a 55% interest, equivalent to an effective interest of 33%. Zao Yang Brewery, an unaffiliated company in Hubei Province, owns the other 45% interest in Zao Yang High Worth Brewery.

In November 2002, High Worth JV and Zao Yang Brewery agreed to contribute additional capital of RMB 24,444,500 to Zao Yang High Worth Brewery in proportion to their respective equity interests of 55% and 45%. High Worth JV contributed RMB13,444,500 through a deduction from its intercompany balance due from Zao Yang High Worth Brewery and Zao Yang Brewery made a cash contribution of RMB 11,000,000 effective December 31, 2002.

Effective December 31, 1997, the Company, through High Worth JV, entered into a Settlement Agreement with Guangdong Blue Ribbon to acquire a 51% interest in Sichuan Brewery, equivalent to an effective interest of 31%. Prior to the completion of the 51% interest acquisition, pursuant to an Equity Transfer Agreement signed on January 19, 1999, High Worth JV received a 15% consideration-free equity interest in Sichuan Brewery, equivalent to an effective interest of 9%.

On June 5, 1999, a formal Joint Venture Agreement was signed among Le Shan City E Mei Brewery, High Worth JV and Wai Shun Investment Limited, an unaffiliated Hong Kong company, to form Sichuan Blue Ribbon Brewery High Worth Ltd. ("Sichuan High Worth Brewery") and the business of Sichuan Brewery was transferred to Sichuan High Worth Brewery. The total registered and paid-up capital of Sichuan High Worth Brewery was RMB 51,221,258. High Worth JV's 15% equity interest is consideration-free but is entitled to share in the profits of Sichuan High Worth Brewery.

During April 2001, as a result of continuing operating losses and adverse market conditions, the Company conducted discussions with its partners in Sichuan High Worth Brewery, resulting in an agreement to withdraw from Sichuan High Worth Brewery. The Company agreed to give up its effective interest of 9% in Sichuan High Worth Brewery, and was released from any liability for the brewery's accumulated losses. As part of this agreement, Sichuan High Worth Brewery's right to produce Pabst Blue Ribbon beer was terminated. This transaction did not have any impact on the Company's results of operations or financial position, since the sales of Sichuan High Worth Brewery in the Sichuan region have been reallocated between Zhaoqing Brewery and Noble Brewery and the interest in Sichuan High Worth Brewery was originally acquired for no consideration.

On October 18, 1999, Holdings, through its wholly-owned subsidiary, March International Group Limited ("March International"), signed a formal Joint Venture Agreement with Jilin Province Jiutai City Brewery and Jilin Province Chuang Xiang Zhi Yie Ltd., both of which are unaffiliated PRC companies, to form Jilin Lianli (CBR) Brewing Company Ltd. ("Jilin Lianli Brewery"). Jilin Province Jiutai City Brewery and Jilin Province Chuang Xiang Zhi Yie Ltd. received equity interests in Jilin Lianli Brewery of 40% and 9%, respectively. Subsequent to the improvement of the brewing equipment and the installation of a new packing line, Jilin Lianli Brewery commenced operations in May 2000. However, due to weak market response and the inability of the Chinese local partners to honor their portion of the working capital commitment, the production and operation of Jilin Lianli Brewery was formally terminated in December 2000. As of December 31, 2001, the Company has written off a total of RMB 13,788,500 with respect to this investment. On July 9, 2002, March International was formally dissolved.

Noble China Inc. is a Canadian public company formerly listed on the Toronto Stock Exchange which is the 60% shareholder of Noble Brewery. Noble China Inc. has publicly reported that in May 1999 it entered into a license agreement with Pabst US granting it the right to utilize the Pabst Blue Ribbon trademarks in connection with the production, promotion, distribution and sale of beer in China for 30 years commencing in November 2003. In consideration for the license agreement, Noble China Inc. reported that it had paid Pabst US US$5,000,000 for the right to use the Pabst Blue Ribbon trademarks and agreed to pay royalties based on gross sales. Noble China Inc. has also recently 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.

As of December 31, 2002, the Company has not yet obtained a renewal of the Pabst Blue Ribbon s ub-license agreement. The inability of the Company to obtain a sub-license from Noble China Inc. or to renew the Company's sub-license or enter into some other form of strategic relationship under acceptable terms and conditions to allow the Company to continue to produce and distribute Pabst Blue Ribbon beer in China would have a material adverse effect on the Company's future results of operations, financial position and cash flows.

During December 2000, the Company and Noble China Inc. signed a memorandum pursuant to which a management committee was established to evaluate the potential 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. 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. However, Zhaoqing Brewery, Noble Brewery and the Marketing Company each remain as legally distinct entities. The management committee is also responsible for commencing a study to evaluate the formation of a new unified company.

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. Restructuring payments to these employees totaled RMB 20,396,494 by Zhaoqing Brewery, RMB 8,729,830 by Noble Brewery and RMB 1,912,742 by the Marketing Company. The Company recorded restructuring costs of RMB 22,309,236 for the year ended December 31, 2001.

During the year ended December 31, 2001, the Company's controlling shareholder, Shenzhen Huaqiang Holdings Limited ("Huaqiang"), announced that it had acquired a 19.6% equity interest in Noble China Inc. Huaqiang is a company controlled by the Province of Guangdong.

Effective January 10, 2002, Zhaoqing City Lan Wei Alcoholic Beverage (Holdings) Limited ("Lan Wei") acquired from Huaqiang all of its equity interest in the Company. Combined with Lan Wei's prior common stock holdings in the Company, Lan Wei has an approximately 64.3% equity interest in the Company. The transaction has approved by the relevant PRC governmental authorities in April 2002. Lan Wei is a company controlled by the City of Zhaoqing.

In February 2002, Lan Wei acquired common shares representing an additional approximately 7.2% equity interest in the Company from a third party in a private transaction. As a result of this transaction, management and the board of directors of the Company were changed on January 22, 2002. As part of the previously described transaction, Lan Wei also acquired Huaqiang's 19.6% equity interest in Noble China Inc.

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 RMB35,700,000, 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 RMB53,100,000. Noble China Inc., through its wholly-owned subsidiary, Linchpin, owns a 60% interest in Noble Brewery.

The court order specified that a total of RMB53,100,000 was to be retained by Noble Brewery pending resolution of the litigation. Accordingly, in addition to the RMB35,700,000 of funds frozen, Noble Brewery will also be obligated to withhold potential dividend distributions or equity interests due to Linchpin of RMB17,400,000. Noble Brewery has engaged legal.counsel in the PRC to file a challenge to the court order, but there can be no assurances that this effort will be successful.

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 current operating requirements.

In May 2002, Noble Brewery declared a dividend distribution of RMB75,511,040, of which RMB30,204,416 has been paid to High Worth Brewery, while the dividend payable to Linchpin amounting to RMB45,306,624 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 RMB20,000,000 plus legal costs of RMB541,210, and interest from June 21, 2001 within one month of the judgment. Noble China Inc. announced that it would appeal the Shandong Court's decision to the Supreme Court of the PRC.

On September 23, 2002, the Shandong Court issued a new preservation order to those banks where Noble Brewery kept its previously frozen funds, requiring them to 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 another six months to September 23, 2003.

On July 22, 2002, Noble China Inc. held its Annual and General Meeting of Shareholders. A Special Meeting of Shareholders and a Meeting of Debenture holders were also held on July 22, 2002 to seek approval for certain amendments to the 9% Convertible Subordinated Debentures and to the Trust Indenture governing the Debentures. Noble China Inc. has CN$30,000,000 of outstanding Debentures. As a result of ongoing discussions between the major Debenture holders and the City of Zhaoqing, which is indirectly a major shareholder of Noble China Inc., regarding a possible restructuring of Noble China Inc., the amendments to the Debentures and to the Trust Indenture were not presented for a vote at the Special Meeting of Shareholders and at the Meeting of Debenture holders; both such meetings were instead adjourned to times and places to be determined. The Board of Directors of Noble China Inc. was re-elected and confirmed its short-term assistance to facilitate the negotiations between the major shareholder of Noble China Inc. and the major Debenture holders. The Directors of Noble China Inc. indicated that if the major shareholder and major Debenture holders could not reach a resolution on an appropriate restructuring plan that the Board of Directors could support in the interest of all shareholders and Debenture holders within 60 days, the Board of Directors would resign.

On September 3, 2002, Noble China Inc.'s report for the three months ended June 30, 2002 disclosed that although the major shareholder and the major Debenture holders were continuing their discussions, no meaningful process had been noted and the Directors planned to resign on September 20, 2002.

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, were elected to the Board of Directors.

On February 13, 2003, Noble China Inc. announced that it had requested and had been granted permission to voluntarily delist its common shares from the Toronto Stock Exchange effective February 14, 2003.

Discussions between holders of a majority of the Debentures and representatives of the City of Zhaoqing regarding a reorganization of Noble China, Inc. resulted in a preliminary agreement in principle with respect to settlement in full of the outstanding Debentures. Discussions between representatives of the City of Zhaoqing and Pabst Brewing Company regarding a reorganization of Noble China, Inc. and a restructuring of the master license agreement that becomes effective on November 7, 2003 resulted in the execution of a non-binding term sheet in March 2003. These agreements are both conditional on Noble China, Inc. being able to implement a formal reorganization of its debt and equity securities. The successful reorganization of Noble China, Inc. is subject to the preparation and execution of definitive agreements and a plan of reorganization, compliance with all applicable laws and regulations, and the funding, approval and consummation of a court-approved reorganization plan of Noble China, Inc. Accordingly, as a result of the uncertainty with respect to these matters, there can be no assurances that Noble China, Inc. will be successfully reorganized or that the Company and Noble Brewery will be able to retain the right to produce and distribute Pabst Blue Ribbon beer in China subsequent to November 7, 2003.

As of December 31, 2002, the Company and Noble Brewery have not obtained a renewal of their respective Pabst Blue Ribbon sub-license agreements, which expire on November 7, 2003. The inability of the Company or Noble Brewery to obtain or renew a sub-license from Noble China Inc. or enter into some other form of strategic relationship under acceptable terms and conditions to allow the Company and Noble Brewery to continue to produce and distribute Pabst Blue Ribbon beer in China would have a material adverse effect on the Company's future results of operations, financial position and cash flows.