Liquidity and Management Plans	6 Months Ended
Jun. 30, 2013
Liquidity And Management Plans
Liquidity and Management Plans	2. Liquidity and Management Plans Cole Taylor Facility. On June 23, 2011, MBC and Releta entered into a Credit and Security Agreement (the “Agreement”) with Cole Taylor Bank, an Illinois banking corporation (“Cole Taylor”). The Agreement provides a credit facility with a maturity date of June 23, 2016 of up to $10,000,000 consisting of a $4,119,000 revolving facility, a $1,934,000 machinery and equipment term loan, a $2,947,000 real estate term loan and a $1,000,000 capital expenditure line of credit. A significant portion of the proceeds received under the Agreement were used to repay credit facilities provided by Marquette Business Credit, Inc. and Grand Pacific Financing Corporation. Convertible promissory notes issued to United Breweries of America, Inc. (“UBA”), one of the Company’s principal shareholders, are subordinated to the Cole Taylor facility. On March 29, 2013, MBC, Releta, and Cole Taylor entered into a First Amendment (the “Amendment”) to the Agreement to clarify the method by which the fixed charge coverage ratio is calculated. The Amendment also provided that to the extent MBC and Releta may have been in breach of the covenants related to the fixed charge coverage ratio for certain periods before December 31, 2012, such breach is waived and no event of default has occurred by reason of such breach. The Agreement requires MBC and Releta to maintain certain financial covenants, including a minimum fixed charge coverage ratio of 1.05 to 1.00 as of the end of each month for the trailing twelve month period. As previously reported, on April 29, 2013, we determined that the fixed charge coverage ratio for the trailing twelve month period ended March 31, 2013 fell short and was 0.90 to 1.00. The Agreement provides that the failure to observe any financial covenant will constitute an event of default, causing all of our obligations under the Agreement to immediately and automatically become due and payable, without notice. The event of default is deemed continuing until waived in writing by Cole Taylor. In a letter received from Cole Taylor on May 8, 2013 (the “Letter”), Cole Taylor acknowledged the Company’s shortfall as of March 31, 2013, but stated that Cole Taylor has not exercised any default rights or remedies under the Agreement as a result of such default. The Letter further provides that Cole Taylor will continue to monitor the situation and the Company’s performance, and reserves all rights and remedies available to it in connection with such default. The fixed charge coverage ratio for the trailing twelve month period had continued to fall, and as of June 30, 2013, was 0.28 to 1.00. Cole Taylor is aware that we are not in compliance with the required ratio. Royal Bank of Scotland Facility. On April 26, 2005, Royal Bank of Scotland Commercial Services Limited (“RBS”) provided KBEL with an approximately $2.8 million (£1,750,000) maximum revolving line of credit with an advance rate based on 80% of KBEL’s qualified accounts receivable. This facility has a minimum maturity of twelve months, but is automatically extended unless terminated by either party upon six months’ written notice. Heineken Facility. As previously reported, on April 18, 2013, KBEL entered into a Loan Agreement pursuant to which Heineken UK Limited (“Heineken”) agreed to provide KBEL with a secured term loan facility of £1,000,000 to be made available, subject to the fulfillment of certain conditions precedent, on October 9, 2013 and to be repaid in full by October 9, 2016. The Loan Agreement with Heineken is described under the section captioned “Description Of Our Indebtedness” below. Additional Debt. We have several loans, lines of credit, other credit facilities and lease agreements which are currently outstanding (collectively, “Indebtedness”). We currently make timely payments of principal and interest relating to the Indebtedness as they fall due and anticipate that we will continue to make such timely payments in the immediate future. However, if we fail to maintain any of the financial covenants under the various agreements governing Indebtedness (such as the default under the Agreement described above), fail to make timely payments of amounts due under the Indebtedness, or commit any other breach resulting in an event of default under the agreements governing Indebtedness, such events of default (including cross-defaults) could have a material adverse effect on our financial condition. If our existing debt were accelerated and terminated, we would need to obtain replacement financing, the lack of which would have a material adverse effect on our financial condition and ability to continue operations. In addition, actions taken by secured parties against the Company’s assets which have been pledged as collateral could have a material adverse effect on our financial condition and operations. At June 30, 2013, we had cash and cash equivalents of $96,900, an accumulated deficit of $14,254,000, and a working capital deficit of $7,048,800 due to losses incurred and reclassification of debts owing to Cole Taylor as a result of the event of default under the Agreement described above. UBHL Support. On March 22, 2013, United Breweries (Holdings) Limited (“UBHL”), MBC’s indirect majority shareholder, issued a letter of financial support on behalf of KBEL (the “Letter of Support”) to KBEL’s accountants, to confirm that UBHL had agreed to provide funding on an as needed basis to KBEL to ensure that KBEL is able to meet its financial obligations as and when they fall due. The Letter of Support does not specify either the terms of UBHL’s support, or a maximum dollar limit. UBHL’s financial support to KBEL is contingent upon compliance with any applicable exchange control requirements and other applicable laws and regulations relating to the transfer of funds from India to the UK. The Letter of Support was issued for a twelve month minimum period, but, if necessary, Management intends to seek UBHL’s consent to extend the stated support. UBHL controls the Company’s two largest shareholders, UBA and Inversiones Mirabel S.A., and as such, UBHL is the Company’s indirect majority shareholder. The Chairman of the Company’s Board of Directors, Dr. Vijay Mallya, is also the chairman of the board of directors of UBHL. Summary. Management has taken several actions to enable us to meet our working capital needs through June 30, 2014, including reducing discretionary expenditures, expanding business in new territories, and securing additional brewing contracts in an effort to utilize a portion of excess production capacity. We may also seek additional capital infusions to support our operations. If it becomes necessary to seek UBHL’s financial assistance under the Letter of Support and UBHL does not fulfill its commitment to KBEL, it may result in a material adverse effect on our financial position and on our ability to continue operations. In addition, our lenders may seek to satisfy any outstanding obligations through recourse against the applicable pledged collateral which may include our real property and fixed and current assets. The loss of any material pledged asset would likely have a material adverse effect on our financial position and results of operations.

Liquidity and Management Plans

6 Months Ended

Jun. 30, 2013

2. Liquidity and Management Plans

Cole Taylor Facility. On June 23, 2011, MBC and Releta entered into a Credit and Security Agreement (the “Agreement”) with Cole Taylor Bank, an Illinois banking corporation (“Cole Taylor”). The Agreement provides a credit facility with a maturity date of June 23, 2016 of up to $10,000,000 consisting of a $4,119,000 revolving facility, a $1,934,000 machinery and equipment term loan, a $2,947,000 real estate term loan and a $1,000,000 capital expenditure line of credit. A significant portion of the proceeds received under the Agreement were used to repay credit facilities provided by Marquette Business Credit, Inc. and Grand Pacific Financing Corporation. Convertible promissory notes issued to United Breweries of America, Inc. (“UBA”), one of the Company’s principal shareholders, are subordinated to the Cole Taylor facility.

On March 29, 2013, MBC, Releta, and Cole Taylor entered into a First Amendment (the “Amendment”) to the Agreement to clarify the method by which the fixed charge coverage ratio is calculated. The Amendment also provided that to the extent MBC and Releta may have been in breach of the covenants related to the fixed charge coverage ratio for certain periods before December 31, 2012, such breach is waived and no event of default has occurred by reason of such breach.

The Agreement requires MBC and Releta to maintain certain financial covenants, including a minimum fixed charge coverage ratio of 1.05 to 1.00 as of the end of each month for the trailing twelve month period. As previously reported, on April 29, 2013, we determined that the fixed charge coverage ratio for the trailing twelve month period ended March 31, 2013 fell short and was 0.90 to 1.00. The Agreement provides that the failure to observe any financial covenant will constitute an event of default, causing all of our obligations under the Agreement to immediately and automatically become due and payable, without notice. The event of default is deemed continuing until waived in writing by Cole Taylor. In a letter received from Cole Taylor on May 8, 2013 (the “Letter”), Cole Taylor acknowledged the Company’s shortfall as of March 31, 2013, but stated that Cole Taylor has not exercised any default rights or remedies under the Agreement as a result of such default. The Letter further provides that Cole Taylor will continue to monitor the situation and the Company’s performance, and reserves all rights and remedies available to it in connection with such default. The fixed charge coverage ratio for the trailing twelve month period had continued to fall, and as of June 30, 2013, was 0.28 to 1.00. Cole Taylor is aware that we are not in compliance with the required ratio.

Royal Bank of Scotland Facility. On April 26, 2005, Royal Bank of Scotland Commercial Services Limited (“RBS”) provided KBEL with an approximately $2.8 million (£1,750,000) maximum revolving line of credit with an advance rate based on 80% of KBEL’s qualified accounts receivable. This facility has a minimum maturity of twelve months, but is automatically extended unless terminated by either party upon six months’ written notice.

Heineken Facility. As previously reported, on April 18, 2013, KBEL entered into a Loan Agreement pursuant to which Heineken UK Limited (“Heineken”) agreed to provide KBEL with a secured term loan facility of £1,000,000 to be made available, subject to the fulfillment of certain conditions precedent, on October 9, 2013 and to be repaid in full by October 9, 2016. The Loan Agreement with Heineken is described under the section captioned “Description Of Our Indebtedness” below.

Additional Debt. We have several loans, lines of credit, other credit facilities and lease agreements which are currently outstanding (collectively, “Indebtedness”). We currently make timely payments of principal and interest relating to the Indebtedness as they fall due and anticipate that we will continue to make such timely payments in the immediate future. However, if we fail to maintain any of the financial covenants under the various agreements governing Indebtedness (such as the default under the Agreement described above), fail to make timely payments of amounts due under the Indebtedness, or commit any other breach resulting in an event of default under the agreements governing Indebtedness, such events of default (including cross-defaults) could have a material adverse effect on our financial condition. If our existing debt were accelerated and terminated, we would need to obtain replacement financing, the lack of which would have a material adverse effect on our financial condition and ability to continue operations. In addition, actions taken by secured parties against the Company’s assets which have been pledged as collateral could have a material adverse effect on our financial condition and operations.

At June 30, 2013, we had cash and cash equivalents of $96,900, an accumulated deficit of $14,254,000, and a working capital deficit of $7,048,800 due to losses incurred and reclassification of debts owing to Cole Taylor as a result of the event of default under the Agreement described above.

UBHL Support. On March 22, 2013, United Breweries (Holdings) Limited (“UBHL”), MBC’s indirect majority shareholder, issued a letter of financial support on behalf of KBEL (the “Letter of Support”) to KBEL’s accountants, to confirm that UBHL had agreed to provide funding on an as needed basis to KBEL to ensure that KBEL is able to meet its financial obligations as and when they fall due. The Letter of Support does not specify either the terms of UBHL’s support, or a maximum dollar limit. UBHL’s financial support to KBEL is contingent upon compliance with any applicable exchange control requirements and other applicable laws and regulations relating to the transfer of funds from India to the UK. The Letter of Support was issued for a twelve month minimum period, but, if necessary, Management intends to seek UBHL’s consent to extend the stated support. UBHL controls the Company’s two largest shareholders, UBA and Inversiones Mirabel S.A., and as such, UBHL is the Company’s indirect majority shareholder. The Chairman of the Company’s Board of Directors, Dr. Vijay Mallya, is also the chairman of the board of directors of UBHL.

Summary. Management has taken several actions to enable us to meet our working capital needs through June 30, 2014, including reducing discretionary expenditures, expanding business in new territories, and securing additional brewing contracts in an effort to utilize a portion of excess production capacity. We may also seek additional capital infusions to support our operations.

If it becomes necessary to seek UBHL’s financial assistance under the Letter of Support and UBHL does not fulfill its commitment to KBEL, it may result in a material adverse effect on our financial position and on our ability to continue operations. In addition, our lenders may seek to satisfy any outstanding obligations through recourse against the applicable pledged collateral which may include our real property and fixed and current assets. The loss of any material pledged asset would likely have a material adverse effect on our financial position and results of operations.