Related-Party Transactions

9 Months Ended

Sep. 30, 2013

Related Party Transactions [Abstract]

Related-Party Transactions

8. Related-Party Transactions

We have entered into several agreements with affiliated and related entities, including, but not limited to, a Market Development Agreement, a Distribution Agreement, and a Brewing License Agreement between MBC and KBEL; a Distribution Agreement between UBIUK and KBEL; a Trademark Licensing Agreement between MBC and Kingfisher of America, Inc.; and a License Agreement between UBIUK and UBHL. During the period covered by this report, KBEL was a party to a brewing agreement and a loan agreement with Shepherd Neame Limited (“Shepherd Neame”).

As previously reported, on March 11, 2013, UBIUK entered into an amendment (the “UBIUK License Amendment”) of that certain License Agreement between UBIUK and United Breweries Limited, an Indian corporation (“UB”), dated as of October 8, 1998, as amended (the “UBIUK License”). The UBIUK License grants UBIUK the exclusive license to use certain trademarks and do all things necessary to manufacture, package, market, distribute and sell Kingfisher beer in a defined territory. Also as previously reported, on March 11, 2013, UBIUK entered into an amendment (the “KBEL Amendment”) of that certain Distribution Agreement between UBIUK and KBEL dated October 9, 1998, as amended (the “KBEL License”). The KBEL License grants KBEL exclusive distribution rights with respect to Kingfisher beer, and sub-licenses to KBEL rights granted to UBIUK pursuant to the UBIUK License, in each case, within a defined territory. The KBEL Amendment, together with the UBIUK License Amendment, are referred to in this report as the “Subsidiary Amendments”. Also, as previously disclosed, the Chairman of the Company’s board of directors, Dr. Vijay Mallya, is also the Chairman of UB.

Both Subsidiary Amendments became effective October 9, 2013. The Subsidiary Amendments (i) acknowledge that the brewing agreement among UBIUK, KBEL and Shepherd Neame are replaced with a new contract brewing agreement between KBEL and Heineken; (ii) authorize KBEL to enter into loan and sub-license agreements with Heineken; (iii) expand the territory covered by the UBIUK License and the KBEL License to cover Canada, additional countries in eastern Europe, and the Caribbean Islands; (iv) delete the United States from the list of territories covered by the UBIUK License and the KBEL License; and (v) extend the term of the UBIUK License and the KBEL License until October 9, 2018.

Also as previously reported, on March 11, 2013, KBEL entered into an amendment (the “Company Amendment”) of that certain Brewing License Agreement between KBEL and the Company dated October 26, 2001 as amended (the “Company License”). The Company License currently grants us rights to distribute Kingfisher beer in the United States. Effective October 9, 2013, the Company Amendment changes the territory covered by the Company License from the United States to Canada and the Caribbean Islands. The Company has the right to use the Kingfisher mark and the name “Kingfisher Brewing Company” in connection with the brewing and distribution of the assorted beers in the US pursuant to an agreement with Kingfisher America, Inc.

The following tables reflect the value of transactions with Shepherd Neame and UBA during the nine months ended September 30, 2013 and 2012 and the balances outstanding as of September 30, 2013 and December 31, 2012.

TRANSACTIONS	September 30, 2013		September 30, 2012
Sales to Shepherd Neame	$	2,286,700	$	2,846,100
Purchases from Shepherd Neame	$	10,827,700	$	11,953,000
Expense reimbursement to Shepherd Neame	$	788,000	$	797,500
Interest expense related to UBA convertible notes	$	68,000	$	68,300

ACCOUNT BALANCES	September 30, 2013		Dec 31, 2012
Accounts payable to Shepherd Neame	$	2,704,800	$	3,894,900
Accounts receivable from Shepherd Neame	$	158,500	$	356,300