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Anheuser-Busch, LLC is our ongoing partner, and the current distribution network would be challenging to replace A-B's distribution network handles practically all of our products for sale. Should the A-B Distributor Agreement be terminated, we would have to establish and maintain direct contracts with the current wholesaler network or negotiate agreements with

replacement wholesalers individually, so improving our credit evaluation, billing and accounts receivable systems. Such a project would need a lot of time and work to finish, during which our items might not be distributed as intended The sales of our items depend on our wholesalers. While most of our items are offered to retailers via A-B, we still mostly rely on

Wholesalers most of which are independent

for their sale. Independent wholesalers make their own business decisions that might not be in line with our interests and there is no guarantee that distributors' sales initiatives will be successful in producing sales of our products. Any disturbance in the capacity of the wholesalers, A-B, or us to distribute products efficiently due to any significant operational

problems, such wide-spread labor union strikes or the loss of a major wholesaler as a customer, could hinder our capacity to get our products to retailers and could have a peers The Exchange Agreement calls for us to get A-B's permission before making specific investments and engaging in particular activity. For instance, we have to get A-B's permission

before acquiring another brewer if the purchase price is more than $30 million or buy a non-brewing company if the buying price is more than $2 million. Should A-B reject strategic or financial recommendations made by our management, A-B could refuse to provide permission to participate in events or make investments deemed to be best for our shareholders A-B has

A strong voice on board of directors

and shareholder decisions board and shareholder discussions. Running breweCalifornia and the Pacific Northwest account for our focused sales Negative influence on our activities. Under the A-B Distributor Agreement, the loss of Andrew Thomas as our chief executive officer and the inability to locate a substitute fit enough also would be termination events

Ournsured with regard to staff medical bills. up than usual medical expenditure claims in 2014 drove our general, administrative, and selling expenses up as well. Should this tendency persist, our operating results could suffer Any one of our supply chain operations failing could compromise our capacity to run our company Our results are much dependant on our

capacity to precisely forecast and implement over the whole supply chain, including sales forecasting, raw material ordering, brewing and distributig intricacy of our company. We cannot promise that we will properly control such complexity without running across operational inefficiencies, planning mistakes, or other problems that can negatively impact our

Company As part ofour supply chain

we electronically interact with third parties including A-B and our distributors. Any faults or disruptions in our technological interfaces could compromise our running operations Lack of production at our brewing partner could compromise our capacity and throw off our aand hope to run that facility yearly generating up to 100,000 barrels of our beer. Should unanticipated

operations cause disturbance in output at that plant The U.S. federal government taxes beer sold for consumption in the United States an excise tax of $18 per barrel; brewers producing less than two million barrels annually pay $7 per barrel on the first 60,000 barrels shipped, with the remaining shipments taxed at the regular rate. According to individual states, our

operations in also levy excise taxes on beer and other alcohol drinks inries at output levels substantially below their existing designed capacity might negatively effect our financial results. Our breweries have an annual operational capacity of roughly 1,075,000 barrel as of December 31, 2014. Actual production capacity will seldom, if ever, approach full operating capacity because to many considerations including seasonality and manufacturing schedules

Conclusion

of different draft products and bottled goods and packages. Although we hope that capacity of our breweries would be effectively used during periods when our sales are stronger, we believe that capacity utilization of the breweries will vary throughout the year and hence there probably will be times when the capacity utilization will be lower. Should contraction in our sales volumes arise, the resultant surplus capacity and unabsorbed expenses will negatively

impact our gross margins, running cash flow, and general financial performance. We periodically assess whether, over the course of their useful life, we anticipate recouping the expenses of our production breweries. An assessment of recoverability will be conducted by comparing the carrying value of the assets to projected future undiscounted cash flows together with other quantitative and qualitative analyses if facts and circumstances indicate

that the carrying value of these long-lived assets may be impaired Should we find that the carrying value of such assets does not seem to be recoverable, we will acknowledge an impairment loss by a charge on current operations, therefore affecting our operational results somewhat negatively.her brewer if the purchase price is more than $30 million or buy a non-