SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K
                                   (Mark One)
      [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                       EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended December 31, 1999

                                       OR

 [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                          ACT OF 1934 [NO FEE REQUIRED]

                    For the transition period from ___ to ___

                         Commission File Number 0-18761

                           HANSEN NATURAL CORPORATION
             (Exact name of Registrant as specified in its charter)

            Delaware                                 39-1679918
  (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization                      Identification No.)

         2380 Railroad Street, Suite 101, Corona, California 92880-5471
               (Address of principal executive offices) (Zip Code)

      Registrant's telephone number, including area code: (909) 739 - 6200

Securities registered pursuant to Section 12(b) of the Act:

                                                   Name of each exchange
         Title of each class                       on which registered
         Not Applicable                            Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

                                 Title of class
                     Common Stock, $.005 par value per share

         Indicate  by 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 X No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of the  Registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by nonaffiliates of
the Registrant was approximately  $23,336,957  computed by reference to the sale
price for such stock on the Nasdaq Small-Cap Market on March 2, 2000.

         The number of shares of the Registrant's  common stock, $.005 par value
per share (being the only class of common stock of the Registrant),  outstanding
on March 2, 2000 was 10,014,198 shares.



<PAGE>


<TABLE>
<CAPTION>

                                        HANSEN NATURAL CORPORATION

                                                FORM 10-K

                                            TABLE OF CONTENTS



Item Number                                                                                      Page Number

                                                 PART I
<S>            <C>                                                                                       <C>

1.             Business                                                                                   3
2.             Properties                                                                                15
3.             Legal Proceedings                                                                         15
4.             Submission of Matters to a Vote of Security Holders                                       16

                                                 PART II

5.             Market for the Registrant's Common Equity and Related                                     
                    Shareholder Matters                                                                  16
6.             Selected Consolidated Financial Data                                                      18
7.             Management's Discussion and Analysis of Financial                                         
                    Condition and Results of Operations                                                  18
8.             Financial Statements and Supplementary Data                                               28
9.             Changes in and Disagreements with Accountants on                                          
                    Accounting and Financial Disclosure                                                  28

                                                PART III

10.            Directors and Executive Officers of the Registrant                                        29
11.            Executive Compensation                                                                    30
12.            Security Ownership of Certain Beneficial Owners and Management                            35
13.            Certain Relationships and Related Transactions                                            37

                                                 PART IV

14.            Exhibits, Financial Statement Schedules and Reports on Form 8-K                           38

               Signatures                                                                                39



</TABLE>



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                                     PART I


ITEM 1.  BUSINESS

Background of the Company and Subsidiaries

         Hansen  Natural  Corporation  ("Hansen"  or the  "Company"),  which was
incorporated  in Delaware on April 25, 1990,  maintains its  principal  place of
business at 2380 Railroad Street, Suite 101, Corona, California 92880-5471,  and
its telephone number is (909) 739-6200.

         The Company is a holding  company and carries on no operating  business
except  through its direct  wholly-owned  subsidiary,  Hansen  Beverage  Company
("HBC") which was  incorporated in Delaware on June 8, 1992. HBC conducts all of
the Company's  operating  business and generates all of the Company's  operating
revenues.  References  herein to "Hansen" or the "Company" when used to describe
the  operating  business of the Company are  references  to the  business of HBC
unless  otherwise  indicated.  The  Company  also  owns  all of the  issued  and
outstanding  common stock of Hard Energy Company ("HEC"),  formerly known as CVI
Ventures,  Inc., which was incorporated in Delaware on April 30, 1990.  Although
HEC is currently inactive,  the Company plans to commence the marketing and sale
of certain beverage products through HEC during 2000. In addition,  HBC formerly
owned all of the  issued  and  outstanding  ordinary  shares  of its  subsidiary
located in the United  Kingdom,  Hansen  Beverage  Company (UK)  Limited,  which
ceased operating activities at the end of 1997 and was finally dissolved in July
1999.

Background of the Hansen Business

         In the 1930's,  Hubert  Hansen and his three sons started a business to
sell fresh  non-pasteurized  juices in Los Angeles,  California.  This  business
eventually became Hansen's Juices, Inc., now known as The Fresh Juice Company of
California,  Inc. ("FJC").  In 1977, Tim Hansen,  one of the grandsons of Hubert
Hansen,  perceived a demand for pasteurized natural juices and juice blends that
are shelf stable and formed Hansen Foods, Inc. ("HFI"),  which was also based in
the Los Angeles  area.  HFI  expanded  its  product  line from juices to include
Hansen's(R)  Natural  Sodas.  California  CoPackers  Corporation  (d/b/a/ Hansen
Beverage  Company) ("CCC") acquired certain assets of HFI including the right to
market the  Hansen's(R)  brand name,  in January  1990.  On July 27,  1992,  the
Company,  through HBC,  acquired the  Hansen's(R)  brand  natural soda and apple
juice business (the "Hansen Business") from CCC. Under the Company's  ownership,
the Hansen Business has been  significantly  expanded to include a wide range of
beverages within the growing "alternative" beverage category.

Products

         Hansen  is  engaged  in  the   business  of   marketing,   selling  and
distributing  so-called  "alternative"  beverage  category natural sodas,  fruit
juices,   fruit   juice   Smoothies,    "functional   drinks",    non-carbonated
ready-to-drink   iced   teas,   lemonades   and  juice   cocktails,   children's
multi-vitamin juice drinks and still water under the Hansen's(R) brand name.

     The alternative  beverage category combines  non-carbonated  ready-to-drink
iced teas, lemonades, juice cocktails, single serve juices,  ready-to-drink iced
coffees,  sports drinks and  single-serve  still water with "new age" beverages,
including  sodas that are  considered  natural,  sparkling  juices and  flavored
sparkling  waters.  The  alternative  beverage  category is the fastest  growing
segment of the beverage marketplace.  (Source:  Beverage Marketing Corporation).
Sales for the alternative  beverage category of the market are estimated to have
reached  approximately  $8.6  billion at wholesale in 1999 with a growth rate of
approximately   13.3%  over  the  prior  year.   (Source:   Beverage   Marketing
Corporation).

         Hansen's(R)  Natural Sodas are  classified  as "new age"  beverages and
have been a leading  natural soda brand in Southern  California  for the past 22
years. In 1999, Hansen's(R) Natural Sodas had the highest sales among comparable
carbonated  new age category  beverages  measured by unit volume in the Southern


                                       3

<PAGE>

California market (Source:  Information  Resources,  Inc.'s Analyzer Reports for
Southern  California).  Hansen's(R)  Natural  Sodas are  currently  available in
twelve  regular  flavors  consisting  of Mandarin  Lime,  Key Lime,  Grapefruit,
Raspberry,  Creamy Root Beer, Vanilla Cola, Cherry Vanilla Creme,  Orange Mango,
Kiwi Strawberry,  Tropical Passion,  Black Cherry and Tangerine.  Hansen has two
low calorie  sodas in Wildberry  and Cola  flavors.  Hansen's(R)  Natural  Sodas
contain no preservatives,  sodium,  caffeine or artificial coloring and are made
with high quality natural flavors,  citric acid and high fructose corn syrup, or
in the case of low calorie sodas, with aspartame.  Hansen's(R) Natural Sodas are
currently packaged in 12-ounce aluminum cans.

         In January 1999,  Hansen's introduced its new premium line of Signature
Sodas  in  unique  proprietary  14-ounce  glass  bottles.  Signature  Sodas  are
currently  available in five flavors consisting of Orange Creme,  Vanilla Creme,
Ginger  Beer,  Sarsaparilla  and Black  Cherry.  The Company  plans to introduce
additional  flavors of Signature  Sodas during 2000.  Signature  Sodas are being
marketed through the Company's existing distributor network.

         During April 1997, the Company  introduced a lightly  carbonated citrus
flavored Hansen's(R) energy drink in an 8.2-ounce slim can. The Company's energy
drink contains  Taurine,  Ginseng,  Ginkgo Biloba,  Guarana,  Caffeine and key B
vitamins.  The  Company's  energy  drink  falls  within  the  category  that has
generally  been  described  as  the  "functional"  beverage  category,   namely,
beverages  that  provide  a real or  perceived  benefit  in  addition  to simply
delivering  refreshment.  Management  believes  that the  "functional"  beverage
category  has good  growth  potential.  During the first  quarter  of 1998,  the
Company  extended its functional  product line by introducing  three  additional
functional  drinks in 8.2-ounce slim cans namely, a ginger flavored  d-stress(R)
drink, an orange flavored  antioox(R)  drink (since renamed bo well(TM)),  and a
guarana berry flavored  stamina(R) drink. Each of these drinks contain different
combinations  of vitamins,  nutrients,  herbs and  supplements.  The d-stress(R)
drink  contains  Kava Kava,  St.  John's  Wort,  L-Tyrosine,Chamomile  and key B
vitamins. The bowell(TM) drink contains Grape Seed Extract, Selenium, Echinacea,
Vitamins A, C and E as well as key B vitamins.  The  stamina(R)  drink  contains
Co-Enzyme  Q-10,  L-Carnitine,   Bee-Pollen,  Royal  Jelly,  Schizandra  Berrry,
Guarana,  Caffiene and key B vitamins.  During the fourth  quarter of 1998,  the
Company  introduced  its power  functional  drink in an 8.2-ounce  slim can. The
Company is in the process of changing the colors of the power can and the flavor
from  black  cherry to grape.  power  contains  Creatine,  Glutamine,  Red Panax
Ginseng,  Caffeine,  as  well  as  key B  vitamins.  The  Company  is  currently
introducing  slim  down,  it's  sixth  functional  drink.  slim  down is a berry
flavored drink that contains Pyruvate, Garcinia Cambogia, L-Carnitine,  Chromium
Polynicotinate, Co-Enzyme Q-10, calcium, vitamin C and key B vitamins and has no
calories.

         The Company has  concentrated  on marketing its  carbonated  functional
drinks and Smoothies in glass bottles  through its  distributor  network,  which
continued to expand  during 1999.  The Company  intends to leverage its existing
distributor  network to facilitate sales of its premium Signature Sodas in glass
bottles, as well as other new single serve products in glass bottles that it has
introduced  and plans to introduce in 2000,  and which are described  more fully
below.

          The Company's fruit juice product line currently includes  Hansen's(R)
Natural  Old  Fashioned  Apple  Juice  which  is  packaged  in 64 and  128-ounce
polyethylene  terephthalale  ("P.E.T.")  plastic  bottles,  Apple Strawberry and
Apple Grape juice blends in 64-ounce P.E.T. plastic bottles.  These juice blends
were  introduced in the second quarter of 1998. All of these  Hansen's(R)  juice
products contain 100% juice as well as 100% of the recommended  daily intake for
adults of Vitamin C and from 1999 also contain added calcium.  Hansen's(R) juice
products compete in the shelf-stable juice category.

         In  March  1995,  the  Company  expanded  its  juice  product  line  by
introducing a line of fruit juice Smoothies. The Company's fruit juice Smoothies
contain  approximately  35% juice (save for the Company's  Smoothies in 12-ounce
glass bottles which contain  approximately  25% juice) and have a smooth texture
that is thick but lighter than a nectar.  The  Company's  fruit juice  Smoothies
provide  100% of the  recommended  daily  intake for adults of Vitamins A, C & E
(the  antioxidant  triad) and  represented  Hansen's entry into what is commonly
referred to as the  "functional"  beverage  category.  The Company's fruit juice


                                       4

<PAGE>

Smoothies are packaged in 11.5-ounce aluminum cans and in new unique proprietary
12-ounce  glass bottles  designed by the Company,  as well as in 64-ounce  P.E.T
plastic bottles. In 1999, the new 12-ounce glass bottles replaced the 13.5-ounce
glass bottles previously used by the Company.  Hansen's(R) fruit juice Smoothies
are  available  in  eleven  flavors:   Strawberry  Banana,  Peach  Berry,  Mango
Pineapple,  Guava  Strawberry,   Pineapple  Coconut,  Apricot  Nectar,  Tropical
Passion,  Whipped Orange and Cranberry  Twist.  The product line also includes a
Cranberry  Raspberry  lite  Smoothie as well as an Energy  Smoothie  which has a
unique formula.  The Energy Smoothie product  contains Ginseng and Taurine,  two
popular energy supplements,  as well as Vitamins B2, B6, B12, Niacin,  Vitamin C
and  Glucose.  The  Company is  currently  introducing  its two newest  Smoothie
flavors,  Whipped Orange and Cranberry  Twist. The Company intends to extend its
Smoothie  line in  64-ounce  P.E.T.  plastic  bottles  from two  flavors  to six
flavors, during the first half of 2000.

         During the second half of 1999,  the Company  introduced  a new line of
premium functional Smoothies in 11.5-ounce cans Energy, Power, Protein and Vita.
Each of these products contains different  combinations of vitamins,  nutrients,
herbs and supplements.  Energy has a tropical fruit flavor and contains Ginseng,
Taurine,  Vitamins A, C, and E and key B vitamins.  Power has a berry flavor and
contains  Astralagus,  Bee  Pollen,  Calcium,  Vitamins  A,  C,  and E and key B
vitamins. Protein has a banana citrus flavor and contains Protein (including soy
protein), Calcium and Vitamins A, C, and E. Vita has an orange carrot flavor and
contains  Echinacea,   Zinc,   Selenium,   Calcium  and  a  blend  of  important
Multi-vitamins.  During  the  fourth  quarter of 1999,  the  Company  introduced
certain of such premium functional  Smoothies as line extensions to its Smoothie
line, in 12-ounce glass bottles.
         .
         During  the second  quarter of 1998,  the  Company  launched  its first
Healthy Start product,  Dyna  Juice(R),  a shelf stable 100% juice blend with 15
vitamins and minerals added. Dyna Juice(R) was renamed  VITAMAX-JUICE during the
fourth quarter of 1998 to more directly communicate its attributes to consumers.
During the fourth  quarter of 1998,  the  Company  expanded  its  Healthy  Start
product line with three new Healthy  Start 100% juices  namely,  ANTIOXJUICE(R),
IMMUNEJUICE(TM),  and  INTELLIJUICE(R).  ANTIOXJUICE(R) is a carrot and tropical
juice  blend  with  Grape  Seed  extract,  Vitamins  A,  C and  E and  Selenium.
IMMUNEJUICE(TM)  is an aronia and cranberry juice blend with Echinacea and Zinc,
and  INTELLIJUICE(R)  is an orange and tomato  juice blend with  Gingko  Biloba,
Hawthorn Berry and Ginseng.  The Healthy Start line was  originally  launched in
46-ounce P.E.T. plastic bottles and at the end of 1998 the Company expanded this
line into 64-ounce  P.E.T.  plastic  bottles as well.  Early in 2000 the Company
entered  into a  licensing  agreement  with the  Silver  Foxes  Network  for the
licensing to the Company of the Silver  Foxes(TM) brand and trademark,  which is
positioned  towards  consumers in the 50+ age group,  for and in connection with
certain of the  Company's  products.  The  Company  has  determined  to use that
trademark  for and in  connection  with its Healthy  Start 100% juice line.  The
Company has  redesigned the labels for its Silver  Foxes(TM)/Healthy  Start 100%
juice  line and  anticipates  launching  that new  renamed  line,  which will be
targeted at the 50+ age group, within the next few months.

         In the first quarter of 2000, the Company  introduced its Healthy Start
100% juice line in single- serve glass bottles,  which will be marketed  through
its distributor network.

            Hansen's(R)  ready-to-drink  iced teas and lemonades were introduced
in 1993.  Hansen's(R)  ready-to-drink  iced teas are currently available in five
flavors:  Original  with Lemon,  Tropical  Peach,  Wildberry,  Tangerine and Low
Calorie  Blueberry  Raspberry and its  lemonades are currently  available in one
flavor:  Original Old  Fashioned  Lemonade.  Hansen's(R)  juice  cocktails  were
introduced in 1994 and are currently available in four flavors:  Kiwi Strawberry
Melon,  Tangerine  Pineapple with Passion Fruit,  California  Paradise Punch and
Mango Magic.  Hansen's  ready-to-drink iced teas,  lemonades and juice cocktails
are currently packaged in 16-ounce non-returnable wide-mouth glass bottles.

         Hansen's(R)  ready-to-drink  iced teas are made with decaffeinated tea.
The Company's other  non-carbonated  products are made with high quality juices.
Hansen's(R)  non-carbonated  products  (other than its 100% juice  products) are
also made with natural flavors,  high fructose corn syrup and in the case of the
low calorie iced tea with aspartame, citric acid and other ingredients.



                                       5

<PAGE>

         After offering a  ready-to-drink  green tea in a 20 ounce glass bottle,
the Company  resolved to  introduce  a full line of  specialty  teas in 20 ounce
glass bottles,  which it named its "Gold Standard" line. The line was introduced
in the 20 ounce glass  bottles  that were being used by the Company at the time,
while the  Company  proceeded  with the design and  manufacture  of a new unique
proprietary 20 ounce glass bottle for the line,  which was introduced at the end
of 1999.  Following  continuing demand for its green tea product, the Company is
currently in the process of introducing additional green tea flavors,  including
two diet green tea flavors, as well as six juice cocktails, in this package. All
of the products in the Gold  Standard  line contain  different  combinations  of
nutrients,  herbs and  supplements,  but at lower  levels than in the  Company's
functional drinks.

           In the third quarter of 1999, the Company introduced two new lines of
children's multi-vitamin juice drinks in 8.45-ounce aseptic packages. Each drink
contains eleven  essential  vitamins and six essential  minerals.  Each line was
introduced in three flavors. The Company intends to introduce additional flavors
for each line in 2000.  One of the lines is a  co-branded  100% juice line named
"Juice  Blast(TM)"  that was  launched  in  conjunction  with  Costco  Wholesale
Corporation  ("Costco") under the "Kirkland  Signature(TM)/Hansen's(R)  Natural"
brand name and is sold nationally through Costco stores. The other line is a 10%
juice line named "Juice Slam(TM)" that is available to all of our customers.

         Hansen's(R)  still water products were introduced in 1993.  Hansen's(R)
still water products are primarily sold in .5-liter plastic bottles.

         In 2000,  the  Company  plans to  introduce  additional  flavors of its
existing products as well as a new line of soy based drinks and, in addition,  a
new line of premium  "functional" iced teas in unique proprietary glass bottles,
which latter line was previously scheduled to be introduced late in 1999.

         In 2000,  the Company plans to introduce  two new lines of  nutritional
food bars under the  Hansen's(R)  brand name.  The first will be a line of snack
bars made from  grains  and fruit and the  second  will be a line of  functional
bars. In addition, the Company plans to test market a new line of premium G.M.O.
free cereals under the Hansen's(R) brand name.

            The Company continues to evaluate and, where considered appropriate,
introduce  additional  flavors and other types of  beverages to  compliment  its
existing  product lines.  The Company will also evaluate,  and where  considered
appropriate,   introduce  functional  foods/snack  foods  that  utilize  similar
channels of  distribution  and/or are  complimentary  to the Company's  existing
products and/or to which the Hansen's(R) brand name is able to add value.


Manufacture, Production and Distribution

         The  concentrates  for  Hansen's(R)  Natural  Soda and  Signature  Soda
products are blended at  independent  production  facilities.  In each case, the
concentrate is delivered by independent  trucking  companies to Hansen's various
copackers,  each of which adds filtered water,  high fructose corn syrup or cane
sugar  or,  in the case of the low  calorie  sodas  aspartame,  citric  acid and
carbonation  and  packages the products in approved  containers.  Hansen's  most
significant copacking arrangement is with Southwest Canning and Packaging,  Inc.
("Southwest")  pursuant to a contract under which Southwest packages Hansen's(R)
Natural  Sodas.  This  arrangement  continues  indefinitely  and is  subject  to
termination on 60 days written notice from either party.

         The  Company  purchases  juices,   concentrates,   flavors,   vitamins,
minerals,  nutrients,  herbs,  supplements  and other  ingredients for its juice
products,  ready-to-drink  iced tea, lemonade and juice cocktail products;  Gold
Standard  specialty tea and juice cocktail line, fruit juice Smoothie  products;
functional drinks,  Healthy Start juice line and children's  multi-vitamin juice
drinks  from  various  producers  and  manufacturers.  Such  materials  are then
delivered to the Company's  various  copackers for  manufacture and packaging of
the finished products.



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<PAGE>

         All  of  the  Company's  beverage  products  are  copacked  by  various
copackers  situated  throughout  the United  States and  Canada  under  separate
arrangements,  each of which continue on a month-to-month  basis, except for the
arrangement with Southwest which is described above.

         In the Western  states,  the Company's  Natural Sodas,  juice products,
iced tea, lemonade,  and juice cocktail products and Gold Standard Specialty tea
and  juice  cocktail  line,  fruit  juice  Smoothie  products  in cans and P.E.T
bottles, Healthy Start juice line in P.E.T. bottles and children's multi-vitamin
juice drinks are  primarily  sold to major  grocery  chain stores and in certain
limited instances to mass  merchandisers  through food brokers;  to club stores,
specialty  chain  stores and mass  merchandisers  in these  states,  directly by
Hansen and to the health food trade through specialty health food  distributors.
In Colorado,  a licensed  distributor is responsible for sales of certain of the
above products.  The Company's  fruit juice Smoothie  products in glass bottles,
carbonated functional drinks in 8.2-ounce slim cans, Signature Sodas and Healthy
Start juices in glass bottles are  distributed  almost  exclusively  by bottlers
and/or distributors that do not distribute other products of the Company.

         Management  has  secured  limited  additional  copacking   arrangements
outside the West to enable the Company to produce certain of its products closer
to the markets where they are sold and thereby reduce freight costs.  As volumes
in markets outside California grow, the Company will secure additional copacking
arrangements to further reduce freight costs.

         During 1998, the Company  entered into an  arrangement  with one of its
copackers,  pursuant to which certain modifications were made to that copacker's
equipment to enable it to produce certain products on behalf of the Company.  In
consideration  thereof,  the Company agreed to pack a minimum number of cases of
products  over a four-year  period.  Should the Company  fail to pack the agreed
minimum number of cases of products over such period, the Company will be liable
to reimburse the copacker for a proportionate share of the cost thereof based on
such  shortfall.  Based on the volume levels achieved by the Company in the past
and its expected volume levels,  the Company does not believe that it will incur
any liability in connection with the above arrangement.  However, such co-packer
has  experienced  difficulties in producing the Company's  functional  drinks in
8.2-ounce slim cans and Smoothies in 11.5-ounce  cans. The co-packer has on some
occasions  attributed certain of such difficulties to defective equipment and/or
supplies  of cans and ends and/or to other  causes for which they are  allegedly
not responsible.  During 1999, the Company,  without admission of defects in any
cans or ends supplied,  agreed to arrange for another can company to supply cans
and ends for the 11.5-ounce cans. Such new can manufacturer  commenced to supply
11.5-ounce  cans and ends in October 1999. As there is only one  manufacturer of
8.2-ounce slim cans and ends in the United States,  such an arrangement  was not
available for that package.

         The Company has  continued to work with the copacker who has,  however,
continued to experience  difficulties with the 8.2-ounce slim cans,  despite the
fact that other  copackers used by the Company were able to effectively  run and
produce  commercially  acceptable  finished  products  with the same  cans.  The
subject copacker has indicated that it is considering whether it will be willing
to continue to pack the Company's  functional  drinks in 8.2-ounce  slim cans or
Smoothies in 11.5-ounce cans, and if so, on what terms. The Company is currently
in  discussions  with that  copacker.  There are a number of other  lines in the
United  States  with  available  capacity  to pack the  Company's  Smoothies  in
11.5-ounce  cans.  However,  there are only two other lines in the United States
that are  capable,  at the present  time,  of packing the  Company's  functional
drinks in 8.2-ounce slim cans. The Company  believes that in the short term such
lines will have sufficient available capacity to meet the Company's  anticipated
volumes. However, the Company may incur higher packing fees and freight costs as
a result.  The Company is  currently  engaged in  discussions  with  prospective
copackers and its can supplier,  with a view to arriving at an arrangement  with
respect to  certain  modifications  to be made to the lines of such  prospective
copackers  to  enable  them  to run  and  produce  the  Company's  Smoothies  in
11.5-ounce cans and functional drinks in 8.2-ounce slim cans.

         During March 1999,  the Company  entered into an  arrangement  with its
glass supplier  pursuant to which its glass supplier  agreed to install a shrink
sleeve  labeling  machine at its plant to  facilitate  the  pre-labeling  of the


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<PAGE>

Company's glass bottles at the point of manufacture.  In consideration  thereof,
the Company  agreed to have a minimum  quantity  of labels  applied to its glass
bottles  over a four-year  period.  Should the  Company  fail to have the agreed
minimum quantity of labels applied over such period,  the Company will be liable
to compensate its supplier for a  proportionate  share of the cost thereof based
on such shortfall.  Based on the Company's  estimated volume levels, the Company
does not  believe  that it will  incur any  liability  in  connection  with this
arrangement.

         The Company's  ability to estimate  demand is  imprecise,  particularly
with new  products,  and may be less  precise  during  periods of rapid  growth,
particularly in new markets. If the Company materially underestimates demand for
its  products or is unable to secure  sufficient  ingredients  or raw  materials
including but not limited to glass, cans or labels,  or copacking  arrangements,
it might not be able to satisfy demand on a short-term basis.

         Although the Company's  arrangements for production of its products are
generally of short duration or are terminable upon request,  management believes
that  (subject  to  what  is  stated  above)  a  short   disruption   would  not
significantly  affect  the  Company's  revenues  since  alternative   co-packing
facilities in the United States with adequate  capacity can be obtained for most
of its products at  commercially  reasonable  rates,  if necessary or desirable,
within a  reasonably  short time period.  However,  as stated  above,  there are
limited  copacking  facilities in the United  States with adequate  capacity for
products in 8.2-ounce slim cans.  There are also limited shrink sleeve  labeling
facilities  available  in the  United  States  with  adequate  capacity  for the
Company's  Signature  Soda  line and  Healthy  Start  line in glass  bottles.  A
disruption in production of any of such products could significantly  affect the
Company's revenues from such products as alternative copacking facilities in the
United States with  adequate  capacity may not be available for such products at
commercially  reasonable  rates, if necessary or desirable,  within a reasonably
short time  period.  The Company is taking steps to secure the  availability  of
alternative  copacking  facilities  in the United States or Canada with adequate
capacity  for the  production  of such  products,  to  minimize  the risk of any
disruption in production.

         The Company itself is primarily  responsible for marketing its products
(other than its fruit juice  Smoothies in glass  bottles,  functional  drinks in
8.2-ounce  slim cans and  Signature  Sodas  and  Healthy  Start  juices in glass
bottles)  in the United  States.  The  Company  has  entered  into  distribution
agreements  with  distributors  to distribute  Smoothies in glass bottles and/or
functional  drinks in 8.2-ounce slim cans and/or Signature Sodas in more than 40
states  (Healthy Start in glass bottles is being  introduced  currently  through
distributors).  However,  in  many  of such  states,  distribution  is only on a
limited  scale.  Certain of the  Company's  products are also marketed in Canada
and, on a more limited basis, in other  countries  outside of the United States,
including the United  Kingdom,  Mexico,  Philippines,  Guam, the Caribbean,  and
South  Africa.  During 1999,  sales by the Company to  distributors  outside the
United States amounted to approximately $800,000.

         The Company  intends to  aggressively  expand the  distribution  of its
products into new markets, both within the United States and abroad.

         In the first quarter of 2000, the Company  introduced its new slim down
functional  drink and Healthy Start juice line in glass  bottles.  Presentations
are  currently  being  made to the  Company's  existing  distributor  network to
endeavor to secure their agreement to distribute such products.

         The Company is  continuing  to expand  distribution  of its products by
seeking to enter into  agreements  with regional  bottlers or other direct store
delivery  distributors  having  established  sales,  marketing and  distribution
organizations.  Hansen's  licensed bottlers and distributors are affiliated with
and manufacture and/or distribute other soda and non-carbonated brands and other
beverage  products.  In many cases, such products are directly  competitive with
the Company's products. The Company's strategy of licensing regional bottlers to
produce Hansen's(R) Natural Sodas from concentrate  provided by the Company, has
not fulfilled management's expectations,  partly because bottlers have preferred
to focus on alternative  beverage  products having higher margins than sodas. At
the end of 1997,  management  awarded the Company's  distributor in Colorado the
right to market and  distribute  its Natural Sodas in that state in place of its


                                       8

<PAGE>

licensed  bottler.  The Company continues to utilize such bottler to manufacture
Hansen's(R) Natural Sodas on its behalf.

         Management  continues to evaluate  various  alternatives  to expand the
distribution  of its products  into  selected new markets.  The Company plans to
expand the  distribution  of its Natural Sodas and Smoothies in cans into Oregon
and  Washington  states  during 2000,  by itself  retaining  responsibility  for
securing  sales and  providing  marketing  support.  To this end the Company has
appointed a regional sales manager for the northwestern states.

         In  1999,   the  Company   continued  to  expand  its  national   sales
organization to support and grow the sales primarily of Smoothies in bottles and
functional  drinks in 8.2-ounce  slim cans and to introduce its Signature  sodas
and intends to continue to build that organization during 2000.

         During  September 1997, the Company's main  distribution  warehouse was
relocated to Corona,  California and in March 1998, the corporate offices of the
Company relocated to the same facility.  Although the Company agreed to sublease
a portion of the warehouse facility to the independent  contractor which manages
the warehouse  facility on its behalf and the repacking and  distribution of the
Company's  products  therefrom,  the sublease  could not be  implemented  as the
entire  warehouse  facility is being utilized for the Company's  products due to
higher  inventory  levels  which  were   attributable  to  increased  sales  and
additional  products being marketed and distributed by the Company.  In light of
its agreement with the independent contractor concerned, it is not necessary for
the Company to employ additional personnel to manage the warehouse facility,  or
for the repacking or  distribution  of its  products.  The Company also utilizes
public  warehouses.  Due primarily to increased  sales and  additional  products
marketed  by the Company in 1999 it became  necessary  for the Company to secure
additional warehousing.  To cater for increased sales in 2000 and beyond and new
products  that the  Company  plans  to  introduce  in the  future  and  increase
efficiency by consolidating it's warehousing and distribution into one facility,
the Company has entered into an agreement  to lease a new  substantially  larger
facility in Corona from August 2000 in place of its existing main facility.  The
corporate  offices of the Company will also relocate to the same  facility.  See
also "ITEM 2 PROPERTIES."


Source and Availability of Raw Materials

         The Company purchases  beverage  flavors,  concentrates and supplements
from  independent  suppliers  located in the United States and Mexico and juices
from independent suppliers in the United States and abroad.

         Suppliers regard flavors as proprietary to them.  Consequently,  Hansen
does not currently  have the list of ingredients or formulae for its flavors and
certain of its concentrates  readily available to it and may be unable to obtain
these flavors or concentrates  from alternative  suppliers on short notice.  The
Company  has  identified  alternative  suppliers  of  many  of  the  supplements
contained in its carbonated functional drinks, Smoothies, Healthy Start and Gold
Standard lines.  However,  industry wide shortages of certain  supplements  have
been and could,  from time to time in the  future be  experienced,  which  could
interfere with production of certain of the Company's products.

         Management is continuing  with its attempts to develop  back-up sources
of supply for its flavors and  concentrates  from other  suppliers as well as to
conclude  arrangements  with suppliers which would enable it to obtain access to
certain  concentrate  formulae  in certain  circumstances.  The Company has been
partially  successful in these endeavors.  By working with suppliers rather than
on its own,  Hansen is able to develop  new  products  at low cost as well as to
diversify its supplier network.

         Hansen's  goal  is to  ensure  that  all  raw  materials  used  in  the
manufacture and packaging of the Company's  products,  including  natural sodas,
Signature  sodas,  functional  drinks  and  non-carbonated  drinks  and  juices,
including,  but not limited to,  concentrates  and juices,  high  fructose  corn
syrup,  cane sugar,  citric acid,  caps,  cans,  glass bottles,  P.E.T.  plastic
bottles,  aseptic  packaging and labels,  are readily available from two or more


                                       9

<PAGE>

sources and is  continuing  its efforts to achieve this goal,  although  each of
such raw  materials  are, in practice,  usually  obtained  from single  sources.
However,  the cans for the Company's  functional drinks are only manufactured by
one company in the United States.

         In connection  with the  development  of new products and flavors,  the
Company  contracts  with  independent  suppliers who bear a large portion of the
expense of product  development,  thereby  enabling  the  Company to develop new
products  and flavors at  relatively  low cost.  The  Company  has  historically
developed and successfully introduced new products and flavors and packaging for
its products and currently anticipates developing and introducing additional new
beverage products and flavors.


Competition

         The soda,  juice,  and  non-carbonated  beverage  businesses are highly
competitive.   The  principal  areas  of  competition  are  pricing,  packaging,
development of new products and flavors and marketing  campaigns.  The Company's
products  compete  with  traditional  soft  drinks  (cola  and  non-cola),   and
alternative beverages, including new age beverages and ready-to-drink iced teas,
lemonades  and juice  cocktails  as well as juices and juice  drinks and nectars
produced  by a  relatively  large  number of  manufacturers,  most of which have
substantially greater financial and marketing resources than Hansen.

         The Company's  functional energy drink competes directly with Red Bull,
Red Devil,  Lipovitan,  Met-rx,  Hype,  XTC and many other  brands and its other
functional  drinks compete directly with Elix,  Lipovitan,  Met-rx,  Think, Sobe
Essentials  and other  brands.  The  "functional"  beverage  category  is in its
infancy and  increased  competition  is  anticipated  within a relatively  short
period of time. A number of companies  who market and  distribute  iced teas and
juice  cocktails  in larger  volume  packages,  such as 16- and  20-ounce  glass
bottles,  including Sobe,  Snapple Elements and Arizona,  have recently added or
are in the process of adding vitamins,  herbs and/or nutrients to their products
with a view to marketing their products as  "functional"  beverages or as having
functional benefits. However, many of those products are believed to contain low
levels of supplements and principally deliver refreshment.  In addition, many of
the competitive products are positioned  differently to the Company's functional
drinks and Super Smoothies.  The Company's Gold Standard line is positioned more
closely against those products

         For its natural  sodas,  smoothies,  carbonated  functional  drinks and
Signature sodas as well as other products, Hansen competes not only for consumer
acceptance,  but also for  maximum  marketing  efforts by  multi-brand  licensed
bottlers,  brokers and distributors,  many of which have a principal affiliation
with competing  companies and brands.  The Company's  products  compete with all
liquid  refreshments and with products of much larger and  substantially  better
financed  competitors,  including  the  products  of numerous  nationally  known
producers  such as The Coca Cola Company,  PepsiCo,  Inc.,  Dr.  Pepper/Seven-Up
Companies,  Inc.,  Cadbury Schweppes,  The Quaker Oats Company,  Triarc Group of
Companies  (which includes the RC Soda,  Snapple,  Mistic and Stewards  brands),
Nestle  Beverage  Company and Ocean  Spray.  More  specifically,  the  Company's
products compete with other alternative beverages,  including new age beverages,
such as Snapple, Mistic, Arizona, Clearly Canadian, Sobe, Stewart's,  Everfresh,
Nantucket Nectar, Kerns Nectar, Mistic Rain Forest Nectar,  VeryFine, V8 Splash,
Calistoga,  Blue Sky, Red Bull,  Met-rx and Crystal  Geyser  brands.  Due to the
rapid growth of the alternative  beverage  segment of the beverage  marketplace,
certain  large  companies  such as The Coca Cola Company and PepsiCo,  Inc. have
introduced  products in that market  segment  which  compete  directly  with the
Company's  products  such as  Nestea,  Fruitopia,  Lipton and Ocean  Spray.  The
Company's  products also compete with private label brands such as those carried
by chain and club  stores.  Important  factors  affecting  Hansen's  ability  to
compete  successfully  include taste and flavor of products,  trade and consumer
promotion,  rapid  and  effective  development  of  new,  unique,  cutting  edge
products,  attractive and different packaging, brand and product advertising and
pricing.  Hansen must also  compete for  distributors  who will  concentrate  on
marketing the Company's  products  over those of Hansen's  competitors,  provide
stable and  reliable  distribution  and secure  adequate  shelf  space in retail
outlets.  Competitive  pressures  in the  alternative  and  functional  beverage


                                       10

<PAGE>

categories could cause the Company's products to lose market share or experience
price erosion, which could have a material adverse effect on Hansen's business.

         The Company's fruit juice Smoothies  compete with Kern's nectars in the
western  states and Libby's in the eastern  states and Whipper  Snapple,  Mistic
Rain Forest Nectar,  and Nantucket Nectar  nationally and also with single serve
juice  products  produced by many  competitors.  Such  competitive  products are
packaged in glass and P.E.T.  bottles  ranging from 10- to 20 ounces in size and
in 11.5-ounce  aluminum  cans.  The juice content of such  competitive  products
ranges from 1% to 100%.

         The Company's apple and other juice products compete directly with Tree
Top, Mott's, Martinelli's, Welsh's, Ocean Spray, Minute Maid, Langers, Wildland,
Apple and Eve,  Seneca,  Northland and also with other brands of apple juice and
juice blends, especially store brands. The Company's Healthy Start line competes
with Langer's, V8 Splash,  Knudsen,  Nantucket Nectar,  Wildland and other juice
products.  The  Company's  still water  products  compete  directly  with Evian,
Crystal Geyser, Naya, Palomar Mountain, Sahara, Arrowhead, Aquafina, Dannon, and
other brands of still water especially store brands.


Marketing

         Hansen's marketing strategy is to focus on consumers who seek beverages
which are perceived to be natural and healthy.  To attract these consumers,  the
Company  emphasizes the natural  ingredients  and the absence of  preservatives,
sodium,  artificial  coloring and caffeine in the Company's product lines (other
than the  Company's  functional  energy,  stamina(R)  and power  drinks which do
contain  caffeine)  and the  addition  to all of its  products,  other  than its
Natural  sodas  and  Signature  sodas,  of  one  or  more  vitamins,   minerals,
supplements,  nutrients  or herbs.  This  message is  reinforced  in the product
packaging,  the majority of which was redesigned in 1999. The regular  wholesale
price of Hansen's(R)  Natural Sodas in cans is slightly  higher than  mainstream
soft drinks  such as  Coca-Cola  and Pepsi,  although  generally  lower than the
prices of the  products  of many  competitors  in the new age  category.  In its
marketing,  Hansen emphasizes its high quality "natural" image and the fact that
its soda  products  contain no  preservatives,  sodium,  caffeine or  artificial
coloring.  The regular wholesale price of the Company's iced teas, lemonades and
juice cocktails,  including it's Gold Standard line, is slightly lower than that
of  competitive  non-carbonated  beverages  marketed  under the  Snapple,  Sobe,
Arizona,  Mistic,  Lipton, Nestea,  Fruitopia,  Ocean Spray and Nantucket Nectar
brands. In its marketing, Hansen emphasizes the high quality natural and healthy
image of its products.  The regular wholesale price of the Company's fruit juice
Smoothie products is similar to that of Kern's nectars.  Without  abandoning its
natural and healthy  image,  the Company  launched a lightly  carbonated  energy
drink in 8.2-ounce slim cans, containing two popular energy supplements, Ginseng
and Taurine,  to appeal to the young and active  segment of the beverage  market
that  desires an energy boost from its beverage  selection.  Hansen's(R)  energy
drink also  contains  Vitamins B2, B6, B12,  Niacin,  Vitamin C, Ginkgo  Biloba,
Guarana,  Caffeine and Glucose.  The Company has since launched five  additional
lightly  carbonated  functional  drinks.  The first, a stamina(R) drink contains
Coenzyme  Q-10,  L-Carnitine,  Bee Pollen,  Royal  Jelly,  Schizandra  Berry and
Vitamins B5, B6, B12, Niacin, Vitamin C, Guarana Berry and Caffeine; the second,
a d-stress(R) drink contains Kava Kava, St John's Wort, L-Tyrosine, Chamomile as
well as Vitamins  B5, B6, B12,  Niacin and Vitamin C; the third,  an  antioox(R)
drink  (since  renamed  bowell(TM))  contains  Grape  Seed  Extract,   Selenium,
Echinacea,  Vitamins A, C and E as well as Vitamins B5, B6, B12 and Niacin;  the
fourth, a power drink contains Creatine, Glutamine, Red Panax Ginseng as well as
key B Vitamins  and the fifth,  a slim down drink  contains  Pyruvate,  Garcinia
Cambogia,  L-Carnitine,  Coenzyme Q-10, Chromium  Polynicotinate and calcium, as
well as Vitamins B5, B6, B12, C and Niacin. The vitamins,  minerals,  nutrients,
supplements and herbs ("supplements") contained in each of the functional drinks
are  intended  to provide  specific  but  different  functional  benefits to the
consumers of each of such products.

         To cater for  consumers who regularly  purchase  juices in  multi-serve
sizes and perceive the  inclusion of  supplements  therein to be of added value,
the Company  launched  its Healthy  Start line of 100% juices in 1998.  Although
marketed in larger  multi-serve  packages that are appropriate for grocery chain


                                       11

<PAGE>

stores, club stores, specialty chains and health food stores, the positioning of
these products is similar to the Company's lightly carbonated  functional drinks
in 8.2-ounce slim cans. To distinguish these products from those of competitors,
each label clearly indicates the function of the product, in addition to listing
the supplements contained therein. As stated above,  following the conclusion of
a licensing agreement by the Company with the Silver Foxes Network,  the Company
is currently having the labels for its Silver Foxes(TM)/Healthy Start 100% juice
line  redesigned.  The new re-named line,  which will be targeted at the 50+ age
group,  will be  launched  within  the next few  months.  The  Company is in the
process of  introducing  its  Healthy  Start 100% line in single  serve 12 ounce
glass bottles, through its distributor network.

         According to Roche Vitamins, very few American children meet all of the
recommendations of the Food Guide Pyramid.  In 1999 the Company introduced a new
line of children's  multi-vitamin juice drinks in 8.45- ounce aseptic packaging.
These  products are  positioned  to assist  parents  improve the daily intake by
their children of essential vitamins and minerals.

         The Company's  sales and marketing  strategy is to focus its efforts on
developing  brand  awareness  and trial  through  sampling both in stores and at
events.  The Company intends to continue to place increased  emphasis on product
sampling  and  participating  in direct  promotions.  The  Company  proposes  to
continue to use its refrigerated truck and other promotional  vehicles at events
at which the Company's products, including its fruit juice smoothies and natural
sodas,   will  be  distributed  to  consumers  for  sampling.   Hansen  utilizes
"push-pull" tactics to achieve maximum shelf and display space exposure in sales
outlets  and  maximum   demand  from   consumers  for  its  products   including
advertising,  in store promotions and point of sale materials, prize promotions,
price promotions,  competitions,  endorsements from selected public figures such
as baseball  star Sammy Sosa in 2000,  couponing,  sampling and  sponsorship  of
selected sports figures as well as sporting events such as marathons,  10k runs,
bicycle  races,  volleyball  tournaments  and other  health- and  sports-related
activities,   including  extreme  sports,   and  also  participates  in  product
demonstrations, food tasting and other related events. Posters, print, radio and
television  advertising  together with price  promotions  and couponing are also
used extensively to promote the Hansen's(R) brand.

         While the Company retains responsibility for the marketing of the Juice
Slam(TM) line of children's  multi-vitamin  juice drinks,  Costco has undertaken
sole responsibility for the marketing of the co-branded Juice Blast(TM) line.

         Management increased  expenditures for its sales and marketing programs
by approximately 21% in 1999 compared to 1998.

         The Company  intends to support its planned  expansion of  distribution
and sale of its  Smoothie  products in bottles,  functional  drinks in 8.2-ounce
cans,  Signature  Sodas and Healthy Start juices in glass  bottles,  through the
in-store placement of point-of-sale  materials,  use of glide racks, suction cup
racks and a proprietary  rolling rack for its functional drinks and by attending
and  sponsoring  many sporting  events,  including  extreme  sports and selected
sports  figures and through  endorsements  from selected  public figures such as
Sammy Sosa, and by developing  local marketing  programs in conjunction with its
distributors  in their  respective  markets.  By enlisting its  distributors  as
participants in its marketing and advertising programs, Hansen intends to create
an  environment  conducive to the growth of both the  Hansen's(R)  brand and the
businesses of its distributors.

         In January 1994,  the Company  entered into an agreement  with a barter
company  for the  exchange  of  certain  inventory  for future  advertising  and
marketing  credits.  The Company  assigned a value of $490,000 to these  credits
based on the net realizable value of the inventory exchanged. As of December 31,
1999, unused  advertising and marketing credits totaled $203,000.  Although such
credits remain available for use by the Company through January 2002, management
was unable to estimate  their  remaining  net  realizable  value at December 31,
1997.  Accordingly,  in the year ended  December  31,  1997,  the Company  fully
reserved against and expensed such advertising and marketing credits.



                                       12

<PAGE>

         Management  continues to believe that one of the keys to success in the
beverage  industry  is  differentiation;  making  Hansen's(R)  products  clearly
distinctive  from other  beverages  on the  shelves of  retailers.  The  Company
reviews its products and  packaging on an ongoing  basis and,  where  practical,
endeavors  to make  them  different,  better  and  unique.  The  labels  for the
Company's  juice  products  were  redesigned  recently.  The  graphics  for  the
Company's Natural Soda and Smoothie products were completely  redesigned in 1999
in an endeavor to develop a new system to maximize visibility and identification
thereof, wherever they may be placed in stores.

Customers

         Retail  and  specialty  chains,  and  club  stores  represented  58% of
Hansen's  sales in the year ended  December  31,  1999 and 59% in the year ended
December 31, 1998,  while the percentage of sales to distributors  (primarily of
Hansens(R)  Smoothies in bottles,  functional  drinks in 8.2-ounce slim cans and
Signature Sodas) increased slightly from 32% in the year ended December 31, 1998
to 33% in the year ended December 31, 1999.

         Hansen's major customers in 1999 included  Costco,  Trader Joes,  Sam's
Club, Lucky, Vons, Ralph's, Wal-Mart and Albertson's. One customer accounted for
approximately  25% and 27% of the Company's  sales for the years ended  December
31, 1999 and 1998,  respectively.  Two customers accounted for approximately 29%
and 11%,  respectively,  of the Company's  sales for the year ended December 31,
1997. A decision by these major customers to decrease the amount  purchased from
the Company or to cease  carrying the Company's  products  could have a material
adverse effect on the Company's financial condition and results of operations.

Seasonality

         Hansen normally  experiences greater sales and profitability during its
second and third fiscal quarters (April through  September).  The consumption of
beverage  products  fluctuates  in part  due to  temperature  changes  with  the
greatest  consumption  occurring  during the warm  months.  During  months where
temperatures  are  abnormally  warm  or  cold,   consumption  goes  up  or  down
accordingly.   Similarly,   consumption  is  affected  in  those  regions  where
temperature  and other  weather  conditions  undergo  dramatic  changes with the
seasons.  Management  anticipates  that the sale of the  Company's  products may
become increasingly subject to seasonal fluctuations as more sales occur outside
of California in areas where weather  conditions are  intemperate.  Sales of the
Company's  juice  products,  its  Healthy  Start  line,  functional  drinks  and
children's  multi-vitamin  juice drinks will be less  affected by such  factors.
However, as the Company has not had sufficient experience with such products, it
is unable to predict the likely sales trend of such  products with any degree of
accuracy.


Trademark

         The Hansen's(R)  trademark is crucial to the Company's  business.  This
trademark is registered in the U.S.  Patent and Trademark  Office and in various
countries  throughout the world.  The Hansen's(R)  trademark is owned by a trust
(the  "Trust")  which  was  created  by  an  agreement  between  HBC  and  FJC's
predecessor (the "Agreement of Trust").  The Trust licensed to HBC in perpetuity
on an exclusive  world-wide  royalty-free basis the right to use the Hansen's(R)
trademark  in  connection  with  the  manufacture,   sale  and  distribution  of
carbonated  beverages  and  waters  and shelf  stable  fruit  juices  and drinks
containing fruit juices. In addition,  the Trust licensed to HBC, in perpetuity,
on an exclusive world-wide basis, the right to use the Hansen's(R)  trademark in
connection with the manufacture, sale and distribution of certain non-carbonated
beverages and water in  consideration  of royalty  payments.  A similar  license
agreement exists between the Trust and HBC with regard to non-beverage products.
Royalty expenses incurred in respect of such non-carbonated  beverages and water
during 1999  amounted to $12,000.  No  royalties  are payable on sodas,  juices,
lemonades, juice cocktails, fruit juice Smoothies,  "functional" drinks, Healthy
Start or Signature Soda lines or on the children's multi-vitamin juice drinks.



                                       13

<PAGE>

         HBC,  FJC's  predecessor  and the  Trust  also  entered  into a Royalty
Sharing Agreement  pursuant to which royalties payable by third parties procured
by FJC or its predecessor or HBC are initially  shared between the Trust and HBC
and,  after a  specified  amount of  royalties  have been  received,  are shared
equally  between HBC and FJC.  Under the terms of the  Agreement  of Trust,  FJC
receives  royalty  income  paid to the Trust in excess of Trust  expenses  and a
reserve therefor. Management believes that such royalty payments as a percentage
of sales are comparatively low.

         HBC entered into an Assignment  and Agreement  with Fresh Juice Company
of California,  Inc. (FJC) effective  September 22, 1999,  pursuant to which HBC
acquired exclusive ownership of the Hansen's(R) trademark and trade names. Under
the Assignment and Agreement, among other matters, HBC acquired all FJC's rights
as grantor and  beneficiary  of the Trust,  all FJC's  rights as licensee  under
certain  license  agreement  pursuant to which FJC has the right to manufacture,
sell and distribute fresh juice products under the Hansen's(R) trademark and all
FJC's rights under the Royalty Sharing  Agreement  referred to above, as well as
certain additional rights, for a total consideration of $775,010, payable over 3
years.  FJC is permitted to continue to manufacture,  sell and distribute  fresh
juice  products  under  the  Hansen's(R)  trademark  for a  period  of 5  years.
Consequently,  HBC now has full ownership of the  Hansen's(R)  trademark and its
obligation  to pay  royalties  to,  and to share  royalties  with,  FJC has been
terminated.

         The  Company  has  applied to  register a number of  trademarks  in the
United States including, but not limited to, THE REAL DEAL(TM), Juice Blast(TM),
Juice  Slam(TM),  Immunejuice(TM),   Defense(TM),   bothin(TM),   Powerpack(TM),
Medicine Man(TM), bowell(TM)

         The  Company  owns in its own  right  the  trademarks,  LIQUIDFRUIT(R),
Imported from Nature(R), California's Natural Choice(R), California's Choice(R),
Dyna Juice(R), Equator(R), Be well(R), antioox(R), d-stress(R), stamina(R), Aqua
Blast(R),  Antioxjuice(R)  and  Intellijuice(R)  in the  United  States  and the
"Smoothie" trademark in a number of countries around the world.

         During 1999,  the United States  Patent and  Trademark  Office issued a
Notice of Allowance to the Company for an invention related to a shelf structure
(rolling rack) and, more  particularly,  a shelf structure for a walk-in cooler.
Such shelf structure is utilized by the Company to secure shelf space for and to
merchandise its functionals  drinks in 8.2-ounce slim cans in refrigerated  Visi
coolers and walk-in coolers in retail stores.


Government Regulation

         The  production and marketing of beverages are subject to the rules and
regulations  of the United States Food and Drug  Administration  (the "FDA") and
other  federal,  state and local health  agencies.  The FDA also  regulates  the
labeling of containers  including,  without  limitation,  statements  concerning
product ingredients.


Employees

         As of March 1, 2000,  Hansen  employed a total of 81  employees,  65 of
whom are  employed  on a full-time  basis.  Of  Hansen's  81  employees,  29 are
employed in administrative and quality control capacities and 52 are employed in
sales and marketing capacities.

         The Company operates with three separate divisions namely,  carbonated,
non-carbonated  and  distributor  divisions,  under  existing  management at the
direction of Messrs. Rodney Sacks and Hilton Schlosberg.  The Company intends to
create a fourth separate  division to manage the new  nutritional  food bars and
cereals  that  the  Company  plans  to  introduce  in 2000  and  any  functional
foods/snack foods that may be introduced by the Company in the future.



                                       14

<PAGE>

Compliance with Environmental Laws

         The  operation  of  Hansen's  business  is not  materially  affected by
compliance with federal,  state or local environmental laws and regulations.  In
California,  Hansen is required to collect  deposits  from its  customers and to
remit such deposits to the State of California  Department of Conservation based
upon the number of cans and bottles of its carbonated  products sold. In certain
other states and Canada where Hansens(R)  products are sold, the Company is also
required to collect  deposits  from its  customers and to remit such deposits to
the respective  conservation  agencies based upon the number of cans and bottles
of certain products sold.



I
TEM 2.  PROPERTIES

         Hansen's  corporate  offices and main warehouse are located in a single
building at 2380 Railroad Street,  Suite 101,  Corona,  California  92880.  This
facility is leased by HBC for a period of  eighty-nine  (89)  months  commencing
from September 19, 1997. The gross area of the facility is approximately  66,700
square feet.  HBC also utilizes  public  warehouses.  On February 23, 2000,  the
Company entered into a new lease agreement for a 113,600 square foot facility at
1010 Railroad  Street in Corona,  California,  commencing on August 1, 2000. The
term of the lease is ten years with  increases  in the monthly  rental  payments
during the third,  sixth and eighth years.  Upon  commencement of the new lease,
the lease for the existing premises will terminate by mutual consent.



ITEM 3.  LEGAL PROCEEDINGS

         The second stage of the trial in HBC's action against ERLY  Industries,
Inc.  ("ERLY") in the Superior  Court for the State of  California,  was held in
July 1997 for the sole purpose of determining  the amount of HBC's  damages,  if
any,  resulting from ERLY's breach of certain rights of first refusal provisions
contained in HBC's subordinated  secured promissory note in the principal amount
of $4 million in favor of ERLY (the "ERLY Note").  In November  1997,  the court
held that HBC had not suffered  any damages as a result of ERLY's  breach of the
ERLY Note. HBC has filed an appeal  against that judgment.  A motion was made by
ERLY for the  costs  of such  action  to be  awarded  in its  favor,  which  was
dismissed by the court.  ERLY has filed a cross  appeal on that issue.  The full
amount due under the ERLY Note was paid in November  1997 with the proceeds of a
term loan obtained by the Company from Comerica Bank - California  ("Comerica").
During 1998, ERLY filed for bankruptcy and the appeal was consequently stayed by
law. The Company has filed a claim against ERLY.  Although the trustee initially
rejected the claim,  discussions  are  currently  taking place in an endeavor to
agree on a figure for the principal  amount of the Company's  unsecured claim to
avoid the necessity for HBC to pursue the appeal.  The ultimate outcome of this
matter cannot presently be predicted.

         Towards the end of 1998,  HBC,  together with the Trustee of the Hansen
Trust,  commenced  arbitration   proceedings  before  the  American  Arbitration
Association in Los Angeles, California,  against FJC, the former Trustees of the
Trust, and a company called Hansen's Juice Creations LLC ("Creations"), in which
HBC and the Trustee claimed,  among other matters:  (i) that certain acts of the
former Trustees of the Trust constituted breach of trust; (ii) a certain license
agreement  purportedly entered into between the former Trustees of the Trust and
Creations  (the  "Purported  Agreement")  was,  in  whole  or in  part,  void or
terminable  by the  Trust;  and  (iii)  certain  acts of  Creations  constituted
infringement  of the  Hansen's(R)  trademark and certain acts of FJC constituted
contributory  infringement  of the Hansen's(R)  trademarks.  HBC and the Trustee
sought damages and injunctive relief against FJC and Creations. Such proceedings
were settled in September 1999. Pursuant to written settlement  agreements among
the various parties to such proceedings,  the Purported Agreement was terminated
by  mutual  consent,  the  right  of the  successor  to  Creations  to  use  the
Hansen's(R) trademark on limited, but clearly defined, fresh juice products, was
clarified and agreed upon, and certain other matters  relating to and concerning
the use of the Hansen's(R) trademark, were resolved.

                                       15

<PAGE>

         The Company is subject to claims and contingencies  related to lawsuits
and other  matters  arising out of the normal  course of business.  The ultimate
liability  associated with such claims and contingencies,  if any, is not likely
to have a material adverse effect on the financial condition of the Company.

         Except  as  described  above,  there  are  no  material  pending  legal
proceedings  to which the  Company or any of its  subsidiaries  is a party or to
which  any of the  properties  is  subject,  other  than  ordinary  and  routine
litigation incidental to the Company's business.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The annual meeting of stockholders of the Company was held on September
24, 1999. At the meeting, the following individuals were elected as directors of
the Company  and  received  the number of votes set  opposite  their  respective
names:

                                    Votes For

                 Rodney C. Sacks                                8,756,925
                 Hilton H. Schlosberg                           8,756,925
                 Benjamin M. Polk                               8,756,875
                 Norman C. Epstein                              8,756,925
                 Harold C. Taber, Jr.                           8,756,875
                 Mark S. Vidergauz                              8,757,025

         In addition,  at the meeting the  stockholders of the Company  ratified
the appointment of Deloitte & Touche LLP as independent  auditors of the Company
for the year ending December 31, 1999, by a vote of 8,668,015 for, 3,590 against
and  9,462  abstaining.  The  stockholders  also  adopted  an  amendment  to the
Company's Employee Stock Option Plan ("Plan") increasing the number of shares of
common stock issuable upon the exercise of stock options  granted under the Plan
from 2,000,000 shares to 3,000,000  shares,  by a vote of 5,593,881 for, 296,311
against and 118,913 abstaining.



PART II


ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
          MATTERS

Principal Market

         The Company's Common Stock began trading in the over-the-counter market
on  November  8, 1990 and is quoted on the  Nasdaq  Small-Cap  Market  under the
symbol "HANS". As of March 2, 2000 there were 10,014,198 shares of the Company's
Common Stock outstanding held by approximately 674 holders of record.


                                       16

<PAGE>


Stock Price and Dividend Information

     The following table sets forth high and low bid closing  quotations for the
Common Stock, on a quarterly basis from January 1, 1997 to December 31, 1999:


<TABLE>
<CAPTION>
                                                                                   Common Stock
                                                     ------------------------------------------------------------
                                                                  High Bid                       Low Bid
                                                     ------------------------------ -----------------------------
          <S>                                                       <C>                           <C>    
     
          Year Ended December 31, 1999

          First Quarter                                             $  5  5/8                     $  3  7/16
          Second Quarter                                            $  5  1/2                     $  3  5/8
          Third Quarter                                             $  5  5/8                     $  4  5/16
          Fourth Quarter                                            $  5  1/8                     $  3  7/8

          Year Ended December 31, 1998

          First Quarter                                             $  2  9/16                    $  1 15/32
          Second Quarter                                            $  4  3/4                     $  2  3/8
          Third Quarter                                             $  6 13/16                    $  3  3/4
          Fourth Quarter                                            $  6 17/32                    $  2 15/16

          Year Ended December 31, 1997
                                                                    
          First Quarter                                             $  1  3/8                     $  1
          Second Quarter                                            $  1  7/16                    $    31/32
          Third Quarter                                             $  1 15/16                    $  1  3/8
          Fourth Quarter                                            $  2 11/16                    $  1  9/16
          
</TABLE>



         The  quotations  for the Common  Stock set forth  above  represent  bid
quotations  between  dealers,  do not  include  retail  markups,  mark-downs  or
commissions   and,  bid  quotations,   may  not  necessarily   represent  actual
transactions  and "real time" sale prices.  The source of the bid information is
the Nasdaq Stock Market, Inc.

         Hansen has not paid dividends to its  stockholders  since its inception
and does not anticipate paying dividends in the foreseeable future.



                                       17

<PAGE>


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The  consolidated  statement  of  operations  data set forth below with
respect  to each of the years  ended  December  31,  1995  through  1999 and the
balance sheet data as of December 31, for the dates indicated,  are derived from
the  consolidated  financial  statements  audited by  Deloitte  and Touche  LLP,
independent certified public accountants, and should be read in conjunction with
those financial  statements and notes thereto included  elsewhere in this and in
the 1996, 1997 and 1998 Forms 10-K and in the 1995 Form 10-KSB.



(in thousands, except per
share information)
                         1999        1998         1997        1996         1995
----------------- ----------- ------------ ----------- ------------ ------------


Net sales             $72,303     $53,866      $43,057     $35,565      $33,991

Net income (loss)     $ 4,478     $ 3,563      $ 1,250     $   357      $(1,350)

Net income (loss)
per common share
  Basic               $  0.45     $  0.38      $  0.14     $  0.04      $ (0.15)
  Diluted             $  0.43     $  0.34      $  0.13     $  0.04           -


Total assets          $28,709     $22,557      $16,933     $16,109      $17,521

Long-term debt        $   903     $ 1,335      $ 3,408     $    -       $ 4,032




ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

General

         During 1999 the Company  continued to expand its existing product lines
and further develop its markets.  In particular,  the Company continues to focus
on developing and marketing  beverages  that fall within the category  generally
described as the "functional" beverage category.

         In January 1999, the Company launched its new premium line of Signature
Sodas in unique proprietary 14-ounce glass bottles.

         The Company is currently  introducing  slim down, its sixth  functional
drink in 8.2-ounce slim cans.  slim down is a berry flavored drink that contains
Pyruvate,  Garcinia Cambogia,  L-Carnitine,  Chromium Polynicotinate,  Co-Enzyme
Q-10, Calcium, vitamin C and key B vitamins and has no calories.

         During 1999, the Company  replaced the 13.5-ounce glass bottles used by
it for its Smoothie products with a new unique proprietary 12-ounce glass bottle
and further  introduced two of its Smoothie products in 64-ounce P.E.T.  plastic
bottles.  The Company is currently  introducing its two newest Smoothie flavors,
Whipped  Orange and Cranberry  Twist in 11.5-ounce  cans. The Company is also in
the process of extending its Smoothie line in 64-ounce  P.E.T.  plastic  bottles
from two flavors to six flavors.

         During the second half of 1999,  the Company  introduced  a new line of
premium functional Smoothies in 11.5-ounce cans Energy, Power, Protein and Vita.
Each of these products contain  different  combinations of vitamins,  nutrients,
herbs and  supplements.  At the end of 1999, the Company  introduced  certain of


                                       18

<PAGE>

such premium  functional  Smoothies as line  extensions  to its Smoothie line in
12-ounce glass bottles.

         Earlier this year,  the Company  entered into a license  agreement with
the  Silver  Foxes  Network  for the  licensing  to the  Company  of the  Silver
Foxes(TM) brand and trademark,  which is positioned towards consumers in the 50+
age group,  for and in connection  with certain of the Company's  products.  The
Company has  determined to use that  trademark  for and in  connection  with its
Healthy  Start 100% juice line.  The Company is currently  having the labels for
its Silver  Foxes(TM)/Healthy  Start 100% juice line  redesigned and anticipates
launching that new re-named  line,  which will be targeted at the 50+ age group,
within the next few months.

         In the first  quarter  of 2000,  the  Company  plans to  introduce  its
Healthy  Start 100%  juice line in single  serve  glass  bottles,  which will be
marketed through its distributor network.

         In the third quarter of 1999,  the Company  introduced two new lines of
children's multi-vitamin juice drinks in 8.45-ounce aseptic packaging. Each line
was introduced in three  flavors.  The Company  intends to introduce  additional
flavors  for each line in 2000.  One line is a  co-brand  100%  juice line named
"Juice  Blast(TM)"  that was  launched  in  conjunction  with  Costco  under the
"Kirkland   Signature(TM)/Hansen's(R)   Natural"   co-brand  name  and  is  sold
nationally  through  Costco  stores.  The other  line is a 10% juice  line named
"Juice Slam(TM)" that is available to all of our customers.

         During  1999,  the  Company  expanded  its Green Tea line with four new
specialty teas in proprietary  20-ounce glass bottles,  which it named its "Gold
Standard"  line.  The  Company  is  currently  in  the  process  of  introducing
additional Green Tea flavors including two diet green tea flavors as well as six
juice cocktails, all under the "Gold Standard" name.

         In 2000,  the  Company  plans to  introduce  additional  flavors of its
existing products as well as a new line of soy based drinks and, in addition,  a
new line of premium "functional" iced teas in unique proprietary glass bottles.

         In  2000,  the  Company  also  plans  to  introduce  two new  lines  of
nutritional  food  bars and to test  market a new line of  premium  G.M.O.  free
cereals under the Hansen's(R)  brand name. The one new line of nutritional  food
bars will be a line of snack bars made from  grains and fruit and the other will
be a line of functional bars.

         The increase in net sales and profitability for the year ended December
31,  1999,  was  primarily  attributable  to  increased  sales of the  Company's
functional drinks in 8.2-ounce slim cans and to the Company's Healthy Start line
as well as the  introduction  of the Company's  Signature  Sodas and  children's
multi-vitamin juice drinks in aseptic packaging.

         Net sales of iced  teas,  lemonades  and juice  cocktails  in 1999 were
comparable to the sales of such products in 1998.

         Net sales of the  Company's  Smoothie  products were higher in 1999 
than in 1998 due primarily to sales of Smoothies in 64-ounce plastic bottles, 
which were introduced during 1999.

         Net  sales  of  Natural  Sodas  were  significantly  higher  in 1999 as
compared to 1998. The primary  increase is attributable  to the  introduction of
the Company's Signature Soda line in 14-ounce glass bottles.  Net sales of apple
juice were higher in 1999 than in 1998.

         The mix of products  sold by the Company  continued  to change in 1999.
The change in product mix resulted in a decrease in the gross profit margin as a
percentage  of net  sales  to 46.4%  for the year  ended  December  31,  1999 as
compared to 49.3% for the year ended December 31, 1998.

                                       19

<PAGE>

         During  1999,  sales  outside  of  California  represented  39%  of the
aggregate  sales  of  the  Company,  as  compared  to  approximately  34% of the
aggregate sales of the Company in 1998. Sales to distributors outside the United
States during 1999 amounted to $800,000 compared to $500,000 in 1998.

         During  1999,  the  Company  entered  into  several  new   distribution
agreements  for the sale of its  products,  both  within and  outside the United
States.  As  discussed  under  "ITEM 1 BUSINESS -  Manufacture,  Production  and
Distribution",  it is  anticipated  that the Company will continue  building its
national  sales  organization  in 2000 to  support  and  grow  the  sales of its
products.

         The Company  continues to incur  expenditures  in  connection  with the
development and introduction of new products and flavors.


Results of Operations  for the Year Ended December 31, 1999 Compared to the Year
Ended December 31, 1998.

         Net  Sales.  For the year  ended  December  31,  1999,  net sales  were
approximately  $72.3  million,  an increase  of $18.4  million or 34.2% over the
$53.9  million net sales for the year ended  December 31, 1998.  The increase in
net sales was primarily  attributable to increased sales of the Company's energy
and other  functional  drinks in 8.2-ounce  slim cans, the  introduction  of the
Company's  new  children's  multi-vitamin  juice drinks in the third  quarter of
1999, as well as the Company's  Signature Soda line, which was introduced in the
first quarter of 1999,  increased  sales of the Company's  Healthy Start product
line and sales of Smoothies in 64-ounce P.E.T.  bottles. To a lesser extent, the
increase in net sales was also  attributable to increased sales of juice blends,
Smoothies in cans, apple juice, soda in cans and sales of Super Smoothies, which
were  introduced in the second half of 1999.  Net sales of iced teas,  lemonades
and juice  cocktails in 1999 were  comparable  to the sales of such  products in
1998. The increase in net sales was partially  offset by the  discontinuance  of
Equator(R) and other marginal products.

         Gross  Profit.  Gross  profit  was  $33.5  million  for the year  ended
December 31, 1999,  an increase of $7.0 million or 26.4% over the $26.5  million
gross profit for the year ended December 31, 1998.  Gross profit as a percentage
of net sales  decreased to 46.4% for the year ended December 31, 1999 from 49.3%
for the year ended December 31, 1998. The increase in gross profit was primarily
attributable  to  increased  net  sales.  The  decrease  in  gross  profit  as a
percentage of net sales is primarily attributable to lower margins achieved as a
result of a change in the Company's product mix.

         Total Operating  Expenses.  Total operating expenses were $26.0 million
for the year ended  December  31, 1999 an increase of $5.4 million or 26.5% over
total operating  expenses of $20.6 million for the year ended December 31, 1998.
Total operating expenses as a percentage of net sales decreased to 36.0% for the
year ended  December 31, 1999,  from 38.2% for the year ended December 31, 1998.
The increase in total operating expenses was primarily attributable to increased
selling,  general and administrative  expenses and other operating expenses. The
decrease in total operating  expenses as a percentage of net sales was primarily
attributable to the increase in net sales and the comparatively smaller increase
in selling, general and administrative expenses.

         Selling, general and administrative expenses were $25.3 million for the
year ended  December  31, 1999 an increase of $5.1  million or 25.3% higher than
selling, general and administrative expenses of $20.2 million for the year ended
December 31, 1998. Selling,  general and administrative expenses as a percentage
of net sales  decreased to 35.0% for the year ended December 31, 1999 from 37.5%
for the year ended  December 31, 1998.  Selling  expenses were $17.8 million for
the year ended  December  31, 1999 an increase of $3.7  million or 26.2%  higher
than  selling  expenses of $14.1  million for the year ended  December 31, 1998.
Selling  expenses as a percentage  of net sales  decreased to 24.6% for the year
ended  December 31, 1999 from 26.2% for the year ended  December  31, 1998.  The
increase  in  selling   expenses  was   primarily   attributable   to  increased
distribution (freight) expenses, advertising costs and promotional expenditures,
particularly  in-store  demonstrations  and coupon  expenses.  The  increase  in
selling  expenses  was  partially  offset  by a  decrease  in  expenditures  for
merchandise  displays and point of sale  materials.  General and  administrative


                                       20

<PAGE>

expenses were $7.5 million for the year ended  December 31, 1999, an increase of
$1.4  million or 23.4% higher than  general and  administrative  expense of $6.1
million  for the year  ended  December  31,  1998.  General  and  administrative
expenses  as a  percentage  of net sales  decreased  to 10.4% for the year ended
December 31, 1999, from 11.4% for the year ended December 31, 1998. The increase
in general and administrative  expenses was primarily  attributable to increased
payroll  costs and  certain  other  expenses  incurred  in  connection  with the
Company's product development and expansion activities into additional states.

         Amortization  of trademark  license and trademarks was $308,000 for the
year ended  December  31,  1999,  an increase of $12,000  over  amortization  of
trademark  license and  trademarks  of $296,000 for the year ended  December 31,
1998.

         Other operating  expenses were $380,000 for the year ended December 31,
1999, an increase of $320,000 over other  operating  expenses of $60,000 for the
year ended  December 31,  1998.  The  increase in other  operating  expenses was
primarily  attributable  to  expenses  incurred  in  connection  with a proposed
business combination that was not completed.  The increase in other expenses was
partially offset by the expiration of a consulting  agreement with a director of
the Company.

         Operating Income.  Operating income was $7.5 million for the year ended
December  31,  1999,  compared to $6.0  million for the year ended  December 31,
1998. The $1.5 million increase in operating  income was primarily  attributable
to increased gross profits,  which was partially  offset by increased  operating
expenses.

         Net Nonoperating  Expense. Net nonoperating expense was $52,000 for the
year ended  December 31, 1999,  which was $278,000  lower than net  nonoperating
expense of $330,000  for the year ended  December  31,  1998.  Net  nonoperating
expense consists of interest and financing expense interest income and for 1998,
other  nonoperating  expense.  Interest and financing expense for the year ended
December  31, 1999 was  $171,000  as  compared  to  $387,000  for the year ended
December  31,  1998.  The  decrease  in  interest  and  financing   expense  was
attributable  to a reduction in financing fees that were fully amortized in 1998
and to the fact that the principal  amounts  outstanding  on the Company's  term
loan were lower in 1999 than 1998. See also  "Liquidity  and Capital  Resources"
below. Interest income for the year ended December 31, 1999 was $118,000,  which
was $46,000  higher than interest  income of $72,000 for the year ended December
31, 1998. The increase in interest income was primarily attributable to interest
earned on excess cash invested.

         Provision  for Income  Taxes.  Provision  for income taxes for the year
ended  December 31, 1999 was $3.0  million as compared to  provision  for income
taxes of $2.1  million  for the year ended  December  31,  1998.  The  effective
combined  federal and state tax rate for 1999 was 39.9% as compared to 36.7% for
1998. The increase in provision for income taxes was primarily  attributable  to
increased  operating income and the increase in the effective tax rate for 1999.
Certain net operating loss carryforwards  resulted in a lower effective tax rate
in 1998. Such net operating loss carryforwards were not available in 1999.

         Net Income. Net income was $4.5 million for the year ended December 31,
1999,  compared  to $3.6  million  for the year ended  December  31,  1998.  The
$915,000  increase in net income was attributable to increased  operating income
of $1.5 million and decreased nonoperating expense of $278,000, which was offset
by increased provision for income taxes of $904,000.


Results of Operations  for the Year Ended December 31, 1998 Compared to the Year
Ended December 31, 1997.

         Net  Sales.  For the year  ended  December  31,  1998,  net sales  were
approximately  $53.9  million,  an increase  of $10.8  million or 25.1% over the
$43.1  million net sales for the year ended  December 31, 1997.  The increase in


                                       21

<PAGE>

net sales was primarily  attributable to increased sales of the Company's energy
functional drink and sales of the Company's three additional  functional  drinks
in 8.2-ounce slim cans  introduced in the first quarter of 1998. The increase in
sales of functional drinks was attributable in part to the fact that the Company
launched  its energy  functional  drink in April 1997 and also that during 1997,
the Company  did not have any sales of its three  additional  functional  drinks
which were  introduced  in the first  quarter of 1998. A portion of the sales of
functional   drinks  during  1998  were  attributable  to  opening  orders  from
distributors  prior  to  their  launching  such  products  in  their  respective
territories.  Consequently,  sales of  functional  drinks during 1998 may not be
indicative  of sales that will be achieved  from those  products  in  subsequent
periods. The increase in net sales was also, to a lesser extent, attributable to
the Company's Healthy Start line and apple juice blends which were also launched
in 1998, and increased sales of Smoothies in bottles,  iced teas,  lemonades and
juice  cocktails.  The increase in net sales was  partially  offset by decreased
sales of soda, Smoothies in cans, and the discontinuance of Equator(R) and other
marginal  products.  The decrease in sales of  Smoothies  in cans was  primarily
attributable to a large  introductory order received during the third quarter of
1997, which was not repeated in 1998 and also to the fact that only a portion of
the stores of the customer concerned continue to stock those products.

         Gross  Profit.  Gross  profit  was  $26.5  million  for the year  ended
December 31, 1998,  an increase of $8.7 million or 48.8% over the $17.8  million
gross profit for the year ended December 31, 1997.  Gross profit as a percentage
of net sales  increased to 49.3% for the year ended December 31, 1998 from 41.4%
for the year ended December 31, 1997. The increase in gross profit was primarily
attributable  to  increased  net sales as well as cost  reductions  achieved  in
certain  raw  materials  and  packaging.  The  increase  in  gross  profit  as a
percentage of net sales was primarily attributable to higher margins achieved as
a result of a change in the Company's product mix.

         Total Operating  Expenses.  Total operating expenses were $20.6 million
for the year ended  December  31,  1998,  an increase  of $4.6  million or 29.0%
higher  than  total  operating  expenses  of $16.0  million  for the year  ended
December  31,  1997.  Total  operating  expenses  as a  percentage  of net sales
increased to 38.2% for the year ended December 31, 1998, from 37.0% for the year
ended December 31, 1997. The increase in total operating  expenses was primarily
attributable to increased selling,  general and administrative expenses incurred
as a result of the Company's  increased sales volume which was partially  offset
by decreased other expenses.

         Selling, general and administrative expenses were $20.2 million for the
year ended  December 31, 1998,  an increase of $4.7 million or 30.8% higher than
selling, general and administrative expenses of $15.5 million for the year ended
December 31, 1997. Selling,  general and administrative expenses as a percentage
of net sales  increased to 37.5% for the year ended December 31, 1998 from 35.9%
for the year ended  December 31, 1997.  Selling  expenses were $14.1 million for
the year ended  December 31,  1998,  an increase of $3.6 million or 33.9% higher
than  selling  expenses of $10.5  million for the year ended  December 31, 1997.
Selling  expenses as a percentage  of net sales  increased to 26.2% for the year
ended  December 31, 1998 from 24.4% for the year ended  December  31, 1997.  The
increase in selling  expenses was primarily  attributable  to increased costs of
promotional  allowances  and  materials  primarily  to support the  expansion of
distribution  into new  markets and to support  the  placement  and sales of the
Company's functional drinks in 8.2-ounce slim cans and Smoothies in bottles and,
to a lesser extent,  increased  distribution  costs.  General and administrative
expenses were $6.1 million for the year ended  December 31, 1998, an increase of
$1.2 million or 24.2% higher than  general and  administrative  expenses of $4.9
million for the year ended December 31, 1997. General and administrative expense
as a percent of net sales was 11.4% both for the years ended  December  31, 1998
and 1997, respectively.  The increase in general and administrative expenses was
primarily  attributable  to increased  payroll costs and certain other  expenses
incurred in connection  with the  Company's  product  development  and expansion
activities into additional states.

         Amortization  of trademark  license and trademarks was $296,000 for the
year  ended  December  31,  1998,  a decrease  of $5,000  from  amortization  of
trademark  license and  trademarks  of $301,000 for the year ended  December 31,
1997.

                                       22

<PAGE>

         Other  expenses  were  $60,000 for the year ended  December 31, 1998, a
decrease of $139,000  or 69.8%  below  other  expenses of $199,000  for the year
ended  December  31,  1997.  This  decrease was  primarily  attributable  to the
expiration of certain consulting  agreements in 1997, which were entered into in
connection with the purchase of the Hansen Business. This decrease was partially
offset  by a new  consulting  agreement  entered  into in 1997  with the  former
president of HBC.

         Operating Income.  Operating income was $6.0 million for the year ended
December  31,  1998,  compared to $1.9  million for the year ended  December 31,
1997. The $4.1 million increase in operating  income was primarily  attributable
to increased  gross profits which was  partially  offset by increased  operating
expenses.

         Net Nonoperating Expense. Net nonoperating expense was $330,000 for the
year ended  December 31, 1998,  which was $262,000  lower than net  nonoperating
expense of $592,000  for the year ended  December  31,  1997.  Net  nonoperating
expense  consists of interest and financing  expense,  interest income and other
expense. Interest and financing expense for the year ended December 31, 1998 was
$387,000 as  compared to $525,000  for the year ended  December  31,  1997.  The
decrease in interest and financing  expense was  attributable to lower financing
fees;  less interest  incurred on the term loan (refer to "Liquidity and Capital
Resources" below); and lower average short-term borrowings during the year ended
December 31, 1998 than during 1997.  Interest income for the year ended December
31, 1998 was $72,000 as compared to interest income of $3,000 for the year ended
December 31, 1997. The increase in interest income was primarily attributable to
interest  earned on excess  cash  invested.  Other  expense of $15,000  for 1998
consists of certain expenses  incurred in connection with the  discontinuance of
operations in the United Kingdom.  Other expense for 1997 consisted of a $70,000
loss  incurred on the disposal of certain  assets,  arising  primarily  from the
closure of the route distribution system

         Provision  for Income  Taxes.  Provision  for income taxes for the year
ended  December 31, 1998 was $2.1  million as compared to  provision  for income
taxes of $40,200 for the year ended December 31, 1997. The increase in provision
for income taxes was primarily  attributable to increased  operating income, and
to a lesser extent,  decreased net  nonoperating  expense and a reduction in the
valuation allowance attributable to prior years net operating losses.

         Net Income. Net income was $3.6 million for the year ended December 31,
1998,  compared to $1.3 million for the year ended  December 31, 1997.  The $2.3
million increase in net income was attributable to increased operating income of
$4.1 million and decreased nonoperating expense of $262,000, which was offset by
increased provision for income taxes of $2.0 million.


Liquidity and Capital Resources

         As of December 31, 1999, the Company had working  capital of $8,997,000
compared to working  capital of $4,997,000 as of December 31, 1998. The increase
in  working  capital  was  primarily  attributable  to net income  earned  after
adjustments for certain noncash  expenses,  primarily  amortization of trademark
license and trademarks,  depreciation and other  amortization,  and compensation
expense  related to the  issuance  of stock  options.  The  increase  in working
capital was partially  offset by increases in trademark  license and trademarks,
the  reclassification  of a portion  of  long-term  debt to  current  portion of
long-term debt and, to a lesser  extent,  increases in deposits and other assets
and acquisitions of property and equipment, and reclassification of a portion of
the deferred tax liability to income taxes payable.

         During 1999, the Company's cash reserves were used for working  capital
including the  acquisition  of increased  inventories  and increases in accounts
receivable and the acquisition of trademark  licenses and trademarks,  increases
in deposits and other assets,  and the acquisition of property and equipment and
to reduce long term debt. The acquisition of increased inventories, increases in
accounts  receivable,  increases in deposits and other  assets,  acquisition  of
property and equipment,  acquisition of trademark  licenses and trademarks,  and


                                       23

<PAGE>

repayment  of the  Company's  term loan,  are  expected to remain the  Company's
principal recurring use of cash and working capital funds.

         Net cash used in investing  activities  for the year ended December 31,
1999 was $1.5 million as compared to net cash used in  investment  activities of
$515,000 in 1998.  The  increase in net cash used in  investing  activities  was
primarily  attributable to increases in deposits and other assets. This increase
was  partially  offset by a decrease  in  purchases  of property  and  equipment
(including  vans  and  promotional  vehicles).  Management,  from  time to time,
considers  the  acquisition  of  capital  equipment,  particularly,  merchandise
display racks,  vans and  promotional  vehicles,  coolers and other  promotional
equipment and businesses  compatible with the image of the Hansen's(R)  brand as
well as the  introduction  of new  product  lines.  In May  1999,  the  Board of
Directors  of the  Company  approved  the  repurchase  by the  Company  of up to
1,000,000  shares of its outstanding  common stock in the market or in privately
negotiated  transactions.  Prior to  December  31,  1999,  the  Company  did not
repurchase any shares of its outstanding common stock.  However,  in March 2000,
the Company began to implement such repurchase  program.  Such purchases will be
financed through available cash, the Company's line of credit or funds generated
from operations.  The Company may require  additional  capital  resources in the
event  of the  acquisition  by it of any  businesses,  depending  upon  the cash
requirements  relating  thereto.  Any such transaction and the repurchase of its
shares of common  stock will also be subject  to the terms and  restrictions  of
HBC's credit facilities.

         Net cash used in financing activities increased to $1.6 million for the
year ended  December  31, 1999 from  $445,000 in 1998.  The increase in net cash
used in financing activities is primarily  attributable to principal payments of
$2.1  million  made on  long-term  debt in the year ended  December  31, 1999 as
compared to principal  payments of $521,000 made in the year ended  December 31,
1998. Additionally,  cash generated by the issuance of common stock decreased to
$28,000 in 1999 from $76,000 in 1998. The increase in net cash used in financing
activities  was  also  attributable  to a  liability  of  $431,000  incurred  in
connection with the acquisition of the Hansen's(R) trademark.

         In 1997, a credit  facility was granted to HBC by Comerica,  consisting
of a  revolving  line of credit of up to $3  million  in  aggregate  at any time
outstanding and a term loan of $4 million. The utilization of the revolving line
of  credit  by HBC  is  dependent  upon  certain  levels  of  eligible  accounts
receivable  and inventory  from time to time.  Such revolving line of credit and
term loan are secured by substantially all of HBC's assets,  including  accounts
receivable, inventory, trademarks, trademark licenses and certain equipment. HBC
entered into a modification agreement with Comerica as of December 1, 1998 which
provides for the original revolving line of credit agreement to be and remain in
full force and effect until May 1, 2000 and for the rate of interest  payable by
HBC on advances  under the revolving  line of credit to be reduced from 1% above
the bank's base  (prime)  rate to 2 1/2% over the bank's  Libor rate or 1/4 of 1
percent  above the bank's base  (prime)  rate,  at the option of HBC. As of both
December 31, 1999 and 1998, no amounts were outstanding under the revolving line
of credit.  HBC  anticipates  that the revolving  line of credit will be renewed
when it expires on May 1, 2000. However, there can be no assurance that it will,
in fact,  be renewed,  or if renewed  that the terms of such renewal will not be
disadvantageous to HBC and its business.

         The  initial  use of  proceeds  under  the  term  loan  was to pay  the
principal  balance  due by the  Company  under a note  payable to ERLY (refer to
"ITEM  3.  LEGAL  PROCEEDINGS").   As  of  December  31,  1999,  $1,332,000  was
outstanding  under the term loan. The term loan is repayable over a period of 60
months from November 1997.

         The credit facility  imposes  quarterly and  annual financial covenants
requiring the Company to maintain  certain  financial ratios and achieve certain
levels of annual income. The credit facility also contains certain non-financial
covenants.  At both  December 31, 1999 and 1998,  the Company was in  compliance
with all covenants.

         Management believes that cash available from operations, including cash
resources  and  revolving  line of credit,  will be  sufficient  for its working
capital needs, including purchase commitments for raw materials, payments of tax


                                       24

<PAGE>

liabilities,  debt servicing,  expansion and development needs, repayments under
the term loan during  2000,  purchases of shares of common stock of the Company,
as well as any  purchases of capital  assets or equipment  through  December 31,
2000.

European Monetary Union

         Within  Europe,  the European  Economic and Monetary  Union (the "EMU")
introduced a new currency,  the euro, on January 1, 1999. The new currency is in
response to the EMU's policy of economic  convergence to harmonize trade policy,
eliminate  business costs  associated with currency  exchange and to promote the
free flow of capital, goods and services.

         On January 1, 1999,  the  participating  countries  adopted the euro as
their local  currency,  initially  available  for  currency  trading on currency
exchanges  and  noncash   transactions  such  as  banking.  The  existing  local
currencies,  or legacy  currencies,  will remain legal tender through January 1,
2002. Beginning January 1, 2002,  euro-denominated  bills and coins will be used
for cash  transactions.  For a period of up to six months  from this date,  both
legacy  currencies and the euro will be legal tender. On or before July 1, 2002,
the participating  countries will withdraw all legacy currencies and exclusively
use the euro.

         The Company's transactions are recorded in U.S. Dollars and the Company
does not currently  anticipate future  transactions  being recorded in the euro.
Based on the lack of  transactions  recorded in the euro,  the Company  does not
believe  that the euro will have a material  effect on the  financial  position,
results of operations or cash flows of the Company. In addition, the Company has
not  incurred  and does not  expect  to incur  any  significant  costs  from the
continued  implementation of the euro,  including any currency risk, which could
materially  affect the  Company's  business,  financial  condition or results of
operations.

         The Company has not experienced any significant operational disruptions
to date and does not currently expect the continued  implementation  of the euro
to cause any significant operational.

New Accounting Pronouncements

         In June 1998, the FASB issued SFAS No. 133,  "Accounting for Derivative
Instruments  and  Hedging  Activities",  which the  Company is required to adopt
effective  in its fiscal  year 2001.  SFAS No. 133 will  require  the Company to
record all derivatives on the balance sheet at fair value.  The Company does not
currently  engage in hedging  activities,  but will  continue  to  evaluate  the
effects of  adopting  SFAS No. 133.  The Company  will adopt SFAS No. 133 in its
fiscal year 2001.

         The Company has adopted the  American  Institute  of  Certified  Public
Accountants  Statement  of  Position  (SOP)  98-1,  Accounting  for the Costs of
Computer Software Developed or Obtained for Internal Use, during 1999. There was
no material impact on the consolidated financial statements as a result.

Year 2000 - Compliance

         Prior to January 1, 2000,  the Company  reviewed  the  readiness of its
computer  systems and business  practices for handling  Year 2000 issues.  These
issues  involve  systems that are date sensitive and may not be able to properly
process  the  transition  from year 1999 to year 2000 and beyond,  resulting  in
miscalculations  and  software  failures.  Year  2000  compliance  updates  were
completed in the fourth quarter of 1999 and the Company's information technology
("IT") and  non-information  technology  ("NIT") computer systems  completed the
transition to the year 2000 without any material issues or problems. The Company
estimates  expenditures  of  approximately  $120,000 were incurred to enable the
Company to become Year 2000 compliant.  No additional expenditures are currently
anticipated.   The  Company  has  been  in  contact  with  critical   suppliers,
co-packers,  customers, and other third parties to determine the extent to which
they may be vulnerable to Year 2000 issues. The Company cannot currently predict
any future effect of third parties' Year 2000 issues.  However,  the Company has


                                       25

<PAGE>

not been made aware of any matter which would  materially  impact the  Company's
business from third parties.

Forward Looking Statements

         The Private Security Litigation Reform Act of 1995 (the "Act") provides
a safe  harbor  for  forward  looking  statements  made by or on  behalf  of the
Company. The Company and it's representatives may from time to time make written
or oral  forward  looking  statements,  including  statements  contained in this
report and other  filings with the  Securities  and Exchange  Commission  and in
reports to  shareholders  and  announcements.  Certain  statements  made in this
report,  including  certain  statements  made  in  management's  discussion  and
analysis,  may  constitute  forward  looking  statements  (within the meaning of
Section  27.A of the  Securities  Act 1933 as amended  and  Section  21.E of the
Securities  Exchange Act of 1934,  as amended)  regarding  the  expectations  of
management  with  respect to  revenues,  profitability,  adequacy  of funds from
operations and the Company's  existing credit facility,  among other things. All
statements  which address  operating  performance,  events or developments  that
management  expects or  anticipates  will or may occur in the  future  including
statements  related to new products,  volume  growth,  revenues,  profitability,
adequacy  of  funds  from  operations,  and/or  the  Company's  existing  credit
facility,  earnings per share growth,  statements  expressing  general  optimism
about  future  operating  results and  non-historical  information,  are forward
looking statements within the meaning of the Act.

         Management  cautions that these statements are qualified by their terms
and/or important  factors,  many of which are outside the control of the Company
that  could  cause  actual  results  and  events to differ  materially  from the
statements made including, but not limited to, the following:

o    Company's  ability to  generate  sufficient  cash flows to support  capital
     expansion  plans and general  operating  activities;
o    Changes in consumer preferences;
o    Changes in demand that are weather  related,  particular in
     areas outside of California;
o    Competitive  products and pricing pressures and the  Company's  ability  to
     gain or maintain share of sales in the marketplace as a  result of  actions
     by competitors;
o    The introduction of new products;
o    Laws and  regulations,  and/or any changes  therein,  including  changes in
     accounting standards,  taxation  requirements  (including tax rate changes,
     new tax laws and revised tax law interpretations) and environmental laws as
     well as the Federal  Food Drug and  Cosmetic  Act,  the Dietary  Supplement
     Health and Education Act, and regulations  made thereunder or in connection
     therewith,  especially those that may affect the way in which the Company's
     products  are  marketed  as well as laws and  regulations  or rules made or
     enforced by the Food and Drug Administration;
o    Changes in the cost and  availability  of raw  materials and the ability to
     maintain favorable supply arrangements and relationships and procure timely
     and/or adequate production of all or any of the Company's products;
o    The Company's ability to achieve earnings forecasts,  which may be based on
     projected  volumes and sales of many  product  types  and/or new  products,
     certain of which are more profitable than others. There can be no assurance
     that the Company will achieve projected levels or mixes of product sales;
o    The Company's ability to penetrate new markets;
o    The marketing  efforts of distributors of the Company's  products,  most of
     which  distribute  products that are  competitive  with the products of the
     Company;
o    Unilateral  decisions by  distributors,  grocery  chains,  specialty  chain
     stores, club stores and other customers to discontinue  carrying all or any
     of the Company's products that they are carrying at any time;
o    The terms and/or  availability of the Company's  credit  facilities and the
     actions  of  it's  creditors;   
o    The   effectiveness   of  the  Company's advertising,   marketing  and
     promotional   programs;
o    Adverse weather conditions, which could reduce demand for the Company's 
     products;
o    The Company's ability to make suitable arrangements for the co-packing of
     its functional drinks in 8.2-ounce slim cans and Smoothies in 11.5-ounce
     cans; and


                                       26

<PAGE>

o    The Company's  and the Company's  customers',  co-packers'  and  suppliers'
     ability  to  replace,  modify or  upgrade  computer  programs  in ways that
     adequately  address  Year 2000 issues.  Given the numerous and  significant
     uncertainties  involved,  there can be no assurance regarding their ability
     to identify and correct all relevant  computer codes and imbedded chips and
     other  unanticipated  difficulties  or the  ability  of  third  parties  to
     remediate their respective systems.

The foregoing list of important factors is not exhaustive.

Sales

         The table set forth below discloses  selected  quarterly data regarding
sales  for the past  five  years.  Data  from any one or more  quarters  are not
necessarily indicative of annual results or continuing trends.

         Sales are  expressed  in  actual  cases  and case  equivalents.  A case
equivalent  is equal to the  amount of soda  concentrate  sold  that will  yield
twenty-four  12-ounce  (354 ml) cans  measured by volume.  Actual  cases of soda
equal  twenty-four  12-ounce cans or 11-ounce (325 ml) bottles,  thirty 12-ounce
cans,  or twelve  23-ounce  (680 ml) bottles or  twenty-four  14-ounce  (414 ml)
bottles measured by volume. A case of apple juice and juice blends equals twelve
32-ounce  bottles,  six 64-ounce glass bottles,  eight 64-ounce P.E.T.  bottles,
four 128-ounce P.E.T. bottles,  twenty-four  8.45-ounce (250 ml) tetra-pak boxes
or the equivalent  volume.  A case of  non-carbonated  iced teas,  lemonades and
juice cocktails  equals  twenty-four  16-ounce (473 ml) or fifteen 20-ounce (591
ml)  bottles  measured  by  volume.  A case of still  water  equals  twenty-four
0.5-liter,  twelve  1.0-liter and twelve  1.5-liter  plastic bottles measured by
volume. A case of fruit juice Smoothies equals  twenty-four  11.5-ounce (340 ml)
cans or twenty-four 16-ounce or 13.5-ounce (400 ml) or 12-ounce bottles or eight
64-ounce P.E.T. bottles measured by volume. A case of "functional" drinks equals
twenty-four  8.2-ounce (243 ml) cans measured by volume.  A case of Health Start
equals twelve  46-ounce (1.36 L) or eight 64-ounce P.E.T.  bottles,  measured by
volume.

         The Company's  quarterly results of operations  reflect seasonal trends
that are  primarily  the result of increased  demand in the warmer months of the
year.  It has been  Hansen's  experience  that  beverage  sales tend to be lower
during the first and fourth  quarters of each fiscal  year.  Because the primary
historical  market for Hansen's  products is  California,  which has a year-long
temperate climate, the effect of seasonal  fluctuations on quarterly results may
have been mitigated;  however,  such  fluctuations may be more pronounced as the
distribution  of Hansen's  products  expands  outside of  California.  Quarterly
fluctuations may also be affected by other factors including the introduction of
new products including Hansen's(R) functional drinks, the opening of new markets
where temperature fluctuations are more pronounced, the addition of new bottlers
and  distributors,  changes in the mix of the sales of its finished products and
soda concentrates and increased advertising and promotional  expenses.  See also
"ITEM 1. BUSINESS Seasonality."


                                       27

<PAGE>

         Case Sales (in Thousands)

                 1999          1998         1997             1996          1995
               --------      ---------     --------      ---------     ---------
   
   Quarter 1     1,372          1,237          861            940           834
   Quarter 2     1,716          1,566        1,383          1,340         1,282
   Quarter 3     2,074          1,845        1,648          1,341         1,580
   Quarter 4     1,779          1,241        1,234            876           902
               --------      ---------     --------      ---------     ---------
   Totals        6,941          5,889        5,126          4,497         4,598
               ========      =========     ========      =========     =========

         Sales Revenues (in Thousands)

                  1999           1998         1997           1996          1995
               --------      ---------     --------      ---------     ---------
   Quarter 1   $15,229       $ 11,265      $ 7,120        $ 7,365       $ 5,434
   Quarter 2    19,142         13,950       11,496         10,394         9,560
   Quarter 3    20,491         16,589       13,439         10,817        12,109
   Quarter 4    17,441         12,062       11,002          6,989         6,888
               --------      ---------     --------      ---------     ---------
   Totals      $72,303       $ 53,866     $ 43,057       $ 35,565      $ 33,991
               ========      =========     ========      =========     =========


Inflation

         The Company does not believe that inflation had a significant impact on
the Company's results of operations for the periods presented.






I
TEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  information  required to be  furnished in response to this item is
submitted  hereinafter  following the signature page hereto at pages F-1 through
F-22.



ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         None.


                                       28

<PAGE>


     PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

General

         Directors  of the Company  are  elected  annually by the holders of the
common  stock  and  executive  officers  are  elected  annually  by the Board of
Directors,  to serve until the next annual meeting of  stockholders or the Board
of  Directors,  as the case may be, or until  their  successors  are elected and
qualified.  It  is  presently  anticipated  that  the  next  annual  meeting  of
stockholders will be held in September 2000.

         Set forth below are the names,  ages and principal  occupations for the
last five years of the directors and/or executive officers of the Company:

         Rodney  C.  Sacks  (50) -  Chairman  of the Board of  Directors  of the
Company,  Chief Executive Officer and director of the Company from November 1990
to the present.  Member of the Executive  Committee of the Board of Directors of
the Company since October 1992. Chairman and a director of HBC from June 1992 to
the present.  Mr. Sacks resigned from his position as Chief Financial Officer of
the Company in July 1996,  which office he had held from  November  1990 to July
1996.

         Hilton H.  Schlosberg (47) - Vice Chairman of the Board of Directors of
the Company,  President,  Chief Operating Officer,  Secretary, and a director of
the Company from November 1990 to the present.  Chief  Financial  Officer of the
Company  since  July 1996.  Member of the  Executive  Committee  of the Board of
Directors of the Company since October  1992.  Member of the Audit  Committee of
the Board of Directors of the Company since September 1997. Vice Chairman of the
Board of  Directors,  Secretary  and a  director  of HBC from  July  1992 to the
present. Director and/or Deputy Chairman of AAF Industries PLC, a United Kingdom
publicly quoted industrial group, from June 1990 until April 1995.

         Benjamin M. Polk (49) - Director of the Company from  November  1990 to
the present. Assistant Secretary of HBC since October 1992 and a director of HBC
since July 1992.  Member of the Audit Committee of the Board of Directors of the
Company since September 1997. Member of the Compensation  Committee of the Board
of Directors of the Company from April 1991 until September  1997.  Partner with
Whitman  Breed  Abbott & Morgan  LLP (New  York,  New York)  where Mr.  Polk has
practiced law with that firm and its predecessor,  Whitman & Ransom, from August
1976 to the present. 1

         Norman C.  Epstein  (59) - Director  of the  Company  and member of the
Compensation Committee of the Board of Directors of the Company since June 1992.
Member and  Chairman of the Audit  Committee  of the Board of  Directors  of the
Company  since  September  1997.  Director  of HBC since July 1992.  Director of
Integrated  Asset  Management  Limited,  a company  listed on the  London  Stock
Exchange since June 1998.  Managing Director of Cheval  Acceptances,  a mortgage
finance  company  based in London,  England.  Partner  with Moore  Stephens,  an
international  accounting  firm,  from 1974 to  December  1996  (senior  partner
beginning 1989 and the managing  partner of Moore  Stephens,  New York from 1993
until 1995).

         Harold C. Taber,  Jr.  (60) - Director of the Company  since July 1992.
Consultant to the Company from July 1, 1997 to June 30, 1999.  Consultant to The
Joseph Company from September 1997 to March 1999.  President and Chief Executive
Officer and a director of HBC from July 1992 to June 1997. On June 30, 1997, Mr.
Taber  resigned  from his  employment  as well as director,  President and Chief
Executive  Officer of HBC. In  addition,  effective  June 30,  1997,  Mr.  Taber
resigned as a member of the Executive Committee on which he served since October
1992.

         Mark S.  Vidergauz  (46) - Director  of the  Company  and member of the
Compensation Committee of the Board of Directors of the Company since June 1998.
Managing  director at the Los Angeles  office of ING Barings LLC, a  diversified
financial  services  institution  headquartered  in the  Netherlands.  Prior  to


                                       29

<PAGE>

joining ING Barings LLC in April 1995, Mr. Vidergauz was a managing  director at
Wedbush Morgan Securities,  an investment banking firm in Los Angeles, from 1991
to 1995.  Prior to  joining  Wedbush,  Mr.  Vidergauz  was a  corporate  finance
attorney in the Los Angeles office of O'Melveny & Meyers.


1 Mr. Polk and his law firm, Whitman Breed Abbott & Morgan LLP, serve as counsel
to the Company.



Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act requires the Company's  directors and
executive  officers,  and persons who own more than ten percent of a  registered
class of the Company's equity securities, to file by specific dates with the SEC
initial  reports of  ownership  and  reports of changes in  ownership  of equity
securities  of the  Company.  Officers,  directors  and greater than ten percent
stockholders  are required by SEC  regulation to furnish the Company with copies
of all Section 16(a) forms that they file.  The Company is required to report in
this  annual  report on Form 10-K any  failure of its  directors  and  executive
officers and greater than ten percent  stockholders  to file by the relevant due
date any of these  reports  during the most recent  fiscal year or prior  fiscal
years.

         To the  Company's  knowledge,  based solely on review of copies of such
reports furnished to the Company during the fiscal year ended December 31, 1999,
all Section 16(a) filing  requirements  applicable  to the  Company's  officers,
directors and greater than ten percent  stockholders were in compliance,  except
as  follows:  Rodney  C.  Sacks and  Hilton H.  Schlosberg,  both  officers  and
directors of the Company, were late in filing their annual statements of changes
in beneficial  ownership with respect to employee stock options  granted to them
during  1999;  and Mark S.  Vidergauz,  a director of the  Company,  was late in
filing his report of beneficial  ownership with respect to stock options granted
to him in June 1998.



ITEM 11. EXECUTIVE COMPENSATION

         The following tables set forth certain information  regarding the total
remuneration  earned  and  grants of  options/SARs  made to the chief  executive
officer and each of the four most highly  compensated  executive officers of the
Company and its  subsidiaries  who earned total cash  compensation  in excess of
$100,000  during the year ended December 31, 1999.  These amounts  reflect total
cash  compensation paid by the Company and its subsidiaries to these individuals
during the fiscal years December 31, 1997 through 1999.


                                       30

<PAGE>

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
----------------------------------------- --------------------------------------------- --------------------
                                                                                            Long Term
                                                  ANNUAL COMPENSATION                     Compensation(4)
                                                                                              Awards(5)
----------------------------- ----------- --------------------------------------------- --------------------
                                                                           Other            Securities
                                                                           Annual           underlying
Name and Principal Positions                              Bonus(2)      Compensation ($)   Options/SARs (#)
                              Year        Salary(1)($)      ($)
<S>                           <C>         <C>             <C>         <C>                  <C>
----------------------------- ----------- --------------- ----------- ----------------- --------------------
Rodney C. Sacks               1999        180,000         25,000          6,088 (3)        100,000
Chairman, CEO                 1998        160,000         34,000      1,927,431 (6)         75,000
and Director                  1997        160,000            -           12,302 (3)            -
----------------------------- ----------- --------------- ----------- ----------------- --------------------
Hilton H. Schlosberg          1999        180,000         25,000          6,088 (3)        100,000
Vice-Chairman, CFO            1998        160,000         34,000      1,689,972 (7)         75,000
President, Secretary and      1997        158,030           -             5,572 (3)            -
Director                                                  
----------------------------- ----------- --------------- ----------- ----------------- --------------------
Mark J. Hall                  1999        150,000         40,000          7,551 (3)            -
Sr. Vice President            1998        136,250         65,000        180,982 (8)         30,000
Distributor Division          1997        116,250         40,000          6,327 (3)        120,000
----------------------------- ----------- --------------- ----------- ----------------- --------------------
Kirk S. Blower                1999        110,000         16,800          7,099 (3)         12,500
Sr. Vice President            1998        111,250         16,800        363,440 (9)            -
Juice Division                1997        102,850         10,000          7,468 (3)            -
----------------------------- ----------- --------------- ----------- ----------------- --------------------
Thomas J. Kelly               1999         98,000         18,000         60,499 (10)        10,000
Secretary and Controller      1998         93,000         18,000             -              60,000
of HBC                        1997         91,000         12,500             -                 -
----------------------------- ----------- --------------- ----------- ----------------- --------------------
</TABLE>


(1) SALARY - Pursuant to his employment  agreement,  Mr. Sacks is entitled to an
annual  base  salary of  $180,000.  For 1998 and  1997,  Mr.  Sacks  agreed to a
temporary  reduction  of his annual  base  salary to  $160,000.  Pursuant to his
employment  agreement,  Mr.  Schlosberg  is entitled to an annual base salary of
$180,000. For 1998, Mr. Schlosberg agreed to a temporary reduction of his annual
base  salary  to  $160,000.  For 1997,  Mr.  Schlosberg  agreed  to a  temporary
reduction  of his annual base salary to $158,030.
  
(2) BONUS - Payments  made in 2000,  1999 and 1998 for bonuses  accrued in 1999,
1998 and 1997.

(3) OTHER  ANNUAL  COMPENSATION  - The cash  value of  perquisites  of the named
persons  did not total  $50,000 or 10% of  payments  of salary and bonus for the
years shown.

(4) LTIP PAYOUTS - None paid. No plan in place.

(5) RESTRICTED  STOCK AWARDS - The Company does  not have a plan for  restricted
stock awards.

(6) Includes $1,921,625  representing the dollar value of the difference between
the price paid for common  stock of the Company  through  the  exercise of stock
options and the fair market  value of the common  stock on the date of exercise;
and $5,806 for automobile expense reimbursement.

(7) Includes $1,684,125  representing the dollar value of the difference between
the price paid for common  stock of the Company  through  the  exercise of stock
options and the fair market  value of the common  stock on the date of exercise;
and $5,847 for automobile expense reimbursement.

(8) Includes  $179,660  representing the dollar value of the difference  between
the price paid for common  stock of the Company  through  the  exercise of stock
options and the fair market  value of the common  stock on the date of exercise;
and $1,322 for automobile expense reimbursement.

(9) Includes  $362,040  representing the dollar value of the difference  between
the price paid for common  stock of the Company  through  the  exercise of stock
options and the fair market  value of the common  stock on the date of exercise;
and $1,400 for automobile expense reimbursement.

(10) Includes $60,499  representing  the dollar value of the difference  between
the price paid for common  stock of the Company  through  the  exercise of stock
options and the fair market value of the common stock on the date of exercise.

ALL OTHER COMPENSATION - none paid
                                       31


<PAGE>

<TABLE>
<CAPTION>
     OPTION/SAR GRANTS FOR THE YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------------------------------------------------- ---------------------------------
                                                                                                Potential realizable value at
                                      INDIVIDUAL GRANTS                                         assumed annual rates of stock
                                                                                               price appreciate for option term
---------------------------------------------------------------------------------------------- ---------------------------------
                                Number of      Percent of total
                               Securities        Options/SARs     Exercise or
                               underlying         granted to       base price
                              Options/SARs     employees in 1999   ($/Share)     Expiration
           Name                granted (#)                                          Date               5%              10%
--------------------------- ------------------ ------------------ ------------- --------------    ------------- ----------------
<S>                            <C>                  <C>              <C>        <C>               <C>               <C>       
Rodney C. Sacks                100,000(1)           23.6%            $4.25      02/02/2009         267,280           677,340
--------------------------- ------------------ ------------------ ------------- --------------    ------------- ----------------
Hilton H. Schlosberg           100,000(1)           23.6%            $4.25      02/02/2009         267,280           677,340
--------------------------- ------------------ ------------------ ------------- --------------    ------------- ----------------
Kirk S. Blower                  12,500(2)            2.9%            $4.25      02/02/2005          18,068            40,989
--------------------------- ------------------ ------------------ ------------- --------------    ------------- ----------------
Thomas J. Kelly                 10,000(2)            2.4%            $4.25      02/02/2005          14,454            32,791
--------------------------- ------------------ ------------------ ------------- --------------    ------------- ----------------
</TABLE>


(1) 9,500  options to purchase the  Company's  common stock are  exercisable  on
February  2, 1999;  23,500  are  exercisable  on  February  2, 2000;  23,500 are
exercisable  on February 2, 2001;  23,500 are  exercisable  on February 2, 2002;
and, 20,000 are exercisable on February 2, 2003.

(2) Options to purchase the Company's  common stock become  exercisable in equal
annual increments over 5 years beginning February 2, 2000.


<TABLE>
<CAPTION>

AGGREGATED OPTION/SAR EXERCISES DURING THE YEAR ENDED DECEMBER 31 1999 AND OPTION/SAR VALUES AT DECEMBER 31, 1999
------------------------------- --------------------- --------------------- --------------------- ------------------------
                                                                                 Number of         Value of unexercised
                                                                                 underlying            in-the-money
                                                                                unexercised           options/SARs at
                                                                              options/SARs at        December 31, 1999
                                                                             December 31, 1999              ($)
                                                                                    (#)
                                                                            --------------------- ------------------------
                                 Shares acquired on          Value              Exercisable/           Exercisable/
            Name                    exercise (#)          Realized ($)         Unexercisable           Unexercisable
------------------------------- --------------------- --------------------- --------------------- ------------------------
<S>                                    <C>                  <C>                 <C>                   <C>  
Rodney C. Sacks                           -                    -                47,000 / 90,500(1)    102,711 /  5,702
------------------------------- --------------------- --------------------- --------------------- ------------------------
Hilton H. Schlosberg                      -                    -                47,000 / 90,500(1)    102,711 /  5,702
------------------------------- --------------------- --------------------- --------------------- ------------------------
Mark J. Hall                              -                    -                34,000 / 82,000(2)    105,302 /261,446
------------------------------- --------------------- --------------------- --------------------- ------------------------
Kirk J. Blower                            -                    -                     0 / 12,500(3)          0 /    788
------------------------------- --------------------- --------------------- --------------------- ------------------------
Thomas J. Kelly                        15,473         $     60,499              44,527 / 10,000(4)    121,247 /    630
------------------------------- --------------------- --------------------- --------------------- ------------------------
</TABLE>




(1)  Includes  options to purchase  37,500  shares of common  stock at $1.59 per
share of which all are exercisable at December 31, 1999,  granted  pursuant to a
Stock Option  Agreement  dated  January 30, 1998 between the Company and Messrs.
Sacks and Schlosberg,  respectively;  and options to purchase  100,000 shares of
common stock at $4.25 per share of which 9,500 are  exercisable  at December 31,
1999, granted pursuant to Stock Option Agreements dated February 2, 1999 between
the Company and Messrs. Sacks and Schlosberg, respectively.

(2)  Includes  options to purchase  96,000  shares of common  stock at $1.06 per
share of which 24,000 are exercisable at December 31, 1999,  granted pursuant to
a Stock  Option  Agreement  dated  February 10, 1997 between the Company and Mr.
Hall;  options to purchase  20,000  shares of common stock at $1.59 per share of
which 10,000 are exercisable at December 31, 1999,  granted  pursuant to a Stock
Option Agreement dated January 30, 1998 between the Company and Mr. Hall.

(3)Includes  options to purchase 12,500 share of common stock at $4.25 per share
of which none are exercisable at December 31, 1999,  granted pursuant to a Stock
Option Agreement dated February 2, 1999 between the Company and Mr. Blower.


                                       32

<PAGE>

(4)Includes options to purchase 44,527 shares of common stock at $1.59 per share
of which all are exercisable at December 31, 1999,  granted  pursuant to a Stock
Option  Agreement dated January 30, 1998 between the Company and Mr. Kelly;  and
options to purchase  10,000  shares of common  stock at $4.25 per share of which
none are  exercisable at December 31, 1999,  granted  pursuant to a Stock Option
Agreement dated February 2, 1999 between the Company and Mr. Kelly.



Performance Graph

The following graph shows a five-year comparison of cumulative total returns.(1)

                           TOTAL SHAREHOLDER RETURNS

                            ANNUAL RETURN PERCENTAGE

For the years ended December 31,

Company Name/Index                 1995      1996      1997      1998      1999
----------------------           -------   -------   -------   -------   -------
HANSEN NAT CORP                  (63.36)    54.59     70.62    196.63    (19.78)
S&P SMALLCAP 600 INDEX            29.96     21.32     25.58     (1.31)    12.40
PEER GROUP                       (25.39)    49.88     34.05    (43.03)     9.99



                                INDEXED RETURNS

For the years ended December 31,

                         Base
                        Period
Company Name/Index       1994      1995      1996      1997      1998      1999
---------------------- -------   -------   -------   -------   -------   -------
HANSEN NAT CORP           100     36.64     56.64     96.64    286.67    229.97
S&P SMALLCAP 600 INDEX    100    129.96    157.67    198.01    195.42    219.66
PEER GROUP                100     74.61    111.83    149.91     85.41     93.94

 

(1) Annual return assumes  reinvestment  of dividends.  Cumulative  total return
assumes an initial  investment  of $100 on  December  31,  1994.  The  Company's
self-selected   peer  group  is  comprised  of  Saratoga  Beverage  Group,  Cott
Corporation,  National Beverage Corporation,  Clearly Canadian Beverage Company,
Triarc Companies,  Inc., Leading Brands, Inc. and Northland Cranberries,  all of
which traded during the entire five-year period.


                                       33

<PAGE>

Employment Agreements

         The Company entered into an employment agreement dated as of January 1,
1999,  with Rodney C. Sacks pursuant to which Mr. Sacks renders  services to the
Company as its Chairman and Chief Executive Officer for an annual base salary of
$180,000,  for the twelve-month period ending December 31, 1999, increasing by a
minimum of 8% for each  subsequent  twelve-month  period  during the  employment
period,  plus an annual bonus in an amount  determined at the  discretion of the
Board of Directors and certain fringe benefits.  The employment period commenced
on January 1, 1999 and ends on December 31, 2003.

         The Company  also  entered  into an  employment  agreement  dated as of
January 1, 1999,  with Hilton H.  Schlosberg  pursuant  to which Mr.  Schlosberg
renders  services  to the  Company  as its Vice  Chairman,  President  and Chief
Financial Officer,  for an annual base salary of $180,000,  for the twelve-month
period  ending  December  31,  1999,  increasing  by a  minimum  of 8% for  each
subsequent  twelve-month  period during the  employment  period,  plus an annual
bonus in an amount  determined  at the  discretion of the Board of Directors and
certain fringe benefits.  The employment period commenced on January 1, 1999 and
ends on December 31, 2003.

          Effective  June 30, 1997,  Mr. Taber elected to retire and  terminated
his  employment  agreement  with HBC and entered into a Severance and Consulting
Agreement  with the Company  and HBC (the  "Consulting  Agreement")  pursuant to
which, among other matters, HBC agreed to retain Mr. Taber as a consultant for a
period  of two years at a fixed  monthly  fee of $5,000  and Mr.  Taber's  Stock
Option  Agreement  with the Company dated as of June 30, 1995 was terminated and
replaced with a new Stock Option Agreement with the Company dated as of June 20,
1997  (the  "Replacement  Stock  Option  Agreement").  Under  the  terms  of the
Replacement  Stock Option  Agreement,  Mr. Taber was granted options to purchase
100,000  shares of common  stock  exercisable  until June 30,  1999 at $1.38 per
share.  Such  options were duly  exercised  by Mr. Taber during 1998.  Mr. Taber
remains a director  of the  Company.  In  addition,  Mr.  Taber  agreed to repay
amounts owed by him to HBC under a certain promissory note by offsetting amounts
owed under the note  against  accrued  and  unpaid  base pay  payable  under Mr.
Taber's employment agreement and amounts payable under the Consulting Agreement,
beginning January 1, 1998.  Such  promissory note was paid in  full by Mr. Taber
during 1999.

         The preceding  descriptions  of the  employment  agreements for Messrs.
Sacks and Schlosberg and the Consulting  Agreement and Replacement  Stock Option
Agreement  with Mr. Taber are  qualified in their  entirety by reference to such
agreements  which have been filed or  incorporated  by  reference as exhibits to
this report.

Directors' Compensation

         The Company's current policy is to pay outside directors (non-executive
officers)  who are not  contractually  entitled  to be  nominated  to  serve  as
directors,  annual  fees of $7,000  plus $500 for each  meeting  attended of the
Board of Directors or any committee thereof. Norman E. Epstein, Benjamin M. Polk
and Mark S. Vidergauz  earned  directors fees of $8,000 for the one-year  period
ended December 31, 1999.  Harold C. Taber, Jr. earned outside  directors fees of
$4,500 for the six-month period ended December 31, 1999.

Employee Stock Option Plan

         The Company has a stock option plan (the "Plan") that  provides for the
grant of options to purchase up to  3,000,000  shares of the common stock of the
Company to certain key  employees of the Company and its  subsidiaries.  Options
granted  under the Plan may either be incentive  stock options  qualified  under
Section 422 of the Internal  Revenue Code of 1986, as amended,  or non-qualified
options.  Such options are exercisable at fair market value on the date of grant
for a period of up to ten years.  Under the Plan,  shares subject to options may
be purchased for cash, for shares of common stock valued at fair market value on
the date of purchase or in  consideration  of the cancellation of options valued
at the  difference  between the exercise price thereof and the fair market value
of the common stock on the date of  exercise.  The Plan is  administered  by the


                                       34

<PAGE>

Compensation  Committee of the Board of  Directors of the Company,  comprised of
directors who have not received  grants of options under the Plan.  Grants under
the Plan are made pursuant to individual agreements between the Company and each
grantee that  specifies the terms of the grant,  including  the exercise  price,
exercise period, vesting and other terms thereof.

Outside Directors Stock Option Plan

         The  Company  has  an  option  plan  for  its  outside  directors  (the
"Directors  Plan") that  provides  for the grant of options to purchase up to an
aggregate  of 100,000  shares of common stock of the Company to directors of the
Company who are not and have not been employed by or acted as consultants to the
Company and its  subsidiaries  or  affiliates  and who are not and have not been
nominated  to the Board of Directors  of the Company  pursuant to a  contractual
arrangement.  On the date of the  annual  meeting  of  stockholders  at which an
eligible  director is initially  elected,  each eligible director is entitled to
receive a one-time grant of an option to purchase 6,000 shares (12,000 shares if
the  director is serving on a committee  of the Board) of the  Company's  Common
Stock  exercisable  at the closing price for a share of common stock on the date
of grant.  Options become  exercisable  one-third each on the first,  second and
third anniversary of the date of grant; provided,  however, that options granted
as of February 14, 1995 are exercisable 66 2/3% on the date of grant and 100% on
July 8, 1995;  provided  further,  that all options held by an eligible director
become  fully  and  immediately  exercisable  upon a change  in  control  of the
Company.  Options  granted  under  the  Directors  Plan  that are not  exercised
generally  expire ten years after the date of grant.  Option  grants may be made
under the Directors  Plan for ten years from the effective date of the Directors
Plan. The Directors  Plan is a "formula plan" so that a non-employee  director's
participation   in  the  Directors   Plan  does  not  affect  his  status  as  a
"disinterested  person" (as defined in Rule 16b-3 under the Securities  Exchange
Act of 1934).


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)               The  following  table sets forth  information,  as of March 2,
                  2000,   of  the  only   persons   known  to  the  Company  who
                  beneficially own more than 5% of the outstanding  common stock
                  of the Company:

Title            Name and Address of      Amount and Nature of        Percent
Of Class          Beneficial Owner         Beneficial Ownership        of Class

--------------- ----------------------- --------------------------- ------------
Common Stock     Brandon Limited                                              
                     Partnership No. 1 (1)       654,822                 6.5%
                 Brandon Limited
                     Partnership No. 2 (2)     2,831,667                28.3%
                 Rodney C. Sacks       (3)     3,944,489  (4)           39.1%
                 Hilton H. Schlosberg  (5)     3,905,586  (6)           38.7%

(1) The mailing  address of Brandon No. 1 is P.O.  Box 30749,  Seven Mile Beach,
Grand  Cayman,  British West Indies.  The general  partners of Brandon No. 1 are
Rodney C. Sacks and Hilton H. Schlosberg.
(2) The mailing  address of Brandon No. 2 is P.O.  Box 30749,  Seven Mile Beach,
Grand  Cayman,  British West Indies.  The general  partners of Brandon No. 2 are
Rodney C. Sacks and Hilton H. Schlosberg.

(3) The mailing address of Mr. Sacks is 2380 Railroad Street, Suite 101, Corona,
California 92880.

(4) Includes  387,500 shares of common stock owned by Mr. Sacks;  654,822 shares
beneficially  held by Brandon No. 1 because Mr.  Sacks is one of Brandon No. 1's
general  partners;  and  2,831,667  shares  beneficially  held by Brandon  No. 2
because  Mr.  Sacks is one of Brandon No. 2's general  partners.  Also  includes
options to purchase 37,500 shares of common stock exercisable at $1.59 per share
granted pursuant to a Stock Option Agreement dated January 30, 1998; and options
presently  exercisable to purchase 33,000 shares of common stock, out of options


                                       35

<PAGE>

to purchase a total of 100,000 shares,  exercisable at $4.25 per share,  granted
pursuant to a Stock Option  Agreement dated February 2, 1999 between the Company
and Mr. Sacks.

Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially owned
by him  hereunder  except (i) 387,500  shares of common  stock;  (ii) the 70,500
shares presently exercisable under Stock Option Agreements; (iii) 243,546 shares
held by Brandon No. 1 allocable to the limited partnership  interests in Brandon
No.  1 held by Mr.  Sacks,  his  children  and a trust  for the  benefit  of his
children; and (iv) 250,000 shares held by Brandon No. 2 allocable to the limited
partnership  interests  in Brandon No. 2 held by Mr.  Sacks,  his children and a
trust for the benefit of his children.

(5) The mailing address of Mr.  Schlosberg is 2380 Railroad  Street,  Suite 101,
Corona, California 92880.

(6) Includes  348,597 shares of common stock owned by Mr.  Schlosberg,  of which
2,000 shares are owned jointly by Mr.  Schlosberg  and his wife,  654,822 shares
beneficially  held by Brandon No. 1 because Mr. Schlosberg is one of Brandon No.
1's general  partners;  and 2,831,667 shares  beneficially held by Brandon No. 2
because Mr. Schlosberg is one of Brandon No. 2's general partners. Also includes
options to purchase 37,500 shares of common stock exercisable at $1.59 per share
granted  pursuant to a Stock Option Agreement dated January 30, 1998 between the
Company and Mr. Schlosberg; and options presently exercisable to purchase 33,000
shares of common  stock,  out of options to purchase a total of 100,000  shares,
exercisable  at $4.25 per share,  granted  pursuant to a Stock Option  Agreement
dated February 2, 1999 between the Company and Mr. Schlosberg.

Mr. Schlosberg  disclaims beneficial ownership of all shares deemed beneficially
owned by him  hereunder  except (i)  348,597  shares of common  stock,  (ii) the
70,500 shares presently exercisable under Stock Option Agreements; (iii) 247,911
shares held by Brandon No. 1 allocable to the limited  partnership  interests in
Brandon No 1 held by Mr.  Schlosberg  and his children;  and (iv) 250,000 shares
held by Brandon No. 2 allocable to the limited partnership  interests in Brandon
No. 2 held by Mr. Schlosberg and his children.


(b)               The following table sets forth information as to the ownership
                  of  shares  of  Common  Stock,  as of March 2,  2000,  held by
                  persons who are directors of the Company,  naming them, and as
                  to directors  and officers of the Company as a group,  without
                  naming them:

Title of Class    Name                     Amount Owned         Percent of Class
----------------- ---------------------    -------------------- ----------------
Common Stock      Rodney C. Sacks          3,944,489(1)                 39.1%
                  Hilton H. Schlosberg     3,905,586(2)                 38.7%
                  Harold C. Taber, Jr.       107,419(3)                  1.1%
                  Benjamin M. Polk            25,600(4)                   * %
                  Norman C. Epstein           13,149(5)                   * %
                  Mark S. Vidergauz            4,000(6)                   * %

Officers and Directors as a group (6 members:
4,513,754 shares or 44.4% in aggregate)

* Less than 1%


(1) Includes  387,500 shares of common stock owned by Mr. Sacks;  654,822 shares
beneficially  held by Brandon No. 1 because Mr.  Sacks is one of Brandon No. 1's
general  partners;  and  2,831,667  shares  beneficially  held by Brandon  No. 2
because  Mr.  Sacks is one of Brandon No. 2's general  partners.  Also  includes
options to purchase 37,500 shares of common stock exercisable at $1.59 per share
granted pursuant to a Stock Option Agreement dated January 30, 1998; and options
presently  exercisable to purchase 33,000 shares of common stock, out of options
to purchase a total of 100,000 shares,  exercisable at $4.25 per share,  granted
pursuant to a Stock Option  Agreement dated February 2, 1999 between the Company
and Mr. Sacks.

Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially owned
by him  hereunder  except (i) 387,500  shares of common  stock;  (ii) the 70,500
shares presently exercisable under Stock Option Agreements;  (iii) 243,546 share
held by Brandon No. 1 allocable to the limited partnership  interests in Brandon
No.  1 held by Mr.  Sacks,  his  children  and a trust  for the  benefit  of his
children; and (iv) 250,000 shares held by Brandon No. 2 allocable to the limited
partnership  interests  in Brandon No. 2 held by Mr.  Sacks,  his children and a
trust for the benefit of his children.



                                       36

<PAGE>

(2) Includes  348,597  shares of common stock owned by Mr.  Schlosberg  of which
2,000 shares are owned jointly by Mrs.  Schlosberg and his wife;  654,822 shares
beneficially  held by Brandon No. 1 because Mr. Schlosberg is one of Brandon No.
1's general  partners;  and 2,831,667 shares  beneficially held by Brandon No. 2
because Mr. Schlosberg is one of Brandon No. 2's general partners. Also includes
options to purchase 37,500 shares of common stock exercisable at $1.59 per share
granted  pursuant to a Stock Option Agreement dated January 30, 1998 between the
Company and Mr. Schlosberg; and options presently exercisable to purchase 33,000
shares of common  stock,  out of options to purchase a total of 100,000  shares,
exercisable  at $4.25 per share,  granted  pursuant to a Stock Option  Agreement
dated February 2, 1999 between the Company and Mr. Schlosberg.

Mr. Schlosberg  disclaims beneficial ownership of all shares deemed beneficially
owned by him  hereunder  except (i)  348,597  shares of common  stock,  (ii) the
70,500 shares presently exercisable under Stock Option Agreements; (iii) 247,911
shares held by Brandon No. 1 allocable to the limited  partnership  interests in
Brandon No 1 held by Mr.  Schlosberg  and his children;  and (iv) 250,000 shares
held by Brandon No. 2 allocable to the limited partnership  interests in Brandon
No. 2 held by Mr. Schlosberg and his children.

(3)  Includes  71,137  shares of common stock owned by Mr.  Taber;  and 36,281.7
shares of common  stock owned by the Taber  Family  Trust of which Mr. Taber and
his wife are trustees.

(4) Includes  13,600 shares of the  Company's  common stock jointly owned by Mr.
Polk and his wife.  Also  include  options to purchase  12,000  shares of common
stock  exercisable  at $1.38 per share,  granted under a Stock Option  Agreement
with the Company dated as of June 30, 1995 pursuant to the Directors Plan.

(5) Includes 13,149 shares of common stock owned by Mr. Epstein.

(6) Includes  options  presently  exercisable to purchase 4,000 shares of common
stock, out of options to purchase a total of 12,000 shares, exercisable at $3.72
per share,  granted under a Stock Option  Agreement with the Company dated as of
June 18, 1998 pursuant to the Directors Plan.

     There are no  arrangements  known to the Company the operation of which may
at a subsequent date result in a change of control of the Company.


  ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Benjamin  M. Polk is a partner  in the law firm of Whitman  Breed  Abbott &
Morgan LLP, a law firm  retained  by the  Company  since 1992 and in the current
fiscal year.

     Rodney C. Sacks is  current  acting as the sole  Trustee of a trust  formed
pursuant to an Agreement of Trust dated July 27, 1992 for the purpose of holding
the Hansen's  (R)  trademark.  The Company and HBC have agreed to indemnify  Mr.
Sacks and hold him harmless  from any claims,  loss or liability  arising out of
his acting as Trustee.

     During 1999 the  Company  purchased  promotional items from IFM Group, Inc.
("IFM"). Rodney C. Sacks, together with members of his family, own approximately
27% of the issued shares in IFM. Hilton H. Schlosberg,  together with members of
his family,  own approximately  43% of the issued shares in IFM.  Purchases from
IFM of  promotional  items in 1999,  1998 and 1997 were  $121,289,  $151,393 and
$20,092,  respectively. The Company continues to purchase promotional items from
IFM in 2000.

     The preceding descriptions of agreements are qualified in their entirety by
reference to such agreements which have been filed as exhibits to this Report.


                                       37

<PAGE>



PART IV


ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                      FORM 8-K


(a)  1. Exhibits

     See the Index to Exhibits included hereinafter.

     2. Index to Financial Statements filed as part of this Report:

     Independent Auditors' Report                                            F-2

     Consolidated Balance Sheets as of December 31, 1999 and 1998            F-3

     Consolidated Statements of Income for the years ended 
      December 31, 1999, 1998 and 1997                                       F-4
     
     Consolidated Statements of Comprehensive Income for the years
      ended December 31, 1999, 1998 and 1997                                 F-5

     Consolidated Statements of Shareholders' Equity for the years
      ended December 31, 1999, 1998 and 1997                                 F-6

     Consolidated Statements of Cash Flows for the years ended
      December 31, 1999, 1998 and 1997                                       F-7

     Notes to Consolidated Financial Statements for the years ended          
      December 31, 1999, 1998 and 1997                                       F-9

(b)  Financial Statement Schedules

     Valuation and Qualifying Accounts for the years ended
      December 31,1999, 1998 and 1997                                       F-22

(c)  Reports on Form 8-K
     None


                                       38

<PAGE>



SIGNATURES

     Pursuant to the  requirements  of  Sections 13 and 15(d) 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.

                           HANSEN NATURAL CORPORATION


                        By:   /s/ RODNEY C. SACKS         Date:   March 30, 2000
                             -------------------------                    
                              Rodney C. Sacks
                              Chairman of the Board

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant in the capacities and on the dates indicated.

Signature                   Title                                 Date

/s/ RODNEY C. SACKS         Chairman of the Board of Directors    March 30, 2000
------------------------     and Chief Executive Officer
Rodney C. Sacks              (Principal Executive Officer)


/s/ HILTON H. SCHLOSBERG 
------------------------    Vice Chairman of the Board of         March 30, 2000
Hilton H. Schlosberg         Directors, President, Chief
                             Operating Officer, Principal
                             Financial and Accounting Officer
                             and Secretary

/s/BENJAMIN M. POLK         Director                              March 30, 2000
------------------------
Benjamin M. Polk



/s/ NORMAN C. EPSTEIN       Director                              March 30, 2000
------------------------
Norman C. Epstein



/s/ HAROLD C. TABER, JR.    Director                              March 30, 2000
------------------------
Harold C. Taber, Jr.



/s/ MARK S. VIDERGAUZ       Director                              March 30, 2000
------------------------
Mark S. Vidergauz



                                       39

<PAGE>



INDEX TO EXHIBITS

     The following  designated  exhibits,  as indicated  below, are either filed
herewith  or have  heretofore  been  filed  with  the  Securities  and  Exchange
Commission  under the Securities  Act of 1933 or the Securities  Exchange Act of
1934 as indicated by footnote.

<TABLE>
----------------- -------------------------------------------------------------------------------------------
Exhibit No.       Document Description
----------------- -------------------------------------------------------------------------------------------
<S>               <C>
3(a)              Certificate of Incorporation 1
----------------- -------------------------------------------------------------------------------------------
3(b)              Amendment to Certificate of Incorporation dated October 21, 1992. 2
----------------- -------------------------------------------------------------------------------------------
3(c)              By-Laws  2
----------------- -------------------------------------------------------------------------------------------
10(c)             Asset Purchase  Agreement dated June 8, 1992 ("Asset  Purchase  Agreement"),  by and among
                  Unipac Corporation  ("Unipac"),  Hansen Beverage Company ("Hansen"),  California CoPackers
                  Corporation  ("CoPackers"),  South Pacific Beverages,  Ltd. ("SPB"),  Harold C. Taber, Jr.
                  ("Taber"),  Raimana  Martin ("R.  Martin"),  Charles Martin ("C.  Martin"),  and Marcus I.
                  Bender  ("Bender"),  and  with  respect  to  certain  provisions,  ERLY  Industries,  Inc.
                  ("ERLY"),   Bender  Consulting   Incorporated   ("Bender   Consulting")  and  Black  Pearl
                  International, Ltd. ("Blank Pear"). 2
----------------- -------------------------------------------------------------------------------------------
10(d)             First Amendment to Asset Purchase Agreement dated as of July 10, 1992. 2
----------------- -------------------------------------------------------------------------------------------
10(e)             Second Amendment to Asset Purchase Agreement dated as of July 16, 1992. 2
----------------- -------------------------------------------------------------------------------------------
10(f)             Third Amendment to Asset Purchase Agreement dated as of July 17, 1992. 2
----------------- -------------------------------------------------------------------------------------------
10(g)             Fourth Amendment to Asset Purchase Agreement dated as of July 24, 1992. 2
----------------- -------------------------------------------------------------------------------------------
10(h)             Subordinated  Secured  Promissory  Note of Hansen in favor of ERLY dated July 27,  1992 in
                  the principal amount of $4,000,000.  2
----------------- -------------------------------------------------------------------------------------------
10(i)             Security Agreement dated July 27, 1992 by and between Hansen and ERLY. 2
----------------- -------------------------------------------------------------------------------------------
10(j)             Stock  Option  Agreement  by and between SPB and Unipac  dated July 27, 1992 for an option
                  price of $4.75 per share. 2
----------------- -------------------------------------------------------------------------------------------
10(k)             Stock Option  Agreement by and between  Taber and Unipac dated July 27, 1992 for an option
                  price of $4.75 per share. 2
----------------- -------------------------------------------------------------------------------------------
10(l)             Stock  Option  Agreement  by and between  CoPackers  and Unipac dated July 27, 1992 for an
                  option price of $4.75 per share. 2
----------------- -------------------------------------------------------------------------------------------
10(n)             Stock  Option  Agreement  by and between SPB and Unipac  dated July 27, 1992 for an option
                  price of $2.50 per share. 2
----------------- -------------------------------------------------------------------------------------------
10(o)             Stock  Option  Agreement  by and between  CoPackers  and Unipac dated July 27, 1992 for an
                  option price of $2.50 per share. 2
----------------- -------------------------------------------------------------------------------------------
10(p)             Assignment  Agreement re:  Trademarks by and between Hansen's Juices,  Inc.  ("FJC"),  and
                  Hansen, dated July 27, 1992. 8
----------------- -------------------------------------------------------------------------------------------
10(q)             Assignment  of  Trademarks  dated July 27, 1992 by FJC to Gary  Hansen,  Anthony  Kane and
                  Burton S. Rosky,  as trustees under that certain trust  agreement dated July 27, 1992 (the
                  "Trust"). 8
----------------- -------------------------------------------------------------------------------------------
10(r)             Assignment of License by CoPackers to Hansen dated  as of July 27, 1992. 8
----------------- -------------------------------------------------------------------------------------------
10(s)             Employment Agreement between Hansen and Taber dated as of July 27, 1992. 3
----------------- -------------------------------------------------------------------------------------------
10(t)             Consulting Agreement by and between Hansen and Black Pearl dated July 27, 1992. 3
----------------- -------------------------------------------------------------------------------------------
10(u)             Consulting Agreement by and between Hansen and C. Martin dated July 27, 1992. 3
----------------- -------------------------------------------------------------------------------------------
10(w)             Registration Rights Agreement by and among Unipac, SPB, CoPackers,  Taber,  Wedbush Morgan
                  Securities ("Wedbush"), Rodney C. Sacks, and Hilton H. Schlosberg, dated July 27, 1992. 3
----------------- -------------------------------------------------------------------------------------------
10(z)             Soda Side Letter  Agreement  dated June 8, 1992 by and among Unipac,  Hansen,  SPB,  Black
                  Pearl, Tahiti Beverages, S.A.R.L., R. Martin and C. Martin. 4
----------------- -------------------------------------------------------------------------------------------
10(bb)            Hansen/Taber Agreement dated July 27, 1992 by and among Hansen and Taber. 8
----------------- -------------------------------------------------------------------------------------------
10(cc)            Other Beverage License  Agreement dated July 27, 1992 by and between Hansen and the Trust.8
----------------- -------------------------------------------------------------------------------------------
                                       40

<PAGE>

10(dd)            Non-Beverage License Agreement dated July 27, 1992 by and between Hansen and the Trust. 8
----------------- -------------------------------------------------------------------------------------------
10(ee)            Agreement  of Trust  dated  July 27,  1992 by and among FJC and  Hansen  and Gary  Hansen,
                  Anthony Kane and Burton S. Rosky.  8
----------------- -------------------------------------------------------------------------------------------
10(ff)            Carbonated  Beverage  License  Agreement dated July 27, 1992 by and between Hansen and the
                  Trust.  8
----------------- -------------------------------------------------------------------------------------------
10(gg)            Royalty Sharing Agreement dated July 27, 1992 by and between Hansen and the Trust.  8
----------------- -------------------------------------------------------------------------------------------
10(hh)            Fresh Juices  License  Agreement  dated as of July 27, 1992 by and between  Hansen and the
                  Trust.  8
----------------- -------------------------------------------------------------------------------------------
10(ii)            Incentive  Stock Option  Agreement  dated July 27, 1992 by and between Unipac and Taber at
                  the option price of $2.00 per share.  2
----------------- -------------------------------------------------------------------------------------------
10(jj)            CoPacking  Agreement dated November 24, 1992 by and between Tropicana Products Sales, Inc.
                  and Hansen.  4
----------------- -------------------------------------------------------------------------------------------
10(kk)            Office  Lease,  dated  December 16, 1992 by and between Lest C. Smull as Trustee,  and his
                  Successors under  Declaration of Trust for the Smull family,  dated December 7, 1984 , and
                  Hansen.  5
----------------- -------------------------------------------------------------------------------------------
10(ll)            Stock  Option  Agreement  dated as of June 15,  1992 by and  between  Unipac and Rodney C.
                  Sacks.  5
----------------- -------------------------------------------------------------------------------------------
10(mm)            Stock  Option  Agreement  dated as of June 15,  1992 by and  between  Unipac and Hilton H.
                  Schlosberg.  5
----------------- -------------------------------------------------------------------------------------------
10(nn)            Stock Option  Agreement  dated as of February 14, 1995 between Hansen Natural  Corporation
                  and Benjamin M. Polk.  7
----------------- -------------------------------------------------------------------------------------------
10(oo)            Stock Option  Agreement  dated as of February 14, 1995 between Hansen Natural  Corporation
                  and Norman C. Epstein.  7
----------------- -------------------------------------------------------------------------------------------
10(pp)            Employment  Agreement  dated as of January 1, 1994 between Hansen Natural  Corporation and
                  Hilton H. Schlosberg.  6
----------------- -------------------------------------------------------------------------------------------
10(qq)            Employment  Agreement  dated as of January 1, 1994 between Hansen Natural  Corporation and
                  Rodney C. Sacks.  6
----------------- -------------------------------------------------------------------------------------------
10(rr)            Stock Option  Agreement  dated as of July 3, 1995 between Hansen Natural  Corporation  and
                  Rodney C. Sacks. 8
----------------- -------------------------------------------------------------------------------------------
10(ss)            Stock Option  Agreement  dated as of July 3, 1995 between Hansen Natural  Corporation  and
                  Hilton H. Schlosberg.  8
----------------- -------------------------------------------------------------------------------------------
10(tt)            Stock Option  Agreement  dated as of June 30, 1995 between Hansen Natural  Corporation and
                  Harold C. Taber, Jr.  8
----------------- -------------------------------------------------------------------------------------------
10(uu)            Standard  Industrial  Lease  Agreement  dated as of April 25, 1997 between Hansen Beverage
                  Company and 27 Railroad Partnership L.P. 9
----------------- -------------------------------------------------------------------------------------------
10(vv)            Sublease  Agreement  dated as of April 25, 1997 between Hansen  Beverage  Company and U.S.
                  Continental Packaging, Inc. 9
----------------- -------------------------------------------------------------------------------------------
10(ww)            Packaging  Agreement  dated  April 14,  1997  between  Hansen  Beverage  Company  and U.S.
                  Continental Packaging, Inc. 10
----------------- -------------------------------------------------------------------------------------------
10(xx)            Revolving  Credit Loan and Security  Agreement dated May 15, 1997 between  Comerica Bank -
                  California and Hansen Beverage Company. 10
----------------- -------------------------------------------------------------------------------------------
10(yy)            Severance and Consulting  Agreement dated as of June 20, 1997 by and among Hansen Beverage
                  Company, Hansen Natural Corporation and Harold C. Taber, Jr. 10
----------------- -------------------------------------------------------------------------------------------
10(zz)            Stock  Option  Agreement  dated  as of  June  20,  1997  by  and  between  Hansen  Natural
                  Corporation and Harold C. Taber, Jr. 10
----------------- -------------------------------------------------------------------------------------------
10 (aaa)          Variable Rate  Installment  Note dated October 14, 1997 between Comerica Bank - California
                  and Hansen Beverage Company. 10
----------------- -------------------------------------------------------------------------------------------
10 (bbb)          Stock  Option  Agreement  dated as of  January  30,  1998 by and  between  Hansen  Natural
                  Corporation and Rodney C. Sacks11
----------------- -------------------------------------------------------------------------------------------
10 (ccc)          Stock  Option  Agreement  dated as of  January  30,  1998 by and  between  Hansen  Natural
                  Corporation and Hilton S. Schlosberg11
----------------- -------------------------------------------------------------------------------------------


                                       41

<PAGE>

10 (ddd)          Warrant  Agreement  made as of April 23, 1998 by and between  Hansen  Natural  Corporation
                  and Rick Dees12
----------------- -------------------------------------------------------------------------------------------
10 (eee)          Modification  to Revolving  Credit Loan and Security  Agreement as of December 31, 1998 by
                  and between Hansen Beverage Company and Comerica Bank - California13
----------------- -------------------------------------------------------------------------------------------
10 (fff)          Employment  Agreement as of January 1, 1999 by and between Hansen Natural  Corporation and
                  Rodney C. Sacks13
----------------- -------------------------------------------------------------------------------------------
10 (ggg)          Employment  Agreement as of January 1, 1999 by and between Hansen Natural  Corporation and
                  Hilton S. Schlosberg13
----------------- -------------------------------------------------------------------------------------------
10 (hhh)          Stock  Option  Agreement  dated as of  February  2,  1999 by and  between  Hansen  Natural
                  Corporation and Rodney C. Sacks13
----------------- -------------------------------------------------------------------------------------------
10 (iii)          Stock  Option  Agreement  dated as of  February  2,  1999 by and  between  Hansen  Natural
                  Corporation and Hilton S. Schlosberg13
----------------- -------------------------------------------------------------------------------------------
10 (jjj)          Stock  Repurchase  Agreement  dated as of August 3, 1998,  by and between  Hansen  Natural
                  Corporation and Rodney C. Sacks14
----------------- -------------------------------------------------------------------------------------------
10 (kkk)          Stock  Repurchase  Agreement  dated as of August 3, 1998,  by and between  Hansen  Natural
                  Corporation and Hilton H. Schlosberg14
----------------- -------------------------------------------------------------------------------------------
10 (lll)          Assignment  and  Agreement  dated as of September  22, 1999 by the Fresh Juice  Company of
                  Califorrnia, Inc. and Hansen Beverage Company. 15
----------------- -------------------------------------------------------------------------------------------
10 (mmm)          Settlement  Agreement dated as of September 1999 by and between and among Rodney C. Sacks,
                  as sole Trustee of The Hansen's Trust and Hansen Beverage  Company The Fresh Juice Company
                  of California, Inc. 15
----------------- -------------------------------------------------------------------------------------------
10 (nnn)          Trademark  Assignment  dated as of  September  24,  1999 by and  between  The Fresh  Juice
                  Company  of  California,  Inc.  (Assignor)  and  Rodney C.  Sacks as sole  Trustee  of The
                  Hansen's Trust (Assignee). 15
----------------- -------------------------------------------------------------------------------------------
10 (ooo)          Settlement  Agreement dated as of September 3, 1999 by and between The Fresh Juice Company
                  of  California,  Inc.,  The Fresh  Smoothie  Company,  LLC,  Barry Lublin,  Hansen's Juice
                  Creations,  LLC,  Harvey  Laderman  and Hansen  Beverage  Company and Rodney C. Sacks,  as
                  Trustee of The Hansen's Trust. 15
----------------- -------------------------------------------------------------------------------------------
10 (ppp)          Royalty  Agreement  dated as of April 26, 1996 by and between  Hansen's  Juices,  Inc. and
                  Hansen's Juice Creations, Limited Liability Company. 15
----------------- -------------------------------------------------------------------------------------------
10 (qqq)          Royalty Agreement dated as of April 26, 1999 by and between Gary Hansen,  Anthony Kane and
                  Burton S. Rosky,  as trustees of Hansen's  Trust and Hansen's Juice  Creations,  a limited
                  liability company. 15
----------------- -------------------------------------------------------------------------------------------
10 (rrr)          Letter Agreement dated May 14, 1996. 15
----------------- -------------------------------------------------------------------------------------------
10 (sss)          Amendment to Royalty  Agreement  as of May 9, 1997 by and between The Fresh Juice  Company
                  of California and Hansen's Juice Creations, Limited Liability Company. 15
----------------- -------------------------------------------------------------------------------------------
10 (ttt)          Assignment of License  Agreements  dated as of February 1999 by Hansen's Juice  Creations,
                  LLC (Assignor) to Fresh Smoothie, LLC (Assignee). 15
----------------- -------------------------------------------------------------------------------------------
10 (uuu)          Amendment  to  Revolving  Credit  Loan and  Security  Agreement  between  Comerica  Bank -
                  California and Hansen Beverage Company dated March 28, 2000.
----------------- -------------------------------------------------------------------------------------------
10 (vvv)          Endorsement and Spokeman  Arrangement  dated as of February 18, 2000 by and between Hansen
                  Beverage Company and Sammy Sosa.
----------------- -------------------------------------------------------------------------------------------
10 (www)          Standard  Industrial Lease Agreement dated as of February 23, 2000 between Hansen Beverage
                  Company and 43 Railroad Partnership L.P.
----------------- -------------------------------------------------------------------------------------------
21                Subsidiaries  5
----------------- -------------------------------------------------------------------------------------------
23                Independent Auditors' Consent
----------------- -------------------------------------------------------------------------------------------
27                Financial Data Schedule
----------------- -------------------------------------------------------------------------------------------
</TABLE>




1    Filed  previously as an exhibit to the  Registration  Statement on Form S-3
     (no. 33-35796) (the "Registration Statement").



                                       42

<PAGE>

2    Filed  previously  as an exhibit to the  Company's  proxy  statement  dated
     October 21, 1992.

3    Filed previously as an exhibit to Form 8-K dated July 27, 1992.

4    Filed  previously  as an exhibit to  Post-Effective  Amendment No. 8 to the
     Registration Statement.

5    Filed  previously as an exhibit to Form 10-KSB for the year ended  December
     31, 1992.

6    Filed  previously as an exhibit to Form 10-KSB for the year ended  December
     31, 1993.

7    Filed  previously as an exhibit to Form 10-KSB for the year ended  December
     31, 1994.

8    Filed previously as an exhibit to Form 10-K for the year ended December 31,
     1995.

9    Filed  previously  as an exhibit to Form 10-Q for the period ended June 30,
     1997.

10   Filed  previously as an exhibit to Form 10-Q for the period ended September
     30, 1997.

11   Filed  previously as an exhibit to Form 10-Q for the period ended March 31,
     1998.

12   Filed  previously  as an exhibit to Form 10-Q for the period ended June 30,
     1998.

13   Filed previously as an exhibit to Form 10-K for the year ended December 31,
     1998.

14   Filed  previously  as an exhibit to Form 10-Q for the period ended June 30,
     1999.

15   Filed  previously  as an exhibit to Form 10-Q for the year ended  September
     30, 1999.


                                       43

<PAGE>



INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



                                                                            Page

HANSEN NATURAL CORPORATION AND SUBSIDIARIES


Independent Auditors' Report                                                 F-2


Consolidated Balance Sheets as of December 31, 1999 and 1998                 F-3


Consolidated Statements of Income for the years ended 
 December 31, 1999, 1998 and 1997                                            F-4

Consolidated Statements of Comprehensive Income for the years ended
 December 31, 1999, 1998 and 1997                                            F-5

Consolidated Statements of Shareholders' Equity for the years ended 
 December 31, 1999, 1998 and 1997                                            F-6

Consolidated Statements of Cash Flows for the years ended 
 December 31, 1999, 1998 and 1997                                            F-7

Notes to Consolidated Financial Statements for the years ended 

 December 31, 1999, 1998 and 1997                                            F-9

Valuation and Qualifying Accounts for the years ended 
 December 31, 1999, 1998 and 1997                                           F-22

                                      F-1


<PAGE>



INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders
Hansen Natural Corporation
Corona, California



We have audited the accompanying  consolidated  balance sheets of Hansen Natural
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the related
consolidated  statements of income,  comprehensive income,  shareholders' equity
and cash flows for the years ended December 31, 1999,  1998 and 1997. Our audits
also  included  the  financial  statement  schedule  listed  in Item  14.  These
consolidated  financial  statements  and  financial  statement  schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  and  financial  statement
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of Hansen Natural  Corporation  and
subsidiaries as of December 31, 1999 and 1998, and the  consolidated  results of
its operations  and cash flows for the years ended  December 31, 1999,  1998 and
1997 in conformity with accounting  principles  generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule, when
considered  in  relation to the  consolidated  financial  statements  taken as a
whole,  presents  fairly,  in all material  respects,  the information set forth
therein.




/s/ DELOITTE AND TOUCHE LLP

Costa Mesa, California
March 22, 2000


                                      F-2

<PAGE>


<TABLE>
<CAPTION>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------


                                                                                         1999                      1998
                                                                                         ----                      ----
                                                  ASSETS
<S>                                                                              <C>                       <C>

CURRENT ASSETS:
Cash and cash equivalents                                                        $         2,009,155       $         3,806,089
Accounts receivable (net of allowance for doubtful
    accounts, sales returns and cash discounts of $415,305
    in 1999 and $378,641 in 1998 and promotional allowances
    of $1,651,604 in 1999 and $1,608,123 in 1998)                                          3,751,258                 1,827,544
Inventories, net (Note 3)                                                                  9,894,414                 5,211,077
Prepaid expenses and other current assets (Note 4)                                           553,689                   244,318
Deferred income tax asset (Note 9)                                                           743,364                   630,070
                                                                                 --------------------      --------------------
                                                                                          16,951,880                11,719,098

PROPERTY AND EQUIPMENT, net (Note 5)                                                         504,191                   601,523

INTANGIBLE AND OTHER ASSETS:
Trademark license and trademarks (net of accumulated amortization
    of $2,995,285 in 1999 and $2,687,462 in 1998)                                         10,768,493                10,003,417
Note receivable from director                                                                                           20,861
Deposits and other assets                                                                    484,388                   211,903
                                                                                 --------------------      --------------------
                                                                                          11,252,881                10,236,181
                                                                                 --------------------      --------------------
                                                                                 $        28,708,952       $        22,556,802
                                                                                 ====================      ====================

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                 $         5,936,873       $         1,870,253
Accrued liabilities                                                                          345,794                   403,864
Accrued compensation                                                                         462,285                   476,001
Current portion of long-term debt (Note 7)                                                   863,501                 2,072,818
Income taxes payable (Note 9)                                                                346,636                 1,269,185
                                                                                 --------------------      --------------------
    Total current liabilities                                                              7,955,089                 6,092,121

LONG-TERM DEBT, less current portion (Note 7)                                                902,716                 1,334,967

DEFERRED INCOME TAX LIABILITY (Note 9)                                                     1,225,271                 1,187,531

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS' EQUITY: (Note 10)
Common stock - $.005 par value; 30,000,000 shares
    authorized; 10,010,084 and 9,911,905 shares issued
    and outstanding in 1999 and 1998, respectively                                            50,050                    49,560
Additional paid-in capital                                                                11,340,074                11,207,765
Retained earnings                                                                          7,235,752                 2,684,858
                                                                                 --------------------      --------------------
    Total shareholders' equity                                                            18,625,876                13,942,183
                                                                                 --------------------      --------------------
                                                                                 $        28,708,952       $        22,556,802
                                                                                 ====================      ====================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3



<PAGE>


<TABLE>
<CAPTION>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
------------------------------------------------------------------------------------------------------------------------------------


                                                                       1999                    1998                     1997
                                                                       ----                    ----                     ----

<S>                                                                   <C>                     <C>                      <C>

NET SALES                                                             $ 72,303,186            $ 53,866,294             $ 43,057,064

COST OF SALES                                                           38,776,532              27,332,028               25,222,881
                                                                 ------------------      ------------------       ------------------

GROSS PROFIT                                                            33,526,654              26,534,266               17,834,183

OPERATING EXPENSES:
Selling, general and administrative                                     25,337,374              20,217,818               15,452,188
Amortization of trademark license and trademarks                           307,823                 296,584                  301,238
Other operating expenses                                                   380,378                  60,000                  198,848
                                                                 ------------------      ------------------       ------------------

     Total operating expenses                                           26,025,575              20,574,402               15,952,274
                                                                 ------------------      ------------------       ------------------

OPERATING INCOME                                                         7,501,079               5,959,864                1,881,909

NONOPERATING EXPENSE (INCOME):
Interest and financing expense                                             170,506                 387,446                  525,294
Interest income                                                           (118,413)                (72,352)                  (3,481)
Other nonoperating expense                                                                          14,719                   69,745
                                                                 ------------------      ------------------       ------------------

     Net nonoperating expense                                               52,093                 329,813                  591,558

                                                                 ------------------      ------------------       ------------------
INCOME BEFORE PROVISION
     FOR INCOME TAXES                                                    7,448,986               5,630,051                1,290,351

PROVISION FOR INCOME TAXES (Note 9)                                      2,971,118               2,066,922                   40,200
                                                                 ------------------      ------------------       ------------------

NET INCOME                                                             $ 4,477,868             $ 3,563,129              $ 1,250,151
                                                                 ==================      ==================       ==================


NET INCOME PER COMMON SHARE:
     Basic                                                                  $ 0.45                  $ 0.38                   $ 0.14
                                                                 ==================      ==================       ==================
     Diluted                                                                $ 0.43                  $ 0.34                   $ 0.13
                                                                 ==================      ==================       ==================


NUMBER OF COMMON SHARES USED
     IN PER SHARE COMPUTATIONS:
     Basic                                                               9,964,778               9,386,688                9,125,630
                                                                 ==================      ==================       ==================
     Diluted                                                            10,510,604              10,430,727                9,288,642
                                                                 ==================      ==================       ==================
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-4


<PAGE>


<TABLE>
<CAPTION>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
------------------------------------------------------------------------------------------------------------------------------------


                                                                       1999                    1998                     1997
                                                                       ----                    ----                     ----

<S>                                                                    <C>                     <C>                      <C>

NET INCOME, as reported                                                $ 4,477,868             $ 3,563,129              $ 1,250,151

     Foreign currency translation adjustment                                                                               (127,823)


                                                                 ==================      ==================       ==================
COMPREHENSIVE INCOME                                                   $ 4,477,868             $ 3,563,129              $ 1,122,328
                                                                 ==================      ==================       ==================
</TABLE>


                See accompanying notes to consolidated financial statements.

                                      F-5


<PAGE>


<TABLE>
<CAPTION>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
------------------------------------------------------------------------------------------------------------------------------------

                                                                                    Retained          Foreign
                                                                 Additional         earnings         currency           Total
                                        Common stock              paid-in          (accumulated      translation    shareholders'
                                -----------------------------
                                   Shares         Amount          capital           deficit)         adjustment         equity
                                -------------  --------------  ---------------  -----------------  --------------  -----------------
<S>                               <C>               <C>           <C>               <C>                 <C>             <C>

Balance,
   January 1, 1997                 9,122,868        $ 45,614      $10,847,355       $ (2,126,100)       $ 60,582        $ 8,827,451

Issuance of common stock               8,001              40           10,960                                                11,000

Foreign currency translation
   adjustment                                                                                           (127,823)          (127,823)

Net income                                                                             1,250,151                          1,250,151
                                -------------  --------------  ---------------  -----------------  --------------  -----------------

Balance,
   December 31, 1997               9,130,869        $ 45,654      $10,858,315       $   (875,949)       $(67,241)       $ 9,960,779

Issuance of common stock             781,036           3,906           72,051                                                75,957

Compensation expense related to
  issuance of nonqualified
  stock options (Note 10)                                                                 64,919                             64,919

Reduction of tax liability in
  connection with the exercise
  of certain stock options                                            277,399                                               277,399

Net income                                                                             3,563,129                          3,563,129
                                -------------  --------------  ---------------  -----------------  --------------  -----------------

Balance,
   December 31, 1998               9,911,905        $ 49,560      $11,207,765        $ 2,752,099       $ (67,241)      $ 13,942,183

Issuance of common stock              98,179             490           38,331                                                38,821

Compensation expense related to
  issuance of nonqualified
  stock options (Note 10)                                                                 73,026                             73,026

Reduction of tax liability in
  connection with the exercise
  of certain stock options                                             93,978                                                93,978

Net income                                                                             4,477,868                          4,477,868
                                -------------  --------------  ---------------  -----------------  --------------  -----------------

Balance,
   December 31, 1999              10,010,084        $ 50,050      $11,340,074        $ 7,302,993       $ (67,241)      $ 18,625,876
                                =============  ==============  ===============  =================  ==============  =================
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-6


<PAGE>

<TABLE>
<CAPTION>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                   1999               1998               1997
                                                                                   ----               ----               ----
<S>                                                                          <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                   $     4,477,868    $     3,563,129    $     1,250,151
Adjustments to reconcile net income to
   net cash provided by operating activities:
      Amortization of trademark license and trademarks                               307,824            296,584            301,238
      Depreciation and other amortization                                            258,343            246,494            270,114
      Loss on disposal of plant and equipment                                         15,569                317             69,745
      Compensation expense related to issuance of stock options                       73,026             64,919
      Deferred income taxes                                                          (75,554)           557,461
      Effect on cash of changes in operating assets and liabilities:
        Accounts receivable                                                       (1,912,674)          (285,813)          (589,521)
        Inventories                                                               (4,683,337)        (1,295,094)          (804,859)
        Prepaid expenses and other current assets                                   (309,371)           (29,850)           117,401
        Accounts payable                                                           4,066,620           (324,947)            56,150
        Accrued liabilities                                                          (58,070)           (84,943)           360,177
        Accrued compensation                                                         (13,716)           153,887            250,142
        Income taxes payable                                                        (828,571)         1,508,784             37,800
                                                                             ----------------   ----------------   ----------------
          Net cash provided by operating activities                                1,317,957          4,370,928          1,318,538

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                  (258,543)          (435,838)          (186,570)
Proceeds from sale of property and equipment                                          81,963                                37,945
Increase in trademark license and trademarks                                      (1,072,900)           (91,885)           (50,209)
Decrease in note receivable from director                                             20,861             39,391              1,918
(Increase)decrease in deposits and other assets                                     (272,485)           (26,821)           218,271
                                                                             ----------------   ----------------   ----------------
          Net cash (used in) provided by investing activities                     (1,501,104)          (515,153)            21,355

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term borrowings                                                                                         (893,429)
Increase in long-term debt                                                           431,250                                14,546
Principal payments on long-term debt                                              (2,072,818)          (520,874)          (135,887)
Issuance of common stock                                                              27,781             75,957             11,000
                                                                             ----------------   ----------------   ----------------
          Net cash used in financing activities                                   (1,613,787)          (444,917)        (1,003,770)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                              -                  -                 (127,823)

                                                                             ----------------   ----------------   ----------------
NET (DECREASE) INCREASE IN CASH                                                   (1,796,934)         3,410,858            208,300
CASH AND CASH EQUIVALENTS, beginning of year                                       3,806,089            395,231            186,931
                                                                             ----------------   ----------------   ----------------
CASH AND CASH EQUIVALENTS, end of year                                       $     2,009,155    $     3,806,089    $       395,231
                                                                             ================   ================   ================
                                                                             
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
      Interest                                                               $       184,891    $       372,256    $       375,821
                                                                             ================   ================   ================
      Income taxes                                                           $     3,908,586    $         2,400    $         2,400
                                                                             ================   ================   ================
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-7


<PAGE>

NONCASH TRANSACTIONS:

During 1999, the Company reduced its tax liability and increased additional paid
     in capital in the amount of $93,978  in  connection  with the  exercise  of
     certain stock options.
During 1999,  the Company  issued  72,866 shares of common stock to employees in
     connection  with a net  exercise  of options to purchase  93,273  shares of
     common stock.
During 1999,  the Company  issued 8,000 shares of common stock to an employee in
     connection with the execution of a note receivable in the amount of
     $11,040.
During 1998, the Company reduced its tax liability and increased additional paid
     in capital in the amount of $277,399  in  connection  with the  exercise of
     certain stock options.
During 1998,  the Company  issued 554,732 shares of common stock to two officers
     in connection with a net exercise of options to purchase  725,000 shares of
     common stock.
During 1998,  the Company  issued 138,900 shares of common stock to employees in
     connection  with the net exercise of options to purchase  99,167  shares of
     common stock.
During 1998,  the Company issued 71,137 shares of common stock to a non-employee
     in connection with a net exercise of options to purchase  100,000 shares of
     common stock.







          See accompanying notes to consolidated financial statements.

                                      F-8



<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT  ACCOUNTING  POLICIES  

     Organization - Hansen Natural  Corporation  (the "Company" or "Hansen") was
     incorporated  in  Delaware  on April 25,  1990.  The  Company  is a holding
     company  and carries on no  operating  business  except  through its direct
     wholly-owned   subsidiary,   Hansen  Beverage  Company  ("HBC")  which  was
     incorporated in Delaware on June 8, 1992. HBC conducts all of the Company's
     operating business and generates all of the Company's  operating  revenues.
     References  herein to "Hansen" or the  "Company"  when used to describe the
     operating  business of the Company are  references  to the  business of HBC
     unless  otherwise  indicated.  The Company  also owns all of the issued and
     outstanding  common stock of Hard Energy Company ("HEC")  formerly known as
     CVI Ventures,  Inc.,  which was incorporated in Delaware on April 30, 1990.
     Although  HEC is  currently  inactive,  the Company  plans to commence  the
     marketing and sale of certain beverage products through HEC during 2000. In
     addition,  HBC formerly  owned all of the issued and  outstanding  ordinary
     shares of its subsidiary  located in the United  Kingdom,  Hansen  Beverage
     Company (UK) Limited ("HBC (UK)"), which ceased operating activities at the
     end of 1997 and was finally dissolved in July 1999.

     Nature of  Operations  - Hansen is engaged in the  business  of  marketing,
     selling and distributing so-called  "alternative" beverage category natural
     sodas,   fruit  juices,   fruit  juice  Smoothies,   "functional   drinks",
     non-carbonated  ready-to-drink  iced teas,  lemonades and juice  cocktails,
     children's multi-vitamin juice products and still water primarily under the
     Hansen's(R) brand name primarily in certain Western states as well as other
     states,  and on a limited  basis,  in other  countries  outside  the United
     States.

     Principles  of  Consolidation  - The  accompanying  consolidated  financial
     statements   include  the   accounts   of  Hansen  and  its  wholly   owned
     subsidiaries,  HBC and HEC and, up until  December 31,  1997,  HBC's wholly
     owned subsidiary HBC (UK),  since their respective dates of  incorporation.
     All  intercompany   balances  and  transactions  have  been  eliminated  in
     consolidation (Note 2).

     Reclassifications  -  Certain  reclassifications  have  been  made  in  the
     consolidated financial statements to conform to the 1999 presentation.

     Translation of Foreign Currencies - Assets and liabilities of the Company's
     United  Kingdom  subsidiary  for the year  1997 are  translated  into  U.S.
     dollars  at  year-end  rates of  exchange,  and  income  and  expenses  are
     translated at average rates during the  respective  years.  The  functional
     currency of the subsidiary is the pound  sterling;  therefore,  translation
     gains or losses are  recorded  as a  separate  component  of  shareholders'
     equity (Note 2).

     Cash and Cash Equivalents - The Company  considers  certificates of deposit
     with original maturities of three months or less to be cash equivalents.

     Inventories  - Inventories  are valued at the lower of first-in,  first-out
     (FIFO) cost or market value (net realizable value).

     Property  and  Equipment  -  Property  and  equipment  are  stated at cost.
     Depreciation  of  furniture,  fixtures,  equipment and vehicles is based on
     their estimated  useful lives (three to five years) and is calculated using
     the straight-line method.  Amortization of leasehold  improvements is based
     on the lesser of their  estimated  useful lives or the terms of the related
     leases and is calculated using the straight-line method.

                                      F-9

<PAGE>

     Trademark  License  and  Trademarks  -  Trademark  license  represents  the
     Company's  exclusive  world-wide right to use the Hansen's(R)  trademark in
     connection  with the  manufacture,  sale  and  distribution  of  carbonated
     beverages and waters, shelf stable fruit juices and drinks containing fruit
     juices on a royalty free basis and other non-carbonated beverages and water
     and  non-beverage   products  in  consideration  of  royalty  payments.  In
     September 1999, HBC entered into an Assignment and Agreement with the Fresh
     Juice Company of California,  Inc. ("FJC"),  pursuant to which HBC acquired
     exclusive  ownership of the  Hansen's(R)  trademark  and trade  names.  The
     Company  also owns in its own right,  a number of other  trademarks  in the
     United  States as well as in a number of  countries  around the world.  The
     Company amortizes trademark license and trademarks over 40 years.

     Long-Lived Assets - The Company accounts for the impairment and disposition
     of long-lived  assets in accordance with Statement of Financial  Accounting
     Standard  ("SFAS") No. 121,  Accounting  for the  Impairment  of Long-Lived
     Assets and for Long-Lived Assets to Be Disposed Of. In accordance with SFAS
     No. 121, long-lived assets to be held are reviewed for events or changes in
     circumstances   that  indicate  that  their   carrying  value  may  not  be
     recoverable.  The  Company  periodically  reviews  the  carrying  value  of
     long-lived  assets to determine whether or not impairment to such value has
     occurred.  As of December  31, 1999,  management  does not believe that the
     Company's long-lived assets have been impaired.

     Revenue  Recognition - The Company  records revenue at the time the related
     products are shipped. Management believes an adequate provision against net
     sales has been made for estimated returns, allowances and cash discounts.

     Advertising  - The Company  accounts for  advertising  production  costs by
     expensing  such  production  costs the first time the  related  advertising
     takes place.  Advertising expenses included in selling and general expenses
     amount to $5.7  million in 1999,  $4.3  million in 1998 and $2.9 million in
     1997.  In  addition,   the  Company   supports  its  customers   (including
     distributors) with promotional allowances,  a portion of which are utilized
     for indirect advertising by them.  Promotional  allowances amounted to $6.3
     million in 1999, $5.6 million in 1998 and $4.0 million in 1997.

     Net Income Per Common Share - In accordance with SFAS No. 128, Earnings per
     Share,  net income per  common  share,  on a basic and  diluted  basis,  is
     presented  for all  periods.  Basic net  income  per share is  computed  by
     dividing  net  income by the  weighted  average  number  of  common  shares
     outstanding.  Diluted  net income per share is  computed  by  dividing  net
     income  by the  weighted  average  number  of common  and  dilutive  common
     equivalent  shares  outstanding,   if  dilutive.  Weighted  average  common
     equivalent shares include stock options using the treasury stock method.

     Concentration  Risk - Certain of the Company's  products utilize components
     from a limited  number of  sources.  A  disruption  in  production  of such
     components  could  significantly  affect the Company's  revenues from those
     products, as alternative sources of such components may not be available at
     commercially reasonable rates or within a reasonably short time period. The
     Company is taking steps to secure the  availability of alternative  sources
     for such components, to minimize the risk of any disruption in production.

     Credit Risk - The  Company  sells its  products  nationally,  primarily  to
     retailers and beverage  distributors.  The Company  performs ongoing credit
     evaluations of its customers and generally does not require collateral. The
     Company  maintains  reserves for potential  credit losses,  and such losses
     have been within management's expectations.

     Fair Value of Financial  Instruments - SFAS No. 107, Disclosures about Fair
     Value  of  Financial  Instruments,  requires  management  to  disclose  the
     estimated fair value of certain assets and liabilities  defined by SFAS No.
     107 as financial  instruments.  At December 31, 1999,

                                      F-10

<PAGE>
  
     management  believes that the carrying amount of cash,  accounts receivable
     and accounts  payable  approximate fair value because of the short maturity
     of these  financial  instruments.  Long-term  debt bears interest at a rate
     comparable to the prime rate;  therefore,  management believes the carrying
     amount for the  outstanding  borrowings at December 31, 1999,  approximates
     fair value.

     Use of Estimates - The preparation of the consolidated financial statements
     in  conformity  with  generally  accepted  accounting  principles  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities  and disclosure of contingent  assets and
     liabilities  at the  date of the  financial  statements  and  the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from those estimates.

     New  Accounting  Pronouncements  - In June 1998,  the Financial  Accounting
     Standards Board issued SFAS No. 133, Accounting for Derivative  Instruments
     and Hedging Activities, which the Company is required to adopt effective in
     its fiscal year 2000.  SFAS No. 133 will  require the Company to record all
     derivatives  on the  balance  sheet at fair  value.  The  Company  does not
     currently engage in hedging  activities,  but will continue to evaluate the
     effects of adopting  SFAS No. 133.  The Company  will adopt SFAS No. 133 in
     its fiscal year 2001.

     The  Company  has  adopted  the  American  Institute  of  Certified  Public
     Accountants  Statement of Position (SOP) 98-1,  Accounting for the Costs of
     Computer  Software  Development or Obtained for Internal Use,  during 1999.
     There was no material impact on the consolidated  financial statements as a
     result.

2. REORGANIZATION OF UNITED KINGDOM OPERATIONS

     Sales in the United  Kingdom were lower than  anticipated  during 1997.  In
     consequence,  the Company's foreign  subsidiary,  HBC (UK) ceased operating
     activities  at the end of 1997  and was  finally  dissolved  in July  1999.
     Beginning in 1998,  the Company  dealt with its  distributor  in the United
     Kingdom from its corporate  offices in California from which it exports its
     products to such distributor.

3. INVENTORIES

     Inventories consist of the following at December 31:

                                                    1999             1998
                                                    ----             ----
         Raw materials                            $ 3,615,269       $1,815,040
         Finished goods                             6,442,193        3,664,270
                                                 --------------    -------------
                                                   10,057,462        5,479,310
         Less inventory reserves                     (163,048)        (268,233)
                                                 --------------    -------------
                                                  $ 9,894,414       $5,211,077
                                                 ==============    =============

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

     In January  1994,  the  Company  entered  into an  agreement  with a barter
     company for the exchange of certain  inventory for future  advertising  and
     marketing  credits.  The  Company  assigned  a value of  $490,000  to these
     credits based on the net realizable value of the inventory exchanged. As of
     December  31,  1999,  unused  advertising  and  marketing  credits  totaled
     $203,000.  Although  such credits  remain  available for use by the Company
     through January 2002, management was unable to estimate their remaining net
     realizable  value at  December  31,  1997.  Accordingly,  in the year ended
     December 31, 1997,  the Company  fully  reserved  against and expensed such
     advertising and marketing credits.

                                      F-11



<PAGE>

5.  PROPERTY AND EQUIPMENT  

     Property and equipment consist of the following at December 31:


                                                         1999             1998
                                                         ----             ----
         Leasehold improvements                    $    61,277      $    55,305
         Furniture and office equipment                546,105          523,650
         Equipment and vehicles                        768,576          826,599
                                                   ------------     ------------
                                                     1,375,958        1,405,554
         Less accumulated depreciation                (871,767)        (804,031)
                                                   ------------     ------------
                                                   $   504,191       $  601,523
                                                   ============     ============

6. SHORT-TERM BORROWINGS

     In  1997,   a  credit   facility   was  granted  to  the  HBC  by  Comerica
     Bank-California ("Comerica") consisting of a revolving line of credit of up
     to $3 million in  aggregate at any time  outstanding  and a term loan of $4
     million.  The  utilization  of  the  revolving  line  of  credit  by HBC is
     dependent upon certain levels of eligible accounts receivable and inventory
     from time to time.  Such revolving line of credit and term loan are secured
     by  substantially  all of  HBC's  assets,  including  accounts  receivable,
     inventory,  trademarks,  trademark  licenses  and  certain  equipment.  HBC
     entered into a modification  agreement with Comerica as of December 1, 1998
     which provides for the original  revolving  line of credit  agreement to be
     and remain in full  force and effect  until May 1, 2000 and for the rate of
     interest  payable by HBC on advances  under the revolving line of credit to
     be  reduced  from 1% above the banks base  (prime)  rate to 2 1/2% over the
     bank's Libor rate or 1/4 of 1 percent  above the bank's base (prime)  rate,
     at the option of HBC. As of both  December  31,  1999 and 1998,  no amounts
     were outstanding under the revolving line of credit.

7. LONG-TERM DEBT

     As discussed in Note 6 above,  HBC obtained a credit facility from Comerica
     consisting  of a term loan of up to $4 million or such lesser amount as was
     necessary, to retire a subordinated secured promissory note executed by HBC
     in favor of ERLY  Industries,  Inc.  ("ERLY")  in the  principal  sum of $4
     million (the "ERLY Note"). The full amount due under the ERLY Note was paid
     during  November  1997. The term loan will be repayable by October 2001 and
     requires variable monthly payments of principal and interest which escalate
     over time.  The  interest  rate  payable on the term loan is 1.5% above the
     bank's base rate (8.5% as of December 31, 1999).

     The term loan contains quarterly and annual financial  covenants  requiring
     the Company to  maintain  certain  financial  ratios and  maintain  certain
     levels of net  worth.  The term loan also  contains  certain  non-financial
     covenants.  At  both  December  31,  1999  and  1998,  the  Company  was in
     compliance with all covenants.

                                      F-12


<PAGE>


<TABLE>
<CAPTION>

       Long-term debt consists of the following at December 31:                       1999                  1998
                                                                                      ----                  ----
       <S>                                                                          <C>                   <C>

       Note payable to Comerica,  collateralized  by substantially  all of HBC's
       assets,  payable in variable  amounts of  principle  and  interest  which
       escalate over time, at an effective  interest rate of 10% and 9.25% as of
       December 31, 1999 and 1998, respectively, payable by October 2001
                                                                                    $1,331,881            $3,399,996

       Note payable  related to the  acquisition  of the Hansen  trademark and
       trade name payable in three equal annual installments of $143,750,  due
       between August 2, 2000 and August 2, 2002                                       431,250

       Other                                                                             3,086
                                                                                ------------------    ------------------
                                                                                     1,766,217             3,407,785
       Less: current portion of long-term debt                                        (863,501)           (2,072,818)
                                                                                ------------------    ------------------
                                                                                      $902,716            $1,334,967
                                                                                ==================    ==================

            Long-term debt is payable as follows:

                            Year ending December 31:
                            2000                                                    $  863,501
                            2001                                                       758,967
                            2002                                                       143,749
                                                                                ------------------
                                                                                    $1,766,217
                                                                                ==================
</TABLE>


     Interest expense amounted to $168,131, $368,896, and $488,388 for the years
     ended December 31, 1999, 1998 and 1997.

8. COMMITMENTS AND CONTINGENCIES

     Operating Leases - The Company's  warehouse  facility and corporate offices
     are leased for a period of 89 months commencing on September 19, 1997, when
     the Company first occupied the warehouse facilities.  On March 1, 1998, the
     corporate offices of the Company were relocated to such premises in Corona,
     California.  The facility lease and certain equipment under  non-cancelable
     operating  leases expire through 2005. Rent expenses  related to the Corona
     facility and other  non-cancelable  equipment  leases amounted to $391,000,
     $369,000 and $157,000 for the years ended December 31, 1999, 1998 and 1997,
     respectively.

     Future  minimum  rental  payments  at  December  31, 1999 under such leases
     referred to above are as follows:

                       Year ending December 31:
                       2000                                          $   361,284
                       2001                                              367,205
                       2002                                              369,700
                       2003                                              377,084
                       2004                                              381,816
                       Thereafter                                         31,818
                                                                     -----------
                                                                      $1,888,907
                                                                     ===========

     On February 23, 2000, the Company agreed to lease a new facility commencing
     from August 1, 2000 for a term of ten (10) years and which will replace the
     current lease (Note 15).

                                      F-13

<PAGE>
     Employment  and  Consulting  Agreements  -  The  Company  entered  into  an
     employment  agreement  with  Rodney C.  Sacks  dated as of January 1, 1999,
     pursuant to which Mr. Sacks renders services to the Company as its Chairman
     and Chief Executive Officer,  and entered into an employment agreement with
     Hilton H.  Schlosberg  dated as of January 1, 1999,  pursuant  to which Mr.
     Schlosberg renders services to the Company as its Vice Chairman,  President
     and Chief Financial Officer for an annual base salary of $180,000 each, and
     increasing  by a  minimum  of 8% for each  subsequent  twelve-month  period
     during the employment period,  plus an annual bonus in an amount determined
     at the  discretion  of the Board of  Directors  of the  Company and certain
     fringe  benefits  for the  period  commencing  January  1, 1999 and  ending
     December 31, 2003.  After such date, such agreements  provide for automatic
     annual  renewals unless written notice is delivered to each of them by June
     30, 2003, or any subsequent June 30 thereafter.

     Effective June 30, 1997,  Mr. Harold C. Taber,  Jr.,  former  President and
     Chief  Executive  Officer  of HBC,  elected to retire  and  terminated  his
     employment  agreement  with HBC and entered into a Severance and Consulting
     Agreement with the Company and HBC (the "Consulting Agreement") pursuant to
     which, among other matters,  HBC agreed to retain Mr. Taber as a consultant
     for a period of two years at a fixed monthly fee of $5,000. In terms of the
     Consulting Agreement,  Mr. Taber's existing Stock Option Agreement dated as
     of June 30, 1995, was terminated  and  substituted  with a new Stock Option
     Agreement  dated  as of  June  20,  1997  (the  "Replacement  Stock  Option
     Agreement")  between the parties.  Under the terms of the Replacement Stock
     Option Agreement,  Mr. Taber was granted options to purchase 100,000 shares
     of the  Company's  common stock,  outside the Company's  stock option plans
     (Note 10),  exercisable  until  June 30,  1999,  at $1.38 per  share.  Such
     options were duly  exercised by Mr. Taber during 1998.  Mr. Taber remains a
     director of the Company.  In  addition,  other than with respect to certain
     restrictive covenants, Mr. Taber agreed to repay amounts owed by him to HBC
     under a certain  promissory note by offsetting  amounts owed under the note
     against  accrued and unpaid base pay payable under Mr.  Taber's  employment
     agreement and amounts  payable under the  Consulting  Agreement,  beginning
     January 1, 1998.  Such promissory note was paid in full by Mr. Taber during
     1999.

     Endorsement  Arrangement - Effective February 22, 2000, the Company entered
     into an Endorsement and Promotion Arrangement  ("Endorsement  Arrangement")
     with  a  nationally  recognized  sports  figure  for  the  endorsement  and
     promotion of certain Hansen's products.  The Endorsement  Arrangement calls
     for  payments up to an  aggregate  of $700,000  over a period of two years,
     subject to the due  performance by the sports figure of his endorsement and
     promotion  obligations  in  terms  of  that  arrangement.  The  Endorsement
     Arrangement  provides for additional  compensation to be paid to the sports
     figure in the event that sales of Hansen's(R)  energy drinks exceed certain
     specified   thresholds.   The  Company  has  the  right  to  terminate  the
     Endorsement  Arrangement  in the event that the  endorsement  and promotion
     obligations  undertaken  by the  sports  figure  concerned  are  not met or
     predetermined sales levels of Hansen's(R) energy drinks are not achieved.

     Supplier   Arrangements  -  During  1998,  the  Company   entered  into  an
     arrangement  with  one  of  its  co-packers,   pursuant  to  which  certain
     modifications  were  made to that  co-packer's  equipment  to  enable it to
     produce  certain  products  on  behalf  of the  Company.  In  consideration
     thereof,  the Company  agreed to pack a minimum number of cases of products
     over a four-year period. Should the Company fail to pack the agreed minimum
     number of cases of products over such period, the Company will be liable to
     reimburse the co-packer for a proportionate share of the cost thereof based
     on such  shortfall.  Based on the volume levels  achieved by the Company in
     the past and its expected volume levels,  the Company does not believe that
     it will  incur any  liability  in  connection  with the above  arrangement.
     However,  such  co-packer  has  experienced  difficulties  in producing the
     products  covered  by  such  arrangement  and  has  been  informed  by such
     co-packer  that they may terminate the co-packing  arrangement.  Management
     believes that, in the event of the co-packers  terminating the arrangement,
     the Company is not liable for any damages or claims to the  co-packer  as a
     result of not achieving the minimum  volume  levels,  or to the extent that
     the Company may have any  liability,  that the Company would be indemnified
     by a third party  supplier.  

                                      F-14



<PAGE>
     During March 1999, the Company  entered into an arrangement  with its glass
     supplier  pursuant to which its glass  supplier  agreed to install a shrink
     sleeve-labeling  machine at its plant to facilitate the pre-labeling of its
     glass bottles at the point of manufacture.  In consideration  thereof,  the
     Company  agreed to have a minimum  quantity of such  labels  applied to its
     glass bottles over a four-year period.  Should the Company fail to have the
     agreed  minimum  quantity of labels  applied over such period,  the Company
     will be liable to compensate its supplier for a proportionate  share of the
     cost thereof based on such  shortfall.  Based on volumes levels achieved by
     the Company in the past and its expected  volume  levels,  the Company does
     not  believe  that it will  incur any  liability  in  connection  with this
     arrangement.

     Purchase  Commitments  - As of  December  31,  1999,  the  Company had open
     purchase commitments for certain raw materials of approximately $2,721,080.

     Litigation - The Company is subject to claims and contingencies  related to
     lawsuits and other  matters  arising out of the normal  course of business.
     The ultimate liability  associated with such claims and  contingencies,  if
     any,  is not  likely to have a  material  adverse  effect on the  financial
     condition of the Company.

9. INCOME TAXES 

     The Company  accounts for income taxes under the provision of SFAS No. 109,
     Accounting  for Income Taxes.  This statement  requires the  recognition of
     deferred tax assets and liabilities  for the future  consequences of events
     that have been  recognized  in the  Company's  financial  statements or tax
     returns. Measurement of the deferred items is based on enacted tax laws. In
     the  event  the  future   consequences  of  differences  between  financial
     reporting  bases  and tax bases of the  Company's  assets  and  liabilities
     result in a deferred tax asset,  SFAS No. 109 requires an evaluation of the
     probability of being able to realize the future benefits  indicated by such
     asset.  A valuation  allowance  related to a deferred tax asset is recorded
     when it is more  likely than not that some  portion or all of the  deferred
     tax asset will not be realized.

     Components of the income tax provision are as follows:

<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                            1999                    1998                    1997
                                                            ----                    ----                    ----
         <S>                                             <C>                     <C>                     <C>
         Current income taxes:                                                 
         Federal                                         $2,409,512              $1,180,688              $     -
         State                                              637,160                 328,773                 40,200
                                                      ------------------      ------------------      ---------------
                                                         $3,046,672              $1,509,461              $  40,200
                                                      ==================      ==================      ===============
         Deferred income taxes:
         Federal                                         $  (97,681)             $  675,528              $ (89,215)
         State                                               22,127                 159,813                (38,435)
         Less change in valuation allowance                     -                  (277,880)               127,650
                                                      ------------------      ------------------      ---------------
                                                            (75,554)                557,461                    -
                                                      ------------------      ------------------      ---------------
                                                         $2,971,118              $2,066,922              $  40,200
                                                      ==================      ==================      ===============
</TABLE>


                                      F-15

<PAGE>


     The  differences  between the income tax  provision  that would result from
     applying the 34% federal  statutory  rate to income  before  provision  for
     income taxes and the reported provision for income taxes are as follows:


<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                            1999                1998                 1997
                                                            ----                ----                 ----
         <S>                                                <C>                 <C>                  <C>

         Income tax provision using the    statutory
             rate                                           $2,532,655          $1,914,217           $ 438,719
         State taxes, net of federal tax benefit               434,604             295,272              40,200
         Change in utilization of certain net
             operating losses                                                      106,718
         Permanent differences                                   3,859               6,318
         Effect of foreign corporation                                                                (520,678)
         Other                                                                      22,277             (45,691)
         Change in valuation allowance                                            (277,880)            127,650
                                                       ----------------    ----------------     ---------------
                                                            $2,971,118          $2,066,922           $  40,200
                                                       ================    ================     ===============
</TABLE>


     Major  components  of the  Company's  deferred  taxes at December 31 are as
     follows:

<TABLE>
<CAPTION>

                                                                                 Year Ending December 31,
                                                                     1999                 1998                1997
                                                                     ----                 ----                ----
        <S>                                                     <C>                  <C>                  <C>

        Net operating loss carryforwards -
           Non-Separate Return Loss Year Limitation ("SRLY")    $                    $                    $ 653,290
        Net operating loss carryforwards - SRLY                                                             101,160
        Net operating loss carryforwards - state                                                            107,021
        Reserves for returns                                        111,681               79,311             61,730
        Reserves for bad debts                                       45,192               56,657             28,860
        Reserves for obsolescence                                    69,850              114,911            161,967
        Reserves for marketing's development fund                   159,327
        Capitalization of inventory costs                            72,670               34,272             25,980
        State franchise tax                                         267,189              141,000            (31,383)
        Accrued compensation                                         17,456              203,919            139,474
        Stock-based compensation                                     59,096
        Amortization of trademark license                        (1,412,994)          (1,161,652)          (920,997)
        Amortization of graphic design                              124,664
        Depreciation                                                  3,962              (25,879)           (49,223)
                                                                ---------------      ---------------      --------------
                                                                   (481,907)            (557,461)           277,879
        Less valuation allowance                                        -                    -             (277,879)
                                                                ---------------      ---------------      --------------
                                                                $  (481,907)         $  (557,461)         $     -
                                                                ===============      ===============      ==============
</TABLE>


     During  the year,  the  Company  was  subject  to an audit by the  Internal
     Revenue  Service ("IRS Audit") for the years ending December 31, 1998, 1997
     and 1996. Based on the results of the IRS Audit,  certain  deductions taken
     in certain years were  postponed  until later years.  The effect thereof on
     the Company's  provision  for income taxes for the year ended  December 31,
     1999 was immaterial.

10.  STOCK  OPTIONS AND WARRANTS  

     The Company has two stock  option  plans,  the  Employee  Stock Option Plan
     ("the  Plan") and the  Outside  Directors  Stock  Option  Plan  ("Directors
     Plan").  



                                      F-16

<PAGE>

     The Plan  provided  for the  granting of options to purchase  not more than
     2,000,000 shares of Hansen common stock to key employees of the Company and
     its subsidiaries.  During 1999, the Company amended the Plan to provide for
     an additional  1,000,000 shares to be granted under the Plan. Stock options
     are  exercisable  at such time and in such  amounts  as  determined  by the
     Compensation  Committee  of the Board of  Directors  of the Company up to a
     ten-year  period  after their date of grant,  and no options may be granted
     after July 1, 2001.  The option price will not be less than the fair market
     value at the date of grant.  As of December 31,  1999,  options to purchase
     2,070,800  shares of Hansen  common stock had been granted  under the Plan,
     net of options that have expired, and options to purchase 929,200 shares of
     Hansen common stock remained available for grant under the Plan (Note 15).

     The  Directors'  Plan  provides  for the grant of options to purchase up to
     100,000  shares of common  stock of the Company to directors of the Company
     who are not and have not been  employed by or acted as  consultants  to the
     Company and its  subsidiaries  or  affiliates  and who are not and have not
     been  nominated  to the Board of  Directors  of the  Company  pursuant to a
     contractual arrangement. On the date of the annual meeting of shareholders,
     at which an eligible director is initially elected,  each eligible director
     is  entitled  to receive a one-time  grant of an option to  purchase  6,000
     shares  (12,000  shares if the  director is serving on a  committee  of the
     Board) of the Company's  common stock,  exercisable  one-third  each on the
     first,  second  and  third  anniversary  of the  date of  grant;  provided,
     however,  that options  granted as of February 14, 1995, are exercisable 66
     2/3% on the date of grant and 100% on July 8, 1995; provided, further, that
     all  options  held by an eligible  director  become  fully and  immediately
     exercisable upon a change in control of the Company.  Options granted under
     the Directors Plan that are not exercised  generally expire ten years after
     the date of grant.  Option grants may be made under the Directors  Plan for
     ten years from the effective date of the Directors Plan. The Directors Plan
     is a "formula" plan so that a non-employee director's  participation in the
     Directors Plan does not affect his status as a  "disinterested  person" (as
     defined in Rule 16b-3 under the  Securities  Exchange  Act of 1934).  As of
     December 31, 1999, options to purchase 36,000 shares of Hansen common stock
     had been granted  under the Directors  Plan and options to purchase  64,000
     shares of Hansen common stock remain available for grant.

     Information regarding the Plan and the Directors Plan is as follows:

<TABLE>
<CAPTION>

                                                   1999                      1998                       1997
                                                   ----                      ----                       ----
                                                       Weighted                   Weighted                  Weighted
                                                        Average                   average                    average
                                                       Exercise                   exercise                  exercise
                                             Shares      Price          Shares     price          Shares      price
                                         ------------ ------------ ------------ ------------ ------------ ------------         
             <S>                         <C>             <C>         <C>            <C>       <C>           <C>
             Options outstanding,
              beginning of year             833,900         $1.49    1,475,500         $1.34   1,332,000        $1.37
             Options granted                424,000         $4.38      297,500         $2.04     370,500        $1.10
             Options exercised              (93,573)        $1.35     (919,900)        $1.49        -             -  
             Options canceled or
              expired                       (71,000)        $1.82      (19,200)        $1.11    (227,000)       $1.11
              
                                         ------------    ---------   -----------    --------   -----------    --------
             Options outstanding,
               end of year                1,093,327         $2.60      833,900        $1.49    1,475,500        $1.34
                                         ===========                 ============             ===========     

             Option price range                          $0.75 to                   $0.72 to                 $0.72 to
               end of year                                  $5.25                      $4.50                    $1.79
</TABLE>


     The Company has adopted  the  disclosure-only  provisions  of SFAS No. 123,
     Accounting for Stock-Based Compensation.  Accordingly, no compensation cost
     has been recognized for the stock option plans. The impact of stock options
     granted  prior to 1996 has been  excluded  from the pro forma  calculation;
     accordingly,  the  1999,  1998  and  1997  pro  forma  adjustments  are not
     indicative of future period pro forma adjustments, when the calculation may
     apply  to all  applicable  stock  options.  Had  compensation  cost for the
     Company's option plans been

                                      F-17
 
<PAGE>

     determined  based on the fair  value at the  grant  date for  awards in the
     years 1997 through 1999 consistent with the provisions of SFAS No. 123, the
     Company's  net  income and net  income  per  common  share  would have been
     reduced to the pro forma amounts indicated below:



                                            1999         1998        1997
                                            ----         ----        ---- 
Net  income,  as  reported               $4,477,868   $3,563,129  $1,250,151
Net income, pro forma                    $4,176,799   $3,383,375  $1,121,473



Net income  per  common  share,
  as reported
 Basic                                      $.45         $.38        $.14
 Diluted                                    $.43         $.34        $.13

Net income  per  common  share,
  pro forma
 Basic                                     $.42          $.36        $.12
 Diluted                                   $.40          $.32        $.12


     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions used for grants in:

                                                  Risk-Free
         Dividend Yield   Expected Volatility   Interest Rate     Expected Lives
         --------------   -------------------   -------------     --------------
1999          0%             60%                  4.8%              5 years
1998          0%             72%                  5.2%              4 years
1997          0%             43%                  6.0%              3 years


     The  Company  has granted  warrants  to various  non-employees  to purchase
     shares of Hansen  common stock.  Such  warrants vest in various  increments
     over an eighteen-month to three-year period.


Information regarding non-employee stock options is as follows:

<TABLE>
<CAPTION>

                                                  1999                           1998                        1997
                                                  ----                           ----                        ----
<S>                                   <C>           <C>               <C>          <C>             <C>            <C>
                                                      Weighted                       Weighted                      Weighted
                                                      Average                        average                       average
                                                      Exercise                       exercise                      exercise
                                         Shares       Price              Shares      price            Shares        price
                                      ------------  -----------       ----------   -----------     ------------   -----------
                                                    
Options outstanding,
  Beginning of year                      225,000      $2.29             145,000        $ 1.42          812,500       $ 3.57
Options granted                             -                           180,000        $ 2.48          100,000       $ 1.38
Options exercised                        (30,000)     $1.50            (100,000)       $ 1.38             -
Options canceled or expired              (58,000)     $2.50                -                          (767,500)       $ 3.69
                                      ------------   ----------       ----------   -----------     ------------   -----------
Options outstanding,                                       
  end of year                           137,000       $2.37             225,000        $ 2.29         145,000        $ 1.42
                                      ============                    ==========                    ===========

Option price range,                                   $1.50 to                         $ 1.50 to                     $1.38 to
  end of year                                         $3.75                            $ 3.75                        $1.50


</TABLE>


                                      F-18

<PAGE>

The following table  summarizes  information  about  fixed-price  stock options
and warrants outstanding at December 31, 1999:


<TABLE>
<CAPTION>


                                                   Options Outstanding                         Options Exercisable
                                   ------------------------------------------------------- ---------------------------------

         <S>                       <C>                <C>               <C>                <C>                <C>   
                                                          Weighted
                                        Number            average       Weighted average        Number          Weighted
                                    outstanding at       remaining          exercise        exercisable at       average
         Range of exercise prices  December 31, 1999  contractual life        price        December 31, 1999    exercise
                                                                                                                  Price
         ------------------------- ------------------ ----------------- ------------------ ------------------ --------------
             $.75 to $1.38             322,400               3                $1.02            102,400            $1.01
             $1.50 to $1.59            286,427               3                $1.58            264,027            $1.59
             $1.72 to $2.50            150,500               3                $2.25            115,666            $2.35
             $3.72 to $4.31            321,000               7                $4.22             33,000            $4.03
             $4.44 to $5.25            150,000               5                $4.64              5,000            $4.50

                                   ------------------                                      ------------------
              $.75 to $5.25          1,230,327                                                 520,093
                                   ==================                                      ==================

</TABLE>


11.      EMPLOYEE BENEFIT PLAN

         Employees of Hansen Natural  Corporation  may participate in the Hansen
         Natural  Corporation  401(k) Plan, a defined  contribution  plan, which
         qualifies   under  Section   401(k)  of  the  Internal   Revenue  Code.
         Participating employees may contribute up to 15% of their pretax salary
         up to statutory  limits.  The Company  contributes  25% of the employee
         contribution,   up  to  8%  of  the  participants'  earnings.  Matching
         contributions  were  $37,274,  $29,438,  and $20,390 in 1999,  1998 and
         1997, respectively.


12.      MAJOR CUSTOMERS AND SEGMENTATION

         One customer  accounted for  approximately 25% and 27% of the Company's
         sales for the years ended December 31, 1999 and 1998, respectively. Two
         customers accounted for approximately 29% and 11%, respectively, of the
         Company's sales for the year ended December 31, 1997. A decision by any
         of these major  customers  to decrease  the amount  purchased  from the
         Company  or to cease  carrying  the  Company's  products  could  have a
         material  adverse  effect  on the  Company's  financial  condition  and
         consolidated results of operations.

         The Company has determined  that it has only one operating  segment but
         manages its business by  distribution  channel  through a warehouse and
         distributor   function.   The   percentages  of  the  Company's   sales
         represented by each of those functions over the past three years is set
         out in the table below.

                                     1999              1998              1997
                                     ----              ----              ----
            Warehouse                 67%               67%               80%
            Distributor               32%               32%               19%
            Export                     1%                1%                1%


13.      LEGAL PROCEEDINGS

         The second stage of the trial in HBC's action against ERLY  Industries,
         Inc.  ("ERLY") in the Superior Court for the State of  California,  was
         held in July 1997 for the sole  purpose  of  determining  the amount of
         HBC's damages,  if any,  resulting from ERLY's breach of certain rights
         of first  refusal  provisions  contained  the "ERLY Note".  In November
         1997,  the court held that HBC had not suffered any damages as a result
         of ERLY's breach of the ERLY Note. HBC has filed an appeal against that
         judgment.  A motion was made by ERLY for the costs of such action to be

                                      F-19

<PAGE>

         awarded in its favor,  which was dismissed by the court. ERLY has filed
         a cross  appeal on that issue.  The full amount due under the ERLY Note
         was paid in November  1997 with the proceeds of a term loan obtained by
         the Company from Comerica Bank - California ("Comerica").  During 1998,
         ERLY filed for  bankruptcy  and the appeal was  consequently  stayed by
         law. The Company has filed a claim against  ERLY.  Although the trustee
         initially rejected the claim, discussions are currently taking place in
         an  endeavor  to agree  on a figure  for the  principal  amount  of the
         Company's  unsecured claim to avoid the necessity for HBC to pursue the
         appeal.  The  ultimate  outcome  of this  matter  cannot  presently  be
         predicted.

         Towards the end of 1998,  HBC,  together with the Trustee of the Hansen
         Trust,   commenced   arbitration   proceedings   before  the   American
         Arbitration  Association in Los Angeles,  California,  against FJC, the
         former  Trustees  of the Trust,  and a company  called  Hansen's  Juice
         Creations  LLC  ("Creations"),  in which HBC and the  Trustee  claimed,
         among other  matters:  (i) that certain acts of the former  Trustees of
         the Trust constituted breach of trust; (ii) a certain license agreement
         purportedly  entered into between the former  Trustees of the Trust and
         Creations (the "Purported Agreement") was, in whole or in part, void or
         terminable   by  the  Trust;   and  (iii)  certain  acts  of  Creations
         constituted  infringement of the Hansen's(R) trademark and certain acts
         of  FJC  constituted  contributory   infringement  of  the  Hansen's(R)
         trademarks.  HBC and the Trustee sought  damages and injunctive  relief
         against FJC and Creations.  Such  proceedings were settled in September
         1999.  Pursuant  to written  settlement  agreements  among the  various
         parties to such proceedings,  the Purported Agreement was terminated by
         mutual  consent,  the right of the  successor  to  Creations to use the
         Hansen's(R)  trademark  on limited,  but clearly  defined,  fresh juice
         products,  was  clarified  and agreed upon,  and certain  other matters
         relating to and concerning the use of the Hansen's(R)  trademark,  were
         resolved.

         The Company is subject to claims and contingencies  related to lawsuits
         and other  matters  arising out of the normal  course of business.  The
         ultimate liability  associated with such claims and  contingencies,  if
         any, is not likely to have a material  adverse  effect on the financial
         condition of the Company.

         Except  as  described  above,  there  are  no  material  pending  legal
         proceedings to which the Company or any of its  subsidiaries is a party
         or to which any of the  properties  is  subject,  other  than  ordinary
         routine litigation incidental to the Company's business.

14.      RELATED PARTY

         A director  of the  Company  is a partner in a law firm that  serves as
         counsel to the Company.  Expenses  incurred to such firm in  connection
         with services  rendered to the Company during 1999,  1998 and 1997 were
         $414,932, $173,673 and $186,033, respectively.

         A director of the Company was a  consultant  to the Company from  July,
         1997 to June, 1999.  Expenses incurred to such director  in  connection
         with consulting  services rendered to the Company during 1999, 1998 and
         1997 were $30,000, $60,000 and $30,000 respectively.

         Two  directors  of the Company are  principal  owners of a company that
         provides  promotional  materials to the Company.  Expenses  incurred to
         such company in  connection  with  promotional  materials  purchased in
         1999, 1998 and 1997 were $121,289, $151,393 and $20,092, respectively.

                                      F-20



<PAGE>

15.      SUBSEQUENT EVENT

         Subsequent  to  year-end,   the  Company  granted  options  to  certain
         employees to purchase  57,000  shares of Hansen  common stock under the
         Plan at exercise prices ranging from $4.14 to $4.50 per share.

         On February 23, 2000,  the Company  entered into a new lease  agreement
         for a 113,600 square foot facility in Corona, California, commencing on
         August 1, 2000.  The term of the lease is ten (10) years with increases
         in the  monthly  rental  payments  during the  third,  sixth and eighth
         years.  Upon  commencement of the new lease, the lease for the existing
         premises will terminate by mutual consent.

                                      F-21



<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>

<S>                       <C>               <C>               <C>                <C>

                             Balance at        Charged to
                            beginning of       costs and                          Balance at end
      Description              period           expenses            Deductions      of period
------------------------- ----------------- ----------------- ------------------ -----------------
Allowance for doubtful accounts, sales returns and cash discounts:

1999                             $ 378,641         1,478,889        (1,442,225)         $ 415,305
1998                             $ 315,629         1,432,404        (1,369,392)         $ 378,641
1997                             $ 234,749         1,090,929        (1,010,049)         $ 315,629

Promotional allowances:

1999                            $1,608,123         6,337,903        (6,294,422)        $1,651,604
1998                            $1,067,749         5,584,000        (5,043,626)        $1,608,123
1997                             $ 926,045         4,034,845        (3,893,141)        $1,067,749

Inventory reserves:

1999                             $ 268,233           151,091       (   256,276)         $ 163,048
1998                             $ 383,227             4,027       (   119,021)         $ 268,233
1997                             $ 120,543           253,514             9,170          $ 383,227
                                                             


</TABLE>



                                      F-22





                                                                    EXHIBIT 23



INDEPENDENT AUDITORS' CONSENT


We consent to the  incorporation  by reference in  Registration  Statements  No.
33-92526,  No. 333-41333 and No. 333-89123 of Hansen Natural Corporation on Form
S-8 of our report dated March 22, 2000,  appearing in the Annual  Report on Form
10-K of Hansen Natural Corporation for the year ended December 31, 1999.



/s/ DELOITTE AND TOUCHE LLP

Costa Mesa, California
March 30, 2000

                                    






                                FOURTH AMENDMENT
                                       TO
                  REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

                  THIS FOURTH  AMENDMENT TO  REVOLVING  CREDIT LOAN AND SECURITY
AGREEMENT  is dated March 28, 2000 by and between  HANSEN  BEVERAGE  COMPANY,  a
Delaware  corporation  (herein  referred  to as  the  "Borrower")  and  COMERICA
BANK-CALIFORNIA,  a California  banking  corporation  (herein referred to as the
"Bank").

                                    RECITALS

                  A. Borrower and the Bank entered into a Revolving  Credit Loan
and Security Agreement dated May 15, 1997 (the  "Agreement"),  and certain other
related  documents  pursuant to which the Bank agreed to make loans and advances
to the Borrower under the terms and conditions set forth therein; and

                  B. Pursuant to the  Agreement,  on October 14, 1997,  Borrower
executed a Term Loan Note in the original  principal  amount of $4,000,000  (the
"Term Loan Note")

                  C. The Borrower and the Bank have  previously  (i) amended the
Agreement by entering into a Modification to Loan & Security  Agreement dated as
of May 11,  1998 (the  "First  Amendment"),  a  Modification  to Loan & Security
Agreement dated as of July 27, 1998 (the "Second Amendment"),  a Modification to
Revolving Credit Loan & Security Agreement, an Addendum to Revolving Credit Loan
& Security  Agreement dated December 1, 1998 and an Inventory
 Rider to Revolving
Credit Loan and Security  Agreement dated as of December 1, 1998  (collectively,
the "Third  Amendment")  and (ii) amended the Term Loan Note by entering  into a
Loan Revision/Extension Agreement dated June 14, 1999 (the "Note Amendment").

                  D. The  Borrower  has  requested  that the Bank  make  certain
changes in the Term Loan Note and conforming changes to the Agreement.

                  E. On the basis of the  foregoing,  the Bank and the  Borrower
have agreed to modify the Agreement,  as heretofore  amended, in accordance with
the provisions of this Fourth Amendment set forth below.


     NOW, THEREFORE, the Borrower and the Bank agree as follows:

     1. The  obligation of the Bank to amend the  provisions of the Agreement as
set forth herein is subject to the fulfillment, to the satisfaction of the Bank,
of each of the conditions set forth in Section 5.1 of the Agreement,  as well as
each of the foregoing conditions:

     (a) Each Guarantor shall have executed the  confirmation of guaranty in the
form on the signature page of this Amendment.

     (b) Borrower shall have provided all security  agreements and  instruments,
financing statements and amendments to the foregoing,  if any, as the Bank shall
in its discretion require.


     (c) Borrower shall have paid all fees and expenses required, if any, by the
Bank.


     (d) If required by the Bank,  Bank shall have  received UCC record and copy
searches,  evidencing  the  appropriate  filing and  recording of all  Financing
Statements and disclosing no notice of any liens or  encumbrances  filed against
any of the  Collateral  other than the  Financing  Statements  or the  Permitted
Liens.

     (e)  Bank  shall  have  received  certified  resolutions  of  Borrower  and
Guarantor  reflecting the taking of all necessary  corporate action to authorize
the transactions  contemplated herein in form and substance  satisfactory to the
Bank.

     (f) The Borrower  shall have  delivered  the Amended and Restated  Variable
Rate Promissory Note in the form attached hereto as Exhibit A, in fully executed
form, against delivery of the original Term Loan Note marked void.

     2. The  definition of "Net Income" set forth in Section 1.26 is amended and
restated to read in its entirety as follows:

     .... Net Income" as used in this  Agreement  means the net income (or loss)
of a person for any period  determined in accordance  with GAAP excluding in any
event:


     (a) any  gains  or  losses  on the sale or  other  disposition,  not in the
ordinary course of business,  of investments or fixed or capital assets, and any
taxes on the excluded  gains and any tax deductions or credits on account of any
excluded losses;

     (b) in the  case of the  Borrower,  net  earnings  of any  person  in which
Borrower has an  ownership  interest  other than a  consolidated  subsidiary  of
Hansen  Natural,  unless such net earnings  shall have actually been received by
Borrower in the form of cash distributions."

     3. The definition of "Profit Recapture  Payments" set forth in Section 1.30
is deleted.

     4. The  definition  of "Term  Loan  Note"  set forth in  paragraph  1.35 is
amended and restated to read in its entirety as follows:

     ....  Term Loan Note"  shall mean the Amended and  Restated  Variable  Rate
Promissory Note in the form attached hereto as Exhibit A."

     5.  Paragraph  a. of Section  6.8 is amended  and  restated  to read in its
entirety as follows:

     "Borrower will not make any distribution or declare or pay any dividend (in
stock or in cash) to any  shareholder  or on any of its  capital  stock,  of any
class, whether now or hereafter  outstanding,  or purchase,  acquire,  redeem or
retire any such capital stock; provided,  however, that Borrower may declare and
pay a cash  dividend  in cash or in stock in an amount  not in excess of current
retained earnings."

     6.  Paragraph  a. of Section  6.16 of the  Agreement  is amended to read as
follows:

     "Working  Capital in an amount not less than  $1,000,000  as of the date of
this Amendment,  as of the end of the fiscal quarter ending June 30, 1999 and as
of the end of each fiscal quarter thereafter."

     7.  Paragraph  b. of Section  6.16 of the  Agreement  is amended to read as
follows:

     "Net Worth in an amount not less than (i) for the  fiscal  quarters  ending
June 30,  1999 and  September  30,  1999,  $10,000,000  and (ii) for the  fiscal
quarter ending December 31, 1999, $10,000,000 plus an amount equal to 75% of Net
Income for the 1999 fiscal year."

     8.   Without   affecting   in  any  way  the   continuing   effect  of  the
representations and warranties  contained in the Agreement,  Borrower represents
and warrants to the Bank that each of said  representations are true and correct
as of the date of this Fourth Amendment.

     9. Except as  otherwise  provided  herein and in the First  Amendment,  the
Second  Amendment,  the Third  Amendment and the Note  Amendment,  the Agreement
shall remain in full force and effect in accordance with its original terms.

     IN WITNESS  WHEREOF,  the  Borrower  and the Bank have  caused  this Fourth
Amendment  to be  executed by their duly  authorized  officers as of the day and
year set forth in the Introductory Paragraph to this Fourth Amendment.


HANSENS BEVERAGE COMPANY

By: /s/ Rodney Sacks
Print: Rodney Sacks
Name:
Its: Chairman


COMERICA BANK-CALIFORNIA

By: /s/ Willaim Purcell
Print: William Purcell
Name: 
Its: Vice President





February 18, 2000



Mr. Sammy Sosa


Dear Mr. Sosa:

     I  refer  to  the   discussions   that  have  taken  place   between   your
representatives,  Domingo  Dayhajre,  Jimmy  Tiberia  and Rick Nunley on the one
hand, and Mark Hall, the Senior  Vice-President of our Distributor  Division, on
the  other  hand.  We set out  below  our  proposed  endorsement  and  spokesman
arrangement with you, for your consideration.

1.       Throughout the term of the arrangement, you:

A. Grant to us the exclusive right to use your name, likeness, photograph, voice
and endorsement on and in connection with the packaging, marketing, advertising,
general  promotion  and sale of Hansen's  Functional  Energy drinks in 8-oz cans
(hereinafter  referred to as the "Products"),  in every area in which we now and
may at any time during the term of this  arrangement  do business or sell any of
the Products.  You represent and warrant to us that you have not heretofore made
any contract or  commitment  in conflict  with this grant.  This license will be
exclusive to us, but only insofar as the Products are  concerned.  You will have
the right to authorize the use of your name and likeness for any other beverages
that do not compete with the Products or for any other purpose at any time.  You
will make  yourself  available
 for a photo shoot (which shall  comprise  several
poses) at such  times and  places as may be  reasonable,  for use by us in terms
hereof.  You will  have the right of final  approval  over the use by us of your
photograph,  likeness and voice to ensure that the commercials and materials are
consistent and compatible  with your current image,  provided  however that such
approval shall not be unreasonably withheld by you.

B. Agree and  undertake to ensure  product  exposure for Hansen's  Energy drinks
during nationally  televised interviews with you and other appearances by you on
television, with a minimum of 15 Qualifying Product Exposures (as defined below)
of Hansen's  Energy  drinks  during  nationally  televised  interviews  with you
between March 1 and October 31 in each year during the term of this  arrangement
and with no less than six (6) such exposures  between March 1 and June 30 and no
less than six (6) such  exposures  between  July 1 and  October  31.  Qualifying
Product Exposures shall be required to meet the following minimum criteria:

Hansen's  Energy  drinks to be held by you and be clearly  visible to viewers on
nationally televised interviews.  The can, colors and name of the product are to
be clearly  visible and legible to uninformed  viewers  (including  when product
placed on table in front of you or in locker behind you during interviews) for a
minimum of 15 continuous seconds per exposure. During the course of each such 15
second exposure, you are to be seen holding and/or drinking the product.

                  Without in any way detracting from your obligations to provide
ongoing product exposure for Hansen's Energy drinks during nationally  televised
interviews with you and other  appearances by you on television,  over and above
the minimum number of Qualifying  Product Exposures  provided above and pursuant
to  Paragraph  1-C below,  (which  shall  continue  throughout  the term of this
arrangement),  Hansen's shall be entitled,  but not obliged,  to request you, in
writing,  to provide additional  Qualifying Product Exposures in any year during
the term,  and in such event,  you shall be entitled to payment of an additional
fee of $______ in respect of each  additional  Qualifying  Product  Exposure (as
defined above) that Hansen's may, in writing, request you to provide.

C. Agree to actively endorse and promote the Products,  emphasize its attributes
and deliver product messages and endorsements thereof, including, but without in
any way limiting the generality of the foregoing, the following:

                  i) Promote and endorse the  Products  both on and off the air.
                  ii) Drink the Products during interviews and whenever feasible
                  and appropriate.
                  iii)Include the Products at events and at personal appearances
                      and whenever  appropriate  and, on occasion,  wear quality
                      Hansen's wearables.

D.  Agree,  for an  additional  fee of  $______,  to  appear  for a full  day to
participate in the production and shooting of a television commercial(s).

E. Agree to appear at such time or times as may be  reasonable  for one full day
per year during the term of this  agreement to  participate in the production at
such session of such number of radio  commercials as may be reasonably  feasible
during the course of that day.

F. Agree,  subject to prior  commitments,  at or immediately  after signing this
arrangement,  to attend a press conference to announce the endorsement by you of
Hansen's  Energy  drinks in terms of this  arrangement,  and further to attend a
minimum  of two (2) meet and greet  sessions  per year  during  the term of this
arrangement  on our  behalf.  Such  meet and  greet  appearances  shall be for a
reasonable length of time in the circumstances.  We will give you 28 days notice
of the date(s) for any proposed meet and greet  appearances  and you will advise
us within seven (7) days whether you are or are not available on the  designated
date(s) and place(s). Should you not respond within seven (7) days, your failure
will constitute your acceptance of the designated date(s) and place(s). G. Agree
that if, in connection with the  performance by you of your services  hereunder,
you are required to travel in excess of 50 miles,  which you would otherwise not
have been  required to do, we will  reimburse  you (and one other person in your
party)  for  first  class  round-trip  travel  expenses  and first  class  hotel
accommodations  incurred solely for the purpose of fulfilling  your  obligations
created by this arrangement.

         H. Agree that we will have the right to use, reproduce,  print, publish
and distribute your name, picture,  portrait,  photograph,  likeness,  voice and
biographical materials in any manner including, without limitation on, for or in
connection with the marketing,  advertising,  promotion and sale of the Products
and/or in  identification  of and/or as an  endorsement  for all of the Products
including our attributing to you such statements on behalf of the Products as we
deem  desirable.  You shall have the right of final  approval of all  statements
which are released and attributed to you, which  approval may not,  however,  be
unreasonably  withheld by you. In  addition  to our rights set forth  above,  we
shall have the right to use (and may authorize others) to use, reproduce, print,
publish and distribute your name, picture,  portrait,  photograph,  likeness and
voice in  commercial  tie-ins  and  merchandise  tie-ins  with or for any of the
Products.  Notwithstanding anything to the contrary contained in this agreement,
the  rights  granted  to us  hereunder  shall  remain  in effect  following  the
termination  or the  expiration of the term hereof and we may continue,  without
limitation,  to,  advertise,  promote,  distribute  or sell all Products  and/or
merchandising aids and/or materials that may have been created,  produced and/or
manufactured  prior  to the  termination  or  expiration  of the  term  of  this
arrangement.

         I.  Acknowledge and agree that all right,  title and interest in and to
any and all  materials  created  or  furnished  for and in  connection  with the
services rendered hereunder which embody the results of your services including,
but  not  limited  to,  ideas,   creations,   properties,   recordings,   films,
photographs,  television  and radio  commercials  and other  tangible/intangible
materials shall be, become and remain our sole and exclusive property during and
after  the term  hereof,  whether  the same were  furnished  by you or any other
party,  without additional  compensation to you. Without limiting the generality
of the aforegoing,  we may edit, revise,  touchup,  adapt and combine with other
materials,  any  photographs,  drawings,  films,  recordings or other  materials
containing your name, likeness,  voice or other results of your services. We may
use any television or radio commercials, as seasonal or dealer commercials

J.  Agree  that you will  use your  best  efforts  in  rendering  your  services
hereunder  and  perform  these  services in  cooperation  with us and such other
parties  as we may  designate  and  will  attend  and  participate  in pre-  and
production conferences and meetings,  make-up,  costume fitting appointments and
other  activities  necessary or appropriate  for the proper  performance of your
services to be rendered hereunder.

         K. Agree that you will not, during the term of this arrangement and for
up to six (6) months  following the  termination  or expiration  hereof,  render
services to,  furnish  materials to or authorize or permit the use of your name,
picture,  likeness,  voice, biographical materials or endorsements by others for
and on behalf  or in  connection  with any  products  competitive  to any of the
Products.

         L. Agree that you shall not have, nor claim to have,  either under this
arrangement or otherwise,  any right, title or interest of any kind or nature in
and to any advertising ideas,  announcements,  phrases,  titles,  music,  words,
commercials,  whether  originated and supplied by us and/or on our behalf or not
and all rights  therein are  recognized  to vest in us as our sole and exclusive
property.

2. This  agreement  shall  enure for a period of two (2) years  commencing  from
March 1, 2000 and  terminating  on  February  28,  2002 ("the  Term"),  provided
however that in the event of this  arrangement  being signed before March 1, the
period  between  such  date and  March 1 shall be added to and form  part of the
first year of the Term.

3. A. In consideration of all rights,  licenses and privileges herein granted by
you to us and the services to be rendered and performed by you, all as described
in 1 above,  as well as all rights to use all television  and radio  commercials
produced  during the Term, we will make payment to you of an endorsement  fee of
$______  per year for each year of the Term.  Such fee shall  become  due and be
paid to you as follows:

a)       For the first year of the term:

i)       $______ on March 1, 2000;
ii)      $______ on September 1, 2000;
iii)     $______ on November 12, 2000; and,
iv)      $______ on February 28, 2001.

b)       For the second year of the term of this arrangement:

i)       $______ on June 1, 2001;
ii)      $______ on October 1, 2001;
iii)     $______ on November 12, 2001; and,
iv)      $______ on or before February 28, 2002.

         B. In addition to and as an integral part of the  compensation  payable
by us to you in terms of 3A above,  we agree and  undertake  to make  additional
payments  to you  based  upon and with  reference  to the net sales by us of the
Products  during  calendar  year 2000 and calendar year 2001,  respectively,  as
follows:  In the event  that our net sales of the  Products  exceed  $______  in
calendar  year 2000  (the  "Base  Level"),  we will  make  payment  to you of an
override  on the excess net sales over and above the Base Level  equal to __% of
the excess up to net sales of  $______  and equal to __% of the excess net sales
above that level. Such override shall be determined and be paid to you within 90
days from the end of calendar year 2000 but our  obligation to make such payment
shall be subject to and conditional  upon this  arrangement  being of full force
and effect on the due date of such  payment.  In the event that our net sales of
the  Products  in calendar  year 2001  exceed the net sales of such  products in
calendar year 2000 or $______,  whichever is the greater ("the 2nd Base Level"),
we will make  payment  to you of an  override  on the  excess net sales over and
above the 2nd Base  Level  equal to __% of the  excess up to net sales __% above
the 2nd Base Level and equal to __% of the excess  net sales  above that  level.
Such override shall be determined and be paid to you within 90 days from the end
of calendar  year 2001 but our  obligation to make such payment shall be subject
to and conditional upon this  arrangement  being of full force and effect on the
due date of such payment.

4. In addition to and not by way of limitation of the aforegoing, should the net
sales by us of the Products in calendar year 2000 be less than $______, we shall
have the right, to be exercised on or before the expiration of the first year of
the Term, to terminate  this  arrangement  as at and with effect from the end of
the first year and in such event this  arrangement  shall not  continue  for the
second year of the Term.

5. A. If you fail,  refuse,  neglect  and/or are unable to render or perform any
services as contemplated hereunder for any reason whatsoever including,  but not
limited  to,  death,  mental  or  physical  disability  or  illness,  injury  or
substantial change of appearance (which shall include,  without limitation,  any
substantial facial or bodily  disfigurement or change which in our sole judgment
interferes  with  your  ability  to  perform  properly  the  services   required
hereunder),  we shall have the right to terminate  this  arrangement at any time
provided that we shall have given you 14 days written notice of such default and
you have not cured such default, during such 14-day period.

         B. If you  commit  any  act or  become  involved  in any  situation  or
occurrence which brings you into public disrepute, scandal or ridicule or shocks
or offends the community or any group or class  thereof or  derrogates  from the
public image or reflects  unfavorably  upon us or the  reputation  of any of the
Products  and/or the Hansen's brand and its image in the market or services,  we
shall have the right to terminate  this  arrangement  at any time  following the
time that we become  aware of such act or  involvement,  provided  that we shall
have given you 14 days  written  notice of such  default  and you have not cured
such default, during such 14-day period.

         C. If, at any time during the Term, you are not actively  endorsing and
promoting  the Hansen's  brand or the Products in the manner  contemplated  in 1
above, to a reasonable extent and with reasonable  frequency or are in breach of
any  provisions  of this  arrangement,  we shall be entitled to give you 14-days
written notice to remedy such failure or breach.  Should you fail to remedy such
failure or breach within such period,  we shall have the right to terminate this
arrangement with immediate effect upon written notice to you.

6. Upon termination of this arrangement, pursuant to 5 above, all rights, duties
and  obligations of the parties shall cease and you shall be entitled to receive
and/or  retain,  as the  case  may  be,  payment  only of  that  portion  of the
fee/compensation  payable  to you  in  terms  of 3A  above  as  bears  the  same
proportion as the period that shall have elapsed between the commencement of the
Term and the termination  thereof bears to the full Term;  provided however that
in the event the  termination  is due to your  failure  to provide  the  minimum
Qualifying Product Exposures in accordance with 1B above on nationally televised
interviews,  the portion of the fee/compensation  which you shall be entitled to
receive and/or retain, as the case may be, shall be determined with reference to
the same proportion that the number of Qualifying  Product Exposures provided by
you prior to the  termination  hereof  bears to the minimum  Qualifying  Product
Exposures that you are required to provide  during the Term, in accordance  with
1B above.

7. You will have the right, through your authorized  representative,  to examine
at any reasonable  time, and from time to time, our books of account and records
that relate to the sales of our Functional drinks.

8. We  undertake to provide you with free  Products for your  personal use which
shall  be  delivered  to you on a  regular  monthly  basis at  Wrigley  Field in
Chicago.  Whenever  possible,  you shall attempt to drink Hansen's Energy drinks
and convey your use thereof to the public and facilitate the endorsement thereof
by you through the use thereof.  We will attempt,  whenever  reasonably possible
and provided we have been provided with reasonable  advance  notice,  to provide
you with Products at other venues around the country.

9. Whenever you are granted the right of approval  herein such approval shall be
deemed to have been given if you have not disapproved  thereof in writing within
10 days of receiving our request therefor.

10. Nothing herein contained shall be deemed to constitute a partnership between
or a joint venture by or an agency  relationship  between you and us. Neither of
us shall hold itself or himself out contrary to the terms of this arrangement by
any means whatsoever.  Neither party shall be bound by or become liable for, any
representation,  commitment, act or omission whatsoever of the other contrary to
the provisions hereof.

11. Any  disagreement,  dispute or claim  arising our of this  agreement  or the
breach or termination  hereof shall be settled by arbitration in accordance with
the rules of the  American  Arbitration  Association  and  judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction.  The
parties  agree  that  in  rendering  an  award,  the  arbitrator  shall  have no
jurisdiction  to  consider  evidence  with  respect  to or  render  any award or
judgment for punitive or exemplary  damages or any other amount  awarded for the
purposes of imposing a penalty.  The parties  specifically  waive any claims for
punitive or exemplary  damages or any other  amount  awarded for the purposes of
imposing a penalty  that arises out of or is related to this  agreement,  or the
conduct of the parties in  connection  with this  agreement  of the  termination
thereof. The arbitrator shall have the power to award reasonable attorneys fees.

12. This arrangement shall be governed by and interpreted in accordance with the
laws of the State of  California  (without  reference  to its law of conflict of
laws).

13. This arrangement  constitutes the entire arrangement  between us and may not
be changed or  modified,  nor may any  provision  hereof be waived  except by an
agreement in writing  signed by the party  against whom the  enforcement  of the
change or modification  is asserted.  No waiver by either of us of the breach of
any of the provisions of this arrangement  shall be deemed to be a waiver of any
preceeding or succeeding breach of the same or of a similar nature.

14.  This  letter  shall be binding  upon and shall  inure to the benefit of the
parties hereto and their respective  successors or assigns,  provided,  however,
that this  arrangement  and all  rights  and  obligations  hereunder  may not be
assigned or transferred by you without our prior written consent.

15. Service of all notices under this arrangement  shall be sufficient if mailed
to either of us at our respective  addresses specified on the first page of this
letter or to such  different  address as may hereafter be specified by either of
us in writing to the other.  Any notice shall be deemed to be given on the third
day after the date it is mailed or on the day it is sent, if it is sent by fax.

If the aforegoing correctly reflects our understanding and is acceptable to you,
please would you so indicate by affixing your  signature in the space  indicated
below and returning a signed copy of this letter to us.

Kind regards,

HANSEN  BEVERAGE  COMPANY

/s/ RODNEY C. SACKS

Rodney C. Sacks
Chairman of the Board

RCS:bv

I, the undersigned, SAMMY SOSA, by my signature below, do hereby agree to and to
be bound by the arrangements recorded in the above letter

AGREED.

Date: 2/22/2000                    /s/ SAMMY SOSA
                                   SAMMY SOSA




STANDARD INDUSTRIAL LEASE

Dated (for reference) as of February 23, 2000

1. Defined  Terms.  Each  reference in this Lease to any of the following  terms
shall include the data for such term as stated below with any  additional  terms
used in this Lease to have the meaning and definition given hereinafter:

Tenant:   Hansen Beverage Company,        Landlord: 43 Railroad Partnership L.P.
           A Delaware Corporation         California limited partnership


Tenant's Address:                         Landlord's Address:

1010 Railroad Street                       -c/o Investment Building Group
Corona, California 92882                   4100 Newport Place, Suite 750
                                           Newport Beach, CA 92660


Description of the Premises:

Floor  Area:  Approximately  113,600  square  feet  indicated  on  Exhibit  "A".
(Including +/- 5, 000 s.f. of 2nd floor office)

Street Address    1010 Railroad Street, Corona, California

 Term:  ten (10) years
 Commencement Date: August 1, 2000
 Rent:    forty-four thousand dollars ($44,000) per month (see Paragraph 39, 40)
 Taxes, Insurance and Maintenance Reserve Deposit:   $4,600 per month
 Security Deposit:      $40,000
 Insurance Amounts:

   Bodily Injury per Person               Three million dollars  ($3,000,000)
   Bodily Injury per Occurrence           Three million dollars  ($3,000,000)
   Property Damage                        One million dollars    ($1,000,000)

 Tenant Improvement Plans (approved
 by Tenant and Landlord): ..See Exhibit "B"
 Tenant's Construction Representative: .........................................

Uses:  Warehousing,  packaging and  distribution of consumer  products/corporate
offices.

Tenant's Share (if multi-tenant) of: Real Property Taxes 81% Insurance  Expenses
81% Maintenance Expenses 81% for building #10 only.

2.  Preamble.  Landlord  hereby  leases to Tenant,  and Tenant hereby leases and
accepts from  Landlord,  that certain real property and building floor area more
particularly described in Paragraph I (the "Premises") for the Term and upon the
covenants and conditions hereinafter specified.

3. Construction and Commencement.
     3.1  Construction.  Landlord shall cause to be constructed the building and
improvements  substantially in accordance with the Tenant Improvement Plans. The
Premises  shall be  ready  for  occupancy  on the date  upon  which  the work of
construction  to be  undertaken  by Landlord  has been  substantially  completed
("Ready for  Occupancy") as determined by the issuance of a written  certificate
by  Landlord  to  Tenant   certifying  (a)  that  the  improvements   have  been
substantially completed in accordance with the Tenant Improvement Plans, and (b)
the date of such  completion.  Landlord  shall  complete,  as soon as reasonably
possible,  any items of work or adjustment  not completed  when the Premises are
Ready for Occupancy and such defective or omitted work undertaken by Landlord of
which Tenant has given Landlord written notice within thirty (30) days after the
date the  Premises  are Ready for  Occupancy.  The  Premises  shall be Ready for
Occupancy not later than the  Commencement  Date;  provided,  however,  that the
Commencement  Date may be  extended  for a period of time equal to the period of
any delay encountered by Landlord affecting said work of construction because of
fire, inclement weather, acts of God, riot, governmental  regulations,  strikes,
shortages of material or labor,  changes in the Tenant Improvement Plans, or any
other cause beyond the reasonable control of Landlord.

     3.2  Commencement.  The Term of this Lease shall  commence upon the earlier
of: (a) the Commencement Date, or if the Premises are not Ready for Occupancy by
the Commencement Date, the date upon which the Premises are Ready for Occupancy,
(b) the date upon which Tenant first  occupies any portion of the  Premises,  or
(c) the date upon which Rent would have otherwise commenced to accrue under this
Lease  had  Tenant  not  delayed  in the  performance  of any of its  duties  or
obligations  hereunder or had not otherwise interfered with or caused a delay in
the performance of Landlord's obligations hereunder. If the work of construction
is not  completed  within one hundred  twenty (120) days after the  Commencement
Date as extended  pursuant to  Paragraph  3.1,  the sole remedy of either  party
shall be the option to  terminate  this Lease by the delivery to the other party
of written notice of such termination within ten (10) days thereafter.

4. Rent;  Net Lease.  Tenant agrees to pay Landlord at Landlord's  address or at
such other place designated by Landlord by written notice to Tenant the Rent, in
lawful  money of the United  States,  in  advance,  without  demand,  off-set or
deduction, on the first day of each calendar month of the Term hereof and in the
event the Term  commences or the date of  expiration  of this Lease occurs other
than on the first  day or the last day of a  calendar  month,  the Rent for such
month shall be prorated. This Lease is what is commonly called a "net lease," it
being  understood that Landlord shall receive the Rent free and clear of any and
all  impositions,  taxes,  liens,  charges  or  expenses  of any  nature or kind
whatsoever  in  connection  with the  ownership  and  operation of the Premises,
including  reimbursement of an asset management fee equal to two percent (2%) of
the Rent.  If Rent is not  received as provided  above,  a late charge  shall be
payable by Tenant as provided in Paragraph 13.4. In the event that a late charge
is payable, whether or not collected, two times in any twelve month period, then
Rent shall  automatically  become due and payable  quarterly in advance,  rather
than monthly.

5.   Deposits.
     5.1 Taxes,  Insurance and  Maintenance  Reserve.  Tenant shall deposit with
Landlord  each month the amount set forth in Paragraph I as a reserve to be used
to pay real property taxes,  maintenance  expenses and insurance expenses on the
Premises  which are  payable  by Tenant  under the terms of this  Lease.  If the
amounts deposited with Landlord by Tenant under the provisions of this Paragraph
are  insufficient to discharge the  obligations of Tenant,  Tenant shall send to
Landlord, upon Landlord's demand, the additional sums necessary to fully satisfy
such obligations. All monies deposited with Landlord under this Paragraph may be
intermingled with other moneys of Landlord and shall not bear interest.

5.2 Security  Deposit.  Tenant has deposited with Landlord the Security  Deposit
set forth in Paragraph 1 above as security for Tenant's faithful  performance of
Tenant's obligations hereunder. If Tenant fails to pay Rent or other charges due
hereunder,  or otherwise  defaults  with respect to any provision of this Lease,
Landlord  may use,  apply or retain all or any  portion of said  deposit for the
payment of any Rent or other  charge in default or for the  payment of any other
sum to which Landlord may become obligated by reason of Tenant's default,  or to
compensate Landlord for any loss or damage which Landlord may suffer thereby. If
Landlord  so uses or applies all or any portion of said  deposit,  Tenant  shall
within ten (10) days after written demand therefor deposit cash with Landlord in
an amount  sufficient  to  restore  said  deposit to the full  amount  stated in
Paragraph  1 and  Tenant's  failure to do so shall be a material  breach of this
Lease.  Landlord  shall not be required to keep said deposit  separate  from its
general accounts. If Tenant performs all of Tenant's obligations hereunder, said
deposit,  or so much  thereof as has not  theretofore  been applied by Landlord,
shall be returned,  without  payment of interest or other increment for its use,
to Tenant (or, at Landlord's  option, to the last assignee,  if any, of Tenant's
interest  hereunder) at the expiration of the Term hereof,  and after Tenant has
vacated the Premises.  No trust  relationship is created herein between Landlord
and Tenant with respect to said Security Deposit.

6.   Use.
     6.1    Use. The Premises shall be used and occupied only for the uses
stated in Paragraph 1.

     6.2 Compliance with Law; Prior Restriction.  Tenant shall, at Tenant's sole
expense,   comply  promptly  and  continuously  with  all  applicable  statutes,
ordinances, rules, regulations, orders, restrictions of record, and requirements
in effect during the Term or any part of the Term hereof  regulating  the use of
the  Premises.  Tenant  shall not use or permit the use of the  Premises  in any
manner that will tend to create waste or a nuisance.  Permanent  outside storage
shall not be allow without prior written approval from Landlord.

     6.3  Conditions of Premises.  Tenant  hereby  accepts the Premises in their
condition  existing  as of the date of the  execution  hereof,  except for those
specific  improvements  which  Landlord has undertaken to provide in Paragraph 3
and  subject  to all  applicable  zoning,  municipal,  county  and  state  laws,
ordinance and regulations and any covenants or restrictions of record  governing
and regulating the use of the Premises,  and accepts this Lease subject  thereto
and to matters  disclosed  thereby and by any exhibits  attached hereto.  Tenant
acknowledges   that  neither   Landlord  nor  Landlord's   agent  has  made  any
representation warranty as to the suitability of the Premises for the conduct of
Tenants business, and that Tenant has made such legal and factual inquiries with
respect thereto it deems appropriate and has relied solely thereon.

     6.4  Hazardous  Materials.  Tenant  shall not cause any  hazardous  wastes,
chemicals  or  materials  (collectively   "Hazardous  Materials")  to  be  used,
generated, stored or disposed of on or about the Premises except with Landlord's
written permission and in strict compliance with all applicable  regulations and
using all necessary and appropriate  precautions.  Landlord's  permission may be
withheld  for any reason and may be revoked at any time.  Tenant shall be liable
to Landlord for any and all damages  caused by Tenants  failure to keep,  store,
use, maintain or handle Hazardous Materials on the Premises.  Landlord shall not
be liable to Tenant for any  claims,  damages  or losses  due to the  effects of
Hazardous  Materials  on  the  Premises  that  is  caused  by  owners,  tenants,
licensees,  and  invitees  of other  properties  or is not  directly  caused  by
Landlord.  Landlord  shall not be liable to Tenant  regardless of whether or not
Landlord has approved  Tenants  activities.  Tenant shall  indemnify,  defend by
counsel  acceptable to Landlord and hold Landlord  harmless from and against any
claims,  damages or liabilities arising out of a breach of any provision of this
Paragraph 6.4.

7. Maintenance, Repairs And Alterations
     7.1 Tenant's Obligations. Subject to Paragraph 7.4 below, Tenant shall keep
in good  order,  condition  and repair,  the  Premises  and every part  thereof,
structural  and  non-structural,   and  all  adjacent  sidewalks,   landscaping,
driveways,  parking lots,  and fences located in the areas which are adjacent to
and  included  with the  Premises.  At the  cost  and  expense  of  Tenant,  the
landscaping  shall be maintained by a professional  gardener and the exterior of
the building shall be repainted at least once every four (4) years.

     7.2  Surrender.  On the  last  day of the  Term  hereof,  or on any  sooner
termination,  Tenant  shall  surrender  the  Premises  to  Landlord  in the same
condition as when received,  ordinary wear and tear excepted,  clean and free of
debris. Tenant shall repair any damage to the Premises occasioned by the removal
of Tenant's trade fixtures,  furnishings  and equipment.  Tenant shall leave the
air lines, power panels,  electrical  distribution  systems,  lighting fixtures,
space heaters,  air  conditioning,  plumbing and fencing on the Premises in good
operating condition.

     7.3 Landlord Rights. If Tenant fails to perform Tenant's  obligations under
this Paragraph 7, or under any other  paragraph of this Lease,  Landlord may, at
its option (but shall not be required to),  enter upon the  Premises,  after ten
(10) days' prior written  notice to Tenant  (except in the case of an emergency,
in which case no notice shall be required), perform such obligations on Tenant's
behalf  and put the  same in good  order,  condition  and  repair,  and the cost
thereof  shall become due and payable as  additional  rent to Landlord  together
with Tenant's next rent installment.

     7.4   Landlord's   Obligations.   Except  for  the  repair  of  any  latent
construction  defects in the structural bearing elements of the building and the
obligations of Landlord under  Paragraph 9 and 14, it is intended by the parties
hereto that Landlord  shall have no  obligation,  in any manner  whatsoever,  to
repair and maintain the Premises nor the equipment  therein,  whether structural
or  non-structural,  all of which  obligations  are  intended  to be that of the
Tenant.  Tenant  hereby waives the  provisions of California  Civil Code Section
1941 and 1942 or any related or successor provision of law which would otherwise
afford  Tenant the right to make repairs at  Landlord's  expense or to terminate
this Lease  because of  Landlord's  failure to keep the  Premises in good order,
condition and repair.

     7.5   Alterations and Additions.
         (a) Tenant shall not without Landlord's prior written consent, make any
alterations,   improvements,   additions  or  Utility  Installations  which  for
non-structural  alterations and utility  installations shall not be unreasonably
withheld in, on or about the Premises, except for non-structural alterations not
exceeding ten thousand dollars  ($10,000) during the Term of this Lease. As used
in this paragraph 7.5, the term "Utility Installations" shall include carpeting,
window coverings,  air lines,  power panels,  electrical  distribution  systems,
lighting  fixtures,  space  heaters,  air-conditioning,  plumbing,  and fencing.
Landlord  may  require  that  Tenant  remove  any or all  of  said  alterations,
improvements,  additions or Utility Installations at the expiration of the Term,
and restore the Premises to their prior  condition.  Landlord may require Tenant
to provide  Landlord,  at Tenant's sole cost and expense,  a lien and completion
bond in an amount equal to one and  one-half  times the  estimated  cost of such
improvements,  to insure  Landlord  against any  liability  for  mechanic's  and
materialmen's  liens and to insure  completion  of work.  Should Tenant make any
alterations,  improvements, additions or Utility Installations without the prior
approval of Landlord,  Landlord may require that Tenant remove any or all of the
same

         (b) Any alterations,  improvements,  additions or Utility Installations
in, or about the Premises that Tenant shall desire to make and which require the
consent of the Landlord  shall be presented  to Landlord in written  form,  with
proposed  detailed plans. If Landlord shall give its consent,  the consent shall
be deemed  conditioned  upon Tenant acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Landlord prior to the
commencement  of the work,  and the  compliance by Tenant with all conditions of
said permit in a prompt and expeditious manner.

         (c) Tenant  shall  pay,  when due,  all  claims for labor or  materials
furnished  or alleged to have been  furnished  to or for Tenant at or for use in
the  Premises,  which  claims  are or  may  be  secured  by  any  mechanic's  or
materialmen's  lien against the Premises or any interest  therein.  Tenant shall
give Landlord not less than ten (10) days' notice prior to the  commencement  of
any work in or on the  Premises,  and  Landlord  shall  have  the  right to post
notices of non-responsibility in or on the Premises as provided by law.

         (d) Unless Landlord  requires their removal,  as set forth in Paragraph
7.5(a),  all  alterations,  improvements,  additions  and Utility  Installations
(whether or not such Utility Installations constitute trade fixtures of Tenant),
which may be made on the  Premises,  shall  become the  property of Landlord and
remain upon and be surrendered  with the Premises at the expiration of the Term.
Notwithstanding the provisions of this Paragraph 7.5(d),  Tenant's machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without  material  damage to the Premises,  shall remain the property of
Tenant and may be removed by Tenant subject to the provisions of Paragraph 7.2.

     7.6 Common Area  Maintenance.  In the event that the Premises are a portion
of a larger building or complex, Landlord, at Landlord's option, may arrange for
any portion of the exterior or common area maintenance and repair.  Tenant shall
pay to Landlord upon demand a reasonable proportion to be determined by Landlord
of all costs  including a ten percent (10%)  administration  fee on landscaping,
irrigation and exterior lighting charges in the event Landlord administrates the
same.

8. lnsurance, Indemnity.
     8.1 Coverage. The following insurance and any additional insurance coverage
that maybe  required  bylaw,  holders of  mortgages  or deeds of trust  shall be
carried  protecting  Landlord and the holders of any mortgages or deeds of trust
covering the Premises.  Any insurance  policies provided by Tenant shall provide
that such policies are primary and  non-contributing  with any insurance carried
by the Landlord.
          (a) Insurance covering loss or damage to the Premises in the amount of
the full replacement value thereof, as the same may exist from time to time, but
in no event less than the total amount  required by lenders  having liens on the
Premises,  against  all  perils  included  within  the  classification  of fire,
extended coverage,  vandalism,  malicious mischief,  and special extended perils
("all  risk" as such term is used in the  insurance  industry).  Said  insurance
shall  provide for payment of loss  thereunder  to Landlord or to the holders of
mortgages or deeds of trust on the Premises. A stipulated value or agreed amount
endorsement deleting the co-insurance  provision of the policy shall be procured
with said insurance.  If such insurance  coverage has a deductible  clause,  the
deductible amount:  shall not exceed $5,000 per occurrence,  and Tenant shall be
liable for such deductible amount.
          (b) Comprehensive  general  liability  (Landlord's risk only including
without limitation bodily injury, personal injury and property damage insurance)
in the amount of six  million  dollars or such  higher  limits as  Landlord  may
reasonably require.
          (c)  Insurance  against  abatement  or loss of rent in case of fire or
other  casualty  in an  amount  equal to the  Rent,  Real  Property  Taxes,  and
insurance premium payments to be made by Tenant during one (1) year; and
          (d) Comprehensive   public  liability  insurance  (including   without
limitation bodily injury,  personal injury and property damage insurance),  with
limits at least as high as the amounts  respectively  stated in  Paragraph 1, or
such higher limits as Landlord may reasonably require.

     8.2 Payment of Premiums.  Tenant shall obtain the  insurance  policy called
for in Paragraph 8.1(d). Landlord shall obtain the insurance policies called for
in Paragraphs 8.1(a),  (b), and (c) and Tenant shall pay the cost thereof to the
extent not prepaid  through  reserves paid pursuant to Paragraph 5.1 upon demand
as  additional  rent.  However,  if the Premises  are a one-tenant  building and
Tenant can provide  suitable  insurance  at lesser cost within  thirty (30) days
-after notice of the company and rate obtained by Landlord; Tenant may do so and
shall not be liable to Landlord for any cost of temporary insurance in excess of
the rate for substitute  insurance.  If tenant fails to maintain insurance which
Tenant  has  undertaken  to  provide,  Tenant  shall  pay for  any  loss or cost
resulting from said failure.

     8.3  Insurance  Policies.   Insurance  required  hereunder  shall  be  with
companies holding a Bests Insurance Guide "General  Policyholders  Rating" of at
le and a  "Financial  Size  Category"  rating of at least Class VIII.  Insurance
policies  shall not be  cancelable  or subject to reduction in coverage or other
modification  except after thirty (30) days' prior  written  notice to Landlord.
The  insuring  party shall  deposit with such  mortgage  holders as Landlord may
require, p duplicates or certificates as such holders may require,  and shall in
all cases furnish the other party with policies,  duplicates  and  certificates.
Tenant shall not or permit to be violated any of the conditions or provisions of
any policy  provided  for in  Paragraph  8.1,  and Tenant  shall so perform  and
satisfy the requirement the companies writing such policies so that at all times
companies of good standing reasonably  satisfactory to Landlord shall be willing
to write and/or continue insurance.

     8.4 Waiver of  Subrogation.  Tenant and  Landlord  each hereby  release the
other,  and waive their entire right of recovery  against the other for I damage
arising out of or incident to the perils insured against hereunder,  whether due
to the negligence of Tenant or Landlord or their agents, employees,  contractors
and/or  invitees.  Tenant and  Landlord  shall,  upon  obtaining  the polices of
insurance  required  hereunder,  give  notice  to  the  Insurance  carriers  the
foregoing mutual waiver of subrogation is contained in this Lease.

     8.5 Indemnity.  Tenant shall indemnify and hold harmless  Landlord from and
against any and all claims  arising from Tenant's use of the  Premises,  or from
the conduct of  Tenant's  business or from any  activity,  work or things  done,
permitted or suffered by Tenant in or about the Premises or elsewhere  and shall
further indemnify and hold harmless Landlord from and against any and all claims
arising  from any breach or  default in the  performance  of any  obligation  on
Tenant's part to be performed under the terms of this Lease, or arising from any
negligence of Tenant, or any of Tenant's agents,  contractors, or employees, and
from and against all costs,  attorneys' fees, expenses and liabilities  incurred
in the defense of any such claim or any action or  proceeding  brought  thereon;
and in case any action or  proceeding be brought  against  Landlord by reason of
any such  claim,  Tenant  upon notice  from  Landlord  shall  defend the same at
Tenants expense by counsel  satisfactory to Landlord.  Tenant as a material part
of the  consideration  to Landlord hereby assumes all risk of damage to property
or injury to persons,  in, upon or about the Premises arising from any cause and
Tenant hereby waives all claims in respect thereof against Landlord.

     8.6  Exemption  of  Landlord  from  Liability.  Tenant  hereby  agrees that
Landlord  shall not be liable for  injury to  Tenant's  business  or any loss of
income  therefrom  or for  damage  to the  goods,  wares,  merchandise  or other
property of Tenant, Tenants employees,  invitees, customers, or any other person
in or about the Premises;  nor shall Landlord be liable for injury to the person
of Tenant,  Tenant's  employees,  agents or contractors,  whether such damage or
injury is caused by or results  from fire,  steam,  electricity,  gas,  water or
rain,  or from the  breakage,  leakage,  obstruction  or other defects of pipes,
sprinklers, wires, appliances,  plumbing, air conditioning or lighting fixtures,
or from any other cause,  whether said damage or injury results from  conditions
arising  upon the  Premises or upon other  portions of the building of which the
Premises are a part, or from other sources or places,  and regardless of whether
the  cause  of  such  damage  or  injury  or the  means  of  repairing  same  is
inaccessible  to Tenant.  Landlord  shall not be liable for any damages  arising
from any act or neglect of any other  tenant,  if any, of the  building in which
the Premises are located.

9. Damage or Destruction.       See Paragraph 47.
     9.1 Partial  Damage - Insured.  Subject to the provisions of Paragraphs 9.3
and 9.4,  if the  Premises  are damaged and such damage was Caused by a casualty
covered under an insurance policy,  Landlord shall repair such damage as soon as
reasonably  possible and this Lease shall continue in full force and effect.  If
the insurance  proceeds  received by Landlord are not  sufficient to effect such
repair and such  insufficiency  is not due to an  insufficient  policy  coverage
amount,  Tenant shall pay to Landlord upon demand any costs incurred by Landlord
not fully covered by insurance proceeds. If Tenant repairs the damage,  Landlord
shall  reimburse  Tenant  for the  costs of repair  to the  extent of  insurance
proceeds received by Landlord.

     9.2 Partial Damage - Uninsured. Subject to the provisions of Paragraphs 9.3
and 9.4,  if the  Premises  are  damaged  where the cost to repair  such  damage
exceeds  $25,000  except by a negligent or willful act of Tenant (in which event
Tenant shall make the repairs at its  expense),  and such damage was caused by a
casualty  not  covered  under an  insurance  policy  required  to be  maintained
pursuant to Paragraph 8.1,  Landlord may at Landlord's  option either (i) repair
such damage as soon as reasonably possible at Landlord's expense, in which event
this Lease shall continue in full force and effect,  or (ii) give written notice
to Tenant  within  thirty  (30) days  after the date of the  occurrence  of such
damage of Landlord's intention to cancel and terminate this Lease as of the date
of the  occurrence  of such damage.  In the event  Landlord  elects to give such
notice of Landlord's  intention to cancel and terminate this Lease, Tenant shall
have the right  within  ten (10) days after the  receipt of such  notice to give
written  notice to  Landlord  of  Tenant's  intention  to repair  such damage at
Tenant's expense, without reimbursement from Landlord, in which event this Lease
shall  continue in full force and effect,  and Tenant shall proceed to make such
repairs as soon as  reasonably  possible.  If Tenant  does not give such  notice
within such ten (10) day period,  this Lease shall be canceled and terminated as
of the date of the occurrence of such damage.

     9.3 Total  Destruction.  If at any time during the Term of this Lease there
is damage,  whether or not an insured loss,  (including  destruction required by
any  authorized  public  authority)  to the building of which the Premises are a
part to the extent that the cost of repair  exceeds  fifty  percent (50%) of the
then  replacement  cost of such  building  as a whole,  then  this  Lease  shall
automatically terminate as of the date of such destruction.

     9.4 Damage Near End of Term.  If the  Premises  are  significantly  damaged
during  the last  year of the Term of this  Lease,  Landlord  may at  Landlord's
option  cancel and  terminate  this Lease as of the date of  occurrence  of such
damage by giving written notice to Tenant of Landlord's election to do so within
thirty (30) days after the date of occurrence of such damage.

     9.5 Abatement of Rent. In the event of damage  described in Paragraphs  9.1
or 9.2, and Landlord or Tenant  repairs or restores the  Premises,  Rent for the
period during which such damage, repair or restoration continues shall be abated
in proportion  to the degree to which  Tenant's use of the Premises is impaired,
but  only to the  extent  of any  proceeds  received  by  Landlord  from  rental
abatement  insurance  described in Paragraph  8.1.  Except for the  abatement of
Rent,  if any,  Tenant  shall  have no claim  against  Landlord  for any  damage
suffered by reason of any such damage, destruction, repair or restoration.

     9.6 Waiver.  Tenant and Landlord  hereby waive the provisions of California
Civil  Code  Paragraphs  1932  (2) and  1933  (4) or any  related  or  successor
provision of law which relate to  termination of leases when the thing leased is
destroyed  and agree  that such  event  shall be  governed  by the terms of this
Lease.

10. Real Property Taxes.
     10.1 Payment of Taxes.  Tenant shall pay the Real  Property Tax, as defined
in Paragraph  10.2,  applicable  to the Premises  during the Term.  11' deposits
collected  for  real  property  taxes  as  provided  in  Paragraph  5.1  are not
sufficient to discharge the Tenant's  obligations,  payment of the balance shall
be made at least ten (10) days prior to the delinquency  date of such payment by
depositing  the payment  with  Landlord.  If any such taxes paid by Tenant shall
cover any period of time after the expiration of the Term hereof, Tenant's share
of such  taxes  shall be  equitably  prorated  to cover  only the period of time
within the tax fiscal  Year  during  which  this Lease  shall be in effect,  and
Landlord shall  reimburse  Tenant to the extent required within thirty (30) days
following  expiration  of the Term.  If Tenant shall fail to pay any such taxes,
Landlord  shall have the right to pay the same, in which case Tenant shall repay
such  amount to Landlord  with  Tenant's  next rent  installment  together  with
interest at the rate of twelve percent (12%) per annum.

     10.2  Definition  of "Real  Property  Tax".  As used herein,  the term Real
Property Tax shall include any form of real estate tax or  assessment,  general,
special, ordinary or extraordinary,  and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance,  personal income
or estate taxes)  imposed on the Premises by any authority  having the direct or
indirect power to tax, including any city, state or federal  government,  or any
school,  agricultural,  sanitary,  fire,  street,  drainage or other improvement
district thereof,  as against any legal or equitable interest of Landlord in the
Premises or in the real  property of which the Premises  are a part,  as against
Landlord's right to rent or other income  therefrom,  and as against  Landlord's
business of leasing the Premises.  Real Property Tax shall also include any tax,
fee, levy,  assessment or charge (i) in substitution  of,  partially or totally,
any tax,  fee,  levy  assessment  or  charge  hereinabove  included  within  the
definition  of Real  Property  Tax or (ii) the nature of which was  hereinbefore
included within the definition of Real Property Tax.

     10.3  Joint  Assessment.  If the  Premises  are  not  separately  assessed,
Tenant's  liability shall be an equitable  proportion of the Real Property Taxes
for all of the land and  improvements  included within the tax parcel  assessed,
such  proportion to be determined  by Landlord  from the  respective  valuations
assigned  in the  assessor's  work  sheets or such other  information  as may be
reasonably available.

11.  Utilities.  Tenant  shall pay for water,  gas,  electricity,  and any other
utilities and services  supplied to the Premises  together  with taxes  thereon.
Tenant shall be responsible for any  installation  or hook-up  charge.  Landlord
shall not be liable to Tenant for  interruption in or curtailment of any utility
service,  nor  shall  any  such  interruption  in or  curtailment  constitute  a
constructive eviction or grounds for rental abatement.  If any such services are
not separately metered to Tenant, Tenant shall pay a reasonable proportion to be
determined by Landlord of all charges jointly metered with other premises.

12. Assignment and Subletting.
     12.1  Landlord's  Consent  Required.  Tenant  shall not  voluntarily  or by
operation of law assign, mortgage, sublet, or otherwise transfer or encumber all
or any  part of  Tenant's  interest  in this  Lease or in the  Premises  without
Landlord's prior written consent.  Landlord shall not unreasonably  withhold its
consent to an to an  assignment  or sublet,  provided the  proposed  assignee or
sublessee is  reasonably  satisfactory  to Landlord as to credit and will occupy
and use the  Premises  for the  same  purposes  specified  in  Paragraph  1. Any
attempted assignment, transfer, mortgage, encumbrance or subletting without such
consent  shall  constitute a breach of this Lease and be voidable at  Landlord's
election.   Tenant  shall  pay  to  Landlord  five  hundred  dollars  ($500)  as
compensation  for expenses in connection with any request for landlords  consent
by Tenant.

12.2 No Release of Tenant.  Regardless of Landlord's  consent,  no subletting or
assignment  shall  release  Tenant of Tenant's  obligation  or alter the primary
liability of Tenant to pay the Rent and to perform all other  obligations  to be
performed  by Tenant  hereunder.  The  acceptance  of Rent by Landlord  from any
liability of Tenant to pay the Rent and to perform all other  obligations to pay
the rent or subletting shall not be deemed consent to any subsequent  assignment
or subletting.

12.3  Recapture of Premises.  In  connection  with any  proposed  assignment  or
sublease of the entire premises,  Tenant shall submit to landlord in writing (a)
the name of the proposed  assignee or sublessee,  (b) such information as to its
financial  responsibility  a hall have an option to cancel  and  terminate  this
Lease with respect to the Premises  which is to be assigned or sublet.  Landlord
may exercise  said option in writing  within  thirty (30) days after its receipt
from Tenant of such  request to assign or  sublease  the  Premises.  If Landlord
shall  exercise its option,  Tenant  shall  surrender  possession  of the entire
Premises,

     12.4 Excess  Sublease  Rental.  If, on account of or in connection with any
assignment or sublease if more than 5O% of the Premises, tenant receives rent or
other  consideration in excess of the Rent called for hereunder,  or in the case
of the  sublease  of a portion of the  Premises,  in excess of the pro rata Rent
based on the floor area of such portion, after appropriate adjustments to assure
all other payments  called for hereunder are  appropriately  taken into account,
Tenant shall pay to Landlord  Fifty  Percent (50%) of the excess of such payment
of rent or other consideration received by Tenant promptly after its receipt.

13. Defaults; Remedies.
     13.1 Defaults.  The  occurrence of any one or more of the following  events
     shall constitute a material default and breach of this Lease by Tenant:
         (a) The vacating or  abandonment of the Premises by Tenant for at least
thirty (30) days.
         (b) The  failure  by  Tenant to make any  payment  of Rent or any other
payment  required to be made by Tenant  hereunder,  as and when due,  where such
failure  shall  continue  for a period of three (3) days  after  written  notice
thereof from Landlord to Tenant.
         (c) The failure by Tenant to observe or perform  any of the  covenants,
conditions  or  provisions  of this Lease to be observed or performed by Tenant,
other than described in Paragraph 13.1(b), where such failure shall continue for
a period of thirty  (30) days after  written  notice  thereof  from  Landlord to
Tenant;  provided,  however, that if the nature of Tenant's default is such that
more than thirty (30) days are  reasonably  required  for its cure,  then Tenant
shall not be deemed to be in default if Tenant  commences  such cure within said
thirty  (30) day  period  and  thereafter  diligently  prosecutes  such  cure to
completion.
         (d)(i) The making by Tenant of any general  arrangement  or  assignment
for the benefit of creditors; (ii) the filing by or against Tenant of a petition
to have Tenant adjudged bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy  (unless the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30)  days;  or (iv) the  attachment,  execution  or other  judicial  seizure of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease,  where such seizure is not discharged within thirty (30)
days.
         (e) The  discovery by Landlord that any  financial  statement  given to
Landlord  by Tenant,  any  assignee  of Tenant,  any  subtenant  of Tenant,  any
successor in interest or any  guarantor of Tenant's  obligations  hereunder  was
materially false.

     13.2  Remedies.  In the event of any material  default or breach by Tenant,
Landlord  may at any time  thereafter,  with or  without  notice or  demand  and
without limiting  Landlord in the exercise of any right or remedy which Landlord
may have by reason of such default or breach:
          (a) Terminate  Tenant's right to possession of the Premises,  in which
case  this  Lease  shall  terminate  and  Tenant  shall  immediately   surrender
possession  of the  Premises  to  Landlord.  In such  event,  Landlord  shall be
entitled to recover  from  Tenant all damages  incurred by Landlord by reason of
Tenant's  default  including,  but  not  limited  to,  the  cost  of  recovering
possession of the Premises; expenses of reletting including necessary renovation
of the Premises,  reasonable  attorneys'  fees,  and any real estate  commission
actually paid;  the worth at the time of award by the court having  jurisdiction
thereof of the amount by Which the unpaid Rent for the balance of the Term after
the time of such  award  exceeds  the  amount of such  rental  loss for the same
period that Tenant proves could be reasonably  avoided;  and that portion of the
leasing  commission  paid by Landlord  applicable to the unexpired  Term of this
Lease. Unpaid installments of Rent or other sums shall bear interest at the rate
of twelve percent (12%) per annum.
          (b) Maintain  Tenant's  right to  possession  in which case this Lease
shall  continue  in effect  whether  or not  Tenant  shall  have  abandoned  the
Premises. In such event, Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the Rent as
it becomes due hereunder.
         (c) Pursue any other  remedy now or  hereafter  available  to  Landlord
under the laws or judicial decisions of the State of California.

     13.3 Default by Landlord.  Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within thirty (30) clays after
written  notice by Tenant to Landlord  and to the holder of any mortgage or deed
of trust  covering the Premises  whose name and address  shall have  theretofore
been furnished to Tenant in writing,  specifying  wherein Landlord has failed to
perform such obligations;  provided,  however,  that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance,
then Landlord shall not be in default if Landlord  commences  performance within
such thirty (30) day period and  thereafter  diligently  prosecutes  the same to
completion.

     13.4 Late Charges.  Tenant hereby  acknowledges that late payment by Tenant
to Landlord of Rent and other sums due  hereunder  will cause  Landlord to incur
costs  not  contemplated  by this  Lease,  the  exact  amount  of which  will be
extremely  difficult to ascertain.  Such costs include,  but are not limited to,
processing  and  accounting  charges,  and late charges  which may be imposed on
Landlord  by the terms of any  mortgage  or trust deed  covering  the  Premises.
Accordingly,  if any  installment of Rent or any other sum due from Tenant shall
not be received by Landlord or Landlord's designee within five (5) business days
after such amount  shall be due,  then,  without any  requirement  for notice to
Tenant, Tenant shall pay to Landlord a late charge equal to five percent (5%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable  estimate of the costs Landlord will incur by reason of late
payment by Tenant.  Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount, nor
prevent  Landlord from  exercising any of the other rights and remedies  granted
hereunder.

14.  Condemnation.  If the  Premises or any portion  thereof are taken under the
power of eminent domain,  or sold under the threat of the exercise of said power
(all of which are herein called  "Condemnation"),  this Lease shall terminate as
to the part so taken as of the date  the  condemning  authority  takes  title or
possession,  whichever first occurs. If more than ten percent (10%) of the floor
area of the building on the Premises or more than twenty- five percent  (25%) of
the land area of the Premises  which is not occupied by any building is taken by
Condemnation;  then Tenant may, at Tenant's  option to be  exercised  in writing
only within ten (10) days after  Landlord shall have given Tenant written notice
of such taking (or in the absence of such notice, within ten (10) days after the
condemning  authority shall have taken  possession),  terminate this Lease as of
the date the  condemning  authority  takes such  possession.  If Tenant does not
terminate this Lease in accordance  with the foregoing,  this Lease shall remain
in full force and effect as to the  portion of the  Premises  remaining,  except
that the Rent shall be reduced in the proportion that the floor area taken bears
to the total floor area of the building  situated on the Premises.  No reduction
in Rent  shall  occur  if the only  area  taken  is that  which  does not have a
building  located  thereon.  Any award for the  taking of all or any part of the
Premises  under the power of eminent  domain or any payment made under threat of
the exercise of such power shall be the property of Landlord, whether such award
shall be made as  compensation  for  diminution in value of the leasehold or for
the taking of the fee, or as severance damages;  provided,  however, that Tenant
shall be entitled to any award for loss or damage to Tenant's trade fixtures and
removable personal  property.  In the event that this Lease is not terminated by
reason of such Condemnation,  Landlord shall, to the extent of severance damages
received by Landlord in connection with such Condemnation,  repair any damage to
the Premises  caused by such  Condemnation  except to the extent that Tenant has
been reimbursed therefor by the condemning authority.

15.  Examination  of Lease.  Submission of this  instrument  for  examination or
signature  by Tenant does not  constitute a  reservation  of or option to lease.
This  instrument  is not effective as a lease or otherwise  until  execution and
delivery by Landlord and Tenant.

16. Estoppel Certificate.
     (a) Tenant  shall,  upon ten (10) days prior  written  notice from Landlord
execute,  acknowledge  and  deliver to  Landlord  a  statement  in  writing  (i)
certifying  that this Lease is  unmodified  and in full force and effect (or, if
modified,  stating  the nature of such  modification  and  certifying  that this
Lease,  as so  modified,  is in full force and effect) and the date to which the
Rent and other charges are paid in advance,  if any, and (ii) acknowledging that
there are not,  to  Tenant's  knowledge,  any  uncured  defaults  on the part of
Landlord  hereunder,  or specifying  such defaults if any are claimed.  Any such
statement  may be  conclusively  relied  upon by any  prospective  purchaser  or
encumbrancer of the Premises.
     (b) At Landlord's option,  Tenants failure to deliver such statement within
ten (10) days of receipt of written  notice  shall be a material  breach of this
Lease or shall be  conclusive  upon  Tenant (i) that this Lease is in full force
and effect, without modification except as may be represented by Landlord,  (ii)
that there are no uncured defaults in Landlord's performance, and (iii) that not
more than one month's Rent has been paid in advance.
      (c) If Landlord desires to finance, refinance or sell the Premises, or any
     part thereof,  Tenant hereby agrees upon ten (10) days prior written notice
     to  deliver  to  Landlord  such  financial  statements  of Tenant as may be
     reasonably required by a lender or
  purchaser.     Such  statement  shall  include  the most recent  three  years'
                 financial  statements of Tenant. All such financial  statements
                 shall be received by Landlord in  confidence  and shall be used
                 only for the purposes herein set forth.


17.  Landlord's  Liability.  Whenever  Landlord  conveys  its  interest  in  the
Premises,  Landlord  shall  be  automatically  released  from all  liability  as
respects the performance of covenants on the part of Landlord  herein  contained
provided the assignee  executes an assumption  agreement  expressly  agreeing to
assume Landlord's  obligations with respect to this Lease. If requested,  Tenant
shall execute a form of release and such other  documentation as may be required
to effect these  provisions.  Tenant agrees to look solely to Landlord's  estate
and interest in the  Premises for the  satisfaction  of any  liability,  duty or
obligation of Landlord in respect to this Lease or the  relationship of Landlord
and Tenant  hereunder  and no other  assets of Landlord  shall be subject to any
liability  therefor.  Tenant  agrees  it will  not seek and  hereby  waives  any
recourse  against the individual  partners,  directors,  officers,  employees or
shareholders of Landlord or their personal assets for such satisfaction.

18. Severability. The invalidity of any provision of this Lease as determined by
a court of  competent  jurisdiction  shall in no way affect the  validity of any
other provision hereof.

19. Interest on Past-Due Obligations.  Except as expressly herein provided,  any
amount  due to  Landlord  not paid when due shall  bear  interest  at the twelve
percent (12%) per annum.  Payment of such interest  shall not excuse or cure any
default by Tenant.

20. Time of Essence. Time is of the essence.


21.  Additional  Rent. Any monetary  obligations of Tenant to Landlord under the
terms of this Lease shall be deemed to be rent.

22.  Incorporation  of Prior  Agreements;  Amendments.  This Lease  contains all
agreements of the parties with respect to any matter mentioned  herein. No prior
agreement or  understanding  pertaining  to any such matter shall be  effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification.

23. Notices.  Any notice required or permitted to be given hereunder shall be in
writing  and may be given by  personal  service  or by  certified  mail,  return
receipt  requested.  Notice by certified mail shall be deemed served on the date
of delivery as shown on the postal  receipt.  Either  party may by notice to the
other  specify a  different  address  for notice  purposes,  except  that,  upon
Tenant's  taking  possession  of the  Premises,  the Premises  shall  constitute
Tenants  address  for  notice  purposes.  A copy of all  notices  to be given to
Landlord hereunder shall be concurrently  transmitted by Tenant to such party or
parties at such  addresses  as Landlord  may  hereafter  designate  by notice to
Tenant.

24.  Waivers.  No waiver by Landlord of any  provision  hereof shall be deemed a
waiver of any other  provision  hereof or of any subsequent  breach by Tenant of
the same or any other  provision.  Landlord's  consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Landlord's consent to
or approval of any subsequent act by Tenant. The acceptance of Rent hereunder by
Landlord  shall  not be a waiver  of any  preceding  breach  by Tenant or of any
provision hereof, other than the failure of Tenant to pay the particular Rent so
accepted,  regardless of Landlord's  knowledge of such  preceding  breach at the
time of acceptance  of such Rent.  Partial or  incomplete  payments  accepted by
Landlord shall not be a waiver or considered an accord and  satisfaction  of any
amounts due.

25. Captions. Paragraph captions are not a part hereof.

26.  Holding Over.  If Tenant  remains in possession of the Premises or any part
thereof after the expiration of the Term without the express  written consent of
Landlord,  such  occupancy  shall be a tenancy  from  month to month at a rental
equal to the Rent during the last month of the Term  increased by twenty percent
(20%) and upon all the terms hereof applicable to a month-to-month tenancy.

27.  Cumulative  Remedies.  No  remedy  or  election  hereunder  shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions. Each provision of this Lease performable by Tenant
shall be deemed both a covenant and a condition.

29. Binding  Effect;  Choice of Law.  Subject to the provisions of Paragraphs 12
and 17, this Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns and legal representatives.  This
Lease shall be governed by the laws of the State of California.

30. Subordination.
     (a) This Lease,  at Landlord's  option,  shall be subordinate to any ground
lease,  mortgage,  deed of trust, or any other  hypothecation or security now or
hereafter  placed upon the real property of which the Premises are a part and to
any  and  all  advances  made  on the  security  thereof  and  to all  renewals,
modifications,  consolidations,  replacements and extensions thereof. Landlord's
election  to  subordinate  this Lease shall not be  effective  unless the ground
lessor,  mortgagee  or  trustee  shall  execute  with  Tenant  a  nondisturbance
agreement  recognizing  that Tenant's eight to quiet  possession of the Premises
shall not be  disturbed  if Tenant is not in default and so long as Tenant shall
pay the Rent and observe and perform all the  provisions  of this Lease.  If any
mortgagee,  trustee or ground lessor shall elect to have this Lease prior to the
lien of its  mortgage,  deed of trust or ground  lease,  and shall give  written
notice  thereof to Tenant,  this Lease shall be deemed  prior to such  mortgage,
deed of trust, or ground lease,  whether this Lease is dated prior or subsequent
to the  date of said  mortgage,  deed of trust  or  ground  lease or the date of
recording thereof.
     (b) Tenant  agrees to execute  any  documents  required  to  effectuate  an
attornment,  a  subordination  or to make  this  Lease  prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to
execute  such  documents  within  ten  (10)  days  after  written  demand  shall
constitute a default by Tenant  hereunder,  or at  Landlord's  option,  Landlord
shall execute such  documents on behalf of Tenant as Tenant's  attorney-in-fact.
Tenant does hereby make,  constitute and irrevocably appoint Landlord as Tenants
attorney-in-fact and in Tenants name, place and stead to execute such documents.

31.  Attorney's  Fees.  If  Landlord  or Tenant  brings an action to enforce its
respective  rights hereunder,  the unsuccessful  party therein agrees to pay all
costs incurred by the prevailing party therein,  including reasonable attorney's
fees and court costs to be fixed by the court.

32.  Landlord's  Access.  Landlord and Landlord's agents shall have the right to
enter the Premises at reasonable  times for the purpose of inspecting  the same,
showing the same to prospective purchasers, lenders, or tenants, and making such
alterations,  repairs,  improvements  or  additions  to the  Premises  or to the
building of which they are a part as Landlord may deem  necessary or  desirable.
Landlord  may at any time during the last one hundred  twenty  (120) days of the
Term  hereof  place on or about the  Premises  any  ordinary  "For Sale" or "For
Lease" signs, all without rebate of Rent or liability to Tenant.

33.  Auctions.  Tenant shall not conduct any auction  without  Landlord's  prior
written consent.

34. Signs.  Any sign placed on the Premises shall contain only Tenant's name and
slogan for the name of any affiliate of Tenant actually  occupying the Premises,
but no  advertising  matter.  No such sign  shall be  erected  until  Tenant has
obtained Landlord's written approval which shall not unreasonably be withheld of
the location,  materials,  size,  design,  and content thereof and any necessary
permit  therefor.  Tenant shall remove any such sign upon termination and return
the Premises to their condition prior to the placement of said sign.

35.  Merger.  The  voluntary or other  surrender  of this Lease by Tenant,  or a
mutual  cancellation  thereof,  or a termination  by Landlord,  shall not work a
merger and shall at the option of the  Landlord,  terminate  all or any existing
subtenancies  or may, at the option of  Landlord,  operate as an  assignment  to
Landlord of any or all of such tenancies.

36.  Easements,  Boundary  Changes.  Landlord reserves to itself the right, from
time to time, to grant such  easements,  rights,  dedications and enact boundary
and common area  configuration  adjustments  that  Landlord  deems  necessary or
desirable and to cause the recordation of parcel maps and restrictions,  so long
as they do not  unreasonably  interfere  with the use of the Premises by Tenant.
Tenant shall sign any of the  aforementioned  documents upon request of Landlord
and failure to do so shall constitute a breach of this Lease by Tenant.

37. Quiet Possession.  Upon Tenant's paying the Rent,  additional rent and other
sums  provided  hereunder and observing  and  performing  all of the  covenants,
conditions  and  provisions  on  Tenants  part  to  be  observed  and  performed
hereunder,  Tenant  shall have quiet  possession  of the Premises for the entire
Term hereof, subject to the provisions of this Lease.

38. Authority. If Tenant is a corporation, trust or partnership, each individual
executing this Lease on behalf of such entity represents and warrants that he is
duly  authorized to execute and deliver this Lease on behalf of said entity.  If
Tenant is a corporation, trust or partnership,  Tenant shall, within thirty (30)
days after  execution  of this  Lease,  deliver  evidence of such  authority  to
Landlord.
    See Addendum for Paragraphs 39 through 47.


    The parties hereto have executed this lease on the dates  immediately  above
their respective signatures.

    Dated:  2/25/00                            Dated:
            Hansen Beverage Company            43 Railroad Partnership L.P.
            A Delaware corporation             a California Limited Partnership

    By:  /s/ Rodney Sacks                     By:  Investment Building Group
    Its: /s/ Chairman                              a California corporation
                                                   General partner

                                               By: /s/ Jack M. Langson
                                                       Jack M. Langson, 
                                                       President

    "Tenant"                                                  "Landlord"



<PAGE>
ADDENDUM TO STANDARD INDUSTRIAL LEASE
DATED FEBRUARY 23, 2000 BY AND BETWEEN
43 RAILROAD PARTNERSHIP L.P. ("LANDLORD") AND
HANSEN BEVERAGE COMPANY ("TENANT")

39. Rent  Increases.  The Rent as called for in  Paragraph  I shall  commence at
forty four thousand  dollars  ($44,000)  per month.  The Rent shall be increased
periodically according to the following schedule:

   Months                                         Monthly Rental
1 through 30                                         $44,000
31 through 60                                        $46,500
61 through 90                                        $49,000
91 through 120                                       $51,000


40. Rent Waiver. Landlord hereby grants a rent waiver to Tenant in the amount of
twenty-five  thousand  dollars  ($25,000) to be applied toward the first month's
rent due under this Lease.  In the event of a default as defined in paragraph 13
of the Lease  and the Lease is not  reinstated  within  sixty  (60) days of such
occurrence,  the rent waiver  shall  automatically  be deemed  deleted from this
Lease and of no further force and effect, and any portion theretofore previously
credited  against  the Rent shall be  immediately  due and  payable by Tenant to
Landlord and recoverable by Landlord as additional rent due under this Lease.

41. Tenant  Improvement  Allowance.  Landlord shall provide a tenant improvement
allowance  (the  "Improvement  Allowance")  in the amount of three hundred fifty
thousand dollars ($350,000) for the design and construction, etc., of additional
offices  and  other  improvements  as  outlined  in  Exhibit  "B" or  any  other
improvement approved by Landlord  ("Improvements") as well as for payment of any
upgrade costs over Landlord's existing specifications and allowances that may be
incurred  toward initial 2,300 sq. ft. of preplanned  office space. In the event
that the  Improvements  cost more than the Improvement  Allowance,  Tenant shall
have the right to reduce the  Improvements  to limit the cost to the Improvement
Allowance; or, alternatively, Tenant shall pay to Landlord on demand the cost of
the  Improvements  above the  Improvement  Allowance.  If Tenant does not pay to
Landlord the extra costs above the  Improvement  Allowance or notify Landlord of
the items to be eliminated within ten (10) days of written notice from Landlord,
Landlord may in its sole  discretion  eliminate items to bring the budget within
the Improvement  Allowance and proceed with the construction of the Improvements
as revised.  In no event shall  commencement of Rent be delayed due to any delay
in completion of the tenant  improvement  items.  Up to ten percent (10%) of any
Improvement  Allowance  unspent  after the first year of the Term may be applied
toward the Rent.

         Tenant  shall  provide  Landlord  with the mutually  acceptable  office
tenant improvement plan on or before March 30, 2000.

42. Initial Premises Specification: The Premises include approximately 2,300 sq.
ft. of HVAC office space with "bonus" structural  mezzanine above. At Landlord's
expense the Premises shall be modified from the existing  construction  plans to
include a total of seventeen (17) dock high loading doors.

43.  Additional  Improvements  to be Installed by Landlord.  Landlord  shall, be
responsible  for the erection of a partial  separation  wall on the east side of
the  Premises  with pass  through  openings  per mutual  tenant's  direction.  A
directional  sign of reasonable  size and design and including the Tenant's name
in space not to  exceed 3 ft tall and 6 ft wide  will be placed at the  Railroad
Street entry to the park in the location approximately shown on Exhibit A.

44. Fencing of Vehicles on Site.  Subject to Landlord's  reasonable  approval on
scope and  configuration and Tenant  compliance with other  governmental  codes,
Tenant shall be permitted to erect fences around the paved areas onsite adjacent
to the Premises for the purposes of overnight  vehicular  security.  Any fencing
allowed that encloses a paved area shared with an adjoining  property  shall not
encumber the rights of use of the occupants of that adjoining property. Landlord
may require Tenant to share security gate access with a neighboring tenant.

45. Right of First Offering on Expansion Building. Provided Tenant (i) is not in
default under the Lease, (ii) has a shareholder's  equity balance of least seven
million  dollars in the most current  release of its financial  statements,  and
(iii) has not assigned nor sublet any portion of the  Premises,  Landlord  shall
give notice in writing to Tenant when, after August 1, 2001, Landlord desires to
lease the neighboring  building  addressed as 1020 Railroad  Street  ("Expansion
Building") to other than an existing tenant of that building.  Such notice shall
specify  the  floor  area  and  configuration  of the  Expansion  Building,  the
consideration to be received therefore,  and the other terms upon which Landlord
offers to make such lease to Tenant. Tenant shall have the right to enter into a
lease with Landlord at the rent and terms specified in such notice provided that
Tenant shall  deliver to Landlord  written  acceptance of the offer within seven
(7) days after receiving notice from Landlord. If the Tenant does not accept the
offer to lease within the seven (7) day period,  then within the  following  six
(6) months,  Landlord  shall have the right to enter into a lease on any portion
of the Expansion Building with another party provided that such terms and rental
are  not  more  favorable  than  those  offered  to  Tenant.  This  right  shall
automatically  terminate  upon the earlier of a) July 31, 2009 b) termination of
this  Lease,  or c) the sale of the  Expansion  Building  to a third  party that
requires for itself, or its affiliate,  the occupancy of the Expansion Building.
This Paragraph shall be deleted from this Lease upon Landlord recording on title
of the  Expansion  Building  a  conforming  memorandum  of said  right  of first
offering including all of the terms outlined above.

46. Right to Expand  Premises.  With regard to the remaining 26,600 sq. ft. unit
at the east end of the building ("Expansion Space"), provided that Tenant (i) is
not in default under the Lease, (ii) has a shareholder's equity balance of least
seven million dollars in the most current  release of its financial  statements,
and (iii) has not assigned nor sublet any portion of the  Premises,  and (iv) US
Continental,  or any  successor or assignee  thereof,  is then the tenant in the
Expansion  Space,  Tenant  shall  have the right at  anytime  during the Term to
expand the Premises to include the Expansion Space by 1) providing Landlord with
authorized  written  notice of such exercise of this Tenant's right at least one
year prior to the specified expansion date, and 2) executing an amendment to the
Lease effecting such expansion  within fifteen days of its delivery by Landlord.
Upon such  execution,  Landlord shall  exercise its  relocation and  termination
rights on any  existing  lease  covering  the  Expansion  Space to  deliver  the
Expansion  Space to Tenant on the  specified  expansion  date.  If the Expansion
Space is not covered by a lease,  this right shall remain valid (except that the
expansion  date  must be no more  than  two  months  after  Tenant's  notice  of
exercise) until Landlord has relet the Expansion  Space to another tenant,  upon
which this right shall become null and void in its entirety. It is hereby agreed
that after the expansion date the Rent,  Security Deposit,  and reserve deposits
specified in Paragraph 1 herein  shall be increased  from the schedule  shown in
Paragraph 39 above by 23.4%.

47. Paragraph 9.1 Continued. Insurance claim shortfalls greater than $25,000 per
occurrence for capital  repairs /  replacements  may, at Tenant's  election,  be
amortized over the life of the capital asset as determined by Generally Accepted
Accounting  Practices 10% annual  interest and paid as additional  rent over the
remainder of the Term.



<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
     THIS SCHEDULE  CONTAINS SUMMARY  FINANCIAL  INFORMATION  EXTRACTED FROM THE
     CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND
     ON  PAGES  F-3 AND F-4 OF THE  COMPANY'S  FORM  10-K FOR THE  YEAR,  AND IS
     QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>                      
       
<S>                                            <C>
<PERIOD-TYPE>                                  YEAR
<FISCAL-YEAR-END>                              DEC-31-1999
<PERIOD-START>                                 JAN-01-1999
<PERIOD-END>                                   DEC-31-1999
<CASH>                                          2,009,155
<SECURITIES>                                            0
<RECEIVABLES>                                   5,818,167
<ALLOWANCES>                                    2,066,909
<INVENTORY>                                     9,894,414
<CURRENT-ASSETS>                               16,951,880
<PP&E>                                          1,375,958
<DEPRECIATION>                                    871,767
<TOTAL-ASSETS>                                 28,708,952
<CURRENT-LIABILITIES>                           7,955,089
<BONDS>                                                 0
<PREFERRED-MANDATORY>                                   0
<PREFERRED>                                             0
<COMMON>                                           50,050
<OTHER-SE>                                     18,575,826
<TOTAL-LIABILITY-AND-EQUITY>                   28,708,952
<SALES>                                        72,303,186
<TOTAL-REVENUES>                               72,421,599
<CGS>                                          38,776,532
<TOTAL-COSTS>                                  25,645,197
<OTHER-EXPENSES>                                  380,378
<LOSS-PROVISION>                                        0
<INTEREST-EXPENSE>                                170,506
<INCOME-PRETAX>                                 7,448,986
<INCOME-TAX>                                    2,971,118
<INCOME-CONTINUING>                             4,477,868
<DISCONTINUED>                                          0
<EXTRAORDINARY>                                         0
<CHANGES>                                               0
<NET-INCOME>                                    4,477,868
<EPS-BASIC>                                         .45
<EPS-DILUTED>                                         .43
        



</TABLE>