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, 1998

                                       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 91720
               (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  $22,867,281  computed by reference to the sale
price for such stock on the Nasdaq Small-Cap Market on March 1, 1999.

         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 1, 1999 was 9,923,414 shares.




                                       1

<PAGE>


                           HANSEN NATURAL CORPORATION

                                    FORM 10-K

                                TABLE OF CONTENTS



Item Number                                                          Page Number


          PART I

1.        Business                                                            3
2.        Properties                                                         12
3.        Legal Proceedings                                                  13
4.        Submission of Matters to a Vote of Security Holders                13

          PART II

5.        Market for the Registrant's Common Equity and Related              
            Shareholder Matters                                              14
6.        Selected Consolidated Financial Data                               15
7.        Management's Discussion and Analysis of Financial                    
            Condition and Results of Operations                              15
8.        Financial Statements and Supplementary Data                        27
9.        Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                              27

          PART III

10.       Directors and Executive Officers of the Registrant                 27
11.       Executive Compensation                                             29
12.       Security Ownership of Certain Beneficial Owners and Management     34
13.       Certain Relationships and Related Transactions                     36

          PART IV

14.       Exhibits, Financial Statement Schedules and Reports on Form 8-K    37

          Signatures                                                         38

<PAGE>


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 91720, 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 CVI Ventures, Inc. ("CVI"), which was incorporated
in Delaware on April 30, 1990. CVI is currently inactive. In addition, HBC owns
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 is in the process of being
deregistered.

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. Subsequently, HFI expanded its product line from juices to
include  Hansen's(R)  Natural  Sodas.  In November  1988,  HFI  reorganized  its
business  under Chapter 11 of the federal  Bankruptcy  Code. In connection  with
those  reorganization  proceedings,  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.

Products

         Hansen  is  engaged  in  the   business  of   marketing,   selling  and
distributing  so-called  "alternative"  beverage  category sodas,  fruit juices,
fruit juice Smoothies, non-carbonated ready-to-drink iced teas, lemonades, juice
cocktails,  "functional" drinks and still water, primarily under the Hansen's(R)
Natural 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 $7.7 billion at wholesale in 1998 with a
growth rate of approximately 12.5% 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
twenty  years.  In 1998,  Hansen's(R)  Natural Sodas had the highest sales among
comparable  carbonated new age category beverages measured by unit volume in the
Southern  California  market  (Source:  Nielsen  Scantrack  Reports for Southern
California).  Hansen's(R)  Natural Sodas are currently  available in ten regular
flavors consisting of Mandarin Lime, Lemon Lime, Grapefruit,  Raspberry,  Creamy
Root Beer, Vanilla Cola, Cherry Vanilla Creme, Peach Mango, Kiwi Strawberry, and
                                   

                                       3

<PAGE>

Tropical  Passion.  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  introduced  its new premium line of Signature
Sodas  in  unique  proprietary  14-ounce  glass  bottles.  Signature  Sodas  are
currently  available in four flavors consisting of Orange Creme,  Vanilla Creme,
Ginger Beer, and  Sarsaparilla.  Signature  Sodas will initially be sold through
the Company's existing distributor  network.  Initial response from distributors
and consumers has been favorable.

         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 new
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(TM) drink, an orange flavored  antioox(TM) drink and a
guarana berry flavored stamina(TM) drink. During the fourth quarter of 1998, the
Company introduced power(TM),  it's newest functional drink in an 8.2-ounce slim
can.  power(TM)  is a  black  cherry  flavored  drink  that  contains  Creatine,
Glutamine,  and Red Panax  Ginseng,  as well as key B  vitamins.  Response  from
distributors,  convenience  chain store buyers,  and  consumers  continues to be
favorable.

         The Company has  concentrated  on marketing its  carbonated  functional
drinks through its distributor network that continued to expand during 1998. The
Company intends to leverage its existing  distributor  network to facilitate the
introduction of its new line of premium Signature Sodas in glass bottles as well
as other new  products  that it plans to  introduce  later in 1999 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  juice
products  contain 100% juice and provides 100% of the  recommended  daily intake
for adults of Vitamin C and  beginning  in 1999,  also  contain  added  calcium.
Hansen's 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.  Hansen's(R)  fruit juice Smoothies
contain  approximately  35%  juice and have a smooth  texture  that is thick but
lighter than a nectar.  Hansen's(R)  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  the  functional   beverage   category.
Hansen's(R)  fruit juice Smoothies are packaged in 11.5-ounce  aluminum cans and
in  unique  proprietary  13.5-ounce  glass  bottles  designed  by  the  Company.
Hansen's(R)  fruit juice  Smoothies are available in eight  flavors:  Strawberry
Banana,  Peach Berry,  Mango Pineapple,  Guava  Strawberry,  Pineapple  Coconut,
Apricot  Nectar,  Strawberry  Lemonade,  and Tropical  Passion.  There is also a
Cranberry  Raspberry lite Smoothie available as well as an Energy Smoothie which
is different,  not only from other beverages in the market,  but also from other
Smoothies. 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  plans to  introduce a new line of  "premium"  functional
Smoothies in 11.5-ounce cans and unique glass bottles later in 1999.

         During  the second  quarter of 1998,  the  Company  launched  its first
Healthy Start(TM) product,  DYNAoJUICE(TM), a shelf stable 100% juice blend with
15 vitamins and minerals added.  DYNAoJUICE(TM) was renamed VITAMAXoJUICE 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(TM)  product  line with three new Healthy  Start(TM)  100% juices  namely,
ANTIOXoJUICE(TM), IMMUNEoJUICE(TM), and INTELLIoJUICE(TM). ANTIOXoJUICE(TM) is a


                                       4

<PAGE>

carrot and tropical juice blend with Grape Seed extract, Vitamins A, C and E and
Selenium. IMMUNEoJUICE(TM) is an aronia and cranberry juice blend with Echinacea
and Zinc, and  INTELLIoJUICE(TM) is an orange and tomato juice blend with Gingko
Biloba,  Hawthorn Berry and Ginseng.  The Healthy  Start(TM) 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.

         Hansen's  ready-to-drink  iced teas and  lemonades  were  introduced in
1993. Hansen's 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 three flavors:
Original Old Fashioned Lemonade, Pink Lemonade and Strawberry Lemonade. Hansen's
juice  cocktails  were  introduced  in 1994 and are  currently  available in six
flavors:  Kiwi  Strawberry  Melon,   Tangerine  Pineapple  with  Passion  Fruit,
California Paradise Punch, Mango Magic, Apple and Low Calorie Peach Mango.

         Hansen's  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  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 and low calorie juice cocktail, with aspartame, citric acid and
other  ingredients.  Hansen's  ready-to-drink  iced  teas,  lemonades  and juice
cocktails are currently  packaged in 16-ounce  non-returnable  wide-mouth  glass
bottles.  Management  is  currently  considering  also  offering  these types of
beverages in 20-ounce glass bottles.

         The Company  discontinued  marketing its  Equator(R)  brand of beverage
products in 20-ounce  glass bottles and in their place offered a  ready-to-drink
green tea in a  20-ounce  glass  bottle  under the  Hansen's(R)  brand to select
customers.  The Company is at present  designing a  proprietary  20-ounce  glass
bottle for that product and intends to  introduce  three new  specialty  teas in
such bottle, to select customers in 1999.

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

         The Company plans to introduce additional  carbonated functional drinks
in 1999 as well as its Healthy  Start(TM)  100% juice line in single serve glass
bottles through its distributor network.  Other new product developments include
a new line of "premium" functional iced teas in unique proprietary glass bottles
late in 1999.

         The Company  continues  to evaluate and where  considered  appropriate,
introduce  additional  flavors and other types of  beverages to  compliment  its
existing product lines.

Manufacturing, Production and Distribution

         The concentrates for Hansen's(R) Natural Soda and Hansen's(R) 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,
nutrients,  herbs and other  ingredients for its juice products;  ready-to-drink
iced teas, lemonades and juice cocktail products; fruit juice Smoothie products;
carbonated  functional  drinks;  and Healthy  Start(TM)  products  from  various
producers and manufacturers.  Such materials are then delivered to the Company's
various copackers for manufacture and packaging of the finished products.

                                       5

<PAGE>

         All  of  the  Company's  beverage  products  are  copacked  by  various
copackers  situated  throughout the United States 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,  fruit  juice
products,  iced  teas,  lemonades,  and juice  cocktail  products,  fruit  juice
Smoothie products in cans and Healthy Start(TM)  products in P.E.T.  bottles are
primarily sold to major grocery chain stores and, in certain limited  instances,
to mass merchandisers through food brokers; club stores;  specialty chain stores
and to certain  mass  merchandisers  directly  by Hansen;  the health food trade
through  specialty  health  food  distributors;  and in  Colorado,  to  licensed
distributors. The Company's fruit juice Smoothie products in bottles, carbonated
functional  drinks in 8.2-ounce  slim cans and Signature  Sodas 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  California  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.

         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 it's supplier for a proportionate  share of the cost thereof based on
such shortfall.  Based on 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 a short disruption would not  significantly  affect the Company's  revenues
since  alternative  copacking  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,  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  new Signature  Soda line. A disruption in production
of either 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.

                                       6

<PAGE>

         The Company itself is primarily  responsible for marketing its products
(other than its fruit juice Smoothies in bottles, functional drinks in 8.2-ounce
slim cans and  Signature  Sodas in glass  bottles)  in the  United  States.  The
Company has entered into distribution agreements with distributors to distribute
Smoothies  in  bottles  and/or  functional  drinks  in  8.2-ounce  slims  and/or
Signature  Sodas  in  more  than 40  states.  However,  in many of such  states,
distribution is only on a limited scale.  Certain of the Company's  products are
also  marketed in the United  Kingdom  and, on a more  limited  basis,  in other
countries  outside of the United  States,  including  Canada,  Mexico,  Denmark,
Philippines,  Guam, the Caribbean,  and South Africa.  During 1998, sales by the
Company to  distributors  outside the United  States  amounted to  approximately
$500,000.

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

         In  January  1999,  the  Company  introduced  its new  premium  line of
Hansen's(R)  Signature Sodas in 14-ounce proprietary glass bottles. The majority
of the Company's  existing  distributor  network have agreed to distribute  such
products commencing on varying dates over the next six months.

         The Company is  continuing  to expand  distribution  of its products by
seeking to enter  into  agreements  with  regional  bottlers,  and beer or other
direct store  delivery  distributors  having  established  sales,  marketing and
distribution organizations. The Company'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 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 Hansen's(R) Natural Sodas into selected new markets.

         In 1998,  the Company  expanded  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 intends to continue to build that organization
during 1999.

         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 are attributable to increased sales and additional
products  being  marketed  and  distributed  by the  Company.  In  light  of its
agreement  with the  independent  contractor,  it will not be necessary  for the
Company to employ additional personnel to manage the warehouse facility,  or for
the repacking or distribution of its products.

Source and Availability of Raw Materials

         The Company  purchases its soda,  functional  drink and  non-carbonated
beverage  flavors,  concentrates  and  supplements  from  independent  suppliers
located in the United States and Mexico and juices, concentrates and flavors for
its juice,  fruit juice Smoothie and Healthy Start(TM) products 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


                                       7

<PAGE>

Company  has  identified  alternative  suppliers  of  many  of  the  supplements
contained in its carbonated  functional drinks,  Smoothies and Healthy Start(TM)
line.  However,  industry wide shortages of certain  supplements  have been and,
from time to time in the future,  could be  experienced,  which could  interfere
with production of certain of the Company's products.

         Management is continuing  with it's 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.

         The  Company's  goal is to ensure  that all raw  materials  used in the
manufacture  and packaging of the Company's  products,  including  natural soda,
functional drink and non-carbonated  concentrates and juices, high fructose corn
syrup,  cane sugar,  citric acid,  caps,  cans,  glass  bottles and labels,  are
readily  available  from two or more  sources and is  continuing  its efforts to
achieve this goal.

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

Competition

         The Company's  functional energy drink competes directly with Red Bull,
Hype, XTC and many other brands and its other functional drinks compete directly
with Elix, Lipovitan,  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,  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 those of the Company.

         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.

         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) and
Nestle Beverage Company. More specifically,  the Company's products compete with
other  alternative  beverages,  including  new age  beverages,  such as Snapple,
Mistic,  Arizona,  Clearly Canadian,  Sobe, Everfresh,  Nantucket Nectar, Mistic
Rain Forest Nectar, Very Fine, Calistoga,  Blue Sky, Red Bull 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


                                       8

<PAGE>

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
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.

         Hansen's(R)  fruit juice  Smoothies  compete with Kern's nectars in the
western states and Libby's in the eastern states and Wipper 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 18-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,  Langers,  Adams  and Eve,
Northland and also with other brands of apple juice and juice blends, especially
store brands.  The Company's Healthy  Start(TM) line competes with Langer's,  V8
Splash,  Knudsen 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 new functional energy and stamina(TM) drinks which do contain
caffeine).  This message is reinforced in the product packaging, the majority of
which is currently undergoing extensive redesign. 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 is
slightly  lower than  competitive  non-carbonated  beverages  marketed under the
Snapple, Mistic, Lipton, Nestea,  Fruitopia,  Ocean Spray and Arizona brands. In
its marketing,  Hansen  emphasizes  its high quality  natural image and the fact
that its iced tea products are  decaffeinated  and lighter than those of many of
its  competitors.  The regular  wholesale  prices of the  Company's  fruit juice
Smoothie products are similar to those 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 four  additional
lightly  carbonated  functional  drinks. The first, a stamina(TM) 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(TM) 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(TM)
drink contains Grape Seed Extract, Selenium,  Echinacea,  Vitamins A, C and E as
well as Vitamins  B5, B6, B12 and  Niacin;  and the  fourth,  a power(TM)  drink
contains Creatine,  Glutamine,  Red Panax Ginseng as well as key B Vitamins. The
vitamins,   nutrients  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 would  perceive the  inclusion of  supplements  therein to be of added
value, the Company  launched its Healthy  Start(TM) line of 100% juices in 1998.
Although  marketed  in larger  multi-serve  packages  that are  appropriate  for


                                       9

<PAGE>

grocery chain 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.

         Hansen's sales and marketing  strategy is to focus its primary  efforts
on developing  brand awareness and trial through  sampling both in stores and at
events.  Hansen  intends to place  increased  emphasis on product  sampling  and
participating in direct promotions.  The Company proposes to continue to use its
refrigerated  truck  extensively  at  events at which  the  Company's  products,
particularly 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,  price promotions,  couponing,
sampling and sponsorship of sporting events such as marathons, 10k runs, bicycle
races,  volleyball  tournaments and other health- and sports-related  activities
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.

         Management increased  expenditures for its sales and marketing programs
by approximately 37% in 1998 compared to 1997.

         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 and  Signature  Sodas,  through the  in-store  placement  of  point-of-sale
materials,  use of glide racks and a proprietary rolling rack for its functional
drinks and by attending and  sponsoring  many sporting  events 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,
1997, advertising and marketing credits totaled $265,000.  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,
and fully expensed such advertising and marketing credits.

         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  Company  recently
redesigned the labels for Hansen's(R) juice products. In the case of Hansen's(R)
Natural  Soda  products,  an  inexpensive  redesign  of  the  can  graphics  was
implemented  during 1997 as an interim  measure.  The graphics  for  Hansen's(R)
Natural Soda and Smoothie products in cans are being completely redesigned in an
endeavor to develop a new  packaging  system that will maximize  visibility  and
identification of all Hansen's(R) brand products, wherever they may be placed in
stores. It is anticipated that such redesign will be completed by May 1999.

Customers

         Retail  and  specialty  chains,  and  club  stores  represented  72% of
Hansen's  sales in the year  ended  December  31,  1997 but only 59% in the year
ended  December  31,  1998,  while  the  percentage  of  sales  to full  service
distributors (primarily of Hansens(R) Smoothies in bottles and functional drinks
in  8.2-ounce  slim cans)  increased  from  approximately  19% in the year ended
December 31, 1997 to approximately 32% in the year ended December 31, 1998.

         Hansen's major customers in 1998 include Costco Wholesale, Trader Joes,
Sam's Club,  Lucky,  Vons,  Safeway,  Ralph's,  Wal-Mart  and  Albertson's.  One
customer  accounted for  approximately  27% of the Company's  sales for the year


                                       10

<PAGE>

ended  December  31,  1998.  A decision by this major  customer 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.

         The Company  has one  operating  segment  but  manages its  business by
distribution channel through a warehouse and distributor function.

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 are less affected by such factors. The Company believes
that sales of its  Healthy  Start(TM)  line and  functional  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  Hansen  and FJC's
predecessor  (the  "Agreement  of  Trust").  The  Trust has  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  has  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.  Such
license is, however, terminable if certain minimum royalty payments are not made
to the Trust. 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 1998 amounted to $15,257. No royalties
are payable on sodas, juices, lemonades, juice cocktails, fruit juice Smoothies,
functional  drinks,  Healthy  Start(TM)  or  Signature  Soda lines.  HBC,  FJC's
predecessor  and the Trust have also  entered into a Royalty  Sharing  Agreement
pursuant  to which  royalties  payable by third  parties  procured by FJC or its
predecessor or HBC will initially be shared between the Trust and HBC and, after
a specified  amount of  royalties  have been  received,  will be shared  equally
between HBC and FJC. Under the terms of the Agreement of Trust, FJC will receive
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. FJC's predecessor applied to register the trademark
Hansen's  Smoothie(TM),  and agreed to assign  its rights  thereto to the Trust.
However,  FJC's  predecessor  failed to prosecute such application or assignment
and the Trust is  considering  whether or not to proceed with an  application to
register  such  trademark.   The  Company's  right  to  use  such  trademark  is
coextensive with its right to use the Hansen's(R) trademark.

         The Company has applied to register a number of  trademarks  including,
but not limited to, antioox(TM),  d-stress(TM),  stamina(TM), THE REAL DEAL(TM),
It's Just  Good(TM),  Juice  Blast(TM),  and Aqua  Blast(TM),  ANTIOXoJUICE(TM),
INTELLIoJUICE(TM), IMMUNEoJUICE(TM), Defense(TM), bothin(TM), and Powerpack(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)
and Equator(R).


                                       11

<PAGE>

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, 1999,  Hansen  employed a total of 68  employees,  63 of
whom are  employed  on a full-time  basis.  Of  Hansen's  68  employees,  27 are
employed in administrative and quality control capacities and 41 are employed in
sales and marketing capacities.

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  warehouse  are  located  in a single
building at 2380 Railroad Street,  Suite 101,  Corona,  California  91720.  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.



                                       12

<PAGE>



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.  In November  1997,  the court held that HBC had
not suffered any damages as a result of ERLY's breach of the 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 note to ERLY
was paid in  November  1997 with the  proceeds  of a term loan  obtained  by the
Company from Comerica Bank - California.  During 1998, ERLY filed for bankruptcy
and the appeal was  consequently  stayed by law.  The  Company has filed a claim
against ERLY but has received no response  from the trustee and is  consequently
unaware  whether the  trustee  intends to accept the claim or pursue the appeal.
The ultimate outcome of this matter cannot presently be predicted.

         Towards the end of 1998,  the Company  together with the trustee of the
Hansen Trust commenced arbitration  proceedings against FJC, the former trustees
of the Trust and a company called Hansen Juice Creations,  LLC, ("Creations") in
which the  Company  and the trustee  claim (i) that  certain  acts of the former
trustees  of the Trust  constitute  breach of  trust;  (ii) a certain  agreement
purportedly entered into between the former trustees of the Trust and Creations,
is, in whole or in part, void or terminable by the Trust; and (iii) certain acts
of Creations constitute  infringement of the Hansen's trademark and certain acts
of FJC constitute  contributory  infringement  of the Hansen's  trademarks.  The
Company  and the trustee  seek  damages and  injunctive  relief  against FJC and
Creations. It is expected that such proceedings will be completed before the end
of 1999. The Company does not believe that the outcome of such  proceedings will
materially affect 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.


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

         The annual meeting of  stockholders of the Company was held on June 19,
1998. 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                              7,508,862
                   Hilton H. Schlosberg                         7,512,349
                   Benjamin M. Polk                             7,512,349
                   Norman C. Epstein                            7,512,349
                   Harold C. Taber, Jr.                         7,512,349
                   Mark S. Vidergauz                            7,512,349

         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, 1998, by a vote of 7,491,314 for, 1,585 against
and 24,285 abstaining.



                                       13

<PAGE>



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 1, 1999, there were 9,923,414 shares of the Company's
common stock outstanding held by approximately 681 holders of record.

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, 1996 to December  31,
1998:

                                                     Common Stock
                                        ----------------------------------------
                                           High Bid                     Low Bid
                                        ------------                  ----------
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

                                        $  1   3/8                    $  1
First Quarter
                                        $  1  7/16                    $    31/32
Second Quarter
                                        $  1 15/16                    $  1  3/8
Third Quarter
                                        $  2 11/16                    $  1  9/16
Fourth Quarter

Year Ended December 31, 1996

                                        $    31/32                    $     5/8
First Quarter
                                        $  2 11/16                    $     5/8
Second Quarter
                                        $  2   1/2                    $  1  5/8
Third Quarter
                                        $  2  5/16                    $  1 1/16
Fourth Quarter


         The quotations for the Company's 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.


                                       14

<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,  1994  through  1998 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 and 1997 Forms 10-K and in the 1994 and 1995 Forms 10-KSB.

(in thousands, except per
share information)
                         1998      1997        1996       1995      1994
- ------------------    ---------  ---------- ---------- ---------- ----------

Net sales              $53,866     $43,057    $35,565    $33,991   $28,816

Net income (loss)      $ 3,563     $ 1,250    $   357    $(1,350)  $(1,407)

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


Total assets           $21,927     $16,933    $16,109     $17,521   $17,654

Long-term debt         $ 1,335     $ 3,408        -       $ 4,032   $ 3,971



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

General

         During 1998 the Company  continued to make progress  towards  achieving
its goal of expanding both the Hansen's(R)  brand product range and distribution
of such products into new markets outside of California.  Sales of the Company's
four carbonated  functional drinks continued to exhibit strength and good repeat
purchase by consumers.  During the year, the Company introduced power(TM),  it's
newest  functional drink in an 8.2-ounce slim can and the new Healthy  Start(TM)
juice line, consisting of VITAMAXoJUICE, ANTIOXoJUICE(TM),  IMMUNEoJUICE(TM) and
INTELLIoJUICE(TM).  power(TM) is a black  cherry  flavored  drink that  contains
Creatine, Glutamine and Red Panax Ginseng as well as key B Vitamins. The Healthy
Start(TM) line was originally  launched in 46-ounce P.E.T.  multiserve packs and
was extended to a 64-ounce  size for the full line during the fourth  quarter of
1998, following testing of DYNAoJUICE(TM) in that size package.  Also during the
fourth quarter, DYNAoJUICE(TM) was renamed VITAMAXoJUICE.

         The Company  introduced its new line of premium  Hansen's(R)  Signature
Sodas in January 1999 and plans to introduce its new line of premium  functional
Smoothies along with additional  functional  drinks in 8.2-ounce slim cans later
in 1999. Other new product development includes a new line of premium functional
iced teas in  proprietary  glass bottles later in 1999.  Following  enthusiastic
response from  distributors to the Healthy  Start(TM) line, the Company plans to
introduce the Healthy Start(TM) line in single-serve  glass bottles for the down
the  street  market  during  1999  as  well.  The  Company  continues  to  incur
expenditures in connection with the development and introduction of new products
and flavors.

         The increase in net sales and  profitability  in the fourth  quarter of
1998 and for the year ended  December 31, 1998,  was primarily  attributable  to
increased sales of the Company's  functional  drinks in 8.2-ounce slim cans and,
to a lesser extent, the Company's Healthy Start(TM) line and apple juice blends.

                                       15

<PAGE>

         Net sales of iced teas,  lemonades  and juice  cocktails  were slightly
higher in 1998 than in 1997 primarily due to increased sales to club stores.

         Net sales of Smoothie  products were about the same in 1998 as in 1997.
Sales to  distributors  of Smoothies in glass bottles were slightly higher while
sales of Smoothies in cans to club stores and grocery chain stores were slightly
lower in 1998 than in 1997.

         Net sales of natural  sodas were  slightly  lower in 1998 than in 1997.
Management  believes  that the  lower  sales  and  gross  profits  from soda was
primarily  attributable to decreased sales to retail stores and distributors due
to aggressive  retail  pricing and promotions of main stream sodas and decreased
sales  to  club  stores.  In  1997,  a bonus  6-pack  program  was  successfully
introduced  in club stores and was repeated in 1998.  However,  such program did
not achieve the same level of success and  consequently,  the  increase in sales
that was achieved in 1997 was not repeated in 1998.

         Net sales of apple juice were lower in 1998 than in 1997. Such decrease
was  primarily  attributable  to  aggressive  pricing  promotions  undertaken by
competitors of the Company.

         The Company  decided to discontinue  offering its  Equator(R)  brand of
ready to drink iced teas,  lemonades and juice cocktails in 20-ounce blue cobalt
glass  bottles and in their place offered a green tea under the Equator brand in
20-ounce  blue  cobalt  glass  bottles to select  customers.  Subsequently,  the
Company  substituted  the Hansen's brand name for the Equator brand name on such
green tea products.  The Company is at the present time  expanding its green tea
line with three new  specialty  teas and will offer that line,  in a proprietary
20-ounce  glass bottle that is  presently  being  designed  for the Company,  to
select customers in 1999.

         The mix of  products  sold by the Company  continued  to change in 1998
with an  increased  percentage  of sales  being  attributable  to the  Company's
functional  drinks in 8.2-ounce  slim cans and to the new Healthy  Start(TM) and
juice  blends  product  lines.  The change in  product  mix  together  with cost
reductions  achieved  resulted in an increase  in the gross  profit  margin as a
percentage  of net  sales  to 49.3 % for the year  ended  December  31,  1998 as
compared to 41.4% for year ended December 31, 1997.

         During  1998,  sales  outside  of  California  represented  34%  of the
aggregate sales of the Company as compared to approximately 24% of the aggregate
sales of the Company in 1997.  Sales to  distributors  outside the United States
from the United States during 1998 amounted to $500,000 compared to $854,000.

         During  1998,  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 1999 to  support  and  grow  the  sales of its
products.

         In 1998 the  Company  benefited  from cost  reductions  achieved in the
procurement of certain  concentrates,  juices,  flavors and packaging materials,
the  co-packing  of its  sodas  as  well as the  re-packing  of  certain  of its
products.  In 1998 cost savings were also  realized  from the  relocation of the
Company's  warehouse and corporate  offices to the Corona facility.  The Company
continues to take steps to reduce costs,  particularly  the cost of its soda and
non-carbonated and Smoothie product lines.

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


                                       16

<PAGE>

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
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(TM)  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.

                                       17

<PAGE>

         Amortization  of trademark  license and trademarks was $296,000 for the
year  ended  December  31,  1998,  a decrease  of $4,000  from  amortization  of
trademark  license and  trademarks  of $301,000 for the year ended  December 31,
1997.

         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.

Results of Operations  for the Year Ended December 31, 1997 Compared to the Year
Ended December 31, 1996.

         Net  Sales.  For the year  ended  December  31,  1997,  net sales  were
approximately $43.1 million, an increase of $7.5 million or 21.1% over the $35.6
million net sales for the year ended  December  31,  1996.  The  increase in net
sales was primarily  attributable to increased sales of Hansen's(R)  fruit juice
Smoothies in cans and bottles,  increased sales of Hansen's(R)  apple juice, and
sales of Hansen's(R)  energy drink,  which was introduced during April 1997. The
increase  in net  sales was  partially  offset  by  decreased  sales of soda and
Equator(R).  Sales of iced teas,  lemonades and juice  cocktails  were about the
same as in the comparable period in 1996.

         Gross  Profit.  Gross  profit  was  $17.8  million  for the year  ended
December 31, 1997,  an increase of $3.9 million or 28.4% over the $13.9  million
gross profit for the year ended December 31, 1996.  Gross profit as a percentage
of net sales  increased to 41.4% for the year ended December 31, 1997 from 39.1%
for the year ended December 31, 1996. The increase in gross profit was primarily
attributable  to  increased  net sales as well as cost  reductions  achieved for
certain  raw  materials  and  packaging.  The  increase  in  gross  profit  as a


                                       18

<PAGE>

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 $16.0 million
for the year ended  December  31,  1997,  an increase  of $2.8  million or 20.7%
higher  than  total  operating  expenses  of $13.2  million  for the year  ended
December  31,  1996.  Total  operating  expenses  as a  percentage  of net sales
decreased to 37.0% for the year ended December 31, 1997, from 37.2% for the year
ended December 31, 1996. The increase in total operating  expenses was primarily
attributable to increased selling, general and administrative expenses which was
partially offset by decreased  amortization of trademark  license and trademarks
and other expenses.  The decrease in total operating expenses as a percentage of
net  sales  was   primarily   attributable   to  increased  net  sales  and  the
comparatively  smaller increase in operating expenses from the comparable period
in 1996.

         Selling, general and administrative expenses were $15.5 million for the
year ended  December 31, 1997,  an increase of $3.0 million or 23.4% higher than
selling, general and administrative expenses of $12.5 million for the year ended
December 31, 1996. Selling,  general and administrative expenses as a percentage
of net sales  increased to 35.9% for the year ended December 31, 1997 from 35.2%
for the year ended  December 31, 1996.  Selling  expenses were $10.5 million for
the year ended  December 31,  1997,  an increase of $2.5 million or 30.8% higher
than  selling  expenses of $8.0  million for the year ended  December  31, 1996.
Selling  expenses as a percentage  of net sales  increased to 24.4% for the year
ended  December 31, 1997 from 22.6% for the year ended  December  31, 1996.  The
increase in selling expenses was primarily attributable to increased advertising
and costs of  promotional  materials  primarily  to  support  the  expansion  of
distribution  and sales of Smoothie  bottles and the launch of the Company's new
energy drink;  increased  distribution costs; and, partially attributable to the
establishment  of a reserve in the Company's  financial  statements  against the
advertising and marketing credits more fully described under "ITEM 1. BUSINESS -
Marketing", above. General and administrative expenses were $4.9 million for the
year ended  December  31,  1997,  an increase  of $449,000 or 10.0%  higher than
general and administrative  expenses of $4.5 million for the year ended December
31,  1996.  General and  administrative  expenses as a  percentage  of net sales
decreased to 11.4% for the year ended  December 31, 1997 from 12.6% for the year
ended December 31, 1996. The increase in general and administrative expenses was
primarily  attributable  to  increased  payroll  costs  in  connection  with the
Company's expansion activities into additional states.

         Amortization  of trademark  license and  trademarks  was  approximately
$301,000  for the year ended  December  31, 1997, a decrease of $96,000 from the
$397,000 for the year ended December 31, 1996.  This decrease is attributable to
the change in the  amortization  period  from 25 years to 40 years as more fully
described in Note 1 in the Company's consolidated financial statements.

         Other  expenses were  $199,000 for the year ended  December 31, 1997, a
decrease of $97,000 or 32.8% below other expenses of $296,000 for the year ended
December 31, 1996. 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 $1.9 million for the year ended
December  31, 1997,  compared to $677,000 for the year ended  December 31, 1996.
The increase in operating  income was primarily  attributable to increased gross
profit which was partially offset by increased operating expenses.

         Net Nonoperating Expense. Net nonoperating expense was $592,000 for the
year ended December 31, 1997,  which was $274,000  higher than net  nonoperating
expense of $317,000  for the year ended  December  31,  1996.  Net  nonoperating
expense for the year ended  December 31, 1997 consists of interest and financing
expense,  interest income and other expense.  Net  nonoperating  expense for the
year ended  December  31,  1996  consists  of interest  and  financing  expense,
interest  income and other income.  Interest and financing  expense for the year
ended  December  31, 1997 was  $525,000  compared to $586,000 for the year ended
December  31,  1996.  The  decrease  in  interest  and  financing   expense  was
attributable to decreased  amortization of certain  capitalized  financing costs


                                       19

<PAGE>

incurred in connection  with the securing of HBC's  previous  revolving  line of
credit,  which  were fully  amortized  by the third  quarter of 1996;  and lower
average  short-term  borrowings  during the year ended  December  31,  1997 than
during 1996.  Interest income for the year ended December 31, 1997 was $4,000 as
compared  to interest  income of $9,000 for the year ended  December  31,  1996.
Other  expense for 1997  consists of a $70,000  loss on the  disposal of certain
assets,  arising  primarily from the closure of the route  distribution  system.
Other income for 1996  consisted  of $259,000 of income from the recovery  under
the  Hawaiian  Water  Partners  note  described  in  Note  11 in  the  Company's
consolidated financial statements.

         Provision  for income  taxes.  Provision  for income taxes for the year
ended December  31,1997 was $40,200 as compared to provision for income taxes of
$2,400 for the year ended  December  31, 1996.  The  increase in  provision  for
income taxes was primarily attributable to increased state franchise taxes.

         Net Income. Net income was $1.3 million for the year ended December 31,
1997,  compared to $357,000 for the year ended  December 31, 1996.  The $893,000
increase in net income was  attributable to increased  operating  income of $1.2
million  which was offset by  increased  nonoperating  expense of  $274,000  and
increased provision for income taxes of $38,000.

Liquidity and Capital Resources

         As of December 31, 1998, the Company had working  capital of $4,997,000
compared to working  capital of $2,503,000 as of December 31, 1997. 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 the  reclassification  of portion of long-term
debt to current portion of long-term debt and, to a lesser extent,  by purchases
of property and equipment,  increases in trademark  license and trademarks,  and
principal repayments made on long-term debt.

         In 1997, a credit facility was granted to the Company 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 the Company 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,  trademark license and
trademarks,  and certain  equipment.  The Company  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 the  Company  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 banks base (prime) rate, at the option of the Company. During the year
ended  December 31, 1998, no amounts were borrowed  under the revolving  line of
credit and as of  December  31,  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 the  principal
balance  due  by  the   Company   under  the  Note  (refer  to  "ITEM  3.  LEGAL
PROCEEDINGS").  As of December 31, 1998,  $3,399,996 was  outstanding  under the
term loan.  The term loan is repayable  over a period of 60 months from November
1997.

         During 1998, a portion of the  Company's  cash  reserves  were used for
working capital including the acquisition of increased inventories, increases in
accounts receivable, and the acquisition of property and equipment and to reduce
long-term  debt.  The  acquisition  of increased  inventories  and  increases in
accounts receivables, acquisition of property and equipment and repayment of the
Company's term loan, as well as HBC's acquisition and development plans are, and
for the foreseeable future, are expected to remain HBC's principle recurring use
of cash and working capital funds.


                                       20

<PAGE>

         Net cash used in investing  activities  for the year ended December 31,
1998 was $515,000 as compared to net cash provided by  investment  activities of
$21,000 in 1997.  The  increase  in net cash used in  investing  activities  was
primarily  attributable  to purchases of property and equipment  (including vans
and  promotional  vehicles) to support the Company's  expansion and  development
plans,  and,  to  a  lesser  extent,  to  increases  in  trademark  license  and
trademarks.  Although  the  Company has no current  plans to incur any  material
capital expenditures,  management,  from time to time, considers the acquisition
of property and equipment,  particularly,  merchandise  display racks,  vans and
promotional  vehicles,  coolers and other  promotional  equipment and businesses
compatible with the image of the Hansens(R) brand as well as the introduction of
new product lines. The Company may require  additional  capital resources in the
event of any such  transaction,  depending upon the cash  requirements  relating
thereto. Any such transaction will also be subject to the terms and restrictions
of HBC's credit facilities.

         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 nonfinancial covenants.
At both December 31, 1998 and 1997, respectively,  the Company was in compliance
with all covenants.

         Net cash used in  financing  activities  decreased  to $445,000 for the
year ended  December 31, 1998 from  $1,004,000 in 1997. The decrease in net cash
used in financing activities was attributable to the fact that during the twelve
months  ended  December 31, 1997,  principal  payments of $893,000  were made in
reduction of HBC's  revolving  line of credit as compared to no payments made on
such line in 1998.  The  decrease in net cash used in financing  activities  was
partially offset by principal payments made on long-term debt of $521,000 in the
year ended December 31, 1998 as compared to principal payments made on long-term
debt of  $136,000 in 1997 and also by $76,000  received by the Company  from the
issuance of common stock as compared to $11,000 received in 1997.

         Management believes that cash available from operations, including cash
resources and its revolving  line of credit,  will be sufficient for its working
capital needs, including purchase commitments for raw materials, payments of tax
liabilities,  debt servicing,  expansion and development needs, repayments under
the term  loan  during  1999,  as well as any  purchases  of  capital  assets or
equipment through December 31,1999.

Year 2000 Compliance

         Many currently  installed  computer  systems and software  products are
coded to accept only two digit  entries in the date code field.  These date code
fields will need to accept four digit  entries or be modified in some fashion to
distinguish  twenty-first  century  dates from  twentieth  century  dates.  This
problem could force  computers to either  shut-down or provide  incorrect  data.
Incomplete  or  untimely  resolution  of Year  2000  issues by the  Company,  by
critically  important  suppliers,  co-packers  or customers of the Company could
have  a  material  adverse  impact  on the  Company's  business,  operations  or
financial condition in the future.

         The Company's Year 2000 compliance  efforts are ongoing and its overall
plan,  as well as the  consideration  of  contingency  plans,  will  continue to
evolve, as new information  becomes available.  While the Company anticipates no
major interruption of its business  activities,  this will be dependent in part,
upon the  ability  of third  parties  to be Year 2000  compliant.  Although  the
Company has  implemented  the  actions  described  below to address  third party
issues, it has no direct ability to influence  compliance  actions by such third
parties or to verify their  representations  that they are Year 2000  compliant.
The Company's  most  significant  potential  risk is the temporary  inability of
certain key suppliers to supply raw materials and/or key co-packers to pack some
of the Company's  products in certain  locations and/or certain of the Company's
major customers to order and pay on a timely basis,  should their systems not be
Year 2000 compliant by January 1, 2000.

                                       21

<PAGE>
         The  Company  is  in  the  process  of  investigating  its  information
technology  ("IT")  systems as well as its  non-information  technology  ("NIT")
systems.  Based upon such investigation,  the Company believes that the majority
of its IT and NIT systems are Year 2000 compliant. However, certain systems such
as the communication and voice mail system still require  remediation.  To date,
the  expenses  incurred by the  Company in order to become Year 2000  compliant,
including  computer  software  costs,  have been  approximately  $75,000 and the
current  estimated  cost to  complete  remediation  is  expected  not to  exceed
$50,000.  Such costs,  other than  software,  have been and will  continue to be
expensed as incurred.  Remediation and testing activities are well underway with
approximately  80% of the  Company's  systems  already  compliant.  The  Company
currently  estimates that it will complete the required  remediation,  including
testing,  of all of its IT and NIT systems,  by the end of the third  quarter of
1999.

         An assessment of Year 2000 compliance issues by third parties with whom
the  Company  has  relationships,   such  as  critically   important  suppliers,
co-packers,  customers,  banking institutions,  payroll processors and others is
ongoing. The Company has inquired and continues to inquire of such third parties
as to their  readiness  with respect to Year 2000  compliance  issues and has to
date received  indications from certain of them that their systems are compliant
or in the process of  remediation.  The Company will  continue to monitor  these
third  parties to  determine  the  possible  impact of their  non-compliance  or
otherwise  on the  business of the Company and the actions the Company can take,
if any,  in the  event of  non-compliance  by any of these  third  parties.  The
Company believes there are multiple vendors of many of the goods and services it
receives  from its  suppliers  and thus Year 2000  compliance  issue  risks with
respect to any particular supplier is mitigated by this factor. However, certain
flavors and ingredients used by the Company are unique to certain  suppliers and
the Company  does not have and may not be able to secure  alternative  suppliers
therefor or alternatively, alternative suppliers that are able to supply flavors
or ingredients  of the same or similar  quality and/or with the same and similar
taste.  The Company also is dependent on customers  for sales and for  cashflow.
Interruptions  in customers'  operations due to Year 2000 issues could result in
decreased revenue, increased inventory and cash flow reductions.

         Contingency plans for Year 2000 related interruptions will be developed
during 1999 where  necessary and possible and will  include,  but not be limited
to, the development of emergency back-up and recovery procedures, remediation of
existing  systems  parallel  with the  installation  of new  systems,  replacing
electronic  applications with manual processes,  identification  and securing of
alternative  suppliers and increasing raw material and finished goods  inventory
levels and alternative sales strategies.  All plans are expected to be completed
by the end of 1999.

         The Company's  plans,  which  continue to evolve,  including  estimated
costs and dates for completion of Year 2000 remediation,  are based in important
part on numerous assumptions about future events.  Certain of these assumptions,
involving key matters such as the availability of certain resources, third party
remediation plans and other factors,  involve inherent  uncertainties or are not
within the Company's control.  Given the numerous and significant  uncertainties
involved,  there can be no assurance  that these  estimates will be achieved and
therefore,  actual results could differ materially.  Specific factors that might
cause  material  differences  include,  but are not  limited  to, the ability to
identify  and  correct  all  relevant   computer   codes  and  imbedded   chips,
unanticipated  difficulties or delays in the implementation of project plans and
the ability of third parties to remediate their respective systems.



                                       22

<PAGE>

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 s 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  on 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 disruptions.

New Accounting Pronouncements

         The Company has adopted  Statement  of  Financial  Accounting  Standard
("SFAS") No. 130, "Reporting  Comprehensive  Income" for the year ended December
31,  1998.  SFAS 130  establishes  standards  for the  reporting  and display of
comprehensive  income.  Components of  comprehensive  income may include,  among
other items,  foreign currency  translation  adjustments,  compensation  expense
related to issuance of nonqualified  stock options,  minimum  pension  liability
adjustments, and unrealized gains and losses on marketable securities classified
as available-for-sale.

         The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise  and Related  Information".  In  accordance  with SFAS No.  131,  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 Note 12 in the  Company's  consolidated
financial statements.

         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 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
2000.



                                       23

<PAGE>
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  Year 2000  information,  are
forward looking statements within the meaning of the Act.


                                       24

<PAGE>

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:

- -Company's ability to generate sufficient cash flows to support capital
 expansion plans and general operating activities;
- -Changes in consumer preferences;
- -Changes in demand that are weather related, particular in areas outside of
 California;
- -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;
- -The introduction of new products;
- -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;
- -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;
- -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;
- -The Company's ability to penetrate new markets;
- -The marketing efforts of distributors of the Company's products, most of
 which distribute products that are competitive with the products of the
 Company;
- -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;
- -The terms and/or availability of the Company's credit facilities and the
 actions of it's creditors;
- -The effectiveness of the Company's advertising,marketing and promotional
 programs;
- -Adverse weather conditions, which could reduce demand for the Company's
 products;
- -The Company's customers', co-packers' and suppliers' ability to replace,
 modify or upgrade computer programs in ways that adequately address Year 2000
 issues; and
- -The Company's project plans, which continue to evolve, including estimated
 costs and dates for completion of Year 2000 remediation, are based in
 important part on numerous assumptions about future events. Certain of
 these assumptions, involving key matters such as the availability of
 certain resources, third party remediation plans and other factors, involve
 inherent uncertainties or are not within the Company's control. Given the
 numerous and significant uncertainties involved, there can be no assurance
 that these estimates will be achieved and actual results could differ
 materially. Specific factors that might cause material differences include,
 but are not limited to, the inability to identify and correct all relevant
 computer codes and imbedded chips, unanticipated difficulties or delays in
 the implementation of project plans and the ability of third parties to
 remediate their respective systems.

The foregoing list of important factors is not exhaustive.

                                       25

<PAGE>

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 (354 ml) cans or 11-ounce (325 ml) bottles or twelve
23-ounce (680 ml) bottles or twenty-four  14-ounce (414 ml) bottles  measured by
volume. A case of apple juice equals twelve 32-ounce bottles, six 64-ounce glass
bottles,  eight 64-ounce P.E.T.  bottles,  four 128-ounce P.E.T.  bottles or the
equivalent  volume.  A case of  non-carbonated  iced teas,  lemonades  and juice
cocktails equals twenty-four  16-ounce (473 ml) or twenty-four 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  (354  ml)  cans or
twenty-four 16-ounce (473 ml) or 13.5-ounce (400 ml) bottles measured by volume.
A case of functional drinks equals twenty-four  8.2-ounce (243 ml) cans 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  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."


Case Sales (in Thousands)

                        1998      1997        1996        1995       1994
                      ---------  --------   ---------  ---------   --------   
     Quarter 1           1,237       861         940        834        953
     Quarter 2           1,566     1,383       1,340      1,282      1,270
     Quart               1,845     1,648       1,341      1,580      1,210
     Quarter 4           1,241     1,234         876        902        860
                      =========  =========  =========  =========  ========= 
     Totals              5,889     5,126       4,497      4,598      4,293
                      =========  =========  =========  =========  =========  

Sales Revenues (in Thousands)

                         1998        1997     1996       1995       1994
                      ---------  ---------  ---------  ---------  ---------
     Quarter 1         $11,265    $ 7,120    $ 7,365    $ 5,434     $6,050
     Quarter 2          13,950     11,496     10,394      9,560      8,749
     Quarter 3          16,589     13,439     10,817     12,109      8,328
     Quarter 4          12,062     11,002      6,989      6,888      5,689
                      =========  =========  =========  =========  =========   
     Totals            $53,866    $43,057    $35,565    $33,991    $28,816
                      =========  =========  =========  =========  =========   


Inflation

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


                                       26

<PAGE>


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-19.


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

         None.


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 June 1999.

         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 (49) - Chairman,  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
was assumed by Mr. Schlosberg.

         Hilton H. Schlosberg (46) - Vice Chairman,  President,  Chief Operating
Officer, Chief Financial Officer,  Secretary, and a 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.  Member of the Audit  Committee of
the Board of Directors  of the Company  since  September  1997.  Vice  Chairman,
Secretary and a director of HBC from July 1992 to the present. In July 1996, Mr.
Schlosberg assumed the office of Chief Financial  Officer,  which was previously
held by Mr. Sacks.  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 (48) - 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  (58) - 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).

                                       27

<PAGE>

         Harold C. Taber,  Jr.  (59) - Director of the Company  since July 1992.
Consultant  to the Company from July 1, 1997 to the present.  Consultant  to The
Joseph Company from September 1997 to the present. 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  (45) - Director  of the  Company  and member of the
Compensation Committee of the Board of Directors of the Company since June 1998.
Managing  director and head of the Los Angeles  office of ING Baring Furman Selz
LLC,  a  diversified   financial  services  institution   headquartered  in  the
Netherlands.  Prior to joining ING Baring  Furman  Selz 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.

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


Compliance with Section 16(a) of the Securities Exchange Act of 1934

         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 two preceding fiscal years.


         To the  Company's  knowledge,  based solely on review of copies of such
reports  furnished to the Company during the two fiscal years ended December 31,
1998,  all  Section  16(a)  filing  requirements  applicable  to  the  Company's
officers,   directors  and  greater  than  ten  percent   stockholders  were  in
compliance.


                                       28

<PAGE>


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, 1998.  These amounts  reflect total
cash  compensation   earned  by  the  Company  and  its  subsidiaries  to  these
individuals during the fiscal years December 31, 1996 through 1998.

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

- ---------------------------------------- ---------------------------------------------- --------------
                                                      Annual Compensation(1)              Long Term
                                                                                        Compensation(4)
                                         ---------------------------------------------- --------------
                                                                                        Awards (5)
- ---------------------------------------- ---------------------------------------------- --------------
                                                                           Other        Securities
                                                                          Annual        underlying
Name and Principal                          Salary        Bonus(2)     Compensation(3)      Options/SARs
Positions                       Year          ($)           ($)            ($)              (#)
- ---------------------------- ----------- -------------- ------------ ----------------   --------------
<S>                             <C>            <C>           <C>             <C>          <C>   
Rodney C. Sacks                 1998           160,000       34,000           5,806        75,000
Chairman, CEO                   1997           160,000                       12,302                
and Director                    1996           135,000                       10,293                
- ---------------------------- ----------- -------------- ------------ ---------------    --------------
Hilton H. Schlosberg            1998           160,000       34,000           5,847        75,000
Vice-Chairman, CFO              1997           158,030                        5,572                
President, Secretary and        1996           127,500                        5,358
Director                                                                                 
- ---------------------------- ----------- -------------- ------------ ---------------    --------------
Mark J. Hall                    1998           136,250       65,000           1,322        30,000
Sr. Vice President              1997           116,250       40,000           6,327       120,000
Distributor Division            1996                                                                  
                                                                              
- ---------------------------- ----------- -------------- ----------------------------    --------------
Kirk S. Blower                  1998           111,250       16,800           1,400               
Sr. Vice President              1997           102,850       10,000           7,468                
Juice Division                  1996            96,121        9,836           4,513                
- ---------------------------- ----------- -------------- ------------ ---------------    --------------
John R. Brooks                  1998            99,658        9,340          15,894                
Sr. Vice President              1997            59,723        5,137          14,922        60,000
Soda Division                   1996                                                                  
                                                                              
- ---------------------------- ----------- -------------- ------------ ---------------    --------------
</TABLE>


(1) SALARY-Pursuant to his  employment  agreement,  Mr.  Sacks is entitled to an
annual  base  salary of  $170,000.  For 1998 and  1997,  Mr.  Sacks  agreed to a
temporary reduction of his annual base salary to $160,000. For 1996, Mr.
Sacks agreed to a temporary reduction of his annual base salary to $135,000.

Pursuant to his employment  agreement,  Mr.  Schlosberg is entitled to an annual
base salary of $170,000 starting when he commenced full-time employment,  during
July 1995.  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. For 1996, Mr. Schlosberg agreed
to a temporary reduction of his annual base salary to $127,500.

(2) BONUS-Payments made in 1999 and 1998 for bonuses accrued in 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 each of the
years  shown,  except for Mr.  Brooks in 1998 and 1997.  For 1998,  Mr.  Brooks'
perquisites  include  $15,000 for  housing  allowances  and $894 for  automobile
related expenses.  For 1997, Mr. Brooks' perquisites include $11,500 for housing
allowances and $3,422 for relocation and  automobile  related  expenses.  
(4) LTIP PAYOUTS-None paid. No plan in place.  
(5) RESTRICTED STOCK AWARDS-The Company does not have a plan for restricted
stock awards. 
ALL OTHER COMPENSATION - none paid


                                       29

<PAGE>

<TABLE>
<CAPTION>
                                 OPTION/SAR GRANTS FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------ -------------------------
                                                                                           Potential realizable
                                                                                           value at assumed annual
                                                                                           rates of stock price
                                                                                           appreciate for option
Individual Grants                                                                          term
- -------------------------- ----------------- ------------------ ------------ ------------- ---------- --------------
<S>                        <C>               <C>                <C>          <C>              <C>           <C>
                                             Percent of total
                           Number of         Options/SARs
                           Securities        granted to         Exercise
                           underlying        employees in 1998  or base
                           Options/SARs                         price        Expiration       5%            10%
Name                       granted (#)                          ($/Share)    Date             ($)           ($)
- -------------------------- ----------------- ------------------ ------------ ------------- ---------- --------------
Rodney C. Sacks                75,000(1)           26.3%              $1.59    1/30/08        75,000        189,750
- -------------------------- ----------------- ------------------ ------------ ------------- ---------- --------------
Hilton H. Schlosberg           75,000(1)           26.3%              $1.59    1/30/08        75,000        189,750
- -------------------------- ----------------- ------------------ ------------ ------------- ---------- --------------
Mark J. Hall                   30,000(2)           10.5%              $1.59    1/30/04        30,000         75,900
- -------------------------- ----------------- ------------------ ------------ ------------- ---------- --------------
</TABLE>


(1)37,500 options to purchase the Company's common stock are exercisable on
January 30, 1998; and 37,500 are exercisable on January 30, 1999.
(2) 10,000 options to purchase the Company's common stock are exercisable on
January 30, 1998; 10,000 are exercisable on January 30, 1999; and 10,000 are
exercisable on January 30, 2000.

<TABLE>
<CAPTION>

 AGGREGATED OPTION/SAR EXERCISES DURING THE YEAR ENDED DECEMBER 31 1998 AND OPTION/SAR VALUES AT DECEMBER 31, 1998

- ------------------------------ --------------------- --------------------- --------------------- ---------------------
                                                                             Number of             Value of
                                                                             underlying            unexercised
                                                                             unexercised           in-the-money
                                                                             options/SARs at       options/SARs at
                                                                             December 31, 1998     December 31, 1998
                                                                                  (#)                   ($)
<S>                             <C>                    <C>                   <C>                   <C>    
                                                                             -------------------   -----------------
                                Shares acquired on     Value                 Exercisable/          Exercisable/
Name                            exercise (#)           Realized ($)          Unexercisable         Unexercisable
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
Rodney C. Sacks                       387,500              $1,921,625             0 / 37,500 (1)        0 / 141,938
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
Hilton H. Schlosberg                  337,500              $1,684,125             0 / 37,500 (2)        0 / 141,938
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
Mark J. Hall                           34,000              $ 179,660              0 / 116,000(3)        0 / 489,940
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
Kirk S. Blower                         84,000              $ 362,040              0 / 0                 0 /  0
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
John R. Brooks                          --                    --             12,000 / 48,000 (4)   50,940 / 203,760
- ------------------------------ --------------------- --------------------- ---------------------   -----------------
</TABLE>


1)Includes  options to purchase  37,500 shares of the Company's  common stock at
$1.59 per share of which none are  exercisable  at December  31,  1998,  granted
pursuant to a Stock Option  Agreement dated January 30, 1998 between the Company
and Mr. Sacks.

2)Includes  options to purchase  37,500 shares of the Company's  common stock at
$1.59 per share of which none are  exercisable  at December  31,  1998,  granted
pursuant to a Stock Option  Agreement dated January 30, 1998 between the Company
and Mr. Schlosberg.

3)Includes  options to purchase  96,000 shares of the Company's  common stock at
$1.06 per share of which none are  exercisable  at December  31,  1998,  granted
pursuant to a Stock Option Agreement dated February 10, 1997 between the Company
and Mr. Hall;  and options to purchase  20,000  shares of the  Company's  common
stock at $1.59 per share of which none are  exercisable  at December  31,  1998,
granted  pursuant to a Stock Option Agreement dated January 30, 1998 between the
Company and Mr. Hall.

4)Includes options to purchase  60,000  share of the  Company's  common stock at
$1.59 per share of which 12,000 are  exercisable  at December 31, 1998,  granted
pursuant to a Stock Option Agreement dated February 24, 1997 between the Company
and Mr. Brooks.


                                       30

<PAGE>


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                  1994      1995      1996    1997       1998
- -----------------------          --------  --------   -------  --------  -------
HANSEN NAT CORP                   (28.57)   (63.36)    54.59    70.62    196.63
S&P SMALLCAP 600 INDEX             (4.77)    29.96     21.32    25.58    ( 1.31)
PEER GROUP                        (54.85)   (25.29)    52.16    33.97    (42.80)




                                             INDEXED RETURNS
For the years ended December 31,

                           Base              
                          Period
Company Name/Index         1993     1994      1995      1996    1997       1998
- -----------------------  ------- --------  --------   -------  --------  -------
HANSEN NAT CORP            100     71.43     26.17     40.46     69.03    204.76
S&P SMALLCAP 600 INDEX     100     95.23    123.76    150.14    188.56    186.10
PEER GROUP                 100     45.15     33.73     51.33     68.77     39.33





(1) Annual return assumes reinvestment of dividends. Cumulative total return
assumes an initial investment of $100 on December 31, 1993. The Company's
self-selected peer group is comprised of Atlantic Premium Brands, Ltd. (which
began trading in November 1993); Great Pines Water, Inc. (which began trading in
August 1993); Saratoga Beverage Group (which began trading in June 1993); Cable
Car Beverage Corporation (which was acquired by Triarc Companies, Inc. in
December 1997); and Cott Corporation, National Beverage Corporation, Clearly
Canadian Beverage Company, Triarc Companies, Inc. and Northland Cranberries,
which are also members of the peer group, traded during the entire five-year
period.


                                       31

<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 the Company's common stock  exercisable until June 30, 1999 at
$1.38 per share. 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.  See  "Certain  Relationships  and Related  Transactions"
below.

         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.  Benjamin M. Polk earned directors
fees of $8,000 and Norman C.  Epstein  earned  directors  fees of $7,500 for the
one-year period ended December 31, 1998. Mark S. Vidergauz earned directors fees
of $4,500 for the  seven-month  period ended  December  31, 1998.  See "ITEM 13.
CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS"  below  for  description  of
contractual obligations to nominate certain outside directors.





                                       32

<PAGE>

Employee Stock Option Plan

         The Company has a stock option plan (the "Plan") that  provides for the
grant of options to  purchase up to  2,000,000  shares of the  Company's  common
stock 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 the Company's  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 the Company's common stock on the date of exercise. The Plan
is administered by the  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.

         On January 4, 1999,  the Board of  Directors  of the Company  adopted a
resolution to amend the Plan to provide that the  aggregate  number of shares of
the Company's  common stock issuable upon the exercise of options  granted under
the Plan shall be increased  from  2,000,000  shares to 3,000,000  shares.  Such
amendment is subject to approval by the  stockholders of the Company at the next
annual meeting of stockholders.

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 the  Company's  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).


                                       33

<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         (a)      The  following  table sets forth  information,  as of March 1,
                  1999,   of  the  only   persons   known  to  the  Company  who
                  beneficially  own more  than 5% of the  Company's  outstanding
                  common stock:

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)              680,899                6.9%
               Brandon Limited
                Partnership No. 2 (2)            2,831,667               28.5%
               Rodney C. Sacks (3)               3,947,066(4)            39.6%
               Hilton H. Schlosberg (5)          3,906,163(6)            39.2%



(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 91720.

(4) Includes  387,500  shares of the Company's  common stock owned by Mr. Sacks;
680,899  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 the  Company's  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  9,500
shares of the  Company's  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 the Company's  common stock,  (ii)
the 137,500 shares presently issuable under the Plan and (iii) his proportionate
interest  as a  shareholder  in  the  following  shares  beneficially  owned  by
Hazelwood  Investments Limited, a company controlled by Mr. Sacks and his family
("Hazelwood"):  (a) the  243,546  shares  held by  Brandon  No. 1  allocable  to
Hazelwood's  limited  partnership  interest in Brandon No. 1 and (b) the 250,000
shares  held by Brandon  No. 2  allocable  to  Hazelwood's  limited  partnership
interest in Brandon No. 2.

(5) The mailing address of Mr.  Schlosberg is 2380 Railroad  Street,  Suite 101,
Corona, California 91720.

(6)  Includes  346,597  shares  of  the  Company's  common  stock  owned  by Mr.
Schlosberg;  680,899  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 the
Company's  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 9,500 shares of the
Company's  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) 346,597 shares of the Company's common stock,
(ii) the  137,500  shares  presently  issuable  under  the Plan  and  (iii)  his
proportionate  interest as a shareholder  in the following  shares  beneficially
owned by Brandon Securities  Limited, a company controlled by Mr. Schlosberg and
his family:  (a) the 247,911  shares held by Brandon No. 1 allocable  to Brandon
Securities  Limited's limited  partnership  interest in Brandon No 1 and (b) the
250,000 shares held by Brandon No. 2 allocable to Brandon  Securities  Limited's
limited partnership interest in Brandon No. 2.


                                       34

<PAGE>

         (b)      The following table sets forth information as to the ownership
                  of shares of the Company's  common stock, as of March 1, 1999,
                  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             3,947,066   (1)        39.6%
                  Hilton H. Schlosberg        3,906,163   (2)        39.2%
                  Harold C. Taber, Jr.          106,419   (3)         1.1%
                  Benjamin M. Polk               25,600   (4)          *  %
                  Norman C. Epstein              13,149   (5)          *  %
                  Mark S. Vidergauz               --      (6)          *  %

Officers and Directors as a group (5 members:
4,485,831 shares or 44.7% in aggregate)

* Less than 2%


1 Includes  387,500  shares of the  Company's  common stock owned by Mr.  Sacks;
680,899  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 the  Company's  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  9,500
shares of the  Company's  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 the Company's  common stock,  (ii)
the 137,500 shares presently issuable under the Plan and (iii) his proportionate
interest  as a  shareholder  in  the  following  shares  beneficially  owned  by
Hazelwood  Investments Limited, a company controlled by Mr. Sacks and his family
("Hazelwood"):  (a) the  243,546  shares  held by  Brandon  No. 1  allocable  to
Hazelwood's  limited  partnership  interest in Brandon No. 1 and (b) the 250,000
shares  held by Brandon  No. 2  allocable  to  Hazelwood's  limited  partnership
interest in Brandon No. 2.

2 Includes 346,597 shares of the Company's common stock owned by Mr. Schlosberg;
680,899 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 the Company's  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  9,500 shares of the Company's  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) 346,597 shares of the Company's common stock,
(ii) the  137,500  shares  presently  issuable  under  the Plan  and  (iii)  his
proportionate  interest as a shareholder  in the following  shares  beneficially
owned by Brandon Securities  Limited, a company controlled by Mr. Schlosberg and
his family:  (a) the 247,911  shares held by Brandon No. 1 allocable  to Brandon
Securities  Limited's limited  partnership  interest in Brandon No 1 and (b) the
250,000 shares held by Brandon No. 2 allocable to Brandon  Securities  Limited's
limited partnership interest in Brandon No. 2.

3 Includes 71,137 shares of the Company's  common stock owned by Mr. Taber;  and
35,281.7 shares of the Company's 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 includes  options to purchase 12,000 shares of the Company's
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 the Company's common stock owned by Mr. Epstein.

6 None of the options to purchase  12,000 shares of the  Company's  common stock
exercisable at $3.27 per share,  granted under a Stock Option Agreement with the
Company dated as of June 18, 1998 pursuant to the Directors  Plan, are presently
exercisable.



                                       35

<PAGE>

         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.

         Pursuant to the terms of a certain Assignment  Agreement dated July 27,
1992 between FJC's  predecessor  and Hansen,  the Company has agreed to nominate
and solicit  proxies for the election to the Company's Board of Directors of one
of the  trustees  designated  by the trustees of a certain  trust (the  "Trust")
formed  pursuant to an Agreement of Trust dated July 27, 1992 for so long as the
Trust  shall be in  existence  for the  benefit of Hansen and FJC.  The  initial
designee of the Trust  nominated  to the Board was Anthony F. Kane who  resigned
from the Board in June, 1993. No other designee has been nominated by the Trust.

         Rodney C. Sacks is  currently  acting as the sole trustee of the Trust,
as FJC has failed to designate any person to act as Trustee. The Company and HBC
have agreed to indemnify Mr. Sacks and hold him harmless from any claims,  loss,
liability or expense arising out of his acting as Trustee.

         Harold C. Taber, Jr., who is a director of the Company and a consultant
to HBC, is  indebted to the Company in the amount of $20,861 as of December  31,
1998.

         During 1998 the  Company  purchased  promotional  items from IFM Group,
Inc. to a total value of $151,393. Rodney C. Sacks, together with members of his
family,  own approximately  27% of the issued shares in that Company.  Hilton H.
Schlosberg,  together with members of his family,  own  approximately 43% of the
issued shares in that  Company.  The Company  continues to purchase  promotional
items from IFM Group, Inc. in 1999.

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


                                       36

<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, 1998 and 1997       F-3

         Consolidated Statements of Income for the years ended 
          December 31, 1998, 1997 and 1996                                   F-4

         Consolidated Statements of Comprehensive Income for the years
          ended December 31, 1998, 1997 and 1996                             F-5

         Consolidated Statements of Shareholders' Equity for the years
          ended December 31, 1998, 1997 and 1996                            F-6

         Consolidated Statements of Cash Flows for the years ended
          December 31, 1998, 1997 and 1996                                  F-7

         Notes to Consolidated Financial Statements for the years ended
          December 31, 1998, 1997 and 1996                                  F-8

(b)      Financial Statement Schedules

         Valuation and Qualifying Accounts for the years ended 
          December 31, 1998, 1997 and 1996                                 F-20

(c)      Reports on Form 8-K
         None



                                       37

<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 31, 1999
                          -------------------------
                           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 31, 1999
- ------------------------      and Chief Executive Officer
Rodney C. Sacks               (Principal Executive Officer)


/s/ HILTON H. SCHLOSBERG     Vice Chairman of the Board of        March 31, 1999
- ------------------------      Directors, President, Chief
Hilton H. Schlosberg          Operating Officer, Principal
                              Financial and Accounting Officer
                              and Secretary



/s/ BENJAMIN M. POLK         Director                             March 31, 1999
- ----------------------- 
Benjamin M. Polk



/s/ NORMAN C. EPSTEIN        Director                             March 31, 1999
- -----------------------
Norman C. Epstein



/s/ HAROLD C. TABER, JR.     Director                             March 31, 1999
- ------------------------
Harold C. Taber, Jr.



/s/ MARK S. VIDERGAUZ        Director                             March 31, 1999
- ------------------------
Mark S. Vidergauz




                                       38

<PAGE>


<TABLE>
<CAPTION>


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.
<S>              <C>

- ---------------- ---------------------------------------------------------------------------------------------
Exhibit No.      Document Description
- ---------------- ---------------------------------------------------------------------------------------------
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
- ---------------- ---------------------------------------------------------------------------------------------
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


                                       39

<PAGE>

- ---------------- ---------------------------------------------------------------------------------------------
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


                                       40

<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 - California
- ---------------- -------------------------------------------------------------------------------------------
10 (fff)         Employment Agreement as of January 1, 1999 by and between Hansen Natural Corporation and
                 Rodney C. Sacks
- ---------------- -------------------------------------------------------------------------------------------
10 (ggg)         Employment Agreement as of January 1, 1999 by and between Hansen Natural Corporation and
                 Hilton S. Schlosberg
- ---------------- -------------------------------------------------------------------------------------------
10 (hhh)         Stock Option Agreement dated as of February 2, 1999 by and between Hansen Natural
                 Corporation and Rodney C. Sacks
- ---------------- -------------------------------------------------------------------------------------------
10 (iii)         Stock Option Agreement dated as of February 2, 1999 by and between Hansen Natural
                 Corporation and Hilton S. Schlosberg
- ---------------- -------------------------------------------------------------------------------------------
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").

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 From 10-Q for the  period  ended
    June 30, 1997.

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

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

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


                                       41

<PAGE>
                                                    

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                                                                          
HANSEN NATURAL CORPORATION AND SUBSIDIARIES

                                                                          Page
                                                                          ---- 
Independent Auditors' Report                                              F-2


Consolidated Balance Sheets as of December 31, 1998 and 1997              F-3

Consolidated Statements of Income for the years ended
 December 31, 1998, 1997 and 1996                                         F-4

Consolidated Statements of Comprehensive Income for the years ended
 December 31, 1998, 1997 and 1996                                         F-5

Consolidated Statements of Shareholders' Equity for the years ended
 December 31, 1998, 1997 and 1996                                         F-6

Consolidated Statements of Cash Flows for the years ended
 December 31, 1998, 1997 and 1996                                         F-7

Notes to Consolidated Financial Statements for the years ended

 December 31, 1998, 1997 and 1996                                         F-8

Valuation and Qualifying Accounts for the years ended
 December 31, 1998, 1997 and 1996                                        F-20



                                     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 (the Company) as of December 31, 1998 and 1997, and
the  related   consolidated   statements   of  income,   comprehensive   income,
shareholders'  equity and cash flows for the years ended December 31, 1998, 1997
and 1996. 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  generally   accepted  auditing
standards.  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, 1998 and 1997, and the  consolidated  results of
their  operations and cash flows for the years ended December 31, 1998, 1997 and
1996 in conformity with generally accepted accounting  principles.  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 23, 1999

   except for Note 7, as to which the date is March 29, 1999


                                     F - 2

<PAGE>

<TABLE>
<CAPTION>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998, 1997 AND 1996
- ---------------------------------------------------------------------------------------------------------------------------------


                                                                                           1998                      1997
                                                                                           ----                      ----
                                                   ASSETS
<S>                                                                                        <C>                       <C>

CURRENT ASSETS:
Cash and cash equivalents                                                                  $ 3,806,089              $    395,231
Accounts receivable (net of allowance for doubtful
   accounts, sales returns and cash discounts of $378,641
   in 1998 and $315,629 in 1997 and promotional allowances
   of $1,608,123 in 1998 and $1,067,749 in 1997)                                             1,827,544                 1,541,731
Inventories, net (Note 3)                                                                    5,211,077                 3,915,983
Prepaid expenses and other current assets (Note 4)                                             244,318                   214,468
                                                                                           ------------              ------------
                                                                                            11,089,028                 6,067,413

PROPERTY AND EQUIPMENT, net (Note 5)                                                           601,523                   412,496

INTANGIBLE AND OTHER ASSETS:
Trademark license and trademarks (net of accumulated amortization
   of $2,687,462 in 1998 and $2,390,878 in 1997)                                            10,003,417                10,208,116
Note receivable from director                                                                   20,861                    60,252
Deposits and other assets                                                                      211,903                   185,082
                                                                                           ------------              ------------
                                                                                            10,236,181                10,453,450
                                                                                           ------------              ------------ 
                                                                                           $21,926,732               $16,933,359
                                                                                           ============              ============

                       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                                           $ 1,870,253               $ 2,195,200
Accrued liabilities                                                                            403,864                   488,807
Accrued compensation                                                                           476,001                   322,114
Current portion of long-term debt (Note 7)                                                   2,072,818                   520,835
Income taxes payable (Note 9)                                                                1,269,185                    37,800
                                                                                           ------------              ------------
   Total current liabilities                                                                 6,092,121                 3,564,756

LONG-TERM DEBT, less current portion (Note 7)                                                1,334,967                 3,407,824

DEFERRED INCOME TAX LIABILITY (Note 9)                                                         557,461

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS' EQUITY: (Note 10)
Common stock - $.005 par value; 30,000,000 shares
   authorized; 9,911,905 and 9,130,869 shares issued
   and outstanding in 1998 and 1997, respectively                                               49,560                    45,654
Additional paid-in capital                                                                  11,207,765                10,858,315
Retained earnings (accumulated deficit)                                                      2,752,099                  (875,949)
Foreign currency translation adjustment                                                        (67,241)                  (67,241)
                                                                                           ------------              ------------
   Total shareholders' equity                                                               13,942,183                 9,960,779
                                                                                           ------------              ------------
                                                                                           $21,926,732               $16,933,359
                                                                                           ============              ============
</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, 1998, 1997 AND 1996
- ------------------------------------------------------------------------------------------------------------------------------------


                                                                         1998                      1997                     1996
                                                                         ----                      ----                     ----

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

NET SALES                                                           $ 53,866,294              $ 43,057,064             $ 35,565,485

COST OF SALES                                                         27,332,028                25,222,881               21,671,064
                                                               ------------------        ------------------       ------------------

GROSS PROFIT                                                          26,534,266                17,834,183               13,894,421

OPERATING EXPENSES:
Selling, general and administrative                                   20,217,818                15,452,188               12,524,850
Amortization of trademark license and trademarks                         296,584                   301,238                  396,755
Other expenses                                                            60,000                   198,848                  295,869
                                                               ------------------        ------------------       ------------------

     Total operating expenses                                         20,574,402                15,952,274               13,217,474
                                                               ------------------        ------------------       ------------------

OPERATING INCOME                                                       5,959,864                 1,881,909                  676,947

NONOPERATING EXPENSE (INCOME):
Interest and financing expense                                           387,446                   525,294                  585,733
Interest income                                                          (72,352)                   (3,481)                  (8,919)
Other expense (income)(Note 11)                                           14,719                    69,745                 (259,433)
                                                               ------------------        ------------------       ------------------

     Net nonoperating expense                                            329,813                   591,558                  317,381

                                                               ------------------        ------------------       ------------------
INCOME BEFORE PROVISION
     FOR INCOME TAXES                                                  5,630,051                 1,290,351                  359,566

PROVISION FOR INCOME TAXES (Note 9)                                    2,066,922                    40,200                    2,400
                                                               ------------------        ------------------       ------------------

NET INCOME                                                           $ 3,563,129               $ 1,250,151                $ 357,166
                                                               ==================        ==================       ==================


NET INCOME PER COMMON SHARE:
     Basic                                                                 $ 0.38                    $ 0.14                   $ 0.04
                                                               ==================        ==================       ==================
     Diluted                                                               $ 0.34                    $ 0.13                   $ 0.04
                                                               ==================        ==================       ==================


NUMBER OF COMMON SHARES USED
     IN PER SHARE COMPUTATIONS:
     Basic                                                             9,386,688                 9,125,630                9,122,868
                                                               ==================        ==================       ==================
     Diluted                                                          10,430,727                 9,288,642                9,159,415
                                                               ==================        ==================       ==================
</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, 1998, 1997 AND 1996
- ------------------------------------------------------------------------------------------------------------------------------------


                                                                         1998                      1997                     1996
                                                                         ----                      ----                     ----
<S>                                                                      <C>                       <C>

NET INCOME, as reported                                                  $ 3,563,129               $ 1,250,151            $ 357,166

     Compensation expense related to issuance of
       nonqualified stock options                                             64,919

     Foreign currency translation adjustment                                                          (127,823)              24,370


                                                                   ==================        ==================       ==============
COMPREHENSIVE INCOME                                                     $ 3,628,048               $ 1,122,328            $ 381,536
                                                                   ==================        ==================       ==============



</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, 1998, 1997 AND 1996
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                                      Retained           Foreign
                                         Common stock             Additional          earnings          currency           Total
                                 ------------------------------    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
                                 ==============  ==============  ================  ==================  ==============  =============

</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, 1998, 1997 AND 1996
- --------------------------------------------------------------------------------------------------------------------------------

                                                                                 1998               1997              1996
<S>                                                                        <C>                <C>                <C>
                                                                                 ----               ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                 $     3,563,129    $     1,250,151    $      357,166
Adjustments to reconcile net income to
   net cash provided by operating activities:
      Amortization of trademark license and trademarks                             296,584            301,238           396,755
      Depreciation and other amortization                                          246,494            270,114           249,035
      Loss on disposal of plant and equipment                                          317             69,745
      Compensation expense related to issuance of stock options                     64,919
      Deferred income taxes                                                        557,461
      Effect on cash of changes in operating assets and liabilities:
        Accounts receivable                                                       (285,813)          (589,521)          784,928
        Inventories                                                             (1,295,094)          (804,859)            9,395
        Prepaid expenses and other current assets                                  (29,850)           117,401           155,638
        Accounts payable                                                          (324,947)            56,150        (1,243,715)
        Accrued liabilities                                                        (84,943)           360,177            38,504
        Accrued compensation                                                       153,887            250,142             6,139
        Income taxes payable                                                     1,508,784             37,800
                                                                           ----------------   ----------------   ---------------
          Net cash provided by operating activities                              4,370,928          1,318,538           753,845

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                (435,838)          (186,570)          (97,650)
Proceeds from sale of property and equipment                                                           37,945            61,893
Increase in trademark license and trademarks                                       (91,885)           (50,209)          (61,847)
Decrease in note receivable from director                                           39,391              1,918             3,730
(Increase)decrease in deposits and other assets                                    (26,821)           218,271            40,150
                                                                           ----------------   ----------------   ---------------
          Net cash (used in) provided by investing activities                     (515,153)            21,355           (53,724)

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term borrowings                                                                    (893,429)         (580,906)
Increase in long-term debt                                                                             14,546
Principal payments on long-term debt                                              (520,874)          (135,887)          (44,570)
Issuance of common stock                                                            75,957             11,000
                                                                           ----------------   ----------------   ---------------
          Net cash used in financing activities                                   (444,917)        (1,003,770)         (625,476)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                            -                 (127,823)           24,370

                                                                           ----------------   ----------------   ---------------
NET INCREASE IN CASH                                                             3,410,858            208,300            99,015
CASH AND CASH EQUIVALENTS, beginning of year                                       395,231            186,931            87,916
                                                                           ================   ================   ===============
CASH AND CASH EQUIVALENTS, end of year                                     $     3,806,089    $       395,231    $      186,931
                                                                           ================   ================   ===============
                                                                           ----------------   ----------------   ---------------

SUPPLEMENTAL INFORMATION Cash paid during the year for:
      Interest                                                             $       372,256    $       375,821    $      459,182
                                                                           ================   ================   ===============
      Income taxes                                                         $         2,400    $         2,400    $        2,400
                                                                           ================   ================   ===============
</TABLE>


NONCASH TRANSACTIONS:
      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 a 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 - 7

<PAGE>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

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 owns all of
         the issued and outstanding common stock of CVI Ventures,  Inc. ("CVI"),
         which was  incorporated in Delaware on April 30, 1990. CVI is currently
         inactive.  The  Company  also owns all of the  issued  and  outstanding
         common stock of Hansen Beverage Company ("HBC"), which was incorporated
         in Delaware on June 8, 1992. HBC owns all of the issued and outstanding
         ordinary shares of Hansen  Beverage  Company (UK) Limited ("HBC (UK)"),
         which  ceased  operating  activities  at the end of 1997  and is in the
         process of being deregistered in the United Kingdom.

         The Company is a holding  company and carries on no operating  business
         except  through its direct wholly owned  subsidiary,  HBC. 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.

         Nature of  Operations - Hansen is engaged in the business of marketing,
         selling and  distributing  so-called  "alternative"  beverage  category
         sodas,   fruit   juices,   fruit   juice   Smoothies,    non-carbonated
         ready-to-drink  iced teas,  lemonades,  juice  cocktails,  "functional"
         drinks  and  still  water  under the  Hansen's(R)  Natural  brand  name
         primarily in certain Western states as well as other states, the United
         Kingdom,  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, CVI and HBC and, up until December 31, 1997, HBC's wholly
         owned  subsidiary  HBC (UK),  since  their date 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 1998 presentation.

         Translation  of  Foreign  Currencies  - Assets and  liabilities  of the
         Company's  United  Kingdom  subsidiary  for the years 1997 and 1996 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,  Plant and  Equipment -  Property,  plant 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 - 8

<PAGE>
         Trademark  License and  Trademarks - Trademark  license  represents the
         Company's  license to use certain  Hansen(R)  brand  names.  Trademarks
         represent expenditures incurred to trademark other branded names. Prior
         to the third quarter of 1996,  trademark  license and  trademarks  were
         being  amortized  over  25  years  using  the   straight-line   method.
         Management periodically evaluates whether there has been any impairment
         of  the  trademark  license  or  trademarks  based  on an  analysis  of
         applicable  undiscounted  expected future cash flows.  During the third
         quarter of 1996, the estimated life of the Company's  trademark license
         and  trademarks  was changed  from 25 years to 40 years to more closely
         conform  such  useful  life with that  used by other  branded  beverage
         companies.  The effect of such change in  accounting  estimate is (i) a
         reduction  in  amortization  of  trademark  license and  trademarks  of
         $211,000 for 1998,  $203,000 for 1997 and $101,000 for 1996 and (ii) an
         increase  in net  income of $.02 per share on a diluted  basis for both
         1998 and 1997, and $.01 per share on a diluted basis for the year 1996.

         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,  1998,  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.  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 $4.3 million in 1998, $2.9 million in 1997 and $1.5
         million in 1996.  In  addition,  the  Company  supports  its  customers
         (including distributors) with promotional allowances,  portion of which
         are utilized for indirect advertising by them.  Promotional  allowances
         amounted to $5.6 million in 1998, $4.0 million in 1997 and $3.6 million
         in 1996.

         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 of 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.

                                     F - 9

<PAGE>

         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, 1998, 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, 1998,
         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  - The Company has adopted SFAS No. 130,
         Reporting  Comprehensive  Income, for the year ended December 31, 1998.
         SFAS No. 130  establishes  standards  for the  reporting and display of
         comprehensive  income.  Components of comprehensive income may include,
         among  other   items,   foreign   currency   translation   adjustments,
         compensation expense related to issuance of nonqualified stock options,
         minimum pension liability adjustments,  and unrealized gains and losses
         on marketable securities classified as available-for-sale.

         The Company has adopted SFAS No. 131,  Disclosures About Segments of an
         Enterprise and Related  Information.  In accordance  with SFAS No. 131,
         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 Note 12.

         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 2000.

2.        REORGANIZATION OF UNITED KINGDOM OPERATIONS

         Sales in the United  Kingdom were lower than  anticipated  during 1997;
         and, as a  consequence,  the  Company's  foreign  subsidiary,  HBC (UK)
         ceased operating activities at the end of 1997 and is in the process of
         being  deregistered.  Beginning  in 1998,  the  Company  dealt with its
         distributor  in the  United  Kingdom  from  its  corporate  offices  in
         California to export all products sold by it to such  distributor  from
         the United States.

3.        INVENTORIES

         Inventories consist of the following at December 31:

                                                  1998                1997
                                                  ----                ----
           Raw materials                          $1,815,040         $   875,884
           Finished goods                          3,664,270           3,423,326
                                             ----------------     --------------
                                                   5,479,310           4,299,210
           Less inventory reserves                 (268,233)           (383,227)
                                             ----------------     --------------
                                                  $5,211,077          $3,915,983
                                             ================     ==============

                                     F - 10

<PAGE>

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, 1997,  advertising and marketing credits
         totaled $265,000. 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, and fully expensed
         such advertising and marketing credits.

5.        PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of the following at December 31:

                                                        1998             1997
                                                        ----             ----
           Leasehold improvements                   $   55,305       $   54,203
           Furniture and office equipment              523,650          332,817
           Equipment and vehicles                      826,599          656,391
                                                 --------------      -----------
                                                     1,405,554        1,043,411
           Less accumulated depreciation              (804,031)        (630,915)
                                                  =============      ===========
                                                     $ 601,523        $ 412,496
                                                  =============      ===========

6.        SHORT-TERM BORROWINGS

         In 1997, HBC obtained a credit  facility from 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 up to
         $4 million,  as more fully  described in Note 7. The utilization of the
         revolving  line of credit by the  Company  is  dependent  upon  certain
         levels of eligible  accounts  receivable and  inventory.  The revolving
         line of  credit  is  secured  by  substantially  all of  HBC's  assets,
         including  accounts  receivable,   inventory,  trademark  licenses  and
         trademarks,  and certain  equipment.  The initial use of proceeds under
         the revolving  line of credit was to refinance  HBC's  previous line of
         credit.  As of December 31, 1998, no amounts were outstanding under the
         revolving line of credit.  The revolving line of credit is renewable on
         May 1, 2000.

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 note  executed  by the Company in
         favor of ERLY  Industries,  Inc.  ("ERLY") in the  principal  sum of $4
         million  (the  "Note").  The full  amount  due  under the Note was paid
         during  November  1997.  The term loan will mature in October  2002 and
         requires  variable  monthly  payments of principal  and interest  which
         escalate  over time plus  payments of a portion of HBC's  adjusted cash
         flow,  from year to year. The interest rate payable on the term loan is
         1.5% above the bank's base rate (7.75% as of December  31,  1998).  For
         the year ended  December 31, 1998, the payment due Comerica on April 1,
         1999,  pursuant to HBC's adjusted cash flow for such year, was computed
         to be $1,451,449, which was paid in full as of March 29, 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
         nonfinancial   covenants.   At  both   December   31,  1998  and  1997,
         respectively, the Company was in compliance with all covenants.


                                     F - 11

<PAGE>

<TABLE>
<CAPTION>


         Long-term debt consists of the following at December 31:
                                                                                    1998                      1997
                                                                                    ----                      ----
         <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,  and  additional  payments  of a portion of HBC's
         adjusted cash flow, from year to year, at an effective interest rate of
         9.25% and 10% as of December  31, 1998 and 1997,  respectively,  due in
         October 2002.
                                                                                 $3,399,996               $ 3,916,666


         Other                                                                        7,789                    11,993

                                                                             ----------------          ----------------
                                                                                  3,407,785                 3,928,659
         Less: current portion of long-term debt                                 (2,072,818)              (   520,835)
                                                                             ================          ================
                                                                                 $1,334,967               $ 3,407,824
                                                                             ================          ================

         Long-term debt is payable as follows:

                              Year ending December 31:
                              1999                                               $2,072,818
                              2000                                                  719,750
                              2001                                                  615,217
                                                                             ================
                                                                                 $3,407,785
                                                                             ================
</TABLE>


         Interest expense amounted to $368,896,  $488,388, and $498,413, for the
         years ended December 31, 1998, 1997 and 1996.

8.        COMMITMENTS AND CONTINGENCIES

         Operating Leases - Hansen's  warehouse  facility and corporate  offices
         are leased for a period of 89 months  commencing on September 19, 1997,
         when the Company occupied the warehouse  facilities.  On March 1, 1998,
         the corporate offices of the Company were relocated to such premises in
         Corona,  California.   This  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  $369,000,  $157,000,  and  $119,000  for the years  ended
         December 31, 1998, 1997 and 1996, respectively.

         Future minimum rental  payments under such leases referred to above are
as follows:

                              Year ending December 31:
                              1999                                  $    350,000
                              2000                                       361,000
                              2001                                       367,000
                              2002                                       369,000
                              2003                                       377,000
                              Thereafter                                 414,000
                                                                      ==========
                                                                      $2,238,000
                                                                     ===========

                                     F - 12

<PAGE>
         Employment  and  Consulting  Agreements  - The Company  entered into an
         employment  agreement with Rodney C. Sacks dated as of January 1, 1994,
         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,  1994,
         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  $170,000  each,  subject to  adjustments  annually,  plus an
         annual bonus in an amount  determined at the discretion of the Board of
         Directors  and  certain  fringe  benefits,  both  of  which  agreements
         terminate on December 31, 1998.  For the years ended December 31, 1998,
         1997, and 1996, Mr. Sacks agreed to a temporary reduction of his annual
         base salary to $160,000, $160,000 and $135,000,  respectively.  For the
         years ended December 31, 1998, 1997, and 1996, Mr. Schlosberg agreed to
         a temporary  reduction of his annual base salary to $160,000,  $158,030
         and $127,500, respectively.

         The Company also entered into employment agreements dated as of January
         1, 1999,  with Messrs.  Sacks and Schlosberg  pursuant to which each of
         them will continue with their  current  responsibilities  and authority
         and that  each of their  annual  base  salaries  will be  increased  to
         $180,000,  for the  twelve-month  period ending  December 31, 1999, 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  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. 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.  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. 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.

         Supplier  Arrangements  - 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.


                                     F - 13

<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  estimated  volume  levels,  the Company  does not
         believe  that it will  incur  any  liability  in  connection  with this
         arrangement.

         Purchase  Commitments  - As of December 31, 1998,  the Company had open
         purchase   commitments  for  certain  raw  materials  of  approximately
         $307,000.

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.

<TABLE>
<CAPTION>

         Components of the income tax provision are as follows:
                                                                          Year Ended December 31,
           <S>                                              <C>                   <C>                  <C> 
                                                             1998                  1997                   1996
           Current income taxes:
           Federal                                          $1,180,688            $    -               $     -
           State                                               328,773               40,200                 2,400
                                                       =================     =================      =================
                                                             1,509,461               40,200                 2,400
                                                       =================     =================      =================
           Deferred income taxes:
           Federal                                             675,528              (89,215)              693,174
           State                                               159,813              (38,435)               64,685
           Less change in valuation allowance                 (277,880)             127,650              (757,859)
                                                       =================     =================      =================
                                                               557,461                -                       - 
                                                       =================     =================      =================
                                                            $2,066,922            $  40,200            $    2,400
                                                       =================     =================      =================


         The differences between the income tax provision that would result from
         applying  the 34%  federal  statutory  rate  to  income  (loss)  before
         provision for income taxes and the reported  provision for income taxes
         are as follows:
                                                                          Year Ended December 31,
                                                             1998                  1997                   1996
           Income tax provision using the
               statutory rate                               $1,914,217            $ 438,719            $ 122,252
           State taxes, net of federal tax benefit             295,272               40,200                2,400
           Change in utilization of certain net
               operating losses                                106,718
           Permanent differences                                 6,318
           Effect of foreign corporation                                           (520,678)              69,386
           Other                                                22,277              (45,691)              10,618
           Change in valuation allowance                      (277,880)             127,650             (202,256)
                                                       =================      ================      =================
                                                            $2,066,922            $  40,200            $   2,400
                                                       =================      ================      =================
</TABLE>


                                     F - 14

<PAGE>


<TABLE>
<CAPTION>

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

                                                                                Year Ended December 31,
                                                                      1998                   1997                  1996
          <S>                                                    <C>                     <C>                    <C>
          Net operating loss carryforwards -
              Non-Separate Return Loss Year Limitation
              ("SRLY")                                           $                       $  653,290             $ 603,222
                                                                
          Net operating loss carryforwards - SRLY                                           101,160                32,149
                                                                
          Net operating loss carryforwards - state                                          107,021                88,960
                                                                
          Reserves for returns                                         79,311                61,730                60,533
          Reserves for bad debts                                       56,657                28,860                30,310
          Reserves for obsolescence                                   114,911               161,967                52,195
          Capitalization of inventory costs                            34,272                25,980                17,320
          State franchise tax                                         141,000               (31,383)              (38,310)
          Accrued compensation                                        203,919               139,474                31,164
          Amortization of trademark license                        (1,161,652)             (920,997)             (678,146)
          Depreciation                                                (25,879)              (49,223)              (49,168)
                                                              ----------------      ----------------      ----------------
                                                                     (557,461)              277,879               150,229
          Less valuation allowance                                     --                  (277,879)             (150,229)
                                                              ================      ================      ================
                                                                  $ (557,461)            $    -                 $    -
                                                              ================      ================      ================
</TABLE>


         During  the  year  ended  December  31,  1997,  the  operations  of the
         Company's foreign subsidiary,  HBC (UK), ceased (Note 2). In connection
         therewith,  certain  intercompany  balances were forgiven  resulting in
         income to the foreign subsidiary. HBC (UK)'s prior year's net operating
         loss  carryforwards were utilized to fully reduce the taxable income of
         HBC (UK).

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").

         The Plan provides 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. 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, 1998, options to purchase 1,717,800 shares of Hansen
         common stock had been granted under the Plan,  net of options that have
         expired,  and options to purchase 282,200 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


                                     F - 15

<PAGE>

         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,  1998,  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.

<TABLE>
<CAPTION>

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

                                                 1998                          1997                         1996
                                                 ----                          ----                         ----
                                                       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                        1,475,500         $1.34       1,332,000         $1.37     1,245,400         $1.44
Options granted                             297,500         $2.04         370,500         $1.10       135,000          $.79
Options exercised                         (919,900)         $1.49        -                            -
Options canceled or expired                (19,200)         $1.11       (227,000)         $1.11      (48,400)         $1.38
                                                                                                               
                                     --------------- ------------- --------------- ------------- ------------- -------------
Options outstanding,
  end of year                               833,900         $1.49       1,475,500         $1.34     1,332,000         $1.37
                                     ===============               ===============               =============

Option price range                                        $.72 to                       $.72 to                     $.72 to
  end of year                                               $4.50                         $1.79                       $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 1995 has been  excluded  from the pro
         forma  calculation;  accordingly,  the  1998,  1997 and 1996 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 determined based
         on the fair  value at the  grant  date for  awards  in the  years  1996
         through  1998  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:

<TABLE>
<CAPTION>

                                                   1998                    1997                 1996
                                                   ----                    ----                 ----
           <S>                                         <C>                   <C>                    <C>     
           Net income, as reported                     $3,563,129            $1,250,151             $357,166
           Net income, pro forma                       $3,383,375            $1,121,473             $ 49,819

           Net income per common share,
               as reported
              Basic                                          $.38                  $.14                 $.04
              Diluted                                        $.34                  $.13                 $.04

           Net income per common share,
               pro forma
              Basic                                          $.36                  $.12                 $.01
              Diluted                                        $.32                  $.12                 $.01


</TABLE>



                                     F - 16

<PAGE>

         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      Expected         Interest 
                   Yield      Volatility         Rate         Expected Lives

           1998       0%           72%            5.2%           4 years
           1997       0%           43%            6.0%           3 years
           1996       0%           81%            5.5%           2 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.  For the  year  ended
         December  31, 1998,  compensation  expense  recorded for such  warrants
         totaled  $64,919  based on the fair  value of such  warrants  using the
         Black-Scholes  option-pricing model with the following weighted-average
         assumptions:  dividend yield, 0%; expected  volatility,  61%; risk-free
         interest rate, 6%; and expected life, 36 months.

         Information regarding non-employee stock options is as follows:


<TABLE>
<CAPTION>
                                                1998                          1997                         1996
                                                 ----                          ----                         ----
                                                       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                         145,000        $ 1.42         812,500        $ 3.57       812,500        $ 3.61
Options granted                             180,000          2.48         100,000          1.38        15,000          1.50
Options exercised                         (100,000)          1.38            --                          --
Options canceled or expired                  --                         (767,500)          3.69      (15,000)          3.69
                                                     
                                     ---------------               ---------------               --------------
Options outstanding,
  end of year                               225,000        $ 2.29         145,000        $ 1.42       812,500        $ 3.57
                                     ===============               ===============               =============

Option price range,                                      $1.50 to                      $1.38 to                    $1.50 to
  end of year                                              $ 3.75                         $1.50                      $ 3.69

</TABLE>


         The following table  summarizes  information  about  fixed-price  stock
         options and warrants outstanding at December 31, 1998:


<TABLE>
                                                    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     December 31, 1998  contractual life        price        December 31, 1998    exercise
                   prices                                                                                         Price
           ----------------------- ------------------ ----------------- ------------------ ------------------ --------------
                   $.72 to $ 1.13            366,000         4                $1.01                   62,800           $.96
                 $ 1.25 to $ 1.38             38,200         2                $1.38                   34,400          $1.38
                 $ 1.50 to $ 1.59            340,700         4                $1.58                  223,500          $1.58
                 $ 1.72 to $ 2.50            270,500         3                $2.26                   58,498          $2.39
                 $ 3.75 to $ 4.50             47,000         5                $4.14                    3,330          $3.75

                                   ==================                                      ==================
                   $.72 to $ 4.50          1,062,400                                                 382,528
                                   ==================                                      ==================


</TABLE>


                                     F - 17

<PAGE>

11.       OTHER EXPENSE (INCOME)

         In connection with the acquisition of the Hansen business,  the Company
         was assigned a promissory  note made by Hawaiian  Water Partners in the
         original principal amount of $310,027 plus interest thereon and certain
         additional principal amounts. The note was secured by the proceeds,  if
         any, of a lawsuit. The collectibility of this note was dependent on the
         outcome of that lawsuit and,  consequently,  the Company fully reserved
         against this asset.  Following a judgment in the lawsuit,  a settlement
         was reached among the plaintiff,  defendant and competing  claimants to
         the proceeds from the lawsuit.  Under the terms of the settlement,  the
         Company was to receive a total of $616,000, plus interest. In 1995, the
         reserve  against  the note was  reduced to  $270,000,  and the  Company
         recorded  $346,000 in other income.  Following receipt of the remaining
         proceeds  during  1996,  the  remaining  reserve  against  the note was
         eliminated.  In  connection  therewith,  $233,000 was recorded in other
         income  during  1996,  net of $37,000 of  attorney's  fees  incurred in
         connection  with the settlement,  which  constituted the full extent of
         recovery under this note.

12.       MAJOR CUSTOMERS AND SEGMENTATION

         One  customer  accounted  for 27% of the  Company's  sales for the year
         ended  December  31, 1998.  Two  customers  accounted  for 29% and 11%,
         respectively,  of the Company's  sales for the year ended  December 31,
         1997.  Two customers  accounted for 26% and 13%,  respectively,  of the
         Company's sales for the year ended December 31, 1996. 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
         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.

                                         1998             1997              1996
                                         ----             ----              ----

                Warehouse                67%               80%              84%
                Distributor              32%               19%              15%
                Export                    1%                1%               1%


13.      LEGAL PROCEEDINGS

         The  second  stage of the  trial in HBC's  action  against  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. In November 1997,
         the court  held that HBC had not  suffered  any  damages as a result of
         ERLY's  breach  of the  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 note to
         ERLY  was  paid in  November  1997  with the  proceeds  of a term  loan
         obtained by the Company from Comerica  Bank - California.  During 1998,
         ERLY filed for  bankruptcy  and the appeal was  consequently  stayed by
         law.  The Company has filed a claim  against  ERLY but has  received no
         response  from the  trustee  and is  consequently  unaware  whether the
         trustee intends to accept the claim or pursue the appeal.  The ultimate
         outcome of this matter cannot presently be predicted.


                                     F - 18

<PAGE>


         Towards the end of 1998,  the Company  together with the trustee of the
         Hansen Trust commenced arbitration  proceedings against The Fresh Juice
         Company of California,  Inc. ("FJC"),  the former trustees of the Trust
         and a company  called Hansen Juice  Creations,  LLC,  ("Creations")  in
         which the Company and the trustee  claim (i) that  certain  acts of the
         former trustees of the Trust constitute breach of trust; (ii) a certain
         agreement  purportedly  entered into between the former trustees of the
         trust and Creations, is, in whole or in part, void or terminable by the
         Trust; (iii) certain acts of Creations  constitute  infringement of the
         Hansen's  trademark  and certain  acts of FJC  constitute  contributory
         infringement  of the Hansen's  trademarks.  The Company and the trustee
         seek damages and injunctive  relief  against FJC and  Creations.  It is
         expected  that such  proceedings  will be  completed  before the end of
         1999. The Company does not believe that the outcome of such proceedings
         will materially affect 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 1998,  1997 and 1996 were
         $173,673, $186,033 and $238,069, respectively.

         A director of the Company has been a  consultant  to the Company  since
         July 1997.  Expenses  incurred  to such  director  in  connection  with
         consulting  services  rendered to the Company during 1998 and 1997 were
         $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 1998
         amounted to $151,393.

         In connection with a net exercise of options to purchase 725,000 shares
         of the Company's common stock,  during 1998, the Company issued 554,732
         shares of common  stock to two  officers of the  Company,  who are also
         directors and shareholders of the Company.

15.      SUBSEQUENT EVENT

         On January 4, 1999,  the Board of  Directors  of the Company  adopted a
         resolution  to amend the Plan to provide that the  aggregate  number of
         shares of common stock  issuable  upon the exercise of options  granted
         under the Plan shall be increased  from  2,000,000  shares to 3,000,000
         shares.  Such amendment is subject to approval by the  stockholders  of
         the Company at the next annual meeting of stockholders.

         Subsequent  to  year-end,   the  Company  granted  options  to  certain
         employees to purchase  356,000  shares of Hansen common stock under the
         Plan at an exercise price of $4.25 per share.


                                     F - 19

<PAGE>

<TABLE>
<CAPTION>
HANSEN NATURAL CORPORATION AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- -------------------------------------------------------------------------------------------------------------------




                       Balance at
                      beginning of       Charged to costs                       Balance at end
   Description           period            and expenses         Deductions         of period
- ------------------- ------------------ --------------------- ----------------- ------------------

Allowance for doubtful accounts, sales returns and cash discounts:


<S>                       <C>                     <C>             <C>                <C>        
1998                      $   315,629             1,432,404       (1,369,392)        $   378,641
1997                      $   234,749             1,090,929       (1,010,049)        $   315,629
1996                      $   422,831               937,502       (1,125,584)        $   234,749

Promotional allowances:


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
1996                      $   782,034             3,915,447       (3,771,436)        $   926,045

Inventory reserves:


1998                      $   383,227                 4,027      (   119,021)        $   268,233
1997                      $   120,543               253,514             9,170        $   383,227
1996                      $   200,000          (    57,997)     (     21,460)        $   120,543


</TABLE>












                                     F - 20





            MODIFICATION TO REVOLVING CREDIT LOAN & SECURITY AGREEMENT


        This   Third   Modification   to  Loan  &  Security   Agreement   (this
"Modification")   is  entered  into  by  and  between  HANSEN  BEVERAGE  COMPANY
("Borrower")  and  COMERICA  BANK -  CALIFORNIA  ("Bank")  as of this 1st day of
December, 1998, at San Jose, California.

                                                  R E C I T A L S:

         A. Bank and Borrower  entered  into a Revolving  Credit Loan & Security
Agreement (Accounts & Inventory) dated May 15, 1997 as previously amended on May
11, 1998 and July 27, 1998 (as so amended, the "Agreement").

         B.       Borrower has requested, and Bank has agreed, to modify further
                  the Agreement as set forth below.

                                                      AGREEMENT

         For good and  valuable  consideration,  the parties  agree as set forth
below:

         1.       Incorporation by Reference. The Agreement as modified hereby 
               and the Recitals are incorporated herein by this reference.

         2. The Agreement is amended as follows:

                  a. Section 2.2 of the Agreement is amended to read as follows:

                           "2.2 As a sub-facility under the Revolving Loan, Bank
                  shall  issue  for  the   benefit  of  Borrower   one  or  more
                  irrevocable  standby  letters of credit (each a "Standby  L/C"
                  and collectively,  the "Standby L/C's") and commercial letters
                  of credit  ("Commercial  L/C") and  together  with the Standby
                  L/C's collectively referred to as the "L/C's") under
 which the
                  aggregate of all amounts  available to be drawn and all unpaid
                  reimbursement  obligations shall not exceed $500,000, it being
                  understood  that in no  event  shall  the sum of (i) the  face
                  amount of all L/C's  plus (ii) the  amount of all  outstanding
                  letter  of credit  reimbursement  obligations  plus  (iii) the
                  outstanding Revolving Loan advances exceed the Borrowing Base.
                  All Standby L/C's shall be drawn on such terms and  conditions
                  as are  acceptable  to Bank and shall have an expiry  date not
                  later than 365 days after the issuance thereof. All Commercial
                  L/C's  shall be  drawn on such  terms  and  conditions  as are
                  acceptable  to Bank and shall  have an  expiry  date not later
                  than 180 days after the issuance  thereof.  All L/C's shall be
                  governed by the terms of Bank's standard form letter of credit
                  applications and  reimbursement  agreements for commercial and
                  standby letters of credit,  respectively,  which  applications
                  and  reimbursement  agreements  Borrower hereby  covenants and
                  agrees to execute and deliver to Bank.  Bank shall be entitled
                  to receive a fee of 1.5% of the maximum amount available to be
                  drawn on each  Standby  L/C issued  pursuant  to this  Section
                  2.2."

                  b. Section 2.3 of the Agreement is amended to read as follows:




<PAGE>


                           "2.3 The Credit  shall bear  interest as set forth in
                  the Addendum to Revolving  Credit & Loan Agreement dated as of
                  December 1, 1998,  which is  incorporated in this Agreement by
                  reference (the "Rate");  provided,  however,  the Credit shall
                  bear  interest  from  and  after an  occurrence  of a Event of
                  Default and without constituting a waiver of any such Event of
                  Default  on  the  Daily  Balance  Owing  at a rate  three  (3)
                  percentage  points  above the Rate  otherwise  in effect.  All
                  interest  chargeable under this Agreement that is based upon a
                  per annum  calculation shall be computed on a basis of 360 day
                  year for the actual  number of days  elapsed.  With respect to
                  any  portion of the Credit  which  bears  interest at the Base
                  Rate  Option (as  defined in the  Addendum),  in the event the
                  Base Rate is from  time to time  changed,  adjustments  in the
                  Base  Rate  Option  shall be made  based  on the Base  Rate in
                  effect on the date of such change. The Base Rate Option, as so
                  adjusted,  shall  apply to the  Credit  until the Base Rate is
                  adjusted again.  The minimum  interest payable by the Borrower
                  under this  Agreement  shall in no event be less than $500 per
                  month. All interest payable by Borrower under the Credit shall
                  be due and  payable  on the first day of each  calendar  month
                  during the term of this Agreement and Bank may, at its option,
                  elect to treat such  interest and any and all Bank Expenses as
                  advances  of  the  Credit,   which  amount   shall   thereupon
                  constitute Obligations and shall thereafter accrue interest at
                  the Rate  applicable  to the  Credit  under  the terms of this
                  Agreement."

         c. The first  sentence  of Section 3.1 of the  Agreement  is amended to
read as follows:

                           "This Agreement shall remain in full force and effect
                  until May 1,  2000,  unless  earlier  terminated  by notice by
                  Borrower."

         d.       Section 6.8 (a) of the Agreement is amended to read
                     as follows:

                           "(a)     [Reserved];"

         e.       Section 6.15.b of the Agreement is amended to read as follows:




<PAGE>


                           "Borrower   shall   deliver   to  Bank   (i)   within
                  ninety-five  (95)  days  after  the end of each of  Borrower's
                  fiscal years audited financial  statements of the Borrower for
                  each  such  fiscal  year,  including,  but not  limited  to, a
                  balance  sheet  and  profit  and  loss   statement,   with  an
                  unqualified  opinion  thereon from the Borrower's  independent
                  accountant, (ii) within ninety-five (95) days after the end of
                  each of Borrower's  fiscal years, the Borrower's Annual Report
                  on Form 10-K as filed with the U.S.  Securities  and  Exchange
                  Commission, (iii) within sixty (60) days after the end of each
                  fiscal quarter of Borrower, the Borrower's Quarterly Report on
                  Form  10-Q as  filed  with the U.S.  Securities  and  Exchange
                  Commission  and any other report  requested by Bank related to
                  the  Collateral and financial  condition of Borrower,  (iv) at
                  the time of  delivery of the items  described  in clause ii of
                  this paragraph, a certificate signed by an authorized employee
                  of  Borrower  to the  effect  that  all  reports,  statements,
                  computer  disks or tape files,  computer  printouts,  computer
                  runs, or other  computer  prepared  information of any kind or
                  nature  relating to the  foregoing or  documents  delivered or
                  caused to be  delivered  to Bank under this  subparagraph  are
                  complete,  correct and fairly present the financial  condition
                  of Borrower and (v) within sixty (60) days of each quarter end
                  of  Borrower,  a  certificate  signed by the  Chief  Executive
                  Officer and the Chief  Financial  Officer of the Borrower that
                  the  representations  and warranties of the Borrower set forth
                  herein are true and correct as of the date  thereof,  that the
                  Borrower has complied  with all  covenants of the Borrower set
                  forth herein and that no condition or event which  constitutes
                  a breach  or Event  of  Default  under  this  Agreement  is in
                  existence on the date thereof."

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

                  "a. Working Capital as of the end of each quarter in an amount
                   not less than $1,500,000."

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

                           "b. Net Worth in an amount  not less than  $9,650,000
                  for each fiscal  quarter  ending in calender year 1998; and in
                  an  amount  not  less  than  an  amount  equal  to the  sum of
                  $9,650,000  plus 75% of Borrower's  net profit after taxes (as
                  determined in accordance with GAAP) for the fiscal year ending
                  December 31, 1998."

         h.       Section 6.16.e of the Agreement is amended to read as follows:

                           "e. Borrower shall not,  without Bank's prior written
                  consent,  acquire or expend for or commit itself to acquire or
                  expend for fixed  assets by lease,  purchase or  otherwise  or
                  incur new long-term debt in any aggregate  amount that exceeds
                  One Million Dollars ($1,000,000) in any fiscal year; and"

         3. The Inventory Rider dated May 15, 1997 executed by Borrower in favor
of Bank and  incorporated  in this  Agreement  by  reference  is  amended in its
entirety to read in the form annexed hereto, and such amended Inventory Rider is
incorporated by reference in the Agreement, as amended hereby.

         4. Legal Effect.  Except as specifically set forth in this Modification
and the Libor Addendum and the Inventory Rider annexed hereto,  all of the terms
and conditions of the Agreement remain in full force and effect.

         5. Integration.  This is an integrated  Modification and supersedes all
prior  negotiations  and agreements  regarding the subject  matter  hereof.  All
amendments hereto must be in writing and signed by the parties.

         IN WITNESS  WHEREOF,  the parties  have agreed as of the date first set
forth above.

                                                     COMERICA BANK-CALIFORNIA


                                                     By:_____________________

                                                     Its:____________________




<PAGE>



                                                     HANSEN BEVERAGE COMPANY


                                                     By:_______________________

                                                     Its:______________________

                                                     By:_______________________
                                                     Its:______________________


Acknowledged and accepted by the undersigned
Guarantors this ___ day of ______________, 1998

HANSEN NATURAL CORPORATION

By:_________________________________

Its:_________________________________

HANSEN BEVERAGE COMPANY (UK) LIMITED

By:__________________________________

Its:__________________________________

CVI VENTURES, INC.

By:__________________________________

Its:__________________________________


C:\WPDOCS\KOHDOC\7351.




<PAGE>



             Addendum to Revolving Credit Loan & Security Agreement

         This  Addendum  to  Revolving  Credit Loan & Security  Agreement  (this
"Addendum") is entered into as of this 1st day of December, 1998, by and between
Comerica Bank-California ("Bank") and Hansen Beverage Company ("Borrower"). This
Addendum supplements the terms of the Revolving Credit Loan & Security Agreement
dated May 15, 1997 as amended on May 11,  1998,  July 7, 1998,  and  December 1,
1998.

Definitions.

1.                Advance. As used herein, "Advance" means a borrowing requested
                  by Borrower and made by Bank under the Note, including a LIBOR
                  Option Advance and/or a Base Rate Option Advance.

2.                Business  Day. As used  herein,  "Business  Day" means any day
                  except a  Saturday,  Sunday or any other day  designated  as a
                  holiday under Federal or California statute or regulation.

3.                LIBOR.  As used  herein,  "LIBOR"  means  the rate  per  annum
                  (rounded upward if necessary,  to the nearest whole 1/8 of 1%)
                  and determined pursuant to the following formula:

                                        LIBOR =                Base LIBOR
                                                100% - LIBOR Reserve Percentage

1.                         "Base LIBOR" means the rate per annum  determined  by
                           Bank at which  deposits for the relevant LIBOR Period
                           would be offered to Bank in the approximate amount of
                           the relevant  LIBOR Option  Advance in the inter-bank
                           LIBOR market  selected by Bank,  upon request of Bank
                           at 10:00 a.m. California time, on the day that is the
                           first day of such LIBOR Period.

2.                         "LIBOR   Reserve   Percentage"   means  the   reserve
                           percentage  prescribed  by the Board of  Governors of
                           the Federal  Reserve  System (or any  successor)  for
                           "Eurocurrency  Liabilities" (as defined in Regulation
                           D of the Federal Reserve Board, as amended), adjusted
                           by  Bank  for   expected   changes  in  such  reserve
                           percentage during the applicable LIBOR Period.


4.                LIBOR Business Day. As used herein, "LIBOR Business Day" means
                  a Business  day on which  dealings in Dollar  deposits  may be
                  carried out in the interbank LIBOR market.




<PAGE>


5. LIBOR Period.  As used herein,  "LIBOR Period" means, with respect to a LIBOR
Option Advance:

1.                         initially,  the period commencing on, as the case may
                           be, the date the Advance is made or the date on which
                           the Advance is converted  to a LIBOR Option  Advance,
                           and  continuing  for, in every case,  a period of 30,
                           60,  90,  120 or 180 days  thereafter  so long as the
                           LIBOR  Option  is  quoted  for  such  period  in  the
                           applicable  interbank LIBOR market, as such period is
                           selected  by  Borrower  in the  notice of  Advance as
                           provided  in the Note or in the notice of  conversion
                           as provided in this Addendum; and

2.                         thereafter, each period commencing on the last day of
                           the next  preceding  LIBOR Period  applicable to such
                           LIBOR  Option  Advance and  continuing  for, in every
                           case,  a  period  of 30,  60,  90,  120  or 180  days
                           thereafter  so long as the LIBOR Option is quoted for
                           such period in the applicable interbank LIBOR market,
                           as such  period is selected by Borrower in the notice
                           of continuation as provided in this Addendum.

6.       Note.  As used herein, "Note" means the Loan & Security Agreement
          of even date herewith.

7.                Regulation D. As used herein,  "Regulation D" means Regulation
                  D of the Board of Governors of the Federal  Reserve  System as
                  amended or supplemented from time to time.

8.                Regulatory   Development.    As   used   herein,   "Regulatory
                  Development" means any or all of the following: (i) any change
                  in any law, regulation or interpretation thereof by any public
                  authority  (whether or not having the force of law);  (ii) the
                  application   of  any   existing   law,   regulation   or  the
                  interpretation thereof by any public authority (whether or not
                  having the force of law);  and (iii)  compliance  by Bank with
                  any request or  directive  (whether or not having the force of
                  law) of any public authority.

Interest Rate Options.  Borrower shall have the following options regarding the
 interest rate to be paid by Borrower on Advances under the Note:

1.                A rate  equal to two and one  quarter  percent  (2.25%)  above
                  Bank's LIBOR,  (the "LIBOR Option"),  which LIBOR Option shall
                  be in effect during the relevant LIBOR Period; or

2.                A rate equal to one  quarter of one percent  (.25%)  above the
                  "Base  Rate" as defined  in the Note and  quoted  from time to
                  time by Bank as such  rate may  change  from time to time (the
                  "Base Rate Option").




<PAGE>


LIBOR    Option Advance.  The minimum LIBOR Option Advance will not be less than
         Five Hundred Thousand Dollars ($500,000) for any LIBOR Option Advance.

Payment  of Interest on LIBOR  Option  Advances.  Interest on each LIBOR  Option
         Advance shall be payable pursuant to the terms of the Note. Interest on
         such LIBOR Option  Advance  shall be computed on the basis of a 360-day
         year and shall be assessed  for the actual  number of days elapsed from
         the first day of the LIBOR Period applicable  thereto but not including
         the last day thereof.

Bank's   Records Re:  LIBOR Option  Advances.  With respect to each LIBOR Option
         Advance,  Bank is hereby authorized to note the date, principal amount,
         interest rate and LIBOR Period applicable thereto and any payments made
         thereon on Bank's books and records  (either  manually or by electronic
         entry)  and/or on any schedule  attached to the Note,  which  notations
         shall be prima facie evidence of the accuracy of the information noted.

Selection/Conversion  of  Interest  Rate  Options.  At the time any  Advance  is
         requested  under the Note  and/or  Borrower  wishes to select the LIBOR
         Option for all or a portion of the outstanding principal balance of the
         Note,  and at the end of each LIBOR  Period,  Borrower  shall give Bank
         notice  specifying  (a) the interest rate option  selected by Borrower;
         (b) the principal amount subject  thereto;  and (c) if the LIBOR Option
         is selected, the length of the applicable LIBOR Period. Any such notice
         may be given by telephone so long as, with respect to each LIBOR Option
         selected by  Borrower,  (i) Bank  receives  written  confirmation  from
         Borrower  not later  than  three (3) LIBOR  Business  Days  after  such
         telephone  notice is given; and (ii) such notice is given to Bank prior
         to 10:00 a.m.,  California  time, on the first day of the LIBOR Period.
         For  each  LIBOR  Option  requested  hereunder,  Bank  will  quote  the
         applicable  fixed LIBOR Rate to Borrower at  approximately  10:00 a.m.,
         California time, on the first day of the LIBOR Period. If Borrower does
         not  immediately  accept  the  rate  quoted  by  Bank,  any  subsequent
         acceptance  by Borrower  shall be subject to a  redetermination  of the
         rate by Bank; provided,  however,  that if Borrower fails to accept any
         such quotation given,  then the quoted rate shall expire and Bank shall
         have no obligation to permit a LIBOR Option to be selected on such day.
         If no specific  designation of interest is made at the time any Advance
         is requested under the Note or at the end of any LIBOR Period, Borrower
         shall be deemed to have  selected the Base Rate Option for such Advance
         or the principal amount to which such LIBOR Period applied. At any time
         the  LIBOR  Option  is in  effect,  Borrower  may,  at  the  end of the
         applicable LIBOR Period,  convert to the Base Rate Option.  At any time
         the Base Rate  Option is in effect,  Borrower  may convert to the LIBOR
         Option, and shall designate a LIBOR Period.




<PAGE>


Default  Interest  Rate.  From and after the maturity  date of the Note, or such
         earlier date as all principal owing  hereunder  becomes due and payable
         by acceleration or otherwise,  the outstanding principal balance of the
         Note shall bear  interest  until paid in full at an increased  rate per
         annum  (computed on the basis of a 360-day  year,  actual days elapsed)
         equal to three percent  (3.00%) above the rate of interest from time to
         time applicable to the Note.

Prepayment. Bank is not under any  obligation  to accept any  prepayment  of any
         LIBOR Option  Advance  except as described  below or as required  under
         applicable  law.  Borrower may prepay a Base Rate Option Advance at any
         time, without paying any Prepayment Amount, as defined below.  Borrower
         may  prepay an LIBOR  Option  Advance  in  increments  of Five  Hundred
         Dollars  ($500.00) prior to the end of the LIBOR Period, as long as (i)
         Bank is provided  written  notice of such  prepayment at least five (5)
         LIBOR Business Days prior to the date thereof (the "Prepayment  Date");
         and (ii) Borrower pays the Prepayment  Amount. The notice of prepayment
         shall contain the following  information:  (a) the Prepayment Date; and
         (b) the LIBOR Option  Advance which will be prepaid.  On the Prepayment
         Date,  Borrower shall pay to Bank, in addition to any other amount that
         may then be due on the Note, the Prepayment  Amount.  Bank, in its sole
         discretion, may accept any prepayment of a LIBOR Option Advance even if
         not  required to do so under the Note and may deduct from the amount to
         be applied against the LIBOR Option Advance any other amounts  required
         to be paid as part of the Prepayment Amount.

                  The  Prepaid  Principal  Amount  (as  defined  below)  will be
         applied  to the  LIBOR  Option  Advance  being  prepaid  as Bank  shall
         determine in its sole discretion.

                  If Bank  exercises its right to accelerate  the payment of the
         Note prior to maturity  based upon an Event of Default  under the Note,
         Borrower  shall pay to Bank,  in addition to any other amounts that may
         then  be  due  on the  Note,  on the  date  specified  by  Bank  as the
         Prepayment Date, the Prepayment Amount.

                  Bank's   determination  of  the  Prepayment  Amount  shall  be
         conclusive  in the absence of obvious  error or fraud.  If requested in
         writing by Borrower,  Bank shall provide  Borrower a written  statement
         specifying the Prepayment Amount.

                  The  following  (the  "Prepayment  Amount")  shall  be due and
payable in full on the Prepayment Date:




<PAGE>


1.   If the principal  amount of the LIBOR Option Advance being prepaid  exceeds
     Seven Hundred Fifty Thousand Dollars ($750,000), then the Prepayment Amount
     is the sum of: (i) the amount of the principal  balance of the LIBOR Option
     Advance which Borrower has elected to prepay or the amount of the principal
     balance of the LIBOR Option  Advance  which Bank has  required  Borrower to
     prepay because of acceleration,  as the case may be (the "Prepaid Principal
     Amount"); (ii) interest accruing on the Prepaid Principal Amount up to, but
     not including,  the Prepayment Date; (iii) Five Hundred Dollars  ($500.00);
     plus (iv) the  present  value,  discounted  at the  Reinvestment  Rates (as
     defined below) of the positive  amount by which (A) the interest Bank would
     have earned had the Prepaid Principal Amount not been paid prior to the end
     of the LIBOR  Period at the Note's  interest  rate exceeds (B) the interest
     Bank  would  earn  by  reinvesting  the  Prepaid  Principal  Amount  at the
     Reinvestment Rates.

2.   If the principal  amount of the LIBOR Option Advance being prepaid is Seven
     Hundred Fifty  Thousand  Dollars  ($750,000) or less,  then the  Prepayment
     Amount is the sum of: (i) the principal  amount of the LIBOR Option Advance
     which  Borrower has elected to prepay or the principal  amount of the LIBOR
     Option  Advance  which  Bank has  required  Borrower  to prepay  because of
     acceleration  due to an Event of Default under the Note, as the case may be
     (the "Prepaid  Principal  Amount");  (ii) interest  accruing on the Prepaid
     Principal Amount up to, but not including,  the Prepayment Date; plus (iii)
     an amount equal to two percent (2%) of the Prepaid Principal Amount.

                  "Reinvestment  Rates"  mean the per  annum  rates of  interest
         equal to one half percent (1/2%) above the rates of interest reasonably
         determined  by Bank to be in effect  not more than seven (7) days prior
         to the  Prepayment  Date in the  secondary  market  for  United  States
         Treasury   Obligations  in  amount(s)  and  with  maturity(ies)   which
         correspond  (as closely as possible) to the LIBOR Option  Advance being
         prepaid.

                  BY  INITIALING  BELOW,  BORROWER  ACKNOWLEDGE(S)  AND AGREE(S)
         THAT:  (A) THERE IS NO RIGHT TO PREPAY  ANY LIBOR  OPTION  ADVANCE , IN
         WHOLE OR IN PART,  WITHOUT  PAYING  THE  PREPAYMENT  AMOUNT,  EXCEPT AS
         OTHERWISE  REQUIRED UNDER  APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE
         FOR PAYMENT OF THE  PREPAYMENT  AMOUNT IF BANK  EXERCISES  ITS RIGHT TO
         ACCELERATE  PAYMENT OF ANY LIBOR  OPTION  ADVANCE AS PART OR ALL OF THE
         OBLIGATIONS  OWING  UNDER  THE  NOTE,   INCLUDING  WITHOUT  LIMITATION,
         ACCELERATION  UNDER A DUE-ON-SALE  PROVISION;  (C) BORROWER  WAIVES ANY
         RIGHTS UNDER SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH LIBOR OPTION
         ADVANCE PURSUANT TO THE NOTE IN RELIANCE ON THESE AGREEMENTS.

- ------------------
BORROWER'S INITIALS





<PAGE>


Hold     Harmless and Indemnification.  Borrower agrees to indemnify Bank and to
         hold Bank  harmless  from,  and to  reimburse  Bank on demand for,  all
         losses and  expenses  which Bank  sustains or incurs as a result of (i)
         any  payment  of a LIBOR  Option  Advance  prior to the last day of the
         applicable LIBOR Period for any reason, including,  without limitation,
         termination  of the Note,  whether  pursuant  to this  Addendum  or the
         occurrence  of an Event of  Default;  (ii) any  termination  of a LIBOR
         Period prior to the date it would otherwise end in accordance with this
         Addendum;  or (iii) any failure by Borrower,  for any reason, to borrow
         any portion of a LIBOR Option Advance.

Funding  Losses. The  indemnification  and hold harmless provisions set forth in
         this  Addendum  shall  include,  without  limitation,  all  losses  and
         expenses  arising  from  interest and fees that Bank pays to lenders of
         funds it obtains in order to fund the loans to Borrower on the basis of
         the  LIBOR   Option(s)  and  all  losses  incurred  in  liquidating  or
         re-deploying  deposits  from which such funds were obtained and loss of
         profit for the period after termination. A written statement by Bank to
         Borrower of such losses and expenses  shall be conclusive  and binding,
         absent manifest error, for all purposes.  This obligation shall survive
         the termination of this Addendum and the payment of the Note.

Regulatory  Developments  Or  Other  Circumstances  Relating  To  Illegality  or
         Impracticality  of  LIBOR.  If  any  Regulatory  Development  or  other
         circumstances  relating to the interbank  Euro-dollar markets shall, at
         any time,  in Bank's  reasonable  determination  , make it  unlawful or
         impractical for Bank to fund or maintain,  during any LIBOR Period,  to
         determine or charge  interest  rates based upon LIBOR,  Bank shall give
         notice of such circumstances to Borrower and:

         a.       In the case of a LIBOR Period in progress,  Borrower shall, if
                  requested by Bank, promptly pay any interest which had accrued
                  prior to such  request and the date of such  request  shall be
                  deemed to be the last day of the term of the LIBOR Period; and

         b. No LIBOR Period may be designated  thereafter  until Bank determines
that such would be practical.




<PAGE>


Additional Costs.  Borrower  shall pay to Bank from  time to time,  upon  Bank's
         request,  such amounts as Bank determines are needed to compensate Bank
         for any costs it incurred which are attributable to Bank having made or
         maintained a LIBOR  Option  Advance or to Bank's  obligation  to make a
         LIBOR Option Advance, or any reduction in any amount receivable by Bank
         hereunder  with  respect to any LIBOR Option or such  obligation  (such
         increases in costs and  reductions in amounts  receivable  being herein
         called "Additional Costs"), resulting from any Regulatory Developments,
         which (i) change the basis of taxation  of any amounts  payable to Bank
         hereunder  with  respect to  taxation  of any  amounts  payable to Bank
         hereunder  with respect to any LIBOR Option  Advance  (other than taxes
         imposed on the overall net income of Bank for any LIBOR Option  Advance
         by the  jurisdiction  where Bank is  headquartered  or the jurisdiction
         where Bank extends the LIBOR Option Advance;  (ii) impose or modify any
         reserve,  special  deposit,  or similar  requirements  relating  to any
         extensions  of credit or other assets of, or any deposits with or other
         liabilities  of,  Bank  (including  any  LIBOR  Option  Advance  or any
         deposits  referred to in the definition of LIBOR);  or (iii) impose any
         other  condition  affecting  this Addendum (or any of such extension of
         credit  or  liabilities).  Bank  shall  notify  Borrower  of any  event
         occurring  after the date hereof which  entitles  Bank to  compensation
         pursuant to this paragraph as promptly as practicable  after it obtains
         knowledge   thereof  and  determines  to  request  such   compensation.
         Determinations  by Bank  for  purposes  of  this  paragraph,  shall  be
         conclusive,  provided that such determinations are made on a reasonable
         basis.

          Legal Effect. Except as specifically modified hereby, all of the terms
     and conditions of the Note remain in full force and effect.

         IN WITNESS WHEREOF,  the parties have agreed to the foregoing as of the
date first set forth above.

HANSEN BEVERAGE COMPANY             COMERICA BANK-CALIFORNIA


By:______________________________           By:________________________________

Title:____________________________          Title:______________________________

By:______________________________

Title:____________________________

C:\WPDOCS\KOHDOC\7351.



                                 INVENTORY RIDER
                                       TO
                  REVOLVING CREDIT LOAN AND SECURITY AGREEMENT


         This  Inventory  Rider dated  December 1, 1998,  by and between  Hansen
Beverage Company ("Borrower") and Comerica Bank-California ("Bank").

                                                  R E C I T A L S:

         A.  Borrower and Bank  entered into a Revolving  Credit Loan & Security
Agreement (Accounts and Inventory) ("Agreement") dated May 15, 1997, as amended.

         B.  Borrower  executed an Inventory  Rider dated May 15, 1997 which was
incorporated by reference in the Agreement ("Prior Inventory Rider").

          C. Borrower and Bank desire to amend the Prior  Inventory Rider in its
     entirety.

         The  parties  agree  that the prior  Inventory  Rider is amended in its
entirety to read as follows:

         1. At the request of  Borrower,  made at any time and from time to time
during the term of the  Agreement,  and so long as no Event of Default under the
Agreement has occurred and Borrower is in full,  faithful and timely  compliance
with each and all of the covenants,  conditions,  warranties and representations
contained in the Agreement,  this Rider and/or any other agreement  between Bank
and Borrower, Bank agrees to lend Borrower fifty five percent (55%) of the lower
of cost or market value of  Borrower's  finished  goods  Inventory and Inventory
consisting  of apple juice  concentrate  ("Eligible  Inventory"),  and as may be
adjusted by Bank, in Bank's discretion, for age and seasonality or other factors
affecting the value of the Inventory, up to a maximum advance outstanding at any
one time of One  Million,  Five  Hundred  Thousand  Dollars  ($1,500,000),  upon
Borrower's  concurrent  execution  and  delivery  to  Bank of a  Designation  of
Eligible Inventory, or Certification of Borrowing Base, in form customarily used
by Bank; provided,  however,  that for a period of sixty consecutive days during
each calendar year,  which period shall commence no later than October 1 of each
such  year,  such  Inventory  Borrowing  Base  shall be  reduced to zero and the
Borrower shall be required,  immediately  upon the  commencement  of such period
shall to pay down and maintain at zero the amount of the Credit  attributable to
the Inventory  Borrowing Base. All advances made and to be made pursuant to this
Rider are solely and exclusively for working capital purposes including enabling
Borrower  to  acquire  rights  in  and  purchase  new  Inventory,  and  Borrower
represents and warrants that all advances by Bank pursuant to this Rider will be
used solely and  exclusively  for such purpose;  and since such advances will be
used  for  the  foregoing  purposes,  Bank's  security  interest  in  Borrower's
Inventory  is and shall be at all times a purchase  money  security  interest as
that term is  described  in Section 9107 of the  California  Uniform  Commercial
Code.




<PAGE>



                                                         2

         2.  Advances  made by Bank to Borrower  pursuant to this Rider shall be
included  as  part  of  the   Obligations  of  Borrower  to  Bank  as  the  term
"Obligations"  is  defined  in the  Agreement;  and at Bank's  option,  advances
pursuant to this Rider may be evidenced by  promissory  note(s),  in form and on
terms  satisfactory  to Bank.  all such advances shall bear interest at the rate
and be payable in the manner  specified in said promissory  note(s) in the event
Bank exercises the  aforementioned  option, and in the event Bank does not, such
advances shall bear interest at the rate and be payable in the manner  specified
in the Agreement.

         3. All of the terms, covenants, warranties,  conditions, agreements and
representations of the Agreement are incorporated  herein as though set forth in
their  entirety and are hereby  reaffirmed  by Borrower and Bank as though fully
set forth here at.


                                                     HANSEN BEVERAGE COMPANY


                                                     By:________________________
                                                     Its:_______________________


                                                     By:________________________
                                                     Its:_______________________


                                                     COMERICA BANK- CALIFORNIA


                                                     By:________________________

                                                     Its:_______________________






                              EMPLOYMENT AGREEMENT


                AGREEMENT  dated as of January 1, 1999,  by and  between  HANSEN
NATURAL CORPORATION,  a Delaware corporation (the "Corporation"),  and RODNEY C.
SACKS (the "Executive").

                IN  CONSIDERATION  OF the premises and mutual  covenants  herein
contained,  and other good and valuable  consideration,  the Corporation and the
Executive agree as follows:

                1.  Employment.  The Corporation  shall employ the Executive and
the  Executive  agrees  to serve as an  executive  of the  Corporation,  in such
capacities and upon such conditions as are hereinafter set forth.



<PAGE>



                2.       Definitions.

                (a) "Cause" shall mean (i) an act or acts of dishonesty or gross
misconduct  on the  Executive's  part which  result or are intended to result in
material  damage to the  Corporation's  business or  reputation or (ii) repeated
material  violations by the Executive of his obligations under Section 4 of this
Agreement  which  violations  are  demonstrably  willful and  deliberate  on the
Executive's  part and which  result  in  material  damage  to the  Corporation's
business  or  reputation  and as to  which  material  violations  the  Board  of
Directors of the Corporation has notified the Executive in writing.

                (b)      "Constructive Termination" shall mean:

                      (i) without the written
 consent of the Executive,  (A) the
                assignment  to the Executive of any duties  inconsistent  in any
                substantial respect with the Executive's position,  authority or
                responsibilities as contemplated by Section 4 of this Agreement,
                or (B) any other  substantial  adverse  change in such position,
                including titles, authority or responsibilities;

                     (ii) any failure by the  Corporation  to comply with any of
                the provisions of this Agreement, other than an insubstantial or
                inadvertent  failure remedied by the Corporation  promptly after
                receipt of notice thereof given by the Executive;

                    (iii) the Corporation's  requiring the Executive without his
                consent to be based at any office or location  outside of Orange
                County,  California except for travel reasonably required in the
                performance of the Executive's responsibilities; or

                     (iv)  any  failure  by  the   Corporation   to  obtain  the
                assumption   and  agreement  to  perform  this  Agreement  by  a
                successor as  contemplated  by Section 12(b),  provided that the
                successor has had actual written notice of the existence of this
                Agreement  and  its  terms  and an  opportunity  to  assume  the
                Corporation's  responsibilities  under this  Agreement  during a
                period of 10 business days after receipt of such notice.

                3.  Employment  Period.  The  "Employment  Period"  shall be the
period commencing  January 1, 1999, and ending on December 31, 2003,  subject to
extension or termination as hereinafter  provided.  On December 31, 2003, and on
each  December 31  thereafter,  the  Employment  Period  shall be  automatically
extended by one additional year unless prior to June 30, 2003, or any subsequent
June 30, the  Corporation  shall deliver to the Executive or the Executive shall
deliver to the Corporation written notice that the Employment Period will not be
extended (a "Non-Renewal  Notice"), in which case the Employment Period will end
at its then scheduled  expiration date and shall not be further  extended except
by written agreement of the Corporation and the Executive.

                4.       Position and Duties.

                (a) No Reduction in Position.  During the Employment Period, the
Executive's   position  (including  titles),   authority  and   responsibilities
(including, without limitation, reporting authority and responsibility) shall be
at least  commensurate  with the  position of Chairman of the Board of Directors
and CEO. It is understood  that, for purposes of this Agreement,  such position,
authority and responsibilities  shall not be regarded as not commensurate merely
by virtue of the fact that a successor shall have acquired all or  substantially
all of the business  and/or assets of the Corporation as contemplated by Section
12(b) of this  Agreement,  provided that the Executive  shall continue to have a
position and authority and  responsibilities  with respect to such  successor or
affiliated  company  substantially  corresponding  to that of the Executive with
respect to the Corporation prior to such acquisition. As used in this Agreement,
the term "affiliated company" means any company  controlling,  controlled by, or
under common control with the  Corporation.  During the Employment  Period,  the
Executive also agrees to serve without  additional  compensation  as Chairman of
the Board of Directors of Hansen Beverage  Company  ("HBC"),  the  Corporation's
wholly-owned subsidiary.

                (b) Business Time. During the Employment  Period,  the Executive
agrees to devote his full  business  time during  normal  business  hours to the
business and affairs of the  Corporation  and to use his best efforts to perform
faithfully and efficiently the  responsibilities  assigned to him hereunder,  to
the extent necessary to discharge such responsibilities.

                5.       Compensation.

                (a) Base Salary.  During the  Employment  Period,  the Executive
shall receive a base salary (the "Base  Salary"),  payable  bi-weekly or in such
other  installments as may be agreed upon, at an annual rate of $180,000 for the
12-month  period ending December 31, 1999, and increasing by a minimum of 8% for
each subsequent  12-month period during the Employment  Period.  The Corporation
shall  review the Base Salary  annually  and in light of such review may, in the
discretion  of the  Board of  Directors  of the  Corporation  increase  (but not
decrease) the Base Salary by more than the minimum 8% per annum increase  taking
into  account  any  change in the  Executive's  responsibilities,  increases  in
compensation of other executives with comparable  responsibilities,  performance
of the  Executive  and other  pertinent  factors,  and such adjusted Base Salary
shall then constitute the "Base Salary" for purposes of this Agreement.

                (b) Bonus. In addition to the Base Salary,  the Executive may be
granted a bonus ("Bonus"), payable at such times, and in such amounts, as may be
fixed from time to time at the discretion of the Board of Directors.

                (c) Incentive and Savings  Plans;  Retirement and Life Insurance
Programs.  In  addition  to the Base  Salary and Bonus  payable  as  hereinabove
provided,  during the  Employment  Period,  the  Executive  shall be entitled to
participate  in all incentive and savings  plans and programs,  including  stock
option plans and other  equity-based  compensation  plans, and in all retirement
and life  insurance  plans  which  the  Corporation  may from  time to time make
available to the Executive and/or any other executives of the Corporation or any
affiliated company.

                (d) Benefit Plans.  During the Employment Period, the Executive,
his spouse  and their  eligible  dependents  (as  defined  in, and to the extent
permitted  by, the  applicable  plan),  as the case may be, shall be entitled to
participate in or be covered under all medical, dental, disability,  group life,
accidental  death  and  travel  accident  insurance  plans and  programs  of the
Corporation  and its  affiliated  companies  (at the  most  favorable  level  of
participation and providing  highest levels of benefits  available to him) as in
affect (i) on the date hereof or (ii) if more favorable to the Executive,  as in
effect at any time thereafter with respect to the Executive or other  executives
with comparable responsibilities.

                (e)  Club  Memberships.   During  the  Employment   Period,  the
Corporation  shall pay all  initial  and  annual  fees and all other  reasonable
expenses  relating to membership in up to two (2) business or social clubs to be
selected by the Executive in his sole discretion.

                (f) Automobile.  During the Employment  Period,  the Corporation
shall pay all costs and  expenses  relating to the  purchase or lease,  use, and
maintenance  of a  luxury  automobile  to be  dedicated  to the  sole use of the
Executive.

                (g) Expenses.  During the Employment Period, the Executive shall
be  entitled  to  receive  prompt   reimbursement  for  all  reasonable  travel,
entertainment  and other expenses  incurred by the Executive in connection  with
the  performance  of his duties  hereunder in accordance  with such policies and
procedures as the Corporation may from time to time establish.

                (h) Vacation and Fringe Benefits.  During the Employment Period,
the Executive  shall be entitled to paid  vacation  consisting of four (4) weeks
per year to be taken at such times  selected  by the  Executive  and  reasonably
acceptable  to the  Corporation,  such  vacation  to accrue  ratably  during the
Employment  Period;  such other paid holidays as may be accorded to employees of
the  Corporation  as well as up to ten (10)  paid  personal  days per year to be
taken at such times as may be selected by the Executive.

                6.       Termination.

                (a)  Death  or  Disability.   This  Agreement   shall  terminate
automatically  upon the  Executive's  death.  The Corporation may terminate this
Agreement, after having established the Executive's Disability, by giving to the
Executive  written notice of its intention to terminate his employment,  and his
employment with the Corporation shall terminate  effective on the 90th day after
receipt of such  notice if,  within 90 days after such  receipt,  the  Executive
shall fail to return to  full-time  performance  of his duties.  For purposes of
this Agreement,  "Disability" means disability which would entitle the Executive
to receive full long-term disability benefits under the Corporation's  long-term
disability  plan,  or if no such plan shall then be in effect,  any  physical or
mental  disability  or  incapacity  which  renders the  Executive  incapable  of
performing the services required of him in accordance with his obligations under
Section 4 hereof for a period of more than 120 days in the aggregate  during any
12-month period during the Employment Period.

                (b)  Voluntary  Termination.  Notwithstanding  anything  in this
agreement  to the  contrary,  the  Executive  may,  upon not less  than 90 days'
written  notice to the  Corporation,  voluntarily  terminate  employment for any
reason,  provided that any termination by the Executive pursuant to Section 6(d)
on  account of  Constructive  Termination  shall not be  treated as a  voluntary
termination under this Section 6(b).

                (c)  Cause.   The  Corporation  may  terminate  the  Executive's
employment for Cause.

                (d)  Constructive  Termination.  The Executive may terminate his
employment for Constructive Termination.

                (e) Notice of  Termination.  Any  termination by the Company for
Cause or by the Executive for Constructive  Termination shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
13(c). For purposes of this Agreement, a "Notice of Termination" means a written
notice given, in the case of a termination for Cause, within 30 business days of
the  Corporation's  having  actual  knowledge of the events  giving rise to such
termination,  and in the case of a  termination  for  Constructive  Termination,
within 90 days of the Executive's  having actual  knowledge of the events giving
rise to such  termination,  and which (i)  indicates  the  specific  termination
provision in this Agreement  relied upon,  (ii) sets forth in reasonable  detail
the facts and  circumstances  claimed to provide a basis for  termination of the
Executive's  employment  under  the  provision  so  indicated,  and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination  date of this  Agreement  (which date shall be not more than 15 days
after the giving of such  notice).  The failure by the Executive to set forth in
the  Notice of  Termination  any fact or  circumstance  which  contributes  to a
showing of Constructive  Termination  shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or  circumstance in
enforcing his rights hereunder.

                (f) Date of Termination.  For the purpose of this Agreement, the
term "Date of  Termination"  means (i) in the case of a termination  for which a
Notice  of  Termination  is  required,  the date of  receipt  of such  Notice of
Termination  or, if later,  the date specified  therein,  as the case may be and
(ii) in all other  cases,  the actual date on which the  Executive's  employment
terminates during the Employment Period.

                7.  Obligations  of  the  Corporation  upon  Termination.   Upon
termination  of  this  Agreement  the  Corporation   shall  have  the  following
obligations:

                (a) Death.  If the Executive's  employment is terminated  during
the Employment Period by reason of the Executive's  death, the Corporation shall
(i) continue to pay to the  Executive's  legal  representatives  the Executive's
full Base  Salary  for a period of one year from the Date of  Termination,  (ii)
provide the  Executive's  dependents  with the benefits  provided under Sections
5(d) and 5(f) for a period of one year from the Date of  Termination,  (iii) pay
to the Executive's legal representatives any compensation previously deferred by
the Executive and not yet paid by the Corporation  and any accrued  vacation pay
not  yet  paid  by  the  Corporation  and  (iv)  pay to  the  Executive's  legal
representatives   any  other  amounts  or  benefits  owing  to  the  Executive's
beneficiaries  under the then applicable  employee  benefit plans or policies of
the  Corporation   (such  amounts  specified  in  clauses  (iii)  and  (iv)  are
hereinafter referred to as "Accrued Obligations").

                (b) Disability.  If the Executive's  employment is terminated by
reason of the Executive's Disability,  the Corporation shall (i) continue to pay
to the  Executive his full Base Salary for a period of one year from the Date of
Termination,  (ii) provide the  Executive and his  dependents  with the benefits
provided  under Sections 5(d) and 5(f) for a period of one year from the Date of
Termination, and (iii) pay to the Executive the Accrued Obligations.

                (c) Cause and Voluntary  Termination.  If, during the Employment
Period, the Executive's  employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Constructive Termination),
the  Corporation  shall pay the  Executive all Base Salary and benefits to which
the Executive is entitled  pursuant to Section 5 through the Date of Termination
and the Accrued  Obligations.  Unless otherwise  directed by the Executive,  the
Executive  shall  be paid  all such  Accrued  Obligations  in a lump sum in cash
within 30 days of the Date of  Termination  and the  Corporation  shall  have no
further obligations to the Executive under this Agreement.

                (d)   Termination  by  Corporation   other  than  for  Cause  or
Disability and Termination by the Executive for  Constructive  Termination.  If,
during the Employment  Period,  the  Corporation  gives a Non-Renewal  Notice or
terminates the Executive's employment other than for Cause or Disability, or the
Executive   terminates  his  employment  for   Constructive   Termination,   the
Corporation shall pay or provide to the Executive the following:

                      (i) Cash Payment.  First, the Corporation shall pay to the
                Executive in a lump sum in cash within 15 days after the Date of
                Termination the aggregate of the following amounts:

                                  (A) if not  theretofore  paid, the Executive's
                Base Salary through the date of Termination  (plus,  in the case
                of termination  without Cause,  two weeks of Base Salary in lieu
                of notice) at the rate in effect on the Date of Termination;

                                  (B)      a cash amount equal to any amounts
                described in Section 7(a)(iv); and

                                  (C) the present value of the Executive's  Base
                Salary for the period through  December 31, 2003, or through the
                date  which is  twelve  months  from  the  Date of  Termination,
                whichever period is longer, at the rate in effect on the Date of
                Termination, discounted at the interest rate payable on one year
                Treasury  Bills in  effect on the day that is 30  business  days
                prior to the Date of  Termination,  as if paid  monthly from the
                Date of Termination in arrears.

                     (ii) Benefits Continuation. Second, for the period from the
                Date of  Termination  to December 31, 2003,  or through the date
                which is twelve months from the Date of  Termination,  whichever
                period  is  longer,   the  Corporation  shall  provide  for  the
                participation  of the  Executive,  his spouse and their eligible
                dependents (as defined in the applicable  plan), as the case may
                be, in the plans  described in Section 5(d) on the same terms as
                described in Section 5(d), and for the automobile provided under
                Section 5(f). All rights under this Section 7(d)(ii) shall cease
                immediately upon the Executive's violation of Section 11(b).

                    (iii) Deferred Payment. Third, the Corporation shall pay the
                Executive any amounts  payable  under  Section  7(a)(iii) on the
                terms and conditions of the applicable plan or policy.

                     (iv) Discharge of Corporation's Obligations. Subject to the
                performance  of its  obligations  under this Section  7(d),  the
                Corporation  shall have no further  obligations to the Executive
                under  this  Agreement  in  respect  of any  termination  by the
                Executive for  Constructive  Termination  or by the  Corporation
                other  than  for  Cause  or  Disability,  except  to the  extent
                expressly  provided  under Sections 10 or 12 hereof or under any
                of the plans referred to in Sections 5(c) or 5(d) hereof.

                8.  Non-exclusivity  of Rights.  Nothing in this Agreement shall
prevent  or limit the  Executive's  continuing  or future  participation  in any
benefit,  bonus,  incentive or other plan or program provided by the Corporation
or any of its affiliated  companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise  prejudice such rights as the Executive
may  have  under  any  other  agreements  with  the  Corporation  or  any of its
affiliated companies,  including, but not limited to, stock option or restricted
stock  agreements.  Amounts which are vested  benefits or which the Executive is
otherwise  entitled to receive under any plan or program of the  Corporation  or
any of its  affiliated  companies at or  subsequent  to the Date of  Termination
shall be payable in accordance with such plan or program.

                9. Full Settlement.  Except as provided in Sections 7(d)(ii) and
11(b), the  Corporation's  obligation to make the payments  provided for in this
Agreement  and  otherwise  to perform  its  obligations  hereunder  shall not be
affected by any  circumstances,  including,  without  limitation,  any  set-off,
counterclaim,  recoupment, defense or other right which the Corporation may have
against the Executive or others whether by reason of the  subsequent  employment
of the Executive or  otherwise.  In no event shall the Executive be obligated to
seek  other  employment  by way of  mitigation  of the  amounts  payable  to the
Executive under any of the provisions of this  Agreement.  In the event that the
Executive  shall in good faith  give a Notice of  Termination  for  Constructive
Termination and it shall thereafter be determined that Constructive  Termination
did  not  take  place,  the  employment  of  the  Executive  shall,  unless  the
Corporation and the Executive shall otherwise  mutually agree, be deemed to have
terminated,  at the date of giving  such  purported  Notice of  Termination,  by
mutual consent of the  Corporation  and the Executive and, except as provided in
the last  preceding  sentence,  the Executive  shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he  terminated  his  employment  voluntarily  at such date  under  this
Agreement.

                10.  Legal  Fees  and  Expenses.  In the  event  that a claim or
payment or benefits under this Agreement is disputed,  the Corporation shall pay
all reasonable  attorney fees and expenses incurred by the Executive in pursuing
such claim,  provided  that  Executive is  successful as to at least part of the
disputed  claim by reason of  arbitration  (as set  forth in  Section  13(g)) or
settlement.

                11.      Special Obligations of the Executive.

                (a)  Confidential  Information.  The  Executive  shall hold in a
fiduciary capacity for the benefit of the Corporation all secret or confidential
information,  knowledge  or  data  relating  to  the  Corporation  or any of its
affiliated  companies,  and their  respective  businesses,  (i)  obtained by the
Executive  during his  employment by the  Corporation  or any of its  affiliated
companies and (ii) not otherwise  public  knowledge  (other than by reason of an
unauthorized  act by  the  Executive).  After  termination  of  the  Executive's
employment  with the  Corporation,  the  Executive  shall not  without the prior
written consent of the Corporation,  unless compelled  pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or divulge
any such information, knowledge or data to anyone other than the Corporation and
those  designated  by  it.  In no  event  shall  an  asserted  violation  of the
provisions of this Section 11(a) constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                (b)  Noncompetition.  In order for the Corporation to reasonably
protect  its  interests   against  the  competitive  use  of  any   confidential
information,   knowledge  or  relationships   concerning  the  business  of  the
Corporation  and its  affiliated  companies  to which the  Executive  has access
because of the special nature of his employment,  the Executive shall not during
the  Employment  Period and for a period of six months  thereafter,  directly or
indirectly,  by ownership of  securities  or  otherwise,  engage in any business
organization  whose activities are competitive in any state of the United States
or in any foreign country with  activities in which the  Corporation  and/or its
affiliated  companies are engaged in such state or country, or become associated
with or render services to any person,  business or enterprise so engaged.  Mere
ownership as an investor of not more than 5% of the  securities of a corporation
or other  business  enterprise  shall  not be deemed  an  association  with such
corporation or enterprise.

                12.      Successors.

                (a) This Agreement is personal to the Executive and, without the
prior  written  consent  of the  Corporation,  shall  not be  assignable  by the
Executive  otherwise than by will or the laws of descent and distribution.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
legal representatives.

                (b) This Agreement  shall inure to the benefit of and be binding
upon the  Corporation  and its  successors.  The  Corporation  shall require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Corporation,  whether direct or indirect,  by purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
satisfactory  to the  Executive,  expressly  to assume and agree to perform this
Agreement in the same manner and to the same extent as the Corporation  would be
required to perform if no such succession had taken place.  For purposes of this
Section 12(b), the term "Corporation" shall include the Corporation and HBC.

                13.      Miscellaneous.

                (a)  Applicable  Law.  This  Agreement  shall be governed by and
construed  in  accordance  with the laws of the  State  of  California,  applied
without reference to principles of conflict of laws.

                (b)  Amendments.  This  Agreement may not be amended or modified
otherwise  than by a written  agreement  executed by the parties hereto or their
respective successors and legal representatives.

                (c)  Notices.  All  notices and other  communications  hereunder
shall be in writing and shall be given by hand-delivery to the other party or by
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed as follows:


                If to the Executive        14 Vienne
                                           Irvine, California  92606


                If to the Corporation:     Hansen Natural Corporation
                                           2380 Railroad Street
                                           Corona, CA  91720
                                           Attention:  Board of Directors


or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

                (d) Tax  Withholding.  The  Corporation  may  withhold  from any
amounts payable under this Agreement such federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

                (e)  Severability.  The  invalidity or  unenforceability  of any
provision of this Agreement shall not affect the validity or  enforceability  of
any other provision of this Agreement.

                (f) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

                (g)  Arbitration.  Except  with  respect  to the  rights  of the
Corporation  to apply to a court of law or equity  for  equitable  relief in the
event of the breach by the  Executive of any of the  provisions of Section 11 of
this  Agreement,  any  controversy  or claim  arising out of or relating to this
Agreement or its termination  shall be settled by arbitration in accordance with
the rules of the American Arbitration  Association,  and judgment upon the award
rendered by the  arbitrator(s)  may be entered in any court having  jurisdiction
thereof. Any such arbitration shall take place in Los Angeles,  California or at
such other location as may be agreed by the parties.



<PAGE>



                IN WITNESS WHEREOF,  the Executive has hereunto set his hand and
the  Corporation  has caused  this  Agreement  to be executed in its name on its
behalf, all as of the day and year first above written.



                                                      HANSEN NATURAL CORPORATION



                                                            By:
                                                            Title:  President


                                                            EXECUTIVE:




                                                            Rodney C. Sacks




                              EMPLOYMENT AGREEMENT


                AGREEMENT  dated as of January 1, 1999,  by and  between  HANSEN
NATURAL CORPORATION,  a Delaware corporation (the "Corporation"),  and HILTON H.
SCHLOSBERG (the "Executive").

                IN  CONSIDERATION  OF the premises and mutual  covenants  herein
contained,  and other good and valuable  consideration,  the Corporation and the
Executive agree as follows:

                1.  Employment.  The Corporation  shall employ the Executive and
the  Executive  agrees  to serve as an  executive  of the  Corporation,  in such
capacities and upon such conditions as are hereinafter set forth.



<PAGE>



                2.       Definitions.

                (a) "Cause" shall mean (i) an act or acts of dishonesty or gross
misconduct  on the  Executive's  part which  result or are intended to result in
material  damage to the  Corporation's  business or  reputation or (ii) repeated
material  violations by the Executive of his obligations under Section 4 of this
Agreement  which  violations  are  demonstrably  willful and  deliberate  on the
Executive's  part and which  result  in  material  damage  to the  Corporation's
business  or  reputation  and as to  which  material  violations  the  Board  of
Directors of the Corporation has notified the Executive in writing.

                (b)      "Constructive Termination" shall mean:

                      (i) without the written
 consent of the Executive,  (A) the
                assignment  to the Executive of any duties  inconsistent  in any
                substantial respect with the Executive's position,  authority or
                responsibilities as contemplated by Section 4 of this Agreement,
                or (B) any other  substantial  adverse  change in such position,
                including titles, authority or responsibilities;

                     (ii) any failure by the  Corporation  to comply with any of
                the provisions of this Agreement, other than an insubstantial or
                inadvertent  failure remedied by the Corporation  promptly after
                receipt of notice thereof given by the Executive;

                    (iii) the Corporation's  requiring the Executive without his
                consent to be based at any office or location  outside of Orange
                County,  California except for travel reasonably required in the
                performance of the Executive's responsibilities; or

                     (iv)  any  failure  by  the   Corporation   to  obtain  the
                assumption   and  agreement  to  perform  this  Agreement  by  a
                successor as  contemplated  by Section 12(b),  provided that the
                successor has had actual written notice of the existence of this
                Agreement  and  its  terms  and an  opportunity  to  assume  the
                Corporation's  responsibilities  under this  Agreement  during a
                period of 10 business days after receipt of such notice.

                3.  Employment  Period.  The  "Employment  Period"  shall be the
period commencing  January 1, 1999, and ending on December 31, 2003,  subject to
extension or termination as hereinafter  provided.  On December 31, 2003, and on
each  December 31  thereafter,  the  Employment  Period  shall be  automatically
extended by one additional year unless prior to June 30, 2003, or any subsequent
June 30, the  Corporation  shall deliver to the Executive or the Executive shall
deliver to the Corporation written notice that the Employment Period will not be
extended (a "Non-Renewal  Notice"), in which case the Employment Period will end
at its then scheduled  expiration date and shall not be further  extended except
by written agreement of the Corporation and the Executive.

                4.       Position and Duties.

                (a) No Reduction in Position.  During the Employment Period, the
Executive's   position  (including  titles),   authority  and   responsibilities
(including, without limitation, reporting authority and responsibility) shall be
at least  commensurate  with the position of President and COO. It is understood
that,   for  purposes  of  this   Agreement,   such   position,   authority  and
responsibilities  shall not be regarded as not commensurate  merely by virtue of
the fact that a successor  shall have acquired all or  substantially  all of the
business  and/or assets of the  Corporation as  contemplated by Section 12(b) of
this  Agreement,  provided that the Executive  shall continue to have a position
and authority and responsibilities  with respect to such successor or affiliated
company substantially corresponding to that of the Executive with respect to the
Corporation  prior  to such  acquisition.  As used in this  Agreement,  the term
"affiliated  company"  means any company  controlling,  controlled  by, or under
common control with the Corporation. During the Employment Period, the Executive
also agrees to serve  without  additional  compensation  as  President of Hansen
Beverage Company ("HBC"), the Corporation's wholly-owned subsidiary.

                (b) Business Time. During the Employment  Period,  the Executive
agrees to devote his full  business  time during  normal  business  hours to the
business and affairs of the  Corporation  and to use his best efforts to perform
faithfully and efficiently the  responsibilities  assigned to him hereunder,  to
the extent necessary to discharge such responsibilities.

                5.       Compensation.

                (a) Base Salary.  During the  Employment  Period,  the Executive
shall receive a base salary (the "Base  Salary"),  payable  bi-weekly or in such
other  installments as may be agreed upon, at an annual rate of $180,000 for the
12-month  period ending December 31, 1999, and increasing by a minimum of 8% for
each subsequent  12-month period during the Employment  Period.  The Corporation
shall  review the Base Salary  annually  and in light of such review may, in the
discretion  of the  Board of  Directors  of the  Corporation  increase  (but not
decrease) the Base Salary by more than the minimum 8% per annum increase  taking
into  account  any  change in the  Executive's  responsibilities,  increases  in
compensation of other executives with comparable  responsibilities,  performance
of the  Executive  and other  pertinent  factors,  and such adjusted Base Salary
shall then constitute the "Base Salary" for purposes of this Agreement.

                (b) Bonus. In addition to the Base Salary,  the Executive may be
granted a bonus ("Bonus"), payable at such times, and in such amounts, as may be
fixed from time to time at the discretion of the Board of Directors.

                (c) Incentive and Savings  Plans;  Retirement and Life Insurance
Programs.  In  addition  to the Base  Salary and Bonus  payable  as  hereinabove
provided,  during the  Employment  Period,  the  Executive  shall be entitled to
participate  in all incentive and savings  plans and programs,  including  stock
option plans and other  equity-based  compensation  plans, and in all retirement
and life  insurance  plans  which  the  Corporation  may from  time to time make
available to the Executive and/or any other executives of the Corporation or any
affiliated company.

                (d) Benefit Plans.  During the Employment Period, the Executive,
his spouse  and their  eligible  dependents  (as  defined  in, and to the extent
permitted  by, the  applicable  plan),  as the case may be, shall be entitled to
participate in or be covered under all medical, dental, disability,  group life,
accidental  death  and  travel  accident  insurance  plans and  programs  of the
Corporation  and its  affiliated  companies  (at the  most  favorable  level  of
participation and providing  highest levels of benefits  available to him) as in
affect (i) on the date hereof or (ii) if more favorable to the Executive,  as in
effect at any time thereafter with respect to the Executive or other  executives
with comparable responsibilities.

                (e)  Club  Memberships.   During  the  Employment   Period,  the
Corporation  shall pay all  initial  and  annual  fees and all other  reasonable
expenses  relating to membership in up to two (2) business or social clubs to be
selected by the Executive in his sole discretion.

                (f) Automobile.  During the Employment  Period,  the Corporation
shall pay all costs and  expenses  relating to the  purchase or lease,  use, and
maintenance  of a  luxury  automobile  to be  dedicated  to the  sole use of the
Executive.

                (g) Expenses.  During the Employment Period, the Executive shall
be  entitled  to  receive  prompt   reimbursement  for  all  reasonable  travel,
entertainment  and other expenses  incurred by the Executive in connection  with
the  performance  of his duties  hereunder in accordance  with such policies and
procedures as the Corporation may from time to time establish.

                (h) Vacation and Fringe Benefits.  During the Employment Period,
the Executive  shall be entitled to paid  vacation  consisting of four (4) weeks
per year to be taken at such times  selected  by the  Executive  and  reasonably
acceptable  to the  Corporation,  such  vacation  to accrue  ratably  during the
Employment  Period;  such other paid holidays as may be accorded to employees of
the  Corporation  as well as up to ten (10)  paid  personal  days per year to be
taken at such times as may be selected by the Executive.

                6.       Termination.

                (a)  Death  or  Disability.   This  Agreement   shall  terminate
automatically  upon the  Executive's  death.  The Corporation may terminate this
Agreement, after having established the Executive's Disability, by giving to the
Executive  written notice of its intention to terminate his employment,  and his
employment with the Corporation shall terminate  effective on the 90th day after
receipt of such  notice if,  within 90 days after such  receipt,  the  Executive
shall fail to return to  full-time  performance  of his duties.  For purposes of
this Agreement,  "Disability" means disability which would entitle the Executive
to receive full long-term disability benefits under the Corporation's  long-term
disability  plan,  or if no such plan shall then be in effect,  any  physical or
mental  disability  or  incapacity  which  renders the  Executive  incapable  of
performing the services required of him in accordance with his obligations under
Section 4 hereof for a period of more than 120 days in the aggregate  during any
12-month period during the Employment Period.

                (b)  Voluntary  Termination.  Notwithstanding  anything  in this
agreement  to the  contrary,  the  Executive  may,  upon not less  than 90 days'
written  notice to the  Corporation,  voluntarily  terminate  employment for any
reason,  provided that any termination by the Executive pursuant to Section 6(d)
on  account of  Constructive  Termination  shall not be  treated as a  voluntary
termination under this Section 6(b).

                (c)  Cause.   The  Corporation  may  terminate  the  Executive's
employment for Cause.

                (d)  Constructive  Termination.  The Executive may terminate his
employment for Constructive Termination.

                (e) Notice of  Termination.  Any  termination by the Company for
Cause or by the Executive for Constructive  Termination shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
13(c). For purposes of this Agreement, a "Notice of Termination" means a written
notice given, in the case of a termination for Cause, within 30 business days of
the  Corporation's  having  actual  knowledge of the events  giving rise to such
termination,  and in the case of a  termination  for  Constructive  Termination,
within 90 days of the Executive's  having actual  knowledge of the events giving
rise to such  termination,  and which (i)  indicates  the  specific  termination
provision in this Agreement  relied upon,  (ii) sets forth in reasonable  detail
the facts and  circumstances  claimed to provide a basis for  termination of the
Executive's  employment  under  the  provision  so  indicated,  and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination  date of this  Agreement  (which date shall be not more than 15 days
after the giving of such  notice).  The failure by the Executive to set forth in
the  Notice of  Termination  any fact or  circumstance  which  contributes  to a
showing of Constructive  Termination  shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or  circumstance in
enforcing his rights hereunder.

                (f) Date of Termination.  For the purpose of this Agreement, the
term "Date of  Termination"  means (i) in the case of a termination  for which a
Notice  of  Termination  is  required,  the date of  receipt  of such  Notice of
Termination  or, if later,  the date specified  therein,  as the case may be and
(ii) in all other  cases,  the actual date on which the  Executive's  employment
terminates during the Employment Period.

                7.  Obligations  of  the  Corporation  upon  Termination.   Upon
termination  of  this  Agreement  the  Corporation   shall  have  the  following
obligations:

                (a) Death.  If the Executive's  employment is terminated  during
the Employment Period by reason of the Executive's  death, the Corporation shall
(i) continue to pay to the  Executive's  legal  representatives  the Executive's
full Base  Salary  for a period of one year from the Date of  Termination,  (ii)
provide the  Executive's  dependents  with the benefits  provided under Sections
5(d) and 5(f) for a period of one year from the Date of  Termination,  (iii) pay
to the Executive's legal representatives any compensation previously deferred by
the Executive and not yet paid by the Corporation  and any accrued  vacation pay
not  yet  paid  by  the  Corporation  and  (iv)  pay to  the  Executive's  legal
representatives   any  other  amounts  or  benefits  owing  to  the  Executive's
beneficiaries  under the then applicable  employee  benefit plans or policies of
the  Corporation   (such  amounts  specified  in  clauses  (iii)  and  (iv)  are
hereinafter referred to as "Accrued Obligations").

                (b) Disability.  If the Executive's  employment is terminated by
reason of the Executive's Disability,  the Corporation shall (i) continue to pay
to the  Executive his full Base Salary for a period of one year from the Date of
Termination,  (ii) provide the  Executive and his  dependents  with the benefits
provided  under Sections 5(d) and 5(f) for a period of one year from the Date of
Termination, and (iii) pay to the Executive the Accrued Obligations.

                (c) Cause and Voluntary  Termination.  If, during the Employment
Period, the Executive's  employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Constructive Termination),
the  Corporation  shall pay the  Executive all Base Salary and benefits to which
the Executive is entitled  pursuant to Section 5 through the Date of Termination
and the Accrued  Obligations.  Unless otherwise  directed by the Executive,  the
Executive  shall  be paid  all such  Accrued  Obligations  in a lump sum in cash
within 30 days of the Date of  Termination  and the  Corporation  shall  have no
further obligations to the Executive under this Agreement.

                (d)   Termination  by  Corporation   other  than  for  Cause  or
Disability and Termination by the Executive for  Constructive  Termination.  If,
during the Employment  Period,  the  Corporation  gives a Non-Renewal  Notice or
terminates the Executive's employment other than for Cause or Disability, or the
Executive   terminates  his  employment  for   Constructive   Termination,   the
Corporation shall pay or provide to the Executive the following:

                      (i) Cash Payment.  First, the Corporation shall pay to the
                Executive in a lump sum in cash within 15 days after the Date of
                Termination the aggregate of the following amounts:

                                  (A) if not  theretofore  paid, the Executive's
                Base Salary through the date of Termination  (plus,  in the case
                of termination  without Cause,  two weeks of Base Salary in lieu
                of notice) at the rate in effect on the Date of Termination;

                                  (B)      a cash amount equal to any amounts
                described in Section 7(a)(iv); and

                                  (C) the present value of the Executive's  Base
                Salary for the period through  December 31, 2003, or through the
                date  which is  twelve  months  from  the  Date of  Termination,
                whichever period is longer, at the rate in effect on the Date of
                Termination, discounted at the interest rate payable on one year
                Treasury  Bills in  effect on the day that is 30  business  days
                prior to the Date of  Termination,  as if paid  monthly from the
                Date of Termination in arrears.

                     (ii) Benefits Continuation. Second, for the period from the
                Date of  Termination  to December 31, 2003,  or through the date
                which is twelve months from the Date of  Termination,  whichever
                period  is  longer,   the  Corporation  shall  provide  for  the
                participation  of the  Executive,  his spouse and their eligible
                dependents (as defined in the applicable  plan), as the case may
                be, in the plans  described in Section 5(d) on the same terms as
                described in Section 5(d), and for the automobile provided under
                Section 5(f). All rights under this Section 7(d)(ii) shall cease
                immediately upon the Executive's violation of Section 11(b).

                    (iii) Deferred Payment. Third, the Corporation shall pay the
                Executive any amounts  payable  under  Section  7(a)(iii) on the
                terms and conditions of the applicable plan or policy.

                     (iv) Discharge of Corporation's Obligations. Subject to the
                performance  of its  obligations  under this Section  7(d),  the
                Corporation  shall have no further  obligations to the Executive
                under  this  Agreement  in  respect  of any  termination  by the
                Executive for  Constructive  Termination  or by the  Corporation
                other  than  for  Cause  or  Disability,  except  to the  extent
                expressly  provided  under Sections 10 or 12 hereof or under any
                of the plans referred to in Sections 5(c) or 5(d) hereof.

                8.  Non-exclusivity  of Rights.  Nothing in this Agreement shall
prevent  or limit the  Executive's  continuing  or future  participation  in any
benefit,  bonus,  incentive or other plan or program provided by the Corporation
or any of its affiliated  companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise  prejudice such rights as the Executive
may  have  under  any  other  agreements  with  the  Corporation  or  any of its
affiliated companies,  including, but not limited to, stock option or restricted
stock  agreements.  Amounts which are vested  benefits or which the Executive is
otherwise  entitled to receive under any plan or program of the  Corporation  or
any of its  affiliated  companies at or  subsequent  to the Date of  Termination
shall be payable in accordance with such plan or program.

                9. Full Settlement.  Except as provided in Sections 7(d)(ii) and
11(b), the  Corporation's  obligation to make the payments  provided for in this
Agreement  and  otherwise  to perform  its  obligations  hereunder  shall not be
affected by any  circumstances,  including,  without  limitation,  any  set-off,
counterclaim,  recoupment, defense or other right which the Corporation may have
against the Executive or others whether by reason of the  subsequent  employment
of the Executive or  otherwise.  In no event shall the Executive be obligated to
seek  other  employment  by way of  mitigation  of the  amounts  payable  to the
Executive under any of the provisions of this  Agreement.  In the event that the
Executive  shall in good faith  give a Notice of  Termination  for  Constructive
Termination and it shall thereafter be determined that Constructive  Termination
did  not  take  place,  the  employment  of  the  Executive  shall,  unless  the
Corporation and the Executive shall otherwise  mutually agree, be deemed to have
terminated,  at the date of giving  such  purported  Notice of  Termination,  by
mutual consent of the  Corporation  and the Executive and, except as provided in
the last  preceding  sentence,  the Executive  shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he  terminated  his  employment  voluntarily  at such date  under  this
Agreement.

                10.  Legal  Fees  and  Expenses.  In the  event  that a claim or
payment or benefits under this Agreement is disputed,  the Corporation shall pay
all reasonable  attorney fees and expenses incurred by the Executive in pursuing
such claim,  provided  that  Executive is  successful as to at least part of the
disputed  claim by reason of  arbitration  (as set  forth in  Section  13(g)) or
settlement.

                11.      Special Obligations of the Executive.

                (a)  Confidential  Information.  The  Executive  shall hold in a
fiduciary capacity for the benefit of the Corporation all secret or confidential
information,  knowledge  or  data  relating  to  the  Corporation  or any of its
affiliated  companies,  and their  respective  businesses,  (i)  obtained by the
Executive  during his  employment by the  Corporation  or any of its  affiliated
companies and (ii) not otherwise  public  knowledge  (other than by reason of an
unauthorized  act by  the  Executive).  After  termination  of  the  Executive's
employment  with the  Corporation,  the  Executive  shall not  without the prior
written consent of the Corporation,  unless compelled  pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or divulge
any such information, knowledge or data to anyone other than the Corporation and
those  designated  by  it.  In no  event  shall  an  asserted  violation  of the
provisions of this Section 11(a) constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

                (b)  Noncompetition.  In order for the Corporation to reasonably
protect  its  interests   against  the  competitive  use  of  any   confidential
information,   knowledge  or  relationships   concerning  the  business  of  the
Corporation  and its  affiliated  companies  to which the  Executive  has access
because of the special nature of his employment,  the Executive shall not during
the  Employment  Period and for a period of six months  thereafter,  directly or
indirectly,  by ownership of  securities  or  otherwise,  engage in any business
organization  whose activities are competitive in any state of the United States
or in any foreign country with  activities in which the  Corporation  and/or its
affiliated  companies are engaged in such state or country, or become associated
with or render services to any person,  business or enterprise so engaged.  Mere
ownership as an investor of not more than 5% of the  securities of a corporation
or other  business  enterprise  shall  not be deemed  an  association  with such
corporation or enterprise.

                12.      Successors.

                (a) This Agreement is personal to the Executive and, without the
prior  written  consent  of the  Corporation,  shall  not be  assignable  by the
Executive  otherwise than by will or the laws of descent and distribution.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
legal representatives.

                (b) This Agreement  shall inure to the benefit of and be binding
upon the  Corporation  and its  successors.  The  Corporation  shall require any
successor  to all or  substantially  all of the  business  and/or  assets of the
Corporation,  whether direct or indirect,  by purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
satisfactory  to the  Executive,  expressly  to assume and agree to perform this
Agreement in the same manner and to the same extent as the Corporation  would be
required to perform if no such succession had taken place.  For purposes of this
Section 12(b), the term "Corporation" shall include the Corporation and HBC.

                13.      Miscellaneous.

                (a)  Applicable  Law.  This  Agreement  shall be governed by and
construed  in  accordance  with the laws of the  State  of  California,  applied
without reference to principles of conflict of laws.

                (b)  Amendments.  This  Agreement may not be amended or modified
otherwise  than by a written  agreement  executed by the parties hereto or their
respective successors and legal representatives.

                (c)  Notices.  All  notices and other  communications  hereunder
shall be in writing and shall be given by hand-delivery to the other party or by
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed as follows:


                If to the Executive        2 Nidden
                                           Irvine, California  92612


                If to the Corporation:     Hansen Natural Corporation
                                           2380 Railroad Street
                                           Corona, CA  91720
                                           Attention:  Board of Directors


or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

                (d) Tax  Withholding.  The  Corporation  may  withhold  from any
amounts payable under this Agreement such federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

                (e)  Severability.  The  invalidity or  unenforceability  of any
provision of this Agreement shall not affect the validity or  enforceability  of
any other provision of this Agreement.

                (f) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

                (g)  Arbitration.  Except  with  respect  to the  rights  of the
Corporation  to apply to a court of law or equity  for  equitable  relief in the
event of the breach by the  Executive of any of the  provisions of Section 11 of
this  Agreement,  any  controversy  or claim  arising out of or relating to this
Agreement or its termination  shall be settled by arbitration in accordance with
the rules of the American Arbitration  Association,  and judgment upon the award
rendered by the  arbitrator(s)  may be entered in any court having  jurisdiction
thereof. Any such arbitration shall take place in Los Angeles,  California or at
such other location as may be agreed by the parties.



<PAGE>



                IN WITNESS WHEREOF,  the Executive has hereunto set his hand and
the  Corporation  has caused  this  Agreement  to be executed in its name on its
behalf, all as of the day and year first above written.



                                                     HANSEN NATURAL CORPORATION



                                                          By:
                                                          Title:  Chairman


                                                            EXECUTIVE:




                                                            Hilton H. Schlosberg




                             STOCK OPTION AGREEMENT


         This Stock  Option  Agreement  ("Agreement")  is made as of February 2,
1998, by and between Hansen Natural  Corporation,  a Delaware  corporation  (the
"Company"), and Rodney C. Sacks ("Holder").


                                                Preliminary Recitals
          A. Holder is an employee of the Company or one of its  subsidiaries or
     affiliates.
         B. Pursuant to the Hansen Natural  Corporation  Stock Option Plan (the
     "Plan"),  the Company  desires to grant Holder an incentive stock option to
     purchase  shares of the Company's  common stock,  par value $.005 per share
     (the "Common  Stock"),  subject to the terms and conditions of the Plan and
     subject further to the terms and conditions set forth below.


         NOW, THEREFORE, the Company and Holder agree as follows:
         1. Grant of  Incentive  Stock  Option.  The  Company  hereby  grants to
Holder,  subject to the terms and  conditions  set forth  herein,  the incentive
stock option  ("ISO") to purchase up to 100,000  shares of Common Stock,  at the
purchase price of $4.25 per share,  such ISO to be exercisable  and exercised as
hereinafter provided.
         2.  Exercise  Period.  The ISO  shall  expire  three  months  after the
termination of the Holder's employment with the Company and its subsidiaries and
affiliates  (the "Hansen Group") unless the employment is terminated by a member

of the Hansen  Group for Cause (as defined  below) or unless the  employment  is
terminated  by reason of the death or Total  Disability  (as  defined  below) of
Holder. If the Holder's employment is terminated by a member of the Hansen Group
for Cause,  the ISO shall expire as of the date  employment  terminates.  If the
Holder's  employment  terminates due to his death or Total Disability,  then the
ISO may be exercised by Holder or the person or persons to which Holder's rights
under this Agreement  pass by will, or if no such person has such right,  by his
executors or administrators,  within six months after the date of death or Total
Disability,  but no later than the  expiration  date  specified  in Section 3(d)
below.  "Cause"  means the  Holder's  act of fraud or  dishonesty,  knowing  and
material failure to comply with applicable laws or regulations,  drug or alcohol
abuse,  as determined by the Committee of the Hansen Natural  Corporation  Stock
Option  Plan  (the  "Committee").  "Total  Disability"  means the  complete  and
permanent  inability of Holder to perform all of his duties of  employment  with
the Company,  as determined by the  Committee  upon the basis of such  evidence,
including   independent  medical  reports  and  data,  as  the  Committee  deems
appropriate or necessary.
         3.       Exercise of Option
                  (a) Subject to the other terms of this Agreement regarding the
exercisability  of the ISO,  the ISO may only be  exercised  in  respect  of the
number of shares listed in column A from and after the exercise  dates listed in
column B,
                               Column "A"                        Column "B"
                           Number of Shares                   Exercise Date

                                      9,500                  February 2, 1999
                                     23,500                  February 2, 2000
                                     23,500                  February 2, 2001
                                     23,500                  February 2, 2002
                                     20,000                  February 2, 2003
                                    -------
                                    100,000
                  (b) This ISO may be exercised,  to the extent  exercisable  by
its  terms,  from  time to time in  whole  or in part at any  time  prior to the
expiration thereof. Any exercise shall be accompanied by a written notice to the
Company  specifying the number of shares as to which this ISO is being exercised
(the  "Option  Shares").  Notations  of  any  partial  exercise  or  installment
exercise, shall be made by the Company on Schedule A hereto.
                  (c)  Notwithstanding  the  above,  this  ISO  shall  be  fully
exercisable in the event Holder's employment with the Hansen Group is terminated
by Holder for "Good Reason" (as defined below),  or a member of the Hansen Group
terminates  his employment  without  "Cause" (as defined  above).  "Good Reason"
means the Holder's termination of employment with the Hansen Group on or after a
reduction in his compensation or benefits, his removal as the Company's Chairman
of the  Board or Chief  Executive  Officer,  or his  being  assigned  duties  or
responsibilities that are inconsistent with the dignity,  importance or scope of
his position with the Company.
                  (d) Notwithstanding anything else herein to the contrary, this
ISO shall expire ten years from the date indicated above.
                  (e) The Holder  hereby agrees to notify the Company in writing
in the  event  shares  acquired  pursuant  to  the  exercise  of  this  ISO  are
transferred,  other  than by will or by the laws of  descent  and  distribution,
within  two years  after the date  indicated  above or within one year after the
issuance of such shares pursuant to such exercise.
         4. Payment of Purchase Price Upon Exercise. At the time of any exercise
of the ISO the purchase price of the ISO shall be paid in full to the Company in
either of the following ways or in any combination of the following ways:
                  (a)      By check or other immediately available funds.
                  (b) With property  consisting of shares of Common Stock.  (The
shares of Common  Stock to be used as payment  shall be valued as of the date of
exercise of the ISO at the  Closing  Price as defined  below.  For  example,  if
Holder  exercises  the  option  for 4,000  shares at a total  Exercise  Price of
$7,000,  assuming  exercise  price of $1.75 per share,  and the Closing Price is
$5.00,  he may pay for the 4,000 Option Shares by  transferring  1,400 shares of
Common Stock to the Company.)
                  (c) For purposes of this  Agreement,  the term "Closing Price"
means,  with  respect  to the  Company's  Common  Stock,  the  last  sale  price
regular-way  or, in case no such sale takes  place on such date,  the average of
the  closing  bid  and  asked  prices  regular-way  on  the  principal  national
securities  exchange on which the  securities are listed or admitted to trading;
or, if they are not listed or  admitted  to trading on any  national  securities
exchange, the last sale price of the securities on the consolidated  transaction
reporting system of the National  Association of Securities Dealers (NASD"),  if
such last sale  information  is reported on such system or, if not so  reported,
the  average  of the  closing  bid and  asked  prices of the  securities  on the
National Association of Securities Dealers Automatic Quotation System ("NASDAQ")
or any  comparable  system or, if the  securities  are not listed on NASDAQ or a
comparable  system, the average of the closing bid and asked prices as furnished
by two  members of the NASD  selected  from time to time by the Company for that
purpose.
         5. Purchase for Investment; Resale Restrictions.  Unless at the time of
exercise of the ISO there shall be a valid and effective  registration statement
under the Securities Act of 1933 ("'33 Act") and appropriate  qualification  and
registration  under  applicable  state  securities  laws  relating to the Option
Shares  being   acquired,   Holder  shall  upon  exercise  of  the  ISO  give  a
representation  that  he is  acquiring  such  shares  for his  own  account  for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. In the absence of such registration  statement,
Holder shall execute a written affirmation, in a form reasonably satisfactory to
the Company,  of such investment intent.  Holder further agrees that he will not
sell or transfer any Option  Shares until he requests and receives an opinion of
the Company's counsel or other counsel reasonably satisfactory to the Company to
the effect that such proposed sale or transfer will not result in a violation of
the '33 Act, or a  registration  statement  covering the sale or transfer of the
shares has been declared effective by the Securities and Exchange Commission, or
he obtains a no-action  letter from the Securities and Exchange  Commission with
respect to the proposed transfer.
         6.  Nontransferability.This ISO shall not be transferable other than by
will or by the laws of descent and distribution.  During the lifetime of Holder,
this ISO shall be exercisable only by Holder.
         7.       Adjustments.
                  (a) If the Company  hereafter (i) declares a  distribution  on
its shares in shares,  (ii) splits its  outstanding  shares,  (iii) combines its
outstanding shares into a smaller number of securities or (iv) issues any shares
or other  securities  by  reclassification  of its  shares  (including  any such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company is the continuing  entity),  the purchase price in effect at the time of
the record date for such distribution or the effective date of such subdivision,
combination  or  reclassification  shall be  adjusted so that it shall equal the
price  determined  by  multiplying  the  purchase  price  by  a  fraction,   the
denominator of which shall be the number of shares outstanding immediately after
giving effect to such action,  and the numerator of which shall be the number of
shares outstanding immediately prior to such action. Whenever the purchase price
payable upon exercise of the ISO is adjusted pursuant to the preceding  sentence
above,  the  number  of  shares  purchasable  upon  exercise  of the  ISO  shall
simultaneously  be adjusted by  multiplying  the number of shares  issuable upon
exercise of the ISO  immediately  prior to the event which causes the adjustment
by the purchase price in effect  immediately prior to the event which causes the
adjustment  and  dividing  the  product so obtained by the  purchase  price,  as
adjusted.  Such adjustments shall be made successively whenever any event listed
above shall occur.
                  (b)  If,  at any  time,  as a  result  of an  adjustment  made
pursuant to paragraph  7(a) above,  the Holder shall become  entitled to receive
any  securities  of the  Company  other  than  shares,  the number of such other
securities so receivable upon exercise of the ISO shall thereafter be subject to
adjustment  from time to time in a manner and on terms as nearly  equivalent  as
practicable to the provisions with respect to the shares  contained in paragraph
7(a) above.
                  (c) If any other event  contemplated  in Section  10(a) of the
Plan occurs,  adjustments  to the number and kind of shares  subject to this ISO
and/or to the purchase  price for each share  subject to this ISO may be made in
accordance with Section 10(a) of the Plan.
                  (d) No  adjustments  shall be made under  this  Section 7 that
would have the effect of modifying this ISO under  Internal  Revenue Code ss.ss.
422 or 424.
                  (e)  Whenever  the  purchase  price or the number of shares is
adjusted, as herein provided,  Hansen shall within 10 business days of the event
causing such adjustment give a notice setting forth the adjusted  purchase price
and adjusted  number of shares issuable upon exercise of the ISO to be mailed to
the Holder.
                  (f) Notwithstanding anything else herein to the contrary, upon
the  occurance  of a change in control (as defined in (g) below),  the option or
any portion  thereof  not  theretofore  exercisable,  shall  immediately  become
exercisable in its entirety and the option (being the option to purchase  shares
of Common Stock subject to the applicable  provisions of the Plan and awarded in
accordance  with the Plan in terms of section 1 above) may,  with the consent of
Holder, be purchased by the Company for cash at a price equal to the fair market
value (as defined in 7(g) below) less the  purchase  price  payable by Holder to
exercise  the  option as set out in  Article 1 above for one (1) share of Common
Stock of the Company  multiplied  by the number of shares of Common  Stock which
Holder has the option to purchase in terms of Article 1 above.
                  (g)      For the purposes of this agreement
                           (i)      "Change in Control" means;
                                    (A)the acquisition of "Beneficial Ownership"
by any person (as defined in rule 13 (d) - 3 under the Securities Exchange
Act 1934),  corporation or other entity other than the Company or a wholly owned
subsidiary of the Company of 20% or more of the outstanding Stock,
                                    (B)the sale or disposition of substantially
 all of the assets of the Company, or
                                    (C)the  merger of the Company  with  another
corporation in which the Common Stock of the Company is no longer outstanding
after such merger.
                           (ii)     "Fair Market Value" means,  as of any date,
the Closing Price for one share of the Common Stock of the Company on such date.
         8. The  provisions  of Section  5(b) (iii) of the Plan,  regarding  the
execution of a shareholder's agreement as a condition precedent to the Company's
obligation  to issue  shares  under the Plan,  shall not apply to the ISO or any
shares issued pursuant to the ISO.
         9. The Company  represents and warrants to Holder that (a) there are no
options  to  purchase  the  Company's  Common  Stock,  containing  the  same  or
substantially  the same  terms as the  ISO,  which  are  actively  traded  on an
established  market  within the meaning of Internal  Revenue  Code ss.83 and the
regulations promulgated  thereunder;  and (b) the shares of the Company's Common
Stock issued upon exercise of the ISO, when issued in accordance  with the terms
hereof, will be duly authorized,  validly issued,  fully paid and nonassessable.
The Company  shall  reserve and keep  reserved out of its  authorized  shares of
Common Stock the number of shares of Common Stock that may be issuable from time
to time upon exercise of the ISO.
         10.  No  Rights  as  Stockholder.Holder  shall  have  no  rights  as  a
stockholder with respect to any shares of Common Stock subject to this ISO prior
to the date of issuance to him of a certificate or certificates for such shares.
         11. No Right to Continue  Employment.  This Agreement  shall not confer
upon Holder any right with respect to continuance of employment  with any member
of the Hansen Group nor shall it interfere in any way with the right of any such
member to terminate his employment at any time.
         12.  Compliance  With  Law  and   Regulation.This   Agreement  and  the
obligation of the Company to sell and deliver  shares of Common Stock  hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
If at any time the Board of Directors of the Company  shall  determine  that (i)
the listing, registration or qualification of the shares of Common Stock subject
or related  thereto upon any  securities  exchange or under any state or federal
law,  or (ii) the  consent or approval of any  government  regulatory  body,  is
necessary  or desirable  as a condition  of or in  connection  with the issue or
purchase of shares of Common Stock  hereunder,  this ISO may not be exercised in
whole or in part  unless such  listing,  registration,  qualification,  consent,
approval  or  agreement  shall  have  been  effected  or  obtained  free  of any
conditions not  acceptable to the Board of Directors.  The Company agrees to use
its  reasonable   efforts  to  obtain  any  necessary   listing,   registration,
qualification,  consent, approval or agreement as expeditiously as possible, and
the term of this ISO shall be  extended  until 30 days  following  the date such
listing, registration, qualification, consent, approval or agreement is effected
or  obtained.  Moreover,  this ISO may not be  exercised  if its exercise or the
receipt  of  shares  of Common  Stock  pursuant  thereto  would be  contrary  to
applicable law.
         13. Tax Withholding  Requirements.  The Company shall have the right to
require  Holder to remit to the  Company an amount  sufficient  to  satisfy  any
federal,  state or local  withholding tax requirements  prior to the delivery of
any certificate or certificates for Common Stock.
         14.  Fractional  Shares.Notwithstanding  any  other  provision  of this
Agreement,  no  fractional  shares of stock shall be issued upon the exercise of
this ISO and the Company shall not be under any obligation to compensate  Holder
in any way for such fractional shares.
         15. Notices.  Any notice hereunder to the Company shall be addressed to
it at its office at 2380 Railroad Street,  Suite 101, Corona,  California 91720,
Attention:  Hilton  Schlosberg  with a copy to Benjamin  Polk,  Whitman,  Breed,
Abbott & Morgan  200 Park  Avenue,  New York,  New York  10166,  and any  notice
hereunder to Holder shall be addressed to him at 14 Vienne,  Irvine,  California
92606,  subject to the right of either party to designate at any time  hereafter
in writing some other address.
         16.  Amendment.  No  modification,  amendment  or  waiver of any of the
provisions of this Agreement shall be effective  unless in writing  specifically
referring hereto, and signed by both parties.
         17.  Governing Law. This Agreement shall be construed  according to the
laws of the State of Delaware and all  provisions  hereof shall be  administered
according to and its validity shall be determined under, the laws of such State,
except where preempted by federal laws.
         18.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, each of which shall constitute one and the same instrument.

         IN  WITNESS  WHEREOF,   Hansen  Natural  Corporation  has  caused  this
Agreement  to be executed by a duly  authorized  officer and Holder has executed
this Agreement both as of the day and year first above written.


                                                   HANSEN  NATURAL  CORPORATION


                      By:_________________________________
                                                         Title:  Vice Chairman

- -----------------------------------
Rodney C. Sacks




                             STOCK OPTION AGREEMENT


         This Stock  Option  Agreement  ("Agreement")  is made as of February 2,
1998, by and between Hansen Natural  Corporation,  a Delaware  corporation  (the
"Company"), and Hilton H. Schlosberg ("Holder").


                                                Preliminary Recitals
          A. Holder is an employee of the Company or one of its  subsidiaries or
     affiliates.
          B. Pursuant to the Hansen Natural  Corporation  Stock Option Plan (the
     "Plan"),  the Company  desires to grant Holder an incentive stock option to
     purchase  shares of the Company's  common stock,  par value $.005 per share
     (the "Common  Stock"),  subject to the terms and conditions of the Plan and
     subject further to the terms and conditions set forth below.


         NOW, THEREFORE, the Company and Holder agree as follows:
         1. Grant of  Incentive  Stock  Option.  The  Company  hereby  grants to
Holder,  subject to the terms and  conditions  set forth  herein,  the incentive
stock option  ("ISO") to purchase up to 100,000  shares of Common Stock,  at the
purchase price of $4.25 per share,  such ISO to be exercisable  and exercised as
hereinafter provided.
         2.  Exercise  Period.  The ISO  shall  expire  three  months  after the
termination of the Holder's employment with the Company and its subsidiaries and
affiliates  (the "Hansen Group") unless the employment is terminated
 by a member
of the Hansen  Group for Cause (as defined  below) or unless the  employment  is
terminated  by reason of the death or Total  Disability  (as  defined  below) of
Holder. If the Holder's employment is terminated by a member of the Hansen Group
for Cause,  the ISO shall expire as of the date  employment  terminates.  If the
Holder's  employment  terminates due to his death or Total Disability,  then the
ISO may be exercised by Holder or the person or persons to which Holder's rights
under this Agreement  pass by will, or if no such person has such right,  by his
executors or administrators,  within six months after the date of death or Total
Disability,  but no later than the  expiration  date  specified  in Section 3(d)
below.  "Cause"  means the  Holder's  act of fraud or  dishonesty,  knowing  and
material failure to comply with applicable laws or regulations,  drug or alcohol
abuse,  as determined by the Committee of the Hansen Natural  Corporation  Stock
Option  Plan  (the  "Committee").  "Total  Disability"  means the  complete  and
permanent  inability of Holder to perform all of his duties of  employment  with
the Company,  as determined by the  Committee  upon the basis of such  evidence,
including   independent  medical  reports  and  data,  as  the  Committee  deems
appropriate or necessary.
         3.       Exercise of Option
                  (a) Subject to the other terms of this Agreement regarding the
exercisability  of the ISO,  the ISO may only be  exercised  in  respect  of the
number of shares listed in column A from and after the exercise  dates listed in
column B,
                               Column "A"                      Column "B"
                           Number of Shares                   Exercise Date

                                      9,500                 February 2, 1999
                                     23,500                 February 2, 2000
                                     23,500                 February 2, 2001
                                     23,500                 February 2, 2002
                                     20,000                 February 2, 2003
                                    -------
                                    100,000
                  (b) This ISO may be exercised,  to the extent  exercisable  by
its  terms,  from  time to time in  whole  or in part at any  time  prior to the
expiration thereof. Any exercise shall be accompanied by a written notice to the
Company  specifying the number of shares as to which this ISO is being exercised
(the  "Option  Shares").  Notations  of  any  partial  exercise  or  installment
exercise, shall be made by the Company on Schedule A hereto.
                  (c)  Notwithstanding  the  above,  this  ISO  shall  be  fully
exercisable in the event Holder's employment with the Hansen Group is terminated
by Holder for "Good Reason" (as defined below),  or a member of the Hansen Group
terminates  his employment  without  "Cause" (as defined  above).  "Good Reason"
means the Holder's termination of employment with the Hansen Group on or after a
reduction in his  compensation  or benefits,  his removal as the Company's  Vice
Chairman of the Board of Directors,  President,  Chief Operating Officer,  Chief
Financial Officer or Secretary, or his being assigned duties or responsibilities
that are inconsistent with the dignity, importance or scope of his position with
the Company.
                  (d) Notwithstanding anything else herein to the contrary, this
ISO shall expire ten years from the date indicated above.
                  (e) The Holder  hereby agrees to notify the Company in writing
in the  event  shares  acquired  pursuant  to  the  exercise  of  this  ISO  are
transferred,  other  than by will or by the laws of  descent  and  distribution,
within  two years  after the date  indicated  above or within one year after the
issuance of such shares pursuant to such exercise.
         4. Payment of Purchase Price Upon Exercise. At the time of any exercise
of the ISO the purchase price of the ISO shall be paid in full to the Company in
either of the following ways or in any combination of the following ways:
                  (a)      By check or other immediately available funds.
                  (b) With property  consisting of shares of Common Stock.  (The
shares of Common  Stock to be used as payment  shall be valued as of the date of
exercise of the ISO at the  Closing  Price as defined  below.  For  example,  if
Holder  exercises  the  option  for 4,000  shares at a total  Exercise  Price of
$7,000,  assuming  exercise  price of $1.75 per share,  and the Closing Price is
$5.00,  he may pay for the 4,000 Option Shares by  transferring  1,400 shares of
Common Stock to the Company.)
                  (c) For purposes of this  Agreement,  the term "Closing Price"
means,  with  respect  to the  Company's  Common  Stock,  the  last  sale  price
regular-way  or, in case no such sale takes  place on such date,  the average of
the  closing  bid  and  asked  prices  regular-way  on  the  principal  national
securities  exchange on which the  securities are listed or admitted to trading;
or, if they are not listed or  admitted  to trading on any  national  securities
exchange, the last sale price of the securities on the consolidated  transaction
reporting system of the National  Association of Securities Dealers (NASD"),  if
such last sale  information  is reported on such system or, if not so  reported,
the  average  of the  closing  bid and  asked  prices of the  securities  on the
National Association of Securities Dealers Automatic Quotation System ("NASDAQ")
or any  comparable  system or, if the  securities  are not listed on NASDAQ or a
comparable  system, the average of the closing bid and asked prices as furnished
by two  members of the NASD  selected  from time to time by the Company for that
purpose.
         5. Purchase for Investment; Resale Restrictions.  Unless at the time of
exercise of the ISO there shall be a valid and effective  registration statement
under the Securities Act of 1933 ("'33 Act") and appropriate  qualification  and
registration  under  applicable  state  securities  laws  relating to the Option
Shares  being   acquired,   Holder  shall  upon  exercise  of  the  ISO  give  a
representation  that  he is  acquiring  such  shares  for his  own  account  for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. In the absence of such registration  statement,
Holder shall execute a written affirmation, in a form reasonably satisfactory to
the Company,  of such investment intent.  Holder further agrees that he will not
sell or transfer any Option  Shares until he requests and receives an opinion of
the Company's counsel or other counsel reasonably satisfactory to the Company to
the effect that such proposed sale or transfer will not result in a violation of
the '33 Act, or a  registration  statement  covering the sale or transfer of the
shares has been declared effective by the Securities and Exchange Commission, or
he obtains a no-action  letter from the Securities and Exchange  Commission with
respect to the proposed transfer.
         6.  Nontransferability.This ISO shall not be transferable other than by
will or by the laws of descent and distribution.  During the lifetime of Holder,
this ISO shall be exercisable only by Holder.
         7.       Adjustments.
                  (a) If the Company  hereafter (i) declares a  distribution  on
its shares in shares,  (ii) splits its  outstanding  shares,  (iii) combines its
outstanding shares into a smaller number of securities or (iv) issues any shares
or other  securities  by  reclassification  of its  shares  (including  any such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company is the continuing  entity),  the purchase price in effect at the time of
the record date for such distribution or the effective date of such subdivision,
combination  or  reclassification  shall be  adjusted so that it shall equal the
price  determined  by  multiplying  the  purchase  price  by  a  fraction,   the
denominator of which shall be the number of shares outstanding immediately after
giving effect to such action,  and the numerator of which shall be the number of
shares outstanding immediately prior to such action. Whenever the purchase price
payable upon exercise of the ISO is adjusted pursuant to the preceding  sentence
above,  the  number  of  shares  purchasable  upon  exercise  of the  ISO  shall
simultaneously  be adjusted by  multiplying  the number of shares  issuable upon
exercise of the ISO  immediately  prior to the event which causes the adjustment
by the purchase price in effect  immediately prior to the event which causes the
adjustment  and  dividing  the  product so obtained by the  purchase  price,  as
adjusted.  Such adjustments shall be made successively whenever any event listed
above shall occur.
                  (b)  If,  at any  time,  as a  result  of an  adjustment  made
pursuant to paragraph  7(a) above,  the Holder shall become  entitled to receive
any  securities  of the  Company  other  than  shares,  the number of such other
securities so receivable upon exercise of the ISO shall thereafter be subject to
adjustment  from time to time in a manner and on terms as nearly  equivalent  as
practicable to the provisions with respect to the shares  contained in paragraph
7(a) above.
                  (c) If any other event  contemplated  in Section  10(a) of the
Plan occurs,  adjustments  to the number and kind of shares  subject to this ISO
and/or to the purchase  price for each share  subject to this ISO may be made in
accordance with Section 10(a) of the Plan.
                  (d) No  adjustments  shall be made under  this  Section 7 that
would have the effect of modifying this ISO under  Internal  Revenue Code ss.ss.
422 or 424.
                  (e)  Whenever  the  purchase  price or the number of shares is
adjusted, as herein provided,  Hansen shall within 10 business days of the event
causing such adjustment give a notice setting forth the adjusted  purchase price
and adjusted  number of shares issuable upon exercise of the ISO to be mailed to
the Holder.
                  (f) Notwithstanding anything else herein to the contrary, upon
the  occurance  of a change in control (as defined in (g) below),  the option or
any portion  thereof  not  theretofore  exercisable,  shall  immediately  become
exercisable in its entirety and the option (being the option to purchase  shares
of Common Stock subject to the applicable  provisions of the Plan and awarded in
accordance  with the Plan in terms of section 1 above) may,  with the consent of
Holder, be purchased by the Company for cash at a price equal to the fair market
value (as defined in 7(g) below) less the  purchase  price  payable by Holder to
exercise  the  option as set out in  Article 1 above for one (1) share of Common
Stock of the Company  multiplied  by the number of shares of Common  Stock which
Holder has the option to purchase in terms of Article 1 above.
                  (g)      For the purposes of this agreement
                           (i)      "Change in Control" means;
                                    (A)the acquisition of "Beneficial Ownership"
by any person (as defined in rule 13 (d) - 3 under the Securities Exchange
Act 1934),  corporation or other entity other than the Company or a wholly owned
subsidiary of the Company of 20% or more of the outstanding Stock,
          (B)the sale or disposition of  substantially  all of the assets of the
     Company, or
                                    (C)the  merger of the Company  with  another
corporation in which the Common Stock of the Company is no longer outstanding
after such merger.
          (ii) "Fair Market Value" means,  as of any date, the Closing Price for
     one share of the Common Stock of the Company on such date.
         8. The  provisions  of Section  5(b) (iii) of the Plan,  regarding  the
execution of a shareholder's agreement as a condition precedent to the Company's
obligation  to issue  shares  under the Plan,  shall not apply to the ISO or any
shares issued pursuant to the ISO.
         9. The Company  represents and warrants to Holder that (a) there are no
options  to  purchase  the  Company's  Common  Stock,  containing  the  same  or
substantially  the same  terms as the  ISO,  which  are  actively  traded  on an
established  market  within the meaning of Internal  Revenue  Code ss.83 and the
regulations promulgated  thereunder;  and (b) the shares of the Company's Common
Stock issued upon exercise of the ISO, when issued in accordance  with the terms
hereof, will be duly authorized,  validly issued,  fully paid and nonassessable.
The Company  shall  reserve and keep  reserved out of its  authorized  shares of
Common Stock the number of shares of Common Stock that may be issuable from time
to time upon exercise of the ISO.
         10.  No  Rights  as  Stockholder.Holder  shall  have  no  rights  as  a
stockholder with respect to any shares of Common Stock subject to this ISO prior
to the date of issuance to him of a certificate or certificates for such shares.
         11. No Right to Continue  Employment.  This Agreement  shall not confer
upon Holder any right with respect to continuance of employment  with any member
of the Hansen Group nor shall it interfere in any way with the right of any such
member to terminate his employment at any time.
         12.  Compliance  With  Law  and   Regulation.This   Agreement  and  the
obligation of the Company to sell and deliver  shares of Common Stock  hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
If at any time the Board of Directors of the Company  shall  determine  that (i)
the listing, registration or qualification of the shares of Common Stock subject
or related  thereto upon any  securities  exchange or under any state or federal
law,  or (ii) the  consent or approval of any  government  regulatory  body,  is
necessary  or desirable  as a condition  of or in  connection  with the issue or
purchase of shares of Common Stock  hereunder,  this ISO may not be exercised in
whole or in part  unless such  listing,  registration,  qualification,  consent,
approval  or  agreement  shall  have  been  effected  or  obtained  free  of any
conditions not  acceptable to the Board of Directors.  The Company agrees to use
its  reasonable   efforts  to  obtain  any  necessary   listing,   registration,
qualification,  consent, approval or agreement as expeditiously as possible, and
the term of this ISO shall be  extended  until 30 days  following  the date such
listing, registration, qualification, consent, approval or agreement is effected
or  obtained.  Moreover,  this ISO may not be  exercised  if its exercise or the
receipt  of  shares  of Common  Stock  pursuant  thereto  would be  contrary  to
applicable law.
         13. Tax Withholding  Requirements.  The Company shall have the right to
require  Holder to remit to the  Company an amount  sufficient  to  satisfy  any
federal,  state or local  withholding tax requirements  prior to the delivery of
any certificate or certificates for Common Stock.
         14.  Fractional  Shares.Notwithstanding  any  other  provision  of this
Agreement,  no  fractional  shares of stock shall be issued upon the exercise of
this ISO and the Company shall not be under any obligation to compensate  Holder
in any way for such fractional shares.
         15. Notices.  Any notice hereunder to the Company shall be addressed to
it at its office at 2380 Railroad Street,  Suite 101, Corona,  California 91720,
Attention:  Rodney Sacks with a copy to Benjamin Polk, Whitman,  Breed, Abbott &
Morgan 200 Park Avenue,  New York, New York 10166,  and any notice  hereunder to
Holder shall be addressed to him at 2 Nidden, Irvine,  California 92715, subject
to the right of either party to designate at any time  hereafter in writing some
other address.
         16.  Amendment.  No  modification,  amendment  or  waiver of any of the
provisions of this Agreement shall be effective  unless in writing  specifically
referring hereto, and signed by both parties.
         17.  Governing Law. This Agreement shall be construed  according to the
laws of the State of Delaware and all  provisions  hereof shall be  administered
according to and its validity shall be determined under, the laws of such State,
except where preempted by federal laws.
         18.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, each of which shall constitute one and the same instrument.

         IN  WITNESS  WHEREOF,   Hansen  Natural  Corporation  has  caused  this
Agreement  to be executed by a duly  authorized  officer and Holder has executed
this Agreement both as of the day and year first above written.


                                                 HANSEN  NATURAL  CORPORATION


                      By:_________________________________
                                                      Title: Chairman and CEO


- -----------------------------------
Hilton H. Schlosberg




                                                                      EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT


We hereby consent to the  incorporation by reference in Registration  Statements
No. 33-92526 and No. 333-41333 of Hansen Natural  Corporation on Form S-8 of our
report  dated March 23,  1999,  except for Note 7, as to which the date is March
29,  1999,  included  in the  Annual  Report  on  Form  10-K of  Hansen  Natural
Corporation for the year ended December 31, 1998.




Costa Mesa, California
March 31, 1999






<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 COMPANN'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-31-1998
<PERIOD-START>                               JAN-01-1998
<PERIOD-END>                                 DEC-31-1998 
<CASH>                                         3,806,089
<SECURITIES>                                           0
<RECEIVABLES>                                  3,814,308
<ALLOWANCES>                                   1,986,764
<INVENTORY>                                    5,211,077
<CURRENT-ASSETS>                              11,089,028 
<PP&E>                                         1,405,554
<DEPRECIATION>                                   804,031
<TOTAL-ASSETS>                                21,926,732
<CURRENT-LIABILITIES>                          6,092,121 
<BONDS>                                                0
<PREFERRED-MANDATORY>                                  0
<PREFERRED>                                            0
<COMMON>                                          49,560
<OTHER-SE>                                    13,892,623
<TOTAL-LIABILITY-AND-EQUITY>                  21,926,732
<SALES>                                       53,866,294
<TOTAL-REVENUES>                              53,938,646
<CGS>                                         27,332,028
<TOTAL-COSTS>                                 20,514,402
<OTHER-EXPENSES>                                  60,000
<LOSS-PROVISION>                                       0
<INTEREST-EXPENSE>                               387,446
<INCOME-PRETAX>                                5,630,051
<INCOME-TAX>                                   2,066,922
<INCOME-CONTINUING>                            3,563,129
<DISCONTINUED>                                         0
<EXTRAORDINARY>                                        0
<CHANGES>                                              0
<NET-INCOME>                                   3,563,129
<EPS-PRIMARY>                                        .38
<EPS-DILUTED>                                        .34
        


</TABLE>