SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-Q

                   Quarterly Report under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


  For the Quarterly Period Ended March 31, 1998 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)


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




     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




               The registrant had 9,138,909 shares of common stock
                          outstanding as of May 1, 1998




                                     HANSEN NATURAL CORPORATION AND SUBSIDIARIES
                                                   March 31, 1998

                                                        INDEX



                                                                      Page No.

Part I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

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

          Consolidated Statements of Operations for the
          three months ended March 31, 1998 and 1997                       4

          Consolidated Statements of Cash Flows for the
          three months ended March 31, 1998 and 1997                       5

          Notes to Consolidated Financial Statements                       6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operation                               7


Part II.  OTHER INFORMATION

Items 1-5.Not Applicable                                                  12

Item 6. Exhibits and Reports on Form 8-K                                  12

Signatures                                                                12




HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------

March 31, December 31, 1998 1997 ASSETS CURRENT ASSETS: Cash ............................................................ $ 465,919 $ 395,231 Accounts receivable (net of allowance for doubtful accounts, sales returns and cash discounts of $418,027 in 1998 and $315,629 in 1997 and promotional allowances of $1,224,414 in 1998 and $1,067,749 in 1997) ................ 2,196,885 1,533,748 Inventories ..................................................... 3,492,822 3,915,983 Prepaid expenses and other current assets ....................... 176,733 214,468 ------------ ------------ Total current assets ......................................... 6,332,359 6,059,430 PROPERTY AND EQUIPMENT, net ..................................... 600,471 412,496 INTANGIBLE AND OTHER ASSETS: Trademark license and trademarks (net of accumulated amortization of $2,464,678 in 1998 and $2,390,878 in 1997) ................ 10,151,549 10,208,116 Notes receivable from officer and director ...................... 57,363 68,235 Deposits and other assets ....................................... 192,866 185,082 ------------ ------------ Total intangible and other assets ............................ 10,401,778 10,461,433 ------------ ------------ $ 17,334,608 $ 16,933,359 ============ ============ LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................ $ 1,755,775 $ 2,195,200 Accrued liabilities ............................................. 317,657 444,807 Accrued compensation ............................................ 251,125 322,114 Current portion of long-term debt ............................... 537,660 520,835 Income taxes payable ............................................ 540,590 81,800 ------------ ------------ Total current liabilities .................................... 3,402,807 3,564,756 LONG-TERM DEBT .................................................. 3,264,991 3,407,824 SHAREHOLDERS' EQUITY: Common stock - $.005 par value; 30,000,000 shares authorized; 9,130,869 shares issued and outstanding .......... 45,654 45,654 Additional paid-in capital ...................................... 10,858,315 10,858,315 Accumulated deficit ............................................. (170,763) (875,949) Foreign currency translation adjustment ......................... (66,396) (67,241) ------------ ------------ Total shareholders' equity ................................... 10,666,810 9,960,779 ------------ ------------ $ 17,334,608 $ 16,933,359 ============ ============ See accompanying notes to the consolidated financial statements
3 HANSEN NATURAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (Unaudited) - --------------------------------------------------------------------------------
1998 1997 NET SALES ............................................................. $11,264,856 $ 7,119,586 COST OF SALES ......................................................... 5,613,428 4,236,246 ----------- ----------- GROSS PROFIT .......................................................... 5,651,428 2,883,340 OPERATING EXPENSES: Selling, general and administrative ................................... 4,278,486 2,587,765 Amortization of trademark license and trademarks ...................... 73,800 73,500 Other expenses ........................................................ 15,000 74,144 ----------- ----------- Total operating expenses ......................................... 4,367,286 2,735,409 ----------- ----------- OPERATING INCOME ...................................................... 1,284,142 147,931 NET INTEREST AND FINANCING EXPENSE .................................... 108,833 124,376 ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES ................................................. 1,175,309 23,555 PROVISION FOR INCOME TAXES ............................................ 470,123 2,400 ----------- ----------- NET INCOME ............................................................ $ 705,186 $ 21,155 =========== =========== NET INCOME PER COMMON SHARE: Basic ............................................................ $ 0.08 $ 0.00 =========== =========== Diluted .......................................................... $ 0.07 $ 0.00 =========== =========== NUMBER OF COMMON SHARES USED IN PER SHARE COMPUTATIONS: Basic ............................................................ 9,130,869 9,122,868 =========== =========== Diluted .......................................................... 9,740,264 9,123,005 =========== =========== See accompanying notes to the consolidated financial statements
4 HANSEN NATURAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (Unaudited) - --------------------------------------------------------------------------------
1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income ...................................................... $ 705,186 $ 21,155 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization of trademark license and trademarks ............. 73,800 73,500 Depreciation and other amortization .......................... 76,466 52,903 Effect on cash of changes in operating assets and liabilities: Accounts receivable ........................................ (663,137) (65,154) Inventories ................................................ 423,161 349,282 Prepaid expenses and other current assets .................. 37,735 (79,271) Accounts payable ........................................... (439,425) (123,659) Accrued liabilities ........................................ (127,150) (47,552) Accrued compensation ....................................... (70,989) Income taxes payable ....................................... 458,790 --------- --------- Net cash provided by operating activities ................ 474,437 181,204 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment .............................. (264,441) (40,299) Increase in trademark license and trademarks .................... (17,233) (10,218) Decrease (increase) in notes receivable from officer and director 10,872 (1,518) Increase in deposits and other assets ........................... (7,784) (10,396) --------- --------- Net cash used in investing activities .................... (278,586) (62,431) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in short-term borrowings ............................... (234,736) Principal payments on long-term debt ............................ (126,008) --------- --------- Net cash used in financing activities .................... (126,008) (234,736) EFFECT OF EXCHANGE RATE CHANGES ON CASH ......................... 845 (13,416) --------- --------- NET INCREASE (DECREASE) IN CASH ................................. 70,688 (129,379) CASH, beginning of period ....................................... 395,231 186,931 ========= ========= CASH, end of period ............................................. $ 465,919 $ 57,552 ========= ========= SUPPLEMENTAL INFORMATION: Cash paid during the year for: Interest ..................................................... $ 96,544 $ 114,735 ========= ========= Income taxes ................................................. $ 2,400 $ 2,400 ========= ========= See accompanying notes to the consolidated financial statements.
5 HANSEN NATURAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ 1. BASIS OF PRESENTATION Reference is made to the Notes to Consolidated Financial Statements, in the Company's Form 10-K for the year ended December 31, 1997, which is incorporated by reference, for a summary of significant policies utilized by Hansen Natural Corporation ("Hansen" or "Company") and its subsidiaries, Hansen Beverage Company ("HBC") and CVI Ventures, Inc., and its indirect subsidiary, Hansen Beverage Company (UK) Limited, which is in the course of being deregistered. The information set forth in these interim financial statements is unaudited and may be subject to normal year-end adjustments. The information reflects all adjustments, which include only normal recurring adjustments, which in the opinion of management are necessary to make the financial statements not misleading. Results of operations covered by this report may not necessarily be indicative of results of operations for the full fiscal year. 2. INVENTORIES Inventories consist of the following at: March 31, December 31, 1998 1997 ---------------- ---------------- Raw materials $ 916,899 $ 388,877 Finished goods 2,575,923 3,527,106 ================ ================ $ 3,492,822 $3,915,983 ================ ================ 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------ General During the three months ended March 31, 1998, the Company continued to make progress towards achieving its goal of geographically expanding the Hansen's(R) brand as well as expanding the Hansen's(R) brand product range. During the three months ended March 31, 1998, the expansion of distribution of certain of the Company's products into markets outside of California continued to make good progress. In April 1997, the Company introduced its lightly carbonated functional energy drink in an 8.2-ounce slim can. Repeat sales of this product have been encouraging. During the first quarter of 1998, the Company extended its "functional" beverage product line by introducing three additional functional drinks in 8.2-ounce slim cans, a ginger flavored d-stress drink, an orange flavored anti-ox drink and a guarana flavored stamina drink. The Company intends to introduce additional functional drinks and a new line of premium functional Smoothies later in 1998. In addition, the Company intends to introduce a new line of premium natural sodas and premium functional iced teas in proprietary glass bottles later in 1998 or in 1999. Net sales and profitability were positively affected by increased sales of all of the Company's products and, in particular, the Company's new functional drinks in 8.2-ounce slim cans. The increase in net sales of Smoothie products was primarily due to increased sales to club stores and retail stores. The increase in net sales of soda, iced teas, lemonades and juice cocktails was primarily due to increased sales to club stores. The increase in net sales of apple juice was primarily attributable to aggressive pricing and promotions undertaken by the Company. Management believes that the redesign of the apple juice label late in 1997 may also have contributed towards such increase. Attention is drawn to the fact that during the comparable period in 1997, the Company did not have any sales of its lightly carbonated functional energy drinks in 8.2-ounce slim cans, such drinks having been introduced in April 1997. Moreover, the majority of the sales of functional drinks in 8.2-ounce slim cans during the three months ended March 31, 1998 were attributable to opening orders from distributors for the three new functional drinks prior to their launching such products in their respective territories. Consequently, the sales of the three new functional drinks during the three months ended March 31, 1998 may not be indicative of the sales that will be achieved in subsequent periods. The Company continues to incur expenditures in connection with the development and introduction of new products and flavors. 7 Results of Operations For The Three-month period ended March 31, 1998 Compared to The Three-month period ended March 31, 1997 Net Sales. For the three months ended March 31, 1998, net sales were approximately $11.3 million, an increase of $4.1 million or 58.2% over the $7.1 million net sales for the three months ended March 31, 1997. The increase in net sales was primarily attributable to sales of the Company's new functional energy drink which was introduced during April 1997, sales of the Company's other functional drinks which were introduced during the first quarter of 1998 and an increase in net sales of the Company's remaining product lines. Gross Profit. Gross profit was $5.7 million for the three months ended March 31, 1998, an increase of $2.8 million or 96.0% over the $2.9 million gross profit for the three months ended March 31, 1997. The increase in gross profit was primarily attributable to the increase in net sales and, to a lesser extent, to cost reductions achieved for certain raw materials and packaging. Gross profit as a percentage of net sales increased to 50.2% for the three months ended March 31, 1998 from 40.5% for the three months ended March 31, 1997. 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 $4.4 million for the three months ended March 31, 1998, an increase of $1.6 million or 59.7% higher than total operating expenses of $2.7 million for the three months ended March 31, 1997. The increase in total operating expenses was primarily attributable to increases in selling, general and administrative expenses, which were partially offset by a decrease in other expenses. Total operating expenses as a percentage of net sales increased to 38.8% for the three months ended March 31, 1998 from 38.4% for the three months ended March 31, 1997. The increase in total operating expenses as a percentage of net sales was primarily attributable to an increase in selling, general and administrative expenses, which were partially offset by a decrease in amortization of trademark license and trademarks, and other expenses. Selling, general and administrative expenses were approximately $4.3 million for the three months ended March 31, 1998, an increase of $1.7 million or 65.3% higher than $2.6 million for the three months ended March 31, 1997. Selling, general and administrative expenses as a percentage of net sales increased to 38.0% for the three months ended March 31, 1998 compared to 36.3% for the three months ended March 31, 1997. The increase in selling expenses was primarily attributable to increases in distribution costs, promotional allowances and costs of promotional materials primarily to support the expansion of distribution and sales of the Company's functional product line and Smoothie products in bottles. The increase in general and administrative expenses was primarily attributable to increased payroll and other costs incurred in connection with the Company's expansion activities into additional states. Other expenses were approximately $15,000 for the three months ended March 31, 1998 compared to $74,000 for the three months ended March 31, 1997. The decrease in other expenses was primarily attributable to the expiration of certain consulting agreements entered into in connection with the acquisition of the Hansen business. The decrease was partially offset by a new consulting agreement entered into with the former president of HBC in June 1997. 8 Operating Income. Operating income was $1.3 million for the three months ended March 31, 1998 compared to operating income of $148,000 for the three months ended March 31, 1997. The increase in operating income is primarily attributable to the increase in gross profit, which was partially offset, by an increase in total operating expenses. Net Interest and Financing Expense. Net interest and financing expense for the three months ended March 31, 1998 was $109,000 compared to $124,000 for the three months ended March 31, 1997. The decrease in interest and financing expense was attributable to the fact that during the three months ended March 31, 1998, no amounts were outstanding under the Company's revolving line of credit and lower principal amounts were outstanding on the Company's term loan during the three months ended March 31, 1998 than during the comparable period in 1997. Net Income. Net income was $705,000 for the three months ended March 31, 1998 compared to net income of $21,000 for the three months ended March 31, 1997. The $684,000 increase in net income is attributable to an increase in operating income of $1.1 million and a decrease in total nonoperating expenses of $15,000, but was partially offset by an increase in the provision for income taxes of $468,000. Liquidity and Capital Resources As of March 31, 1998, the Company had working capital of $2,930,000 compared to working capital of $2,495,000 as of December 31, 1997. Net cash provided by operating activities increased to $474,000 for the three months ended March 31, 1998 as compared to $181,000 for the comparable period in 1997. The increase in working capital and net cash provided by operating activities was primarily attributable to net income earned after adjustments for certain noncash expenses, primarily amortization of trademark license and trademarks and depreciation and other amortization, during the quarter ended March 31, 1998. Management believes that cash generated from operations and its cash resources and amounts available under the revolving line of credit, will be sufficient to meet its operating cash requirements in the foreseeable future, including purchase commitments for raw materials, debt servicing, expansion and development needs as well as any purchases of capital assets or equipment. Net cash used in investing activities increased to $279,000 for the three months ended March 31, 1998 as compared to $62,000 for the comparable period in 1997. The increase in net cash used in investing activities was primarily attributable to purchases of property and equipment to support the Company's expansion and development plans. Although the Company has no current plans to incur any material capital expenditures, management, from time to time, considers the acquisition of capital equipment, particularly coolers and vans, and businesses compatible with the image of the Hansen's(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. 9 Net cash used in financing activities decreased to $126,000 for the three months ended March 31, 1998 as compared to $235,000 during the comparable period in 1997. The decrease in net cash used in financing activities was primarily attributable to the fact that during the three-month period ended March 31, 1998, no amounts were borrowed by the Company under its revolving line of credit. Such decrease in net cash used in financing activities was partially offset by principal payments made during the three months ended March 31, 1998 on the term loan. As of March 31, 1998, the sum of $3,791,665 was outstanding under the term loan. The revolving line of credit is renewable on July 1, 1998. The Company anticipates that such line will be renewed by this date; 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. 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 21st century dates from 20th century dates. This problem could force computers to either shut down or provide incorrect data. As a result, in less than two years, computer systems and software used by many companies may need to be upgraded to comply with such "Year 2000" requirements. The Company has examined its internal computer systems and contacted its software providers to determine whether the Company's software applications are compliant with the Year 2000. While the Company believes that its internal systems are fully Year 2000 compliant, the Company intends to continue to review its internal systems for any problems as well as monitor its key customers and suppliers for any impact that the Year 2000 may have on their information systems which in turn could impact the Company. While it is difficult to quantify the total cost to the Company of the Year 2000 compliance activities, the Company does not expect the cost to be material. Forward Looking Statements Certain statements made in this Report, including certain statements made in this Management's Discussion and Analysis, contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E 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. 10 Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein, including, but not limited to, the following: changes in consumer preferences, changes in demand that are weather related, particularly in areas outside of California, competitive pricing pressures, changes in the price of the raw materials for the Company's beverage products, the marketing efforts of the distributors of the Company's products, most of which distribute products that are competitive with the products of the Company, and the introduction of new products, as well as unilateral decisions that may be made by grocery chain stores, specialty chain stores and club stores to discontinue carrying all or any of the Company's products that they are carrying at any time. Management further notes that the Company's plans and results may be affected by the terms of the Company's credit facilities and the actions of its creditors. Inflation The Company does not believe that inflation has a significant impact on the Company's results of operations for the periods presented. 11 PART II - OTHER INFORMATION Items 1 - 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - See Exhibit Index (b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements 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 Registrant Date: May 13, 1998 /s/ RODNEY C. SACKS Rodney C. Sacks Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: May 13, 1998 /s/ HILTON H. SCHLOSBERG Hilton H. Schlosberg Vice Chairman of the Board, President, Chief Operating Officer, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) 12 EXHIBIT INDEX Exhibit 10 (bbb) Stock Option Agreement dated as of January 30, 1998 between Hansen Natural Corporation and Rodney C. Sacks Exhibit 10 (ccc) Stock Option Agreement dated as of January 30, 1998 between Hansen Natural Corporation and Hilton H. Schlosberg Exhibit 27 Financial Data Schedule


                                              STOCK OPTION AGREEMENT


         This Stock  Option  Agreement  ("Agreement")  is made as of January 30,
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 75,000  shares of Common  Stock,  at the
purchase price of $1.59 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

                                      37,500                  January 30, 1998
                                      37,500                  January 30, 1999
                                      75,000
                  (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  occurrence 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 non-assessable.
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 22 Halfmoon, Irvine, California
92714,  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 January 30,
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 75,000  shares of Common  Stock,  at the
purchase price of $1.59 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

                                      37,500                   January 30, 1998
                                      37,500                   January 30, 1999
                                      75,000
                  (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:  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

 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAO INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS. 0000865752 HANSEN NATURAL CORPORATION 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 465,919 0 3,839,326 1,642,441 3,492,822 6,332,359 1,327,467 726,996 17,334,608 3,402,807 0 0 0 45,654 10,621,156 17,334,608 11,264,856 11,265,959 5,613,428 4,278,486 88,800 0 109,936 1,175,309 470,123 705,186 0 0 0 705,186 .08 .07