MIDDLETON, Wis. – Capital Brewery achieved its third consecutive year of profitable growth in the year ended May 31, 2006, reporting net sales of $3,657,178 and net income of $138,742. Fiscal year 2006 was marked by significant accomplishments including the highly acclaimed product launch of Island Wheat, the completion of the first phase of cellar expansion, and the commencement of a 15,000 barrel expansion project for the company’s brewing and cellar facility in Middleton, Wisconsin. We also continued to build our strong team — more — by recruiting Catherine Baldauf for our sales team and Brodie Birkel for our Brew House team. Carl Nolen, Capital Brewery President and CEO, said “The efforts of our employees and the spirit in which they have performed their duties are very much appreciated. We are growing and there is much more to learn. Our opportunity to rise to the occasion and compete as a major player in the Craft Beer segment in the Malt Beverage Industry is there for us. We will navigate the course successfully and meet the challenges “head on.” We will succeed.”Sales and Cost of Goods Sold Net sales (sales net of excise tax and sales discounts) increased to $3,657,178 in fiscal year 2006, an increase of $794,493 from the prior year. Gross profit increased to $1,235,600 from the prior year gross profit of $1,026,103. The overall gross margin for fiscal year 2006 was 33.8% compared to 35.8% gross margin last year. The decrease in gross margin occurred because the product mix shifted slightly in fiscal year 2006 to a higher percentage of packaged product sales compared to draught product.Expenses Sales and marketing expenses in fiscal year 2006 were $515,406 compared to $321,740 in fiscal year 2005. The increase in sales and marketing expenses was for the “Island Wheat” product launch and for overall increases in our sales and marketing capabilities. Our sales and marketing efforts continue to focus on our home territory of Wisconsin. Administration expense was $501,620 in 2006 compared to $451,572 in 2005. Interest expense increased slightly in fiscal year 2006 due to additional borrowing for new aging tanks in fiscal year 2006.Liquidity and Capital Resources As of May 31, 2006, we had working capital of $659,541, compared to $525,627 as of May 31, 2005. This — more — increase of $133,914 was principally the result of working capital provided by profitable operations (income before depreciation and deferred income tax) totaling $318,124, less debt repayment of $145,323. Capital Brewery’s achievements are based on the success factors of our business: • We can grow our business profitably and will continue to do so. • Wisconsin is our home and our primary market and presents great opportunity. • Our employees are the greatest asset of our Company. “This past year has been another fantastic year for us at Capital Brewery. At the end of the day it’s all about the beer,” stated Carl Nolen.