SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         For Quarter Ended June 30, 1999
                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to

                         Commission file number: 0-13181

                          CAPITAL BEVERAGE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

                    Delaware                          13-3878747
         State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization              Identification No.)

                 1111 East Tremont Avenue, Bronx, New York 10460
               (Address of Principal Executive Office) (Zip Code)

                                 (718) 409-2337
               (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  number  of shares  of  registrant's  Common  Stock,  $.001  par  value,
    outstanding as of August 5, 1999 was 2,378,409 shares.

<PAGE>
                          CAPITAL BEVERAGE CORPORATION
                                   FORM 10-QSB
                                  June 30, 1999
                                      INDEX




PART I.  FINANCIAL INFORMATION
                                                                      PAGE
Item 1.  Consolidated Financial Statements (Unaudited)               NUMBER


         Balance Sheet as of June 30, 1999                              3

         Statements of Operations for the three-months
          ended June 30, 1999 and 1998 and the six months
          ended June 30, 1999 and 1998                                  4

         Statements of Cash Flows for the six-months
          ended June 30, 1999 and 1998                                  5

         Note to Financial Statements                                   6

Item 2.  Management's Discussion and Analysis                        7 - 8


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                               9

Signatures                                                             10

                                        2


<PAGE>
<TABLE>
<CAPTION>

                                         CAPITAL BEVERAGE CORPORATION

                                          CONSOLIDATED BALANCE SHEET


                                                                                                         June 30,
                                                                                                           1999
                                                                                                   -------------------
                                                    ASSETS                                              (Unaudited)


<S>                                                                                             <C>
CURENT ASSETS:
     Cash                                                                                         $          1,838,621
     Accounts receivable - trade, net of allowance for doubtful accounts of $60,000                            435,607
     Inventories                                                                                               910,414
     Prepaid expenses and other                                                                                131,908
                                                                                                    -------------------
         TOTAL CURRENT ASSETS                                                                                3,316,550

PROPERTY AND EQUIPMENT, less accumulated depreciation of $25,967                                                97,697

OTHER ASSETS:
     Intangible assets, less accumulated amortization of $520,000                                            1,040,000
     Deposits                                                                                                    3,290
                                                                                                    -------------------

                                                                                                  $          4,457,537
                                                                                                     ===================

                                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                                                             $            429,769
     Accrued expenses and taxes                                                                                268,509
     Current portion of long-term debt                                                                          71,145
     Accrued dividends on preferred stock                                                                      312,113
                                                                                                    -------------------
         TOTAL CURRENT LIABILITIES                                                                           1,081,536
                                                                                                    -------------------

LONG-TERM DEBT                                                                                                 523,202
                                                                                                    -------------------

STOCKHOLDERS' EQUITY:
     7% Cumulative Series B Preferred Stock, par value $.01;
         issued and outstanding 300,000 shares (Liquidation value $1,200,000)                                     3,000
     Common stock, $ .001 par value; authorized 20,000,000 shares;
         issued and outstanding 2,378,409 shares                                                                  2,379
     Additional paid-in capital                                                                               5,365,573
     Accumulated deficit                                                                                     (2,518,153)
                                                                                                     -------------------
         TOTAL STOCKHOLDERS' EQUITY                                                                           2,852,799
                                                                                                     -------------------

                                                                                                   $          4,457,537
                                                                                                      ===================
                     The accompanying note is an integral part of the financial statements.

                                                       3


</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                    CAPITAL BEVERAGE CORPORATION

                                               CONSOLIDATED STATEMENTS OF OPERATIONS


                                                           Three Months Ended June 30,                Six Months Ended June 30,
                                                    -------------------------------------------   ----------------------------------
                                                           1999                   1998                 1999               1998
                                                    --------------------   --------------------   ----------------   ---------------
                                                        (Unaudited)            (Unaudited)          (Unaudited)        (Unaudited)

<S>                                              <C>                    <C>                    <C>                <C>
SALES                                             $           3,366,881  $           2,488,413  $       5,361,103  $      4,712,128

COST OF GOODS SOLD                                            2,589,138              2,238,127          4,218,041         4,328,669
                                                    --------------------   --------------------   ----------------   ---------------

GROSS PROFIT                                                    777,743                250,286          1,143,062           383,459
                                                    --------------------   --------------------   ----------------   ---------------

OPERATING EXPENSES
     Selling and delivery                                       203,235                 50,737            361,448           104,652
     General and administrative                                 567,093                354,944          1,045,784           764,464
                                                    --------------------   --------------------   ----------------   ---------------
                                                                770,328                405,681          1,407,232           869,116
                                                    --------------------   --------------------   ----------------   ---------------

INCOME (LOSS) FROM OPERATIONS                                     7,415               (155,395)          (264,170)         (485,657)

INTEREST EXPENSE                                                (13,321)               (14,553)           (26,837)          (29,436)

INTEREST INCOME                                                  18,560                 30,540             38,807            62,376
                                                    --------------------   --------------------   ----------------   ---------------

NET INCOME (LOSS)                                                12,654               (139,408)          (252,200)         (452,717)

PREFERRED STOCK DIVIDENDS                                       (21,000)               (21,000)           (42,000)          (42,000)
                                                    --------------------   --------------------   ----------------   ---------------

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS        $              (8,346) $            (160,408) $        (294,200) $       (494,717)
                                                    ====================   ====================   ================   ===============

LOSS PER  COMMON SHARE - BASIC AND DILUTED        $                (0.00)$               (0.07) $           (0.12) $          (0.21)
                                                    ====================   ====================   ================   ===============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES                      2,378,409              2,378,409          2,378,409         2,378,409
                                                    ====================   ====================   ================   ===============











                               The accompanying note is an integral part of the financial statements.

                                                                 4





</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                        CAPITAL BEVERAGE CORPORATION

                                    CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                            Six Months Ended June 30,
                                                                    ------------------------------------------
                                                                           1999                   1998
                                                                    --------------------   -------------------
                                                                        (Unaudited)           (Unaudited)

<S>                                                             <C>                     <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                     $            (252,200) $           (452,717)
                                                                    --------------------   -------------------
     Adjustments to reconcile net loss to
         net cash used in operating activities:
            Depreciation and amortization                                        84,077                82,120

     Changes in assets and liabilities:
         (Increase) decrease in accounts receivable                             (93,838)              358,740
         (Increase) in inventories                                             (331,315)             (266,729)
         (Increase) decrease in prepaid expenses                                 24,691              (170,906)
         Decrease in deposits                                                    72,372                     -
         Increase in accounts payable and accrued expenses                      327,336                74,684
                                                                    --------------------   -------------------
                                                                                 83,323                77,909
                                                                    --------------------   -------------------

NET CASH USED IN OPERATING ACTIVITIES                                          (168,877)             (374,808)
                                                                    --------------------   -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                       (47,915)               (2,437)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Decrease in  note payable                                                  (33,328)              (30,565)
                                                                    --------------------   -------------------

NET DECREASE IN CASH                                                           (250,120)             (407,810)

CASH - BEGINNING OF PERIOD                                                    2,088,741             2,843,870
                                                                    --------------------   -------------------

CASH - END OF PERIOD                                              $           1,838,621  $          2,436,060
                                                                    ====================   ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:

     Cash paid for interest                                       $              26,837  $             29,436
                                                                    ====================   ===================

     Cash paid for income taxes                                   $                   -  $                  -
                                                                    ====================   ===================
















                   The accompanying note is an integral part of the financial statements.

                                                      5



</TABLE>









<PAGE>

                          CAPITAL BEVERAGE CORPORATION

                    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 1999

                                   (Unaudited)


1.       BASIS OF PRESENTATION

                  The accompanying  financial statements reflect all adjustments
         which,  in  the  opinion  of  management,  are  necessary  for  a  fair
         presentation  of the  financial  position and the results of operations
         for the interim periods presented.

                  Certain  financial  information  which is normally included in
         financial  statements is prepared in accordance with generally accepted
         accounting principles,  but which is not required for interim reporting
         purposes has been  condensed  or omitted.  The  accompanying  financial
         statements should be read in conjunction with the financial  statements
         and notes  thereto  contained in the  Company's  Annual  Report on Form
         10-KSB.






                                       -6-

<PAGE>



  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

           The following  discussion  and analysis  provides  information  which
  management  believes is relevant to an  assessment  and  understanding  of the
  Company's  results of operations  and  financial  condition.  This  discussion
  should be read in conjunction with the financial  statements and notes thereto
  appearing elsewhere herein.

           Statements in this Form 1O-QSB that are not  statements of historical
  or current fact constitute "forward-looking  statements" within the meaning of
  the Private  Securities  Litigation  Reform Act of 1995. Such  forward-looking
  statements  involve known and unknown risks,  uncertainties  and other unknown
  factors  that could cause the actual  results of the Company to be  materially
  different from the historical  results or from any future results expressed or
  implied by such  forward-looking  statements.  In addition to statements  that
  explicitly  describe  such  risks  and  uncertainties,  readers  are  urged to
  consider  statements labeled with the terms "believes,"  "belief,"  "expects,"
  "intends,"  "anticipates" or "plans" to be uncertain and forward-looking.  The
  forward- looking  statements  contained  herein are also subject  generally to
  other  risks and  uncertainties  that are  described  from time to time in the
  Company's  reports and  registration  statements filed with the Securities and
  Exchange Commission.

  a.       Results of Operations

           Sales for the six  months  ended  June 30,  1999 were  $5,361,103  as
  compared to sales of $4,712,128 for the six months ended June 30, 1998.  Sales
  for the quarter  ended June 30, 1999 were  $3,366,881  as compared to sales of
  $2,488,413  for the quarter  ended June 30, 1998.  The cost of goods sold as a
  percentage  of  sales  for the six  month  period  in 1999  period  was 79% as
  compared to 92% for the comparable 1998 period.  The decrease in cost of goods
  sold as a percentage  of sales for the six months ended June 30, 1999,  is due
  primarily to the additional sales of products from the Pittsburgh Brewery Co.,
  which affords the Company a significantly greater gross margin percentage.

         Selling,  general and administrative  expenses for the six month period
  ended June 30, 1999 were $1,407,232 as compared to $869,116 for the respective
  1998  period.  The increase in the six months ended June 30, 1999 results from
  expansion  into new products  provided by the Pittsburgh  Brewery  Co.,certain
  expenses increased as a result of added warehousing and salespeople  salaries,
  automobile  expenses,  legal fees,  office  expenses,  repairs and maintenance
  expenses.

        Interest  expense  for the six  month  period  ended  June 30,  1999 was
  $26,837 as compared to $29,436 for the respective 1998 period. The decrease in
  the six month  period  ended June 30,  1999 is due to the  reduction  of debt.
  Interest  income for the six month  period  ended June 30, 1999 was S38,807 as
  compared to $62,376 for the  respective  1998 period.  The decrease in the six
  month period  resulted  from the decrease in average cash balance  invested in
  the Vista account.






                                       -7-

<PAGE>



  b.       Liquidity and Capital Resources

               Cash used in  operations  for the six months  ended June 30, 1999
      was $168,887.  The increase in  inventories  of  $331,315was  offset by an
      increase in accounts payable and accrued expenses of $327,336.

               Working capital decreased from $2,457,022 at December 31, 1998 to
      $2,235,014  at June 30, 1999 as a result of the cash required in operating
      activities.

               At June 30, 1999, the Company's primary sources of liquidity were
      $1,838,621 in cash, $435,607 in accounts receivable and $910,414.

               Management  believes it has sufficient sources of working capital
      to adequately meet the Company's needs through the end of 1999,

               CAP  Communications  Ltd. was formed in November 1998 to explore,
      as an ancillary to beverage  sales,  the rapidly  expanding  prepaid phone
      card  market.  Within New York City,  the bulk of phone  cards sales occur
      within  ethnic  neighborhoods,  with  major  sales  occurring  within  the
      Hispanic based  communities.  Given Capital  Beverage's  well  established
      position in local  Hispanic  retail markets and its'  connection  with the
      business  owners,  phone  cards may serve as a  significant  source of new
      revenues to Capital's  expanding beverage sales. The synergism of the two,
      beer sales and phone  cards,  may prove to be the  catalyst,  which sparks
      continued revenue growth for Capital Beverage. Working in conjunction with
      Orion  Telecommunications  Corporation,  with offices in New York, Capital
      Beverage  has begun an  infrastructure  development  to  explore  this new
      potential  market Orion has agreed to provide funding to Capital  Beverage
      which will allow  Capital  Beverage to determine  what course of action to
      take to make their card a success here in New York.

      c.   Year 2000

               The Company recognizes that a challenging  problem exists in that
      many systems  worldwide do not have the capability of recognizing the year
      2000 or the years thereafter.  No easy  technological  "quick fix" has yet
      been  developed for this problem.  While the issue is not of  significance
      for the Company because of its minimal  reliance on computers,  this "Year
      2000  Computer  Problem"  creates  risk for the  Company  from  unforeseen
      problems in its own computer  systems and from third parties with whom the
      Company deals. Such failures of third parties' computer systems could have
      a material  adverse  effect on the  Company and its ability to conduct its
      business in the future.










                                       -8-

<PAGE>


PART II - OTHER INFORMATION


Item 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits:

       Number                  Description

           27          Financial Data Schedule

(b)    Reports on Form 8-K

       No reports on Form 8-K were filed during the quarter ended June 30, 1999.




                                       -9-

<PAGE>



                                   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.

                                      CAPITAL BEVERAGE CORPORATION



Date: August 13, 1999
                                      /s/Carmine N. Stella, President and
                                      Chief Executive Officer,
                                      as  Registrant's duly authorized officer




                                      /s/Carol Russell,
                                      Secretary and Treasurer











                                      -10-