UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
10-Q
 
 [X]
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the quarterly period ended March 31, 2009
  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.)120
      Rio Vista Drive, Norwood, New Jersey
                    07648(Address
      of principal executive offices)
                    (Zip
      Code)
 
 (201)
679-6752
 (Registrant’s telephone
number, including area code)
 
 Not
Applicable
 (Former
name, former address and former fiscal year, if changed since last
report)
  ___________________
 
 
 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 whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
 
 Large
accelerated filer [ 
]                Accelerated
filer  [ 
]           
Non-accelerated filer [X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
 Yes [X]No [  ]
 
 The
number of shares of common stock, $.001 par value, outstanding as of May 20,
2009  was 3,792,045.
 
 
 CAPITAL
BEVERAGE CORPORATION
 
 QUARTERLY
REPORT ON FORM 10-Q
 
 TABLE
OF CONTENTS
  
 PagePART I - FINANCIAL INFORMATIONItem
      1.
                            Financial
      Statements (Unaudited)Balance
      Sheets
                            3Statements
      of Operations
                            4Statements
      of Cash Flows
                            5Notes
      to Financial Statements
                            6Item
      2.
                            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                            9Item
      3.
                            Quantitative
      and Qualitative Disclosures About Market Risks
                            10Item
      4.
                            Controls
      and Procedures
                            10PART II - OTHER INFORMATIONItem
      1.
                            Legal
      Proceedings
                            11Item
      1A.
                            Risk
      Factors
                            11Item
      2
                            Unregistered
      Sales of Equity Securities and Use of  Proceeds
                            11Item
      3
                            Defaults
      Upon Senior Securities
                            11Item
      4
                            Submission
      of Matters to Vote of Securities Holders
                            11Item
      5
                            Other
      Information
                            11Item
      6.
                            Exhibits
                            11Signatures
                            
                            12
 
 2
 PART
I-FINANCIAL INFORMATION
 
 Item
1. Financial Statements
 CAPITAL BEVERAGE
  CORPORATIONBALANCE SHEETSASSETS
  March
      31,
                                
                                
                                December
      31,2009
                                
                                
                                2008(Unaudited)CURRENT
      ASSETS:Cash
                                
                                $
                                9,947
                                
                                
                                $
                                8,326Restricted
      cash
                                
                                
                                -
                                
                                
                                
                                55,876TOTAL
      CURRENT ASSETS
                                
                                
                                9,947
                                
                                
                                
                                64,202OTHER
      ASSETS
                                
                                
                                2,319
                                
                                
                                
                                2,319$
                                12,266
                                
                                
                                $
                                66,521LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIES:Accounts
      payable
                                
                                $
                                1,126,953
                                
                                
                                $
                                1,092,817TOTAL
      CURRENT LIABILITIES
                                
                                
                                1,126,953
                                
                                
                                
                                1,092,817STOCKHOLDERS'
      DEFICIT:Preferred
      stock, no shares issued and outstanding
                                
                                
                                -
                                
                                
                                
                                -Common
      stock, $.001 par value; authorized 20,000,000 shares;issued
      and outstanding 3,792,045 shares
                                
                                
                                3,793
                                
                                
                                
                                3,793Additional
      paid-in capital
                                
                                
                                6,011,249
                                
                                
                                
                                6,011,249Accumulated
      deficit
                                
                                
                                (7,129,729
                                )
                                
                                
                                (7,041,338
                                )TOTAL
      STOCKHOLDERS' DEFICIT
                                
                                
                                (1,114,687
                                )
                                
                                
                                (1,026,296
                                )$
                                12,266
                                
                                
                                $
                                66,521
  See
      notes to unaudited financial
statements.
  3
  CAPITAL BEVERAGE
CORPORATIONSTATEMENTS OF OPERATIONSThree
      Months Ended March 31,2009
                                
                                
                                2008(Unaudited)
                                
                                
                                (Unaudited)REVENUES
                                
                                $
                                -
                                
                                
                                $
                                -COSTS
      AND EXPENSES:General
      and administrative
                                
                                
                                88,391
                                
                                
                                
                                100,75088,391
                                
                                
                                
                                100,750LOSS
      FROM CONTINUING OPERATIONS
                                
                                
                                (88,391
                                )
                                
                                
                                (100,750
                                )NET
      LOSS
                                
                                $
                                (88,391
                                )
                                
                                $
                                (100,750
                                )NET
      LOSS PER SHARE:Basic
      and diluted
                                
                                $
                                (0.02
                                )
                                
                                $
                                (0.03
                                )WEIGHTED
      AVERAGE NUMBER OF SHARES:Basic
      and Diluted
                                
                                
                                3,792,045
                                
                                
                                
                                3,792,045
  See
      notes to unaudited financial
statements.
   4
  CAPITAL BEVERAGE
CORPORATIONSTATEMENTS OF CASH FLOWSThree
      Months Ended March 31,2009
                                
                                
                                2008(Unaudited)
                                
                                
                                (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                
                                $
                                (88,391
                                )
                                
                                $
                                (100,750
                                )Changes
      in assets and liabilities:Accounts
      payable
                                
                                
                                34,137
                                
                                
                                
                                (36,657
                                )Accrued
      expenses and taxes
                                
                                
                                -
                                
                                
                                
                                (42,543
                                )Other
      Receivable-Current Portion
                                
                                
                                -
                                
                                
                                
                                5,000Total
      adjustments
                                
                                
                                34,137
                                
                                
                                
                                (74,200
                                )NET
      CASH USED IN OPERATING ACTIVITIES
                                
                                
                                (54,255
                                )
                                
                                
                                (174,950
                                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Capital
      contributed
                                
                                
                                -
                                
                                
                                
                                4,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                
                                
                                -
                                
                                
                                
                                4,000NET
      DECREASE IN CASH
                                
                                
                                (54,255
                                )
                                
                                
                                (170,950
                                )CASH
      - BEGINNING OF PERIOD
                                
                                
                                64,202
                                
                                
                                
                                743,165CASH
      - END OF PERIOD
                                
                                $
                                9,947
                                
                                
                                $
                                572,215SUPPLEMENTAL
      DISCLOSURE OF CASH FLOWINFORMATION:Cash
      paid for interest
                                
                                $
                                -
                                
                                
                                $
                                -Cash
      paid for taxes
                                
                                $
                                -
                                
                                
                                $
                                -
  See
      notes to unaudited financial
statements.
  5
 CAPITAL BEVERAGE CORPORATION
                  
                  NOTES TO FINANCIAL STATEMENTS
                  
                  THREE MONTHS ENDED MARCH 31, 2009 AND
      2008
   1. BASIS OF PRESENTATION AND
DESCRIPTION OF BUSINESS
  The
accompanying unaudited financial statements of Capital Beverage Corporation (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments necessary to present fairly the information set forth therein have
been included. Operating results for the three months ended March 31, 2009 are
not necessarily indicative of the results that may be experienced for the fiscal
year ending December 31, 2009.
  The
accompanying financial statements should be read in conjunction with the
Company's Form 10-K/A for the fiscal year ended December 31, 2008, which was
filed on April 15, 2009.
  Capital
Beverage Corporation (the “Company” or “Capital”) was formed in December 1995 to
operate as a wholesale distributor of beer and other beverages in New York City.
On December 16, 2005, the Company sold substantially all of its assets to Oak
Beverages, Inc. In December 1998, CAP Communications, Ltd. (“Cap Com”), a
wholly-owned subsidiary, was organized to market domestic and long distance
prepaid telephone calling cards to distributors and to the general public. In
December 2006, the Company dissolved Cap Com.
  The
Company’s principal business objective for the next 12 months and beyond such
time will be to achieve long-term growth potential through a combination with an
operating business.  The Company will not restrict its potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business. The analysis of new
business opportunities will be undertaken by or under the supervision of the
officers and directors of the Company.
  2. GOING
CONCERN
  The
accompanying financial statements have been prepared on a going-concern basis,
which presumes that the Company will be able to continue to meet its obligations
and realize its assets in the normal course of business.
  The
Company has not generated revenue since the sale of assets in December 2005. As
a result, current operations are not an adequate source of cash to fund future
operations. The report of the independent registered public accounting firm for
the year ended December 31, 2008 contains an explanatory paragraph regarding the
Company’s ability to continue as a going concern. The Company’s ability to
continue as a going concern is dependent on its ability to find an operating
business to acquire or merge with. There are no assurances that the Company will
be able to achieve its objective to find an operating company to merge with or
acquire.
  6
 3. SIGNIFICANT ACCOUNTING
POLICIES
  Cash and Cash Equivalents- Cash and cash equivalents include cash on hand and cash in banks in
demand and time deposit accounts with maturities of 90 days or
less.
  Restricted Cash– All
funds held in escrow were released on January 30, 2009.
  Income Taxes- The
Company follows Statement of Financial Accounting Standards No. 109 - Accounting
for Income Taxes, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
  Use of Estimates-
The preparation of 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
  Fair Value of Financial
Instruments- The Company considers its financial instruments, which are
carried at cost, to approximate fair value due to their near-term
maturities.
  Income (loss) per Common
Share- Net loss per common share is based on the weighted average number
of shares outstanding. Potential common shares includable in the computation of
fully diluted per share results are not presented in the financial statements as
their effect would be anti-dilutive.
  New Accounting
Pronouncements– Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, could
have a material effect on the accompanying financial statements.
  4. LITIGATION
  On June
26, 2007, the Company filed a complaint against Oak Beverages, Inc.
("Oak"), Victoria Beverage, Inc. ("Victoria"), and Dealy &
Silberstein, LLP, solely in its capacity as escrow agent, in the U.S.
District Court for the Southern District of New York (the "Court"), seeking a
declaratory judgment that, under the parties' Asset Purchase Agreement, dated
September 15, 2005 and Escrow Agreement, dated December 16, 2005, the Company is
not required to indemnify Oak and Victoria for unemployment insurance
contributions based on the experience rating account held by Oak and maintained
by the State of New York Department of Labor
("NYDOL").
  7
 On July
23, 2007, Oak and Victoria filed with the Court an answer, counterclaim, and
cross-claim in response to the Company's complaint alleging that the Asset
Purchase Agreement was "deliberately structured" such that any
liability, which would include the disputed unemployment
taxes, would be retained by the Company post-closing and would not be
transferred to Oak.  On August 15, 2007, the Company filed a
reply to Oak and Victoria's counterclaim.
  On August
6, 2008, the parties reached a settlement agreement.  The settlement
provided that the Company pay Oak the sum of $100,000.00 in full settlement of
all claims.  The settlement also provided that the balance of the
funds held in escrow, be released to the Company with the exception of the
amount of $55,739.00 which will continue to be held in escrow in connection with
a unrelated pending claim asserted by a third party.  The settlement
agreement was executed as of August 28, 2008 and included a Joint Stipulation
and Order of Dismissal with Prejudice (the "Joint Stipulation"), which
was signed by all parties.  Judge Buchwald signed and entered the
Joint Stipulation on September 8, 2008, which formally concluded the
action.
 
 In
January 2009, the Company settled a claim made by the Pabst Brewing Company
(Pabst Claim) for $27,869.50 which represents one half of the Pabst
Claim.  At January 30, 2009 the total amount held in escrow was
$55,875.50 including accrued interest of $136.50.  On January 30,
2009, the escrow agent issued the Company a check for $22,006 which represents
the balance remaining in escrow after payment of the Pabst Claim settlement and
$6,000 in fees owed to the escrow agent.
  8
 Special Note Regarding
Forward-Looking Statements
  This Quarterly Report on Form 10-Q
contains “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.  For this purpose any statements contained
herein that are not statements of historical fact may be deemed to be
forward-looking statements.  Without limiting the foregoing, the words
“believes,” “anticipates,” “plans,” “expects” and similar expressions are
intended to identify forward-looking statements.  These statements
involve unknown risks, uncertainties and other factors, which may cause our
actual results to differ materially from those implied by the forward looking
statements.  Among the important factors that could cause actual
results to differ materially from those indicated by such forward-looking
statements include those risks identified in “Item 7 – Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and other risks
identified in our Form 10-K for the year ended December 31, 2007 and presented
elsewhere by management from time to time.  Such forward-looking
statements represent management’s current expectations and are inherently
uncertain.  Investors are warned that actual results may differ from
management’s expectations.
 
 Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
  Management’s
Discussion and Analysis
 
 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 operations and financial conditions.  This
discussion should be read in conjunction with the financial statements and notes
thereto appearing elsewhere herein.
 
 As of
December 16, 2005, the Company closed the sale of the Assets to Oak, pursuant to
the terms and conditions of the Asset Purchase Agreement.  The
purchase price paid by Oak for the Assets was Nine Million Three Hundred
Thousand Dollars ($9,300,000.00), of which One Million Five Hundred Thousand
Dollars ($1,500,000.00), was deposited with an escrow agent, pursuant to the
terms of an escrow agreement, for at least 18 months for post closing
indemnification claims which may be asserted by Oak (the “Escrow”).  A
substantial amount of the proceeds from the transaction were used by the Company
to repay outstanding indebtedness and for working capital purposes.
 
 The
Company will continue to use the proceeds from the sale of the Assets for
working capital purposes, including the payment of indebtedness, trade payables
and other outstanding obligations.  Following the full payment of its
creditors, the Company may elect to acquire another entity, issue dividend(s) to
its stockholders or invest the net proceeds at the discretion of the Board of
Directors and management of the Company.  Management currently
anticipates that additional transactions may take the form of a dissolution of
the corporation, the liquidation of its remaining assets, and the ultimate
distribution to stockholders of any assets remaining after satisfaction of our
liabilities, including personnel termination and related costs, sale transaction
expenses and final liquidation costs.
 
 After
application of the net proceeds in the manner contemplated, and assuming
ultimate release to us of the entire escrowed amount, and after deduction of
transaction costs in connection with the Asset Sale, the Company will not have
any remaining assets.  There will be no monies left over for
distribution, and we may have to reduce or eliminate the severance pay
provision.
 
 We will
continue to incur claims, liabilities and expenses, which will reduce the
realizable value of our remaining assets and the amount potentially available
for distribution to stockholders.  Claims, liabilities and expenses
from operations (such as salaries, directors’ and officers’ insurance, payroll
and taxes, legal, accounting and consulting fees and miscellaneous office
expenses) will continue to be incurred subsequent to the Asset
Sale.  These expenses will have to be satisfied from our remaining
assets and, therefore, will reduce the net realizable value of those
assets.
 
 9
 The
Company intends to comply with the periodic reporting requirements of the
Exchange Act for so long as we are subject to those requirements.  We
have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, even though
compliance with such reporting requirements is economically
burdensome.
 
 As of
December 2, 2005, all employees were terminated, except for Carmine Stella who
will continue to serve as the Company’s Chief Executive Officer.
 
 RESULTS
OF OPERATIONS
 
 The
Company had no revenue from operations for the three months ended March 31,
2009.
 
 General
and administrative expenses for the three months ended March 31, 2009 were
$88,391, which consisted mostly of legal fees, professional fees, tax accruals
and the salary and expenses to our only remaining employee.  General
and administrative expenses for the three months ended March 31, 2008 were
$100,750.
 
 At March
31, 2009 and December 31, 2008, respectively, we had working capital deficits of
$1,117,006 and $1,028,614, respectively.
  Item
3.  Quantitative and Qualitative Disclosures About Market
Risks
 
 All of
the Company’s indebtedness that would have posed an interest rate risk have been
paid in full. As a result, the Company no longer has an interest rate
risk.
  Item
4. Controls and Procedures
 
 We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Securities Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and
Treasurer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, as ours are designed to do, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
 
 As
required by SEC Rule 13a-15(b), we carried out an evaluation as of March 31,
2009, under the supervision and with the participation of our management,
including our Chief Executive Officer and Treasurer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as of the end of
the quarter covered by this report. Based upon that evaluation, our Chief
Executive Officer and Treasurer concluded that our disclosure controls and
procedures were not effective in enabling us to record, process, summarize and
report information required to be included in our periodic SEC filings within
the required time period.
 
 10
 More
specifically, we determined our controls were not effective due to a lack of
sufficient personnel with appropriate knowledge, experience and training in U.S.
GAAP resulting in a lack of sufficient analysis and documentation of the
application of U.S. GAAP to transactions.
  Due to
our small size and limited financial resources, our part-time outside accountant
has been the only individual involved in our accounting and financial
reporting.  As a result, there has been no segregation of duties
within the accounting function.  This lack of segregation of duties
represents a material weakness.
 
 There have been no changes in our
internal control over financial reporting that occurred during the period
covered by this report that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
 
  PART
II—OTHER INFORMATION
  Item
1.  Legal Proceedings -There
have been no material developments in our legal proceedings from those disclosed
in our 2008 Annual
Report on Form 10-K.
  Item 1A- Risk Factors-- There
have been no material changes in our risk factors from those disclosed in our
2008 Annual Report on Form 10-K.
 
 Item 2 – Unregistered Sales of Equity
Securities and Use of Proceeds - None
 
 Item 3 - Defaults Upon Senior
Securities - None
 
 Item 4 - Submission of Matters to
Vote of Securities Holders - None
 
 Item 5 - Other Information –
None
 
 Item
6.  Exhibits
 
 (a)
              Exhibits
 
 31.1
                Certification
      of Chief Executive Officer pursuant to Section 302 of theSarbanes
      Oxley Act of 2002
 
 31.2
              Certification
      of Treasurer pursuant to Section 302 of the SarbanesOxley
      Act of 2002
 
 32.1
              Certification
      of Chief Executive Officer and Treasurer pursuant toSection
      906 of the Sarbanes Oxley Act of
2002
 
  11
 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

                                      (Registrant)Date:  May
      20, 2009
                                    By:
                                    /s/ Carmine
      N. StellaCarmine
      N. Stella
                                      President
      and Chief Executive Officer
                                      (Principal
      Executive Officer)By:
                                    /s/
      Carol RussellCarol
      Russell
                                      Secretary
      and Treasurer (Principal
                                      Financial
      Officer and Accounting Officer)
   12