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 March 31, 2003
                                       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.)


    700 Columbia Street, Erie Basin, Building #302, Brooklyn, New York  11231
               (Address of Principal Executive Office)                (Zip Code)

                                 (718) 488-8500
               (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 May 20, 2003 was 3,792,045 shares.



<PAGE>



                          CAPITAL BEVERAGE CORPORATION
                                   FORM 10-QSB
                                 March 31, 2003



                                      INDEX
                                                                      PAGE
                                                                     NUMBER

PART I.  FINANCIAL INFORMATION


Item 1.  Consolidated Financial Statements (Unaudited)

           Balance Sheet as of March 31, 2003                            3

           Statement of Operations for the three-months
              ended March 31, 2003 and 2002                              4

           Statement of Cash Flows for the three-months
              ended March 31, 2003 and 2002                              5

           Notes to Consolidated Financial Statements                    6

Item 2.  Management's Discussion and Analysis or Plan of Operations     7-8

PART II. OTHER INFORMATION

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

Signatures                                                              10

Certification                                                          11-12



<PAGE>
                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                     d/b/a DIVERSIFIED DISTRIBUTORS NETWORK

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 2003
                                   (Unaudited)

                                     ASSETS

CURRENT ASSETS:
     Cash                                                   $            10,571
     Accounts receivable -
      net of allowance for doubtful
      accounts of $127,580                                              410,086
     Inventories                                                      2,764,504
     Prepaid expenses and other current assets                            6,925
                                                              ------------------
         TOTAL CURRENT ASSETS                                         3,192,086

PROPERTY AND EQUIPMENT                                                  150,097

DISTRIBUTION LICENSE                                                  4,358,462

OTHER ASSETS                                                            146,003
                                                              ------------------
                                                            $         7,846,648
                                                              ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                       $         2,941,484
     Accrued expenses and taxes                                         123,344
     Deferred sales                                                      43,636
     Revolving loans                                                  2,000,000
     Current portion of long-term debt                                  846,329
     Current portion of capital lease obligations                        31,876
     Accrued dividends on preferred stock                                25,000
                                                              ------------------
         TOTAL CURRENT LIABILITIES                                    6,011,669
                                                              ------------------

CAPITAL LEASE OBLIGATIONS                                                35,976

LONG-TERM DEBT                                                        1,228,178

STOCKHOLDERS' EQUITY:
     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
     Additional paid-in capital                                       5,796,249
     Accumulated deficit                                             (5,229,217)
                                                              ------------------
         TOTAL STOCKHOLDERS' EQUITY                                     570,825
                                                              ------------------
                                                            $         7,846,648
                                                              ==================




                 See notes to consolidated financial statements.

                                        3

<PAGE>
                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                     d/b/a DIVERSIFIED DISTRIBUTORS NETWORK

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                                                  Three Months Ended March 31,
                                                                                           -----------------------------------------
                                                                                                   2003                    2002
                                                                                           ---------------------    ----------------
                                                                                               (Unaudited)             (Unaudited)

<S>                                                                                      <C>                      <C>
NET SALES                                                                                $            6,419,213   $       6,075,053
COST OF SALES                                                                                         4,624,939           4,557,319
                                                                                           ---------------------    ----------------
GROSS PROFIT                                                                                          1,794,274           1,517,734
                                                                                           ---------------------    ----------------

COSTS AND EXPENSES:
     Selling and delivery                                                                               324,439             422,169
     General and administrative                                                                       1,306,849           1,593,997
                                                                                           ---------------------    ----------------
                                                                                                      1,631,288           2,016,166
                                                                                           ---------------------    ----------------

INCOME (LOSS) FROM OPERATIONS                                                                           162,986            (498,432)

INTEREST EXPENSE, net                                                                                  (145,635)           (121,000)
                                                                                           ---------------------    ----------------

NET INCOME (LOSS)                                                                        $               17,351   $        (619,432)
                                                                                           =====================    ================

INCOMES (LOSS) PER SHARE - BASIC AND DILUTED                                             $                 0.00   $           (0.19)
                                                                                           =====================    ================

WEIGHTED AVERAGE NUMBER OF SHARES
     USED IN CALCULATION OF BASIC AND
     DILUTED INCOME (LOSS) PER SHARE                                                                  3,792,045           3,178,409
                                                                                           =====================    ================

</TABLE>










                 See notes to consolidated financial statements.

                                        4

<PAGE>

                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                     d/b/a DIVERSIFIED DISTRIBUTORS NETWORK

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                  Three Months Ended March 31,
                                                                             -------------------------------------------
                                                                                    2003                    2002
                                                                             ------------------    ---------------------
                                                                                 (Unaudited)            (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                     <C>                      <C>
     Net income (loss)                                                  $            17,351      $          (619,432)
                                                                             ------------------    ---------------------
     Adjustments to reconcile net income (loss)
      to net cash used in operating
      activities:
          Depreciation and amortization                                              20,924                   16,824

     Changes in assets and liabilities:
         Accounts receivable                                                         70,914                  (73,882)
         Inventories                                                               (378,924)              (1,586,765)
         Prepaid expenses                                                                (2)                    (373)
         Other assets                                                                10,399                   (1,990)
         Deposits payable                                                              -                      15,000
         Accounts payable and accrued expenses                                      550,030                  (90,847)
         Deferred sales                                                              43,636                        -
                                                                              ------------------    ---------------------
            Total adjustments                                                       316,977               (1,722,033)
                                                                              ------------------    ---------------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                 334,328               (2,341,465)
                                                                              ------------------    ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                   -                        -
                                                                              ------------------    ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Revolving loans                                                                 31,121                  (13,058)
     Proceeds from (repayments to) officer                                             -                     (14,000)
     Principal payments of capital lease obligations                                (21,224)                 (15,841)
     Payment of accrued dividends on preferred stock                                (25,000)                 (25,000)
     Cash overdraft                                                                    -                     759,237
     Payments of long-term debt                                                    (428,896)                (595,234)
                                                                              ------------------    ---------------------
NET CASH USED IN FINANCING ACTIVITIES                                              (443,999)                  96,104
                                                                              ------------------    ---------------------

DECREASE IN CASH                                                                   (109,671)              (2,245,361)

CASH - BEGINNING OF PERIOD                                                          120,242                2,272,786
                                                                              ------------------    ---------------------

CASH - END OF PERIOD                                                    $            10,571      $            27,425
                                                                              ==================    =====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:
         Cash paid for interest                                         $           145,635      $           123,302
                                                                              ==================    =====================

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
         Capital lease obligations                                      $                 -      $                -
                                                                              ==================    =====================
</TABLE>


                 See notes to consolidated financial statements.

                                        5



<PAGE>



                          CAPITAL BEVERAGE CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2003

                                   (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
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.

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.

As shown in the accompanying financial statements, the Company has a history of
losses with an accumulated deficit of $5,229,217 at March 31, 2003 and, as of
that date, a working capital deficiency of $2,819,583. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company's continuation as a going concern is dependent upon its ability to
ultimately attain profitable operations, generate sufficient cash flow to meet
its obligations, and obtain additional financing as may be required.


                                        6


<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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.

Results of Operations

Net sales for the quarter ended March 31, 2003 were $6,419,213, reflecting an
increase of $344,160 or 6% from the $6,075,053 net sales for the quarter ended
March 31, 2002. The increase in the quarter ended March 31, 2003 resulted
primarily from the growth in our Pabst related product brands, specifically Colt
45 Malt Liquor and Pabst Blue Ribbon beer. A strong effort by our sales force to
offset the extreme negative weather conditions of the first quarter resulted in
increases both in our retail and wholesale divisions.

In addition, Capital has now started to expand it marketing territory for its
brand "Night Flight" in the northeastern states of Pennsylvania, New Jersey and
Connecticut.

Cost of sales was $4,624,939 or 72% of net sales for the quarter ended March 31,
2003, as compared to $4,557,319 or 75% of net sales for the quarter ended March
31, 2002. The cost of goods sold as a percentage of sales for the quarter ended
March 31, 2002, has decreased due to changes in our discounting policies which
management put into effect in the last two quarters of 2002, as well as a
favorable return rate on unredeemed deposits. Management expects the Company's
gross profit percentage to level off over the course of the year to between 26
and 27%.

Selling, general and administrative expenses for the quarter ended March 31,
2003 were $1,631,288 as compared to $2,016,166 for the respective 2002 period.
The decrease for the quarter ended March 31, 2003 was due primarily to
substantial cuts that management has implemented in the last half of the year
2002. Personnel reductions were made in both selling and distribution. The
management has also reduced upper and middle management compensation between
10-30%. These cost cutting measures are still in effect going forward in our
second quarter.

Interest expense for quarter ended March 31,2003 was $145,635 as compared to
$121,000 for the respective 2002 period. The increase in the period ended March
31,2003 was due primarily to interest paid on the Entrepreneur Growth Capital
line of credit which in some cases were over the allowable caps which were in
place in our present agreement.

Management is presently seeking a new credit facility which will be more
appropriate to serving Capital's present and future growth plans.




                                        7


<PAGE>



Liquidity and Capital Resources

Cash provided in operations for the quarter ended March 31, 2003 was $334,328.
The was primalrily due to the increase in accounts payable and accrued expenses
of $550,030 for the quarter ended March 31, 2003.

Working capital deficiency decreased from $(2,418,137) at December 31, 2002 to
$(2,819,583) at March 31, 2003 due to the Company's decision to pay-off
additional long-term debt.

At March 31, 2003, the Company's primary sources of liquidity were $10,571 in
cash, $410,086 in accounts receivable and $2,764,504 in inventories.

Management believes it has sufficient sources of working capital to adequately
meet the Company's needs through the end of 2003.

ITEM 3. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer and
Treasurer, of the effectiveness of the design and operation of the Company's
controls and procedures, as defined in Exchange Act Rules 13a-14(c) and
15d-14(c). Based upon that evaluation, the Company's President and Chief
Executive Officer and Treasurer, concluded that the Company's disclosure
controls and procedures are effective in enabling the Company to record,
process, summarize and report information required to be included in the
Company's periodic SEC filings within the required time period.

There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.

                                        8


<PAGE>



                           PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Not applicable

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

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

Not applicable

Item 5. OTHER INFORMATION

Not applicable

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits: 99.1 Certification of President and CEO
              99.2 Certification of Treasurer


                                        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: May 20, 2002                          /s/Carmine N. Stella, President and
                                               Chief Executive Officer,
                                               as Registrant's duly authorized
                                               officer

                                            /s/Carol Russell,
                                               Secretary and Treasurer




                                       10



<PAGE>

                                 CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

I, Carmine N. Stella, certify that:

1.         I have reviewed this quarterly report on Form 10-QSB of Capital
           Beverage Corporation;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I (herein the
           "Certifying Officers") are responsible for establishing and
           maintaining disclosure controls and procedures (as defined in
           Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

              a)      designed such internal controls to ensure that material
                      information relating to the registrant, including its
                      consolidated subsidiaries (collectively the "Company"), is
                      made known to the Certifying Officers by others within the
                      Company, particularly during the period in which this
                      quarterly report is being prepared;

              b)      evaluated the effectiveness of the registrant's internal
                      controls as of a date within 90 days prior to the filing
                      date of this quarterly report (the "Evaluation Date"); and

              c)      presented in this quarterly report the conclusions of the
                      Certifying Officers about the effectiveness of the
                      disclosure controls and procedures based on our evaluation
                      as of the Evaluation Date;

5.         The registrant's Certifying Officers have disclosed, based on our
           most recent evaluation, to the registrant's auditors and the audit
           committee of the registrant's board of directors:

              a       all significant deficiencies (if any) in the design or
                      operation of internal controls which could adversely
                      affect the registrant's ability to record, process,
                      summarize and report financial data and have identified
                      for the registrant's auditors any material weaknesses in
                      internal controls; and

              b)      any fraud, whether or not material, that involves
                      management or other employees who have a significant role
                      in the registrant's internal controls; and

6.         The registrant's Certifying Officers have indicated in this quarterly
           report whether or not there were significant changes in internal
           controls or in other factors that could significantly affect internal
           controls subsequent to the date of our most recent evaluation,
           including any corrective actions with regard to significant
           deficiencies and material weaknesses.

Date: May 20, 2003

/s/ Carmine N. Stella
    -------------------------------------
    Carmine N. Stella
    President and Chief Executive Officer


                                       11
<PAGE>

                                  CERTIFICATION
            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

I, Carol Russell, certify that:

1.         I have reviewed this quarterly report on Form 10-QSB of Capital
           Beverage Corporation;

2.         Based on my knowledge, this quarterly report does not contain any
           untrue statement of a material fact or omit to state a material fact
           necessary to make the statements made, in light of the circumstances
           under which such statements were made, not misleading with respect to
           the period covered by this quarterly report;

3.         Based on my knowledge, the financial statements, and other financial
           information included in this quarterly report, fairly present in all
           material respects the financial condition, results of operations and
           cash flows of the registrant as of, and for, the periods presented in
           this quarterly report;

4.         The registrant's other certifying officer and I (herein the
           "Certifying Officers") are responsible for establishing and
           maintaining disclosure controls and procedures (as defined in
           Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

              a)      designed such internal controls to ensure that material
                      information relating to the registrant, including its
                      consolidated subsidiaries (collectively the "Company"), is
                      made known to the Certifying Officers by others within the
                      Company, particularly during the period in which this
                      quarterly report is being prepared;

              b)      evaluated the effectiveness of the registrant's internal
                      controls as of a date within 90 days prior to the filing
                      date of this quarterly report (the "Evaluation Date"); and

              c)      presented in this quarterly report the conclusions of the
                      Certifying Officers about the effectiveness of the
                      disclosure controls and procedures based on our evaluation
                      as of the Evaluation Date;

5.         The registrant's Certifying Officers have disclosed, based on our
           most recent evaluation, to the registrant's auditors and the audit
           committee of the registrant's board of directors:

              a       all significant deficiencies (if any) in the design or
                      operation of internal controls which could adversely
                      affect the registrant's ability to record, process,
                      summarize and report financial data and have identified
                      for the registrant's auditors any material weaknesses in
                      internal controls; and

              b)      any fraud, whether or not material, that involves
                      management or other employees who have a significant role
                      in the registrant's internal controls; and

6.         The registrant's Certifying Officers have indicated in this quarterly
           report whether or not there were significant changes in internal
           controls or in other factors that could significantly affect internal
           controls subsequent to the date of our most recent evaluation,
           including any corrective actions with regard to significant
           deficiencies and material weaknesses.

Date: May 20, 2003

/s/ Carol Russel
------------------
    Carol Russell
    Treasurer

                                       12