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, 2001
                                       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 May 14, 2001 was 2,678,409 shares.


<PAGE>
                          CAPITAL BEVERAGE CORPORATION
                                   FORM 10-QSB
                                 March 31, 2001

                                      INDEX
                                                                          PAGE
                                                                         NUMBER

PART I.      FINANCIAL INFORMATION


Item 1.      Consolidated Financial Statements (Unaudited)

              Balance Sheet as of March 31, 2001                           3

              Statement of Operations for the three-months
               ended March 31, 2001 and 2000                               4

              Statement of Cash Flows for the three-months
               ended March 31, 2001 and 2000                               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



<PAGE>
                          CAPITAL BEVERAGE CORPORATION

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 2001
                                   (Unaudited)



                                     ASSETS

CURRENT ASSETS:
 Cash                                                              $    137,924
 Accounts receivable - trade,
  net of allowance for doubtful accounts of $80,000                     421,540
 Inventories                                                            529,239
 Prepaid expenses and other                                              17,145
                                                                     -----------
  TOTAL CURRENT ASSETS                                                1,105,848

PROPERTY AND EQUIPMENT,
 less accumulated depreciation of $80,339                               241,265

OTHER ASSETS:
 Intangible assets,
  less accumulated amortization of $840,000                             760,000
 Deferred expenses                                                      225,539
 Other assets                                                            32,703
                                                                     -----------

                                                                   $  2,365,355
                                                                     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable                                                  $    339,813
 Accrued expenses and taxes                                             179,092
 Current portion of long-term debt                                       82,786
 Current portion of capital lease obligations                            40,785
 Accrued dividends on preferred stock                                   200,000
                                                                     -----------
  TOTAL CURRENT LIABILITIES                                             842,476
                                                                     -----------

CAPITAL LEASE OBLIGATIONS                                               155,292

LONG-TERM DEBT                                                          382,866

STOCKHOLDERS' EQUITY:
 Common stock, $ .001 par value;
  authorized 20,000,000 shares;
  issued and outstanding 2,678,409 shares                                 2,679
 Additional paid-in capital                                           5,368,273
 Accumulated deficit                                                 (4,386,231)
                                                                     -----------
  TOTAL STOCKHOLDERS' EQUITY                                            984,721
                                                                     -----------

                                                                   $  2,365,355
                                                                     ===========



    The accompanying notes are an integral part of the financial statements.
                                        3
<PAGE>
                          CAPITAL BEVERAGE CORPORATION


                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                            Three Months Ended March 31,
                                   ---------------------------------------------
                                              2001                     2000
                                   ---------------------------------------------
                                            (Unaudited)            (Unaudited)


SALES                            $            2,632,568  $            4,070,820

COST OF GOODS SOLD                            2,154,529               3,477,796
                                   ---------------------   ---------------------

GROSS PROFIT                                    478,039                 593,024
                                   ---------------------   ---------------------

OPERATING EXPENSES:
 Selling and delivery                           233,020                 375,758
 General and administrative                     566,961                 491,183
                                   ---------------------   ---------------------
                                                799,981                 866,941
                                   ---------------------   ---------------------

LOSS FROM OPERATIONS                           (321,942)               (273,917)

INTEREST EXPENSE                                (15,048)                (12,729)

INTEREST INCOME                                     120                  10,670
                                   ---------------------   ---------------------

NET LOSS                                       (336,870)               (275,976)

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

NET LOSS APPLICABLE
 TO COMMON SHAREHOLDERS          $             (336,870) $             (296,976)
                                   =====================   =====================

LOSS PER  COMMON SHARE
 - BASIC AND DILUTED             $                (0.13) $                (0.12)
                                   =====================   =====================

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES                             2,678,409               2,378,409
                                   =====================   =====================











    The accompanying notes are an integral part of the financial statements.

                                        4
<PAGE>
                          CAPITAL BEVERAGE CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                                         Three Months Ended March 31,
                                                                ----------------------------------------------
                                                                         2001                     2000
                                                                ----------------------------------------------
                                                                       (Unaudited)            (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                           <C>                      <C>
 Net loss                                                     $             (336,870)  $             (275,976)
                                                                ---------------------    ---------------------
 Adjustments to reconcile net
  loss to net cash used in
  operating activities:
   Depreciation and amortization                                             53,609                   44,124

 Changes in assets and liabilities:
  Increase in accounts receivable                                           (16,802)                (188,763)
  (Increase) decrease in inventories                                        505,552                 (353,316)
  Decrease (increase) in prepaid expenses                                     3,073                  (38,389)
  Increase in deferred expenses                                             (10,284)                       -
  Increase (decrease) in other assets                                          (393)                  36,567
  Increase (decrease) in accounts payable and accrued expenses             (218,760)                 678,446
                                                                ---------------------    ---------------------
                                                                            315,995                  178,669
                                                                ---------------------    ---------------------

NET CASH USED IN OPERATING ACTIVITIES                                       (20,875)                 (97,307)
                                                                ---------------------    ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Principal payments of capital lease obligations                            (12,943)                  (1,546)
 Decrease in  note payable                                                  (19,600)                 (17,974)
                                                                ---------------------    ---------------------
NET CASH USED IN FINANCING ACTIVITIES                                       (32,543)                 (19,520)
                                                                ---------------------    ---------------------

NET DECREASE IN CASH                                                        (53,418)                (116,827)

CASH - BEGINNING OF PERIOD                                                  191,342                  897,934
                                                                ---------------------    ---------------------

CASH - END OF PERIOD                                         $              137,924   $              781,107
                                                                =====================    =====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:

 Cash paid for interest                                      $               15,048   $               12,727
                                                                =====================    =====================


</TABLE>









    The accompanying notes are an integral part of the financial statements.

                                        5
<PAGE>

                          CAPITAL BEVERAGE CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2001

                                   (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.        SUBSEQUENT EVENT

                  Capital Beverage Corporation (the "Company") announced that it
          has entered into an Asset Purchase  Agreement,  dated May 4, 2001 (the
          "Agreement"),  to acquire  certain assets and  liabilities of Prospect
          Beverages  Inc., a New York  corporation  ("Prospect").  Prospect is a
          Brooklyn  based  Pabst  Distributor  of Colt-45  Malt Liquor and other
          beverages.

                  Pursuant to the Agreement, the  Company will  purchase all  of
          the assets of Prospect's  business which relate to Prospect's business
          of  distributing   beverages,   including  among  other  things,  beer
          distribution rights, properties,  rights, leases, interests, goods and
          customer lists of Prospect.  The purchase price of the assets consists
          of the  assumption by the Company of certain  liabilities  of Prospect
          and the issuance to Prospect  shareholders  of five  hundred  thousand
          (500,000) shares of the common stock of the Company.

                  Pabst Brewing  Company,  the  key  supplier  to  approve  this
          transaction,  has already  approved the  transfer of the  distribution
          rights for the Pabst  Brewing  Company  brands  from  Prospect  to the
          Company.   Pursuant  to  the  Agreement,   upon  approval  of  certain
          manufacturers and brewers,  Prospect's other  distribution  rights and
          territories  will be  transferred to the Company.  The  transaction is
          also  contingent  upon the Company  obtaining  necessary  financing in
          order to replace Prospect's current debt position,  which financing is
          currently being arranged.

                                       -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 three  months  ended  March 31, 2001  were  $2,632,568
reflecting a decrease of $1,438,252 or 35% from  $4,070,820 of net sales for the
three months ended March 31, 2000.  The decrease in the three months ended March
31, 2001 resulted from the removal of the popular Heineken brand.  Cost of sales
was  $2,154,529  or 82% of net  sales  for the three  month  period in 2001,  as
compared to  $3,477,796  or 85% of net sales for the three month period ended in
2000.  The decrease in cost of goods sold as a percentage of sales for the three
months  ended March 31,  2001,  is due  primarily to the removal of the Heineken
brand  which sold as a lead item at a lower gross  margin  than  products in our
primary brand portfolio.

        Selling, general and administrative expenses for the three-month  period
ended March 31, 2001 were  $799,981 as compared to $866,941  for the  respective
2000 period. The decrease in the three months ended March 31, 2001 resulted from
the decreased costs associated with delivering the lower sales generated in this
period.

        Interest expense for the  three-month  period  ended  March 31,2001  was
$15,048 as compared to $12,729 for the respective  2000 period.  The increase in
the three-month  period ended March 31,2001 is due to additional leases acquired
for additional fixed assets in fiscal 2000.  Interest income for the three-month
period  ended March 31, 2001 was $120 as compared to $10,670 for the  respective
2000 period.  The decrease in the three-month  period resulted from the decrease
in average cash balance invested in the Vista account.




                                       -7-

<PAGE>


        Liquidity and Capital Resources

        Cash used in operations for the three months  ended  March 31, 2001  was
$20,875. The decrease in inventories of $505,552 was due to normalized levels of
product associated with the lower sales volume.

        Working capital decreased from $592,543 at December 31, 2000 to $263,372
at March 31, 2001 as a result of the loss  generated  for the three month period
ended March 31, 2001.

        At March 31, 2001,  the  Company's  primary  sources of  liquidity  were
$137,924 in cash, $421,540 in accounts receivable and $529,239 in inventories.

        Management believes it has sufficient  sources  of  working  capital  to
adequately meet the Company's needs through the end of 2001.


        Recent Developments

        Capital Beverage  Corporation  (the "Company")  announced  that  it  has
entered into an Asset Purchase  Agreement,  dated May 4, 2001 (the "Agreement"),
to acquire certain assets and liabilities of Prospect Beverages Inc., a New York
corporation  ("Prospect").  Prospect is a Brooklyn  based Pabst  Distributor  of
Colt-45 Malt Liquor and other beverages.

        Pursuant to the Agreement, the Company will purchase all  of  the assets
of  Prospect's  business  which relate to  Prospect's  business of  distributing
beverages,  including among other things, beer distribution rights,  properties,
rights,  leases,  interests,  goods and customer lists of Prospect. The purchase
price of the  assets  consists  of the  assumption  by the  Company  of  certain
liabilities  of  Prospect  and the  issuance to  Prospect  shareholders  of five
hundred thousand (500,000) shares of the common stock of the Company.

        Pabst Brewing Company, the key supplier to approve this transaction, has
already approved the transfer of the  distribution  rights for the Pabst Brewing
Company  brands from Prospect to the Company.  Pursuant to the  Agreement,  upon
approval of certain  manufacturers  and brewers,  Prospect's other  distribution
rights and  territories  will be transferred to the Company.  The transaction is
also  contingent  upon the Company  obtaining  necessary  financing  in order to
replace  Prospect's  current debt position,  which  financing is currently being
arranged.










                                       -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:   None

                     Number                 Description

                     (b)                    Reports on Form 8-K

                     No reports on Form 8-K were filed during the quarter ended
                     March 31, 2001, however on May 14, 2001, the Company filed
                     a current report on form 8-K dated May 4, 2001, reporting
                     under item 5 the agreement to acquire certain assets and
                     liabilities of Prospect Beverages Inc.


                                       -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 15, 2000                     /s/Carmine N. Stella, President and
                                          Chief Executive Officer, as
                                          Registrant's duly authorized officer



                                       /s/Carol Russell,
                                          Secretary and Treasurer






























                                      -10-