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, 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 12, 1998 was 2,378,409 shares.



<PAGE>
                          CAPITAL BEVERAGE CORPORATION
                                   FORM 10-QSB
                                 March 31, 1999
                                      INDEX




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


                  Balance Sheet as of March 31, 1999                      3

                  Statements of Operations for the three-months
                    ended March 31, 1999 and 1998                         4

                  Statements of Cash Flows for the three-months
                    ended March 31, 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

                                                                                             March 31,       
                                                                                               1999          
                                                                                         -------------------
                               ASSETS                                                         (Unaudited)
<S>                                                                                    <C>                      
CURRENT ASSETS:
     Cash                                                                              $          2,124,197 
     Accounts receivable - trade, net of allowance for doubtful 
          accounts of $60,000                                                                       365,361
     Inventories                                                                                    465,194 
     Prepaid expenses and other                                                                     135,712 
                                                                                         -------------------
         TOTAL CURRENT ASSETS                                                                     3,090,464  

PROPERTY AND EQUIPMENT, less accumulated depreciation of $23,672                                     60,611 

OTHER ASSETS:
     Intangible assets, less accumulated amortization of $520,000                                 1,080,000  
     Deposits                                                                                         3,290   
                                                                                         -------------------  
                                                                                       $          4,234,365   
                                                                                         ===================   

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                                                  $            289,641  
     Accrued expenses and taxes                                                                     181,275 
     Current portion of long-term debt                                                               69,621 
     Accrued dividends on preferred stock                                                           291,113 
                                                                                          ------------------- 
         TOTAL CURRENT LIABILITIES                                                                  831,650  
                                                                                          -------------------
LONG-TERM DEBT                                                                                      541,570   
                                                                                          ------------------- 
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                                                                         (2,509,807) 
                                                                                          -------------------
         TOTAL STOCKHOLDERS' EQUITY                                                               2,861,145 
                                                                                          ------------------- 

                                                                                       $          4,234,365   
                                                                                          =================== 
</TABLE>

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

                                        3
<PAGE>
<TABLE>
<CAPTION>
                          CAPITAL BEVERAGE CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                               Three Months Ended March 31,
                                                                                         ------------------------------------------
                                                                                                1999                   1998
                                                                                         --------------------   -------------------
                                                                                             (Unaudited)           (Unaudited)
<S>                                                                                    <C>                    <C>
SALES                                                                                  $           1,994,222  $          2,223,715
COST OF GOODS SOLD                                                                                 1,628,903             2,090,542
                                                                                         --------------------   -------------------
GROSS PROFIT                                                                                         365,319               133,173
                                                                                         --------------------   -------------------
OPERATING EXPENSES
     Selling and delivery                                                                            158,213                53,915
     General and administrative                                                                      478,691               409,520
                                                                                         --------------------   -------------------
                                                                                                     636,904               463,435
                                                                                         --------------------   -------------------
LOSS FROM OPERATIONS                                                                                (271,585)             (330,262)

INTEREST EXPENSE                                                                                     (13,516)              (14,883)

INTEREST INCOME                                                                                       20,247                31,836
                                                                                         --------------------   -------------------
NET LOSS                                                                                            (264,854)             (313,309)

PREFERRED STOCK DIVIDENDS                                                                            (21,000)              (21,000)
                                                                                         --------------------   -------------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS                                             $            (285,854) $           (334,309)
                                                                                         ====================   ===================
LOSS PER  COMMON SHARE - BASIC                                                         $               (0.12) $              (0.14)
                                                                                         ====================   ===================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                                           2,378,409             2,378,409
                                                                                         ====================   ===================
</TABLE>


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

                                        4
<PAGE>
<TABLE>
<CAPTION>
                          CAPITAL BEVERAGE CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                                  Three Months Ended March 31,
                                                                                          ------------------------------------------
                                                                                                 1999                  1998
                                                                                          -------------------   --------------------
                                                                                                (Unaudited)            (Unaudited)

<S>                                                                                     <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                           $           (264,854) $            (313,309)
                                                                                          -------------------   --------------------
     Adjustments to reconcile net loss to                                                
         net cash provided by (used in) operating activities:
            Depreciation and amortization                                                            41,634                 41,046

     Changes in assets and liabilities:
         (Increase) decrease in accounts receivable                                                 (23,592)               230,497
         (Increase) decrease in inventories                                                         113,905                (97,834)
         (Increase) decrease in prepaid expenses                                                     20,887               (234,074)
         Increase in accounts payable and accrued expenses                                          172,346                 72,434
                                                                                          -------------------   --------------------
                                                                                                    325,180                 12,069
                                                                                          -------------------   --------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                                  60,326               (301,240)
                                                                                          -------------------   --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                                            (8,386)                     -

CASH FLOWS FROM FINANCING ACTIVITIES:
     Decrease in of note payable                                                                    (16,484)               (15,117)

NET INCREASE (DECREASE) IN CASH                                                                      35,456               (316,357)

CASH - BEGINNING OF PERIOD                                                                        2,088,741              2,843,870
                                                                                          -------------------   --------------------
CASH - END OF PERIOD                                                                   $          2,124,197  $           2,527,513
                                                                                          ===================   ====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:

     Cash paid for interest                                                            $             13,516  $              14,883
                                                                                         ===================   ====================
     Cash paid for taxes                                                               $                  -  $                   -
                                                                                         ===================   ====================

</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                        5
<PAGE>
                       CAPITAL BEVERAGE CORPORATION, INC.

                    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 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 10-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

         Sales for the three  months  ended  March 31, 1999 were  $1,994,222  as
compared to sales of $2,223,715  for the three months ended March  31,1998.  The
cost of goods  sold as a  percentage  of sales  for the 1999  period  was 82% as
compared to 94% for the  comparable  1998 period.  The decrease in cost of goods
sold as a percentage  of sales for the three months ended March 31, 1999, is due
primarily to the additional  sales of products from the Pittsburgh  Brewery Co.,
which afford Capital a significantly greater gross margin percentage.

         Selling, general and administrative expenses for the three month period
ended March 31, 1999 were  $636,904 as compared to $463,435  for the  respective
1998 period.  The increase in the three month period ended March 31, 1999 is due
primarily  to the  additional  territory  we  expanded  into in  relation to new
products from 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 three month  period  ended March 31, 1999 was
$13,516 as compared to $14,883 for the respective  1998 period.  The decrease in
the three month  period  ended March 31, 1999 is due to the  reduction  of debt.
Interest  income for the three month  period ended March 31, 1999 was $20,247 as
compared to $31,836 for the  respective  1998 period.  The decrease in the three
month period resulted from the decrease in average cash balance  invested in the
Vista account.






                                       -7-

<PAGE>



b.   Liquidity and Capital Resources

       Cash provided by operations for the three months ended March 31, 1999 was
$60,326.  This was  primarily  attributable  to a  decrease  in  inventories  of
$113,905 and an increase in accounts payable and accrued expenses of $172,346.

         Working  capital  decreased  from  $2,457,022  at December  31, 1998 to
$2,258,814  at March 31,  1999 as a result  of the cash  required  in  operating
activities.

         At March 31, 1999,  the  Company's  primary  sources of liquidity  were
$2,124,197 in cash, $365,361 in accounts receivable and $465,194 in inventories.

         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 through
April 1999 which will allow Capital  Beverage to determine what course of action
to take to make their card a success here in New York.

Year 2000

         The Company  recognizes that a challenging  problem exists in that many
computer  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 March 31,
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: May 18, 1999
                                       Carmine N. Stella, President and
                                       Chief Executive Officer,
                                       as  Registrant's duly authorized officer




                                       Carol Russell,
                                       Secretary and Treasurer









                                      -10-