UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



|Washington, D.C. 20549FORM 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, 2008
|---------------------------------------------



|OR
|--

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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 June 10, 2008 was 3,792,045.



|
|

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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 INFORMATION
     
     11Item 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


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PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

CAPITAL BEVERAGE CORPORATIONBALANCE SHEETSASSETSMarch 31,
     
     
     
     
     December 31,2008
     
     
     
     
     2007(Unaudited)CURRENT ASSETS:Cash
     
     $
     
     2,232
     
     
     $
     
     188Restricted cash
     
     
     
     569,983
     
     
     
     
     742,977Other Receivable-Current Portion
     
     
     
     -
     
     
     
     
     5,000TOTAL CURRENT ASSETS
     
     
     
     572,215
     
     
     
     
     748,165OTHER ASSETS
     
     
     
     1,929
     
     
     
     
     1,929$
     
     574,144
     
     
     $
     
     750,094LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable
     
     $
     
     1,134,533
     
     
     $
     
     1,171,190Officer loans
     
     
     
     4,000
     
     
     
     
     -Accrued expenses and taxes
     
     
     
     -
     
     
     
     
     42,544TOTAL CURRENT LIABILITIES
     
     
     
     1,138,533
     
     
     
     
     1,213,734STOCKHOLDERS' EQUITY (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
     
     
     
     5,986,249
     
     
     
     
     5,986,249Accumulated deficit
     
     
     
     (6,554,431
     )
     
     
     
     (6,453,682
     )TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
     
     
     
     (564,389
     )
     
     
     
     (463,640
     )$
     
     574,144
     
     
     $
     
     750,094




|See notes to consolidated financial statements.
|-----------------------------------------------

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|CAPITAL BEVERAGE CORPORATIONSTATEMENTS OF OPERATIONS
|----------------------------------------------------

Three Months Ended March 31,2008
     
     
     
     
     2007(Unaudited)
     
     
     
     
     (Unaudited)REVENUES
     
     $
     
     -
     
     
     $
     
     -COSTS AND EXPENSES:General and administrative
     
     
     
     100,750
     
     
     
     
     113,689100,750
     
     
     
     
     113,689LOSS FROM CONTINUING OPERATIONS
     
     
     
     (100,750
     )
     
     
     
     (113,689
     )NET LOSS
     
     $
     
     (100,750
     )
     
     $
     
     (113,689
     )NET LOSS PER SHARE:Basic and diluted
     
     $
     
     (0.03
     )
     
     $
     
     (0.03
     )WEIGHTED AVERAGE NUMBER OF SHARES:Basic and Diluted
     
     
     
     3,792,045
     
     
     
     
     3,792,045




|See notes to consolidated financial statements.
|-----------------------------------------------

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CAPITAL BEVERAGE CORPORATIONSTATEMENTS OF CASH FLOWSThree Months Ended March 31,2008
     
     
     
     
     2007(Unaudited)
     
     
     
     
     (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
     
     $
     
     (100,750
     )
     
     $
     
     (113,689
     )Changes in assets and liabilities:Other assets
     
     
     
     -
     
     
     
     
     2,351Accounts payable
     
     
     
     (36,657
     )
     
     
     
     78,989Accrued expenses and taxes
     
     
     
     (42,543
     )
     
     
     
     (28,094
     )Other Receivable-Current Portion
     
     
     
     5,000
     
     
     
     
     -Total adjustments
     
     
     
     (74,200
     )
     
     
     
     53,246NET CASH USED IN OPERATING ACTIVITIES
     
     
     
     (174,950
     )
     
     
     
     (60,443
     )CASH FLOWS FROM FINANCING ACTIVITIES:Officer loans
     
     
     
     4,000NET CASH PROVIDED BY FINANCING ACTIVITIES
     
     
     
     4,000
     
     
     
     
     -DECREASE IN CASH
     
     
     
     (170,950
     )
     
     
     
     (60,443
     )CASH - BEGINNING OF PERIOD
     
     
     
     743,165
     
     
     
     
     803,955CASH - END OF PERIOD
     
     $
     
     572,215
     
     
     $
     
     743,512SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION:Cash paid for interest
     
     $
     
     -
     
     
     $
     
     -Cash paid for taxes
     
     $
     
     -
     
     
     $
     
     -See notes to consolidated financial statements.


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CAPITAL BEVERAGE CORPORATION

NOTES TO FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2008 AND 2007

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, 2008 are not necessarily indicative of the results that may be experienced for the fiscal year ending December 31, 2008.

The accompanying financial statements should be read in conjunction with the Company's Form 10-K/A for the fiscal year ended December 31, 2007, which was filed on May 9, 2008.

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 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 its liabilities, including personnel termination and related costs, sale transaction expenses and final liquidation costs. In the event of such dissolution, the residual proceeds of the sale of the Assets would become part of a pool of assets governed by the plan of dissolution. Alternatively, management may elect to invest the net proceeds from the sale of the Assets in assets or operations acquired by the Company. In such an event, no assets will be distributed to the stockholders.

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.

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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, 2007 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 obtain necessary financing to meet obligations and repay its liabilities when they become due or be acquired by an operating company. The Company plans to continue to provide for capital requirements from the cash from
the sale of its assets. There are no assurances that the Company will have sufficient funds to pay its obligations as they become due or be acquired by an operating company.

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 As per the terms of the asset sale the final portion of cash held in escrow was to be released on June 16, 2007.
This release has been delayed pending ongoing litigation between the Company, escrow agent and Oak Beverages, Inc. (see Note 5)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.

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4.CONCENTRATION OF CREDIT RISK

The Company maintains its cash balances at various financial institutions. These balances are insured by the Federal Deposit Insurance Corporation up to $100,000. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash on deposit.

5.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. The Company disputes Oak and Victoria's claim for the additional unemployment taxes on the grounds that the Company is not liable for contributions that were assessed to Oak post-closing (1) as a result of Oak's voluntary decision to employ Company personnel, and (2) as a natural consequence of Oak's increase in assets following its purchase of the Company's assets in 2005. 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 would be retained by the Company post-closing and would not be transferred to Oak and that, under the terms of the Asset Purchase Agreement, the Company agreed to indemnify Oak for all damages arising out of the liabilities and obligations the Company agreed to undertake. Further action in the matter is currently pending.

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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

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.

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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.

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, 2008.

General and administrative expenses for the three months ended March 31, 2008 were $100,750.00, which consisted mostly of legal fees, tax accruals and the
salary and expenses to our only remaining employee. General and administrative expenses for the three months ended March 31, 2007 were $113,689.00.

At March 31, 2008 and December 31, 2007, respectively, we had a working capital (deficit) of ($566,317) and ($465,568), 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.

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As required by SEC Rule 13a-15(b), we carried out an evaluation as of March 31, 2008, 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 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.

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 INFORMATIONItem 1. Legal Proceedings -There have been no material developments in our legal proceedings fromthose disclosed in our2007 Annual Report on Form 10-K.Item 1A- Risk Factors-- There have been no material changes in our risk factors from those disclosed inour 2007 Annual Report on Form 10-K.Item 2  Unregistered Sales of Equity Securities and Use of Proceeds- NoneItem 3 - Defaults Upon Senior Securities- NoneItem 4 - Submission of Matters to Vote of Securities Holders- NoneItem 5 - Other Information NoneItem 6. Exhibits
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | Exhibits
|--- | --------
|    | 31.1    
|    | 31.2    
|    | 32.1    

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|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.

|Date: |  | June 9, 2008 |  |     |  | CAPITAL BEVERAGE CORPORATION             
|----- |  | ------------ |  | --- |  | -----------------------------------------
|      |  |              |  |     |  | (Registrant)                             
|     
|     
|     
|      |  |              |  | By: |  | /s/ Carmine N. Stella                    
|     
|      |  |              |  |     |  | Carmine N. Stella                        
|      |  |              |  |     |  | President and Chief Executive Officer    
|      |  |              |  |     |  | (Principal Executive Officer)            
|     
|     
|     
|     
|      |  |              |  | By: |  | /s/ Carol Russell                        
|     
|      |  |              |  |     |  | Carol Russell                            
|      |  |              |  |     |  | Secretary and Treasurer (Principal       
|      |  |              |  |     |  | Financial Officer and Accounting Officer)

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