<PAGE>





                        SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             REPORT ON FORM 10-KSB/A
                                Amendment No. 1

Item 10 and  Footnote  No.  11 to the Item 13  Financial  Statements  have  been
amended  to  accurately  reflect  information  regarding  options  issued by the
Company.

             X    Annual Report pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

         For the fiscal year ended December 31, 2000.

                  Transition Report pursuant to Section 13 or 15(d) of
                  The Securities Exchange Act of 1934


   For the transition period from ___________________ to ___________________.

                          Commission File No. 0-13181


                          CAPITAL BEVERAGE CORPORATION
             (Exact name of registrant as specified in its charter)

                 Delaware                        13-3878747

(State of or other jurisdiction           (IRS Employer Identification No.)
 of incorporation or organization)

1111 East Tremont Avenue,  Bronx, New York                       10460
------------------------------------------                       -----
(Address of Principal Executive Officers)                      (Zip Code)

Registrant's telephone number, including area code: (718) 409-2337

Securities registered pursuant to Section 12(b) of the Act:  None.
                                                             ----

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.001 per share
                                (Title of Class)

Units consisting of one (1) share of Common Stock, par value $.001 per share
 and one-half (1/2) Class A Redeemable Common Stock Purchase Warrant
                                (Title of Class)

Class A Redeemable Common Stock Purchase Warrant
                                (Title of Class)


<PAGE>


ITEM 10. EXECUTIVE COMPENSATION.
         ----------------------

         The  following  table  sets  forth the  compensation  paid to the Named
Executive Officers for the fiscal years ending December 31, 1998, 1999 and 2000.

                           Summary Compensation Table

                                        Other Annual Restricted Stock Option
NAME AND PRINCIPAL POSITION  YEAR  SALARY   COMPENSATION    AWARD      GRANTS

Carmine N. Stella            2000 $301,982      -0-          -0-         -0-
President, Chief Executive
Officer,                     1999 $302,643      -0-          -0-         -0-
Chairman of the Board        1998 $307,799      -0-          -0-         -0-


Anthony Stella               2000 $171,146      -0-          -0-         -0-
Vice President of Sales      1999 $171,529      -0-          -0-         -0-
and Marketing Director       1998 $175,579      -0-          -0-         -0-


Carol Russell                2000 $ 82,500      -0-          -0-         -0-
                             1999 $ 88,000      -0-          -0-         -0-
                             1998 $112,116      -0-          -0-         -0-


         The  following  table sets forth  certain  information  with respect to
options  granted  during the last fiscal year to the Company's  Chief  Executive
Officer and the other executive officers named in the above Summary Compensation
Table.

                      Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>

Name                             Number of Securities         Percent of Total          Exercise or
                                      Underlying           Options/SARS Granted to      Base Price
                                 Options/SARS Granted     Employees in Fiscal Year        ($/Sh)        Expiration Date
                                 ---------------------    ------------------------      -----------     ---------------
                                          (#)
<S>                                       <C>                       <C>                    <C>                <C>

Carmine Stella                          25,000                     14.3%                   $.55             12/29/09
Anthony Stella                          25,000                     14.3%                   $.50             12/29/09
Carol Russell                           25,000                     14.3%                   $.50             12/29/09

</TABLE>

----------------------------------
(1)      Options are exercisable for shares of Common Stock.

         The  following  table sets forth  certain  information  with respect to
options  exercised  during the last fiscal year by the Company's Chief Executive
Officer and the executive officers named in the Summary  Compensation Table, and
with respect to unexercised  options held by such persons at the end of the last
fiscal year:


<PAGE>

<TABLE>
<CAPTION>

Aggregate   Option/SAR  Exercises  In  Last  Fiscal  Year  And  Fiscal  Year-End
Option/SAR Values

                      Shares                                Number of Securities           Value of Unexercised in the Money
                    Acquired on     Value Realized         Underlying Unexercised                   Options/SARs at
      Name        Exercise (#)(1)        $                Options/SARS at FY-End (#)                     FY-End ($) (2)
      ----        ---------------   --------------        --------------------------       ----------------------------------

                                                         Exercisable     Unexercisable        Exercisable       Unexercisable
                                                         -----------     -------------        -----------       -------------
<S>                     <C>              <C>                <C>               <C>                 <C>                <C>

                        -0-              -0-                -0-               -0-                 -0-                -0-
</TABLE>

         Each  director  of  the  Company  is  entitled  to  receive  reasonable
out-of-pocket  expenses incurred in attending meetings of the Board of Directors
of the Company.  The members of the Board of Directors  meet at least  quarterly
during the Company's fiscal year, and at such other times duly called.

Employment Agreements

      The  Company  entered  into an  employment  agreement  with Mr.  Stella on
October  1, 1996  which  provides  for a  three-year  term and  includes  annual
compensation of $300,000, plus certain fringe benefits including health and life
insurance.  The  contract  was renewed  for another  three years and will expire
October, 2003. There were no changes made to the original contract.

Stock Option Plans and Agreements

      The Company's 1996  Incentive  Stock Option Plan was approved by the Board
of  Directors  and  holders of Common  Stock of the  Company on June 19, 1996 to
provide for the grant of incentive  stock options  within the meaning of Section
422 of the  Internal  Revenue  Code of 1986 to  officers  and  employees  of the
Company.  A total of  350,000  shares of Common  Stock has been  authorized  and
reserved for issuance  under the 1996  Incentive  Stock Option Plan,  subject to
adjustment to reflect changes in the Company's  capitalization  in the case of a
stock split, stock dividend or similar event.  175,000 options have been granted
under the Company's 1996 Incentive  Stock Option Plan. The 1996 Incentive  Stock
Option Plan will be administered by the  Compensation  Committee,  which has the
sole authority to interpret the 1996  Incentive  Stock Option Plan, to determine
the persons to whom options will be granted,  to determine  the basis upon which
the options will be granted,  and to determine the exercise price,  duration and
other terms of options to be granted under the 1996 Incentive Stock Option Plan;
provided  that,  (i) the exercise  price of each option  granted  under the 1996
Incentive  Stock  Option Plan may not be less than the fair market  value of the
Common Stock on the day of the grant of the option, (ii) the exercise price must
be paid in cash and or stock upon exercise of the option, (iii) no option may be
exercisable  for more than 10 years after the date of grant,  and (iv) no option
is transferable  other than by will or the laws of descent and distribution.  No
option is exercisable  after an optionee ceases to be employed by the Company or
a subsidiary of the Company,  subject to the right of the Compensation Committee
to extend the exercise  period for not more than 90 days  following  the date of
termination  of  an  optionee's  employment.  If  an  optionee's  employment  is
terminated by reason of disability, the Compensation Committee has the authority
to extend the exercise  period for not more than one year  following the date of
termination of the optionee's  employment.  If an optionee dies holding  options
that were not fully exercised, such options may be exercised in whole or in part
within one year of the optionee's  death by the executors or  administrators  of
the optionee's  estate or by the optionee's  heirs. The vesting period,  if any,
specified for each option will be accelerated upon the occurrence of a change of
control or threatened change of control of the Company

<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

Item     a.                EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Financial Statements.
                                      Index

         Independent Auditors' Report                                  F - 2

         Consolidated Financial Statement

                  Balance Sheet                                        F - 3
                  Statements of Operations                             F - 4
                  Statements of Stockholders' Equity                   F - 5
                  Statements of Cash flows                             F - 6
                  Notes to Financial Statements                        F - 7 -13




                                      F - 1


<PAGE>











                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Capital Beverage Corporation and Subsidiary

         We have audited the accompanying  consolidated balance sheet of Capital
Beverage  Corporation  and  Subsidiary  as of December  31, 2000 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended December 31, 2000 and 1999.  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

         We conducted our audit in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining on a test basis,  evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, the consolidated  financial position of Capital Beverage Corporation and
Subsidiary  as of  December  31,  2000  and  the  consolidated  results  of  its
operations  and its cash flows for the years ended December 31, 2000 and 1999 in
conformity with generally accepted accounting principles.



                                             /s/Feldman Sherb & Co, P.C.
                                                Feldman Sherb & Co., P.C.
                                                Certified Public Accountants

New York, New York
March 1, 2001


                                      F - 2


<PAGE>
                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2000


                                     ASSETS

CURRENT ASSETS:
 Cash                                                            $      191,342
 Accounts receivable - net of allowance for doubtful
  accounts of $80,000                                                   404,738
 Inventories                                                          1,034,791
 Prepaid expenses and other current assets                               20,218
                                                                  --------------
  TOTAL CURRENT ASSETS                                                1,651,089

PROPERTY AND EQUIPMENT                                                  254,874

DISTRIBUTION LICENSE                                                    800,000

DEFERRED EXPENSES                                                       215,255

OTHER ASSETS                                                             32,310
                                                                  --------------

                                                                 $    2,953,528
                                                                  ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable                                                $      539,313
 Accrued expenses and taxes                                             198,349
 Current portion of long-term debt                                       81,013
 Current portion of capital lease obligations                            39,871
 Accrued dividends on preferred stock                                   200,000
                                                                  --------------
         TOTAL CURRENT LIABILITIES                                    1,058,546
                                                                  --------------

CAPITAL LEASE OBLIGATIONS                                               169,149

LONG-TERM DEBT                                                          404,239

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                                                 (4,049,358)
                                                                  --------------
         TOTAL STOCKHOLDERS' EQUITY                                   1,321,594
                                                                  --------------

                                                                 $    2,953,528
                                                                  ==============




                 See notes to consolidated financial statements.

                                       F-3

<PAGE>
                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                  Year Ended December 31,
                                           -----------------------------------
                                                  2000               1999
                                           ---------------    ----------------


NET SALES                                $     17,172,121   $      12,903,154
COST OF SALES                                  14,537,102          10,428,057
                                           ---------------    ----------------
GROSS PROFIT                                    2,635,019           2,475,097
                                           ---------------    ----------------

COSTS AND EXPENSES:
     Selling and delivery                       1,214,583           1,025,068
     General and administrative                 2,418,094           2,140,674
                                           ---------------    ----------------
                                                3,632,677           3,165,742
                                           ---------------    ----------------

LOSS FROM OPERATIONS                             (997,658)           (690,645)

INTEREST EXPENSE                                  (55,872)            (53,385)

INTEREST INCOME                                    29,689              71,966
                                           ---------------    ----------------

NET LOSS                                       (1,023,841)           (672,064)

PREFERRED STOCK DIVIDENDS                         (45,500)            (84,000)
                                           ---------------    ----------------

NET LOSS APPLICABLE TO COMMON
 SHAREHOLDERS                            $     (1,069,341)  $        (756,064)
                                           ===============    ================

LOSS PER SHARE - BASIC AND DILUTED       $          (0.42)  $           (0.32)
                                           ===============    ================

WEIGHTED AVERAGE NUMBER OF SHARES
     USED IN CALCULATION OF BASIC AND
     DILUTED LOSS PER SHARE                     2,528,409           2,378,409
                                           ===============    ================











                 See notes to consolidated financial statements.

                                       F-4
<PAGE>

                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>


                                        Preferred Stock     Common Stock      Additional                      Total
                                        ---------------  ------------------     Paid-In   Accumulated     Stockholders'
                                         Shares   Amount    Shares    Amount     Capital     Deficit          Equity
                                        -------  -------  ---------- -------  ----------- -------------- ---------------

<S>                                     <C>     <C>       <C>       <C>     <C>          <C>            <C>
Balance December 31, 1998                300,000 $ 3,000   2,378,409 $ 2,379 $ 5,365,573  $ (2,223,953)    $ 3,146,999

Net loss                                    -       -           -       -           -         (672,064)       (672,064)

Dividends payable to preferred
 shareholders                               -       -           -       -           -          (84,000)        (84,000)
                                        -------  -------  ---------- -------  ----------- -------------- ---------------
Balance December 31, 1999                300,000   3,000   2,378,409   2,379   5,365,573    (2,980,017)      2,390,935

Conversion of preferred to common       (300,000) (3,000)    300,000     300       2,700          -               -

Net loss                                    -       -           -       -           -        (1,023,841)    (1,023,841)

Dividends payable to preferred
 shareholders                               -       -           -       -           -          (45,500)        (45,500)
                                        -------  -------  ---------- -------  ----------- -------------- ---------------
Balance December 31, 2000                   -   $   -     2,678,409  $ 2,679 $ 5,368,273  $ (4,049,358)    $ 1,321,594
                                        =======  =======  ========== =======  =========== ============== ===============

</TABLE>











                See notes to consolidated financial statements.

                                       F-5
<PAGE>
                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                            STATEMENTS OF CASH FLOWS


                                                        Year Ended December 31,
                                                    ----------------------------
                                                       2000              1999
                                                    -------------   ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                          $  (1,023,841) $    (672,064)
                                                    -------------   ------------
 Adjustments to reconcile net loss to
  net cash used in operating activities:
   Depreciation and amortization                        193,217         171,032

 Changes in assets and liabilities:
  (Increase) decrease in accounts receivable            298,859        (361,828)
  Increase in inventories                               (78,137)       (377,555)
  Decrease in prepaid expenses                            7,505          21,501
  Increase in deferred expenses                        (107,880)           -
  Decrease in other assets                                7,547          35,805
  Increase in accounts payable and accrued expenses     291,190          75,530
                                                    --------------  ------------
                                                        612,301        (435,515)
                                                    --------------  ------------

NET CASH USED IN OPERATING ACTIVITIES                  (411,540)     (1,107,579)
                                                    --------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of equipment                                   (1,008)        (10,203)
                                                    --------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Principal payments of capital lease obligations        (20,139)         (4,894)
 Payment of accrued dividends on preferred stock       (199,613)           -
 Payments of long-term debt                             (74,292)        (68,131)
                                                    --------------  ------------
NET CASH USED IN FINANCING ACTIVITIES                  (294,044)        (73,025)
                                                    --------------  ------------

DECREASE IN CASH                                       (706,592)     (1,190,807)

CASH - BEGINNING OF YEAR                                897,934       2,088,741
                                                    --------------  ------------

CASH - END OF YEAR                                 $    191,342   $     897,934
                                                    ==============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:

     Cash paid for interest                        $     55,713   $      53,299
                                                    ==============  ============

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

     Capital lease obligations                     $    180,942   $      38,388
                                                    ==============  ============


                 See notes to consolidated financial statements.

                                       F-6
<PAGE>

                   CAPITAL BEVERAGE CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999




1.       DESCRIPTION OF BUSINESS

         Capital  Beverage  Corporation  (the  "Company") was formed in December
         1995 to operate as a wholesale  distributor of beer and other beverages
         in New York City. In December  1998,  CAP  Communications,  Ltd.  ("Cap
         Comm"), a wholly-owned subsidiary, was organized to market domestic and
         long distance  prepaid  telephone  calling cards to distributors and to
         the general public.

2.       SIGNIFICANT ACCOUNTING POLICIES

         Principles  of  Consolidation  - The financial  statements  include the
         accounts of the Company and Cap Comm, its wholly-owned subsidiary.  All
         significant intercompany balances and transactions have been eliminated
         in consolidation.

         Inventories - Inventories of beer, other beverage  products and prepaid
         calling  cards  are  stated  at the  lower of cost,  determined  by the
         first-in, first-out method, or market.

         Property and  Equipment - Property and equipment are stated at cost and
         are depreciated  over the estimated useful lives of the related assets,
         ranging  from  5  to  39  years.   Depreciation   is  computed  on  the
         straight-line and accelerated  methods for both financial reporting and
         income tax purposes.

         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 bases 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.

                                      F - 7

<PAGE>





         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.

         Distribution  License - The  Company's  license to  distribute  certain
         beverage  products in New York City, is recorded at cost.  Amortization
         is provided on a straight-line basis over ten years.

         Revenue  Recognition - Wholesale sales are recognized at the time goods
         are shipped.  Revenue on prepaid phone cards is recognized when the end
         user utilizes calling time and upon expiration of such card.

         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  - In June 1998 and June 2000, the FASB
         issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities"  and SFAS  No.  138,  "Accounting  for  Certain  Derivative
         Instruments and Certain Hedging Activities." These statements establish
         accounting  and reporting  standards  requiring  that every  derivative
         instrument  be  recorded  on the  balance  sheet as  either an asset or
         liability  measured  at its  fair  value.  SFAS  Nos.  133 and 138 also
         require  that  changes in the  derivative's  fair  value be  recognized
         currently in earnings  unless  specific hedge  accounting  criteria are
         met.  SFAS Nos. 133 and 138 are  effective  for fiscal years  beginning
         after June 15,  2000.  The Company does not expect that the adoption of
         these new  standards  will  have a  material  impact  on the  Company's
         earnings or financial position.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
         Staff Accounting  Bulletin No. 101,  "Revenue  Recognition in Financial
         Statements" ("SAT 101"),  which clarifies  certain existing  accounting
         principles for the timing of revenue recognition and its classification
         in the financial statements. In June 2000, the SEC delayed the required
         implementation  date of SAT  101.  As a  result,  SAT 101  will  not be
         effective for the Company  until the quarter ended  September 30, 2001.
         In October 2000, the SEC issued further guidance on the interpretations
         included in SAT 101. The Company is currently  analyzing  the impact of
         this Staff Accounting Bulletin.







                                      F - 8

<PAGE>



         In  September  2000,  the FASB  issued  SFAS No.  140  "Accounting  for
         Transfers  and  Servicing of  Financial  Assets and  Extinguishment  of
         Liabilities-a replacement of FASB Statement No. 125" ("SFAS 140"). SFAS
         140 revises the standards for accounting for  securitization  and other
         transfers  of financial  assets and  collateral  and  requires  certain
         disclosures,  but it carries over most of SFAS 125's provisions without
         reconsideration.   This   Statement  is  effective  for  transfers  and
         servicing  of  financial  assets  and   extinguishment  of  liabilities
         occurring  after  March 31,  2001.  This  Statement  is  effective  for
         recognition  and  reclassification  of collateral  and for  disclosures
         relating to securitization transactions and collateral for fiscal years
         ending after December 15, 2000. The Company is currently analyzing this
         new standard.

3.       DISTRIBUTION LICENSE

         The  Company has  acquired an  exclusive  license to  distribute  Pabst
         Products within the "territory", as defined in the licensing agreement.
         The Company paid $1,600,000,  of which $800,000 was paid at the closing
         and the  balance  in a note  payable  in 120  monthly  installments  of
         $10,000 each, inclusive of interest at 9% per annum.

         Principal  payments  of the notes over the next five years are:  2001 -
         $81,013;  2002 - $88,338;  2003 - $96,327;  2004 -  $105,038;  - 2005 -
         $114,536.

4.       WARRANTS

         In July 1997,  the Company  sold  800,000  units for  $3,803,000  after
         expenses.  The units consisted of one share of Common Stock and Class A
         Redeemable Common Stock Purchase Warrants. Two Class A warrants entitle
         the holder to  purchase  one share of Common  Stock at $6.25 per share.
         The warrants  are  exercisable  commencing  July 17, 1998 and expire on
         July 16, 2002.  The warrants are redeemable by the Company at $.001 per
         warrant  under terms as defined in the warrant  agreement.  At December
         31, 2000, 1,659,000 Class A warrants were issued and outstanding.

         The Company issued a unit purchase warrant to the underwriter for $100,
         enabling the  underwriter to purchase up to 80,000 units at an exercise
         price of at least 120  percent  of the  initial  offering  price of the
         units. The Company has reserved 120,000 shares of Common Stock to cover
         the exercise of such warrant.

5.       INCOME TAXES

         At December 31, 2000, the Company had a net operating loss carryover of
         $3,500,000  available as offsets against future taxable income, if any,
         which expire at various dates through 2015.  The Company has a deferred
         tax asset of $1,200,000 arising from such net operating loss deductions
         and has  recorded a  valuation  allowance  for the full  amount of such
         deferred tax asset.


                                      F - 9

<PAGE>



         The  difference  between  the  recorded  income  tax  benefits  and the
         computed tax benefits using a 40 percent effective rate are as follows:


                                            Year Ended December 31,
                                         -----------------------------
                                               2000            1999
                                         ---------------  ------------
Computed expected
 income tax (benefit)                 $       (400,000)  $   (270,000)
Non-deductible items                              -            20,000
Temporary differences                             -            (2,000)
Benefits not recorded                          400,000        252,000
                                         ---------------  ------------
                                      $           -      $       -
                                         ===============  ============

6.       PROPERTY AND EQUIPMENT

         Property  and  equipment,  at  cost,  consist  of the  following  as of
December 31, 2000:


Leasehold improvements                     $                  60,000
Computer equipment                                            16,418
Machinery and equipment                                      244,002
                                                --------------------
                                                             320,420
Less accumulated depreciation                               (65,546)
                                                --------------------
                                           $                 254,874
                                                ====================

         The  Company  has  machinery  and  equipment  under  capital  leases of
$234,921.

7.       CAPITAL LEASE OBLIGATIONS

         The  Company  has  various   capital   lease   obligations   which  are
         collateralized  by equipment.  Interest  rates under the agreements are
         7.6% to 9.9%, with monthly principal and interest payments of $4,758.







                                     F - 10

<PAGE>



         Future  minimum  lease  payments  and the present  value of the minimum
         lease payments under the noncancellable capital lease obligations as of
         December 31, 2000 are as follows:


2001                                   $      59,064
2002                                          59,064
2003                                          59,064
2004                                          51,136
2005                                          26,508
                                        -------------
Total future minimum
 lease payments                              254,836
Less amounts representing interest            45,816
                                        -------------
Present value of minimum
 lease payments                              209,020
Less current maturities                       39,871
                                        -------------
Total long - term obligations          $     169,149
                                        =============

8.       LEASE COMMITMENTS

         The Company  renegotiated the lease of its warehouse and administrative
         facilities in April 1998 thereby  reducing its monthly rental  payments
         from  $10,000  to $4,000 for the  remainder  of its lease  term,  which
         expires in 2001.  A  principal  shareholder  in the  company has a one-
         sixth interest in the lessor.  Additional  warehouse space was acquired
         from a customer on a  month-to-month  basis  commencing  October  1998.
         Rental payments of $7,000 per month are offsettable against amounts due
         from the customer until the balance is liquidated. In November 1999 the
         Company agreed to pay $4,000 per month,  and the remaining  $3,000 will
         be offsettable against amounts due from the customer.  Rent expense for
         2000 and 1999 was $131,500 and $107,258, respectively.

9.       CONCENTRATION OF CREDIT RISK

         The Company is subject to credit risk  through  trade  receivables  and
         short-term  cash  investments.   Credit  risk  with  respect  to  trade
         receivables is mitigated to a degree because of management's  knowledge
         of the  local  marketplace  and the  relative  creditworthiness  of the
         customers to which it extends credit.  Short-term cash  investments are
         placed  with  high  credit  quality  financial  institutions,   thereby
         limiting the amount of credit exposure.





                                     F - 11

<PAGE>



         The Company's  operations,  and therefore its revenues are concentrated
         in the New York City Metropolitan area.  Additionally,  the majority of
         the  Company's   revenues  are  derived  from  the  sale  of  alcoholic
         beverages.  Downturns  in New York City's  economic  activities  and/or
         negative  changes  in the  publics  perception  of the  consumption  of
         alcoholic beverages may adversely affect the Company's operations.

10.      MAJOR CUSTOMER AND SUPPLIER INFORMATION

         Sales to a single  customer  in 1999  accounted  for 14% of net  sales.
         Purchases  from  major  suppliers  were  approximately  $6,700,000  and
         $3,000,000 in 2000 and 1999, respectively.

9.       RELATED PARTY TRANSACTION

         The Company's carting and recycling  services are provided by an entity
         whose  principle  shareholder  is also a director of the Company.  Such
         services approximated $61,462 in 2000 and $63,000 in 1999.

10.      EMPLOYMENT AGREEMENT

         The  Company  has an  agreement  for the  services of an officer of the
         Company as President and Chief Executive Officer ("CEO"). The agreement
         expires on October 2003 and provides for base  compensation of $300,000
         per year payable in equal weekly payments.  The agreement also provides
         for  participation  in whatever  executive  stock option plan is agreed
         upon by the board of  directors,  the use of a luxury  car,  health and
         welfare  coverage for the officer and his family,  coverage and benefit
         of pension  plan in the event that a plan is  approved  by the board of
         directors,  reimbursement  of all expenses  reasonably  incurred in the
         performance  of duties under the  agreement,  four weeks paid  vacation
         annually,  six paid  personal  days and sick days in  keeping  with the
         Company's policy regarding executives, four weeks paid leave of absence
         and if the Company ceases  employment for any reason,  the officer will
         receive four weeks pay for each year of service with the Company.  Such
         payment will be pro-rated for the portion of the final year of service.

11.      STOCK OPTIONS

         The  Company's  1996  Incentive  Stock  Option  Plan (the  "Plan")  was
         approved by the Board of  Directors  and holders of Common Stock of the
         Company on June 19,  1996 to provide for the grant of  incentive  stock
         options within the meaning of Section 422 of the Internal  Revenue Code
         of 1986 to officers and  employees  of the Company.  A total of 350,000
         shares of Common Stock has been  authorized  and reserved for issuance,
         subject   to   adjustment   to  reflect   changes   in  the   Company's
         capitalization in the case of a stock split,  stock dividend or similar
         event.  The Plan will be  administered by the  Compensation  Committee,
         which has the sole  authority to determine  the persons to whom options
         will be granted,  to determine the basis upon which the options will be
         granted, and to determine the exercise price, duration

                                     F - 12

<PAGE>



         and  other  terms of  options  to be  granted  provided  that,  (i) the
         exercise  price of each option  granted  under the Plan may not be less
         than the fair market  value of the Common Stock on the day of the grant
         of the  option,  (ii) the  exercise  price  must be paid in cash and or
         stock upon exercise of the option,  (iii) no option may be  exercisable
         for more than 10 years  after the date of grant,  and (iv) no option is
         transferable other than by will or laws of descent and distribution.

         175,000  options  were  granted,  on  December  30,  1999,  and another
         175,000  options were granted,  on December 29, 2000. Had  compensation
         cost for  the Plan been determined based on the fair value at the grant
         dates  for awards under the Plan,  the  Company's net loss and loss per
         share would have increased to the pro forma amounts indicated below:


                                          1999                      2000
                                 ---------------------     ---------------------
Net loss as reported                    ($672,064)              ($1,023,841)
Pro forma net loss as reported          ($993,662)              ($1,083,241)
Net loss per share as reported           ($0.32)                   ($0.42)
Pro forma net loss                       ($0.42)                   ($0.43)

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black  Scholes  option-pricing  method  with the  following
         weighted average assumptions used for grants in 1999 and 2000; dividend
         yield 0%, expected volatility 50%, risk free interest rate 7%, expected
         lives in years is 5 for the  options  granted  in 1999,  and 10 for the
         options granted in 2000.

         The weighted  average fair value of stock  options  granted  during the
         year  ended   December   31,   1999  and  2000  was  $3.50  and  $0.50,
         respectively.

12.      DEFERRED EXPENSES

         Deferred  expenses   represent  costs  associated  with  the  Company's
         proposed purchase of Prospect Beverages, Inc.

13.      SUBSEQUENT EVENTS

         On January  9, 2001,  the  Company  entered  into a letter of intent to
         purchase  certain assets and  liabilities of Prospect  Beverages,  Inc.
         ("Prospect"),  a  Brooklyn-based  distributor.  Prospect  will  receive
         500,000  shares of the  Company's  common  stock as well as  employment
         contracts for certain of its officers.

                                     F - 13

<PAGE>



(a) (2)  Exhibits

         A list and description of exhibits filed as part of this Form 10-KSB is
provided in the attached Exhibit Index.

 1.1     Form of Underwriting Agreement.*
 1.2     Form of Agreement Among Underwriters.*
 1.3     Form of Selected Dealer Agreement.*
 3.1     Certificate of Incorporation.*
 3.2     Certificate of Designations, As Amended, Relating to Series A Preferred
         Stock.*
 3.3     Form of Certificate of Designations Relating to Series B Preferred
         Stock.*
 3.4     ByLaws.*
 4.1     Specimen Common Stock Certificate.*
 4.2     Specimen Series A Preferred Stock Certificate.*
 4.3     Specimen Series B Preferred Stock Certificate.*
 4.4     Specimen Class A Warrant Certificate.*
 4.5     Form of Convertible Bridge Note.*
 4.6     Form of Class A Warrants Issued to Certain Members of Management.*
 4.7     Form of Class A Warrants Issued in 1996 Private Placement Financing.*
 4.8     Form of Representative's Unit Purchase Option Agreement.*
 4.9     Form of Warrant Agreement.*
10.1     Agreement with Consolidated Beverage Corp. relating to Pabst
         Distribution Rights *
10.2     Form of Series of Promissory Notes to Consolidated Beverage
         Corporation *
10.3     Bill of Sale from Consolidated Beverage Corp. to Registrant.*
10.4     Distributorship Agreement with Pabst Brewing Company *
10.5     Agency Agreement with Vito Santoro, Inc.*
10.6     Employment Agreement between Registrant and Carmine N. Stella.*
10.7     1996 Incentive Stock Option Plan.*
10.8     Agreement with Carmine N. Stella relating to Option to acquire Vito
         Santoro, Inc.*
10.9     Merger Agreement relating to Vito Santoro, Inc.*

* Incorporated by reference to Registrant's Registration Statement on Form SB-2,
and amendments thereto, Registration No. 333-9995 declared effective on July 17,
1997.

(b)      Reports on Form 8-K.

                  None.



<PAGE>



                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly executed on this 19th day of April, 2001.

                                         CAPITAL BEVERAGE CORPORATION


                                         By:/s/ Carmine Stella
                                         Carmine Stella
                                         President, Chief Executive Officer
                                         and Chairman of the Board of Directors


         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant in the capacities and on the dates
indicated

Signature                            Title                        Date

/s/ Carmine Stella             Chief Executive Officer,       April 19, 2001
------------------             President and Chairman of
Carmine Stella                 the Board of Directors



/s/ Robert Vessa               Director                       April 19, 2001
----------------
Robert Vessa


 /s/Carol Russell              Secretary and Treasurer        April 19, 2001
-----------------              and Director
Carol Russell


/s/ Dawn Collins               Director                       April 19, 2001
-----------------
Dawn Collins


 /s/ Joseph Luzzi              Director                       April 19, 2001
-----------------
Joseph Luzzi


/s/ Anthony Stella             Vice President of Sales        April 19, 2001
------------------             and Managing Director
Anthony Stella