<SUBMISSION>
<ACCESSION-NUMBER>0001172665-08-000155
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20080630
<FILING-DATE>20080812
<DATE-OF-FILING-DATE-CHANGE>20080812
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CAPITAL BEVERAGE CORP
<CIK>0001020186
<ASSIGNED-SIC>5180
<IRS-NUMBER>133878747
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-13181
<FILM-NUMBER>081009685
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1111 EAST TREMONT AVENUE
<CITY>BRONX
<STATE>NY
<ZIP>10460
<PHONE>7184092337
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1111 EAST TREMONT AVENUE
<STREET2>1111 EAST TREMONT AVENUE
<CITY>BRONX
<STATE>NY
<ZIP>10460
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q1.htm
<TEXT>

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<P align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=4>UNITED STATES</FONT></B></P>
<P align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=4>SECURITIES AND EXCHANGE COMMISSION</FONT></B></P>
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     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Washington, D.C. 20549</FONT></B><BR>
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<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=4>FORM 10-Q</FONT></B></TD></TR></TABLE></P>
<P align=center><FONT face="CG Times,Times New Roman,Times,serif" size=2>[</FONT><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>X</FONT></B><FONT face="CG Times,Times New Roman,Times,serif" size=2>] </FONT><B><FONT face="CGTimes-Bold,Times &#13;&#10;New Roman,Times,serif" size=2>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></B></P>
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     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>For the quarterly period ended June 30, 2008</FONT></B></TD></TR></TABLE></P>
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     <TD noWrap align=center><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>OR</FONT></B></TD></TR></TABLE></P>
<P align=center><FONT face="CG Times,Times New Roman,Times,serif" size=2>[ ] </FONT><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES </FONT></B><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>EXCHANGE ACT OF 1934</FONT></B></P>
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     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>For the transition period from ______ to&nbsp; ________</FONT></B></TD></TR></TABLE></P>
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     <TD noWrap align=center><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>Commission File Number: 0-13181</FONT></B></TD></TR></TABLE></P>
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     <TD noWrap align=center><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>CAPITAL BEVERAGE CORPORATION</FONT></B><BR>
<FONT face="CG Times,Times New Roman,Times,serif" size=2>(Exact name of registrant as specified in its charter)</FONT></TD></TR></TABLE></P>
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     <TD noWrap align=center width="63%"><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>Delaware</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="34%">&nbsp;<B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>13-3878747</FONT></B>&nbsp; </TD></TR>
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     <TD noWrap align=center width="63%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(State or other jurisdiction of</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="34%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(I.R.S. Employer)</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=center width="63%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>incorporation or organization)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="34%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Identification No.)</FONT>&nbsp; </TD></TR>
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     <TD align=center width="99%" colSpan=3>&nbsp; </TD></TR>
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     <TD noWrap align=center width="63%"><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>120 Rio Vista Drive, Norwood, New Jersey</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="34%"><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>07648</FONT></B>&nbsp; </TD></TR>
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     <TD noWrap align=center width="63%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(Address of principal executive offices)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="34%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(Zip Code)</FONT>&nbsp; </TD></TR></TABLE></DIV><BR>
<P align=center><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>(201) 679-6752</FONT></B></P>
<P align=center><FONT face="CG Times,Times New Roman,Times,serif" size=2>(Registrant&#146;s telephone number, including area code)</FONT></P>
<P align=center><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>Not Applicable</FONT></B></P>
<P align=center><FONT face="Times New Roman" size=3>(Former name, former address and former fiscal year, if changed since last report)</FONT></P>
<P align=left><FONT face="Times New Roman" size=3>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 [</FONT><B><FONT face="Times New Roman" size=3>X</FONT></B><FONT face="Times New Roman" size=3>] No [ ]</FONT></P>
<P align=left><FONT face="Times New Roman" size=3>Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one):</FONT></P>
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     <TD noWrap><FONT face="CG Times,Times New Roman,Times,serif" size=3><FONT face="Times New Roman">Large accelerated filer&nbsp;<FONT face=Wingdings>&#168;</FONT></FONT><FONT face="Times New Roman">&nbsp;&nbsp; Accelerated filer&nbsp;&nbsp;<FONT face=Wingdings>&#168;</FONT></FONT><FONT face="Times New Roman">&nbsp;&nbsp; Non-accelerated filer&nbsp; <FONT face=Wingdings>x</FONT></FONT></FONT></TD></TR></TABLE></P>
<P align=left><FONT face="Times New Roman" size=3>Indic</FONT><FONT face="Times New Roman" size=3>ate </FONT><FONT face="Times New Roman" size=3>by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes <FONT face=Wingdings>x</FONT> No <FONT face=Wingdings>&#168;</FONT></FONT></P>
<P align=left><FONT face="Times New Roman" size=3>The number of shares of common stock, $.001 par value, outstanding as of August 12, 2008 was 3,792,045.</FONT></P>
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<P><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>&nbsp;CAPITAL BEVERAGE CORPORATION</FONT></B><BR>
<B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2></FONT></B></P>
<P><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>QUARTERLY REPORT ON FORM 10-Q</FONT></B><BR>
<BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TABLE OF CONTENTS</FONT></B></P>
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     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="5%"><B><U><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>Page</FONT></U></B>&nbsp; </TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><B><U><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>PART I </FONT></U></B><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=2>- </FONT></B><B><U><FONT face="TimesNewRomanPS-BoldMT,Times New &#13;&#10;Roman,Times,serif" size=2>FINANCIAL INFORMATION</FONT></U></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="5%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="7%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 1.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Financial Statements (Unaudited)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="5%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Balance Sheets</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;3 </FONT></TD></TR>
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     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Statements of Operations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;4 </FONT></TD></TR>
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     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Statements of Cash Flows</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;5 </FONT></TD></TR>
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     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Notes to Financial Statements</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;6 </FONT></TD></TR>
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     <TD noWrap align=left width="7%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Item 2.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;9 </FONT></TD></TR>
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     <TD noWrap align=left width="7%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 3.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Quantitative and Qualitative Disclosures About Market Risks</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;10 </FONT></TD></TR>
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     <TD noWrap align=left width="7%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 4.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="82%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Controls and Procedures</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;10 </FONT></TD></TR>
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     <TD width="98%" colSpan=5>
<P></P>
</TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><B><U><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>PART II </FONT></U></B><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>- </FONT></B><B><U><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>OTHER INFORMATION</FONT></U></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="CG Times,Times New Roman,Times,serif" size=2>Item 1. Legal Proceedings</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11 </FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="CG Times,Times New Roman,Times,serif" size=2>Item 1A. Risk Factors</FONT>&nbsp; </TD>
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     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11 </FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11 </FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 3. Defaults Upon Senior Securities</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11 </FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 4. Submission of Matters to Vote of Securities Holders</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11</FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 5. Other Information</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11 </FONT></TD></TR>
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     <TD align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 6.</FONT> <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Exhibits</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="5%"><FONT size=2>&nbsp;11</FONT></TD></TR>
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     <TD noWrap align=left width="91%" colSpan=3><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Signatures</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
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<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>PART I - FINANCIAL INFORMATION</FONT></P>
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Item 1. Financial Statements</FONT></P>
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     <TD align=center width="97%" colSpan=11><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CAPITAL BEVERAGE CORPORATION</FONT></U> </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
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     <TD align=center width="97%" colSpan=11><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>BALANCE SHEETS</FONT></U> </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="97%" colSpan=11><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>ASSETS</FONT></U> </TD></TR>
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     <TD noWrap align=left width="60%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>June 30,</FONT> </TD>
     <TD noWrap align=center width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>December 31,</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2008</FONT> </TD>
     <TD noWrap align=center width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2007</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="60%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CURRENT ASSETS:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Cash</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2,818</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>188</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Restricted cash</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>570,693</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>742,977</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other Receivable-Current Portion</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5,000</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>TOTAL CURRENT ASSETS</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>573,511</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>748,165</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>OTHER ASSETS</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,929</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,929</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>575,440</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>750,094</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="97%" colSpan=11><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>LIABILITIES AND STOCKHOLDERS' DEFICIT</FONT> </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CURRENT LIABILITIES:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accounts payable</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,186,957</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,171,190</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accrued expenses and taxes</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>42,329</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>42,544</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Loan payable</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>31,000</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>TOTAL CURRENT LIABILITIES</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,260,286</FONT></TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,213,734</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>STOCKHOLDERS' DEFICIT:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Preferred stock, no shares issued and outstanding</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Common stock, $.001 par value; authorized 20,000,000 shares;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>issued and outstanding 3,792,045 shares</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,793</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,793</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Additional paid-in capital</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5,986,249</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5,986,249</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accumulated deficit</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(6,674,888</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(6,453,682</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>TOTAL STOCKHOLDERS' DEFICIT</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(684,846</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(463,640</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="60%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="11%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>575,440</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>750,094</FONT> </TD>
     <TD noWrap align=left width="2%">&nbsp; </TD></TR></TABLE></DIV><BR>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center>
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>See notes to consolidated financial statements.</FONT></P>
<P><FONT size=2>3</FONT></P>
</TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2></FONT></TD></TR></TABLE></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" noShade SIZE=2>

<!--$$/page=-->
<A name="page_4"></A>
<DIV align=center>
<TABLE style="WIDTH: 900px; HEIGHT: 501px" cellSpacing=0 cellPadding=0 width=900 border=0>
<TR vAlign=bottom>
     <TD align=center width="86%" colSpan=21><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CAPITAL BEVERAGE CORPORATION</FONT></U></TD></TR>
<TR>
     <TD align=center width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=center width="86%" colSpan=21><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>STATEMENTS OF OPERATIONS</FONT></U></TD></TR>
<TR>
     <TD align=center width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD align=center width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD align=center width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="30%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="24%" colSpan=6><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Three Months Ended June 30,</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="24%" colSpan=6><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Six Months Ended June 30,</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="30%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2008</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2007</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2008</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2007</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="30%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>REVENUES</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>COSTS AND EXPENSES:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>General and administrative</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>121,849</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>182,348</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>222,599</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>269,059</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>121,849</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>182,348</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>222,599</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>269,059</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>OTHER INCOME:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Sale of liquor license</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>25,000</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>25,000</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Interest income</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,393</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,978</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,393</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,805</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>NET LOSS</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(120,456</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(155,370</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(221,206</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=center width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(240,254</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>NET LOSS PER SHARE:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Basic and diluted</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.03</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.04</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.06</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=center width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=center noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(0.06</FONT> </TD>
     <TD vAlign=center noWrap align=left width="1%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="86%" colSpan=21><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>WEIGHTED AVERAGE NUMBER OF SHARES:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="10%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Basic and Diluted</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,792,045</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,792,045</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,792,045</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="1%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3,792,045</FONT> </TD>
     <TD noWrap align=left width="1%"><FONT size=2>&nbsp; </FONT></TD></TR></TABLE></DIV><BR>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center>
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>See notes to consolidated financial statements.</FONT></P>
<P><FONT size=2>4</FONT></P>
</TD></TR></TABLE></P>
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     <TD align=center width="95%" colSpan=11><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CAPITAL BEVERAGE CORPORATION</FONT></U></TD></TR>
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     <TD align=center width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD align=center width="95%" colSpan=11><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>STATEMENTS OF CASH FLOWS</FONT></U></TD></TR>
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     <TD align=center width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD align=center width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD noWrap align=center width="55%"><FONT size=2>&nbsp; </FONT></TD>
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     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="32%" colSpan=6><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Six Months Ended June 30,</FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD noWrap align=center width="55%"><FONT size=2>&nbsp; </FONT></TD>
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     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2008</FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD>
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     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2007</FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="55%"><FONT size=2>&nbsp; </FONT></TD>
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     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=center width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(Unaudited)</FONT></TD>
     <TD noWrap align=center width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CASH FLOWS FROM OPERATING ACTIVITIES:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Net loss</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(221,206</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(240,254</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Adjustments to reconcile net loss from continuing</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>operations to net cash used in operating activities:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Changes in assets and liabilities:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other receivable</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5,000</FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(20,000</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Other assets</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1,601</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accounts payable</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>15,767</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>54,576</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accrued officer salary</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>167,618</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Accrued expenses and taxes</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(215</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT size=2>)&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(28,094</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total adjustments</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>20,552</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>175,701</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>NET CASH USED IN OPERATING ACTIVITIES</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(200,654</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(64,553</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CASH FLOWS FROM FINANCING ACTIVITIES:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Proceeds from loan payable</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>31,000</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>NET CASH PROVIDED BY FINANCING ACTIVITIES</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>31,000</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>DECREASE IN CASH</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(169,655</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD vAlign=center noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>(64,553</FONT> </TD>
     <TD vAlign=center noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>)</FONT><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CASH - BEGINNING OF PERIOD</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>743,165</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>803,955</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CASH - END OF PERIOD</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>573,511</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>739,402</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD noWrap align=left width="55%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>SUPPLEMENTAL DISCLOSURE OF CASH FLOW</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
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     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>INFORMATION:</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Cash paid for interest</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="55%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Cash paid for taxes</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=right width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD noWrap align=left width="2%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>$</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD width="2%"><FONT size=2>&nbsp; </FONT></TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>-</FONT> </TD>
     <TD noWrap align=left width="2%"><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
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     <TD align=center width="95%" colSpan=11><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>See notes to consolidated financial statements.</FONT> </TD></TR>
<TR>
     <TD width="95%" colSpan=11><FONT size=2>&nbsp; </FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=center width="95%" colSpan=11><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5</FONT></TD></TR></TABLE></DIV><BR>
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     <TD noWrap align=center><U><FONT face="CG Times,Times New Roman,Times,serif">CAPITAL BEVERAGE CORPORATION</FONT></U><BR>
<BR>
<U><FONT face="CG Times,Times New Roman,Times,serif">NOTES TO FINANCIAL STATEMENTS</FONT></U><BR>
<BR>
<U><FONT face="CG Times,Times New Roman,Times,serif">SIX MONTHS ENDED JUNE 30, 2008 AND </FONT></U><U><FONT face="CG Times,Times New Roman,Times,serif">2007</FONT></U></TD></TR></TABLE></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">1. </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS</FONT></U></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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 six months ended June 30, 2008 are not necessarily indicative of the results that may be experienced for the fiscal year ending December 31, 2008.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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 &#147;Company&#148; or &#147;Capital&#148;) 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. (&#147;Cap Com&#148;), 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.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">2. </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">GOING CONCERN</FONT></U></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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.</FONT></P>
<P align=center><FONT face="CG Times">6</FONT></P>
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<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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&#146;s ability to continue as a going concern. The Company&#146;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.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">3. </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">SIGNIFICANT ACCOUNTING POLICIES</FONT></U></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">Cash and Cash Equivalents </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">- 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.</FONT></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">Restricted Cash </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">&#150; 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) </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">Income Taxes </FONT></U><FONT face="CG Times,Times New &#13;&#10;Roman,Times,serif">- 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.</FONT></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">Use of Estimates </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">- 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.</FONT></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">Fair Value of Financial Instruments </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">- The Company considers its financial instruments, which are carried at cost, to approximate fair value due to their near-term maturities.</FONT></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">Income (loss) per Common Share </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">- 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.</FONT></P>
<P align=left><U><FONT face="CG Times,Times New Roman,Times,serif">New Accounting Pronouncements </FONT></U><FONT face="CG Times,Times New Roman,Times,serif">&#150; 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.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">4. </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">CONCENTRATION OF CREDIT RISK</FONT></U></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">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 <FONT face="CG Times,Times New Roman,Times,serif">experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash on deposit.</FONT></FONT></P>
<P align=center><FONT face="CG Times">7</FONT></P>
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<P align=left><FONT face="CG Times,Times New Roman,Times,serif"></FONT>&nbsp;</P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif">5. </FONT><U><FONT face="CG Times,Times New Roman,Times,serif">LITIGATION</FONT></U></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif" size=3>On June 26, 2007, the Company filed a complaint against Oak Beverages, Inc. ("Oak"), Victoria Beverage, Inc. ("Victoria"), and Dealy &amp; 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.</FONT></P>
<P align=center><FONT face="CG Times">8</FONT></P>
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<P align=center><B><U><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Special Note Regarding Forward-Looking Statements</FONT></U></B></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><B><I><FONT face="CGTimes-BoldItalic,Times New Roman,Times,serif" size=3>This Quarterly Report on Form 10-Q contains &#147;forward-looking&#148; 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 &#147;believes,&#148; &#147;anticipates,&#148; &#147;plans,&#148; &#147;expects&#148; 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 &#147;Item 7 &#150; Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations&#148; 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&#146;s current expectations and are inherently uncertain. Investors are warned that actual results may differ from management&#146;s expectations.</FONT></I></B></P>
<P align=left><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=3>Item 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</FONT></B></P>
<P align=left><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=3>Management&#146;s Discussion and Analysis</FONT></B></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>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 &#147;Escrow&#148;). A substantial amount of the proceeds from the transaction were used by the Company to repay outstanding indebtedness and for working capital purposes.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>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.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>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.</FONT></P>
<P align=center><FONT face="CG Times">9</FONT></P>
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<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="CG Times,Times New Roman,Times,serif" size=3>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&#146; and officers&#146; 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.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>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.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>As of December 2, 2005, all employees were terminated, except for Carmine Stella who will continue to serve as the Company&#146;s Chief Executive Officer.</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif" size=3>RESULTS OF OPERATIONS</FONT></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif" size=3>The Company had no revenue from operations for the six months ended June 30, 2008.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>General and administrative expenses for the six months ended June 30, 2008 were $222,599.00, which consisted mostly of legal fees, tax accruals and the salary and expenses to our only remaining employee. General and administrative expenses for the six months ended June 30, 2007 were $269,059.00.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>At June 30, 2008 and December 31, 2007, respectively, we had a working capital (deficit) of ($686,774) and ($465,568), respectively.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 3. Quantitative and Qualitative Disclosures About Market Risks</FONT></B></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>All of the Company&#146;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.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 4. Controls and Procedures</FONT></B></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>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&#146;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.</FONT></P>
<P align=left><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>As required by SEC Rule 13a-15(b), we carried out an evaluation as of June 30, 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.</FONT></P>
<P align=center>10</P>
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<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;<FONT size=3>&nbsp;</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>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.</FONT></P>
<P align=left><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=3>PART II&#151;OTHER INFORMATION</FONT></B></P>
<P align=left><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=3>Item 1. Legal Proceedings - </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>There have been no material developments in our legal proceedings from those disclosed in our </FONT><FONT face="CG Times,Times New Roman,Times,serif" size=3>2007 Annual Report on Form 10-K</FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 1A- Risk Factors- </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>- There have been no material changes in our risk factors from those disclosed in our 2007 Annual Report on Form 10-K.</FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 2 &#150; Unregistered Sales of Equity Securities and Use of Proceeds </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>- None </FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 3 - Defaults Upon Senior Securities </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>- None </FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times &#13;&#10;New Roman,Times,serif" size=3>Item 4 - Submission of Matters to Vote of Securities Holders </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>- None </FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New &#13;&#10;Roman,Times,serif" size=3>Item 5 - Other Information </FONT></B><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>&#150; None </FONT></P>
<P align=left><B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=3>Item 6. Exhibits</FONT></B></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
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     <TD vAlign=top width="100%" colSpan=2><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>(a) </FONT><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>Exhibits</FONT></TD></TR>
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     <TD><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>31.1 </FONT></FONT></TD>
     <TD width="100%">
<P align=justify><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>Certification of Chief Executive Officer pursuant to Section 302 of the <FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=3>Sarbanes Oxley Act of 2002</FONT></FONT></P>
</TD></TR>
<TR>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 31.2</TD>
     <TD width="100%">Certification of Treasurer pursuant to Section 302 of the Sarbanes Oxley Act of 2002</TD></TR>
<TR>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32.1</TD>
     <TD width="100%">Certification of Chief Executive Officer and Treasurer pursuant to Section 906 of the Sarbanes Oxley Act of 2002</TD></TR></TABLE>
<P align=center>11</P>
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     <TD noWrap align=center><B><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>SIGNATURES</FONT></B></TD></TR></TABLE></P>
<P align=left><FONT face="CG Times,Times New Roman,Times,serif" size=2>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.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="60%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Date:</FONT>&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>August 12, 2008</FONT>&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=center width="42%"><B><U><FONT face="CGTimes-Bold,Times New Roman,Times,serif" size=2>CAPITAL BEVERAGE CORPORATION</FONT></U></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=center width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(Registrant)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="82%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=right width="3%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>By:</FONT>&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2><U>/s/ Carmine N. Stella</U></FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Carmine N. Stella</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>President and Chief Executive Officer</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>(Principal Executive Officer)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="82%" colSpan=7>&nbsp; </TD></TR>
<TR>
     <TD width="82%" colSpan=7>&nbsp; </TD></TR>
<TR>
     <TD width="82%" colSpan=7>&nbsp; </TD></TR>
<TR>
     <TD width="82%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=right width="3%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>By:</FONT>&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2><U>/s/ Carol Russell</U></FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Carol Russell</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Secretary and Treasurer (Principal</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="5%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD width="1%">&nbsp; </TD>
     <TD noWrap align=left width="42%"><FONT face="CG Times,Times New Roman,Times,serif" size=2>Financial Officer and Accounting Officer)</FONT>&nbsp; </TD></TR></TABLE><BR>
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<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>form10q2.htm
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<P align=center>
<TABLE>
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     <TD noWrap align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CERTIFICATION</FONT></TD></TR></TABLE></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Pursuant to Section 302 of the Sarbanes Oxley Act of 2002</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD width=2>&nbsp;</TD>
     <TD noWrap><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>I, Carmine Stella, certify that:</FONT></TD></TR></TABLE></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1. I have reviewed this quarterly report on Form 10-Q of Capital Beverage Corporation.;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4. The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>c. Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>d. Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting.</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5. The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Date: August 12, 2008</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap>
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>/s/ <U>Carmine Stella</U></FONT></P>
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Carmine Stella</FONT><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>President and Chief Executive Officer</FONT></P>
</TD></TR></TABLE></P>
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<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>form10q3.htm
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     <TD noWrap align=right><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Exhibit 31.2</FONT></TD></TR></TABLE></P>
<P align=center>
<TABLE>
<TR>
     <TD noWrap align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CERTIFICATION</FONT></TD></TR></TABLE></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Pursuant to Section 302 of the Sarbanes Oxley Act of 2002</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD width=2>&nbsp;</TD>
     <TD noWrap><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>I, Carol Russell, certify that:</FONT></TD></TR></TABLE></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1. I have reviewed this quarterly report on Form 10-Q of Capital Beverage Corporation.;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>4. The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>c. Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>d. Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting.</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>5. The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and</FONT></P>
<P align=left><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Date: August 12, 2008</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><U><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>/s/ Carol Russell</FONT></U><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Carol Russell</FONT><BR>
<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Treasurer</FONT></TD></TR></TABLE></P>
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<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>form10q4.htm
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     <TD noWrap align=right><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Exhibit 32.1</FONT></TD></TR></TABLE></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CERTIFICATIONS OF</FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>CHIEF EXECUTIVE OFFICER AND TREASURER </FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>PURSUANT TO 18 U.S.C. SECTION 1350, </FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>AS ADOPTED PURSUANT TO</FONT></P>
<P align=center><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>SECTION 906 OF SARBANES-OXLEY ACT OF 2002</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>In connection with the quarterly report on Form 10-Q of Capital Beverage Corporation (the "Company") for the quarter ended June 30, 2008 (the "Report"), I, Carmine N. Stella, hereby certify in my capacity as Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1. The Report fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934, as amended; and</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="60%" border=0>
<TR vAlign=top>
     <TD width="47%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Dated: August 12, 2008</FONT></P>
</TD>
     <TD width="52%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>By:&nbsp; /s/<U>Carmine N. Stella</U></FONT></P>
</TD></TR>
<TR>
     <TD width="47%"></TD>
     <TD width="52%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Name: Carmine N. Stella</FONT></TD></TR>
<TR>
     <TD width="47%"></TD>
     <TD width="52%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Title: Chief Executive Officer</FONT></P>
</TD></TR></TABLE><BR>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>In connection with the quarterly report on Form 10-Q of Capital Beverage Corporation (the "Company") for the quarter ended June 30, 2008 (the "Report"), I, Carol Russell, hereby certify in my capacity as Treasurer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>1. The Report fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Exchange Act of 1934, as amended; and</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 width="60%" border=0>
<TR vAlign=top>
     <TD width="47%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Dated: August 12, 2008</FONT></P>
</TD>
     <TD width="52%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>By: /s/ <U>Carol Russell</U></FONT></P>
</TD></TR>
<TR>
     <TD width="47%"></TD>
     <TD width="52%"><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Name: Carol Russell </FONT></TD></TR>
<TR>
     <TD width="47%"></TD>
     <TD width="52%">
<P><FONT face="TimesNewRomanPSMT,Times New Roman,Times,serif" size=2>Title: Treasurer</FONT></P>
</TD></TR></TABLE><BR>
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