UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  ______ to  ________

Commission File Number:  0-13181

CAPITAL BEVERAGE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	13-3878747
(State or other jurisdiction of	(I.R.S. Employer)
incorporation or organization)	Identification No.)
120 Rio Vista Drive, Norwood, New Jersey	07648
(Address of principal executive offices)	(Zip Code)

(201) 679-6752

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

___________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  [X] No  [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]                Accelerated filer  [  ]            Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [X]   No [  ]

The number of shares of common stock, $.001 par value, outstanding as of May 20, 2009  was 3,792,045.

CAPITAL BEVERAGE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Balance Sheets	3
	Statements of Operations	4
	Statements of Cash Flows	5
	Notes to Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	10
Item 4.	Controls and Procedures	10
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2	Unregistered Sales of Equity Securities and Use of  Proceeds	11
Item 3	Defaults Upon Senior Securities	11
Item 4	Submission of Matters to Vote of Securities Holders	11
Item 5	Other Information	11
Item 6.	Exhibits	11
Signatures		12

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PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

CAPITAL BEVERAGE CORPORATION

BALANCE SHEETS

ASSETS

		March 31,				December 31,
		2009				2008
		(Unaudited)
CURRENT ASSETS:
Cash		$	9,947			$	8,326
Restricted cash			-				55,876
TOTAL CURRENT ASSETS			9,947				64,202
OTHER ASSETS			2,319				2,319
		$	12,266			$	66,521
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	1,126,953			$	1,092,817
TOTAL CURRENT LIABILITIES			1,126,953				1,092,817
STOCKHOLDERS' DEFICIT:
Preferred stock, no shares issued and outstanding			-				-
Common stock, $.001 par value; authorized 20,000,000 shares;
issued and outstanding 3,792,045 shares			3,793				3,793
Additional paid-in capital			6,011,249				6,011,249
Accumulated deficit			(7,129,729	)			(7,041,338	)
TOTAL STOCKHOLDERS' DEFICIT			(1,114,687	)			(1,026,296	)
		$	12,266			$	66,521

See notes to unaudited financial statements.

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CAPITAL BEVERAGE CORPORATION
STATEMENTS OF OPERATIONS
		Three Months Ended March 31,
		2009				2008
		(Unaudited)				(Unaudited)
REVENUES		$	-			$	-
COSTS AND EXPENSES:
General and administrative			88,391				100,750
			88,391				100,750
LOSS FROM CONTINUING OPERATIONS			(88,391	)			(100,750	)
NET LOSS		$	(88,391	)		$	(100,750	)
NET LOSS PER SHARE:
Basic and diluted		$	(0.02	)		$	(0.03	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic and Diluted			3,792,045				3,792,045

See notes to unaudited financial statements.

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CAPITAL BEVERAGE CORPORATION
STATEMENTS OF CASH FLOWS
		Three Months Ended March 31,
		2009				2008
		(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(88,391	)		$	(100,750	)
Changes in assets and liabilities:
Accounts payable			34,137				(36,657	)
Accrued expenses and taxes			-				(42,543	)
Other Receivable-Current Portion			-				5,000
Total adjustments			34,137				(74,200	)
NET CASH USED IN OPERATING ACTIVITIES			(54,255	)			(174,950	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed			-				4,000
NET CASH PROVIDED BY FINANCING ACTIVITIES			-				4,000
NET DECREASE IN CASH			(54,255	)			(170,950	)
CASH - BEGINNING OF PERIOD			64,202				743,165
CASH - END OF PERIOD		$	9,947			$	572,215
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-

See notes to unaudited financial statements.

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CAPITAL BEVERAGE CORPORATION

NOTES TO FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2009 AND 2008

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

The accompanying unaudited financial statements of Capital Beverage Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the information set forth therein have been included. Operating results for the three months ended March 31, 2009 are not necessarily indicative of the results that may be experienced for the fiscal year ending December 31, 2009.

The accompanying financial statements should be read in conjunction with the Company's Form 10-K/A for the fiscal year ended December 31, 2008, which was filed on April 15, 2009.

Capital Beverage Corporation (the “Company” or “Capital”) was formed in December 1995 to operate as a wholesale distributor of beer and other beverages in New York City. On December 16, 2005, the Company sold substantially all of its assets to Oak Beverages, Inc. In December 1998, CAP Communications, Ltd. (“Cap Com”), a wholly-owned subsidiary, was organized to market domestic and long distance prepaid telephone calling cards to distributors and to the general public. In December 2006, the Company dissolved Cap Com.

The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business.  The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company.

2. GOING CONCERN

The accompanying financial statements have been prepared on a going-concern basis, which presumes that the Company will be able to continue to meet its obligations and realize its assets in the normal course of business.

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, 2008 contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to find an operating business to acquire or merge with. There are no assurances that the Company will be able to achieve its objective to find an operating company to merge with or acquire.

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3. SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents - Cash and cash equivalents include cash on hand and cash in banks in demand and time deposit accounts with maturities of 90 days or less.

Restricted Cash – All funds held in escrow were released on January 30, 2009.

Income Taxes - The Company follows Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments - The Company considers its financial instruments, which are carried at cost, to approximate fair value due to their near-term maturities.

Income (loss) per Common Share - Net loss per common share is based on the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.

New Accounting Pronouncements – Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, could have a material effect on the accompanying financial statements.

4. LITIGATION

On June 26, 2007, the Company filed a complaint against Oak Beverages, Inc. ("Oak"), Victoria Beverage, Inc. ("Victoria"), and Dealy & Silberstein, LLP, solely in its capacity as escrow agent, in the U.S. District Court for the Southern District of New York (the "Court"), seeking a declaratory judgment that, under the parties' Asset Purchase Agreement, dated September 15, 2005 and Escrow Agreement, dated December 16, 2005, the Company is not required to indemnify Oak and Victoria for unemployment insurance contributions based on the experience rating account held by Oak and maintained by the State of New York Department of Labor ("NYDOL").  

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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, which would include the disputed unemployment taxes, would be retained by the Company post-closing and would not be transferred to Oak.  On August 15, 2007, the Company filed a reply to Oak and Victoria's counterclaim.

On August 6, 2008, the parties reached a settlement agreement.  The settlement provided that the Company pay Oak the sum of $100,000.00 in full settlement of all claims.  The settlement also provided that the balance of the funds held in escrow, be released to the Company with the exception of the amount of $55,739.00 which will continue to be held in escrow in connection with a unrelated pending claim asserted by a third party.  The settlement agreement was executed as of August 28, 2008 and included a Joint Stipulation and Order of Dismissal with Prejudice (the "Joint Stipulation"), which was signed by all parties.  Judge Buchwald signed and entered the Joint Stipulation on September 8, 2008, which formally concluded the action.

In January 2009, the Company settled a claim made by the Pabst Brewing Company (Pabst Claim) for $27,869.50 which represents one half of the Pabst Claim.  At January 30, 2009 the total amount held in escrow was $55,875.50 including accrued interest of $136.50.  On January 30, 2009, the escrow agent issued the Company a check for $22,006 which represents the balance remaining in escrow after payment of the Pabst Claim settlement and $6,000 in fees owed to the escrow agent.

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  For this purpose any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements.  Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements.  These statements involve unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward looking statements.  Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include those risks identified in “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other risks identified in our Form 10-K for the year ended December 31, 2007 and presented elsewhere by management from time to time.  Such forward-looking statements represent management’s current expectations and are inherently uncertain.  Investors are warned that actual results may differ from management’s expectations.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial operations and financial conditions.  This discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.

As of December 16, 2005, the Company closed the sale of the Assets to Oak, pursuant to the terms and conditions of the Asset Purchase Agreement.  The purchase price paid by Oak for the Assets was Nine Million Three Hundred Thousand Dollars ($9,300,000.00), of which One Million Five Hundred Thousand Dollars ($1,500,000.00), was deposited with an escrow agent, pursuant to the terms of an escrow agreement, for at least 18 months for post closing indemnification claims which may be asserted by Oak (the “Escrow”).  A substantial amount of the proceeds from the transaction were used by the Company to repay outstanding indebtedness and for working capital purposes.

The Company will continue to use the proceeds from the sale of the Assets for working capital purposes, including the payment of indebtedness, trade payables and other outstanding obligations.  Following the full payment of its creditors, the Company may elect to acquire another entity, issue dividend(s) to its stockholders or invest the net proceeds at the discretion of the Board of Directors and management of the Company.  Management currently anticipates that additional transactions may take the form of a dissolution of the corporation, the liquidation of its remaining assets, and the ultimate distribution to stockholders of any assets remaining after satisfaction of our liabilities, including personnel termination and related costs, sale transaction expenses and final liquidation costs.

After application of the net proceeds in the manner contemplated, and assuming ultimate release to us of the entire escrowed amount, and after deduction of transaction costs in connection with the Asset Sale, the Company will not have any remaining assets.  There will be no monies left over for distribution, and we may have to reduce or eliminate the severance pay provision.

We will continue to incur claims, liabilities and expenses, which will reduce the realizable value of our remaining assets and the amount potentially available for distribution to stockholders.  Claims, liabilities and expenses from operations (such as salaries, directors’ and officers’ insurance, payroll and taxes, legal, accounting and consulting fees and miscellaneous office expenses) will continue to be incurred subsequent to the Asset Sale.  These expenses will have to be satisfied from our remaining assets and, therefore, will reduce the net realizable value of those assets.

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The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.  We have an obligation to continue to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended, even though compliance with such reporting requirements is economically burdensome.

As of December 2, 2005, all employees were terminated, except for Carmine Stella who will continue to serve as the Company’s Chief Executive Officer.

RESULTS OF OPERATIONS

The Company had no revenue from operations for the three months ended March 31, 2009.

General and administrative expenses for the three months ended March 31, 2009 were $88,391, which consisted mostly of legal fees, professional fees, tax accruals and the salary and expenses to our only remaining employee.  General and administrative expenses for the three months ended March 31, 2008 were $100,750.

At March 31, 2009 and December 31, 2008, respectively, we had working capital deficits of $1,117,006 and $1,028,614, respectively.

Item 3.  Quantitative and Qualitative Disclosures About Market Risks

All of the Company’s indebtedness that would have posed an interest rate risk have been paid in full. As a result, the Company no longer has an interest rate risk.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Treasurer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation as of March 31, 2009, 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 not 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.

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More specifically, we determined our controls were not effective due to a lack of sufficient personnel with appropriate knowledge, experience and training in U.S. GAAP resulting in a lack of sufficient analysis and documentation of the application of U.S. GAAP to transactions.

Due to our small size and limited financial resources, our part-time outside accountant has been the only individual involved in our accounting and financial reporting.  As a result, there has been no segregation of duties within the accounting function.  This lack of segregation of duties represents a material weakness.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.  Legal Proceedings - There have been no material developments in our legal proceedings from those disclosed in our 2008 Annual Report on Form 10-K.

Item 1A- Risk Factors- - There have been no material changes in our risk factors from those disclosed in our 2008 Annual Report on Form 10-K.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds - None

Item 3 - Defaults Upon Senior Securities - None

Item 4 - Submission of Matters to Vote of Securities Holders - None

Item 5 - Other Information – None

Item 6.  Exhibits

(a) Exhibits

31.1  Certification of Chief Executive Officer pursuant to Section 302 of theSarbanes Oxley Act of 2002

31.2  Certification of Treasurer pursuant to Section 302 of the SarbanesOxley Act of 2002

32.1  Certification of Chief Executive Officer and Treasurer pursuant toSection 906 of the Sarbanes Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAPITAL BEVERAGE CORPORATION (Registrant)
Date:  May 20, 2009	By:	/s/ Carmine N. Stella
		Carmine N. Stella President and Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Carol Russell
		Carol Russell Secretary and Treasurer (Principal Financial Officer and Accounting Officer)

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