Summary of DRINKS AMERICAS HOLDINGS, LTD

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

Introduction

The following discussion and analysis summarizes the significant factors affecting (1) our consolidated results of operations for the three months ended July 31 2008, compared to the three months ended July 31, 2007, and (2) our liquidity and capital resources. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes included in Item 1 of this Report, and the audited consolidated financial statements and notes included in Form 10-KSB, which Report was filed on August 4, 2008.

Three Months Ended July 31, 2008 and 2007:

Net Sales: Net sales were $1,069,000 for the three months ended July 31, 2008 compared to net sales of $1,307,000 for the three months ended July 31, 2007, a decrease of 18%. The decrease is due to the timing of certain shipments. Trump Super Premium Vodka sales aggregated $521,000, which accounted for 48.7% of total dollar sales for the three months ended July 31, 2008. For the three months ended July 31, 2007, Trump Super Premium Vodka sales aggregated $781,000 which accounted for 59.8% of total dollar sales. This represents a dollar decrease of 33.9%. In addition to the timing of certain shipments, Trump Super Premium Vodka sales for the three months ended July 31, 2008 were also effected by issues relating to our California and Chicago distributors which are currently being corrected and the delay in receiving glass from China. The launch of Trump Super Premium Vodka in Texas in July 2007 also contributed to proportionally greater sales of Trump Super Premium Vodka for the three months ended July 31, 2007 compared to the three months ended July 31, 2008. Sales of all wine and spirits products aggregated $795,000 for the three months ended July 31, 3008 compared to $990,000 for the three months ended July 31, 2007. Net sales of Old Whiskey River Bourbon totaled $96,000 on 763 cases sold for the three months ended July 31, 2008 compared to net sales of $68,000 on 501 cases sold for the three months ended July 31, 2007. This represents a dollar increase of 41.9% and a case increase of 52.3%. Net sales of our Aguila Tequila aggregated $32,000 on 374 cases sold for the three months ended July 31, 2008 compared to $26,000 on 313 cases sold for the three months ended July 31, 2007. This represents a dollar increase of 22.0% and a case increase of 19.5%. Net sales of our Damiana Liqueur aggregated $74,000 on 558 cases sold for the three months ended July 31, 2008 compared to net sales of $46,000 on 367 cases sold for the three months ended July 31, 2007. This represents a dollar increase of 60.7% and a case increase of 52.0%. Net sales of our premium imported wines totaled $72,000 on 796 cases sold for the three months ended July 31, 2008 compared to net sales of $67,000 on 957 cases sold for the three months ended July 31, 2007. This represents a dollar increase of 7.7% and a case decrease of 16.8%. The dollar amount increased while cases decreased due to the liquidation of certain discontinued wines at below cost in the prior year. Net sales of our non alcoholic product, Newman's Own sparkling fruit beverages and sparkling waters decreased to $273,000 on 29,482 cases sold for the three months ended July 31, 2008 compared to $318,000 on 32,646 cases sold for the three months ended July 31, 2007. This represents a dollar decrease of 14.2% and a case decrease of 9.7%. Sales of our Newmans Own products were also effected by temporary inventory shortfalls in July 2008 related to a changeover to a more effective glass packaging.

Gross margin: Gross profit was $338,000 (31.6% of net sales) for the three months ended July 31, 2008 a decrease of $132,000, compared to gross profit of $470,000 (35.9% o f net sales) for the three months ended July 31, 2007. Gross margin for our wine and spirits business was 34.8% percent for the three months ended July 31, 2008 compared to 43.5% for the prior year. Gross margin for our non alcoholic business was 22.2 percent for the three months ended July 31, 2008 compared to 18.5 % for the three months ended July 31, 2007. The increase in gross margin for our Newmans Own products is the result of increases in our selling price. The gross profit margin of our non alcoholic Newman's Own products is expected to further improve with the implementation of alternate packaging which will lead to lower product costs. Gross margin of our wines increased to 28.2% for the three months ended July 31, 2008 from 24.2% for the three months ended July 31, 2007. This increase is the direct result of the aforementioned liquidation of certain wines in the prior year. Gross margin of Trump Super Premium Vodka, decreased 33.0% for the three months ended July 31, 2008 compared to 46.6% for the three months ended July 31, 2007. The gross margin decrease is largely due to increased direct costs such as excise taxes, freight and delivery, and to a greater extent due to price support for Trump Super Premium Vodka. The decrease in gross margin for our Trump Super Premium Vodka is expected to be mitigated by various marketing efficiences and the transfer of bottle production to China.

Selling, general and administrative: Selling, general and administrative expenses decreased 18.5% to $1,617,000 for the three months ended July 31, 2008 , compared to $1,985,000 for the three months ended July 31, 2007. Total selling and marketing costs aggregated $761,000 for the three months ended July 31, 2008 compared to $1,066,000 for the three months ended July 31, 2007. The decrease in selling and marketing expenses is due to an overall more normalized a marketing spend level as sales promotions for the introduction of Trump Vodka have become more targeted. General and administrative expenses aggregated $856,000 for the three months ended July 31, 2008 compared to $919,000 for the three months ended July 31, 2007. l. Charges relating to purchase order financing aggregated $37,000 for the three months ended July 31, 2007. For the three months ended July 31, 2008 there were no such charges as the Company utilized the less expensive working capital revolving line. Travel related expenses have also decreased for the three months ended July 31, 2008 compared to the three months ended July 31, 2007.

Other Income (expense): Interest expense totaled $24,000 for the three months ended July 31, 3008 compared to expense of $53,000 for the three months ended July 31, 2007. The decrease is due to expensing of deferred interest charges relating to extinguished debt in the prior year.

Income Taxes: We have incurred substantial net losses from our inception and as a result, have not incurred any income tax liabilities. Our federal net operating loss carry forward is approximately $25,000,000, which we can use to reduce taxable earnings in the future. No income tax benefits were recognized in fiscal 2008 and 2007 as we have provided valuation reserves against the full amount of the future carry forward tax loss benefit. We will evaluate the reserve every reporting period and recognize the benefits when realization is reasonably assured.

Impact of Inflation

Although management expects that our operations will be influenced by general economic conditions we do not believe that inflation has had a material effect on our results of operations.

Financial Liquidity and Capital Resources

Although our working capital position was initially improved as a result of our December 2007 Private Placement of our preferred stock, our business continues to be effected by insufficient working capital. We will continue to carefully manage our working capital and our business decisions will continue to be influenced by our working capital requirements. Lack of liquidity related to our asset based financing, continues to negatively affect our business and curtail the execution of our business plan.

We have experienced net losses and negative cash flows from operations and investing activities since our inception in 2003. Net losses for the three months ended July 31, 2008 and 2007 were $1,303,120 and $1,568,599, respectively. Cash used in operating activities for the three months ended July 31, 2008 and 2007 were $81,146 and $1,831,002, respectively. We have to date funded our operations predominantly through bank borrowings, loans from shareholders and investors, and proceeds from the sale of our common stock, preferred stock, and warrants. For the three months ended July 31, 2008 net cash used in financing activities totaled $38,827. For the three months ended July 31, 2007 net cash provided by financing totaled $843,498.

On December 18, 2007 (the "Closing Date") the Company sold to three related investors (the "December Investors") an aggregate of 3,000 shares of our Series A Preferred Stock, $.001 par value (the "Preferred Stock"), at a cash purchase price of $1,000 per share, generating gross proceeds of $3,000,000 (the "December Financing"). The Preferred Stock is convertible into our common stock at $.50 per share, which, if all the Preferred Stock is converted, would result in the issuance of 6,000,000 shares of our common stock. The Preferred Stock has no voting or dividend rights. Out of the gross proceeds of the December Financing, we paid Midtown Partners & Co., LLC (the "Placement Agent") $180,000 in commissions and $30,000 for non-accountable expenses. We also issued, to the Placement Agent, warrants to acquire 600,000 shares of our Common Stock for a purchase price of $.50 per share (the "Placement Agent Warrants"), which warrants are exercisable for a five year period and contain anti-dilution provisions in the events of stock splits and similar matters. Both the commissions and expenses were accounted for as a reduction of Additional Paid in Capital.

The financing that we consummated in January 2007 (the "January Financing") provided participating investors (the "January Investors") rights to exchange the common stock they acquired for securities issued in subsequent financings consummated at a common stock equivalent of $2.00 per share or less. Under this provision, the January Investors have exchanged 4,444,445 shares of common stock for 8,000 shares of Preferred Stock (which Preferred Stock is convertible into an aggregate of 16,000,000 shares of our common stock). The 4,444,445 shares exchanged were accounted for as a reduction of Additional Paid in Capital and a reduction of Common Stock since the shares have been cancelled. Also in the January Financing, the January Investors acquired warrants to purchase 3,777,778 shares of our common stock at an exercise price of $3.00 per share (the "January Warrants"). The January Warrants contain full ratchet anti-dilution provisions, as to both the exercise price and the number of shares purchasable under the warrants, which due to the December Financing, would have resulted in the January Warrants representing the right to acquire 22,666,668 shares of our common stock, i.e., an additional 18,888,890 shares (the "Warrant Increment") at a reduced exercise price of $.50 per share. We have issued 5,000,000 shares of our common stock to the January Investors, in consideration of their waiver of the Warrant Increment (the "Waiver Shares"). This waiver will apply to future financings as well.

The provisions of the January Warrants which result in the reduction of the exercise price remain in place and, as a result of the December Financing, the exercise price of the January Warrants have been reduced to $.50 per share. Each of our December Investors participated in the January Financing but not all of our January Investors participated in the December Financing.

We filed a Registration Statement covering the resale of 6,011,001 shares of our common stock issuable on the conversion of Preferred Stock issued to the December Investors and the January Investors. Such Registration Statement was declared effective by the Securities and Exchange Commission under the Securities and Exchange Act of 1934 on June 5, 2008. We do not have sufficient shares of common stock available to allow for the conversion of all of the preferred stock into common stock. We have agreed, and our board of directors previously approved amending our Certificate of Incorporation to increase the number of shares of common stock we are authorized to issue to 200,000,000 shares.

Approval of our stockholders shall be required to effect such amendment under Delaware law and we expect to hold a special meeting of our stockholders for the purpose of securing such approval and note that shareholders representing over 50% of our outstanding common stock consented to such amendment.

The December Investors may allege that certain penalties are owed to them by the Company based on certain time requirements in the documentation relating to the December Financing. If such claim is successfully made, we may lack the liquidity to satisfy such claim.

From July 2007 through April 2008 the Company borrowed an aggregate of $522,303 from our CEO for working capital purposes. For the three months ended July 31, 2008 the Company borrowed an additional $97,000 from our CEO for working capital purposes. The borrowings bear interest at 12% per annum. As of July 31, 2008, $344,554 including interest has been repaid. For the three months ended July 31, 2008 and 2007 interest incurred on this loan aggregated $8,479 and $1,799 respectively. As of July 31, 2008 amounts owed to our CEO on these loans aggregated $321,044 including accrued interest.

In October 2006, the Company borrowed $250,000 and issued a convertible promissory note in like amount. The due date of the loan was extended by the Company to October 2008 from October 2007 in accordance with the terms of the original note agreement. The note is convertible into shares of our common stock at $0.60 per share. The note bears interest at 12% per annum and is payable quarterly. At the option of the lender, interest can be paid in shares of Company common stock. During the year ended July 31, 2008 the Company issued the note holder an aggregate of 49,307 shares of Holdings common stock to satisfy an aggregate of $29,583 of unpaid interest accrued through October 10, 2007. In February 2008 the Company paid the note holder an additional $7,742 for interest accrued through January 10, 2008. At July 31, 2008 accrued interest on this loan aggregated $16, In connection with this borrowing we issued warrants to purchase 250,000 shares of our common stock for $0.60 per share. These warrants are exercisable for a five-year period from the date of issuance.

In June 2006, we entered into a $10 million, three-year, asset-based revolving credit facility with a financial institution to be used for working capital purposes. Under this line, we may borrow 85% of eligible accounts receivable, as defined under the agreement. Interest on the line accrues at 1.5% above the prime rate. Also, in June 8 2006, we entered into a secured purchase order financing facility with another financial institution. The amount we are able to borrow under these facilities will depend on our outstanding eligible accounts receivable, inventory and eligible purchase orders, respectively. Both of these facilities are secured by our assets. As of July 31, 2008 $214,653 and $0 was outstanding on our revolving credit and purchase order facilities, respectively.

ROYALTIES/LICENSING AGREEMENTS

In November 2005, the Company entered into an eight-year license agreement for sales of Trump Super Premium Vodka. Under the agreement the Company is required to pay royalties on sales of the licensed product. The agreement provides for certain minimum royalty payments through November 2012 which if not satisfied could result in termination of the license.

Under our license agreement for Old Whiskey River, we are obligated to pay a per case royalty, depending on the size of the bottle.

Under our license agreement for Newman's Own, we are obligated to pay a per case royalty.

Under our license agreement for Damaina Liqueur we are obligated to pay a per case royalty.

Under our license agreement with Aguila Tequila we are obligated to pay a per case royalty.

OTHER AGREEMENTS

In fiscal 2003 we entered into a consulting agreement with a company, Marvin Traub & Associates ("MTA"), owned 100% by Marvin Traub, a member of the Board of Directors. Under the agreement, MTA is being compensated at the rate of $100,000 per annum. As of July31, 2008, we were indebted to MTA in the amount of $181,248.

In December 2002, we entered into a consulting agreement with Mr. Shep Gordon which provides for payment of $120,000 per year to Mr. Gordon, payable through June 2009. As of July 31, 2008, the aggregate amount owed to Mr. Gordon was $60,000. We have an informal understanding with Mr. Shep Gordon pursuant to which he can convert all or a portion of the consulting fees which we owe to him into shares of our common stock at a conversion price negotiated from time to time.

Since we were founded in 2002, the implementation of our business plan has been negatively affected by insufficient working capital. Business judgments have been substantially affected by the availability of working capital. Although our working capital position and our cash balance was initially improved as a result of our December and January, 2007 private placement of our common stock, preferred stock and warrants, our business continues to be effected by insufficient working capital. We will need to continue to carefully manage our working capital and our business decisions will continue to be influenced by our working capital requirements. Therefore, our short term business strategy will rely heavily on our cost efficient icon brand strategy and the resources available to us from our media and entertainment partners We will continue to focus on those of our products which we believe will provide the greatest return per dollar of investment with the expectation that as a result of increases in sales and the resulting improvement in our working capital position, we will be able to focus on those products for which market acceptance might require greater investments of time and resources. To that end, our short-term focus will be, for wine and spirits, Trump Super Premium Vodka, Old Whiskey River Bourbon, Damiana, Aquila Tequila, our select label wines, and in association with our recent joint venture with music icon Dr. Dre, a super premium cognac and a unique sparkling vodka. For the non-alcoholic beverages Newman's Own lightly sparkling fruit juice drinks and waters. In order for us to continue and grow our business, we will need additional financing which may take the form of equity or debt. There can be no assurance we will be able to secure the financing we require, and if we are unable to secure the financing we need, we may be unable to continue our operations. We anticipate that increased sales revenues will help to some extent, but we will need to obtain funds from equity or debt offerings, and/or from a new or expanded credit facility. In the event we are not able to increase our working capital, we will not be able to implement or may be required to delay all or part of our business plan, and our ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected.