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 six and three months ended October 31 2008, compared to the six and three months ended October 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.

Six Months Ended October 31, 2008 and 2007:

Net Sales: Net sales were $1,650,000 for the six months ended October 31, 2008 compared to net sales of $2,783,000 for the six months ended October 31, 2007, a decrease of 41%. The decrease is predominantly due to inventory shortfalls as a result of insufficient working capital and the resulting delay of certain shipments. Trump Super Premium Vodka sales aggregated $805,000 which accounted for 49% of total dollar sales for the six months ended October 31, 2008. For the six months ended October 31, 2007, Trump Super Premium Vodka sales aggregated $1,557,000 which accounted for 56% of total dollar sales. This represents a dollar decrease of 48%. In addition to temporary inventory shortfalls for Trump Super Premium Vodka sales of Trump for the six months ended October 31, 2008 were also effected by issues relating to our California distributor which are currently being corrected. The launch of Trump Super Premium Vodka in Texas in July 2007 also contributed to greater sales of Trump Super Premium Vodka for the six months ended October 31, 2007 compared to the six months ended October 31, 2008. Trump sales in New Jersey have increased for the six months ended October 31, 2008 compared to October 31, 2007 due to improved casino sales. Sales of all wine and spirits products aggregated $1,350,000 for the six months ended October 31, 2008 compared to $2,281,000 for the six months ended October 31, 2007. Net sales of Old Whiskey River Bourbon totaled $142,000 on 1,110 cases sold for the six months ended October 31, 2008 compared to net sales of $257,000 on 2,201 cases sold for the six months ended October 31, 2007. This represents a dollar decrease of 45% and a case decrease of 50%. Net sales of our Aguila Tequila aggregated $44,000 on 533 cases sold for the six months ended October 31, 2008 compared to $34,000 on 404 cases sold for the six months ended October 31, 2007. This represents a dollar increase of 31.0% and a case increase of 32%. Net sales of our Damiana Liqueur aggregated $109,000 on 825 cases sold for the six months ended October 31, 2008 compared to net sales of $86,000 on 689 cases sold for the six months ended October 31, 2007. This represents a dollar increase of 27% and a case increase of 20%. Net sales of our premium imported wines totaled $249,000 on 2,393 cases sold for the six months ended October 31, 008 compared to net sales of $331,000 on 2,233 cases sold for the six months ended October 31, 2007. This represents a dollar decrease of 25% and a case decrease of 7%. The percentage dollar decrease compared to case decrease was significantly greater due increased liquidation of certain closed-out wines in the current year. The Company is considering whether it should continue this product line. Net sales of our non alcoholic product, Newman's Own sparkling fruit beverages and sparkling waters decreased to $300,000 on 34,501 cases sold for the six months ended October 31, 2008 compared to $502,000 on 55,857 cases sold for the six months ended October 31, 2007. This represents a dollar decrease of 42% and a case increase of 38%. Sales of our Newmans Own products were also affected by temporary inventory shortfalls.

Gross margin: Exclusive of our allowance for slow moving inventory, gross profit was $486,000 (29.4% of net sales) for the six months ended October 31, 2008 a decrease of $585,000, compared to gross profit of $1,071,000 (38.5% o f net sales) for the six months ended October 31, 2007. Gross margin for our wine and spirits business was 31.5% percent for the six months ended October 31, 2008 compared to 43.0% for the prior year. Gross margin for our non alcoholic business was 19.4 percent for the six months ended October 31, 2008 compared to 18.6 % for the six months ended October 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 decreased to 13.3% for the six months ended October 31, 2008 from 30.2% for the six months ended October 31, 2007. This decrease is the direct result of the aforementioned close-out of certain wines in the current year. Gross margin of Trump Super Premium Vodka, decreased to 33.4% for the six months ended October 31, 2008 compared to 47.2% for the six months ended October 31, 2007. The gross margin decrease is largely due to a decrease in the percentage of direct sales which leads to increased direct costs such as excise taxes and freight, price competition, and a weaker dollar against the Euro which has increased Trump Vodka component costs. For the six months ended October 31, 2008 the Company recorded a reserve for Cohete Rum of $106,000 as it is the Company's intention to liquidate the inventory and terminate the brand.

Selling, general and administrative: Selling, general and administrative expenses totaled $2,707,000 for the six months ended October 31, 2008, compared to $4,004,000 for the six months ended October 31, 2007, a decrease of $1,297,000 or 32.4%. Total selling and marketing costs aggregated $1,162,000 for the six months ended October 31, 2008 compared to $2,045,000 for the six months ended October 31, 2007. The decrease in selling and marketing expenses is due to the overall decreased marketing spend on Trump Super Premium Vodka to a normalized level as sales promotions for Trump Vodka have become more targeted. General and administrative expenses aggregated $1,545,000 for the six months ended October 31, 2008 compared to $1,959,000 for the six months ended October 31, 2007. Charges relating to purchase order financing aggregated $5,000 for the six months ended October 31, 2008 compared to $37,000 for the six months ended October 31, 2007 as the Company utilized its working capital revolving line. Professional fees, including legal fees have decreased from the prior year and travel related expenses have also decreased for the six months ended October 31, 2008 compared to the six months ended October 31, 2007.

Other Income (expense): Interest expense totaled $ 157,000 for the six months ended October 31, 2008 compared to expense of $116,000 for the six months ended October 31, 2007. In December 2008 the Company was notified by its lender, BACC, that the lender has calculated interest on the working capital line incorrectly since the inception of the line in June 2006. Although the Company is going to vigorously contest the amount we have accrued $100,000 of interest expense for the six months ended October 31, 2008 which is the approximate amount of the indicated "shortfall".

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.

Three Months Ended October 31, 2008 and 2007:

Net Sales: Net sales were $581,000 for the three months ended October 31, 2008 compared to net sales of $1,476,000 for the three months ended October 31, 2007, a decrease of 61%. The decrease is due to the aforementioned inventory shortfalls as a result of insufficient working capital and the resulting delay in certain shipments. Trump Super Premium Vodka sales aggregated $284,000 which accounted for 49% of total dollar sales for the three months ended October 31, 2008. For the three months ended October 31, 2007, Trump Super Premium Vodka sales aggregated $764,000 which accounted for 52% of total dollar sales. The decrease of 63% is predominantly due to temporary inventory shortfalls and the timing of certain shipments. Sales of all wine and spirits products aggregated $555,000 for the three months ended October 31, 2008 compared to $1,287,000 for the three months ended October 31, 2007. Net sales of Old Whiskey River Bourbon totaled $46,000 on 347 cases sold for the three months ended October 31, 2008 compared to net sales of $190,000 on 1,700 cases sold for the three months ended October 31, 2007. This represents a dollar decrease of 76% and a case decrease of 80%. Net sales of our Aguila Tequila aggregated $12,000 on 159 cases sold for the three months ended October 31, 2008 compared to $8,000 on 91 cases sold for the three months ended October 31, 2007. This represents a dollar increase of 59.0% and a case increase of 75%. Net sales of our Damiana Liqueur aggregated $35,000 on 267 cases sold for the three months ended October 31, 2008 compared to net sales of $40,000 on 322 cases sold for the three months ended October 31, 2007. This represents a dollar decrease of 12% and a case decrease of 17%. Net sales of our premium imported wines totaled $177,000 on 1,597 cases sold for the three months ended October 31, 008 compared to net sales of $269,000 on 1,582 cases sold for the three months ended October 31, 2007. This represents a dollar decrease of 34% and a case decrease of 1%. The percentage dollar decrease compared to case was significantly greater due to greater liquidation of certain closed-out wines at below cost in the current year. Net sales of our non alcoholic product, Newman's Own sparkling fruit beverages and sparkling waters decreased to $26,000 on 5,019 cases sold for the three months ended October 31, 2008 compared to $189,000 on 23,212, cases sold for the three months ended October 31, 2007. This represents a dollar decrease of 86% and a case increase of 78%. Sales of our Newmans Own products were also affected by temporary inventory shortfalls.

Gross margin: Exclusive of our allowance for slow moving inventory, gross profit was $148,000 (25.5% of net sales) for the three months ended October 31, 2008 a decrease of $453,000, compared to gross profit of $601,000 (40.7% o f net sales) for the three months ended October 31, 2007. Gross margin for our wine and spirits business was 26.6% percent for the three months ended October 31, 2008 compared to 42.4% for the prior year. Gross margin for our non alcoholic business was 0 percent for the three months ended October 31, 2008 compared to 20.3 % for the three months ended October 31, 2007 . The decrease in gross margin for our Newmans' Own products is the result of the selling of remaining cases at cost. Gross margin of our wines decreased to 7.2% for the three months ended October 31, 2008 from 31.6% for the three months ended October 31, 2007 due to the close out at a deep discount of the Company's wine business. Gross margin of Trump Super Premium Vodka, decreased to 34.1% for the three months ended October 31, 2008 compared to 47.8% for the three months ended October 31, 2007. The gross margin decrease is largely due to a decrease in the percentage of direct sales which leads to increased direct costs such as excise taxes and freight and price support for Trump Super Premium Vodka necessary in order to achieve competitive pricing. For the three months ended October 31, 2008 the Company recorded a reserve for Cohete Rum of $106,000 as it is the Company's intention to liquidate the inventory and terminate the brand.

Selling, general and administrative: Selling, general and administrative expenses totaled $1,089,000 for the three months ended October 31, 2008, compared to $2,019,000 for the three months ended October 31, 2007, a decrease of $930,000 or 46.1%. Total selling and marketing costs aggregated $409,000 for the three months ended October 31, 2008 compared to $995,000 for the three months ended October 31, 2007. The decrease in selling and marketing expenses is due to the overall decreased marketing spend on Trump Super Premium Vodka to a normalized level as sales promotions for Trump Vodka have become more targeted. General and administrative expenses aggregated $680,000 for the three months ended October 31, 2008 compared to $1,024,000 for the three months ended October 31, 2007. Professional fees, including accounting and legal fees have decreased from the prior year and travel related expenses have also decreased for the three months ended October 31, 2008 compared to the three months ended October 31, 2007.

Other Income (expense): Interest expense totaled $ 136,000 for the three months ended October 31, 2008 compared to expense of $64,000 for the three months ended October 31, 2007. The three months ended October 31, 2008 includes the accrual of $100,000 cumulative adjustment which the Company is contesting.

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 October 2008 Warrant Repricing Program and our December 2007 Private Placement of our preferred stock, 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. Lack of liquidity 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 six months ended October 31, 2008 and 2007 were $2,484,204 and $3,050,359, respectively. Cash used in operating activities for the six months ended October 31, 2008 and 2007 were $47,998 and $1,572,617, 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 six months ended October 31, 2008 and 2007 net cash provided by financing activities totaled $646,287 and $591,939, respectively.

On October 27, 2008, in order to encourage holders of warrants which we issued in our January Financing (described below) to exercise their warrants, and enabling us to decrease the number of unexercised warrants and raise short-term working capital at low cost, the Company reduced the exercise price from $.50 to $0.20 per share of common stock for a period of 5 trading days, subject to adjustment in the event that the Company's stock trades for $1.50 or higher (subject to adjustments for forward and reverse stock splits, recapitalizations, stock dividends, and the like after the date hereof) for ten (10) consecutive trading days through February 28, 2009 then the exercise price reverts to the exercise price of $.50 per share and the warrant holders must pay the Company the difference of $.30 per share, as part of this re-pricing program. Each of the investors who participated in the January Financing exercised all of the warrants issued in the private placement representing a total of 3,777,778 newly issued shares of common stock, resulting in proceeds to the Company of $755,556 less a due diligence fee paid of $70,693. We also agreed to reduce the conversion price of the preferred stock acquired by these investors in our December Financing (described below) from $0.50 per share of common stock to $0.35 per share. There are a total of 11,000 shares of preferred shares outstanding with a redemption value of $11,000,000 which if all the preferred stock was converted would result in the issuance of 31,428,571 shares of our common stock. One other investor, Greenwich Beverage Group LLC, who is controlled by a member of our board of directors, elected to exercise warrants for a total of 166,667 shares of common stock at $0.20 per share, which the Company reduced from $1.25, for an aggregate exercise price of $33,333.

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 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 which were 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. The 4,444,445 shares returned 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"). These warrants were exercised at $.20 per share of common stock. We have issued an aggregate of 11,000 shares of our Series A Preferred Stock with a redemption value of $11,000,000, which under their original terms were convertible into our Common Stock at $50 per share, and now convertible at $.35 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 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 500,000,000 shares. Approval of our stockholders shall be required to effect such amendment under Delaware law and we have scheduled our annual meeting of our stockholders s for the purpose of securing such approval.

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 six months ended October 31, 2008 the Company borrowed an additional $123,3750 from our CEO for working capital purposes. The borrowings bear interest at 12% per annum. As of October 31, 2008, a total of $358,654 including interest has been repaid. For the six months ended October 31, 2008 and 2007 interest accrued on this loan aggregated $18,831 and $15,648 respectively and for the three months ended October 31, 2008 and 2007, $10,334 and $13,849, respectively. As of October 31, 2008 and April 30, 2008 amounts owed to our CEO on these loans aggregated $343,652 and $232,547, respectively, 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 Company is currently engaged in a negotiation with the lender to modify certain terms of his agreement, including, without limitation, deferral of payment of principal and accrued interest. 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 April 30, 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 October 31, 2008 and April 30, 2008 accrued interest on this loan aggregated $24,693 and $9,283, respectively, which is included in accrued expenses on the accompanying balance sheets. 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 based on a minimum daily balance of $1 million. 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 October 31, 2008 $202,360 and $0 was outstanding on our revolving credit and purchase order facilities, respectively. In December 2008 the Company was notified by the lender, BACC that the lender has calculated interest on the working capital line incorrectly since the inception of the line in June 2006. Although the Company intends to vigorously contest the amount have accrued $100,000 of interest for the six months ended October 31, 2008 which is the approximate amount of the indicated "shortfall". BACC has agreed to defer payment of the "back" interest beginning February 2009 payable over a 5 month period. The Company is currently engaged in a negotiation with BACC to modify certain terms of its agreement, including, without limitation, the aggregate amount of availability under the line and the terms under which interest is calculated.

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. The Company is currently engaged in a negotiation with Trump Marks LLC to modify certain terms of its license agreement, including, without limitation, the deferral of certain minimum aggregate royalties and the payment of on-going minimum royalties.

Under our license agreement for Old Whiskey River, we are obligated to pay royalties of between $10 and $33 per case, depending on the size of the bottle.

Under our license agreement for Newman's Own, we are obligated to pay royalties of $.95 per twelve bottle case.

Under our license agreement for Damaina Liqueur we are obligated to pay $3 per case.

Under our license agreement with Aguila Tequila we are obligated to pay $3 per case.

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 October 31, 2008, we were indebted to MTA in the amount of $206,248.

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 October 31, 2008, the aggregate amount owed to Mr. Gordon was $90,000. We have an informal understanding with Mr. 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 October 2008 Warrant Repricing Program and 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, for beer and spirits, will be on Trump Super Premium Vodka, Old Whiskey River Bourbon, Damiana, Aquila Tequila, and in association with our recent joint venture with music icon Dr. Dre, a super premium cognac and unique sparkling vodka and our recent joint venture with music icon Kid Rock, a domestic beer. 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 . . .