In a blender or food processor combine chocolate, sugar, the 1/2 teaspoon cinnamon, and the 1/8 teaspoon cayenne pepper. Cover and blend or process until finely ground.
In a large saucepan combine ground chocolate mixture and milk. Cook and stir over low heat about 10 minutes or until chocolate melts. Remove saucepan from heat; stir in vanilla and almond extract.
Beat with a rotary beater, whisk, or Mexican molinillo (wooden beater) until very frothy. Serve in mugs. If desired, top with whipped cream and/or sprinkle with additional ground cinnamon and/or cayenee pepper.