UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C.
20549




FORM 10-K




(Mark
      One)þ
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF
              THE
      SECURITIES EXCHANGE ACT OF 1934For
      the fiscal year ended December 31, 2008ORo
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE
      SECURITIES EXCHANGE ACT OF 1934For
      the transition period from to





Commission
file number:  0-52202





Dragon’s Lair
Holdings, Inc.


(Exact
name of registrant as specified in its charter)




Florida
            
            26-1427633(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)




785 NE
83rd
Terrace


Miami,
Florida  33138


(Address
of principal executive offices) (Zip
Code)





Registrant’s
telephone number, including area code:
(786) 554-2771





Securities
registered under Section 12(b) of the Exchange Act:  None





Securities
registered under Section 12(g) of the Exchange Act:





Common Stock, no par
value


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No þ




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o  No þ





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  þ  No o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  o







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





Large
accelerated
filer                                                                                     Accelerated
filer


Non-accelerated
filer                                                                                     Smaller
reporting company  x


(Do not
check if a smaller reporting company)





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




The
aggregate market value of the registrant’s Common Stock held by non-affiliates
was $67,800, based on the conversion price of a share of Common Stock on
December 11, 2008, which was sold in the registrant’s initial public
offering.  Shares of Common Stock known by the registrant to be
beneficially owned as of March 15, 2009 by the registrant’s directors and the
registrant’s executive officers subject to Section 16 of the Securities
Exchange Act of 1934 are not included in the computation. The registrant,
however, has made no determination that such persons are “affiliates” within the
meaning of Rule 12b-2 under the Securities Exchange Act of
1934.




At March
15, 2009, there were 7,901,078 shares of the registrant’s Common Stock issued
and outstanding.


-1-




Dragon’s
Lair Holdings, Inc.




FORM
10-K




For The
Fiscal Year Ended December 31, 2008




INDEX









PART
      IItem
      1.
            
            Business
            
            3Item
      1A.
            
            Risk
    Factors
            
            10Item
      1B.
            
            Unresolved Staff
      Comments
            
            10Item
      2.
            
            Properties
            
            10Item
      3.
            
            Legal
      Proceedings
            
            10Item
      4.
            
            Submission of Matters to a Vote
      of Security Holders
            
            10PART
      IIItem
      5.
            
            Market for Registrant’s Common
      Equity, Related Stockholder Matters, and Issuer Purchases of Equity
      Securities
            
            11Item
      6.
            
            Selected Financial
      Data
            
            13Item
      7.
            
            Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
            
            14Item
      7A.
            
            Quantitative and Qualitative
      Disclosures about Market Risk
            
            20Item
      8.
            
            Financial Statements and
      Supplementary Data
            
            21Item
      9.
            
            Changes in and Disagreements with
      Accountants on Accounting and Financial Disclosure
            
            34Item
      9A.
            
            Controls and
      Procedures
            
            34Item
      9B.
            
            Other
      Information
            
            35PART
      IIIItem
      10.
            
            Directors, Executive Officers and
      Corporate Governance
            
            36Item
      11.
            
            Executive
      Compensation
            
            39Item
      12.
            
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
            
            43Item
      13.
            
            Certain Relationships and Related
      Transactions, and Director Independence
            
            44Item
      14.
            
            Principal Accounting Fees and
      Services
            
            45PART
      IVItem
      15.
            
            Exhibits and Financial Statement
      Schedules
            
            46Signatures
            
            47




-2-


Explanatory
Notes




In this
Annual Report on Form 10-K, Dragon’s Lair Holdings, Inc. is sometimes
referred to as the “Company”, “we”, “our” or “The Dragon’s Lair” and U.S.
Securities and Exchange Commission is sometimes referred to as the
“SEC”.




PART
I





Item
1.  Business.





Introduction





Dragon’s
Lair Holdings, Inc., a development stage company, is a provider of personal care
products by means of a network of direct sales consultants, which currently only
provides one product and has recently commenced doing
so.  Substantially all of our entire sales and distribution channel is
based upon our network or multi-level marketing program.  Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit; however, we have never operated
profitably.  In July, 2008, we commenced providing to the marketplace
our first product, the Sore-EezÔ Chinese herbal body
liniment, and have generated revenues of $1,241 as of the date of this
report.  All of our revenues have come from the sale of the
Sore-EezÔ
Chinese herbal body liniment and from no other sources.  We have
candidates for other personal care products that are currently under
development; however, we currently do not have any other products available for
commercial sale.  Neither the Food and Drug Administration nor any
other regulatory authority or similar regulator has approved the Sore-EezÔ Chinese herbal body
liniment or our candidates for other personal care products.





We
commenced our initial public offering on October 2, 2008, pursuant to that
certain Registration Statement on Form S-1 (Commission File No. 333-150751),
which was  declared effective by the Securities and Exchange
Commission on that date.  We registered 50,000 shares of Series A
Convertible Preferred Stock for sale by the Company for an aggregate offering
price of $500,000 and also registered the shares of Common Stock into which the
shares of our Series A Convertible Preferred Stock may then be
converted.  We terminated the offering and withdrew the Form S-1
Registration Statement pursuant to that certain Post-Effective Amendment No. 1
thereto, which was filed with the SEC on February 26, 2009.  We sold
6,780 shares of Series A Convertible Preferred Stock in the offering, which were
subsequently converted into 1,762,800 shares of our Common Stock. The offering
provided proceeds to us in the amount of $67,800.




Our
company structure is set forth in the following chart:




DRAGON’S
      LAIR HOLDINGS, INC.
              a
      Florida corporation





DRAGON’S
      LAIR HEALTH PRODUCTS, INC.
              a
      Florida corporation
              (100%
      Owned Subsidiary)




-3-


As of
December 31, 2008, we had an accumulated deficit of $22,432.  Our
auditors have raised substantial doubt as to our ability to continue as a going
concern, as expressed in its opinion on our financial statements included in
this report.  Our ability to continue as a going concern is dependent
upon our ability to generate profitable operations in the future and/or to
obtain the necessary financing to meet our obligations and repay our liabilities
arising from normal business operations when they come due.  There can
be no assurance that we will operate at a profit or such additional financing
will be available, or if available, can be obtained on satisfactory
terms.





Our
principal executive office is located at 785 N.E. 83rd Terrace, Miami,
FL  33138.  Our telephone number is (786) 554-2771, and
our company website is www.sore-eez.com.  We
were incorporated under the laws of the State of Florida on October 4,
2007.





Company
Description





Our
company structure is set forth in the following chart:


DRAGON’S
      LAIR HOLDINGS, INC.
                a
      Florida corporation
 
 DRAGON’S
      LAIR HEALTH PRODUCTS, INC.
                a
      Florida corporation
                (100%
      Owned Subsidiary)


We seek
to provide personal care products, which have a broad consumer
appeal.  Our business plan uses a distribution strategy for direct
selling and marketing through direct sales consultants.  Our business
plan provides that these direct sales consultants, who will be independent
contractors, will purchase products from us and sell them directly to their
customers. We will provide recruitment and training activities for the direct
sales consultants. We will provide assistance to the direct sales consultants
through support tools, such as sales brochures, product samples and
demonstration aids.  We have established a web site, which we
anticipate will serve as an additional marketing tool and support the efforts of
our direct sales consultants.





License
Agreement





We have
entered into a license agreement with Yamit Lemoine, a significant shareholder
and the wife of our chief executive officer, which grants us a license for the
exclusive worldwide use of the Sore-EezÔ Chinese herbal
liniment recipe.  Pursuant to this license agreement, we are required
to exercise our best efforts to undertake and maintain the commercial scale
production, marketing and distribution of products embodying the subject matter
of the Sore-EezÔ Chinese herbal
liniment recipe.  The term of the license agreement is five (5) years
and Yamit Lemoine may terminate this license agreement in the event that we have
not recognized revenues of at least $400,000 from the sale of products based on
the Sore-EezÔ
Chinese herbal liniment recipe by October 4, 2012.  We may not
sublicense or assign any of our rights under the license
agreement.  On October 4, 2007, the date of our inception, we issued
975,000 shares of our restricted common stock to Yamit Lemoine, for a purchase
price of $0.0012308 per share, for the license to the Sore-EezÔ Chinese herbal
liniment recipe.  We do not have any future payments obligations to
Yamit Lemoine under the license agreement.  -4-





Products





We are
committed to building a brand name and direct sales consultant and customer
loyalty by selling quality personal care products that have broad consumer
appeal.  The Company is committed to developing and providing quality
products that direct sales consultants can sell at attractive retail prices and
allow the Company to operate at a profit.





In July,
2008, we commenced providing our first product to the marketplace, the
Sore-EezÔ
Chinese herbal body liniment.  This is the only product currently
being made available by us and we anticipate providing other product candidates
to the marketplace; however, we currently do not have any other products
available for commercial sale.  Neither the Food and Drug Administration
nor any other regulatory authority or similar regulator has approved the
Sore-EezÔ
Chinese herbal body liniment product or any other product
candidates.





Industry
Overview





We are in
the direct selling industry.  Direct selling is the sale of a consumer
product or service, person-to-person, away from a fixed retail
location.  Independent salespeople market these products and services
to customers.  Products are sold primarily through in-home product
demonstrations, parties, farmer’s markets, organizational and sports gatherings,
and one-on-one selling.





A
majority of adult Americans have been affected by the direct selling
industry.  According to the Direct Selling Association’s 2000
survey:





§
            55%
      of American adults reported having, at some time, purchased goods or
      services from a direct selling
representative.





§
            One
      in five American adults (20%) reported they are now (6%) or have been
      (14%) a direct selling
representative.





§
            Among
      direct selling customers, three out of four (77%) have attended an in-home
      demonstration or party.





The 2000
survey also revealed 38% of adult Americans surveyed in 2000 have some interest
in purchasing a product or service in the future via direct selling, but only
27% had actually made a direct selling purchase in the past year.





The
success of direct sales is established in the reasons people choose direct
selling as a career option.  These include:





§
            Direct
      selling is a good way to meet and socialize with
  people.





§
            Direct
      selling offers flexible work
schedules.





§
            Direct
      selling is a good way to earn extra
income.





§
            Direct
      selling is a good way to own a
business.





§
            Earnings
      are in proportion to efforts.


-5-


Marketing
plan





We are a
direct sales company, which distributes products through a network marketing
system. Under our system, direct sales consultants purchase products from us for
resale and for personal use.





We
believe network marketing is an effective vehicle to distribute our products
because:





●
            A
      consumer can be educated about a product in person by a direct sales
      consultant.





●
            Direct
      sales allow for actual product testing by a potential
      consumer.





●
            The
      impact of the direct sales consultant’s and consumer’s testimonials is
      enhanced.





●
            Direct
      sales consultants can give customers high levels of service and attention,
      by, among other things, delivering products directly to a consumer and
      following up on sales to ensure proper product usage and customer
      satisfaction, and to encourage repeat
purchases.





We rely
on our direct sales consultants to sponsor new direct sales consultants. While
we anticipate providing sales tools, such as brochures, direct sales consultants
are primarily responsible for educating new direct sales consultants with
respect to products and how to build a successful home-based
business.





The
sponsoring of new direct sales consultants creates multiple levels in the
network marketing structure. Persons whom a direct sales consultants sponsors
are referred as “downline” or “sponsored” direct sales
consultants.  If downline direct sales consultants also sponsor new
direct sales consultants, they create additional levels in the
structure.





Sponsoring
activities are not required of direct sales consultants. However, because of the
financial incentives provided to those who succeed in building a direct sales
consultant network that consumes and resells products, we believe that most of
our direct sales consultants will attempt, with varying degrees of effort and
success, to sponsor additional direct sales consultants.  Generally,
we believe that direct sales consultants will invite friends, family members,
and acquaintances to sales meetings, the Company’s web site and conference calls
in which the Sore-EezÔ Chinese herbal
liniment and other product candidates are presented and the compensation plan is
explained.  We believe that people will be attracted to become direct
sales consultants after using the Sore-EezÔ Chinese herbal
liniment and other product candidates and becoming regular retail
customers.  A person becomes a direct sales consultant by completing a
new distributor application and agreement.  Once a person becomes a
direct sales consultant, he or she is able to purchase products directly from us
at wholesale prices for resale to consumers or for personal consumption. The
direct sales consultant is also entitled to sponsor other direct sales
consultants in order to build a network of direct sales consultants and product
users.  -6-





As of
March 15, 2009, we had 10 direct sales consultants for the Sore-EezÔ Chinese herbal body
liniment.  A potential direct sales consultant must enter into a
standard direct sales consultant agreement with us that obligates the direct
sales consultant to abide by our policies and procedures.  These
policies and procedures include but are not limited to:





·
            A
      direct sales consultant must be of legal age to do business to be eligible
      to become a distributor.·
            Once
      accepted as a distributor by the Company, the direct sales consultant will
      have the right to purchase and sell the Company’s
  products.


·
            The
      business relationship of the direct sales consultant with the Company will
      be an independent contractor relationship.·
            The
      Company’s sales and marketing program is based upon retail sales to the
      ultimate consumer and has adopted a 70% rule.  Under the rule, a
      direct sales consultant may not order additional products unless he or she
      has sold or used for personal or family use at least 70% of previously
      purchased products.·
            A
      direct sales consultant is eligible to purchase products at wholesale
      prices, thus allowing him or her to sell the Company products to customers
      at retail prices, and may retain the difference between the wholesale cost
      and retail sales price as immediate cash income.·
            The
      Company has established a retail price for each of its products that must
      be adhered to.·
            There
      are no minimum order requirements for placing orders.·
            A
      direct sales consultant may voluntarily cancel the distributor agreement
      at any time.  The Company will pay 90% of the original cost for
      the unopened products being returned.·
            The
      Company business opportunity is not a franchise and does not provide a
      direct sales consultant with exclusive rights to any region or
      territory.·
            No
      income claims, income projections nor income representations may be made
      to prospective direct sales consultants.  Any false, deceptive
      or misleading claims regarding the opportunity or products are
      prohibited.·
            When
      conducting business, a direct sales consultant must safeguard and promote
      the reputation of the products offered by the Company.  The
      direct sales consultant must refrain from all conduct which might be
      harmful to the Company’s reputation, or to the marketing of its products,
      or inconsistent with the public interest.  As a distributor, a
      direct sales consultant must honestly promote and describe the products
      offered by the Company and avoid all discourteous, deceptive, disruptive,
      misleading, unethical or immoral conduct or practices.·
            If
      a direct sales consultant violates the terms of the distributor agreement,
      the Company’s policies and procedures, applicable laws or the standards of
      fair dealing, he or she may be terminated by the
  Company.




Manufacturing





We have
not engaged a contract packer at this time and we are preparing and packaging
the Sore-EezÔ
Chinese herbal liniment at our facilities, which has a production capacity of
four (4) gallons per month.  In the future, we anticipate using
contract packers to manufacture the Sore-EezÔ Chinese herbal
liniment and other product candidates according to our specifications.  -7-





Raw
Materials and Suppliers





The
Sore-EezÔ
Chinese herbal liniment is composed of certain key raw materials, which include
camphor and rubbing alcohol and Chinese herbs, such as angelica root, borneol,
red peony root, rhubarb root, clover flower, aucklandia root, safflower, myrrh,
cattail pollen, frankincense, peach kernal, root of psuedoginseng and xue
jie.  These raw materials  are available from numerous
sources.  Our sole supplier for these Chinese herbs is Asia Natural
Products, Inc., located in San Francisco, California. In a situation where this
supplier is not able to supply the ingredients, other sources of supply will
need to be identified.  In the situation where we are not supplied
with the necessary raw materials, it may result in a temporary delay in
production until replacement supplies are obtained to meet our production
requirements.





Trademarks,
Patents and Intellectual Property





We intend
to seek trademark protection for the Sore-EezÔ Chinese herbal
liniment and other product candidates. We will do a search of existing
trademarks prior to selecting trademarks for the Sore-EezÔ Chinese herbal
liniment and other product candidates.  We believe that trademark
protection will be important to brand name recognition and distributor and
consumer loyalty to the Sore-EezÔ Chinese herbal
liniment and other product candidates. We intend to register our important
trademarks in the United States.  We will use our best efforts to
maintain the confidentiality of the Sore-EezÔ Chinese herbal
liniment and other product candidates' formulations through confidentiality
agreements and physical security.





Government
Regulation





The
Sore-EezÔ
Chinese herbal liniment and other product candidates are not subject to
pre-market regulatory approval in the United States.  However, the
processing, formulation, manufacturing, packaging, labeling, advertising and
distribution of the Sore-EezÔ Chinese herbal
liniment and other product candidates are subject to federal laws and
regulations.  The federal agencies regulating the Sore-EezÔ Chinese herbal
liniment and other product candidates include the Food and Drug Administration,
the Federal Trade Commission, the Department of Agriculture and the
Environmental Protection Agency.  These activities are also regulated
by various state and local laws and agencies of the states and localities in
which the Sore-EezÔ Chinese herbal
liniment and other product candidates may be sold. Additional regulations may
prevent or delay the introduction, or require the reformulation, of the
Sore-EezÔ
Chinese herbal liniment and other product candidates, which could result in lost
sales and increased costs to us. The Food and Drug Administration may determine
that a particular statement of support on the Sore-EezÔ Chinese herbal
liniment and other product candidates, or that we want to use, is an
unacceptable drug claim or the Food and Drug Administration or the Federal Trade
Commission may determine that particular claims are not adequately supported by
available scientific evidence.  Any such regulatory determination
would prevent us from marketing the Sore-EezÔ Chinese herbal
liniment and other product candidates or using certain statements on the
Sore-EezÔ
Chinese herbal liniment and other product candidates, which could adversely
affect our sales. The Food and Drug Administration also could require us to
remove the Sore-EezÔ Chinese herbal
liniment and other product candidates from the market.  -8-





Because
of our direct marketing approach of personal care products, our current and
prospective operations are not restricted to a material extent by any current or
proposed governmental laws or regulations, nor is governmental approval required
for the conduct of our business.  We are subject to the Federal Trade
Commission Act, Florida Deceptive and Unfair Trade Practices and Act and other
similar state consumer protection laws and regulations governing network or
multi-level marketing companies.  These laws and regulations prohibit
unfair and deceptive trade practices in the sale of products and services,
including illegal pyramid schemes.  Federal and state consumer
protection laws and regulations do not materially limit or materially impact our
current or prospective operations, nor does compliance with any consumer
protection laws or regulations impose a material cost on our
business.





Competition





The
market for personal care products and direct sales consultants is large and
intensely competitive.  We compete directly with direct selling
organizations and companies that manufacture personal care
products.  Many of the Company’s competitors have much greater name
recognition and financial resources than the Company.  In addition,
personal care products can be purchased in a wide variety of channels of
distribution. While the Company believes that consumers appreciate the
convenience of ordering products from home through a sales person, or through a
catalog, the buying habits of many consumers accustomed to purchasing products
through traditional retail channels are difficult to change. The Company’s
product offerings are also small compared to the wide variety of products
offered by many other personal care products companies and direct selling
organizations.





We
compete with other direct selling organizations and personal care products
companies, some of which have a longer operating history and higher visibility,
name recognition, and financial resources. The leading direct selling company in
our existing market is Amway Corporation and its affiliates. We compete for new
direct sales consultants on the strength of our business opportunities, product
offerings, the compensation plan, and management strength. We envision the entry
of many more direct selling organizations into the marketplace as this channel
of distribution expands over the next several years.




Research
and Development Activities




No
research and development expenditures have been incurred, either on our account
or sponsored by customers since our inception.




Employees





As of
March 15, 2009, we had no full-time employees. All activities to date have been
undertaken by Michel Lemoine, our Chief Executive Officer, President and
Treasurer, as needed. Michel Lemoine does not currently spend all of his time on
our business and estimates he devotes approximately 50% of his business time on
the business of the Company.  We anticipate that we will begin hiring
employees, as needed.  -9-





Item
1A.  Risk Factors.





Not
applicable.





Item
1B.  Unresolved Staff Comments.





None.




Item
2.  Properties.





Our
executive offices are located at 785 N.E. 83rd
Terrace, Miami, Florida 33138, which is situated on the property of Michel
Lemoine, our Chairman of the Board, Chief Executive Officer, President and
Treasurer.  We do not pay Michel Lemoine for the use of such space. We
anticipate that we will rent separate manufacturing and office facilities and
warehouse space, when needed to support the growth of our business.





Item
3.  Legal Proceedings.





We are
not a party to any legal proceedings, nor are we aware of any threatened
litigation whatsoever.





Item
4.  Submission of Matters to a Vote of Security Holders.





There
were no matters submitted to a vote of security holders during the fourth
quarter of 2008.




-10-





PART
II





Item
5.  Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.





Market
Information





Our
common stock has been approved for quotation on the over-the-counter bulletin
board market under the symbol “DRGA.”  While we anticipate that a
public trading market for our shares of common stock will develop, a public
trading market for our shares of Common Stock has not yet commenced and no
shares of our common stock have been traded on the over-the-counter bulletin
board market.  There can be no assurance that such a public trading
market will develop, or, if such a trading market is developed, that it can be
maintained with liquidity.  On March 15, 2009, there were 42
registered holders of our common stock.





Dividends





We have
not paid any dividends on our common stock, and it is not anticipated that any
dividends will be paid in the foreseeable future. The declaration and payment of
dividends in the future will be determined by the Board of Directors in light of
conditions then existing, including our earnings, financial condition, capital
requirements and other factors.





Recent
Sales of Unregistered Securities





The
following is a summary of transactions by us from October 4, 2007, which is our
inception, through March 15, 2009 involving sales of our securities that were
not registered under the Securities Act.  Each offer and sale was made
in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated
under Section 4(2) of the Securities Act, as transactions by an issuer not
involving any public offering.  The purchasers were “accredited
investors,” officers, directors or employees of the registrant or known to the
registrant and its management through pre-existing business relationships,
family, friends and employees.  All purchasers were provided access to
all material information which they requested, and all information necessary to
verify such information and were afforded access to management of the registrant
in connection with their purchases. All holders of the unregistered securities
acquired such securities for investment and not with a view toward distribution,
acknowledging such intent to the registrant. All certificates or agreements
representing such securities that were issued contained restrictive legends,
prohibiting further transfer of the certificates or agreements representing such
securities, without such securities either being first registered or otherwise
exempt from registration under the Securities Act, in any further resale or
disposition.




Founders Share
Issuances





On
October 4, 2007, the date of our inception, we issued 975,000 shares of our
restricted common stock to Yamit Lemoine for the license to the recipe to the
Sore-EezÔ
Chinese herbal liniment, our initial product.  The value of the
license was determined to be the legal costs to create the license, which was
$1,200, as there were no other out-of-pocket costs for the license or the
development of the recipe.  We believe that the issuance of the shares
was exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933 by virtue of Section 4(2).  -11-




On
November 4, 2007, we issued 5,000,000 shares of our restricted common stock
to Talles Investments, Inc., pursuant to its investment of $11,100 in the
Company. We believe that the issuance of the shares was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2).





On
December 31, 2007, we issued the Company issued 63,278 shares of common stock to
our Michel Lemoine, our Chairman, Chief Executive Officer, President, Secretary
and Treasurer, for cash in the amount of $633.  We believe that the
issuance of the shares was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of
Section 4(2).




Directors Share
Issuances





On March
27, 2008, the Company issued 25,000 shares of common stock to each of our
directors, Michel Lemoine, Steve Kravitz, H. Bradley Ress and Joseph
Pierre-Louis, or an aggregate of 100,000 shares of common stock, for services
rendered by each of our directors valued at $1,002, or an aggregate of
$4,008.  We believe that the issuance of the shares was exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2).





Use
of Proceeds from Initial Public Offering





We
commenced our initial public offering on October 2, 2008, pursuant to that
certain Registration Statement on Form S-1 (Commission File No. 333-150751),
which was  declared effective by the Securities and Exchange
Commission on that date.  We registered 50,000 shares of Series A
Convertible Preferred Stock for sale by the Company for an aggregate offering
price of $500,000 and also registered 13,000,000 shares of Common Stock into
which the shares of our Series A Convertible Preferred Stock may then be
converted.  The offering was made directly by us and was not
underwritten. We terminated the offering and filed Post-Effective Amendment No.
1 to the Form S-1 Registration Statement with the SEC on February 26,
2009.  We sold 6,780 shares of Series A Convertible Preferred Stock in
the offering, which were subsequently converted into 1,762,800 shares of our
Common Stock. We raised $67,800 in this initial public offering.  The
net proceeds provided to us by the public offering was $49,709 after deduction
of offering expenses in the amount of $18,091.  The following is a
list of the expenses incurred by us in connection with the preparation and
filing of the registration statement and related public offering
matters.




SEC
      registration fee
            
            $
            20Printing
      expenses
            
            
            4,858Legal
      fees and expenses
            
            
            3,000Accounting
      fees and expenses
            
            
            6,500Blue
      sky fees and expenses
            
            
            1,292Transfer
      Agent fees
            
            
            2,000Miscellaneous
            
            
            421Total
            
            $
            18,091


-12-


From the
effective date of the public offering on October 2, 2008 through December 31,
2008, we have used $1,243 for working capital purposes, including cost of goods
sold.




Item
6.  Selected Financial Data.





The
following financial data has been derived from and should be read in conjunction
with (i) our audited financial statements for the period from October 4,
2007, our inception, to December 31, 2007 and the year ended December 31, 2008,
together with the notes to these financial statements; (ii) and the sections of
this report entitled “Business” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”, included elsewhere herein or
filed with the SEC.  Our historical results are not necessarily
indicative of the results we may achieve in any future period.


Year
      Ended
              December
      31,
              2008Consolidated
      Statement of Operations Data:
            
            Period
      from
              October
      4,
              2007
              (inception)
      to
              December
      31, 2007Revenue:
            
            $
            1,241
            $
            —Expenses:General
      and administrative
            
            
            21,723
            
            1,529Total
      expenses
            
            
            22,013
            
            1,529Net
      (loss)
            
            $
            (20,903
            )
            $        (1,529)Basic
      and diluted net (loss) per share
            
            $
            —
            
            $                —Weighted
      average number of common shares outstanding
            
            
            7,901,278
            
            5,975,711


-13-


As
      of
              December
      31, 2008Consolidated
      Balance Sheet Data:Cash
      and cash equivalents
            
            $
            66,613Working
      capital
            
            
            60,964Total
      assets
            
            
            68,360Total
      long-term liabilities
            
            
            —Total
      liabilities
            
            
            6,051Total
      shareholders’ equity
            
            
            62,309




Item
7.  Management’s Discussion And Analysis Of Financial Condition And
Results Of Operations





The
following discussion should be read in conjunction with (i) our audited
financial statements for the period October 4, 2007, our inception, through
December 31, 2007, the year ended December 31, 2008 and cumulative from October
4, 2007, our inception, through December 31, 2008 and the related notes; and
(ii) the section entitled “Business” that appears elsewhere in this
report.  The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this report. You should not place undue
certainty on these forward-looking statements, which apply only as of the date
of this report.  Our financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.




Plan
of Operation





Our
Company is a provider of personal care products by means of a network of direct
sales consultants, which is in the development stage.  Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit.  In July, 2008, we
commenced providing to the marketplace our first product, the Sore-EezÔ Chinese herbal
body liniment.  Our primary focus over the course of the next 12
months will be to concentrate our efforts on introducing the Sore-EezÔ Chinese herbal
liniment and other product candidates to the marketplace, producing inventory
for sale and implementing our business plans, including recruiting and training
of a network of direct sales consultants.





Our chief
executive officer provides daily management of our company. We intend
to engage employees and service providers for services, as the need may
arise for services, including computer systems, marketing, advertising,
public relations, cash management, collections, accounting and administration.  -14-





As a
public company, we are subject to certain reporting and other compliance
requirements involving certain costs for such compliance, which private
companies may not choose to make. We have identified such costs as being
primarily for audits, legal advice, transfer agent fees and SEC filing expenses
and estimate the cost to be approximately $30,000 for the next twelve months. We
expect to pay such costs from a combination of cash on hand ($66,613 as of
December 31, 2008) and cash generated by product sales.




Results
of Operations




We are a
development stage company and have incurred losses of $22,432 as of December 31,
2008.  In July, 2008, we commenced providing to the marketplace our
first product, the Sore-EezÔ Chinese herbal body
liniment, and have generated revenues of $1,241 as of December 31,
2008.  All of our revenues have come from the sale of the
Sore-EezÔ
Chinese herbal body liniment and from no other sources.





Liquidity
and Capital Resources





The
following table sets forth our liquidity and capital resources as of December
31, 2008:


Cash
      and cash equivalents
            
            $
            66,613Working
      capital
            
            
            60,964Total
      assets
            
            
            68,360Total
      liabilities
            
            
            6,051Total
      shareholders’ equity
            
            
            62,309




During
the period October 4, 2007 (inception) through December 31, 2007 compared to the
year ended December 31, 2008, working capital increased from $10,264 to a
$60,964. The primary reason for the increase was the increase in cash as a
result of the Company’s initial public offering during the fourth quarter 2008,
which provided proceeds to us in the amount of $67,800.





Cash
Flows from Operating Activities




We have
not generated positive cash flows from operating activities as of March 15,
2009.  Operating expenditures during the period covered by this report
include general and administrative costs, depreciation expense and amortization
expense.  During the period October 4, 2007 (inception) through
December 31, 2007 compared to the year ended December 31, 2008, cash used in
operating activities increased from $533 to $11,892.  The primary
reason for the increase in cash used in operating activities was due to the
professional fees and costs associated with the Company’s initial public
offering.  -15-




Cash
Flows from Investing Activities




During
the year ended December 31, 2008, the Company’s cash flows from investing
activities increased $495 due to the purchase of an herb grinder on June 25,
2008.  Except for the herb grinder, we have not acquired any other
significant equipment.




Cash
Flows from Financing Activities




We have
financed our operations from the issuance of equity securities.  Net
cash provided by financing activities for the period from October 4, 2007, our
inception, through December 31, 2007 and the year ended December 31, 2008 was
$11,733 and $67,800, respectively.  The increase in cash flows from
financing activities was due to our initial public offering, which provided
proceeds to us in the amount of $67,800.




We expect
that working capital requirements will continue to be funded through a
combination of our existing funds, product sales and future issuances of
securities, as needed.  Our working capital requirements are expected
to increase in line with the growth of our business.




Our
future capital requirements will depend on many factors, including our sales
growth, market acceptance of our existing and future products, the amount and
timing of our research and development expenditures, the timing of our
introduction of new products, the expansion of our sales and marketing efforts
and working capital needs. We expect our long-term liquidity needs to consist
primarily of working capital and capital expenditure requirements.




Going
Concern




Our
auditors have raised substantial doubt as to our ability to continue as a going
concern, as expressed in its opinion on our financial statements included in
this report.  We commenced operations on October 4, 2007 and have
realized minimal revenues and operated at a loss since inception. As at December
31, 2008, we had working capital of $60,964 and an accumulated deficit of
$22,432.   Our ability to continue as a going concern is dependent
upon our ability to generate profitable operations in the future and/or obtain
the necessary financing to meet our obligations and repay our
liabilities.  We have not yet established an ongoing source of
revenues sufficient to cover our operating costs and allow us to continue as a
going concern.  Our ability to continue as a going concern is
dependent on us obtaining adequate capital to fund operating losses until we
become profitable.  If we are unable to obtain adequate capital, we
could be forced to cease operations.  There can be no assurance that we
will operate at a profit or additional debt or equity financing will be
available, or if available, can be obtained on satisfactory terms.




Material
Commitments




There
were no material commitments for the period from October 4, 2007, our inception,
through December 31, 2007 and the year ended December 31, 2008.  -16-




Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.




Critical
Accounting Policies




Our
financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.




We
regularly evaluate the accounting policies and estimates that we use to prepare
our financial statements. In general, management's estimates are based on
historical experience, on information from third party professionals, and on
various other assumptions that are believed to be reasonable under the facts and
circumstances. Actual results could differ from those estimates made by
management.




Cash
and Cash Equivalents





We
consider all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents. We have no cash equivalents.





Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.





Inventories





Inventories
are valued at the lower of cost or market on a first-in, first-out (FIFO) basis,
and include finished goods.




-17-





Revenue
Recognition





We
recognize revenue when:





·
            Persuasive
      evidence of an arrangement exists;





·
            Shipment
      has occurred;





·
            Price
      is fixed or determinable; and





·
            Collectibility
      is reasonably assured.





For the
period from October 4, 2007 (inception) through December 31, 2007 and the year
ended December 31, 2008, we recognized revenues of $0 and $1,241,
respectively.





Earnings
(Loss) Per Share





We
compute earnings per share in accordance with Statement of Accounting Standards
No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of SFAS No.
128, basic earnings per share is computed by dividing the net income (loss) for
the period by the weighted average number of common shares outstanding during
the period. Diluted earnings per share is computed by dividing the net income
(loss) for the period by the weighted average number of common and potentially
dilutive common shares outstanding during the period.  There were no
potentially dilutive common shares outstanding during the period from October 4,
2007 (inception) through December 31, 2007 and the year ended December 31,
2008.





Intangible
Assets





Intangible
assets consist of a license agreement, which is recorded at cost and amortized
over a straight-line basis.  The amortization expense for the period
from October 4, 2007 (inception) to December 31, 2007 and the year ended
December 31, 2008 was $60 and $240, respectively.  The value of the
license was determined to be the legal costs to create the license, which was
$1,200.





The
Company evaluates the recoverability of identifiable intangible assets whenever
events or changes in circumstances indicate that an intangible asset’s carrying
amount may not be recoverable. There was no impairment loss for the period from
October 4, 2007 (inception) to December 31, 2007 and the year ended December 31,
2008.  -18-




Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.





Fair
Value of Financial Instruments





The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.





Share
Based Payments





In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.





Effective
October 4, 2007, the Company has fully adopted the provisions of SFAS No. 123(R)
and related interpretations as provided by SAB 107. As such, compensation cost
is measured on the date of grant as the fair value of the share-based payments.
Such compensation amounts, if any, are amortized over the respective vesting
periods of the share-based payments.





Recent
Accounting Pronouncements




In June
2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, which clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.
The Interpretation provides a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. Under FIN No. 48, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN No. 48 also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is effective for us for the
year ended December 31, 2007.  We do not expect FIN No. 48 to have a
material impact on our financial statements.  -19-





In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for us for the year ended
December 31, 2007. The cumulative effect of the application of this consensus on
prior period results should be recognized through a cumulative-effect adjustment
to retained earnings as of the beginning of the year of adoption. Elective
retrospective application is also permitted. We do not expect the application of
this consensus to have a material impact on our financial
statements.





Staff
Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Current Year Misstatements. SAB
No. 108 requires companies to quantify misstatements using both a balance
sheet (iron curtain) and an income statement (rollover) approach to evaluate
whether either approach results in an error that is material in light of
relevant quantitative and qualitative factors, and provides for a one-time
cumulative effect transition adjustment.  This statement is effective
for us for the year ended December 31, 2007.  SAB No. 108 will
not have an impact on our financial statements.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This
statement is effective for us for the year ended December 31,
2007.  SFAS No. 157 will not have an impact on our financial
statements.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 gives us the
irrevocable option to carry many financial assets and liabilities at fair
values, with changes in fair value recognized in earnings. SFAS No. 159 is
effective for us commencing on January 1, 2008.  SFAS
No. 159 will not have an impact on our financial statements.





The FASB
has replaced SFAS No. 141 with a new statement on Business Combinations that
changes the way that minority interest is recorded and modified as a parent’s
interest in a subsidiary changes.  This statement is effective for us
commencing on January 1, 2008.  Currently, this change will have no
effect on our financial statements.





Item
7A.  Quantitative and Qualitative Disclosures about Market
Risk.





We are
not subject to risks related to foreign currency exchange rate
fluctuations.




Our
functional currency is the United States dollar. We do not transact our business
in other currencies. As a result, we are not subject to exposure from movements
in foreign currency exchange rates. We do not use derivative financial
instruments for speculative trading purposes.


-20-


Item
8.  Financial Statements and Supplementary Data.





MOORE
& ASSOCIATES, CHARTERED


ACCOUNTANTS AND
ADVISORS


PCAOB
REGISTERED





Report of Independent
Registered Public Accounting
Firm





To
the Board of Directors


Dragon’s
Lair Holdings, Inc.


(A
Development Stage Company)





We have
audited the accompanying consolidated balance sheets of Dragon’s Lair Holdings
Inc (A Development Stage Company) as of December 31, 2008 and 2007, and the
related consolidated statements of operations, shareholders’ equity and cash
flows for the year ended December 31, 2008 and the period since inception
October 4, 2007 through December 31, 2007 and since inception on October 4, 2007
through December 31, 2008. These financial statements are the responsibility of
the Company’s management.  Our responsibility is to express an opinion
on these financial statements based on our audits.





We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States).  Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Dragon’s Lair Holdings Inc (A
Development Stage Company) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, shareholders’ equity and cash flows for
the year ended December 31, 2008 and the period since inception October 4, 2007
through December 31, 2007 and since inception on October 4, 2007 through
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has limited operations and has not established
a source of revenue sufficient to cover operations, which raises substantial
doubt about its ability to continue as a going concern.  Management’s
plans concerning these matters are also described in Note 1.  The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.





/s/
Moore & Associates, Chartered





Moore
& Associates, Chartered


Las
Vegas, Nevada


March 25,
2009





6490 West Desert Inn Rd, Las
Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501


-21-




DRAGON'S LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      BALANCE SHEETS(Audited)
  ASSETSDecember
      31, 2008
              
              
              December
      31, 2007CURRENT
      ASSETS:Cash
      and equivalents
              
              $
              66,613
              
              
              $
              11,200Inventory
              
              
              402
              
              
              
              533Total
      Current Assets
              
              
              67,015
              
              
              
              11,733FIXED
      ASSETS:Equipment,
      net
              
              
              445
              
              
              
              -OTHER
      ASSETS:License,
      net
              
              
              900
              
              
              
              1,140Total
      Assets
              
              $
              68,360
              
              
              $
              12,873LIABILITIES AND SHAREHOLDERS' EQUITY
      (DEFICIENCY)CURRENT
      LIABILITIES:Accounts
      payable & accrued expenses
              
              $
              6,051
              
              
              $
              1,469Total
      Liabilities
              
              
              6,051
              
              
              
              1,469SHAREHOLDERS'
      EQUITY:Preferred
      stock (50,000,000 authorized;par
      value $.001; none issued and outstanding)
              
              $
              -
              
              
              $
              -Common
      stock (100,000,000 shares authorized;no
      par value; 7,901,078 issued and outstanding)
              
              
              84,741
              
              
              
              12,933Deficit
      accumulated during the development stage
              
              
              (22,432
              )
              
              
              (1,529
              )Total
      Shareholders' Equity
              
              
              62,309
              
              
              
              11,404Total
      Liabilities and Shareholders' Equity
              
              $
              68,360
              
              
              $
              12,873
 
 -22-
  
  DRAGON'S LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF OPERATIONS(Audited)
              
              
              October
      4, 2007
              
              
              Cumulative
      fromFor
      the year ended
              
              
              (Inception)
      through
              
              
              October
      4, 2007 (Inception)ended
      December 31, 2008
              
              
              December
      31, 2007
              
              
              through
      December 31, 2008Net
      Sales
              
              $
              1,241
              
              
              $
              -
              
              
              $
              1,241Cost
      of Sales
              
              
              131
              
              
              
              -
              
              
              
              131Gross
      Profit
              
              
              1,110
              
              
              
              -
              
              
              
              1,110Expenses:Amortization
              
              
              240
              
              
              
              60
              
              
              
              300Depreciation
              
              
              50
              
              
              
              -
              
              
              
              50General
      and Administrative
              
              
              21,723
              
              
              
              1,469
              
              
              
              23,192Total
      Expenses
              
              
              (22,013
              )
              
              
              (1,529
              )
              
              
              23,542Net
      (loss) before Income Taxes
              
              
              (20,903
              )
              
              
              (1,529
              )
              
              
              (22,432
              )Provision
      for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -Net
      (loss)
              
              $
              (20,903
              )
              
              $
              (1,529
              )
              
              $
              (22,432
              )Basic
      and diluted net loss per common share
              
              $
              -
              
              
              $
              -Weighted
      average number of common shares outstanding
              
              
              7,901,078
              
              
              
              5,975,711
 
  -23-
  DRAGON'S
      LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS' EQUITYFROM
      OCTOBER 4, 2007 (INCEPTION) THROUGH DECEMBER 31, 2008(Audited)
  Accumulated
              
              
              TotalPreferred
      Stock
              
              
              Common
      Stock
              
              
              (Deficit)
      During
              
              
              Shareholders'Shares
              
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Development
      Stage
              
              
              EquityBalance
      at October 4, 2007
              
              
              -
              
              
              
              $
              -
              
              
              
              975,000
              
              
              $
              1,200
              
              
              $
              -
              
              
              $
              1,200Common
      stock issued for licenseFounder's
      shares
              
              
              -
              
              
              
              
              -
              
              
              
              5,000,000
              
              
              
              11,100
              
              
              
              -
              
              
              
              11,100November
      4, 2007, $0.00222/shareCommon
      stock issued for cash
              
              
              -
              
              
              
              
              -
              
              
              
              63,278
              
              
              
              633
              
              
              
              -
              
              
              
              633December
      31, 2007, $0.01/shareNet
      (loss) for the period
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,529
              )
              
              
              (1,529
              )Balance
      at December 31, 2007
              
              
              -
              
              
              
              
              -
              
              
              
              6,038,278
              
              
              
              12,933
              
              
              
              (1,529
              )
              
              
              11,404Common
      stock issued for services
              
              
              -
              
              
              
              
              -
              
              
              
              100,000
              
              
              
              4,008
              
              
              
              -
              
              
              
              4,008March
      27, 2008, $0.04008/shareCommon
      stock issued for cashDecember
      31, 2008, $0.03846/share
              
              
              
              
              
              
              
              
              
              
              
              1,762,800
              
              
              
              67,800
              
              
              
              
              
              
              
              67,800Net
      (loss) for the period
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (20,903
              )
              
              
              (20,903
              )Balance
      at December 31, 2008
              
              
              -
              
              
              
              $
              -
              
              
              
              7,901,078
              
              
              $
              84,741
              
              
              $
              (22,432
              )
              
              $
              62,309
 
 -24-
  
  
  DRAGON'S LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Audited)
  For
      the period October 4,
              
              
              Cumulative
      fromFor
      the year ended
              
              
              2007
      (Inception) through
              
              
              October
      4, 2007 (Inception)December
      31, 2008
              
              
              December
      31, 2007
              
              
              through
      December 31, 2008OPERATING
      ACTIVITIES:Net
      loss
              
              $
              (20,903
              )
              
              $
              (1,529
              )
              
              $
              (22,432
              )Issuance
      of common stock for services
              
              
              4,008
              
              
              
              -
              
              
              
              4,008Increase
      in amortization
              
              
              240
              
              
              
              60
              
              
              
              300Increase
      in depreciation
              
              
              50
              
              
              
              -
              
              
              
              50(Increase)
      decrease in inventory
              
              
              131
              
              
              
              (533
              )
              
              
              (402
              )Increase
      in accounts payable
              
              
              4,582
              
              
              
              1,469
              
              
              
              6,051Net
      cash used in operating activities
              
              
              (11,892
              )
              
              
              (533
              )
              
              
              (12,425
              )INVESTING
      ACTIVITIES:Increase
      in equipment
              
              
              (495
              )
              
              
              -
              
              
              
              (495
              )FINANCING
      ACTIVITIES:Proceeds
      from issuance of common stock
              
              
              67,800
              
              
              
              11,733
              
              
              
              79,533NET
      INCREASE IN CASH
              
              
              55,413
              
              
              
              11,200
              
              
              
              66,613CASH
      BEGINNING BALANCE
              
              
              11,200
              
              
              
              -
              
              
              
              -CASH
      ENDING BALANCE
              
              $
              66,613
              
              
              $
              11,200
              
              
              $
              66,613SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Taxes
      paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -Interest
      paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -CASH
      TRANSACTIONS AFFECTING OPERATING, INVESTINGAND
      FINANCING ACTIVITIES:Issuance
      of common stock for license
              
              $
              -
              
              
              
              1,200
              
              
              $
              1,200
 
 -25-







DRAGON’S
LAIR HOLDINGS, INC.


(A
DEVELOPMENT STAGE COMPANY)





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2007 AND DECEMBER 31, 2008





NOTE
1 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK





Description of
Business





Dragon’s
Lair Holdings, Inc., a Florida corporation (the “Company”, “we”, “us” and
“our”), was incorporated on October 4, 2007, and conducts is operations through
its sole operating subsidiary, Dragon’s Lair Health Products, Inc., a Florida
corporation, which was incorporated on October 5, 2007.  Our company
structure is set forth in the following chart:


DRAGON’S
      LAIR HOLDINGS, INC.
                a
      Florida corporation
 
 DRAGON’S
      LAIR HEALTH PRODUCTS, INC.
                a
      Florida corporation
                (100%
      Owned Subsidiary)
  Our
Company is a provider of personal care products by means of a network of direct
sales consultants, which is in the development stage.  Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit.  In July, 2008, we
commenced providing our first product, the Sore-EezÔ Chinese herbal body
liniment.





Our
principal executive office is located at 785 N.E. 78th Street,
Miami, FL  33138.  Our telephone number is
 (786) 554-2771 , and our company website is www.sore-eez.com.  Our
fiscal year ends on December 31st.





Basis of
Presentation





The
accompanying consolidated financial statements have been prepared by the
Company. The Company’s consolidated financial statements are prepared in
accordance with generally accepted accounting principals in the United States of
America (“US GAAP”). The consolidated financial statements of the Company
include the Company and its sole subsidiary. All material inter-company balances
and transactions have been eliminated.


-26-





Going
Concern





The
Company’s financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business.  The Company has not yet established an
ongoing source of revenues sufficient to cover its operating costs and allow it
to continue as a going concern.  The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable.  If the
Company is unable to obtain adequate capital, it could be forced to cease
operations.  The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.





Management’s Plan to
Continue as a Going Concern





The
Company has met its historical working capital requirements from the sale of its
capital shares.  In order to continue as a going concern, the Company
will need, among other things, additional capital
resources.  Management’s plans to obtain such resources for the
Company include (1) obtaining capital from the sale of its securities, (2) the
sale of the Sore-EezÔ Chinese herbal body
liniment and other product candidates, and (3) seeking out and completing a
merger with an existing operating company.  However, management cannot
provide any assurance that the Company will be successful in accomplishing any
of its plans.





The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations.





Development Stage
Risk





Since its
inception, the Company has been dependent upon the receipt of capital investment
to fund its continuing activities.  In addition to the normal risks
associated with a new business venture, there can be no assurance that the
Company's business plan will be successfully executed. Our ability to execute
our business plan will depend on our ability to obtain additional financing and
achieve a profitable level of operations. There can be no assurance that
sufficient financing will be obtained.  Further, we cannot give any
assurance that we will generate substantial revenues or that our business
operations will prove to be profitable.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Cash and Cash
Equivalents





The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. The Company has no cash
equivalents.


-27-





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.





Inventories





Inventories
are valued at the lower of cost or market on a first-in, first-out (FIFO) basis,
and include finished goods.





Revenue
Recognition





The
Company recognizes revenue when:





·
            Persuasive
      evidence of an arrangement exists;





·
            Shipment
      has occurred;





·
            Price
      is fixed or determinable; and





·
            Collectibility
      is reasonably assured.





The
Company closely follows the provisions of Staff Accounting Bulletin No. 104 as
described above. For the periods from October 4, 2007 (inception) to December
31, 2007 and January 1, 2008 to June 30, 2008, respectively, the Company
recognized no revenues.  In July, 2008, the Company commenced
providing our first product, the Sore-EezÔ Chinese herbal body
liniment.  For the period from July 1, 2008 to December 31, 2008, the
Company recognized revenues in the amount of $1,241.





Earnings (Loss) Per
Share





The
Company computes earnings per share in accordance with Statement of Accounting
Standards No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of
SFAS No. 128, basic earnings per share is computed by dividing the net income
(loss) for the period by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and potentially dilutive common shares outstanding during the
period.  There were no potentially dilutive common shares outstanding
during the period.


-28-





Intangible
Assets





Intangible
assets consist of a license agreement which is recorded at cost and amortized
over a straight-line basis.  The amortization expense for the periods
from October 4, 2007 (inception) to December 31, 2007 and from January 1, 2008
to December 31, 2008 was $60 and $240, respectively.  The value of the
license was determined to be the legal costs to create the license, which was
$1,200, as there were no other out-of-pocket costs for the license or the
development of the recipe.





The
Company evaluates the recoverability of identifiable intangible assets whenever
events or changes in circumstances indicate that an intangible asset’s carrying
amount may not be recoverable. There was no impairment loss for the periods from
October 4, 2007 (inception) to December 31, 2007 and January 1, 2008 to December
31, 2008, respectively.





Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.





Fair Value of Financial
Instruments





The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.





Share Based
Payments





In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.


-29-





Effective
for the year ended December 31, 2007, the Company has fully adopted the
provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.





Recent Accounting
Pronouncements




In June
2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, which clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.
The Interpretation provides a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. Under FIN No. 48, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN No. 48 also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is effective for the
Company for the year ended December 31, 2007.  The Company does not
expect FIN No. 48 to have a material impact on its financial
statements.





In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for the Company for the
year ended December 31, 2007.  The cumulative effect of the
application of this consensus on prior period results should be recognized
through a cumulative-effect adjustment to retained earnings as of the beginning
of the year of adoption. Elective retrospective application is also permitted.
The Company does not expect the application of this consensus to have a material
impact on its financial statements.





Staff
Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Current Year Misstatements. SAB
No. 108 requires companies to quantify misstatements using both a balance
sheet (iron curtain) and an income statement (rollover) approach to evaluate
whether either approach results in an error that is material in light of
relevant quantitative and qualitative factors, and provides for a one-time
cumulative effect transition adjustment. This statement is effective for the
Company for the year ended December 31, 2007.  SAB No. 108 will
not have an impact on the Company’s financial statements.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. SFAS
No. 157 is effective for the Company for the year ended December 31,
2007.  SFAS No. 157 will not have an impact on the Company’s financial
statements.


-30-





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 gives us the
irrevocable option to carry many financial assets and liabilities at fair
values, with changes in fair value recognized in earnings. SFAS No. 159 is
effective for the Company commencing on January 1, 2008.  SFAS No. 159
will not have an impact on the Company’s financial statements.





The FASB
has replaced SFAS No. 141 with a new statement on Business Combinations that
changes the way that minority interest is recorded and modified as a parent’s
interest in a subsidiary changes.  This statement is effective for the
Company commencing on January 1, 2008.  Currently, this change will
have no effect on the Company’s financial statements.





NOTE
3 - EQUITY TRANSACTIONS




On
October 4, 2007 (inception), the Company issued 975,000 shares of common stock
for the purchase of the license to manufacture, distribute and sell, the
Sore-EezÔ
Chinese herbal liniment, its initial product, from Yamit Lemoine.  The
value of the license was determined to be the legal costs to create the license,
which was $1,200, as there were no other out-of-pocket costs for the license or
the development of the recipe.




On
November 4, 2007, the Company issued 5,000,000 shares of common stock to an
investor for cash in the amount of $11,100.




On
December 31, 2007, the Company issued 63,278 shares of common stock to an
investor for cash in the amount of $633.




On March
27, 2008, the Company issued 100,000 shares of common stock to directors for
services rendered at a value of $4,008.





On
December 11, 2008, the Company completed its public offering pursuant to its
Form S-1 Registration Statement of 6,780 shares of Series A Convertible
Preferred Stock, which were converted into 1,762,800 shares of common stock and
provided aggregate offering proceeds in the amount of $67,800.





NOTE
4 – INCOME TAXES





The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.





SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.


-31-





The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 34% to the net loss before
provision for income taxes for the following reasons:





December
      31,
            
            
            December
      31,2008
            
            
            2007Income
      tax expense (asset) at statutory rate
            
            $
            (371
            )
            
            $
            (371
            )Valuation
      allowance
            
            
            371
            
            
            
            371Income
      tax expense per books
            
            $
            -0-
            
            
            $
            -0-





Net
deferred tax assets consist of the following components as of:


December
      31,
            
            
            December
      31,2008
            
            
            2007NOL
      Carryover
            
            $
            20,903
            
            
            $
            1,529Valuation
      allowance
            
            
            (20,903
            )
            
            
            (1,529
            )Net
      deferred tax asset
            
            $
            -0-
            
            
            $
            -0





Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards for the year ended December 31, 2008 and the period October
4, 2007 (inception) to December 31, 2007, were $20,903 and 1,529, respectively,
and for federal income tax reporting purposes are subject to annual limitations.
Should a change in our ownership occur the net operating loss carry forwards may
be limited as to their use in future years.




NOTE
5 - CONCENTRATION OF CREDIT RISK





Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At
December 31, 2007 and December 31, 2008, respectively, the Company had no
amounts in excess of FDIC insured limit.


-32-





NOTE
6 - LICENSE AGREEMENT





We have
entered into a license agreement with Yamit Lemoine, a significant shareholder
and the wife of our chief executive officer, which grants us a license for a
term five (5) years until at least October 4, 2012 for the exclusive worldwide
use of the Sore-EezÔ Chinese herbal
liniment recipe and, perpetually, thereafter, if we have generated at least
$400,000 from the sale of products based on the Sore-EezÔ Chinese herbal
liniment recipe on or prior to such date.  Pursuant to this license
agreement, we are required to exercise our best efforts to undertake and
maintain the commercial scale production, marketing and distribution of products
embodying the subject matter of the Sore-EezÔ Chinese herbal
liniment recipe.  We may not sublicense or assign any of our rights
under the license agreement.





On
October 4, 2007, the date of our inception, we issued 975,000 shares of our
restricted common stock to Yamit Lemoine, for a purchase price of $0.0012308 per
share, for the license to the Sore-EezÔ Chinese herbal
liniment recipe.  The value of the license was determined to be the
legal costs to create the license, which was $1,200, as there were no other
out-of-pocket costs for the license or the development of the
recipe.  We do not have any future payments obligations to Yamit
Lemoine under the license agreement.





The
license will be amortized over five years using the straight line
method.  Yamit Lemoine may terminate this license agreement in the
event that we have not recognized revenues of at least $400,000 from the sale of
products based on the Sore-EezÔ Chinese herbal
liniment recipe by October 4, 2012.   We have not achieved this level
of sales as of December 31, 2007 and December 31, 2008, so the license remains
subject to termination by the licensor at the end of such period.





The
estimated amortization expense over the next five years is as
follows:




Year
      Ending December 312007
            
            $
            602008
            
            $
            2402009
            
            
            2402010
            
            
            2402011
            
            
            2402012
            
            
            180$
            1,200





-33-





Item
9.  Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.





None.





Item
9A.  Controls and Procedures.





We
maintain disclosure controls and procedures that are designed to ensure that the
information required to be disclosed in the reports that we file under the
Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and that such information is accumulated
and communicated to our management, including our President and Treasurer, as
appropriate, to allow timely decisions regarding required
disclosures.  In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can only provide reasonable assurance of
achieving the desired control objectives, and in reaching a reasonable level of
assurance, 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, under the
supervision and with the participation of our management, including our
President and Treasurer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of our fourth fiscal quarter
covered by this report. Based on the foregoing, our President and Treasurer
concluded that our disclosure controls and procedures were effective at the
reasonable assurance level.





There has
been no change in our internal controls over financial reporting during our
fourth fiscal quarter ended December 31, 2008, that has materially affected, or
is reasonably likely to materially affect, our internal controls over financial
reporting.





MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING





Our
management of is responsible for establishing and maintaining adequate internal
control over financial reporting.  Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the Company’s principal executive and financial officer and
effected by the Company’s board of directors, management and other personnel, 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 and includes those policies and
procedures that:


-34-





·
            Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;





·
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and





·
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that
      could have a material effect on the financial
  statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.





The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of March 15, 2009.  In making this
assessment, the Company’s management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in
Internal Control-Integrated Framework.  The COSO framework is based
upon five integrated components of control: control environment, risk
assessment, control activities, information and communications and ongoing
monitoring.





Based on
the assessment performed, management has concluded that the Company’s internal
control over financial reporting, as of March 15, 2009, is effective and
provides reasonable assurance regarding the reliability of its financial
reporting and the preparation of its financial statements in accordance with
generally accepted accounting principles.  Further, management has not
identified any material weaknesses in internal control over financial reporting
as of March 15, 2009.





This
annual report does not include an attestation report of the Company’s registered
independent public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permit the Company to provide only management’s report in
this annual report.





/s/
Michel Lemoine


CEO,
President and Treasurer





Item
9B.  Other Information.





There
exists no information required to be disclosed by us in a report on Form 8-K
during the fourth quarter ended December 31, 2008, but not
reported.





-35-


PART
III





Item
10.  Directors, Executive Officers and Corporate
Governance.





Our
directors and executive officers and their respective ages as of March 15, 2009
are as follows:




Name
            
            Age
            
            Principal
      Positions With UsMichel
      “Klodi” Lemoine
            
            62
            
            Chairman
      of the Board, Chief Executive Officer, President, Secretary and
      TreasurerSteve
      Kravitz
            
            38
            
            DirectorH.
      Bradley Ress
            
            58
            
            DirectorJoseph
      Pierre-Louis
            
            47
            
            Director




The
following describes the business experience of each of our directors and
executive officers, including other directorships held in reporting companies,
if any:




Michel “Klodi” Lemoinehas
served as our Chairman of the Board, Chief Executive Officer, President,
Secretary and Treasurer since our inception.  Since February 2002, Mr.
Lemoine has been a licensed massage therapist specializing in massage based on
acupressure.  For the past 40 years, Mr. Lemoine has been a martial
arts teacher.





Steve Kravitzhas been one of
our directors since March 2008.  Since February 2007, Mr. Kravitz has
served as a Senior Loan Officer for Regions Bank.  From June 2000
until February 2007, Mr. Kravitz served as a Senior Loan Officer for Wachovia
Bank, N.A.  From February 1996 until May 2000, Mr. Kravitz served as a
Loan Officer for CTX Mortgage Corp.  From September 1993 until January
1996, Mr. Kravitz served as a Loan Officer for National Title &
Mortgage.




H. Bradley Resshas been one
of our directors since March 2008.  Since August 2007, Mr. Ress has
served as a real estate agent with Lang Realty in Florida.  From
January 1996 until August 2007, Mr. Ress served as a real estate agent with
Castles By The Sea in Florida.




Joseph Pierre-Louishas been
one of our directors since March 2008.  Since August 2001, Mr.
Pierre-Louis has been employed by the Miami-Dade County Department of Human
Services serving as the Center Manager for the Haitian American Senior Center
located in Miami, Florida.  Since November 2004, Mr. Pierre-Louis has
also served as the Food Program Monitor for the Haitian American Senior Centers
located throughout Miami-Dade County, Florida.




Term
of Office




All of
our directors hold office until the next annual general meeting of the
shareholders or until their successors are elected and qualified. Our officers
are appointed by our board of directors and hold office until their earlier
death, retirement, resignation or removal.


-36-




Significant
Employees




There are
no significant employees other than our sole executive officer.





Committees
of the Board of Directors




Our board
of directors intends to establish an audit committee, a compensation committee
and a nominating and corporate governance committee. Our board may establish
other committees from time to time to facilitate the management of our company;
however, we have not yet established any such committees.




Audit
committee.  Our audit committee will oversee a broad range of
issues surrounding our accounting and financial reporting processes and audits
of our financial statements, including by (1) assisting our board in monitoring
the integrity of our financial statements, our compliance with legal and
regulatory requirements, our independent auditor's qualifications and
independence and the performance of our internal audit function and independent
auditors, (2) appointing, compensating, retaining and overseeing the work
of any independent registered public accounting firm engaged for the purpose of
performing any audits, reviews or attest services, and (3) preparing the
audit committee report that may be included in our annual proxy statement or
annual report on Form 10-K. We will have at least three directors on our
audit committee, each of whom will be independent under the requirements of the
NASDAQ Capital Market, the Sarbanes-Oxley Act and the rules and regulations of
the SEC.  We expect that the initial members of our audit committee
will be Steve Kravitz, H. Bradley Ress and Joseph Pierre-Louis.  We
expect that Steve Kravitz will be our audit committee chair and will be our
audit committee financial expert as defined by the SEC rules implementing
Section 407 of the Sarbanes-Oxley Act.




Compensation
committee.  Our compensation committee will review and
recommend our policies relating to compensation and benefits for our executive
officers and other significant employees, including reviewing and approving
corporate goals and objectives relevant to compensation of our Chief Executive
Officer and other executive officers, evaluating the performance of our
executive officers relative to goals and objectives, determining compensation
for these executive officers based on these evaluations and overseeing the
administration of our incentive compensation plans.  The compensation
committee will also prepare the compensation committee report that may be
included in a subsequent annual report on Form 10-K. We will have at least
two directors on our compensation committee, each of whom will be independent
under the requirements of the NASDAQ Capital Market. We expect that the initial
members of our compensation committee will be H. Bradley Ress and Joseph
Pierre-Louis. We expect that Mr. Ress will be our compensation committee
chair.




Nominating and
corporate governance committee.  Our nominating and corporate
governance committee will (1) identify, review and recommend nominees for
election as directors, (2) advise our board of directors with respect to board
composition, procedures and committees, (3) recommend directors to serve on each
committee, (4) oversee the evaluation of our board of directors and our
management, and (5) develop, review and recommend corporate governance
guidelines and policies. We will have at least two directors on our nominating
and corporate governance committee, each of whom will be independent under the
requirements of the NASDAQ Capital Market.  We expect that the initial
members of our nominating and corporate governance committee will be Joseph
Pierre-Louis and Steve Kravitz.  We expect that Joseph Pierre-Louis
will be our nominating and corporate governance committee chair.


-37-




Compensation
Committee Interlocks and Insider Participation




Our board
of directors does not have a compensation committee. Since inception, all of our
executive compensation decisions have been made by Mr. Lemoine, the Chairman,
Chief Executive Officer, President and Treasurer of our company.




Code
of Ethics




Our board
of directors intends to adopt a code of ethics for our principal executive and
senior financial officers. This code of ethics will apply to our principal
executive officer, principal financial officer, principal accounting officer,
and persons performing similar functions. We intend to post the full text of
this code on our Internet website, which is www.sore-eez.com.  We
intend to disclose future amendments to provisions of our code of ethics, or
waivers of such provisions, applicable to any principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, as required by law or
regulation.




Family
Relationships




Michel
Lemoine is the husband of Yamit Lemoine, the licensor of the Sore-EezÔ Chinese herbal
liniment recipe.  As a result thereof, Michel Lemoine is deemed to
beneficially own the 975,000 shares of our common stock issued to Yamit
Lemoine.




Involvement
in Certain Legal Proceedings




None of
our directors, executive officers or control persons has been involved in any of
the events prescribed by Item 401(f) of Regulation S-K during the past
five years, including:




1.
            any
      bankruptcy petition filed by or against any business of which such person
      was a general partner or executive officer either at the time of the
      bankruptcy or within two years prior to that
  time;




2.
            any
      conviction in a criminal proceeding or being subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offenses);




3.
            being
      subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or




4.
            being
      found by a court of competent jurisdiction (in a civil action), the
      Securities and Exchange Commission or the Commodity Futures Trading
      Commission to have violated a federal or state securities or commodities
      law, and the judgment has not been reversed, suspended, or
      vacated.




-38-


Compliance
with Section 16(a) of the Act





Section
16(a) of the Exchange Act requires our officers and directors, and persons who
own more than ten percent (10%) of our shares of common stock, to file reports
of ownership and changes in ownership with the SEC.   Officers,
directors and greater than ten percent (10%) stockholders are required by
regulations promulgated by the SEC to furnish us with copies of all Section
16(a) forms that they file.  With reference to transactions during the
fiscal year ended December 31, 2008, to our knowledge, all Section 16(a) forms
required to be filed with the SEC were filed; however, the Form 3 Initial
Statement of Beneficial Ownership of Securities for each of Michel Lemoine,
Yamit Lemoine and Ellen Talles was filed on October 3, 2008, October 3, 2008 and
October 14, 2008, respectively.  The filing of the Form 3s were due on
October 2, 2008.  The Form 3s for Michel Lemoine and Yamit Lemoine
were filed late, because of difficulty with obtaining updated EDGAR filing codes
for such persons.  The Form 3 for Ellen Talles was inadvertently filed
late because of a clerical error.





Item
11.   Executive Compensation.





Compensation
Discussion and Analysis




Philosophy
and objectives




For the
period October 4, 2007 (inception) through December 31, 2008, all compensation
decisions being made by Michel Lemoine, our Chairman, Chief Executive Officer,
President and Treasurer.  The primary objective of our compensation
policies and programs with respect to executive compensation is to serve our
shareholders by attracting, retaining and motivating talented and qualified
individuals to manage and lead our business. We will focus on providing a
competitive compensation package that provides significant short and long-term
incentives for the achievement of measurable corporate and individual
performance objectives.  We intend to establish a compensation
committee and future decisions regarding executive compensation will be the
responsibility of that committee.




Elements
of executive compensation




Base salary.  We
will seek to provide our senior management with a level of base salary in the
form of cash compensation appropriate to their roles and responsibilities. Base
salaries for our executives will be established based on the executive’s
qualifications, experience, scope of responsibilities, future potential and past
performance and cash available to pay executive compensation. Base salaries will
be reviewed annually and adjusted from time to time to realign salaries with
market levels after taking into account individual responsibilities, performance
and experience. We will consider four factors in determining the base salaries
of our named executive officers. These four factors are, in order of
significance, (1) creating an incentive to achieve corporate goals, (2)
individual performance, (3) cash available to pay compensation and (4) the total
compensation each executive officer previously received while employed with us,
if any.


-39-




Incentive cash
bonuses.  Our practice will be to seek to award incentive cash
bonuses to our executive officers based upon their individual performance, as
well as our overall business and strategic objectives. In determining the amount
of cash bonuses paid to our named executive officers, we will consider the same
four factors as in determining their base salaries. We expect that our
compensation committee will adopt formal processes for incentive cash bonuses
beginning in 2008 and will utilize incentive cash bonuses to reward executives
for achieving corporate financial and operational goals and for achieving
individual performance objectives.  We have not paid any incentive
cash bonuses through March 15, 2009.




Long-term equity
compensation.  We believe that successful long-term performance
is achieved through an ownership culture that encourages long-term performance
by our executive officers through the use of stock and stock-based awards. We
intend to establish equity incentive plans to provide our employees, including
our named executive officers, with incentives to help align those employees’
interests with the interests of our shareholders. We expect that our incentive
plans will permit the grant of stock options, restricted shares and other stock
awards to our executive officers, employees, consultants and non-employee board
members. When we hire executive officers in the future, we expect to grant them
stock-based awards that will generally vest over a four or five-year period. We
believe that stock-based awards provide an incentive for these officers to
continue their employment with us, provide our executive officers with an
opportunity to obtain an ownership interest in our company and encourage them to
focus on our long-term profitable growth. We believe that the use of stock-based
awards will promote our overall executive compensation objectives and expect
that equity incentives will continue to be a significant source of compensation
for our executives. In determining amounts awarded to our named executive
officers under our incentive plans, we will consider the same four factors (and
use the same method of measurement) as in determining base salary. The third
factor (cash available) has an indirect effect when determining long-term equity
compensation. Specifically, to the extent that this factor causes us not to pay
base salary or cash bonuses, it points toward providing long-term equity
compensation.  We have not issued any long-term equity compensation
since our inception.




Other
compensation.  When we hire other executive officers, our
executive officers will be eligible to receive the same benefits, including
non-cash group life and health benefits, that are available to all employees. We
may offer a 401(k) plan to our employees, including our executive officers. This
plan will permit employees to make contributions up to a statutory maximum and
will permit us to make matching or profit-sharing contributions. To date, we
have not offered a 401(k) plan or made, or committed to make, any matching or
profit-sharing contributions under a 401(k) plan or offered any other benefits
to Michel Lemoine, our sole executive officer.




Policies
related to compensation




Guidelines for equity
awards.  We have not formalized a policy as to the amount or
timing of equity grants to Michel Lemoine, our sole executive officer. We
expect, however, that the compensation committee will approve and adopt
guidelines for equity awards.  Among other things, we expect that the
guidelines will specify procedures for equity awards to be made under various
circumstances, address the timing of equity awards in relation to the
availability of information about us and provide procedures for grant
information to be communicated to and tracked by our finance
department.  As of the date of this report, we have not established a
finance department.  We anticipate that the guidelines will require
that any stock options or stock appreciation rights have an exercise or strike
price not less than the fair market value of our common stock on the date of the
grant.


-40-




Stock ownership
guidelines.  As of the date of this report, we have not
established ownership guidelines for Michel Lemoine, our sole executive officer,
or the Board of Directors.




Compliance
with Sections 162(m) and 409A of the Internal Revenue Code




Section 162(m)
of the Internal Revenue Code limits the deductibility of compensation in excess
of $1 million paid to certain executive officers, unless such compensation
qualifies as performance-based compensation. Among other things, in order to be
deemed performance-based compensation for Section 162(m) purposes, the
compensation must be based on the achievement of pre-established, objective
performance criteria and must be pursuant to a plan that has been approved by
our shareholders. At least for the next several years, we expect the cash
compensation paid to our sole executive officer and other executive officers, if
any, to be below the threshold for non-deductibility provided in Section 162(m),
and our equity incentive plans will afford our compensation committee with the
flexibility to make a variety of types of equity awards to our executive
officers, the deductibility of which will not be limited under
Section 162(m).  However, our compensation committee, which we
expect to form, will fashion our future equity compensation
awards.  However, we do not now know whether any such awards will
satisfy the requirements for deductibility under Section 162(m).





We also
currently intend for our executive compensation program to satisfy the
requirements of Internal Revenue Code Section 409A, which addresses the tax
treatment of certain nonqualified deferred compensation benefits.




Summary
Compensation Table




Michel
Lemoine, our Chairman, Chief Executive Officer, President, Secretary and
Treasurer received 25,000 shares of Common Stock for serving as a director for
the period from October 4, 2007 (inception) through December 31,
2008.  There was no other compensation paid to Michel Lemoine, our
sole executive officer, during the period from October 4, 2007 (inception)
through December 31, 2008.




Potential
Employment Agreement and Benefits




We have
not entered into an employment agreement with Michel Lemoine, our sole executive
officer.  We intend to have our sole executive officer enter into an
employment agreement with us providing a compensation package which will fairly
compensate him for his services, including base salary and eligibility for
annual bonuses determined by the compensation committee.  The
employment agreement will also provide that our sole executive officer is
eligible to participate in our equity incentive plans and other employee benefit
programs, if any.  However, there can be no assurance that we will
enter into any such employment agreement, equity incentive plans or employee
benefit programs.




Our
decision to enter into an employment agreement, if any, will be made by our
compensation committee.  We believe that, following receipt of the net
proceeds of the offering, our substantially improved cash position may enable us
to compensate our sole executive officer and continue to expand and develop our
business.


-41-




Potential
Payments Upon Termination or Change in Control




As of
March 15, 2009, there were no potential payments or benefits payable to Michel
Lemoine upon his termination of employment or in connection with a change in
control.





Grants
of Plan-Based Awards in 2008





We have
not granted any plan-based awards to Michel Lemoine, since our
inception.





Outstanding
Equity Awards at Fiscal Year-End





We did
not have any outstanding equity awards to Michel Lemoine, as of
December 31, 2008, our fiscal year-end.





Option
Exercises and Stock Vested in 2008





Michel
Lemoine did not exercise any options, nor did any unvested shares of stock vest,
during fiscal year 2008.  Michel Lemoine did not have any stock
options or unvested shares of stock of the Company.





Equity
Incentive Plan





We expect
to adopt an equity incentive plan. The purposes of the plan are to attract and
retain qualified persons upon whom our sustained progress, growth and
profitability depend, to motivate these persons to achieve long-term company
goals and to more closely align these persons' interests with those of our other
shareholders by providing them with a proprietary interest in our growth and
performance. Our executive officers, employees, consultants and non-employee
directors will be eligible to participate in the plan.  We have not
determined the amount of shares of our common stock to be reserved for issuance
under the proposed equity incentive plan.





Compensation
of Directors





All of
our directors have been issued 25,000 shares of our common stock in
consideration of their serving as directors.  All directors are
reimbursed for out-of-pocket expenses for business related
purposes.  We do not have any other arrangements for compensating our
directors at this time.  Our director compensation program is
determined by our board of directors.


-42-





Item
12.   Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.





The
following table sets forth certain information regarding beneficial ownership of
our common stock as of March 15, 2009, for:




• each
person or group known to us to beneficially own 5% or more of our common
stock;





• each
of our directors and director nominees;





• each
of our named executive officers; and





• all of
our executive officers and directors as a group.





Unless
otherwise indicated below, to our knowledge, all persons listed below have sole
voting and investment power with respect to their shares of common stock, except
to the extent authority is shared by spouses under applicable law. Unless
otherwise indicated below, each entity or person listed below maintains an
address of 785 N.E. 83rd
Terrace, Miami, Florida  33138.





The
number of shares beneficially owned by each shareholder is determined under
rules promulgated by the SEC. The information is not necessarily indicative of
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting or investment power and any shares as to which the individual or
entity has the right to acquire beneficial ownership within 60 days after March
15, 2009, through the exercise of any stock option, warrant or other right. The
inclusion in the following table of those shares, however, does not constitute
an admission that the named shareholder is a direct or indirect beneficial
owner.


Beneficial
      owner
            
            Number of shares
      beneficially
              owned
            
            
            Percentage
      of shares outstandingMichel
      Lemoine and Yamit Lemoine
            
            
            1,063,278
            
            
            
            13.5
            %Steve
      Kravitz
            
            
            25,000
            
            
            
            *Joseph
      Pierre-Louis
            
            
            25,000
            
            
            
            *H.
      Bradley Ress
            
            
            25,000
            
            
            
            *Talles
      Investments, Inc.
            
            
            5,000,000
            
            
            
            63.3
            %All
      directors and executive officers as a group
            
            
            1,138,278
            
            
            
            14.4
            %


_______________





* Less
than 1 percent.





(1)
            Ellen
      J. Talles is the sole shareholder and maintains sole voting and investment
      control of the shares held by Talles Investments, Inc.  As a
      result, Ellen J. Talles is deemed to beneficially own all of the shares of
      common stock held by Talles Investments,
Inc.





-43-





Item
13.   Certain Relationships and Related Transactions, and
Director Independence.





Related
Party Transactions





On
November 4, 2007, we issued 5,000,000 shares of our restricted common stock
to Talles Investments, Inc., for a purchase price of $0.00222 per share,
pursuant to its investment of $11,100 in the Company.




On
December 31, 2007, we issued the Company issued 63,278 shares of restricted
common stock to our Michel Lemoine, our Chairman, Chief Executive Officer,
President, Secretary and Treasurer, for a purchase price of $0.01 per share, for
cash in the amount of $633.





On March
27, 2008, the Company issued 25,000 shares of restricted common stock to each of
our directors, Michel Lemoine, Steve Kravitz, H. Bradley Ress and Joseph
Pierre-Louis, or an aggregate of 100,000 shares of common stock, for a purchase
price of $0.04008 per share, for services rendered by each of our directors
valued at $1,002, or an aggregate of $4,008.




All
related party transactions involving provision of services or tangible assets
were recorded at the exchange amount, which is the value established and agreed
to by the related parties reflecting arms length consideration payable for
similar services or transfers.




License
Agreement





We have
entered into a license agreement with Yamit Lemoine, a significant shareholder
and the wife of our chief executive officer, which grants us a license for a
term of five (5) years until at least October 4, 2012 for the exclusive
worldwide use of the Sore-EezÔ Chinese herbal
liniment recipe and, perpetually, thereafter, if we have generated at least
$400,000 from the sale of products based on the Sore-EezÔ Chinese herbal
liniment recipe on or prior to such date.  Pursuant to this license
agreement, we are required to exercise our best efforts to undertake and
maintain the commercial scale production, marketing and distribution of products
embodying the subject matter of the Sore-EezÔ Chinese herbal
liniment recipe.  We may not sublicense or assign any of our rights
under the license agreement. On October 4, 2007, the date of our inception, we
issued 975,000 shares of our restricted common stock to Yamit Lemoine, for a
purchase price of $0.0012308 per share, for the license to the Sore-EezÔ Chinese herbal
liniment recipe.  We do not have any future payments obligations to
Yamit Lemoine under the license agreement.


-44-


.


Policies
and Procedures for Related Party Transactions




We intend
to adopt a written policy that requires any transaction, arrangement or
relationship in which we will be a participant and the amount involved exceeds
$120,000, and in which any of our directors, executive officers or shareholders
owning at least 5% of any class of our voting securities, or any of their
immediate family members or any entity in which any of the foregoing persons is
employed or is a general partner or principal had or will have a direct or
indirect material interest, to be submitted to our audit committee for review,
consideration and approval. In the event that a proposed transaction with a
related person involves an amount that is less than $120,000, the transaction
will be subject to the review and approval of our Chief Executive Officer (or
our Chief Financial Officer in the event our Chief Executive Officer, an
immediate family member of the Chief Executive Officer, or an entity in which
our Chief Executive Officer or a member of his immediate family is employed or
is a general partner or principal is a party to such transaction). If the
transaction is approved by our Chief Executive Officer or Chief Financial
Officer, such officer will report the material terms of the transaction to our
audit committee at its next meeting. The policy will provide for periodic
monitoring of pending and ongoing transactions. In approving or rejecting the
proposed transaction, our audit committee will consider the relevant facts and
circumstances available to it, including, (1) the impact on a director’s
independence if the related person is a director or his or her family member or
related entity, (2) the material terms of the proposed transaction, including
the proposed aggregate value of the transaction, (3) the benefits to us, (4) the
availability of other sources for comparable services or products (if
applicable), and (5) an assessment of whether the proposed transaction is on
terms that are comparable to the terms available to an unrelated third party or
to our employees generally. Our audit committee will approve only those
transactions that the committee determines to be, in light of known
circumstances, in, or not inconsistent with, our best interests and the best
interest of our shareholders.





Annual Report on
Form 10-K




Copies of
our Annual Report on Form 10-K, without exhibits, can be obtained without
charge from us at The Dragon’s Lair, 785 N.E 83rd
Terrace, Miami, Florida  33138, or telephone
(786) 554-2771.





Item
14.   Principal Accountant Fees and Services.





The
following table sets forth fees billed to us for principal accountant fees and
services during the period from October 4, 2007 (inception) through December 31,
2007 and the year ended December 31, 2008.


-45-


2008
            
            2007Audit
      Fees
            
            $
            5,500
            
            
            $
            —Audit-Related
      Fees (1)
            
            
            1,000
            
            
            
            —Tax
      Fees
            
            
            —
            
            
            
            —All
      Other Fees
            
            
            —
            
            
            
            —Total
      Audit and Audit-Related Fees
            
            $
            6,500
            
            
            $
            —


_________





(1)
            Audit-related
      fees incurred during 2008 include billings for services related to the
      report on Form 10-Q for the quarterly period ended September 30,
      2008.





Item
      15.   Exhibits.





(a)
            Exhibits




The
following exhibits are filed with this report on Form 10-K:


Exhibit
      No.
            Description3
            .1
            
            Articles
      of Incorporation, as currently in effect*3
            .2
            
            Bylaws,
      as currently in effect*4
            .1
            
            Specimen
      common stock certificate*10
            .1
            
            Exclusive
      License Agreement with Yamit Lemoine dated October 4,
  2007*21
            .1
            
            List
      of Subsidiaries*23
            .1
            
            Consent of Moore &
      Associates, Chartered (filed
herewith)


31.1        302
Certification – Michel Lemoine (filed herewith)


32.1        906
Certification – Michel Lemoine (filed herewith)


__________


*
            Previously
      filed with the SEC as an exhibit to our Registration Statement on Form S-1
      (No. 333-150751) on May 8, 2008.








-46-





SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 31st day of March, 2009.




DRAGON’S
      LAIR HOLDINGS, INC.By:
              /s/ Michel
      LemoineMichel
      LemoineCEO,
      President and Treasurer


-47-





Dragon’s
Lair Holdings, Inc.





Index to
Exhibits





Exhibits








Exhibit
      23.1
            Consent
      of Moore & Associates, CharteredExhibit
      31.1
            302
      Certification – Michel LemoineExhibit
      32.1
            906
      Certification – Michel Lemoine






-48-