UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

--------------------------------------------------------------------------------


(Mark one)
    XX          QUARTERLY  REPORT  UNDER  SECTION  13 OR 15(d) OF THE SECURITIES
----------      EXCHANGE ACT OF 1934

                      For the quarterly period ended September 30, 2001

                TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE  ACT
----------      OF 1934

                      For the transition period from ____________ to ___________

--------------------------------------------------------------------------------


                         Commission File Number: 0-27006
                                                 -------

                           Million Dollar Saloon, Inc.
        (Exact name of small business issuer as specified in its charter)

           Nevada                                             13-3428657
----------------------------                        ----------------------------
  (State of incorporation)                            (IRS Employer ID Number)

                    6848 Greenville Avenue, Dallas, TX 75231
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (214) 691-6757
                           (Issuer's telephone number)


--------------------------------------------------------------------------------


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.  YES X   NO
                                                              ---    ---

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
         October 30, 2001: 5,731,778

Transitional Small Business Disclosure Format (check one):  YES     NO X
                                                               ---    ---

<PAGE>

                           Million Dollar Saloon, Inc.

              Form 10-QSB for the Quarter ended September 30, 2001

                                Table of Contents


                                                                           Page
                                                                           ----
Part I - Financial Information

  Item 1   Financial Statements                                              3

  Item 2   Management's Discussion and Analysis or Plan of Operation        14


Part II - Other Information

  Item 1   Legal Proceedings                                                15

  Item 2   Changes in Securities                                            16

  Item 3   Defaults Upon Senior Securities                                  16

  Item 4   Submission of Matters to a Vote of Security Holders              16

  Item 5   Other Information                                                16

  Item 6   Exhibits and Reports on Form 8-K                                 16


Signatures                                                                  16






                                                                               2
<PAGE>

Item 1 - Part 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                           September 30, 2001 and 2000

                                   (Unaudited)

                                     Assets
                                     ------
                                              September 30,    September 30,
                                                   2001             2000
                                              -------------    -------------
Current Assets
   Cash on hand and in bank                    $   865,869      $   863,477
   Inventory                                        26,987           26,951
   Prepaid expenses                                  4,179           99,471
                                               -----------      -----------

      Total current assets                         897,035          989,899
                                               -----------      -----------


Property and Equipment - At Cost
   Buildings and related improvements            2,017,514        2,017,514
   Furniture and equipment                         867,453          856,566
                                               -----------      -----------
                                                 2,884,967        2,874,080
   Less accumulated depreciation                (1,786,795)      (1,690,424)
                                               -----------      -----------
                                                 1,098,172        1,183,656
   Land                                            741,487          741,487
                                               -----------      -----------

      Net property and equipment                 1,839,659        1,925,143
                                               -----------      -----------


Other Assets
   Other                                             5,475            6,225
                                               -----------      -----------

      Total other assets                             5,475            6,225
                                               -----------      -----------

Total Assets                                   $ 2,742,169      $ 2,921,267
                                               ===========      ===========



                                  - Continued -

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               3
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
                     Consolidated Balance Sheets - Continued
                           September 30, 2001 and 2000

                                   (Unaudited)

                      Liabilities and Shareholders' Equity
                      ------------------------------------

                                                                     September 30,    September 30,
                                                                          2001             2000
                                                                     -------------    -------------
<S>                                                                  <C>              <C>
Current Liabilities
   Accounts payable - trade                                            $   23,565       $   21,059
   Accrued liabilities                                                     63,209           80,629
   Federal income taxes payable                                            33,489           79,855
   Tenant deposits                                                          6,500            6,500
                                                                       ----------       ----------

      Total current liabilities                                           126,763          188,043
                                                                       ----------       ----------


Long-term Liabilities
   Deferred tax liability                                                 133,101          139,248
                                                                       ----------       ----------

      Total liabilities                                                   259,864          327,291
                                                                       ----------       ----------


Commitments and Contingencies


Shareholders' Equity
   Preferred stock - $0.001 par value.  5,000,000 shares
      authorized.  None issued and outstanding                               --               --
   Common stock - $0.001 par value.  50,000,000 shares
      authorized.  5,731,778 issued and outstanding, respectively           5,732            5,732
   Additional paid-in capital                                                --               --
   Retained earnings                                                    2,476,573        2,588,244
                                                                       ----------       ----------

      Total shareholders' equity                                        2,482,305        2,593,976
                                                                       ----------       ----------

Total Liabilities and Shareholders' Equity                             $2,742,169       $2,921,267
                                                                       ==========       ==========

</TABLE>


The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               4
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
            Nine and Three months ended September 30, 2001 and 2000

                                   (Unaudited)

                                       Nine months      Nine months     Three months     Three months
                                          ended            ended            ended            ended
                                      September 30,    September 30,    September 30,    September 30,
                                           2001             2000             2001             2000
                                      -------------    -------------    -------------    -------------
<S>                                   <C>              <C>              <C>              <C>
Revenues
   Bar and restaurant sales            $ 2,463,931      $ 2,991,784      $   762,654      $ 1,015,371
   Rental income                           387,446          515,075          125,775          174,525
                                       -----------      -----------      -----------      -----------
      Total revenues                     2,851,377        3,506,859          888,429        1,189,896
                                       -----------      -----------      -----------      -----------

Cost of Sales - Bar and
   Restaurant Operations                 1,647,296        1,811,941          460,399          619,500
                                       -----------      -----------      -----------      -----------

Gross Profit                             1,204,081        1,694,918          428,030          570,396
                                       -----------      -----------      -----------      -----------

Operating Expenses
   General and administrative              996,430        1,139,501          328,576          378,478
   Interest                                   --              2,129             --               --
   Depreciation and amortization            68,546           78,334           22,849           22,398
                                       -----------      -----------      -----------      -----------
      Total operating expenses           1,064,976        1,219,964          351,425          400,876
                                       -----------      -----------      -----------      -----------

Income from Operations                     139,105          474,954           76,605          169,520

Other Income (Expenses)
   Interest and other miscellaneous         21,242           26,811            5,552            8,721
                                       -----------      -----------      -----------      -----------

Income before Income Taxes                 160,347          501,765           82,157          178,241

Income tax (expense)
   Currently payable                       (66,630)        (155,750)         (44,511)         (55,750)
   Deferred                                   --               --               --               --
                                       -----------      -----------      -----------      -----------

Net Income                                  93,717          346,015           37,646          122,491

Other comprehensive income                    --               --               --               --
                                       -----------      -----------      -----------      -----------

Comprehensive Income                   $    93,717      $   346,015      $    37,646      $   122,491
                                       ===========      ===========      ===========      ===========

</TABLE>

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               5
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
            Nine and Three months ended September 30, 2001 and 2000

                                   (Unaudited)

                                 Nine months      Nine months     Three months     Three months
                                    ended            ended            ended            ended
                                September 30,    September 30,    September 30,    September 30,
                                     2001             2000             2001             2000
                                -------------    -------------    -------------    -------------
<S>                             <C>              <C>              <C>              <C>
Net Income                        $   93,717       $  346,015       $   37,646       $  122,491

Other comprehensive income              --               --               --               --
                                  ----------       ----------       ----------       ----------

Comprehensive Income              $   93,717       $  346,015       $   37,646       $  122,491
                                  ==========       ==========       ==========       ==========


Earnings per share of common
   stock outstanding computed
   on net income - basic and
   fully diluted                  $     0.02       $     0.06       $     0.01       $     0.02
                                  ==========       ==========       ==========       ==========

Weighted-average number
   of shares outstanding -
   basic and fully diluted         5,731,778        5,731,778        5,731,778        5,731,778
                                  ==========       ==========       ==========       ==========

</TABLE>

                (Remainder of this page left blank intentionally)










The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               6
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                  Nine months ended September 30, 2001 and 2000

                                   (Unaudited)

                                                               Nine months      Nine months
                                                                  ended            ended
                                                              September 30,    September 30,
                                                                  2001             2000
                                                              -------------    -------------
<S>                                                           <C>              <C>
Cash Flows from Operating Activities
   Net income                                                   $  93,717        $ 346,015
   Adjustments to reconcile net income to net cash
     provided by operating activities
       Depreciation and amortization                               68,546           78,334
       (Increase) decrease in
         Accounts receivable - trade and other                      8,737            8,848
         Federal income taxes receivable                           33,141           20,339
         Inventory                                                 (4,143)           4,711
         Prepaid expenses                                          (4,179)         (98,571)
       Increase (decrease) in
         Accounts payable and other accrued liabilities           (87,490)          23,912
         Income taxes payable                                      33,489           79,855
                                                                ---------        ---------
Net cash provided by operating activities                         141,818          463,443
                                                                ---------        ---------

Cash Flows from Investing Activities
   Principal collections on note receivable                          --             35,179
   Purchases of property and equipment                             (2,992)         (48,403)
                                                                ---------        ---------
Net cash provided by investing activities                          (2,992)         (13,224)
                                                                ---------        ---------

Cash Flows from Financing Activities
   Principal payments on long-term notes payable                     --           (139,657)
   Dividends paid                                                    --            (57,318)
                                                                ---------        ---------
Net cash used in financing activities                                --           (196,975)
                                                                ---------        ---------

Increase in Cash and Cash Equivalents                             138,826          253,244

Cash and cash equivalents at beginning of period                  727,043          610,233
                                                                ---------        ---------

Cash and cash equivalents at end of period                      $ 865,869        $ 863,477
                                                                =========        =========

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                            $    --          $   2,129
                                                                =========        =========
     Income taxes paid                                          $    --          $  55,556
                                                                =========        =========

</TABLE>


The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               7
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


Note A - Background and Organization

Million Dollar Saloon,  Inc. (MDS) was incorporated  under the laws of the State
of Nevada on September 28, 1987. MDS is a holding company  providing  management
support to its operating  subsidiaries:  Furrh,  Inc., Tempo Tamers,  Inc., Don,
Inc. and Corporation Lex.

Furrh,  Inc.  (Furrh) was  incorporated  under the laws of the State of Texas on
February 25, 1974. Furrh provides  management services to Tempo Tamers, Inc, its
wholly-owned subsidiary.  Tempo Tamers, Inc. (Tempo), was incorporated under the
laws  of  the  State  of  Texas  on  July  3,  1978.  Tempo  operates  an  adult
entertainment  lounge and restaurant facility,  located in Dallas,  Texas, under
the registered trademark and trade name "Million Dollar Saloon(R)".

Don,  Inc.  (Don)  was  incorporated  under  the  laws of the  State of Texas on
November 8, 1973. Don owns and manages  commercial  rental  property  located in
Tarrant County, Texas.

Corporation Lex (Lex) was  incorporated  under the laws of the State of Texas on
November 30, 1984. Lex owns and manages  commercial  rental property  located in
Dallas County, Texas.

These  financial  statements  reflect  the books and  records of Million  Dollar
Saloon, Inc., Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don, Inc. for
the nine months ended September 30, 2001 and 2000, respectively. All significant
intercompany transactions have been eliminated in combination.  The consolidated
entities are referred to as Company.

During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange  Commission.
The information  presented  herein may not include all  disclosures  required by
generally accepted accounting  principles and the users of financial information
provided for interim  periods should refer to the annual  financial  information
and footnotes  contained in its Annual Report Pursuant to Section 13 or 15(d) of
The  Securities  Exchange Act of 1934 on Form 10-KSB when  reviewing the interim
financial results presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in accordance with the instructions for Form 10-QSB,  are unaudited and
contain  all  material   adjustments,   consisting  only  of  normal   recurring
adjustments  necessary to present  fairly the  financial  condition,  results of
operations  and cash flows of the Company  for the  respective  interim  periods
presented.  The  current  period  results  of  operations  are  not  necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 2001.

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


                                                                               8
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


Note B - Summary of Significant Accounting Policies

1.   Cash and Cash Equivalents
     -------------------------

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  including  accounts  in  book  overdraft  positions,
     certificates of deposit and other highly-liquid investments with maturities
     of three months or less, when purchased, to be cash and cash equivalents.

     Cash  overdraft  positions may occur from time to time due to the timing of
     making bank deposits and releasing checks, in accordance with the Company's
     cash management policies.

2.   Accounts Receivable and Revenue Recognition
     -------------------------------------------

     In the normal course of business,  the Company extends  unsecured credit to
     virtually  all of its tenants  related to rental  property  operations  and
     accepts national  bankcards as payment for goods and services in its lounge
     and  entertainment  facility.  Bankcard  charges are  normally  paid by the
     clearing  institution  within  three  to  fourteen  days  from  the date of
     presentation  by the Company.  All lease rental  payments are either due on
     the first day of the month in advance  for the month or on the first day of
     the week in arrears  for the  previous  corresponding  period.  All revenue
     sources are located either in Dallas or Tarrant County,  Texas.  Because of
     the credit risk involved, management has provided an allowance for doubtful
     accounts which reflects its opinion of amounts which will eventually become
     uncollectible.  In the  event  of  complete  non-performance,  the  maximum
     exposure to the Company is the recorded amount of trade accounts receivable
     shown on the balance sheet at the date of non-performance.

3.   Inventory
     ---------

     Inventory  consists  of  food  and  liquor  consumables  necessary  in  the
     operation of Tempo's adult lounge and entertainment  facility.  These items
     are  valued at the lower of cost or market  using the  first-in,  first-out
     method of accounting.

4.   Property and Equipment
     ----------------------

     Property  and  equipment  is  recorded  at  cost  and is  depreciated  on a
     straight-line  basis,  over the estimated  useful lives  (generally 5 to 40
     years)  of the  respective  asset.  Major  additions  and  betterments  are
     capitalized and depreciated  over the estimated useful lives of the related
     assets. Maintenance, repairs, and minor improvements are charged to expense
     as incurred.

5.   Trademark rights
     ----------------

     Amounts  paid in  conjunction  with the  acquisition  and  retention of the
     trademark "Million Dollar Saloon(R)" have been capitalized. The life of the
     registration  is  twenty  years  from  its  affirmation  in 1988 and may be
     extended as allowed by applicable law at that point in time. This trademark
     has been  assigned  Registration  No.  1,509,636  by the U. S.  Patent  and
     Trademark Office.  The Company amortizes the trademark over a 10- year life
     using the straight-line method.


                                                                               9
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


Note B - Summary of Significant Accounting Policies - Continued

6.   Income Taxes
     ------------

     The Company files a consolidated Federal Income Tax return and utilizes the
     asset and liability method of accounting for income taxes. The deferred tax
     asset and deferred tax liability accounts, as recorded when material to the
     financial statements, are entirely the result of temporary differences.  No
     valuation  allowance was provided  against  deferred tax assets.  Temporary
     differences   represent  differences  in  the  recognition  of  assets  and
     liabilities for tax and financial reporting purposes, primarily accumulated
     depreciation and amortization.

7.   Earnings per share
     ------------------

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance,   whichever  is  later.  As  of  September  30,  2001  and  2000,
     respectively,  the Company has no outstanding  stock  warrants,  options or
     convertible  securities  which could be considered as dilutive for purposes
     of the loss per share calculation.

Note C - Fair Value of Financial Instruments

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Note D - Concentrations of Credit Risk

The Company  maintains its cash accounts in a financial  institution  subject to
insurance coverage issued by the Federal Deposit Insurance  Corporation  (FDIC).
Under FDIC rules,  the Company and its  subsidiaries  are  entitled to aggregate
coverage of $100,000 per account type per  separate  legal entity per  financial
institution. During the nine and three months ended September 30, 2001 and 2000,
respectively,  the  various  operating  companies  had  deposits  in a financial
institution with credit risk exposures in excess of statutory FDIC coverage. The
Company has  incurred no losses  during 2001 or 2000 as a result of any of these
unsecured situations.

Note E - Property and Equipment

Property and equipment consists of the following at September 30, 2001 and 2000:

                                                   2001          2000       Estimated life
                                                ----------    ----------    --------------
<S>                                             <C>           <C>           <C>
         Buildings and related improvements      2,017,514     2,017,514      15-40 years
         Furniture and equipment                   867,453       856,566       5-10 years
                                                ----------    ----------
                                                 2,884,967     2,874,080
         Less accumulated depreciation          (1,786,795)   (1,690,424)
                                                ----------    ----------
                                                 1,098,172     1,183,656
         Land                                      741,487       741,487
                                                ----------    ----------
         Net property and equipment             $1,839,659    $1,925,143
                                                ==========    ==========

</TABLE>




                                                                              10
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


Note E - Property and Equipment - Continued

Depreciation  expense for the nine months ended  September 30, 2001 and 2000 was
$68,546 and $72,518, respectively.

Note F - Income Taxes

The  deferred  current  tax asset and  non-current  deferred  tax  liability  on
September  30,  2001 and  2000,  respectively,  balance  sheet  consists  of the
following:
                                                                   September 30,    September 30,
                                                                       2001             2000
                                                                   -------------    -------------
<S>                                                                <C>              <C>
         Non-current deferred tax liability                          $(133,101)       $(139,248)
                                                                     =========        =========

The  non-current  deferred  tax  liability  results  from the usage of statutory
accelerated tax depreciation and amortization methods.

The  components  of income  tax  expense  (benefit)  for the nine  months  ended
September 30, 2001 and 2000, respectively, are as follows:
                                                                    Nine months      Nine months
                                                                       ended            ended
                                                                   September 30,    September 30,
                                                                       2001             2000
                                                                   -------------    -------------
         Federal:
           Current                                                   $  66,630        $ 155,750
           Deferred                                                          -                -
                                                                     ---------        ---------
                                                                        66,630          155,750
                                                                     ---------        ---------
         State:
           Current                                                           -                -
           Deferred                                                          -                -
                                                                     ---------        ---------
                                                                             -                -
                                                                     ---------        ---------
           Total                                                     $  66,630        $ 155,750
                                                                     =========        =========

The Company's income tax expense (benefit) for the nine months ended September
30, 2001 and 2000, respectively, differed from the statutory federal rate of 34
percent as follows:
                                                                    Nine months      Nine months
                                                                       ended            ended
                                                                   September 30,    September 30,
                                                                       2001             2000
                                                                   -------------    -------------

       Statutory rate applied to earnings before income taxes        $  54,517        $ 170,600
       Increase (decrease) in income taxes resulting from:
         State income taxes                                                  -                -
         Deferred income taxes                                               -                -
         Effect of incremental tax brackets and the
           application of business tax credits                          12,113          (14,850)
                                                                     ---------        ---------

       Income tax expense                                            $  66,630        $ 155,750
                                                                     =========        =========

</TABLE>



                                                                              11
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


Note G - Capital Stock Transactions

On  March  19,  1998,  the  Company  entered  into a  Stock  Purchase  Agreement
(Agreement)  with an unrelated  individual.  The  Agreement  contained a "second
closing"  clause,  as amended,  whereby the individual may acquire an additional
400,000 shares of restricted,  unregistered common stock at a price of $1.10 per
share on or before the close of business on October 18,  2004.  As of  September
30,  2001,  no shares of common  stock have been issued in  accordance  with the
"second closing" portion of the Agreement.

Note H - Commitments

The Company leases  commercial real estate on long-term  operating  leases.  The
leases require  minimum weekly lease  payments,  plus  reimbursement  for annual
property taxes.  The respective  tenants are responsible for normal  maintenance
and  repairs,  insurance  and other  direct  operating  expenses  related to the
property. As of December 31, 2000, future minimum non-cancellable lease revenues
are as follows:

                                                    Year ending
                                                    December 31,       Amount
                                                    ------------    -----------

                                                        2001        $   689,000
                                                        2002            546,500
                                                        2003            280,500
                                                                    -----------

                                                        Total       $ 1,516,000
                                                                    ===========

Note I - Segment Information

The  Company  operates  with a  centralized  management  structure  and  has two
identifiable  operating segments:  an adult entertainment  lounge and restaurant
located in Dallas, Texas and commercial rental real estate located in Dallas and
Tarrant  Counties,  Texas.  All  revenues  are  generated  operations  in  these
geographic  areas.  The Company has a relationship  whereby rental revenues from
various entities under the common control of a controlling  shareholder comprise
approximately  13.59% and 14.69% of total  revenues  for the nine  months  ended
September 30, 2001 and 2000, respectively.
                                             Restaurant       Rental        General and
                                              facility     real estate    administrative       Total
                                             ----------    -----------    --------------    ----------
<S>                                          <C>           <C>            <C>               <C>
Nine months ended September 30, 2001
------------------------------------
   Revenue from external customers           $2,463,931    $        -       $        -      $2,463,931
   Revenue from related parties                       -       387,446                -         387,446
   Revenue (expenses) from/to
     intercompany sources                      (180,000)     (213,100)         393,100               -
   Interest income                                    -         9,861           11,381          21,242
   Interest expense                                   -             -                -               -
   Depreciation and amortization                 52,118        16,428                -          68,546
   Income tax expense (benefit)                 (64,920)       41,069           90,481          66,630
   Segment assets                               339,782     2,512,543          110,156       2,742,169
   Fixed asset expenditures                       2,992             -                -           2,992



                                                                              12
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


Note I - Segment Information - Continued
                                             Restaurant       Rental        General and
                                              facility     real estate    administrative       Total
                                             ----------    -----------    --------------    ----------
Nine months ended September 30, 2000
   Revenue from external customers           $2,991,784    $        -       $        -      $2,991,784
   Revenue from related parties                       -       515,075                -         515,075
   Revenue (expenses) from/to
     intercompany sources                      (180,000)      180,000                -               -
   Interest income                                    -           440           26,371          26,811
   Interest expense                                   -             -            2,129           2,129
   Depreciation and amortization                 19,404        51,398            7,532          78,334
   Income tax expense (benefit)                 (10,558)      163,345            2,963         155,750
   Segment assets                               260,504     2,310,434          350,329       2,921,267
   Fixed asset expenditures                      48,403             -                -          48,403

</TABLE>




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                                                                              13
<PAGE>

Part I - Item 2

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

(1)  Results of Operations

Bar and restaurant  operations  decreased by approximately  $528,000 between the
first nine months of 2001 as  compared  to the first nine months of 2000.  Total
bar and  restaurant  sales for the nine  months  ended  September  30, 2001 were
approximately  $2,464,000 as compared to  approximately  $2,992,000 for the nine
months ended September 30, 2000.

As discussed in Part II - Legal  Proceedings,  the Company is a  participant  in
litigation  against  the City of  Dallas,  Texas  where  the  Company  and other
operators  of adult  cabarets  within  the City of  Dallas  are  contesting  the
constitutionality of certain provisions of the Dallas Sexually Oriented Business
Ordinance  (the  "Ordinance")  which impacts the Company's and other  operators'
license to do business as an adult cabaret in Dallas. The Company remains of the
opinion that it will prevail on its constitutional claims.

However, as an interim measure, the City of Dallas initiated various enforcement
actions and  on-premises  monitoring  of conduct  within the Company's and other
facilities  which has  negatively  impacted  both  patronage and revenues in all
adult entertainment  facilities within the City of Dallas during 2001. As of the
date of this filing and pending the ultimate outcome of the pending  litigation,
management is unable to assess the long-term impact of these regulatory actions.

Management's  continues  to direct it's  efforts  towards  customer  service and
increasing sales through effective marketing and advertising methods to maintain
and increase its bar and restaurant patronage and comply with current regulatory
conditions and environment.

The Company's  rental income declined due to a renegotiated  lease with entities
controlled by the Company's controlling shareholder during the first quarter. On
January 30, 2001, the Company's Board of Directors  approved an amendment to the
lease  agreement  covering the property owned by Corporation  Lex. The amendment
provides that  effective  January 1, 2001,  the base rental will be reduced from
$4,750 per week to $1,000 per week. Additionally, the amended lease will provide
that the Company, as Landlord, shall receive 10% of the gross revenues generated
from the business located at the property,  payable quarterly, until termination
of the lease in May 2002. The modification of the lease agreement was the result
of negotiations  between the Company and  representatives  of the tenant, who is
affiliated with the Company's controlling  shareholder.  Such modifications were
requested by the tenant as a result of decreasing revenues of the tenant's adult
cabaret  operation  located on the property.  The tenant had advised the Company
that if the lease was not  modified,  it may be  compelled to close its business
operations.  The tenant is owned by an affiliated  corporation  of Duncan Burch,
who is also an officer and director of the Company.

Cost of sales were relatively constant at approximately $1,647,000 for the first
nine month of 2001 as compared to  approximately  $1,812,000  for the first nine
months of 2000. Key areas of management focus are entertainer compensation, food
and beverage costs in the Company's Dallas Texas entertainment  facility.  Gross
profit percentages decreased to 42.53% ($1,204,000) for the first nine months of
2001 versus  48.33%  ($1,695,000)  for the first nine months of 2000.  Increased
cost  controls  over  purchasing,   inventory  management  protocols  and  labor
management are continuously monitored to improve gross profit percentages.

General and  administrative  expenses declined by approximately  $143,000 in the
first nine  months of 2001  versus the first nine  months of 2000.  The  Company
continues  to  experience  relatively  constant  expenditure  levels for general
operating  expenses.  Management  continues to monitor its expenditure levels to
achieve optimum financial results.



                                                                              14
<PAGE>

Net income  before  income taxes was  approximately  $160,000 for the first nine
months of 2001 versus approximately  $502,000 for the first nine months of 2000.
After-tax net income  decreased by  approximately  $252,000  from  approximately
$346,000  for the first nine  months of 2000 to  approximately  $94,000  for the
first  nine  months  of 2001.  The  Company  experienced  earnings  per share of
approximately  $0.02 and $0.06 per share for the first  nine  months of 2001 and
2000, respectively.

(2)  Liquidity and Capital Resources

As of  September  30,  2001,  the Company has working  capital of  approximately
$770,272  as  compared  to  approximately  $611,001  at  December  31,  2000 and
approximately $801,856 at September 30, 2000. The Company achieved positive cash
flows from  operations  of  approximately  $141,818 for the first nine months of
2001  versus  approximately  $463,443  for the first  nine  months of 2000.  The
Company's  first  quarter  2000  working  capital  position  was impacted by the
payment in full of all  outstanding  long-term  debt during the first quarter of
2000. The Company's  year-to-date  working  capital  position and cash flow from
operations  has been  impacted by the decreased  revenues from the  restructured
lease with an entity controlled by the Company's controlling shareholder.

The Company has identified no significant  capital  requirements for the current
annual period.  Liquidity requirements mandated by future business expansions or
acquisitions,  if any are specifically identified or undertaken, are not readily
determinable  at this  time as no  substantive  plans  have been  formulated  by
management.

The Company  announced  the  discontinuance  of the payment of  dividends  after
December  31,  1999.  The Company  paid  declared  fourth  quarter  dividends of
approximately  $57,000  during  the  first  quarter  of 2000.  Future  operating
liquidity  is expected to be provided by  continuing  operations.  Additionally,
management  is of the opinion that there is potential  availability  of mortgage
debt and the opportunity for the sale of additional  common stock through either
private placements or secondary offerings.


Part II - Other Information

Item 1 - Legal Proceedings

Case No.  3-00-CV-2500-H;  Adventure Plus, Inc.,  Millennium  Restaurant  Group,
Inc.,  D/B/A  Cabaret  Royale,  et al. v. City of Dallas,  Inc.;  United  States
District Court, Northern District of Texas, Dallas Division

     This is an action where the Company and other  operators of adult  cabarets
     within the City of Dallas are contesting the  constitutionality  of certain
     provisions  of  the  Dallas  Sexually  Oriented  Business   Ordinance  (the
     "Ordinance") which impacts the Company's and other operators' license to do
     business as an adult cabaret in Dallas.  The Company is of the opinion that
     it will prevail on its constitutional claims.

     In January  2001,  as a result of a trial  setting,  the City of Dallas has
     agreed to  re-write  the  contested  provisions  of the  Ordinance,  so any
     impact, if any, on the operations of the Company, if any, will not be known
     such actions are taken by the City of Dallas.

     Management  anticipates that any actions,  if any, are anticipated to occur
     in  Calendar  2002.  However,  the  Company  reasonably  believes  that the
     Ordinance  will be amended so as to have no material  adverse impact on the
     Company's  future  operations.  There can be no assurance  that the City of
     Dallas will in fact amend the  Ordinance  to an extent  that the  Ordinance
     will  not  have any  material  adverse  effect  on the  Company's  business
     operations  or that in the  future  the  City of  Dallas  will  modify  the
     Ordinance to such an extent that it will materially  effect the business of
     the Company.

The  Company  may from time to time be a party to various  other  legal  actions
arising in the ordinary  course of its  business.  The Company is not  currently
involved  in any such  actions  that it  believes  will have a material  adverse
effect on its results of operations or financial condition.



                                                                              15
<PAGE>

Item 2 - Changes in Securities

   None

Item 3 - Defaults on Senior Securities

   None

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

   The  Company  has  held no regularly scheduled, called or special meetings of
   shareholders during the reporting period.

Item 5 - Other Information

   None

Item 6 - Exhibits and Reports on Form 8-K

   Exhibits - None
   Reports on Form 8-K - None

--------------------------------------------------------------------------------

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                                     MILLION DOLLAR SALOON, INC.


October    30   , 2001                                 /s/ Dewanna Ross
        --------                                     ---------------------------
                                                                    Dewanna Ross
                                                         Chief Operating Officer
                                                                    and Director







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