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 March 31, 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:  May 8, 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 March 31, 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                                            15

  Item 3   Defaults Upon Senior Securities                                  15

  Item 4   Submission of Matters to a Vote of Security Holders              15

  Item 5   Other Information                                                16

  Item 6   Exhibits and Reports on Form 8-K                                 16


Signatures                                                                  16




                                        2

<PAGE>

S. W. HATFIELD, CPA
certified public accountants

Member:    American Institute of Certified Public Accountants
               SEC Practice Section
               Information Technology Section
           Texas Society of Certified Public Accountants

Item 1 - Part 1 - Financial Statements


                           Accountant's Review Report
                           --------------------------


Board of Directors and Shareholder
Million Dollar Saloon, Inc.

We have reviewed the accompanying  consolidated balance sheets of Million Dollar
Saloon,  Inc. (a Nevada  corporation)  and Subsidiaries as of March 31, 2001 and
2000  and  the   accompanying   consolidated   statements  of   operations   and
comprehensive  income and  consolidated  statements  of cash flows for the three
months ended March 31, 2001 and 2000. These  consolidated  financial  statements
are prepared in accordance with the instructions  for Form 10-QSB,  as issued by
the U. S. Securities and Exchange Commission, and are the sole responsibility of
the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression on an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying  consolidated financial statements for them to be in
conformity with generally accepted accounting principles.




                                                            S. W. HATFIELD, CPA
Dallas, Texas
May 8, 2001




                      Use our past to assist your future sm

P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                                                      SWHCPA@aol.com

                                        3

<PAGE>
<TABLE>
<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                             March 31, 2001 and 2000

                                   (Unaudited)

                                                           March 31,      March 31,
                                                             2001           2000
                                                           ---------      ---------
<S>                                                        <C>            <C>

                                     ASSETS
                                     ------
Current Assets
   Cash on hand and in bank                              $   739,663    $   579,735
   Note receivable - current portion                            --           28,354
   Accounts receivable - other                                  --              900
   Prepaid Federal income taxes                               12,603           --
   Inventory                                                  22,566         22,436
   Prepaid expenses                                            3,675         53,988
                                                           ---------      ---------
     Total current assets                                    778,507        685,412
                                                           ---------      ---------

Property and Equipment - At Cost
   Buildings and related improvements                      2,017,514      1,987,514
   Furniture and equipment                                   865,596        856,566
                                                           ---------      ---------
                                                           2,883,110      2,844,080
   Less accumulated depreciation                          (1,741,098)    (1,648,981)
                                                           ---------      ---------
                                                           1,142,012      1,195,099
   Land                                                      741,488        741,488
                                                           ---------      ---------
     Net property and equipment                            1,883,500      1,936,587
                                                           ---------      ---------

Other Assets
   Organization costs, net of accumulated amortization
     of $74,928 and $68,377, respectively                       --            6,551
   Loan costs, net of accumulated amortization of
      $31,607 and $28,446 respectively                          --            3,161
   Other                                                       5,475          6,225

     Total other assets                                        5,475         15,937

Total Assets                                             $ 2,667,482    $ 2,637,936
                                                         ===========    ===========
</TABLE>


                                  - Continued -

The  consolidated  financial  information  presented herein has been prepared by
management  without  audit by  independent  certified  public  accountants.  See
Accountant's Review Report. The accompanying notes are an integral part of these
consolidated financial statements.

                                       4

<PAGE>
<TABLE>
<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
                     Consolidated Balance Sheets - Continued
                             March 31, 2001 and 2000

                                   (Unaudited)

                                                            March 31,    March 31,
                                                              2001         2000
                                                            ---------    ---------
<S>                                                         <C>          <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Current Liabilities
   Accounts payable - trade                                $   29,190       25,871
   Accrued liabilities                                         67,242       75,389
   Federal income taxes payable                                  --         30,236
   Tenant deposits                                              6,500        6,500
                                                            ---------    ---------
     Total current liabilities                                102,932      137,996
                                                            ---------    ---------

Long-Term Liabilities
   Deferred tax liability                                     133,101      139,248
                                                            ---------    ---------
     Total liabilities                                        236,033      277,244
                                                            ---------    ---------

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 shares issued and outstanding                    5,732        5,732
   Retained earnings                                        2,425,717    2,354,960
                                                            ---------    ---------
     Total shareholders' equity                             2,431,449    2,360,692
                                                            ---------    ---------
Total Liabilities and Shareholders' Equity                 $2,667,482   $2,637,936
                                                            =========    =========
</TABLE>



The  consolidated  financial  information  presented herein has been prepared by
management  without  audit by  independent  certified  public  accountants.  See
Accountant's Review Report. The accompanying notes are an integral part of these
consolidated financial statements.

                                       5

<PAGE>
<TABLE>
<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
                        Consolidated Statements of Income
                   Three months ended March 31, 2001 and 2000

                                   (Unaudited)

                                                       Three months  Three months
                                                          ended         ended
                                                         March 31,     March 31,
                                                          2001           2000
                                                        ---------      ---------
<S>                                                   <C>             <C>

Revenues
   Bar and restaurant sales                           $   874,569    $ 1,000,831
   Rental income                                          135,896        166,025
                                                        ---------      ---------
     Total revenues                                     1,010,465      1,166,856
                                                        ---------      ---------
Cost of Sales - Bar and Restaurant Operations             604,698        617,426
                                                        ---------      ---------
Gross Profit                                              405,767        549,430
                                                        ---------      ---------
Operating Expenses
   General and administrative expenses                    328,006        368,066
   Interest expense                                          --            2,129
   Depreciation and amortization                           22,848         27,177
                                                        ---------      ---------
     Total operating expenses                             350,854        297,372
                                                        ---------      ---------
Income from Operations                                     54,913        152,058

Other Income (Expenses)
   Interest and other miscellaneous                         8,486         11,248
                                                        ---------      ---------
Income before Income Taxes                                 63,399        163,306

Income Tax (Expense) Benefit
   Currently payable                                      (20,538)       (50,575)
   Deferred                                                  --             --
                                                        ---------      ---------
Net Income                                                 42,861        112,731

Other Comprehensive Income                                   --             --
                                                        ---------      ---------
Comprehensive Income                                  $    42,861    $   112,731
                                                        =========      =========
Earnings per share of common stock outstanding,
   computed on net income - basic and fully diluted   $      0.01    $      0.02
                                                        =========      =========
Weighted-average number of shares outstanding           5,731,778      5,731,778
                                                        =========      =========
</TABLE>


The  consolidated  financial  information  presented herein has been prepared by
management  without  audit by  independent  certified  public  accountants.  See
Accountant's Review Report. The accompanying notes are an integral part of these
consolidated financial statements.

                                        6

<PAGE>
<TABLE>
<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                   Three months ended March 31, 2001 and 2000

                                   (Unaudited)

                                                            Three months  Three months
                                                               ended        ended
                                                              March 31,    March 31,
                                                               2001         2000
                                                             ---------    ---------
<S>                                                          <C>          <C>

Cash Flows from Operating Activities
   Net income                                                $  42,861    $ 112,731
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                            22,848       27,177
       (Increase) decrease in
         Accounts receivable - trade and other                   8,737        8,848
         Federal income taxes receivable                        20,538       50,575
         Inventory                                                 278        9,226
         Prepaid expenses                                       (3,675)     (53,998)
       Increase (decrease) in
         Accounts payable and other accrued liabilities        (77,832)      23,484
                                                             ---------    ---------
     Net cash provided by operating activities                  13,755      178,053
                                                             ---------    ---------
Cash Flows from Investing Activities
   Principal collections on note receivable                       --          6,825
   Purchases of property and equipment                          (1,135)     (18,402)
                                                             ---------    ---------
     Net cash used in investing activities                      (1,135)     (11,577)
                                                             ---------    ---------
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                           12,620      (30,499)

Cash at beginning of period                                    727,043      610,233
                                                             ---------    ---------
Cash at end of period                                        $ 739,663    $ 579,734
                                                             =========    =========
Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                         $    --      $   2,129
                                                             =========    =========
     Income taxes paid (refunded)                            $    --      $    --
                                                             =========    =========
</TABLE>


The  consolidated  financial  information  presented herein has been prepared by
management  without  audit by  independent  certified  public  accountants.  See
Accountant's Review Report. The accompanying notes are an integral part of these
consolidated financial statements.

                                       7

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             March 31, 2001 and 2000


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 three months ended March 31, 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
                             March 31, 2001 and 2000


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>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2001 and 2000


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 March 31, 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 - 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  three   months   ended  March  31,  2001  and  2000,
respectively,  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 D - Note Receivable

Note receivable as of March 31, 2001 and 2000, respectively, is as follows:
                                                              2001      2000
                                                            --------  --------
$35,179 note receivable from an unrelated
   individual for the sale of real estate.  Interest
   at 9.50%.  Payable in monthly installments
   of approximately $2,665, including interest
   Final payment due in February 2001.  Collateral-
   ized by real estate and improvements located in
   Dallas County, Texas.  Paid in full in May 2000         $   --     $ 28,354
                                                            --------  --------
   Total notes receivable                                      --       28,354
     Less current portion                                      --      (28,354)
                                                            --------  --------
     Noncurrent portion                                    $   --     $   --
                                                            ========  ========

                                       10


<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2001 and 2000


Note E - Property and Equipment

Property and equipment consists of the following at March 31, 2001 and 2000:

                                         2001           2000      Estimated life
                                     -----------    -----------   --------------

Buildings and related improvements   $ 2,017,514    $ 1,987,514    15-40 years
Furniture and equipment                  865,596        856,566     5-10 years
                                     -----------    -----------
                                       2,883,110      2,844,080
Less accumulated depreciation         (1,741,098)    (1,648,981)
                                     -----------    -----------
                                       1,142,012      1,195,099
Land                                     741,488        741,488
                                     -----------    -----------
Net property and equipment           $ 1,883,500    $ 1,936,587
                                     ===========    ===========

Depreciation  expense  for the three  months  ended  March 31, 2001 and 2000 was
$22,848 and $21,851, respectively.


Note F - Income Taxes

The deferred current tax asset and non-current deferred tax liability on March
31, 2001 and 2000, respectively, balance sheet consists of the following:

                                                          March 31,    March 31,
                                                           2001         2000
                                                         ----------   ----------

                  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 three months ended March
31, 2001 and 2000, respectively, are as follows:

                                                     2001                2000
                                                     -------             -------
                  Federal:
                    Current                          $20,538             $50,575
                    Deferred                            --                  --
                                                      20,538              50,575
                  State:
                    Current                             --                  --
                    Deferred                            --                  --
                                                     -------             -------
                  Total                              $20,538             $50,575
                                                     =======             =======

                                       11

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2001 and 2000


Note F - Income Taxes - Continued

The  Company's  income tax expense  (benefit) for the years ended March 31, 2001
and 2000,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

                                                            2001        2000
                                                           --------    --------
Statutory rate applied to earnings before income taxes     $ 21,556    $ 55,524
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                 (1,018)     (4,949)
                                                           --------    --------

Income tax expense                                         $ 20,538    $ 50,575
                                                           ========    ========

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 March 31,
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
                                                                   ==========

                                       12


<PAGE>
<TABLE>
<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2001 and 2000


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  % and % of total  revenues  for the three  months ended March 31,
2001 and 2000, respectively.

                                         Restaurant          Rental         General and
                                          facility         real estate     administrative        Total
                                        ------------      -------------    --------------     -----------
<S>                                     <C>               <C>              <C>                <C>

Three months ended March 31, 2001
   Revenue from external customers      $   874,569       $      --         $      --         $   874,569
   Revenue from related parties                --             135,896              --             135,896
   Revenue (expenses) from/to
     intercompany sources                   (60,000)          (70,000)          130,000              --
   Interest income                             --               4,227             4,259             8,486
   Interest expense                            --                --                --                --
   Depreciation and amortization              8,096            14,752              --              22,848
   Income tax expense (benefit)             (18,963)           38,121             1,380            20,538
   Segment assets                           207,417         2,087,845           359,617         2,654,879
   Fixed asset expenditures                   1,135              --                --               1,135



Three months ended March 31, 2000
   Revenue from external customers      $ 1,000,831       $      --         $      --         $ 1,000,831
   Revenue from related parties                --             166,025              --             166,025
   Revenue (expenses) from/to
     intercompany sources                   (60,000)          220,000          (160,000)             --
   Interest income                             --              10,110             1,139            11,248
   Interest expense                            --                --               2,129             2,129
   Depreciation and amortization              7,098             5,476            14,543            27,117
   Income tax expense (benefit)               9,156            46,945            (5,526)           50,575
   Segment assets                           331,334         1,961,834           344,768         2,637,936
   Fixed asset expenditures                  18,402              --                --              18,402

</TABLE>





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<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  $126,000 between the
first  quarter of 2001 as compared to the first  quarter of 2000.  Total bar and
restaurant  sales for the three months  ended March 31, 2001 were  approximately
$875,000 as compared to  approximately  $1,001,000  for the three  months  ended
March 31, 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  the first
quarter of 2001 and periods  subsequent  thereto.  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  $605,000 for the first
three months of 2001 as compared to  approximately  $617,000 for the first three
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 40,16% ($406,000) for the first three months of
2001 versus 47.09% ($549,000) for the first three 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  $40,000 in the
first three  months of 2001 versus the first three  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.

Net income  before  income taxes was  approximately  $63,000 for the first three
months of 2001 versus approximately $163,000 for the first three months of 2000.
After-tax  net income  decreased by  approximately  $70,000  from  approximately
$43,000 for the first three  months of 2001 to  approximately  $113,000  for the
first  three  months of 2000.  The  Company  experienced  earnings  per share of
approximately  $0.01 and $0.02 per share for the first three  months of 2001 and
2000, respectively.

                                       14

<PAGE>

(2)  Liquidity

As of March 31, 2001, the Company has working capital of approximately  $675,575
as compared to  approximately  $611,001 at December  31, 2000 and  approximately
$547,416  at March 31,  2000.  The  Company  achieved  positive  cash flows from
operations  of  approximately  $13,755 for the first three months of 2001 versus
approximately  $178,000 for the first three 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 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,  will not be known until  June,  2001.  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.

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

                                       15

<PAGE>

                                   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.


May 9 , 2001                                         /s/ Dewanna Ross
                                                     ---------------------------
                                                                    Dewanna Ross
                                                         Chief Operating Officer
                                                                    and Director











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