UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

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

(Mark one)
   X     Quarterly  Report Under Section 13 or 15(d) of The Securities  Exchange
-------  Act of 1934


                  For the quarterly period ended March 31, 2004

         Transition  Report Under Section 13 or 15(d of The Securities  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, 2004: 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, 2004

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1 Financial Statements                                                 3

  Item 2 Management's Discussion and Analysis or Plan of Operation           15

  Item 3 Controls and Procedures                                             18

Part II - Other Information

  Item 1 Legal Proceedings                                                   18

  Item 2 Changes in Securities                                               18

  Item 3 Defaults Upon Senior Securities                                     19

  Item 4 Submission of Matters to a Vote of Security Holders                 19

  Item 5 Other Information                                                   19

  Item 6 Exhibits and Reports on Form 8-K                                    19


Signatures                                                                  19

























                                                                               2
<PAGE>

Part I
Item 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                             March 31, 2004 and 2003

                                   (Unaudited)
                                                     March 31,       March 31,
                                                        2004            2003
                                                    -----------     -----------
                                     ASSETS
                                     ------
Current Assets
   Cash on hand and in bank                         $   326,840     $   323,187
   Marketable securities                                 42,514         372,231
   Accounts receivable - trade and other                  8,500         103,770
   Federal income tax refund receivable                 145,000            --
   Inventory                                             34,377          48,086
   Prepaid expenses                                      45,056          71,872
                                                    -----------     -----------

     Total current assets                               602,287         919,146
                                                    -----------     -----------


Property and Equipment - At Cost
   Buildings and related improvements                 2,095,914       2,095,914
   Furniture and equipment                              891,150         881,710
                                                    -----------     -----------
                                                      2,987,064       2,977,624
   Less accumulated depreciation                     (2,026,483)     (1,930,924)
                                                    -----------     -----------
                                                        960,581       1,046,700
   Land                                                 741,488         741,488
                                                    -----------     -----------

     Net property and equipment                       1,702,069       1,788,188
                                                    -----------     -----------


Other Assets
   Land held for future development                   2,649,786       2,649,786
   Deposits and other                                     1,725           1,725
                                                    -----------     -----------

     Total other assets                               2,651,511       2,651,511
                                                    -----------     -----------

Total Assets                                        $ 4,955,867     $ 5,358,845
                                                    ===========     ===========



                                  - Continued -










  The consolidated 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
                       consolidated financial statements.
                                                                               3
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                     Consolidated Balance Sheets - Continued
                             March 31, 2004 and 2003

                                   (Unaudited)
                                                         March 31,    March 31,
                                                           2004         2003
                                                        ----------   ----------

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Current Liabilities
   Note payable                                         $     --     $2,156,714
   Current maturities of long-term debt                     82,356
   Loan from officer                                          --        140,000
   Accounts payable - trade                                 21,089       38,894
   Accrued liabilities                                      79,265       62,159
   Federal income taxes payable                            114,354       53,500
   Tenant deposits                                           6,500        6,500
                                                        ----------   ----------

     Total current liabilities                             303,564    2,457,767
                                                        ----------   ----------


Long-Term Liabilities
   Mortgage note payable - long-term portion             1,834,783         --
   Deferred tax liability                                  281,062      288,916
                                                        ----------   ----------

     Total liabilities                                   2,419,409    2,746,683
                                                        ----------   ----------
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                                     2,530,726    2,606,430
                                                        ----------   ----------

     Total shareholders' equity                          2,536,458    2,612,162
                                                        ----------   ----------

Total Liabilities and Shareholders' Equity              $4,955,867   $5,358,845
                                                        ==========   ==========








  The consolidated 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
                       consolidated financial statements.
                                                                               4

<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
                        Consolidated Statements of Income
                   Three months ended March 31, 2004 and 2003

                                   (Unaudited)

                                                      Three months    Three months
                                                         ended           ended
                                                       March 31,        March 31,
                                                          2004            2003
                                                      ------------    ------------
<S>                                                   <C>             <C>
Revenues
   Bar and restaurant sales                           $  1,046,488    $    867,732
   Rental income                                           126,613         161,134
                                                      ------------    ------------
     Total revenues                                      1,173,101       1,028,866
                                                      ------------    ------------

Cost of Sales - Bar and Restaurant Operations              546,655         476,864
                                                      ------------    ------------

Gross Profit                                               626,446         552,002
                                                      ------------    ------------

Operating Expenses
   General and administrative expenses                     240,865         372,795
   Depreciation and amortization                            21,840          22,680
                                                      ------------    ------------
     Total operating expenses                              262,705         395,475
                                                      ------------    ------------

Income from Operations                                     363,741         156,527

Other Income (Expenses)
   Interest and other miscellaneous                          2,593           4,431
   Unrealized gain on marketable securities                   --             1,059
                                                      ------------    ------------

Income before Income Taxes                                 366,334         162,467

Income Tax (Expense) Benefit
   Currently payable                                      (114,354)        (55,000)
   Deferred                                                   --              --
                                                      ------------    ------------

Net Income                                                 251,980         107,467

Other Comprehensive Income                                    --              --
                                                      ------------    ------------

Comprehensive Income                                  $    251,980    $    107,467
                                                      ============    ============

Earnings per share of common stock outstanding,
   computed on net income - basic and fully diluted   $       0.04    $       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.
              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 Cash Flows
                   Three months ended March 31, 2004 and 2003

                                   (Unaudited)

                                                             Three months    Three months
                                                                ended           ended
                                                               March 31,       March 31,
                                                                 2004            2003
                                                             ------------    ------------
<S>                                                          <C>             <C>
Cash Flows from Operating Activities
   Net income                                                $    251,980    $    107,467
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                               21,840          22,680
       Unrealized loss on marketable securities                      --            (1,509)
       (Increase) decrease in
         Accounts receivable - trade and other                       --           (35,242)
         Inventory                                                 (9,025)           --
         Prepaid expenses                                         (41,516)        (28,129)
       Increase (decrease) in
         Accounts payable and other liabilities                  (111,454)       (214,037)
         Federal income taxes payable                             114,354          55,000
         Unearned revenues                                           --            (9,500)
                                                             ------------    ------------

     Net cash provided by operating activities                    226,179        (103,270)
                                                             ------------    ------------

Cash Flows from Investing Activities
   Purchases of property and equipment                               --              --
   Cash received from sale of marketable securities               347,405            --
   Cash paid for marketable securities                               --            (3,629)
   Cash paid for land held for future development                    --          (493,072)
                                                             ------------    ------------

     Net cash used in investing activities                        347,405        (496,701)
                                                             ------------    ------------


Cash Flows from Financing Activities
   Principal paid on long-term mortgage note payable             (239,575)           --
   Cash received (paid) on note payable to officer               (140,000)        140,000
                                                             ------------    ------------

     Net cash provided by financing activities                   (379,575)        140,000
                                                             ------------    ------------

Increase in Cash and Cash Equivalents                             194,009        (459,971)

Cash at beginning of period                                       132,831         783,157
                                                             ------------    ------------

Cash at end of period                                        $    326,840    $    323,186
                                                             ============    ============

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                         $     20,473    $     22,034
                                                             ============    ============
     Income taxes paid (refunded)                            $       --      $       --
                                                             ============    ============
</TABLE>






  The consolidated 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
                       consolidated financial statements.
                                                                               6

<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.


NOTE B - Preparation of Financial Statements

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
adopted a year-end of December 31.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange  Commission  on its  Annual  Report on Form  10-KSB  for the year ended
December 31, 2003.  The  information  presented  within these interim  financial
statements  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
when reviewing the interim financial results presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
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, 2004.

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, 2004 and 2003,  respectively.  All  significant
intercompany transactions have been eliminated in combination.  The consolidated
entities are referred to as Company.

                                                                               7

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE C - 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.   Marketable Securities
     ---------------------

     Investments in the equity  securities of other companies,  including mutual
     fund investments, that have readily determinable fair values (as defined in
     Statement  of  Financial  Accounting  Standards  No. 115,  "Accounting  for
     Certain   Investments  in  Debt  and  Equity  Securities"  (SFAS  115)  are
     classified, at the date of acquisition, into three categories and accounted
     for as follows:

     Trading Securities - Equity securities that are bought and held principally
     for the  purpose  of  selling  them in the near term are  reported  at fair
     value. Unrealized gains and losses are included in earnings.

     Available-for-Sale  Securities - Equity  securities not classified in other
     categories  are reported at fair value,  with  unrealized  gains and losses
     excluded   from   earnings  and   reported  in  a  separate   component  of
     shareholders' equity.

     Held-to-Maturity  Securities - Equity  securities  that the Company has the
     positive  intent and ability to hold to maturity  are reported at amortized
     cost.

     Other  investments that do not have a readily  determinable  fair value are
     recorded at amortized cost.

     The Company  evaluates  the  carrying  value of all  marketable  securities
     classified as  "held-to-maturity"  or "other investments that do not have a
     readily  determinable  fair value" on a quarterly  basis in accordance with
     Statement of Financial  Accounting  Standards No. 144,  "Accounting for the
     Impairment or Disposal of Long-Lived Assets". Any permanent impairment,  if
     any, is charged to operations in the quarter in which the  determination of
     impairment is made.

     For  purposes  of  computing   realized  gains  and  losses,  the  specific
     identification method is used.

3.   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  cash or  nationally  issued  bankcards  as  payment  for goods and
     services in its adult 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.

     Since  December  31,  2000,  all  lessors of Company  rental  property  are
     entities  controlled  by a Company  controlling  shareholder,  officer  and
     director.  All lease rental payments are due in advance on the first day of
     the week for that week. All revenue sources are located either in Dallas or
     Tarrant County, Texas.


                                                                               8

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE C - Summary of Significant Accounting Policies - Continued

3.   Accounts Receivable and Revenue Recognition - continued
     -------------------------------------------

     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.

4.   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.

5.   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.

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) available to common shareholders by the  weighted-average  number of
     common shares  outstanding  during the respective  period  presented in our
     accompanying financial statements.  Fully diluted earnings (loss) per share
     is  computed  similar  to basic  income  (loss) per share  except  that the
     denominator is increased to include the number of 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, at either the
     beginning  of the  respective  period  presented  or the date of  issuance,
     whichever is later, and only if the common stock equivalents are considered
     dilutive  based  upon the  Company's  net  income  (loss)  position  at the
     calculation date. At March 31, 2004 and 2003, respectively, the Company had
     no outstanding  stock options,  stock warrants and/or  convertible  debt or
     equity issues which would be considered dilutive.


NOTE D - Related Party Transactions

Since a change in  majority  shareholders  of the  Company  in 2000,  the rental
properties  of  Corporation  Lex and Don,  Inc. have been subject to leases with
entities  controlled  by Duncan  Burch,  an officer,  director  and  controlling
shareholder of the Company.  These respective  leases were in place prior to the
2000 change in control.


                                                                               9

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE D - Related Party Transactions - Continued

In October  2002,  Duncan  Burch,  Nick Mehmeti  (officers  and directors of the
Company) and certain of their affiliated businesses (the "Clubs") entered into a
Compromise Settlement Agreement and Mutual Releases (the "Settlement Agreement")
with the City of  Dallas to  settle  pending  litigation,  claims  and  disputes
between  the  parties  arising  out of the  operation  of the  Clubs in  alleged
violation  of the Dallas City Code,  including  the Sexually  Oriented  Business
Ordinance. The Settlement Agreement did not involve the Company's Million Dollar
Saloon nor did the  Settlement  Agreement  affect the  operation  of the Million
Dollar Saloon.

However, the Settlement Agreement did affect the usage of the Company's property
owned by  Corporation  Lex,  which was  subject to a  month-to-month  basis.  In
accordance  with the  Settlement  Agreement,  lessee  agreed  to  terminate  the
operation of the adult cabaret  business at the Corporation Lex property by July
31, 2003. The entity controlled by Duncan Burch concurrently  tendered notice to
the Company that the associated  lease would be terminated on July 31, 2003 as a
result of this action.

The Company and its subsidiary, Corporation Lex, signed the Settlement Agreement
for a limited  purpose.  The  Company and  Corporation  Lex are not bound by the
terms of the Settlement Agreement except that Corporation Lex has agreed it will
not  allow  the  Clubs to use the  property,  as or in  support  of, a  sexually
oriented business,  dance hall,  business featuring exotic striptease,  business
featuring  scantily clad  employees,  individuals  or  performers,  any business
featuring  individuals,   employees,   licensees,   or  independent  contractors
displaying   specified   anatomical   areas  or  engaging  in  specified  sexual
activities,  or  operation  by the  Clubs  of a  business  in any  other  manner
circumventing or frustrating, or intending to circumvent or frustrate the intent
of Chapter 41A and 51A of the Dallas City Code. The Company  and/or  Corporation
Lex may lease the premises for any other lawful purpose.

Since January 1, 2001, the  renegotiated  lease between  Corporation Lex and the
entity  controlled by Duncan Burch  contained a percentage  rent clause  whereby
Corporation  Lex would receive a base rental equal to 10% of the gross  revenues
generated from the business located at the property, less State Liquor and State
Sales Taxes,  payable  quarterly,  with a minimum weekly payment of $1,000 which
will be credited  against the quarterly  percentage rent due. The minimum weekly
rent  payment  shall not be less than  $1,000  per week.  During  2003 and 2002,
approximately $31,000 and $52,000 of lease payments were received by the Company
for this property.

In March 2004, the Company received the required  supporting  documentation from
the lessee to validate the  percentage  rents due for Calendar  2002 and through
July 31, 2003,  which caused a significant  upward  revision of our estimate for
amounts  due in  Calendar  2002,  which was  adjusted  during the 4th quarter of
Calendar 2003. As of July 31, 2003, the lessee owed percentage rent as follows:

                        Year ended
                       December 31,                          Amount due
                       ------------                          ----------
                           2001                              $   42,952
                           2002                                  98,000
                           2003                                 07,513
                                                             ----------
                                                             $  248,465
                                                             ==========

In December 31, 2003, the Company's Board of Directors  accepted notice from the
lessee,  controlled  by Duncan  Burch,  an  officer,  director  and  controlling
shareholder,  that the  percentage  rent due to the  Company  would not be paid.
Accordingly,  the Company  recognized a charge to  operations  of  approximately
$248,465 as bad debt expense from  uncollectible  trade  accounts  receivable on
December 31, 2003.

The  property  owned by Don,  Inc.  is also  subject  to a lease with a separate
entity  controlled  by  Duncan  Burch,  an  officer,  director  and  controlling
shareholder  of the  Company.  This lease  expired  in August  2003 and is being
continued  on a  month-to-month  basis at the final  contractual  rental rate of
approximately  $8,500  per week.  The lessee has not  indicated  to the  Company
whether a new long-term lease will be negotiated on this property.


                                                                              10

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE D - Related Party Transactions - Continued

On February 14,  2003,  Duncan  Burch  advanced the Company  $140,000 for use in
closing the acquisition of certain  property being held for future  development.
This advance was non-interest  bearing and due upon demand. On January 29, 2004,
the Company  refinanced  the subject  property  and repaid Mr.  Burch the entire
$140,000 at closing of the refinancing.


NOTE E - 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.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.


NOTE F - 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,  2003  and  2002,
respectively,   the  various  operating  companies  had  deposits  in  financial
institutions  with credit risk  exposures in excess of statutory  FDIC coverage.
The Company has  incurred no losses  during  Calendar  2002,  Calendar  2003 and
through March 31, 2004 as a result of any of these unsecured situations.


NOTE G - Marketable Securities

Marketable securities as of March 31, 2004 and 2003 consist entirely of an
investment in a money market instrument- based mutual funds and are summarized
as follows:

                                                 Available    Held to
                                      Trading    for sale    Maturity
                                     ---------   ---------   ---------
March 31, 2004
--------------
   Aggregate fair value              $  42,514   $    --     $    --
   Gross unrealized holding gains    $    --     $    --     $    --
   Gross unrealized holding losses   $    --     $    --     $    --
   Amortized cost basis              $  42,514   $    --     $    --

March 31, 2003
--------------
   Aggregate fair value              $ 372,231   $    --     $    --
   Gross unrealized holding gains    $   1,509   $    --     $    --
   Gross unrealized holding losses   $    --     $    --     $    --
   Amortized cost basis              $ 370,722   $    --     $    --


The net  unrealized  holding gains and losses on trading  securities  which have
been included in the statement of operations were  approximately $-0- and $1,509
for the three months ended March 31, 2004 and 2003, respectively.


                                                                              11

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE H - Property and Equipment

Property  and  equipment  consists of the  following at March 31, 2004 and 2003,
respectively.

                                      March 31,      March 31,
                                        2004           2003       Estimated life
                                     -----------    -----------   --------------

Buildings and related improvements     2,095,914      2,095,914     15-40 years
Furniture and equipment                  891,150        881,710     5-10 years
                                     -----------    -----------

                                       2,987,064      2,977,624
Less accumulated depreciation         (2,026,483)    (1,930,924)
                                     -----------    -----------

                                         960,581      1,046,700
Land                                     741,488        741,488
                                     -----------    -----------

Net property and equipment           $ 1,702,069    $ 1,810,868
                                     ===========    -----------

Depreciation  expense  for the three  months  ended  March 31, 2004 and 2003 was
approximately $21,840 and $22,680, respectively.


NOTE I - Land Held for Future Development
         Note Payable
         Loan from Officer
         Long-term Mortgage Note Payable

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately  $53,599.  The Company paid $493,072
cash,  inclusive of a $140,000 loan to the Company from Duncan Burch, an officer
and  director of the  Company,  and issued to the seller a one-year  note in the
principal amount of $2,156,713 with 8% annual interest.  The payment of the note
is secured with a lien  against the  property  granted to the note holder by the
Company. The interest on the note is payable monthly  (approximately $14,678 per
month)  beginning  April 1, 2003 with the  principal  amount due and  payable on
February 1, 2004.

The Company paid  approximately  $153,800  during  Calendar 2003 to service this
debt.

The property is undeveloped  and suitable for commercial  development.  Although
the  Company  has not  determined  the usage of the land,  the Company may use a
portion  of the land for an adult  cabaret  and sell the  remaining  undeveloped
property to a third party.  The  development  of the property will be subject to
the Company  obtaining a construction  loan. The Company does not currently know
the amount of the loan it will need to develop this  property or whether it will
be able to obtain a  sufficient  loan for  development  of the  property  or, if
obtained, whether the terms of the loan will be favorable to the Company.

On January 29,  2004,  the Company  obtained  permanent  long-term  financing to
retire the $2,156,713 note payable issued at the initial  closing.  The new note
is for a principal  balance of  $2,000,000  and bears  interest at 6.50% for the
first  year and then  adjusts to 1.0% above the Wall  Street  Journal  published
prime rate,  rounded to the nearest 0.125%. The interest rate adjusts every 12th
month,  commencing  on January  29,  2005.  The new note  requires  payments  of
principal and accrued interest in the amount of  approximately  $17,426 monthly,
commencing on February 29, 2004. As this is a variable  interest rate note,  the
payments  may change  after the 12th  payment  and after every  succeeding  12th
payment.  The new note matures on January 29, 2019. Further, the note is secured
by underlying land and the separate  personal  guaranty of each of the Company's
officers, directors and controlling shareholders; Duncan Burch and Nick Mehmeti.


                                                                              12

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE J - Income Taxes

The components of income tax expense  (benefit) for the three months ended March
31, 2004 and 2003, respectively, are as follows:

                                                  Three months     Three months
                                                     ended            ended
                                                 March 31, 2004   March 31, 2003
                                                 --------------   --------------
     Federal:
       Current                                   $      114,354   $       55,000
       Deferred                                            --               --
                                                 --------------   --------------
                                                        114,354           55,000
                                                 --------------   --------------
     State:
       Current                                             --               --
       Deferred                                            --               --
                                                 --------------   --------------
                                                           --               --
                                                 --------------   --------------

       Total                                     $      114,354   $       55,000
                                                 ==============   ==============

The Company's income tax expense  (benefit) for the three months ended March 31,
2004 and 2003,  respectively,  differed  from the  statutory  federal rate of 34
percent as follows:
<TABLE>
<CAPTION>

                                                               Three months      Three months
                                                                   ended             ended
                                                              March 31, 2004    March 31, 2003
                                                              --------------    --------------
<S>                                                           <C>               <C>
     Statutory rate applied to earnings before income taxes   $      124,554    $       55,239
     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                         (10,200)             (239)
                                                              --------------    --------------

     Income tax expense                                       $      114,354    $       55,000
                                                              ==============    ==============
</TABLE>

The deferred  current tax asset and non-current  deferred tax liability on March
31, 2004 and 2003, respectively, balance sheet consists of the following:

                                                        March 31,    March 31,
                                                           2004         2003
                                                        ---------    ---------

     Non-current deferred tax liability                 $(281,062)   $(288,916)
                                                        =========    =========

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


NOTE K - 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,
2003, no shares of common stock have been issued in accordance  with the "second
closing" portion of the Agreement.


                                                                              13

<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE L - Commitments

The rental  property  owned by Don,  Inc.  is subject to a lease with a separate
entity  controlled  by  Duncan  Burch,  an  officer,  director  and  controlling
shareholder  of the  Company.  This lease  expired  in August  2003 and is being
continued  on a  month-to-month  basis at the final  contractual  rental rate of
approximately  $8,500  per week.  The lessee has not  indicated  to the  Company
whether a new long-term lease will be negotiated on this property. The lessee is
also for normal  maintenance and repairs,  insurance and other direct  operating
expenses related to the property.


NOTE M - 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.  As of March 31,  2003 and  2002,  respectively,  all  rental
revenues  are  derived  from  entities   controlled  by  a  Company  controlling
shareholder,  officer  and  director.  Approximately  13.8%  and  16.5% of total
revenues for Calendar 2002 and 2001, respectively, came from related parties.

                                        Restaurant         Rental         General and
                                        facility         real estate     administrative         Total
                                     --------------    --------------    --------------    --------------
<S>                                  <C>               <C>               <C>               <C>
Three months ended March 31, 2004
   Revenue from external customers   $    1,046,488    $         --      $         --      $    1,046,488
   Revenue from related parties                --             126,613              --             126,613
   Revenue (expenses) from/to
     intercompany sources                   (60,000)          (32,768)           92,768              --
   Interest income                             --                --               2,593             2,593
   Interest expense                            --                --              20,473            20,473
   Depreciation and amortization              7,014            14,826              --              21,840
   Income tax expense (benefit)              51,196            80,778           (17,620)          114,354
   Segment assets                           483,028         1,774,370         2,698,469         4,955,867
   Fixed asset expenditures                    --                --                --                --

Three months ended March 31, 2003
   Revenue from external customers   $      867,732    $         --      $         --      $      867,732
   Revenue from related parties                --             161,134              --             161,134
   Revenue (expenses) from/to
     intercompany sources                   (60,000)         (120,000)          180,000              --
   Interest income                             --                 790             3,641             4,431
   Interest expense                              16              --              22,018            22,034
   Depreciation and amortization              7,928            14,752              --              22,680
   Income tax expense (benefit)              31,240            29,465            (5,705)           55,000
   Segment assets                           514,386         1,816,141         3,028,318         5,358,845
   Fixed asset expenditures                    --                --           2,649,786         2,649,786
</TABLE>




                                                                              14

<PAGE>

Part I - Item 2

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

(8)  Caution Regarding Forward-Looking Information

Certain  statements  contained  in  this  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully make and integrate acquisitions;  raw material costs and
availability;  new product  development and  introduction;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse publicity;  competition; the loss of significant customers
or suppliers;  fluctuations  and  difficulty in forecasting  operating  results;
changes in business strategy or development  plans;  business  disruptions;  the
ability  to attract  and  retain  qualified  personnel;  the  ability to protect
technology; and other factors referenced in this and previous filings.

Given  these  uncertainties,  readers  of this Form  10-QSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

(9)  Results of Operations

Three  months  ended March 31, 2004 as compared to three  months ended March 31,
2003

Bar and restaurant sales increased by  approximately  $179,000 (or 20.6)% in the
three months ended March 31, 2004. Bar and restaurant  sales were  approximately
$1,046,000   for  the  three   months  ended  March  31,  2004  as  compared  to
approximately  $868,000 for the three months ended March 31, 2003.  The increase
over the comparable  period from the preceding year is directly  attributable to
overall  fluctuations in visitor  traffic to the Dallas-Ft.  Worth Metroplex and
the  effects of shifts in  economic  and  ethnic  populations  in the  immediate
geographical area of the Company's location.  While the Company's facility holds
a valid  "sexually  oriented  business"  license  issued by the City of  Dallas,
Texas; the City of Dallas, Texas continues to pursue vigorous enforcement of its
Sexually Oriented Business  Ordinance.  This Ordinance  restricts the attire and
dancing activities at the Company's Million Dollar Saloon, and other local adult
cabarets, which has resulted in unpredictable  fluctuations in patron attendance
at the Company's facilities.

The Company's  operating  location,  when  originally  built,  was in one of the
dynamic retail and entertainment  corridors within the City of Dallas, Texas. At
the current  time,  the  expansion of the City into other  geographic  areas has
contributed to a diversification  of retail and  entertainment  districts within
the City.  These newer areas have received  better  reception from the patronage
traffic than the Company's current location which has suffered from City neglect
in infrastructure  maintenance,  the introduction of economically depressed foot
traffic as a result of available mass transit facilities and a shift in economic
and ethnic population in the immediate vicinity of the Company's club.

While the City of Dallas'  efforts  against  the  Company's  principal  business
activity,  the lack of  efforts  by the City of Dallas to  maintain  a degree of
economic and ethnic  diversity  and  prosperity in the vicinity of the Company's
facility may contribute to further revenue deterioration in future periods.

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 decreased by approximately  $34,000 to approximately
$127,000 for the three months ended March 31, 2004 as compared to  approximately
$161,000 in the same period of Calendar  2003.  All of the leases were/ are with


                                                                              15

<PAGE>

entities   controlled  by  Duncan  Burch,  one  of  the  Company's   controlling
shareholders.  On January 30, 2001, the Company's Board of Directors approved an
amendment to the lease agreement covering the property owned by Corporation Lex,
a Company subsidiary. The amendment provided that effective January 1, 2001, the
base rental was reduced  from $4,750 per week to $1,000 per week.  Additionally,
the amended lease provided that the Company,  as landlord,  shall receive 10% of
the gross  revenues  generated from the business  located at the property,  less
State Liquor and State Sales Taxes,  payable  quarterly,  with a minimum  weekly
payment of $1,000 which will be credited  against the quarterly  percentage rent
due. During 2003 and 2002,  approximately  $31,000 and $52,000 of lease payments
were received by the Company for this property.

In March 2004, the Company received the required  supporting  documentation from
the lessee to validate the  percentage  rents due for Calendar  2002 and through
July 31, 2003.  This  previously  unprovided  information  caused a  significant
upward  revision of our estimate for amounts due for percentage rent in Calendar
2002,  which  was  recognized  as a 4th  quarter  2003  event  in our  financial
statements,  given the events discussed in subsequent paragraphs. As of July 31,
2003, the lessee owed percentage rent as follows:

                Year ended
               December 31,           Amount due
               ------------           ----------
                   2001               $   42,952
                   2002                   98,000
                   2003                  107,513
                                      ----------
                                      $  248,465

In December  2003,  the Company's  Board of Directors  accepted  notice from the
lessee,  an  entity  controlled  by  Duncan  Burch,  an  officer,  director  and
controlling  shareholder,  that the percentage rent due to the Company would not
be paid. Accordingly,  the Company recognized a charge to operations on December
31, 2003 of approximately  $248,465 as bad debt expense from uncollectible trade
accounts receivable.

At the present time, this property is vacant and available for lease. Management
is  uncertain  of the future use or ability to obtain a suitable  tenant on this
property.

Our rental real  estate  owned by Don,  Inc.  is also  subject to a lease with a
separate entity controlled by Duncan Burch, an officer, director and controlling
shareholder  of the  Company.  This lease  expired  in August  2003 and is being
continued  on a  month-to-month  basis at the final  contractual  rental rate of
approximately $8,500 per week..The Company has been advised that the tenant does
not intend to renew the Fort Worth lease with the current  terms.  Instead,  the
tenant has  requested to  renegotiate  the lease  terms.  As of the date of this
filing, no formal lease has been negotiated.  There can be no assurance that the
Company will be able to obtain terms similar to the current lease or that tenant
will agree to the terms of a new lease.

Although  the  Company is seeking  lease terms for both  properties  that are at
least  comparable to terms for similar  properties in the geographic area, there
can be no  assurance  that the  Company  will be able to renew its  leases  with
entities  controlled by Mr. Burch or any other unaffiliated  third-party,  or if
renewed,  that the terms of the leases will be as favorable to the Company as it
could have obtained from an  unaffiliated  party.  The failure of the Company to
obtain long-term lease  agreements with Mr. Burch, or other third parties,  with
terms at  least  comparable  to the  existing  lease  arrangements  will  have a
material adverse effect on the revenues of the Company.

Cost of sales  increased  to  approximately  $547,000 for the three months ended
March 31,  2004 as  compared to  approximately  $477,000  for the same period of
2003.   Gross  profit   percentages   remain   relatively   constant  at  53.40%
(approximately $626,000) for the three months ended March 31, 2004 versus 53.65%
(approximately $552,000) for the three months ended March 31, 2003. Fluctuations
in the Company's gross profit percentages react to and parallel the key areas of
management focus for cost of sales expenditure  control - principally  personnel
staffing  levels and food and beverage  costs.  These areas,  specifically  cost
controls over purchasing,  inventory  management protocols and labor management,
are continuously monitored to maintain the Company's gross profit percentages.

General and administrative  expenses were  approximately  $240,865 for the three
months  ended  March 31,  2004 as compared  to  approximately  $373,000  for the
comparable  period  of  2002.  The  decrease  was  attributable  to the  lack of
expenditures related to professional fees for investigation of possible business
acquisition  targets and legal  expenses as a result of ongoing  litigation  and
issues  related  to the City of Dallas  Sexually  Oriented  Business  Ordinance.
Further, the Company experienced increases in executive compensation during 2002

                                                                              16

<PAGE>

which  payments to our  executive  and  operating  officers  have  continued  at
consistent  levels as noted in our Form 10-KSB for the year ended  December  31,
2003  through the current  date.  The Company  anticipates  relatively  constant
expenditure  levels  for  general  operating  expenses  in  future  periods  and
management  continues  to monitor  its  expenditure  levels to  achieve  optimum
financial results.

During  2003,  the  Company  expended   approximately   $328,200  in  legal  and
professional fees (approximately  $189,300 - legal and approximately  $138,900 -
auditing) for due diligence  procedures related to a proposed acquisition by the
Company of certain  businesses  and  properties  owned by Duncan  Burch and Nick
Mehmeti,  personally,  or by entities  owned or  controlled  by Mr. Burch or Mr.
Mehmeti.  The Company has  discontinued  all activity  related to this  proposed
acquisition.

Net income before income taxes was  approximately  $366,000 for the three months
ended March 31, 2004 versus  approximately  $162,400  for the three months ended
March 31, 2003.  After-tax net income increased by  approximately  $145,000 from
approximately   $107,000   for  the  three   months  ended  March  31,  2003  to
approximately  $252,000 for the same period  ended March 31,  2004.  The Company
experienced  earnings per share of approximately $0.04 and $0.02 for each of the
respective three month periods ended March 31, 2004 and 2003, respectively.

As  a  general  rule,  the  Company's   adult  cabaret   operations   experience
unpredictable  fluctuations  as a result of the overall  discretionary  spending
habits  related to the U. S.  economy,  visitation  levels  related to  visitor,
convention and business travel levels and impacts related to the City of Dallas'
various  enforcement  actions and on-premises  monitoring of entertainer conduct
and the condition of the surrounding  environment as maintained and monitored by
the City of Dallas,  Texas.  Management makes it's best efforts to timely adjust
its  expenditure  levels  to these  events  as they  occur in order to  maintain
profitability.

(3)  Liquidity

As of March 31,  2003,  December  31, 2003 and March 31,  2002,  the Company has
working capital of approximately $299,000, $347,000 and $618,000 (exclusive of a
note  payable  which was  refinanced  on January 29,  2004),  respectively.  The
Company achieved positive (negative) cash flows from operations of approximately
$226,000  and  $(103,000)  for the three  months  ended March 31, 2004 and 2003,
respectively, as compared to $(276,000) for the year ended December 31, 2003.

The  deterioration  of the Company's  working capital is directly related to the
cash  expended to acquire  land for future  development  and for  Calendar  2003
expenditures  related to the abandoned  acquisition  efforts on facilities owned
and/or controlled by the Company's  controlling  shareholders;  Duncan Burch and
Nick Mehmeti.

Future  operating  liquidity and debt service are expected to be sustained  from
continuing operations. Additionally,  management is of the opinion that there is
additional   potential   availability  of  incremental  mortgage  debt  and  the
opportunity  for the sale of  additional  common stock  through  either  private
placements or secondary public offerings.

On January 29, 2004, the Company refinanced the initial acquisition debt related
to land held for  future  development.  The new  permanent  long-term  financing
retired the entire  initial  short-term  $2,156,713  note payable  issued at the
initial closing. The new note is for a principal balance of $2,000,000 and bears
interest  at 6.50% for the first  year and then  adjusts  to 1.0% above the Wall
Street Journal published prime rate, rounded to the nearest 0.125%. The interest
rate adjusts  every 12th month,  commencing  on January 29,  2005.  The new note
requires   payments  of  principal  and  accrued   interest  in  the  amount  of
approximately  $17,426  monthly,  commencing  on February 29, 2004. As this is a
variable  interest rate note, the payments may change after the 12th payment and
after every  succeeding 12th payment.  The new note matures on January 29, 2019.
The  long-term  note is secured by  underlying  land and the  separate  personal
guaranty  of  each  of  the  Company's   officers,   directors  and  controlling
shareholders; Duncan Burch and Nick Mehmeti.

(4)  Capital Resources

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately  $53,599.  The Company paid $493,072
cash,  inclusive of a $140,000 loan to the Company from Duncan Burch, an officer
and  director of the  Company,  and issued to the seller a one-year  note in the
principal amount of $2,156,713 with 8% annual interest.  The payment of the note
is secured with a lien  against the  property  granted to the note holder by the


                                                                              17

<PAGE>

Company. The interest on the note is payable monthly  (approximately $14,678 per
month)  beginning  April 1, 2003 with the  principal  amount due and  payable on
February 1, 2004.

The Company paid  approximately  $153,800  during  Calendar  2003 to service the
initial short-term debt.

The property is undeveloped  and suitable for commercial  development.  Although
the  Company  has not  determined  the usage of the land,  the Company may use a
portion  of the land for an adult  cabaret  and sell the  remaining  undeveloped
property to a third party.  The  development  of the property will be subject to
the Company  obtaining a construction  loan. The Company does not currently know
the amount of the loan it will need to develop this  property or whether it will
be able to obtain a  sufficient  loan for  development  of the  property  or, if
obtained, whether the terms of the loan will be favorable to the Company.

The Company has also paid an  additional  sum of  approximately  $366,000 at the
closing of the permanent long-term financing in January 2004.

The Company has identified no other significant  capital  requirements for 2004,
other than normal repair and  replacement  activity at the Company's  commercial
rental properties and the adult  entertainment  lounge and restaurant  facility.
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 knows of no new accounting releases or pronouncements that will have
any impact upon the Company's financial statements upon adoption.


Item 3 - Controls and Procedures

As required by Rule 13a-15 under the Exchange  Act,  within the 90 days prior to
the filing date of this report,  the Company  carried out an  evaluation  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures.  This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's President
and Chief Executive  Officer along with the Company's  Chief Financial  Officer.
Based upon that evaluation,  the Company's President and Chief Executive Officer
along with the Company's  Chief Financial  Officer  concluded that the Company's
disclosure controls and procedures are effective. There have been no significant
changes in the  Company's  internal  controls or in other  factors,  which could
significantly  affect  internal  controls  subsequent  to the date  the  Company
carried out its evaluation.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information  required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive  Officer and Chief Financial  Officer as appropriate,  to allow timely
decisions regarding required disclosure.


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 is contesting the  constitutionality of
     certain  provisions  of a Dallas  Municipal  Ordinance  which  impacts  its
     license to do business as an adult  cabaret.  The Company is of the opinion
     that it will prevail on its  constitutional  claims.  In August,  2001, the
     City amended the contested  provisions  of the  ordinance;  however,  there
     still remain certain constitutional infirmities,  and the Company is of the
     opinion that the ordinance remains subject to constitutional  challenge and


                                                                              18

<PAGE>


     will have no adverse impact on the Company's operations. In March 2004, the
     City agreed to further  amend  pertinent  portions of the  ordinance  in an
     attempt to resolve the constitutional infirmities.  The case is not set for
     trial.

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

      31.1  Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
      32.1  Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

    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.

Dated: May 8, 2004                                        /s/ Nick Mehmeti
       -----------                                   ---------------------------
                                                                    Nick Mehmeti
                                                        Chief Executive Officer,
                                                     Chief Financial Officer and
                                                                    and Director
























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