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, 2002

          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  10,   2002:   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, 2002

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1   Financial Statements                                               3

  Item 2   Management's Discussion and Analysis or Plan of Operation         11


Part II - Other Information

  Item 1   Legal Proceedings                                                 12

  Item 2   Changes in Securities                                             13

  Item 3   Defaults Upon Senior Securities                                   13

  Item 4   Submission of Matters to a Vote of Security Holders               13

  Item 5   Other Information                                                 13

  Item 6   Exhibits and Reports on Form 8-K                                  13


Signatures                                                                   13



                                        2

<PAGE>
<TABLE>
<CAPTION>



Item 1 - Part 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                             March 31, 2002 and 2001

                                   (Unaudited)
                                                              March 31,      March 31,
                                                                 2002           2001
                                                             -----------    -----------
<S>                                                          <C>            <C>

                                     ASSETS
                                     ------
Current Assets
   Cash on hand and in bank                                  $ 1,066,745    $   739,663
   Accounts receivable - trade                                    68,867           --
   Prepaid Federal income taxes                                     --           12,603
   Inventory                                                      19,155         22,566
   Prepaid expenses                                               38,231          3,675
                                                             -----------    -----------
     Total current assets                                      1,192,998        778,507
                                                             -----------    -----------

Property and Equipment - At Cost
   Buildings and related improvements                          2,017,514      2,017,514
   Furniture and equipment                                       867,452        865,596
                                                             -----------    -----------
                                                               2,884,966      2,883,110
   Less accumulated depreciation                              (1,832,888)    (1,741,098)
                                                             -----------    -----------
                                                               1,052,078      1,142,012
   Land                                                          741,488        741,488
                                                             -----------    -----------
     Net property and equipment                                1,793,566      1,883,500
                                                             -----------    -----------

Other Assets                                                       4,725          5,475
                                                             -----------    -----------

Total Assets                                                 $ 2,991,289    $ 2,667,482
                                                             ===========    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities
   Accounts payable - trade                                  $    19,699    $    29,190
   Accrued liabilities                                            67,916         67,242
   Federal income taxes payable                                  129,900           --
   Tenant deposits                                                 6,500          6,500
                                                             -----------    -----------
     Total current liabilities                                   224,015        102,932
                                                             -----------    -----------

Long-Term Liabilities
   Deferred tax liability                                        134,524        133,101
                                                             -----------    -----------
     Total liabilities                                           358,539        236,033
                                                             -----------    -----------

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                                           2,627,018      2,425,717
                                                             -----------    -----------
     Total shareholders' equity                                2,632,750      2,431,449
                                                             -----------    -----------

Total Liabilities and Shareholders' Equity                   $ 2,991,289    $ 2,667,482
                                                             ===========    ===========
</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.


                                       3
<PAGE>



                  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,
                                                          2002           2001
                                                     -----------    -----------
Revenues
   Bar and restaurant sales                          $   958,171    $   874,569
   Rental income                                         148,195        135,896
                                                     -----------    -----------
     Total revenues                                    1,106,366      1,010,465
                                                     -----------    -----------

Cost of Sales - Bar and Restaurant Operations            579,664        604,698
                                                     -----------    -----------

Gross Profit                                             526,702        405,767
                                                     -----------    -----------

Operating Expenses
   General and administrative expenses                   303,141        328,006
   Depreciation and amortization                          22,907         22,848
                                                     -----------    -----------
     Total operating expenses                            326,048        350,854
                                                     -----------    -----------

Income from Operations                                   200,654         54,913

Other Income (Expenses)
   Interest and other miscellaneous                        6,878          8,486
                                                     -----------    -----------

Income before Income Taxes                               207,532         63,399

Income Tax (Expense) Benefit
   Currently payable                                     (70,500)       (20,538)
   Deferred                                                 --             --
                                                     -----------    -----------

Net Income                                               137,032         42,861

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

Comprehensive Income                                 $   137,032    $    42,861
                                                     ===========    ===========

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

Weighted-average number of shares outstanding          5,731,778      5,731,778
                                                     ===========    ===========

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 Cash Flows
                   Three months ended March 31, 2002 and 2001

                                   (Unaudited)

                                                            Three months   Three months
                                                                ended          ended
                                                               March 31,      March 31,
                                                                  2002           2001
                                                             -----------    -----------
<S>                                                          <C>            <C>

Cash Flows from Operating Activities
   Net income                                                $   137,032    $    42,861
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                              22,907         22,848
       (Increase) decrease in
         Accounts receivable - trade and other                   (12,001)         8,737
         Federal income taxes receivable                            --           20,538
         Inventory                                                   262            278
         Prepaid expenses                                        (38,228)        (3,675)
       Increase (decrease) in
         Accounts payable and other accrued liabilities          (37,512)       (77,832)
                                                             -----------    -----------

     Net cash provided by operating activities                   127,960         13,755
                                                             -----------    -----------


Cash Flows from Investing Activities
   Purchases of property and equipment                              --           (1,135)
                                                             -----------    -----------

     Net cash used in investing activities                          --           (1,135)
                                                             -----------    -----------


Cash Flows from Financing Activities                                --             --
                                                             -----------    -----------


Increase in Cash and Cash Equivalents                            127,960         12,620

Cash at beginning of period                                      938,785        727,043
                                                             -----------    -----------

Cash at end of period                                        $ 1,066,745    $   739,663
                                                             ===========    ===========

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                         $      --      $      --
                                                             ===========    ===========
     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.


                                       5
<PAGE>




                  Million Dollar Saloon, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


NOTE A - Background and Organization

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

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

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

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

These  financial  statements  reflect  the books and  records of Million  Dollar
Saloon, Inc., Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don, Inc. for
the years  ended  December  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  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, 2001.  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, 2002.

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.


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.




                                       6
<PAGE>




                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE B - Summary of Significant Accounting Policies - Continued

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  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.

     All lessors of Company rental property are entities controlled by a Company
     shareholder,  officer and  director.  All lease rental  payments are due in
     advance  on the first day of the week for that  week.  All  properties  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.

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
<PAGE>




                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE B - Summary of Significant Accounting Policies - Continued

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, 2002 and 2001, respectively,
     the Company  has no  outstanding  stock  warrants,  options or  convertible
     securities  which could be  considered as dilutive for purposes of the loss
     per share calculation.


NOTE C - Fair Value of Financial Instruments

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


NOTE D - Concentrations of Credit Risk

The Company  maintains its cash accounts in a financial  institution  subject to
insurance coverage issued by the Federal Deposit Insurance  Corporation  (FDIC).
Under FDIC rules,  the Company and its  subsidiaries  are  entitled to aggregate
coverage of $100,000 per account type per  separate  legal entity per  financial
institution. During the nine and three months ended September 30, 2001 and 2000,
respectively,  the  various  operating  companies  had  deposits  in a financial
institution with credit risk exposures in excess of statutory FDIC coverage. The
Company has  incurred no losses  during 2002 or 2001 as a result of any of these
unsecured situations.


NOTE E - Property and Equipment

Property and equipment consists of the following at March 31, 2002 and 2001:

                                       March 31,      March 31,     Estimated
                                          2002           2001          life
                                     -----------    -----------    -----------
Buildings and related improvements     2,017,514    $ 2,017,514    15-40 years
Furniture and equipment                  867,452        865,596     5-10 years
                                     -----------    -----------

                                       2,884,866      2,883,110
Less accumulated depreciation         (1,832,888)    (1,741,098)
                                     -----------    -----------

                                       1,052,078      1,142,012
Land                                     741,488        741,488
                                     -----------    -----------

Net property and equipment           $ 1,793,566    $ 1,883,500
                                     ===========    ===========

Depreciation  expense  for the three  months  ended  March  31,2002 and 2001 was
$22,907 and $22,848, respectively.



                                       8
<PAGE>
<TABLE>
<CAPTION>




                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE F - Income Taxes

The components of income tax expense  (benefit) for the three months ended March
31, 2002 and 2001, respectively, are as follows:

                                                 Three months     Three months
                                                     ended            ended
                                                    March 31,        March 31,
                                                       2002             2001
                                                 ------------     ------------
Federal:
  Current                                        $     70,500     $     20,538
  Deferred                                               --               --
                                                 ------------     ------------
                                                       70,500           20,538
                                                 ------------     ------------
State:
  Current                                                --               --
  Deferred                                               --               --
                                                 ------------     ------------
                                                         --               --
                                                 ------------     ------------
  Total                                          $     70,500     $     20,538
                                                 ============     ============

The Company's income tax expense  (benefit) for the three months ended March 31,
2002 and 2001,  respectively,  differed  from the  statutory  federal rate of 34
percent as follows:

                                                           Three months    Three months
                                                                ended           ended
                                                              March 31,       March 31,
                                                                 2002            2001
                                                           ------------    ------------
<S>                                                        <C>             <C>

Statutory rate applied to earnings before income taxes     $     70,561    $     21,556
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                             (61)         (1,018)
                                                           ------------    ------------

Income tax expense                                         $     70,500    $     20,538
                                                           ============    ============
</TABLE>

The deferred  current tax asset and  non-current  deferred  tax  liability as of
March 31, 2002 and 2001, respectively, consists of the following:

                                                     March 31,        March 31,
                                                        2002             2001
                                                     ---------        ---------

Non-current deferred tax liability                   $(134,524)       $(133,101)
                                                     =========        =========

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


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,
2002, no shares of common stock have been issued in accordance  with the "second
closing" portion of the Agreement.



                                       9
<PAGE>
<TABLE>
<CAPTION>




                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE H - Commitments

The Company leases  commercial  real estate to entities  controlled by a Company
shareholder,  officer and director on both short and 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, 2001, future minimum non-cancellable lease revenues
are as follows:

                                             Year ending
                                            December 31,            Amount

                                                 2002                   $294,200
                                                 2003                    169,750
                                                                        --------

                                                 Total                  $463,950
                                                                        ========

NOTE J - 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,  2002 and  2001,  respectively,  all  rental
revenues are derived from entities controlled by a Company shareholder,  officer
and director.  Approximately  13.39% and 13.45% of total  revenues for the three
months ended March 31, 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, 2002
   Revenue from external customers   $   958,171    $      --      $      --      $   958,171
   Revenue from related parties             --          148,195           --          148,195
   Revenue (expenses) from/to
     intercompany sources                (60,000)          --           60,000           --
   Interest income                          --            1,208          5,670          6,878
   Interest expense                         --             --             --             --
   Depreciation and amortization           8,155         14,752           --           22,907
   Income tax expense (benefit)           17,626         50,946          1,928         70,500
   Segment assets                        393,495      2,224,993        372,801      2,991,289
   Fixed asset expenditures                 --             --             --             --

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
</TABLE>




                                       10
<PAGE>




Part I - Item 2

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

(4)  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.

(5)  Results of Operations

Bar and  restaurant  operations  increased  slightly from $875,000 for the three
months ended March 31, 2001 to approximately $958,000 for the three months ended
March 31, 2002.

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 increased slightly from  approximately  $136,000 for
the first three  months of 2001 as compared to  approximately  $148,000  for the
first  three  months of 2002.  All  rental  income  is  received  from  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. 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. As of March 31, 2002, the Company is due approximately
$69,000  in  additional  rents  over and above the  required  weekly  payment as
calculated on the gross sales of the tenant.

The modification of this 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


                                       11
<PAGE>



tenant  as a  result  of  decreasing  revenues  of the  tenant's  adult  cabaret
operation  located on the property.  The tenant  continues to advise the Company
that the lessee may be compelled to close its business operations.

Cost of sales were relatively  constant at approximately  $580,000 for the first
three months of 2002 as compared to  approximately  $605,000 for the first three
months of 2001.  During 2001,  the Company began  treating all  entertainers  as
independent contractors, including the maintenance and issuance of Form 1099, as
required by the  Internal  Revenue  Service and the  Department  of Labor.  This
change in  employment  policy  and  treatment  created a decline  in both  dance
revenues and  entertainer  compensation  as all table dances are now  negotiated
directly  between  the  entertainer  and the  Company's  patrons.  Key  areas of
management focus for cost of sales expenditure  control are principally food and
beverage costs. Gross profit  percentages  remain relatively  constant at 47.61%
($527,000)  for the first three months of 2002 versus 40.16%  ($605,000) for the
first three months of 2001. 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  $25,000 in the
first three  months of 2002 versus the first three  months of 2001.  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  $208,000 for the first three
months of 2002 versus approximately  $63,000 for the first three months of 2001.
After-tax  net income  increased by  approximately  $70,000  from  approximately
$94,000 for the first three  months of 2001 to  approximately  $137,000  for the
first  three  months of 2000.  The  Company  experienced  earnings  per share of
approximately  $0.02 and $0.01 per share for the first three  months of 2002 and
2001, respectively.

(3)  Liquidity

As of March 31, 2002, the Company has working capital of approximately  $969,000
as compared to  approximately  $809,000 at December  31, 2001 and  approximately
$676,000  at March 31,  2001.  The  Company  achieved  positive  cash flows from
operations of  approximately  $128,000 for the first three months of 2001 versus
approximately $13,800 for the first three months of 2001.

The Company has identified no significant  capital  requirements for 2002, 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.

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.

For all periods prior to 2001, the Company treats and has  consistently  treated
all entertainers as employees  whereas other similar  facilities may or may have
treated their entertainers as independent contractors.  During 2001, as a result
of certain  related  court and/or tax rulings,  the Company  began  treating all
entertainers as independent contractors,  including the maintenance and issuance
of Form 1099, as required by the Internal  Revenue Service and the Department of
Labor.  This change in employment policy and treatment created a decline in both
dance  revenues  and  entertainer  compensation  as all  table  dances  are  now
negotiated   directly  between  the  entertainer  and  the  Company's   patrons.
Management  is of the opinion that it's  actions,  policies and  procedures,  as
predicated  on  promulgated  court and  administrative  rulings,  will  cause an
insignificant risk to both future operations and profitability for any potential
assessment of payroll and related taxes in the future by regulatory authorities.


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


                                       12
<PAGE>



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  October 2002.
However,  the Company reasonably  believes that the Ordinance will be amended so
as to have no material adverse impact on the Company's future operations.  There
can be no assurance  that the City of Dallas will in fact amend the Ordinance to
an extent that the Ordinance  will not have any material  adverse  effect on the
Company's  business  operations  or that in the future  the City of Dallas  will
modify the Ordinance to an extent that the Ordinance  will not have any material
adverse effect on the Company's business operations.

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

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


                                   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 10, 2002                                 /s/ Nick Mehmeti
       ------------                                 ---------------------------
                                                          Nick Nehmeti
                                                        Chief Operating Officer
                                                                   and Director






                                       13
<PAGE>