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, 2003

         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 13, 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, 2003

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1   Financial Statements                                               3

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

  Item 3   Controls and Procedures                                           16

Part II - Other Information

  Item 1   Legal Proceedings                                                 16

  Item 2   Changes in Securities                                             16

  Item 3   Defaults Upon Senior Securities                                   17

  Item 4   Submission of Matters to a Vote of Security Holders               17

  Item 5   Other Information                                                 17

  Item 6   Exhibits and Reports on Form 8-K                                  17


Signatures                                                                   17


Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002          18
















                                                                               2

<PAGE>

Part I
Item 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                             March 31, 2003 and 2002

                                   (Unaudited)
                                                    March 31,        March 31,
                                                       2003             2002
                                                   -----------      -----------
                                     ASSETS
                                     ------
Current Assets
   Cash on hand and in bank                        $   323,187      $ 1,066,745
   Marketable securities                               372,231             --
   Accounts receivable - trade                         103,770           68,867
   Inventory                                            48,086           19,155
   Prepaid expenses                                     71,872           38,231
                                                   -----------      -----------

     Total current assets                              919,146        1,192,998
                                                   -----------      -----------


Property and Equipment - At Cost
   Buildings and related improvements                2,095,914        2,017,514
   Furniture and equipment                             881,710          867,452
                                                   -----------      -----------
                                                     2,977,624        2,884,966
   Less accumulated depreciation                    (1,930,924)      (1,832,888)
                                                   -----------      -----------
                                                     1,046,700        1,052,078
   Land                                                741,488          741,488
                                                   -----------      -----------

     Net property and equipment                      1,788,188        1,793,566
                                                   -----------      -----------


Other Assets
   Land held for future development                  2,649,786             --
   Deposits and other                                    1,725            4,725
                                                   -----------      -----------

     Total other assets                              2,651,511            4,725
                                                   -----------      -----------

Total Assets                                       $ 5,358,845      $ 2,991,289
                                                   ===========      ===========



                                  - 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, 2003 and 2002

                                   (Unaudited)
                                                        March 31,      March 31,
                                                          2003           2002
                                                       ----------     ----------
                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities
   Note payable                                        $2,156,714     $     --
   Loan from officer                                      140,000           --
   Accounts payable - trade                                38,894         19,699
   Accrued liabilities                                     62,159         67,916
   Federal income taxes payable                            53,500        129,900
   Tenant deposits                                          6,500          6,500
                                                       ----------     ----------

     Total current liabilities                          2,457,767        224,015
                                                       ----------     ----------


Long-Term Liabilities
   Deferred tax liability                                 288,916        134,524
                                                       ----------     ----------

     Total liabilities                                  2,746,683        358,539
                                                       ----------     ----------


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                                    2,060,430      2,627,018
                                                       ----------     ----------

     Total shareholders' equity                         2,612,162      2,632,750
                                                       ----------     ----------

Total Liabilities and Shareholders' Equity             $5,358,845     $2,991,289
                                                       ==========     ==========


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, 2003 and 2002

                                   (Unaudited)

                                                      Three months    Three months
                                                          ended           ended
                                                        March 31,       March 31,
                                                          2003            2002
                                                      ------------    ------------
<S>                                                   <C>             <C>
Revenues
   Bar and restaurant sales                           $    867,732    $    958,171
   Rental income                                           161,134         148,195
                                                      ------------    ------------
     Total revenues                                      1,028,866       1,106,366
                                                      ------------    ------------

Cost of Sales - Bar and Restaurant Operations              476,864         579,664
                                                      ------------    ------------

Gross Profit                                               552,002         526,702
                                                      ------------    ------------

Operating Expenses
   General and administrative expenses                     372,795         303,141
   Depreciation and amortization                            22,680          22,907
                                                      ------------    ------------
     Total operating expenses                              395,475         326,048
                                                      ------------    ------------

Income from Operations                                     156,527         200,654

Other Income (Expenses)
   Interest and other miscellaneous                          4,431           6,878
   Unrealized gain on marketable securities                  1,059            --
                                                      ------------    ------------

Income before Income Taxes                                 162,467         207,532

Income Tax (Expense) Benefit
   Currently payable                                       (55,000)        (70,500)
   Deferred                                                   --              --
                                                      ------------    ------------

Net Income                                                 107,467         137,032

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

Comprehensive Income                                  $    107,467    $    137,032
                                                      ============    ============

Earnings per share of common stock outstanding,
   computed on net income - basic and fully diluted   $       0.02    $       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, 2003 and 2002

                                   (Unaudited)

                                                             Three months    Three months
                                                                 ended           ended
                                                               March 31,      March 31,
                                                                 2003            2002
                                                             ------------    ------------
<S>                                                          <C>             <C>
Cash Flows from Operating Activities
   Net income                                                $    107,467    $    137,032
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                               22,680          22,907
       Unrealized loss on marketable securities                    (1,509)           --
       (Increase) decrease in
         Accounts receivable - trade and other                    (35,242)        (12,001)
         Inventory                                                   --               262
         Prepaid expenses                                         (28,129)        (38,228)
       Increase (decrease) in
         Accounts payable and other liabilities                  (214,037)        (37,512)
         Unearned revenues                                         (9,500)           --
                                                             ------------    ------------

     Net cash provided by operating activities                    103,270         127,960
                                                             ------------    ------------


Cash Flows from Investing Activities
   Purchases of property and equipment                               --              --
   Cash paid for land held for future development                (493,072)           --
                                                             ------------    ------------

     Net cash used in investing activities                       (493,072)           --
                                                             ------------    ------------


Cash Flows from Financing Activities
   Cash received on note payable to officer                       140,000            --
   Cash paid for marketable securities                             (3,629)           --
                                                             ------------    ------------

     Net cash provided by financing activities                    136,371            --
                                                             ------------    ------------

Increase in Cash and Cash Equivalents                            (459,971)        127,960

Cash at beginning of period                                       783,157         938,785
                                                             ------------    ------------

Cash at end of period                                        $    323,186    $  1,066,745
                                                             ============    ============

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                         $     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, 2002.  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, 2003

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, 2003 and 2002,  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.   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.

     On December 31, 2002, in accordance with Statement of Financial  Accounting
     Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
     Assets",  Management  reflected  an  impairment  equivalent  to 100% of the
     unamortized  balance  (approximately  $2,250) against the carrying value of
     this asset.

7.   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.


                                                                               9

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE C - Summary of Significant Accounting Policies - Continued

8.   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, 2003 and 2002, 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 D - 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 E - 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 2003 and 2002 as a result of any of
these unsecured situations.


NOTE F - Marketable Securities

Marketable  securities as of March 31, 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
                                         -----------   -----------   -----------
       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  $1,509 for the
three months ended March 31, 2003.


                                                                              10

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE G - Property and Equipment

Property  and  equipment  consists of the  following at March 31, 2003 and 2002,
respectively.

                                      March 31,      March 31,
                                         2003          2002       Estimated life
                                     -----------    -----------   --------------

Buildings and related improvements     2,095,914      2,017,514     15-40 years
Furniture and equipment                  881,710        867,452      5-10 years
                                     -----------    -----------

                                       3,977,624      2,884,866
Less accumulated depreciation         (1,930,924)    (1,832,888)
                                     -----------    -----------

                                       1,046,700      1,052,078
Land                                     741,488        741,488
                                     -----------    -----------

Net property and equipment           $ 1,810,868    $ 1,793,566
                                     ===========    ===========

Depreciation  expense  for the three  months  ended  March 31, 2003 and 2002 was
approximately $22,680 and $22,907, respectively.


NOTE H - Land Held for Future Development
         Note Payable
         Loan from Officer

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 will be required to pay approximately  $132,000 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.

The Company  intends to seek  long-term  financing  for the  purchased  property
before the principal  note is due in February  2004. If the Company is unable to
obtain long-term financing, the Company may have to sell the property to pay the
note.  There can be no  assurance  that the  property  can be sold for the total
amount  of the  note.  The  sale of the  property  for less  than the  Company's
purchase price will result in a loss which may  materially  impact the Company's
future financial condition and results of operations.



                                                                              11

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE H - Income Taxes

The components of income tax expense  (benefit) for the three months ended March
31, 2003 and 2002, respectively, are as follows:

                                                  Three months     Three months
                                                      ended            ended
                                                 March 31, 2003   March 31, 2002
                                                 --------------   --------------

     Federal:
       Current                                   $       55,000   $       70,500
       Deferred                                            --               --
                                                 --------------   --------------
                                                         55,000           70,500
                                                 --------------   --------------
     State:
       Current                                             --               --
       Deferred                                            --               --
                                                 --------------   --------------
                                                           --               --
                                                 --------------   --------------

       Total                                     $       55,000   $       70,500
                                                 ==============   ==============

The Company's income tax expense  (benefit) for the three months ended March 31,
2003 and 2002,  respectively,  differed  from the  statutory  federal rate of 34
percent as follows:
<TABLE>
<CAPTION>

                                                               Three months      Three months
                                                                   ended             ended
                                                              March 31, 2003    March 31, 2002
                                                              --------------    --------------
<S>                                                           <C>               <C>
     Statutory rate applied to earnings before income taxes   $       55,239    $       70,561
     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                            (239)              (61)
                                                              --------------    --------------

     Income tax expense                                       $       55,000    $       70,500
                                                              ==============    ==============
</TABLE>

The deferred  current tax asset and non-current  deferred tax liability on March
31,2003 and 2002, respectively, balance sheet consists of the following:

                                                         March 31,    March 31,
                                                            2003         2002
                                                         ---------    ---------

     Non-current deferred tax liability                  $(288,916)   $(133,101)
                                                         =========    =========

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


NOTE I - 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.


                                                                              12

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE J - 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, 2002, future minimum non-cancellable lease revenues
are as follows:

                                                     Year ending
                                                     December 31,      Amount
                                                     ------------   ------------
                                                        2003        $    169,750
                                                                    ============


NOTE K - 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.
<TABLE>
<CAPTION>

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


                                       Restaurant          Rental         General and
                                        facility        real estate      administrative        Total
                                     --------------    --------------    --------------    --------------

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                    --                --                --                --

</TABLE>



                                                                              13

<PAGE>

Part I - Item 2

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

(6)  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.

(7)  Results of Operations

Three  months  ended March 31, 2003 as compared to three  months ended March 31,
--------------------------------------------------------------------------------
2002
----

Bar and restaurant sales declined by  approximately  (9.44)% in the three months
ended March 31, 2003. Bar and restaurant sales were  approximately  $868,000 for
the three months ended March 31, 2003 as compared to  approximately  $958,000 in
the  comparable  period  of 2002.  The  decrease  was  attributable  to  overall
fluctuations  in visitor  traffic to the  Dallas-Ft.  Worth  Metroplex and local
patronage.  The City of Dallas,  Texas  continues to pursue  enforcement  of its
Sexually Oriented Business  Ordinance.  The Sexually Oriented Business Ordinance
restricts  the attire and dancing  activities at the  Company's  Million  Dollar
Saloon,  and other local  adult  cabarets,  which has  resulted in a decrease in
patron  attendance at the Company's  facilities.  Management is unable to assess
the  long-term  impact of this  continuing  litigation.  See "Part II - Item 1 -
Legal Proceedings."

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 by approximately  $13,000 to approximately
$161,000  for the  first  three  months  of 2003 as  compared  to  approximately
$148,000 in the same  period of  Calendar  2002.  A  significant  factor to this
decrease was a renegotiated lease with 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 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  provided  that the
Company, as landlord, shall receive 10% of the gross revenues generated from the
business  located  at the  property,  payable  quarterly.  Since  the  scheduled
expiration  of this lease in May 2002,  the lessee has been on a  month-to-month
basis at the same  rental  rate.  As of  March  31,  2003,  the  Company  is due
approximately  $104,000 in additional  rents over and above the required  weekly
payment as calculated on the gross sales of the tenant.

Cost of sales  decreased  to  approximately  $477,000 for the three months ended
March 31, 2003 as compared to  approximately  $580,000  for 2002.  Gross  profit
percentages remain relatively  constant at 53.65%  (approximately  $552,000) for
the three months ended March 31, 2003 versus 54.8% (approximately  $527,000) for

                                                                              14

<PAGE>

the three months ended March 31, 2002. Key areas of management focus for cost of
sales expenditure control are 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  $373,000 for the first
three months ended March 31, 2003 as compared to approximately  $303,000 for the
comparable   period  of  2002.  The  increase  was   attributable  to  increased
professional fees for investigation of possible business acquisition targets and
increased 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 which continue into
2003. 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.

Net income  before income taxes was  approximately  $162,000 for the first three
months  ended March 31, 2003 versus  approximately  $201,000 for the first three
months of March 31,  2002.  After-tax  net  income  decreased  by  approximately
$30,000 from  approximately  $137,000 for the first three months ended March 31,
2002 to approximately $107,000 for the same period in Calendar 2002. The Company
experienced  earnings per share of approximately $0.02 per share for each of the
three month periods ended March 31,2003 and 2002, respectively.

As  a  general  rule,  the  Company's   adult  cabaret   operations   experience
unpredictable  fluctuations as a result of the overall  economic state of 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.  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,  the  Company  has  working  capital  of  approximately
($1,539,000)  as compared  to  approximately  $981,000 at December  31, 2001 and
approximately  $969,000 at March 31, 2002.  The Company  achieved  positive cash
flows from  operations of  approximately  $103,000 for the first three months of
2003  versus  approximately  $128,000  for the first three  months of 2002.  The
deterioration  of the Company's  working capital is directly related to the note
payable  given to acquire  land held for  future  development  which  matures in
February 2004.

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.

(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  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 will be required to pay approximately  $132,000 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.


                                                                              15

<PAGE>

The Company  intends to seek  long-term  financing  for the  purchased  property
before the principal  note is due in February  2004. If the Company is unable to
obtain long-term financing, the Company may have to sell the property to pay the
note.  There can be no  assurance  that the  property  can be sold for the total
amount  of the  note.  The  sale of the  property  for less  than the  Company's
purchase price will result in a loss which may  materially  impact the Company's
future financial condition and results of operations.

The Company has identified no other significant  capital  requirements for 2003,
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.

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 and other  operators of adult  cabarets
     within the City of Dallas are contesting the  constitutionality  of certain
     provisions  of  the  Dallas  Sexually  Oriented  Business   Ordinance  (the
     "Ordinance") which impacts the Company's and other operators' license to do
     business as an adult cabaret in Dallas.  The Company is of the opinion that
     it will prevail on its constitutional claims. In January, 2001, as a result
     of a trial  setting,  the City of Dallas  agreed to re-write the  contested
     provisions of the Ordinance.

     In May 2003,  the Company and the City of Dallas  reached a  settlement  in
     this case as it relates to the Company and two other entities controlled by
     the  Company's  officers  and  directors.  In  exchange  for the two  other
     entities  controlled by the Company's  officers and directors closing prior
     to  December  31,  2003,  the City of  Dallas  will  grant the  Company  an
     operating  permit under it's  Sexually  Oriented  Business  Ordinance on an
     annual basis through July 31, 2009.

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

                                                                              16

<PAGE>

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
     --------

     99.1 Certifications Pursuant to Section 302 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 13, 2003                                             /s/ Nick Mehmeti
       ------------                                  ---------------------------
                                                                    Nick Mehmeti
                                                         Chief Operating Officer
                                                                    and Director



                                                                              17

<PAGE>

       Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002


In  connection  with  the  Quarterly  Report  of  Million  Dollar  Saloon,  Inc.
(Registrant)  on Form 10-QSB for the quarter ended March 31, 2003, as filed with
the Securities  and Exchange  Commission,  on the date hereof,  I, Nick Mehmeti,
Chief Executive and Chief Financial Officer of the Company,  certify to the best
of my knowledge, pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that:

5.   I have  reviewed  this  Quarterly  Report on Form 10-QSB of Million  Dollar
     Saloon, Inc. for the quarter ended March 31, 2003.

6.   Based on my knowledge,  this  Quarterly  Report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

7.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  Quarterly  Report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     Quarterly Report;

8.   The registrant's other certifying  officers,  if any, and I are responsible
     for  establishing  and maintaining  disclosure  controls and procedures (as
     defined in Exchange  Act Rules  13a-14 and 15d-14) for the  Registrant  and
     have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  Registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  Quarterly
          Report is being prepared;
     (b)  evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this Quarterly Report (the "Evaluation Date"); and
     (c)  presented  in  this  Quarterly   Report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

(5)  The Registrant's other certifying  officers,  if any, and I have disclosed,
     based on our most recent evaluation,  to the Registrant's  auditors and the
     audit committee of registrant's  board of directors (or persons  performing
     the equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  Registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  Registrant's  auditors any material  weaknesses in
          internal controls; and
     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          controls; and

(6)  The Registrant's other certifying officers, if any, and I have indicated in
     this  Quarterly  Report  whether or not there were  significant  changes in
     internal  controls  or in other  factors  that could  significantly  affect
     internal  controls  subsequent  to the date of our most recent  evaluation,
     including any corrective  actions with regard to  significant  deficiencies
     and material weaknesses.


/s/ Nick Mehmeti                                             Dated: May 13, 2003
----------------                                                    ------------

Nick Mehmeti
Chief Executive Officer and
Chief Financial Officer


                                                                              18