UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-Q



(Mark one)

[X]  Quarterly  Report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934

                For the quarterly period ended September 30, 2008

[ ]  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 registrant 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 [ ] NO [X]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files). YES [ ] NO [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer",  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

       Large accelerated filer  [ ]       Accelerated filer           [ ]

       Non-accelerated filer    [ ]       Smaller reporting company    [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [ ] NO [X]


State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: January 13, 2010: 5,731,778
                                          ---------------------------

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





                                                                               1
<PAGE>



                           Million Dollar Saloon, Inc.

               Form 10-Q for the Quarter ended September 30, 2008

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1 - Financial Statements                                                3

  Item 2 - Management's Discussion and Analysis or Plan of Operation          18

  Item 3 - Quantitative and Qualitative Disclosures About Market Risk         21

  Item 4 - Controls and Procedures                                            22

Part II - Other Information

  Item 1 - Legal Proceedings                                                  22

  Item 2 - Recent Sales of Unregistered Securities and Use of Proceeds        24

  Item 3 - Defaults Upon Senior Securities                                    24

  Item 4 - Submission of Matters to a Vote of Security Holders                24

  Item 5 - Other Information                                                  24

  Item 6 - Exhibits                                                           24

Signatures                                                                    25












                                       2
<PAGE>
<TABLE>
<CAPTION>

Part I
Item 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                    September 30, 2008 and December 31, 2007


                                                                (Unaudited)         (Audited)
                                                               September 30,       December 31,
                                                                   2008               2007
                                                                -----------        -----------
<S>                                                                                <C>
                                     ASSETS
                                     -------
Current Assets
   Cash on hand and in bank                                     $ 1,366,497        $ 1,211,293
   Inventory                                                         51,094             62,840
   Prepaid expenses                                                   1,213             10,040
                                                                -----------        -----------

     Total current assets                                         1,418,804          1,284,173
                                                                -----------        -----------


Property and Equipment - At Cost
   Buildings and related improvements                             1,526,424          1,526,424
   Furniture and equipment                                          466,070            466,070
                                                                -----------        -----------
                                                                  1,992,494          1,992,494
   Less accumulated depreciation                                 (1,693,416)        (1,625,313)
                                                                -----------        -----------
                                                                    299,078            367,181
   Land                                                             210,000            210,000
                                                                -----------        -----------

     Net property and equipment                                     509,078            577,181
                                                                -----------        -----------


Other Assets
   Land held for future development                               2,661,546          2,661,546
   Property and equipment held for sale                                --              870,930
   Operations agreement, net of accumulated
     amortization of approximately $848,450
     and $712,055, respectively                                     151,550            287,945
   Loan costs, net of accumulated amortization
     of approximately $3,201 and $2,687, respectively                 7,088              7,602
   Security deposits and other                                        1,725              1,725
                                                                -----------        -----------

     Total other assets                                           2,821,909          3,829,748
                                                                -----------        -----------


Total Assets                                                    $ 4,749,791        $ 5,691,102
                                                                ===========        ===========



                                  - Continued -

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



                                                                               3
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                    September 30, 2008 and December 31, 2007


                                                                 (Unaudited)         (Audited)
                                                                September 30,       December 31,
                                                                    2008               2007
                                                                 -----------        -----------
                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Current Liabilities
   Current maturities of long-term mortgage note payable        $  103,203         $  103,203
   Current maturities of long-term lawsuit settlement payable      100,528            152,037
   Accounts payable - trade                                         19,735             43,095
   Accrued liabilities                                             103,945             90,475
   Federal income taxes payable                                    162,000             55,000
   Contract payable to affiliated entities                            --            1,000,000
   Accrued interest payable to affiliated entities                    --                 --
                                                                ----------         ----------

     Total current liabilities                                     489,411          1,443,810
                                                                ----------         ----------

Long-Term Liabilities
   Long-term mortgage note payable, net of current maturities    1,493,997          1,569,327
   Long-term lawsuit settlement payable                             45,245             87,734
   Deferred tax liability                                           82,763            198,173
                                                                ----------         ----------

     Total liabilities                                           2,111,416          3,299,044
                                                                ----------         ----------

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, respectively.          5,732              5,732
   Retained earnings                                             2,632,643          2,386,326
                                                                ----------         ----------

     Total shareholders' equity                                  2,638,375          2,392,058
                                                                ----------         ----------

Total Liabilities and Shareholders' Equity                      $4,749,791         $5,691,102
                                                                ==========         ==========


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




                                                                               4
<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
             Nine and Three months ended September 30, 2008 and 2007

                                   (Unaudited)


                                          Nine months       Nine months      Three months      Three months
                                             ended             ended            ended             ended
                                         September 30,     September 30,     September 30,     September 30,
                                             2008              2007              2008              2007
                                         -----------       -----------       -----------       -----------
Revenues
   Bar and restaurant sales              $ 2,049,687       $ 2,254,671       $   660,200       $   772,021
   Rental income                             377,594           331,500           149,200           102,000
                                         -----------       -----------       -----------       -----------
   Total revenues                          2,427,281         2,586,171           809,400           874,021
                                         -----------       -----------       -----------       -----------

Cost of Sales - Bar and
   Restaurant Operations                   1,022,116           984,889           323,925           333,038
                                         -----------       -----------       -----------       -----------

Gross Profit                               1,405,165         1,601,282           485,475           540,983
                                         -----------       -----------       -----------       -----------

Operating Expenses
   General and administrative expenses       801,478           921,253           274,844           331,554
   Interest expense                          126,078           178,835            35,720            60,127
   Depreciation and amortization             204,499           204,589            68,166            70,676
                                         -----------       -----------       -----------       -----------
     Total operating expenses              1,132,055         1,304,677           378,730           462,357
                                         -----------       -----------       -----------       -----------

Income from Operations                       273,110           296,605           106,745            78,626

Other Income (Expenses)
   Interest and other miscellaneous           29,276            27,492             8,005             9,658
   Lawsuit settlement                        (10,000)             --             (10,000)             --
   Sale of property easement                    --              16,007              --                --
   Gain on sale of land and building          61,736              --                --                --
                                         -----------       -----------       -----------       -----------


Income before Income Taxes                   354,122           340,104           104,750            88,284

Income Tax (Expense) Benefit
   Currently payable/refundable             (223,215)         (115,635)          (37,731)          (34,135)
   Deferred
                                                --                --                --             115,410
                                         -----------       -----------       -----------       -----------

Net Income                                   246,317           224,469            67,019            54,149

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



Comprehensive Income                     $   246,317       $   224,469       $    67,019       $    54,149
                                         ===========       ===========       ===========       ===========

Earnings per share of common stock
   outstanding, computed on net income
   - basic and fully diluted             $      0.04       $      0.04       $      0.01       $      0.01
                                         ===========       ===========       ===========       ===========

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

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


                                                                               5
<PAGE>
                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                  Nine months ended September 30, 2008 and 2007

                                   (Unaudited)

                                                                      Nine months         Nine months
                                                                        ended               ended
                                                                     September 30,       September 30,
                                                                         2008                2007
                                                                      -----------         -----------
Cash Flows from Operating Activities
   Net Income                                                         $   246,317         $   224,469
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                                      205,013             205,103
       Gain on sale of land and building                                  (61,736)               --
       Gain on sale of easement                                              --               (16,007)
       Closing and other costs related to sale of land and building        36,778                --
       (Increase) decrease in
         Accounts receivable - trade and other                               --                  --
Income taxes receivable                                                      --               120,423
         Inventory                                                         11,746             (10,301)
         Prepaid expenses                                                   8,827              (2,526)
       Increase (decrease) in
         Accounts payable and other liabilities                            (9,891)            (12,000)
         Federal income taxes payable                                     107,000              58,662
         Lawsuit settlement payable                                       (93,998)            (67,500)
         Accrued interest payable to affiliated entities                     --                59,835
                                                                      -----------         -----------

     Net cash provided by operating activities                            334,646             560,158
                                                                      -----------         -----------


Cash Flows from Investing Activities
   Cash received on sale of land and building                             895,888                --
   Cash received from sale of property easement                              --                16,007
   Purchases of property and equipment                                       --                (1,191)
   Cash paid for marketable securities                                       --                  (781)
                                                                      -----------         -----------

     Net cash used in investing activities                                895,888              14,035
                                                                      -----------         -----------


Cash Flows from Financing Activities
   Cash paid on operating agreement payable to related parties         (1,000,000)               --
   Principal paid on long-term mortgage note payable                      (75,330)            (61,871)
                                                                      -----------         -----------

     Net cash provided by financing activities                         (1,075,330)            (61,871)
                                                                      -----------         -----------

Increase in Cash and Cash Equivalents                                     155,204             512,322

Cash at beginning of period                                             1,211,293           1,010,743
                                                                      -----------         -----------

Cash at end of period                                                 $ 1,366,497         $ 1,523,065
                                                                      ===========         ===========

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                                  $   125,564         $   118,486
                                                                      ===========         ===========
     Income taxes paid (refunded)                                     $   116,215         $   (63,450)
                                                                      ===========         ===========
</TABLE>


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


                                                                               6
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                           September 30, 2008 and 2007



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)".   In
conjunction  with an October 2002 Settlement  Agreement with the City of Dallas,
Texas, the Company's adult entertainment  lounge and restaurant,  Million Dollar
Saloon,  may operate in its present  "non-conforming  location" with a mandatory
closing date of July 31, 2009.

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-K for the  year  ended
December 31, 2007.  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, 2008.



                                                                               7
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE B - Preparation of Financial Statements - Continued

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  respective  periods ended  September 30, 2008 and 2007,  respectively.  All
significant intercompany  transactions have been eliminated in combination.  The
consolidated entities are referred to as Company.


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,  certificates  of  deposit  and  other  highly-liquid
     investments with maturities of three months or less, when purchased,  to be
     cash and cash equivalents.

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

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

     In the normal course of business,  the Company extends  unsecured credit to
     virtually  all of its tenants  related to rental  property  operations  and
     accepts  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  rental  property   lessors  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.

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

     The Company  files  income tax returns in the United  States of America and
     various states,  as appropriate and  applicable.  With few exceptions,  the
     Company  is no  longer  subject  to  U.S.  federal,  state  and  local,  as
     applicable,  income tax examinations by regulatory  taxing  authorities for
     years before 2005.  The Company does not  anticipate  any  examinations  of
     returns filed for periods ending after December 31, 2004.




                                                                               8
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE C - Summary of Significant Accounting Policies - Continued

5.   Income Taxes - continued
     ------------

     The Company uses the asset and liability  method of  accounting  for income
     taxes.  At September  30, 2008 and December  31,  2007,  respectively,  the
     deferred tax asset and deferred tax  liability  accounts,  as recorded when
     material to the financial statements,  are entirely the result of temporary
     differences.  Temporary  differences generally represent differences in the
     recognition  of assets  and  liabilities  for tax and  financial  reporting
     purposes,  primarily accumulated  depreciation and amortization,  allowance
     for doubtful accounts and vacation accruals.

     The  Company  adopted  the  provisions  of  FASB   Interpretation  No.  48,
     "Accounting  for  Uncertainty  in Income Taxes",  on October 1, 2007.  FASB
     Interpretation No. 48 requires the recognition of potential  liabilities as
     a result of management's  acceptance of potentially uncertain positions for
     income  tax  treatment  on  a  "more-likely-than-not"   probability  of  an
     assessment upon examination by a respective taxing  authority.  As a result
     of the  implementation of Interpretation  48, the Company did not incur any
     liability for unrecognized tax benefits.

6.   Earnings per share
     ------------------

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) available to common shareholders by the  weighted-average  number of
     common shares  outstanding  during the respective  period  presented in our
     accompanying financial statements.

     Fully diluted earnings (loss) per share is computed similar to basic income
     (loss) per share  except that the  denominator  is increased to include the
     number of common  stock  equivalents  (primarily  outstanding  options  and
     warrants).

     Common  stock  equivalents  represent  the  dilutive  effect of the assumed
     exercise of the outstanding stock options and warrants,  using the treasury
     stock method, at either the beginning of the respective period presented or
     the date of  issuance,  whichever  is later,  and only if the common  stock
     equivalents  are  considered  dilutive  based upon the Company's net income
     (loss) position at the calculation date.

     At September 30, 2008 and 2007, and subsequent thereto,  the Company has no
     outstanding stock warrants,  options or convertible  securities which could
     be   considered  as  dilutive  for  purposes  of  the  earnings  per  share
     calculation.

7.   Pending and/or New Accounting Pronouncements
     --------------------------------------------

     The Company is of the opinion that any pending  accounting  pronouncements,
     either in the adoption  phase or not yet  required to be adopted,  will not
     have a significant impact on the Company's financial position or results of
     operations.


NOTE D - Related Party Transactions

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

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


                                                                               9
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE D - Related Party Transactions - Continued

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

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

The  property  owned by Don,  Inc.  is also  subject  to a lease with a separate
entity  controlled  by  Duncan  Burch,  an  officer,  director  and  controlling
shareholder  of the  Company.  This lease  expired  in August  2003 and is being
continued  on a  month-to-month  basis at the final  contractual  rental rate of
approximately  $8,500 per week.  This lease has  converted  to a  month-to-month
basis.

In  conjunction  with the October  2002  Settlement  Agreement  with the City of
Dallas,  Texas, as discussed  previously,  the Company entered into negotiations
between the Company's  wholly-owned  subsidiary,  Tempo Tamers, Inc., Mainstage,
Inc. (Mainstage), an entity controlled by Nick Mehmeti, the Company's President,
which operated a non-conforming  adult cabaret located in Dallas,  Texas, called
P.T.'s and  Allen-Burch,  Inc.  (Allen  Burch),  an entity  controlled by Duncan
Burch,  a  Company  officer  and  significant  shareholder,   also  operating  a
non-conforming  adult  cabaret  known  as  The  Fare.  These  negotiations  were
initiated to determine  which of these  non-conforming  entities  would continue
operating in a "non-conforming location".

In May 2003,  these three  affiliated  parties  granted the  exclusive  right to
negotiate  with  the  City of  Dallas,  Texas  to  Tempo  Tamers,  Inc.  for the
continuance  of the  operations  of The  Million  Dollar  Saloon  as a  sexually
oriented business in a "non-conforming location."

This Settlement  Agreement  provided that, in the event that the City of Dallas,
Texas  granted  The  Million  Dollar  Saloon  the  exclusive  right to  continue
operating as an adult cabaret in a "non-conforming  location" for a six (6) year
period,  Tempo Tamers would pay $500,000  each to Mainstage  and Allen Burch and
Mainstage  and  Allen-Burch  would  each  discontinue  the  operation  of  their
respective sexually oriented businesses.

In May 2003,  the City of Dallas  agreed to allow  Tempo  Tamers to  continue to
operate The Million Dollar Saloon at its current  location  through the last day
of July 2009.  Mainstage  and Allen  Burch then  agreed with the City of Dallas,
Texas to  discontinue  the  respective  operations  of  Mainstage  and The Fare,
respectively,  as  sexually  oriented  business  in  January  and  March,  2004,
respectively.

The cessation of operations by Mainstage and Allen Burch  triggered the $500,000
payment clause to each entity as set forth in the May 2003 Settlement Agreement.
The aggregate $1,000,000 payment has been accrued in the accompanying  financial
statements,  bears  interest  at  8.0%  per  annum  and is  being  amortized  to
operations over the 67 month term from the triggering  event date(s) through the
mandatory   closing  date  of  The  Million   Dollar   Saloon  in  it's  present
"non-conforming  location" on July 31, 2009. As of June 30, 2008, the $1,000,000
aggregate payable has been accrued in the accompanying  financial statements and
all accrued interest payable has been paid in full through December 31, 2007.

NOTE E - Fair Value of Financial Instruments

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


                                                                              10
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE E - Fair Value of Financial Instruments - Continued

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

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

NOTE F - Concentrations of Credit Risk

The  Company  maintains  its cash  accounts  in various  financial  institutions
subject  to  insurance   coverage  issued  by  the  Federal  Deposit   Insurance
Corporation  (FDIC).  Under FDIC rules,  the Company  and its  subsidiaries  are
entitled to the listed  aggregate  coverage per account type per separate  legal
entity per financial institution. During the period ended September 30, 2008 and
for each of the  years  ended  December  31,  2007 and 2006,  respectively,  the
various operating companies maintained deposits in these financial  institutions
with credit risk exposures in excess of statutory FDIC coverage. The Company has
incurred no losses as a result of any of these unsecured situations.

NOTE G - Property and Equipment

Property and  equipment  consists of the  following  at  September  30, 2008 and
December 31, 2007:

                                    September 30,   December 31,
                                         2008           2007     Estimated life
                                     -----------    -----------  --------------

Buildings and related improvements   $ 1,526,424    $ 1,526,424   15-40 years
Furniture and equipment                  466,070        466,070    5-10 years
                                     -----------    -----------
                                       1,992,494      1,992,494
Less accumulated depreciation         (1,693,416)    (1,625,313)
                                     -----------    -----------
                                         299,078        367,181
Land                                     210,000        210,000
                                     -----------    -----------

Net property and equipment           $   509,078    $   577,181
                                     ===========    ===========

Depreciation  expense for the nine  months  ended  September  30, 2008 and 2007,
respectively, was approximately $68,104 and $68,194.

NOTE H - Land Held for Future Development
           Long-term Mortgage Note Payable

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately $53,599. The 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 if it will be able to
develop the property,  acquire a  construction  loan in an amount  sufficient to
facilitate  development  or if  obtained,  whether the terms of the loan will be
favorable to the Company.


                                                                              11
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE H - Land Held for Future Development - Continued
           Long-term Mortgage Note Payable

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

As of September 30, 2008 and December 31, 2007,  respectively,  the Company owed
approximately $1,597,200 and $1,672,530 on the long-term mortgage note payable.

Future maturities of the long-term mortgage note payable are as follows:

                                           Year ending            Principal
                                           December 31              due

                                              2008             $  103,203
                                              2009                111,918
                                              2010                119,212
                                              2011                126,227
                                            2012-2016             773,083
                                            2017-2019             438,887
                                                               ----------

                                              Total            $1,672,530
                                                               ==========

NOTE I - Property and Equipment held for Sale

During the 3rd  quarter of Calendar  2004,  Company  management  listed the real
estate and other significant  assets owned by Corporation Lex for sale through a
commercial real estate  brokerage firm and  reclassified the net carrying values
at  the  listing  date  to  "Property  and  Equipment  held  for  Sale"  in  the
accompanying financial statements.

This  property  was sold on February 5, 2008 for net  proceeds of  approximately
$896,000,  resulting in a recognized  gain at the date of sale of  approximately
$61,000.


NOTE J - Operations Agreement
             Contract Payable to Affiliated Entities

In  conjunction  with the October  2002  Settlement  Agreement  with the City of
Dallas,  Texas, as discussed  previously,  the Company entered into negotiations
between the Company's  wholly-owned  subsidiary,  Tempo Tamers, Inc., Mainstage,
Inc. (Mainstage), an entity controlled by Nick Mehmeti, the Company's President,
which operated a non-conforming  adult cabaret located in Dallas,  Texas, called
P.T.'s and  Allen-Burch,  Inc.  (Allen  Burch),  an entity  controlled by Duncan
Burch,  a  Company  officer  and  significant  shareholder,   also  operating  a
non-conforming  adult  cabaret  known  as  The  Fare.  These  negotiations  were
initiated to determine  which of these  non-conforming  entities  would continue
operating in a "non-conforming location".

In May 2003,  these three  affiliated  parties  granted the  exclusive  right to
negotiate  with  the  City of  Dallas,  Texas  to  Tempo  Tamers,  Inc.  for the
continuance  of the  operations  of The  Million  Dollar  Saloon  as a  sexually
oriented business in a "non-conforming location."


                                                                              12
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE J - Operations Agreement
             Contract Payable to Affiliated Entities - Continued

This Settlement  Agreement  provided that, in the event that the City of Dallas,
Texas  granted  The  Million  Dollar  Saloon  the  exclusive  right to  continue
operating as an adult cabaret in a "non-conforming  location" for a six (6) year
period,  Tempo Tamers would pay $500,000  each to Mainstage  and Allen Burch and
Mainstage  and  Allen-Burch  would  each  discontinue  the  operation  of  their
respective sexually oriented businesses.

In May 2003,  the City of Dallas  agreed to allow  Tempo  Tamers to  continue to
operate The Million Dollar Saloon at its current  location  through the last day
of July 2009.  Mainstage  and Allen  Burch then  agreed with the City of Dallas,
Texas to  discontinue  the  respective  operations  of  Mainstage  and The Fare,
respectively,  as  sexually  oriented  business  in  January  and  March,  2004,
respectively.

The cessation of operations by Mainstage and Allen Burch  triggered the $500,000
payment clause to each entity as set forth in the May 2003 Settlement Agreement.
The aggregate $1,000,000 payment has been accrued in the accompanying  financial
statements,  bears  interest  at  8.0%  per  annum  and is  being  amortized  to
operations over the 67 month term from the triggering  event date(s) through the
mandatory   closing  date  of  The  Million   Dollar   Saloon  in  it's  present
"non-conforming location" on July 31, 2009.

During the nine months  ended  September  30, 2008 and 2007,  respectively,  the
Company paid or accrued approximately $26,667 and $59,835 in interest payable on
this  Agreement.  During the quarter ended June 30, 2008,  the Company paid this
indebtedness and all accrued, but unpaid, interest payable in full.

NOTE K - Income Taxes

The components of income tax expense  (benefit) for the nine month periods ended
September 30, 2008 and 2007, respectively, are as follows:

                           Nine months        Nine months
                              ended              ended
                           September 30,      September 30,
                               2008               2007
                            ---------          ---------
         Federal:
           Current          $ 223,215          $ 115,635
           Deferred          (115,410)              --
                            ---------          ---------
                              107,105            115,635
                            ---------          ---------
         State:
           Current               --                 --
           Deferred              --                 --
                            ---------          ---------
                                 --                 --
                            ---------          ---------

           Total            $  70,074          $ 115,635
                            =========          =========



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                                                                              13
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE K - Income Taxes - Continued

The  Company's  income tax expense  (benefit) for each of the nine month periods
ended  September  30, 2008 and 2007,  respectively,  differed from the statutory
federal rate of 34 percent as follows:
                                                        Nine months     Nine months
                                                            ended           ended
                                                        September 30,   September 30,
                                                            2008            2007
                                                         ---------       ---------
<S>                                                                      <C>
Statutory rate applied to earnings before income taxes   $ 120,400       $  36,000
  Increase (decrease) in income taxes resulting from:
    State income taxes                                        --              --
    Deferred income taxes                                 (115,410)           --
    Effect of reversal of timing differences related
      to sale of land and building                         103,000
    Effect of incremental tax brackets and the
      application of business tax credits                     (185)        (11,300)
                                                         ---------       ---------

  Income tax expense                                     $ 107,805       $  24,700
                                                         =========       =========
</TABLE>

The  deferred  current  tax asset and  non-current  deferred  tax lia  bility on
September 30, 2008 and December 31, 2007,  respectively,  balance sheet consists
of the following:
                                                  September 30,     December 31,
                                                      2008             2007
                                                  ------------     ------------

     Non-current deferred tax liability            $(82,763)        $(198,173)
                                                   ========         =========

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

NOTE L - Commitments

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

NOTE M - Litigation

1)   City of Dallas licensing

     In conjunction  with an October 2002 Settlement  Agreement with the City of
     Dallas,  Texas, the Company entered into negotiations between the Company's
     wholly-owned subsidiary,  Tempo Tamers, Inc., Mainstage,  Inc. (Mainstage),
     an entity  controlled  by Nick  Mehmeti,  the  Company's  President,  which
     operated a non-conforming  adult cabaret located in Dallas,  Texas,  called
     P.T.'s and Allen-Burch,  Inc. (Allen Burch), an entity controlled by Duncan
     Burch,  a Company  officer and  significant  shareholder,  also operating a
     non-conforming  adult cabaret known as The Fare.  These  negotiations  were
     initiated  to  determine  which  of  these  non-conforming  entities  would
     continue operating in a "non-conforming location". In May 2003, these three
     affiliated  parties  granted the exclusive right to negotiate with the City
     of  Dallas,  Texas  to  Tempo  Tamers,  Inc.  for  the  continuance  of the
     operations of The Million Dollar Saloon as a sexually  oriented business in
     a "non-conforming location."


                                                                              14
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE M - Litigation - Continued

     This  Settlement  Agreement  provided  that,  in the event that the City of
     Dallas,  Texas granted The Million  Dollar  Saloon the  exclusive  right to
     continue operating as an adult cabaret in a "non-conforming location" for a
     six (6) year period,  Tempo Tamers would pay $500,000 each to Mainstage and
     Allen  Burch and  Mainstage  and  Allen-Burch  would each  discontinue  the
     operation of their respective  sexually oriented  businesses.  In May 2003,
     the City of Dallas,  Texas  agreed to allow  Tempo  Tamers to  continue  to
     operate The Million Dollar Saloon at its current  location through the last
     day of July 2009.  Mainstage  and Allen  Burch then agreed with the City of
     Dallas, Texas to discontinue the respective operations of Mainstage and The
     Fare,  respectively,  as sexually  oriented  business in January and March,
     2004,  respectively.  The  cessation of  operations  by Mainstage and Allen
     Burch triggered the $500,000  payment clause to each entity as set forth in
     the May 2003 Settlement  Agreement.  The aggregate  $1,000,000  payment has
     been accrued in the Company's  financial  statements and is being amortized
     to  operations  over the 67 month term from the  triggering  event  date(s)
     through the  mandatory  closing date of The Million  Dollar  Saloon in it's
     present "non-conforming location" on July 31, 2009.

2)   "John Doe I" v. Tempo Tamers  Beverage  Company,  Inc.  dba Million  Dollar
     Saloon and  Christopher  John Thornton,  Dallas County Texas District Court
     Cause No.  05-02015;  filed  February  24,  2005 and settled on October 20,
     2005. Plaintiff "Doe I" filed a wrongful death/survivor claim under Section
     2.02 of the Texas  Alcoholic  Beverage  Code (dram shop).  The suit alleged
     that a customer of the Company's Tempo Tamers, Inc. subsidiary (dba Million
     Dollar  Saloon) (Club) was served in violation of Section 2.02 resulting in
     a motor vehicle  collision  causing the wrongful death of "Doe I's" spouse.
     While the Company's  wholly-owned  subsidiary  denied all allegations;  the
     case was  settled  on  October  20,  2005  under a  sealed  confidentiality
     agreement.  The  settlement was for the gross sum of $460,000 to be paid as
     follows: $50,000 on the signing of the settlement documents,  $50,000 on or
     about  January 13,  2006 and $7,500 per month  starting on November 1, 2005
     through  October 1, 2009. The settlement is  non-interest  bearing and, per
     the  requirements of generally  accepted  accounting  principles,  has been
     discounted  at the  Prime  Rate  of  6.75%  to  yield a net  settlement  of
     approximately   $415,026,   exclusive  of  imputed  interest.   The  entire
     discounted  settlement  was  charged  to  operations  on the  October  2005
     settlement date.

3)   "John Doe II" v. Tempo  Tamers,  Inc.  dba Million  Dollar  Saloon;  Dallas
     County Texas 44th District Court Cause No. 04-09918-A;  filed September 24,
     2004.  Clarendon  American  Insurance  Company v. Tempo  Tamers,  Inc.  dba
     Million  Dollar  Saloon;  Dallas County Texas 44th District Court Cause No.
     06-11838; filed November 17, 2006.

     This is a suit for  damages/loss of consortium  brought by Plaintiffs under
     Section 2.02 of the Texas Alcoholic Beverage Code. The Plaintiff claimed he
     was served by Club  employees in  violation of Section 2.02  resulting in a
     motorcycle  accident  whereby he  sustained  head  injuries and has medical
     bills  over  $300,000.  The  Plaintiff  further  asserted  to  have  no  or
     diminished capacity to continue his profession.  The Company's wholly-owned
     subsidiary,  Tempo Tamers,  Inc.,  vigorously  denied the  allegations  and
     asserted that the Plaintiff's  accident was primarily,  if not exclusively,
     of his own  doing  and  asserted  that  the  Plaintiff  was  more  than 50%
     responsible  for his  injuries  and that the only valid cause of action was
     pursuant to Section 2.02. The Company denied all liability.

     In 2006,  the  Company's  insurance  carrier  (Clarendon)  sued the Company
     claiming that they had no obligation to pay the claim of the  plaintiffs in
     the "John Doe II" litigation.

     In 2007, the Company, without an admission of liability, settled all claims
     in a confidential settlement agreement whereby Tempo Tamers, Inc. agreed to
     reimburse Clarendon $25,000 of the monies Clarendon paid to Plaintiffs,  in
     five (5)  monthly  installments  of $5,000  each,  with the  first  monthly
     installment  to be paid on November 1, 2007 and the last  installment to be
     paid on March 1, 2008. Thereafter,  Tempo Tamers, Inc. agreed to pay Doe II
     and Doe II's  counsel  the total sum of  $75,000,  to be paid in 15 monthly
     installments  of $5,000  each,  commencing  on April 1, 2008 with the final
     installment  to be paid on July 1, 2009. The effect and settlement of these
     actions was charged to operations on the November 2007 settlement date.

4)   Cody Staus and Kelly  Nowlin v.  Million  Dollar  Saloon  Inc.  dba Million
     Dollar Saloon;  Dallas County Texas  District Court Cause No.;  05-04622-K,
     filed May 10, 2005.  This case was brought by  Plaintiffs  Staus and Nowlin
     claiming they were assaulted by employees/security of Million Dollar Saloon
     and seek actual and punitive damages.  This matter was settled in June 2006
     for an aggregate  $10,000 cash to all  Plaintiffs and charged to operations
     at the settlement date.



                                                                              15
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE M - Litigation - Continued

5)   Beatrice  Hunter v. Tempo Tamers,  Inc. and Tempo Tamers  Beverage  Company
     Cause # 06-12954  in the116th  Judicial  District  Court for Dallas  County
     Texas, filed December 28, 2006.

     This case was originally brought by a person injured in a car accident with
     an  alleged  customer  of the Club  against  Million  Dollar  Saloon,  Inc.
     alleging a variety of causes of action  including  violations under Section
     2.02 of the Texas Alcoholic Beverage Code, negligence, gross negligence and
     other  allegations.  Million  Dollar Saloon,  Inc.  claimed that it was not
     liable as it did not operate the Club and claimed that Section 2.02 was the
     only valid  cause of action  and  injuries  were due to the  conduct of the
     driver of the  woman's  car to an extent to bar any  recovery  against  the
     club.  The initial case was dismissed  against  Million  Dollar Saloon Inc.
     when a settlement was reached between the Plaintiff and alleged customer. A
     new lawsuit was  thereafter  refiled  against  Tempo  Tamers Inc. and Tempo
     Tamers  Beverage  Company Inc.  This case is scheduled  for a jury trial to
     commence on August 11, 2008 and the ultimate outcome is not determinable at
     this time.  Management  is  aggressively  defending  these  actions  and no
     material impact to the Company's financial condition is anticipated at this
     time.

6)   Furrh Inc. v.  Charlene  McCartney  et al.,  Cause  #06-01564  in the 193rd
     District Court for Dallas County, Texas.

     This was a claim by Furrh Inc. against its landlord for offices and parking
     for  contracting  to sell the  leasehold  without  allowing  Furrh Inc. the
     opportunity to exercise its right of first refusal under the party's lease.
     Counterclaims  were filed.  The case was settled and  dismissed  with Furrh
     Inc.  allowing  the sale with  concessions  to allow use of the offices and
     parking to continue as long as the adjacent property owned by Furrh Inc can
     be operated as a SOB by the Lessee.

7)   Texas Alcoholic Beverage Commission v. Tempo Tamers Beverage Company Inc.

     This is Administrative  action brought by a state regulatory agency against
     a non subsidiary  corporation which provides Tempo Tamers, Inc. with liquor
     permitting and services for the Tempo Tamers,  Inc.'s  business  operations
     known as "Million Dollar Saloon".

     This Action is being vigorously  contested by the Company and the potential
     outcome of this  administrative  action is not  determinable  at this time.
     Management is  aggressively  defending these actions and no material impact
     to the Company's  financial condition is anticipated at this time; however,
     a  finding  against  Tempo  Tamers  Beverage  Company,  Inc.  could  have a
     significant detrimental impact on the operation of the Club.

From  time-to-time,  in the ordinary course of business,  the Company has become
and may become party to other lawsuits. The outcome of this litigation, existing
or future, if any, is not determinable at this time.  Management is aggressively
defending any current  actions and  anticipates  aggressively  defending  future
actions,  if any.  Accordingly,  no material  impact to the Company's  financial
condition is anticipated.

NOTE N - 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 September 30, 2008 and December 31, 2007,  respectively,
all rental  revenues are derived from entities  controlled  by Duncan Burch,  an
officer, director and controlling shareholder.  Approximately 14.8% and 14.8% of
total revenues for 2007 and 2006, respectively,  were derived from these related
parties.

NOTE O - Subsequent Events

On July 31, 2009, in accordance  with an agreement with the City of Dallas,  the
Company  ceased all  operations  associated  with the Million  Dollar Saloon and
Tempo Tamers, Inc.


                                                                              16
<PAGE>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                           September 30, 2008 and 2007



NOTE O - Subsequent Events - Continued

Management  has evaluated all activity of the Company  through  January 13, 2010
(the issue date of the financial  statements)  and concluded  that no subsequent
events, other than disclosed above, have occurred that would require recognition
in the financial statements or disclosure in the notes to financial statements.






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                                                                              17
<PAGE>

Part I - Item 2

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

(1)  Caution Regarding Forward-Looking Information

Certain statements contained in this Form 10-Q,  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-Q 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 whether to reflect new information,  future results, events, developments
or otherwise.

(2)  Results of Operations

Bar and restaurant sales decreased by approximately $205,000 for the nine months
ended  September  30, 2008 as compared to the nine month period ended  September
30, 2007. The Company  experienced net revenues of  approximately  $2,050,000 in
the 2008 period as compared to approximately $2,255,000 for the 2007 period.

Management is of the opinion that the overall fluctuations in visitor traffic to
the  Dallas-Ft.  Worth  Metroplex and the effects of changes in the economic and
ethnic  populations in the immediate  geographic area of the Company's  physical
location has stabilized.  The Company experienced  deteriorating revenues during
the fiscal  years  ended  December  31, 2006 and 2005.  Given the  demographics,
mobility and economic conditions of the City of Dallas and the specific location
of the Million Dollar  Saloon,  management is unable to predict any future trend
with any degree of certainty.

In May 2003,  the City of Dallas  agreed to allow  Tempo  Tamers to  continue to
operate the Million Dollar Saloon at its current  location  through the last day
of July 2009.  While the Company's  facility  holds a valid  "sexually  oriented
business" license issued by the City of Dallas, Texas; the City of Dallas, Texas
continues  to pursue  vigorous  enforcement  of its Sexually  Oriented  Business
Ordinance.  This  Ordinance  restricts the attire and dancing  activities at the
Company's  Million  Dollar  Saloon,  and other local adult  cabarets,  which has
resulted in  unpredictable  fluctuations  in patron  attendance at the Company's
facilities.

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


                                                                              18
<PAGE>

While the City of Dallas'  efforts  against  the  Company's  principal  business
activity,  the lack of  efforts  by the City of Dallas to  maintain  a degree of
economic and ethnic  diversity  and  prosperity in the vicinity of the Company's
facility may  contribute to further  revenue  deterioration  in future  periods.
Further,  due to the Company's  agreement  with the City of Dallas,  Texas,  all
operations in the current format at the Million Dollar Saloon will cease on July
31, 2009.

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 was relatively  consistent at $377,600 for the nine
months ended  September 30, 2008 as compared to  approximately  $331,500 for the
comparable nine months ended September 30, 2007. The difference relates directly
to the  differences in recovered  property taxes paid by Don, Inc. on the rental
property and reimbursed by the related party lessee.  Due to the  uncertainty of
collection  and the fact that this is a related party  transaction,  the Company
records the reimbursement in the accompanying  financial statements upon receipt
of the funds.  All of the leases  were/are  with  entities  controlled by Duncan
Burch, one of the Company's controlling shareholders.

During  Calendar  2004,   Management   reclassified   the  net  carrying  value,
approximately  $871,000,  to  "Property  and  equipment  held  for  sale" in the
Company's  financial  statements on the date of listing for sale.  This property
was  sold on  February  5,  2008 for net  proceeds  of  approximately  $896,000,
resulting in a net gain at the time of sale of approximately $62,000.

Our rental real  estate  owned by Don,  Inc.  is also  subject to a lease with a
separate entity controlled by Duncan Burch, an officer, director and controlling
shareholder  of the  Company.  This lease  expired  in August  2003 and is being
continued  on a  month-to-month  basis at the final  contractual  rental rate of
approximately  $8,500  per week.  This  arrangement  continues  in this  fashion
through the date of this filing.

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

Cost of sales increased  slightly by  approximately  $37,000 from  approximately
$985,000  for  the  nine  months  ended  September  30,  2007  to  approximately
$1,022,000  for  the  nine  months  ended  September  30,  2008.   Gross  profit
percentages declined to approximately 57.9%  (approximately  $1,405,000) for the
nine months ended September 30, 2008 versus 61.9% (approximately $1,601,000) for
the nine months ended  September 30, 2007.  Fluctuations  in the Company's gross
profit  percentages  react to and parallel the key areas of management focus for
cost of sales expenditure  control - principally  personnel  staffing levels and
food  and  beverage  costs.   These  areas,   specifically  cost  controls  over
purchasing,   inventory   management   protocols  and  labor   management,   are
continuously monitored to maintain the Company's gross profit percentages.

General and  administrative  expenses were  approximately  $801,000 for the nine
months ended  September 30, 2008 as compared to  approximately  $921,000 for the
comparable period ended September 30, 2007. Management attention to expenditures
of all types  caused the Company to  experience a  relatively  flat  expenditure
level for  overhead  expenses.  Management;  however,  is  continually  aware of
inflationary pressures in the economy, fluctuating legal expenses as a result of
ongoing  litigation  and the general  nature of a  litigious  society and issues
related to the City of Dallas Sexually Oriented Business Ordinance. Further, the
Company's executive compensation remains relatively stable and is anticipated to


                                                                              19
<PAGE>

remain stable into the foreseeable  future. 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.

The  Company  experienced  net  income  before  income  taxes was  approximately
$354,000  for the nine months  ended  September  30,  2008 versus  approximately
$340,000 for the  comparable  period ended  September  30, 2007.  After-tax  net
income increased nominally from approximately $224,000 for the nine months ended
September  30, 2007 as compared to  approximately  $246,000  for the  comparable
period ended September 30, 2008. The Company  experienced  earnings per share of
approximately  $0.04 and $0.04 per share for each of the six month periods ended
September 30, 2008 and 2007, respectively.

As  a  general  rule,  the  Company's   adult  cabaret   operations   experience
unpredictable  fluctuations  as a result of the overall  discretionary  spending
habits  related to the U. S.  economy,  visitation  levels  related to  tourism,
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 September 30, 2008 and December 31, 2007, the Company has working  capital
of approximately  $929,000 and $(160,000).  The Company  achieved  positive cash
flows from  operations  of  approximately  $335,000  for the nine  months  ended
September  30, 2008 as compared to  approximately  $560,000  for the  comparable
period in 2007.

The  Company's  working  capital is directly  related to the cash  expended  and
future  debt  service  requirements  to  acquire  land for  future  development.
Additionally,  the Company  incurred a  liability  of  approximately  $1,000,000
($500,000  each)  to  two  entities  controlled  by  the  Company's  controlling
shareholders,  Nick  Mehmeti  and Duncan  Burch  related to the  securing  of an
operating  license  for the  Company's  Million  Dollar  Saloon  operation  in a
"non-conforming  location"  through July 31, 2009. This debt was retired in full
using the proceeds of the sale of land in the second quarter of Calendar 2008.

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

On January 29, 2004, the Company  obtained  permanent  long-term  financing from
Citizens National Bank,  Waxahachie,  Texas, and used the proceeds to pay off in
full the  original  note  payable to the  seller.  The term loan had an original
balance of $2,000,000 and initially bore interest at 6.5% for the first year and
then adjusts to 1% above the  published  prime rate.  The interest  rate adjusts
every 12 months  commencing  January 29, 2005. The note required initial monthly
principal and interest payments of $17,426.  As this is a variable interest rate
note, the payments may change after the 12th payment and every  succeeding  12th
payment thereafter. The note matures on January 29, 2019. The note is secured by
the underlying land and the separate  personal guaranty of Duncan Burch and Nick
Mehmeti, each a Company officer, director and controlling shareholder.

Our primary  source of  liquidity  is generated  from  ongoing  operations.  Our
liquidity  beyond July 2009 will be greatly  diminished after the closing of the
Million Dollar Saloon on July 31, 2009.

(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 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 if it will be able to


                                                                              20
<PAGE>

develop the property,  acquire a  construction  loan in an amount  sufficient to
facilitate  development  or if  obtained,  whether the terms of the loan will be
favorable to the Company.

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

The Company has identified no other significant  capital  requirements for 2008,
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.

(4)  Critical Accounting Policies

Our financial  statements and related public financial  information are based on
the application of accounting principles generally accepted in the United States
("GAAP").  GAAP  requires  the  use of  estimates;  assumptions,  judgments  and
subjective  interpretations of accounting  principles that have an impact on the
assets,  liabilities,  revenue and expense amounts reported. These estimates can
also affect  supplemental  information  contained  in our  external  disclosures
including information regarding contingencies,  risk and financial condition. We
believe our use of estimates and  underlying  accounting  assumptions  adhere to
GAAP and are consistently and conservatively  applied.  We base our estimates on
historical  experience  and on various other  assumptions  that we believe to be
reasonable under the  circumstances.  Actual results may differ  materially from
these  estimates  under  different  assumptions  or  conditions.  We continue to
monitor  significant  estimates  made during the  preparation  of our  financial
statements.

Our  significant  accounting  policies are summarized in Note C of our financial
statements. While all these significant accounting policies impact our financial
condition  and  results of  operations,  we view  certain of these  policies  as
critical.  Policies  determined to be critical are those  policies that have the
most significant  impact on our financial  statements and require  management to
use a greater degree of judgment and  estimates.  Actual results may differ from
those  estimates.   Our  management   believes  that  given  current  facts  and
circumstances,  it is unlikely that applying any other  reasonable  judgments or
estimate  methodologies  would  cause  effect  on our  consolidated  results  of
operations,  financial  position or liquidity for the periods  presented in this
report.

(5)  Accounting Pronouncements

The Company knows of no new accounting releases or pronouncements that will have
any impact upon the Company's financial condition or position upon adoption.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

In future  periods,  the Company  may become  subject to certain  market  risks,
including  changes in interest rates and currency exchange rates. At the present
time, the Company has no identified exposure and does not undertake any specific
actions to limit exposures, if any.


                                                                              21
<PAGE>

Item 4 - Controls and Procedures

1.   Evaluation of Disclosure Controls and Procedures

     Under  the  supervision  and  with  the  participation  of our  management,
     including our principal  executive officer and principal financial officer,
     we conducted an evaluation of our disclosure  controls and  procedures,  as
     such term is defined under Rule 13a-15(e)  promulgated under the Securities
     Exchange Act of 1934, as amended  (Exchange Act), as of September 30, 2008.
     Based on this  evaluation,  our principal  executive  officer and principal
     financial officer concluded that our disclosure controls and procedures are
     effective  in  alerting  them on a  timely  basis to  material  information
     relating  to our Company  required  to be included in our reports  filed or
     submitted under the Exchange Act.

2.   Changes in Internal Controls

     There were no significant changes (including corrective actions with regard
     to  significant  deficiencies  or  material  weaknesses)  in  our  internal
     controls over financial  reporting  that occurred  during the quarter ended
     September 30, 2008 that has materially affected, or is reasonably likely to
     materially affect, our internal control over financial reporting.


Part II - Other Information

Item 1 - Legal Proceedings

1)   City of Dallas licensing

     In conjunction  with an October 2002 Settlement  Agreement with the City of
     Dallas,  Texas, the Company entered into negotiations between the Company's
     wholly-owned subsidiary,  Tempo Tamers, Inc., Mainstage,  Inc. (Mainstage),
     an entity  controlled  by Nick  Mehmeti,  the  Company's  President,  which
     operated a non-conforming  adult cabaret located in Dallas,  Texas,  called
     P.T.'s and Allen-Burch,  Inc. (Allen Burch), an entity controlled by Duncan
     Burch,  a Company  officer and  significant  shareholder,  also operating a
     non-conforming  adult cabaret known as The Fare.  These  negotiations  were
     initiated  to  determine  which  of  these  non-conforming  entities  would
     continue operating in a "non-conforming location". In May 2003, these three
     affiliated  parties  granted the exclusive right to negotiate with the City
     of  Dallas,  Texas  to  Tempo  Tamers,  Inc.  for  the  continuance  of the
     operations of The Million Dollar Saloon as a sexually  oriented business in
     a "non-conforming location."

     This  Settlement  Agreement  provided  that,  in the event that the City of
     Dallas,  Texas granted The Million  Dollar  Saloon the  exclusive  right to
     continue operating as an adult cabaret in a "non-conforming location" for a
     six (6) year period,  Tempo Tamers would pay $500,000 each to Mainstage and
     Allen  Burch and  Mainstage  and  Allen-Burch  would each  discontinue  the
     operation of their respective  sexually oriented  businesses.  In May 2003,
     the City of Dallas,  Texas  agreed to allow  Tempo  Tamers to  continue  to
     operate The Million Dollar Saloon at its current  location through the last
     day of July 2009.  Mainstage  and Allen  Burch then agreed with the City of
     Dallas, Texas to discontinue the respective operations of Mainstage and The
     Fare,  respectively,  as sexually  oriented  business in January and March,
     2004,  respectively.  The  cessation of  operations  by Mainstage and Allen
     Burch triggered the $500,000  payment clause to each entity as set forth in
     the May 2003 Settlement  Agreement.  The aggregate  $1,000,000  payment has
     been accrued in the Company's  financial  statements and is being amortized
     to  operations  over the 67 month term from the  triggering  event  date(s)
     through the  mandatory  closing date of The Million  Dollar  Saloon in it's
     present "non-conforming location" on July 31, 2009.

2)   "John Doe I" v. Tempo Tamers  Beverage  Company,  Inc.  dba Million  Dollar
     Saloon and  Christopher  John Thornton,  Dallas County Texas District Court
     Cause No.  05-02015;  filed  February  24,  2005 and settled on October 20,


                                                                              22
<PAGE>

     2005. Plaintiff "Doe I" filed a wrongful death/survivor claim under Section
     2.02 of the Texas  Alcoholic  Beverage  Code (dram shop).  The suit alleged
     that a customer of the Company's Tempo Tamers, Inc. subsidiary (dba Million
     Dollar  Saloon) (Club) was served in violation of Section 2.02 resulting in
     a motor vehicle  collision  causing the wrongful death of "Doe I's" spouse.
     While the Company's  wholly-owned  subsidiary  denied all allegations;  the
     case was  settled  on  October  20,  2005  under a  sealed  confidentiality
     agreement.  The  settlement was for the gross sum of $460,000 to be paid as
     follows: $50,000 on the signing of the settlement documents,  $50,000 on or
     about  January 13,  2006 and $7,500 per month  starting on November 1, 2005
     through  October 1, 2009. The settlement is  non-interest  bearing and, per
     the  requirements of generally  accepted  accounting  principles,  has been
     discounted  at the  Prime  Rate  of  6.75%  to  yield a net  settlement  of
     approximately   $415,026,   exclusive  of  imputed  interest.   The  entire
     discounted  settlement  was  charged  to  operations  on the  October  2005
     settlement date.

3)   "John Doe II" v. Tempo  Tamers,  Inc.  dba Million  Dollar  Saloon;  Dallas
     County Texas 44th District Court Cause No. 04-09918-A;  filed September 24,
     2004.  Clarendon  American  Insurance  Company v. Tempo  Tamers,  Inc.  dba
     Million  Dollar  Saloon;  Dallas County Texas 44th District Court Cause No.
     06-11838; filed November 17, 2006.

     This is a suit for  damages/loss of consortium  brought by Plaintiffs under
     Section 2.02 of the Texas Alcoholic Beverage Code. The Plaintiff claimed he
     was served by Club  employees in  violation of Section 2.02  resulting in a
     motorcycle  accident  whereby he  sustained  head  injuries and has medical
     bills  over  $300,000.  The  Plaintiff  further  asserted  to  have  no  or
     diminished capacity to continue his profession.  The Company's wholly-owned
     subsidiary,  Tempo Tamers,  Inc.,  vigorously  denied the  allegations  and
     asserted that the Plaintiff's  accident was primarily,  if not exclusively,
     of his own  doing  and  asserted  that  the  Plaintiff  was  more  than 50%
     responsible  for his  injuries  and that the only valid cause of action was
     pursuant to Section 2.02. The Company denied all liability.

     In 2006,  the  Company's  insurance  carrier  (Clarendon)  sued the Company
     claiming that they had no obligation to pay the claim of the  plaintiffs in
     the "John Doe II" litigation.

     In 2007, the Company, without an admission of liability, settled all claims
     in a confidential settlement agreement whereby Tempo Tamers, Inc. agreed to
     reimburse Clarendon $25,000 of the monies Clarendon paid to Plaintiffs,  in
     five (5)  monthly  installments  of $5,000  each,  with the  first  monthly
     installment  to be paid on November 1, 2007 and the last  installment to be
     paid on March 1, 2008. Thereafter,  Tempo Tamers, Inc. agreed to pay Doe II
     and Doe II's  counsel  the total sum of  $75,000,  to be paid in 15 monthly
     installments  of $5,000  each,  commencing  on April 1, 2008 with the final
     installment  to be paid on July 1, 2009. The effect and settlement of these
     actions was charged to operations on the November 2007 settlement date.

4)   Cody Staus and Kelly  Nowlin v.  Million  Dollar  Saloon  Inc.  dba Million
     Dollar Saloon;  Dallas County Texas  District Court Cause No.;  05-04622-K,
     filed May 10, 2005.  This case was brought by  Plaintiffs  Staus and Nowlin
     claiming they were assaulted by employees/security of Million Dollar Saloon
     and seek actual and punitive damages.  This matter was settled in June 2006
     for an aggregate  $10,000 cash to all  Plaintiffs and charged to operations
     at the settlement date.

5)   Beatrice  Hunter v. Tempo Tamers,  Inc. and Tempo Tamers  Beverage  Company
     Cause # 06-12954  in the116th  Judicial  District  Court for Dallas  County
     Texas, filed December 28, 2006.

     This case was originally brought by a person injured in a car accident with
     an  alleged  customer  of the Club  against  Million  Dollar  Saloon,  Inc.
     alleging a variety of causes of action  including  violations under Section
     2.02 of the Texas Alcoholic Beverage Code, negligence, gross negligence and
     other  allegations.  Million  Dollar Saloon,  Inc.  claimed that it was not
     liable as it did not operate the Club and claimed that Section 2.02 was the
     only valid  cause of action  and  injuries  were due to the  conduct of the
     driver of the  woman's  car to an extent to bar any  recovery  against  the


                                                                              23
<PAGE>

     club.  The initial case was dismissed  against  Million  Dollar Saloon Inc.
     when a settlement was reached between the Plaintiff and alleged customer. A
     new lawsuit was  thereafter  refiled  against  Tempo  Tamers Inc. and Tempo
     Tamers  Beverage  Company Inc.  This case is scheduled  for a jury trial to
     commence on August 11, 2008 and the ultimate outcome is not determinable at
     this time.  Management  is  aggressively  defending  these  actions  and no
     material impact to the Company's financial condition is anticipated at this
     time.

6)   Furrh Inc. v.  Charlene  McCartney  et al.,  Cause  #06-01564  in the 193rd
     District Court for Dallas County, Texas.

     This was a claim by Furrh Inc. against its landlord for offices and parking
     for  contracting  to sell the  leasehold  without  allowing  Furrh Inc. the
     opportunity to exercise its right of first refusal under the party's lease.
     Counterclaims  were filed.  The case was settled and  dismissed  with Furrh
     Inc.  allowing  the sale with  concessions  to allow use of the offices and
     parking to continue as long as the adjacent property owned by Furrh Inc can
     be operated as a SOB by the Lessee.

7)   Texas Alcoholic Beverage Commission v. Tempo Tamers Beverage Company Inc.

     This is Administrative  action brought by a state regulatory agency against
     a non subsidiary  corporation which provides Tempo Tamers, Inc. with liquor
     permitting and services for the Tempo Tamers,  Inc.'s  business  operations
     known as "Million Dollar Saloon".

     This Action is being vigorously  contested by the Company and the potential
     outcome of this  administrative  action is not  determinable  at this time.
     Management is  aggressively  defending these actions and no material impact
     to the Company's  financial condition is anticipated at this time; however,
     a  finding  against  Tempo  Tamers  Beverage  Company,  Inc.  could  have a
     significant detrimental impact on the operation of the Club.

From  time-to-time,  in the ordinary course of business,  the Company has become
and may become party to other lawsuits. The outcome of this litigation, existing
or future, if any, is not determinable at this time.  Management is aggressively
defending any current  actions and  anticipates  aggressively  defending  future
actions,  if any.  Accordingly,  no material  impact to the Company's  financial
condition is anticipated.

Item 2 - Recent Sales of Unregistered Securities and Use of Proceeds

   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

   In  conjunction  with an October 2002  Settlement  Agreement with the City of
   Dallas,  Texas,  the Company's  adult  entertainment  lounge and  restaurant,
   Million Dollar Saloon, may operate in its present  "non-conforming  location"
   with a mandatory closing date of July 31, 2009.

Item 6 - Exhibits

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


                                                                              24
<PAGE>




                                   SIGNATURES

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

Dated: January 14, 2010                              /s/ Nick Mehmeti
       ----------------                              ---------------------------
                                                                    Nick Mehmeti
                                                        Chief Executive Officer,
                                                     Chief Financial Officer and
                                                                    and Director




                                                                              25