UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   Form 10-QSB

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


(Mark one)
    XX   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--------
         ACT OF 1934

                  For the quarterly period ended March 31, 2000

         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
--------

         For the transition period from ______________ to _____________

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


                         Commission File Number: 0-27006
                                                 -------

                           Million Dollar Saloon, Inc.
        (Exact name of small business issuer as specified in its charter)

           Nevada                                             13-3428657
----------------------------                            -------------------
  (State of incorporation)                            (IRS Employer ID Number)

                    6848 Greenville Avenue, Dallas, TX 75231
                    -----------------------------------------
                    (Address of principal executive offices)

                                 (214) 691-6757
                            -------------------------
                           (Issuer's telephone number)

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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES X NO

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: May 8, 2000: 5,731,778

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



<PAGE>



                           Million Dollar Saloon, Inc.

                Form 10-QSB for the Quarter ended March 31, 2000

                                Table of Contents

                                                                            Page
                                                                            ----

Part I - Financial Information

  Item 1   Financial Statements                                               3

  Item 2   Management's Discussion and Analysis or Plan of Operation         16


Part II - Other Information

  Item 1   Legal Proceedings                                                 17

  Item 2   Changes in Securities                                             17

  Item 3   Defaults Upon Senior Securities                                   17

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

  Item 5   Other Information                                                 17

  Item 6   Exhibits and Reports on Form 8-K                                  17


Signatures                                                                   18





                                                                               2


<PAGE>


S. W. HATFIELD, CPA
certified public accountants

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

           Texas Society of Certified Public Accountants

Item 1 - Part 1 - Financial Statements

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

Board of Directors and Shareholder
Million Dollar Saloon, Inc.

We have reviewed the accompanying  consolidated balance sheets of Million Dollar
Saloon,  Inc. (a Nevada  corporation)  and Subsidiaries as of March 31, 2000 and
1999  and  the   accompanying   consolidated   statements  of   operations   and
comprehensive  income and  consolidated  statements  of cash flows for the three
months ended March 31, 2000 and 1999. These  consolidated  financial  statements
are prepared in accordance with the instructions  for Form 10-QSB,  as issued by
the U. S. Securities and Exchange Commission, and are the sole responsibility of
the Company's management.

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

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




                                                  /s/ S.W. Hatfield, CPA
                                                      ------------------
                                                      S. W. HATFIELD, CPA
Dallas, Texas
May 8, 2000

                      Use our past to assist your future sm

P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                                                      SWHCPA@aol.com
                                        3


<PAGE>

<TABLE>

<CAPTION>



                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                             March 31, 2000 and 1999

                                   (Unaudited)

                                                           March 31,     March 31,
                                                            2000            1999
                                                         -----------    -----------
<S>                                                      <C>            <C>

                                     ASSETS
Current Assets

   Cash on hand and in bank                              $   579,735    $   675,690
   Note receivable - current portion                          28,354         24,480
   Accounts receivable - other                                   900           --
   Prepaid income taxes receivable                              --           33,653
   Inventory                                                  22,436         18,560
   Prepaid expenses                                           53,988         71,212
                                                         -----------    -----------

      Total current assets                                   685,412        823,595
                                                         -----------    -----------


Property and Equipment - At Cost

   Buildings and related improvements                      1,987,514      1,987,514
   Furniture and equipment                                   856,566        798,372
   Vehicles                                                     --           52,728
                                                         -----------    -----------
                                                           2,844,080      2,838,614
   Less accumulated depreciation                          (1,648,981)    (1,591,391)
                                                         -----------    -----------
                                                           1,195,099      1,247,223
   Land                                                      741,488        741,488
                                                         -----------    -----------

      Net property and equipment                           1,936,587      1,988,711
                                                         -----------    -----------


Other Assets

   Note receivable - noncurrent portion                         --           73,868
   Organization costs, net of accumulated amortization
      of $68,377 and $53,391, respectively                     6,551         21,537
   Loan costs, net of accumulated amortization of
       $28,446 and $22,125 respectively                        3,161          9,482
   Other                                                       6,225          6,975
                                                         -----------    -----------

      Total other assets                                      15,937        111,862
                                                         -----------    -----------

Total Assets                                             $ 2,637,936    $ 2,924,168
                                                         ===========    ===========
</TABLE>


                                  - Continued -

See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.

                                                                               4


<PAGE>

<TABLE>
<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
                     Consolidated Balance Sheets - Continued

                             March 31, 2000 and 1999

                                   (Unaudited)

                                                            March 31,    March 31,
                                                              2000         1999
                                                           ----------   ----------
<S>                                                        <C>          <C>


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

   Current portion of long-term debt                       $     --     $  181,905
   Accounts payable - trade                                    25,871       27,803
   Accrued liabilities                                         75,389       61,274
   Dividends payable                                             --         56,418
   Federal income taxes payable                                30,236         --
   Tenant deposits                                              6,500        6,500
                                                           ----------   ----------

      Total current liabilities                               137,996      333,900
                                                           ----------   ----------


Long-Term Liabilities

   Long-term debt, net of current maturities                     --        112,754
   Deferred tax liability                                     139,248      125,057
                                                           ----------   ----------

      Total liabilities                                       277,244      571,711
                                                           ----------   ----------


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 and 5,731,778 issued
      and outstanding, respectively                             5,732        5,732
   Additional paid-in capital                                    --           --
   Retained earnings                                        2,354,960    2,346,725
                                                           ----------   ----------

      Total shareholders' equity                            2,360,692    2,352,457
                                                           ----------   ----------

Total Liabilities and Shareholders' Equity                 $2,637,936   $2,924,168
                                                           ==========   ==========

</TABLE>


See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.

                                                                               5


<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
                        Consolidated Statements of Income

                   Three months ended March 31, 2000 and 1999

                                   (Unaudited)

                                                     Three months  Three months
                                                       ended         ended
                                                      March 31,     March 31,
                                                       2000          1999
                                                     -----------    -----------
Revenues

   Bar and restaurant sales                          $ 1,000,831    $   855,208
   Rental income                                         166,025        169,911
                                                     -----------    -----------
      Total revenues                                   1,166,856      1,025,119
                                                     -----------    -----------

Cost of Sales - Bar and Restaurant Operations            617,426        486,098
                                                     -----------    -----------

Gross Profit                                             549,430        539,021
                                                     -----------    -----------

Operating Expenses

   General and administrative expenses                   368,066        332,940
   Interest expense                                        2,129          8,779
   Depreciation and amortization                          27,177         28,817
                                                     -----------    -----------
      Total operating expenses                           397,372        370,536
                                                     -----------    -----------

Income from Operations                                   152,058        168,485

Other Income (Expenses)

   Interest and other miscellaneous                       11,248          4,906
                                                     -----------    -----------

Income before Income Taxes                               163,306        173,391

Income Tax (Expense) Benefit

   Currently payable                                     (50,575)       (58,000)
   Deferred                                                 --             --
                                                     -----------    -----------

Net Income                                               112,731        115,391

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

Comprehensive Income                                 $   112,731    $   115,391
                                                     ===========    ===========

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

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

See Accountant's Review Report
The accompanying notes are an integral part of these financial statements.

                                                                               6


<PAGE>

<TABLE>

<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

                   Three months ended March 31, 2000 and 1999

                                   (Unaudited)

                                                            Three months  Three months
                                                              ended         ended
                                                             March 31,     March 31,
                                                               2000          1999
                                                             ---------    ---------
<S>                                                          <C>          <C>

Cash Flows from Operating Activities

   Net income                                                $ 112,731    $ 115,391
   Adjustments to reconcile net income to net cash
      provided by operating activities
         Depreciation and amortization                          27,177       28,817
         (Increase) decrease in
            Accounts receivable - trade and other                8,848        6,671
            Federal income taxes receivable/payable             50,575       58,000
            Inventory                                            9,226         (156)
            Prepaid expenses                                   (53,988)     (14,752)
         Increase (decrease) in

            Accounts payable and other accrued liabilities      23,484        2,883
            Tenant deposits                                       --           --
                                                             ---------    ---------
      Net cash provided by operating activities                178,053      196,854
                                                             ---------    ---------

Cash Flows from Investing Activities

   Principal collections on note receivable                      6,825        5,902
   Purchases of property and equipment                         (18,402)        --
                                                             ---------    ---------
      Net cash used in investing activities                    (11,577)       5,902
                                                             ---------    ---------

Cash Flows from Financing Activities

   Principal payments on long-term notes payable              (139,657)     (43,665)
   Dividends paid                                              (57,318)     (58,218)
                                                             ---------    ---------
      Net cash used in financing activities                   (196,975)    (101,883)
                                                             ---------    ---------

Increase in Cash and Cash Equivalents                          (30,499)     100,873
   Cash and cash equivalents at beginning of period            610,233      574,817
                                                             ---------    ---------

Cash and cash equivalents at end of period                   $ 579,734    $ 675,690
                                                             =========    =========

Supplemental Disclosures of Interest
   and Income Taxes Paid

      Interest paid during the period                        $   2,129    $   8,779
                                                             =========    =========
      Income taxes paid (refunded)                           $    --      $    --
                                                             =========    =========

Supplemental Disclosure of Non-Cash
   Investing and Financing Activities

      Declaration of first quarter dividend
      of  $0.01per share, respectively                       $    --      $  57,318
                                                             =========    =========

</TABLE>

See Accountant's Review Report.
The accompanying notes are an integral part of these financial statements.

                                                                               7


<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

                             March 31, 2000 and 1999



Note A - Background and Organization

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

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

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

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

These  financial  statements  reflect  the books and  records of Million  Dollar
Saloon, Inc., Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don, Inc. for
the three months ended March 31, 2000 and 1999,  respectively.  All  significant
intercompany transactions have been eliminated in combination.  The consolidated
entities are referred to as Company.

During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange  Commission.
The information  presented  herein may not include all  disclosures  required by
generally accepted accounting  principles and the users of financial information
provided for interim  periods should refer to the annual  financial  information
and footnotes  contained in its Annual Report Pursuant to Section 13 or 15(d) of
The  Securities  Exchange Act of 1934 on Form 10-KSB when  reviewing the interim
financial results presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in accordance with the instructions for Form 10-QSB,  are unaudited and
contain  all  material   adjustments,   consisting  only  of  normal   recurring
adjustments  necessary to present  fairly the  financial  condition,  results of
operations  and cash flows of the Company  for the  respective  interim  periods
presented.  The  current  period  results  of  operations  are  not  necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 2000.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.





                                                                               8


<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note B - Summary of Significant Accounting Policies

1. Cash and Cash Equivalents
   -------------------------

   For Statement of Cash Flows purposes,  the Company considers all cash on hand
   and in banks, including accounts in book overdraft positions, certificates of
   deposit and other  highly-liquid  investments with maturities of three months
   or less, when purchased, to be cash and cash equivalents.

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

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

   In the normal course of business,  the Company  extends  unsecured  credit to
   virtually  all of its  tenants  related  to rental  property  operations  and
   accepts  national  bankcards  as payment for goods and services in its lounge
   and  entertainment  facility.  Bankcard  charges  are  normally  paid  by the
   clearing  institution  within  three  to  fourteen  days  from  the  date  of
   presentation by the Company.  All lease rental payments are either due on the
   first  day of the month in  advance  for the month or on the first day of the
   week in arrears for the previous  corresponding  period.  All revenue sources
   are located either in Dallas or Tarrant County,  Texas. Because of the credit
   risk  involved,  management  has provided an allowance for doubtful  accounts
   which  reflects  its  opinion  of  amounts  which  will   eventually   become
   uncollectible. In the event of complete non-performance, the maximum exposure
   to the Company is the recorded amount of trade accounts  receivable  shown on
   the balance sheet at the date of non-performance.

3. Inventory
   ---------

   Inventory consists of food and liquor consumables  necessary in the operation
   of Tempo's adult lounge and entertainment facility. These items are valued at
   the  lower  of cost  or  market  using  the  first-in,  first-out  method  of
   accounting.

4. Property and Equipment
   ----------------------

   Property  and  equipment  is  recorded  at  cost  and  is  depreciated  on  a
   straight-line  basis,  over the  estimated  useful  lives  (generally 5 to 40
   years)  of  the  respective  asset.   Major  additions  and  betterments  are
   capitalized  and depreciated  over the estimated  useful lives of the related
   assets.  Maintenance,  repairs, and minor improvements are charged to expense
   as incurred.

5. Trademark rights
   ----------------

   Amounts  paid in  conjunction  with  the  acquisition  and  retention  of the
   trademark  "Million Dollar Saloon(R)" have been capitalized.  The life of the
   registration is twenty years from its affirmation in 1988 and may be extended
   as allowed by applicable  law at that point in time.  This trademark has been
   assigned Registration No. 1,509,636 by the U. S. Patent and Trademark Office.
   The  Company   amortizes  the  trademark   over  a  10-year  life  using  the
   straight-line method.


                                                                               9


<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note B - Summary of Significant Accounting Policies - Continued

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

   The Company files a  consolidated  Federal Income Tax return and utilizes the
   asset and liability  method of accounting for income taxes.  The deferred tax
   asset and deferred tax liability  accounts,  as recorded when material to the
   financial statements,  are entirely the result of temporary  differences.  No
   valuation  allowance  was provided  against  deferred  tax assets.  Temporary
   differences   represent   differences  in  the   recognition  of  assets  and
   liabilities for tax and financial reporting purposes,  primarily  accumulated
   depreciation and amortization.

7. Earnings per share
   ------------------

   Earnings  per share is computed by  dividing  consolidated  net income by the
   composite  weighted-average  number of shares  of  common  stock  outstanding
   during the year. As of March 31, 2000 and 1999, the Company has no issued and
   outstanding securities,  options or warrants that would be deemed potentially
   dilutive in the current and future periods.

Note C - Concentrations of Credit Risk

The Company  maintains its cash accounts in a financial  institution  subject to
insurance coverage issued by the Federal Deposit Insurance  Corporation  (FDIC).
Under FDIC rules,  the Company and its  subsidiaries  are  entitled to aggregate
coverage of $100,000 per account type per  separate  legal entity per  financial
institution.   During  the  three   months   ended  March  31,  2000  and  1999,
respectively,  respectively,  the various operating  companies had deposits in a
financial  institution  with credit risk  exposures in excess of statutory  FDIC
coverage.  The Company has incurred no losses during 1999 or 1998 as a result of
any of these unsecured situations.

Note D - Note Receivable

Note receivable as of March 31, 2000 and 1999, respectively, is as follows:

                                                              2000        1999
                                                             --------   --------
$220,000 note receivable from an unrelated
   individual for the sale of real estate.  Interest
   at 8.00%.  Payable in monthly installments
   of approximately $2,669, including interest.
   Final payment due in July 2002.  Collateralized
   by real estate and improvements located in
   Dallas County, Texas                                      $      -    $98,348






                                                                              10


<PAGE>

<TABLE>

<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note D - Note Receivable - Continued

                                                                           2000            1999
                                                                         --------        --------
<S>                                                                      <C>             <C>

$35,179 note receivable from an unrelated
   individual for the sale of real estate.  Interest
   at 9.50%.  Payable in monthly installments
   of approximately $2,665, including interest.
   Final payment due in February 2001.  Collateral-
   ized by real estate and improvements located in
   Dallas County, Texas.  Paid in full in May 2000.                        28,354             --
                                                                          --------        --------
Total notes receivable                                                     28,354         98,348
     Less current portion                                                 (28,354)        (24,480)
                                                                          --------        --------
     Noncurrent portion                                                   $  --           $73,868
                                                                          ========        ========

Future maturities of the note receivable are as follows:

                                                                     Year ending
                                                                    December 31,           Amount

                                                                        2000              $28,354
                                                                                          =======


Note E - Property and Equipment

Property and equipment consists of the following at March 31, 2000 and 1999:

                                                     2000              1999        Estimated life
                                                 ------------      ------------   --------------
         Buildings and related improvements        $1,987,514       $1,987,514     15-40 years
         Furniture and equipment                      856,566          798,372      5-10 years
         Vehicles                                     --                52,728      3 years
                                                 ------------      ------------
                                                    2,844,080        2,838,614
         Less accumulated depreciation             (1,648,981)      (1,591,391)
                                                 ------------      ------------
                                                    1,195,099        1,247,223
         Land                                         741,488          741,488
                                                 ------------      ------------

         Net property and equipment                $1,936,587       $1,988,711
                                                 ============      ============

</TABLE>

Depreciation  expense  for the three  months  ended  March 31, 2000 and 1999 was
$21,851 and $18,045, respectively.

                                                                              11


<PAGE>

<TABLE>

<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note F -Long-Term Debt

Long-term   debt  consists  of  the  following  at  March  31,  2000  and  1999,
respectively:

                                                                                     2000        1999
                                                                                   -------     -------
<S>                                                                                <C>         <C>

$750,000 note payable to a bank.  Interest
   at 11.0%.  Payable in monthly installments
   of approximately $16,369, including
   interest.  Final payment due in September
   2000.  Collateralized by real estate and
   improvements located in Dallas and
   Tarrant Counties, Texas.  Paid in full
   during the first quarter of 2000.                                               $     -    $269,543

$52,707  installment  note  payable  to a finance
   company.  Payable in monthly installments of
   approximately  $1,111, including interest at
   9.50%. Paid in full in July 1999.
   Collateralized by a vehicle                                                           -      25,116
                                                                                   -------     -------

                                                                                         -     294,659
      Less current portion                                                               -    (181,905)
                                                                                   -------     -------

      Long-term portion                                                            $     -    $112,754
                                                                                   =======     =======


Note H - Income Taxes

The deferred  current tax asset and non-current  deferred tax liability on March
31, 2000 and 1999, respectively, balance sheet consists of the following:

                                                                                December 31,  December 31,
                                                                                  1999            1998
                                                                                ------------  ------------

                  Non-current deferred tax liability                             $(139,248)   $(125,057)
                                                                                  ========     ========
</TABLE>

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

                                                                              12


<PAGE>

<TABLE>

<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note H - Income Taxes - Continued

The components of income tax expense  (benefit) for the three months ended March
31, 2000 and 1999, respectively, are as follows:

                                                                                    2000             1999
                                                                                   -------          -------
<S>                                                                                <C>              <C>

                  Federal:
                    Current                                                        $50,575          $58,000
                    Deferred                                                             -                -
                                                                                   -------          -------
                                                                                    50,575           58,000
                                                                                   -------          -------
                  State:
                    Current                                                              -                -
                    Deferred                                                             -                -
                                                                                   -------          -------
                                                                                         -                -
                                                                                   -------          -------
                  Total                                                            $50,575          $58,000
                                                                                    ======           ======

The  Company's  income tax expense  (benefit) for the years ended March 31, 2000
and 1999,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

                                                                                     2000             1999
                                                                                   -------          -------
Statutory rate applied to earnings before income taxes                             $55,524          $58,953
Increase (decrease) in income taxes resulting from:
     State income taxes                                                                  -                -
     Deferred income taxes                                                               -                -
     Effect of incremental tax brackets and the
         application of business tax credits                                        (4,949)             953
                                                                                   -------          -------

Income tax expense                                                                 $50,575          $58,000
                                                                                    ======           ======
</TABLE>


Note I - Capital Stock Transactions

On March 19, 1998, the Company sold 530,000  shares of restricted,  unregistered
common stock to an individual under a Stock Purchase Agreement  (Agreement) at a
price of $1.00 per share for total  proceeds  to the  Company of  $530,000.  The
Agreement also contains a "second  closing"  clause whereby the individual  will
acquire an  additional  400,000  shares of equivalent  restricted,  unregistered
common  stock at $1.10 per share for gross  proceeds of  $440,000,  on or before
July 15, 1998. On October 18, 1999,  the Company's  Board of Directors  modified
and amended the "second  closing" clause whereby the purchaser may purchase from
time to time any or all of the 400,000 shares of common stock at $1.10 per share
and to extend the  exercise  period  until the close of  business on October 18,
2004.  As of March 31, 2000,  the  individual  has not  purchased  any shares of
common stock in accordance with the "second closing" portion of the Agreement.

Further, the Company granted the individual the option to purchase an additional
1,000,000  shares of restricted,  unregistered  common stock at a price of $1.25
per  share  on or  before  February  28,  1999.  The  option  expiration  may be
accelerated  if the  Company's  common  stock is traded on the NASDAQ  Small-Cap
Market or other  national  exchange  and the closing bid price equals or exceeds
$1.75 per share for 10 consecutive trading days (Trading Period). In this event,
the expiration date of the option shall be the 90th day after the Trading Period
and the Company must notify the individual of the acceleration in writing.  This
option expired on February 28, 1999 with no shares being issued.




                                                                              13


<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note I - Capital Stock Transactions - Continued

On March 19, 1998, concurrent with the Stock Purchase Agreement discussed above,
the Company entered into a Consulting  Agreement with a separate  individual for
consulting,  advisory and management services to be performed as directed by the
Company's Board of Directors.  The Consulting Agreement is for a term of one (1)
year and may be  terminated  by either party with ten (10) days written  notice.
The  compensation   for  the  Consulting   Agreement  was  paid  in  restricted,
unregistered  common stock of the Company as follows:  150,000 shares as payment
for consulting,  advisory and management services to be performed as directed by
the Company's Board of Directors and an additional 55,000 shares upon receipt of
the $530,000  discussed above. An additional 45,000 shares will be issued to the
consultant  upon  receipt of the  $440,000  which was due on or before  July 15,
1998.  This Consulting  Agreement  terminated of its own accord in July 1998 and
the termination was  acknowledged in writing to the Company by the individual in
January 2000.

The Company,  upon  execution  of the  Consulting  Agreement  and receipt of the
$530,000 related to the Stock Purchase Agreement,  issued the respective 150,000
and  55,000  shares  due  under  the terms of the  Consulting  Agreement.  These
transactions  were  valued at  approximately  $0.34 per share,  or an  aggregate
$69,700,  which approximated the "fair value" of the Company's  restricted stock
issued on the transaction date.

Note J - Commitments

The  Company  leases  commercial  real  estate  to  entities   controlled  by  a
controlling  shareholder  on  long-term  operating  leases.  The leases  require
minimum weekly lease payments, plus reimbursement for annual property taxes. The
respective tenants are responsible for normal maintenance and repairs, insurance
and other direct operating expenses related to the property.  As of December 31,
1999, future minimum non-cancellable lease revenues are as follows:

                                             Year ending

                                            December 31,     Amount
                                            ------------    ----------
                                                2000        $  689,000
                                                2001           689,000
                                                2002           546,500
                                                2003           280,500
                                                            ----------
                                                Total       $2,205,000
                                                            ==========



                                                                              14


<PAGE>

<TABLE>

<CAPTION>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued

                             March 31, 2000 and 1999



Note K - Segment Information

The  Company  operates  with a  centralized  management  structure  and  has two
identifiable  operating segments:  an adult entertainment  lounge and restaurant
located in Dallas, Texas and commercial rental real estate located in Dallas and
Tarrant  Counties,  Texas.  All  revenues  are  generated  operations  in  these
geographic  areas.  The Company has a relationship  whereby rental revenues from
various entities under the common control of a controlling  shareholder comprise
approximately  % and % of total  revenues  for the three  months ended March 31,
2000 and 1999, respectively.

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

Three months ended March 31, 2000

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


                                       Restaurant    Rental        General and
                                        facility     real estate  administrative    Total
                                     ------------   ------------  -------------- -----------
Three months ended March 31, 1999

   Revenue from external customers   $   855,208    $      --     $      --      $   855,208
   Revenue from related parties             --          169,911          --          169,911
   Revenue (expenses) from/to
     intercompany sources                   --             --            --             --
   Interest income                          --            2,108         2,798          4,906
   Interest expense                          631          8,148         8,779
   Depreciation and amortization           8,714         17,279         2,824         28,817
   Income tax expense (benefit)           13,800         45,600        (1,400)        58,000
   Segment assets                        537,873      1,910,667       475,628      2,924,168
   Fixed asset expenditures                 --             --            --             --

</TABLE>


                                                                              15


<PAGE>



Part I - Item 2

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

(1)  Results of Operations

Bar and restaurant  operations  increased by approximately  $145,000 between the
first  quarter of 2000 as compared to the first  quarter of 1999.  Total bar and
restaurant sales for the 2000 period were  approximately  $1,001,000 as compared
to  approximately  $855,000  for  the  1999  period.  The  increase  was  due to
management's   refocused  efforts  in  customer  service  and  increasing  sales
subsequent to the 2000 change in control of the Company.  The Company  continues
to seek effective marketing and advertising methods to maintain and increase its
bar and restaurant patronage.

Cost of sales increased by approximately  $131,000 during the first three months
of 2000 as  compared  to the same  expenses  for the same  period in 1999.  This
increase is a result of increases in entertainer  compensation  and other direct
costs related to the approximate  $145,000 increase in revenues in the Company's
Dallas  Texas  entertainment  facility.  Gross profit  percentages  decreased to
47.09% for the first  three  months of 2000  versus  52.58% for the first  three
months of 1998.  Increased cost controls over purchasing,  inventory  management
protocols  and labor  management  are  continuously  monitored to improve  gross
profit percentages.

General and administrative  expenses  increased by approximately  $35,000 in the
first three months of 2000 versus the first three months of 1999.  This increase
relates to increased advertising expenses and administrative compensation caused
by the  2000  change  in  control  of the  Company.  The  Company  continues  to
experience  relatively  constant  expenditure levels for other general operating
expenses.  Management  continues  to monitor its  expenditure  levels to achieve
optimum financial results.

Net income  before income taxes was  approximately  $163,000 for the first three
months of 2000 versus approximately $173,000 for the first three months of 1999.
After-tax  net income  decreased  by  approximately  $2,700  from  approximately
$115,000  for the first three months of 1999 to  approximately  $113,000 for the
first  three  months of 2000.  The  Company  experienced  earnings  per share of
approximately  $0.02  per share  for the  first  three  months of 2000 and 1999,
respectively.

(2)  Liquidity

As of March 31, 2000, the Company has working capital of approximately  $547,416
as compared to  approximately  $420,643 at December  31, 1999 and  approximately
$489,695  at March 31,  1999.  The  Company  achieved  positive  cash flows from
operations of  approximately  $178,000 for the first three months of 2000 versus
approximately $197,000 for the first three months of 1999. The Company's working
capital  position  was  impacted  by the  payment  in  full  of all  outstanding
long-term debt during the first quarter of 2000.

The Company has identified no significant  capital  requirements for the current
annual period.  Liquidity requirements mandated by future business expansions or
acquisitions,  if any are specifically identified or undertaken, are not readily
determinable  at this  time as no  substantive  plans  have been  formulated  by
management.

The Company  announced  the  discontinuance  of the payment of  dividends  after
December  31,  1999.  The Company  paid  declared  fourth  quarter  dividends of
approximately   $57,000  during  both  the  first  quarter  of  2000  and  1999,
respectively.   Future  operating  liquidity  is  expected  to  be  provided  by
continuing operations. Additionally,  management is of the opinion that there is
potential  availability  of mortgage  debt and the  opportunity  for the sale of
additional   common  stock  through  either  private   placements  or  secondary
offerings.

                                                                              16


<PAGE>



(3)  Year 2000 Considerations

The Year 2000 (Y2K) date change was believed to affect  virtually  all computers
and  organizations.   The  Company  undertook  a  comprehensive  review  of  its
information  systems,  including  personal  computers,  software and  peripheral
devices, and its general  communications systems during 1999. The Company has no
direct electronic links with any customer or supplier.

The costs associated with the Y2K date change compliance did not have a material
effect  on the  Company's  financial  position  or its  results  of  operations.
However, as the Year 2000 progresses,  there can be no assurance that all of the
Company's  systems,  and the systems of its  suppliers,  shippers,  customers or
other external business partners will continue to function adequately.

Part II - Other Information

Item 1 - Legal Proceedings

The  Company was one of several  defendants  in Cause No.  DV99-02585-L;  Roy D.
Stedham v. The Million Dollar  Saloon,  et al.;  193rd  District  Court,  Dallas
County, Texas which is alleged to be a class action seeking monetary damages for
violation of the Texas  Finance Code  concerning  overcharges  for  purchases of
certain items by the use of a credit card.  This litigation was withdrawn by the
plaintiff during the first quarter of 2000 with no further exposure or financial
impact to the Company.

Item 2 - Changes in Securities

   None

Item 3 - Defaults on Senior Securities

   None

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

   The Company has held no regularly  scheduled,  called or special  meetings of
   shareholders during the reporting period.

Item 5 - Other Information

   None

Item 6 - Exhibits and Reports on Form 8-K

   None

                                                                              17


<PAGE>



                                   SIGNATURES

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

                                                    MILLION DOLLAR SALOON, INC.


May    10   , 2000                              /s/ Dewanna Ross
    --------                              --------------------------------------
                                                                   Dewanna Ross
                                                        Chief Operating Officer
                                                                   and Director

May    10   , 2000                              /s/ Ronald W. Johnston
    --------                              --------------------------------------
                                                             Ronald W. Johnston
                                                        Chief Financial Officer



                                                                              18