UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

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

(Mark one)

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


              For the quarterly period ended March 31, 2005

[ ]  Transition Report Under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934

              For the transition period from ______________ to _____________

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

                         Commission File Number: 0-27006

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

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

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

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

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


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

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: August 18, 2008: 5,731,778
                                          --------------------------

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




<PAGE>


[PG NUMBER]

                           Million Dollar Saloon, Inc.

                Form 10-QSB for the Quarter ended March 31, 2005

                                      Index

                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1 Financial Statements                                                  3

  Item 2 Management's Discussion and Analysis or Plan of Operation            17

  Item 3 Controls and Procedures                                              19

Part II - Other Information

  Item 1 Legal Proceedings                                                    20

  Item 2 Recent Sales of Unregistered Securities and Use of Proceeds          20

  Item 3 Defaults Upon Senior Securities                                      20

  Item 4 Submission of Matters to a Vote of Security Holders                  20

  Item 5 Other Information                                                    20

  Item 6 Exhibits                                                             20


Signatures                                                                    21










                                       2
<PAGE>

Part I
Item 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                             March 31, 2005 and 2004

                                   (Unaudited)
                                                    March 31,     March 31,
                                                      2005          2004
                                                  -----------    -----------
                                     ASSETS
Current Assets
   Cash on hand and in bank                         $793,068       $326,840
   Marketable securities                              50,033         42,514
   Accounts receivable - trade and other                --            8,500
   Federal income tax refund receivable               81,624        145,000
Inventory                                             23,321         34,377
   Prepaid expenses                                     --           45,056
                                                 -----------    -----------

     Total current assets                            965,046        602,287
                                                 -----------    -----------


Property and Equipment - At Cost
   Buildings and related improvements              1,473,356      2,095,914
   Furniture and equipment                           451,093        891,150
                                                 -----------    -----------
                                                   1,924,449      2,987,064
   Less accumulated depreciation                  (1,385,540)    (2,026,483)
                                                 -----------    -----------
                                                     538,909        960,581
   Land                                              210,000        741,488
                                                 -----------    -----------

     Net property and equipment                     748, 909      1,702,069
                                                 -----------    -----------


Other Assets
   Land held for future development                2,661,546      2,649,786
   Property and equipment held for sale              870,930           --
   Operations agreement, net of accumulated
     amortization of approximately $211,940          788,640           --
   Loan costs, net of accumulated amortization
     of approximately $629                             9,660           --
   Security deposits and other                         1,725          1,725
                                                 -----------    -----------

     Total other assets                            4,331,921      2,651,511
                                                 -----------    -----------

Total Assets                                      $6,045,876     $4,955,867
                                                 ===========    ===========



                                  - Continued -



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


                                       3
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
                     Consolidated Balance Sheets - Continued
                             March 31, 2005 and 2004

                                   (Unaudited)
                                                                 March 31,    March 31,
                                                                   2005         2004
                                                                ----------   ----------
<S>                                                             <C>          <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
   Current maturities of long-term mortgage note payable           $86,552      $82,256
   Current maturities of long-term lawsuit settlement payable       62,202         --
   Loan from officer                                                  --           --
   Accounts payable - trade                                         15,211       21,089
   Accrued liabilities                                              85,200       79,265
   Federal income taxes payable                                       --        114,354
   Contract payable to affiliated entities                       1,000,000         --
   Accrued interest payable to affiliated entities                 153,333         --
   Tenant deposits                                                    --          6,500
                                                                ----------   ----------
     Total current liabilities                                   1,402,498      303,564
                                                                ----------   ----------


Long-Term Liabilities
   Mortgage note payable - long-term portion                     1,816,840    1,834,783
   Lawsuit settlement payable - long-term portion                  352,824         --
   Deferred tax liability                                          264,876      281,062
                                                                ----------   ----------

     Total liabilities                                           3,837,038    2,419,409
                                                                ----------   ----------


Commitments and Contingencies


Shareholders' Equity Preferred stock - $0.001 par value.
     5,000,000 shares authorized.
     None issued and outstanding.                                     --           --
   Common stock - $0.001 par value.
     50,000,000 shares authorized.
     5,731,778 shares issued and outstanding.                        5,732        5,732
   Retained earnings                                             2,203,106    2,530,726
                                                                ----------   ----------

     Total shareholders' equity                                  2,208,838    2,536,458
                                                                ----------   ----------

Total Liabilities and Shareholders' Equity                      $6,045,876   $4,955,867
                                                                ==========   ==========




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





                                       4
<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
                        Consolidated Statements of Income
                   Three months ended March 31, 2005 and 2004

                                   (Unaudited)

                                                      Three months  Three months
                                                          ended         ended
                                                        March 31,     March 31,
                                                          2005          2004
                                                      -----------    -----------
Revenues
   Bar and restaurant sales                              $826,028     $1,064,488
Rental income                                             110,500        126,613
                                                      -----------    -----------
     Total revenues                                       936,528      1,173,101
                                                      -----------    -----------

Cost of Sales - Bar and Restaurant Operations             354,392        546,655
                                                      -----------    -----------

Gross Profit                                              582,136        626,446
                                                      -----------    -----------

Operating Expenses
   General and administrative expenses                    262,799        240,865
   Depreciation and amortization                           63,681         22,680
                                                      -----------    -----------
     Total operating expenses                             326,480        262,705
                                                      -----------    -----------

Income from Operations                                    255,656        363,741

Other Income (Expenses)
   Interest and other miscellaneous                           498          2,593
   Lawsuit settlement                                    (415,026)          --
                                                      -----------    -----------

Income before Income Taxes                               (158,872)       366,334

Income Tax (Expense) Benefit
   Currently (payable) refundable                          45,300       (114,354)
   Deferred                                                  --             --
                                                      -----------    -----------

Net Income (Loss)                                        (113,572)       251,980

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

Comprehensive Income                                    $(113,572)      $251,980
                                                      ===========    ===========

Earnings per share of common stock outstanding,
   computed on net income - basic and fully diluted        $(0.02)         $0.04
                                                      ===========    ===========

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



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




                                       5
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                   Three months ended March 31, 2005 and 2004

                                   (Unaudited)

                                                            Three months Three months
                                                                ended        ended
                                                              March 31,    March 31,
                                                                2005         2004
                                                             ---------    ---------
Cash Flows from Operating Activities
   Net Income (Loss)                                         $(113,672)    $251,980
   Adjustments to reconcile net income to
     net cash provided  by operating activities
       Depreciation and amortization                            63,681       21,840
       Unrealized loss on marketable securities                   --           --
       (Increase) decrease in
         Accounts receivable - trade and other                  (8,500)        --
         Income taxes receivable                               (45,300)        --
         Inventory                                              (2,165)      (9,205)
         Prepaid expenses                                        1,963      (41,516)
       Increase (decrease) in
         Accounts payable and other liabilities                399,891     (111,454)
         Federal income taxes payable                             --        114,354
         Accrued interest payable to affiliated entities        20,000         --
                                                             ---------    ---------

     Net cash provided by operating activities                 315,998      226,179
                                                             ---------    ---------

Cash Flows from Investing Activities
   Purchases of property and equipment                            --           --
   Cash received from sale of marketable securities               (496)     347,405
   Cash paid for marketable securities                            --           --
   Cash paid for land held for future development                 --           --
                                                             ---------    ---------

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


Cash Flows from Financing Activities
   Principal paid on long-term mortgage note payable           (21,517)    (239,575)
   Cash received (paid) on note payable to officer                --       (140,000)
                                                             ---------    ---------

     Net cash provided by financing activities                 (21,517)    (379,575)
                                                             ---------    ---------

Increase in Cash and Cash Equivalents                          293,985      194,009

Cash at beginning of period                                    499,083      132,831
                                                             ---------    ---------

Cash at end of period                                         $793,068     $326,840
                                                             =========    =========

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                           $30,741      $20,473
                                                             =========    =========
     Income taxes paid (refunded)                            $    --      $    --
                                                             =========    =========
</TABLE>


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



                                       6
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004



NOTE A - Background and Organization

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

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

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

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


NOTE B - Preparation of Financial Statements

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

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

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

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange  Commission  on its  Annual  Report on Form  10-KSB  for the year ended
December 31, 2004.  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, 2005.




                                       7
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



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
each of the three month periods ended March 31, 2005 and 2004, 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.   Marketable Securities
     ---------------------

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

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

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

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

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

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

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

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

     In the normal course of business,  the Company extends  unsecured credit to
     virtually  all of its tenants  related to rental  property  operations  and
     accepts  cash or  nationally  issued  bankcards  as  payment  for goods and
     services in its adult lounge and entertainment  facility.  Bankcard charges
     are normally paid by the clearing institution within three to fourteen days
     from the date of presentation by the Company.




                                       8
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE C - Summary of Significant Accounting Policies - Continued

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

     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.

4.   Inventory
     ---------

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

5.   Property and Equipment
     ----------------------

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

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

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

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

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) available to common shareholders by the  weighted-average  number of
     common shares  outstanding  during the respective  period  presented in our
     accompanying financial statements.  Fully diluted earnings (loss) per share
     is  computed  similar  to basic  income  (loss) per share  except  that the
     denominator is increased to include the number of common stock  equivalents
     (primarily outstanding options and warrants).

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

     At March 31,  2005 and 2004,  and  subsequent  thereto,  the Company has no
     outstanding stock warrants,  options or convertible  securities which could
     be considered as dilutive for purposes of the loss per share calculation.



                                       9
<PAGE>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



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.

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

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

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

In March 2004, the Company received the required  supporting  documentation from
the lessee to validate the  percentage  rents due for Calendar  2002 and through
July 31, 2003,  which caused a significant  upward  revision of our estimate for
amounts due in Calendar  2002. As of July 31, 2003,  the lessee owed  percentage
rent as follows:
                                          Year ended
                                         December 31,         Amount due
                                         ------------         ----------
                                             2001               $ 42,952
                                             2002                 98,000
                                             2003                107,513
                                                                --------
                                                                $248,465

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




                                       10
<PAGE>



                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE D - Related Party Transactions - Continued

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.

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

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.


NOTE E - Fair Value of Financial Instruments

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

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




                                       11
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE E - Fair Value of Financial Instruments - Continued

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 aggregate  coverage of $100,000 per account type per separate  legal
entity per financial  institution.  During the years ended December 31, 2004 and
2003 and the period through March 31, 2005, 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 during 2004 and 2003, and subsequent thereto, as a result of any of these
unsecured situations.


NOTE G - Marketable Securities

Marketable  securities  as of March 31,  2005 and 2004  consist  entirely  of an
investment in a money market instrument-based mutual funds and are summarized as
follows:
                                                           Available    Held to
                                          Trading          for sale     Maturity
                                          -------          --------     --------

March 31, 2005
--------------
   Aggregate fair value                   $50,033          $   -        $   -
   Gross unrealized holding gain          $     -          $   -        $   -
   Gross unrealized holding losses        $     -          $   -        $   -
   Amortized cost basis                   $50,033          $   -        $   -

March 31, 2004
--------------
   Aggregate fair value                   $42,514          $   -        $   -
   Gross unrealized holding gains         $     -          $   -        $   -
   Gross unrealized holding losses        $     -          $   -        $   -
   Amortized cost basis                   $42,514          $   -        $   -

The net unrealized  holding gains and (losses) on trading  securities which have
been included in the statement of operations  were  approximately  $-0- and $-0-
for the each of the  respective  three  month  periods  ended March 31, 2005 and
2004.

NOTE H - Property and Equipment

Property and equipment consists of the following at March 31, 2005 and 2004:

                                       March 31,      March 31,
                                         2005           2004      Estimated life
                                     -----------    -----------    -----------
<S>                                                                <C>

Buildings and related improvements    $1,473,356     $2,095,914   55 months - 40 years
Furniture and equipment                  451,093        891,150   55 months -10 years
                                     -----------    -----------
                                       1,924,449      2,987,064
Less accumulated depreciation         (1,385,540)    (2,026,483)
                                     -----------    -----------
                                         538,909        960,581
Land                                     210,000        741,488
                                     -----------    -----------
Net property and equipment              $748,909     $1,702,069
                                     ===========    ===========
</TABLE>



                                       12
<PAGE>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE H - Property and Equipment - Continued

Depreciation  expense  for the three  months  ended  March 31, 2005 and 2004 was
approximately $18,216 and $21,840, respectively.


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

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

The Company paid approximately $14,000 and$153,800 during Calendar 2004 and 2003
to service this debt.

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

On January 29, 2004, the Company obtained permanent long-term 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 March 31, 2005, the Company owes approximately $1,903,392 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
                                         -----------         ----------
                                            2005             $   86,552
                                            2006                 92,082
                                            2007                 96,931
                                            2008                103,203
                                            2009                111,918
                                          2010-2014             678,465
                                          2015-2019              55,758
                                                              ---------
                                         Balance at
                                      December 31, 2004      $1,924,909
                                                             ==========




                                       13
<PAGE>


                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE J - 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.

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets",  the Company
follows the policy of  evaluating  all  qualifying  assets as of the end of each
reporting  quarter.  As of March 31, 2005,  management  has  determined  that no
impairment  of the carrying  value of property and  equipment  held for sale was
necessary.


NOTE K - 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."

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.




                (Remainder of this page left blank intentionally)





                                       14
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE L - Income Taxes

The  components  of income tax  expense  (benefit)  for each of the three  month
periods ended March 31, 2005 and 2004, respectively, are as follows:

                         Three months   Three months
                             ended          ended
                           March 31,      March 31,
                             2005           2004
                          ---------      ---------
      Federal:
        Current           $(45,300)      $114,354
        Deferred              --             --
                         ---------      ---------
                           (45,300)       114,354
                         ---------      ---------
      State:
        Current               --             --
        Deferred              --             --
                         ---------      ---------
                              --             --
                         ---------      ---------
        Total             $(45,300)      $114,354
                         =========      =========

The Company's  income tax expense  (benefit) for each of the three month periods
ended March 31, 2005 and 2004, respectively, differed from the statutory federal
rate of 34 percent as follows:
                                                       Three months Three months
                                                           ended        ended
                                                         March 31,    March 31,
                                                           2005         2004
                                                        ---------    ---------

Statutory rate applied to earnings before income taxes  $(38,600)    $124,554
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                   (6,700)     (10,200)
                                                       ---------    ---------

Income tax expense                                      $(45,300)    $114,354
                                                       =========    =========

The deferred  current tax asset and non-current  deferred tax liability on March
31, 2005 and 2004, respectively, balance sheet consists of the following:

                                                   March 31,         March 31,
                                                     2005              2004
                                                  ---------         ---------

    Non-current deferred tax liability            $(264,877)        $(281,062)
                                                  =========         =========

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


NOTE M - Capital Stock Transactions

On  March  19,  1998,  the  Company  entered  into a  Stock  Purchase  Agreement
(Agreement)  with an unrelated  individual.  The  Agreement  contained a "second
closing"  clause,  as amended,  whereby the individual may acquire an additional
400,000 shares of restricted,  unregistered common stock at a price of $1.10 per
share on or before the close of  business on October 18,  2004.  This  Agreement
expired  with no shares of common stock  issued in  accordance  with the "second
closing" portion of the Agreement.




                                       15
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE N - 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 O - Contingencies

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,
     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.





                                       16
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE O - Litigation - Continued

     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  $300,000.00.  The  Plaintiff  further  asserted  to have no or
     diminished capacity to continue his professional 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 Dryer 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
     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) 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.




                                       17
<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements - Continued
                             March 31, 2005 and 2004



NOTE O - Litigation - Continued

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  agressively  defending  future
actions,  if any.  Accordingly,  no material  impact to the Company's  financial
condition is anticipated.





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                                       18
<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  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

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

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

(2)  Results of Operations

Three  months  ended March 31, 2005 as compared to three  months ended March 31,
--------------------------------------------------------------------------------
2004
----

Bar and restaurant sales decreased by approximately  $238,500 (or  approximately
22.4%) in the three months ended March 31, 2005. Bar and  restaurant  sales were
approximately  $1,046,000  for the three months ended March 31, 2004 as compared
to  approximately  $826,000  for the three  months  ended  March 31,  2005.  The
decrease  over  the  comparable  period  from  the  preceding  year is  directly
attributable to overall fluctuations in visitor traffic to the Dallas-Ft.  Worth
Metroplex  and the effects of shifts in economic and ethnic  populations  in the
immediate  geographical  area of the  Company's  location.  While the  Company's
facility holds a valid "sexually  oriented  business" license issued by the City
of  Dallas,  Texas;  the City of  Dallas,  Texas  continues  to pursue  vigorous
enforcement  of  its  Sexually  Oriented  Business  Ordinance.   This  Ordinance
restricts  the attire and dancing  activities at the  Company's  Million  Dollar
Saloon,  and other local adult  cabarets,  which has  resulted in  unpredictable
fluctuations in patron attendance at the Company's facilities.

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

While the City of Dallas'  efforts  against  the  Company's  principal  business
activity,  the lack of  efforts  by the City of Dallas to  maintain  a degree of
economic and ethnic  diversity  and  prosperity in the vicinity of the Company's
facility may  contribute to further  revenue  deterioration  in future  periods.
Further,  the Company's  agreement with the City of Dallas  requires the Million
Dollar  Saloon  to  cease  business  operations  as an adult  sexually  oriented
business at the close of business 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 decreased by approximately  $26,500 to approximately
$110,500 for the three months ended March 31, 2005 as compared to  approximately
$127,000 for the comparable  three month period ended March 31, 2004, due to the
termination  of the lease on the  Corporation  Lex  property.  All of the leases
were/are  with  entities  controlled  by  Duncan  Burch,  one of  the  Company's
controlling  shareholders.  The  Corporation  Lex  property  was vacant  through
February  2008  when it was sold for an  approximate  gain of  $25,000  over the
carrying value in the accompanying financial statements.  The rental real estate



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<PAGE>

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.

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

Cost of sales  decreased  to  approximately  $354,000 for the three months ended
March 31,  2005 as  compared to  approximately  $547,000  for the same period of
2004.  Gross  profit  percentages  rose by  approximately  800  basis  points to
approximately 61.46%  (approximately  $565,000) for the three months ended March
31, 2005 versus  53.40%%  (approximately  $626,000)  for the three  months ended
March 31, 2004.  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  $263,000 for the three
months  ended  March 31,  2005 as compared  to  approximately  $241,000  for the
comparable period of 2004. Management is of the opinion that G&A expenses should
remain relatively constant in future periods and management continues to monitor
its expenditure levels to achieve optimum financial results.

Pursuant to an October 20, 2005  settlement  of a lawsuit  filed on February 24,
2005,  the Company has accrued the  discounted  present  value of  approximately
$415,026  at the prime  interest  rate of 6.75% to yield  the gross  agreed-upon
settlement of $460,000.

Net income before income taxes was approximately $(159,000) for the three months
ended March 31, 2005 versus  approximately  $366,000  for the three months ended
March 31, 2004.  After-tax net income decreased by  approximately  $366,000 from
approximately   $252,000   for  the  three   months  ended  March  31,  2004  to
approximately  $(114,000)  for the same period ended March 31, 2005. The Company
experienced  earnings per share of  approximately  $(0.02) and $0.04 for each of
the respective three month periods ended March 31, 2005 and 2004, respectively.

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

(3)  Liquidity

As of March 31,  2005,  December  31, 2004 and March 31,  2004,  the Company has
working capital of approximately  $(437,000),  $(687,000) and $299,000. The sole
contributor to the Company's working capital deficit is a $1,000,000  payable to
related  parties,  bearing  interest at 8.0% per annum,  related to an Operating
Agreement which was triggered with the City of Dallas granting a  non-confirming
operating  permit to the  Company  through  July 31, 2009 and the closing of two
competing   operations  owned  and  controlled  by  the  Company's   controlling
shareholders.

The  Company  achieved  positive  cash flows from  operations  of  approximately
$316,000  and  $226,000  for the three  months  ended  March 31,  2005 and 2004,
respectively, as compared to $419,000 for the year ended December 31, 2004.

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

On January 29, 2004, the Company refinanced the initial acquisition debt related
to land held for  future  development.  The new  permanent  long-term  financing
retired the entire  initial  short-term  $2,156,713  note payable  issued at the
initial closing. The new note is for a principal balance of $2,000,000 and bears
interest  at 6.50% for the first  year and then  adjusts  to 1.0% above the Wall
Street Journal published prime rate, rounded to the nearest 0.125%. The interest
rate adjusts  every 12th month,  commencing  on January 29,  2005.  The new note
requires   payments  of  principal  and  accrued   interest  in  the  amount  of



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<PAGE>

approximately  $17,426  monthly,  commencing  on February 29, 2004. As this is a
variable  interest rate note, the payments may change after the 12th payment and
after every  succeeding 12th payment.  The new note matures on January 29, 2019.
The  long-term  note is secured by  underlying  land and the  separate  personal
guaranty  of  each  of  the  Company's   officers,   directors  and  controlling
shareholders; Duncan Burch and Nick Mehmeti.

The Company,  in accordance  with an agreement  with the City of Dallas,  Texas,
will cease  operating the Million Dollar Saloon at the close of business on July
31, 2009. This event will have a deterimental  impact on the Company's liquidity
and business operations.

(4)      Capital Resources

On October 20, 2005, the Company's wholly-owned subsidiary,  Tempo Tamers, Inc.,
settled a lawsuit filed on February 24, 2005 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 has been charged
to operations in the accompanying financial statements.

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately  $53,599.  The Company paid $493,072
cash,  inclusive of a $140,000 loan to the Company from Duncan Burch, an officer
and  director of the  Company,  and issued to the seller a one-year  note in the
principal amount of $2,156,713 with 8% annual interest. This note was refinanced
with a $2,000,000  long-term  mortgage  note  payable on January 29,  2004.  The
Company paid an additional sum of  approximately  $366,000 at the closing of the
permanent long-term mortgage financing.

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

The Company has identified no other significant  capital  requirements for 2005,
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.

(5)  Recent Accounting Pronouncements

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


Item 3 - Controls and Procedures

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

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



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<PAGE>

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,
     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  $300,000.00.  The  Plaintiff  further  asserted  to have no or
     diminished capacity to continue his professional 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 Dryer 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



                                       22
<PAGE>

     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
     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) 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.

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



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<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: August 18, 2008                               /s/ Nick Mehmeti
----------------------                               ---------------------------
                                                                    Nick Mehmeti
                                                        Chief Executive Officer,
                                                     Chief Financial Officer and
                                                                    and Director






















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