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 September 30, 2002

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


              For the transition period from ______________ to _____________

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


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

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

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

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

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

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


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

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: November 4, 2002: 5,731,778
                                          ---------------------------

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

                           Million Dollar Saloon, Inc.

              Form 10-QSB for the Quarter ended September 30, 2002

                                Table of Contents

                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1  Financial Statements                                                 3

  Item 2  Management's Discussion and Analysis or Plan of Operation           12

Part II - Other Information

  Item 1  Legal Proceedings                                                   14

  Item 2  Changes in Securities                                               14

  Item 3  Defaults Upon Senior Securities                                     14

  Item 4  Submission of Matters to a Vote of Security Holders                 14

  Item 5  Other Information                                                   14

  Item 6  Exhibits and Reports on Form 8-K                                    14

Signatures                                                                    15













                                                                               2

<PAGE>
<TABLE>
<CAPTION>

Item 1 - Part 1 - Financial Statements

                  Million Dollar Saloon, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                           September 30, 2002 and 2001

                                   (Unaudited)

                                     Assets
                                     ------
                                                                      September 30,    September 30,
                                                                            2002             2001
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
Current Assets
   Cash on hand and in bank                                           $   1,089,750    $     865,869
   Accounts receivable - trade                                               92,867             --
   Inventory                                                                 21,903           26,987
   Prepaid expenses                                                          98,629            4,179
                                                                      -------------    -------------
      Total current assets                                                1,303,149          897,035
                                                                      -------------    -------------

Property and Equipment - At Cost
   Buildings and related improvements                                     2,017,514        2,017,514
   Furniture and equipment                                                  867,453          867,453
                                                                      -------------    -------------
                                                                          2,884,967        2,884,967
   Less accumulated depreciation                                         (1,878,702)      (1,786,795)
                                                                      -------------    -------------
                                                                          1,006,265        1,098,175
   Land                                                                     741,487          741,487
                                                                      -------------    -------------
      Net property and equipment                                          1,747,752        1,839,659
                                                                      -------------    -------------

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

Total Assets                                                          $   3,055,626    $   2,742,169
                                                                      =============    =============

                      Liabilities and Shareholders' Equity
                      ------------------------------------
Current Liabilities
   Accounts payable - trade                                           $      12,885    $      23,565
   Accrued liabilities                                                       42,260           63,209
   Federal income taxes payable                                             116,014           33,489
   Tenant deposits                                                            6,500            6,500
                                                                      -------------    -------------
      Total current liabilities                                             177,659          126,763
                                                                      -------------    -------------

Long-term Liabilities
   Deferred tax liability                                                   134,524          133,101
                                                                      -------------    -------------
      Total liabilities                                                     312,183          259,864
                                                                      -------------    -------------

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 issued and outstanding, respectively                         5,732            5,732
   Retained earnings                                                      2,737,711        2,476,573
                                                                      -------------    -------------
      Total shareholders' equity                                          2,743,443        2,482,305
                                                                      -------------    -------------

Total Liabilities and Shareholders' Equity                            $   3,055,626    $   2,742,169
                                                                      =============    =============
</TABLE>

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               3

<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
             Nine and Three months ended September 30, 2002 and 2001

                                   (Unaudited)

                                       Nine months      Nine months     Three months     Three months
                                          ended            ended            ended            ended
                                      September 30,    September 30,    September 30,    September 30,
                                            2002             2001             2002             2001
                                      -------------    -------------    -------------    -------------
<S>                                   <C>              <C>              <C>              <C>
Revenues
   Bar and restaurant sales           $   2,699,352    $   2,463,931    $     855,893    $     762,654
   Rental income                            424,920          387,446          137,775          125,775
                                      -------------    -------------    -------------    -------------
      Total revenues                      3,124,272        2,851,377          993,668          888,429
                                      -------------    -------------    -------------    -------------

Cost of Sales - Bar and
   Restaurant Operations                  1,694,772        1,647,296          581,955          460,399
                                      -------------    -------------    -------------    -------------

Gross Profit                              1,429,500        1,204,081          411,713          428,030
                                      -------------    -------------    -------------    -------------

Operating Expenses
   General and administrative               993,437          996,430          350,717          328,576
   Interest                                     207             --                207             --
   Depreciation and amortization             68,721           68,546           22,907           22,849
                                      -------------    -------------    -------------    -------------
      Total operating expenses            1,062,365        1,064,976          373,831          351,425
                                      -------------    -------------    -------------    -------------

Income from Operations                      367,135          139,105           37,882           76,605

Other Income (Expenses)
   Interest and other miscellaneous           6,590           21,242           (3,647)           5,552
                                      -------------    -------------    -------------    -------------

Income before Income Taxes                  373,725          160,347           34,235           82,157

Income tax (expense)
   Currently payable                       (126,000)         (66,630)         (33,428)         (44,511)
   Deferred                                    --               --               --               --
                                      -------------    -------------    -------------    -------------

Net Income                                  247,725           93,717              807           37,646

Other comprehensive income                     --               --               --               --
                                      -------------    -------------    -------------    -------------

Comprehensive Income                  $     247,725    $      93,717    $         807    $      37,646
                                      =============    =============    =============    =============

Earnings per share of common
   stock outstanding computed
   on net income - basic and
   fully diluted                      $        0.04    $        0.02              nil    $        0.01
                                      =============    =============    =============    =============

Weighted-average number
   of shares outstanding -
   basic and fully diluted                5,731,778        5,731,778        5,731,778        5,731,778
                                      =============    =============    =============    =============
</TABLE>



The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               4

<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                  Nine months ended September 30, 2002 and 2001

                                   (Unaudited)

                                                              Nine months      Nine months
                                                                 ended            ended
                                                             September 30,    September 30,
                                                                   2002             2001
                                                             -------------    -------------
<S>                                                          <C>              <C>
Cash Flows from Operating Activities
   Net income                                                $     247,725    $      93,717
   Adjustments to reconcile net income to net cash
     provided by operating activities
       Depreciation and amortization                                68,721           68,546
       (Increase) decrease in
         Accounts receivable - trade and other                     (36,001)           8,737
         Federal income taxes receivable                              --             33,141
         Inventory                                                  (2,486)          (4,143)
         Prepaid expenses                                          (98,626)          (4,179)
       Increase (decrease) in
         Accounts payable and other accrued liabilities            (69,982)         (87,490)
         Income taxes payable                                       41,614           33,489
                                                             -------------    -------------
Net cash provided by operating activities                          150,965          141,818
                                                             -------------    -------------

Cash Flows from Investing Activities
   Principal collections on note receivable                           --               --
   Purchases of property and equipment                                --             (2,992)
                                                             -------------    -------------
Net cash provided by investing activities                             --             (2,992)
                                                             -------------    -------------

Cash Flows from Financing Activities
   Principal payments on long-term notes payable                      --               --
   Dividends paid                                                     --               --
                                                             -------------    -------------
Net cash used in financing activities                                 --               --
                                                             -------------    -------------

Increase in Cash and Cash Equivalents                              150,965          138,826

Cash and cash equivalents at beginning of period                   938,785          727,043
                                                             -------------    -------------

Cash and cash equivalents at end of period                   $   1,089,750    $     865,869
                                                             =============    =============

Supplemental Disclosures of Interest and Income Taxes Paid
     Interest paid during the period                         $        --      $        --
                                                             =============    =============
     Income taxes paid                                       $         207    $        --
                                                             =============    =============

</TABLE>

The  financial information presented herein has been prepared by management
     without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
                                                                               5

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


NOTE A - Background and Organization

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

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

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

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

These  financial  statements  reflect  the books and  records of Million  Dollar
Saloon, Inc., Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don, Inc. for
the years  ended  December  31,  2001 and 2000,  respectively.  All  significant
intercompany transactions have been eliminated in combination.  The consolidated
entities are referred to as Company.

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange  Commission  on its  Annual  Report on Form  10-KSB  for the year ended
December 31, 2001.  The  information  presented  within these interim  financial
statements  may not  include all  disclosures  required  by  generally  accepted
accounting  principles  and the  users of  financial  information  provided  for
interim periods should refer to the annual  financial  information and footnotes
when reviewing the interim financial results presented herein.

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
instructions   for  Form  10-QSB,   are   unaudited  and  contain  all  material
adjustments,  consisting  only of  normal  recurring  adjustments  necessary  to
present fairly the financial condition,  results of operations and cash flows of
the Company for the respective  interim  periods  presented.  The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending December 31, 2002.

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


NOTE B - 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.

During interim periods, the Company follows the accounting policies set forth in
its annual  audited  financial  statements  filed with the U. S.  Securities and
Exchange  Commission  on its  Annual  Report on Form  10-KSB  for the year ended
December 31, 2001.  The  information  presented  within these interim  financial
statements  may not include all  disclosures  required by accounting  principles
generally  accepted in the United  States of America 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.

                                                                               6

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE B - Preparation of Financial Statements - Continued

In the opinion of management,  the accompanying  interim  financial  statements,
prepared in  accordance  with the U. S.  Securities  and  Exchange  Commission's
instructions   for  Form  10-QSB,   are   unaudited  and  contain  all  material
adjustments,  consisting  only of  normal  recurring  adjustments  necessary  to
present fairly the financial condition,  results of operations and cash flows of
the Company for the respective  interim  periods  presented.  The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending December 31, 2002.

The preparation of financial statements in conformity with 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


NOTE C - Summary of Significant Accounting Policies

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

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

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

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

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

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

     Because of the credit risk  involved,  management has provided an allowance
     for doubtful  accounts  which  reflects  its opinion of amounts  which will
     eventually become uncollectible.  In the event of complete non-performance,
     the  maximum  exposure  to the  Company  is the  recorded  amount  of trade
     accounts   receivable   shown  on  the   balance   sheet  at  the  date  of
     non-performance.


                                                                               7

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE C - Summary of Significant Accounting Policies  - Continued

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

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

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

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

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

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

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

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

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

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance,   whichever  is  later.  As  of  September  30,  2002  and  2001,
     respectively,  the Company has no outstanding  stock  warrants,  options or
     convertible  securities  which could be considered as dilutive for purposes
     of the loss per share calculation.


NOTE D - Fair Value of Financial Instruments

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


                                                                               8
<PAGE>
<TABLE>
<CAPTION>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE D - Fair Value of Financial Instruments - Continued

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

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


NOTE E - Concentrations of Credit Risk

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


NOTE F - Property and Equipment

Property and equipment consists of the following at September 30, 2002 and 2001:

                                           September 30,    September 30,
                                                 2002             2001      Estimated life
                                           -------------    -------------   --------------
<S>                                            <C>          <C>               <C>
      Buildings and related improvements       2,017,514    $   2,017,514     15-40 years
      Furniture and equipment                    867,453          867,453      5-10 years
                                           -------------    -------------

                                               2,884,967        2,884,967
      Less accumulated depreciation           (1,878,702)      (1,786,795)
                                           -------------    -------------

                                               1,006,265        1,098,175
      Land                                       741,487          741,487
                                           -------------    -------------

      Net property and equipment           $   1,747,752    $   1,839,659
                                           =============    =============
</TABLE>

Depreciation  expense for the nine months ended  September  30,2002 and 2001 was
$68,721 and $68,546, respectively.




                (Remainder of this page left blank intentionally)


                                                                               9

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE G - Income Taxes

The  components  of income  tax  expense  (benefit)  for the nine  months  ended
September 30, 2002 and 2001, respectively, are as follows:

                                                    Nine months     Nine months
                                                       ended           ended
                                                   September 30,   September 30,
                                                         2002            2001
                                                   -------------   -------------
     Federal:
       Current                                     $     126,000   $      66,630
       Deferred                                             --              --
                                                   -------------   -------------
                                                         126,000          66,630
                                                   -------------   -------------
     State:
       Current                                              --              --
       Deferred                                             --              --
                                                   -------------   -------------
                                                            --              --
                                                   -------------   -------------
       Total                                       $     126,000   $      66,630
                                                   =============   =============

The Company's  income tax expense  (benefit) for the nine months ended September
30, 2002 and 2001, respectively,  differed from the statutory federal rate of 34
percent as follows:
<TABLE>
<CAPTION>

                                                               Nine months      Nine months
                                                                  ended            ended
                                                              September 30,    September 30,
                                                                    2002             2001
                                                              -------------    -------------
     <S>                                                      <C>              <C>
     Statutory rate applied to earnings before income taxes   $     127,100    $      54,500
     Increase (decrease) in income taxes resulting from:
       State income taxes                                              --               --
       Deferred income taxes                                           --               --
       Estimated proposed adjustments on IRS audit
         of prior year returns                                      (21,000)            --
       Effect of incremental tax brackets and the
         application of business tax credits                         19,900           12,130
                                                              -------------    -------------

     Income tax expense                                       $     126,000    $      66,630
                                                              =============    =============
     </TABLE>

The deferred  current tax asset and  non-current  deferred  tax  liability as of
September 30, 2002 and 2001, respectively, consists of the following:

                                                 September 30,    September 30,
                                                       2002             2001
                                                 -------------    -------------

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

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


NOTE H - Capital Stock Transactions

On  March  19,  1998,  the  Company  entered  into a  Stock  Purchase  Agreement
(Agreement)  with an unrelated  individual.  The  Agreement  contained a "second
closing"  clause,  as amended,  whereby the individual may acquire an additional
400,000 shares of restricted,  unregistered common stock at a price of $1.10 per
share on or before the close of business on October 18,  2004.  As of  September
30, 2002 and subsequent  thereto,  no shares of common stock have been issued in
accordance with the "second closing" portion of the Agreement.

                                                                              10

<PAGE>

                  Million Dollar Saloon, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements - Continued


NOTE I - Commitments

The Company leases  commercial  real estate to entities  controlled by a Company
shareholder,  officer and director on both short and long-term operating leases.
The leases require minimum weekly lease payments,  plus reimbursement for annual
property taxes.  The respective  tenants are responsible for normal  maintenance
and  repairs,  insurance  and other  direct  operating  expenses  related to the
property. As of December 31, 2001, future minimum non-cancellable lease revenues
are as follows:

                                              Year ending
                                              December 31,              Amount
                                              ------------            ----------

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

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

NOTE J - Segment Information

The  Company  operates  with a  centralized  management  structure  and  has two
identifiable  operating segments:  an adult entertainment  lounge and restaurant
located in Dallas, Texas and commercial rental real estate located in Dallas and
Tarrant  Counties,  Texas.  All  revenues  are  generated  operations  in  these
geographic  areas. As of September 30, 2002 and 2001,  respectively,  all rental
revenues are derived from entities controlled by a Company shareholder,  officer
and  director.  Approximately  13.60% and 13.59% of total  revenues for the nine
months  ended  September  30,  2002 and 2001,  respectively,  came from  related
parties.
<TABLE>
<CAPTION>


                                         Restaurant          Rental         General and
                                          facility         real estate    administrative       Total
                                       --------------    --------------   --------------   --------------
<S>                                    <C>               <C>              <C>              <C>
Nine months ended September 30, 2002
   Revenue from external customers     $    2,699,352    $         --     $         --     $    2,699,352
   Revenue from related parties                  --             424,920             --            424,920
   Revenue (expenses) from/to
     intercompany sources                    (180,000)             --            180,000             --
   Interest income                               --               4,590            2,000            6,590
   Interest expense                              --                 207             --                207
   Depreciation and amortization               24,465            44,256             --             68,721
   Income tax expense (benefit)                 5,590           119,730              680          126,000
   Segment assets                             478,298         2,208,197          369,131        3,055,626
   Fixed asset expenditures                      --                --               --               --

Nine months ended September 30, 2000
   Revenue from external customers     $    2,991,784    $         --     $         --     $    2,991,784
   Revenue from related parties                  --             515,075             --            515,075
   Revenue (expenses) from/to
     intercompany sources                    (180,000)          180,000             --               --
   Interest income                               --                 440           26,371           26,811
   Interest expense                              --                --              2,129            2,129
   Depreciation and amortization               19,404            51,398            7,532           78,334
   Income tax expense (benefit)               (10,558)          163,345            2,963          155,750
   Segment assets                             260,504         2,310,434          350,329        2,921,267
   Fixed asset expenditures                    48,403              --               --             48,403
</TABLE>


                                                                              11

<PAGE>

Part I - Item 2

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

(4)  Caution Regarding Forward-Looking Information

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

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

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

(5)  Results of Operations

Bar and restaurant  operations  increased  slightly from $2,464,000 for the nine
months ended September 30, 2001 to approximately  $2,700,000 for the nine months
ended September 30, 2002.

As discussed in Part II - Legal  Proceedings,  the Company is a  participant  in
litigation  against  the City of  Dallas,  Texas  where  the  Company  and other
operators  of adult  cabarets  within  the City of  Dallas  are  contesting  the
constitutionality of certain provisions of the Dallas Sexually Oriented Business
Ordinance  (the  "Ordinance")  which impacts the Company's and other  operators'
license to do business as an adult cabaret in Dallas. The Company remains of the
opinion that it will prevail on its constitutional claims.

However, as an interim measure, the City of Dallas initiated various enforcement
actions and  on-premises  monitoring  of conduct  within the Company's and other
facilities  which has  negatively  impacted  both  patronage and revenues in all
adult  entertainment  facilities  within  the City of  Dallas  during  the first
quarter of 2001 and periods  subsequent  thereto.  As of the date of this filing
and pending the ultimate outcome of the pending litigation, management is unable
to assess the long-term impact of these regulatory actions.

Management's  continues  to direct it's  efforts  towards  customer  service and
increasing sales through effective marketing and advertising methods to maintain
and increase its bar and restaurant patronage and comply with current regulatory
conditions and environment.

The Company's rental income increased slightly from  approximately  $387,000 for
the first nine  months of 2001 as  compared to  approximately  $425,000  for the
first  nine  months  of 2002.  All  rental  income  is  received  from  entities
controlled by Duncan Burch, one of the Company's  controlling  shareholders . On
January 30, 2001, the Company's Board of Directors  approved an amendment to the
lease  agreement  covering the property owned by Corporation  Lex. The amendment
provides that  effective  January 1, 2001,  the base rental will be reduced from
$4,750 per week to $1,000 per week. Additionally, the amended lease will provide
that the Company, as Landlord, shall receive 10% of the gross revenues generated
from the business located at the property,  payable quarterly, until termination
of the  lease  in May  2002.  As of  September  30,  2002,  the  Company  is due
approximately  $93,000 in  additional  rents over and above the required  weekly
payment as calculated on the gross sales of the tenant.


                                                                              12

<PAGE>

The modification of this lease agreement was the result of negotiations  between
the  Company  and  representatives  of the tenant,  who is  affiliated  with the
Company's  controlling  shareholder.  Such  modifications  were requested by the
tenant  as a  result  of  decreasing  revenues  of the  tenant's  adult  cabaret
operation  located on the property.  The tenant  continues to advise the Company
that the lessee may be compelled to close its business operations.

Cost of sales were relatively constant at approximately $1,695,000 for the first
nine months of 2002 as compared to  approximately  $1,647,000 for the first nine
months  of  2001.  The  Company  experiences   fluctuations  in  cost  of  sales
expenditures,  specifically  beverage,  food  and  entertainer  costs,  based on
staffing  levels and  patronage.  Both of these  variable  costs are  constantly
monitored by management for expenditure control. Gross profit percentages remain
relatively  constant  at 45.75%  (approximately  $1,430,000)  for the first nine
months of 2002  versus  42.23%  ($1,204,000)  for the first nine months of 2001.
Cost  controls  over  purchasing,   inventory  management  protocols  and  labor
management are continuously monitored to improve gross profit percentages.

General and  administrative  expenses  declined by  approximately  $3,000 in the
first nine  months of 2002  versus the first nine  months of 2001.  The  Company
continues  to  experience  relatively  constant  expenditure  levels for general
operating  expenses.  Management  continues to monitor its expenditure levels to
achieve optimum financial results.

During the third quarter,  as a result of  adjustments  arising from an Internal
Revenue Service examination of the Company's consolidated income tax returns for
the years  ended  December  31,  1999,  2000,  and  2001,  the  Company  accrued
approximately  $21,000 in additional  income taxes and related interest due as a
current charge to operations.

Net income  before  income taxes was  approximately  $374,000 for the first nine
months of 2002 versus approximately  $139,000 for the first nine months of 2001.
After-tax net income  increased by  approximately  $154,000  from  approximately
$94,000  for the first nine  months of 2001 to  approximately  $247,000  for the
first  nine  months  of 2000.  The  Company  experienced  earnings  per share of
approximately  $0.04 and $0.02 per share for the first  nine  months of 2002 and
2001, respectively.

(3)  Liquidity

As of  September  30,  2002,  the Company has working  capital of  approximately
$1,125,000  as compared  to  approximately  $809,000  at  December  31, 2001 and
approximately $770,000 at September 30, 2001. The Company achieved positive cash
flows from  operations  of  approximately  $151,000 for the first nine months of
2002 versus approximately $142,000 for the first nine months of 2001.

The Company has identified no significant  capital  requirements for 2002, other
than normal repair and replacement  activity at the Company's  commercial rental
properties and the adult entertainment lounge and restaurant facility. Liquidity
requirements mandated by future business expansions or acquisitions,  if any are
specifically identified or undertaken, are not readily determinable at this time
as no substantive plans have been formulated by management.

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

For all periods prior to 2001, the Company treats and has  consistently  treated
all entertainers as employees  whereas other similar  facilities may or may have
treated their entertainers as independent contractors. For a period during 2001,
as a result of certain  related  court  and/or tax  rulings,  the Company  began
treating all entertainers as independent contractors,  including the maintenance
and issuance of Form 1099, as required by the Internal  Revenue  Service and the
Department of Labor.  The Company  currently,  and for the  foreseeable  future,
treats all  entertainers  as employees . For the 2001 period where  entertainers
were treated as independent contractors,  this brief change in employment policy
and  treatment  created  a  decline  in  both  dance  revenues  and  entertainer
compensation  as  all  table  dances  were  negotiated   directly   between  the
entertainer  and the Company's  patrons.  Management is of the opinion that it's
actions,  policies  and  procedures,  as  predicated  on  promulgated  court and
administrative  rulings, were appropriate;  however, the current position allows
for  better  control  over  personnel  staffing  levels  and  costs  and  better
monitoring of compliance with local laws and regulations.



                                                                              13

<PAGE>

Part II - Other Information

Item 1 - Legal Proceedings

Case No.  3-00-CV-2500-H;  Adventure Plus, Inc.,  Millennium  Restaurant  Group,
Inc.,  D/B/A  Cabaret  Royale,  et al. v. City of Dallas,  Inc.;  United  States
District Court, Northern District of Texas, Dallas Division

     This is an action where the Company and other  operators of adult  cabarets
     within the City of Dallas are contesting the  constitutionality  of certain
     provisions  of  the  Dallas  Sexually  Oriented  Business   Ordinance  (the
     "Ordinance") which impacts the Company's and other operators' license to do
     business as an adult cabaret in Dallas.  The Company is of the opinion that
     it will prevail on its constitutional claims. In January, 2001, as a result
     of a trial setting, the City of Dallas has agreed to re-write the contested
     provisions of the  Ordinance,  so any impact,  if any, on the operations of
     the Company,  will not be known until  October 2002.  However,  the Company
     reasonably  believes  that the  Ordinance  will be amended so as to have no
     material adverse impact on the Company's future operations. There can be no
     assurance  that the City of Dallas will in fact amend the  Ordinance  to an
     extent that the Ordinance will not have any material  adverse effect on the
     Company's business operations or that in the future the City of Dallas will
     modify the  Ordinance  to an extent  that the  Ordinance  will not have any
     material adverse effect on the Company's business operations.

The  Company  may from time to time be a party to various  other  legal  actions
arising in the ordinary  course of its  business.  The Company is not  currently
involved  in any such  actions  that it  believes  will have a material  adverse
effect on its results of operations or financial condition.

Item 2 - Changes in Securities

     None

Item 3 - Defaults on Senior Securities

     None

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

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

Item 5 - Other Information

     None

Item 6 - Exhibits and Reports on Form 8-K

     Exhibits
     --------
     99.1 CEO/CFO  Certification  Pursuant to 18 USC,  Section  1330, as adopted
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     Reports on Form 8-K
     -------------------
     None



                                                                              14

<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: November 4, 2002                                     /s/ Nick Mehmeti
       ----------------                              ---------------------------
                                                                    Nick Mehmeti
                                                        Chief Executive Officer,
                                                         Chief Financial Officer
                                                                    and Director
























                                                                              15