U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934 FOR THE
                       FISCAL YEAR ENDED DECEMBER 31, 1999

                         Commission File Number: 0-27006

                           MILLION DOLLAR SALOON, INC.
                 (Name of Small Business Issuer in Its Charter)


            Nevada                                         13-3428657
     (State of Incorporation)                           (IRS Employer
                                                         Identification No.)

                             6848 Greenville Avenue
                               Dallas, Texas 75231
          (Address of Principal Executive Offices, including Zip Code)

                                 (214) 691-6757
                (Issuer's Telephone Number, Including Area Code)


         Securities registered under Section 12(b) of the Exchange Act:

                                                      Name of Each Exchange
          Title of Each Class                          on which Registered
          -------------------                          -------------------
                  N/A                                        N/A



         Securities registered pursuant to 12(g) of the Exchange Act:

                               Title of Each Class
                          Common Stock, $.001 par value

         Check whether the issuer (i) 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 issuer was required to file such reports),  and (ii) has
been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

         Check if  disclosure  of  delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of the  issuer's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.   [x]

         The issuer's  revenues for the fiscal year ended December 31, 1999 were
$3,645,571. The aggregate market value of common stock held by non-affiliates of
the  issuer  at March 1,  2000,  based  upon the  closing  bid  price on The OTC
Electronic  Bulletin  Board on said date, was  $1,163,939.  As of March 1, 2000,
there were 5,731,778 shares of the issuer's common stock outstanding.

                       Documents Incorporated by Reference
         No documents,  other than certain  exhibits,  have been incorporated by
reference into this report.




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                                TABLE OF CONTENTS

                                                                                           PAGE
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PART I   .....................................................................................3

         ITEM 1.  DESCRIPTION OF BUSINESS.....................................................3

         ITEM 2.  PROPERTIES..................................................................8

         ITEM 3.  LEGAL PROCEEDINGS...........................................................9

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS........................10

PART II  ....................................................................................10

         ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                   ..........................................................................10

         ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..................11

         ITEM 7.  FINANCIAL STATEMENTS.......................................................14

         ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE...................................................14

PART III ....................................................................................14

         ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT..........................14

         ITEM 10.  EXECUTIVE COMPENSATION....................................................15

         ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                   ..........................................................................16

         ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................19

         ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K..........................................19

</TABLE>



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                                     PART I

CAUTION REGARDING FORWARD-LOOKING INFORMATION

         This annual report  contains  certain  forward-looking  statements  and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to  the  Company  or  management.   When  used  in  this  document,   the  words
"anticipate,"   "believe,"   "estimate,"   "expect"  and  "intend"  and  similar
expressions,  as they relate to the Company or its  management,  are intended to
identify forward-looking statements. Such statements reflect the current view of
the  Company   regarding  future  events  and  are  subject  to  certain  risks,
uncertainties  and  assumptions,  including the risks and  uncertainties  noted.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying assumptions prove incorrect,  actual results may vary materially from
those  described  herein  as  anticipated,   believed,  estimated,  expected  or
intended. In each instance,  forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.

ITEM 1.  DESCRIPTION OF BUSINESS

General

         Million Dollar Saloon Inc. (the "Company") was  incorporated  under the
laws of the  State of  Nevada  on  September  28,  1987.  The  Company  provides
management support and conducts its business operations through its wholly-owned
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. ("Tempo"),  its wholly-owned  subsidiary.  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.

         Unless otherwise indicated,  the "Company" refers to the Company,  each
of its wholly-owned subsidiaries and Tempo.

         The Company is based in Dallas,  Texas and currently  conducts business
in two distinct areas:

         o    Owning and operating an adult cabaret.

         o    Owning and  managing  income  producing  commercial  real estate.


 Adult Cabaret

         General. The Company, through Tempo, owns and operates an adult cabaret
under  the name "The  Million  Dollar  Saloon,"  which is its  primary  business
operation.  The  Million  Dollar  Saloon  opened  in 1982  with  the  intent  of
establishing a sophisticated  entertainment  environment focused on attracting a
professional  clientele.  To enhance the club's appeal to its target market, The
Million Dollar Saloon offers restaurant and first-class bar service conducive to
attracting  businessmen  and  out-of-town  convention  clientele.   The  Company
continues to explore the expansion of the adult cabaret  segment of its business




                                      - 3 -

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by  establishing  additional  Million  Dollar Saloons or acquiring and operating
similar  facilities  in  selected  cities.  As of the  date of this  report,  no
specific locations have been identified.

         Female  Entertainment.  The  entertainers  at The Million Dollar Saloon
must follow  management's  policy of high personal  appearance  and  personality
standards.  A performer's physical appearance and her ability to present herself
attractively and to converse  intelligently  with customers is very important to
management.  Management insists that the performers at The Million Dollar Saloon
be  experienced  dancers.  The  performers  dance on the main  stage or on small
stages  throughout the club. While their  performances  include topless dancing,
management  insists that  performers  wear elegant  attire when not dancing,  as
opposed to being scantily  dressed as in many other adult  cabarets.  Management
never  allows  full  nudity in the club.  Management  provides  performers  with
guidelines  for the manner of dress,  hairstyle,  makeup and  general  demeanor.
Guidelines are imposed to maintain a high standard of professionalism  among the
performers  and to ensure  that  they  always  maintain  a  pleasant,  congenial
demeanor.   Further,   management  evaluates  each  performer's  appearance  and
performance  on a  nightly  basis  and  advises  them if  their  dress,  makeup,
hairstyle, general appearance or demeanor does not meet the Company's standards.
Though these  policies have the effect of limiting the number of performers  who
are permitted to dance at The Million Dollar Saloon,  the Company  believes that
its policy of  maintaining  these high  standards  is in its best  interest  for
long-term market position. Entertainers who have performed at The Million Dollar
Saloon have been featured in various leading men's entertainment magazines.

         Compliance Policies.  The Company's management has a policy of ensuring
that its  business is carried on in  conformity  with  local,  state and federal
laws. In particular,  the Company's management has a "no tolerance" policy as to
illegal  drug use in or around  the  premises.  Posters  placed  throughout  the
nightclub  reinforce  this  policy as do  periodic  unannounced  searches of the
entertainer's  lockers.  Entertainers and waitresses who arrive for work are not
allowed to leave the premises  without the  permission  of  management.  Once an
entertainer does leave the premises,  she is not allowed to return to work until
the next day.  Management  continually  monitors the  behavior of  entertainers,
waitresses  and  customers  to ensure that  proper  standards  of  behavior  are
observed.  The Company's  management has the power to levy fines on entertainers
for breaches of the Company's  rules. In the event an entertainer is fined three
times by management,  the entertainer is barred from future  performances at The
Million Dollar Saloon.

         Management also reviews all credit card charges made by customers while
at The Million Dollar  Saloon.  Specifically,  the Company's  policy is that all
credit card charges  must be  approved,  in writing,  by  management  before any
charges are accepted.  Management of the club is particularly  trained to review
credit card  charges to ensure that the only credit card  charges  approved  for
payment are for food and drink at The Million Dollar Saloon.

         Food and Drink.  The Company believes a key to the success of a premier
adult  cabaret  is a  quality,  first-class  bar  and  restaurant  operation  to
complement its adult entertainment. The Company's restaurant operation is a full
service  operation which provides  business lunch buffets and a full-scale lunch
and dinner menu service offering hot and cold appetizers, salads, seafood, steak
and other  entrees.  A variety of premier  wines are offered to  compliment  any
customer's lunch or dinner  selection.  The Company employs a full-time  Service
Manager who is in charge of  recruiting  and  training a  professional  waitress
staff and ensuring that each customer receives prompt and courteous service. The
Company also employs a Chef and a Bar  Manager.  The Bar Manager is  responsible
for stocking, inventory control, and scheduling of bar staff.

         Controls.  Operational  and  accounting  controls are  essential to the
successful operation of a cash intensive nightclub and bar business. The Company
separates  management  personnel  from all cash  handling.  The  Company  uses a
combination of accounting and physical  inventory control mechanisms to ensure a
high  level  of  integrity  in  its  accounting  practices.   Computers  play  a
significant  role in capturing and analyzing a variety of information to provide
management with the information  necessary to efficiently manage and control the
nightclub.  Management  personnel  reconcile  deposits  of cash and credit  card
receipts  each  day to a daily  income  report.  Daily  computer  reports  alert
management of any variances from expected  financial results based on historical
norms.




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         Atmosphere.  The Million  Dollar Saloon  maintains an elegant  European
atmosphere through its Italian decor and other customer related  amenities.  The
furniture and  furnishings in The Million Dollar Saloon create the feeling of an
upscale  restaurant.  The club offers a gourmet menu,  two cigar humidors and an
extensive  champagne and wine list.  The sound system design  provides a quality
sound at levels so conversation  can take place.  The Million Dollar Saloon also
provides a state-of-the-art light show and employs a sound and light engineer to
upgrade,  monitor,  and  maintain  the  sound  and  light  systems.   Management
constantly  monitors  the  environment  of The Million  Dollar  Saloon for music
selection, customer service, appearance, and ambience.

         VIP Area.  To  emphasize  service  for the  upper-end  of the  business
market, the Company maintains a VIP mezzanine  encompassing the upstairs area of
The Million Dollar Saloon  facility.  The VIP area is opened to individuals  who
pay  an  increased  daily  admission  charge  or  purchase  annual  or  lifetime
memberships.  The VIP area  provides  a higher  level of luxury in its decor and
more personalized  services. The VIP area consists of approximately 1,800 square
feet for food and  entertainment  purposes  and has an occupancy of 100 persons.
Catering to the upscale VIP customer,  this area includes "The  Champagne  Room"
accessible for an additional  fee. The downstairs  club and dining area consists
of  approximately   4,500  square  feet  for  entertainment   purposes  and  can
accommodate  250 persons.  The lower level also offers "The Blue Room",  an area
for bachelor and other private parties.

         Advertising  and Promotion.  The Company's  marketing  philosophy is to
portray The Million Dollar Saloon as a premiere adult cabaret  providing  female
entertainment in a sophisticated,  discreet  environment for its patrons.  Hotel
publications,  local radio,  cable  television,  newspapers,  billboards,  and a
variety of promotional  campaigns ensure that the public  recognizes The Million
Dollar Saloon name.

Future Expansion

         The Company has not determined  the precise  locations or nature of its
future expansion, but it believes, based upon its experience, that opportunities
for  expansion  exist  primarily in the  Dallas/Fort  Worth  Metroplex and other
metropolitan  areas in the  Southwest  United  States.  The  Company  may expand
through the acquisition of sports bars, casual clubs and adult cabarets that may
use the trademark "The Million Dollar  Saloon." In determining  which cities may
be suitable  locations for  expansion,  a variety of factors will be considered,
including,  but  not  limited  to,  the  current  regulatory  environment,   the
availability  of sites  located in high traffic  commercial  areas  suitable for
conversion to The Million  Dollar Saloon style cabarets or sports bars or casual
clubs,  potential  competition  in  the  area,  current  market  conditions  and
profitability of other adult cabarets in the city.

Competition

         The adult  entertainment  nightclub industry is highly competitive with
respect  to  price,   service,   location,   and  the   professionalism  of  its
entertainment.  The Million Dollar Saloon competes with many locally-owned adult
cabarets in Dallas,  Texas,  certain of which may enjoy  recognition that equals
that of The  Million  Dollar  Saloon.  While  there  may be  local  governmental
restrictions on the location of a so-called "sexually oriented business",  there
are no barriers to entry into the adult cabaret  market.  There are in excess of
30 adult cabarets located in the Dallas,  Texas metropolitan area of which three
are in direct  competition with the Million Dollar Saloon.  The Company believes
that the  combination of its existing name  recognition  and its distinctive and
unique  entertainment  environment will allow the Company to effectively compete
within this industry.

Governmental Regulations

         The  Company  is  subject  to  various  federal,  state and local  laws
affecting its business activities.  In Texas, the authority to issue a permit to
sell alcoholic  beverages is governed by the Texas Alcoholic Beverage Commission
("TABC").  The TABC has the authority,  in its discretion,  to issue appropriate
permits.  The  Company,  through  a  management  agreement  with  an  affiliated
corporation,  operates its business under a Texas Mixed Beverage Permit and Late
Hours  Permit  (the "Permits").  These  Permits  are  subject to annual renewal,



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provided the Company and its affiliated corporation have complied with all rules
and regulations governing the Permits. Renewal of a permit is subject to protest
by a law  enforcement  agency or by a member of the public.  In case of protest,
the TABC may hold a hearing for interested  parties to express their views.  The
TABC  has the  authority  after  such  hearing  not to  issue a  renewal  of the
protested  alcoholic  beverage  permit.  Neither the Company nor its  affiliated
corporation  have been the subject of a protest  hearing  against the renewal of
its Permits.  Other states may have similar laws that may limit the availability
of a permit to sell  alcoholic  beverages or which may provide for suspension or
revocation  of a permit to sell  alcoholic  beverages in certain  circumstances.
Prior  to  expanding  into any new  market,  the  Company  will  take all  steps
necessary to ensure compliance with all licensing and regulatory requirements.

         Various groups have  increasingly  advocated  certain  restrictions  on
"happy hour" and other promotions  involving  alcoholic  beverages.  The Company
believes its  entertainment  value,  admittance  charge  beginning  after normal
"happy  hours" and its policies of not  discounting  drink prices are  effective
tools in promoting its business.  The Company cannot predict whether  additional
restrictions  on the promotion of sales of alcoholic  beverages will be adopted,
or if adopted, the effect of such restrictions on its business.

         Beyond various regulatory  requirements affecting the sale of alcoholic
beverages,  the location of an adult cabaret is subject to  restriction  by city
ordinance.  In Dallas, the Company is subject to "The Sexually Oriented Business
Ordinance" (the "Ordinance")  which contains  prohibitions on the location of an
adult  cabaret.  The  prohibitions  deal  generally  with distance from schools,
churches,  and other sexually oriented businesses and contain restrictions based
on the  percentage of residences  within the immediate  vicinity of the sexually
oriented  business.   The  granting  of  a  Sexually  Oriented  Business  Permit
("Business  Permit") is not subject to discretion;  the Business  Permit must be
granted if the proposed  operation  satisfies the requirements of the Ordinance.
The Company has held a Business Permit since passage of the city ordinance.  The
Business  Permit  is  valid  for a  period  of  one  year  and is  renewable  by
application of the permit holder subject to a hearing.  The Company has received
positive support at such hearings from business associations, nearby businesses,
and residential  neighbors.  The Company believes that it will be able to obtain
annual renewals of its Business Permit.

Employees and Independent Contractors

         As of December 31,  1999,  the Company had  approximately  63 full-time
employees,  of which 11 were in management  positions,  including  corporate and
administrative operations and approximately 52 were engaged in food and beverage
service,   including   bartenders   and   waitresses.    Entertainers   numbered
approximately  115 full and  part  time.  None of the  Company's  employees  are
represented  by a union and the Company  considers its employee  relations to be
good.

         In  contrast  to  prevailing  industry  treatment  of  entertainers  as
independent  contractors,  the Company  classifies its entertainers as employees
for both  federal  income  tax  purposes  and  compliance  with  the Fair  Labor
Standards  Act. By  classifying  its  entertainers  as employees  subject to the
income tax  withholding  provisions  of the Internal  Revenue Code and under the
Federal Insurance  Contributions  Act and the Federal  Unemployment Tax Act, the
Company  avoids the  imposition  of  penalties  for  failure to comply with such
requirements.

Insurance

         The Company  maintains  insurance in amounts it considers  adequate for
personal injury and property damage.  The Company does maintain  personal injury
liquor  liability  insurance  because the  Company  may be exposed to  potential
liabilities  that may be imposed  pursuant to the Texas  "Dram Shop"  statute or
similar "Dram Shop" statutes or common law theories of liability in other states
where the Company may expand.  The Texas "Dram Shop"  statute  provides a person
injured  by  an  intoxicated  person  the  right  to  recover  damages  from  an
establishment  that wrongfully  served alcoholic  beverages to such person if it
was apparent to the server that the  individual  being sold,  served or provided
with an  alcoholic  beverage  was  obviously  intoxicated  to the extent that he
presented a clear  danger to himself  and others.  An employer is not liable for




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the actions of its  employee  who  wrongfully  serves an  individual  if (i) the
employer  requires its employees to attend a seller training program approved by
the TABC; (ii) the employee has actually attended such a training  program;  and
(iii) the  employer has not directly or  indirectly  encouraged  the employee to
violate the law. It is the policy of the Company to require  that all servers of
alcohol,  including management,  be certified every two years as servers under a
training program approved by the TABC. Certification gives statutory immunity to
the  sellers of alcohol  from damage  caused to third  parties by those who have
consumed  alcoholic  beverages  at  such  establishment  pursuant  to the  Texas
Alcoholic Beverage Code.

Income Producing Commercial Real Estate

         The Company owns three income producing  commercial  properties,  which
house adult entertainment nightclubs in the Dallas-Fort Worth geographic region.
One facility is Company operated,  The Million Dollar Saloon,  and the other two
are subject to long-term  lease  agreements and operated by affiliates of Duncan
Burch, an officer and director of the Company.

         The  Company-operated  Million Dollar Saloon is located in North Dallas
and consists of a 9,750 square foot building  located on an  approximate  25,500
square foot tract of land fronting a major traffic artery. The property is owned
by Furrh and is subject to a lien also  covering the other leased  properties in
connection with a $750,000  long-term note payable to a bank dated September 22,
1995. See "Properties"  and Note G -- Long- Term Debt to Consolidated  Financial
Statements.

         The remaining two  properties are leased to affiliates of Duncan Burch,
an officer and director of the Company,  which also operate adult  entertainment
nightclubs in the facilities.  All of the properties are stand-alone  structures
and,  accordingly,  are 100%  occupied  with a single tenant and, at the present
time,  are  not  subject  to any  plans  for  renovation,  remodeling  or  other
significant  improvement.  All properties  are physically  located in geographic
areas suitable for their current use. There exist similar properties which could
be similarly used in the same  geographic  area as the subject  properties.  The
effective   rentals  vary  between   locations   because  of  desirability   and
attractiveness of locations.  Management believes that all of its properties are
adequately covered by insurance. See "Properties."

Risk Factors

         Certain  of the  statements  contained  in this  Annual  Report on Form
10-KSB are forward looking statements that involve risks and uncertainties. Such
statements  are subject to important  factors that could cause actual results to
differ materially, including the following risk factors:

         Risk of Adult Cabaret Operations.  The adult entertainment,  restaurant
and bar industry is a volatile  industry.  The industry tends to be sensitive to
the general  local  economy.  When local  economic  conditions  are  prosperous,
entertainment  industry  revenues  increase,  conversely,  when  local  economic
conditions are unfavorable,  entertainment industry revenues decline.  Customers
who frequent adult cabarets generally follow trends in personal preferences. The
Company continuously  monitors trends in its customers' tastes and entertainment
preferences so that, if necessary,  it can change its operations and services to
accommodate the changes in trends. Any significant  decline in general corporate
conditions or the economy that affect  consumer  spending  could have a material
adverse effect on the Company's business and financial condition.

         Risk  of  Inadequate  Financial  Controls.  A  significant  part of the
revenues earned by the Company  through its adult  nightclub  operations will be
collected  in cash by full  and  part-time  employees.  Comprehensive  financial
controls are required to minimize the potential loss of revenue through theft or
misappropriation  of cash. To the extent that these  controls are not structured
or executed properly,  significant cash revenues could be lost and profitability
of  the  Company  impaired.   The  Company  believes  that  it  has  implemented
significant  cash  controls and is utilizing a  combination  of  accounting  and
physical  inventory control devices to deter theft and to ensure a high level of
security within its accounting practices and procedures.



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         Competition  Within  the  Industry.  The  adult  cabaret  entertainment
business is highly competitive with respect to price, service,  location and the
professionalism  of entertainment.  The Million Dollar Saloon competes in Dallas
with a number of  locally-owned  adult  cabarets,  some of whose names may enjoy
recognition that equals that of The Million Dollar Saloon.  Although the Company
believes  that  due to its  strategic  location  it  will  be  able  to  compete
successfully with other local adult cabarets, there can be no assurance that the
Company will be able to maintain its high level of name recognition and prestige
within the  marketplace.  The Company's  success  depends on  maintaining a high
quality  of  female   entertainers   and  waitresses.   Competition  for  female
entertainers  in the  adult  entertainment  business  is  intense.  The  lack of
availability of quality,  personable,  attractive  entertainers or the Company's
inability to attract and retain other key employees,  such as kitchen  personnel
and bartenders, could adversely affect the business of the Company.

         Management   of  Growth.   For  the  Company  to  expand  its  business
operations,  it must  continue  to  improve  and  expand  the  expertise  of its
personnel and must attract, train and manage qualified managers and employees to
oversee and manage the expanded  operations.  The Company  intends to expand its
existing business  operations by opening or acquiring  additional adult cabarets
in the Dallas/Fort Worth Metroplex and other metropolitan  areas. The opening of
additional  cabarets  will subject the Company to a variety of risks  associated
with rapidly growing companies. In particular,  the Company's growth may place a
significant strain on its accounting systems,  internal controls,  and oversight
of its day-to-day  operations.  Although  management  intends to ensure that its
internal  controls remain adequate to meet the demands of further growth,  there
can be no assurance  that its systems,  controls or personnel will be sufficient
to meet these demands. Inadequacies in these areas could have a material adverse
effect on the Company's business, financial condition and results of operations.

         Permits  Relating  to the Sale of Alcohol  and  Operation  of  Sexually
Oriented Business. While the Company and its affiliate corporation have obtained
annual renewals of the TABC Permits and Dallas Business Permit,  there can be no
assurance  that the Permits will  continue to be renewed.  Other states may have
similar  laws  which may limit the  availability  of a permit to sell  alcoholic
beverages or operate a sexually  oriented  business.  The temporary or permanent
suspension or revocations of the TABC Permits or the Dallas  Business  Permit or
the  inability  to obtain  permits in areas of  expansion  would have a material
adverse effect on the revenues, financial condition and results of operations of
the Company.

         Limitations  on Protection of Service  Marks.  Rights of the Company to
the trade name "The Million Dollar Saloon" were purchased. There is no assurance
that  the   Company   will  be  able  to   protect   its  trade  name  to  deter
misappropriation of its protected  intellectual property rights.  Litigation may
be necessary in the future to protect the  Company's  rights from  infringement,
which may be costly and time  consuming.  The loss of the right to use the trade
name "Million Dollar Saloon" would have a material adverse effect on the Company
and its business operations.

ITEM 2.  PROPERTIES

         The Company maintains its corporate office at 6848 Greenville Avenue in
Dallas,  Texas. The corporate office is comprised of approximately  2,700 square
feet and is subject to a monthly  rental payment of  approximately  $3,600 under
the terms of a lease  agreement  which  expires  on August  31,  2001.  Based on
current local market conditions and available information,  management is of the
belief that it will either be able to renew the existing  lease upon  expiration
or relocate to a comparable location at a comparable cost.

         The Company owns three  facilities  which operate as adult  cabarets in
the Dallas-Fort  Worth Metroplex.  One facility,  the Million Dollar Saloon,  is
Company  operated while the other two are subject to long-term lease  agreements
and  operated by  affiliates  of Duncan  Burch,  an officer and  director of the
Company.

         The Million  Dollar Saloon is located in North Dallas and consists of a
9,750 square foot building located on an approximate 25,500 square foot tract of
land fronting a major traffic artery.




                                      - 8 -

<PAGE>

<TABLE>

<CAPTION>


         The remaining two properties  leased to affiliates of Duncan Burch,  an
officer and director of the Company,  also operate  adult  cabarets.  All of the
properties are stand-alone structures and, accordingly, are 100% occupied with a
single  tenant  and,  at the  present  time,  are not  subject  to any plans for
renovation,  remodeling or other  significant  improvement.  All  properties are
physically located in geographic areas suitable for their current use. The lease
rental  amounts  are based  upon the  location  and  physical  condition  of the
respective property.

         The  following  is a summary of the  terms,  conditions  and  operating
parameters of the two properties  being leased from the Company by affiliates of
Duncan Burch, an officer and director of the Company:


                                                                       Location/Address
<S>                                         <C>                                 <C>

                                            -------------------------------------------------------------------
                                               3021 Northwest Highway               3601 State Highway 157
                                                   Dallas, Texas                      Fort Worth, Texas
                                            ------------------------------      ------------------------------

Square footage
    Building                                              8,550                                4,850
    Real estate tract                                     37,162                              60,398
Mortgages                                                  (1)                                  (1)
Lease expiration                                         May 2002                           August 2003
Scheduled rentals                                  $4,750 per week from                   $8,500 per week
                                                 5/26/99 through 5/23/02
Effective annual rental per square                        $24.33                              $91.13
    foot (total lease term)
Gross book basis (including land)                       $1,206,829                           $160,447
Net book basis (including land)                          $934,344                             $77,977
Federal income tax basis                                 $153,060                             $21,241
    (excluding land)
Depreciation method and life                            SL-19 yrs.                         ACRS-15 yrs.
Ad valorem tax rate per $100 of                           $2.58                                $3.14
    valuation
</TABLE>
-------------------
(1)  Both  properties  are  subject  to a lien  incurred  in  connection  with a
     $750,000  long-term  note payable to a bank dated  September 22, 1995.  The
     note bears  interest  at 11.0% and is payable  in monthly  installments  of
     approximately  $16,369,  including  interest.  The final  payment is due in
     September  2000.  At December  31, 1999,  the balance of this  mortgage was
     $139,657.   See  Note  G  --  Long-Term  Debt  to  Consolidated   Financial
     Statements.

ITEM 3.  LEGAL PROCEEDINGS

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



                                      - 9 -

<PAGE>



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         On December 9, 1999, the Company held its annual shareholders  meeting.
Of the  Company's  5,731,778  shares of  common  stock  entitled  to vote at the
meeting, 4,153,051 shares were represented at the meeting,  approximately 72% of
the outstanding shares entitled to vote. The following matters were submitted to
a vote of the shareholders through solicitation of proxies or otherwise:



                                                 For       Against      Abstain
                                             ----------- ----------   ----------
Election of Board of Directors
     Dewanna Ross                             4,143,766       6,185       3,100
     Michael R. Garrett                       4,140,236       9,685       3,100
Appointment of S.W. Hatfield, CPA as          4,130,704      22,296          51
     Auditors for 1999

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         As of December 31, 1999, the Company had  approximately  400 holders of
record of its Common Stock.  Outstanding  shares of the  Company's  Common Stock
totaled  5,731,778.   The  Company's  transfer  agent  is  Securities   Transfer
Corporation, Dallas, Texas.

         The Company's Common Stock began trading on The OTC Electronic Bulletin
Board under symbol "MLDS" on January 29, 1996.  The  following  table sets forth
the  quarterly  average high and low closing bid prices per share for the Common
Stock.


           Fiscal Year Ended                Common Stock
           December 31, 1999                High         Low
           -----------------                ----         ---
             First Quarter                 $0.75       $0.63
            Second Quarter                 $0.66       $0.31
             Third Quarter                 $0.63       $0.31
            Fourth Quarter                 $0.50       $0.28

           Fiscal Year Ended
           December 31, 1999
           -----------------
             First Quarter                 $0.56       $0.38
            Second Quarter                 $1.13       $0.41
             Third Quarter                 $0.75       $0.53
            Fourth Quarter                 $0.53       $0.41

         First Quarter-- 2000              $0.97       $0.53
       (through March 17, 2000)

         The source for the high and low closing bids quotations is the National
Quotation Bureau, Inc. and does not reflect inter-dealer prices, such quotations
are  without  retail  mark-ups, mark-downs or commissions, and may not represent



                                     - 10 -

<PAGE>


actual  transactions  and have not been adjusted for stock  dividends or splits.
The closing bid and ask prices of the  Company's  common stock on March 17, 2000
were $0.53 and $0.63 per share, respectively.

         During each quarter of 1999 and 1998, the Company's  Board of Directors
declared a per share cash dividend as follows:


              Period                   1999                  1998
       --------------------          -------               -------

          First Quarter              $0.010                $0.010
          Second Quarter              0.010                 0.010
          Third Quarter               0.010                 0.010
          Fourth Quarter              0.010                 0.010
                                      -----                 -----
         Total per share             $0.040                $0.040
                                      =====                 =====

         Total  dividends  declared  during  1999  and 1998  were  approximately
$230,013  and  $241,051,  respectively.  On  February  28,  2000,  the  Board of
Directors  approved the discontinuance of the payment of a quarterly dividend to
its common stock  holders.  The Company  intends for the  foreseeable  future to
invest its available capital into the expansion of its business operations.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

         You should read the following  discussion  and analysis in  conjunction
with audited  consolidated  financial statements included in this annual report.
The following  information  contains  forward-looking  statements.  See "Caution
Regarding Forward-Looking Information" at the beginning of this annual report.

Results of Operations

         Year ended  December  31, 1999 as compared to year ended  December  31,
1998. Bar and restaurant  operations were relatively consistent at approximately
$2.95 million in 1999 compared to approximately $3.11 million in 1998.

         Cost of sales  decreased by  approximately  $20,000 from  approximately
$1,806,000  in 1998 to  $1,787,000  in  1999.  The  decrease  is  related  to an
approximate  $33,400  decrease in direct labor and was offset by an  approximate
$13,000  increase in purchases of inventories,  consumable  supplies and related
State  excise  taxes.  The  Company  experienced  gross  profit  percentages  of
approximately  50.7% in 1998 and 1999.  The Company is  exploring  all  possible
opportunities to return its gross profit percentages to those experienced in the
previous year.

         General and  administrative  expenses  were  relatively  consistent  at
$1,604,000  in 1998 as compared to  approximately  $1,607,000  in 1999.  Of this
change,  the  Company  experienced  a  decrease  of  approximately   $93,000  in
professional  and  consulting  fees  related to the  acquisition  of  additional
capital  and the  exploration  of  possible  business  expansion  opportunities.
Additionally,  the Company experienced an increase of approximately  $115,000 in
general and  administrative  compensation  and payroll  taxes for the  Company's
entire  operations.  Further,  the Company  experienced  an  approximate  $9,000
increase  in  general  operating  expenses  which  were a result  of  additional
advertising and general inflationary increases in the cost of goods and services
in the  Dallas-Ft.  Worth  Metroplex.  The Company  monitors  all  expenses on a
monthly basis to control costs and optimize its operations.

         Income from operations in 1999 was  approximately  $252,000 as compared
to  approximately  $254,000 in 1998. The Company  realized  income before income




                                     - 11 -

<PAGE>


taxes of  approximately  $273,000  in 1999 and  approximately  $234,000 in 1998.
Interest  income  remained  approximately  $21,000  for  1998  and  1999.  It is
anticipated  that interest income in future periods will fluctuate  depending on
the  amount  of  surplus  cash  reserves  that the  Company  may or may not have
available for investment.

         The Company had  earnings  per share (both basic and fully  diluted) of
approximately $0.02 in 1998 and approximately $0.03 in 1999.

         As a general rule, the bar and restaurant  operations  decrease  during
the  summer  months  of June,  July  and  August  due to the lack of  convention
activity  in  Dallas,  Texas  and the  availability  of other  recreational  and
vacation  activity by the  patronage.  No  significant  financial  impact on the
operations is caused by this repetitive seasonal decline.

         Year ended  December  31, 1998 as compared to year ended  December  31,
1997. Bar and restaurant  operations were relatively consistent at approximately
$3.12  million in 1998  compared to  approximately  $3.11  million in 1997.  The
Company's  adult  entertainment   lounge  and  restaurant   continues  to  be  a
destination  of  choice  for  visitors  to the  Dallas-Ft.  Worth  Metroplex  in
conjunction with various  convention and athletic events.  Further,  the Company
enjoys a quality reputation in the local market for local patronage.

         In August 1998, the Company obtained a new five-year lease agreement on
the commercial rental property located on Highway 157 in Fort Worth,  Texas. The
new lease  provides that the weekly rental  payment to the Company will increase
from $4,225 per week to $8,500 per week for the five-year term of the lease.

         Cost of sales  increased by  approximately  $90,000 from  approximately
$1.71 million in 1997 to  approximately  $1.81 million in 1998.  The increase is
related to an  approximately  $113,400  increase in direct  labor as a result of
normal  operating  increases  in these  costs and was  offset by an  approximate
$19,000  cost  savings in  purchases  of  inventories,  consumable  supplies and
related State excise taxes. The Company  experienced gross profit percentages of
approximately  52.1% in 1997 and  approximately  50.7% in 1998.  The  Company is
exploring all possible  opportunities to return its gross profit  percentages to
those experienced in the previous year.

         General and administrative expenses increased by approximately $304,000
from  approximately  $1.3 million in 1997 to approximately $1.6 million in 1998.
Of this increase, the Company experienced approximately $168,000 in professional
and consulting fees related to the acquisition of additional capital in 1998 and
the exploration of possible business expansion opportunities.  Additionally, the
Company  experienced  an  increase  of  approximately  $62,000  in  general  and
administrative   compensation   and  payroll  taxes  for  the  Company's  entire
operations.  Further, the Company experienced an approximate $79,000 increase in
general  operating  expenses which were a result of additional  advertising  and
general  inflationary  increases  in the  cost  of  goods  and  services  in the
Dallas-Ft. Worth Metroplex. The Company monitors all expenses on a monthly basis
to control costs and optimize its operations.

         Income from operations in 1998 was  approximately  $254,000 as compared
to  approximately  $559,000 in 1997. The Company  realized  income before income
taxes of  approximately  $234,000  in 1998 and  approximately  $660,000 in 1997.
Included in the Company's financial  statements is a one-time gain from the sale
of real estate in Calendar 1997 of  approximately  $48,000 and a one-time charge
to operations of approximately $40,000 for the forgiveness of related party debt
in excess of the agreed upon value of the common stock taken for the  retirement
of debt in 1998.  Neither  of these  events are  anticipated  to recur in future
periods.  In  conjunction  with the  retirement of the related  party debt,  the
Company  experienced  a reduction of interest  income of  approximately  $32,000
between 1998 and 1997. It is anticipated  that interest income in future periods
will fluctuate depending on the amount of surplus cash reserves that the Company
may or may not have available for investment.

         The Company had  earnings  per share (both basic and fully  diluted) of
approximately $0.02 in 1998 and approximately $0.08 in 1997.



                                     - 12 -

<PAGE>



         As a general rule, the bar and restaurant  operations  decrease  during
the  summer  months  of June,  July  and  August  due to the lack of  convention
activity  in  Dallas,  Texas  and the  availability  of other  recreational  and
vacation  activity by the  patronage.  No  significant  financial  impact on the
operations is caused by this repetitive seasonal decline.

Liquidity and Capital Resources

         Year ended  December  31, 1999 as compared to year ended  December  31,
1998. As of December 31, 1999, the Company had working capital of  approximately
$420,600 as compared to  approximately  $440,500 as of December  31,  1998.  The
Company  continues to experience  positive cash flows from operations.  Net cash
flow from operating activities was approximately $415,000 in 1999 as compared to
approximately $372,000 in 1998.

         The Company has  identified no  significant  capital  requirements  for
2000,  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.

         On February  28, 2000,  the Board of Directors of the Company  approved
the  discontinuance  of the payment of  quarterly  dividends to its common stock
holders.  The Company intends for the foreseeable future to invest its available
capital into the expansion of its business operations. In 1999, the Company paid
approximately $230,013 in dividend payments to its shareholders.

         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.

         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. Management believes that as a result of
its initial and continuing  policies and procedures,  there is an  insignificant
risk to both future operations and profitability for any potential assessment of
payroll and related  taxes in the future by regulatory  authorities  which would
have  potentially a very  significant  financial and  operational  impact if the
Company treated all entertainers as independent contractors.

         Year ended  December  31, 1998 as compared to year ended  December  31,
1997. As of December 31, 1998, the Company had working capital of  approximately
$440,500 as compared to  approximately  $17,400 as of  December  31,  1997.  The
Company  continues to experience  positive cash flows from operations.  Net cash
flow from operating activities was approximately $372,000 in 1998 as compared to
approximately $430,000 in 1997.

         The Company did not have any significant capital  expenditures in 1998,
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.

         The Company  paid  approximately  $238,000 in  dividends  during  1998,
including  approximately  $54,000 in dividends declared in the fourth quarter of
1997.  Further,  the  Company  declared  a fourth  quarter  dividend  in 1998 of
approximately $57,000 which was paid in January 1999.




                                     - 13 -

<PAGE>



Year 2000 Compliance

         Many computer  systems and software  products were originally  coded to
accept only two-digit  entries in the date code field.  Now that we have entered
the year 2000, these date code fields will need to accept four-digit  entries to
distinguish  21st century dates from 20th century dates.  As a result,  computer
systems and software  used by many  companies  may need to be upgraded to comply
with these "Year 2000" requirements. Systems that do not properly recognize this
information could generate erroneous data or cause a system to fail.

         As of the date of this annual report, neither we nor, to our knowledge,
any of our  suppliers or service  providers  have  experienced  any  significant
disruption in operations as a result of Year 2000 issues.  We do not  anticipate
any of these problems in the future. We estimate our total costs to address Year
2000 issues was less than $5,000.

ITEM 7.  FINANCIAL STATEMENTS

         The required  items are presented as a separate  section of this report
beginning on Page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         There  have been no changes  in  accountants  since 1995 nor have there
been any disagreements  with accountants on any matter of accounting  principles
or practices, financial statement disclosure, or auditing scope or procedure.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The following table sets forth certain  information about the directors
and executive officers of the Company.  All directors of the Company hold office
until the next annual meeting of  stockholders  or until their  successors  have
been elected and qualified. Executive officers of the Company are elected by the
Board of Directors to hold office until their respective  successors are elected
and qualified.


Name                         Age        Position(s)
----                         ---        -----------
Nick Mehmeti(1)              42         Chief Executive Officer, President and
                                        Director
Duncan Burch(1)              42         Executive Vice President and Director
Dewanna Ross(2)              43         Chief Operating Officer, Vice President
                                        of Operations,
                                        Secretary, Treasurer and Director
Ronald W. Johnston           46         Chief Financial Officer and
                                        Vice President of Finance
Sharon Furrh                 50         Vice President of Public Relations and
                                        Marketing
-------------------
(1)  On January 18, 2000,  Messrs.  Mehmeti and Burch were elected  directors of
     the Company.  On January 19, 2000, Mr. Mehmeti was elected as the President
     and Chief  Executive  Officer and Mr. Burch was elected as  Executive  Vice
     President of the Company.  See "Item 11--  Security  Ownership  and Certain
     Beneficial Owners and Management-- Changes of Control."
(2)  On January 19, 2000,  Ms. Ross  resigned as President  and Chief  Executive
     Officer of the Company and was elected as Vice  President of Operations and
     Chief Operating Officer.

         Nick Mehmeti has served as the  Company's  President,  Chief  Executive
Officer and a director  since January 2000.  For at least the last fifteen years




                                     - 14 -

<PAGE>


Mr. Mehmeti and his  affiliates  have owned and operated  restaurants  and adult
cabarets in the Dallas-Fort Worth Metroplex.  Mr. Mehmeti will devote as much of
his time as is necessary to perform his duties as Chief Executive  Officer and a
director of the Company.

         Duncan Burch has served as the Company's Executive Vice President and a
director  since  January  2000.  Mr.  Burch and his  affiliates  have  owned and
operated  restaurants and adult cabarets in the Dallas-Fort  Worth Metroplex for
at least the past ten years.  Mr.  Burch  will  devote as much of his time as is
necessary to perform his duties as an officer and a director of the Company.

         Dewanna Ross has served in  various positions  with the  Company  since
1995.  Ms. Ross served as President and Chief  Executive  Officer of the Company
from July 1999 to January 2000. In January 2000,  she was elected Vice President
of  Operations  and  Chief  Operating  Officer  of  the  Company.  Ms.  Ross  is
responsible  for the  development  of the  corporate  procedures,  including the
hiring and training of corporate  staff.  Ms. Ross has also served as an officer
and operator of a private club and as an officer of other businesses.

         Ronald W. Johnston, CPA, has  served  as  Chief Financial Officer since
1996. Mr. Johnston has been a certified public accountant in private practice in
Dallas, Texas and a principal of his own firm since 1990. Mr. Johnston's current
firm serves a wide range of business and individual clients.

         Sharon  Furrh was elected as Vice  President  of Public  Relations  and
Marketing  of the Company in December  1999.  She has been  involved as a design
consultant for The Million Dollar Saloon, in both its original  construction and
in  subsequent  remodelings.  Additionally,  Sharon  Furrh  is  responsible  for
advertising,  promotions  and public  relations for the Company.  Mrs. Furrh has
been employed by the Company in various capacities since 1995.

Compliance with Section 16(a) of the Exchange Act

         Section  16(a) of the Exchange Act  requires the  Company's  directors,
executive  officers  and persons  who own more than ten percent of a  registered
class of the  Company's  equity  securities  ("10%  holders"),  to file with the
Securities and Exchange  Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity  securities  of
the Company. Directors,  officers and 10% holders are required by SEC regulation
to furnish the Company  with copies of all of the  Section  16(a)  reports  they
file.

         Based solely on a review of reports furnished to the Company or written
representatives  from the Company's  directors and executive officers during the
fiscal year ended  December 31,  1999,  all Section  16(a)  filing  requirements
applicable  to its  directors,  officers  and 10%  holders  for such  year  were
complied with.

ITEM 10.  EXECUTIVE COMPENSATION

         The  following  Summary  Compensation  Table sets forth,  for the years
indicated,  all cash  compensation  paid,  distributed  or accrued for services,
including  salary and bonus amounts,  rendered in all capacities for the Company
to its  President  and Chief  Executive  Officer.  No  executive  officer of the
Company  received  remuneration  in excess of  $100,000  during  the  referenced
periods. All other compensation related tables required to be reported have been
omitted as there has been no  applicable  compensation  awarded to, earned by or
paid to any of the Company's executive officers in any fiscal year to be covered
by such tables.




                                     - 15 -

<PAGE>

<TABLE>
<CAPTION>


                           Summary Compensation Table


                                           Annual Compensation       Long-Term Compensation
                                        ------------------------   --------------------------
                                                                             Awards             Payouts
                                                                   --------------------------   -------
                                                        Other      Restricted    Securities                   All
                                        Salary/        Annual         Stock      Underlying      LTIP        Other
Name/Title                     Year      Bonus      Compensation     Awards     Options/SARs    Payouts   Compensation
----------                     ----     -------     ------------     ------     ------------    -------   ------------
<S>                            <C>      <C>              <C>           <C>           <C>          <C>         <C>

Dewanna Ross, President and    1999     $36,400          NA            NA            NA           NA          $   -0-
  Chief Executive Officer(1)
Nina Furrh, President and      1999     $66,000          NA            NA            NA           NA          $   -0-
  Chief Executive Officer(2)   1998     $ 9,000          NA            NA            NA           NA          $   -0-
                               1997     $ -0-            NA            NA            NA           NA          $   -0-
Bjorn Heyerdahl, Chief         1998     $ -0-            NA            NA            NA           NA          $13,340(3)
  Executive Officer            1997     $ -0-            NA            NA            NA           NA          $13,340(3)
</TABLE>

-------------------
(1)  Ms. Ross was elected  President and Chief Executive Officer in July 1999 to
     replace Nina Furrh. Subsequently, in January 2000 she resigned as President
     and Chief Executive Officer and was elected as Vice President of Operations
     and Chief Operating Officer. The $36,400 represents Ms. Ross's salary while
     she served as President and Chief Executive Officer.
(2)  Ms.  Furrh  became  Chief  Executive  Officer  in  February  1998  upon the
     resignation of Mr. Heyerdahl as Chief Executive Officer.  In July 1999, Ms.
     Furrh resigned as President and Chief Executive Officer.
(3)  Represents  payment of an auto lease by the  Company for the benefit of Mr.
     Heyerdahl.

Director Compensation

         The  Company  does  not  currently  pay a  director  fee for  attending
scheduled and special  meetings of the Board of Directors.  The Company pays the
expenses of all of its directors in attending board meetings.

Indebtedness of Directors and Senior Officers

         None of the  directors  or officers of the Company or their  respective
associates or affiliates is indebted to the Company.

Committees of the Board of Directors and Meeting Attendance

         There are no audit,  compensation  or other  committees of the Board of
Directors of the Company.

Family Relationships

         There are no family  relationships  among the  Company's  directors  or
officers.

Employment Agreements

         On July 9, 1999,  Dewanna Ross, the Company's Chief Operating  Officer,
Vice President of Operations,  Secretary, Treasurer and a director, entered into
an Employment  Agreement with the Company for a term of two years which provides
for a salary of $1,400 per week during the first year of  employment  and $1,500
per week  during  the  second  year of the  Agreement.  Ms.  Ross  served as the
Company's President and Chief Executive Officer from July 1999 to January 2000.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain  information as of March 1, 1999
relating  to the  beneficial  ownership  of shares  of Common  Stock by (i) each




                                     - 16 -

<PAGE>

<TABLE>

<CAPTION>


person who owns  beneficially  more than 5% of the outstanding  shares of Common
Stock,  (ii) each director of the Company,  (iii) each executive  officer of the
Company,  and (iv) all  executive  officers  and  directors  of the Company as a
group.



                                                                              Number of           Percentage of
                                 Name(1)                                       Shares          Common Stock Owned
-----------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                    <C>

Nick Mehmeti(2).........................................................      2,419,787(3)           39.5%
Duncan Burch(2).........................................................      2,075,787(3)           33.9%
Dewanna Ross(4).........................................................         34,350(5)             *
Sharon Furrh, as Trustee for The Joshua Barrett Furrh Trust(6)..........         28,087                *
Ronald W. Johnston(7)...................................................          1,987                *
J.M. Tibbals as Trustee for The Irrevocable Equity Trust No. 1(8).......        451,558               7.9%
Officers and Directors as a group (5 persons)...........................      4,159,998(9)           67.8%
</TABLE>

-------------------
*Less than 1%
(1)      Unless  otherwise  indicated,  the persons  listed have sole voting and
         investment powers with respect to all such shares.
(2)      Mr. Mehmeti is the President, Chief Executive Officer and a director of
         the  Company  and Mr.  Burch  is the  Executive  Vice  President  and a
         director of the Company.  The mailing  address for Messrs.  Mehmeti and
         Burch is c/o the Company, 6848 Greenville Ave., Dallas, Texas 75231.
(3)      Includes an option to purchase  400,000  shares of the common  stock of
         the Company for $440,000  ($1.10 per share)  which is jointly  owned by
         Messrs.  Mehmeti and Burch and may be  exercised in whole or in part at
         any time until October 18, 2004 when the option  expires.  See "Changes
         in Control" below.
(4)      Dewanna  Ross  is  the  Chief  Operating  Officer,  Vice  President  of
         Operations, Secretary, Treasurer and a director of the Company.
(5)      Includes  4,000  shares  owned by Ms. Ross and 30,350  shares held in a
         custodian  account for the benefit of Solon Weaver.  Ms. Ross disclaims
         any  ownership  interest  in the 30,350  shares  held in the  custodian
         account, but she does have voting authority of such shares.
(6)      Sharon Furrh is the Vice President of Public Relations and Marketing of
         the  Company  and has the  authority  to vote the  shares  owned by The
         Joshua Barrett Furrh Trust.
(7)      Mr.  Johnston  is the Chief  Financial  Officer and Vice  President  of
         Finance of the Company.
(8)      The mailing address for The Irrevocable  Equity Trust No. 1 is c/o J.M.
         Tibbals,  Arter & Hadden, 1717 Main Street,  Suite 4100, Dallas,  Texas
         75201.
(9)      Includes  400,000 shares which are subject to an option jointly held by
         Messrs.  Mehmeti  and Burch  which may be  exercised  at any time until
         October 18, 2004, 28,087 shares owned by the Joshua Barrett Furrh Trust
         over which Sharon  Furrh has voting  power and 30,350  shares held in a
         custodian account over which Dewanna Ross has voting power.

Changes in Control

         W-W Investments,  L.L.P. Transaction. On July 9, 1999, W-W Investments,
L.L.P., a Texas registered  limited liability  partnership ("W-W  Investments"),
acquired  in a private  transaction  460,001  shares of the common  stock of the
Company from Bjorn Heyerdahl,  a former officer and director of the Company, for
$299,000 ($.65 per share) and additionally acquired from Nina J. Furrh, a former
officer and director of the Company, 1,823,297 shares of the common stock of the
Company for  $1,427,637  ($.7829975  per  share).  The  2,283,298  shares of the
Company's   common  stock  acquired  from  the  two   shareholders   represented
approximately 39.8% of the outstanding  5,731,778 shares of the Company's common
stock.

         As part of the transaction,  Nina J. Furrh,  Sharon Furrh and Ronald W.
Johnston  resigned as  directors.  Nina J. Furrh also  resigned as President and
Chief  Executive  Officer of the Company.  Nina Furrh continued with the Company
until  August 31, 1999 as a salaried  employee to assist  management  during the
transition period.




                                     - 17 -

<PAGE>



         With the  acquisition of the 2,283,298  shares of the Company's  common
stock,   W-W   Investments  and  its  affiliates   owned  3,351,574   shares  or
approximately  58.5% of the Company's  issued and  outstanding  shares of common
stock.

         W-W Investments is an investment  partnership in which Linda Weaver and
Steven  Wheeler  are  partners.  In  addition  to  the  shares  acquired  by W-W
Investments,  Linda Weaver owned 500,000 shares of the common stock and owned an
option granted by the Company to purchase an additional 400,000 shares of common
stock for  $440,000  or $1.10 per share,  which  expires  October  18, 2004 (the
"Option"). As a result of the acquisition of the shares by W-W Investment, Linda
Weaver owned  beneficially,  directly or indirectly,  3,473,898 shares of common
stock which  included the  2,283,298  shares owned by W-W  Investments,  500,000
shares owned by Linda  Weaver,  290,000  shares owned by Diamond  Production  of
Oklahoma,  L.P.,  and  400,000  shares  which may be  acquired  by Linda  Weaver
pursuant to the Option.

         As a  result  of  the  acquisition  of  the  additional  shares  by W-W
Investments,   Steven  Wheeler  beneficially  owned,   directly  or  indirectly,
2,851,574  shares of the  Company's  common stock which  included the  2,283,298
shares  acquired by W-W  Investments,  218,000  shares owned by Steven  Wheeler,
290,000 shares owned by Diamond  Production of Oklahoma,  L.P. and 59,676 shares
owned by Diamond Production Company L.L.C.,  which is owned by The Wheeler Trust
'89. Linda Weaver is a limited partner of Diamond  Production of Oklahoma,  L.P.
and Diamond Production Company L.L.C. is the General Partner.

         Neither W-W  Investments  nor any of its  partners  borrowed  the funds
necessary to make the purchase of the shares from the two  shareholders  nor did
W-W Investment nor any of its partners pledge any of the shares of the Company's
common stock owned by them to obtain any funds for this transaction.

         W-W Investments was granted the right to elect up to three directors to
fill the vacancies  created by the  resignations of Nina J. Furrh,  Sharon Furrh
and Ronald  Johnston.  On July 9, 1999,  Michael R.  Garrett  was elected to the
Board  of  Directors  to  fill  one of the  vacancies  created  by the  director
resignations and Dewanna Ross was elected  President and Chief Executive Officer
to replace Nina Furrh.

         Mehmeti  and Burch  Transaction.  On January  18,  2000,  Nick  Mehmeti
("Mehmeti")  and  Duncan  Burch  ("Burch")  acquired  in a  private  transaction
3,351,574 shares of the common stock of the Company from W-W Investments,  Linda
Weaver ("Weaver"),  Steven Wheeler ("Wheeler"),  Diamond Production,  L.L.C., an
Oklahoma  registered  limited  liability  company  ("Diamond  LLC"), and Diamond
Production of Oklahoma,  L.P., an Oklahoma limited  partnership  ("Diamond LP"),
for  $3,854,310.10  ($1.15 per share).  The  3,351,574  shares of the  Company's
common stock acquired by Mehmeti and Burch represents approximately 58.5% of the
outstanding  5,731,778 shares of the Company's  common stock.  Mehmeti and Burch
will each hold  1,675,787 of these shares.  In addition to the purchase of these
shares, Weaver assigned to Mehmeti and Burch, jointly, the Option.

         As part of the  transaction,  the  number  of  members  on the board of
directors  of the  Company  was  increased  to three.  Michael R.  Garrett  then
resigned as a director  and  Mehmeti and Burch were  elected to fill the vacancy
created by the  resignation  of Michael R. Garrett and the newly  created  third
directorship.  On January 19, 2000, Dewanna Ross resigned as President and Chief
Executive officer and was replaced by Mehmeti who was elected to such positions.
Ms.  Ross was  elected  as Vice  President  of  Operations  and Chief  Operating
Officer. Mr. Burch was elected as Executive Vice President of the Company.

         As a result of the acquisition of the 3,351,574 shares of the Company's
common stock, Mehmeti beneficially owns directly and indirectly 2,019,787 shares
or approximately  35.2% of the Company's issued and outstanding shares of common
stock.  Additionally,  Mehmeti  jointly owns with Burch the Option to acquire at
any time until  October 18, 2004 up to 400,000  shares of the  Company's  common
stock for $1.10 per share.  Mehmeti had  previously  acquired  344,000 shares of
Company  common  stock in open  market  transactions.  Burch  beneficially  owns
directly and indirectly 1,675,787 shares or approximately 29.2% of the Company's
issued and outstanding shares of common stock.  Collectively,  Mehmeti and Burch
beneficially own directly and indirectly



                                     - 18 -

<PAGE>



3,695,574 shares or approximately  64.5% of the Company's issued and outstanding
shares of common  stock and  jointly  own the  Option to  acquire  up to 400,000
shares of common stock from the Company.

         The  purchase  price  of  $3,854,310.10  was  paid to W-W  Investments,
Weaver,  Wheeler,  Diamond LLC and Diamond LP  pro-rata  based on each  entity's
respective interest in the shares sold as follows.  Weaver, Wheeler, Diamond LLC
and  Diamond  LP  received  a cash  payment of  $1,228,517.40.  W-W  Investments
received a cash payment of  $1,787,899.20  and the remaining  $837,893.50 of the
purchase  price due to W-W  Investments  was financed by W-W  Investments.  Such
financing  was  evidenced  by a  promissory  note  executed by Mehmeti and Burch
collectively.  The note  shall be repaid  over a five  year term in sixty  equal
monthly  installments  of principal and interest with the unpaid balance bearing
interest  at a rate of 7 1/2% per annum.  The note is secured by a stock  pledge
agreement  whereby  Mehmeti  and  Burch  have  pledged  1,000,000  shares of the
Company's  common stock as collateral  for the  repayment of the note.  The cash
payments described herein were made out of Mehmeti's and Burch's personal funds.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During 1999 there were no material transactions between the Company and
its  officer,  directors  or  shareholders  owning 10% or more of the  Company's
outstanding  shares  of  Common  Stock.  Two of the  Companies'  properties  are
currently leased to affiliates of Duncan Burch, who became an officer,  director
and major  shareholder of the Company in January 2000. See "Item 2.  Properties"
and "Item 11. Security Ownership of Certain Beneficial Owners and Managements --
Changes in Control."

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Financial Statements and Exhibits                                  Page
         ---------------------------------                                  ----

1. Financial  Statements.  The following  financial  statements are
submitted as part of this report:


         Report of Independent Certified Public Accountants                  F-2
         Consolidated Balance Sheets - December 31, 1999 and 1998            F-3
         Consolidated Statements of Income and Comprehensive Income -
             Years Ended December 31, 1999 and 1998                          F-5
         Consolidated Statements of Changes in Shareholders' Equity -
             Years Ended December 31, 1999 and 1998                          F-6
         Consolidated Statement of Cash Flows -
             Years Ended December 31, 1999 and 1998                          F-7
         Notes to Consolidated Financial Statements                          F-9

2.       Exhibits


         Exhibit
         Number                   Description
         -------                  -----------

         2.1*     Stock Purchase  Agreement dated August 23, 1995 by and between
                  Art Beroff and Bjorn Heyerdahl.

         2.2*     Stock Purchase  Agreement dated August 23, 1995 by and between
                  Joseph  MacDonald,   Goodheart   Ventures,   Inc.,  and  Bjorn
                  Heyerdahl.

         2.3*     Stock Purchase  Agreement dated September 7, 1995 by and among
                  Million Dollar Saloon,  Inc.,  Goodheart  Ventures,  Inc., and
                  certain individuals.




                                     - 19 -

<PAGE>



         Exhibit
         Number                 Description
         ------                 -----------

         2.4*     Addendum and  Modification  to Stock Purchase  Agreement dated
                  September 19, 1995, by and among Million Dollar Saloon,  Inc.,
                  Goodheart Ventures, Inc., and certain individuals.

         2.5*     Stock Exchange  Agreement dated September 7, 1995 by and among
                  Million Dollar Saloon,  Inc.,  Goodheart  Ventures,  Inc., and
                  J.M. Tibbals, Trustee for Irrevocable Equity Trust No. 1.

         2.6*     Addendum and  Modification  to Stock Exchange  Agreement dated
                  September 19, 1995, by and among Million Dollar Saloon,  Inc.,
                  Goodheart  Ventures,  Inc.,  and  J.M.  Tibbals,  Trustee  for
                  Irrevocable Equity Trust No. 1.

         2.7*     Agreement  and Plan of  Merger  dated  October  5, 1995 by and
                  between Million Dollar Saloon, Inc., a Texas corporation,  and
                  Goodheart Ventures, Inc., a Nevada corporation.

         2.8**    Addendum and Modification to Stock Purchase Agreement made and
                  entered  into  the 7th  day of  September  1995  by and  among
                  Million Dollar Saloon,  Inc.,  Goodheart  Ventures,  Inc., and
                  certain individuals dated October 31, 1995.

         3(i)*    Articles of Incorporation of The Company, as amended to date.

         3(ii)*   Bylaws of the Company.

         3(iii)   Amended and Restated  Bylaws of the Company  effective July 9,
                  1999.

         4.1*     Specimen Common Stock Certificate.

         10.1*    Leases of Properties.

         10.2*    Promissory  Note for $750,000 with Abrams Centre National Bank
                  dated September 22, 1995.

         21.1*    Subsidiaries of the Company.

         27.1     Financial Disclosure Schedule.

-------------------
* Incorporated by reference to the Company's Form 10-SB filed December 26, 1995.

(b)      Reports on Form 8-K.

         No reports on Form 8-K were filed  during the three month  period ended
December 31, 1999.



                                     - 20 -

<PAGE>

<TABLE>

<CAPTION>

                                   SIGNATURES

         In  accordance  with  Section  13 and 15(d) of the  Exchange  Act,  the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 23rd day of March, 2000.

                                    MILLION DOLLAR SALOON, INC.


                                    By:  /s/ Nick Mehmeti
                                        ----------------------------------------
                                        Nick Mehmeti, President, Chief Executive
                                        Officer and Director

         Pursuant to the  requirements of the Exchange Act, this report has been
signed  below  by the  following  persons  in the  capacities  and on the  dates
indicated:


                  Signature                                         Title                              Date
                  ---------                                         -----                              ----
<S>                                          <C>                                <C>               <C>

              /s/ Nick Mehmeti               President, Chief Executive Officer and               March 23, 2000
-------------------------------------------- Director
Nick Mehmeti

              /s/ Duncan Burch               Executive Vice President and Director                March 23, 2000
--------------------------------------------
Duncan Burch

              /s/ Dewanna Ross               Chief Operating Officer, Vice President of           March 23, 2000
-------------------------------------------- Operations, Secretary, Treasurer and Director
Dewanna Ross
            /s/ Ronald W. Johnston           Chief Financial Officer and Vice President of        March 23, 2000
-------------------------------------------- Finance
Ronald W. Johnston

</TABLE>












                                     - 21 -
<PAGE>


                                  EXHIBIT INDEX



   Exhibit Number                 Description
   --------------   ------------------------------------------------------------

      3(iii)        Amended and Restated  Bylaws of the Company  effective
                    July 9, 1999

      27.1          Financial Disclosure Schedule














                                     - 22 -