UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-K



(Mark one)

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

       For the fiscal year ended December 31, 2007

[ ]  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, Texas 75231
                    (Address of principal executive offices)

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


      Securities registered under Section 12 (b) of the Exchange Act - None

Securities  registered under Section 12(g) of the Exchange Act: - Common Stock -
                                $0.001 par value


Indicate by check mark if the  registrant is a well known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]

Indicate by check mark whether the registrant has (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 the Company was required to file such reports),  and
(2) has been subject to such filing  requirements  for the past 90 days.
Yes [ ]  No [X]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

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

       Large accelerated filer  [ ]               Accelerated filer          [ ]

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


                                                                               1
<PAGE>



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


The  aggregate  market  value of voting and  non-voting  common  equity  held by
non-affiliates  as of  June  25,  2009  was  approximately  $96,362  based  upon
1,606,038 shares held by non-affiliates  and a closing market price of $0.06 per
share as reported on www.bigcharts.com for January 13, 2010.

As of January 13, 2010,  there were 5,731,778  shares of Common Stock issued and
outstanding.





















                                                                               2
<PAGE>

                           Million Dollar Saloon, Inc.

                                Index to Contents

                                                                     Page Number
Part I

Item 1     Business                                                            3
Item 1A    Risk Factors                                                        8
Item 2     Properties                                                          8
Item 3     Legal Proceedings                                                   8
Item 4     Submission of Matters to a Vote of Security Holders                10

Part II

Item 5     Market for Registrant's Common Equity,
              Related Stockholder Matters and
              Issuer Purchases of Equity Securities                           10
Item 6     Selected Financial Data                                            11
Item 7     Management's Discussion and Analysis of
              Financial Condition and Results of Operations                   12
Item 7A    Quantitative and Qualitative Disclosures About Market Risk         15
Item 8     Financial Statements and Supplementary Data                       F-1
Item 9     Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure                          16
Item 9A    Controls and Procedures                                            16

Part III

Item 10    Directors, Executive Officers and Corporate Governance             17
Item 11    Executive Compensation                                             19
Item 12    Security Ownership of Certain Beneficial Owners and Management
              and Related Stockholder Matters                                 20
Item 13    Certain Relationships and Related Transactions, and
              Director Independence                                           21
Item 14    Principal Accountant Fees and Services                             22

Part IV

Item 15    Exhibits and Financial Statement Schedules                         22

Signatures                                                                    51








                                                                               3
<PAGE>


                  Caution Regarding Forward-Looking Information
                  ---------------------------------------------

Certain statements contained in this Form 10-K,  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-K and investors are cautioned
not to place undue  reliance  on such  forward-looking  statements.  The Company
disclaims any obligation to update any such factors or to publicly  announce the
result  of any  revisions  to any of the  forward-looking  statements  contained
herein whether to reflect new information,  future results, events, developments
or otherwise.

                                     PART I

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.
The Company  owns and  operates an adult  cabaret in Dallas,  Texas and owns one
other commercial properties located in the Dallas-Fort Worth Metroplex.

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  the  Company's  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 owned  commercial  rental  property  located in Dallas
County, Texas through February 2008.

The Company's  principal offices are located at 6848 Greenville Avenue,  Dallas,
Texas  75231,  and its  telephone  number is (214)  691-6757.  Unless  otherwise
indicated,  the  "Company"  refers  to the  Company,  each  of its  wholly-owned
subsidiaries and Tempo. The Company's common stock is traded on the OTC Bulletin
Board under the symbol "MLDS".

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 commercial real estate.


                                                                               4
<PAGE>


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

Business closure

Effective  at the close of business  on July 31,  2009,  the Company  ceased all
operations of Tempo Tamers,  Inc. and the Company's adult  entertainment  lounge
and restaurant, Million Dollar Saloon.

Purchase of Real Estate

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

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

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

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.
   Although the Company,  in February  2003,  purchased 6.6 acres of undeveloped
   land in Dallas,  Texas, the Company has not determined  whether the land will
   be developed as an adult cabaret or for other purposes. Other than the recent
   purchase of the Dallas,  Texas property,  no specific locations for potential
   additional Million Dollar Saloons have been identified.

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


                                                                               5
<PAGE>

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

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

   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.  The  guidelines  are  intended to
   maintain a high standard of professionalism among the performers and 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 the best  interest of the Company and its  long-term  market
   position.

   Compliance Policies - The Company's management has policies in place intended
   to ensure 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.

   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.  Club supervisory  personnel review various credit card
   charges,  including  those  purchasing  "house"  money or charges  with total
   charges  above an in-house  floor limit as a control to ensure  collection of
   the  charges and to  minimize  challenges  and or  chargebacks  initiated  by
   patrons after leaving the premises.

   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  with 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  a  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.


                                                                               6
<PAGE>


   Controls  -  Operational  and  accounting   controls  are  essential  to  the
   successful  management of a cash  intensive  nightclub and bar business.  The
   Company uses a  combination  of  nightclub-oriented  accounting  software and
   physical  inventory control  mechanisms  intended to maintain 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  monitor and control the nightclub.
   Management  controls,  restricts and supervises  carefully all personnel with
   cash handling  responsibilities.  Management  personnel reconcile deposits of
   cash and credit card  receipts  to produce a detailed  daily  income  report.
   Daily  computer  reports  alert  management  of any  variances  from expected
   financial results based on historical norms.

   Atmosphere - We believe that the Million  Dollar Saloon  maintains an elegant
   atmosphere  through its Mediterranean  decor theme and other customer related
   amenities.  We believe the furniture and  furnishings  in the Million  Dollar
   Saloon  contribute  to  the  atmosphere  equivalent  to  that  of an  upscale
   restaurant.  The club  offers a  gourmet  menu,  two  cigar  humidors  and an
   extensive  champagne  and fine wine list.  The sound system  design  provides
   quality  high-energy  music levels that also permit easy conversation to 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 its
   sound and light systems. Management regularly monitors the environment of the
   Million Dollar Saloon for appropriate music selection,  customer service, and
   upscale appearance, and ambience.

   "VIP" Area - To provide  service for the  upper-end  of the  business  market
   segment,  the Company  maintains a spacious VIP  mezzanine  encompassing  the
   entire  upstairs public 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 a maximum 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 a maximum of 250 persons. The
   lower level also offers "The Blue Room",  a private  entertainment  space for
   bachelor and other large group activities.

   Advertising and Promotion - The Company's marketing philosophy is to position
   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 other  promotional  activities are regularly  employed so that the
   public recognizes the Million Dollar Saloon name.

   This facility was closed at the close of business on July 31, 2009.

Future Expansion

The Company has not determined  evaluated or identified  any specific  locations
outside  of the  Dallas  market  or  conducted  any  efforts  related  to future
expansion,  but it believes,  based upon its experience,  that opportunities for
expansion exist primarily in metropolitan  areas in the Southwest United States.
The aforementioned  approximately 6.6 acre tract located in Dallas, Texas may be
suitable  for  relocation  of  the  club  subsequent  to the  expiration  of its
operating permit in July 2009; however,  these plans are subject to change based
on  municipal  changes in zoning,  neighboring  businesses  or  developments  or
societal  norms.  The Company may expand through the acquisition of sports bars,
casual  clubs and adult  cabarets  that may use the  trademark  "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. At the present time, the Company has no definitive  expansion,  relocation
or other plans for the operation of the existing facility after July 31, 2009 or
any other conceptual facility in the future.

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,


                                                                               7
<PAGE>

Texas, certain of which may enjoy recognition that equals or exceeds that of the
Million  Dollar  Saloon and may be owned or controlled by either Duncan Burch or
Nick Mehmeti,  the Company's officers,  directors and controlling  shareholders.
While  there  may  be  local  governmental  restrictions  on the  location  of a
"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  several are in direct  competition  with the
Million  Dollar  Saloon.  Some of the  competitive  adult  cabarets are owned by
corporations controlled by or affiliated with Nick Mehmeti and Duncan Burch, who
are  officers  and  directors  of the  Company.  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 Tempo Tamers  Beverage  Company,
Inc.,  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,  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. The failure of the
Company to obtain a renewal of its Permits would have a material  adverse effect
upon the financial condition and prospects of the Company.

In 2008, the Texas Alcoholic Beverage  Commission  initiated a regulatory action
against Tempo Tamers Beverage  Company,  Inc. styled "Texas  Alcoholic  Beverage
Commission  v.  Tempo  Tamers  Beverage  Company  Inc."  This  Action  is  being
vigorously   contested  by  the  Company  and  the  potential  outcome  of  this
administrative   action  is  not  determinable  at  this  time.   Management  is
aggressively  defending  these  actions and no material  impact to the Company's
financial  condition is anticipated  at this time;  however,  a finding  against
Tempo Tamers Beverage Company, Inc. could have a significant  detrimental impact
on the operation of the Million Dollar Saloon.

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.

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


                                                                               8
<PAGE>


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

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

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

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

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

Beginning  January 1, 2008,  the Million  Dollar Saloon became  subject to a new
state law requiring a $5 surcharge  for every club  visitor.  A lawsuit has been
filed by the Texas Entertainment Association,  an organization to which we are a
member,  alleging the fee amounts to be an unconstitutional  tax. This tax could
discourage certain potential customers from visiting the Million Dollar Saloon.

Employees

As of May 29, 2009, the Company had  approximately  19 full-time  employees,  of
which 10 were in management  positions,  including  corporate and administrative
operations and 9 were engaged in food and beverage service, including bartenders
and  waitresses.  The Company  also  employed 28  part-time  employees  who were
engaged in food and beverage service and 14 part-time employees who were engaged
in club operations.  Contract entertainers numbered  approximately 94 working on
both full and part time schedules, as individually determined by the contractor.
None of the  Company's  employees  are  represented  by a union and the  Company
considers its employee relations to be good.

Insurance

The Company  maintains  insurance in amounts it considers  adequate for property
damage.

The Company does not maintain  personal  injury liquor  liability  insurance for
exposures or  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.  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.

Commercial Real Estate


                                                                               9
<PAGE>


The  Company  owns a total of three  (3)  properties  in the  Dallas-Fort  Worth
Metroplex.  One facility is Company operated, the Million Dollar Saloon, located
in Dallas,  Texas.  The second  property is owned by Don, Inc. and is located in
Fort Worth,  Texas.  This  property is leased to an entity  controlled by Duncan
Burch,  an officer and  director of the Company,  for the  operation of an adult
cabaret.  The third property  consists of 6.6 acres of  undeveloped  real estate
located in Dallas,  Texas.  The Company has not determined the best and ultimate
use of this undeveloped property.

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.

Management  believes  that  all of its  properties  are  adequately  covered  by
insurance.

Risk Factors

Not required for a Smaller Reporting Company.

Item 2 - Description of Property

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.  The Company
occupies the premises for its corporate offices on a month-to-month basis. Based
on current local market conditions and available  information,  management is of
the  belief  that it will be able to  relocate  to a  comparable  location  at a
comparable cost if necessary.

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.

The Fort Worth,  Texas facility is owned by Don, Inc. and is leased to an entity
controlled  by Duncan  Burch,  an officer and director of the  Company,  for the
operation of an adult  cabaret.  The property is a stand-alone  structure and is
100% occupied with a single tenant.  The property is subject to a month-to-month
lease that requires the tenant to pay a weekly rental of $8,500.

The following is a summary of the terms,  conditions and operating parameters of
the referenced properties:

                                                           Location/Address
                                                           ----------------

                                                        3601 State Highway 157
                                                           Ft. Worth, Texas
                                                           ----------------

   Owner                                                       Don, Inc.
   Square footage
     Building                                                    4,850
     Real estate tract                                          60,398
   Mortgages                                                     None
   Lease expiration                                         Month-to-month
   Scheduled rentals                                        $8,500 per week
   Effective annual rental per square foot
     (Total lease term)                                         $91.13
Gross book basis  (including  land)                            $160,447
Net   book basis (including land)                               $43,235
Federal income tax basis (excluding land)                       $16,724
Depreciation method and life                                 ACRS-15 years


                                                                              10
<PAGE>


Item 3 - Legal Proceedings

1) City of Dallas licensing

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

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

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

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

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


                                                                              11
<PAGE>


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

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

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

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

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

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

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

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

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

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

From  time-to-time,  in the ordinary course of business,  the Company has become
and may become party to other lawsuits. The outcome of this litigation, existing
or future, if any, is not determinable at this time.  Management is aggressively


                                                                              12
<PAGE>

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

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

The Company has not conducted any meetings of shareholders  during the preceding
quarter or periods subsequent thereto.


                                     PART II

Item 5 - Market for the Registrant's Common Equity,  Related Stockholder Matters
and Issuer Purchases of Equity Securities

Transfer Agent

Our independent stock transfer agent is Securities Transfer  Corporation.  Their
address is 2591 Dallas Parkway,  Suite 102, Frisco, TX 75034. Their phone number
is (469) 633-0101 and their fax number is (469) 633-0088.

Market for Trading

As of May 29,  2009,  the  Company  had  approximately  800  holders  of record,
exclusive of shares held in "street name", of its Common Stock and had 5,731,778
issued and outstanding shares of Common Stock.

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

                                                    High             Low
Fiscal year ending December 31, 2006
   Quarter ended March 31, 2006                    $0.20           $0.15
   Quarter ended June 30, 2006                      0.30            0.16
   Quarter ended September 30, 2006                 0.20            0.15
   Quarter ended December 31, 2006                  0.25            0.15

Fiscal year ended December 31, 2007
   Quarter ended March 31, 2007                    $0.23           $0.19
   Quarter ended June 30, 2007                      0.25            0.19
   Quarter ended September 30, 2007                 0.25            0.19
   Quarter ended December 31, 2007                  0.25            0.19

Fiscal year ended December 31, 2008
   Quarter ended March 31, 2008                    $0.28           $0.19
Quarter ended June 30, 2008                         0.25            0.20
   Quarter ended September 30, 2008                 0.20            0.09
   Quarter ended December 31, 2008                  0.14            0.09

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
actual  transactions  and have not been adjusted for stock  dividends or splits.
The reported  closing  price of the Company's  common  stock,  based on the last
reported  trade of  approximately  15,000  shares on May 29,  2009 was $0.14 per
share.


                                                                              13
<PAGE>

Common Stock

The  Company's  Articles  of  Incorporation  authorize  the  issuance  of  up to
50,000,000 shares of $0.001 par value Common Stock. Each record holder of Common
Stock  is  entitled  to one vote for each  share  held on all  matters  properly
submitted  to the  stockholders  for  their  vote.  The  Company's  Articles  of
Incorporation do not permit for cumulative voting for the election of directors.

Holders of outstanding  shares of Common Stock are entitled to such dividends as
may be  declared  from time to time by the  Board of  Directors  out of  legally
available funds; and, in the event of liquidation,  dissolution or winding up of
the affairs of the Company,  holders are entitled to receive,  ratably,  the net
assets of the Company  available to stockholders  after  distribution is made to
the  preferred  stockholders,  if  any,  who are  given  preferred  rights  upon
liquidation.  Holders of outstanding  shares of Common Stock have no preemptive,
conversion or redemption  rights.  All of the issued and  outstanding  shares of
Common Stock are,  and all  unissued  shares when offered and sold will be, duly
authorized,  validly issued, fully paid, and non-assessable.  To the extent that
additional  shares of the  Company's  Common  Stock  are  issued,  the  relative
interests of then existing stockholders may be diluted.

Recent issuances of Unregistered Securities

None

Dividend policy

No  dividends  have been paid in the most recent  fiscal year and the  Company's
Board of Directors  does not  anticipate  paying  dividends  in the  foreseeable
future.  It is the  current  policy to retain all  earnings,  if any, to support
current operations.

Item 6 - Selected Financial Data

Not applicable


Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following  discussion and analysis  should be read in  conjunction  with the
financial  statements and related notes included elsewhere in this annual report
on Form 10-K. This discussion contains forward-looking statements reflecting our
current expectations,  estimates and assumptions concerning events and financial
trends  that may affect  our future  operating  results or  financial  position.
Actual  results  and the  timing of events  may  differ  materially  from  those
contained  in  these  forward-looking  statements  due to a number  of  factors,
including those  discussed in the sections  entitled "Risk Factors" and "Caution
Regarding Forward-Looking Information" appearing elsewhere in this annual report
on Form 10-K.

(1)  Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations
are based upon consolidated  financial  statements,  which have been prepared in
accordance with accounting principles generally accepted in the United States of
America,  or GAAP. The preparation of these  consolidated  financial  statements
requires us to make estimates and judgments that affect the reported  amounts of
assets, liabilities,  revenues and expenses. We have identified certain of these
policies as being of  particular  importance  to the  portrayal of our financial
position  and  results  of  operations  and which  require  the  application  of
significant judgment by our management. We analyze our estimates including those
related to marketable  securities,  accounts  receivable,  revenue  recognition,


                                                                              14
<PAGE>

inventory, and income taxes, and base our estimates on historical experience and
various  other   assumptions   that  we  believe  to  be  reasonable  under  the
circumstances.  Actual results may differ from these  estimates  under different
assumptions or conditions. We believe the following critical accounting policies
affect our more  significant  judgments and estimates used in the preparation of
our consolidated financial statements:

Marketable Securities
---------------------

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

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

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

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

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

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

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

Accounts Receivable and Revenue Recognition
-------------------------------------------

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

     Since  December  31,  2000,  all  rental  property   lessors  are  entities
     controlled by a Company controlling shareholder,  officer and director. All
     lease  rental  payments are due in advance on the first day of the week for
     that week.  All revenue  sources  are  located  either in Dallas or Tarrant
     County, Texas.

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

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.


                                                                              15
<PAGE>


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.

(2)  Results of Operations

Year ended December 31, 2007 as compared to Year ended December 31, 2006
------------------------------------------------------------------------

Bar and restaurant sales increased by  approximately  $167,000 (or +6.6%) in the
year ended  December  31,  2007.  Bar and  restaurant  sales were  approximately
$2,705,000  for the year ended  December  31, 2007 as compared to  approximately
$2,538,000 for 2006.

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

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

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

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

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

The Company's rental income declined nominally to approximately $442,000 for the
year ended December 31, 2007 as compared to approximately  $441,000 for Calendar
2006. All of the leases were/are with entities  controlled by Duncan Burch,  one
of the Company's controlling shareholders.

During  Calendar  2004,   Management   reclassified   the  net  carrying  value,
approximately  $871,000,  to  "Property  and  equipment  held  for  sale" in the
Company's  financial  statements on the date of listing for sale.  This property
was  sold on  February  5,  2008 for net  proceeds  of  approximately  $896,000,
resulting  in a  net  gain  at  the  time  of  sale  of  approximately  $61,000.
Accordingly, management did not and has not provided a loss or impairment of the
recorded carrying value as of the date of the accompanying financial statements.


                                                                              16
<PAGE>


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

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

Cost of sales increased  slightly by  approximately  $37,000 from  approximately
$1,034,000 for the year ended December 31, 2006 to approximately  $1,061,000 for
the  year  ended  December  31,  2007.  Gross  profit  percentages  improved  to
approximately 66.3%  (approximately  $2,086,000) for the year ended December 31,
2007 versus 65.3%  (approximately  $1,946,000)  for the year ended  December 31,
2006.  Fluctuations  in the  Company's  gross  profit  percentages  react to and
parallel the key areas of management focus for cost of sales expenditure control
-  principally  personnel  staffing  levels and food and beverage  costs.  These
areas,   specifically  cost  controls  over  purchasing,   inventory  management
protocols  and labor  management,  are  continuously  monitored  to maintain the
Company's gross profit percentages.

General and administrative  expenses were approximately  $1,853,000 for the year
ended  December  31,  2007 as  compared to  approximately  $1,876,000  for 2006.
Management  attention  to  expenditures  of all  types  caused  the  Company  to
experience  a  relatively  flat   expenditure   level  for  overhead   expenses.
Management;  however,  is  continually  aware of  inflationary  pressures in the
economy,  fluctuating  legal expenses as a result of ongoing  litigation and the
general  nature of a litigious  society and issues related to the City of Dallas
Sexually  Oriented  Business   Ordinance.   Further,   the  Company's  executive
compensation  remains relatively stable and is anticipated to remain stable into
the foreseeable future. The Company anticipates  relatively constant expenditure
levels for general operating expenses in future periods and management continues
to monitor its expenditure levels to achieve optimum financial results.

The  Company  experienced  net  income  before  income  taxes was  approximately
$192,000 for the year ended December 31, 2007 versus  approximately  $65,000 for
Calendar   2006.  The  increase  in  income  before  income  taxes  is  directly
attributable  to our increase in gross profit in  operating  the Million  Dollar
Saloon.   After-tax  net  income   increased  by   approximately   $19,000  from
approximately  $106,000  for the year ended  December  31,  2007 as  compared to
approximately  $87,000 for Calendar 2006. The Company  experienced  earnings per
share of  approximately  $0.02 and  $0.02 per share for each of the years  ended
December 31, 2007 and 2006, respectively.

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

(3)  Liquidity

As  of  December  31,  2007  and  2006,  the  Company  has  working  capital  of
approximately  $(160,,000) and $(355,000).  The Company  achieved  positive cash
flows from operations of approximately $231,000 for Calendar 2007 as compared to
approximately$180,000 for 2006.

The  Company's  working  capital is directly  related to the cash  expended  and
future  debt  service  requirements  to  acquire  land for  future  development.
Additionally,  the Company  incurred a  liability  of  approximately  $1,000,000
($500,000  each)  to  two  entities  controlled  by  the  Company's  controlling
shareholders,  Nick  Mehmeti  and Duncan  Burch  related to the  securing  of an


                                                                              17
<PAGE>

operating  license  for the  Company's  Million  Dollar  Saloon  operation  in a
"non-conforming  location" through July 31, 2009. This debt was retired from the
proceeds of the sale of land in Calendar 2008.

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

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

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

(4)  Capital Resources

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately  $53,599.  The Company paid $493,072
cash,  inclusive of a $140,000 loan to the Company from Duncan Burch, an officer
and  director of the  Company,  and issued to the seller a one-year  note in the
principal  amount of $2,156,713 with 8% annual  interest.  This debt was paid in
full with proceeds of the $2,000,000  long-term  mortgage note refinancing.  The
Company paid  approximately  $153,800  during  Calendar  2003 and  approximately
$14,700 during Calendar 2004 to service this initial short-term debt.

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

The  Company  has also  remitted  approximately  $366,000  at the closing of the
permanent  long-term  financing  in  January  2004 for  closing  costs,  interim
interest, loan origination fees and other ancillary items.

The Company has identified no other significant  capital  requirements for 2004,
other than normal repair and  replacement  activity at the Company's  commercial
rental properties and the adult  entertainment  lounge and restaurant  facility.
Liquidity  requirements  mandated by future business expansions or acquisitions,
if any are specifically  identified or undertaken,  are not readily determinable
at this time as no substantive plans have been formulated by management.

(5)  Accounting Pronouncements

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


Item 7 - Index to Financial Statements


                                                                              18
<PAGE>


The required financial statements begin on page F-1 of this document.


Item 7A - Quantitative and Qualitative Disclosures about Market Risk

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

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

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.


Item 8 - Financial Statements and Supplementary Data

The required financial statements begin on page F-1 of this document.


Item 9 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

None

Item 9A - Controls and Procedures

Disclosure  Controls and Procedures.  Our management,  under the supervision and
with  the  participation  of our  Chief  Executive  Officer  ("CEO")  and  Chief
Financial  Officer  ("CFO"),  has evaluated the  effectiveness of our disclosure
controls  and  procedures  as  defined  in Rules  13a-15  promulgated  under the
Exchange Act as of the end of the period covered by this Annual Report. Based on
such  evaluation,  our CEO and CFO  have  concluded  that,  as of the end of the
period covered by this Annual Report, our disclosure controls and procedures are
effective.  Disclosure  controls and  procedures  are  controls  and  procedures
designed to ensure that  information  required  to be  disclosed  in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported  within the time  periods  specified  in the SEC's  rules and forms and
include  controls  and  procedures  designed to ensure that  information  we are
required  to  disclose  in such  reports  is  accumulated  and  communicated  to
management,  including our Chief Executive Officer and Chief Financial  Officer,
as appropriate to allow timely decisions regarding required disclosure.

Management's  Annual  Report  on  Internal  Control  over  Financial  Reporting.
Management is responsible for  establishing  and maintaining  adequate  internal
control over financial  reporting,  as such term is defined in Rule 13a-15(f) of
the Exchange Act.

Internal control over financial reporting is defined under the Exchange Act as a
process  designed by, or under the  supervision of, our CEO and CFO and effected
by our board of directors, management and other personnel, to provide reasonable
assurance  regarding the reliability of financial  reporting and the preparation
of financial  statements  for external  purposes in  accordance  with  generally
accepted accounting principles and includes those policies and procedures that:

--   Pertain to the maintenance of records that in reasonable  detail accurately
     and fairly reflect the transactions and dispositions of our assets;


                                                                              19
<PAGE>

--   Provide reasonable assurance that transactions are recorded as necessary to
     permit  preparation  of financial  statements in accordance  with generally
     accepted accounting principles,  and that our receipts and expenditures are
     being made only in accordance  with  authorizations  of our  management and
     directors; and

--   Provide reasonable  assurance  regarding  prevention or timely detection of
     unauthorized acquisition,  use or disposition of our assets that could have
     a material effect on the financial statements.

Because of its inherent  limitation,  internal control over financial  reporting
may not prevent or detect misstatements. Also, projections of any evaluations of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies and procedures may deteriorate. Accordingly, even an effective
system of internal control over financial reporting will provide only reasonable
assurance with respect to financial statement preparation.

Our  management,  with  the  participation  of our CEO and  CFO,  evaluated  the
effectiveness of the Company's  internal control over financial  reporting as of
December 31, 2007. In making this  assessment,  our management used the criteria
set  forth  by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway
Commission in Internal Control - Integrated Framework.  Based on this evaluation
and those criteria,  our management,  with the participation of our CEO and CFO,
concluded  that, as of December 31, 2007,  our internal  control over  financial
reporting was effective.

This  Annual  Report does not include an  attestation  report of our  registered
public accounting firm regarding our internal control over financial  reporting.
Management's  report was not subject to  attestation  by our  registered  public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this Annual Report.

Changes in Internal  Control over Financial  Reporting.  There have not been any
changes in our internal control over financial reporting (as defined in Exchange
Act Rules  13a-15(f))  that occurred  during the quarter ended December 31, 2007
that have materially  affected,  or are reasonably likely to materially  affect,
our internal control over financial reporting.

                                    PART III

Item 10 - Directors, Executive Officers and Corporate Governance

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  shareholders  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  the  annual  meeting  of  directors
following  the  annual  meeting  of  shareholders  or  until  their   respective
successors  are duly  elected and  qualified  or their  earlier  resignation  or
removal.

      Name                Age                          Position
  ------------          -------               --------------------------

  Nick Mehmeti            53                  President, Chief Executive
                                               Officer, Chief Financial
                                                 Officer and Director
  Duncan Burch            53                   Executive Vice President
                                                     and Director
  Dewanna Ross            55                      Secretary/Treasurer


Nick Mehmeti - Mr.Mehmeti has served as the Company's President, Chief Executive
Officer and a director since January 2000 and as the Company's  Chief  Financial
Officer since March 2, 2001.  Mr.  Mehmeti,  his  affiliates  and his affiliated
companies  have  owned  and  operated  restaurants  and  adult  cabarets  in the
Dallas-Fort  Worth Metroplex for more than 15 years.  Mr. Mehmeti will devote as
much of his time as is  necessary  to  perform  his duties as  President,  Chief
Executive Officer, Chief Financial Officer and a director of the Company.


                                                                              20
<PAGE>

Duncan Burch - Mr. Burch has served as the Company's  Executive  Vice  President
and a director since January 2000. Mr. Burch,  his affiliates and his affiliated
companies  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 - Ms. Ross has served in various  positions  with the Company since
1995. Ms. Ross served as a director of the Company from 1995 until January 2002.
She served as  President  and Chief  Executive  Officer of the Company from July
1999 to January  2000.  She served as Vice  President  of  Operations  and Chief
Operating  Officer of the Company from January 19, 2000 to January 10, 2002. She
currently serves as  Secretary-Treasurer of the Company. Ms. Ross is responsible
for the  development  of the  corporate  procedures,  including  the  hiring and
training of  corporate  staff and the  day-to-day  operations  of the  Company's
Million Dollar Saloon.  Ms. Ross has also served as an officer and operator of a
private club and as an officer of other  businesses.  Ms. Ross has a Bachelor of
Arts degree from the University of Texas at Dallas.

Board of Directors and Committees

We are managed under the  direction of our board of  directors.  The size of our
board  of  directors  is set at  three  members,  and we  currently  have  three
directors,  all of whom are  employees  of the  Company.  During the fiscal year
ended December 31, 2007,  the Board held only one meeting - its annual  meeting.
The Company does not have a standing audit committee,  compensation committee or
nominating  committee  or any  other  committee.  The  Company  does not have an
independent audit committee financial expert, as defined in Item 407(d)(5).  The
Company  currently  does not pay a  director  fee for  attending  scheduled  and
special meetings of the Board of Directors.  The Company pays expenses of all of
its directors in attending meetings.

Identifying and Evaluating Nominees for Directors

Our board of directors does not have a standing nominating committee. The entire
board of directors  participates in the consideration of director nominees.  Our
board of  directors  does not  consider it  necessary  to establish a nominating
committee  because  our  board  of  directors  is  relatively  small in size and
believes it can operate more effectively in concert.  Further, because there has
not been turnover on our board of directors,  there has been no need to nominate
new directors.  In the event that vacancies are anticipated or otherwise  arise,
our board of directors will consider various potential candidates.  Our board of
directors anticipates that it would utilize a variety of methods for identifying
and  evaluating  nominees for director.  Candidates may come to the attention of
our board of directors through current board members, professional search firms,
stockholders or other persons. These candidates would be evaluated at regular or
special  meetings of our board of directors  and may be  considered at any point
during the year.

Our board of  directors  will  consider  stockholder  nominations  for  director
candidates  upon written  submission  of such  recommendation  to our  corporate
secretary  along with,  among other  things,  the nominee's  qualifications  and
certain biographical  information  regarding the nominee, such nominee's written
consent  to serving as a  director  if elected  and being  named in any proxy or
information  statement  and  certain  information  regarding  the  status of the
stockholder  submitting the  recommendation,  all in the manner  required by our
amended and restated bylaws and the applicable rules and regulations promulgated
under the Securities Exchange Act of 1934, as amended. Following verification of
the stockholder status of persons proposing candidates,  recommendations will be
aggregated and considered by our board of directors at a regularly  scheduled or
special  meeting.  If any materials are provided by a stockholder  in connection
with the nomination of a director candidate, such materials will be forwarded to
our board of directors.

Communications with the Board


                                       21
<PAGE>


Individuals may communicate  with the Company's Board of Directors or individual
directors  by writing to the  Company's  Secretary  at 6848  Greenville  Avenue,
Dallas,  Texas  7231.  The  Secretary  will review all such  correspondence  and
forward  to the Board of  Directors  a summary  of all such  correspondence  and
copies of all correspondence  that, in the opinion of the Secretary,  relates to
the functions of the Board or committees thereof or that he otherwise determines
requires their attention.  Directors may review a log of all such correspondence
received by the Company and request  copies.  Concerns  relating to  accounting,
internal   control  over  financial   reporting  or  auditing  matters  will  be
immediately  brought to the  attention of the Board of Directors  and handled in
accordance with its procedures established with respect to such matters.

Code of Ethics

The Company's  Board of Directors have adopted a Code of Ethics which applies to
its Chief Executive  Officer and Chief Financial Officer has filed as an exhibit
to our Form 10-K in a prior period. A copy of the code of ethics is available in
print  without  charge to any  person  who sends a request  to the office of the
Secretary of the Company at 6848 Greenville Avenue, Dallas, Texas 75231.

Indemnification of Officers and Directors.

The  Company's  By-Laws  provide  for the  indemnification  of  its,  directors,
officers, employees, and agents, under certain circumstances, against attorney's
fees and other expenses  incurred by them in any litigation to which they become
a party  arising  from their  association  with or  activities  on behalf of the
Company.  The Company will also bear the expenses of such  litigation for any of
its directors,  officers,  employees,  or agents,  upon such persons  promise to
repay the Company  therefor if it is ultimately  determined that any such person
shall not have been entitled to  indemnification.  This  indemnification  policy
could result in substantial  expenditures by the Company, which it may be unable
to recoup.

Director Independence and Conflicts of Interest

None of our directors  are  independent  directors  under NASDAQ or AMEX general
independence  rules  and  under  the  independence  rules  applicable  to  audit
committees,  nominating  committees  and  compensation  committees.  Non  of our
directors  are  "non-employee  directors"  as defined by Rule 16b-3  promulgated
under the Securities Exchange Act of 1934, as amended, or "outside directors" as
defined by Section 162(m) of the Internal Revenue Code.

None of the officers of the Company will devote of their  respective time to the
affairs of the Company  than is deemed  necessary by them.  Mr.  Mehmeti and Mr.
Burch have ownership  interests in other  business  ventures which are in direct
competition  with  the  Company.  These  business  interests  present  potential
conflicts of interest with those of the Company and its stockholders. There will
be occasions when the time requirements of the Company's  business conflict with
the demands of the officers'  other  business and  investment  activities.  Such
conflicts may require that the Company attempt to employ  additional  personnel.
There is no  assurance  that the  services of such  persons will be available or
that they can be obtained upon terms favorable to the Company.

The Company has adopted a policy under which any  consulting or finders fee that
may be paid to a third party for  consulting  services to assist  management  in
evaluating a prospective business opportunity would be paid in stock rather than
in cash, if deemed beneficial to the Company. Accordingly, the Company is unable
to  predict  whether,  or in what  amount,  such stock  issuance  might be made.
However, through the filing date of this report, no such shares have been issued
pursuant to arrangements of this nature.

Section 16(a) Beneficial Ownership Compliance

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.


                                                                              22
<PAGE>
<TABLE>
<CAPTION>
Based solely on a review of reports  furnished to the Company  during the fiscal
year ended  December  31,  2007 or written  representations  from the  Company's
directors and executive officers,  Mr. Mehmeti, Mr. Burch and Ms. Ross failed to
comply with the Section 16(a) filing  requirements  applicable to its directors,
officers and 10% holders for either year were complied with.

Involvement on Certain Material Legal Proceedings During the Past Five (5) Years

   (1) No  director,  officer,  significant  employee  or  consultant  has  been
       convicted in a criminal proceeding, exclusive of traffic violations or is
       subject to any pending criminal proceeding.

   (2) No  bankruptcy  petitions  have been filed by or against any  business or
       property of any director, officer,  significant employee or consultant of
       the  Company  nor  has any  bankruptcy  petition  been  filed  against  a
       partnership  or business  association  where these  persons  were general
       partners or executive officers.

   (3) No  director,  officer,  significant  employee  or  consultant  has  been
       permanently  or  temporarily  enjoined,  barred,  suspended  or otherwise
       limited from  involvement in any type of business,  securities or banking
       activities.

   (4) No  director,  officer or  significant  employee  has been  convicted  of
       violating a federal or state securities or commodities law.

Item 11 - Executive Compensation

The following  summary  compensation  table sets forth the compensation  paid or
accrued by the Company to each of the Company's  executive officers for services
rendered to the Company  during the  Company's  fiscal years ended  December 31,
2007, 2006 and 2005.

                                                                    Long-Term
                                                                   Compensation

                                         Annual Compensation             Awards              Payouts
                                         -------------------             ------              -------

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

Nick Mehmeti                   2007    $101,550        $-0-         $-0-         $-0-         $-0-              $-0-
Chief Executive Officer and    2006     $78,000        $-0-         $-0-         $-0-         $-0-              $-0-
Chief Financial Officer        2005     $78,000        $-0-         $-0-         $-0-         $-0-              $-0-


Duncan Burch                   2007    $101,550        $-0-         $-0-         $-0-         $-0-              $-0-
Executive Vice President       2006     $78,000        $-0-         $-0-         $-0-         $-0-              $-0-
                               2005     $78,000        $-0-         $-0-         $-0-         $-0-              $-0-

Dewanna Ross                   2007     $80,675        $-0-         $-0-         $-0-         $-0-              $-0-
Secretary/Treasurer            2006     $80,000        $-0-         $-0-         $-0-         $-0-              $-0-
                               2005     $80,000        $-0-         $-0-         $-0-         $-0-              $-0-

</TABLE>

Option Grants In Last Fiscal Year

There were no grants of stock  options to any officer or director of the Company
during the fiscal year ended December 31, 2007, 2006 and 2005, respectively.


                                                                              23
<PAGE>

Option Exercises And Holdings

The Company does not have a stock option plan.  Except as disclosed in "Security
Ownership of Certain Beneficial Owners and Management," no officer,  director or
employee of the  Company  holds any stock  options to purchase  shares of Common
Stock of the Company.

Committees of the Board of Directors and Director Compensation

There are no audit,  compensation or other  committees of the Board of Directors
of the Company.  The Company currently does not pay a director fee for attending
scheduled  and special  meetings  of the Board of  Directors.  The Company  pays
expenses of all of its directors in attending meetings.


Item 12 - Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

The following table sets forth certain information as of the filing date of this
Annual Report  relating to the beneficial  ownership (as defined by the rules of
the  Securities  and Exchange  Commission) of shares of Common Stock by (I) each
person who owns  beneficially  more than 5% of the outstanding  shares of Common
Stock,  (ii)  each  director  of the  Company,  (iii)  the  President  and Chief
Executive  Officer of the Company for the year ended December 31, 2004, and (iv)
each named executive officer of the Company,  and (v) all executive officers and
directors of the Company as a group.


                                                             % of Class
 Name and address                     Number of Shares    Beneficially Owned (1)
 ----------------                     ----------------    ------------------

 Nick Mehmeti (2)                       1,675,787 (3)           29.24%
 Duncan Burch (2)                       1,675,787 (3)           29.24%
 The Irrevocable Equity Trust No. 1
     J. M. Tibbals, Trustee (4)           451,558                7.88%
 Ronald A. Zlatniski (5)                  322,610                5.63%
 Dewanna Ross (2)                           4,000                0.70%

 All Officers and Directors
     as a Group                         3,355,574               58.54%


(1)  Beneficial  ownership is determined in accordance  with the SEC's rules. In
     determining the percent of Common Stock owned by a person (a) the numerator
     is the number of shares of Common Stock  beneficially  owned by the person,
     including  shares the beneficial  ownership of which may be acquired within
     60 days  upon  the  exercise  of  options  or  warrants  or  conversion  of
     convertible  securities,  and (b) the  denominator  is the total of (I) the
     5,731,778  shares in the  aggregate  of Common  Stock on the filing date of
     this Annual Report and (ii) any shares of Common Stock which the person has
     the right to  acquire  within  60 days  upon the  exercise  of  options  or
     warrants or conversion of convertible securities. Neither the numerator nor
     the  denominator  includes  shares which may be issued upon the exercise of
     any  options  or  warrants  or  the  conversion  of any  other  convertible
     securities held by any other person.

(2)  Mr. Mehmeti is the President,  Chief  Executive  Officer,  Chief  Financial
     Officer and a director of the Company and Mr. Burch is the  Executive  Vice
     President  and a  director  of the  Company.  Ms.  Ross  is  the  Corporate
     Secretary/Treasurer.  The mailing address for these  individuals is c/o the
     Company, 6848 Greenville Ave., Dallas, Texas 75231.

(3)  Excludes an expired  option to purchase  400,000 shares of the Common Stock
     of the Company for $440,000  ($1.10 per share)  which was jointly  owned by
     Messrs. Mehmeti and Burch and could have been exercised in whole or in part
     at any time through October 18, 2004 when such option expired.


                                                                              24
<PAGE>

(4)  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.

(5) The mailing  address for Mr.  Zlatniski  is 1450  Raleigh  Road,  Suite 300,
    Chapel Hill, NC 27517.

Changes in Control

There are currently no  arrangements  which may result in a change in control of
the Company.

Item  13  -  Certain  Relationships  and  Related  Transactions,   and  Director
             Independence

The Company  provides  management  support and conducts its business  operations
through its wholly-owned operating subsidiaries: Furrh, Inc., Tempo Tamers, Inc.
("Tempo  Tamers"),  Don, Inc. and Corporation Lex ("Lex").  The Company owns and
operates  an adult  cabaret  in  Dallas,  Texas and owns and  manages  two other
commercial properties located in the Dallas-Fort Worth Metroplex.

Tempo Tamers owns and operates an adult  cabaret at 6826  Greenville,  Avenue in
Dallas,  Texas operates  under the registered  trademark and trade name "Million
Dollar  Saloon  (R)." The 6826  Greenville  Avenue  location is, and has been, a
"non-conforming  location" under the Dallas Sexually Oriented Business Ordinance
since 1986 due to the fact that 6826 Greenville Avenue is within 1,000 feet of a
residentially  zoned  property.  Various  other  sexually  oriented  businesses,
including those owned or controlled by entities owned by Duncan Burch, Executive
Vice  President and a director of the Company,  and/or Nick Mehmeti,  President,
Chief Executive Officer,  Chief Financial Officer and a Director of the Company,
were likewise in  "non-conforming  locations." While many of these locations had
previously  been successful in obtaining  locational  exemptions from the Dallas
Sexually Oriented Business Ordinance so as to allow their continued operation as
sexually oriented  businesses,  the City of Dallas recently proposed legislation
to  eliminate  the  possibility  of a  locational  exemption.  Despite  years of
intensive and expensive litigation funded primarily by entities owned by Messrs.
Burch and Mehmeti,  the City of Dallas is moving toward  closure of all sexually
oriented  businesses in "non-conforming  locations."  Accordingly,  the Company,
through  Tempo  Tamers,  and other  similarly  situated  operators  of  sexually
oriented  businesses  entered  into  settlement  negotiations  with  the City of
Dallas.  During  those  negotiations,  it  became  the view of the  Company  and
operators of other sexually oriented  businesses in  "non-conforming  locations"
that the City  would  allow one such  sexually  oriented  business  to remain in
business in a "non-conforming  location" for a limited period of time, if all of
the other sexually oriented businesses  operating in "non-conforming  locations"
ceased operations.

In October,  2002,  entities  controlled  by Mr. Burch entered into a settlement
agreement with the City of Dallas which provides for the closure of the sexually
oriented  business  known as Chicas Locas,  which is operated by an affiliate of
Mr.  Burch,  and Baby Dolls Saloon which is also operated by an affiliate of Mr.
Burch.  Chicas Locas was the tenant of the Company's property located at 3021 W.
Northwest  Highway  in  Dallas,   Texas.  Nick  Mehmeti,  the  Company  and  its
subsidiary,  Corporation Lex, the record owner of the 3021 W. Northwest Highway,
signed the settlement  agreement for limited  purposes.  In accordance  with the
settlement agreement and an agreement reached between Corporation Lex and Chicas
Locas,  Chicas Locas agreed to terminate the lease and the Company agreed not to
allow  the  operation  of an adult  cabaret  business  at its 3021 W.  Northwest
Highway  property  after July 31, 2003.  Chicas  Locas ended its  month-to-month
lease  arrangements  with the Company  regarding the 3021 W.  Northwest  Highway
property and vacated the premises  effective  July 31,  2003.  During 2002,  the
Company  received $52,000 in lease payments for this property from Chicas Locas.
Chicas  Locas owed  approximately  $69,000 at December  31, 2002 and $137,000 at
July 31, 2003 on the lease for accrued, unpaid rent for this property.  Pursuant
to their  agreement,  Corporation Lex agreed to forego the accrued,  unpaid rent
from the 3021 W. Northwest Highway  property.  The Company sold this property in
February 2008.

Thereafter,   negotiations   began   between   Mainstage,   Inc.   d/b/a  P.T.'s
("Mainstage"),   an  entity   controlled  by  Nick  Mehmeti  which   operated  a
non-conforming adult cabaret called P.T.'s,  Allen-Burch,  Inc. ("Allen Burch"),
an entity  controlled by Duncan Burch operating a  non-conforming  adult cabaret
known as The Fare,  and Tempo  Tamers  regarding  which of these  non-conforming
entities would negotiate with the City of Dallas to become the sexually oriented
business to continue  operating in a  "non-conforming  location."  Pursuant to a
settlement  agreement  entered into in May 2003,  Tempo Tamers,  Mainstage,  and
Allen Burch,  Tempo Tamers was granted the exclusive right to negotiate with the
City of Dallas to continue to operate  the Million  Dollar  Saloon as a sexually


                                                                              25
<PAGE>

oriented  business in a  "non-conforming  location."  The  settlement  agreement
provided  that, in the event that the city granted the Million Dollar Saloon the
exclusive right to continue  operating as an adult cabaret in a  "non-conforming
location" for a six (6) year period,  Tempo Tamers would pay $500,000 to each of
P.T.'s and Allen  Burch,  and they  would  each  discontinue  the  operation  of
sexually  oriented  businesses.  In May 2003, the City of Dallas agreed to allow
Tempo  Tamers to continue to operate  The Million  Dollar  Saloon at its current
location  until July  2009.  Mainstage  and Allen  Burch  agreed to  discontinue
operations of P.T.'s and The Fare,  respectively,  as sexually oriented business
in January and March, 2004.

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

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  Although  the  Company  has not yet  determined  the
ultimate  usage of the land,  the  Company  knows that it will be  necessary  to
relocate  the  Million  Dollar  Saloon in 2009 if the  facility  is to remain in
business.  The  Company  may elect to use a portion of this new land to relocate
the Million Dollar  Saloon,  subject to zoning and permit  restrictions,  and/or
sell or lease any remaining properties to third parties.

Item 14 - Principal Accountant Fees and Services

The Company paid or accrued the  following  fees in each of the prior two fiscal
years  to  it's  principal  accountant,  Blanchfield,  Kober  &  Company,  PC of
Hauppauge, NY:

                          Year ended            Year ended
                         December 31,          December 31,
                             2007                  2006
                           -------               -------
Audit fees                 $34,618               $ 9,112
Audit-related fees            --                    --
Tax fees                      --                    --
All other fees                --                    --
                           -------               -------

   Totals                  $34,618               $ 9,112
                           =======               =======

The  Company  has no  formal  audit  committee.  However,  the  entire  Board of
Directors (Board) is the Company's  defacto audit committee.  In discharging its
oversight  responsibility  as to the audit process,  the Board obtained from the
independent  auditors a formal written  statement  describing all  relationships
between  the  auditors  and  the  Company  that  might  bear  on  the  auditors'
independence as required by the appropriate Professional Standards issued by the
Public Company  Accounting  Oversight  Board,  the U. S. Securities and Exchange
Commission and/or the American  Institute of Certified Public  Accountants.  The
Board  discussed  with the  auditors  any  relationships  that may impact  their
objectivity  and  independence,  including  fees  for  non-audit  services,  and
satisfied itself as to the auditors' independence. The Board also discussed with
management,  the internal auditors and the independent  auditors the quality and
adequacy of the Company's internal controls.

The Board  discussed  and  reviewed  with the  independent  auditors all matters
required to be discussed by auditing standards  generally accepted in the United
States of America.

The Board reviewed the audited consolidated  financial statements of the Company
as of and for the year ended December 31, 2007 and 2006, with management and the
independent  auditors.  Management has the sole ultimate  responsibility for the
preparation of the Company's financial  statements and the independent  auditors
have the responsibility for their examination of those statements.


                                                                              26
<PAGE>

Based  on the  above-mentioned  review  and  discussions  with  the  independent
auditors and management,  the Board of Directors  approved the Company's audited
consolidated  financial  statements and recommended that they be included in its
Annual Report on Form 10-K for the year ended December 31, 2007, for filing with
the Securities and Exchange Commission.

The Company's principal accountant, Blanchfield, Kober & Company, P. C., did not
engage  any  other  persons  or  firms  other  than the  principal  accountant's
full-time, permanent employees.

Item 15 - Exhibits, Financial Statement Schedules

Exhibits

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. (*)
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. (*)
10.3 Modification of Lease Agreement dated January 31, 2001 between  Corporation
     Lex and MD II Entertainment, Inc. (***)
10.4 Promissory  Note dated  February  14,  2003 (the  "Note") in the  principal
     amount of $2,156,713.50 payable by the Company to One Stemmons Land Limited
     Partnership with interest at 8% per annum, interest payable monthly, with a
     single principal payment due and payable on February 1, 2004. (+)
10.5 Deed of Trust,  dated February 14, 2003,  signed by the Company  granting a
     security interest in 6.6 acres of undeveloped real estate in Dallas,  Texas
     to secure payment of the Note. (+)
10.6 Special  Warranty Deed with Vendor's Lien dated  February 14, 2002 relating
     to 6.6 acres of real estate located in Dallas, Texas. (+)
10.7 Promissory  Note,  dated  January  29,  2004,  in the  principal  amount of
     $2,000,000  payable by the Company to Citizens National Bank in Waxahachie,
     Texas. (o)
10.8 Deed of Trust,  dated  January 29, 2004,  signed by the Company  granting a
     security interest in 6.6 acres of undeveloped real estate in Dallas, Texas,
     to  secure  payment  of the  note  payable  to  Citizens  National  Bank in
     Waxahachie, Texas (o)
14.1 Code of Ethics (z)
21.1 Subsidiaries of the Company. (*)
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 - Chief
     Executive and Financial Officer.
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002 - Chief
     Executive and Financial Officer.


                                                                              27
<PAGE>

--------------
*    Incorporated  by reference to the Company's  Form 10-SB filed  December 26,
     1995.
**   Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended December 31, 1999.
***  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended December 31, 2001.
+    Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended December 31, 2002.
o    Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended December 31, 2003.
z    Incorporated by reference to the Company's Annual report on Form 10-KSB for
     the fiscal year ended December 31, 2004.







                (Remainder of this page left blank intentionally)









         (Financial statements follow on the next page, beginning F-1)




                                                                              28
<PAGE>



                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----

Report of Registered Independent Public Accounting Firm                      F-2

Consolidated Financial Statements

   Consolidated Balance Sheets
      as of December 31, 2007 and 2006                                       F-3

   Consolidated Statements of Operations and Comprehensive Income (Loss)
      for the years ended December 31, 2007 and 2006                         F-5

   Consolidated Statements of Changes in Shareholders' Equity
      for the years ended December 31, 2007 and 2006                         F-7

   Consolidated Statements of Cash Flows
      for the years ended December 31, 2007 and 2006                         F-8

   Notes to Consolidated Financial Statements                               F-10


















                                                                             F-1
<PAGE>


              Letterhead of Blanchfield, Meyer, Kober & Rizzo, LLP

        REPORT OF REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders
Million Dollar Saloon, Inc.

We have audited the consolidated  balance sheets of Million Dollar Saloon,  Inc.
and Subsidiaries (a Nevada corporation and Texas corporations,  respectively) as
of December 31, 2007 and 2006 and the related consolidated  statements of income
and comprehensive  income,  changes in shareholders'  equity, and cash flows for
each of the  years  ended  December  31,  2007  and  2006,  respectively.  These
consolidated   financial   statements  are  the   responsibility   of  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial statements are free of material  misstatement.  An audit also includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting.  Our audit included consideration
of internal  control over  financial  reporting as a basis for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Million
Dollar Saloon,  Inc. and  Subsidiaries  as of December 31, 2007 and 2006 and the
results  of its  operations  and its  cash  flows  for each of the  years  ended
December 31, 2007 and 2006, respectively,  in conformity with generally accepted
accounting principles generally accepted in the United States of America.



                                      /s/ Blanchfield, Meyer, Kober & Rizzo, LLP
                                           -------------------------------------
                                          BLANCHFIELD, MEYER, KOBER & RIZZO, LLP

Hauppauge, New York
December 28, 2008 (except for Note Q
   as to which the date is January 10, 2010)





                                                                             F-2
<PAGE>
<TABLE>
<CAPTION>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2007 and 2006


                                                                December 31,          December 31,
                                                                   2007                  2006
                                                                -----------           -----------
<S>                                                                                   <C>
                                     ASSETS
Current Assets
   Cash on hand and in bank                                     $ 1,211,293           $ 1,010,743
   Marketable securities                                               --                  54,129
   Accounts receivable - trade and other                               --                   8,500
   Prepaid Federal income taxes receivable                             --                 120,423
   Inventory                                                         62,840                37,962
   Prepaid expenses                                                  10,040                   163
                                                                -----------           -----------
     Total current assets                                         1,284,173             1,231,920
                                                                -----------           -----------

Property and Equipment - At Cost
   Buildings and related improvements                             1,526,424             1,526,424
   Furniture and equipment                                          466,070               464,880
                                                                -----------           -----------
                                                                  1,992,494             1,991,304
   Less accumulated depreciation                                 (1,625,313)           (1,534,507)
                                                                -----------           -----------
                                                                    367,181               456,797
   Land                                                             210,000               210,000
                                                                -----------           -----------

     Net property and equipment                                     577,181               666,797
                                                                -----------           -----------

Other Assets
   Land held for future development                               2,661,546             2,661,546
   Property and equipment held for sale                             870,930               870,930
   Operations agreement, net of accumulated
     amortization of approximately $712,055
     and $530,195, respectively                                     287,945               469,805
   Loan costs, net of accumulated amortization
     of approximately $2,687 and $2,001, respectively                 7,602                 8,288
   Security deposits and other                                        1,725                 1,725
                                                                -----------           -----------

     Total other assets                                           3,829,748             4,012,294
                                                                -----------           -----------

Total Assets                                                    $ 5,691,102           $ 5,911,011
                                                                ===========           ===========


                                  - Continued -

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                             F-3
<PAGE>
                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS - CONTINUED
                           December 31, 2007 and 2006






                                                                December 31,          December 31,
                                                                   2007                  2006
                                                                ----------            ----------

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Current Liabilities
   Current maturities of long-term mortgage note payable        $  103,203            $   96,931
   Current maturities of long-term lawsuit settlement payable      152,037                70,550
   Accounts payable - trade                                         43,095                48,778
   Accrued liabilities                                              90,475                77,653
   Federal income taxes payable                                     55,000                  --
   Contract payable to affiliated entities                       1,000,000             1,000 000
   Accrued interest payable to affiliated entities                    --                 293,333
                                                                ----------            ----------

     Total current liabilities                                   1,443,810             1,587,245
                                                                ----------            ----------
Long-Term Liabilities
   Long-term mortgage note payable, net of current maturities    1,569,327             1,659,025
   Long-term lawsuit settlement payable                             87,734               154,770
   Deferred tax liability                                          198,173               223,959
                                                                ----------            ----------

     Total liabilities                                           3,299,044             3,624,999
                                                                ----------            ----------
Commitments and Contingencies

Shareholders' Equity
   Preferred stock - $0.001 par value.
     5,000,000 shares authorized.
     None issued and outstanding                                      --                    --
   Common stock - $0.001 par value.
     50,000,000 shares authorized.
     5,731,778 shares issued and outstanding, respectively.          5,732                 5,732
   Retained earnings                                             2,386,326             2,280,280
                                                                ----------            ----------

     Total shareholders' equity                                  2,392,058             2,286,012
                                                                ----------            ----------

Total Liabilities and Shareholders' Equity                      $5,691,102            $5,911,011
                                                                ==========            ==========


              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                                                             F-4
<PAGE>


                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                     Years ended December 31, 2007 and 2006


                                                    Year ended                Year ended
                                                   December 31,              December 31,
                                                       2007                      2006
                                                   -----------               -----------
Revenues
   Bar and restaurant sales                        $ 2,705,283               $ 2,538,469
   Rental income from related parties                  442,000                   441,431
                                                   -----------               -----------
     Total revenues                                  3,147,283                 2,979,900
                                                   -----------               -----------

Cost of Sales - Bar and Restaurant Operations
   Direct labor                                        549,257                   530,545
   Purchases                                           511,565                   503,582
                                                   -----------               -----------
     Total cost of sales                             1,060,822                 1,024,127
                                                   -----------               -----------

Gross Profit                                         2,086,461                 1,945,773
                                                   -----------               -----------
Operating Expenses
   Salaries, wages and related expenses                507,446                   457,496
   Consulting, legal and other professional fees       153,765                   260,620
   Rental expenses, principally taxes                   70,484                   113,610
   Interest expense                                    257,511                   244,452
   Other operating expenses                            591,197                   529,181
   Depreciation and amortization                       272,666                   270,656
                                                   -----------               -----------
       Total operating expenses                      1,853,069                 1,876,015
                                                   -----------               -----------
Income (Loss) from Operations                          233,392                    69,758

Other Income (Expenses)
   Interest income and other                            42,832                    25,734
   Lawsuit settlement                                 (100,000)                  (30,000)
   Gain on sale of land easement                        16,007                      --
   Unrealized loss on marketable securities               --                        (106)
                                                   -----------               -----------

Income before Income Taxes                             192,231                    65,386

Provision for Income Taxes
   Currently (payable) refundable                     (111,973)                    2,040
   Deferred (expense) benefit                              788                    19,658
                                                   -----------               -----------

Net Income                                             106,046                    87,084

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                             F-5
<PAGE>


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

Comprehensive Income                               $   106,046               $    87,084
                                                   ===========               ===========
Earnings per share of common stock
   outstanding, computed on net income
   basic and fully diluted                         $      0.02               $      0.02
                                                   ===========               ===========

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













              The accompanying notes are an integral part of these
                       consolidated financial statements.













                                                                             F-6
<PAGE>


                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                     Years ended December 31, 2007 and 2006



                                             Common Stock                 Retained
                                             ------------               shareholders'         Total
                                      # shares           Amount            equity           earnings
                                     ----------        ----------        ----------        ----------

Balances at January 1, 2006           5,731,778        $    5,732        $2,193,196        $2,198,928

Net loss for the year                      --                --              87,084            87,084
                                     ----------        ----------        ----------        ----------
Balances at December 31, 2006         5,731,778             5,732         2,280,280         2,286,012

Net loss for the year                      --                --             106,046           106,046
                                     ----------        ----------        ----------        ----------
Balances at December 31, 2007         5,731,778        $    5,732        $2,386,326        $2,392,058
                                     ==========        ==========        ==========        ==========
























              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                                                             F-7
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 2007 and 2006


                                                                  Year ended           ear ended
                                                                 December 31,         December 31,
                                                                    2007                 2006
                                                                 -----------          -----------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                             $   106,046          $    87,084
   Adjustments to reconcile net income to net cash
     provided by operating activities
       Depreciation and amortization                                 273,354              271,342
       Unrealized loss on marketable securities                         --                    106
       Deferred income taxes                                         (25,788)             (19,658)
       (Increase) decrease in
         Accounts receivable - trade                                   8,500                 --
         Federal income taxes receivable                             120,423             (111,798)
         Inventory                                                   (24,878)             (12,577)
Prepaid expenses and other                                            (9,877)                 783
       Increase (decrease) in
         Accounts payable and other accrued liabilities                7,139                6,438
         Lawsuit settlement payable                                   14,451             (122,027)
         Income taxes payable                                         55,000                 --
         Accrued interest payable to affiliated entities            (293,333)              80,000
                                                                 -----------          -----------

     Net cash provided by operating activities                       231,037              179,693
                                                                 -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES

   Cash received from sale of marketable securities                   54,129               (2,841)
   Purchases of property and equipment                                (1,190)             (13,787)
                                                                 -----------          -----------

     Net cash provided by (used in) investing activities              52,939              (16,628)
                                                                 -----------          -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Principal paid on long-term mortgage note payable                 (83,426)             (82,499)
                                                                 -----------          -----------

     Net cash used in financing activities                           (83,426)             (82,499)
                                                                 -----------          -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     200,550               80,566

Cash and cash equivalents at beginning of year                     1,010,743              930,177
                                                                 -----------          -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                         $ 1,211,293          $ 1,010,743
                                                                 ===========          ===========


              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                                                             F-8
<PAGE>

SUPPLEMENTAL DISCLOSURES OF

   INTEREST AND INCOME TAXES PAID
     Interest paid                                               $   550,158          $   163,766
                                                                 ===========          ===========
     Income taxes paid (refunded)                                $   (63,450)         $   109,758
                                                                 ===========          ===========

SUPPLEMENTAL DISCLOSURES OF
   NON-CASH INVESTING AND FINANCING ACTIVITIES                          None                 None


</TABLE>









              The accompanying notes are an integral part of these
                       consolidated financial statements.












                                                                             F-9
<PAGE>


                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2007 and 2006


NOTE A - Background and Organization

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

Furrh,  Inc.  (Furrh) was  incorporated  under the laws of the State of Texas on
February 25, 1974. Furrh provides  management services to Tempo Tamers, Inc, its
wholly-owned subsidiary.  Tempo Tamers, Inc. (Tempo), was incorporated under the
laws  of  the  State  of  Texas  on  July  3,  1978.  Tempo  operates  an  adult
entertainment  lounge and restaurant facility,  located in Dallas,  Texas, under
the  registered  trademark  and  trade  name  "Million  Dollar  Saloon(R)".   In
conjunction  with an October 2002 Settlement  Agreement with the City of Dallas,
Texas, the Company's adult entertainment  lounge and restaurant,  Million Dollar
Saloon,  may operate in its present  "non-conforming  location" with a mandatory
closing date of July 31, 2009.

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

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

NOTE B - Preparation of Financial Statements

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

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

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

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,  2007 and 2006,  respectively.  All  significant
intercompany transactions have been eliminated in combination.  The consolidated
entities are referred to as Company.

                (Remainder of this page left blank intentionally)



                                                                            F-10
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE C - Summary of Significant Accounting Policies


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

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

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

2.   Marketable Securities
     ---------------------

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

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

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

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

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

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

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

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

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

     Since  December  31,  2000,  all  rental  property   lessors  are  entities
     controlled by a Company controlling shareholder,  officer and director. All
     lease  rental  payments are due in advance on the first day of the week for
     that week.  All revenue  sources  are  located  either in Dallas or Tarrant
     County, Texas.



                                                                            F-11
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE C - Summary of Significant Accounting Policies - Continued

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

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

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

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

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

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

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

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

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

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

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

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

     At December 31, 2007 and 2006, and subsequent  thereto,  the Company has no
     outstanding stock warrants,  options or convertible  securities which could
     be considered as dilutive for purposes of the loss per share calculation.

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

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




                                                                            F-12
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE D - Related Party Transactions

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

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

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

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

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

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

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

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


                                                                            F-13
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE D - Related Party Transactions - Continued

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

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

NOTE E - Fair Value of Financial Instruments

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

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

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

NOTE F - Concentrations of Credit Risk

The  Company  maintains  its cash  accounts  in various  financial  institutions
subject  to  insurance   coverage  issued  by  the  Federal  Deposit   Insurance
Corporation  (FDIC).  Under FDIC rules,  the Company  and its  subsidiaries  are
entitled to aggregate  coverage of $250,000 per account type per separate  legal
entity per financial  institution.  During the years ended December 31, 2007 and
2006, respectively, the various operating companies maintained deposits in these
financial  institutions  with credit risk  exposures in excess of statutory FDIC
coverage.  The  Company  has  incurred  no  losses  during  2007 and  2006,  and
subsequent thereto, as a result of any of these unsecured situations.


NOTE G - Marketable Securities

Marketable  securities  as of December 31, 2007 and 2006 consist  entirely of an
investment in a money market instrument-based mutual funds and are summarized as
follows:

                                                     Available        Held to
                                        Trading      for sale        Maturity
                                        -------      --------        --------
December 31, 2007
-----------------
   Aggregate fair value                  $     -       $     -      $     -
   Gross unrealized holding gain         $     -       $     -      $     -
   Gross unrealized holding losses       $     -       $     -      $     -
   Amortized cost basis                  $     -       $     -      $     -




                                                                            F-14
<PAGE>




                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006





NOTE G - Marketable Securities - Continued


                                                     Available        Held to
                                        Trading      for sale         Maturity
                                        -------      --------         --------
December 31, 2006
-----------------

   Aggregate fair value                  $51,394       $     -       $     -
   Gross unrealized holding gains        $   151       $     -       $     -
   Gross unrealized holding losses       $     -       $     -       $     -
   Amortized cost basis                  $51,243       $     -       $     -


The net unrealized  holding gains or (losses) on trading  securities  which have
been included in the statement of operations were  approximately $-0- and $(106)
for  the  each of the  respective  years  ended  December  31,  2007  and  2006,
respectively.

NOTE H - Property and Equipment

Property and equipment consists of the following at December 31, 2007 and 2006:


                                     December 31,   December 31,
                                        2007           2006       Estimated life
                                     -----------    -----------   --------------
Buildings and related improvements   $ 1,526,424    $ 1,526,424    15-40 years
Furniture and equipment                  466,070        464,880     5-10 years
                                     -----------    -----------
                                        1992,494      1,991,304
Less accumulated depreciation         (1,625,313)    (1,534,507)
                                     -----------    -----------
                                         367,181        456,797
Land                                     210,000        210,000
                                     -----------    -----------

Net property and equipment           $   577,181    $   666,797
                                     ===========    ===========

Depreciation  expense  for the  years  ended  December  31,  2007  and  2006 was
approximately $90,806 and $88,796, respectively.

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

On February 14, 2003, the Company purchased 6.695 acres of undeveloped  property
located in Dallas,  Texas.  The  purchase  price was  approximately  $2,650,312,
including closing expenses of approximately  $53,599.  The Company paid $493,072
cash,  inclusive of a $140,000 loan to the Company from Duncan Burch, an officer
and  director of the  Company,  and issued to the seller a one-year  note in the
principal amount of $2,156,713 with 8% annual interest.  The payment of the note
is secured with a lien  against the  property  granted to the note holder by the
Company. The interest on the note is payable monthly  (approximately $14,678 per
month)  beginning  April 1, 2003 with the  principal  amount due and  payable on
February 1, 2004. This debt was refinanced on January 29, 2004 and paid in full.

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



                                                                            F-15
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006


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

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

As of December 31, 2007 and 2006,  respectively,  the Company owed approximately
$1,672,530 and $1,755,956 on the long-term mortgage note payable.

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

                                          Year ending            Principal
                                          December 31              due
                                          -----------          -----------

                                             2008              $  103,203
                                             2009                 111,918
                                             2010                 119,212
                                             2011                 126,227
                                           2012-2016              773,083
                                           2017-2019              438,887
                                                               ----------
                                             Total             $1,672,530
                                                               ==========

NOTE J - Property and Equipment held for Sale

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

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets",  the Company
follows the policy of  evaluating  all  qualifying  assets as of the end of each
reporting  quarter.  As of December 31, 2004,  management has determined that no
impairment  of the carrying  value of property and  equipment  held for sale was
necessary.

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


                                                                            F-16
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE K - Operations Agreement
             Contract Payable to Affiliated Entities

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

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

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

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

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

During each of the years ended  December  31,  2007 and 2006,  the Company  paid
approximately $293,000 and $-0- in accrued interest payable on this Agreement.


NOTE L - Income Taxes


The components of income tax expense  (benefit) for the years ended December 31,
2007 and 2006, respectively, are as follows:


                          Year ended        Year ended
                         December 31,      December 31,
                            2007              2006
                         ---------          ---------
      Federal:
        Current          $ 111,973          $  (2,040)
        Deferred           (25,788)           (19,658)
                         ---------          ---------
                            86,185            (21,698)
                         ---------          ---------
      State:
        Current               --                 --
        Deferred              --                 --
                         ---------          ---------
                              --                 --
                         ---------          ---------

        Total            $  86,185          $ (21,698)
                         =========          =========


                                                                            F-17
<PAGE>


                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE L - Income Taxes - Continued

The Company's income tax expense (benefit) for the years ended December 31, 2006
and 2005,  respectively,  differed from the statutory federal rate of 34 percent
as follows:

                                                        Year ended   Year ended
                                                       December 31, December 31,
                                                           2007        2006
                                                         --------    --------

Statutory rate applied to earnings before income taxes   $ 65,400    $ 22,200
  Increase (decrease) in income taxes resulting from:
    State income taxes                                       --          --
    Deferred income taxes                                 (25,788)    (19,658)
    Effect of incremental tax brackets and the
      application of business tax credits                  46,573     (24,240)
                                                         --------    --------

  Income tax expense                                     $ 86,185    $(21,698)
                                                         ========    ========




The  deferred  current  tax asset and  non-current  deferred  tax  liability  on
December  31,  2007  and  2006,  respectively,  balance  sheet  consists  of the
following:

                                                        Year ended   Year ended
                                                       December 31, December 31,
                                                           2007        2006
                                                         --------    --------

         Non-current deferred tax liability             $(198,173)  $(154,770)
                                                        =========   =========

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

NOTE M - Commitments

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

NOTE N - Litigation

1) City of Dallas licensing

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


                                                                            F-18
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE N - Litigation - Continued


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

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

3)   "John Doe II" v. Tempo  Tamers,  Inc.  dba Million  Dollar  Saloon;  Dallas
     County Texas 44th District Court Cause No. 04-09918-A;  filed September 24,
     2004.

     Clarendon  American  Insurance  Company v. Tempo  Tamers,  Inc. dba Million
     Dollar Saloon;  Dallas County Texas 44th District Court Cause No. 06-11838;
     filed November 17, 2006.

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


                                                                            F-19
<PAGE>


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

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

























                                                                            F-20
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE N - Litigation - Continued


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

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

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

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

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

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

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

NOTE O - 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 December 31, 2007 and 2006,  respectively,  all rental
revenues are derived  from  entities  controlled  by Duncan  Burch,  an officer,
director and  controlling  shareholder.  Approximately  14.0% and 14.8% of total
revenues  for 2007 and 2006,  respectively,  were  derived  from  these  related
parties.




                                                                            F-21
<PAGE>
<TABLE>
<CAPTION>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE O - Segment Information - Continued

A summary of the Company's operating segments is as follows:


                                             Restaurant          Rental            General and
                                              facility         real estate       administrative         Total
                                              --------         -----------       --------------         -----
<S>                                                                                                     <C>
Year ended December 31, 2007
----------------------------
   Revenue from external customers        $ 2,705,283         $      --           $      --           $ 2,705,283
   Revenue from related parties                  --               442,000                --               442,000
   Revenue (expenses) from/to
     intercompany sources                        --                  --                  --                  --
   Interest income                              6,277              35,699                 856              42,832
   Interest expense                            19,450                --               238,061             257,511
   Depreciation and amortization               86,463               4,343             181,860             272,666
   Income tax expense (benefit)                49,800             180,300            (143,915)             86,185
   Segment assets                             310,926           2,340,677           3,039,499           5,691,102
   Fixed asset expenditures                     1,190                --                  --                 1,190


Year ended December 31, 2006
----------------------------
   Revenue from external customers        $ 2,538,469         $      --           $      --           $ 2,538,469
   Revenue from related parties                  --               441,431                --               441,431
   Revenue (expenses) from/to
     intercompany sources                     (65,000)           (145,000)            210,000                --
   Interest income                               --                15,061              10,673              25,734
   Interest expense                            17,974                --               226,478             244,452
   Depreciation and amortization              265,627               4,343                 686             270,656
   Income tax expense (benefit)                (3,569)             94,174            (112,303)            (21,698)
   Segment assets                             371,645           1,634,591           3,904,775           5,911,011
   Fixed asset expenditures                    13,787                --                  --                13,787

NOTE P- Selected Financial Data (Unaudited)

The following is a summary of the quarterly  results of operations for the years
ended December 31, 2007 and 2006, respectively.


                               Quarter ended     Quarter ended       Quarter ended    Quarter ended      Year ended
                                 March 31,         June 30,          September 30,    December 31,      December 31,
                                 ---------         --------          -------------    ------------      ------------
Calendar 2007
-------------
Restaurant sales               $   710,237       $   772,413       $   772,021       $   450,612        $ 2,705,283
Rental income -
  Related party                $   110,500       $   119,000       $   102,000       $   110,500        $   442,000
Gross profit                   $   556,122       $   504,177       $   540,983       $   485,179        $ 2,086,461
Net earnings after
  provision for
  income taxes                 $    86,913       $    73,702       $    63,854       $  (118,423)       $   106,046
Basic and fully diluted
  earnings per share           $      0.02       $      0.01       $      0.01       $     (0.02)       $      0.02
Weighted average
  number of shares
  issued and outstanding         5,731,788         5,731,788         5,731,788         5,731,788          5,731,788





                                                                            F-22
<PAGE>

                  MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 2007 and 2006

NOTE P- Selected Financial Data (Unaudited)


                           Quarter ended     Quarter ended       Quarter ended     Quarter ended      Year ended
                             March 31,         June 30,          September 30,     December 31,      December 31,
                             ---------         --------          -------------     ------------      ------------
Calendar 2006
-------------
Restaurant sales           $   757,137       $   661,590        $   736,497        $   383,245       $ 2,538,469
Rental income -
  Related party            $   102,000       $   118,431        $   119,000        $   102,000       $   441,431
Gross profit               $   529,100       $   428,065        $   553,839        $   434,759       $ 1,945,773
Net earnings after
  provision for
  income taxes             $   103,022       $   (43,780)       $    22,304        $     5,538       $    65,386
Basic and fully diluted
  earnings per share       $      0.02       $     (0.01)       $      0.00        $      0.00       $      0.01
Weighted average
  number of shares
  issued and outstanding     5,731,788         5,731,788          5,731,788          5,731,788         5,731,788


</TABLE>


NOTE Q - Subsequent Events


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


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






                (Remainder of this page left blank intentionally)






                        (Signatures follow on next page)










                                                                            F-23
<PAGE>


                                   SIGNATURES


In accord with Section 13 or 15(d) of the  Securities  Act of 1933,  as amended,
the Company  caused  this report to be signed on its behalf by the  undersigned,
thereto duly authorized.


                                                     Million Dollar Saloon, Inc.


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


In accordance with the Securities Exchange Act of 1934, as amended,  this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities and on the date as indicated.



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



Dated: January 14, 2010                          By:      /s/ Duncan Burch
       ----------------                             ----------------------------
                                                                    Duncan Burch
                                                        Executive Vice President
                                                                    and Director



Dated: January 14, 2010                           By:      /s/ Dewanna Ross
       ----------------                              ---------------------------
                                                                    Dewanna Ross
                                                         Secretary and Treasurer




                                                                              51