UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549







þ
            
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the quarterly period ended March
31, 2009




OR


o
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the transition period from
___________ to ___________




Commission
file number 0-53439 ____________________________




DRAGON’S
LAIR HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)




Florida
              
              26-1427633(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification
      Number)





785
      NE 83rd
      Terrace
                    Miami,
      Florida
                  
                  33138(Address
      of principal executive offices)
                  
                  (Zip
      Code)




(786)
554-2771


(Issuer’s
telephone number, including area code)





Not
applicable


(Former
name, former address and former fiscal year, if changed since last
report)





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes þNo o





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
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.  (Check
one):





Large
accelerated
filer               o                                                                      Accelerated
filer                          
o


Non-accelerated
filer                 o                                                                   Smaller
reporting
company           x


(Do not
check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes þNo o




State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.




Class
                    
                    Outstanding
      at March 31, 2009Common
      Stock, no par value per share
                    
                    7,901,078
      shares




-1-


DRAGON’S LAIR HOLDINGS,
INC.




TABLE OF CONTENTS


PAGEPart I Financial Information
                  
                  
                  3Item 1. Financial Statements
    (unaudited)
                  
                  
                  3Balance Sheets
                  
                  
                  3Statements of Operations
                  
                  
                  4Statements of Cash Flows
                  
                  
                  5Notes to Financial Statements
                  
                  
                  6Item 2. Management’s Discussion and Analysis of Financial
      Condition and Results of Operations
                  
                  
                  12Item 3. Quantitative and Qualitative Disclosures About
      Market Risk
                  
                  
                  17Item 4. Controls and Procedures
                  
                  
                  17Part II Other Information
                  
                  
                  19Item 6. Exhibits
                  
                  
                  19Signatures
                  
                  
                  20Exhibit 31.1Exhibit
32.1





-2-


PART
I FINANCIALINFORMATION





Item
1.  Financial Statements





DRAGON'S LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATEDBALANCESHEETSASSETSMarch
      31, 2009
                                          
                                          
                                          December
      31, 2008(unaudited)
                                          
                                          
                                          (audited)CURRENT
      ASSETS:Cash
      and equivalents
                                          
                                          $
                                          43,932
                                          
                                          
                                          $
                                          66,613Inventory
                                          
                                          
                                          402
                                          
                                          
                                          
                                          402Total
      Current Assets
                                          
                                          
                                          44,334
                                          
                                          
                                          
                                          67,015FIXED
      ASSETS:Equipment,
      net
                                          
                                          
                                          420
                                          
                                          
                                          
                                          445OTHER
      ASSETS:License,
      net
                                          
                                          
                                          840
                                          
                                          
                                          
                                          900Total
      Assets
                                          
                                          $
                                          45,594
                                          
                                          
                                          $
                                          68,360LIABILITIES AND SHAREHOLDERS' EQUITY
      (DEFICIENCY)CURRENT
      LIABILITIES:Accounts
      payable & accrued expenses
                                          
                                          $
                                          800
                                          
                                          
                                          $
                                          6,051Total
      Liabilities
                                          
                                          
                                          800
                                          
                                          
                                          
                                          6,051SHAREHOLDERS'
      EQUITY:Preferred
      stock (50,000,000 authorized;par
      value $.001; none issued and outstanding)
                                          
                                          $
                                          -Common
      stock (100,000,000 shares authorized;no
      par value; 7,901,078 and 7,901,078 issued and outstanding,
      respectively)
                                          
                                          
                                          84,741
                                          
                                          
                                          
                                          84,741Deficit
      accumulated during the development stage
                                          
                                          
                                          (39,947
                                          )
                                          
                                          
                                          (22,432
                                          )Total
      Shareholders' Equity (Deficiency)
                                          
                                          
                                          44,794
                                          
                                          
                                          
                                          62,309Total
      Liabilities and Shareholders' Equity
                                          
                                          $
                                          45,594
                                          
                                          
                                          $
                                          68,360





-3-


DRAGON'S LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF OPERATIONS(Unaudited)Cumulative
      from October
      4, 2007 (Inception) through
      March 31, 2009For
      the three months ended
      March 31, 2009
                                                                                  
                                                                                  
                                                                                  For
      the three months ended
      March 31, 2008Net
      Sales
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,242Cost
      of Sales
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  131Gross
      Profit
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,111Expenses:Amortization
                                                                                  
                                                                                  
                                                                                  60
                                                                                  
                                                                                  
                                                                                  
                                                                                  60
                                                                                  
                                                                                  
                                                                                  
                                                                                  360Depreciation
                                                                                  
                                                                                  
                                                                                  25
                                                                                  
                                                                                  
                                                                                  
                                                                                  25
                                                                                  
                                                                                  
                                                                                  
                                                                                  75General
      and Administrative
                                                                                  
                                                                                  
                                                                                  17,430
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,512
                                                                                  
                                                                                  
                                                                                  
                                                                                  40,623Total
      Expenses
                                                                                  
                                                                                  
                                                                                  (17,515
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (7,597
                                                                                  )
                                                                                  
                                                                                  
                                                                                  41,058Net
      (loss) before Income Taxes
                                                                                  
                                                                                  
                                                                                  (17,515
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (7,597
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (39,947
                                                                                  )Provision
      for Income Taxes
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Net
      (loss)
                                                                                  
                                                                                  $
                                                                                  (17,515
                                                                                  )
                                                                                  
                                                                                  $
                                                                                  (7,597
                                                                                  )
                                                                                  
                                                                                  $
                                                                                  (39,947
                                                                                  )Basic
      and diluted net loss per common share
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -Weighted
      average number of common shares outstanding
                                                                                  
                                                                                  
                                                                                  7,901,078
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,138,278





-4-





DRAGON'S
      LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Unaudited)Cumulative
      from October
      4, 2007 (Inception) through
      March 31, 2009For
      the three months ended
      March 31, 2009OPERATING
      ACTIVITIES:Net
      loss
                                                                      
                                                                      $
                                                                      (17,515
                                                                      )
                                                                      
                                                                      $
                                                                      (39,947
                                                                      )Issuance
      of common stock for services
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      4,008Increase
      in amortization
                                                                      
                                                                      
                                                                      60
                                                                      
                                                                      
                                                                      
                                                                      360Increase
      in depreciation
                                                                      
                                                                      
                                                                      25
                                                                      
                                                                      
                                                                      
                                                                      75Increase
      in inventory
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      (402
                                                                      )Increase
      (decrease) in accounts payable
                                                                      
                                                                      
                                                                      (5,251
                                                                      )
                                                                      
                                                                      
                                                                      800Net
      cash used in operating activities
                                                                      
                                                                      
                                                                      (22,681
                                                                      )
                                                                      
                                                                      
                                                                      (35,106
                                                                      )INVESTING
      ACTIVITIES:Increase
      in Equipment
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      (495
                                                                      )FINANCING
      ACTIVITIES:Proceeds
      from issuance of common stock
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      79,533NET
      INCREASE (DECREASE) IN CASH
                                                                      
                                                                      
                                                                      (22,681
                                                                      )
                                                                      
                                                                      
                                                                      43,932CASH
      BEGINNING BALANCE
                                                                      
                                                                      
                                                                      66,613
                                                                      
                                                                      
                                                                      
                                                                      -CASH
      ENDING BALANCE
                                                                      
                                                                      $
                                                                      43,932
                                                                      
                                                                      
                                                                      $
                                                                      43,932SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Taxes
      paid
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      
                                                                      $
                                                                      -Interest
      paid
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      
                                                                      $
                                                                      -CASH
      TRANSACTIONS AFFECTING OPERATING, INVESTING  AND
      FINANCING ACTIVITIES:Issuance
      of common stock for license
                                                                      
                                                                      $
                                                                      -
                                                                      
                                                                      
                                                                      $
                                                                      1,200





-5-


DRAGON’S
LAIR HOLDINGS, INC.


(A
DEVELOPMENT STAGE COMPANY)





NOTES
TO CONSOLIDATEDFINANCIALSTATEMENTS





MARCH
31, 2009





NOTE
1 – BASIS OF PRESENTATION





The
accompanying unaudited interim financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission for the presentation of interim financial information, but do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements.  The audited
financial statements for the period October 4, 2007 (Inception) through December
31, 2007 and the year ended December 31, 2008 were filed on March 31, 2009 with
the Securities and Exchange Commission and are hereby referenced.  In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included.  Operating results for the three month period ended March
31, 2009 and for the period October 4, 2007 (Inception) through March 31, 2009
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2009.





NOTE
2 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK





Description of
Business





Dragon’s
Lair Holdings, Inc., a Florida corporation (the “Company”, “we”, “us” and
“our”), was incorporated on October 4, 2007, and conducts is operations through
its sole operating subsidiary, Dragon’s Lair Health Products, Inc., a Florida
corporation, which was incorporated on October 5, 2007.  Our company
structure is set forth in the following chart:


DRAGON’S
      LAIR HOLDINGS, INC.
                  a
      Florida corporation
 DRAGON’S
      LAIR HEALTH PRODUCTS, INC.
                  a
      Florida corporation
                  (100%
      Owned Subsidiary)


Our
Company is a provider of personal care products by means of a network of direct
sales consultants, which is in the development stage.  Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit.  In July, 2008, the
Company commenced providing our first product, the Sore-EezÔ Chinese herbal body
liniment.


-6-





Our
principal executive office is located at 785 N.E. 83rd
Terrace, Miami, FL  33138.  Our telephone number is
(786) 554-2771, and our company website is www.sore-eez.com.  Our
fiscal year ends on December 31st.





Basis of
Presentation





The
accompanying consolidated financial statements have been prepared by the
Company. The Company’s consolidated financial statements are prepared in
accordance with generally accepted accounting principals in the United States of
America (“US GAAP”). The consolidated financial statements of the Company
include the Company and its sole subsidiary. All material inter-company balances
and transactions have been eliminated.





Going
Concern





The
Company’s financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business.  The Company has not yet established an
ongoing source of revenues sufficient to cover its operating costs and allow it
to continue as a going concern.  The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable.  If the
Company is unable to obtain adequate capital, it could be forced to cease
operations.  The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.





Management’s Plan to
Continue as a Going Concern





The
Company has met its historical working capital requirements from the sale of its
capital shares.  In order to continue as a going concern, the Company
will need, among other things, additional capital
resources.  Management’s plans to obtain such resources for the
Company include (1) obtaining capital from the sale of the Series A Convertible
Preferred Stock in this offering, (2) the sale of the Sore-EezÔ Chinese herbal body
liniment and other product candidates, (3) loans from Talles Investments, Inc.
to meet its minimal operating expenses, and (4) seeking out and completing a
merger with an existing operating company.  However, management cannot
provide any assurance that the Company will be successful in accomplishing any
of its plans.





The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations.  In order to minimize the financial burden on the Company,
Talles Investments, Inc., the Company’s majority shareholder, has agreed to
provide non-interest bearing demand loans to the Company to pay the Company’s
annual audit fees, filing costs, legal fees and other costs as long as the Board
of Directors of the Company and Talles Investments, Inc. deem it
necessary.  The Company will account for each such payment as a demand
loan and, accordingly, be recorded as a current liability on the Company’s
books.  There can be no assurance that such financial support shall be
ongoing or available on terms or conditions acceptable to the
Company.





Development Stage
Risk





Since its
inception, the Company has been dependent upon the receipt of capital investment
to fund its continuing activities. In addition to the normal risks associated
with a new business venture, there can be no assurance that the Company's
business plan will be successfully executed. Our ability to execute our business
plan will depend on our ability to obtain additional financing and achieve a
profitable level of operations. There can be no assurance that sufficient
financing will be obtained.  Further, we cannot give any assurance
that we will generate substantial revenues or that our business operations will
prove to be profitable.





NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Cash and Cash
Equivalents





The
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents. The Company has no cash
equivalents.


-7-





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.





Inventories





Inventories
are valued at the lower of cost or market on a first-in, first-out (FIFO) basis,
and include finished goods.





Revenue
Recognition





The
Company recognizes revenue when:





·
            Persuasive
      evidence of an arrangement exists;





·
            Shipment
      has occurred;





·
            Price
      is fixed or determinable; and





·
            Collectibility
      is reasonably assured.





The
Company closely follows the provisions of Staff Accounting Bulletin No. 104 as
described above. For the period from October 4, 2007 (inception) to December 31,
2007 the Company recognized no revenues.  In July, 2008, the Company
commenced providing our first product, the Sore-EezÔ Chinese herbal body
liniment.  For the period from October 4, 2007 (inception) to March
31, 2009, the Company recognized revenues in the amount of $1,242.





Earnings (Loss) Per
Share





The
Company computes earnings per share in accordance with Statement of Accounting
Standards No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of
SFAS No. 128, basic earnings per share is computed by dividing the net income
(loss) for the period by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and potentially dilutive common shares outstanding during the
period.  There were no potentially dilutive common shares outstanding
during the period.





Intangible
Assets





Intangible
assets consist of a license agreement which is recorded at cost and amortized
over a straight-line basis.  The amortization expense for the periods
from January 1, 2009 to March 31, 2009 and from October 4, 2007 (inception) to
March 31, 2009 was $60 and $360, respectively.  The value of the
license was determined to be the legal costs to create the license, which was
$1,200, as there were no other out-of-pocket costs for the license or the
development of the recipe.


-8-





The
Company evaluates the recoverability of identifiable intangible assets whenever
events or changes in circumstances indicate that an intangible asset’s carrying
amount may not be recoverable. There was no impairment loss for the periods from
January 1, 2009 to March 31, 2009 and from October 4, 2007 (inception) to March
31, 2009.





Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.





Fair Value of Financial
Instruments





The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.





Share Based
Payments





In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.





Effective
commencing on the year ended December 31, 2007, the Company has fully adopted
the provisions of SFAS No. 123(R) and related interpretations as provided by SAB
107. As such, compensation cost is measured on the date of grant as the fair
value of the share-based payments. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.





NOTE
4 - EQUITY TRANSACTIONS





On
October 4, 2007 (inception), the Company issued 975,000 shares of common stock
for the purchase of the license to manufacture, distribute and sell, the
Sore-EezÔ Chinese
herbal liniment, its initial product, from Yamit Lemoine.  The value
of the license was determined to be the legal costs to create the license, which
was $1,200, as there were no other out-of-pocket costs for the license or the
development of the recipe.





On
November 4, 2007, the Company issued 5,000,000 shares of common stock to an
investor for cash in the amount of $11,100.





On
December 31, 2007, the Company issued 63,278 shares of common stock to an
investor for cash in the amount of $633.




On March
27, 2008, the Company issued 100,000 shares of common stock to directors for
services rendered at a value of $4,008.


-9-






On
December 11, 2008, the Company completed its public offering pursuant to its
Form S-1 Registration Statement of 6,780 shares of Series A Convertible
Preferred Stock, which were converted into 1,762,800 shares of common stock and
provided aggregate offering proceeds in the amount of $67,800.




NOTE
5 – INCOME TAXES





The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.





SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.





The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 34% to the net loss before
provision for income taxes for the following reasons:





March
      31,
                
                
                December
      31,2009
                
                
                2008Income
      tax expense (asset) at statutory rate
                
                $
                (371
                )
                
                $
                (371
                )Valuation
    allowance
                
                
                371
                
                
                
                371Income tax expense per
      books
                
                $
                -0-
                
                
                $
                -0-





Net
deferred tax assets consist of the following components as of:





March
      31,
                
                
                December
      31,2009
                
                
                2008NOL
      Carryover
                
                $
                39,947
                
                
                $
                20,903Valuation
      allowance
                
                
                (39,947
                )
                
                
                (22,432
                )Net
      deferred tax asset
                
                $
                -0-
                
                
                $
                -0-





Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forward as of March 31, 2009 was $39,947, and for federal income tax
reporting purposes are subject to annual limitations. Should a change in our
ownership occur the net operating loss carry forwards may be limited as to their
use in future years.





NOTE
6 - CONCENTRATION OF CREDIT RISK





Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (FDIC). At March 31, 2009,
the Company had no amounts in excess of the FDIC insured limit.


-10-





NOTE
7 - LICENSE AGREEMENT





We have
entered into a license agreement with Yamit Lemoine, a significant shareholder
and the wife of our chief executive officer, which grants us a license for a
term five (5) years until at least October 4, 2012 for the exclusive worldwide
use of the Sore-EezÔ
Chinese herbal liniment recipe and, perpetually, thereafter, if we have
generated at least $400,000 from the sale of products based on the Sore-EezÔ Chinese herbal liniment
recipe on or prior to such date.  Pursuant to this license agreement,
we are required to exercise our best efforts to undertake and maintain the
commercial scale production, marketing and distribution of products embodying
the subject matter of the Sore-EezÔ Chinese herbal liniment
recipe.  We may not sublicense or assign any of our rights under the
license agreement.





On
October 4, 2007, the date of our inception, we issued 975,000 shares of our
restricted common stock to Yamit Lemoine, for a purchase price of $0.0012308 per
share, for the license to the Sore-EezÔ Chinese herbal liniment
recipe.  The value of the license was determined to be the legal costs
to create the license, which was $1,200, as there were no other out-of-pocket
costs for the license or the development of the recipe.  We do not
have any future payments obligations to Yamit Lemoine under the license
agreement.





The
license will be amortized over five years using the straight line
method.  Yamit Lemoine may
terminate this license agreement in the event that we have not recognized
revenues of at least $400,000 from the sale of products based on the
Sore-EezÔChinese herbal liniment
recipe by October 4, 2012.We have not achieved this level of sales as of
September 30, 2008, so the license remains subject to termination by the
licensor at the end of such period.





The
estimated amortization expense over the next five years is as
follows:





Year Ending December 312007
                $  602008
                $2402009
                2402010
                2402011
                2402012
                180$1,200
 -11-
 Item
2.  Management’s Discussion and Analysis of Financial
Condition and Results of Operations





The
following discussion should be read in conjunction with (i) our audited
financial statements for the period October 4, 2007, our inception, through
December 31, 2007, the year ended December 31, 2008 and cumulative from October
4, 2007, our inception, through December 31, 2008 and the related notes; and
(ii) the section entitled “Business” that appears elsewhere in this
report.  The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this report. You should not place undue
certainty on these forward-looking statements, which apply only as of the date
of this report.  Our financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.




Plan
of Operation





Our
Company is a provider of personal care products by means of a network of direct
sales consultants, which is in the development stage.  Our business
strategy is to provide quality products, operate at a profit and enable our
direct sales consultants to operate at a profit.  In July, 2008, we
commenced providing to the marketplace our first product, the Sore-EezÔ Chinese herbal
body liniment.  Our primary focus over the course of the next 12
months will be to concentrate our efforts on introducing the Sore-EezÔ Chinese herbal
liniment and other product candidates to the marketplace, producing inventory
for sale and implementing our business plans, including recruiting and training
of a network of direct sales consultants.




Our chief
executive officer provides daily management of our company. We intend
to engage employees and service providers for services, as the need may
arise for services, including computer systems, marketing, advertising,
public relations, cash management, collections, accounting and
administration.





As a
public company, we are subject to certain reporting and other compliance
requirements involving certain costs for such compliance, which private
companies may not choose to make. We have identified such costs as being
primarily for audits, legal advice, transfer agent fees and SEC filing expenses
and estimate the cost to be approximately $30,000 for the next twelve months. We
expect to pay such costs from a combination of cash on hand ($66,613 as of
December 31, 2008) and cash generated by product sales.




Results
of Operations




We are a
development stage company and have incurred losses of $22,432 as of December 31,
2008 and $39,947 as of March 31, 2009.  In July, 2008, we commenced
providing to the marketplace our first product, the Sore-EezÔ Chinese herbal body
liniment, and have generated revenues of $1,242 as of March 31,
2009.  All of our revenues have come from the sale of the
Sore-EezÔ
Chinese herbal body liniment and from no other sources.





Liquidity
and Capital Resources





The
following table sets forth our liquidity and capital resources as of March 31,
2009:


Cash
      and cash equivalents
                
                $
                43,932Working
      capital
                
                
                43,534Total
      assets
                
                
                45,594Total
      liabilities
                
                
                800Total
      shareholders’ equity
                
                
                44,794




During
the year ended December 31, 2008 compared to the period January 1, 2009 through
March 31, 2009, working capital decreased from $60,964 to $43,534. The primary
reason for the decrease in working capital was an increase in the use of cash as
a result of the offering expenses related to the Company’s initial public
offering during 2008.





-12-


Cash
Flows from Operating Activities
  We have
not generated positive cash flows from operating activities as of March 31,
2009.  Operating expenditures during the period covered by this report
include general and administrative costs, depreciation expense and amortization
expense.  During the three month period ended March 31, 2009, cash
used in operating activities was $22,681.  The primary reason for the
cash used in operating activities was due to the professional fees and costs
associated with the Company’s initial public offering.
 Cash
Flows from Investing Activities
  During
the three month period ended March 31, 2009 compared to the year ended December
31, 2008, the Company’s cash flows from investing activities was $0 and $495,
respectively, due to the purchase of an herb grinder on June 25,
2008.  Except for the herb grinder, we have not acquired any other
significant equipment.


Cash
Flows from Financing Activities




We have
financed our operations from the issuance of equity securities.  Net
cash provided by financing activities during the three month period ended March
31, 2009 and for the period from October 4, 2007, our inception, through
December 31, 2008 was $0 and $79,533, respectively.  The cash flows
from financing activities was due to proceeds from the sale of stock to our
founders of $11,733 and our initial public offering, which provided proceeds to
us in the amount of $67,800.




We expect
that working capital requirements will continue to be funded through a
combination of our existing funds, product sales and future issuances of
securities, as needed.  Our working capital requirements are expected
to increase in line with the growth of our business.




Our
future capital requirements will depend on many factors, including our sales
growth, market acceptance of our existing and future products, the amount and
timing of our research and development expenditures, the timing of our
introduction of new products, the expansion of our sales and marketing efforts
and working capital needs. We expect our long-term liquidity needs to consist
primarily of working capital and capital expenditure requirements.




Going
Concern




Our
auditors have raised substantial doubt as to our ability to continue as a going
concern, as expressed in its opinion on our financial statements included in
this report.  We commenced operations on October 4, 2007 and have
realized minimal revenues and operated at a loss since inception. As at March
31, 2009, we had working capital of $43,534 and an accumulated deficit of
$39,947.   Our ability to continue as a going concern is dependent
upon our ability to generate profitable operations in the future and/or obtain
the necessary financing to meet our obligations and repay our
liabilities.  We have not yet established an ongoing source of
revenues sufficient to cover our operating costs and allow us to continue as a
going concern.  Our ability to continue as a going concern is
dependent on us obtaining adequate capital to fund operating losses until we
become profitable.  If we are unable to obtain adequate capital, we
could be forced to cease operations.  There can be no assurance that we
will operate at a profit or additional debt or equity financing will be
available, or if available, can be obtained on satisfactory terms.




Material
Commitments




There
were no material commitments for the period from October 4, 2007, our inception,
through December 31, 2008 and the three month period ended March 31,
2009.


-13-
 Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.




Critical
Accounting Policies




Our
financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.




We
regularly evaluate the accounting policies and estimates that we use to prepare
our financial statements. In general, management's estimates are based on
historical experience, on information from third party professionals, and on
various other assumptions that are believed to be reasonable under the facts and
circumstances. Actual results could differ from those estimates made by
management. Cash
and Cash Equivalents





We
consider all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents. We have no cash equivalents.





Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.





Inventories





Inventories
are valued at the lower of cost or market on a first-in, first-out (FIFO) basis,
and include finished goods.





Revenue
Recognition





We
recognize revenue when:





·
            Persuasive
      evidence of an arrangement exists;


·
            Shipment
      has occurred;


·
            Price
      is fixed or determinable; and


·
            Collectibility
      is reasonably assured.





For the
period from October 4, 2007 (inception) through December 31, 2008 and the three
month period ended March 31, 2009, we recognized revenues of $1,242 and $0,
respectively.


-14-
 Earnings
(Loss) Per Share





We
compute earnings per share in accordance with Statement of Accounting Standards
No. 128, "Earnings per Share (“SFAS No. 128”). Under the provisions of SFAS No.
128, basic earnings per share is computed by dividing the net income (loss) for
the period by the weighted average number of common shares outstanding during
the period. Diluted earnings per share is computed by dividing the net income
(loss) for the period by the weighted average number of common and potentially
dilutive common shares outstanding during the period.  There were no
potentially dilutive common shares outstanding during the period from October 4,
2007 (inception) through December 31, 2008 and the three month period ended
March 31, 2009.





Intangible
Assets





Intangible
assets consist of a license agreement, which is recorded at cost and amortized
over a straight-line basis.  The amortization expense for the period
from October 4, 2007 (inception) to December 31, 2008 and the three month period
ended March 31, 2009 was $300 and $60, respectively.  The value of the
license was determined to be the legal costs to create the license, which was
$1,200.




The
Company evaluates the recoverability of identifiable intangible assets whenever
events or changes in circumstances indicate that an intangible asset’s carrying
amount may not be recoverable. There was no impairment loss for the period from
October 4, 2007 (inception) to December 31, 2008 and the three month period
ended March 31, 2009.





Income
Taxes





The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.





Fair
Value of Financial Instruments





The
Company considers that the carrying amount of financial instruments, including
accounts payable, approximates fair value because of the short maturity of these
instruments.





Share
Based Payments





In
December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees or
independent contractors are required to provide services. Share-based
compensation arrangements include stock options and warrants, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107,
or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction
between SFAS No. 123(R) and certain SEC rules and regulations and provides the
staff's views regarding the valuation of share-based payment arrangements for
public companies. SFAS No. 123(R) permits public companies to adopt its
requirements using one of two methods. On April 14, 2005, the SEC adopted a new
rule amending the compliance dates for SFAS 123(R). Companies may elect to apply
this statement either prospectively, or on a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods under
SFAS 123.





Effective
October 4, 2007, the Company has fully adopted the provisions of SFAS No. 123(R)
and related interpretations as provided by SAB 107. As such, compensation cost
is measured on the date of grant as the fair value of the share-based payments.
Such compensation amounts, if any, are amortized over the respective vesting
periods of the share-based payments.


-15-
 Recent
Accounting Pronouncements




In June
2006, the FASB issued Interpretation No. 48 (“FIN No. 48”), Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109, which clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes.
The Interpretation provides a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. Under FIN No. 48, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN No. 48 also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is effective for us for the
year ended December 31, 2007.  We do not expect FIN No. 48 to have a
material impact on our financial statements.




In
June 2006, the FASB ratified the Emerging Issues Task Force
(“EITF”) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASB Statement No. 43.” EITF
Issue No. 06-2 requires companies to accrue the costs of compensated
absences under a sabbatical or similar benefit arrangement over the requisite
service period. EITF Issue No. 06-2 is effective for us for the year ended
December 31, 2007. The cumulative effect of the application of this consensus on
prior period results should be recognized through a cumulative-effect adjustment
to retained earnings as of the beginning of the year of adoption. Elective
retrospective application is also permitted. We do not expect the application of
this consensus to have a material impact on our financial
statements.





Staff
Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior
Year Misstatements when Quantifying Current Year Misstatements. SAB
No. 108 requires companies to quantify misstatements using both a balance
sheet (iron curtain) and an income statement (rollover) approach to evaluate
whether either approach results in an error that is material in light of
relevant quantitative and qualitative factors, and provides for a one-time
cumulative effect transition adjustment.  This statement is effective
for us for the year ended December 31, 2007.  SAB No. 108 will
not have an impact on our financial statements.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This
statement is effective for us for the year ended December 31,
2007.  SFAS No. 157 will not have an impact on our financial
statements.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS No. 159 gives us the
irrevocable option to carry many financial assets and liabilities at fair
values, with changes in fair value recognized in earnings. SFAS No. 159 is
effective for us commencing on January 1, 2008.  SFAS
No. 159 will not have an impact on our financial statements.





The FASB
has replaced SFAS No. 141 with a new statement on Business Combinations that
changes the way that minority interest is recorded and modified as a parent’s
interest in a subsidiary changes.  This statement is effective for us
commencing on January 1, 2008.  Currently, this change will have no
effect on our financial statements.


-16-





Item 3. Quantitative
andQualitative Disclosures About Market Risk




We are
not subject to risks related to foreign currency exchange rate
fluctuations.  Our functional currency is the United States dollar. We
do not transact our business in other currencies. As a result, we are not
subject to exposure from movements in foreign currency exchange rates. We do not
use derivative financial instruments for speculative trading
purposes.





Item
4.  Controls and Procedures





We
maintain disclosure controls and procedures that are designed to ensure that the
information required to be disclosed in the reports that we file under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission’s rules and forms,
and that such information is accumulated and communicated to our management,
including our President and Treasurer, as appropriate, to allow timely decisions
regarding required disclosures.  In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can only provide
reasonable assurance of achieving the desired control objectives, and in
reaching a reasonable level of assurance, management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.





As
required by SEC Rule 13a-15(b), we carried out an evaluation, under the
supervision and with the participation of our management, including our
President and Treasurer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of our first fiscal quarter
covered by this report. Based on the foregoing, our President and Treasurer
concluded that our disclosure controls and procedures were effective at the
reasonable assurance level.





There has
been no change in our internal controls over financial reporting during our
first fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.





Management’s
Report on Internal Control over Financial Reporting





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting.  Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
under the Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the Company’s principal executive and financial officers and
effected by the Company’s 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 the assets of the
      Company;





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





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





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation 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 or procedures may deteriorate.


-17-





The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of March 31, 2009.  In making this
assessment, the Company’s management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in
Internal Control-Integrated Framework.  The COSO framework is based
upon five integrated components of control: control environment, risk
assessment, control activities, information and communications and ongoing
monitoring.





Based on
the assessment performed, management has concluded that the Company’s internal
control over financial reporting is effective and provides reasonable assurance
regarding the reliability of its financial reporting and the preparation of its
financial statements as of March 31, 2009 in accordance with generally accepted
accounting principles.  Further, management has not identified any
material weaknesses in internal control over financial reporting as of March 31,
2009.





This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.





/s/
Michel Lemoine


President,
Secretary, Treasurer and Director


-18-





PART
II OTHER INFORMATION





Item
6.  Exhibits




(a)
            Exhibits




Exhibit 31.1
              302 Certification – Michel LemoineExhibit 32.1
              906 Certification – Michel Lemoine





-19-


SIGNATURES







Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





DRAGON’S
      LAIR HOLDINGS, INC.DATE:  May
      13, 2009
              By:
              /s/ Michel
      LemoineMichel
      LemoinePresident,
      Secretary and Treasurer(Principal
      Accounting Officer and Authorized Officer)





Dragon’s
Lair Holdings, Inc.





Index to
Exhibits





Exhibit
      Number
              DescriptionExhibit 31.1
              302 Certification – Michel LemoineExhibit 32.1
              906 Certification – Michel
  Lemoine




-20-