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
September 30, 2008




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 oNo þ




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 September 30, 2008Common
      Stock, no par value per share
            
            6,138,278
      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
            
            
            14Item 4. Controls and Procedures
            
            
            14Part II Other Information
            
            
            16Item 6. Exhibits
            
            
            16Signatures
            
            
            17Exhibit 31.1Exhibit 32.1





-2-


PART
I FINANCIAL INFORMATION





Item 1.  Financial
Statements


DRAGON'S
      LAIR HOLDINGS, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      BALANCE SHEETSASSETSSeptember
      30, 2008
              
              
              December
      31, 2007(unaudited)
              
              
              (audited)CURRENT
      ASSETS:aCash
      and equivalents
              
              $
              909
              
              
              $
              11,200Inventory
              
              
              402
              
              
              
              533Total
      Current Assets
              
              
              1,311
              
              
              
              11,733FIXED
      ASSETS:Equipment,
      net
              
              
              470
              
              
              
              -OTHER
      ASSETS:License,
      net
              
              
              960
              
              
              
              1,140Total
      Assets
              
              $
              2,741
              
              
              $
              12,873LIABILITIES AND SHAREHOLDERS'
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable & accrued expenses
              
              $
              4,424
              
              
              $
              1,469Total
      Liabilities
              
              
              4,424
              
              
              
              1,469SHAREHOLDERS'
      EQUITY:Preferred
      stock (50,000,000 authorized;par
      value $.001; none issued and outstanding)
              
              $
              -Common
      stock (100,000,000 shares authorized;no
      par value; 6,138,278 and 6,038,278 issued and outstanding,
      respectively)
              
              
              16,941
              
              
              
              12,933Deficit
      accumulated during the development stage
              
              
              (18,624
              )
              
              
              (1,529
              )Total
      Shareholders' Equity
              
              
              (1,683
              )
              
              
              11,404Total
      Liabilities and Shareholders' Equity
              
              $
              2,741
              
              
              $
              12,873




-3-


DRAGON'S LAIR HOLDINGS,
      INC.(A DEVELOPMENT STAGE
      COMPANY)CONSOLIDATED STATEMENTS OF OPERATIONS
              
              (Unaudited)




Cumulative
    fromFor the three months
      ended September 30,
      2008
            
            
            For the nine months
      ended September 30,
      2008
            
            
            October 4, 2007
      (Inception)through September 30,
      2008Net Sales
            
            $
            1,242
            
            
            $
            1,242
            
            
            $
            1,242Cost of
    Sales
            
            
            131
            
            
            
            131
            
            
            
            131Gross
Profit
            
            
            1,111
            
            
            
            1,111
            
            
            
            1,111Expenses:Amortization
            
            
            60
            
            
            
            180
            
            
            
            240Depreciation
            
            
            25
            
            
            
            25
            
            
            
            25General and
      Administrative
            
            
            8,730
            
            
            
            18,002
            
            
            
            19,470Total
    Expenses
            
            
            (8,815
            )
            
            
            (18,207
            )
            
            
            (19,735
            )Net (loss) before Income
      Taxes
            
            
            (7,704
            )
            
            
            (17,096
            )
            
            
            (18,624
            )Provision for Income
      Taxes
            
            
            -
            
            
            
            -
            
            
            
            -Net (loss)
            
            $
            (7,704
            )
            
            $
            (17,096
            )
            
            $
            (18,624
            )Basic and diluted net loss per
      common share
            
            $
            -
            
            
            $
            -Weighted average number of common
      shares outstanding
            
            
            6,138,278
            
            
            
            6,090,476


-4-




DRAGON'S LAIR HOLDINGS,
      INC.(A DEVELOPMENT STAGE
      COMPANY)CONSOLIDATED STATEMENTSOF CASH FLOWS(Unaudited)
  Cumulative
    fromFor the nine months
      ended September 30,
      2008
              
              
              October 4, 2007
      (Inception)through September 30,
      2008OPERATING
      ACTIVITIES:Net loss
              
              $
              (17,096
              )
              
              $
              (18,624
              )Issuance of common stock for
      services
              
              
              4,008
              
              
              
              4,008Increase in
      amortization
              
              
              180
              
              
              
              240Increase in
      depreciation
              
              
              25
              
              
              
              25(Increase) decrease in
      inventory
              
              
              131
              
              
              
              (402
              )Increase in accounts
      payable
              
              
              2,956
              
              
              
              4,424Net cash used in operating
      activities
              
              
              (9,796
              )
              
              
              (10,329
              )INVESTING
      ACTIVITIES:Increase in
      Equipment
              
              
              (495
              )
              
              
              (495
              )FINANCING
      ACTIVITIES:Proceeds from issuance of common
      stock
              
              
              -
              
              
              
              11,733NET INCREASE IN
      CASH
              
              
              (10,291
              )
              
              
              909CASH BEGINNING
      BALANCE
              
              
              11,200
              
              
              
              -CASH ENDING
      BALANCE
              
              $
              909
              
              
              $
              909SUPPLEMENTAL DISCLOSURE OF CASH
      FLOW INFORMATION:Taxes paid
              
              $
              -
              
              
              $
              -Interest
    paid
              
              $
              -
              
              
              $
              -CASH TRANSACTIONS AFFECTING
      OPERATING, INVESTINGAND FINANCING
      ACTIVITIES:Issuance of common stock for
      license
              
              $
              -
              
              
              $
              1,200
 -5-


DRAGON’S
LAIR HOLDINGS, INC.


(A
DEVELOPMENT STAGE COMPANY)





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





SEPTEMBER
30, 2008





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 six months ended June 30, 2008 were filed on September 16, 2008
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 and nine month periods
ended September 30, 2008 and for the period October 4, 2007 (Inception) through
September 30, 2008 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2008.





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.





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.


-6-





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 January 1, 2008 to September 30, 2008,
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 October 4, 2007 (inception) to December 31, 2007 and from January 1, 2008
to September 30, 2008 was $60 and $180, 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
October 4, 2007 (inception) to December 31, 2007 and January 1, 2008 to
September 30, 2008, respectively.





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
for 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.


-9-





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.




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:


September
      30,
              
              
              December
      31,2008
              
              
              2007Income
      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:
 
 September
      30,
              
              
              December
      31,2008
              
              
              2007NOL
      Carryover
              
              $
              18,624
              
              
              $
              1,529Valuation
      allowance
              
              
              (18,624
              )
              
              
              (1,529
              )Net
      deferred tax asset
              
              $
              -0-
              
              
              $
              -0-


Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards for the nine month period ended September 30, 2008 were
$18,624, 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 September 30,
2008, respectively, 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 Conditionand Results of Operations




The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs.
Forward-looking statements are often identified by wordslike: believe, expect, estimate,
anticipate, intend, project and similar expressions, or words which, by their
nature, refer to future events.  These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
resultsto differ materially from historical
results or our predictions.  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
theseforward-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.





Management
believes that we will require a minimum of $50,000 of available capital to
support our operations for the next 12 months.  If such capital does
not become available from the proceeds of the Company’s initial public offering,
the sale of the Sore-EezÔ Chinese herbal liniment
and other product candidates or other sources, we will continue development
stage operations for the next 12 months with available cash on
hand.  We may require additional debt or equity financing and there
can be no assurance that such additional financing will be available, or if
available, can be obtained on satisfactory terms. To the extent that any such
financing involves our equity securities, the interests of our then existing
shareholders, including the investors in the Company’s initial public offering,
could be substantially diluted.  Further, such securities might have
rights, preferences or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all.  In
the event that we do not have sufficient capital to support our operations, we
may have to liquidate or curtain our operations.





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, filing expenses and shareholder
communications 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
($909 as of September 30, 2008), the proceeds of the Company’s initial public
offering, loans from our majority shareholder, Talles Investments, Inc., and
cash generated by product sales.  We expect our initial operating
expenses will be paid for by utilization of some of the proceeds of the
Company’s initial public offering, cash flows generated from product sales and
loans from our majority shareholder, Talles Investments, Inc.  In
addition, we will incur throughout the year transfer agent fees, investor
relations and general office and administrative expenses.




Results of
Operations




We are a
development stage company and have incurred losses of $18,624 as of September
30, 2008.  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 September 30,
2008.  All of our revenues have come from the sale of the
Sore-EezÔ Chinese
herbal body liniment and from no other sources.


-12-





Liquidity
and Capital Resources





The
following table sets forth our liquidity and capital resources as of September
30, 2008:


Cash
      and cash equivalents
            
            $
            909Working
      capital deficit
            
            
            (3,113)Total
      assets
            
            
            2,741Total
      liabilities
            
            
            4,424Total
      shareholders’ deficiency
            
            
            (1,683)




During
the period October 4, 2007 (inception) through December 31, 2007 compared to the
nine months ended September 30, 2008, working capital decreased from a surplus
of $10,264 to a deficit of $3,113. The primary reason for the decrease was the
decrease in cash of $10,291, which was primarily due to the costs associated
with the Company’s initial public offering.




Cash Flows from Operating
Activities


We have
not generated positive cash flows from operating
activities.  Operating expenditures during the current period included
general and administrative costs, depreciation expense and amortization
expense.  During the period October 4, 2007 (inception) through
December 31, 2007 compared to the nine months ended September 30, 2008, cash
used in operating activities increased from $533 to $9,796.  The
primary reason for the decrease was due to the costs associated with the
Company’s initial public offering.




Cash Flows from Investing
Activities




There were no cash flows from investing
activities for the period from October 4, 2007, our inception, through December
31, 2007.  During the nine months ended September 30, 2008, the
Company’s cash flows from investing
activities increased $495
due to the purchase of an herb grinder on June 25, 2008.  Except for
the herb grinder, we currently do not plan to acquire any other significant
equipment in fiscal 2008.




Cash Flows from Financing
Activities




We have financed our operations from the issuance of shares of our
common stock.  Net cash provided by financing activities for the
period from October 4, 2007, our inception, through December 31, 2007 and the
nine months ended September 30, 2008 was $11,733 and $0,
respectively.




Weexpect that working capital
requirements will continue to be funded through a combination of our existing
funds, product sales, loans from our majority shareholder, Talles Investments,
Inc., and further issuances of securities, if any. Our working
capitalrequirements 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.


-13-





Critical
Accounting Policies and Estimates





A summary
of significant accounting policies is provided in Note 1 to our consolidated
financial statements.  Our sole officer and director believes that the
application of these policies on a consistent basis enables the Company to
provide useful and reliable financial information about the Company's operating
results and financial condition.





The
preparation of financial statements in conformity with generally accepted
accounting principles requires our sole officer and director 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 will differ from those estimates.




Going Concern




Our auditors haveraised substantial doubt as to our
ability to continue as a going concern, as expressed in its opinion on our
financial statements
included in this prospectus.  The Company commenced operations on
October 4, 2007 and has realized minimal revenues and operated at a loss since
inception. As at September 30, 2008, the Company has an accumulated deficit of
$18,624.  Existing cash resources are currently not expected to
provide sufficient funds through the upcoming year, and the capital expenditures
required to achieve planned principal operations may be
substantial.  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. To date, we have operated at a loss and remained in
business through the issuance of shares of our common stock.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, 2007 and the three and nine months
ended September 30, 2008.




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.





Item 3. Quantitative and
Qualitative Disclosures AboutMarket 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.


-14-





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.





The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of September 30, 2008.  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 September 30, 2008 in accordance with generally
accepted accounting principles.  Further, management has not
identified any material weaknesses in internal control over financial reporting
as of September 30, 2008.





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


-15-





PART
II OTHER INFORMATION





Item
6.  Exhibits




(a)                 Exhibits




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







-16-


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:  November
      14, 2008
              By:
              /s/ Michel
      LemoineMichel
      LemoinePresident,
      Secretary and Treasurer
                (Principal
      Accounting Officer and Authorized Officer)
 -17-





Dragon’s
Lair Holdings, Inc.





Index to
Exhibits








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






-18-