Allan Priaulx - IR Eric Langan - President and CEO

Eric Wold - Merriman Curhan Ford David Vorr - Montgomery StreetResearch Jamie Clement - Sidoti Chuck Lipson - CSL Associates Scott Kolman - Credence Capital Management Peter Siris - Guerilla Capital Management

Greetings and welcome to the Rick's Cabaret International first quarter 2008Earnings Call. At this time, all participants are in a listen-only mode. Abrief question-and-answer session will follow the formal presentation.(Operator Instructions). As a reminder, this conference is being recorded. Itis now my pleasure to introduce your host, Allan Priaulx, Investor RelationsOfficer. Thank you. You may begin.

Thank you, Joe. I just want to remind everybody that our Safe HarborStatement is posted at the beginning of our PowerPoint presentation. It remindsyou that you may hear or see forward-looking statements that involve a numberof risks and uncertainties. I won't go into the entire statement on this callbut do urge you to read it. I would also like to remind you that our press release is posted on ourwebsite www.ricks.com, as is the PowerPoint presentation itself. And for any ofyou who are in New York City tonight please join us after the conference callfrom 6 pm to 8 pm at Rick's Cabaret, 50 West 33rd Street, where we're having aDue Diligence Ball, where you get a chance to look at our operation and upclosing in person. Now it's my pleasure to present to you our President and CEO, Eric Langan.Eric?

Thank you, Allan. Good afternoon everyone. I'll begin with an overview oftoday's presentation. We'll be reviewing the first quarter '08 results. We lookinto the drivers of increase of revenues, the effects of the new clubs on ourincome, our acquisition update, we'll be review our '08 guidance, and we'llalso review our 2009 outlook. The first quarter of 2008 was fantastic quarter for us. Our net income of$1.78 million, up 405% over the last year with earnings per share of $0.26versus $0.07 last year, our revenue increased to $10.95 million, up 56% over2007 and operating cash flow was up 217% in the first quarter to $2.26 million.The main driving factors behind the revenue increases, of course, our cluboperations, which increased the gross revenue to $10.78 million. Tootsies was the real star of this quarter even though it was only includedin the December sales, so one-month out of the quarter. When we broughtTootsies, the revenues were based on a $1.5million of monthly income -- ourmonthly revenues. In December, we exceeded that actually breaking $2 million inrevenues from Tootsies. It's been a fantastic location for us and as you cansee from our January sales release, the sales of Tootsies continued intoJanuary. New York City continued to haverecord revenues of breaking a $1 million marks in December for the firs time,since opening in September 2005. We've been very happy with the New YorkLocation and we believe they'll continue to run year-over-year record numbersfor the rest of this fiscal year. And maybe in the next year, we'll get to theend of this year and revisit that. The Fort Worth location has beenvery accretive for us. The new VIP room is now open. And we expect to seeincreased results from that location as well, going forward. Same club sameperiod revenue of $7.54 million, up 13% and income before income taxes exclusiveof corporate overhead $2.16 million, up 84.6% from the $1.7 million of perviousyear. Our acquisition update. Currently, we have three letters of intent signed.We believe that our acquisition financing plans remain on course even thoughwith the market turmoil and the current credit crisis in the U.S.Also, we are moving forward on the Philadelphiaacquisition, now buying 100%. We expect to close that transaction in the secondquarter and we have actually begun the build out for the steakhouse and thesports bar at that location. As our acquisition strategy moves forward, we will continue to be verychoosy in our locations. We're targeting profitable locations in majormetropolitan areas and locations that contribute to our national branding programto increase the exposure to the Rick's Cabaret brand and the Club Onyx brand. As most of you've probably seen in the recent week, we have hired LonnieHanover, who is adding to our public relations. We've been mentioned on theHoward Stern Show several times in the past week and we believe we'll continueto see additional exposure from that relationship and that will help continueto build up the Rick's Cabaret brand. We're looking for clubs with $10 million plus in sales, but we'll acquiresmaller clubs if they have strategic value either in our branding process or inthe ability to be in markets that have limited competition. We'll continue togive the combination of cash, debt and stock to make these acquisitions. Moving forward to guidance for 2008, we're comfortable and raising ourrevenue guidance to $55 million for fiscal year 2008. Our net income of $8.4million that we believe will contribute $1.10 per share to our earnings pershare for fiscal 2008. Our calendar 2008 revenue we believe will be $61 million with net income of$10.4 million and earnings per share of $1.35. This guidance has not assumedany additional acquisitions. Further acquisitions, if closed, we anticipatewill add an additional $0.15 for these numbers. And our outlook for '09continues to be on a run rate of $100 million going into the beginning offiscal '09 and earnings per share of $2 on an ongoing basis. As we close our acquisitions and continue to expand our acquisition pipeline,we'll give further outlook guidance for 2009. And this will conclude the formalpart, I would like to once again invite everyone to come down tonight to Rick'sCabaret in New York at 50 West33rd. And at this time we'll take any questions that people may have.

Thank you. We will now be conducting a question-and-answer session.(Operator Instructions). Our first question is from Eric Wold with MerrimanCurhan Ford. Please state your question. Eric Wold - Merriman Curhan Ford: Hey, good afternoon guys.

Good afternoon. How are you? Eric Wold - Merriman Curhan Ford: Good. A couple of questions. One, on the Miamiclub, Tootsie's gave you $2 million in December and January. Where would youattribute the main causes to that and how sustainable you see that? Can yougive us any seasonality there, just kind of could it go up from here throughoutthe year or it's just kind of a good level of think about as an annual number?

Well, I mean, It's too early to tell, to be honest with you. We do believethat we'll stay this level. We are told by the locals that the actual seasonbegins in Miami about mid Januaryand runs through mid June and the December is actually not a really good monthin Miami because of Christmas andholidays and a lot of the northern travelers don't actually comedown and settledown until mid January. We've seen very steady numbers with not a lot of increase obviously sportingevents and fights have affected the numbers on a week-to-week basis as well asthere is continues to be some good fights out there whether it's ultimatefighting challenge or boxing and different sporting events the Super Bowl wasfantastic for the club for any of those types events. I think we'll continueand even if we've a month where there is absolutely no events we may have alittle effect but it seems to be very steady and still growing. Eric Wold - Merriman Curhan Ford: And what do you expect kind of if you look at when you acquired the clubsyou are doing about by $80 million and now it's on a run rate doing about say24 plus. Where you going to give the flow through a kind of the contributionmargin that incremental revenue down to your bottom line?

Probably after taxes and cost of goods sold up to 70%. It's really been anunbelievable location for us. We’re able to go in and put our VIP systems inThe Miami Herald had a really nice article saying that Rick's was coming totown. A lot of people saw that article, word spreads that very rapidly thatRick's was coming and taking over Tootsie's that Tootsie's was going to be changedto a Rick's Cabaret. We've actually kept the Tootsie's name -- it's a traditionbeen in business there for over 17 years -- and so everyone knows it's owned byRick's, which has been fantastic. And it's got a lot of quality girls in, it'sgot a lot of quality customers in that are used to the Rick's Cabaret way ofdoing things the customers service, how the entertainers are treated and Ithink we've seen a real nice increase in the revenues from them. Eric Wold - Merriman Curhan Ford: Okay. And then on the -- I know, you probably won’t give a lot ofinformation on the 3 LOIs that are out there, but maybe beyond that includingthat how we want to phrase it. Are these acquisitions are the acquisitions youlook to do this year more likely to be brand new markets you were not in beforeor not in there right now or would some of them be filling locations?

Little bit of combination. We're looking at new markets we're definitelylooking to expand the Rick's brand. That's our part of the strategy with hiringLonnie -- to get ourselves more national exposure through the Stern Show andother media that Lonnie is introducing us to. So, it's a little, to answer yourquestion, honestly, we're looking atsome of the markets that we're in as well as new markets. Eric Wold - Merriman Curhan Ford: Okay. And then lastly for Howard -- but lastly on the -- an accountingquestion or numbers question the $7.7 million in diluted share count for thequarter is there any that's not in that number is that a good number for Q2assuming you don't [issue anymore shares for acquisitions?

I think that's a good number. I don't think there is anything else out atthis point. Eric Wold - Merriman Curhan Ford: Okay.

Until we do another acquisition. Eric Wold - Merriman Curhan Ford: Perfect, thanks guys.

The next question is from [David Vorr] with Montgomery Street Research.Please go ahead with your question. David Vorr - Montgomery Street Research: Hi guys, great quarter, really a good quarter. I guess, first it seems likeit really still [one of] the buyers market for you guys for acquisitions. Iguess on that are you seeing a lot of version increase from potential sellersin the market? And then two how long do you think it's going to last duringthis stern environment right now for that positions?

Is your questions on the (seller) calls yes. We're getting tons of callsfrom owners that are looking to sell their clubs. Right now we're just reallysorting through and trying to cherry-pick the top locations. I think that theenvironment’s going to stay for a while until, as the credit markets aretightening, whether they continue or not remains to be seen. But as theycontinue to tighten there is less and less people out there that are able tocome up with large sums of cash to buy these clubs. So, I think it keeps at a buyers market. There is not a lot of people outthere trying to buy especially the high end clubs right now. They can come upwith $22 million to $25 million or even with using stock $8 and $10 million andbuy these locations. David Vorr - Montgomery Street Research: Okay. Then, I guess Buenos that entered in. We look at kind of that choosybucket or that cherry picking segment of the clubs and sales. I mean how big isthat number I mean, to say there is 2000 clubs when you last sold of the 2000or what percentage which kind of fall in the kind of bucket you are looking atthere?

There is estimate there are 3,500 to 3,800 clubs in the U.S right now. Wethink that the top 20% are acquisition candidates. There are probably 50locations out there right now that we're looking at -- either that we'retalking to the owner because we want to buy or they want to sell. David Vorr - Montgomery Street Research: Okay great. And then, I guess one last question more on the internationalside. Especially if you could comment I guess, as an outside toursinternational markets versus U.S right now or maybe look for the next year ortwo on that?

The next year or two we're staying strictly in the U.S with company ownedstores. We have a licensing agreement in Central and South America.We do expect the Buenos Aireslocation to open sometime in March. They have, their management team isactually coming into the States next week to visit a few of our locations,spend some time with our management team and learn some of our methods ofoperations and how we do it. So I think we're getting much closer to gettingthat location open. David Vorr - Montgomery Street Research: Great. Okay. Thanks for your answers. Great quarter.

Thank you

(Operator Instructions). The next question is from Jamie Clement withSidoti. Please state your question. Jamie Clement - Sidoti: Good afternoon, Eric.

Good afternoon. How are you? Jamie Clement - Sidoti: Good. Thanks. With respect to your guidance for '08 and 2009, what kind oftax rate you're assuming?

Fully taxed. Jamie Clement - Sidoti: Fully taxi. So...

I think 35% is the actual number that we... Jamie Clement - Sidoti: Okay. So you'd expect that, as this year progresses, your tax rate wouldcome up to that level?

Yes Jamie Clement - Sidoti: Okay. And with respect to guidance for this year, are you assuming just forthe purposes your guidance, so you're assuming, the Philly club hits therevenue strength, kind of, the first day of the third quarter, is that how weshould think about it?

Actually, we're hoping to open on April 1st. Jamie Clement - Sidoti: Okay

Yeah. Well, yeah, first day of the third quarter, yes. Jamie Clement - Sidoti: Okay. Very good. And just with respect to the things that you mentioned inyour prepared remarks to promote the brand nationally, and I know you mentionedHoward Stern Show and that sort of thing, can you give us a sense of some otherthings you might be considering? Obviously, there's -- you're a well knowncompany and becoming more well known by the day. So can you give us a sense ofwhat you're branding and marketing and that kind of stuff might be looking likeover the next couple of years?

Well, a lot of it is through, obviously through press, which we can neverguarantee that we can get on a national level. But we're seeing, the stuff likewe did on Fox, stuff we were doing with CNBC and those types of story. We hadan article on the Street.com. It's just really a lot of things to continue,putting our name out in front of more and more people in introducing ourselves.Our website were collecting a lot of names, a lot of contacts through ourwebsite as we move in a new market. And as we move into the new market, we putnew ads out that -- in those market that help to continue. Jamie Clement - Sidoti: Okay. Eric, thank you very much for your time.

Thank you.

The next question is from Chuck Lipson with CSL Associates. Please stateyour question. Chuck Lipson - CSL Associates: Yeah. Hi, Eric. Recently, PTT brought a club for, that's about $22 millionfor about four times EBITDA. I know you paid far less than that for Tootsie’s.Is that sort of -- would you visit the four times EBITDA for an acquisition oris that a little high for you?

We definitely would. I mean we've looked as high as -- we paid as high assix for the Fort Worth transaction.It really depends on the market, the amount of competition and the size of theacquisitions. Chuck Lipson - CSL Associates: So four times, two and a half was – Tootsie’s was a one-off and somewhathigher.

I think it was the first time someone has bought in that price range. So Ithink we got sweet heart deal. I think that woke up a lot of these other -- a lotof these other owners realizing that hey, wow, somebody out there can reallywrite these 20 plus million dollar cheques. And we've got some phone calls. Iam sure that VCG got some phone calls and they were able to lock that one up. Idon't know what they've -- I think they've put a letter of intent on it. They-- we remain to see as they get close and we get some of the numbers on howwe'd operate now. Chuck Lipson - CSL Associates: Okay.

But I'm very excited about it. I mean I think that it just shows andconfirms what we've both begin saying is that there are clubs out there, thereare owners out there that they are interested in monetizing their assets andthat we are a viable extra strategy for them. Chuck Lipson - CSL Associates: Now, some of these clubs like the one that's PTT just bought or has thisletter of intent there on. Like the one that PTT just what or has its letter ofintent on that. I guess they own more than just that club. Are you finding insome of the clubs that you've letters of intent out for the owners might haveadditional clubs that might be for sale for you or they usually just one clubwith them?

We've kind of kept what we're buying kind of quiet. But I mean I thinklittle bit of both. I mean we're seeing everything. You're seeing the chainguys look at you. We’re seeing the individual club owners I mean between thetwo of us we're really the only viable exit strategy they have. Chuck Lipson - CSL Associates: Okay.

Whether they are single club or a chainunless they want to owner financing carry a bunch of paper for an individual,who is going to come and run the business and paying with their own money. Chuck Lipson - CSL Associates: Or maybe we’ll see the two of you get together and then there will be onlyexit strategy for all this as a club?

That right now we like to -- there is a peer comparison at the moment. So… Chuck Lipson - CSL Associates: Okay. Well, keep doing well.

All right, thanks. Operator (Operator Instructions) The next question is from Eric Wold with MerrimanCurhan Ford. Please state your question. Eric Wold - Merriman Curhan Ford: Hey guys couple of follow-ups. So, if I think about, if I'm thinking aboutthis right the numbers for Q1, I know your not giving guidance for Q2 some ofyou, but let me know if my thinking is incorrect if you had Miami and Tootsie’sin Q1 for only one month and it did I think $2 million bucks in a month or $1.5million bucks in the month was it $1.5 or $2?

$2 million in December. Eric Wold - Merriman Curhan Ford: $2 million in the month. So, as you get through March, for all three monthswe should have an additional $4 million tacked on the kind of what you did inQ1 assuming nothing else really changedthe other clubs.

Right but now keep in mind that the first quarter is always a little bitpercentage wise better than the second quarter. So, we probably won't get thefull benefit of the $4 million Eric Wold - Merriman Curhan Ford: Okay.

Based on previous quarters for like January, February or March versus lastJanuary, February and March. When you compare those quarters to the October,November, December quarter. Eric Wold - Merriman Curhan Ford: Fair enough. And then in the January press release you talked about the Minneapolisprobably having some impact from the weather. You talked about in the samestore sales it's become revenue wise, how much of impact do you think that wasin the month?

I had it the other day and I don't still remember that on the top of myhead. But it was considerable because I think our same store sales dropped downa lot from 8.8% but they would have been without that if they are just donetheir normal numbers. I want to say in tune of about $80,000. Eric Wold - Merriman Curhan Ford: Okay. And then lastly let me sure I heard it correctly the 3 LOIs you haveout there, if those do close, would you say it was $0.15 incremental or EUR50…

15. $0.15 Eric Wold - Merriman Curhan Ford: 15 that would be incremental to the fiscal '08 numbers. What would it bekind of on an annual basis?

A little more, simply because you've another quarter in there. But I mean,we just -- we didn’t really dig that far into it because there is still a lotof timing, a lot of moving parts as we close the transactions we will knowexactly what they are, then we can revise the guidance further than that. Wejust wanted to give everyone an idea of where we're for the fiscal year 2008provided we close these transactions as we anticipate. Eric Wold - Merriman Curhan Ford: What's the likelihood of those transactions closing in this quarter versusnext quarter versus Q3?

I think that probably we'd be looking at maybe a transaction each quarter atthis point. Eric Wold - Merriman Curhan Ford: Okay, perfect. Thanks guys.

Okay, thank you.

The next question is from Scott Kolman with Credence Capital Management.Please state your question. Scott Kolman - Credence Capital Management: Hi guys, I was hoping you could maybe walk us through in a little moredetail what's been driving the is it called same club, same period revenuecomps, they are very impressive and I was just wondering if there is particularclubs that are really driving that or if it's really what you're doing rollingout across all the clubs.

Well, it's a little bit above. We have certain clubs that are a littlehigher in some months and little lower in other months. A lot of it is our New York location, and the Club Oynx location in theSouth Huston has been doing very well for us. And I think as we move forward,we're going to such see the Austinand San Antonio locationscontribute. It really has lot to do with our past acquisition strategy, andthat in 2006 we bought four clubs that were all start-up or fix-em up clubs. As those clubs matured --18 months to 36 months maturity levels -- theystart seeing steady growth from 18 months to 36 months. And so we have clubsthat are entering those cycles that are contributing. The New York Club hasbeen a phenomenal, because –it is well over two years and we're still seeingvery steady growth as much as 40% year-over-year growth at that location still. Scott Kolman - Credence Capital Management: That's great. And what do you see driving it, is it more traffic or peoplespending more at the bar, people getting more at dances, charging more at thedoor, what's driving that?

Lot of it just more people, as we're becoming more well known, especially inthe New York market, we're seeing more and more people come to the door. Scott Kolman - Credence Capital Management: Okay.

Certain nights, we're seeing them spend a lot more money and other nightswe're seeing just a lot more people in the building. Scott Kolman - Credence Capital Management: Okay. Great thanks.

The next question is from Peter Siris with Guerrilla Capital Management.Please state your question. Peter Siris - Guerrilla Capital Management: Hi, Eric. How you are doing?

Good. How are you? Peter Siris - Guerrilla Capital Management: Good. If I -- there is just sort of take a big picture questions. If youlooked at -- how many clubs are there at the level that you could see acquiringand I don't mean you. I don't mean Rick's by itself, but how many potentialacquisitions could there be in the country between, say, you and Troyand whoever else might come along could make? If you were like talking about Aand B clubs, how many of them are out there now?

I think a lot of it is like -- it's a 20/80 rule -- 20% of the clubs aredoing 80% of the revenue. Peter Siris - Guerrilla Capital Management: Right.

And I think those 20% are the ones, we're going after. So there is 3,800clubs, there is 760 potential clubs that are in that top 20%. Peter Siris - Guerrilla Capital Management: Okay.

We already -- some of those either weren't for sale or maybe not in the beststrategic location. We are not… I wouldsay the number is somewhere in the 500 range. That's what we've thought forabout two years now. We're still -- we are pretty much still sticking with thatnumber, around 500 potential acquisitions. Peter Siris - Guerrilla Capital Management: So does that say at some point, I'm not saying fulfilling that this year,but does that say at some point, years -- several years down the road thatsomeone in the industry if I combined you and Troy and whoever else might showup the play in this world, then you would find two or three chainsbetween them that would have a 100 clubs each. Is that a long-term goal orsomething?

I mean our goal has always been to be 30 to 50 locations in the next threeto five years. Peter Siris - Guerrilla Capital Management: Okay.

Sorry. Peter Siris - Guerrilla Capital Management: So you see…

So I think that's very realistic. They are not making a bunch of newlocations with the zoning requirements and the different laws out there. So Ido believe that it's very feasible to see in five years, ten years down theroad, a company that has a 100 locations, absolutely doing -- if you figure thetop 20% and 80% of the revenue -- you're talking about $1.6 billion in revenue thatthose 20% of the clubs run. Peter Siris - Guerrilla Capital Management: Right.

So I mean you could see, easily see clubs or company's doing 200 million or300 million in revenues. Peter Siris - Guerrilla Capital Management: Okay, now if you saw a company doing, obviously these are not projections.So, if you started to have whatever 30 to 50 clubs. What branding opportunitiesdoes that give you beyond the idea of economies of scale, having you've got ofcouple of different brand names you could use?

Let's look at the most famous adult brand name out there, Playboy. Theystarted with clubs across the country then… Peter Siris - Guerrilla Capital Management: Right.

…with their magazine out. I mean, I think it's unlimited. Once you get thattype of brand name recognition, at that point I think we would bring in expertsto tell us how do we leverage this brand, how do we create and make the mostmoney we can from leveraging the brand at that point. Peter Siris - Guerrilla Capital Management: And when do you start to -- when are you -- obviously you are running aroundmaking deals and stuff, but when do you personally start thinking aboutleveraging the brand?

Right now, we are making so much money buying and adding additional clubsand building the brands that I just don't think we're to that level yet.Probably in the next three to five years, as we get to that size that we'd trulyhave a national brand. You know, we need to be in about at least 30 majormarkets and then we are reaching a huge amount of people at one time and thenwe'd launch something out through the clubs. Peter Siris - Guerrilla Capital Management: And the last question I'll ask is anything happening with Las Vegas?

We've always looked and been interested in that market. There are times whenwe think it's not a good market and others we think it is a good market. We'rejust laying all the options that are available out there to us. We'd reallylike to be in a casino and operate out of a casino, but we're not ruling outstand-alone properties either. Peter Siris - Guerrilla Capital Management: But do you believe that it's a matter of when, not if?

Absolutely yes. Definitely a matter of when, not if. Peter Siris - Guerrilla Capital Management: Casinos?

It's definitely a market. In order to have a national brand we're going tohave to be in that market. Everybody travels at least once to Las Vegas, especially in our customer base. Peter Siris - Guerrilla Capital Management: Thanks a lot,

Yeah, thank you.

As the phone showing no further questions in queue I'd like to turn the callback over to management for closing remarks.

Just want to remind you that our transcript of this call will be posted onSeeking Alpha most likely tomorrow. So, if you want to review anything thatwe've gone over here you can go to Seeking Alpha to get it. And also there willbe a link on our website as well. And if you have any further questions pleasesend your emails to ir@ricks.com. We'll try to get right back to you. All rightand thank you very much for you calling in, look forward to seeing some of youtonight down at the club.

Thank you, this concludes today's teleconference. You may disconnect yourlines at this time. Thank you for your participation.