Allan Priaulx - Officer IR Eric Langan - CEO Phil Marshall - CFO

Jamie Clement - Sidoti David Vorr - Montgomery Street Research Chuck Lipson - CSL Associates Steven Gard - AM Investment Partners Steve Martin - Slater Capital Management Jeffrey Feinberg - JLF Gerry Brian - Private Investor Philip Calderon - Private Investor Peter Cyrus - Gorilla Capital Herald Hoffman - Stonegate Securities Scott Coleman - Clemens Capital

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

Thank you, Chris. Before we begin, I just want to remind everybody of our Safe Harbor statement which is available on page two of the PowerPoint presentation that is in distribution. It is also at the bottom of our press releases and we urge you to read it carefully. On the call today are Eric Langan, our CEO and Phil Marshall, our CFO. Eric will give a presentation of our second quarter results, and we will follow that with the question-and-answer from you. Phil Marshall will be available to answer any questions that you wanted to ask to him. So Eric, without further delay I would like to turn the call over to you.

Right. Thank you Allan, and thanks for calling everyone, we appreciate your time. We will begin with a quick overview of our presentation today. We are going to review the second quarter 2008 results. The contributions of the Miami and Fort Worth locations, discuss our organic growth strategies, our acquisition, where we are at with our acquisitions and update you on some of the other stuff that we are working on, update our guidance for 2008, and review our outlook for 2009. To begin the quarter, total revenues were $15.46 million, up a 104% over second quarter of 2007. Net income was $2.6 million, up 429% over second quarter of 2007. Fully diluted earnings per share of $0.32 were up from $0.09 last year, and operating cash flow of over $6.4 million. As you can see, the results were right in line with -- were a little better than where we anticipated would be at this time. When we put our original guidance out, we have been very happy with the results in this quarter and the contributions that Tootsie's have added. The main driving factors of course, nightclub operations at $15.29 million and club net income of $4.69 million from operations. Tootsie's revenue continues to exceed our expectations, averaging since we have taken the place over in excess of $2 million per month. The New York City Club had another fantastic month in April, and as you can see in this quarter January, February and March were record months. We believe we will continue to see growth in the New York City locations. On April 28, one of our competitors lost their liquor license and that has put us some business back on the street and some growth, and we are starting to see a little pick up in early May from that. As well, Fort Worth has been a very strong contributor to our success, we have got the VIP room opened at that location, and we are seeing some nice growth at that location as well. Our second quarter same club sales were up 8.24%, pretty much in line with our 6% forecast, a little better. We hope to continue to see a little better than 6%, but 6% is what we are forecasting at this time. We closed several acquisitions in this quarter and proceed in this quarter in April. Our Philadelphia acquisition was completed; we have the grand opening on April 24 either 26. We have got a lot of media press; lot of business, the stake out there is getting great reviews in town. We are seeing the business, people that came in during that time continuing to come through the doors this week and the week before. Obviously, it is a little early to see exactly where that location is going to end up but we are getting a very good strong feel for where we are heading and we are very happy with the direction that it is moving in. The Dallas Executive Club acquisition was completed, we are currently operating the sign actually that the temporary signs went up this morning, here rebranded as Rick's Cabaret. The grand opening is planned for June 12 to 14. We also require the remaining 49% of our Huston Club to make that a wholly owned subsidiary. In addition, we started the media division by acquiring ED Publications, Inc. and Tees and ABS Magazine. What we have got along with that was the largest industry trade show for the gentlemen's club industry. We are also through our media division going to be able to do some considerable marketing with major liquor companies and some other national advertisers in the magazine and in our clubs to help lower our costs and bring more attention to our brand. We signed the definitive agreement for the Las Vegas Scores, Club acquisition, the $21 million purchase, current revenues exceeding $18 million. We are going to continue targeting major clubs in metropolitan areas that we believe will be immediately accretive to our earnings, targeting clubs with $10 million plus in sales. However, as with Philadelphia and Dallas, we will acquire smaller venues to, if they have strategic value for our branding. We will continue to use the combination of cash, debt and equity to make these acquisitions. However, if our equity, we start feeling that our equity is undervalued by the market, we will be using more debt and internal cash flow to make these acquisitions and probably withhold using equity at a discount, if we built the discount to our value. Moving on to our 2008 guidance, for fiscal year 2008, we now believe total revenues will come in somewhere between $61 million and $62 million, with net income of $10.5 million to $11 million or fiscal year 2008 earnings per share of a $1.25 to a $1.30. If we calendarize that over the entire year of 2008, we estimate revenues of $68 million to $70 million with net income somewhere between $13 million and $14 million or earnings per share of a $1.55 to a $1.60 for calendar 2008. Now these assumptions do not include the Las Vegas acquisition. So if we close the Las Vegas acquisition on time, they will add to these estimates. This estimates do not includes any additional acquisitions. This is basically a snapshot of where the company is today. Going into our 2009 outlook, our 2009 outlook for fiscal year 2009 is earnings per share of somewhere between $2.30 and $2.50 and revenue that will exceed $100 million. Now this assumes the completion of the Las Vegas acquisition and that our acquisition strategy will continue through 2009. On our August conference call, we intend to give real guidance instead of just an outlook for 2009, and provided that we have our acquisition pipeline together in place where we feel comfortable, we will also give an outlook for 2010 at that call. If we do not have enough of our acquisition wind up at that point, we may just give guidance for 2009 and hold off on the 2010 outlook until a little bit later in the year when we have better idea of how we think 2010 guidance will go. With that, I would like to invite everyone to come out next Tuesday. I know normally we do the Due Diligence Ball after the conference calls. My schedule has not allowed me to get in to make it in New York tonight. I will not be able to make it up there till late Monday evening, so we are going to do the Due Diligence Ball on Tuesday. So I invite you to come out and meet with me, try to answer any questions, check out the club, and maybe have some dinner. We will have $8 drink till 8 PM. We will have free orders and free admission for anyone who wants to come out. This concludes our formal presentation and we will be happy to take questions from anyone who would like to have more information.

(Operator Instructions). Our first question comes from the line of Jamie Clement with Sidoti. Please proceed with your question. Jamie Clement - Sidoti: Good afternoon, Eric.

Hi, Jamie, how are you? Jamie Clement - Sidoti: Good, thanks. I just wanted to make sure I was just clear on the guidance this year. In the press release you alluded to some start-up costs related to the newly acquired plus your 125 to 130, that includes those costs, that excludes those costs?

Yes. That does includes those costs. What we were warning against is we expect a big ramp up in the next quarter and not this quarter that we are in right now, but in the fourth quarter. The third quarter could go either way. I am going to say somewhere $0.31, $0.34 if we will be added to our bank and then we will that breakout quarter of $0.38 to $0.42 may be in the fourth quarter. It is still little early to tell. That is why we ranged it from a $1.25 to a $1.30. We wanted to be pretty in a safe zone there with the new clubs. New clubs are so hard to gauge. Jamie Clement - Sidoti: Sure.

Once we have the grand opening in Dallas which is not till June, then we will have a much better idea here. Philly has been very strong for us. We are very happy with the results there that we get very good reviews, lots of positive press. The business clientele that we were hoping to attract were attracting the sporting events, have brought in good numbers of people; the weekends have been very, very strong. So far so good, there -- we will continue to monitor and I believe continue to see success there. Jamie Clement - Sidoti: Okay, great. Concerning the Vegas acquisition, I think that there are some macro concerns surrounding Las Vegas in general as there has been some news that it is not been the most favorable about some areas of that market, not for me. Gentlemen's club perspective which is overall, and obviously, it is a competitive gentlemen's club market. How do you feel about that? I mean, obviously, I am sure you are aware of that?

Yes, we are very convinced to the acquisition and if you noticed, this is one of the few acquisitions that we actually put minimum numbers in, minimum revenue numbers, minimum EBITDA numbers, trailing 12 months from closing date. We did that for a specific reason that if the economy is seeing too much of a slowdown or too much of a recession before we close this transaction, then we will have time to go in and maybe negotiate or we rework the deal a little, if it is necessary. From what I understand at this point, everything is still on course there. Things are looking really good. We are watching our due diligence. We are going to the permitting process which I have learned is one of the most pains taking processes of any state or government regulations when you ever had to deal with. When you deal with Las Vegas for a liquor license, you deal with the gaming department and they do some very intensive background checks. Its not that it is a problem, we will pass and we have got licenses in many states, it is just tedious to get through. Jamie Clement - Sidoti: Sure. I would assume that is why you are not including that club in this year's guidance, right?

Right. It is because we have no idea. I mean, we intend to close; we would like to close in early June. I am probably more pessimistic towards the end of June. However, obviously with licensing, lots of things can pop up as we have seen in the past transactions were its taken seven months in Philadelphia to where in Dallas, we thought it was going to take 90 days and took 23. However, you just do not know and we do not like to guess, we like to tell you what we know and to be very transparent on the rest of it. We hope to get the transaction closed by the end of June. The reality is it is out of our control to actually win the licensing will be approved but once licensing is approved, we will move very quickly to close the transaction. Jamie Clement - Sidoti: Okay. Thanks very much. I will get back in the queue.

Yes. Thank you.

Our next question comes from the line of David Vorr with Montgomery Street Research. Please proceed with your question. David Vorr - Montgomery Street Research: Hi, guys.

How are you doing actually? David Vorr - Montgomery Street Research: Thank you. I just had a couple of quick questions here. One, if you have got a substantial step-up and operating margin from quarter-to-quarter sequentially? Sales really came down substantially on percentage basis of revenue. Is that what Sam was going forward in your lines?

Absolutely. The reason why is, you are seeing a three-month of the Tootsies transaction. I have been trying to sell people who are not on the road and as we are doing things that you know, when you look on a trailing basis, 12-month, there is only month of Tootsies in that trailing 12-month. This quarter was the first time people are going to see what three, four months of the Tootsies acquisition meant to the company. As we said in some of our presentations that, our margins were going to increase to 30% or even our margin would increase to 30% plus, it came in this quarter 32.4%. We have always thought that was going to happen, well I did not realize it was going to be this quarter; I thought it would be, maybe the next quarter or the quarter after. However, we are very happy that we are able to get to that 30%. We have always believed that that was the magic number of us. David Vorr - Montgomery Street Research: Super. Another question I guess on the Texas pool tax appeal, Texas still has, I guess that tax within the number of three quarters at that correct?

Yes, and I will elaborate on that a little bit if you do not mind. That tax was $517,000. That tax was ruled unconstitutional by the lower court. They said appeal; they used a tax code trick to basically force us to pay a tax that it has been ruled unconstitutional. There is an appeal to the tax in Supreme Court to try to stay the collection of that tax. We have no idea when they will rule or how they will rule, but we are hoping to get a stay from that. We are collecting the tax still and we hope that some day we filed that we paid the tax under protest; we will be filing a lawsuit against the state to get that money back because we believe that it is an unconstitutional tax and we should not have to pay it. We do not necessarily collect the tax, directly, There is no way to tax the actual patron, it is the patron tax on the business. So it is the business that is actually being taxed. So what we do is, we increase our cover charges, we have increased some of our drink prices in the Texas market. As you can imagine, you do not have a little bit of chilling effect on the smaller blue collar clubs, the rich clubs, the larger clubs, and we even the XTC in Austin have seen to just absorb it, some of the small clubs we do not have a little under harder time whether we may adjust, how we collect our reimbursement on that in those clubs. We are watching very closely. I think our same stores sales would be without the taxes, taxes stayed out I think or our same stores sales would have been increased even more. David Vorr - Montgomery Street Research: Okay, great. Then I guess one last question on the tax side though, more of a general question now. What are your tax rates? Are you going to be marketing in there?

We are not modeling the 37%. David Vorr - Montgomery Street Research: Okay.

That includes because of the state, basically have some corporate, state corporate income tax in New York and in Florida. David Vorr - Montgomery Street Research: Is that for both '08 and '09?

Yes. David Vorr - Montgomery Street Research: Okay, great. Well, thanks guys, again a great quarter.

Thank you.

Our next question comes from the line of Chuck Lipson with CSL Associates. Please proceed with your question. Chuck Lipson - CSL Associates: Well done, Eric. Just one thing I think it is in impacting our stock is that it gossips would have said there were two consolidators in the industry in the adult club business, you and VCGH, given what has happened to VCGH, how do we convince investors that the VCGH issues are not Rick's issues?

Well, at this point, we called our recent downturn a VCGH flu that we have caught from it. I think we continue to do what we do. We execute on our business strategy. We give our guidance. We need our guidance or beat our guidance and continue to grow the company. I do not really know how to do anything different than what we are doing as far as addressing those concerns. We are very transparent. Allan, you can reach him through e-mail or through his office. We are very responsive to investors' concerns. Of course, we operate our business and we are running the numbers, we are meeting the sales target. We are meeting the income numbers and continue to grow the company. So I think eventually the market corrects the fundamentals, our fundamentals are solid. I believe that eventually our share price will correct that. Chuck Lipson - CSL Associates: Has this classes of VCGH stock price in anyway change the price the deal flow that you are seeing?

I mean the deal flow is so heavy right now. I mean I do not know if there is any factor out there right now, that is going to change the deal flow. I am sure that solidify the same things, the phone rings every single day that different emails, contact brokers calling us constantly with new opportunities that are out there. I think the real trick and the real challenge for us and for VCG is taking draw, sorting through, find the needles in the haystack and find the right deal and growing within our ability to manage and within our ability to raise funds and not get ourselves in too much depth or get ourselves into a situation where we are forced into a deal where we have to raise money at any price just to get a deal done. I think that that is one thing that we have avoided. Basically, we can grow much faster than we are growing right now. We are growing at a very, very higher rate compared to most growth companies. However, we could grow faster than if we have the management in place to grow faster. What we do not have right now to increase these growth rates accidentally is to access the capital at rates that we are willing to give up equity to access that capital. Chuck Lipson - CSL Associates: Finally the Scores in the New York losing its liquor license, any thoughts on what might happen there?

In bankruptcy court, obviously I am sure grows up for auction, I will be at the auction. We can get a good price for the location we love to have it. I am sure there is lot of other operators out there that we will be doing the same thing. We have talked to these guys off and on for a year or so trying to figure out if we could do a deal with them and it has been very difficult to get any solid agreements done. We are in a cold pattern. We will wait and see what happens. Chuck Lipson - CSL Associates: Thank you very much.

Yes, thank you.

Our next question comes from the line of Steven Gard with AM Investment Partners. Please proceed with your question. Steven Gard - AM Investment Partners: Congratulations on a great quarter. Most of my questions have been answered. However, I just wanted to ask a general one. I guess where anywhere do you feel impact of the economy and how do you adjust to it, is there any specific geographic or whereas in New York maybe feeling some of the tension, Wall Street?

New York is growing at unbelievable growth. We kept here and we are going to fill Wall Street. The real affect on clubs that we are seeing is in our lower end, blue collar, what I call the $50 club customer. The customer comes in three days a week, spend $50. Now maybe he is only coming in two days a week because he is throwing the extra $50 in there. However, what we are also seeing is more $50 customers in because when reality is what it is today and you are down and you are depressed, you look for an escape from it and Rick's are fun party place to walk in and just get away from at all, leave your troubles outside and get away from it. So, the real effect that we have seen so far has been very, very nominal. It is very hard to gauge. We are watching our sales figures on a weekly and daily basis, watching, seeing, and doing comparisons from week to week, watching patterns and blows to different clubs. We are prepared to make pricing changes, throw extra VIP parties Do whatever we have to do to continue to make sure that we meet our revenue numbers. So far we have been very successful with that. Steven Gard - AM Investment Partners: Okay, great. Thanks.

Our next question comes from the line of Steve Martin with Slater Capital Management. Please proceed with your question. Steve Martin - Slater Capital Management: Thanks a lot. Most of my questions have been answered. However, Eric, if you look at your guidance for the September fiscal year versus the calendar '08, you are really only guiding through a fourth quarter or $0.30 to $0.35. Does that make sense given that your September quarter will be somewhere closer to 40?

Well, I mean we are guiding them between there. We do not know exactly where are the numbers, I mean basically you are looking at probably; this quarter comes in at $0.34 and $0.39. So basically, we are $0.56 right now. So to get where we need to be, we need another $0.74 to get to $1.30, $0.37 a quarter, so $0.34, $0.35 maybe $0.33 and then $0.39 to $0.40 the next. Steve Martin - Slater Capital Management: Okay.

I think we are very close in that range. Steve Martin - Slater Capital Management: Okay. Is the December quarter, and that does not include Las Vegas, if you close it?

That does not include Las Vegas, that includes -- Steve Martin - Slater Capital Management: Right. That would be another based on your guidance, another seven, roughly $0.07 on a straight line basis?

Yes. I have not seen that from additional start-up cost as we converted over and the attorney's fees and what not on the transaction of main cost, some cost in the beginning but that definitely what the run rate would be increased by. Steve Martin - Slater Capital Management: Okay. So if you assume you make the $1.55 to $1.60, that would not, and then you close Las Vegas sometime. What is your run rate when we get into '09 without any more acquisitions, just the one closing with…

With Vegas? Steve Martin - Slater Capital Management: With Vegas.

I believe we are well over $90 million. I mean, may be its $92 million, may be its $94 million, but definitely in the $90 million range. Steve Martin - Slater Capital Management: EPS?

Well, I mean we are, right now we are saying for the quarter, I think off everything we would not have the new acquisition then but, maybe if $1.70. Now, we are seeing $1.55 to $1.60 calendar. It is so hard to tell right now because we just do not know what Dallas and Philadelphia are going to do. Steve Martin - Slater Capital Management: Okay.

So what is going to happen to --

At a minimum you throw $0.29 onto the $1.55, $1.60?

Yes. Steve Martin - Slater Capital Management: Well, Phil you have I remember in the fourth quarter of last year, you only have in 2008, okay so you are talking first quarter 2009 which is October, November, December of this year. We only have 50 for one quarter.

Right. Steve Martin - Slater Capital Management: Okay. I think that is about it. Thank you very much.

All right. Thank you.

Our next question comes from the line of Jeff Feinberg with JLF. Please proceed with your question. Jeffrey Feinberg - JLF: Thanks very much. All my questions have been answered. Love what you are doing, just keep doing it.

All right. Well, that is the plan.

Our next question comes from the line of Gerry Brian a private investor. Please proceed with your question.

The question is, as the number of clubs increases, I just wondered if you can get your thoughts on how you see that helping on both the expense side and the income side. I know lets assume on the expense side there is some economy in the scale in terms of purchasing power, I would assume for the things that are common to club. However, how do you see benefits to each club in terms of from a corporate branding, for people maybe going between cities or what not?

Yes, certainly. Well, I mean, we see that now. We opened in -- when we took over cities in Miami, a lot of our New York customers traveled to Miami, have second homes in Miami, Florida, West Holm areas. Immediately we are seeing them in the clubs in Florida. The other we are seeing is, as business travelers, guys that travel from city to city, once they know our brand, we hope that they will continue to visit our location in all the cities that they are in, which we are seeing happen. I think as we grow and become a much stronger, more nationalized brand, we are often will do more national advertising. Right now, national advertising is expensive and cost prohibitive because we just -- we are not in enough major city, as we are in 30 major cities, the effect of that advertising will be much cost and efficient for us. However, we are really seeing and which is one of the main reasons we went after exotic brands from magazine and the reason is that the national liquor companies, a liquor company is one who keep their brand out there and fill their brand, we have a crew of probably 4,000 sales people with our entertainers, that can market their products for them. So they get point of sale marketing through all the promotions and in-house training that they can do through our staff, our way staff, our bartenders, our entertainers, as well as advertising our international magazine to the industry, comes at the trade show, help support the gentlemen club industry, Budweiser and a lot of these liquor companies do a lot of suffer the restaurant industries and the hotel industries and basically we have said in on that, and the casino, you can not ignore us any more, the gentlemen's club industry is a $2 billion industry and you have to pay attention to it. We have been getting a very positive response from them. So we are going to get national buying power that are paid lower prices for certain brands that will bring our cost down. So those are the type of synergies that we get as we get larger and larger.

Thank you.

Our next question comes from the line of Philip Calderon a Private Investor. Please proceed with your question.

Hey, great quarter guys.

Thank you.

On the last call, we talked about Las Vegas and how it could be the next hottest things for the acquisition. So now what is the next hottest city?

You know that is a big question there. We are looking everywhere. Obviously, we have moved into Dallas and the Philadelphia location. We would like to continue to branch half of our existing hubs where we have strong regional management, Miami, New York. We would like to maybe hit the major cities that branch up of either of those locations as well as continued expansion in Texas. However, we will be watching. We do not want to get Texas heavy again. We have managed to bring our Houston revenues down to about 10% of total revenue, about 5% of operating income. We would like to continue to basically spread our reach from market to market instead of being. We want to be clustered, but we do not want to cluster our risk. So those are things we look at. I mean I think we are going to look major cities on the West Coast. We are going to continue to look up and down to East Coast and maybe get into Detroit, Chicago, places we can spend off a Minnesota from maybe some places in Wisconsin or Indiana. Those are types of locations that we are getting calls on a regular basis. We have just pretty much tried to stay around our hubs and expand our hubs.

Okay, great. One other question if you do not mind. Last call we talked about our international and we want to see how that business is growing, if there has been any changes? Regarding the acquisition of the media companies, is there any international growth seen with that?

Not really, we bought the media company for the synergies within the industry. The main thing that we are looking at on international growth is really the licensing in Argentina. We have not really expanded out of the U.S. because there are just so much growth here for us. Once we have a national brand, American, strong American national brand, can we take that to international locations and be successful? We believe absolutely we can and we probably will. The point is for the next three to five years, there is just so much domestic growth that it really does not make sense for us to spend the money and the time and the energy learning all these new laws and all these new customs of these other countries to figure how to go and make money in our industry there.

Thanks for your time.

Yes. Thank you.

Our next question comes from the line of (Unidentified Analyst). Please proceed with your questions.

Hi, Eric, what's the guidance for Fiscal '09 is excluding Las Vegas?

We have not done that. We have not given any type of guidance. Basically, the run rate is about, I think the run rate probably about $72 million without Vegas, maybe 74 so you can probably extrapolate down from that through even margins and cost, maybe get to that number, but we just haven't put that together, yes.

Okay.

In August, we will give solid fiscal '09 guidance with our outlook probably either for calendar '09 or outlook for 2010. It is so hard and difficult because of the acquisition pipeline here now been and equity market acting the way they are right now, it is very difficult for us to figure how fast to grow. We want to grow as fast as we can, but we are not going to grow at the expanse of our existing shareholders. It is a point where we dilute existing shareholders or give up too cheap .If we have made acquisitions and we have got the growth and the market is not pricing that growth into our stock and we do not want to continue to give up the equity for the sake of growth, I mean, I think 100% growth is pretty phenomenal. Do we have to grow on growth 200% or 300%, using cheap equity, I do not believe that is the right thing to do.

Did you say what the Las Vegas acquisition adds to the fourth quarter? It is something another gentleman asked a question.

We do not have it will add about. We believe that it will add $0.29 annualized, the way it is right now. Now we do plan to make some changes there that we hope will increase revenues but based on where they are out right now, it would add about $0.29 for us, between $0.07 and $0.075 a quarter.

Got you. Thank you

Yes.

Our next question comes from the line of Peter Cyrus with Gorilla Capital. Please proceed with your question. Peter Cyrus - Gorilla Capital: It is Peter Cyrus, and you can do better than 100% growth?

I can. I am just not going to give our feedback, what we do it. I can probably grow at a 100% right now. We are pretty close with internal cash flow and some of the banks clients in depth that they we re able to pick recently. The trick is, there is some acquisitions out there for us like Las Vegas. There is couple other that we are looking at but I do not want to get into a contract situation on these acquisitions and be looking at raising money with a $19 stock, it just does not make sense with our earnings where they are right now. Peter Cyrus - Gorilla Capital: Actually couple of questions, I want to ask. First was, you were talking about your brand by which I gather you mean the Rick's brand, what about the other brands?

The Onyx brand is very strong as well. The XTC brand could be expanded, but it is really not something we are focused on at this time because those locations are very difficult to price. They are all nude as BOBY, most states with full nudity do not even allow lesser consumption, so it is a little different business model as we would expand outside of Texas, so we really haven't gone actively after expanding that brand. However, the Onyx, I mean we are looking at several locations around the country right now that have a lot of potential for the Onyx brand and we love to see that. Peter Cyrus - Gorilla Capital: So that is a very profitable, the Onyx brand.

It is the gentlemen club. It is the branding network that we are working on. Peter Cyrus - Gorilla Capital: Right, the Onyx brand itself is very profitable business for you, is not it?

Yes, it is. Peter Cyrus - Gorilla Capital: Second question, you mentioned before, yes I think somebody mentioned that the Scores in the Manhattan lost its liquor license, and somebody also mentioned, I do not know this is true that the Penthouse Club is turning into something other than a club?

I have heard rumors about it as well. I have seen nothing that confirms that other than, we have had some of their employees coming up, applied for jobs and continue to spread the rumors. However, I guess until they actually notify or say something, we do not know for sure. It is a rumor that our block is being bought by someone including the club location in -- Peter Cyrus - Gorilla Capital: I guess, the question I have is it, its pretty to get a license for a new club in a city like New York or assume another city. So when something like Scores loses his liquor license or if something different would happen in that space. You say you pick up the talent. How do you pick up the customers? Do they just know or they follow the talent?

Well, the nice thing about Scores customers are, they are big heart Stern fans, and sensibly has picked up Lonnie and Lonnie has been a head up on the Stern Show and the Stern Show has been so supportive of Rick's, we can not pay enough for the help they gave us in the Grand Opening at Philadelphia. Gary and Ronnie came out on sites and they were fantastic. Great draw, great sports locked upon really, really made the grand opening party a huge success for us. However, they, they talk about Rick's on the show. The fans go to Scores that is not opening, I know they would just go over to Rick's and I think that is helping a lot. The rest of it I think is word of mouth. As we continue to grow, we have always said in New York City, that marketing, true marketing in the sense that you do in other cities just does not work. You can not afford to pay the market 15 million people when a $1.5 million are more your potential customer base. Peter Cyrus - Gorilla Capital: However, it does not hurt if your expansion just kept cold.

Right, exactly. That does not hurt anything. Peter Cyrus - Gorilla Capital: Well, keep up the good work, Eric.

All right. We will do it. Thank you very much.

Our next question comes from the line of Jacinth (inaudible) a private investor. Please proceed with your question.

Eric, very congratulations.

Thank you.

Actually, you have answered my question, about two seconds I was going to ask you about if you are looking going international at all? I am just curious about what your idea.

We are looking in the US, it is so strong right now. When we need to look internationally to continue our growth strategy we will, but I think right now it is just so much domestically, and it is so much easier to operate. It is so much easier to operate, we know the laws, and there we have the attorneys here in this country. We have the things we need to be successful in this country and the growth is -- I mean we do not have access to an camp of the grow. Everything is grown the US right now. So, I do not see why we would want to go spend capital outside of the US at this time.

I do not really disagree, it makes sense.

Thanks you

Our next question comes from the line of Chuck Lipson with CSL Associates. Please proceed with your question. Chuck Lipson - CSL Associates: Back again, did you say during the conference call that your modeling was based on 6% comps?

Yes. Chuck Lipson - CSL Associates: Okay. So, we only know the first month but you are so much ahead of that.

We have decided to go to the Coral Reef for a couple of reasons. We are getting in some major cities. Now we are spreading in all these different cities and these huge events on a monthly basis that affect specific locations directly. NCAA tournaments football, so, we figure on a quarterly basis that is pretty much even out. However, on a months and month's basis, some times our comps 17%, because we have a huge events that are a one time event. We wanted to even it out, trying to get people a much better constant flow of revenues growth with 8.4% for the quarter on main stores sale. One month was twelve, one month was four. Jim, to me it does not make sense to our long-term investors, the traders, they probably hate the fact that we are going to monthly, going quarterly field, but long-term investors understand it. They better have solid information, you do not to be making long-term decisions on information that is not necessarily 100% accurate, but I do not think it tells the real story of the company and the growth, in a quarterly basis it well. Chuck Lipson - CSL Associates: I agree with the quarterly which was you either buy into it whether do not have hang on each month to say that something has changed dramatically. You said you wanted to use more debt especially with your stock down here. Would that include convertible debt or would that be the just straight debt you like?

We have used converts, small converts in the past. What I do not want to do is to create any major market overhead. I have studied these convert deals that some of these companies do. While GM or Kraft can get away with the large convert, I just do not believe a small cap company like Rick's could go out and do -- I mean we can do this $1 million, $2 million here for quick money if we need it for specific deal. The return on the investment is so huge that it makes sense for us to do. However, to do a large one, I am not leaning towards that, at this time at all. I just think that it puts cap on us to slow us down. While we would work right through it, but I feel like it would be like putting the breaks down for a six months or 12 months period, if we did that. Chuck Lipson - CSL Associates: Okay. Thank you.

It is pretty much around that. It is very confusing, it is hard to weigh all these factors, that is one of the things we do really on a deal-by-deal basis and in an overall basis is, how do we fund it and not timing our growth going forward. We want to keep that growth moving. Chuck Lipson - CSL Associates: You are doing it so far.

Yes, thanks.

Our next question comes from the line Harold Hoffman with Stonegate Securities. Please proceed with your question. Herald Hoffman - Stonegate Securities: Hey, good afternoon, Harold, I just wanted to ask you about a little bit more on some of the acquisition financing. Just moving forward, you obviously were really successful on structuring the Dallas deal with the mortgage debt. I was just wondering if you have seen in some of the other markets where the real estate has already been more volatile and seen more of downturn, if you seen any inclination that there will be a restriction in commercial financing in those markets or just generally around the country and if you did run into that later in the year. How might that, if at all, constrict your acquisition pipeline or your strategy on it?

I guess the big thing that we have right now is, we have never had been financing before. A few deals here and there 40% to 50% loaned values from some banks that took the chance, some smaller banks here, very regionalized banks in Texas that have done some financing for us. We are starting to get a little more solid base, our cash flow is so huge that they can not ignore us. With the credit crunch with that right now, good lenders are in high demand with these banks. It is a double edge source force because its recession and its causing the problem here and there. However, at the same time, it is opening up opportunities to Rick's that we did not have before. I think we will continue to see deals done with banks financing for the real estate, which is what we have always wanted. We hate to give up equity for real estate. The return on equity for real estate is 8% or 9% invested. When we go do this close, we will get 30% to 40% return on investment. In the past, having to come up with all that money for real state definitely has dragged us down a little bit our return on equity. We are very conscious of that, but at the same time we do believe that owning the real estate gives us a huge competitive long-term advantage and we are a long-term thinking company. We are not just worried about this month and next month and next quarter and next year, but we are worried about where we are going to be three years from now and five years from now. Herald Hoffman - Stonegate Securities: Thank you.

Thank you.

Our next question comes from the line of Scott Coleman with Clements Capital Please proceed with your question. Scott Coleman - Clemens Capital: Eric, congratulations on a great quarter and great guidance. I wanted to say as a long-term shareholder I am aligned with your outlook of not trying to grow at such a high cost. However, my question is were there any weather issues this past quarter that might have slowed things down that were abnormal for this season?

I know that Minnesota is very warm. I think Minnesota definitely had some weather and New York had a couple of storms, but I think it was like one to two night effects, slow effects. What we are seeing in this economy is when people do not come in for couple of days, these clubs have few couple slow days, maybe they missed the normal Tuesday, Wednesday, Thursday night out for whatever reason, then they may come out on Friday and go crazy, they get cabin fever. So, overall, we haven't seen that. We have seen the business model at certain locations has changed a little bit to that thing. The weekdays are little slower, the weekends are little busier, but overall the spending is pretty consistent when you take it on a month-to-month basis and week-to-week basis. Scott Coleman - Clemens Capital: Okay. If you would go over, how you think about the put options that are in some of the buyer contracts that you have done?

I am glad you asked that because a lot of people are very confused and now they think it is going to create this huge market overhang or the older stock is going to be dumped on the market and that is absolutely not the truth. Both of the deals, we have two deals. If you look on our balance sheet, you will see a line call temporary equity and that temporary equity right now is little over $5 million and represents 230,000 shares of stock from the Dallas transaction. I am sorry that 230 is only the Philadelphia transaction and the Austin transaction. There will be an additional 210,000 shares added that. So right now we have about 440,000 shares through April. However, for example, the Philadelphia transaction, those shares can be put back to us at 5000 shares a month. It creates about a $100,000 a month cash call. If the stock is trading below a margin, we would have to put it into the market and we have decided just to buyback the $23 a share. It would take the owner about four years to put all that stock back to us. So it is not like, it is going to be a big giant cash call we have to come up with one day where more than free cash flowing enough money. The Dallas transaction is very similar, each partner can put 5000 shares to us if they want to, so it is 10,000. So total you are looking about $300 and some thousand, $400,000 in cash flow, if we had to buy every single share back at the absolute for a put price. We also have the option to have them the shares in the markets. So the stock is $21, we can have them sell the stock in the market for $21, the 5000 shares which right now 5000 shares coming in the market is not going to hurt anything. If they just ever day the stock goes at $30 and they want to sell, they are still limited to 10,000 shares in a week, 25,000 in a month or 70,000 shares in a quarter. So we believe that we set it up so that the any stock that enters the market will enter in an orderly fashion and if the company actually have to buy that stock back that we have more than adequate cash flow to buy it back and basically it is an interest free loan for us. Scott Coleman - Clemens Capital: So at this point, all those shares are in the current diluted share account?

Yes, they are. Scott Coleman - Clemens Capital: I just picked up on something that I did not know before, I think you said the stock is trading at $20.

Right. Scott Coleman - Clemens Capital: The strike on the out is $23. You can ask them to sell it in the market and then you have to write them a check for $3 a share rather than having to buy it for $23 a shares.

Exactly. Scott Coleman - Clemens Capital: Okay.

Like I said its 5,000 shares a month, the market could absorb 5,000 shares, I think our average daily volume right now is in the 300,000 range or so. So, I mean, the market would not even know, if they were selling. You would not, other than if we told you or you know as far as the price, I think would have very minimal effect on the stock price. in any circumstance whether the stock is slower, whether the stock is higher, I think it is a non-issue. Scott Coleman - Clemens Capital: Great.

We design those put options for that exact reason. A, it gives the seller of the club a little guarantee or cushion that he has given us his asset for value he is going to receive at a later date and limits his downsize without putting any undue strain on the company to be able to perform under the terms. Scott Coleman - Clemens Capital: Got you. Great deal, thanks.

Thank you.

Mr. Langan and Mr. Priaulx, there are no further questions at this time. I would like to turn the floor back over to you for any closing comments you may have.

Yes, I just want to add that starting tomorrow a transcript of this call will be available on seekingalpha.com as it is after every quarterly call. Again, remind everybody who is in the New York area to attend our Due Diligence Ball on May 13th from 6 to 8, you will have a good time, you get a chance to look at the club. Eric, do you have any final comments?

No, I think that is it. Look forward to seeing everybody in New York next week. We are going to continue to grow the company. I appreciate your support.