Allan Priaulx – Investor & Corporate Communications Eric Langan – Chairman, President & CEO

Eric Wold – Merriman Curhan Ford Scott Kolman – Credence Capital Management Jamie Clement – Sidoti & Co.

Welcome to the conference call and webcast for the First Quarter of Fiscal ‘09 of Rick’s Cabaret International. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. We will open the call with a brief message from, Allan Priaulx, Investor Relations for Rick’s Cabaret, who will be followed by Eric Langan, President and CEO of the company. Mr. Langan will take you through the company’s PowerPoint presentation available through www.ricks.com or through the PrecisionIR website at www.investorcalendar.com. It is now my pleasure to introduce your host, Allan Priaulx, Investor Relations for Rick’s Cabaret. Thank you Mr. Priaulx, you may begin.

Thank you, Doug. Good afternoon. I’m Allan Priaulx, Investor Relations for Rick’s Cabaret. Welcome to the first quarter ‘09 conference call and webcast for our company. In a moment I’ll turn the call over to Eric Langan, our President and CEO. Before I do, however, I want to draw your attention to our Safe Harbor statement, which is available in our PowerPoint presentation posted on our website and through PrecisionIR. Doug has just given you the URLs for those. Also I want to let you know that Phil Marshall, our CFO, is on the call today, but he is out of town because of a family emergency, so he will not be participating in our call. Also for those of you who are in New York City, we hope that you will join us tonight at our Due Diligence Ball at Rick’s Cabaret, New York City, which is at 50 West 33rd Street, between Fifth Avenue and Broadway. And now, I’ll turn the call over to Eric Langan. Eric?

Thank you, Allan, and welcome, everyone. I’ll just start with the first quarter 2009 overview, overview reviewing our first quarter performance. We are going to review what we're doing to improve the performance on a forward going basis, how we are focused on our operations and our cash generation, how certain of our clubs are in a sweet spot and will have strong financial – strong impact or a future impact, and then get to our question-and-answer session. To give a snapshot of 2009, our total revenues for the first quarter were $17.3 million versus $10.95 million in the first quarter of last year, a 58% increase. However, net income was $790,000 versus $1.78 million or $0.08 per fully diluted share versus $0.24 in the first quarter of last year. Part of that is because our same store sales were essentially flat; however, our cash flows do continue to be strong. What we have done so far at the end of the first quarter and through this quarter, the beginning of January and February of this year, to improve what is going on, is we anticipated a downturn and we have taken steps to lessen the impact. However, in December, it really started to deteriorate a little more than – a little more so than in September as consumer spending continued to decline. Our first quarter demonstrates that we are recession resistant and not recession proof, and that we are still earning money, and still have positive cash flow, however not on target where we would like to be. Our New York City and Miami clubs remain very strong. Sales there are continuing to increase on a year over year basis in January as well. We are adjusting to the spending pattern changes market by market. Major changes are in Las Vegas where we just entered have been very challenging others. We have also initiated major changes in Philadelphia, Dallas and Austin, which we will talk about here in a few seconds. And we're hoping to lower our high legal costs going forward due to some of these class action lawsuits and some of the law suits that we’ve had in Texas as well. Where we are in Vegas right now, is the club lost $678,000 in the first quarter of 2009. We are cutting costs by limiting our daytime operations. Our new operating hours are 4 p.m. to 8 a.m., seven days a week. We're also trimming staff and cutting other costs, including some tourist marketing stuff that we were doing and focusing more on locals. We are also forming new marketing partners such as this last Friday's event at the Hard Rock Hotel and Casino where we had the Rick’s Cabaret Poker Tournament, which was a big success for the Hard Rock, bringing lots of new faces to their hotel, into their poker room, as well as bringing people into the club afterwards. We are launching a very aggressive program to bring local customers in, including no cover charge and discounted drinks on our main floor areas for locals while we await the return of the tourist market. I have been in Vegas this last week and it has been very slow out there. Even the conventions that are out there are having much, much lower turnouts even than the reduced estimates that people have done. And with the financial community of course holding a lot of their conventions and meetings down there, it is going to be tough market for some time. However, I do believe that by focusing on the locals, which basically we have no cost to get that customer into the building versus the tourist market where with the cab payout are very expensive for us in paying for customers to come, and the tourists are not spending as much money as they were in the past, so it's a very challenging amount of money to overcome on each customer as they come in. So by switching to the local market, we don't have those upfront costs and so we are making profit on every drink that they buy from the beginning. Philadelphia is turning around, and we converted it into a Club Onyx concept. We, on Thanksgiving, we did the first Club Onyx concept night on a Thursday night. It was very successful for us. We continued it into December and both of the Thursdays in the December that we did it were very, very good. So basically about mid December, we just made the decision to convert it into a Club Onyx, ordered new signs and started the marketing which all began in January. We turned to profit at that club in January, which is the first time since we had it that we’ve actually turned a profit. Business is still growing there as we start seeing more athletes and more trendsetters, rap artists visiting the club and bringing more and more guess. Our two Dallas locations which were purchased in April and June, our Club Onyx in Dallas had a liquor license problem that is now being resolved. The problem involved in the transfer because we actually formed a new corporation to have that purchased rather than a takeover of the existing business, we had to get a new license. The existing license had a certain time we were able to operate on it, unfortunately it took us about six weeks longer than that to get our new license in place. So we were without a liquor license for most of this last quarter. That club has returned to profitability in January and we anticipate to see continued growth at that location. We’ve also converted the Rick’s cabaret in Dallas to an XTC cabaret format which allowed us to turn the liquor license in, stop all the legal battles that we have been having with the State Controller – I mean the TABC and the State Controller's offices in the city of Dallas on the liquor there, and revenues have surged at that location. If you combine those locations, if you look in the Q, we put a sheet in the Q that tells you exactly what we lost at each of those locations, and on an ongoing basis, I estimate that of the $1.9 million in losses from losing clubs in the last quarter, that between the Dallas properties and the Philadelphia locations, will eliminate over $900,000 of those losses on a going forward basis. So that should strengthen our earnings in the next quarter considerably. If you look at Rick’s Cabaret in New York City, we have had continued strength there. We have been consistently exceeding fiscal 2008 revenues, and our clientele is diverse there; it is not just the Wall Street clientele. A lot of people thought when the market crisis hit, that all the mortgage bankers would stop coming and our business would go down. And then when the Wall Street collapse happened that our business would go down. We have continued to grow year over year. We’ve become the number one upscale club in New York City as we planned. It took us a little longer than we thought, but I do believe we have reached that position. And because of that, like I said, we have a very diversified clientele. We don’t really cater to any one particular industry. We have also started billboard campaigns which are helping our weekend business, building our Friday and Saturday nights with billboard campaigns on the Long Island Expressway and the one in Times Square, they are having a great impact. Tootsie’s Cabaret in the Miami continues to be a strong performer for us. It is easily the leading club in Miami with strong sales and margins continuing, and we have had aggressive marketing campaigns there along with fight nights with the UFC and boxing matches, and we have done Hawaiian luau parties and similar VIP parties to draw more clientele and to bring our big spenders in. Even if they don't spend as much money as they used to, it is nice to have them visit in and come to the club. On a going forward basis, we're going to focus on our growth through our core competency, operating the top clubs and seizing the flight to quality advantage that we have in some of our markets. We're going to continue to really focus on those top clubs, because those are income producers and those are doing very well for us. We want to keep that going and then by re-concepting Philadelphia and the Dallas clubs, and looking at some of the other locations that we can make the number one clubs in their market, because we believe people are having a strong flight to quality. They are not going out three, four, five times a week. There are going out once or twice a week, and they are going to the top clubs, because they want to know they can go out and have a great time. They don't have – since they're not to be going out as much, they don't have that off night, they don't want that off night, and so we're focused on making sure that every night is a great night whenever they come to one of our properties. We're going to begin to cut costs, we are looking for ways to cut costs, increasing our operating efficiencies, so that we can raise our gross margins. We’ve maintained rigid cash control systems and monitoring of all of our bar staff and cash handlers. We are also looking to control our legal costs which have gotten a little high in his last quarter due to some class action law suits we have and some of the increased demand. I think that in this next quarter – in March [ph] we will see a continuation of that for a little as we have some depositions and basically a mini trial in the Minnesota case, we have some depositions coming up in March in the New York case, all of which we believe in the end we will be vindicated and have very little exposure to any problems on those law suits. We're also looking at corporate overhead costs and ways to reduce our corporate overhead on a going forward basis. We have made some small changes in the past quarter and in the first month or so of this quarter and we are going to continue to do that on a going forward basis. We're using our marketing skills and our brand awareness to build on the equity and to build that brand quality. We're trying to bring more people into the clubs and since people are spending less and really focusing – the way we're going that is basically to go directly after certain competitors and try to pull business from their clubs into ours, as the overall pie is not really building as much. So therefore we have to focus on the customers that are out there and try to get those customers into our clubs, especially on the weekends and on night when we they are spending money. Right now focus is on operations, not on our stock price. While we are aware of the stock price, and being one of the largest shareholders of the company, I am personally very aware of it. I just don't believe that in this environment that it is where our focus should be. I believe our focus should be on running our clubs, on lowering losses at clubs that are losing money, and maximizing profits on the clubs that are making money. Our acquisition growth going forward is not really our main focus. We will resume – until we resume our growth. We still continue to look at opportunities as warranted and we do not plan to acquire any clubs that we buy that will be immediately accretive with no ramp up. We are not looking for start-up locations at this time. In summary, I would like to say that, with the first quarter behind us, we remain profitable and we are generating cash. We will continue to cut cost, improve our operating efficiency, continue to pay down debt. We are going to continue aggressive marketing tactics, target advertising and PR and valuable partnerships such as the deal that we are doing with the Hard Rock in Las Vegas. We will continue to look for more deals in that market and other markets. When the recession ends, I believe that we will be in a strong and well positioned to resume our roll up program and in a much better shape than most of our competitors from a cash standpoint and from the ability to use debt and equity on a going forward basis. That will end the formal presentation of the call. I invite everybody to if you have any questions to please queue in and ask the question, and I’ll also see some of you tonight at the club in New York for Due Diligence Ball. Thank you.

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. (Operator instructions). Our first question comes from the line of Eric Wold with Merriman Curhan Ford. Please proceed with your question. Eric Wold – Merriman Curhan Ford: Good afternoon, Eric and Allan.

How are you doing? Eric Wold – Merriman Curhan Ford: Good. A couple of questions. I guess, one, just an accounting question on the some of the promotions and discounts that you're running at some of the clubs, where does that cost appear? Is it in the advertising and marketing line, is it just lower revenues…

Well, some of it is in the decline, especially some of the newer clubs. As you’ll see, our cost of goods sold and our payroll in our stores, same store sales, stores that are open a year or longer, actually declined, while – yet our overall, if you look at the nice little chart we did that gives you all of the percentages in the Q, you will see – and then our advertising, of course, went from 3.3% of gross to 6.8% of gross, an increase basically from $360,000 to almost $1.2 million. So you have the majority of it going into advertising and marketing. Eric Wold – Merriman Curhan Ford: I guess the question is, if you normally charge someone let’s say 15 bucks entry free and now you charge – you do a promotion charge implies you actually charge $10 through advertising and marketing, or does revenues get decreased by…

No, just revenue decrease. Eric Wold – Merriman Curhan Ford: Okay, yes. Revenue decreases.

And you will see overall we have kind of still kept it pretty steady. If you look at our service revenues at 45.9% of revenues and this year we are 47.3% of revenues. Actually service revenues increased a little because while we may be charging less, we are actually getting more people in, but they are spending a little less money too. So it has basically kept the majority of the percentages in line year over year. Eric Wold – Merriman Curhan Ford: Actually that does get to my next question is, is the toughest part getting people in the door, or once they are in, getting money out of them? I guess in a way what I am asking is, is it someone coming in there …

It is a little bit of both. I mean actually we are doing it, and it’s just – you know half the battle is getting them in the door, and the other half of the battle is getting them to spend money once we get them in. I guess there's a lot of nights where you have 50 people sitting around, sipping on their one drink or one beer. And you go around and the waiters push on them, the dancers push on them, but you can tell they are just there to basically escape, kickback a little bit, and there is not a move to spend a lot of money. And then, of course, what’s crazy is, you know, the next week they come in and the same guys are blowing it up and going crazy, simply because they just have all that pent-up demand in them, and want to get out. It is a very difficult market in that you never know what mood the customer is in, so you had to make sure that either mood he is, he is getting treated great, and that's the real promise, especially with the wait staff and the entertainers and the management, just because the guy is not spending money tonight, doesn't mean he is not going to come back this weekend to spend money, and keeping that customer service going, and making sure that the girls don't get discouraged, and keeping them coming back. That is the challenge in an environment like we are in right now. Eric Wold – Merriman Curhan Ford: Okay. And then last question, I think on the third – sorry, on your fourth quarter conference call, there were three clubs that were losing money. Now in the last quarter, there were five clubs losing money, and I guess some obviously have turned profitable since then, are there any clubs besides those that are kind of on a downward trajectory that you are looking for that could flip over?

Yes. I mean we have a lot of clubs that are very close. And while we only – we have a couple of other clubs that may have lost a small amount of money in the quarter other than the five that we named. These were the five that were the majority of the $1.9 million. And if you look, we specifically give you the exact amount of income before taxes that we lost at each of those locations, and we feel those are the ones we are focusing on right now. Overall I think the other clubs are pretty much – they have kind of bottomed out where they are out, and it is just a matter of now getting the costs in line and putting the right marketing plan in there to draw in the business that’s out there. Eric Wold – Merriman Curhan Ford: I guess just a final question, if you do start looking towards the acquisition market, you obviously you want to buy clubs that are immediately accretive, which would exclude probably a clubs that is out there that is losing money. If you take the clubs that are losing money, probably the guys are coming down in price quicker, so you are still kind of priced out of the market the clubs you want to buy or still…

I think a lot of – you know a lot of people in our industry, reality hasn't sunk in a hundred percent yet. Everybody thinks it is going to get better tomorrow still, not everybody, but a lot of them. You know I have talked to several owners, mainly accretive, if we find a location that we think is a number one and number two location, that may not be profitable to the current owner, but if we could re-concept it into an XTC or a Club Onyx format or Tootsie type format, or a Rick’s format, that we believe will be accretive to us, that wouldn’t rule out us buying that location. Eric Wold – Merriman Curhan Ford: Perfect. Thanks, guys.

Our next question comes from the line of Scott Kolman with Credence Capital Management. Please proceed with your question. Scott Kolman – Credence Capital Management: Hi. If you guys could just go over the cash flow, you said cash flow is still doing well, if you could put some numbers on it and what they were and what you are expecting them to be?

If you look at our EBITDA, EBITDA would be the operating income of about $2.1 million, add back the deposition and amortization of about (inaudible) we had about $2.9 million in EBITDA. The biggest change in our cash position was due to change in operating debt and some liabilities and that we paid off several million dollars in debt, both accrued current liabilities and long-term debt. Scott Kolman – Credence Capital Management: So how much less interest will you be paying quarterly because of the debt you paid off?

I don't have the exact number, but I know we paid off about $1.4 million, the entire interest debt, some of it was 12%, some of it was 10%. I know that will be considerable savings for us on an annualized basis. I just don't have all that directly in front of me, and the interest reduction, but it will start showing. I think we paid $833,000 interest expense in this quarter, so you will starting seeing that number decline. Scott Kolman – Credence Capital Management: Okay. So if we assume that the two revamped clubs can do breakeven going forward…

We believe that the Philadelphia club will actually post a profit in the quarter. We posted a profit in January, and February numbers, we almost ran as much in the first 16 days of February as we ran in the entire month of January. So, we are very – Philadelphia's very, very promising for us, the fact I think that that club will do probably over $300,000 plus a month now versus when it was originally doing about $120,000, so a very graphic change. We know that the Dallas Onyx location as well with no liquor license lost money in last quarter, I believe $180,000-some – I am trying to find it right here in front of me right now – the Philadelphia location lost $276,000 last quarter. I believe it will post a profit probably in excess of $100,000 in the quarter. So that turnaround right there is probably about a $400,000 turnaround. The Dallas Club which lost $323,000 in the last quarter, I think worst case is breakeven, it may even make a little money. We had some significant advertising costs on the conversion because basically we closed on a Monday and we re-opened on a Thursday – I mean on Sunday and re-opened on a Thursday. So we spent a bunch of money in that four-day period and then, of course, going through the first few weeks of the opening. So we will recoup most of the money back in January, probably will make the rest of it back through February. We have continued some advertising in February, but about half what we did in January, and will probably halve that number again in March on a going forward basis. We just won’t need it with word of mouth spreading out. Our weekends are building. I mean we’ve got Fridays and Saturdays than Valentine's Day where we can’t put anybody – any more people in the building from about 11:30, 11, 11:30 at night till about three o'clock in the morning. So it just gets to the point where it doesn't do any good to really promote those days. So that club, that’s another $300,000-some odd turnaround. Trying to find the Austin location, and I'm hoping that we take those losses under $150,000 in this quarter, and then hopefully even less on a going forward basis as we focus on just that night shift and continue to build on that format versus the old format. And then the Dallas Onyx was a $200,000 loss, and it made money in January, will make money going forward, so that could be another $300,000 turnaround. Scott Kolman – Credence Capital Management: Okay. So (inaudible) things out correctly, barring anymore cash out for debt – for retiring debt or the put options that are coming up, just on an operating free cash flow basis, just to stick to your term, we should be back up to about a million a month, I think.

Yes, I think we are going to be really close. Scott Kolman – Credence Capital Management: Yes, okay. And then have you got any indication…

Depending on what Vegas does to us, I mean Vegas is the – Vegas is the tough one right now. Scott Kolman – Credence Capital Management: Right.

I mean, you know, to give you an idea of the change in the Vegas market, we basically ran more in the first week we owned Vegas than we did in the month of December. I mean it is a tough, tough market out there right now. It did bounce back in January, and we're hoping – the first week of February was fairly strong with the Super Bowl, and then this past week was a little off, but now we have some conventions coming up this week that look very promising. We’ve got some parties, but I mean we can basically go by our reservations counter and kind of know pretty much how our weeks are going to be. Scott Kolman – Credence Capital Management: Okay. So then what then – have you gotten any indications so far on the puts that will be exercisable starting in March?

They started at the end of March basically – in April. We have been in negotiations with several of the holders to reduce – basically to extend out the puts. So I don't know exactly – actually those are ongoing negotiations where we haven't reached terms with them yet, but hopefully we will hear now that we're getting close. I mean there are still several weeks before they have to make any decisions. We want to get our financials out so they – a lot them wanted to see our current financials, see what our cash position were, see how business was going, before they made any decisions. I'm expecting that we will definitely get some concession, but what the concessions will be at this point, I just don’t know. Scott Kolman – Credence Capital Management: I'm sorry. When you say extend out the puts, what do you mean by that?

Well, for example, right now they have the right to put 5,000 shares a month to us for a set period of time, 36 months or whatever. So what we would do is, say, instead of putting 5,000, lower the amount to 3000, but instead of 36 months, of course, it's going to be extended out to 42 or 48 months or however long the new deal is. Or what we may do is lower the front load and increase the back load, so they put 3,000 to us this year, and then the third year, they put 7,000 to us. Those are some of the ideas that we are looking into right now. Scott Kolman – Credence Capital Management: Okay.

And that way, when they put those to us, maybe the stock price is higher so the cash outlay from the company is much less. Scott Kolman – Credence Capital Management: Right okay. All right, thank you. I appreciate it.

Thank you.

(Operator instructions). Our next question comes from the line of Jamie Clement from Sidoti & Co. Please proceed with your question. Jamie Clement – Sidoti & Co.: Hi. Eric, Allan, good afternoon.

Good afternoon James. How are you?: Jamie Clement – Sidoti & Co.: Hi, Eric. I just wanted to – I did not have a chance to look through the 10Q yet, but just getting back to some of your prepared remarks, and I think some of the answers to the questions that were just asked, I think you said that the $1.9 million associated with the five money-losing clubs, I think…

It’s not all clubs. The $1.9 million is all losing clubs combined. Jamie Clement – Sidoti & Co.: Right, all the money losing clubs combined. I think with the re-branding in Philly and Dallas and with the planned sale of San Antonio, did those three things equal the $900,000 that you thought you might be able to narrow that quarterly…

San Antonio, the write-off is not included in the $1.9 million. Jamie Clement – Sidoti & Co.: Right, but just…

We have a $220,000 impairment that we took in addition to the $1.9 million. Jamie Clement – Sidoti & Co.: Right. So leaving that out a bit, I think – I thought you were alluding to Dallas, was just you were alluding to Dallas and Philly in getting those things squared away, so re-branding behind you, you thought that would narrow the loss of $900,000 a quarter?

Yes. Jamie Clement – Sidoti & Co.: Okay. What is the in your just estimation at this point like you said in the next couple of months to be on that run rate or about how long will that take?

No, I think this quarter … Jamie Clement – Sidoti & Co.: You think, okay.

I think we have already done it in January. I mean Philadelphia made a profit in January, the Dallas Onyx made a profit in January. There's no reason to believe that either of those clubs won’t continue to be profitable for the February and March. The XTC in Dallas didn’t post a profit because it was only an XTC for half the month, we are still just a little under breakeven, even with all the additional advertising costs. The advertising cost reduced, in the first two weeks, we're seeing the revenues continue along the lines of when we first opened, so that we are seeing no decrease in the revenues; in fact, we are seeing increases in business on the weekends still. So we are still seeing growth in the revenues. We're still not charging that tip out to the girls, we basically have the girls – all the girls started in January, and tip out credit to allow them to have free tip outs most of February. So in March we will actually start making money from the girls as well in tip out. So as that continues, I think there is good reason – the worst case scenario for the Dallas Club is it breaks even, it probably will make a little bit of money. Jamie Clement – Sidoti & Co.: Okay. Just Eric, if I may, just moving on to Vegas, I don’t know how much granularity of details on the amount of money you save by changing your hours of operations in Vegas, but can you give us a rough sense you think of by narrowing hours…

Probably about $40,000 a month in costs from the day shift. In addition to that, we have cut back considerable amount of the marketing we have in taxi cabs drop that were very tourist orientated that we ditched it. It’s probably – I think we are paying about $22,000 a month for those. We have got some billboards coming up, we're probably going to get rid of, they are basically tourist billboards. We may convert that into rotating billboards that basically pop up all over the local area, for the locals, to try to cater to those locals, we may just let the billboards go, we haven't really decided. Really Vegas, well, I was out there all of last week, I'm flying back out on Friday again, I'll be there for about three weeks, and then I’ll have a much better handle on how we're going to really reign in the costs. January wasn't as bad as October, November, December, because we had already made a lot of cuts and lowered a lot of costs going into January. And January was actually you know not a great month by old terms, but by October, November, December terms, it wasn’t a bad month. Jamie Clement – Sidoti & Co.: Okay. And look Eric, I wanted to ask your thoughts, the payout to the cabs out there, I mean in this economic environment, how sustainable for your competitors is $50 a head?

You know I don't think they can do it for ever, that’s for sure. It is (inaudible) that’s why we've looked at the local business, we are looking to bring in the local business, nobody else wants it. We'll take it, we will cater to those locals. It will save us a lot of money, and it is a different business than the tourist business, but you can still build a solid location out of it, which is what we want to do. Jamie Clement – Sidoti & Co.: Okay, right. Thank you. Eric, Allan, thank you very much for your time.

Thank you, Jamie.

There are no other questions in the queue at this time. I would like to hand it back over to management for closing comments.

All right. Well, thank you everybody for calling in. Hope I’ll see a bunch of you guys in the club (inaudible) I think a couple of you on the call that are quite not coming in, I will see you there. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time.