Allan Priaulx - Investor and Corporate Communications Eric Langan - Chairman, President and CEO

Jamie Clement - Sidoti & Company Eric Wold - Merriman Curhan Ford and Group Richard Kim - Kensington David Johnson Brian Burns David Griffith

Greetings, and welcome to the Rick’s Cabaret International Inc. Fourth Quarter and Year-End 2009 Earnings Conference 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, Allan Priaulx, Investor Relations; Eric Langan, President and CEO; and Phil Marshall, CFO for Rick’s Cabaret International Inc. Thank you. Mr. Priaulx, you may now begin.

Thank you very much. In the following conference call you may hear oral forward-looking statements that are covered under the provisions of Section 27A of the Securities Act of 1933 regarding Safe Harbor Statements. Forward-looking statements may involve revenue, income and other business activities of Rick’s Cabaret. Actual results could differ materially from those projected in the forward-looking statements as a result of many factors. Under provisions of the Safe Harbor Act, the company is under no obligation to correct, update, or amend oral statements. So, we call your attention to the fact that definitive information about the company is presented on the company’s website, www.ricks.com and in filings made to the SEC, also available on our website. Now here’s Eric Langan, President and CEO of Rick’s Cabaret who will briefly summarize our fourth quarter and full year results and then answer any questions you may have. Eric?

Thank you, Allan. And thanks everyone for taking your time to call in and listen today. We begin with a quick overview. We’re going to review our fourth quarter ‘09 performance, highlights of the full fiscal year, keys to performance improvement, update on our acquisition strategies, and then have a brief question-and-answer session at the end of this presentation. The fourth quarter of ‘09 was a much better quarter for us for the year. As you’ll see, our total fourth quarter revenues was up 18.85 million up from 16.3 million in 2008, a 16.84% increase. Our net income was 1.79 million in the fourth quarter versus 1.44 million last year or a 24% increase over last year. Earnings per share, $0.19 versus $0.14 last year. We’ve had overall improvement, and our cash flow continues to be strong. And I believe we’re going to continue to see this trend continue as consumers are starting to spend more money, and the marketing that we put into place over the last six months has driven our customer traffic. We have a higher customer traffic, though the average per head was lower than previous year, or the average spending per customer was lower than previous years, we’re starting to see that trend start to increase, where customers are actually spending more per visit. And if that continues on a going forward basis, we’ll continue to see our revenues, and definitely our net income start to increase. For the fiscal year 2009, total revenues were 17.15 million, I’m sorry, 75.1 million, yes, up 29.8% over 2008. Net income declined over the previous year to 5.21 million versus 7.66 million, impacted largely by our Las Vegas marketing expenses, some other heavy legal expenses that we’ve had in this year, and just economy related discountings that have affected our margins with extended happy hours and other drink discounting. Same-club sales were off 4.1% for the year, but the average customer counts are up as we said; just customer spending is down. We believe that we’re building our market share with our current programs and plan to continue those programs moving forward. So we may start cutting back certain heavier expenses that we’re able to track to see that we’re not getting the results we want from that marketing and either reroute those marketing dollars if needed or if we’re able to eliminate those marketing dollars, so that we can push that money to the bottom line. Our major impacts for 2009, if you’ll move on to slide number six, 2008 acquisitions were a drag on our profit, including about a $2 million loss in Las Vegas. We believe that was basically a timing issue where we had no idea the economy was going to go into the tailspin that it did. And I think that as we move forward, we’ve got a much better grasp of how to work in Las Vegas market. We’ve created the Rick’s name and branded it, as one of the top locations to visit in Las Vegas now. And I believe as we move into the high convention business, as we move into January with CES and then the concrete convention, and then move into March with the NCAA tournament, that we’ll start seeing those customers that were there last year return to us again this year. And the acquisition cost of those customers will hopefully be less and we’ll start seeing that location actually even turn a profit. The other thing we’ve done is we’ve closed our unprofitable locations and actually placed a couple of those locations up for sale now. We believe that at this time, there’s no sense in chasing and using management’s time and resources in locations that aren’t really making us money, when we can take it and now we’re acquiring clubs again, move it into those clubs, and move it into continuing to see increases in our existing same-stores. Excuse me. We’ve also had much higher than usual legal expenses. Now we were able to settle the case in Minnesota. The New York case is still pending. And we will still see some costs from New York, but at least now there’s only one case instead of two, and hopefully, our legal costs will go down a little bit through this year. And I think most of the costs are going to be occurred in the next six months. So, hopefully, as we move through that process and get those costs out of the way, for the full year of 2010, we’ll actually see a decline in overall legal costs. Moving on to slide number seven, talking about Las Vegas. We do continue the marketing campaign out there, though there has been some agreement and it seems like we’re able to lower our costs significantly going into the last 60 days. And hopefully, on a going forward basis, especially as we can return to the big convention season, hopefully we’ll be able to lower those costs. However, we are prepared to continue those costs, if needed, to not lose market share. The one mistake we made when we first took the location over was trying to keep those marketing costs down at the expense of the brand and of our market share and we can’t make that mistake again going into the high convention time. We are considered among the top clubs in Las Vegas now. We’re recommended by the drivers. Our locals program, where we do a locals party basically every nine days has been fantastic. It brings a lot of locals to the club. A lot of those people work in the casino industry, work in the nightclub industry. They come in on their nights off and party at Rick’s, so that when they’re back at work they recommend Rick’s to the clients that they’re serving in their businesses. I expect to see further improvement as the economy rebounds. With the new City Center opening, hopefully traffic in Las Vegas is going to continue to increase. And hopefully, what we’ll see is a better convention traffic. I know that they’ve done some – the casinos have made major pushes to bring conventions back to Las Vegas, and from what I’ve seen on some of the preliminary numbers that they’re expecting. We should definitely see a benefit to Rick’s with that – from there. Moving on to Tootsie’s in Miami, obviously that’s one of our most profitable locations. We expect that, especially in the January to March quarter, this location is going to see a very, very big winter for us, as we’re preparing for the Super Bowl and the Pro Bowl. We have basically two weeks of parties planned at the club now, including the NFC and AFC media parties; a Vivid party that we’re going to have at the club; one of the radio stations, a sports radio station is doing some parties there. And we expect to have a few more parties to announce as we get closer to the Pro Bowl and the Super Bowl there. We have created the new party rooms upstairs, which basically allows you to – there are four of these rooms. They have basically their own bar in them. They have their own stage and own sound and lighting systems, satellite television, whatnot. And we rent these out. So basically rent your own little private club inside the club. We expect those rooms to be very, very profitable for us during this two week period as well, as groups look for places to throw parties. And the fact that our 6 am liquor license in Miami, lets people have their parties and run them much later than some of the other venues. Moving on to the next slide, our New York City location, the club has been doing very, very well. The media events that we’re starting to have there have been fantastic. I know that they just did the Toys for Tots event there last night and it was fantastic. Lots of toys, lots of people at the club. The only complaint that I have had from New York now is that people can’t get in sometimes. It’s getting that busy, which is great for us. We continue with our aggressive marketing there, including our street teams and some of the billboards that we put up. And once again I say we’re continuing to see improvement in the results there. When we originally built that location, we thought that the maximum sales per week at that location could be – would be about $300,000. We now know that that’s not the case. We have exceeded that number on several different weeks and I expect that the average at that location may actually start beating that number. As far as acquisition strategy goes, we have raised $7.2 million in August. We bought Cabaret North in Ft. Worth for 2.3 million, so we only need the small portion of that money. And at the same time, we are generating cash flow. I think our current cash-on-hand is well over $12 million, and – so we still have plenty of money available for more acquisitions. We’ve announced the new location by the DFW Airport that we will be having built for us, that is a turnkey operation. I know there were some misunderstandings on a few people. This is a $4.5 million turnkey purchase by us. We’re not paying any money for the construction until it is absolutely completed. The contractor and the land owner’s contract in building – are built to suit for us, and so actually our money will not be invested until closing, when the club is ready to open. So, that money is still available with us. We believe that the location will appraise for much higher than the $4.5 million that we’ll have – that we have the right to purchase it for when the construction is complete. And while we have not secured any type of financing for that location at this time, we do believe that we will be able to at least partially finance part of that $4.5 million against the assets and the land. So, we won’t have to use our full $4.5 million of our cash-on-hand to close that transaction. We’re reviewing several other acquisition targets, but we’re still taking our time to get the best deals. I think that on a going forward basis, if we can close an acquisition every quarter we’re going to be happy with that, unless something major comes up that causes us to increase that pace. We’re still focusing on building our brand names and focusing on major markets. But we’re looking at some things outside our normal level of comfort and market our – marketed comfort simply because the deals out there are starting to get better. And we believe that we’ve seen the bottom of consumer spending for our industry at least, and that consumers are going to continue to start spending more money at our clubs. Going on to our outlook, with 2009 behind us, we’re definitely looking forward to a much better 2010. We definitely believe that the first half of 2010 will be very, very strong for us, especially when compared to last year, as we had a much weaker quarter in October to December, and even January, February and March. The Super Bowl and Pro Bowl games in Miami, we have the NBA All-Star Game in Dallas; we’re already booking and setting up parties at our clubs for these events, which will definitely increase revenue. We’re looking for and receiving marketing dollars from different groups that want to market and advertise in our clubs during this time period. We’ll continue to expect strong revenues and increases in income in 2010, and while we’re not prepared to put out guidance at this time, I do believe that as we move through the next few weeks that the company will probably consider issuing some type of guidance on a going forward basis. I do think that we’re much closer to being in the range where we are at this quarter of $0.19 a quarter. Obviously, the January, February and March quarter, we expect to be much higher than normal, and so it should put us on a pretty good course to be in line with where the analysts – the analysts have us for 2010. And once we have a better feel for everything, we’ll know exactly what it is. The other thing I’d like to do is let everyone know that the new Cabaret North location in Ft. Worth, we had a very, very good build of the business at that location, where we’ve actually taken the business from about the 200,000 range – a 150 to 200,000 range that they were doing in the time before we bought it to now exceeding 70,000 a week at that location. And if we continue to see the revenues increase at that location, that that location will become much more profitable than we originally anticipated. I’ll end the conference call here – or the presentation here, and take any questions you may have at this time.

Thank you. (Operator Instructions) Our first question comes from Jamie Clement from Sidoti & Company. Jamie Clement - Sidoti & Company: Eric, good afternoon.

Hey, Jamie. How are you? Jamie Clement - Sidoti & Company: Doing well. Thanks for asking. Just a couple of things. With respect to Las Vegas, I think you mentioned, the last 30 to 60 days, a little bit of moderation perhaps in the marketing costs. I mean, do you think that’s just a function of Vegas getting kind of back up on its feet a little bit, having more customers, kind of running through town, or do you think there has been more of a philosophical competitive change among you and your competitors in that market?

Well, I think it’s a little bit of both. I think the main thing is, is when we got back into the – when we got back into the marketing game out there, everybody said, oh, Rick’s will do this for a couple of weeks and then they’ll back down. I think that now we’re a year into this thing, or almost a year into it, I mean, we really started with, I guess, in mid-February – mid-March, I guess, mid-March of last year. And I think that they’ve realized that we are going to continue to be a player, and that we are not going to back down and we’re not going to be scared away by a little bit of losses and giving up our market share and let people basically buy or take our market share. So I think that has a lot to do with it. And I think the fact that the average customer spend in Las Vegas, of course, is down dramatically. So it just doesn’t make sense for everyone to spend the money. So I think that overall, it’s kind of a combination of the two things that you mentioned. And I think we’re going to continue to see, see those expenses decline. I could be wrong, I mean, there’s always a wild card. That’s just the Vegas market. There’s always somebody who wants to come in and gamble or take a chance. But I think overall, people have lost enough money. I know we feel we have spent enough money buying market share. And if they’re going to try to take it from us, it’s not going to be cheap for them. So I just don’t see – I don’t see where they think they get the advantage anymore. There used to be – in the first six months, we owned the club out there, it was a huge advantage. We were behind on the learning curve and we made mistakes. Jamie Clement - Sidoti & Company: Okay.

And I think they’ve now realized that we are well aware of the mistakes we made and that we’re not going to repeat those mistakes. And so there’s no cost benefit for them to try to do anything other than settle this thing. Jamie Clement - Sidoti & Company: Okay. And sometimes you guys, when you put out your earnings releases, you, kind of, earnings from continuing operations number. Am I right there was about three or $400,000 of losses from discontinued operations during the quarter? So without that, you’d be more like $0.23. Is that, is my math right there?

I believe you’re right on that. And keep in mind, which we don’t directly disclose because of the non-disclosure agreements that we have in the settlement, we also settled the Minnesota case, which was expensed in this quarter. Jamie Clement - Sidoti & Company: Okay.

So even though we settled it now, we have to go back and accrue that expense because we know it’s a known expense. So you had some costs from that settlement as well that would have increased our earnings per share. We actually had a pretty good quarter. I mean, we were very happy with over 3 million in cash flow from operations in the quarter. Like I said, we’re very, very pleased with where we’re seeing this head now and we know going into – definitely the next six months. The problem, I guess, with guidance, we really are trying to work out a definite guidance plan. We’re just – we’re very concerned with how it’s going to look going into next summer, how the economy is going to be, whether we’re going to see some type of setback in that, which could affect us in that April to September time period, the first half of 2010. We’re very, very confident that the next six months are going to be very, very good months for the company. Jamie Clement - Sidoti & Company: Okay, very good. And, Eric just on a diluted share basis, or I think on a basic share basis I’m looking at the K, you got just under 9.4 million shares outstanding. So fully diluted with the financing that you guys have done, where are you at sort of right now, do you have that number?

You’re talking about if everything was to be converted? Jamie Clement - Sidoti & Company: Yes, yes, like in terms for reporting purposes kind of going forward?

On the 7.2 and you’re talking the $7.2 million? Jamie Clement - Sidoti & Company: Yes.

The 7.2 million converts at 8.75 a share. Jamie Clement - Sidoti & Company: Okay.

Which I guess about 830 some thousand shares and then there’s an additional 160,000 warrants that were issued in conjunction with that. So basically it adds just a little under 1 million shares. Jamie Clement - Sidoti & Company: Okay.

We are currently buying back our put option. I believe it’s 12,500 shares a month now. So – but we’re buying those shares. We are not putting those shares into the market and paying the difference. Jamie Clement - Sidoti & Company: Okay.

We’re actually paying the full amount. So basically we’re buying back 12,500 shares a month, right. Jamie Clement - Sidoti & Company: Okay, got you. Okay. Thanks very much for your time.

You bet.

Thank you. Our next question is coming from Eric Wold from Merriman Curhan Ford and Group. Eric Wold - Merriman Curhan Ford and Group: Hey, good evening, guys.

Hey. How are you doing, Eric? Eric Wold - Merriman Curhan Ford and Group: Good. Maybe walk us through, if you look at the clubs, the continuing operation clubs kind of across the board. In general are you seeing kind of the same trends across the board or are there kind of big, are there big variances of strength or weaknesses in kind of the group?

Well, they’re definitely variances of strength and weaknesses. Obviously, the New York location is probably the strongest location we have right now and doing very, very well for us. Tootsie’s in Miami is kind of just holding in its range and then we have other clubs that are all over the place. Some are down a little bit. Some are up a little bit. But what we’re doing is we’re taking the winners and we’re taking the strategies that we’ve put into places at the clubs where we’re winning at and gaining market share and increasing revenues. And we’re now starting to take those models and move them into some of the underperforming locations. And we’re starting to see positive results in this quarter from that maneuver, especially on the revenue side. Now, the real trick of course is always getting that down and then squeezing those margins back up. We’re at 17.8% margins this quarter versus – or this year versus 26 last year. I’d like to see it squeeze in between those two numbers, so that we can get enough of the margin to get an increase over that 17.8 going forward. Maybe not getting back to the 26 but that’s the goal, is obviously to move back towards the higher numbers. Eric Wold - Merriman Curhan Ford and Group: Okay. And then as you look at the opportunities that maybe are out there for acquisition, I know it’s tough to talk about, given there is competition. But I mean is the – are the opportunities more with strong small clubs and markets, are you looking for still the major clubs that are out there?

Well, we’re looking at everything right now. I mean – we’re looking at tons of stuff. I’m getting – we’ve been getting pretty bombarded. Everybody knows we sit here with all this cash. So we get a lot of calls, a lot of brokers have called, but we’ve – we pretty much stayed in that mid-market range similar to the Fort Worth location. It’s something we think going to add three million in revenues or so and that we can get that – sweep that 800,000 to $1 million in net earnings out of it, so that we can go into with limited amount of cash. Of course, we prefer to be able to either an auction to purchase the property or purchase the property from the get-go with some type of owner financing. That’s our preferred acquisition right now simply because they are just easier to integrate, they’re quick, and we’re not taking a ton of risk. We have been a little risk adverse, especially this last year. We’re starting to come out of that a little bit, gaining confidence in that. I think that the forward going numbers are going to be better than the trailing numbers at this point. And so obviously I don’t want to wait a year and start buying on trailing numbers that are higher than what I could buy stuff for right now. Eric Wold - Merriman Curhan Ford and Group: Okay. And then last question, you talked about – you mentioned kind of legal expenses. It should be down this year versus last year with most of the spending happening in the first half of the year. And then looking beyond that, if you had to look at kind of where Q4 expenses kind of ends up, where do you have the most meat that you can cut without hurting operations?

Well, I mean the media – obviously the lot of the media and the majority of the media is Las Vegas. We did have some pretty high expenses in Dallas, as well as we really went into that market to dominate, especially in the Fort Worth market. I believe that we’ve been hugely successful in that market with our media. So, we’re going to continue, but we’re probably going to start cutting back on it a little bit. We’ve noticed in certain magazines we put coupons in and we don’t get much response. We know we can cut those magazines without – and cut that expense without actually hurting our customer counts and our headcounts. Right now, we want to stay the busiest clubs. We may not make the most money that we could make. We may not maximize our profits by staying the busiest clubs in the short-term, but in the long-term we believe that by building up that customer loyalty and building up the market share and keeping our competitors, excuse me – as clubs, I’ve known, as clubs that aren’t as busy as ours that – that’s where the customer is, as the flight to quality continue, that the customers will continue to visit our clubs. And as the spending goes up per person, then our clubs will benefit greatly from that. Eric Wold - Merriman Curhan Ford and Group: Perfect. Thank you, guys.

Thank you. Our next question is coming from [Richard Kim from Kensington]. Richard Kim - Kensington: Hi Eric.

Hey, how are you doing? Richard Kim - Kensington: Great, great. Most of my questions have been answered, but I was wondering, the clubs that are up for sale, number one, have you added some that are for sale now and how are you going to come out on those and what are your expectations as far as...

Well the Austin location, we’ve had for sale for some time. We had it actually sold and then the funding didn’t come through for the other people. We’ve got that location still up for sale. We’re also in some talks amongst ourselves a little bit about, maybe a re-concepting that club and find some additional parking; so we have enough parking for the new concept and redoing that location, that’s just one of the things we’re talking about. At that location, I think we have expensed – I think we’ve wrote off enough of it that we probably wouldn’t take a real hit to earnings or a real hit on anything on that location. The other location we have up for sale, we’ve been in negotiations. We own the property, so we’re actually selling the property and everything. The club itself was pretty much depreciated down, we had very little to no investment – anyway and the property will probably sell for pretty close to what we paid for it. So we probably won’t see much of an effect from that location either. So, I think we’re pretty much safe on the two clubs that we have up for sale right now. We have a third location that we’ve actually closed down that we’ve remodeled. It will probably reopen in the second week or either first – first or second week, maybe the third week of January. Richard Kim - Kensington: Which one, sorry?

That’s the one we have in South Houston. Richard Kim – Kensington: Okay.

It’s a smaller location, and it wasn’t really doing a lot of money. It actually is operated at a loss basically since we’ve owned it. We bought it as an insurance policy in case the City of Houston actually started closing the clubs in the city. And we bought that location for that, but we’ve decided now is the time to go ahead and we basically got it out the inside, redid it and made it much more modern. It was a very, very old location. So we modernized it, we redid the outside of the building with stucco and made it very nice and presentable. And we’ll, like I said, we’ll re-launch that club probably in mid-January. Richard Kim - Kensington: Okay. In Las Vegas, are you – you’re not profitable yet, are you?

No. no, we’re not. The closest – I think the closest we came was in the June and July months where we had the losses under $30,000 for those two months. And obviously, as we moved into Labor Day, the marketing expenses went up drastically due to a couple of competitors. And now, we’re moving back in the direction towards where we were at end of June and July month. As we move into the prime season, I believe that – I believe that if we stay in these markets, we will be profitable in the next quarter. It really just depends on whether we can keep these marketing costs down where we have them right now or even lower than where we’re at right now. Richard Kim – Kensington: And what are they now, the CapEx?

Between 70 and $30. We’re paying – we kind of changed the – we kind of changed the game a little bit. We only pay for the top customers during the top business hours. During the non – during the off-business hours, we’re now paying much less and that’s part of the reason why we believe the losses will go down and stay down. As we finally got the market to realize and our competitors to realize that there’s no sense in all of us competing and paying that kind of money for customers during the off-hours. Now, if we can just get everybody into a – everybody to agree and we can make it all make sense for everyone in the prime hours, then I think we’ll see us return to a more normal business model in that Vegas market. Unfortunately, I think the Vegas market is always going to be different than the rest of the country. That’s just the market. But at the same time, I do believe that even with the economy where it’s at today that we can’t turn a profit out of that location if we can keep these marketing costs at certain levels – below certain levels. Richard Kim - Kensington: That payment is a lot – is substantially less than you were having.

Oh, yes. I mean, as a total per quarter, it’s probably half of what we were paying during the highest quarters. Richard Kim - Kensington: Right, right.

So, if we can continue to pull that down – and our revenues are not off as significantly. Our revenues, looking at where we’re at today, our revenues, what we call net revenue, which is our total gross minus our marketing cost to our net-net – our net growth is increasing. Even though our total gross revenues have declined, our net has increased – our net after payoffs have increased. And that’s what we focus on out there right now, and we’re hoping to continue to see that happen. Richard Kim - Kensington: Got you. Final question is, on the legal expenses, what would you – can you give us an estimate of what you think the legal expenses will be moving forward?

You know I wish I could. Unfortunately, there is just so many moving parts in that that it’s hard to say. As a percentage of income, I would like to see it decline back to the level from last year. Whether we can get it – and maybe even lower than that, depending on how many acquisitions we do. There’s a lot of costs in there from acquisitions and that type of stuff. Richard Kim - Kensington: How about just the litigation fees on through?

Well I mean – obviously I think the litigations in the next few months are going to be a little higher. We’re actually moving into – we’re going to be doing depositions. Especially in the January, March quarter, I think they’ll be a little higher, especially in the New York case. Of course the Minnesota case is gone, there’ll be no fees from that case now. So overall, I mean they may stay in the range that they’ve been at for the next quarter, and this quarter’s obviously going to be a little bit lower. I think the October, November, December quarter will be a little lower because we settled the case. So, and that settlement was written off in the last quarter. We had – excuse me, in the last fiscal year, we had to write it off on the September 30 quarter, we had to accrue it. And so, the cost will hopefully be a little bit less this October, November, December quarter. They’re going to increase a little bit January to March, but there’s going to be enough other stuff out there to offset that with the Super Bowl and Pro Bowl and NBA All-Star Game. So I don’t think it’s going to be a big function of, as far as the percentage of gross revenues. And then hopefully, as we move in to the last six months, as a percentage of gross revenues it just becomes a trivial expense again. Richard Kim - Kensington: Great, great. Thank you.

Yes.

Thank you. Our next question is coming from [David Johnson] who’s a private investor.

Yes, how’re you doing? Thanks for taking my call. Again, a follow up on the Las Vegas location to the previous caller. He mentioned that you’re capped at about half. In the most recent quarter your payout CapEx as he mentioned, as he stated, it were about half in the current quarter as they were maybe earlier in the year. Yes, it looks like our – and it’s still driving a loss. You mentioned about a $2 million loss for the year. I’m just wondering, as an investor I’m just wondering, is there an impairment discussion taking place at all between yourselves and the auditors, and if so, what are those discussions basically entailing?

Well, obviously we use a three-year deal on the deal. Yes, we’ve looked at it and if you look in our footnotes, you’ll see that – if you look at the financial notes in the 10-K, you’ll see there’s disclosure in there that on a going forward basis for 2010, if we don’t see improvements at several of our locations, that we will have to take impairments in the next fiscal year on those locations.

Okay. You guys are looking at a three-year.

And Vegas is one of those. We’re following the – it’s very complicated – it’s a very complicated formula that you have to use, but yes, basically use the FAS rules that govern that and the accountants and the auditors have been very familiar with it and studies it and we’ve done several different valuations to figure out where we’re at. And we felt that definitely with the current economy and given the current situation that there’s no impairment at this time. However, if things don’t improve in the next fiscal year that we’ll be redoing those and that based on the formula that without an increase in the income, of course that we will definitely have an impairment in the following – in 2010 for that location.

Okay, great. Thank you.

Thank you. Our next question is coming from Brian Burns who’s a private investor.

Question in terms of, on the most recent, I guess, the build out I guess. Is there a sense in terms of going forward with acquisitions that you’re just more comfortable buying or building new clubs in cities where you already have a presence that I guess are either both know the market and also have management in place?

The reality of it is, is we’re really not looking to buy or build clubs, new clubs. We’re looking to buy existing locations that are already profitable. The thing with this location is – location. It is a one of a kind location. Basically, every traveler that leaves DFW Airport out of the south airport exit is going to be driving down the toll road there to get on to Highway 183 and they’re going to be looking at a Rick’s Cabaret sign. And when you think the amount of business travel through the DFW Airport, we just couldn’t, from a branding standpoint alone we couldn’t give up the value of that. Add on top of that, that this is a location that’s going to be turnkey built out for us, ready-to-go in the 4.5 million range, which we believe presented a fantastic value in a city that we’re very familiar with and in an area that we want to grow in. It was just impossible to pass the deal up. I’ve got some other – since we’ve announced this, I’ve gotten offers to – for other properties where we can build clubs. But it’s just not something we’re actually looking to do. If we – if somebody comes up with another location that’s this fabulous with the kind of traffic count that this location has and the visibility that this location has, maybe we would consider. But it’s not part of our long-term plan to build clubs from the grounds up.

I was actually focused more in terms of on the location, in other words when you talk about buying existing clubs.

Right.

Do you feel like going forward, your preference would be to buy an existing club in a city where you already have a club and have at least a better feel for the market as opposed to going into a brand new city or does that – is that an impact for you?

Yes. I mean, obviously if we already have locations it’s easier to manage for us.

Right.

However as you’ve known from our past, I mean we will go into markets we haven’t been in as well for the right deal. I don’t think we really have a plan that’s saying, oh, gee, we should only buy in our markets or we should only buy in other markets. Our real strategy for acquisitions right now is we need to buy the best clubs we can buy. That we believe will create the longest and best use of our capital and create the longest cash flow stream and the largest cash flow stream that we can create with our cash. And that’s really how we are evaluating these transactions right now. Obviously something that’s in a market that we are already in, creates other synergies for us and therefore maybe a much better use of our capital then say going to a market that’s far away and harder to manage, more expensive in travel and more time in travel for our management team. But at the same time, it’s not the only thing that we’re looking at. The main thing that we’re looking at is the profitability and whether we believe we can continue running that location at a profit and make a nice return from our investments.

Does that answer your question?

Yes. Thank you.

Thank you. (Operator Instructions) Our next question comes from David Griffith who is a private investor.

Hi. Thanks for taking my call.

Sure.

The question I had is, it sort of dovetails on the last question, is when you examine – when you are looking at these deals like whether to build a new club or to acquire an existing club, what kind of metrics do you evaluate it on? Are you looking at comfortable property values, are you looking at EBITDA multiples, are you looking at IRRs? I’m just kind of curious, I mean what?

I mean we’re looking at the EBITDA, that’s, the first thing we are looking at is EBITDA. We want to make sure that they are making money. But the reality is I mean we’re looking at all of those things. We want to make sure that we believe that we are in a legal environment that’s going to be stable. We are looking at the competitive landscape, how easy would it be for someone else to come in and open a location that could actually compete with our location. It’s in proximity or in the market where you have to compete for let’s say entertainers or customers. And we’re looking at the facility itself. How much investment is it going to take on the company to make this facility something that we want to own and something that we want to, that we would run. We’re looking at the physical features. Does it have a kitchen, does it have parking, does it have – is it easily accessible from high traffic streets or freeways. And all those things. And then of course, can we buy the real estate, is the real estate price at a fair value. If not, what type of lease and how long term is the lease? Can we secure it for a long enough period of time that we believe that we can make all of our money back plus big returns and those types of things, so. And it’s not really a – it’s really – because of our industry and because of the way it’s – the laws are so different from market-to-market, it’s really a much more complex, it’s not really a cookie cutter. This is what we are looking for and this is – we may have a location that’s very, very profitable but if the legal environment isn’t so that we think that that’s going to stay that way for the next ten years. Then we think, we’re going to be looking at some major changes to the method of operation that could affect the profitability of it, obviously, we’re not willing to pay as much for it.

Correct. Okay. I guess I was just trying to get, just a sense in general of, say, you guys trade at 5.5 times EBITDA. Kind of like your target is sort of spread between your kind of public multiple versus, you know.

Yes, I mean that’s one of the things we definitely look at. And that’s why – that’s why when our stock was trading in the $3 range and $4 range, we were buying it back. Because what else could we – we couldn’t buy other people, we couldn’t buy other clubs for the amounts we’re buying our own club back, our own company back for. And so we thought that was the best use of our cash.

Good answer. Thanks very much.

What we’re doing is looking for the best use of our cash.

Thank you.

Yes, thank you. And I think that’s all the questions. So everyone, have a good night and if you have a chance, come by the New York club. I won’t be there tonight but there will be plenty of due diligence for you to do there. All right, thank you very much.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.