Securities and Exchange Commission
                             Washington, D.C. 20549

                                 Form 10-KSB/A
                                Amendment No. 1

                  (Filed solely to clarify the existence of the
                        Issuer's Compensation Committee)

[X]  Annual Report under Section 13 Or 15(d) of the Securities Exchange Act of
     1934
     For the fiscal year ended September 30, 2005
[ ]  Transition report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

Commission File Number: 0-26958


                       Rick's Cabaret International, Inc.
                 (Name of Small Business Issuer in Its Charter)


                   Texas                            76-0458229
     (State or Other Jurisdiction of              (IRS Employer
      Incorporation or Organization)            Identification No.)

                                10959 Cutten Road
                              Houston, Texas 77066
                    (Address of Principal Executive Offices)

                                 (281) 397-6730
                          (Issuer's Telephone Number)

         Securities Registered Under Section 12(b) Of The Exchange Act:

                           Title Of Each Class     n/a
                Name Of Each Exchange On Which Registered     n/a

          Securities Registered Pursuant to 12(g) of the Exchange Act:

                              Title Of Each Class
                          Common Stock, $.01 Par Value

     Check  whether  the  issuer:  (i) filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period that the registrant was required to file such reports), and (ii)
has  been  subject  to  such filing requirements for the past 90 days.   Yes [X]
No  [ ]

     Check  if  there  is no disclosure of delinquent filers in response to Item
405  of Regulation S-B contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information statement
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [X]

     The Issuer's revenues for the year ended September 30, 2005 were
$14,824,407.

     The  aggregate  market  value of Common Stock held by non-affiliates of the
registrant  at  December  23, 2005, based upon the last reported sales prices on
the  NASDAQ  SmallCap  Market,  was  $8,753,979.

     As  of  December  23,  2005,  there  were approximately 4,322,148 shares of
Common  Stock  outstanding  (this  amount  excludes  treasury  shares).


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

PART I                                                         Page
<S>                                                            <C>
Item 1.   Business                                               1

Item 2.   Properties                                             9

Item 3.   Legal Proceedings                                     11

Item 4.   Submission of Matters to a Vote of Security Holders   13


PART II

Item 5.   Market for Common Equity, Related Stockholder
          Matters and Small Business Issuer Purchases
          Of Equity Securities                                  13

Item 6.   Management's Discussion and Analysis or
          Plan of Operation                                     15

Item 7.   Financial Statements                                  28

Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure                28

Item 8A.  Controls and Procedures                               28

Item 8B.  Other Information                                     28

PART III

Item 9.   Directors, Executive Officers, Promoters and
          Control Persons; Compliance with Section 16(a) of
          The Exchange Act                                      29

Item 10.  Executive Compensation                                31

Item 11.  Security Ownership of Certain Beneficial
          Owners and Management and
          Related Stockholder Matters                           34

Item 12.  Certain Relationships and Related Transactions        35

Item 13.  Exhibits                                              36

Item 14.  Principal Accountant Fees and Services                37
</TABLE>


                                        2
<PAGE>

Rick's  Cabaret  International,  Inc.  is  filing  this  Amendment No. 1 on Form
10-KSB/A  to  its  Form  10-KSB  for the year ended September 30, 2005, that was
originally  filed with the Securities and Exchange Commission ("SEC") on January
5, 2006 (the "Original 10-KSB") solely to clarify the existence of the Issuer' s
Compensation  Committee. For the convenience of the reader, this Amendment No. 1
amends  in  its  entirety the Original 10-KSB. This Amendment No. 1 continues to
speak  as  of  the  date  of  the  Original  10-KSB, and we have not updated the
disclosure contained therein to reflect any events that occurred at a later date
other than that set forth above. All information contained in this Amendment No.
1  is  subject to updating and supplementing as provided in our periodic reports
filed with the SEC subsequent to the date of the filing of the Original 10-KSB.

                                     PART I

ITEM 1.     BUSINESS

INTRODUCTION

Our  name  is Rick's Cabaret International, Inc.  We currently own and operate a
total  of  nine adult nightclubs that offer live adult entertainment, restaurant
and  bar  operations.  Four of our clubs operate under the name "Rick's Cabaret"
and  four  of  the  clubs  operate  under the name "XTC".  Our nightclubs are in
Houston,  Austin and San Antonio, Texas; Charlotte, North Carolina; Minneapolis,
Minnesota;  and  New  York,  New  York.  In June 2004, we converted our original
Rick's  Cabaret  nightclub  in  Houston's Galleria District into "Club Onyx", an
upscale  venue  that  welcomes  all  customers  but  cater  especially  to urban
professionals,  businessmen and professional athletes. We also own and operate a
sports  bar  under  the name of "Hummers" in Houston and own or operate premiere
adult  entertainment  Internet  websites.

Our  online  entertainment  sites  are  xxxPassword.com,  CouplesTouch.com,  and
NaughtyBids.com.  The  site  xxxPassword.com  features  adult  content  licensed
through  Voice Media, Inc. CouplesTouch.com is a personals site for those in the
swinging  lifestyle.  Naughtybids.com  is  our  online  adult  auction  site. It
contains  consumer-initiated  auctions  for items such as adult videos, apparel,
photo  sets,  adult  paraphernalia  and  other  erotica.  There  are  typically
approximately  10,000  active auctions at this site at any given time. We charge
the  seller  a fee for each successful auction. All of our sites use proprietary
software  platforms  written  by  us  to deliver the best experience to the user
without  being  constrained  by  off-the-shelf  software  solutions.

Our  website  address  is  www.Ricks.com.  We  make available free of charge our
                           -------------
Annual  Report on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports
on  Form  8-K,  and  all  amendments  to  those  reports  as  soon as reasonably
practicable  after  such  material  is  electronically  filed with the SEC under
Securities  Exchange  Act  of  1934,  as  amended.  Information contained in the
website  shall  not  be  construed  as  part  of  this  prospectus.

Reference  to  us  includes our 100%-owned, 85%-owned and 51%-owned consolidated
subsidiaries.

BUSINESS ACTIVITIES--NIGHTCLUBS

Prior  to the opening of the first Rick's Cabaret in 1983 in Houston, Texas, the
topless  nightclub  business was characterized by small establishments generally
managed  by  their owner.  Operating policies of these establishments were often
lax,  the  sites  were  generally  dimly lit, standards for performers' personal
appearance  and  personality  were  not  maintained  and  it  was  customary for
performers  to  alternate  between dancing and waiting tables.  The quantity and
quality  of  bar service was low and food was not frequently offered.  Music was
usually "hard" rock and roll, played at a loud level by a disc jockey.  Usually,
only  cash  was  accepted.  Many  businessmen  felt  uncomfortable  in  such
environments.  Recognizing  a  void  in  the  market  for  a  first-class  adult
nightclub,  we  designed  Rick's Cabaret to target the more affluent customer by
providing  a unique quality entertainment environment.  The following summarizes
our  areas  of  operation  that  distinguish  us:

     Female  Entertainment.  Our  policy  is to maintain high standards for both
     ---------------------
     personal  appearance  and  personality  for  the  topless  entertainers and
     waitresses. Of equal importance is a performer's ability to present herself
     attractively  and  to  talk  with  customers.  We  prefer  that


                                        1
<PAGE>
     the  performers  we hire be experienced dancers. We make a determination as
     to  whether  a  particular  applicant  is suitable based on such factors of
     appearance,  attitude,  dress,  communication  skills  and demeanor. At all
     clubs,  except for our Minnesota location, the entertainers are independent
     contractors.  We  do  not  schedule  their  work  hours.

     Management.  We  often  recruit  staff from inside the topless industry, as
     ----------
     well  as  from  large  restaurant  and  club  chains,  in  the  belief that
     management  with  experience  in the sector adds to our ability to grow and
     attract  quality  entertainers. Management with experience is able to train
     new  recruits  from  outside  the  industry.

     Compliance  Policies/Employees.  We  have  a  policy  of  ensuring that our
     ------------------------------
     business is carried on in conformity with local, state and federal laws. In
     particular,  we  have  a "no tolerance" policy as to illegal drug use in or
     around  the  premises.  Posters  placed throughout the nightclubs reinforce
     this  policy,  as  do  periodic  unannounced  searches of the entertainers'
     lockers. Entertainers and waitresses who arrive for work are not allowed to
     leave  the premises without the permission of management. If an entertainer
     does  leave  the  premises,  she is not allowed to return to work until the
     next  day.  We continually monitor the behavior of entertainers, waitresses
     and  customers  to  ensure  that proper standards of behavior are observed.

     Compliance  Policies/Credit  Cards.  We review all credit card charges made
     ----------------------------------
     by  our  customers.  We  have  in  place a formal policy requiring that all
     credit  card charges must be approved, in writing, by management before any
     charges  are  accepted. Management is trained to review credit card charges
     to  ensure  that  the only charges approved for payment are for food, drink
     and  entertainment.

     Food  and Drink.  We believe that a key to the success of our branded adult
     ---------------
     nightclubs  is  a  quality,  first-class  bar  and  restaurant operation to
     compliment  our adult entertainment. We employ service managers who recruit
     and  train  professional  waitstaff  and ensure that each customer receives
     prompt  and  courteous service. We employ chefs with restaurant experience.
     Our  bar  managers  order inventory and schedule bar staff. We believe that
     the  operation  of a first class restaurant is a necessary component to the
     operation of a premiere adult cabaret, as is the provision of premium wine,
     liquor  and beer in order to ensure that the customer perceives and obtains
     good  value.  Our  restaurant operations provide business lunch buffets and
     full  lunch  and  dinner menu service with hot and cold appetizers, salads,
     seafood,  steak,  and  lobster.  An extensive selection of quality wines is
     available.

     Controls.  Operational  and  accounting  controls  are  essential  to  the
     --------
     successful  operation  of  a  cash intensive nightclub and bar business. We
     have  designed and implemented internal procedures and controls designed to
     ensure  the  integrity  of our operational and accounting records. Wherever
     practicable,  we  separate  management  personnel from all cash handling so
     that  management  is  isolated  from and does not handle any cash. We use a
     combination  of  accounting  and  physical  inventory control mechanisms to
     maintain a high level of integrity in our accounting practices. Information
     technology plays a significant role in capturing and analyzing a variety of
     information  to  provide  management  with  the  information  necessary  to
     efficiently  manage  and control the nightclub. Deposits of cash and credit
     card  receipts  are  reconciled  each  day  to  a  daily  income report. In
     addition,  we  review  on  a daily basis (i) cash and credit card summaries
     which  tie  together all cash and credit card transactions occurring at the
     front door, the bars in the club and the cashier station, (ii) a summary of
     the  daily  bartenders'  check-out  reports,  and  (iii)  a  daily  cash
     requirements  analysis  which  reconciles


                                        2
<PAGE>
     the  previous  day's  cash  on  hand to the requirements for the next day's
     operations.  These daily computer reports alert management of any variances
     from  expected  financial  results  based on historical norms. We conduct a
     monthly  independent  overview  of  our  financial  condition and operating
     results.

     Atmosphere.  We  maintain  a  high  design  standard  in our facilities and
     ----------
     decor.  The  furniture  and  furnishings  in the nightclubs are designed to
     create  the  feeling of an upscale restaurant. The sound system is designed
     to  provide  quality  sound  at  levels  where conversations can still take
     place.  The  environment  is  carefully  monitored  for  music  selection,
     entertainer  and waitress appearance and all aspects of customer service on
     a  continuous  basis.

     VIP  Room.  In  keeping  with  our emphasis on serving the upper-end of the
     ---------
     businessmen's  market,  some of our nightclubs include a VIP room, which is
     open  to individuals who purchase memberships. A VIP room provides a higher
     level  of  service  and  luxury.

     Advertising  and Promotion.  Our consumer marketing strategy is to position
     --------------------------
     Rick's  Cabarets  as  premiere  entertainment  facilities  that  provide
     exceptional  topless  entertainment in a fun, yet discreet, environment. We
     use  a  variety  of  highly  targeted methods to reach our customers: hotel
     publications,  local  radio,  cable  television,  newspapers,  billboards,
     taxi-cab  reader  boards,  and  the  Internet,  as  well  as  a  variety of
     promotional  campaigns. These campaigns ensure that the Rick's Cabaret name
     is  kept  before  the  public.

     Rick's Cabaret has received a significant amount of media exposure over the
     years  in  national magazines such as Playboy, Penthouse, Glamour Magazine,
     The  Ladies  Home  Journal,  Time  Magazine,  and  Texas  Monthly Magazine.
     Segments  about Rick's have aired on national and local television programs
     such as "Extra" and "Inside Edition", and we have provided entertainers for
     Pay-Per-View  features  as well. Business stories about Rick's Cabaret have
     appeared  in  The  Wall Street Journal, Los Angeles Times, Houston Business
     Journal,  and  numerous  other  regional  publications.

NIGHTCLUB  LOCATIONS

We  currently  operate  clubs under the name "Rick's Cabaret" in Houston, Texas,
Minneapolis,  Minnesota;  Charlotte, North Carolina, and New York, New York.  We
also  operate  a  nightclub  in  Houston's  Galleria District as "Club Onyx", an
upscale  venue  that  welcomes  all  customers  but  caters  especially to urban
professionals, businessmen and professional athletes.  Additionally, we own four
nightclubs  in  San  Antonio,  Austin, and Houston, Texas that operate under the
name XTC.  We also own a controlling interest in and operate a sports bar called
"Hummers".  We sold our New Orleans nightclub in March 1999, but it continues to
use  the  name  "Rick's Cabaret" under a licensing agreement.  In early 2003, we
acquired  51%  control  of  the  Wild  Horse  Cabaret adult nightclub near Hobby
Airport, Houston, Texas and operate it as part of our popular XTC Cabaret group.
In  May  2003, we opened a sports bar called "Hummers", which is located next to
Wild  Horse  Cabaret,  in  Houston,  Texas.

RECENT  NIGHTCLUB  TRANSACTIONS

1.   On  March  3,  2004,  we acquired the assets and business of a 7,000 square
     foot  gentlemen's  club  in  North  Houston,  which  became  our fourth XTC
     Cabaret.  As  a  part  of  the transaction, we entered into a new five-year
     lease  with  an  option  for  five  additional years. The $265,000 all-cash
     purchase  transaction  generated  goodwill  of  $20,000  and  property  and
     equipment  at


                                        3
<PAGE>
     $245,000.

     The  results  of  operations  of  this  new  venue  are  included  in  the
     accompanying  consolidated  financial  statements  from  the  date  of
     acquisition.


2.   In  April  2003,  we  organized  RCI  Ventures,  Inc.  to acquire Nocturnal
     Concepts,  Inc.,  which  operates  as an addition to our XTC Cabaret group,
     called  "XTC  Galleria".  As  part  of this transaction, we transferred our
     ownership  of  Tantric Enterprises, Inc. (our subsidiary that operates Club
     Encounters)  to  RCI  Ventures,  Inc.  As a result of these transactions we
     owned  a  51% interest in RCI Ventures, Inc. On September 30, 2004, we sold
     our  shares  in  RCI  Ventures, Inc. to unrelated third parties for $15,000
     cash and a $235,000 note receivable with an annual interest rate of 6% over
     five  years.  As  a  part  of the transaction, the Purchaser entered into a
     five-year  lease  for  Club  Encounters  with an option for five additional
     years. We recorded a $163,739 deferred gain related to this transaction for
     the  year  ended  September  30,  2004.  The  gain  will be recognized upon
     collection  of  the  note  receivable.

     The  club's  business  was  accounted  for as discontinued operations under
     accounting  principles  generally  accepted in the United States of America
     and  therefore,  the  club's results of operations and cash flows have been
     removed  from  the  Company's consolidated results of continuing operations
     and  cash  flows  for  all  periods  presented  in  this  document.


3.   On  September 15, 2004, our wholly-owned subsidiary, RCI Entertainment (New
     York),  Inc.,  a  New  York  corporation,  entered  into a definitive Stock
     Purchase Agreement with Peregrine Enterprises, Inc., a New York corporation
     and its shareholders, pursuant to which RCI New York agreed to purchase all
     of the shares of common stock of Peregrine. Peregrine owned and operated an
     adult  entertainment cabaret located in midtown Manhattan. The cabaret club
     is located near the Empire State Building and Madison Square Garden, and is
     less  than  10  blocks  from Times Square. We completed this transaction on
     January  18,  2005.

     Under  the terms of the Stock Purchase Agreement, the purchase price of the
     transaction  was  $7,625,000,  payable  $2,500,000  in  cash at closing and
     $5,125,000 payable in a promissory note bearing simple interest at the rate
     of 4.0% per annum. The Promissory Note is payable commencing 120 days after
     Closing as follows: (a) the payment of $58,333.33 per month for twenty-four
     (24) consecutive months; (b) the payment of $63,333.33 for twenty-four (24)
     consecutive  months;  (c)  the  payment  of  $68,333.33  for  twelve  (12)
     consecutive  months; and (d) a lump sum payment of the remaining balance to
     be paid on the sixty-first (61st) month. $2,000,000 of the principal amount
     of  the Promissory Note is convertible into shares of our restricted common
     stock  at  prices  ranging  from $4.00 to $7.50 per share. The parties also
     entered  a  Stock  Pledge  Agreement  and  Security Agreement to secure the
     Promissory  Note.

     Upon  closing  of  the  transaction, the owners of Peregrine entered into a
     five-year  covenant  not  to  compete  with  Peregrine, RCI New York or the
     Company.  After  an  extensive  renovation, we opened the club in September
     2005  as  "Rick's  Cabaret",  which  occupies  10,000  square feet on three
     levels,  with  an  additional 4,000 square feet available for office space.

     The  results  of  operations  of  the club are included in our consolidated
     statement  of  operations  from  January  18,  2005.


                                        4
<PAGE>
4.   On  March  31,  2005,  we  entered  an  Stock  Purchase  Agreement with MBG
     Acquisition,  LLC,  a Delaware limited liability company to sell all of the
     issued  and  outstanding  shares  of RCI Entertainment (Houston), Inc., our
     wholly  owned  subsidiary,  which owned and operated an adult entertainment
     cabaret  known  as  Rick's  Cabaret  - South located at 15301 Gulf Freeway,
     Houston, Texas. The Agreement provided for a sales price of $550,000, which
     was  paid  in  cash  upon  closing.  We  recorded  a  gain  of  $291,987.

     The  club's  business  was  accounted  for as discontinued operations under
     accounting  principles  generally  accepted in the United States of America
     and  therefore,  the  club's results of operations and cash flows have been
     removed  from  the  Company's consolidated results of continuing operations
     and  cash  flows for all periods presented in this document and such assets
     and  liabilities as of September 30, 2004 have been netted in one line item
     on  the  balance  sheet.


5.   On  June  10,  2005,  our wholly owned subsidiary, RCI Entertainment (North
     Carolina),  Inc., a North Carolina corporation entered a Purchase Agreement
     with  Top  Shelf,  LLC, a North Carolina limited liability company and Tony
     Hege,  the  holder  of Top Shelf's membership interests, to purchase all of
     the  issued  and outstanding membership interests of Top Shelf which owns a
     nightclub  known  as  "The  Manhattan  Club"  located  in  Charlotte, North
     Carolina.  RCI  North  Carolina  has  been managing the Club under the name
     "Rick's  Cabaret"  since  February  2005.

     The Purchase Agreement provides for a purchase price of $1,000,000 which is
     payable  with  180,000  shares of our common stock (the "Shares") valued at
     $3.75  per  share  (the  "Value of the Shares") and a seven year promissory
     note (the "Note") in the amount of $325,000 bearing interest at the rate of
     7%  per  annum. The Note is payable with an initial payment due November 1,
     2005,  of  interest  only  for  the period of time from the date of Closing
     until October 31, 2005, plus a principal reduction payment in the amount of
     $3,009.29.  Thereafter,  RCI  North  Carolina  will  make eighty-three (83)
     successive equal monthly payments commencing December 1, 2005, of principal
     and  interest  in  the  amount of $4,905.12 until paid in full. The Note is
     secured  by  the  assets  of  RCI  North  Carolina.

     Pursuant to the terms of the Note, on or after November 1, 2005, Hege shall
     have  the  right,  but not the obligation to have Rick's purchase from Hege
     4,285  Shares  per  month (the "Monthly Shares"), calculated at a price per
     share equal to $3.75 until Hege has received a total of $1,000,000 from the
     sale  of the Shares less the amount of the Note. At our election during any
     given  month,  we  may either buy the Monthly Shares or, if we elect not to
     buy  the  Monthly Shares from Hege, then Hege shall sell the Monthly Shares
     in  the  open market. Any deficiency between the amount which Hege receives
     from  the  sale  of the Monthly Shares and the Value of the Shares shall be
     paid  by us within three (3) days of the date of sale of the Monthly Shares
     during that particular month. Our obligation to purchase the Monthly Shares
     from  Hege  shall  terminate  and cease at such time as Hege has received a
     total  of  $1,000,000  from  the sale of the Shares, less the amount of the
     Note.

     The  results  of  operations  of  the club are included in our consolidated
     statement of operations from February 1, 2005, when we assumed risk of loss
     for  the  club's  operations  under  a  management  agreement.


                                        5
<PAGE>
BUSINESS ACTIVITIES--INTERNET ADULT ENTERTAINMENT WEB SITES

In  1999,  we  began  adult  Internet  Web site operations.  Our xxxPassword.com
website  features  adult  content  licensed  through Voice Media, Inc.  We added
CouplesTouch.com  in  2002  as  a  dating site catering to those in the swinging
lifestyle.  We  recently  purchased  CouplesClick.net,  a  competing site of our
CouplesTouch.com  site, in order to broaden our membership throughout the United
States.  As  part  of  this transaction, we organized RCI Dating Services, Inc.,
which  operates  as  an  addition  to  our  internet  operations,  to  acquire
CouplesClick.net  from  ClickMatch,  LLC.  We  transferred  our  ownership  in
CouplesTouch.com  to RCI Dating and, as a result of the transaction, we obtained
an  85%  interest  in  RCI  Dating,  with the remaining 15% owned by ClickMatch.

Our  Internet  traffic  is  generated  through  the  purchase  of  traffic  from
third-party  adult  sites  or  Internet domain owners and the purchase of banner
advertisements  or  "key  word"  searches  from  Internet  search  engines.  In
addition,  the  bulk  of  our  traffic now comes from search engines on which we
don't  pay  for  preferential  listings.  There are numerous adult entertainment
sites  on  the  Internet  that  compete  with  our  sites.

BUSINESS ACTIVITIES--INTERNET ADULT AUCTION WEB SITES

Our  adult  auction  site  features  erotica  and other adult materials that are
purchased  in  a bid-ask method.  We charge the seller a fee for each successful
auction.  Where  previously  we  operated  six individual auctions sites, now we
have  combined  these into one main site, NaughtyBids.com, to maximize our brand
name  recognition  of  this site.  The site contains new and used adult oriented
consumer  initiated auctions for items such as adult videos, apparel, photo sets
and adult paraphernalia.  NaughtyBids has approximately 10,000 items for sale at
any given time.  NaughtyBids.com offers third party webmasters an opportunity to
create  residual  income  from  web  surfers  through  the NaughtyBids Affiliate
Program, which pays third party webmasters a percentage of every closing auction
sale  in  which  the  buyer originally came from the affiliate webmaster's site.
There  are  numerous auction sites on the Internet that offer adult products and
erotica.

TRANSACTION  WITH  VOICE  MEDIA

In  May  2002,  we  purchased  700,000 shares of our own common stock from Voice
Media, Inc. for an aggregate price of $918,700 (or $795,302 adjusted for imputed
interest)  that  equals  approximately $1.32 per share.  That purchase price was
below  market  value  on  the date of the purchase.  Voice Media, Inc. presently
owns  none  of  our  shares of common stock.  These shares are presently held as
treasury shares.  We may cancel these shares at a later date. The control person
of  Voice  Media,  Inc.  is  Ron Levi, who was a Director until June 2002.   The
terms  of  this  transaction were the result of arms-length negotiations between
Voice  Media,  Inc.  and  us.  We believe the transaction was favorable to us in
view  of the market value of our common stock and the payment terms, although no
appraisal  or  fairness  opinion  was done.  All management contracts previously
signed  relating  to  the  management  of xxxPassword.com will remain in effect.
Pursuant  to  the  transaction,  the  payment  schedule  is  as  follows:
          (a)  The  amount  of  $229,675  due  on  January  10,  2003;
          (b)  The  amount  of  $229,675  due  on  January  10,  2004;
          (c)  The  amount  of  $229,675  due  on  January  10,  2005;  and
          (d)  A  final  payment  in  the  amount of $229,675 due on January 10,
               2006.

We  are  current  on  these  payments.


                                        6
<PAGE>
TRANSACTION  WITH  TAURUS  ENTERTAINMENT

On  June  12,  2003,  we  entered  into  an Asset Purchase Agreement with Taurus
Entertainment  Companies,  Inc.,  whereby  we  acquired  all  the  assets  and
liabilities  of  Taurus  in  exchange  for 3,752,008 shares of Taurus out of the
4,002,008  that  we  owned  plus  $20,000  in  cash.  We  also  executed  an
Indemnification  and Transaction Fee Agreement with Taurus for which we received
$270,000 in cash, with $140,000 payable at closing, $60,000 due on July 15, 2003
and  $70,000  due  on  August 15, 2003. We have received the $60,000 payment and
have  restructured  the remaining balance originally due August 15, 2003, with a
note receivable bearing 12% annual interest over a five year term. Taurus is not
current  in  its  payment  obligation and we have initiated steps to collect the
amount  owing.

COMPETITION

The adult topless club entertainment business is highly competitive with respect
to  price,  service and location. All of our nightclubs compete with a number of
locally  owned  adult  clubs, some of whose names may have name recognition that
equals  that  of  Rick's  Cabaret or XTC. While there may be restrictions on the
location  of  a so-called "sexually oriented business", there are no barriers to
entry  into  the  adult  cabaret  entertainment  market.  For example, there are
approximately  50 adult nightclubs located in the Houston area, all of which are
in  direct competition with our Houston cabarets. In Minneapolis, Rick's Cabaret
is favorably located downtown and is a short walk from the Metrodome Stadium and
the  Target  Center.  There  are  two  adult nightclubs in Minneapolis in direct
competition  with  us.  In  Charlotte,  there  are  5  main  competitors. We are
centrally  located  with  easy  access  to our location from the airport and the
sports stadiums. There are approx 16 adult clubs in Manhattan of which 7 compete
with  Rick's.  Only  one  of  those  competitors' is located in Mid-town. Rick's
location  is one block from the Empire State Building and one block from Madison
Square  Garden. All the local trains have station stops with one block of Rick's
location  and  we  are  located  just  9  blocks  from  Times  Square.

The  names  "Rick's"  and "Rick's Cabaret" and "XTC Cabaret" are proprietary. We
believe  that  the  combination  of  our existing brand name recognition and the
distinctive  entertainment  environment  that  we  have created will allow us to
compete  effectively  in  the  industry  and within the cities where we operate.
Although  we  believe that we are well positioned to compete successfully, there
can  be  no  assurance  that  we will be able to maintain our high level of name
recognition  and  prestige  within  the  marketplace.

We  are  subject to various federal, state and local laws affecting our business
activities.  In  particular,  in  Texas  the authority to issue a permit to sell
alcoholic  beverages  is  governed  by  the Texas Alcoholic Beverage Commission,
which has the authority, in its discretion, to issue the appropriate permits. We
presently hold a Mixed Beverage Permit and a Late Hour Permit. These Permits are
subject  to  annual  renewal,  provided  we  have  complied  with  all rules and
regulations  governing  the  permits. Renewal of a permit is subject to protest,
which  may be made by a law enforcement agency or by the public. In the event of
a  protest,  the  TABC  may hold a hearing at which time the views of interested
parties  are  expressed.  The  TABC  has the authority after such hearing not to
issue  a  renewal  of  the protested alcoholic beverage permit. Rick's has never
been the subject of a protest hearing against the renewal of Permits. Minnesota,
North  Carolina,  and New York have similar laws that may limit the availability
of  a  permit  to sell alcoholic beverages or that may provide for suspension or
revocation  of a permit to sell alcoholic beverages in certain circumstances. It
is  our  policy, prior to expanding into any new market, to take steps to ensure
compliance  with  all  licensing  and  regulatory  requirements  for the sale of
alcoholic  beverages  as  well  as  the  sale  of  food.


                                        7
<PAGE>
In  addition  to various regulatory requirements affecting the sale of alcoholic
beverages,  in  Houston,  and  in  many  other cities, the location of a topless
cabaret  is  subject  to  restriction  by  city ordinance. Topless nightclubs in
Houston,  Texas are subject to "The Sexually Oriented Business Ordinance", which
contains prohibitions on the location of an adult cabaret. The prohibitions deal
generally  with  distance  from  schools,  churches, and other sexually oriented
businesses and contain restrictions based on the percentage of residences within
the  immediate  vicinity  of  the  sexually oriented business. The granting of a
Sexually  Oriented  Business  Permit  is not subject to discretion; the Business
Permit  must  be granted if the proposed operation satisfies the requirements of
the  Ordinance.  (See  "Legal  Proceedings"  herein.)

In  Minneapolis,  we are required to be in compliance with state and city liquor
licensing  laws.  Our  location  in Minneapolis is presently zoned to enable the
operation  of a topless cabaret. We were a plaintiff in civil litigation against
the  defendant  City of Minneapolis. On September 16, 2003, the suit was settled
mainly  on  the  basis  that  the  City  of Minneapolis will enact a late hour's
operation ordinance and allows qualifying liquor establishments, including us at
our  current  location,  to operate until 3:00 a.m. We believe that, in the long
run,  the restoration of late hours operation on a permanent basis is preferable
to  going  forward  with  the  litigation  and  in  our  best  interest.

In  San Antonio and Austin, Texas, we are required to be in compliance with city
or  county  sexually  oriented  business  ordinances.  In  New  York, we will be
required to be in compliance with all state and local laws governing the sale of
liquor  and  zoning  for adult oriented businesses. We feel we are in compliance
with  these  laws at this time. In Charlotte we are required to be in compliance
with  city  or  county  sexually  oriented  business  ordinances.

TRADEMARKS

Our rights to the trademarks "Rick's" and "Rick's Cabaret" are established under
common law, based upon our substantial and continuous use of these trademarks in
interstate  commerce  since  at  least  as early as 1987. We have registered our
service  mark,  'RICK'S  AND  STARS  DESIGN",  with the United States Patent and
Trademark  Office.  We  have  also  obtained service mark registrations from the
Patent  and Trademark Office for the "RICK'S CABARET" service mark. There can be
no  assurance  that the steps we have taken to protect our service marks will be
adequate  to  deter  misappropriation.

EMPLOYEES AND INDEPENDENT CONTRACTORS

As of September 30, 2005, we had approximately 443 employees, of which 64 are in
management  positions,  including  corporate  and  administrative  operation and
approximately  379  of  which  are  engaged  in entertainment, food and beverage
service,  including  bartenders,  waitresses,  and  entertainers.  None  of  our
employees  are  represented by a union and we consider our employee relations to
be  good.  Additionally,  we have independent contractor relationships with more
than  600  entertainers, who are self-employed and perform at our locations on a
non-exclusive basis as independent contractors. Our entertainers in Minneapolis,
Minnesota  act  as  commissioned  employees.


                                        8
<PAGE>
SHARE REPURCHASES

As of December 5, 2005 we owned 908,530 treasury shares of our common stock that
we  acquired in open market purchases and from investors who originally acquired
the  shares  from  us  in private transactions. At this time, we do not have any
plan  to  use  these  shares  to  acquire  any  assets.

On  September 16, 2003, our board of directors authorized us to repurchase up to
$500,000  worth  of  our  common stock. No shares have been purchased under this
program.


ITEM 2.  PROPERTIES

Our  principal  executive office is located at 10959 Cutten Road, Houston, Texas
77066  which  consists  of  a  9,000  square  feet office/warehouse building. We
purchased  this property in mid December 2004 for $512,739, payable with $86,279
cash  at closing and $426,460 in a promissory note carrying 7% interest and a 15
year  term. The monthly payment is $3,834. As of September 30, 2005, the balance
of  the  mortgage  was  $414,057.  The  last mortgage payment is due in 2019. We
believe  that  our  offices are adequate for our present needs and that suitable
space  will  be  available  to  accommodate  our  future  needs.

We  own two locations of Rick's Cabaret (one in Houston and one in Minneapolis),
Club  Onyx, and the two locations of XTC (one in Austin and one in San Antonio).
We  own  the  location  of  Encounters club in Houston, which is currently under
lease  to  RCI Ventures, Inc. We lease XTC Wildhorse, Hummers, XTC North, Rick's
New  York,  and  Rick's  Charlotte  locations.

Club  Onyx,  located  on Bering Drive in Houston, has an aggregate 12,300 square
feet of space. In December 2004, we paid off the old mortgage and obtained a new
one with initial balance of $1,270,000 and interest rate of 10% per annum over a
10  year  term.  The  money  received from this new note was used to finance the
acquisition  of  the New York club. As of September 30, 2005, the balance of the
mortgage  was  $1,256,224.  During  fiscal year 2005, we paid $12,256 in monthly
principal  and  interest  payments.  The  last  mortgage payment is due in 2015.

The  Rick's  Cabaret,  located on North Belt Drive in Houston, has 12,000 square
feet  of space. In November, 2004, we obtained a mortgage using this property as
collateral.  The  principal  balance  of the new mortgage is $1,042,000, with an
annual  interest  rate  of 10% over a 10 year term. The money received from this
new  note  was  used  to  finance  the  acquisition  of the New York club. As of
September  30,  2005,  the  balance  of the mortgage was $1,029,231. The monthly
payment  of  principal and interest is $10,056. The last mortgage payment is due
in  2014.

The Rick's Cabaret, located in Minneapolis, has 15,400 square feet of space. The
balance,  as  of  September 30, 2005, that we owed on the mortgage is $2,035,303
and  the  interest  rate is 9%. We pay $22,732 in monthly principal and interest
payments.  The  last  mortgage  payment is due in 2008 with a balloon payment of
$1,794,432.

The  XTC  nightclub  in Austin has 8,600 square feet of space, which sits on 1.2
acres  of  land.  In  August 2005, we restructured the mortgage by extending the
term  to  10 years. The balance of the mortgage that we owed as of September 30,
2005 is $248,957 with an interest rate of 11% and monthly principal and interest
payments  of  $3,445.  In November 2004, we obtained an additional mortgage. The
principal  balance of the new mortgage is $900,000, with an annual interest rate
of  11% over a 10 year term. In June and July 2005, we obtained additional funds
in  the amount of $200,000. In August 2005 we combined the additional funds into
the  $900,000  mortgage.  The


                                        9
<PAGE>
money  received  from  this  new  note  was  used to finance the acquisition and
renovation  of the New York club.  The monthly principal and interest payment is
$15,034.  The  last  payments  for  both  mortgages  are  due  in  2015.

We  own  XTC nightclub in San Antonio, which has 7,800 square feet of space.  In
November  2004,  we  obtained a mortgage using this property as collateral.  The
principal  balance of the new mortgage is $590,000, with an annual interest rate
of  10%  over a 10 year term.  The money received from this new note was used to
finance  the  acquisition  and renovation of the New York club.  As of September
30,  2005, the balance of this mortgage was $582,770.  The monthly principal and
interest  payment  is  $5,694.  The  last  mortgage  payment  is  due  in  2014.

The  property  where  Encounters  is located has 8,000 square feet of space.  In
December  2004,  we  paid off the mortgage we previously had.  In November 2004,
together  with  property  in  Austin,  this  property  was used as an additional
collateral  to  secure the $900,000 mortgage above.  Beginning November 2004, we
began  receiving  a  monthly lease payment from Tantric Enterprises, Inc. in the
amount  of  $4,000  for  this  space.

Our  subsidiary,  Citation  Land  LLC, owns a 350-acre ranch in Brazoria County,
Texas,  and  approximately  50  acres  of  raw  land  in  Wise  County,  Texas.

The  balance  as  of September 30, 2005 that we owe on the Brazoria County ranch
mortgage  is  $289,308  and  the  interest  rate is 9%. We pay $2,573 in monthly
principal  and interest payments. The last mortgage payment is due in March 2006
with  a  balloon  payment  of  $287,920.

The  balance  as  of  September 30, 2005 that we owe on the Wise County raw land
mortgage  is  $140,802  and  the  interest rate is 12%. We pay $1,537 in monthly
principal and interest payments. The last mortgage payment is due in March 2026.

We  lease  the  property  in Houston, Texas, where our XTC Wildhorse is located.
The  lease  term  is  for  five years, with an additional five-year lease option
thereafter.  The  initial  base  rent  is $4,845 monthly for the first two years
ending  July  31,  2004,  with  an  annual  increase  of  $570  thereafter.

We  lease  the  property  in  Houston, Texas, where the Hummers is located.  The
lease  term  is  for  five  years,  with  an  additional  five-year lease option
thereafter.  The  initial  base  rent  is $2,763 monthly for the first two years
ending  April  30,  2005,  with  an  annual  increase  of  $325  thereafter.

We  lease  the  property in Houston, Texas, where our XTC North is located.  The
lease term is for five years, beginning March 2004, with an additional five-year
lease  option  thereafter.  The monthly rent is $8,000 until August 31, 2006, at
which  time  the  monthly  base  rent  increases  to  $9,000.

We  lease  the property in New York City, New York, where our Rick's Cabaret NYC
is  located.  We  assumed the existing lease which will terminate in April 2023.
The  monthly rent is $40,261 until May 2006, at which time the monthly base rent
increases  to $41,469.  Under the term of the existing lease, the base rent will
increase  by  approximately  3%  each  year.

We  lease  the  property  in Charlotte, North Carolina, where our Rick's Cabaret
Charlotte  is  located.  We  assumed  the existing lease which will terminate in
June  2009,  with  an additional five-year lease option thereafter.  The monthly
rent  is  $22,000  monthly  until July 2007, at which time the monthly base rent
will  increase  to  $23,000.


                                       10
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

SEXUALLY ORIENTED BUSINESS ORDINANCE OF HOUSTON, TEXAS

In  January 1997, the City Council of the City of Houston passed a comprehensive
new  Ordinance  regulating  the  location  of  and  the  conduct within Sexually
Oriented  Businesses  (the  "Ordinance").  The Ordinance established new minimum
distances  that  Sexually  Oriented  Businesses  may  be  located  from schools,
churches,  playgrounds  and  other  sexually  oriented businesses. There were no
provisions  in  the  Ordinance  exempting previously permitted sexually oriented
businesses  from the effect of the new Ordinance. In 1997, we were informed that
one  of  our  Houston  locations  at  3113  Bering  Drive  failed  to  meet  the
requirements  of  the  Ordinance  and  accordingly  the  renewal of our Business
License  at  that  location  was  denied.

The  Ordinance  provided  that  a  business  which  was  denied a renewal of its
operating  permit  due  to  changes in distance requirements under the Ordinance
would  be  entitled  to  continue  in  operation  for  a  period  of  time  (the
"Amortization Period") if the owner were unable to recoup, by the effective date
of  the  Ordinance, its investment in the business that was incurred through the
date  of  the  passage  and  approval  of  the  Ordinance.

We  filed  a  request  with  the City of Houston requesting an extension of time
during  which  operations at our north Houston facility could continue under the
Amortization  Period  provisions of the Ordinance since we were unable to recoup
our  investment  prior to the effective date of the Ordinance. An administrative
hearing  was  held  by  the  City  of  Houston  to  determine  the  appropriate
Amortization  Period  to  be  granted  to us. At the Hearing, we were granted an
amortization period that has since been reached. We have the right to appeal any
decision  of  the  Hearing official to the district court in the State of Texas.

In May 1997, the City of Houston agreed to defer implementation of the Ordinance
until  the constitutionality of the entire Ordinance was decided by court trial.
In  February  1998,  the U.S. District Court for the Southern District of Texas,
Houston Division, struck down certain provisions of the Ordinance, including the
provision  mandating  a 1,500 foot distance between a club and schools, churches
and  other  sexually  oriented business, leaving intact the provision of the 750
foot  distance  as  it  existed  prior  to  the  Ordinance.

The  City  of  Houston  has appealed the District Court's rulings with the Fifth
Circuit Court of Appeals. In the event that the City of Houston is successful in
the  appeal,  we  could  be  out of compliance and such an outcome could have an
adverse  impact on our future. Our nightclub in our south Houston location has a
valid  permit/license  that  will  expire  in December 2005. The permits for our
north  Houston  location  and  our  Bering  Drive  location  have  expired.

There  are  other provisions in the Houston, Texas Ordinance, such as provisions
governing  the  level  of lighting in a sexually oriented business, the distance
between  a  customer  and  dancer  while  the dancer is performing in a state of
undress and provisions regarding the licensing of dancers and club managers that
were  upheld  by  the  court  which  may  be detrimental to our business. We, in
concert  with other sexually oriented businesses, are appealing these aspects of
the  Ordinance.

In  November,  2003, a three judge panel from the Fifth Circuit Court of Appeals
published  their  Opinion  which  affirmed  the  Trial  Court's ruling regarding
lighting  levels,  customer  and  dancer  separation  distances and licensing of
dancers  and  staff.  The  Court  of  Appeals, however, did not follow the Trial
Court's  ruling  regarding  the distance from which a club may be located from a


                                       11
<PAGE>
church  or  school.  The  Court  of  Appeals held that a distance measurement of
1,500 feet would be upheld upon a showing by the City of Houston that its claims
that  there  were  alternative sites available for relocating the clubs could be
substantiated.  The  case was remanded for trial on the issue of the alternative
sites.

There  are  other  technical  issues,  which  could  additionally  bear upon the
location  of  the  clubs,  which  were not decided at the trial level during the
initial  phase  of the case.  It is anticipated that these technical issues will
be  joined  in  the  Trial  Court.  The City has not sought to modify any of the
terms  of  the  injunction  against enforcement of any location provision of the
Ordinance.

The  appeals  process  as  it  relates  to  the Court's rulings in 1998 has been
exhausted.  The  Trial  Court  has  entered  a new scheduling order which places
trial  on  the  remaining  issues for June 2006.  Under the holding of the Fifth
Circuit  Court  of  Appeals, the City of Houston has the burden of proof to show
that, under the distance measurements contained in the 1997 ordinance, there are
over 2,000 alternate sites available for relocation.  If the City of Houston can
meet  this  initial  burden,  then  the  Trial Court will consider the remaining
location  issues  which were not decided during the initial summary phase of the
case.  In  the event the City of Houston can meet its burden and the Trial Court
moves  forward  with  the  case,  an  appeal  is  anticipated.  A  ruling on the
remaining issues in favor of the City of Houston could have an adverse impact on
the  Rick's  locations  in  Houston,  Texas.

OTHER LEGAL MATTERS

On  May 2, 2003, a lawsuit was filed in the United States District Court for the
Western  District  of Texas, San Antonio division, on behalf of XTC Cabaret, and
others,  as  a result of the City of San Antonio having adopted a new ordinance,
which,  among  other  things,  banned nude dancing. This suit asked the Court to
declare  the  ordinance  unconstitutional and enjoin the City from enforcing it.
Prior to a resolution of this litigation, XTC Cabaret withdrew as a party to the
lawsuit.  Although  a  settlement was reached with the remaining parties in June
2005,  it  did  not  include  nude  dancing.  XTC  has  elected  to  address the
constitutionality  of  the ordinance by appealing any conviction obtained by the
City  through  the  state  courts.

On  April  7,  2004,  a lawsuit was filed in the 80th Judicial District Court of
Harris County, Texas, styled Cause No. 2004-18510, Charity Renee Stevens, et al.
vs.  Lazaro Ernesto Alfonso, et al. This is a wrongful death and personal injury
action  against  two  individuals  based  on  negligence  theories  and  five
entertainment  establishments  including  Rick's  based  on  alleged "dram shop"
violations  arising  from  a  two-car  collision. Plaintiffs have also sued Ford
Motor  Company  under  a  theory  of  products liability. Plaintiffs include the
children  of  the decedents, a minor passenger and the mothers of the decedents.
Plaintiffs  are  seeking  unspecified  damages  including  physical  pain  and
suffering, mental anguish, pecuniary loss, past and future loss of companionship
and  consortium,  loss  of  mental  and  intellectual  function, past and future
physical  impairment,  reduction  in earning capacity, increased education costs
and  expenses  including  funeral  and  medical  costs.

Management  believes  that  we are not liable for any of the damages and that we
are  covered  by  the  safe harbor provisions of the Dram Shop Act, which render
certain  compliant  establishments  not liable for the acts of their patrons. We
are not aware of any insurance coverage for this claim. We deny that we have any
liability  for  the  accident  and  are  vigorously  defending  the  matter.

Discovery  is  ongoing and we have filed a Motion for Summary Judgment on behalf
of  Rick's  which  is  currently  pending.


                                       12
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held our Annual Meeting of Shareholders on June 27, 2005.  The results of the
meeting  have  been disclosed in our quarterly report Form 10-QSB for the period
ending  June  30,  2005.


                                    PART II

ITEM 5.  MARKET  FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
         SMALL  BUSINESS  ISSUER  PURCHASES  OF  EQUITY  SECURITIES

Our common stock is quoted on the NASDAQ SmallCap Market under the symbol "RICK"
The  following  table  sets forth the quarterly high and low of sales prices per
share  for  the  common  stock.  Our  fiscal  year  ended  September  30,  2005.

COMMON STOCK PRICE RANGE

<TABLE>
<CAPTION>
                HIGH    LOW
<S>             <C>    <C>
Fiscal 2004
--------------

First Quarter.  $1.84  $1.50
Second Quarter  $2.84  $1.74
Third Quarter.  $3.30  $2.40
Fourth Quarter  $2.79  $2.21

Fiscal 2005
--------------

First Quarter.  $3.03  $2.20
Second Quarter  $4.61  $2.85
Third Quarter.  $3.19  $2.65
Fourth Quarter  $3.55  $2.70
</TABLE>

On  December  23, 2005, the last sales price for the common stock as reported on
the  NASDAQ  SmallCap  Market  was  $3.74.  On  December  23,  2005,  there were
approximately  1,300  stockholders  of  record  of  the  common  stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer
&  Trust  Company.

DIVIDEND POLICY

We  have  not  paid,  and  do  not currently intend to pay cash dividends on our
common  stock  in  the  foreseeable future.  Our current policy is to retain all
earnings,  if any, to provide funds for operation and expansion of our business.
The  declaration  of dividends, if any, will be subject to the discretion of the
Board of Directors, which may consider such factors as our results of operation,
financial  condition,  capital  needs  and  acquisition  strategy, among others.


                                       13
<PAGE>
On  September 16, 2003, our board of directors authorized us to repurchase up to
$500,000 worth of our common stock.     No shares have been purchased under this
program.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth all equity compensation plans as of September 30,
2005:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                      NUMBER OF SECURITIES
                                                                                                    REMAINING AVAILABLE FOR
                                 NUMBER OF SECURITIES TO BE                                       FUTURE ISSUANCE UNDER EQUITY
                                  ISSUED UPON EXERCISE OF         WEIGHTED-AVERAGE EXERCISE            COMPENSATION PLANS
                               OUTSTANDING OPTIONS, WARRANTS    PRICE OF OUTSTANDING OPTIONS,   (EXCLUDING SECURITIES REFLECTED
                                         AND RIGHTS                  WARRANTS AND RIGHTS                 IN COLUMN (A))
PLAN CATEGORY                               (A)                              (B)                              (C)
-----------------------------  ------------------------------  -------------------------------  -------------------------------
<S>                            <C>                             <C>                              <C>
Equity compensation plans
approved by security holders              878,000              $            2.47                            52,000
-----------------------------  ------------------------------  -------------------------------  -------------------------------
Equity compensation plans not
approved by security holders                 0                                0                            300,000
-----------------------------  ------------------------------  -------------------------------  -------------------------------
TOTAL                                     878,000              $            2.47                           352,000
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

DIRECTOR COMPENSATION

We do not currently pay any cash directors' fees, but we pay the expenses of our
directors  in  attending  board  meetings.   In September 2005, we issued 10,000
options  to  each  Director  who  is  a  member of our audit committee and 5,000
options  to  our other Directors. These options have a strike price of $2.80 per
share  and  expire  in  July  2010.

EMPLOYEE STOCK OPTION PLANS

While  we  have been successful in attracting and retaining qualified personnel,
we  believe that our future success will depend in part on our continued ability
to attract and retain highly qualified personnel. We pay wages and salaries that
we  believe  are  competitive.  We  also  believe  that  equity  ownership is an
important factor in our ability to attract and retain skilled personnel. We have
adopted  stock  option  plans  (the  "Plans")  for  employees and directors. The
purpose  of  the  Plans  is  to  further our interests, our subsidiaries and our
stockholders  by  providing  incentives  in  the  form  of  stock options to key
employees  and  directors  who  contribute  materially  to  our  success  and
profitability.  The  grants  recognize  and  reward  outstanding  individual
performances and contributions and will give such persons a proprietary interest
in  us,  thus  enhancing  their  personal  interest in our continued success and
progress.  The  Plans  also  assist  us  and  our subsidiaries in attracting and
retaining  key  employees and directors. The Plans are administered by the Board
of  Directors.  The  Board  of  Directors  has the exclusive power to select the
participants in the Plans, to establish the terms of the options granted to each
participant,  provided  that all options granted shall be granted at an exercise
price equal to at least 85% of the fair market value of the common stock covered
by  the  option  on  the  grant date and to make all determinations necessary or
advisable  under  the  Plans.

In  1995  we  adopted  the  1995 Stock Option Plan (the "1995 Plan"). A total of
300,000  shares could be granted and sold under the 1995 Plan, all of which were
not  exercised and have expired.  We do not plan to issue any additional options
under  the  1995  Plan.

In  August  1999  we  adopted  the 1999 Stock Option Plan (the "1999 Plan") with
500,000  shares


                                       14
<PAGE>
authorized  to  be  granted  and  sold  under  the  1999  Plan.  In August 2004,
shareholders  approved  an  Amendment  to  the 1999 Plan (the "Amendment") which
increased  the  total number of shares authorized to 1,000,000.  As of September
30,  2005,  878,000 stock options are presently outstanding under the 1999 Plan,
with  70,000  of  which  have  been  exercised.

RECENT SALES OF UNREGISTERED SECURITIES

During  the  quarter  ended  September  30,  2005,  we  completed  the following
transactions  in reliance upon exemptions from registration under the Securities
Act  of  1933,  as  amended (the "Act") as provided in Section 4(2) thereof. All
certificates  issued  in connection with these transactions were endorsed with a
restrictive  legend  confirming  that the securities could not be resold without
registration  under  the  Act  or  an applicable exemption from the registration
requirements  of  the  Act. None of the transactions involved a public offering,
underwriting  discounts  or sales commissions. We believe that each person was a
"qualified"  investor  within  the  meaning  of  the  Act  and had knowledge and
experience in financial and business matters, which allowed them to evaluate the
merits  and  risks  of  our  securities. Each person was knowledgeable about our
operations  and  financial  condition.

1.   On  July 22, 2005, we entered into a secured convertible debenture with one
     of our shareholders for a principal sum of $660,000 which bears interest at
     the  rate  of  12%  per  annum.  The term is for three years. The debenture
     matures  on  August  1,  2008.  The  principal  amount  of the debenture is
     convertible  into  shares of our common stock at a rate of $3.00 per share.
     We  also  issued  50,000  warrants  at  $3.00 per share in relation to this
     debenture.  The debenture is secured by our ownership in Citation Land, LLC
     and  RCI  Holdings,  Inc.,  both  are  wholly  owned  subsidiaries.

2.   In  July  2005,  we  sold  200,000  shares of our common stock in a private
     transaction  to  13 persons at $2.00 per share for a total consideration of
     $400,000.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF  OPERATIONS

The  following  discussion  should  be  read  in  conjunction  with  our audited
consolidated  financial  statements  and  the  related  notes  to  the financial
statements  included  in  this  Form  10-KSB.

FORWARD LOOKING STATEMENT AND INFORMATION

We  are including the following cautionary statement in this Form 10-KSB to make
applicable  and  take  advantage  of  the  safe  harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by  us  or  on  behalf  of  us.  Forward-looking  statements  include statements
concerning  plans,  objectives,  goals, strategies, future events or performance
and underlying assumptions and other statements, which are other than statements
of  historical  facts. Certain statements in this prospectus are forward-looking
statements.  Words  such  as  "expects,"  "believes,"  "anticipates," "may," and
"estimates"  and  similar  expressions  are intended to identify forward-looking
statements.  Such  statements  are subject to risks and uncertainties that could
cause  actual  results to differ materially from those projected. Such risks and
uncertainties are set forth below. Our expectations, beliefs and projections are
expressed  in  good  faith  and  we  believe  that they have a reasonable basis,
including  without  limitation,  our examination of historical operating trends,
data contained in our records and other data available from third parties. There
can


                                       15
<PAGE>
be  no  assurance  that our expectations, beliefs or projections will result, be
achieved,  or  be  accomplished.  In  addition  to  other  factors  and  matters
discussed elsewhere in this prospectus, the following are important factors that
in  our view could cause material adverse affects on our financial condition and
results  of  operations:  the  risks  and  uncertainties  related  to our future
operational  and  financial results, the risks and uncertainties relating to our
Internet  operations,  competitive  factors, the timing of the openings of other
clubs,  the  availability  of  acceptable  financing to fund corporate expansion
efforts,  our  dependence on key personnel, the ability to manage operations and
the  future  operational  strength  of  management,  and  the laws governing the
operation of adult entertainment businesses.  We have no obligation to update or
revise  these  forward-looking  statements  to  reflect the occurrence of future
events  or  circumstances.

RISK FACTORS

An  investment  in  our Common Stock involves a high degree of risk.  You should
carefully  consider the risks described below before deciding to purchase shares
of  our  Common  Stock.  If  any  of the events, contingencies, circumstances or
conditions described in the risks below actually occurs, our business, financial
condition or results of operations could be seriously harmed.  The trading price
of  our  Common  Stock could, in turn, decline and you could lose all or part of
your  investment.

Our Business Operations are Subject to Regulatory Uncertainties Which May Affect
Our  Ability  to  Continue Operations of Existing Nightclubs, Acquire Additional
Nightclubs  or  Be  Profitable

Adult  entertainment  nightclubs  are  subject  to  local,  state  and  federal
regulations.  Our  business is regulated by local zoning, local and state liquor
licensing,  local  ordinances  and  state  and  federal  time  place  and manner
restrictions. The adult entertainment provided by our nightclubs has elements of
speech  and  expression  and,  therefore, enjoys some protection under the First
Amendment to the United States Constitution.  However, the protection is limited
to  the  expression, and not the conduct of an entertainer. While our nightclubs
are  generally  well  established  in  their respective markets, there can be no
assurance  that local, state and/or federal licensing and other regulations will
permit  our  nightclubs  to  remain  in  operation  or profitable in the future.

We  May  Need  Additional  Financing  or  Our  Business  Expansion  Plans May Be
Significantly  Limited

If  cash  generated  from  our operations is insufficient to satisfy our working
capital  and  capital expenditure requirements, we will need to raise additional
funds  through  the public or private sale of our equity or debt securities. The
timing  and  amount  of  our  capital  requirements  will  depend on a number of
factors,  including  cash flow and cash requirements for nightclub acquisitions.
If  additional  funds  are  raised through the issuance of equity or convertible
debt securities, the percentage ownership of our then-existing shareholders will
be  reduced. We cannot assure you that additional financing will be available on
terms favorable to us, if at all. Any future equity financing, if available, may
result  in  dilution to existing shareholders, and debt financing, if available,
may  include  restrictive  covenants.  Any  failure  by  us  to  procure  timely
additional  financing  will  have  material adverse consequences on our business
operations.

There  is  Substantial Competition in the Nightclub Entertainment Industry Which
May  Affect  Our  Ability  to  Operate  Profitably  or  Acquire Additional Clubs

Our  nightclubs  face  competition.  Some  of these competitors may have greater
financial  and  management  resources  than  us.  Additionally,  the industry is
subject  to  unpredictable  competitive  trends  and  competition  for  general
entertainment  dollars.  There  can  be  no  assurance  that  we  will  be


                                       16
<PAGE>
able  to  remain  profitable  in  this  competitive  industry.

Risk  of  Adult  Nightclubs  Operations

Historically,  the  adult entertainment, restaurant and bar industry has been an
extremely  volatile  industry.  The  industry tends to be extremely sensitive to
the  general  local  economy,  in  that when economic conditions are prosperous,
entertainment  industry  revenues  increase,  and  when  economic conditions are
unfavorable,  entertainment  industry  revenues  decline.  Coupled  with  this
economic  sensitivity  are  the trendy personal preferences of the customers who
frequent  adult  cabarets.  We  continuously  monitor  trends  in our customers'
tastes  and  entertainment  preferences  so  that,  if  necessary,  we  can make
appropriate  changes  which  will  allow  us to remain one of the premiere adult
cabarets.  However,  any  significant decline in general corporate conditions or
uncertainties  regarding future economic prospects that affect consumer spending
could  have  a  material  adverse  effect on our business.  In addition, we have
historically  catered  to  a  clientele  base  from the upper end of the market.
Accordingly, further reductions in the amounts of entertainment expenses allowed
as  deductions  from income under the Internal Revenue Code of 1954, as amended,
could  adversely  affect  sales  to  customers  dependent upon corporate expense
accounts.

Permits  Relating  to  the  Sale  of  Alcohol

We  derive  a  significant  portion  of  our revenues from the sale of alcoholic
beverages.  In  Texas,  the  authority  to  issue  a  permit  to  sell alcoholic
beverages  is  governed by the Texas Alcoholic Beverage Commission (the "TABC"),
which  has  the  authority, in its discretion, to issue the appropriate permits.
Rick's  presently  holds  a  Mixed  Beverage Permit and a Late Hours Permit (the
"Permits").  These  Permits  are  subject  to  annual  renewal, provided we have
complied  with  all  rules  and regulations governing the permits.  Renewal of a
permit  is  subject to protest, which may be made by a law enforcement agency or
by a member of the general public.  In the event of a protest, the TABC may hold
a hearing at which time the views of interested parties are expressed.  The TABC
has  the  authority  after  such hearing not to issue a renewal of the protested
alcoholic  beverage  permit.  While  we  have  never  been  subject to a protest
hearing  against the renewal of our Permits, there can be no assurance that such
a  protest  could not be made in the future, nor can there be any assurance that
the Permits would be granted in the event such a protest was made.  Other states
may  have  similar  laws  which  may  limit the availability of a permit to sell
alcoholic  beverages  or  which  may  provide  for suspension or revocation of a
permit  to  sell alcoholic beverages in certain circumstances.  The temporary or
permanent suspension or revocations of either of the Permits or the inability to
obtain permits in areas of expansion would have a material adverse effect on the
revenues,  financial  condition  and  results  of  operations  of  the  Company.

We  Must  Continue  to  Meet  The  Nasdaq  Small  Cap  Market  Continued Listing
Requirements  or  We  Risk  Delisting

Our  securities are currently listed for trading on the Nasdaq Small Cap Market.
We  must  continue  to  satisfy  Nasdaq's continued listing requirements or risk
delisting  which would have an adverse effect on our business. If our securities
are ever de-listed from the Nasdaq, it may trade on the over-the-counter market,
which  may  be  a less liquid market. In such case, our shareholders' ability to
trade  or  obtain  quotations  of the market value of shares of our common stock
would  be  severely  limited  because  of  lower trading volumes and transaction
delays. These factors could contribute to lower prices and larger spreads in the
bid  and  ask  prices for our securities.  There is no assurance that we will be
able  to  maintain  compliance  with  the Nasdaq continued listing requirements.


                                       17
<PAGE>
In  The  Future,  We  Will  Incur  Significant  Increased  Costs  as a Result of
Operating  as  a  Public  Company, and Our Management Will Be Required to Devote
Substantial  Time  to  New  Compliance  Initiatives

In  the  future, we will incur significant legal, accounting and other expenses.
The  Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules
subsequently  implemented  by  the SEC, have imposed various new requirements on
public companies, including requiring changes in corporate governance practices.
Our  management  and other personnel will need to devote a substantial amount of
time  to these new compliance initiatives. Moreover, these rules and regulations
will  increase  our  legal  and  financial  compliance  costs and will make some
activities  more  time-consuming  and  costly.  For example, we expect these new
rules  and  regulations  to  make it more difficult and more expensive for us to
obtain director and officer liability insurance, and we may be required to incur
substantial  costs  to  maintain  the  same  or  similar  coverage.

In  addition,  the  Sarbanes-Oxley  Act  requires,  among  other things, that we
maintain  effective  internal  controls  for  financial reporting and disclosure
controls  and  procedures.  In  particular,  commencing  in fiscal 2007, we must
perform  system and process evaluation and testing of our internal controls over
financial  reporting  to  allow management and our independent registered public
accounting  firm  to  report  on the effectiveness of our internal controls over
financial  reporting,  as required by Section 404 of the Sarbanes-Oxley Act. Our
testing,  or  the  subsequent  testing  by  our  independent  registered  public
accounting firm, may reveal deficiencies in our internal controls over financial
reporting that are deemed to be material weaknesses. Our compliance with Section
404  will  require  that  we  incur  substantial  accounting  expense and expend
significant  management  efforts.  We  currently  do  not have an internal audit
group,  and  we will need to hire additional accounting and financial staff with
appropriate  public  company  experience  and  technical  accounting  knowledge.
Moreover, if we are not able to comply with the requirements of Section 404 in a
timely  manner,  or  if  we or our independent registered public accounting firm
identifies  deficiencies  in our internal controls over financial reporting that
are  deemed  to  be  material  weaknesses,  the  market price of our stock could
decline,  and  we  could be subject to sanctions or investigations by the SEC or
other  regulatory  authorities,  which  would  require  additional financial and
management  resources.

Uninsured  Risks

We  maintain  insurance in amounts we considers adequate for personal injury and
property  damage  to which the business of the Company may be subject.  However,
there  can  be no assurance that uninsured liabilities in excess of the coverage
provided  by  insurance,  which liabilities may be imposed pursuant to the Texas
"Dram  Shop"  statute  or similar "Dram Shop" statutes or common law theories of
liability  in  other  states  where we operate or expand.  The Texas "Dram Shop"
statute  provides a person injured by an intoxicated person the right to recover
damages from an establishment that wrongfully served alcoholic beverages to such
person  if  it was apparent to the server that the individual being sold, served
or  provided  with an alcoholic beverage was obviously intoxicated to the extent
that  he  presented  a  clear  danger to himself and others.  An employer is not
liable  for  the  actions  of  its  employee  who overserves if (i) the employer
requires its employees to attend a seller training program approved by the TABC;
(ii)  the  employee has actually attended such a training program; and (iii) the
employer  has  not directly or indirectly encouraged the employee to violate the
law.  It  is  our  policy  to require that all servers of alcohol working at our
clubs  be  certified  as  servers under a training program approved by the TABC,
which  certification  gives  statutory  immunity  to the sellers of alcohol from
damage caused to third parties by those who have consumed alcoholic beverages at
such  establishment pursuant to the Texas Alcoholic Beverage Code.  There can be
no assurance, however, that uninsured liabilities may not arise which could have
a  material  adverse  effect  on  the  Company.


                                       18
<PAGE>
Limitations  on  Protection  of  Service  Marks

Our rights to the tradenames "Rick's" and "Rick's Cabaret" are established under
the common law based upon our substantial and continuous use of these trademarks
in  interstate  commerce  since  at  least  as early as 1987.  "RICK'S AND STARS
DESIGN"  and  "RICK'S  CABARET"  logos  are  registered  through  service  mark
registrations  issued  by the United States Patent and Trademark Office ("PTO").
There  can  be no assurance that these steps taken by the Company to protect its
Service  Marks  will  be  adequate  to  deter  misappropriation of its protected
intellectual  property  rights.  Litigation  may  be  necessary in the future to
protect  our  rights  from infringement, which may be costly and time consuming.
The loss of the intellectual property rights owned or claimed by us could have a
material  adverse  affect  on  our  business.

Anti-takeover  Effects  of  Issuance  of  Preferred  Stock

The  Board  of  Directors  has  the authority to issue up to 1,000,000 shares of
Preferred  Stock in one or more series, to fix the number of shares constituting
any  such  series,  and  to  fix  the  rights  and  preferences  of  the  shares
constituting any series, without any further vote or action by the stockholders.
The issuance of Preferred Stock by the Board of Directors could adversely affect
the  rights  of  the  holders of Common Stock.  For example, such issuance could
result  in  a  class  of securities outstanding that would have preferences with
respect to voting rights and dividends and in liquidation over the Common Stock,
and  could (upon conversion or otherwise) enjoy all of the rights appurtenant to
Common  Stock.  The  Board's authority to issue Preferred Stock could discourage
potential  takeover  attempts  and could delay or prevent a change in control of
the  Company  through merger, tender offer, proxy contest or otherwise by making
such attempts more difficult to achieve or more costly.  There are no issued and
outstanding shares of Preferred Stock; there are no agreements or understandings
for  the  issuance of Preferred Stock, and the Board of Directors has no present
intention  to  issue  Preferred  Stock.

We Do Not Anticipate Paying Dividends on Common Shares in the Foreseeable Future

Since our inception we have not paid any dividends on our common stock and we do
not  anticipate  paying  any dividends in the foreseeable future. We expect that
future earnings, if any, will be used for working capital and to finance growth.

Future  Sales  of  Our  Common  Stock  May  Depress  Our  Stock  Price

The  market  price  of  our  common  stock could decline as a result of sales of
substantial  amounts of our common stock in the public market, or as a result of
the  perception  that  these sales could occur. In addition, these factors could
make  it more difficult for us to raise funds through future offerings of common
stock.

Our  Stock  Price  Has  Been  Volatile  and  May  Fluctuate  in  the  Future

The  trading price of our securities may fluctuate significantly. This price may
be  influenced  by  many  factors,  including:

     -    our  performance  and  prospects;
     -    the  depth  and  liquidity  of  the  market  for  our  securities;
     -    sales  by  selling  shareholders  of  shares  issued  or  issuable  in
          connection  with  the  Debenture  and/or  Convertible  Note;
     -    investor  perception  of  us  and  the  industry  in which we operate;
     -    changes in earnings estimates or buy/sell recommendations by analysts;


                                       19
<PAGE>
     -    general  financial  and  other  market  conditions;  and
     -    domestic  economic  conditions.

Public  stock  markets  have  experienced, and may experience, extreme price and
trading  volume volatility. These broad market fluctuations may adversely affect
the  market  price  of  our  securities.

Our  Management  Controls  a  Significant  Percentage of Our Current Outstanding
Common  Stock  and  Their  Interests May Conflict With Those of Our Shareholders

As  of  December  23,  2005,  our  Directors  and  executive  officers and their
respective  affiliates  collectively and beneficially owned approximately 29% of
our outstanding common stock, including all warrants exercisable within 60 days.
This  concentration of voting control gives our Directors and executive officers
and  their  respective  affiliates  substantial influence over any matters which
require  a  shareholder  vote,  including,  without  limitation, the election of
Directors,  even  if  their  interests  may  conflict  with  those  of  other
shareholders.  It  could also have the effect of delaying or preventing a change
in  control of or otherwise discouraging a potential acquirer from attempting to
obtain  control  of  us. This could have a material adverse effect on the market
price  of  our common stock or prevent our shareholders from realizing a premium
over  the  then  prevailing  market  prices  for  their  shares of common stock.

We  are  Dependent  on  Key  Personnel

Our  future  success is dependent, in a large part, on retaining the services of
Mr. Eric Langan, our President and Chief Executive Officer. Mr. Langan possesses
a  unique  and  comprehensive knowledge of our industry. While Mr. Langan has no
present  plans  to  leave  or  retire  in the near future, his loss could have a
negative  effect on our operating, marketing and financial performance if we are
unable  to  find  an  adequate replacement with similar knowledge and experience
within  our  industry.  We  maintain  key-man life insurance with respect to Mr.
Langan.  Although  Mr.  Langan  is  under  an employment agreement (as described
herein),  there can be no assurance that Mr. Langan will continue to be employed
by  us.  The  loss  of Mr. Langan could have a negative effect on our operating,
marketing,  and  financing  performance.

Cumulative  Voting  is  Not  Available  To  Stockholders

Cumulative  voting  in  the  election  of  Directors  is expressly denied in our
Articles  of  Incorporation. Accordingly, the holder or holders of a majority of
the  outstanding  shares  of  our  common  stock may elect all of our Directors.
Management's  large  percentage  ownership of our outstanding common stock helps
enable them to maintain their positions as such and thus control of our business
and  affairs.

Our  Directors  and  Officers  Have  Limited  Liability  and  Have  Rights  To
Indemnification

Our  Articles  of  Incorporation  and  Bylaws provide, as permitted by governing
Texas  law, that our Directors and officers shall not be personally liable to us
or  any of our stockholders for monetary damages for breach of fiduciary duty as
a  Director  or  officer,  with certain exceptions. The Articles further provide
that  we  will  indemnify  our  Directors  and  officers  against  expenses  and
liabilities  they  incur  to  defend, settle, or satisfy any civil litigation or
criminal  action  brought  against them on account of their being or having been
its  Directors  or  officers  unless,  in such action, they are adjudged to have
acted  with  gross  negligence  or  willful  misconduct.


                                       20
<PAGE>
The  inclusion  of  these  provisions  in  the  Articles  may have the effect of
reducing the likelihood of derivative litigation against Directors and officers,
and  may  discourage or deter stockholders or management from bringing a lawsuit
against  Directors  and  officers  for breach of their duty of care, even though
such  an  action,  if  successful,  might  otherwise  have  benefited us and our
stockholders.  The  Articles provide for the indemnification of our officers and
Directors,  and  the  advancement  to  them  of  expenses in connection with any
proceedings  and  claims,  to  the  fullest  extent  permitted by Texas law. The
Articles include related provisions meant to facilitate the indemnitee's receipt
of  such benefits. These provisions cover, among other things: (i) specification
of the method of determining entitlement to indemnification and the selection of
independent  counsel  that  will  in  some  cases  make such determination, (ii)
specification  of  certain  time  periods  by  which  certain  payments  or
determinations  must  be  made  and  actions  must  be  taken,  and  (iii)  the
establishment  of  certain  presumptions  in  favor  of  an  indemnitee.

Insofar  as indemnification for liabilities arising under the Securities Act may
be  permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, we have been advised that in the opinion of the Securities
and  Exchange  Commission,  such  indemnification  is  against  public policy as
expressed  in  the  Securities  Act  and  is  therefore  unenforceable.

GENERAL

We  operate  in  two  businesses  in  the  adult  entertainment  industry:

1.   We  own  and operate upscale adult nightclubs serving primarily businessmen
     and  professionals.  Our  nightclubs  offer  live  adult  entertainment,
     restaurant  and  bar  operations. We own and operate seven adult nightclubs
     under  the  name  "Rick's  Cabaret"  and  "XTC"  in Houston, Austin and San
     Antonio,  Texas, Charlotte, North Carolina, Minneapolis, Minnesota, and New
     York,  New  York. We also own and operate a sports bar called "Hummers" and
     an upscale venue that caters especially to urban professionals, businessmen
     and  professional athletes called "Club Onyx" in Houston. No sexual contact
     is  permitted  at  any  of  our  locations.

2.   We  have  extensive  Internet  activities.

     a)   We  currently  own  two  adult  Internet  membership  Web  sites  at
          www.CoupleTouch.com  and  www.xxxpassword.com.  We  acquire
          xxxpassword.com  site  content  from  wholesalers.

     b)   We  operate  an  online  auction  site  www.NaughtyBids.com. This site
          provides our customers with the opportunity to purchase adult products
          and  services  in an auction format. We earn revenues by charging fees
          for  each  transaction  conducted  on  the  automated  site.

Our  nightclub  revenues  are derived from the sale of liquor, beer, wine, food,
merchandise,  cover  charges,  membership  fees,  independent contractors' fees,
commissions  from vending and ATM machines, valet parking and other products and
services.  Our Internet revenues are derived from subscriptions to adult content
Internet websites, traffic/referral revenues, and commissions earned on the sale
of  products  and services through Internet auction sites, and other activities.
Our  fiscal  year  end  is  September  30.

Beginning  in fiscal 2002 and continuing through fiscal 2005, we greatly reduced
our  usage  of


                                       21
<PAGE>
promotional  pricing  for membership fees for our adult entertainment web sites.
This  reduced  our  revenues  from  these  web  sites.

We  performed  our  annual evaluation on goodwill impairment as of September 30,
2005.  No  impairment  losses  were  identified  as a result of this evaluation.

CRITICAL  ACCOUNTING  POLICIES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and assumptions that affect certain reported amounts in the financial
statements  and  accompanying  notes.  Estimates  and  assumptions  are based on
historical  experience,  forecasted  future events and various other assumptions
that  we  believe  to  be  reasonable  under  the  circumstances.  Estimates and
assumptions may vary under different assumptions or conditions.  We evaluate our
estimates  and  assumptions  on  an  ongoing  basis.  We  believe the accounting
policies  below  are  critical  in  the portrayal of our financial condition and
results  of  operations.

Accounts  and  Notes  Receivable

Accounts  receivable  trade is primarily comprised of credit card charges, which
are  generally  converted  to cash in two to five days after a purchase is made.
The  Company's  accounts  receivable other is comprised of employee advances and
other  miscellaneous receivables.  The long-term portion of notes receivable are
included  in  other assets in the accompanying consolidated balance sheets.  The
Company recognizes interest income on notes receivable based on the terms of the
agreement  and  based upon management's evaluation that the notes receivable and
interest  income  will  be  collected.  The  Company  recognizes  allowances for
doubtful  accounts  or  notes  when, based on management judgment, circumstances
indicate  that  accounts or notes receivable will not be collected.  There is no
allowance for doubtful accounts or notes receivable as of September 30, 2005 and
2004.

Inventories

Inventories  include  alcoholic  beverages,  food,  and  Company  merchandise.
Inventories  are  carried at the lower of cost, average cost, which approximates
actual  cost  determined  on  a  first-in,  first-out ("FIFO") basis, or market.

Marketable Securities

Marketable  securities  at  September 30, 2005 and 2004 consist of common stock.
As  of  September  30,  2005  and 2004, the Company's marketable securities were
classified  as  available-for-sale,  which  are  carried  at  fair  value,  with
unrealized  gains  and  losses reported as other comprehensive income within the
stockholders'  equity  section  of the accompanying consolidated balance sheets.
The  cost  of  marketable  equity  securities  sold  is determined on a specific
identification  basis.  The  fair value of marketable equity securities is based
on  quoted  market  prices.

Property  and  Equipment

Property  and  equipment are stated at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets for financial
reporting  purposes. Buildings have estimated useful lives ranging from 31 to 40
years.  Furniture,  equipment  and  leasehold


                                       22
<PAGE>
improvements  have  estimated  useful  lives  between  five  and  ten  years.
Expenditures for major renewals and betterments that extend the useful lives are
capitalized.  Expenditures  for  normal  maintenance and repairs are expensed as
incurred.  The  cost  of  assets  sold  or abandoned and the related accumulated
depreciation  are  eliminated  from  the  accounts  and  any gains or losses are
charged  or  credited  in the accompanying statement of income of the respective
period.

Goodwill  and  Intangible  Assets

In  June  2001,  the  FASB  issued  SFAS No. 142, Goodwill and Other Intangibles
Assets, which addresses the accounting for goodwill and other intangible assets.
Under  SFAS No. 142, goodwill and intangible assets with indefinite lives are no
longer  amortized,  but reviewed on an annual basis for impairment.  The Company
adopted  SFAS  effective  October 1, 2001.   The Company's annual evaluation was
performed  as  of September 30, 2005.  No impairment losses were identified as a
result  of this evaluation.  All of the Company's goodwill and intangible assets
relate to the nightclub segment.  Definite lived intangible assets are amortized
on a straight-line basis over their estimated lives.  Fully amortized assets are
written  off  against  accumulated  amortization.

Revenue Recognition

Except  for  VIP  Memberships,  we  recognize  revenue at the point-of-sale upon
receipt  of  cash, check, or credit card charge.  Membership revenue is deferred
and recognized over the estimated membership usage period, which is estimated to
be  12  and  24  months  for  annual and lifetime memberships, respectively.  We
recognize  Internet  revenue  from  monthly  subscriptions  to  its  online
entertainment sites when notification of a new subscription is received from the
third  party  hosting  company  or  from the credit card company, usually two to
three  days  after  the  transaction has occurred. We recognize Internet auction
revenue when payment is received from the credit card as revenues are not deemed
estimable  nor  collection  deemed  probable  prior  to  that  point.

Advertising and Marketing

Advertising  and  marketing  expenses is primarily comprised of costs related to
public  advertisements  and  giveaways, which are used for promotional purposes.
Advertising  and marketing expenses are expensed as incurred and are included in
operating  expenses.

Income Taxes

Deferred  tax  assets  and  liabilities  are  recognized  for  the  future  tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences  are expected to be recovered or settled. The effect on deferred tax
assets  and  liabilities of a change in tax rates is recognized in income in the
period  that  includes the enactment date. In addition, a valuation allowance is
established  to reduce any deferred tax asset for which it is determined that it
is  more likely than not that some portion of the deferred tax asset will not be
realized.

Stock  Options

At  September  30,  2005, the Company has stock options outstanding. The Company
accounts  for its stock options under the recognition and measurement principles
of  Accounting  Principles  Board  ("APB")  Opinion No. 25, Accounting for Stock
Issued  to  Employees,  and  related  Interpretations.  The


                                       23
<PAGE>
following  table  illustrates the effect on net income and earnings per share if
the  Company  had applied the fair value recognition provisions of SFAS No. 123,
Accounting  for  Stock-Based Compensation, to stock-based employee compensation.

The  following  presents  pro  forma  net income and per share data as if a fair
value  accounting  method had been used to account for stock-based compensation:

<TABLE>
<CAPTION>
                                                           YEAR ENDED SEPTEMBER 30,
                                                             2005          2004
                                                         ------------  ------------
<S>                                                      <C>           <C>
          Net income (loss), as reported                 $  (215,148)  $   775,253
          Less total stock-based employee compensation
            expense determined under the fair value
            based method for all awards                     (549,165)     (216,616)
                                                         ------------  ------------
          Pro forma net income (loss)                    $  (764,313)  $   558,637
                                                         ============  ============

          Earnings (loss) per share:
            Basic and diluted  - as reported             $    ( 0.05)  $      0.21
                                                         ============  ============

            Basic and diluted  - pro forma               $     (0.19)  $      0.15
                                                         ============  ============
</TABLE>

Common Stock

In  January 2005, 20,000 stock options were exercised by the Company's employees
and  directors  for $39,625. In March 2005, the Company issued 150,000 shares of
common  stock to an unrelated investor and received proceeds of $375,000, 12,000
shares  of  restricted  common  stock  were issued at a value of $2.26 per share
pursuant  to  a consulting agreement, and 25,000 stock options were exercised by
the  Company's  employees  for  $60,025.  On  June  10, 2005, the Company issued
180,000  shares of common stock pursuant to the purchase of a club in Charlotte,
North  Carolina.  See Note N. In July 2005, we sold 200,000 shares of our common
stock  in  a  private  transaction  to 13 persons at $2.00 per share for a total
consideration  of  $400,000.  In August and September 2005, 25,000 stock options
were  exercised  by  the  Company's  employees  and  directors  for  $54,113.

Impact of Recently Issued Accounting Standards

In  December  2003,  the  Financial  Accounting  Standards Board ("FASB") issued
interpretation  46R  ("FIN  46R"),  a  revision to interpretation 46 ("FIN 46"),
Consolidation  of  Variable  Interest  Entities.  FIN  46R clarifies some of the
provisions  of  FIN  46 and exempts certain entities from its requirements.  FIN
46R  was effective at the end of the first interim period ending after March 15,
2004.  The  adoption of FIN 46 and FIN 46R did not have a material impact on the
Company's  consolidated  financial  statements.

In  December  2004,  the  FASB issued SFAS 123R, Share-Based Payment, which is a
revision  of  SFAS  123, Accounting for Stock-Based Compensation, and supersedes
APB  Opinion  25,  Accounting  for  Stock Issued to Employees. SFAS 123R focuses
primarily  on  share-based  payments  for  employee  services,  requiring  these
payments  to  be  recorded  using a fair-value-based method. The use of APB 25's
intrinsic  value  method  of  accounting  for  employee  stock  options has been
eliminated. As a result, the fair value of stock options granted to employees in
the  future  will  be  required  to  be  expensed.  The impact on the results of
operations of the Company will be dependent on the number of options granted and
the  fair  value  of those options. For the Company, SFAS 123R will be effective
beginning  October  1,  2006.


RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005 AS COMPARED
TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2004

For the fiscal year ended September 30, 2005, we had consolidated total revenues
of  $14,824,407,  compared to consolidated total revenues of $13,858,434 for the
year ended September 30, 2004. The consolidated total revenues for period ending
September  30, 2004 did not include revenues from discontinued operations in the
amount of $2,101,250. This was an increase of $965,973 or 6.97%. The increase in
total  revenues was primarily due to revenues from our new nightclub operations.
Revenues  from  nightclub  operations for same-location same-period decreased by
0.74%  and  for  Internet  businesses  by  0.98%.


                                       24
<PAGE>
Our  loss  before  minority  interest  for the year ended September 30, 2005 was
$368,313 compared to income of $1,129,079 for the year ended September 30, 2004.
The  decrease  in  net income was primarily due to the loss incurred in new club
operations  which  amounts  to  $982,500.  Our  net  income  from operations for
nightclub  operations  was  $1,723,491  for  the  year  ended September 30, 2005
compared  with  $2,684,552 for the year ended September 30, 2004. Our net income
from  operations  for  our  Internet  businesses was $114,500 for the year ended
September  30, 2005 compared with $88,958 for the year ended September 30, 2004.
Our  income  for  our  nightclub  operations  for  the same-location-same-period
increased  by  3.78%.  Our  net  income  for  our  Internet  operations  for the
same-web-site-same-period  increased  by  28.71%.

Our cost of goods sold for the year ended September 30, 2005 was 12.58% of total
revenues  compared  to  11.72 % of related revenues for the year ended September
30, 2004.  The increase was due primarily to the addition of Rick's clubs, which
have  higher  cost  of  goods  sold.  Our  cost  of goods sold for the nightclub
operations  for  the  year  ended  September  30,  2005  was 12.88% of our total
revenues  from  club  operations compared to 11.86% for the year ended September
30,  2004.  We continued our efforts to achieve reductions in cost of goods sold
of the club operations through improved inventory management.  We are continuing
a  program  to  improve  margins  from  liquor  and  food sales and food service
efficiency.  Our  cost  of sales from our Internet operations for the year ended
September  30, 2005 was 7.55% compared to 8.77% of related revenues for the year
ended  September  30,  2004.  We have implemented measures to reduce expenses in
our  Internet  operations.

Our  payroll  and  related  costs  for  the  year  ended September 30, 2005 were
$5,200,976  compared  to  $4,803,515 for the year ended September 30, 2004.  The
increase was primarily due to the increase in payroll in opening new clubs.  Our
payroll  for our nightclub operations for same-location-same-period decreased by
4.86%.  Our  payroll  for same-site-same-period Internet operations decreased by
1.67%.  We believe that our labor and management staff levels are at appropriate
levels.

Our  other  general and administrative expenses for the year ended September 30,
2005  were  $7,458,721  compared  to $6,036,401 for the year ended September 30,
2004.  The  increase  was primarily due to the increase in taxes & permit, rent,
legal  &  professional,  utilities,  and  advertising  & marketing expenses from
opening  new  locations.  Other selling, general and administrative expenses for
same-location-same-period  for  the  nightclub  operations  decreased by 13.69%,
while  the  same  expenses  for  same-site  same-period  for Internet operations
increased  by  2.01%.

Our interest expense for the year ended September 30, 2005 was $699,678 compared
to  $324,411  for the year ended September 30, 2004.  The increase was primarily
due  to  the  increase in debt in relation to the purchase and renovation of New
York  club.  We have increased our long term debt to $13,246,836 as of September
30, 2005 compared to debt of $3,693,560 as of September 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

As  of  September  30,  2005,  we had a deficit in working capital of $2,047,725
compared  to  working  capital of $558,797 as of September 30, 2004.  Because of
the  large  volume  of  cash  we  handle,  stringent  cash  controls  have  been
implemented.  At September 30, 2005, our cash and cash equivalents were $480,330
compared  to  $275,243 at September 30, 2004.  The increase was primarily due to
the  additional  debt.

Our  depreciation for the year ended September 30, 2005 was $573,706 compared to
$479,791  for  the  year ended September 30, 2004. Our amortization for the year
ended  September 30, 2005 was $16,760 compared to no amortization for the period
ended  September  30,  2004.


                                       25
<PAGE>
Net  cash  provided by operating activities in the year ended September 30, 2005
was  $2,090,030  compared to $736,308 for the year ended September 30, 2004. The
increase  in  cash  provided  by  operating  activities was primarily due to the
increase  in  accounts  payable  and  accrued  expenses and decreases in prepaid
expenses  and  other  current  assets.

We  used $6,307,508 of cash in investing activities for the year ended September
30, 2005 compared to $867,206 for the year ended September 30, 2004.  $4,801,197
of cash was provided in financing activities for the year ended in September 30,
2005  compared  to  $153,749  used  for  the  year  ended  September  30,  2004.

Historically,  our  need for capital was a result of construction or acquisition
of  new  clubs,  renovation  of  older  clubs,  and  investments  in technology.
Historically,  we  have  also utilized capital to repurchase its common stock as
part  of  our  share  repurchase  program.

On  September  16, 2003, the Company was authorized by its board of directors to
repurchase  up  to  an additional $500,000 worth of our common stock.  No shares
have  been  purchased  under  this  plan.

On  November 15 and 17, 2004, we borrowed $590,000 and $1,042,000, respectively,
from  a  financial  institution at an annual interest rate of 10% over a 10 year
term.  The  monthly  payments  of principal and interest are $5,694 and $10,056,
respectively.  The note is secured by our properties located at 2023 Sable Lane,
San Antonio and at 410 N. Sam Houston Pkwy. E., Houston, Texas.  On November 30,
2004,  we  borrowed $900,000 from an unrelated individual at the rate of 11% per
annum  for  a  10  year  term.  The monthly payment of principal and interest is
$9,290.  The  note  is secured by our properties located at 3501 Andtree, Austin
and  at  5718  Fairdale,  Houston,  Texas.  On  December  30,  2004, we borrowed
$1,270,000 from a financial institution at an annual interest rate of 10% over a
10 year term. The monthly payment of principal and interest is $12,256. The note
is  secured  by  our  property located at 3113 Bering Drive, Houston, Texas. The
money  received  from this financing was used for the acquisition and renovation
of  the  New  York  club.

We  entered  into  a promissory note on January 18, 2005, for $5,125,000 bearing
simple  interest at the rate of 4.0% per annum with a balloon payment at the end
of  five  years, part of which is convertible to restricted shares of our common
stock  at  prices  ranging  from  $4.00  to  $7.50  per  share.

On  June  10,  2005,  we  entered  into  a  promissory note for $325,000 bearing
interest at a rate of 7% per annum for a seven year term. The note is secured by
liens  upon  the  assets  of  and hereafter acquired assets of RCI Entertainment
(North  Carolina),  Inc.

On  June  17, 2005, we borrowed $160,000 from a shareholder and $100,000 from an
unrelated  individual  at  an  annual interest rate of 12% and 11% over 3 and 10
year  terms,  respectively.

On  July  22,  2005, we entered into a secured convertible debenture with one of
our  shareholders  for  a  principal sum of $660,000, which includes the loan on
June  17,  2005,  in the amount of $160,000. The term is for three years and the
interest rate is 12% per annum. The debenture matures on August 1, 2008. We also
issued  50,000  warrants  at  $3.00 per share in relation to this debenture. The
debenture  is  secured  by our ownership in Citation Land, LLC and RCI Holdings,
Inc.,  both  of  which  are  wholly  owned  subsidiaries.

In  July  2005,  we received additional borrowing in the amount of $100,000 from
the  same  unrelated


                                       26
<PAGE>
individual who advanced $100,000 in June 2005, and with whom we had two existing
notes.  The  term  is  for  10  years and the interest rate is 11% per annum. On
August  15,  2005,  the  notes  were  amended and the amounts from June and July
($200,000)  were  included  in  one  of  the  notes,  for  a  combined  total of
$1,341,520.34  payable  to  this  individual.

In our opinion, working capital is not a true indicator of our financial status.
Typically,  businesses  in  our  industry carry current liabilities in excess of
current  assets  because  businesses  in  our  industry  receive  substantially
immediate  payment  for  sales,  with nominal receivables, while inventories and
other  current  liabilities  normally  carry  longer  payment terms. Vendors and
purveyors  often remain flexible with payment terms, providing businesses in our
industry  with  opportunities  to  adjust  to short-term business down turns. We
consider the primary indicators of financial status to be the long-term trend of
revenue  growth, the mix of sales revenues, overall cash flow, and profitability
from  operations  and  the  level  of  long-term  debt.

We  have  not  established  lines  of  credit  or financing other than the above
mentioned notes payable and our existing debt. There can be no assurance that we
will  be  able to obtain additional financing on reasonable terms in the future,
if  at  all,  should  the  need  arise.

We  believe  that  the  adult  entertainment  industry  standard  of  treating
entertainers  as independent contractors provides us with safe harbor protection
to  preclude payroll tax assessment for prior years. We have prepared plans that
we  believe  will  protect our profitability in the event that sexually oriented
business  industry  is  required  in  all  states to convert dancers who are now
independent  contractors  into  employees.

The  sexually  oriented  business industry is highly competitive with respect to
price,  service  and  location,  as  well  as  the  professionalism  of  the
entertainment.  Although  we  believe  that  we  are  well-positioned to compete
successfully  in  the  future, there can be no assurance that we will be able to
maintain our high level of name recognition and prestige within the marketplace.

SEASONALITY

Our nightclub operations are affected by seasonal factors. Historically, we have
experienced  reduced  revenues  from  April through September with the strongest
operating  results  occurring  during  October  through  March.  Our  experience
indicates  that  there  are no seasonal fluctuations in our Internet activities.

GROWTH STRATEGY

We  believe  that  our nightclub operations can continue to grow organically and
through  careful  entry  into  markets and demographic segments with high growth
potential.  Upon careful market research, we may open new clubs.  As is the case
with  the  acquisition  of the New York club and the North Carolina club, we may
acquire  existing  clubs  in  locations  that are consistent with our growth and
income  targets,  and which appear receptive to the upscale club formula we have
developed.  We  may  form  joint ventures or partnerships to reduce start-up and
operating  costs,  with us contributing equity in the form of our brand name and
management expertise.  We may also develop new club concepts that are consistent
with  our  management  and  marketing  skills  and/or  acquire  real  estate  in
connection  with club operations, although some clubs may be in leased premises.

We also expect to continue to grow our Internet profit centers. We plan to focus
on  high-margin  Internet  activities  that  leverage our marketing skills while
requiring  a  low  level  of  start-up  cost  and


                                       27
<PAGE>
ongoing  operating  costs.


ITEM 7.  FINANCIAL  STATEMENTS

The information required by this Item 7 is included in this report beginning on
page F-1.


ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL  DISCLOSURE

There have been no changes in or disagreements with accountants on accounting
and financial disclosure.


ITEM 8A.  CONTROLS  AND  PROCEDURES

Eric  Langan,  our  Chief  Executive  Officer  and  Chief Financial Officer, has
concluded  that  our  disclosure  controls  and  procedures  are appropriate and
effective.  He  has  evaluated these controls and procedures as of September 30,
2005.  There  were  no  significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation,  including  any corrective actions with regard to significant
deficiencies  and  material  weaknesses.


ITEM 8B.  OTHER  INFORMATION

None


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

DIRECTORS AND EXECUTIVE OFFICERS

Our Directors are elected annually and hold office until the next annual meeting
of  our  stockholders  or  until  their  successors  are  elected and qualified.
Officers  are  elected  annually  and  serve  at  the discretion of the Board of
Directors.  There  is  no  family  relationship  between  or  among  any  of our
directors  and  executive  officers.  Our  Board  of  Directors consists of five
persons.  The  following  table sets forth our Directors and executive officers:


                                       28
<PAGE>
<TABLE>
<CAPTION>
Name               Age       Position
---------------------------------------------------------------------------------------
<S>                <C>       <C>
Eric S. Langan      37       Director, Chairman, Chief Executive Officer, President and
                             Chief Financial Officer
Travis Reese        36       Director and V.P.-Director of Technology
Robert L. Watters   54       Director
Alan Bergstrom      60       Director
Steven Jenkins      48       Director
</TABLE>

Eric  S.  Langan  has  been  a Director since 1998 and our President since March
1999.  Mr.  Langan  is also our Chief Financial Officer. He has been involved in
the  adult  entertainment  business  since  1989.  From January 1997 through the
present,  he  has  held  the  position  of  President  of XTC Cabaret, Inc. From
November  1992  until  January  1997,  Mr.  Langan  was the President of Bathing
Beauties, Inc. Since 1989, Mr. Langan has exercised managerial control over more
than  a  dozen  adult  entertainment  businesses.  Through these activities, Mr.
Langan  has  acquired the knowledge and skills necessary to successfully operate
adult  entertainment  businesses.

Robert  L.  Watters  is  our  founder  and has been our Director since 1986. Mr.
Watters  was our President and our Chief Executive Officer from 1991 until March
1999.  Since  1999, Mr. Watters has owned and operated Rick's Cabaret, and adult
entertainment  club  in  New Orleans, Louisiana, which licenses our name. He was
also  a  founder in 1989 and operator until 1993 of the Colorado Bar & Grill, an
adult  club  located  in  Houston,  Texas  and in 1988 performed site selection,
negotiated  the  property purchase and oversaw the design and permitting for the
club that became the Cabaret Royale, in Dallas, Texas. Mr. Watters practiced law
as  a solicitor in London, England and is qualified to practice law in New York.
Mr.  Watters  worked  in  the  international tax group of the accounting firm of
Touche,  Ross  &  Co. (now succeeded by Deloitte & Touche) from 1979 to 1983 and
was  engaged in the private practice of law in Houston, Texas from 1983 to 1986,
when  he became involved in our full-time management. Mr. Watters graduated from
the  London  School of Economics and Political Science, University of London, in
1973  with a Bachelor of Laws (Honours) degree and in 1975 with a Master of Laws
degree  from  Osgoode  Hall  Law  School,  York  University.

Steven  L.  Jenkins has been a Director since June 2001. Since 1988, Mr. Jenkins
has  been a certified public accountant with Pringle Jenkins & Associates, P.C.,
located  in  Houston,  Texas.  Mr. Jenkins is the President and owner of Pringle
Jenkins  &  Associates,  P.C. Mr. Jenkins has a BBA Degree (1979) from Texas A&M
University.  Mr.  Jenkins  is  a  member  of  the  AICPA  and  the  TSCPA.

Alan  Bergstrom  became our Director in 1999. Since 1997, Mr. Bergstrom has been
the  Chief  Operating  Officer  of  Eagle  Securities,  which  is  an investment
consulting  firm.  Mr.  Bergstrom  is  also a registered stockbroker with Rhodes
Securities,  Inc.  From  1991  until  1997,  Mr.  Bergstrom  was  a  Vice
President--Investments  with  Principal Financial Securities, Inc. Mr. Bergstrom
holds  a  B.B.A.  Degree  in  Finance,  1967,  from  the  University  of  Texas.

Travis  Reese  became our Director and V.P.-Director of Technology in 1999. From
1997  through  1999,  Mr.  Reese  had been a senior network administrator at St.
Vincent's  Hospital  in  Santa  Fe,  New  Mexico.  During  1997, Mr. Reese was a
computer  systems  engineer  with  Deloitte  & Touche. From 1995 until 1997, Mr.
Reese  was  Vice  President with Digital Publishing Resources, Inc., an Internet
service  provider.  From 1994 until 1995, Mr. Reese was a pilot with Continental
Airlines.  From  1992  until  1994, Mr. Reese was a pilot with Hang On, Inc., an
airline company. Mr. Reese has an Associates Degree in Aeronautical Science from
Texas  State  Technical  College.


                                       29
<PAGE>
There  is  no  family  relationship  between  or  among any of our directors and
executive  officers.

COMMITTEES OF THE BOARD OF DIRECTORS

We  have an Audit Committee of independent directors whose members are Robert L.
Watters,  Alan Bergstrom and Steven Jenkins. In May 2000, our Board of Directors
adopted  a  Charter  for  the  Audit  Committee.  The  Charter  establishes  the
independence  of  our  Audit  Committee  and  sets  forth the scope of our Audit
Committee's  duties. The purpose of our Audit Committee is to conduct continuing
oversight  of  our  financial  affairs.  Our Audit Committee conducts an ongoing
review  of  our financial reports and other financial information prior to their
being  filed  with the Securities and Exchange Commission, or otherwise provided
to  the  public.  Our  Audit  Committee  also  reviews  our systems, methods and
procedures  of  internal  controls in the areas of: financial reporting, audits,
treasury  operations,  corporate  finance,  managerial,  financial  and  SEC
accounting,  compliance  with  law,  and ethical conduct. Our Audit Committee is
objective,  and  reviews  and  assesses  the  work of our independent registered
public  accounting  firm.

All  of  our  Audit  Committee  members  are independent Directors. The Board of
Directors  elects the Members of our Audit Committee annually. The Members serve
until  their successors are duly elected and qualified. All Members of the audit
Committee  are  free  from  any  relationship  that could conflict with Member's
independent  judgment.  All  Members are able to read and understand fundamental
financial statements, including a balance sheet, income statement, and cash flow
statement.  At  least  one  Member  has past employment experience in finance or
accounting,  requisite  professional  certification  in  accounting,  or  other
comparable  experience  or background, including a current or past position as a
chief  executive  or  financial  officer  or other senior officer with financial
oversight  responsibilities.  Steven  L. Jenkins serves as Chairman of the Audit
Committee,  having been elected by the Members of our Audit Committee. Steven L.
Jenkins serves as the Audit Committee's Financial Expert, having been elected by
a  unanimous  vote  of  the  Members of our Audit Committee. The Audit Committee
Charter was previously filed as an exhibit to our Proxy Statement filed with the
Securities  and  Exchange  Commission  on  June 3, 2005, and can be found on our
website  at  www.ricks.com.
             -------------

We  have  a  Nominating  Committee  composed  of independent directors Robert L.
Watters,  Alan  Bergstrom  and  Steven  L.  Jenkins.  In  July  2004,  the Board
unanimously  adopted  a  Charter  with  regard  to  the  process  to be used for
identifying  and  evaluating  nominees for director. The Charter establishes the
independence  of  our  Nominating  Committee  and  sets  forth  the scope of the
Nominating  Committee's duties. The Nominating Committee Charter can be found on
our  website  at  www.ricks.com.
                  -------------

We  have  a  Compensation  Committee  whose  members  are  Robert  Watters, Alan
Bergstrom  and  Steven  L.  Jenkins.  Decisions  concerning  executive  officer
compensation  for  the  fiscal  year  ended September 30, 2005, were made by the
Compensation  Committee. The primary purpose of the Compensation Committee is to
evaluate  and  review  the  compensation  of  executive  officers.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section  16(a) of the Securities Exchange Act of 1934 requires our directors and
executive  officers,  and  persons who own beneficially more than ten percent of
our common stock, to file reports of ownership and changes of ownership with the
Securities  and  Exchange  Commission.  Based  solely  on  the  reports  we have
received  and  on  written  representations  from  certain reporting persons, we


                                       30
<PAGE>
believe  that  the  directors,  executive officers, and greater than ten percent
beneficial  owners  have  complied  with  all  applicable  filing  requirements.

CODE OF ETHICS

We  have  adopted  a  code  of  ethics  for  its  Principal Executive and Senior
Financial  Officers, which was previously filed as Exhibit 14 to our Form 10-KSB
for  the fiscal year ended September 30, 2003, as filed with the SEC on December
29,  2003.


ITEM 10.  EXECUTIVE  COMPENSATION

The  following  table  reflects all forms of compensation for services to us for
the  fiscal  years  ended September 30, 2005, 2004 and 2003 of certain executive
officers.  No  other  executive  officer  of  ours  received  compensation  that
exceeded  $100,000  during fiscal 2005.   Mr. Langan is Chairman of the Board, a
Director,  Chief Executive Officer, President and Chief Financial Officer.   Mr.
Reese  is  Director  and  V.P.-Director  of  Technology.

SUMMARY  COMPENSATION  TABLE

<TABLE>
<CAPTION>
                               Annual Compensation                         Long Term Compensation
                                                                      Awards           Payouts

                                                   Other                   Securities
Name and                                           Annual      Restricted  Underlying             All Other
Principal                                          Compen-     Stock       Options/    LTIP       Compen-
Position           Year       Salary        Bonus  sation (1)  Awards      SARs        Payouts    sation
                                ($)          ($)     ($)          ($)         (#)        ($)        ($)
-------------------------------------------------------------------------------------------------------------
<S>           <C>         <C>          <C>         <C>         <C>         <C>         <C>         <C>
Eric Langan
                    2005  $   344,100        -0-     -0-          -0-        5,000       -0         -0-
                    2004  $   326,038        -0-     -0-          -0-      280,000       -0-        -0-
                    2003  $   260,000        -0-     -0-          -0-        5,000       -0-        -0-
Mr. Langan is our Chairman, a Director, Chief Executive Officer, President and Chief Financial Officer.

Travis Reese
                    2005  $   165,531        -0-     -0-          -0-        5,000       -0-        -0-
                    2004  $   161,000        -0-     -0-          -0-       55,000       -0-        -0-
                    2003  $   158,855        -0-     -0-          -0-        5,000       -0-        -0-

Mr. Reese is a Director and V.P.-Director of Technology

-----------------------------------------
     (1)  We provide certain executive officers certain personal benefits. Since
          the  value  of  such benefits does not exceed the lesser of $50,000 or
          10%  of  annual  compensation,  the  amounts  are  omitted.
</TABLE>


                                       31
<PAGE>
<TABLE>
<CAPTION>

            OPTION/SAR GRANTS IN LAST FISCAL YEAR (Individual Grants)

              Number of          Percent of Total
              Securities         Options/SARs
              Underlying         Granted To
              Options/SARs       Employees In       Exercise of        Expiration
Name          Granted            Fiscal Year        Base Price         Date
              #                  %                  $/share
---------------------------------------------------------------------------------------
<S>           <C>                <C>                <C>                <C>
Eric Langan    5,000 shares (1)             5.56 %  $            2.80         7/20/2010

Travis Reese   5,000 shares (1)             5.56 %  $            2.80         7/20/2010
<FN>

-----------------------------------------
     (1)  These options were granted to Messrs. Langan and Reese for serving in their
capacity as Directors.  There were 27,500 shares of options exercised by Messrs. Langan
and Reese during the fiscal year ended September 30, 2005.
</TABLE>


                       AGGREGATED OPTION/SAR EXERCISES IN
                  LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                       Number Of Unexercised
                                       Securities Underlying  Value of Unexercised
                                       Options/SARs           In-The-Money Options/
              Shares                   At FY-End              SARs At FY-End
              Acquired On   Value      Exercisable/           Exercisable/
Name          Exercise      Realized   Unexercisable          Unexercisable
              #             $          #                      $
------------------------------------------------------------------------------------
<S>           <C>           <C>        <C>                    <C>

Eric Langan.     5,000 (1)  $   6,363      290,000 / 105,000  $  178,350 / $55,150

Travis Reese    22,500 (1)  $  25,131       47,500 /  30,500  $   29,975 / $14,650

<FN>
-----------------------------------------
(1)     There were 27,500 shares of options exercised by these persons during the
fiscal year ended September 30, 2005
</TABLE>

DIRECTOR COMPENSATION

We do not currently pay any cash directors' fees, but we pay the expenses of our
directors  in  attending board meetings.  In July 2005, we issued 10,000 options
to each Director who is a member of our audit committee and 5,000 options to our
other Directors. These options have a strike price of $2.80 per share and expire
in  July  2010.

EMPLOYMENT AGREEMENTS

We  have  a  one-year  employment agreement with Mr. Eric S. Langan (the "Langan
Agreement"). The Langan Agreement extends through April 1, 2006 and provides for
an  annual  base  salary  of  $340,000.  The  Langan Agreement also provides for
participation  in all benefit plans maintained by us for salaried employees. The
Langan  Agreement  contains  a  confidentiality  provision  and  an


                                       32
<PAGE>
agreement by Mr. Langan not to compete with us upon the expiration of the Langan
Agreement.  We have not established long-term incentive plans or defined benefit
or  actuarial  plans.  Under  a  prior employment agreement, Mr. Langan received
options to purchase 75,000 shares at an exercise price of $2.20 per share, which
vested immediately.  We intend to enter into a new Employment Agreement with Mr.
Langan  at  the  end  of  the  current  term.

We also have a three-year employment agreement with Mr. Travis Reese (the "Reese
Agreement").  The  Reese Agreement extends through February 1, 2007 and provides
for  an  annual  base  salary of $175,000. The Reese Agreement also provides for
participation  in all benefit plans maintained by us for salaried employees. The
Reese  Agreement  contains  a  confidentiality provision and an agreement by Mr.
Reese not to compete with us upon the expiration of the Reese Agreement. We have
not established long-term incentive plans or defined benefit or actuarial plans.
We  intend to enter into a new Employment Agreement with Mr. Reese at the end of
the  current  term.


ITEM 11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED  STOCKHOLDER  MATTERS

The  following  table  sets forth certain information at December 23, 2005, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known  to  us  who  owns  beneficially more than 5% of the outstanding shares of
Common  Stock,  (ii) each of our directors, (iii) each of our executive officers
and  (iv)  all  of  our  executive  officers  and  directors  as a group. Unless
otherwise  indicated, each stockholder has sole voting and investment power with
respect  to  the  shares  shown.   As of December 23, 2005, there were 4,322,148
share  of  common  stock  outstanding.

<TABLE>
<CAPTION>
NAME/ADDRESS                          NUMBER OF SHARES   TITLE OF CLASS  PERCENT OF CLASS (8)
------------------------------------  -----------------  --------------  --------------------
<S>                                   <C>                <C>             <C>
Eric S. Langan                            1,133,010 (1)  Common stock                   26.2%
505 North Belt, Suite 630
Houston, Texas 77060
------------------------------------  -----------------  --------------  --------------------
Robert L. Watters                            45,000 (2)  Common stock                    0.8%
315 Bourbon Street
New Orleans, Louisiana 70130
------------------------------------  -----------------  --------------  --------------------
Steven L. Jenkins                            20,000 (3)  Common stock                    0.2%
16815 Royal Crest Drive
Suite 160
Houston, Texas 77058
------------------------------------  -----------------  --------------  --------------------
Travis Reese                                 87,275 (4)  Common stock                    1.3%
505 North Belt, Suite 630
Houston, Texas 77060
------------------------------------  -----------------  --------------  --------------------
Alan Bergstrom                               30,000 (5)  Common stock                    0.5%
904 West Avenue, Suite 100
Austin, Texas 78701
------------------------------------  -----------------  --------------  --------------------
All of our Directors and Officers as      1,255,285 (6)  Common stock                   29.0%
a Group of five persons
------------------------------------  -----------------  --------------  --------------------

------------------------------------  -----------------  --------------  --------------------
E. S. Langan. L.P.                             578,632   Common stock                   13.4%
505 North Belt, Suite 630
Houston, Texas 77060
------------------------------------  -----------------  --------------  --------------------
Ralph McElroy                                748,467(7)  Common stock                   17.3%
1211 Choquette
Austin, Texas, 78757
------------------------------------  -----------------  --------------  --------------------
William Friedrichs                           400,260(8)  Common stock                    9.3%
16815 Royal Crest Dr., Suite 260
Houston, Texas 77058
------------------------------------  -----------------  --------------  --------------------
</TABLE>

-----------------------------------------


                                       33
<PAGE>
(1)  Mr.  Langan has sole voting and investment power for 264,378 shares that he
owns  directly.  Mr.  Langan  has shared voting and investment power for 578,632
shares  that  he  owns  indirectly  through E. S. Langan, L.P. Mr. Langan is the
general  partner  of  E.  S.  Langan,  L.P. This amount also includes options to
purchase  up  to  290,000 shares of common stock that are presently exercisable.

(2)  Includes  options  to purchase up to 35,000 shares of common stock that are
presently  exercisable.

(3)  Includes  options  to purchase up to 15,000 shares of common stock that are
presently  exercisable.

(4)  Includes  options  to purchase up to 47,500 shares of common stock that are
presently  exercisable.

(5)  Includes  options  to purchase up to 25,000 shares of common stock that are
presently  exercisable.

(6)  Includes  options to purchase up to 412,500 shares of common stock that are
presently  exercisable.

(7)  Includes  698,467 shares of common stock held directly and 50,000 shares of
common stock that would be issuable upon the exercise of warrants at an exercise
price  of  $3.00  per share. This number specifically excludes 220,000 shares of
common  stock  that would be issuable upon conversion of a convertible debenture
held  by  Mr. McElroy. The Debenture provides, absent shareholder approval, that
the number of shares of our common stock that may be issued by us or acquired by
the Holder upon conversion of the Debenture shall not exceed 19.99% of the total
number  of  issued  and  outstanding  shares  of  our  common  stock.

(8)  Includes  170,000 shares owned by WMF Investments, Inc. Mr. Friedrichs is a
control  person  of  WMF  Investments,  Inc.

(9)  These  percentages exclude treasury shares in the calculation of percentage
of  class.

We are not aware of any arrangements that could result in a change of control.

The disclosure required by Item 201(d) of Regulation S-B is set forth in ITEM 5
herein.


ITEM 12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

Our  Board  of  Directors has adopted a policy that our business affairs will be
conducted  in all respects by standards applicable to publicly held corporations
and  that we will not enter into any future transactions and/or loans between us
and  our  officers,  directors  and 5% shareholders unless the terms are no less
favorable  than  could  be  obtained from independent, third parties and will be
approved  by  a  majority of our independent and disinterested directors. In our
view,  all  of  the  transactions  described  below  meet  this  standard.

In  May  2002,  we  loaned  $100,000  to  Eric Langan who is our Chief Executive
Officer.  The  promissory  note  is  unsecured,  bears  interest  at  11% and is
amortized  over a period of ten years. The note contains a provision that in the
event Mr. Langan leaves the Company for any reason, the note immediately becomes
due  and  payable  in full. The balance of the note was $78,512 at September 30,
2005  and  is  included  in  other  assets  in  our  balance  sheet.

On  July 22, 2005, we issued a Secured Convertible Debenture to Ralph McElroy, a
greater  than  10% shareholder of the Company, for the principal sum of $660,000
bearing interest at the rate of 12% per annum, with a maturity date of August 1,
2008.  Under  the  terms  of  the  Debenture,  we  are

                                       34
<PAGE>
required  to make monthly interest payments beginning September 1, 2005. We have
the  right  to  redeem  the Debenture in whole or in part at any time during the
term  of  the Debenture. At the election of the Holder, the Holder has the right
to  require the Debenture to be repaid in thirty (30) equal monthly installments
commencing  February  2006.  The  Holder  has  the  option to convert all or any
portion of the principal amount of the Debenture into shares of our common stock
at  a  rate  of $3.00 per share, subject to adjustment under certain conditions.
The  Debenture  provides, absent shareholder approval, that the number of shares
of  our  common  stock  that  may be issued by us or acquired by the Holder upon
conversion  of  the  Debenture  shall  not  exceed 19.99% of the total number of
issued  and  outstanding shares of our common stock. The Debenture is secured by
certain of our assets. Additionally, we issued Mr. McElroy a Warrant to purchase
50,000  shares of our common stock at an exercise price of $3.00 per share until
July 22, 2008. The shares of Common Stock underlying the principal amount of the
Debenture  and  the  Warrants  have  piggyback  registration  rights.


ITEM 13.  EXHIBITS

     Exhibit  14 - Code of Ethics - Previously filed as an exhibit to our Form
10-KSB for the fiscal year ended September 30, 2003 as filed with the SEC on
December 29, 2003.

     Exhibit  21 - Subsidiaries of the Registrant.

     Exhibit  31.1  -  Certification  of  Chief  Executive  Officer  of  Rick's
Cabaret International, Inc. Corporation required by Rule 13a-14(1) or Rule 15d -
14(a)  of  the  Securities  Exchange  Act  of  1934,  as  adopted  pursuant  to
Section  302  of  the  Sarbanes-Oxley  Act  of  2002.

     Exhibit  31.2  -  Certification  of  Chief  Financial  Officer  of  Rick's
Cabaret  International,  Inc.  Corporation   required  by Rule 13a-14(1) or Rule
15d-14(a)  of  the Securities  Exchange  Act  of  1934,  as  adopted pursuant to
Section  302  of  the  Sarbanes-Oxley  Act  of  2002.

     Exhibit  32.1  - Certification of Chief Executive Officer of Rick's Cabaret
International,  Inc.  Corporation  pursuant to Section 906 of the Sarbanes-Oxley
Act  of  2002  and  Section  1350  of  18  U.S.C.  63.

     Exhibit  32.2  - Certification of Chief Financial Officer of Rick's Cabaret
International,  Inc.  Corporation  pursuant to Section 906 of the Sarbanes-Oxley
Act  of  2002  and  Section  1350  of  18  U.S.C.  63.


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

     The  following  table  sets  forth  the  aggregate fees paid or accrued for
professional  services  rendered  by  Whitley  Penn  for the audit of our annual
financial statements for fiscal year 2005 and fiscal year 2004 and the aggregate
fees  paid or accrued for audit-related services and all other services rendered
by  Whitley  Penn  for  fiscal  year  2005  and  fiscal  year  2004.

<TABLE>
<CAPTION>
                          2005     2004
                         -------  ------
<S>                      <C>      <C>
     Audit fees          137,529  77,613
     Audit-related fees    8,106       -
     Tax fees             12,550       -
     All other fees            -       -
                         -------  ------

     Total               158,185  77,613
                         -------  ------
</TABLE>


                                       35
<PAGE>
The  category  of  "Audit  fees"  includes  fees for our annual audit, quarterly
reviews  and  services  rendered  in connection with regulatory filings with the
SEC,  such  as  the  issuance  of  comfort  letters  and  consents.

     The category of "Audit-related fees" includes employee benefit plan audits,
internal  control  reviews  and  accounting  consultation.

     The  category  of  "Tax  fees"  includes  consultation related to corporate
development  activities.

     All  above  audit  services,  audit-related  services and tax services were
pre-approved  by the Audit Committee, which concluded that the provision of such
services  by  Whitley  Penn  was  compatible with the maintenance of that firm's
independence  in  the  conduct  of its auditing functions. The Audit Committee's
outside  auditor  independence  policy provides for pre-approval of all services
performed  by  the  outside  auditors.


                                       36
<PAGE>
SIGNATURES


     In  accordance with the requirements of Section 13 of 15(d) of the Exchange
Act,  the  Registrant  has  caused this report to be signed on its behalf by the
undersigned,  thereunto  duly  authorized,  on  January  24,  2006.


                              Rick's Cabaret International, Inc.

                              /s/ Eric S. Langan
                              --------------------------------------
                              By:  Eric S. Langan
                              Director, Chief Executive Officer,
                              President and Chief Financial Officer

     Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons in the capacities and on the dates
indicated:

<TABLE>
<CAPTION>
Signature                      Title                                  Date
<S>                            <C>                                    <C>

/s/ Eric S. Langan
-----------------------------
Eric S. Langan                 Director, Chief Executive Officer,     January 24, 2006
                               President and Chief Financial Officer

/s/ Travis Reese
-----------------------------
Travis Reese                   Director and                           January 24, 2006
                               V.P.-Director of Technology

/s/ Robert L. Watters
-----------------------------
Robert L. Watters              Director                               January 26, 2006

/s/ Alan Bergstrom
-----------------------------
Alan Bergstrom                 Director                               January 24, 2006

/s/ Steven Jenkins
-----------------------------
Steven Jenkins                 Director                               January 25, 2006
</TABLE>


                                       37
<PAGE>
<TABLE>
<CAPTION>
                       RICK'S CABARET INTERNATIONAL, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED SEPTEMBER 30, 2005 AND 2004



                                TABLE OF CONTENTS


<S>                                                                     <C>
Report of Independent Registered Public Accounting Firm. . . . . . . .  F-2

Audited Consolidated Financial Statements:

        Consolidated Balance Sheets. . . . . . . . . . . . . . . . . .  F-3

        Consolidated Statements of Operations. . . . . . . . . . . . .  F-4

        Consolidated Statements of Changes in Stockholders' Equity . .  F-5

        Consolidated Statements of Cash Flows. . . . . . . . . . . . .  F-6

        Notes to Consolidated Financial Statements . . . . . . . . . .  F-8
</TABLE>


                                      F - 1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Rick's Cabaret International, Inc.


We  have  audited the accompanying consolidated balance sheets of Rick's Cabaret
International, Inc. and subsidiaries, as of September 30, 2005 and 2004, and the
related  consolidated statements of operations, changes in stockholders' equity,
and  cash  flows  for  the years then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal  control  over  financial  reporting  as  a  basis  for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing  an  opinion  on  the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures  in  the  financial  statements, assessing the accounting principles
used  and  significant  estimates  made by management, as well as evaluating the
overall  financial  statement presentation. We believe that our audits provide a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the  consolidated financial position of Rick's Cabaret
International,  Inc. and subsidiaries as of September 30, 2005 and 2004, and the
consolidated results of their operations and their cash flows for the years then
ended  in conformity with accounting principles generally accepted in the United
States  of  America.


/s/  Whitley Penn
Dallas, Texas
December 2, 2005


                                      F - 2
<PAGE>
<TABLE>
<CAPTION>
                               RICK'S CABARET INTERNATIONAL, INC.

                                  CONSOLIDATED BALANCE SHEETS

                                                                            SEPTEMBER 30,
                                                                         2005          2004
                                                                     ------------  ------------
<S>                                                                  <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents                                          $   480,330   $   275,243
  Accounts receivable:
    Trade                                                                310,692        72,909
    Other                                                                118,872       204,093
  Marketable securities                                                   28,919       122,350
  Inventories                                                            257,626       232,746
  Net assets of discontinued operations                                        -        27,674
  Prepaid expenses and other current assets                               87,991       976,577
                                                                     ------------  ------------
Total current assets                                                   1,284,430     1,911,592

Property and equipment, net                                           13,416,755     8,681,440

Other assets:
  Goodwill and indefinite lived intangibles                            9,836,560     1,898,926
  Definite lived intangibles, net                                        126,262             -
  Other                                                                  365,011       268,919
                                                                     ------------  ------------
Total other assets                                                    10,327,833     2,167,845
                                                                     ------------  ------------

Total assets                                                         $25,029,018   $12,760,877
                                                                     ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                   $ 1,034,508   $   291,650
  Accrued liabilities                                                    852,865       568,835
  Current portion of long-term debt                                    1,349,894       492,310
  Line-of-credit                                                          94,888             -
                                                                     ------------  ------------
Total current liabilities                                              3,332,155     1,352,795

Other long-term liabilities                                              193,648        20,048
Long-term debt                                                        11,896,942     3,201,250
                                                                     ------------  ------------

Total liabilities                                                     15,422,745     4,574,093

Commitments and contingencies                                                  -             -

Minority interest                                                         31,337        40,808

Stockholders' equity:
  Preferred stock, $.10 par, 1,000,000 shares
    authorized, none outstanding                                               -             -
  Common stock, $.01 par, 15,000,000 shares
    authorized, 5,220,678 and 4,608,678 shares issued, respectively       52,207        46,087
  Additional paid-in capital                                          13,004,567    11,273,149
  Accumulated other comprehensive income                                  15,572       109,002
  Accumulated deficit                                                 (2,203,630)   (1,988,482)
                                                                     ------------  ------------
                                                                      10,868,716     9,439,756
  Less 908,530 shares of common stock held in treasury, at cost        1,293,780     1,293,780
                                                                     ------------  ------------
Total stockholders' equity                                             9,574,936     8,145,976
                                                                     ------------  ------------

Total liabilities and stockholders' equity                           $25,029,018   $12,760,877
                                                                     ============  ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F - 3
<PAGE>
<TABLE>
<CAPTION>
                                RICK'S CABARET INTERNATIONAL, INC.

                                 CONSOLIDATED STATEMENTS OF INCOME

                                                                       YEAR ENDED SEPTEMBER 30,
                                                                         2005            2004
                                                                    --------------  --------------
<S>                                                                 <C>             <C>
Revenues:
  Sales of alcoholic beverages                                      $   5,431,049   $   5,343,858
  Sales of food and merchandise                                         1,688,043       1,581,851
  Service revenues                                                      6,632,201       5,839,759
  Internet revenues                                                       787,617         796,353
  Other                                                                   285,497         296,613
                                                                    --------------  --------------
                                                                       14,824,407      13,858,434

Operating expenses:
  Cost of goods sold                                                    1,865,630       1,623,915
  Salaries and wages                                                    5,200,976       4,803,515
  Other general and administrative:
    Taxes and permits                                                   1,985,989       1,815,883
    Charge card fees                                                      229,397         236,894
    Rent                                                                  558,435         248,074
    Legal and professional                                                685,291         543,550
    Advertising and marketing                                             752,866         756,586
    Depreciation and amortization                                         590,466         479,791
    Other                                                               2,656,277       1,955,623
                                                                    --------------  --------------
                                                                       14,525,327      12,463,831
                                                                    --------------  --------------

Income from continuing operations                                         299,080       1,394,603

Other income (expense):
  Interest income                                                          33,434          28,887
  Interest expense                                                       (699,678)       (324,411)
  Gain on sale of marketable securities                                         -          19,807
  Other                                                                    (1,149)         10,193
                                                                    --------------  --------------

Income (loss) from continuing operations before minority interest        (368,313)      1,129,079

Minority interest                                                           9,472          (4,777)
                                                                    --------------  --------------

Income (loss) from continuing operations                                 (358,841)      1,124,302

Discontinued operations:
  Loss from discontinued operations                                      (148,294)       (349,049)
  Gain on sale of a subsidiary                                            291,987               -
                                                                    --------------  --------------
  Income (loss) from discontinued operations                              143,693        (349,049)
                                                                    --------------  --------------

Net income (loss)                                                   $    (215,148)  $     775,253
                                                                    ==============  ==============

Basic and diluted earnings (loss) per share:
  Continuing operations                                             $       (0.09)  $        0.30
  Discontinued operations                                                    0.04           (0.09)
                                                                    --------------  --------------
  Net income (loss)                                                 $       (0.05)  $        0.21
                                                                    ==============  ==============

Weighted average number of common shares outstanding                    3,937,565       3,700,148
                                                                    ==============  ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F - 4
<PAGE>
<TABLE>
<CAPTION>
                                                RICK'S CABARET INTERNATIONAL, INC.

                                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                             YEARS ENDED SEPTEMBER 30, 2005 AND 2004

                                           COMMON STOCK                     ACCUMULATED                       TREASURY STOCK
                                       --------------------  ADDITIONAL        OTHER                      -----------------------
                                         NUMBER                PAID-IN     COMPREHENSIVE    ACCUMULATED    NUMBER
                                       OF SHARES   AMOUNT      CAPITAL        INCOME          DEFICIT     OF SHARES     AMOUNT
                                       ---------  ---------  -----------  ---------------  -------------  ---------  ------------
<S>                                    <C>        <C>        <C>          <C>              <C>            <C>        <C>
Balance at September 30, 2003          4,608,678  $  46,087  $11,273,149  $      120,000   $ (2,763,735)    908,530  $(1,293,780)

  Net income                                   -          -            -               -        775,253           -            -
  Reclassification from unrealized to
    realized gain                              -          -            -         (13,222)             -           -            -
  Change in available-for-sale
    securities                                 -          -            -           2,224              -           -            -

  Comprehensive income                         -          -            -               -              -           -            -
                                       ---------  ---------  -----------  ---------------  -------------  ---------  ------------


Balance at September 30, 2004          4,608,678     46,087   11,273,149         109,002     (1,988,482)    908,530   (1,293,780)

  Shares issued                          612,000      6,120    1,624,762               -              -           -            -
  Stock warrants issued                        -          -      106,656               -              -           -            -
  Net loss                                     -          -            -               -       (215,148)          -            -
  Change in available-for-sale
    securities                                 -          -            -         (93,430)             -           -            -
  Comprehensive loss                           -          -            -               -              -           -            -
                                       ---------  ---------  -----------  ---------------  -------------  ---------  ------------

Balance at September 30, 2005          5,220,678  $  52,207  $13,004,567  $       15,572   $ (2,203,630)    908,530  $(1,293,780)
                                       =========  =========  ===========  ===============  =============  =========  ============


                                            TOTAL
                                        STOCKHOLDERS'
                                           EQUITY
                                       ---------------
<S>                                    <C>
Balance at September 30, 2003          $    7,381,721

  Net income                                  775,253
  Reclassification from unrealized to
    realized gain                             (13,222)
  Change in available-for-sale
    securities                                  2,224
                                       ---------------
  Comprehensive income                        764,255
                                       ---------------

Balance at September 30, 2004               8,145,976

  Shares issued                             1,630,882
  Stock warrants issued                       106,656
  Net loss                                   (215,148)
  Change in available-for-sale
    securities                                (93,430)
                                       ---------------
  Comprehensive loss                         (308,578)
                                       ---------------

Balance at September 30, 2005          $    9,574,936
                                       ===============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F - 5
<PAGE>
<TABLE>
<CAPTION>
                             RICK'S CABARET INTERNATIONAL, INC.

                            CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                 YEAR ENDED SEPTEMBER 30,
                                                                   2005            2004
                                                              --------------  --------------
<S>                                                           <C>             <C>
OPERATING ACTIVITIES
  Income (loss) from continuing operations                    $    (358,841)  $   1,124,302
  Adjustments to reconcile income (loss) from continuing
    operations to net cash provided by operating activities:
    Depreciation                                                    573,706         479,791
    Amortization                                                     16,760               -
    Bad debts                                                        75,995               -
    Issuance of warrants                                              5,925               -
    Minority interests                                               (9,472)          4,777
    Stock issued for professinal services                            27,120               -
    Gain on sales of marketable securities                                -         (19,807)
    Changes in operating assets and liabilities:
      Accounts receivable                                          (179,583)        (19,465)
      Inventories                                                   (24,880)        (40,435)
      Prepaid expenses and other current assets                     975,432        (967,975)
      Accounts payable and accrued liabilities                      987,868         175,120
                                                              --------------  --------------
Net cash provided by operating activities                         2,090,030         736,308

INVESTING ACTIVITIES
  Acquisitions                                                   (2,650,000)       (265,000)
  Proceeds from sale of subsidiary                                  550,000               -
  Proceeds from sales of marketable securities                            -          21,459
  Purchases of property and equipment                            (4,242,368)       (630,988)
  Note receivable payments                                           34,860           7,323
                                                              --------------  --------------
Net cash used in investing activities                            (6,307,508)       (867,206)

FINANCING ACTIVITIES
  Proceeds from sale of stock                                       928,762               -
  Proceeds from long-term debt                                    4,762,000         300,000
  Payments on long-term debt                                       (889,565)       (453,749)
                                                              --------------  --------------
Net cash provided by (used in) financing activities               4,801,197        (153,749)

Net cash provided by (used in) discontinued operations             (378,632)         56,666
                                                              --------------  --------------

Net increase (decrease) in cash and cash equivalents                205,087        (227,981)
Cash and cash equivalents at beginning of year                      275,243         503,224
                                                              --------------  --------------

Cash and cash equivalents at end of year                      $     480,330   $     275,243
                                                              ==============  ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the year for interest                      $     695,962   $     331,765
                                                              ==============  ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F - 6
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


NON-CASH TRANSACTIONS

     During the year ended September 30, 2004, the Company financed the purchase
     of  a  vehicle  with  a  note  payable  in  the  amount  of  $31,235.

     During  the year ended September 30, 2004, the Company divested a business,
     see  Note  M.  As  a result of the divestiture, the Company received a note
     receivable in the amount of $235,000, recorded a deferred gain of $163,739,
     and  removed  $78,072  of  net  assets.

     During  the  year  ended  September 30, 2005, the Company purchased a 9,000
     square  foot  office  building for $512,739, payable with a $86,279 cash at
     closing  and a $426,460 fifteen-year promissory note, bearing interest rate
     at  7%.

     During  the  year ended September 30, 2005, the Company purchased a club in
     New  York  for  $7,775,000,  payable  with $2,500,000 cash at closing and a
     five-year  secured  convertible promissory note, bearing interest at 4%, in
     the  amount  of  $5,125,000,  and  transaction  costs  of  $150,000.

     During  the  year  ended  September  30,  2005, 12,000 shares of restricted
     common  stocks  were  issued  as  compensation  pursuant  to  a  consulting
     agreement  for  a  total  value  of $27,120, and were issued as part of the
     transaction  costs  related  to  the  club  in  New  York.

     During  the  year ended September 30, 2005, the Company purchased a club in
     Charlotte  for  $1,0000,000,  payable  with  a  $325,000 seven-year secured
     promissory note, bearing interest at 7%, and 180,000 shares of stock valued
     at  $675,000.

See accompanying notes to consolidated financial statements.


                                      F - 7
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2005 AND 2004


A.   NATURE OF BUSINESS

Rick's  Cabaret  International,  Inc.  (the  "Company")  is  a Texas corporation
incorporated  in  1994.  The Company currently owns and operates nightclubs that
offer live adult entertainment, restaurant, and bar operations. These nightclubs
are  located  in Houston, Austin and San Antonio, Texas, as well as Minneapolis,
Minnesota,  Charlotte,  North Carolina, and New York, New York. The Company also
owns  and  operates several adult entertainment Internet websites. The Company's
corporate  offices  are  located  in  Houston,  Texas.


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A  summary of the Company's significant accounting policies consistently applied
in  the  preparation  of  the  accompanying  consolidated  financial  statements
follows:

BASIS OF ACCOUNTING

The  accounts are maintained and the consolidated financial statements have been
prepared  using  the  accrual  basis of accounting in accordance with accounting
principles  generally  accepted  in  the  United  States  of  America.

PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements include the accounts of the Company and
its  subsidiaries.  Significant intercompany accounts and transactions have been
eliminated  in  consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and assumptions that affect certain reported amounts in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from these
estimates  and  assumptions.

CASH AND CASH EQUIVALENTS

The  Company  considers  all  highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.  At September 30, 2005 and
2004,  the  Company  had  no  such  investments.  The Company maintains deposits
primarily  in  one  financial  institution,  which  may  at times exceed amounts
covered  by insurance provided by the U.S. Federal Deposit Insurance Corporation
("FDIC").  At  September  30,  2005,  the  uninsured  portion  of these deposits
approximated  $27,000.  There  were no uninsured deposits at September 30, 2004.
The  Company  has  not  incurred  any losses related to its cash on deposit with
financial  institutions.


                                      F - 8
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ACCOUNTS AND NOTES RECEIVABLE

Accounts  receivable  trade is primarily comprised of credit card charges, which
are  generally  converted  to cash in two to five days after a purchase is made.
The  Company's  accounts  receivable other is comprised of employee advances and
other  miscellaneous receivables.  The long-term portion of notes receivable are
included  in  other assets in the accompanying consolidated balance sheets.  The
Company recognizes interest income on notes receivable based on the terms of the
agreement  and  based upon management's evaluation that the notes receivable and
interest  income  will  be  collected.  The  Company  recognizes  allowances for
doubtful  accounts  or  notes  when, based on management judgment, circumstances
indicate  that  accounts or notes receivable will not be collected.  There is no
allowance for doubtful accounts or notes receivable as of September 30, 2005 and
2004.

MARKETABLE SECURITIES

Marketable  securities  at  September 30, 2005 and 2004 consist of common stock.
Statement  of  Financial  Accounting  Standards ("SFAS") No. 115, Accounting for
Certain  Investments in Debt and Equity Securities, requires certain investments
be  recorded at fair value or amortized cost.  The appropriate classification of
the  investments  in marketable equity is determined at the time of purchase and
re-evaluated at each balance sheet date.  As of September 30, 2005 and 2004, the
Company's marketable securities were classified as available-for-sale, which are
carried  at  fair  value,  with  unrealized  gains  and losses reported as other
comprehensive income within the stockholders' equity section of the accompanying
consolidated  balance  sheets.  The cost of marketable equity securities sold is
determined  on  a  specific  identification basis.  The fair value of marketable
equity securities is based on quoted market prices.   There has been no realized
gains  related  to  marketable securities for the year ended September 30, 2005.
Marketable  securities  held at September 30, 2005 and 2004 have a cost basis of
approximately  $13,000.

INVENTORIES

Inventories  include  alcoholic  beverages,  food,  and  Company  merchandise.
Inventories  are  carried at the lower of cost, average cost, which approximates
actual  cost  determined  on  a  first-in,  first-out ("FIFO") basis, or market.

PROPERTY AND EQUIPMENT

Property  and  equipment are stated at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets for financial
reporting  purposes. Buildings have estimated useful lives ranging from 31 to 40
years.  Furniture,  equipment  and  leasehold improvements have estimated useful
lives  between  five  and  ten  years.  Expenditures  for  major  renewals  and
betterments  that  extend  the  useful  lives are capitalized.  Expenditures for
normal  maintenance  and  repairs  are expensed as incurred.  The cost of assets
sold  or  abandoned and the related accumulated depreciation are eliminated from
the accounts and any gains or losses are charged or credited in the accompanying
statement  of  operations  of  the  respective  period.


                                      F - 9
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

GOODWILL AND INTANGIBLE ASSETS

In  June  2001,  the  FASB  issued  SFAS No. 142, Goodwill and Other Intangibles
Assets, which addresses the accounting for goodwill and other intangible assets.
Under  SFAS No. 142, goodwill and intangible assets with indefinite lives are no
longer  amortized,  but reviewed on an annual basis for impairment.  The Company
adopted  SFAS  effective  October 1, 2001.   The Company's annual evaluation was
performed  as  of September 30, 2005.  No impairment losses were identified as a
result  of this evaluation.  All of the Company's goodwill and intangible assets
relate to the nightclub segment.  Definite lived intangible assets are amortized
on a straight-line basis over their estimated lives.  Fully amortized assets are
written  off  against  accumulated  amortization.

REVENUE RECOGNITION

The  Company  recognizes  revenue from the sale of alcoholic beverages, food and
merchandise  and  services  at the point-of-sale upon receipt of cash, check, or
credit  card  charge.  This  includes  daily  and  annual  VIP  memberships.

Under  Staff  Accounting  Bulletin  No.  101,  Revenue  Recognition in Financial
Statements,  membership  revenue  should  be  deferred  and  recognized over the
estimated  membership  usage  period.  Management  estimates  that  the weighted
average  useful  lives  for  memberships  are  12  and  24 months for annual and
lifetime  memberships, respectively. The Company does not track membership usage
by  type  of  membership,  however  it  believes these lives are appropriate and
conservative,  based on management's knowledge of its client base and membership
usage  at  the  clubs.  The  Company began deferring such revenue in the quarter
ended  March  31,  2004,  and  this  amount  is recorded in accrued liabilities.

If  the  Company  had deferred membership revenue and recognized it based on the
lives  above  prior  to  January  1,  2004, the impact on revenue and net income
recognized  would  have  been  increases of approximately $3,600 and $47,000 for
the  years ended September 30, 2005 and 2004, respectively. This would have also
resulted  in an increase in the deferred revenue balance of approximately $0 and
$12,000  as  of  September  30, 2005 and 2004, respectively. Management does not
believe the impact of this difference in accounting treatment is material to the
Company's  annual  and  quarterly  financial  statements.

The Company recognizes Internet revenue from monthly subscriptions to its online
entertainment sites when notification of a new subscription is received from the
third  party  hosting  company  or  from the credit card company, usually two to
three  days  after the transaction has occurred. The Company recognizes Internet
auction  revenue  when  payment is received from the credit card as revenues are
not  deemed  estimable  nor  collection  deemed  probable  prior  to that point.


                                     F - 10
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ADVERTISING AND MARKETING

Advertising  and  marketing expenses are primarily comprised of costs related to
public  advertisements  and  giveaways, which are used for promotional purposes.
Advertising  and marketing expenses are expensed as incurred and are included in
operating  expenses  in  the accompanying consolidated statements of operations.

INCOME TAXES

Deferred  income  taxes  are determined using the liability method in accordance
with  SFAS  No.  109,  Accounting  for  Income  Taxes.  Deferred  tax assets and
liabilities  are  recognized  for  the  future  tax consequences attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and  their  respective  tax  bases.  Deferred  tax  assets and
liabilities  are  measured  using enacted tax rates expected to apply to taxable
income  in  the  years  in  which those temporary differences are expected to be
recovered  or  settled.  The  effect on deferred tax assets and liabilities of a
change  in  tax  rates  is  recognized in income in the period that includes the
enactment  date. In addition, a valuation allowance is established to reduce any
deferred  tax  asset  for which it is determined that it is more likely than not
that  some  portion  of  the  deferred  tax  asset  will  not  be  realized.

COMPREHENSIVE INCOME

The  Company  reports  comprehensive income in accordance with the provisions of
SFAS  No. 130, Reporting Comprehensive Income.  Comprehensive income consists of
net income and gains (losses) on available-for-sale marketable securities and is
presented  in  the  consolidated  statements of changes in stockholders' equity.

EARNINGS PER COMMON SHARE

The  Company  computes  earnings  per  share  in  accordance  with SFAS No. 128,
Earnings  Per  Share.  SFAS  No.  128  provides for the calculation of basic and
diluted  earnings  per share.  Basic earnings per share includes no dilution and
is  computed by dividing income available to common stockholders by the weighted
average  number  of  common shares outstanding for the period.  Diluted earnings
per  share  reflect the potential dilution of securities that could share in the
earnings  of  the Company.  The impact of dilutive stock options does not change
earnings per share, therefore basic and diluted earnings per share are the same.

Stock  options  of  approximately 733,000 for the year ended September 30, 2004,
have  been  excluded  from  earnings  per  share  due to the stock options being
anti-dilutive.  All  options were excluded for the year ended September 30, 2005
due  to  the  Company's  net  loss.

FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with the reporting requirements of SFAS No. 107, Disclosures About
Fair  Value  of  Financial Instruments, the Company calculates the fair value of
its  assets  and  liabilities  which


                                     F - 11
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

qualify  as  financial  instruments  under  this  statement  and  includes  this
additional  information  in  the notes to consolidated financial statements when
the  fair  value  is  different  than  the  carrying  value  of  these financial
instruments.  The  estimated fair value of accounts receivable, accounts payable
and accrued liabilities approximate their carrying amounts due to the relatively
short  maturity of these instruments.  The carrying value of short and long-term
debt  also  approximates fair value since these instruments bear market rates of
interest.  None  of  these  instruments  are  held  for  trading  purposes.

STOCK OPTIONS

At  September  30,  2005,  the  Company has stock options outstanding, which are
described more fully in Note G. The Company accounts for its stock options under
the  recognition  and  measurement  principles  of  Accounting  Principles Board
("APB")  Opinion  No.  25, Accounting for Stock Issued to Employees, and related
Interpretations.  The  following  table illustrates the effect on net income and
earnings  per  share  if  the  Company  had  applied  the fair value recognition
provisions  of  SFAS  No.  123,  Accounting  for  Stock-Based  Compensation,  to
stock-based  employee  compensation.

The  following  presents  pro  forma  net income and per share data as if a fair
value  accounting  method had been used to account for stock-based compensation:

<TABLE>
<CAPTION>
                                                       YEAR ENDED SEPTEMBER 30,
                                                         2005            2004
                                                    --------------  --------------
<S>                                                 <C>             <C>
     Net income (loss), as reported                 $    (215,148)  $     775,253
     Less total stock-based employee compensation
       expense determined under the fair value
       based method for all awards                       (549,165)       (216,616)
                                                    --------------  --------------
     Pro forma net income (loss)                    $    (764,313)  $     558,637
                                                    ==============  ==============

     Earnings (loss) per share:
       Basic and diluted  - as reported             $       (0.05)  $        0.21
                                                    ==============  ==============

       Basic and diluted  - pro forma               $       (0.19)  $        0.15
                                                    ==============  ==============
</TABLE>


IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In  December  2003,  the  Financial  Accounting  Standards Board ("FASB") issued
interpretation  46R  ("FIN  46R"),  a  revision to interpretation 46 ("FIN 46"),
Consolidation  of  Variable  Interest  Entities.  FIN  46R clarifies some of the
provisions  of  FIN  46 and exempts certain entities from its requirements.  FIN
46R  was effective at the end of the first interim period ending after March 15,
2004.  The  adoption of FIN 46 and FIN 46R did not have a material impact on the
Company's  consolidated  financial  statements.


                                     F - 12
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

In  December  2004,  the  FASB issued SFAS 123R, Share-Based Payment, which is a
revision  of  SFAS  123, Accounting for Stock-Based Compensation, and supersedes
APB  Opinion  25,  Accounting  for  Stock Issued to Employees. SFAS 123R focuses
primarily  on  share-based  payments  for  employee  services,  requiring  these
payments  to  be  recorded  using a fair-value-based method. The use of APB 25's
intrinsic  value  method  of  accounting  for  employee  stock  options has been
eliminated. As a result, the fair value of stock options granted to employees in
the  future  will  be  required  to  be  expensed.  The impact on the results of
operations of the Company will be dependent on the number of options granted and
the  fair  value  of those options. For the Company, SFAS 123R will be effective
beginning  October  1,  2006.


C.   PROPERTY AND EQUIPMENT

Property  and  equipment  consisted  of  the  following:

<TABLE>
<CAPTION>
                                               SEPTEMBER 30,
                                            2005         2004
                                         -----------  -----------
<S>                                      <C>          <C>
          Buildings and land             $ 9,531,112  $ 8,967,481
          Leasehold improvements           4,099,666      565,385
          Furniture                          939,550      547,574
          Equipment                        2,079,895    1,260,763
                                         -----------  -----------
          Total property and equipment    16,650,223   11,341,203
          Less accumulated depreciation    3,233,468    2,659,763
                                         -----------  -----------

          Property and equipment, net    $13,416,755  $ 8,681,440
                                         ===========  ===========
</TABLE>


For  the  years  ended  September  30,  2005  and  2004, the Company capitalized
approximately  $128,000  and  $0,  respectively,  of  interest  to  property and
equipment  in  leasehold  improvements.


                                     F - 13
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


D.   GOODWILL AND INTANGIBLE ASSETS

Goodwill  and  intangible  assets  consisted  of  the  following:

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,
                                                            2005         2004
                                                         -----------  ----------
<S>                                        <C>           <C>          <C>
     Indefinite useful lives:
       Goodwill                                          $1,898,926   $1,898,926
       Licenses                                           7,937,634            -

                                           Amortization
                                              Period
                                           ------------
     Definite useful lives:
       Discounted lease                      18 years        43,022            -
       Non-compete agreement                  5 years       100,000            -
       Less accumulated amortization                        (16,760)           -
                                                         -----------  ----------

     Total goodwill and intangible assets                $9,962,822   $1,898,926
                                                         ===========  ==========
</TABLE>

Future  amortization expense related to definite lived intangible assets subject
to  amortization  at  September  30, 2005 for each of the years in the five-year
period  ending  September  30,  2010  and  thereafter  is 2006 - $22,347, 2007 -
$22,347, 2008 - $22,347, 2009 - $22,347, 2010 - 7,347, and thereafter - $29,527.


                                     F - 14
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT

Long-term  debt  consisted  of  the  following:

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30,
                                                          2005         2004
                                                       -----------  ----------
<S>                                                    <C>          <C>
     Note payable at prime (as determined by
       the Wall Street  Journal) plus 1%,
       matures December 2004                        *  $         -  $  296,163
     Notes payable at 9%, mature February 2008      *    2,035,303   2,120,680
     Notes payable at 12%, mature March 2026        *      140,802     142,263
     Note payable at 9%, matures March 2006         *      289,308     293,224
     Note payable with imputed interest at 7%,
       matures January 2006, unsecured                     214,649     415,255
     Notes payable at 11%, mature August 2015       *    1,335,338     367,072
     Notes payable at 10%, mature December 2014
       and January 2015                             *    2,868,224           -
     Note payable at 7%, matures October 2012,
       collateralized by assets of RCI
       Entertainment North Carolina, Inc.                  325,000           -
     Note payable at 7%, matures December 2004      *            -      27,667
     Convertible note payable at 12%, matures
       August 2008                                         559,270           -
     Convertible note payable at 4%, matures
       May 2010, collateralized by assets of RCI
       Entertainment New York, Inc.                      5,042,362           -
     Note payable at 7%, matures December 2019      *      414,057           -
     Note payable at 8.99%, matures
       October 2007, collateralized by a vehicle            22,523      31,236
                                                       -----------  ----------
     Total debt                                         13,246,836   3,693,560

     Less current portion                                1,349,894     492,310
                                                       -----------  ----------

     Total long-term debt                              $11,896,942  $3,201,250
                                                       ===========  ==========
</TABLE>

     * Collateralized by real estate

The  Company  had  an unsecured note payable at 10% in the amount of $188,051 at
September  30,  2004,  which  was  part  of  discontinued  operations.

In  June,  July  and November 2004, the Company borrowed $100,000, $100,000, and
$900,000,  respectively,  from  an  unrelated  individual at the rate of 11% per
annum  for a 10 year term. These borrowings were an addition to a previous note.
During  fiscal  year  2005, the monthly payment of principal and interest of the
new  borrowing is $15,034, and $3,445 for the old note. The notes are secured by
our  properties  located  at  3501  Andtree,  Austin  and  at  5718  Fairdale,


                                     F - 15
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT - CONTINUED

Houston,  Texas.  The  money  received  from this new financing was used for the
acquisition  and  renovation  of  the  New  York  club.

On  November  15,  November  17,  and  December  30,  2004, the Company borrowed
$590,000, $1,042,000, and $1,270,000, respectively, from a financial institution
at  an  annual interest rate of 10% over a 10 year term. The monthly payments of
principal  and  interest  are  $5,694,  $10,056, and $12,256, respectively.  The
notes are secured by our properties located at 2023 Sable Lane, San Antonio, 410
N.  Sam  Houston  Pkwy.  E.,  and  3113 Bering Drive, Houston, Texas.  The money
received  from this financing was used for the acquisition and renovation of the
New  York  club.

As  a  part  of the purchase the North Carolina club, the Company issued 180,000
shares  of the Company's common stock valued at $3.75 per share and entered into
a  seven  year promissory note in the amount of $325,000 bearing interest at the
rate  of 7% per annum.  The note is payable with an initial payment due November
1,  2005, of interest only for the period of time from the date of Closing until
October  31,  2005,  plus a principal reduction payment in the amount of $3,009.
Thereafter,  RCI  Entertainment  North Carolina, Inc., the Company's subsidiary,
will  make  eighty-three  (83)  successive  equal  monthly  payments  commencing
December  1,  2005, of principal and interest in the amount of $4,905 until paid
in full.  The note is secured by the assets of RCI Entertainment North Carolina,
Inc.  Pursuant  to  the  terms  of  the  note, on or after November 1, 2005, the
holder shall have the right, but not the obligation to have the Company purchase
from the holder 4,285 shares per month, calculated at a price per share equal to
$3.75  until  the holder has received a total of $1,000,000 from the sale of the
shares  less the amount of the note.  At the Company's election during any given
month,  the  Company may either buy the monthly shares or, if the Company elects
not  to  buy  the monthly shares from the holder, then the holder shall sell the
monthly  shares in the open market.  Any deficiency between the amount which the
holder  receives from the sale of the monthly shares and the value of the shares
shall  be  paid  by the Company within three (3) days of the date of sale of the
monthly  shares  during  that  particular  month.  The  Company's  obligation to
purchase  the  monthly  shares from the holder shall terminate and cease at such
time  as  the  holder  has  received  a total of $1,000,000 from the sale of the
shares,  less  the  amount  of  the  note.

On  July 22, 2005, the Company entered into a secured convertible debenture with
one  of  its  shareholders  for  a  principal sum of $660,000.  The debenture is
convertible  into  220,000  shares of the Company's common stock at a conversion
price  of  $3.00  per  share at the option of the holder.  The term is for three
years and interest rate is at 12% per annum.  The debenture matures on August 1,
2008.   The Company also issued 50,000 detachable warrants at $3.00 per share in
relation  to  this  debenture.  The  value  of the discount on notes payable was
estimated  to  be  $106,656  at  the  date  of  grant  using  a  Black-Scholes
option-pricing  model.  For  the  year  ending  September  30, 2005, the Company
recorded  $5,925  interest  expense.  The  debenture  is  secured  by  Company's
ownership  in  Citation  Land, LLC and RCI Holdings, Inc., both are wholly owned
subsidiaries.

As  a  part  of  the  purchase  the New York club, the Company obtained a $5.125
million  in  a  promissory  note bearing simple interest at the rate of 4.0% per
annum  with  a balloon payment at end of five years.  Two million dollars of the
principal  amount  of  the  Promissory  Note  is


                                     F - 16
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT - CONTINUED

convertible  into shares of restricted common stock at prices ranging from $4.00
to  $7.50  per  share.

In  December  2004,  as  a  part  of  the purchase of a 9,000 square-foot office
building,  the  Company obtained a fifteen year promissory note in the amount of
$426,460  with  interest  at  7%.

Future  maturities  of  long-term  debt  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                                      <C>
     2006                                $ 1,349,894
     2007                                    835,062
     2008                                  3,312,223
     2009                                    909,149
     2010                                  2,894,275
     Thereafter                            3,946,233
                                         -----------
     Total maturities of long-term debt  $13,246,836
                                         ===========
</TABLE>


F.   INCOME TAXES

Income  tax  expense for the years presented differs from the "expected" federal
income  tax  expense computed by applying the U.S. federal statutory rate of 34%
to earnings before income taxes for the years ended September 30, as a result of
the  following:

<TABLE>
<CAPTION>
                                                2005        2004
                                              ---------  ----------
<S>                                           <C>        <C>
     Computed expected tax expense (benefit)  $(73,151)  $ 263,586
     State income taxes                         (6,454)     23,257
     Deferred tax asset valuation
       Allowance                                79,605    (286,843)
                                              ---------  ----------
     Total income tax expense                 $      -   $       -
                                              =========  ==========
</TABLE>


The significant components of the Company's deferred tax assets and liabilities
at September 30, are as follows:

<TABLE>
<CAPTION>
                                                    2005         2004
                                                 -----------  ----------
<S>                                              <C>          <C>
     Deferred tax assets (liabilities):
       Goodwill                                  $ (138,150)  $ 284,018
       Property and equipment                      (254,788)   (161,881)
       Net operating losses                       1,165,143     654,405
       Unrealized gain on marketable securities      (5,762)    (40,331)
       Other                                         72,975      16,646
       Valuation allowance                         (839,418)   (752,857)
                                                 -----------  ----------
                                                 $        -   $       -
                                                 ===========  ==========
</TABLE>


                                     F - 17
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


F.   INCOME TAXES - CONTINUED

The  Company has established a valuation allowance to fully reserve the deferred
tax  assets  at September 30, 2005 and 2004 due to the uncertainty of the timing
and  amounts  of  future taxable income.  At September 30, 2005, the Company had
net  operating  loss  carryforwards of approximately $3,149,000, which expire in
2017  through  2020.


G.   STOCK OPTIONS

In  1995,  the  Company adopted the 1995 Stock Option Plan (the "1995 Plan") for
employees  and  directors.  In  August  1999  the Company adopted the 1999 Stock
Option  Plan (the "1999 Plan") (collectively, "the Plans").  The options granted
under the Plans may be either incentive stock options, or non-qualified options.
The  Plans  are  administered  by  the  Board  of Directors or by a compensation
committee  of  the Board of Directors.  The Board of Directors has the exclusive
power  to  select  individuals  to receive grants, to establish the terms of the
options  granted to each participant, provided that all options granted shall be
granted  at  an exercise price equal to at least 85% of the fair market value of
the  common  stock  covered  by  the  option  on  the grant date and to make all
determinations  necessary  or  advisable  under  the  Plans.

Following  is  a  summary  of  options  for  the  years  ended  September  30:

<TABLE>
<CAPTION>
                                               WEIGHTED                WEIGHTED
                                                AVERAGE                 AVERAGE
                                               EXERCISE                EXERCISE
                                     2005        PRICE       2004        PRICE
                                  ----------------------------------------------
<S>                               <C>          <C>        <C>          <C>
Outstanding at beginning of year     908,000   $    2.39     498,000   $    2.35
Granted                               90,000        2.80     575,000        2.46
Expired                              (50,000)       2.49    (165,000)       2.29
Exercised                            (70,000)       2.21           -           -
                                  -----------             -----------
Outstanding at end of year           878,000        2.47     908,000        2.42
                                  ===========             ===========
Exercisable at end of year           583,000   $    2.40     408,000   $    2.32
                                  ===========             ===========
Weighted-average remaining
  contractual life                2.84 years              3.12 years
                                  ===========             ===========
</TABLE>


As  of  September 30, 2005, the range of exercise prices for outstanding options
was  $1.40  -$2.80.

The  Company  has  elected  to  follow APB No. 25 and related interpretations in
accounting  for  its  employee  stock options because the alternative fair value
accounting  provided  for  under  SFAS  No.  123,  Accounting  for  Stock  Based
Compensation,  requires  the  use  of  option  valuation  models  that  were not
developed for use in valuing employee stock options.  See footnote B for related
disclosures.


                                     F - 18
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


G.   STOCK OPTIONS - CONTINUED

Under APB No. 25, no compensation expense is recorded when the exercise price of
the  Company's  employee  stock  option  equals the fair value of the underlying
stock  on  the  date  of  grant.  Compensation  equal  to the intrinsic value of
employee  stock  options is recorded when the exercise price of the stock option
is  less  than the fair value of the underlying stock on the date of grant.  Any
resulting  compensation  is  amortized  to  expense  over  the remaining vesting
periods  of the options on a straight-line basis.  For the years ended September
30,  2005  and 2004, no amounts were recorded to compensation expense related to
stock  options  issued  to  employees.

Information regarding pro forma net income is required by SFAS 123, and has been
determined  as if the Company had accounted for its employee stock options under
the  fair  value  method  of  SFAS  No. 123. The fair value of these options was
estimated  at the date of grant using a Black-Scholes option-pricing model using
the  following  weighted  average  assumptions:

<TABLE>
<CAPTION>
                             2005       2004
                           --------------------
<S>                        <C>       <C>
  Volatility                   137%        137%
  Expected lives           3 years   3.3 years
  Expected dividend yield        -           -
  Risk free rates             4.31%       3.45%
</TABLE>


The Black-Scholes option valuation model was developed for use in estimating the
fair  value  of traded options, which have no vesting restrictions and are fully
transferable.  In  addition, option valuation models require the input of highly
subjective  assumptions  including  the expected stock price volatility. Because
changes in the subjective input assumptions can materially affect the fair value
estimate,  in  management's  opinion,  the  existing  models  do not necessarily
provide  a  reliable  single  measure  of  the  fair value of its employee stock
options.


H.   COMMITMENTS AND CONTINGENCIES

LEASES

The  Company  leases certain equipment and facilities under operating leases, of
which  rent  expense was approximately $558,000 and $536,000 for the years ended
September  30,  2005  and  2004,  respectively.

Rent expense for the Company's operating leases, which generally have escalating
rentals  over  the term of the lease, is recorded using the straight line method
over  the  initial  lease  term  whereby  an  equal  amount  of  rent expense is
attributed  to  each  period  during  the  term of the lease, regardless of when
actual  payments are made.  Generally, this results in rent expense in excess of
cash  payments during the early years of a lease and rent expense less than cash
payments in the later years.  The difference between rent expense recognized and
actual  rental  payments  is  recorded  as  other  long-term  liability  in  the
consolidated  balance  sheets.


                                     F - 19
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

Future  minimum annual lease obligations as of September 30, 2005 are as follow:

<TABLE>
<CAPTION>
<S>                                                <C>
           2006                                    $   964,307
           2007                                        984,472
           2008                                        929,076
           2009                                        788,114
           2010                                        552,882
           Thereafter                                8,517,755
                                                   -----------

           Total future minimum lease obligations  $12,736,606
                                                   ===========
</TABLE>


LEGAL MATTERS

Sexually Oriented Business Ordinance Of Houston, Texas

In  January 1997, the City Council of the City of Houston passed a comprehensive
new  Ordinance  regulating  the  location  of  and  the  conduct within Sexually
Oriented  Businesses  (the  "Ordinance").  The Ordinance established new minimum
distances  that  Sexually  Oriented  Businesses  may  be  located  from schools,
churches,  playgrounds  and  other  sexually oriented businesses.  There were no
provisions  in  the  Ordinance  exempting previously permitted sexually oriented
businesses  from  the  effect  of  the  new Ordinance.  In 1997, the Company was
informed that one of the Company's Houston locations at 3113 Bering Drive failed
to  meet  the  requirements  of the Ordinance and accordingly the renewal of the
Company's  Business  License  at  that  location  was  denied.

The  Ordinance  provided  that  a  business  which  was  denied a renewal of its
operating  permit  due  to  changes in distance requirements under the Ordinance
would  be  entitled  to  continue  in  operation  for  a  period  of  time  (the
"Amortization Period") if the owner were unable to recoup, by the effective date
of  the  Ordinance, its investment in the business that was incurred through the
date  of  the  passage  and  approval  of  the  Ordinance.

The  Company filed a request with the City of Houston requesting an extension of
time  during  which  operations  at  the  Company's north Houston facility could
continue  under  the  Amortization  Period provisions of the Ordinance since the
Company  was  unable to recoup its investment prior to the effective date of the
Ordinance.  An  administrative  hearing  was  held  by  the  City  of Houston to
determine  the appropriate Amortization Period to be granted to the Company.  At
the  Hearing, the Company was granted an amortization period that has since been
reached.  The  Company  has  the  right  to  appeal  any decision of the Hearing
official  to  the  district  court  in  the  State  of  Texas.

In May 1997, the City of Houston agreed to defer implementation of the Ordinance
until  the constitutionality of the entire Ordinance was decided by court trial.
In  February  1998,  the  U.S.


                                     F - 20
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

District Court for the Southern District of Texas, Houston Division, struck down
certain  provisions  of the Ordinance, including the provision mandating a 1,500
foot  distance  between a club and schools, churches and other sexually oriented
business,  leaving  intact  the provision of the 750 foot distance as it existed
prior  to  the  Ordinance.

The  City  of  Houston  has appealed the District Court's rulings with the Fifth
Circuit  Court  of Appeals.  In the event that the City of Houston is successful
in  the appeal, the Company could be out of compliance and such an outcome could
have  an  adverse  impact on the Company's future. The permits for the Company's
north  Houston  location  and  Bering  Drive  location  have  expired.

There  are  other provisions in the Houston, Texas Ordinance, such as provisions
governing  the  level  of lighting in a sexually oriented business, the distance
between  a  customer  and  dancer  while  the dancer is performing in a state of
undress and provisions regarding the licensing of dancers and club managers that
were  upheld  by  the  court which may be detrimental to the Company's business.
The  Company,  in  concert with other sexually oriented businesses, is appealing
these  aspects  of  the  Ordinance.

In  November,  2003, a three judge panel from the Fifth Circuit Court of Appeals
published  their  Opinion  which  affirmed  the  Trial  Court's ruling regarding
lighting  levels,  customer  and  dancer  separation  distances and licensing of
dancers  and  staff.  The  Court  of  Appeals, however, did not follow the Trial
Court's  ruling  regarding  the distance from which a club may be located from a
church  or  school.  The  Court  of  Appeals held that a distance measurement of
1,500 feet would be upheld upon a showing by the City of Houston that its claims
that  there  were  alternative sites available for relocating the clubs could be
substantiated.  The  case was remanded for trial on the issue of the alternative
sites.

There  are  other  technical  issues,  which  could  additionally  bear upon the
location  of  the  clubs,  which  were not decided at the trial level during the
initial  phase  of the case.  It is anticipated that these technical issues will
be  joined  in  the  Trial  Court.  The City has not sought to modify any of the
terms  of  the  injunction  against enforcement of any location provision of the
Ordinance.

The  appeals  process  as  it  relates  to  the Court's rulings in 1998 has been
exhausted.  The  Trial  Court  has  entered  a new scheduling order which places
trial  on  the  remaining  issues for June 2006.  Under the holding of the Fifth
Circuit  Court  of  Appeals, the City of Houston has the burden of proof to show
that, under the distance measurements contained in the 1997 ordinance, there are
over 2,000 alternate sites available for relocation.  If the City of Houston can
meet  this  initial  burden,  then  the  Trial Court will consider the remaining
location  issues  which were not decided during the initial summary phase of the
case.  In  the event the City of Houston can meet its burden and the Trial Court
moves  forward  with  the  case,  an  appeal  is  anticipated.  A  ruling on the
remaining issues in favor of the City of Houston could have an adverse impact on
the  Rick's  locations  in  Houston,  Texas.


                                     F - 21
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

OTHER LEGAL MATTERS

On  May 2, 2003, a lawsuit was filed in the United States District Court for the
Western  District  of Texas, San Antonio division, on behalf of XTC Cabaret, and
others,  as  a result of the City of San Antonio having adopted a new ordinance,
which,  among  other  things, banned nude dancing.  This suit asked the Court to
declare  the  ordinance  unconstitutional and enjoin the City from enforcing it.
Prior to a resolution of this litigation, XTC Cabaret withdrew as a party to the
lawsuit.  Although  a  settlement was reached with the remaining parties in June
2005,  it  did  not  include  nude  dancing.  XTC  has  elected  to  address the
constitutionality  of  the ordinance by appealing any conviction obtained by the
City  through  the  state  courts.

On  April  7,  2004,  a lawsuit was filed in the 80th Judicial District Court of
Harris County, Texas, styled Cause No. 2004-18510, Charity Renee Stevens, et al.
vs. Lazaro Ernesto Alfonso, et al.  This is a wrongful death and personal injury
action  against  two  individuals  based  on  negligence  theories  and  five
entertainment  establishments  including  Rick's  based  on  alleged "dram shop"
violations  arising  from  a  two-car collision.  Plaintiffs have also sued Ford
Motor  Company  under  a  theory of products liability.   Plaintiffs include the
children  of  the decedents, a minor passenger and the mothers of the decedents.
Plaintiffs  are  seeking  unspecified  damages  including  physical  pain  and
suffering, mental anguish, pecuniary loss, past and future loss of companionship
and  consortium,  loss  of  mental  and  intellectual  function, past and future
physical  impairment,  reduction  in earning capacity, increased education costs
and  expenses  including  funeral  and  medical  costs.

Management  believes  that  the Company is not liable for any of the damages and
that  the Company is covered by the safe harbor provisions of the Dram Shop Act,
which  render  certain compliant establishments not liable for the acts of their
patrons.  The  Company  is  not  aware of any insurance coverage for this claim.
The  Company  denies  that the Company has any liability for the accident and is
vigorously  defending  the  matter.

Discovery  is ongoing and the Company has filed a Motion for Summary Judgment on
behalf  of  Rick's  which  is  currently  pending.

For all the above legal matters, no contingent reserves as liabilities have been
recorded  in  the  accompanying  balance sheets as such potential losses are not
deemed  probable  or  estimable.

I.   LINE-OF-CREDIT

The  Company  has  available  a  $100,000  unsecured line-of-credit with a bank.
Interest  is  payable  monthly  on the outstanding balance at a floating rate of
prime  plus  1.5% (8.25% at September 30, 2005).  This arrangement is subject to
renewal  in June 2006.  The amount outstanding under this agreement at September
30, 2005 was $94,888, with the remainder available for future borrowing.


                                     F - 22
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


J.   SEGMENT INFORMATION

The  following  information  is  presented  in  accordance  with  SFAS  No. 131,
Disclosures  about  Segments  of  an  Enterprise  and  Related Information.  The
Company  is  engaged  in  adult  night  clubs  and  adult entertainment websites
("Internet").  The  Company  has  identified  such  segments based on management
responsibility  and  the  nature  of the Company's products, services and costs.
There  are  no major distinctions in geographical areas served as all operations
are  in the United States.  The Company measures segment profit (loss) as income
(loss)  from  operations.  Total  assets  are  those  assets  controlled by each
reportable  segment.

The  following  table  sets  forth  certain  information  about  each  segment's
financial  information  for  the  year  ended  September  30:

<TABLE>
<CAPTION>
                                                     2005          2004
                                                 ------------  ------------
<S>                                              <C>           <C>
Business segment sales:
    Night clubs                                  $14,708,159   $15,163,331
    Internet                                         788,513       796,353
    Discontinued operations                         (672,265)   (2,101,250)
                                                 ------------  ------------
                                                 $14,824,407   $13,858,434

Business segment operating income:
    Night clubs                                  $ 2,283,535   $ 2,542,482
    Internet                                         114,500        88,958
    General corporate                             (2,098,955)   (1,565,871)
    Discontinued operations                                -       329,034
                                                 ------------  ------------
                                                 $   299,080   $ 1,394,603

Business segment capital expenditures:
    Night clubs                                  $ 4,763,060   $   659,073
    Internet                                          58,153         5,580
    General corporate                                516,500        35,546
    Discontinued operations                          (28,693)      (55,634)
                                                 ------------  ------------
                                                 $ 5,309,020   $   644,565

Business segment depreciation and amortization:
    Night clubs                                  $   455,690   $   385,425
    Internet                                          34,231        43,308
    General corporate                                122,277       115,404
    Discontinued operations                          (21,732)      (64,346)
                                                 ------------  ------------
                                                 $   590,466   $   479,791

Business segment assets:
    Night clubs                                  $19,037,102   $ 6,640,888
    Internet                                          99,148       108,595
    General corporate                              5,892,768     6,450,276
    Discontinued operations                                -      (438,882)
                                                 ------------  ------------
                                                 $25,029,018   $12,760,877
</TABLE>


                                     F - 23
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


K.   COMMON STOCK

In  January 2005, 20,000 stock options were exercised by the Company's employees
and  directors for $39,625.  In March 2005, the Company issued 150,000 shares of
common  stock to an unrelated investor and received proceeds of $375,000, 12,000
shares  of  restricted  common  stock  were issued at a value of $2.26 per share
pursuant  to  a consulting agreement, and 25,000 stock options were exercised by
the  Company's  employees  for  $60,025.  On  June  10, 2005, the Company issued
180,000  shares of common stock pursuant to the purchase of a club in Charlotte,
North Carolina.  See Note N.  In July 2005, we sold 200,000 shares of our common
stock  in  a  private  transaction  to 13 persons at $2.00 per share for a total
consideration  of  $400,000.  In August and September 2005, 25,000 stock options
were  exercised  by  the  Company's  employees  and  directors  for  $54,113.


L.   RELATED PARTY TRANSACTIONS

In May 2002, the Company loaned $100,000 to Eric Langan, Chief Executive Officer
of  the  Company.  The note is unsecured, bears interest at 11% and is amortized
over a period of ten years.  The note contains a provision that in the event Mr.
Langan  leaves  the Company for any reason, the note immediately becomes due and
payable  in full.  The balance of the note was approximately $79,000 and $86,000
at September 30, 2005 and 2004, respectively, and is included in other assets in
the  accompanying  consolidated  balance  sheets.


M.   EMPLOYEE RETIREMENT PLAN

The  Company  sponsors  a  Simple IRA plan (the "Plan"), which covers all of the
Company's  corporate  employees.  The  Plan  allows  the  corporate employees to
contribute  up  to  the maximum amount allowed by law, with the Company making a
matching  contribution  of  3%  of  the  employee's salary.  Expenses related to
matching  contributions  to  the  Plan  approximated $28,000 and $23,000 for the
years  ended  September  30,  2005  and  2004,  respectively.


N.   ACQUISITIONS AND DISPOSITIONS

On March 3, 2004, the Company acquired the assets and business of a 7,000 square
foot  gentlemen's  club  in  North Houston and it became the Company's fifth XTC
Cabaret.  As a part of the transaction, the Company entered into a new five-year
lease  with  an  option for five additional years.  The results of operations of
this  new  venue  are  included  in  the  accompanying  consolidated  financial
statements  from  the  date  of  acquisition.  The  $265,000  all-cash  purchase
transaction  generated goodwill of $20,000.  Proforma results of operations have
not  been  provided, as the amounts were not deemed material to the consolidated
financial  statements.  The  transaction  follows the Company's growth strategy.

On  September 30, 2004, the Company entered into a Stock Purchase Agreement with
an  unrelated  third  party,  whereby  the Company sold all of its 510 shares of
common  stock  of  RCI  Ventures,  Inc.  for  $15,000  cash  and a $235,000 note
receivable  bearing  interest  at  a  rate  of  6%


                                     F - 24
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

over  a five year period.   As a part of the transaction, Trumps, a wholly-owned
subsidiary  of  the  Company,  and  Tantric,  a  wholly-owned  subsidiary of RCI
Ventures.,  entered into a five year lease agreement for the property located at
5718  Fairdale,  Houston,  Texas.  The  Company has recorded a $163,739 deferred
gain  related  to  this  transaction for the year ended September 30, 2004.  The
gain  will  be  recognized  upon  collection of the note receivable.  The club's
business  was  accounted  for  as  discontinued  operations  under  accounting
principles generally accepted in the United States of America and therefore, the
club's results of operations and cash flows have been removed from the Company's
consolidated  results  of  continuing  operations and cash flows for all periods
presented  in  this document and such assets and liabilities as of September 30,
2004  have been netted in one line item on the balance sheet.  The deferred gain
is  netted  against  the  note  receivable,  included  in  other  assets  in the
accompanying  balance  sheet.

On  January  18,  2005, the Company's wholly-owned subsidiary, RCI Entertainment
New  York,  Inc.,  a  New  York  corporation  ("RCI  New  York")  completed  the
acquisition  of  Peregrine  Enterprises,  Inc. ("Peregrine"), which operated the
Paradise  Club  in Midtown Manhattan, New York (50 West 33rd Street).  Peregrine
owns  and  operates an adult entertainment cabaret located in midtown Manhattan.
The  cabaret  club  is located near the Empire State Building and Madison Square
Garden,  and  is  less than 10 blocks from Times Square. The total consideration
was  for  $7.775  million  for the assets and stock of the former Paradise Club,
which had operated on the site for more than a decade. The transaction consisted
of  $2.5  million in cash and $5.125 million in a promissory note bearing simple
interest  at  the  rate  of 4.0% per annum with a balloon payment at end of five
years  and  transaction  costs  of  $150,000.  The  Promissory  Note  is payable
commencing  151 days after Closing as follows: (a) the payment of $58,333.33 per
month for twenty-four (24) consecutive months; (b) the payment of $63,333.33 for
twenty-four  (24)  consecutive  months; (c) the payment of $68,333.33 for twelve
(12)  consecutive months; and (d) a lump sum payment of the remaining balance to
be  paid  on the sixty-first (61st) month. $2,000,000 of the principal amount of
the  Promissory  Note  is  convertible into shares of restricted common stock at
prices  ranging  from  $4.00 to $7.50 per share. The parties also entered into a
Stock Pledge Agreement and Security Agreement to secure the Promissory Note. The
results  of  operations  of  the club are included in the Company's consolidated
statement  of  operations  from  January  18,  2005.

The  following  information  summarizes  the final determination of the purchase
price  allocation.

<TABLE>
<CAPTION>
<S>                              <C>
          Current assets         $  150,000
          Discounted lease           43,022
          Non-compete agreement     100,000
          License                 7,481,978
                                 ----------

          Net assets acquired    $7,775,000
</TABLE>


The following unaudited pro forma information presents the results of operations
as  if  the  acquisition  had  occurred  as  of  the  beginning of the immediate
preceding  period.  Peregrine's  operations are for the calendar year 2004.  The
pro  forma  information  is  not  necessarily


                                     F - 25
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

indicative  of what would have occurred had the acquisition been made as of such
periods,  nor  is  it indicative of future results of operations.  The pro forma
amounts  give effect to appropriate adjustments for the fair value of the assets
acquired,  amortization  of  intangibles  and  interest  expense.

<TABLE>
<CAPTION>
                                                        2005         2004
                                                    ------------  -----------
<S>                                                 <C>           <C>
  Revenues                                          $15,310,407   $16,206,998
  Net income (loss) from continuing operations         (638,841)      425,320
  Net income (loss)                                    (495,148)       87,370

  Net income (loss) per share - basic and diluted   $     (0.13)  $      0.02
</TABLE>


On  March  31, 2005, the Company completed the sale of one of its clubs known as
'Rick's South' to MBG Acquisition LLC for cash $550,000.  In connection with the
sale,  the  Company  recorded  a  gain  of  $291,987.  The  club's  business was
accounted  for as a discontinued operation under accounting principles generally
accepted  in  the United States of America, and therefore, the club's results of
operations  and  cash  flows  have  been removed from the Company's consolidated
results  of  continuing  operations and cash flows for all periods presented and
such  assets  and  liabilities as of September 30, 2004 have been included under
"Net  assets  of  discontinued  operation"  in  the  accompanying balance sheet.
Goodwill  in  the  amount  of  $83,923  was  eliminated  as  the  result of this
transaction.

On June 10, 2005, the Company's wholly-owned subsidiary, RCI Entertainment North
Carolina,  Inc.,  a  North Carolina corporation ("RCI North Carolina") completed
the  acquisition of a 30,000 square foot nightclub in Charlotte, North Carolina.
The  name  of  the  club  had  been  changed from 'The Manhattan Club' (5300 Old
Pineville  Road) to 'Rick's Cabaret'.  The purchase price of the transaction was
$1,000,000  through  the  issuance  of 180,000 shares of restricted common stock
valued  at  $675,000  and  a  seven-year  promissory  note  of $325,000, bearing
interest  at  a  rate  of  7%  per annum.  The note is secured by liens upon the
assets  of  and hereafter acquired assets of RCI Entertainment (North Carolina),
Inc.  The  results  of  operations  of the club are included in our consolidated
statement  of operations from February 1, 2005, when the Company assumed risk of
loss  for  the  club's  operations  under  a  management  agreement.

Pursuant  to  the  terms  of  the note, on or after November 1, 2005, the holder
shall  have  the right, but not the obligation to have the Company purchase from
the  holder  4,285  shares  per  month, calculated at a price per share equal to
$3.75  until  the holder has received a total of $1,000,000 from the sale of the
shares  less the amount of the note.  At the Company's election during any given
month,  the  Company may either buy the monthly shares or, if the Company elects
not  to  buy  the monthly shares from the holder, then the holder shall sell the
monthly  shares in the open market.  Any deficiency between the amount which the
holder  receives from the sale of the monthly shares and the value of the shares
shall  be  paid  by the Company within three (3) days of the date of sale of the
monthly  shares  during  that  particular  month.  The  Company's  obligation to
purchase  the  monthly  shares from the holder shall terminate and cease at such
time  as  the


                                     F - 26
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

holder  has received a total of $1,000,000 from the sale of the shares, less the
amount  of  the note.  Proforma results of operations have not been provided, as
the  amounts  were not deemed material to the consolidated financial statements.
The  transaction  follows  the  Company's  growth  strategy.

The following information summarizes the final determination of the purchase
price allocation.

<TABLE>
<CAPTION>
<S>                                          <C>
     Current assets                          $  111,752
     Property & equipment, net depreciation     640,192
     Licenses                                   455,656
     Other assets                                 5,020
     Current liabilities assumed               (212,620)
                                             -----------
     Net assets acquired                     $1,000,000
</TABLE>


On  July  12,  2005,  the  Company  organized  RCI  Dating  Services, Inc. ("RCI
Dating"), which operates as an addition to the Company's internet operations, to
acquire  CouplesClick.net  from  ClickMatch  LLC  ("ClickMatch").  The  Company
transferred  its  ownership in CouplesTouch.com to RCI Dating and as a result of
the  transaction  the  Company  obtained  an 85% interest in RCI Dating with the
other  15%  owned  by  ClickMatch.


                                     F - 27