Securities and Exchange Commission
                             Washington, D.C. 20549

                           Form 10-KSB/Amendment No. 1


[X]     Annual Report under Section 13 Or 15(d) of the Securities Exchange Act
        of 1934 For the fiscal year ended September 30, 2003

[ ]     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.)

                            505 North Belt, Suite 630
                              Houston, Texas 77060
                    (Address of Principal Executive Offices)

                                 (281) 820-1181
                           (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


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<PAGE>
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, 2003 were
$15,059,569.

     The aggregate market value of Common Stock held by non-affiliates of the
registrant at December 9, 2003, based upon the last reported sales prices on the
NASDAQ SmallCap Market, was $6,512,260.

     As of December 9, 2003, there were approximately 3,700,148 shares of Common
Stock outstanding (this amount excludes treasury shares).


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

PART I                                                         Page
<S>       <C>                                                  <C>

Item 1.   Business                                                1

Item 2.   Properties                                              7

Item 3.   Legal Proceedings                                       8

Item 4.   Submission of Matters to a Vote of Security Holders    11

PART II

Item 5.   Market for Registrant's Common Equity and
          Related Stockholder Matters                            11

Item 6.   Management's Discussion and Analysis or
          Plan of Operation                                      14

Item 7.   Financial Statements                                   20

Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosures                20

Item 8A.  Controls and Procedures                                20

PART III

Item 9.   Directors, Executive Officers, Promoters and
          Control Persons; Compliance with Section 16(a) of
          The Exchange Act                                       20

Item 10.  Executive Compensation                                 23

Item 11.  Security Ownership of Certain Beneficial
          Owners and Management and
          Related Stockholder Matters                            24

Item 12.  Certain Relationships and Related Transactions         26

Item 13.  Exhibits and Reports on Form 8-K                       26
</TABLE>


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<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, 2003 that was
originally filed with the Securities and Exchange Commission ("SEC") on December
29, 2003 (the "Original 10-KSB") to (i) separately reflect depreciation expense
on the face of the statements of operations (ii) clarify our revenue recognition
policies disclosure included in the notes to the financial statements and (iii)
clarify and provide more detail related to our acquisitions and dispositions
footnote included in the notes to our financial statements.  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 herein 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 seven adult nightclubs under the names "Rick's Cabaret" and "XTC" that
offer live adult entertainment, restaurant and bar operations.  Our nightclubs
are in Houston, Austin and San Antonio, Texas, and Minneapolis, Minnesota.  We
also own and operate an adults only "couples" night club called "Encounters,"
which is a club for adult couples who enjoy the swingers' lifestyle, and a
sports bar under the name of "Hummers" in Houston.  We also own or operate
premiere adult entertainment Internet websites.

     Our online entertainment sites are xxxPassword.com, CouplesTouch.com,
OthersTouch.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.  OthersTouch.com is a personals site for
gays, lesbians, and bisexuals.  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 these sites 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 to 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.  Information contained in the website shall not
be construed as part of this Form 10-KSB.


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<PAGE>
     References to us in this Form 10-KSB include our 100%-owned and 51%-owned
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 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, 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


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<PAGE>
service managers who recruit and train professional waitstaffs 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. Computers play 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 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 have engaged
independent accountants to conduct an annual audit.

     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


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<PAGE>
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 have three Rick's Cabaret locations in Houston,
Texas and one Rick's Cabaret in Minneapolis, Minnesota.  We also own three
nightclubs in San Antonio, Austin, and Houston, Texas that operate under the
name XTC. We also own a controlling interest in and operate an adults only
"couples" night club in Houston called "Encounters," which is a club for adult
couples who enjoy the swingers' lifestyle, and a sport bar called "Hummers".

     On February 19, 2003, we acquired 51% control of the Wild Horse Cabaret
adult nightclub near Hobby Airport, Houston, Texas and will operate it as part
of our popular XTC Cabaret group. Goodwill of $79,842 was recorded as a result
of this acquisition.

     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 Encounters) to RCI
Ventures, Inc.  As a result of these transactions we own a 51% interest in RCI
Ventures, Inc.

     In May 2003, we opened a sports bar called "Hummers", which is located next
to Wild Horse Cabaret, in Houston, Texas.

     We sold our New Orleans nightclub in March 1999, but it continues to use
our name under a licensing agreement. We continually explore expansion
opportunities to open or acquire more nightclubs in strategically valuable
locations in the United States.

     On June 12, 2003, we entered into an Asset Purchase Agreement with Taurus
Entertainment Companies, Inc. ("Taurus"), whereby we acquired all the assets and
liabilities of Taurus in exchange for 3,752,008 shares of Taurus 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, to be
payable on February 17, 2004 with interest due thereon at the rate of 18%.

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 year 2002 and OthersTouch.com in year 2003.
CouplesTouch.com caters to those in the swinging lifestyle.  It is essentially a
dating site for couples.  OthersTouch.com is a similar site catering to the gay,
lesbian, and bisexual lifestyles.  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


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<PAGE>
from search engines on which we don't pay for preferential listings. There are
numerous adult entertainment sites on the Internet that we compete with.

     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 us
and Voice Media, Inc.  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.

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 6 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.

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 three 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 is only one adult
nightclub in Minneapolis in direct competition with us.


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     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.

GOVERNMENTAL REGULATIONS

     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
(the "TABC"), which has the authority, in its discretion, to issue the
appropriate permits.  We presently hold a Mixed Beverage Permit and a Late Hour
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 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 has 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.

     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" (the
"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 ("Business Permit") is not
subject to discretion; the Business Permit must be granted if the proposed
operation satisfies the requirements of the Ordinance. See Item 3. "Legal
Proceedings".

     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 hours
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. See Item 3.
"Legal Proceedings".

     In San Antonio and Austin we are required to be in compliance with city or
county sexually oriented business ordinances.


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<PAGE>
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, 2003 we had approximately 680 employees of which 48 are
in management positions, including corporate and administrative operation and
approximately 632 of which are engaged in entertainment, food and beverage
service, including bartenders and waitresses. 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.

SHARE REPURCHASES

     As of December 9, 2003 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. We may use these shares to
acquire assets in the future although we have no definitive arrangements at this
time to acquire any assets.

ITEM 2.     PROPERTIES

     Our principal executive office is located at 505 North Belt, Houston, Texas
77060 in leased facilities consisting of a total of 3,680 square feet.  We pay
rent of approximately $3,284 per month for this space.  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 the three locations of Rick's Cabaret (two in Houston and one in
Minneapolis) and the two locations of XTC (one in Austin and one in San
Antonio).  We lease the South Houston location, formerly known as the Chesapeake
Bay Club. We own the location of our Encounters couples club in Houston.  We
lease XTC Wildhorse and Hummers locations.

     The Rick's Cabaret located on Bering Drive in Houston has aggregate 12,300
square feet of space.  The balance as of September 30, 2003, that we owe on the
mortgage is $331,364 and the interest rate is prime plus 1%.  Currently, we pay
$4,289 in monthly principal and interest payments. The last mortgage payment is
due in 2004 with a balloon payment of $297,893.


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     The Rick's Cabaret located on North Belt Drive in Houston has 12,000 square
feet of space.  This property is owned by us free and clear.

     The Rick's Cabaret located in Minneapolis has 15,400 square feet of space.
The balance as of September 30, 2003, that we owe on the mortgage is $2,198,734
and the interest rate is 9%. We pay $22,732 in monthly principal and interest
payments. The last mortgage payment is due in 2018.

     The XTC nightclub in Austin has 8,600 square feet of space, which sits on
1.2 acres of land. The balance of the mortgage that we owe as of September 30,
2003 is $186,841 and the interest rate of 11%. Currently the monthly principal
and interest payment is $9,822. The last payment is due in June 2005.

     We own XTC nightclub in San Antonio, which has 7,800 square feet of space.

     Our Encounters club has 8,000 square feet of space. The balance of the
mortgage as of September 30, 2003, that we owe is $43,097 and the interest rate
is 7%. Currently, we pay $1,500 in monthly principal and interest payments. The
last mortgage payment is due in 2004 with a balloon payment of $23,140. Our
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, 2003 that we owe on the Brazoria County
ranch mortgage is $296,795 and the interest rate is 9%. We pay $2,573 in monthly
principal and interest payments. The last mortgage payment is due in February
2006 with a balloon payment of $287,920.

     The balance as of September 30, 2003 that we owe on the Wise County raw
land mortgage is $143,559 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 Chesapeake Bay Cabaret
is located. We acquired the operations of the Chesapeake Bay Club in May 2000.
The lease term is for ten years, with an additional ten-year lease option
thereafter. The initial lease terms are $12,000 monthly plus 4% of gross
revenues that are in excess of $125,000 per month (excluding payments that we
make to dancers), with the total monthly rent not to exceed $20,000 per month.

     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 year one and
two, 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 $2,762.50 monthly for year one and two,
with an annual increase of $325 thereafter.

     We lease the property in Houston, Texas, where our XTC Galleria is located.
The lease term is for three years, with an additional three-year lease option
thereafter. The monthly rent is $8,500.


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<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 new 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 Houston, Texas
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 Houston, Texas


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<PAGE>
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 after the appellate remedies have been exhausted.
The  City  has  not  sought to modify any of the terms of the injunction against
enforcement  of  any  location  provision  of  the ordinance while the appellate
process  continues.  The  parties  have asked for a rehearing from the appellate
panel  and  will  ask  that the case be heard and considered by the entire Fifth
Circuit.  If  an  unfavorable ruling is again issued by the Court of Appeal then
the  parties  will  request  review  by the United States Supreme Court.  In the
event  that  our  court  appeal  is  unsuccessful, such an outcome could have an
adverse  impact  on  us.

     In April 1998, the City of Houston began enforcing certain portions of the
Ordinance, including the distance requirement between a customer and a dancer
while dancing, and the requirement that dancers be licensed. The City of
Houston's enforcement of the Ordinance could have an adverse impact on the
Rick's locations in Houston, Texas. The current requirement of a three-foot
distance between a dancer and a customer could reduce customer satisfaction and
could result in fewer customers at the Houston location. The requirement that a
dancer be licensed could result in fewer dancers working, which could have an
adverse impact on the Houston location. It is unknown what future impact the
enforcement of the Ordinance may have our Houston locations.

CITY OF MINNEAPOLIS AFTER HOURS ORDINANCE

     In December 1999, we filed a lawsuit against the City of Minneapolis in a
case named RCI Entertainment (Minnesota), Inc. v. City of Minneapolis. No.
0-362, in the Hennepin County District Court. We are the Plaintiff in this
matter. We claim that the city violated our constitutional and other rights by
the city not taking any action on our application for a permit to conduct
after-hours entertainment operations at our Minneapolis location.  The court
granted our motion for a temporary injunction pursuant to which we now conduct
after-hours adult entertainment operations in our Minneapolis location until
3:00 a.m. daily.

     The City of Minneapolis took no appeal from the temporary injunction, the
appeal time has expired, and the injunction remains in full force and effect.
Also included in the lawsuit was a claim for damages from having wrongfully been
denied the right to conduct after-hours entertainment for over one year. In
September 2000, the city moved for summary judgment, seeking dismissal of the
suit in its entirety. That motion was denied, and the city appealed that denial
to the Minnesota Court of Appeals. The Minnesota Court of Appeals dismissed the
City of Minneapolis's appeal for lack of


                                       10
<PAGE>
appellate jurisdiction. The City of Minneapolis has also repealed the ordinance
that permits liquor establishments in the central business district to remain
open from 1:00 a.m. to 3:00 a.m., for the purpose of conducting entertainment.
Liquor establishments having such a license will be required to cease operating
from 1:00 a.m. until 3:00 a.m. as of December 31, 2001. However, we remained
open, not pursuant to a license, but pursuant to the temporary injunction, until
3 a.m. On September 16, 2003, the lawsuit was settled on the following basis:
     1.   The  City  of  Minneapolis will enact a late hours operation ordinance
          that  complies  with  the First Amendment and allows qualifying liquor
          establishments, including us at our current location, to operate until
          3:00  a.m.  daily.
     2.   Upon  issuance  of  a  license  to  us,  the  present  lawsuit will be
          dismissed  with  prejudice,  except  that  in the event the City would
          again  repeal  its late night hours license, we would retain the right
          to  sue  the  City.

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.


     OTHER LEGAL MATTERS

     In April 2003, a suit was filed in the United States District Court for the
Western District of Texas, San Antonio division, as a result of the City of
having previously 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. It is probable that we
will proceed to trial if we elect to continue our present entertainment format.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     We held our Annual Meeting of Shareholders on August 28, 2003.  Eric S.
Langan, Robert L. Watters, Steven L. Jenkins, Alan Bergstrom and Travis Reese
were nominated and elected as Directors with the following vote results at the
shareholder meeting:

<TABLE>
<CAPTION>
                      For     Against  Abstain
                   ---------  -------  -------
<S>                <C>        <C>      <C>

Eric S. Langan     2,399,183   16,585      -0-
Robert L. Watters  2,399,183   16,585      -0-
Steven L. Jenkins  2,399,183   16,585      -0-
Alan Bergstrom     2,399,183   16,585      -0-
Travis Reese       2,399,183   16,585      -0-
</TABLE>

     At the Annual Meeting, the Shareholders ratified Whitley Penn as the
Company's Independent Auditors, with the following vote results:

        2,398,978    VOTES FOR RATIFICATION
      -------------
           12,175    VOTES AGAINST RATIFICATION
      -------------
              960    ABSTAIN
      -------------


                                       11
<PAGE>
     While no other matters were presented at the Annual Meeting, the following
votes were submitted by Shareholders with respect to any other business coming
before the Annual Meeting of Shareholders:

        2,383,832    VOTES FOR OTHER BUSINESS
      -------------
           26,423    VOTES AGAINST OTHER BUSINESS
      -------------
            5,113    ABSTAIN
      -------------
   The meeting was adjourned when all matters of business had been discussed.


                                     PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS

     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, 2003.
COMMON STOCK PRICE RANGE

<TABLE>
<CAPTION>
                HIGH    LOW

Fiscal 2002
-----------
<S>             <C>    <C>

First Quarter   $3.40  $2.61
Second Quarter  $3.15  $2.70
Third Quarter   $2.99  $2.46
Fourth Quarter  $2.82  $2.01

Fiscal 2003
-----------

First Quarter   $2.35  $2.00
Second Quarter  $2.48  $1.45
Third Quarter   $1.65  $1.11
Fourth Quarter  $1.75  $1.25
</TABLE>

     On December 9, 2003, the last sales price for the common stock as reported
on the NASDAQ SmallCap Market was $1.76. On December 9, 2003, there were
approximately 800 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.


                                       12
<PAGE>
     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.

     During 2002, we purchased 700,000 shares of our common stock from Voice
Media, Inc. for $795,302 (adjusted for the imputed interest).  Also, under the
stock buy-back program approved in June 2001, we purchased 120,330 shares of our
common stock at an average price of $2.55 per share, or an aggregate purchase
price of $306,210.  During 2003, we purchased 57,500 shares at an average price
of $2.07 per share, or an aggregate purchase price of $118,649.

     On September 16, 2003, our board of directors authorized us to repurchase
up to $500,000 worth of our common stock.


RECENT SALES OF UNREGISTERED SECURITIES

     During the quarter ended September 30, 2003, we had no sales of
unregistered shares of our common stock.

EQUITY COMPENSATION PLAN INFORMATION

<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              423,000                           $  2.44                          77,000
===============================================================================================================================
Equity compensation plans not
approved by security holders               75,000                           $  1.87                         225,000
===============================================================================================================================
          TOTAL                           498,000                           $  2.35                         302,000
===============================================================================================================================
</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 2003, 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 $1.40 per
share and expire in September 2008.

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


                                       13
<PAGE>
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 a 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 may be granted and sold under the 1995 Plan. As of December 9,
2003 a total of 167,500 stock options had been granted under the 1995 Plan,
92,500 of which were not exercised and have expired and 75,000 of which are
presently outstanding. None of the options granted under the 1995 Plan have been
exercised. 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"). A
total of 500,000 shares may be granted and sold under the 1999 Plan. As of
September 30, 2003, 423,000 stock options are presently outstanding under the
1999 Plan, none of which have been exercised.

EMPLOYMENT AGREEMENT

     We have a three-year employment agreement with Eric S. Langan (the "Langan
Agreement"). The Langan Agreement extends through January 1, 2004 and provides
for an annual base salary of $260,000. The Langan Agreement also provides for
participation in all benefit plans maintained by us for salaried employees. The
Langan Agreement contains a confidentiality provision. 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 125,000 shares at
an exercise price of $1.87 per share, which vested in August 1999. We intend to
enter into a new Employment Agreement with Mr. Langan at the end of the current
term.

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 annual report.

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


                                       14
<PAGE>
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 Form 10-KSB 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 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 Form 10-KSB, 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.

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,  and  Minneapolis,  Minnesota.  We also own and operate an
     adult-themed  club  called  "Encounters"  that  serves  the  couples  or
     "swingers'"  market  and  a  sport  bar called the "Hummers" in Houston. No
     sexual  contact  is  permitted  at  any  of  our  locations.

2.   We  have  extensive  Internet  activities.

     a)   We  currently  own  three  adult  Internet  membership  Web  sites  at
          www.couplestouch.com, www.otherstouch.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


                                       15
<PAGE>
and ATM machines, valet parking and other products and service. 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.

     In fiscal 2002, we took a one time charge of $2,532,384 as a result of the
cumulative effect of the change in accounting for goodwill. We performed our
annual evaluation as of September 30, 2003. No impairment losses were identified
as a result of this evaluation.

     Beginning in fiscal 2002 and continuing through fiscal 2003, we greatly
reduced our usage of promotional pricing for membership fees for our adult
entertainment web sites. This reduced our revenues from these web sites.

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  Receivable

     Accounts  receivable  trade  is comprised of credit card charges, which are
generally  converted  to cash in two to five days after a purchase is made.  The
accounts  receivable  other  is  comprised  of  employee  advances  and  other
miscellaneous  receivables.  We recognize allowances for doubtful accounts when,
based  on our judgment, circumstances indicate that accounts receivable will not
be  collected.

Inventories

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

Marketable Securities

     Marketable securities at September 30, 2003 consist of common stock.  As of
September  30,  2003,  we  classify  the  Company's  marketable  securities  as
available-for-sale  securities, which are carried at fair value, with unrealized
gains  and  losses  reported  as  other  comprehensive  income (loss) within the
stockholders'  equity  section  of  the  balance  sheet.  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.


                                       16
<PAGE>
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 between
31-40  years.  Furniture,  equipment  and  leasehold improvements have estimated
useful  lives  between five and seven 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.

Goodwill

     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. We adopted
SFAS  effective  October  1,  2001.  Revenue  Recognition

     We  recognize  revenue at the point-of-sale upon receipt of cash, check, or
credit  card  charge.  This includes VIP Room Memberships, since the memberships
are non-refundable and we have no significant obligation for future performance.

Advertising and Marketing

     Advertising  and  marketing expenses is primarily composed 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.

RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 AS COMPARED
TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2002

     For the fiscal year ended September 30, 2003, we had consolidated total
revenues of $15,059,569, compared to consolidated total revenues of $15,557,302
for the year ended September 30, 2002.  This was a decrease of $497,733 or
3.20%.  While we had an increase in total revenues in


                                       17
<PAGE>
our existing and new nightclub operations of $561,902, the decrease in total
revenues resulted from our Internet businesses was $1,059,635. Revenues from
nightclub operations for same-location same-period increased by 2.30%, while
revenues of Internet businesses for same-sites same-period decreased by 50.16%.
The overall decrease was primarily due to the decrease in our Internet
activities and the general decrease in revenues in the entertainment industry
post September 11, 2001.

     Our net income before minority interest and cumulative effect of an
accounting change for the year ended September 30, 2003 was $403,936 compared to
$262,552 for the year ended September 30, 2002. The increase in net income was
primarily due to the gain from the sales of our subsidiary Taurus Entertainment
Companies, Inc. Our net income from operations for nightclub operations was
$1,934,574 for the year ended September 30, 2003 compared with $2,121,642 for
the year ended September 30, 2002. Our net income from operations for our
Internet businesses was $36,421 for the year ended September 30, 2003 compared
with $169,793 for the year ended September 30, 2002. Our net income for our
nightclub operations for the same-location-same-period increased by 1.94%. Our
net income for our Internet operations for the same-web-site-same-period
decreased by 78.55%. We had a net loss of $2,271,180 for the year ended
September 30, 2002 as a result of the cumulative effect of the change in the
accounting for goodwill of $2,532,384.

     Our cost of goods sold for the year ended September 30, 2003 was 14.58% of
total revenues compared to 19.09 % of related revenues for the year ended
September 30, 2002. The decrease was due primarily to decrease in costs of our
Internet activities. Our cost of goods sold for the nightclub operations for the
year ended September 30, 2003 was 14.40% of our total revenues from club
operations compared to 15.36% for the year ended September 30, 2002. 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, 2003 was
17.41% compared to 43.08% of related revenues for the year ended September 30,
2002. We have implemented measures to reduce expenses in our Internet
operations.

     Our payroll and related costs for the year ended September 30, 2003 were
$5,393,708 compared to $5,143,549 for the year ended September 30, 2002. The
increase was primarily due to the increase in payroll in opening new club and
corporate activities. Our payroll for our nightclub operations for
same-location-same-period increased by 1.15%. Our payroll for
same-site-same-period Internet operations increased by 32.92%. 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, 2003 were $7,112,974 compared to $6,819,634 for the year ended September 30,
2003. The increase was primarily due to the increase in taxes & permit, rent,
insurance, utilities, and advertising & marketing expenses from opening new
locations. Other selling, general and administrative expenses for
same-location-same-period for the nightclub operations increased by 6.91%, while
the same expenses for same-site same-period for Internet operations decreased by
31.61%.

     Our interest expense for the year ended September 30, 2003 was $384,221
compared to $370,401 for the year ended September 30, 2002.  The increase was
primarily due to the increase in


                                       18
<PAGE>
debt related to our purchase of 763,830 of our shares in a private transaction
(these share are now treasury shares). However, we have decreased our long term
debt to $4,026,335 as of September 30, 2003 compared to debt of $4,607,353 as of
September 30, 2002.

     LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2003, we had working capital of $52,305 compared to
working capital deficit of $32,997 as of September 30, 2002.  Because of the
large volume of cash we handle, stringent cash controls have been implemented.
At September 30, 2003, our cash and cash equivalents were $604,865 compared to
$733,366 at September 30, 2002.

     Our net cash provided by operating activities in the year ended September
30, 2003 was $586,326 compared to $1,285,545 for the year ended September 30,
2002. The decrease in cash provided by operating activities was primarily due to
the increase in net changes in operating assets and liabilities, and decrease in
impairment of goodwill.
     Our depreciation for the year ended September 30, 2003 was $531,561
compared to $490,021 for the year ended September 30, 2002.

     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 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 significantly affected by seasonal factors.
Historically, we have experienced reduced revenues from April through September
with the strongest operating results


                                       19
<PAGE>
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. 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. As is the case of our Encounters couples club, we may also
develop new club concepts that are consistent with our management and marketing
skills. We may also 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 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 a date within
90 days of the filing date of this report on Form 10-KSB.  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.


                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS


                                       20
<PAGE>
     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.

<TABLE>
<CAPTION>
Name                 Age      Position

--------------------------------------------------------------------------------
<S>                  <C>      <C>

Eric S. Langan        35      Director, Chief Executive Officer, President and
                              Chief Financial Officer
Travis Reese          34      Director and V.P.-Director of Technology
Robert L. Watters     52      Director
Alan Bergstrom        57      Director
Steven Jenkins        47      Director
</TABLE>

     Eric S. Langan has been our Director since 1998 and our President since
March 1999. Mr. Langan is also our acting Chief Financial Officer. He has been
involved in the adult entertainment business since 1989. Mr. Langan has also
served as the President and Director of Taurus Entertainment Companies, Inc.
since November 1997. Mr. Langan resigned as President of Taurus in June 2003 and
as Director in September 2003. 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. 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 State. 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


                                       21
<PAGE>
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 Sante 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.

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


COMMITTEES OF THE BOARD OF DIRECTORS

     We have no compensation committee and no nominating committee. Decisions
concerning executive officer compensation for fiscal 2003 were made by the full
Board of Directors.  Eric S. Langan and Travis Reese are our only directors who
are also our officers.

     We have an Audit Committee of independent directors whose members are
Robert L. Watters, Alan Bergstrom and Steven Jenkins. The primary purpose of our
Audit Committee is to oversee our financial reporting process on behalf of the
Board of Directors. The activities and responsibilities of our Audit Committee
include: the nomination or selection of the independent auditors; the review of
the results of the audit; and a detailed, overall corporate review of the
adequacy of our internal controls.

     Our Board of Directors has adopted a Charter for our 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 accountants and our internal audit department.

     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. Unless our Audit
Committee Chairperson is elected by the full Board, the Members of our Audit
Committee designate a Chairperson by majority vote of the all Members. All
Members 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


                                       22
<PAGE>
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.

CERTAIN SECURITIES FILINGS

     Based on a review of the forms submitted to the Company during the fiscal
year ended September 30, 2003, we believe that all persons subject to Section
16(a) of the Exchange Act in connection with their relationship with us have
complied on a timely basis.

CODE OF ETHICS

     The Company has adopted a code of ethics for its Principal Executive and
Senior Financial Officers which is attached hereto as Exhibit 14.

ITEM 10.     EXECUTIVE COMPENSATION

     The following table reflects all forms of compensation for services to us
for the fiscal years ended September 30, 2003, 2002 and 2001 of certain
executive officers.

<TABLE>
<CAPTION>
                                                 SUMMARY COMPENSATION TABLE

                                                              Annual Compensation                           Long Term Compensation
                                                                                                  Awards            Payouts

                                                                                    Other             Securities
Nameand                                                                             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
                                                  2003  $    260,000          -0-        -0-       -0-    5,000       -0-      -0-
                                                  2002  $    260,000          -0-        -0-       -0-      -0-       -0-      -0-
                                                  2001  $    239,600          -0-        -0-       -0-    5,000       -0-      -0-
Mr. Langan is our Chairman, a Director, Chief Executive Officer, President and Acting Chief Financial Officer.

Travis Reese
                                                  2003  $    158,855          -0-        -0-       -0-    5,000       -0-      -0-
                                                  2002  $    137,500          -0-        -0-       -0-      -0-       -0-      -0-
                                                  2001  $    102,000          -0-        -0-       -0-    5,000       -0-      -0-
Mr. Reese is a Director and V.P.-Director of Technology
-------------------------------
<FN>
(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>


                                       23
<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)          -0-%         $   1.40         9/10/2008

Travis Reese  5,000 shares (1)          -0-%         $   1.40         9/10/2008

<FN>
----------------------------
(1)  There  were no exercises of options by these persons during the fiscal year
     ended  September  30,  2003
</TABLE>

<TABLE>
<CAPTION>
                                    AGGREGATED OPTION/SAR EXERCISES IN
                               LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

                                          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          -0- (1)      -0-           200,000 / -0-         $ 1,750 / $-0-

Travis Reese         -0- (1)      -0-            50,000 / -0-         $ 1,750 / $-0-
-------------------------------
<FN>
(1)   There were no exercises of options by these persons during the fiscal year ended
      September 30, 2003
</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 2003, 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 $1.40 per
share and expire in September 2008.

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


                                       24
<PAGE>
     The following table sets forth certain information at December 9, 2003,
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.

<TABLE>
<CAPTION>
Name and Address                        Number          Title      Percent
                                        of Shares       of Class   of Class (8)
--------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>

Eric S. Langan
505 North Belt, Suite 630
Houston, Texas 77060                1,021,200  (1)  Common Stock      27.6%


Robert L. Watters
315 Bourbon Street
New Orleans, Louisiana 70130           35,000  (2)  Common Stock      0 .9%

Steven L. Jenkins
16815 Royal Crest Drive, Suite 160
Houston, Texas 77058                   20,000  (3)  Common Stock       0.5%

Travis Reese
505 North Belt, Suite 630
Houston, Texas 77060                   55,475  (4)  Common Stock       1.5%

Alan Bergstrom
707 Rio Grande, Suite 200
Austin, Texas 78701                    35,000  (2)  Common Stock       0.9%

E. S. Langan. L.P.
505 North Belt, Suite 630
Houston, Texas 77060                  578,632       Common Stock      15.6%

Ralph McElroy
1211 Choquette
Austin, Texas, 78757                  817,147  (5)  Common Stock      22.1%

William Friedrichs
16815 Royal Crest Dr., Suite 260
Houston, Texas 77058                  401,850  (6)  Common Stock      10.9%


                                       25
<PAGE>
All of our Directors and
Officers as a
Group of five persons               1,166,675  (7)  Common Stock      31.5%
----------------------------------

<FN>
(1) Mr. Langan has sole voting and investment power for 242,568 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 200,000 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 20,000 shares of common stock that are
presently exercisable.

(4) Includes options to purchase up to 50,000 shares of common stock that are
presently exercisable.

(5) Includes 66,545 shares of common stock that would be issuable upon
conversion of a convertible debenture held by Mr. McElroy.  Also includes 52,135
shares of common stock that would be issuable upon conversion of a convertible
promissory note held by Mr. McElroy.

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

(7) Includes options to purchase up to 340,000 shares of common stock that are
presently exercisable.

(8) These percentages exclude treasury shares in the calculation of percentage
of class.
</TABLE>

     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 $92,626 at September 30,
2003  and  is  included  in  other  assets  in  our  balance  sheet.


                                       26
<PAGE>
ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

    Exhibit  14 - Code of Ethics.

    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.

(b)     Reports on Form 8-K.

             The Company filed Form 8-K relating to the sale of Taurus
        Entertainment Companies, Inc. containing Item 2 - Acquisition and
        Disposition of Assets and Item 7 - Financial Statement and Exhibits on
        June 12, 2003.


                                       27
<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 May 4, 2004.


                       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:

Signature              Title                                  Date

/s/ Eric S. Langan
---------------------
Eric S. Langan         Director, Chief Executive Officer,     May 4, 2004
                       President and Chief Financial Officer


/s/ Travis Reese
---------------------
Travis Reese           Director and                           May 4, 2004
                       V.P.-Director of Technology


/s/ Robert L. Watters
---------------------
Robert L. Watters      Director                               May 4, 2004


/s/ Alan Bergstrom
---------------------
Alan Bergstrom         Director                               May 4, 2004


/s/ Steven Jenkins
---------------------
Steven Jenkins         Director                               May 4, 2004


                                       28
<PAGE>
<TABLE>
<CAPTION>
                       RICK'S CABARET INTERNATIONAL, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED SEPTEMBER 30, 2003 AND 2002



                                TABLE OF CONTENTS



<S>                                                                 <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . .  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-7
</TABLE>


                                      F-1
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS


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, 2003 and 2002, and the
related  consolidated  statements  of operations, 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 auditing standards generally accepted
in  the  United  States  of  America.  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 examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes 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.  as  of  September  30, 2003 and 2002, 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.


Whitley  Penn
Dallas,  Texas
November  21,  2003


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

                           CONSOLIDATED BALANCE SHEETS


                                                            September 30,
                                                         2003          2002
                                                     ============  ============
<S>                                                  <C>           <C>
Assets
Current assets:
  Cash and cash equivalents                          $   604,865   $   733,366
  Accounts receivable:
    Trade                                                 45,319        35,749
    Other, net                                           213,886       190,888
  Marketable securities                                  135,000             -
  Inventories                                            230,451       210,802
  Prepaid expenses                                        83,647        63,897
                                                     ------------  ------------
Total current assets                                   1,313,168     1,234,702

Property and equipment, net                            8,777,057     9,122,253

Other assets:
  Goodwill                                             1,962,848     1,883,007
  Other                                                  202,439       197,358
                                                     ------------  ------------
                                                       2,165,287     2,080,365
                                                     ------------  ------------

Total assets                                         $12,255,512   $12,437,320
                                                     ============  ============

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                                   $   189,208   $   274,659
  Accrued liabilities                                    622,216       533,068
  Current portion of long-term debt                      449,439       459,972
                                                     ------------  ------------
Total current liabilities                              1,260,863     1,267,699

Long-term debt, less current portion                   3,576,896     4,147,381
                                                     ------------  ------------

Total liabilities                                      4,837,759     5,415,080

Commitments and contingencies                                  -             -

Minority interests                                        36,032        80,164

Stockholders' equity:
  Preferred stock, $.10 par, 1,000,000 shares
    authorized, none outstanding                               -             -
  Common stock, $.01 par, 15,000,000 shares
    authorized, 4,608,678 shares issued at
    September 30, 2003 and 2002, respectively             46,087        46,087
  Additional paid-in capital                          11,273,149    11,273,149
  Accumulated other comprehensive income                 120,000             -
  Accumulated deficit                                 (2,763,735)   (3,202,029)
                                                     ------------  ------------
                                                       8,675,501     8,117,207
  Less 908,530 and 851,030 shares of stock held in
    treasury at cost in 2003 and 2002, respectively    1,293,780     1,175,131
                                                     ------------  ------------
Total stockholders' equity                             7,381,721     6,942,076
                                                     ------------  ------------

Total liabilities and stockholders' equity           $12,255,512   $12,437,320
                                                     ============  ============
</TABLE>

See accompanying notes to consolidated financial statements.


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

                          CONSOLIDATED STATEMENTS OF OPERATIONS


                                                           Year Ended September 30,
                                                             2003           2002
                                                         ============  ===============
<S>                                                      <C>           <C>
Revenues
  Sales of alcoholic beverages                           $ 6,671,498   $    6,380,914
  Sales of food and merchandise                            1,661,358        1,583,433
  Service revenues                                         5,333,889        5,210,950
  Internet revenues                                        1,053,188        2,112,823
  Other                                                      339,636          269,182
                                                         ------------  ---------------
                                                          15,059,569       15,557,302

Operating expenses
  Cost of goods sold                                       2,194,940        2,970,139
  Salaries and wages                                       5,393,708        5,143,549
  Other general and administrative:
    Taxes and permits                                      2,074,067        1,978,360
    Charge card fees                                         254,953          261,952
    Rent                                                     336,592          219,209
    Legal and professional                                   714,250          665,677
    Advertising and marketing                                817,328          653,884
    Impairment of goodwill                                         -          325,776
    Depreciation                                             531,561          490,021
    Other                                                  2,384,223        2,224,755
                                                         ------------  ---------------
                                                          14,701,622       14,933,322
                                                         ------------  ---------------

Income from operations                                       357,947          623,980

Other income (expense)
  Interest income                                             16,875           22,245
  Interest expense                                          (384,221)        (370,401)
  Gain (loss) on sale or disposition of assets               345,820          (14,037)
  Other                                                       67,515              765
                                                         ------------  ---------------

Income before the following items:                           403,936          262,552

Minority interests                                            34,358           (1,348)
Cumulative effect of accounting change                             -       (2,532,384)
                                                         ------------  ---------------

Net income (loss)                                        $   438,294   $   (2,271,180)
                                                         ============  ===============

Basic and diluted earnings (loss) per share:
  Income before cumulative effect of accounting change   $      0.12   $         0.06
                                                         ============  ===============
  Net income (loss)                                      $      0.12   $        (0.54)
                                                         ============  ===============

Weighted average number of common shares outstanding       3,729,167        4,241,483
                                                         ============  ===============
</TABLE>


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

                                   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                       SEPTEMBER 30, 2003


                               Common Stock                  Accumulated                     Treasury Stock
                            ------------------                 Other                      -----------------------
                                                               Compre-                                                  Total
                             Number               Paid-In      hensive      Accumulated     Number                   Stockholders'
                            of Shares  Amount     Capital       Income        Deficit     of Shares     Amount         Equity
                            ---------  -------  -----------  ------------  -------------  ---------  ------------  ---------------
<S>                         <C>        <C>      <C>          <C>           <C>            <C>        <C>           <C>
Balance at September 30,
2001                        4,598,678  $45,987  $11,257,449  $          -  $   (930,849)     30,700  $   (73,619)  $   10,298,968

  Net loss                          -        -            -             -    (2,271,180)          -            -       (2,271,180)
  Shares issued for cash       10,000      100       15,700             -             -           -            -           15,800
  Purchases of treasury
  stock                             -        -            -             -             -     820,330   (1,101,512)      (1,101,512)
                            ---------  -------  -----------  ------------  -------------  ---------  ------------  ---------------

Balance at September 30,
2002                        4,608,678   46,087   11,273,149             -    (3,202,029)    851,030   (1,175,131)       6,942,076

  Net income                        -        -            -             -       438,294           -            -          438,294
  Change in available-for-
  sale securities                   -        -            -       120,000             -           -            -          120,000
  Comprehensive income for
  year                                                                                                                    558,294
  Purchases of treasury
  stock                             -        -            -             -             -      57,500     (118,649)        (118,649)
                            ---------  -------  -----------  ------------  -------------  ---------  ------------  ---------------

Balance at September 30,
2003                        4,608,678  $46,087  $11,273,149  $    120,000  $ (2,763,735)    908,530  $(1,293,780)  $    7,381,721
                            =========  =======  ===========  ============  =============  =========  ============  ===============
</TABLE>


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                               RICK'S CABARET INTERNATIONAL, INC.
                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                    Year Ended    September 30,
                                                                       2003           2002
                                                                   ------------  ---------------
<S>                                                                <C>           <C>
Operating Activities
  Net income (loss)                                                $   438,294   $   (2,271,180)
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
    Depreciation                                                       531,561          490,021
    Impairment of goodwill                                                   -          325,776
    Minority interests                                                 (34,358)           1,348
    (Gain) loss on sale of subsidiary                                 (342,251)               -
    (Gain) loss on sale or disposition of property and equipment        (3,569)           6,240
    Change in accounting principle                                           -        2,532,384
    Changes in operating assets and liabilities:
      Accounts receivable                                               37,432          153,015
      Inventories                                                      (19,649)         (14,502)
      Prepaid expenses and other assets                                (24,831)          17,580
      Accounts payable and accrued liabilities                           3,697           44,863
                                                                   ------------  ---------------
Net cash provided by operating activities                              586,326        1,285,545

Investing Activities
  Acquisitions                                                        (150,000)               -
  Proceeds from disposition of subsidiary                              180,000                -
  Purchases of property and equipment                                 (162,220)        (933,472)
  Proceeds from sale of property and equipment                          47,718            7,900
                                                                   ------------  ---------------
Net cash used in operating activities                                  (84,502)        (925,572)

Financing Activities
  Purchases of treasury stock                                         (118,649)        (156,211)
  Proceeds from long-term debt                                               -          150,000
  Payments on long-term debt                                          (511,676)        (325,024)
                                                                   ------------  ---------------
Net cash used in financing activities                                 (630,325)        (331,235)
                                                                   ------------  ---------------

Net increase (decrease) in cash and cash equivalents                  (128,501)          28,738
Cash and cash equivalents at beginning of year                         733,366          704,628
                                                                   ------------  ---------------

Cash and cash equivalents at end of year                           $   604,865   $      733,366
                                                                   ============  ===============

Supplemental Disclosures of Cash Flow Information
  Cash paid during the year for interest                           $   374,270   $      370,401
                                                                   ============  ===============

  Cash paid during the year for income taxes                       $         -   $            -
                                                                   ============  ===============

<FN>
Non-cash Transactions

     During the year ended September 30, 2003, the Company transferred a Company
     vehicle  and  the  related note to an individual.The remaining note payable
     was $69,342 which approximated the fair value of the vehicle on the date of
     transfer.

     During  the  year  ended September 30, 2002, the Company issued $945,301 in
     notes  payable  to  two  individuals  to acquire 763,830 shares of treasury
     stock.
</TABLE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2003 AND 2002


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.  The  Company  also  owns  and  operates  several adult
entertainment  Internet  websites.  The  Company's  corporate  headquarters  is
located  in  Houston,  Texas.


B.     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, 2003 and
2002, the Company had no such investments included in cash and cash equivalents.
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, 2003 and 2002, the
uninsured  portion  of  these  deposits  approximated  $95,000  and  $211,000,
respectively.  The  Company  has  not  incurred  losses  related  to its cash on
deposit  with  banks.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.     ACCOUNTING  POLICIES  -  CONTINUED

ACCOUNTS  RECEIVABLE

Accounts  receivable  trade  is  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  Company  recognizes  allowances  for  doubtful
accounts  when,  based  on  management  judgment,  circumstances  indicate  that
accounts  receivable  will  not be collected.  Accordingly, accounts receivables
other  are  shown net of the allowance for doubtful accounts of approximately $0
and  $7,300  as  of  September  30,  2003  and  2002,  respectively.

MARKETABLE SECURITIES

Marketable  securities at September 30, 2003 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, 2003, 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  (loss)  within  the  stockholders'  equity section of the balance sheet.
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.

INVENTORIES

Inventories  include  alcoholic  beverages,  food,  and  Company  merchandise.
Inventories are carried at the lower of cost or 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 between 31-40 years.
Furniture,  equipment  and  leasehold  improvements  have estimated useful lives
between  five  and  seven 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-8
<PAGE>
                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.     ACCOUNTING  POLICIES  -  CONTINUED

GOODWILL

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.

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, annual and lifetime 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.

If  the  Company  had deferred membership revenue and recognized it based on the
lives  above,  the impact on revenue and net income (loss) recognized would have
been  a  decrease  of  approximately  $19,000  and  $31,000  for the years ended
September  30,  2003  and 2002, respectively. This would have also resulted in a
deferred  revenue  balance  of  approximately  $60,000 and $40,000 for the years
ended September 30, 2003 and 2002, 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.

ADVERTISING AND MARKETING

Advertising  and  marketing  expenses are primarily composed 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.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.     ACCOUNTING  POLICIES  -  CONTINUED

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 (loss) 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.  Because the Company's potential dilutive securities
are  anti-dilutive,  the accompanying presentation is only of basic earnings per
share.

Stock  options of 498,000 and 643,500 for the years ended September 30, 2003 and
2002,  respectively, have been excluded from earnings per share due to the stock
options  being  anti-dilutive.

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 qualify as financial instruments under this
statement  and  includes  this  additional  information  in  the  notes  to  the
consolidated  financial  statements  when  the  fair value is different than the
carrying value of these financial instruments.  The estimated fair value of cash
equivalents,  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.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.     ACCOUNTING  POLICIES  -  CONTINUED

STOCK  OPTIONS

At  September  30,  2003,  the  Company has stock options outstanding, which are
described more fully in Note H. 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 (loss) 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,
                                                 2003         2002
                                              ----------  ------------
<S>                                            <C>        <C>

Net income (loss), as reported                 $438,294   $(2,271,180)
Less total stock-based employee compensation
     expense determined under the fair value
     based method for all awards                (98,882)     (198,077)
                                               ---------  ------------
Pro forma net income (loss)                    $339,412   $(2,469,257)
                                               =========  ============

Earnings (loss) per share:
     Basic and diluted  - as reported          $   0.12   $     (0.54)
                                               ---------  ------------

     Basic and diluted  - pro forma            $   0.09   $     (0.58)
                                               ---------  ------------
</TABLE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In  May  2003, the Financial Accounting Standards Board ("FASB") issued SFAS No.
150,  Accounting  for Certain Financial Instruments with Characteristics of both
Liabilities  and  Equity.  SFAS  No.  150  requires  that  certain  financial
instruments,  which under previous guidance could be accounted for as equity, be
classified  as  liabilities  in  the accompanying balance sheet. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and  is  otherwise  effective  for  the  Company  in the fourth quarter of 2003.
Adoption  of  SFAS  No.  150  did not have an impact on the Company's results of
operations  or  financial  condition.

In  January  2003,  the  FASB  issued  Interpretation  No.  46, Consolidation of
Variable  Interest  Entities-an  interpretation  of  ARB  No. 51, which provides
guidance  on the identification of and reporting for variable interest entities.
Interpretation  No.  46  expands  the  criteria for consideration in determining
whether a variable interest entity should be consolidated. Interpretation No. 46
was  effective  immediately for variable interest entities created after January
31,  2003,  and  to variable interest entities in which an enterprise obtains an
interest  after


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.     ACCOUNTING  POLICIES  -  CONTINUED

that  date.  Interpretation  No.  46 was effective for the Company in the second
quarter of 2003 for variable interest entities acquired before February 1, 2003.
Adoption  of  Interpretation  No.  46  did  not  have an impact on the Company's
results  of  operations  or  financial  condition.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.


C.     MARKETABLE  SECURITIES

The  cost  and  fair  value  of  available-for-sale  marketable securities as of
September  30,  2003  is  as  follows:

<TABLE>
<CAPTION>
                                UNREALIZED   UNREALIZED     FAIR
        2003            COST       GAINS       LOSSES      VALUE
=====================  =======  ===========  ===========  ========
<S>                    <C>      <C>          <C>          <C>

Marketable securities  $15,000  $   120,000  $         -  $135,000
=====================  =======  ===========  ===========  ========
</TABLE>


D.     PROPERTY  AND  EQUIPMENT

Property  and  equipment  consisted  of  the  following:

<TABLE>
<CAPTION>
                                    SEPTEMBER 30,
                                  2003         2002
                               ===========  ===========
<S>                            <C>          <C>

Buildings and land             $ 8,970,743  $ 8,981,741
Leasehold improvements             311,411      153,289
Furniture                          595,743      625,101
Equipment                        1,322,624    1,456,834
Total property and equipment    11,200,521   11,216,965
                               -----------  -----------
Less accumulated depreciation    2,423,464    2,094,712

Property and equipment, net    $ 8,777,057  $ 9,122,253
</TABLE>


E.     GOODWILL

During  fiscal  2002  the  Company  adopted  SFAS  No.  142,  Goodwill and Other
Intangibles  Assets,  under  which  goodwill is no longer amortized, but instead
tested  for  impairment  at least annually.  The Company's annual evaluation was
performed  as  of September 30, 2003.  No impairment losses were identified as a
result  of  this  evaluation.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

E.     GOODWILL  -  CONTINUED

The  Company  performed  a  transitional  impairment  test of its goodwill as of
October  1,  2001  and  determined  there  should  be  an impairment of goodwill
recorded,  relating  to  portions of the Company's goodwill.  In accordance with
SFAS  No. 142, a write-off of approximately $2,532,000 has been accounted for as
a  change  in  accounting  principle, increasing the Company's loss for the year
ended  September  30,  2002.  Additionally,  goodwill  additions  amounting  to
approximately  $326,000  during  the  year  ended  September  30, 2002 were also
written  off  during  the  year  ended September 30, 2002.  All of the Company's
goodwill  as  of  September  30,  2003  and  2002, related to the Company's club
segment.


F.     LONG-TERM  DEBT

Long-term  debt  consisted  of  the  following:

<TABLE>
<CAPTION>
                                          SEPTEMBER 30,
                                       2003         2002
                                    ===========  ==========

<S>                                 <C>          <C>
Note payable at prime (as
    determined by the Wall Street
    Journal) plus 1%, matures
    December 2004                   * $ 331,364  $  364,167
Notes payable at 9%, matures
    February 2018                   * 2,198,734   2,270,095
Notes payable at 12%, matures
    March 2026                      *   143,559     144,709
Note payable at 9%, matures
    March 2006                      *   296,795     300,052
Note payable at 10%, matures
    August 2010, unsecured              210,260     230,365
Note payable with imputed interest
    at 7%, matures January 2006,
    unsecured                           602,739     795,301
Note payable at 11%, matures June
    2005                            *   186,843     278,590
Other notes payable ranging from
    7% to 10%, maturing
    September 2005                  *    56,041     224,074
                                    -----------  ----------
Total debt                            4,026,335   4,607,353
Less current portion                    449,439     459,972
                                    -----------  ----------

Total long-term debt                $ 3,576,896  $4,147,381
                                    ===========  ==========

<FN>
* Collateralized by real estate
</TABLE>


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

F.     LONG-TERM  DEBT  -  CONTINUED

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

<TABLE>
<CAPTION>
<S>                                               <C>
2004                                                $449,439
2005                                                 460,782
2006                                                 673,533
2007                                                 377,665
2008                                                 148,260
Thereafter                                         1,916,656
                                                  ----------
Total maturities of long-term debt                $4,026,335
                                                  ==========
</TABLE>


G.     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>
                                   2003        2002
                                ==========  ==========
<S>                             <C>         <C>

Computed expected tax expense
     (benefit)                  $ 149,020   $(772,201)
Deferred tax asset valuation
     allowance                   (149,020)    772,201
                                ----------  ----------

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>
                                          2003        2002
                                       ==========  ==========
<S>                                    <C>         <C>
Deferred tax assets (liabilities):
     Goodwill                          $ 501,606   $ 739,130
     Property and equipment               51,179      23,565
     Net operating losses                223,097     158,896
     Unrealized gain on marketable
       securities                        (40,800)          -
     Valuation allowance                (735,082)   (921,591)
                                       ----------  ----------

                                       $       -   $       -
                                       ==========  ==========
</TABLE>

The  Company has established a valuation allowance to fully reserve the deferred
tax  assets  at September 30, 2003 and 2002 due to the uncertainty of the timing
and  amounts of future taxable income.  At September 30, 2003, the Company had a
net operating loss carryforwards of approximately $656,000, which expire in 2011
through  2018.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.     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
                                     2003        PRICE      2002      PRICE
                                  ===========  =========  ========  =========
<S>                               <C>          <C>        <C>       <C>
Outstanding at beginning of year     643,500   $    2.40  604,500   $    2.39

Granted                               40,000        1.40   64,000        2.56

Expired                             (185,500)       2.33  (25,000)       2.52

Exercised                                  -           -        -           -
                                  -----------             --------

Outstanding at end of year           498,000        2.35  643,500        2.40
                                  ===========             ========
Exercisable at end of year           458,000   $    2.41  582,000   $    2.37
                                  ===========             ========
Weighted-average remaining
     contractual life             1.58 years
                                  ===========
</TABLE>


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.

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,  2003  and 2002, no amounts were recorded to compensation expense related to
stock  options  issued  to  employees.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.     STOCK  OPTIONS  -  CONTINUED

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  assumptions:

<TABLE>
<CAPTION>
                                     2003
                                  ==========
<S>                               <C>

Volatility                              165%
Weighted-average expected lives   3.0 years
Expected dividend yield                   -
Weighted-average risk free rates        3.0%
</TABLE>

The  options  granted  in  the  year  ended September 30, 2002 were granted near
year-end, and just after year-end were cancelled.  No proforma expense for these
options  was  calculated  as  the  impact  was  not  deemed  material.

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.


I.     COMMITMENT  AND  CONTINGENCIES

LEASES

The  Company  leases certain equipment and facilities under operating leases, of
which  rent  expense was approximately $301,000 and $219,000 for the years ended
September  30,  2003  and  2002,  respectively.

Future minimum annual lease obligations as of September 30, 2003 approximate the
following:

<TABLE>
<CAPTION>
<S>                                     <C>
2004                                    $  364,000

2005                                       348,000

2006                                       315,000

2007                                       252,000

2008                                       170,000

Thereafter                                 228,000
                                        ----------

Total future minimum lease obligations  $1,677,000
                                        ==========
</TABLE>


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


I.     COMMITMENT  AND  CONTINGENCIES  -  CONTINUED

EMPLOYMENT  AGREEMENT  -  RELATED  PARTY

The  Company  has  a  three-year  employment  agreement with Eric S. Langan (the
"Langan  Agreement").   The Langan Agreement extends through January 1, 2004 and
provides  for  an  annual  base  salary  of  $260,000. The Langan Agreement also
provides  for  participation  in all benefit plans maintained by the Company for
salaried  employees.


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  years  ended  September  30:

<TABLE>
<CAPTION>
                                            2003          2002
                                        ============  ============
<S>                                     <C>           <C>
Business segment sales:
  Night clubs                           $14,006,381   $13,444,479
  Internet                                1,053,188     2,112,823
                                        ------------  ------------

                                        $15,059,569   $15,557,302
                                        ============  ============

Business segment operating income:
  Night clubs                           $ 1,934,574   $ 2,121,642
  Internet                                   36,421       169,793
  General corporate                      (1,613,048)   (1,667,455)
                                        ------------  ------------

                                        $   357,947   $   623,980
                                        ============  ============

Business segment capital expenditures:
  Night clubs                           $   110,198   $   495,043
  Internet                                   35,310       357,500
  General corporate                          16,712        80,929
                                        ------------  ------------

                                        $   162,220   $   933,472
                                        ============  ============
</TABLE>


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


J.     SEGMENT INFORMATION - CONTINUED

                                   2003         2002
                                ===========  ===========
<S>                             <C>          <C>
Business segment depreciation:
  Night clubs                   $   420,312  $   385,944
  Internet                           40,960       35,600
  General corporate                  70,289       68,477
                                -----------  -----------

                                $   531,561  $   490,021
                                ===========  ===========

Business segment assets:
  Night clubs                   $10,452,764  $10,086,465
  Internet                          143,365      200,456
  General corporate               1,659,383    2,150,399
                                -----------  -----------

                                $12,255,512  $12,437,320
                                ===========  ===========
</TABLE>


K.     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 $93,000 and $99,000
at September 30, 2003 and 2002, respectively, and is included in other assets in
the  accompanying  consolidated  balance  sheet.


L.     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 this
Plan approximated $24,000 and $27,000 for the years ended September 30, 2003 and
2002,  respectively.


M.     ACQUISITIONS  AND  DISPOSITIONS

On February 19, 2003, the Company acquired 51% control of the Wild Horse Cabaret
adult  nightclub  near Hobby Airport, Houston, Texas and will operate it as part
of  the  Company's popular XTC Cabaret group. The purchase price was $150,000 of
which  approximately $70,000 was allocated to property and equipment and $80,000
was  allocated  to  goodwill.


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


M.     ACQUISITIONS  AND  DISPOSITIONS  -  CONTINUED

In  April  2003,  the  Company  organized  RCI Ventures Inc. ("RCI Ventures") to
acquire  from  an  unrelated party Nocturnal Concepts, Inc. ("Nocturnal"), which
operates  as  an  addition  to  the  Company's  XTC  Cabaret  group. The Company
transferred  its  ownership  of  Tantric  Enterprises,  Inc.  ("Tantric") to RCI
Ventures  and  as  a  result  of  these  transactions the Company acquired a 51%
interest  in  RCI  Ventures.  RCI  Ventures  is  comprised solely of Tantric and
Nocturnal. The other  49%  owner is an unrelated individual who previously owned
100%  of  Nocturnal. The unrelated individual brings significant club experience
to  the  entity.

The  transaction  was  accounted for as an exchange of non-monetary assets under
APB  No.  29, Accounting for Non-monetary Transactions. The exchange was not the
culmination of an earnings process, but instead was an agreement under which the
two  stockholders  share  profits  from  the  newly  formed  RCI  Ventures  on a
prospective  basis based on respective equity ownership. As a result, no step up
in  basis  was  recorded  at the acquisition date, and the Company recognized no
gain  or  loss.

On  June  12,  2003,  the  Company entered into an Asset Purchase Agreement with
Taurus  Entertainment  Companies,  Inc. ("Taurus"), whereby the Company acquired
all  the  assets  and  liabilities of Taurus in exchange for 3,752,008 shares of
Taurus  of  the  4,002,008  that  the  Company  owned  plus $20,000 in cash from
Bluestar  Physical Therapy, Inc. ("Bluestar"), the acquirer of the Taurus public
shell.  As the Company is publicly traded it was determined that the Company had
no  future  use  for the Taurus public shell and the Company wanted to eliminate
the  related  costs associated with owning a separate public entity. The Company
negotiated  to  retain  250,000 shares of Taurus to participate in the potential
future  gains  from  an  investment  in  Taurus.

The  Company also executed an Indemnification and Transaction Fee Agreement (the
"Agreement")  for  which  the  Company  received  $270,000,  payable $140,000 at
closing,  with $60,000 due on July 15, 2003, and $70,000 due on August 15, 2003.
The remaining outstanding balance of $70,000 is due in the near term. Management
has assessed the collectibility of the outstanding balance and believes there is
not an issue regarding collection of the note receivable as it is collateralized
by  three  million  shares  of  Taurus  stock  held  in  escrow.

In  accordance  with  the  Agreement,  the  Company  is  to indemnify Taurus for
liabilities  assumed  by the Company, which were included in the closing balance
sheet,  and  liabilities that exist or may arise in the future related to Taurus
prior to or as of the closing date of the transaction. An additional significant
consideration  of  this agreement was to compensate the Company for the time and
effort  expended  to  assist  in  the  consummation  of  this  transaction.  The
indemnification  was  requested by Bluestar, as Bluestar did not have experience
with  the  Company's  adult entertainment industry and therefore did not believe
they  had  a  basis  to  determine  what,  if  any, obligations could exist. The
operations  of  Bluestar  are  focused  in  the  medical  industry.  The Company
previously  consolidated  Taurus'  financial  position,  in  accordance with the
consolidation  method  of  accounting,  as the Company owned greater than 50% of
Taurus'  shares  prior  to  consummating this transaction, which resulted in the
Company  properly  including all of Taurus' related liabilities in its financial
statements.  As  of  the date of the transaction, the Company determined that it
was  not  probable  that  there  would  be  any  claims  to  indemnify  in  the


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

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


future. No claims  have  arisen subsequent to the completion of the transaction.
The  gain  on  the sale of the transaction included $270,000 from the Agreement,
and  the  Company  has  recognized  a  $342,000  gain  in  total related to this
transaction  for  the  year  ended  September  30,  2003.


                                      F-20
<PAGE>