SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.  20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
             OF  1934 FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 2001
                                       OR
[ ] TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D) OF  THE  SECURITIES
                             EXCHANGE  ACT  OF  1934

                       COMMISSION  FILE  NUMBER:  0-26958

                       RICK'S CABARET INTERNATIONAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED 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, INCLUDING ZIP CODE)

                                  (281) 820-1181
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
         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


Indicate by check mark whether the registrant (i) has 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  [ ]

Indicate  by  check  mark  if  disclosure  of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information state-
ment incorporated  by  reference  in Part III of this Form 10-KSB or any
amendment to this  Form  10-KSB.      [X]

Issuer's revenues for the year ended September 30, 2001 were $19,659,641.  The
aggregate market value of Common Stock held by non-affiliates of the registrant
at December 3, 2001, based upon the last reported sales prices on the Nasdaq
SmallCap Market, was $13,970,305.  As of December 3, 2001, there were
approximately 4,595,495 shares of Common Stock outstanding.


                                        1
<PAGE>
                                TABLE OF CONTENTS

PART I

Item  1.  Business                                                             3

Item  2.  Properties                                                           7

Item  3.  Legal Proceedings                                                    8

Item  4.  Submission of Matters to a Vote of Security Holders                  9

PART II

Item  5.  Market for Registrant's Common Equity and Related Stockholder       10
          Matters

Item  6.  Management's Discussion and Analysis of Financial Condition         11
          and Results of Operations

Item  7.  Financial Statements                                                13

Item  8.  Changes in and Disagreements With Accountants on Accounting         13
          and Financial Disclosures

PART III

Item  9.  Directors, Executive Officers, Promoters and Control Persons;       14
          Compliance with Section 16(a) of The Exchange Act

Item 10.  Executive Compensation                                              16

Item 11.  Security Ownership of Certain Beneficial Owners And Management      18

Item 12.  Certain Relationships and Related Transactions                      19

Item 13.  Exhibits and Reports on Form 8-K                                    21


                                        2
<PAGE>
PART I

ITEM 1.  BUSINESS

INTRODUCTION

Rick's Cabaret International, Inc. currently owns and operates adult nightclubs
under the name "Rick's Cabaret" and "XTC" that offer live adult entertainment,
restaurant and bar operations.  We own and operate six adult nightclubs in
Houston, Austin and San Antonio, Texas, and Minneapolis, Minnesota.

We recently opened an all-adult "couples" night club in Houston called
"Encounters," which is a club for adult couples who enjoy the swingers'
lifestyle.

We also own and/or operate premiere adult entertainment Internet web sites in
two categories: online entertainment and online auctions of adult products and
erotica.

Our online entertainment sites are www.dancerdorm.com, www.amateurdan.com, and
                                   ------------------  ------------------
www.xxxpassword.com. DancerDorm.com featured exclusive live adult entertainment.
-------------------
The exclusive live activities were discontinued in 2001 and currently all live
content for this site is licensed from third parties.  AmateurDan.com features
exclusive adult photo entertainment.  XXXpassword features adult content
licensed through Voice Media Inc.  We acquire most of our Internet content from
third parties.

Our online adult auction web sites are www.naughtybids.com, www.pornauction.com,
                                       -------------------  -------------------
www.xxxauctionville.com, www.xxxbids.com, www.xxxgayauction.com, and
-----------------------  ---------------  ---------------------
www.allgayauction.com.  These web sites contain consumer-initiated auctions for
---------------------
items such as adult videos, apparel, photo sets, adult paraphernalia and other
erotica.  These web sites use our proprietary auction system that provides a
common technology platform.  There are typically more than 10,000 active
auctions at these sites at any given time.  We charge the seller a fee for each
successful auction.

References to us in this Form 10-KSB include our 100%-owned subsidiaries, and
our 93%-owned subsidiary, Taurus Entertainment Companies, Inc.

We were incorporated as a Texas corporation in 1994 and became the successor to
a private business that had operated Rick's Cabaret since the 1980's.

HISTORY

Until 1996, we had one adult nightclub location in Houston.  In January 1997, we
opened a nightclub in New Orleans, Louisiana, in leased premises, which we
subsequently sold to Mr. Robert Watters in March 1999.  In January 1997, we
purchased a facility in Minneapolis, Minnesota, where we opened a new adult
nightclub that began operations in March 1998.  In August 1998, we acquired
approximately 93% of the outstanding common stock of Taurus Entertainment
Companies, Inc., a Colorado corporation ("Taurus") in a private stock exchange
transaction with certain principal stockholders of Taurus.  The Stock Exchange
Agreement provided that we exchange one share of our common stock for each three
and one-half shares of Taurus common stock owned by certain principal
shareholders of Taurus.  As a result of the Exchange, we exchanged a total of
571,713 shares (post-reverse split) of our common stock for approximately
4,002,006 shares of common stock of Taurus, giving us control of Taurus.  The
terms and conditions of the Exchange were determined by the parties through
arms' length negotiations.  However, no appraisal was conducted.  The financial
results of Taurus have been consolidated into our financial statements since the
date of acquisition.

Taurus is a publicly owned company traded on the OTCBB under the symbol
"TAUR.OB".  In a transaction simultaneous to the acquisition of Taurus, we
acquired certain real estate in San Antonio, Texas from one of the principal
stockholders of Taurus.  We acquired the property from a principal stockholder
of Taurus for the same price that the principal stockholder paid for the
property.  We financed the purchase of the property by the issuance of a
six-year $366,000 Convertible Debenture, secured by the real estate acquired.

In a transaction simultaneous to the acquisition of Taurus, Taurus acquired
certain real estate in Houston, Texas from Mr. Ralph McElroy.  Taurus acquired
the property from Mr. McElroy for the same price that Mr. McElroy paid for the
property.  Taurus financed the purchase of the property by the issuance of a
six-year $286,744 Con-vertible Debenture, secured by the real estate acquired.
We are the guarantor of this Convertible Debenture.  The Convertible Debenture
is convertible into our shares at any time prior to maturity at the Conversion
Price of $5.50.


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<PAGE>
On March 29, 1999, Robert L. Watters, one of our Directors, purchased RCI
Entertainment Louisiana, Inc. ("RCI Louisiana"), our subsidiary, for the
purchase price of $2,200,000 consisting of $1,057,327 in cash, the endorsement
over to us of a $652,744 secured promissory note (the "McElroy Note"), a
guaranteed promissory note in the amount of $326,773 made by Mr. Watters (the
"Watters Note"), and the cancellation by Mr. Watters of our $163,156
indebtedness to him. The McElroy Note, which is due July 31, 2004, bears
interest at the rate of twelve percent (12%) per annum, with interest being paid
monthly. The principal of the McElroy Note is due in one lump sum payment. The
McElroy Note is secured by (i) our convertible debenture in the original
principal amount of $366,000, which we issued on August 11, 1998, in favor of
Mr. McElroy (the "Convertible Debenture") and (ii) a promissory note of Taurus
Entertainment Companies, Inc. (our subsidiary) and guaranteed by us (which has a
conversion feature) in the original principal amount of $286,744.61, dated
August 11, 1998, in favor of Mr. McElroy, (the "Convertible Promissory Note").
Both the Convertible Debenture and the Convertible Promissory Note are secured
by certain real estate holdings. The Watters Note is due and payable in 48 equal
monthly installments of principal and interest in the amount of $7,977.49 with
the final payment due March 29, 2003. The Watters Note bears interest at the
rate of eight percent (8%) per annum and is guaranteed by RCI Louisiana, which
operates a Rick's Cabaret in New Orleans, Louisiana. In connection with the
acquisition of the stock of RCI Louisiana, Mr. Watters also assumed RCI
Louisiana's liabilities of approximately $1,400,000. As a condition of this
transaction, Mr. Watters arranged for the release by a lender of our liability
of $763,199 owed to the lender by RCI Louisiana, which we had guaranteed. We
obtained an opinion from Chaffe & Associates, Inc., a New Orleans investment
banking firm, stating that the purchase price paid by Mr. Watters for RCI
Louisiana was fair from a financial point of view to our shareholders. The terms
of this transaction were the result of arms length negotiations between Mr.
Watters and us. In connection with the sale of RCI Louisiana, Mr. Watters, and
Erich Norton White, our former director, entered into agreements with us to
terminate their Employment Agreements and to cancel all stock options on our
common stock that they held. Further, in connection with the sale of RCI
Louisiana, we entered into an Exclusive Licensing Agreement with Mr. Watters,
which granted Mr. Watters the right to the use of the name "Rick's Cabaret" and
all logos, trademarks and service marks attendant thereto for use in the states
of Louisiana, Florida, Mississippi and Alabama.

In March 1999, we had a 2:1 reverse stock split.

In May 2000, we acquired the Chesapeake Bay Cabaret, an upscale gentlemen's club
located near the NASA Space Center and Houston's Hobby Airport.  The seller and
landlord was WMF Investments, Inc.  The transaction was completed once all
licenses and permits had been granted and issued to Rick's and the club was
subsequently renamed using the Rick's Cabaret brand.  The purchase price for the
business of Chesapeake Bay Cabaret was 160,000 restricted shares of Rick's
common stock.  We also entered into a 10-year lease agreement between Rick's and
WMF Investments.  The lease grants Rick's an additional 10-year option for the
property and the building where the Chesapeake Bay Cabaret is located.   The
initial lease payment is $12,000 per month plus 4% of gross revenues exceeding
$125,000 per month.  In addition, the agreement provided that in the event that
on August 6, 2001, the average closing price of Rick's common stock for the
sixty (60) days prior to August 6, 2001 was less than $5.00 per share then we
were obligated to pay by making a promissory note to the seller an amount equal
to the lesser of (i) $250,000.00 or (ii) $800,000.00 less the market value of
the 160,000 shares.  This event occurred and we gave WMF Investments, Inc. a
promissory note in the principal amount of $250,000, at an interest rate of 10%
per annum and 108 monthly payments.  This transaction was the result of arm
length negotiations between the parties.  However, no appraisal was done.

WMF Investments, Inc. is controlled by Mr. William Friedrichs, who owns
approximately 8.3% of our outstanding shares of common stock.

From time to time, we may enter into agreements to operate adult clubs owned by
others.  We are not presently operating any adult clubs owned by others.

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:


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<PAGE>
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 converse 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.  Once 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.  Specifically, 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 at Rick's Cabaret.

FOOD AND DRINK.  We believe that a key to the success of our branded adult
nightclubs is a quality, first-class bar and restaurant operation to compliment
our adult entertainment.  We employ service managers who recruit and train
professional wait staffs 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.  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. Further, we conduct, on a monthly basis, an
independent overview of our financial condition and have engaged independent
accountants to conduct an annual audit and to review and advise us relating to
our internal controls.

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


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<PAGE>
highly targeted methods to reach our customers: Hotel publications, local radio,
cable television, newspapers, billboards, taxi-cab reader boards, and the
Internet as well as a variety of promotional campaigns. These campaigns ensure
that the Rick's Cabaret name is kept before the public.

Rick's Cabaret has received a significant amount of media exposure over the
years in national magazines such as Playboy, Penthouse, Glamour Magazine, The
Ladies Home Journal, Time Magazine, and Texas Monthly Magazine.  Segments about
Rick's have aired on national and local television programs such as "Extra" and
"Inside Edition" and we have provided entertainers for Pay-Per-View features as
well.  We utilize the services of a public relations firm in New York City with
wide experience in promotion of adult companies.

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 one nightclub in
San Antonio, Texas that operates under the name XTC.  Our 93%-owned subsidiary,
Taurus, owns a nightclub in Austin, Texas also under the name XTC.

We sold our New Orleans nightclub in March 1999, but it continues to use our
name under a licensing agreement.  In July 2000, we sold a facility in south
Houston.  We are continually exploring expansion opportunities to open or
acquire more nightclubs in strategically valuable locations in the United
States.

BUSINESS ACTIVITIES--INTERNET ADULT ENTERTAINMENT WEB SITES

In October 1999, we began adult Internet Web site operations.  DancerDorm.com
featured live Web cam feeds and interactive online "chat and look" experience
for our members to chat with our dancers.  The live activities were discontinued
in 2001 and currently content for this site is licensed from third parties.
Members pay a monthly fee to visit DancerDorm.com.  AmateurDan.com is also a pay
site that features exclusive photos of provocative poses and activities.  The
www.xxxpassword.com Web site features adult content licensed through Voice
Media, Inc.

Our e-commerce program includes efforts to direct Internet traffic to our Web
sites.  Internet traffic is generated through the purchase of traffic from
third-party adult Web sites or Internet domain owners and the purchase of banner
advertisements or "key word" searches from Internet search engines.

There are numerous adult entertainment Web sites on the Internet.

BUSINESS ACTIVITIES--INTERNET ADULT AUCTION WEB SITES

During the fiscal year we began acquiring and developing a network of Web sites
designed to meet a growing need by Internet users for auction sites where
erotica and other adult materials could be purchased in a bid-ask method.  We
presently own and operate six adult auction Internet Web sites at
www.naughtybids.com, www.pornauction.com, www.xxxauctionville.com,
-------------------  -------------------  -----------------------
www.xxxbids.com, www.xxxgayauction.com and www.allgayauction.com.  These Web
---------------  ---------------------     ---------------------
sites contain new and used adult oriented consumer initiated auctions for items
such as adult videos, apparel, photo sets and adult paraphernalia.  We also
developed software and other technology to create a single platform serving our
six separate sites, which have approximately 10,000 items for sale at any given
time.  We charge the seller a fee for each successful auction.  NaughtyBids.com
and related sites offer Webmasters an opportunity to create residual income from
Web surfers through the NaughtyBids Affiliate Program, which pays other
Webmasters a percentage of every closing auction sale in which the buyer
originally came from the affiliate Webmaster's site.  There are numerous auction
Web 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, of which
approximately 10 are in direct competition with our 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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<PAGE>
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, 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, "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.

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

TRADEMARKS

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

EMPLOYEES AND INDEPENDENT CONTRACTORS

As of September 30, 2001, we had approximately 420 full-time employees, of which
40 are in management positions, including corporate and administrative
operations, and approximately 380 are engaged in entertainment, food and
beverage service, including bartenders and waitresses.  None of our employees is
represented by a union and we consider our employee relations to be good.
Additionally, we have independent contractor relationships with over 600
entertainers, who are self-employed and perform at our locations on a
non-exclusive basis as independent contractors.  Performers in Minneapolis,
Minnesota act as commissioned employees.

ITEM 2.  PROPERTIES

Our principal executive offices are co-located at 505 North Belt, Houston, Texas
77060 with our subsidiary, Taurus, in leased facilities consisting of a total of
1,200 square feet. We pay rent of approximately $1,200 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.


                                        7
<PAGE>
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.

The Rick's Cabaret located on Bering Drive in Houston has aggregate 12,300
square feet of space.  The balance as of September 30, 2001, that we owe on the
mortgage is $397,571 and the interest rate is prime plus 1%. Currently, we pay
$8,315 in monthly principal and interest payments. The last mortgage payment is
due in December 2004 with a balloon payment of $173,947.

The Rick's Cabaret located on North Belt Drive in Houston has 12,000 square feet
of space, and is owned by our 93%-owned subsidiary, Taurus.  The balance as of
September 30, 2001, that we owe on the mortgage is $138,295.15 and the interest
rate is 10%.  We pay $13,758 in monthly in principal and interest payments.  The
last mortgage payment is due in August 2002.

The Rick's Cabaret located in Minneapolis has 15,400 square feet of space.  The
balance as of September 30, 2001, that we owe on the mortgage is $2,335,336 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 6,800 square feet of space, which sits on 1.2
acres of land.  This property is owned by us free and clear.

The XTC nightclub in San Antonio has 7,800 square feet of space.  We acquired
the property from Mr. Ralph McElroy for the same price that Mr. McElroy paid for
the property.  We financed the purchase of the property by the issuance of a
six-year $366,000 Convertible Debenture, secured by the real estate acquired.
The principal balance of the Convertible Debenture is due in July 2004, in one
lump sum payment.  Interest is due and payable monthly, with the first interest
payment beginning in September 1998.  The Convertible Debenture is subject to
redemption at our option, in whole or in part, at 100% of the principal face
amount of the Convertible Debenture redeemed plus any accrued and unpaid
interest on the redemption date, at any time and from time to time, upon not
less than 30 nor more than 60 days notice, if the Closing Price of our common
stock shall have equaled or exceeded $17.00 per share of common stock for ten
(10) consecutive trading days.  The Convertible Debenture is convertible into
shares of Common Stock at any time prior to maturity (unless earlier redeemed)
at the Conversion Price of $5.50.  See Certain Relationships and Related
Transactions.

Our Encounters club has 8,000 square feet of space.  This property is owned by
us free and clear.

Taurus and its subsidiaries own 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, 2001 that we owe on the Brazoria County ranch mortgage is $303,023
and the interest rate is 9.25%.  We pay $2,573 in monthly principal and interest
payments.  The last mortgage payment is due in 2006 with a balloon payment of
$287,920.  The balance as of September 30, 2001 that we owe on the Wise County
raw land mortgage is $145,730 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 where our Chesapeake Bay Cabaret is located. We
acquired the operations of the Chesapeake Bay Club in May 2000.   The lease term
is for 10 years, with an additional 10-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.

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


                                        8
<PAGE>
"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.

Our nightclub in south Houston location has a valid permit/license that will
expire in December 2005.

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, and we filed a brief with the Fifth Circuit.  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.

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 Ordinance.  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 require- ment 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 satisfac-tion 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 on the Company's 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 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.  It is estimated that
the damages that can be proved will exceed $1 million.  In September 2000, the
city moved for summary judgment, seeking dismissal of the suit in its entirety.
That motion was denied, and the city has now appealed that denial to the
Minnesota Court of Appeals.  The city 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, since Rick's
remains open, not pursuant to a license, but pursuant to the temporary
injunction, Rick's will be allowed to remain open until the injunction is
dissolved by a court.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     None.


                                        9
<PAGE>
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 last sales
prices per share for the common stock.  Our fiscal year ends September 30, 2001.


COMMON STOCK PRICE RANGE

                     HIGH          LOW

Fiscal 2000

First  Quarter     $  3.500     $ 2.063
Second Quarter     $  6.438     $ 2.375
Third  Quarter     $  5.375     $ 2.000
Fourth Quarter     $  2.500     $ 1.625

Fiscal 2001
First  Quarter     $  3.000     $  0.870
Second Quarter     $  3.370     $  1.120
Third  Quarter     $  2.750     $  2.000
Fourth Quarter     $  3.940     $  1.950


On December 3, 2001, the last sales price for the common stock as reported on
the Nasdaq SmallCap Market was $3.04.  On December 3, 2001, there were
approximately 417 stockholders of record of the common stock.

TRANSFER AGENT AND REGISTRAR

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

DIVIDEND POLICY

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

In June 2001, our Board of Directors has approved a stock buyback program up to
$500,000.  Under this program, through September 2001, we purchased 30,700
shares of our common stock for a total consideration of $73,619.

RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended September 30, 2001, we did not sell unregistered shares
of our common stock.


                                       10
<PAGE>
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 related notes thereto included in this
annual report.

FORWARD LOOKING STATEMENT AND INFORMATION

The Company is including the following cautionary statement in this Form 10-KSB
to make applicable and take advantage of the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company.  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.  The Company's
expectations, beliefs and projections are expressed in good faith and are
believed by the Company to have a reasonable basis, including without
limitation, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result, be achieved, or be accomplished.  In addition to other
factors and matters discussed elsewhere herein, the following are important
factors that, in the view of the Company, could cause material adverse affects
on the Company's financial condition and results of operations: the risks and
uncertainties relating to our Internet operations, the impact and implementation
of the sexually oriented business ordinances in the jurisdictions where our
facilities operate, competitive factors, the timing of the openings of other
clubs, the availability of acceptable financing to fund corporate expansion
efforts, competitive factors, and the dependence on key personnel.  The Company
has no obligation to update or revise these forward-looking statements to
reflect the occurrence of future events or circumstances.

GENERAL

Our Company presently conducts its business in two different areas of operation:

1.   We own and operate upscale adult nightclubs serving primarily businessmen
     and professionals that offer live adult entertainment, restaurant and bar
     operations. We own and operate six adult nightclubs under the name "Rick's
     Cabaret" and "XTC" in Houston, Austin and San Antonio, Texas, and
     Minneapolis, Minnesota. Subsequent to the close of the fiscal year under
     review, on November 17, 2001, we opened an adult-themed club called
     "Encounters" that serves the couples or "swingers'" market 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.dancerdorm.com , www.amateurdan.com, and www.xxxpassword.com. During
     ------------------   ------------------      -------------------
     the course of the fiscal year ending September 30, 2001, we changed our
     Internet strategy and no longer create the content for these sites, opting
     instead to purchase content from wholesalers at what we believe will be a
     cost saving.

     b) We operate a network of six online auction sites accessible on the
     Internet under the flagship site www.naughtybids.com. These sites provide
                                      -------------------
     customers with the opportunity to purchase adult products and services in
     an auction format. We earn revenues by charging service fees for each
     transaction conducted on the highly automated sites, all of which utilize a
     single technology platform operated by us.

Our nightclub revenues are derived from the sale of liquor, beer, wine, food,
merchandise, cover charges, membership fees, independent contractors' fees,
commissions from vending and ATM machines, valet parking, and other products and
service.  Our Internet revenues are derived from subscriptions to adult content
Internet Web sites, 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.

RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001 AS COMPARED
TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2000


                                       11
<PAGE>
For the fiscal year ended September 30, 2001, the Company had consolidated total
revenues of $19,659,641 compared to consolidated total revenues of $12,739,316
for the year ended September 30, 2000, an increase of $6,920,325 or 54.33%.  The
increase in total revenues was due to the increase in revenues in the Company's
existing and new nightclub operations of $1,707,388 and to the revenues
generated by the Company's Internet businesses of $5,212,937.  Revenues of the
nightclub operations for same-location same-period increased by 6.93%, while
revenues of Internet businesses for same-sites same-period decreased by 6.38%.
The overall increase was due to the impact of full year of operations of our new
locations/sites.

Net income for the year ended September 30, 2001 was $1,314,718 compared to
$202,653 for the year ended September 30, 2000.  The increase in net income was
primarily due to the increase in the Company's overall nightclub operations and
our Internet operations.  Net income for nightclub operations was $1,830,131
compared with $1,152,591 for the year ended September 30, 2000 and for Internet
businesses was $ 649,888 compared with a net loss of $309,201for the year ended
September 30, 2000.  Net income of the nightclub operations for same-location
same-period increased by 17.54%, while net income of Internet businesses for
same-site same-period increased by 4.36%.

The cost of goods sold for the year ended September 30, 2001 was 33.51 % of
total revenues compared to 19.19% for the year ended September 30, 2000.  The
increase was due primarily to the costs of our Internet operations, the increase
in cost of complimentary food served for promotional purposes in our XTC
locations, and the addition of logo merchandise to our sales mix.  The cost of
goods sold for the nightclub operations for the year ended September 30, 2001
was 24.80% of the sales of alcoholic beverages and food compared to 24% for the
year ended September 30, 2000.  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.  The cost of sales from our Internet
operation for the year ended September 30, 2001 was 70.02%.  We have implemented
measures to reduce expenses in our Internet operations.

Payroll and related costs for the year ended September 30, 2001 were $4,774,118
compared to $4,193,349 for the year ended September 30, 2000.  The increase
reflects the addition of personnel to staff more nightclub locations and
increases in the size and the scope of our Internet operations.  Payroll for the
nightclub operations for same-location same-period increased by 6.24%, while
payroll for same-site same-period Internet operations decreased by 2.81%.
Management believes that its labor and management staff levels are currently at
appropriate levels.

Other selling, general and administrative expenses for the year ended September
30, 2001 were $6,768,779 compared to $5,986,936 for the year ended September 30,
2000.  The increase was due to the impact of full year of operations of our new
locations/sites and the expansion of our Internet business.  Other selling,
general and administrative expenses for same-location same-period for the
nightclub operation decreased by 3.94%, while the same expenses for same-site
same-period for Internet operation decreased by 6.34%.

Interest expense for the year ended September 30, 2001 was $354,726 compared to
$414,660 for the year ended September 30, 2000.  The decrease was primarily due
to the Company's effort to aggressively reduce its debt and not incur new debt.
We have reduced our debt to $3,837,076 as of September 30, 2001 from $3,866,516
as of September 30, 2000, and from $6,734,539 as of September 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, the Company had a working capital of $501,256 compared to
a working capital deficit of $133,686 at September 30, 2000.

Net cash provided by operating activities in the year ended September 30, 2001
was $ 2,169,490 compared to $774,077 for the year ended September 30, 2000.  The
increase in cash provided by operating activities was due to a significant
profit before depreciation in fiscal 2001.

Depreciation and amortization for the year ended September 30, 2001 was $849,862
compared to $585,797 for the year ended September 30, 2000.  The increase was
primarily due to the increase in amortization of goodwill related to the
purchase of www.xxxpassword.com.
            -------------------

In the opinion of management, working capital is not a true indicator of the
financial status.  Typically, businesses in the industry carry current
liabilities in excess of current assets because the business receives
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 with opportunities to adjust to short-term business down turns.  The


                                       12
<PAGE>
Company considers the primary indicators of financial status to be the long-term
trend of revenue growth and mix of sales revenues, overall cash flow,
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.

Because of the large volume of cash we handle, stringent cash controls have been
implemented.  In the event the sexually oriented business industry is required
in all states to convert the entertainers who perform at our locations, from
being independent contractors to employee status, we have prepared alternative
plans that we believe will protect our profitability.  We believe that the
industry standard of treating the entertainers as independent contractors
provides sufficient safe harbor protection to preclude payroll tax assessment
for prior years.

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 occurring during October through March.
Our experience to date indicates that there does not appear to be a seasonal
fluctuation in our Internet activities.

GROWTH STRATEGY

The Company believes that its club operations can continue to grow organically
and through careful entry into markets and demographic segments with high growth
potential.  Upon careful research, new clubs may be opened, or existing clubs
acquired, 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 our Company contributing equity in the form of our brand name and
management expertise.  As is the case of the aforementioned Encounters 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 and plan to focus
in the future on high-margin activities that leverage our marketing skills while
requiring a low level of start-up expense and ongoing operating costs.

ITEM 7.  FINANCIAL STATEMENTS

The information required hereunder is included in this report as set forth in
the "Index to Financial Statements" on page F-1.

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

There have been no changes in accountants since our incorporation in 1994, nor
have there been any disagreements with accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure.


                                       13
<PAGE>
PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

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 six persons.


Name                Age    Position
------------------  ---    ----------------------------------------------------
Eric S. Langan       33    Director, CEO, President and Chief Financial Officer
Travis Reese         32    Director and V.P.-Director of Technology
Robert L.  Watters   50    Director
Alan Bergstrom       55    Director
Ron Levi             51    Director
Steven Jenkins       45    Director

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.  Taurus is our subsidiary.  From January 1997 through the
present, he has held the position of President with XTC Cabaret, Inc., which was
subsequently acquired by Taurus.  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.

In September 2001, Mr. Langan was charged by a Mobile, Alabama circuit court on
charges related to a tanning salon that Mr. Langan previously owned and sold
more than five years ago.  The charges are completely and totally unrelated to
our operations and activities, or to Mr. Langan's role as our President and
Director.  The charges were brought under a recently enacted statute in Alabama
aimed at the adult entertainment business.  The charges allege that Mr. Langan
owned, had an interest in or was in control of, the tanning salon in Alabama
where the State alleges that nudity occurred in violation of Section
13A-12-200.11 of the Code of Alabama.  The charges are in connection with acts
that purportedly occurred in January 2001 and March 2001, more than five years
after Mr. Langan sold the tanning salon business.  Mr. Langan, who has not been
in Mobile, Alabama, for more than five years, stated that, "These charges are
wholly without merit and I intend to aggressively and vigorously defend myself
against these charges.  I am confident that I will be completely vindicated in
this matter."

Robert L. Watters is the founder of our Company 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.


                                       14
<PAGE>
Alan Bergstrom became our Director in 1999.  Since 1997, Mr. Bergstrom has been
the Chief Operating Officer of Eagle Securities, which is an investment
consulting firm.  Mr. Bergstrom is also a registered stockbroker with Rhodes
Securities, Inc.  From 1991 until 1997, Mr. Bergstrom was a vice
president--investments with Principal Financial Securities, Inc.  Mr. Bergstrom
holds a B.B.A. Degree in Finance, 1967, from the University of Texas.

Travis Reese became our Director and V.P.-Director of Technology in 1999.  From
1997 through 1999, Mr. Reese has 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 a 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.

Ron Levi was appointed to our Board of Directors in July 2000 in connection with
our acquisition of certain assets of Voice Media, Inc, of which he is presently
the sole shareholder.  Mr. Levi has been a director and officer of National
Telemedia Corporation since 1991.  Since 1992, Mr. Levi has been a director and
officer of Voice Media, Inc.  Voice Media, Inc. and the National Telemedia
Corporation are global Internet media companies, focusing on Internet
development and E-commerce applications for Web based entertainment products,
including the development of proprietary technologies, industry-defining systems
and marketing processes.

COMMITTEES OF THE BOARD OF DIRECTORS

We have no compensation committee and no nominating committee.  Decisions
concerning executive officer compensation for fiscal 2001 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 the Audit
Committee is to oversee our financial reporting process on behalf of the Board
of Directors.  The Audit Committee will meet with our Chief Accounting Officer
and with our independent public accountants and evaluates the responses by the
Chief Accounting Officer both to the facts presented and to the judgments made
by the outside independent accountants.  The Audit Committee reports its
activities to the full Board after each such meeting so that the Board is kept
informed of its activities on a current basis.  In addition, the activities and
responsibilities of the Audit Committee include the nomination or selection of
the independent auditors, review of the results of the audit and a detailed,
overall corporate review and the adequacy of our internal controls.

The Board has adopted a Charter for the Audit Committee.  The Charter
establishes the independence of our Audit Committee and sets forth the scope of
the Audit Committee's duties.  The Purpose of the Audit Committee is to
conduct continuing oversight of our financial affairs.  The 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.  The 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.  A majority of the members of the Audit Committee will be independent.
The Audit Committee is objective, and reviews and assesses the work of our
independent accountants and our internal audit department.

A majority of our Audit Committee members must be independent Directors. The
Board of Directors shall elect the Members annually. Members shall serve until
their successors are duly elected and qualified. Unless an Audit Committee
Chairperson is elected by the full Board, the Members of the Committee may
designate a Chairperson by majority vote of the all Members. A majority of the
members will be free from any relationship that could conflict with a Member's
independent judgment. All Members must be able to read and understand
fundamental financial statements, including a balance sheet, income statement,
and cash flow statement. At least one Member must have past employment
experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background, including a current or
past position as a chief executive or financial officer or other senior officer
with financial oversight responsibilities.

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

CERTAIN SECURITIES FILINGS

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.


                                       15
<PAGE>
ITEM 10.  EXECUTIVE COMPENSATION

The following table reflects all forms of compensation for services to us for
the fiscal years ended September 30, 2001, 2000, and 1999 of certain executive
officers.   No other executive officer received compensation
that exceeded  $100,000 during fiscal 2001.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                Annual Compensation                 Long  Term  Compensation
                                                  Awards                    Payouts

                                           Other                Securities
Name and                                  Annual  Restricted    Underlying           All Other
Principal                                Compen-       Stock      Options/   LTIP      Compen-
Position  Year     Salary     Bonus   Sation (1)      Awards          SARs  Payouts     sation
<S>       <C>   <C>           <C>     <C>         <C>           <C>         <C>      <C>
          2001  $   239,600      -0-         -0-           -0-       5,000      -0-        -0-
Eric      2000  $   175,890   $1,000         -0-           -0-       5,000      -0-        -0-
Langan    1999  $   155,000(2)   -0-         -0-           -0-      85,000      -0-        -0-
Mr. Langan is our Chairman, a Director, and our President and Acting CFO.

          2001  $   102,000      -0-         -0-           -0-       5,000      -0-        -0-
Travis    2000  $    93,460      -0-         -0-           -0-       5,000      -0-        -0-
 Reese    1999  $    17,300      -0-         -0-           -0-      35,000      -0-        -0-
<FN>
Mr. Reese is a Director and V.P.-Director of Technology
__________________________________
   (1) We provide certain executive officers certain personal benefits.  Since
the value of such benefits does not exceed the lesser of $50,000 or 10% of
annual compensation, the amounts are omitted.

   (2) We paid Mr. Langan $155,000 as compensation in fiscal 1999, of which
$52,000 was allocated to our subsidiary, Taurus Entertainment Companies, Inc.
In fiscal 2000 and 2001, we paid all of the compensation of Mr. Langan.
</TABLE>

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

Eric      5,000 shares        10%               $    2.13        06-11-06
Langan

Travis   5,000 shares         10%               $    2.13        06-11-06
Reese

<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-          245,000 / -0-              -0- / -0-
Travis Reese       -0- (1)       -0-           45,000 / -0-              -0- / -0-

<FN>
   ___________________________________
   (1)  There were no exercises of options during the fiscal year ended
September  30,  2001
</TABLE>


                                       16
<PAGE>
DIRECTOR COMPENSATION

We do not currently pay any cash directors' fees, but we pay the expenses of our
directors in attending board meetings. In August 2001, we issued 10,000 options
to each Director who is a member of our audit committee and 5,000 options to our
other Directors. These options have a strike price of $2.13 per share and expire
in June 2006.

EMPLOYEE STOCK OPTION PLANS

While we have been successful in attracting and retaining qualified personnel,
we believe that our future success will depend in part on our continued ability
to attract and retain highly qualified personnel.  We pay wages
and salaries that we believe are competitive.  We also believe that equity
ownership is an important factor in our ability to attract and retain skilled
personnel.  We have adopted Stock Option Plans for employee 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. A total of 300,000 shares may be
granted and sold under the 1995 Plan.  As of December 4, 2000 a total of 167,500
stock options had been granted and are outstanding under the Plan, none of which
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. A total of 500,000 shares
may be granted and sold under the 1999 Plan.  As of September 30, 2001, a total
of 437,000 stock options had been granted and are outstanding under the 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 and an agreement by Mr.
Langan not to compete with us upon the expiration of the Langan Agreement.  We
have not established long term incentive plans or defined benefit or actuarial
plans.  Under a prior employment agreement, Mr. Langan received options to
purchase 125,000 shares at an exercise price of $1.87 per share, which vested in
August 1999.


                                       17
<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information at December 3, 2001, 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
<S>                                     <C>              <C>              <C>
Eric S. Langan
505 North Belt, Suite 630
Houston, Texas 77060                      1,026,165 (1)  Common Stock          21.3%

Robert L. Watters
315 Bourbon Street
New Orleans, Louisiana 70130                 15,000 (2)  Common Stock           0.3%

Steven L. Jenkins
16815 Royal Crest Drive,
Suite 160
Houston, Texas 77058                              0 (3)  Common Stock           0.0%

Travis Reese
505 North Belt, Suite 630
Houston, Texas 77060                         40,130 (4)  Common Stock           0.8%

Alan Bergstrom
707 Rio Grande, Suite 200
Austin, Texas 78701                          20,000 (2)  Common Stock           0.4%

Ron Levi
Suite 205
5000 North Parkway
Calabasas, California 91302                 759,000 (5)  Common Stock          16.5%


Voice Media, Inc.
Suite 205
5000 North Parkway Calabasas
Calabasas, California 91302                 700,000      Common Stock          15.2%

E. S. Langan. L.P.
505 North Belt, Suite 630
Houston, Texas 77060                        578,632      Common Stock          12.8%

Ralph McElroy
1211 Choquette
Austin, Texas, 78757                        817,147 (6)  Common Stock          17.3%

William Friedrichs
16815 Royal Crest Dr.,
 Suite 260
Houston, Texas 77058                        381,850 (7)  Common Stock           8.3%

All of our Directors and Officers as a
Group of six(6) persons and               1,860,295 (8)  Common Stock          38.0%


                                       18
<PAGE>
<FN>
--------------------------------------------------------------------------------
(1) Mr. Langan has sole voting and investment power for 207,406 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 240,000 shares of common stock that are presently exercisable;
does not include options to purchase 5,000 shares of common stock that are not
presently exercisable.

(2) Includes options to purchase up to 15,000 shares of common stock that are
presently exercisable; does not include options to purchase 10,000 shares of
common stock that are not presently exercisable.

(3) Does not Includes options to purchase up to 10,000 shares of common stock
that are not presently exercisable

(4) Includes options to purchase up to 40,000 shares of common stock that are
presently exercisable; does not include options to purchase 5,000 shares of
common stock that are not presently exercisable.

(5) Includes 700,000 shares owned by Voice Media, Inc.  Mr. Levi is the sole
shareholder of Voice Media, Inc.  Includes 5,000 options that are presently
exercisable; does not include options to purchase 5,000 shares of common stock
that are not presently exercisable.

(6) 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.

(7) Includes 160,000 shares owned by WMF Investments, Inc.  Mr. Friedrichs is a
control person of WMF Investments, Inc.

(8) Includes options to purchase up to 310,000 shares of common stock that are
presently exercisable.
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our Board of Directors has adopted a policy that our 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 2000, we acquired the Chesapeake Bay Cabaret, an upscale gentlemen's club
located near the NASA Space Center and Houston's Hobby Airport.  The seller and
landlord is WMF Investments, Inc.  WMF Investments, Inc. is controlled by Mr.
William Friedrichs, who owns approximately 8.3% of our outstanding shares of
common stock.   The purchase price for business of the Chesapeake Bay Cabaret
was 160,000 restricted shares of Rick's common stock.  We also entered into a
10-year lease agreement between Rick's and WMF Investments.  The lease grants
Rick's an additional 10-year option for the property and the building where the
Chesapeake Bay Cabaret is located.   The initial lease payment is $12,000 per
month plus 4% of gross revenues exceeding $125,000 per month.

In addition, the agreement provided that in if on August 6, 2001, the average
closing price of Rick's common stock for the sixty (60) days prior to August 6,
2001 was less than $5.00 per share then we were obligated to pay by issuing a
promissory note to WMF Investments, Inc. in  an amount equal to the lesser of
(i) $250,000.00 or (ii) $800,000.00 less the market value of the 160,000 shares.
This event occurred and we issued WMF Investments, Inc. a promissory note in the
principal amount of $250,000, bearing interest at the rate of 10% per annum.
The promissory note is payable in 108 equal monthly payments of $3,519.67.  This
transaction was the result of arm length negotiations between the parties.
However, no appraisal was done.


In August 1998, we acquired approximately 93% of the outstanding common stock of
Taurus Entertainment Companies, Inc. ("Taurus") in a private stock exchange
transaction with the certain principal stockholders of Taurus, among whom were
Eric S. Langan and Ralph McElroy.  The Stock Exchange Agreement provided that we
exchange one share of our common stock for each three and one-half shares of
Taurus common stock owned by certain principal shareholders of Taurus.  As a
result of the Exchange, Mr. Langan received 402,146 shares of our common stock,
and Mr. McElroy received 393,389 shares of our common stock.  The terms and


                                       19
<PAGE>
conditions of the Exchange were determined by the parties through arms length
negotiations.

In a transaction simultaneous to the acquisition of Taurus, we acquired certain
real estate in San Antonio, Texas from Mr. McElroy. We acquired the property
from Mr. McElroy for the same price that Mr. McElroy paid for the property. We
financed the purchase of the property by the issuance of a six year $366,000
Convertible Debenture, secured by the real estate acquired. The Convertible
Debenture bears interest at the rate of 12% per annum, with interest payable
monthly. Interest payments began in September 1998. The principal balance of the
Convertible Debenture is due in one lump sum payment in July 2004. The
Convertible Debenture is subject to redemption at our option, in whole or in
part, at 100% of the principal face amount of the Convertible Debenture redeemed
plus any accrued and unpaid interest on the redemption date, at any time and
from time to time, upon not less than 30 nor more than 60 days notice, if the
closing price of our common stock shall have equaled or exceeded $17.00 per
share of common stock for ten (10) consecutive trading days. The Convertible
Debenture is convertible into shares of Common Stock at any time prior to
maturity (unless earlier redeemed) at the Conversion Price of $5.50 per share.
In the event that we file a Registration Statement to register shares of our
Common Stock with the Securities and Exchange Commission on Form S-3 or other
similar form (except for Form S-8 or Form S-4), then we will undertake to use
our best efforts to register for resale all of Mr. McElroy's shares into which
the Convertible Debenture may be converted under the same Registration
Statement.

In a transaction simultaneous to the acquisition of Taurus, Taurus refinanced a
mortgage on one of its real estate holdings in Houston, Texas by extinguishing
this mortgage and replacing it with a Convertible Debenture secured by this real
estate. The mortgagee was Mr. McElroy and Mr. McElroy received the Convertible
Debenture. Taurus had purchased the property from Mr. McElroy for the same price
that Mr. McElroy paid for the property. We refinanced the purchase of the
property on terms more favorable to Taurus by the issuance of a six year
$286,744 Convertible Debenture, secured by the real estate acquired. We are the
guarantor of this Convertible Debenture. The Convertible Debenture bears
interest at the rate of 12% per annum, with interest payable monthly. Interest
payments began in September 1998. The principal balance of the Convertible
Debenture is due in one lump sum payment in July 2004. The Convertible Debenture
is convertible into shares of our common stock at any time prior to maturity at
the Conversion Price of $5.50 per share. In the event that we file a
Registration Statement to register shares of our Common Stock with the
Securities and Exchange Commission on Form S-3 or other similar form (except for
Form S-8 or Form S-4), then we will undertake to use our best efforts to
register for resale all of Mr. McElroy's shares into which the Convertible
Debenture may be converted under the same Registration Statement.

On March 29, 1999, Robert L. Watters, our Director, purchased RCI Entertainment
Louisiana, Inc. ("RCI Louisiana"), our subsidiary, for the purchase price of
$2,200,000 consisting of $1,057,327 in cash, the endorsement
over to us of a $652,744 secured promissory note (the "McElroy Note"), a
guaranteed promissory note in the amount of $326,773 made by Mr. Watters (the
"Watters  Note"),  and the cancellation by Mr. Watters of our $163,156
indebtedness to him.  The McElroy Note, which is due July 31, 2004, bears
interest at the rate of twelve percent (12%) per annum with interest being paid
monthly.  The principal of the McElroy Note is due in one lump sum payment.  The
McElroy Note is secured by (i) our convertible debenture in the original
principal amount of $366,000, which we issued on August, 11, 1998, in favor of
Mr. McElroy (the "Convertible Debenture") and (ii) a promissory note of Taurus
Entertainment Companies, Inc. (our subsidiary) and guaranteed by us (which has a
conversion feature) in the original principal amount of $286,744.61, dated
August 11, 1998, in favor of Mr. McElroy, (the "Convertible Promissory Note").
Both the Convertible Debenture and the Convertible Promissory Note are secured
by certain real estate holdings of our subsidiaries.  The Watters Note is due
and payable in 48 equal monthly installments of principal and interest in the
amount of $7,977.49 with the final payment due March 29, 2003. The Watters Note
bears interest at the rate of eight percent (8%) per annum and is  is guaranteed
by RCI Louisiana, which operates a Rick's Cabaret in New Orleans, Louisiana.  In
connection with the acquisition of the stock of RCI Louisiana, Mr. Watters also
assumed RCI Louisiana's liabilities of approximately $1,400,000.  As
a condition of this transaction, Mr. Watters arranged for the release by a
lender of our liability of $763,199 owed to the lender by RCI Louisiana, which
we had guaranteed.  We obtained an opinion from Chaffe & Associates, Inc., a New
Orleans investment banking firm, stating that the purchase price paid by Mr.
Watters for RCI Louisiana was fair from a financial point of view to our
shareholders.  The terms of this transaction were the result of arms' length
negotiations between Mr. Watters and us.  In connection with the sale of RCI
Louisiana, Mr. Watters, and Erich Norton White, our former director, entered
into agreements with us to terminate their Employment Agreements and to cancel
all stock options on our common stock that they held.  Further, in connection
with the sale of RCI Louisiana, we entered into an Exclusive Licensing Agreement
with Mr. Watters, which granted Mr. Watters the right to the use of the name
"Rick's Cabaret" and all logos, trademarks and service marks attendant thereto
for use in the states of Louisiana, Florida, Mississippi and Alabama.


                                       20
<PAGE>
On July 6, 2000, we acquired the adult Internet Web site www.XXXPassword.com
                                                         -------------------
from Voice Media, Inc., a corporation owned at that time by Mr. Ron Levi and Mr.
Paul Lesser, both of whom became our directors.  Subsequent to our acquisition,
Voice Media, Inc. redeemed Mr. Lesser's interest and Mr. Lesser resigned from
our board.  As a result of this transaction, Mr. Levi became the sole
shareholder of Voice Media, Inc.  This Web site had gross revenues in excess of
$3,000,000 for the 11 months ended May 31, 2000.  Under the terms of the
acquisition, we issued 700,000 restricted shares of our common stock to Voice
Media, Inc.  Voice Media, Inc. is also entitled to receive a cash earn-out
amount from us of $1,305,000 during the next six years as a result of achieving
certain earnings benchmarks. The Earn Out amount is paid in monthly amounts
equal only to 50% of the Free Net Cash Flow (as defined) of XXXPassword during
the six year period from the closing date.  As part of the acquisition, Voice
Media, Inc. will continue to manage and market XXXPassword for us at a flat
monthly fee.  This transaction was the result of arm length negotiations between
the parties.  However, no appraisal was done.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

          None.

(b)  Reports  on  Form  8-K.

     On September 14, 2001, we filed a report dated September 10, 2001 on Form
     8-K reporting Item 5 Other Events.


                                       21
<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 December 12, 2001.

                                       Rick's Cabaret International, Inc.

                                       _________________________________________
                                       By:  /s/ Eric Langan
                                       ------------------------------
                                       Eric Langan, Director, CEO, 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 Langan                                              December 12, 2001
                              Director, CEO, President
    Eric Langan               and Chief Financial Officer



--------------------------
/s/ Travis Reese                                             December 17, 2001
                             Director  and
    Travis Reese             V.P.-Director of Technology



--------------------------
/s/ Robert L. Watters                                        December 17, 2001
                              Director
    Robert L. Watters



--------------------------
/s/ Alan Bergstrom                                           December 12, 2001
                              Director
    Alan Bergstrom



--------------------------
/s/  Ron Levi                                                December 17, 2001
                              Director
     Ron Levi



--------------------------
/s/  Steven Jenkins                                          December 17, 2001
                              Director
     Steven Jenkins


                                       22
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

                          AUDITED FINANCIAL INFORMATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

Independent  Auditor's  Report. . . . . . . . . . . . . . . . . . . . . .    F-2

Consolidated Balance Sheets for the years ended
     September  30,  2001  and  2000. . . . . . . . . . . . . . . . . . .    F-3

Consolidated Statements of Operations for the years ended
     September  30,  2001  and  2000. . . . . . . . . . . . . . . . . . .    F-4

Consolidated Statements of Changes in Stockholders' Equity
     for  the  years  ended  September  30,  2001  and  2000. . . . . . .    F-5

Consolidated Statements of Cash Flows for the years ended
     September  30,  2001  and  2000. . . . . . . . . . . . . . . . . . .    F-6

Notes  to  Consolidated  Financial  Statements. . . . . . . . . . . . . .    F-7


                                       F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
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, 2001 and 2000, and the
related  consolidated  statements of income, changes in stockholders' equity and
cash  flows  for  the  years  then  ended.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  consolidated  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  audits  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 consolidated financial statements referred to above present
fairly,  in all material respects, the consolidated financial position of Rick's
Cabaret  International, Inc. and subsidiaries as of September 30, 2001 and 2000,
and  the  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.


                                                      Jackson & Rhodes P.C.


Dallas,  Texas
November 9, 2001


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                        RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS
                                    SEPTEMBER 30, 2001 AND 2000

                                              ASSETS

                                                                            2001          2000
                                                                        ------------  ------------
<S>                                                                     <C>           <C>
Current assets:
   Cash                                                                 $   704,628   $   374,532
   Accounts receivable                                                      379,653       297,761
   Inventories                                                              196,300       200,471
   Prepaid expenses                                                          81,477        67,661
   Land held for sale                                                       200,000       200,000
                                                                        ------------  ------------
     Total current assets                                                 1,562,058     1,140,425
                                                                        ------------  ------------
Property and equipment:
   Buildings, land and leasehold improvements                             8,974,252     8,360,090
   Furniture and equipment                                                1,545,876     1,508,990
                                                                        ------------  ------------
                                                                         10,520,128     9,869,080
   Less accumulated depreciation                                         (1,717,214)   (1,296,898)
                                                                        ------------  ------------
                                                                          8,802,914     8,572,182
                                                                        ------------  ------------
Other assets:
   Goodwill, less accumulated amortization of $1,011,766 and $582,221     4,415,391     3,412,827
   Other                                                                    168,137       288,223
                                                                        ------------  ------------
                                                                          4,583,528     3,701,050
                                                                        ------------  ------------
                                                                        $14,948,500   $13,413,657
                                                                        ============  ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt (Note 4)                           $   327,162   $   456,749
   Accounts payable - trade                                                 234,591       437,083
   Accrued expenses                                                         499,049       380,279
                                                                        ------------  ------------
     Total current liabilities                                            1,060,802     1,274,111
Long-term debt, less current portion (Note 4)                             3,509,914     3,409,767
                                                                        ------------  ------------
         Total liabilities                                                4,570,716     4,683,878
                                                                        ------------  ------------
Commitments and contingencies (Note 6)                                            -             -
Minority interests                                                           78,816        64,410
Stockholders' equity (Note 8):
   Preferred stock - $.10 par, authorized
     1,000,000 shares; none issued                                                -             -
   Common stock - $.01 par, authorized
     15,000,000 shares;  issued 4,598,678 and 4,348,678 shares               45,987        43,487
   Additional paid-in capital                                            11,257,449    10,867,449
   Retained earnings (deficit)                                             (930,849)   (2,245,567)
   Treasury stock, 30,700 shares, at cost                                   (73,619)            -
                                                                        ------------  ------------
     Total stockholders' equity                                          10,298,968     8,665,369
                                                                        ------------  ------------
                                                                        $14,948,500   $13,413,657
                                                                        ============  ============
</TABLE>

           See accompanying notes to consolidated financial statements.


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000


                                                   2001          2000
                                               ------------  ------------
<S>                                            <C>           <C>
Revenues:
   Sales of alcoholic beverages                $ 5,816,999   $ 4,751,459
   Sales of food and merchandise                 1,560,270     1,310,893
   Service revenues                              5,205,917     4,918,740
   Internet revenues                             6,793,840     1,582,276
   Other                                           282,615       175,948
                                               ------------  ------------
                                                19,659,641    12,739,316
                                               ------------  ------------

Operating expenses:
   Cost of goods sold                            6,586,886     2,444,429
   Salaries and wages                            4,774,118     4,193,349
   Other general and administrative:
     Taxes and permits                           1,874,442     1,745,975
     Charge card fees                              299,691       189,463
     Rent                                          261,258       121,017
     Legal and professional                        752,819       776,351
     Advertising and marketing                     535,370       793,836
     Other                                       3,045,199     2,360,294
                                               ------------  ------------
                                                18,129,783    12,624,714
                                               ------------  ------------

Income from operations                           1,529,858       114,602

Other income (expense)
   Interest expense                               (354,726)     (414,660)
   Interest income                                  30,267        34,021
   Gain/(loss) on sale/disposition of assets       (45,681)      181,840
   Vendors' concessions                                  -       281,076
   Other                                           155,000         5,708
                                               ------------  ------------

Net income                                     $ 1,314,718   $   202,587
                                               ============  ============

Basic income per common share                  $      0.30   $      0.05
                                               ------------  ------------
Weighted average shares outstanding              4,411,178     4,198,735
                                               ============  ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                     RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                       FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000



                                                      Common Stock
                                                 ---------------------  Additional                 Retained
                                                  Number of               Paid-in                  Earnings
                                                   Shares     Amount      Capital                  (Deficit)      Total
                                                 ----------  ---------  -----------  ----------  ------------  ------------
<S>                                              <C>         <C>        <C>          <C>         <C>           <C>
Balance, September 30, 1999                       3,613,678     36,137    9,727,309          -    (2,448,154)    7,315,292

Sales of common stock for cash                       76,500        765      174,410          -             -       175,175

Issuance of common stock for services                28,500        285       73,655          -             -        73,940

Issuance of common stock for accounts payable        20,000        200       39,800          -             -        40,000

Shares issued for XXXPassword (Note 3)              450,000      4,500      664,875          -             -       669,375

Shares issued for Chesapeake Bay (Note 3)           160,000      1,600      187,400          -             -       189,000

Net income                                                -          -            -          -       202,587       202,587
                                                 ----------  ---------  -----------  ----------  ------------  ------------
Balance, September 30, 2000                       4,348,678     43,487   10,867,449          -    (2,245,567)    8,665,369

Shares issued for XXXPassword (Note 3)              250,000      2,500      390,000          -             -       392,500

Purchase of treasury stock                                -          -            -    (73,619)            -       (73,619)

Net income                                                -          -            -          -     1,314,718     1,314,718
                                                 ----------  ---------  -----------  ----------  ------------  ------------
                                                  4,598,678  $  45,987  $11,257,449  $ (73,619)  $  (930,849)  $10,298,968
                                                 ==========  =========  ===========  ==========  ============  ============
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000


                                                              2001         2000
                                                          ------------  ----------
<S>                                                       <C>           <C>
Net income                                                $ 1,314,718   $ 202,587

Adjustments to reconcile net income to net
   cash provided by operating activities:
   Depreciation and amortization                              849,862     585,797
   Issuance of common stock for services                            -      73,940
   Minority interest                                           14,406      30,163
   Gain/(loss) on sale/disposition of assets                   45,681    (181,840)
   Vendors' concessions                                             -    (281,076)
   Changes in assets and liabilities:
     Accounts receivable                                      (81,892)    102,804
     Inventories                                                4,171     (84,698)
     Prepaid expenses and other assets                        106,271     (30,712)
     Accounts payable and accrued liabilities                 (83,727)    357,112
                                                          ------------  ----------
       Net cash provided by operating activities            2,169,490     774,077
                                                          ------------  ----------

Cash flows from investing activities:
   Additions to property and equipment and goodwill        (1,736,340)   (552,261)
   Proceeds from sale of assets                                     -     240,136
                                                          ------------  ----------
       Net cash by investing activities                    (1,736,340)   (312,125)
                                                          ------------  ----------

Cash flows from financing activities:
   Common stock issued, less offering costs                         -     175,175
   Purchase of treasury stock                                 (73,619)
   Increase in long-term debt                                 464,475     228,150
   Payments on long-term debt                                (493,910)   (868,906)
                                                          ------------  ----------
       Net cash used by financing activities                 (103,054)   (465,581)
                                                          ------------  ----------

Net increase (decrease) in cash                               330,096      (3,629)

Cash at beginning of year                                     374,532     378,161
                                                          ------------  ----------

Cash at end of year                                       $   704,628   $ 374,532
                                                          ============  ==========

Cash paid during the period for:
   Interest                                               $   354,726   $ 418,701
                                                          ============  ==========

Noncash activities:
   During the year ended September 30, 2000, the Company issued common shares for
      accounts payable and for certain acquisitions (see Note 3).
</TABLE>

           See accompanying notes to consolidated financial statements.


                                       F-6
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2001 AND 2000

1.   ORGANIZATION

     Rick's  Cabaret  International, Inc. (the "Company") was formed in December
     1994,  to  acquire  all  the  outstanding  capital  stock  of  Trumps  Inc.
     ("Trumps"),  a  company  owned  100%  by the Company's sole stockholder. On
     October  13,  1995,  the Company completed its public offering of 1,840,000
     shares  of  common  stock.  The proceeds from the sale of stock amounted to
     approximately  $4,270,000  net  of  underwriting discounts, commissions and
     expenses  of  the  offering.  The  Company originally owned a premium adult
     nightclub  offering topless entertainment and restaurant and bar operations
     as  well  as  a  non-sexually  oriented  bar in Houston, Texas. The Company
     opened  another  premium  adult  nightclub  in leased facilities on Bourbon
     Street in New Orleans, Louisiana in January 1997 (sold in 1999), and during
     the year ended September 30, 1998, the Company opened another premium adult
     nightclub in Minneapolis, Minnesota in a facility it purchased. Also during
     the  year  ended September 30, 1998, the Company acquired approximately 93%
     of  the  outstanding  common  stock of Taurus Entertainment Companies, Inc.
     ("Taurus"),  a  publicly  held  company that also owns adult nightclubs. In
     December  1998, the Company opened another premier adult nightclub in north
     Houston,  located  near  George  Bush Intercontinental Airport, in premises
     leased  from  a  subsidiary  of  Taurus.  During 2000, the Company acquired
     another  club  location in Houston. The Company now operates six nightclubs
     in  Houston,  San  Antonio  and  Austin,  Texas and Minneapolis, Minnesota.

     During  the  year  ended  September  30, 1999, the Company launched certain
     adult  Internet  web  sites  and  acquired other sites during 2000 and 2001
     (Note  3).

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     Net  Income  Per  Common  Share

     The  Company  computes  net  income  per  common  share  in accordance with
     Statement  of  Financial  Accounting  Standards No. 128, Earnings Per Share
     ("SFAS  128").  SFAS  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.
     Dilutive  earnings  per share reflects the potential dilution of securities
     that  could  share  in  the  earnings  of  the  Company.  The  accompanying
     presentation  is  of basic earnings per share because dilutive earnings per
     share  is  the  same  as  basic.


                                      F-7
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Use  of  Estimates  and  Assumptions

     Preparation  of  the  Company's  financial  statements  in  conformity with
     generally  accepted  accounting  principles  requires  management  to  make
     estimates  and  assumptions  that  affect  certain  reported  amounts  and
     disclosures. Accordingly, actual results could differ from those estimates.

     Inventories

     Inventories, consisting principally of liquor and food products, are stated
     at  the  lower  of  cost  or  market  (first-in,  first-out  method).

     Cash  Equivalents

     For  purposes  of  the  statement  of cash flows, the Company considers all
     highly liquid debt instruments purchased with an original maturity of three
     months  or  less  to  be  cash  equivalents.

     Property  and  Equipment

     Property  and equipment are stated at cost. Cost of property renovations or
     improvements are capitalized; costs of property maintenance and repairs are
     charged  against operations as incurred. Depreciation is computed using the
     straight-line  method  over  the  estimated  useful lives of the individual
     assets,  as  follows:

          Building  and  improvements                             31  years
          Equipment                                              5-7  years


     Revenue  Recognition

     The  Company recognizes all revenues at point-of-sale upon receipt of cash,
     check  or  charge  card sale. This includes VIP Room Memberships, since the
     memberships  are  non-refundable and the Company has no material obligation
     for  future  performance.

     Income  Taxes

     The  Company  accounts for its income taxes in accordance with Statement of
     Financial  Accounting  Standards  No.  109,  which  reflects  an  asset and
     liability  approach  in  accounting  for income taxes. The objective of the
     asset  and  liability  method  is  to  establish  deferred  tax  assets and
     liabilities  for  the temporary differences between the financial reporting
     basis  and the tax basis of the Company's assets and liabilities at enacted
     tax  rates  expected  to  be  in  effect  when such amounts are realized or
     settled.


                                      F-8
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Principles  of  Consolidation

     The  consolidated  financial statements include the accounts of the Company
     and  its majority-owned subsidiaries. All significant intercompany balances
     and  transactions  are  eliminated  in  consolidation.

     Goodwill

     Goodwill  acquired in business acquisitions is stated at cost and amortized
     over  the  estimated  useful lives of fifteen years for nightclubs and five
     years  for  Internet  web  sites.

3.   ACQUISITIONS

     On  July  6,  2000,  the  Company  acquired  an  adult  Internet  website,
     XXXPassword.  The  acquisition  of  XXXPassword  was  accounted  for by the
     purchase  method  of  accounting;  therefore, the operations of XXXPassword
     have  been  included  in the accompanying statement of operations since the
     date  of  acquisition.  Under  purchase  accounting, the purchase price was
     allocated  to  goodwill,  because  XXXPassword  has no tangible assets. The
     purchase  price  was  based  on  the  value of the 450,000 common shares of
     Rick's  issued in the acquisition. Rick's also placed 250,000 common shares
     in  escrow  to  be  issued  should the earnings, as defined, of XXXPassword
     aggregate $400,000 for the first full 12 months following the closing date.
     These contingent shares were valued at $392,500 and charged to the purchase
     price  since  the  contingency  was  met.

     The acquisition agreement between the Company and the seller of XXXPassword
     requires  the  Company to pay an Earn Out Amount of $380,000 to the seller,
     plus either (1) $475,000 if the earnings before depreciation, amortization,
     interest  and  taxes  ("EBITDA")  of  XXXPassword  during  the  first  full
     twelve-month  period  beginning on the closing date exceeds $800,000 but is
     less  than  $1,200,000 (but not otherwise) or (2) $925,000 if the EBITDA of
     XXXPassword  during  the  first  full  twelve-month period beginning on the
     closing  date  exceed  $1,200,000.  The  Earn  Out  Amount is to be paid in
     monthly amounts equal only to 50% of the Free Net Cash Flow (as defined) of
     XXXPassword  during  the six year period from the closing date. Because the
     EBITDA  in  the  period  from  July  6,  2000  to  September  30,  2000 was
     approximately  $136,000,  a  portion  of  the Earn Out Amount ($68,263) was
     accrued and added to goodwill at September 30, 2000. An additional $645,000
     has  been  paid  and  added to goodwill during the year ended September 30,
     2001  in  connection  with  the  Earn Out Amount. An owner of the seller of
     XXXPassword, Ron Levi, is now on the Company's Board of Directors.


                                      F-9
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.   ACQUISITIONS  (CONTINUED)

     The  cost  of  the  XXXPassword  acquisition  was  as  follows:

     Fair value of 700,000 common shares issued         $1,061,875
     Earn-out amount capitalized                           713,263
                                                        ----------
       Amount charged to goodwill                       $1,775,138
                                                        ==========

     On  May 1, 2000, the Company began operating an adult nightclub in Houston,
     Texas  ("Chesapeake  Bay")  and acquired the club effective August 4, 2000.
     The  acquisition  of  Chesapeake  Bay  (subsequently  renamed  Rick's)  was
     accounted  for  by  the  purchase  method  of  accounting;  therefore,  the
     operations  of  Chesapeake  Bay  have  been  included  in  the accompanying
     statement  of  operations  since  the  date  of acquisition. Under purchase
     accounting,  the  purchase price was allocated to the assets acquired based
     on  their fair values. Consideration for the purchase was 160,000 shares of
     Company common stock valued at their fair market value of $189,000. Because
     the  Company's  common  stock  price  did  not  meet  certain  threshold
     requirements  in  August  2001,  the Company also was required to execute a
     $250,000  note payable to the seller in August 2001. The purchase price and
     adjustments to the historical book values of Chesapeake Bay are as follows:

     Fair value of inventory acquired                   $   12,165
     Fair values of property and equipment                 142,658
     excess cost over fair values assigned to goodwill     284,177
                                                        ----------
       Purchase price                                   $  439,000
                                                        ==========

     The  following unaudited pro forma information for the year ended September
     30,  2000  gives  effect to the transactions as if they had occurred at the
     beginning of the year. The unaudited pro forma information is presented for
     informational purposes only and is not necessarily indicative of results of
     operations  that  would  have  been  achieved  had  the  transactions  been
     completed  as  of the beginning of the year, nor are they indicative of the
     Company's  future  results  of  operations.

     Revenues                                      $ 14,854,067
     Net                                                348,384
                                                   ------------
     Net Loss Per Common Share                     $       0.10
                                                   ============

4.   LONG-TERM  DEBT

     Following is a summary of long-term debt at September 30:

<TABLE>
<CAPTION>
                                                                   2001         2000
                                                                -----------  -----------
<S>                                                             <C>          <C>
Note payable to a bank, payable at $8,315 per month,
including interest at the prime rate plus 1%, matures
December 2001, collateralized by land and building              $  397,571   $  453,824
in Houston, Texas.

9% notes payable to an individual, monthly payments
aggregating $22,732, including interest, maturing in
2018.  Collateralized by real estate in Minneapolis,
Minnesota.                                                       2,335,336    2,394,981

Note payable to partnerships, due in monthly
installments of $1,229 including interest at 12%;
collateralized by real estate.                                     116,325      117,067

Note payable to individual maturing March 2006,
due in monthly installments of $2,573, plus interest at
9.25%; collateralized by real estate.                              303,023      305,731

Note payable to corporation maturing April 2002,
due in monthly installments of $13,758 including
principal and interest at 10%; collateralized by real estate.      138,295      281,682

Note payable to individual, due in monthly installments of
17,957, including interest at 14% through August 2001,
collateralized by real estate.                                           -      184,381

10% note  payable to the seller of Chesapeake Bay
(see Note 3); principal and interest due monthly over
 a nine-year period beginning August 2001.                         248,564            -

Various notes, at interest rates ranging from 6% to 12%,
payable in monthly installments, including interest,
aggregating approximately $12,650, collateralized by
real estate.                                                       297,962      128,850
                                                                -----------  -----------
                                                                 3,837,076    3,866,516
Less current maturities                                           (327,162)    (456,749)
                                                                -----------  -----------
                                                                $3,509,914   $3,409,767
                                                                ===========  ===========
</TABLE>


                                      F-10
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.   LONG-TERM  DEBT  (CONTINUED)

     Substantially  all  the  Company's  assets  are pledged to secure the above
     debt.  The  prime  rate  was  6.0% at September 30, 2001. Following are the
     maturities  of  long-term  debt  for  the  years  ending  September  30:

          2002           $    327,162
          2003                216,195
          2004                234,881
          2005                278,819
          2006                561,837
     Thereafter             2,218,182
                         ------------
                         $  3,837,076
                         ============

5.   INCOME  TAXES

     Following is a reconciliation of income taxes (benefit) at the U.S. Federal
     tax  rate  to  the  amounts  recorded  by  the  Company for the years ended
     September  30:

                                                        2001        2000
                                                     ----------  ----------

     Taxes on income before income taxes
          at the statutory rate                      $ 486,446   $  74,957
     Utilization of net operating loss carryforward   (486,446)    (74,957)
                                                     ----------  ----------
                                                     $       -   $       -
                                                     ==========  ==========

5.   INCOME  TAXES  (CONTINUED)

     The  components  of  the net deferred tax asset/liability are as follows at
     September  30:

                                                          2001        2000
                                                     ----------  ----------
     Operating loss carryforwards                    $ 307,527   $ 792,842
     Deferred tax asset valuation allowance           (307,527)   (792,842)
                                                     ----------  ----------
                                                     $       -   $       -
                                                     ==========  ==========

     For tax purposes, the Company has a net operating loss carryforward
     amounting to approximately $827,000 which will expire, if not utilized,
     beginning in 2012.


                                      F-11
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   COMMITMENTS  AND  CONTINGENCIES

     Leases

     The  Company leases corporate office facilities. Following is a schedule of
     minimum  lease  payments  for  the  years  ending  September  30:

     2002                        14,382
     2003                        15,228
     2004                         7,416

     Concentration  of  Credit  Risk

     The  Company  invests  its  cash  and  certificates of deposit primarily in
     deposits  with  major banks. Certain deposits may be in excess of federally
     insured  limits. The Company has not incurred losses related to its cash on
     deposit  with  banks.

     Litigation

     The  Company  is  also the subject of routine legal matters in the ordinary
     course  of  business.  The  Company  does  not  believe  that  the ultimate
     resolution  of  the  matters  will  have a material impact on the Company's
     financial  position  or  results  of  operations

     Sexually  Oriented  Business  Ordinance  of  Houston,  Texas

     In  January  1997,  the  City  Council  of  the  City  of  Houston passed a
     comprehensive  new  Sexually  Oriented  Business  Ordinance (the Ordinance)
     regulating  the  location  of  and  the  conduct  within  sexually oriented
     businesses.  The Ordinance established new distances that Sexually Oriented
     Businesses  may  be  located  to  schools,  churches, playgrounds and other
     sexually  oriented  businesses.  There  were no provisions in the Ordinance
     exempting previously permitted sexually oriented businesses from the effect
     of the new Ordinance. In 1997, the Company was informed that Rick's Cabaret
     at its location at 3113 Bering Drive failed to meet the requirements of the
     Ordinance  and accordingly the renewal of the Company's Business License at
     that  location was denied. The location in north Houston opened in December
     1998  similarly failed to meet the requirements of the Ordinance as passed.

     The  Ordinance  provided  that  a business that 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 was 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.


                                      F-12
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

     Sexually Oriented Business Ordinance of Houston, Texas

     The  Company filed a written request with the City of Houston requesting an
     extension of time during which the Company could continue operations at its
     original location under the Amortization Period provisions of the Ordinance
     since  the  Company  was  unable  to  recoup  its  investment  prior to the
     effective  date of the Ordinance. An administrative hearing (the "Hearing")
     was  held  by the City of Houston to determine the appropriate Amortization
     Period  to  be  granted  to  the  Company.  At the Hearing, the Company was
     granted an amortization period through July 1998. The Company has the right
     to appeal any decision of the Hearing official to the district court in the
     State  of  Texas.

     In  May  1997,  the  City  of Houston agreed to defer implementation of the
     Ordinance  until the constitutionality of the Ordinance in its entirety 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  in  the  prior  Ordinance.

     There  are  other  provisions  in  the  Ordinance  that  were upheld by the
     District  Court,  including 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 the licensing of
     dancers.  These  provisions  could  be  detrimental  to the business of the
     Company.  The  Company, in concert with other sexually oriented businesses,
     is  appealing  these  aspects  of  the  Ordinance.

     The  City  of Houston has appealed the District Court's rulings to the U.S.
     Fifth  Circuit  Court  of  Appeals,  and the Company filed a brief with the
     Fifth  Circuit.  In  the event that the City of Houston is successful in an
     appeal,  the  Company's  Bering  Drive location could be out of compliance.
     Such  an  outcome  could  have  an adverse financial impact on the Company.

     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 on the
     Company's  Houston  locations.


                                      F-13
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

     Fair  Value  of  Financial  Instruments

     The  following  disclosure  of  the  estimated  fair  value  of  financial
     instruments  is  made  in accordance with the requirements of SFAS No. 107,
     Disclosures  about  Fair Value of Financial Instruments. The estimated fair
     value  amounts  have been determined by the Company, using available market
     information  and  appropriate  valuation  methodologies.

     The  fair  value  of  financial instruments classified as current assets or
     liabilities  including  cash  and  cash  equivalents and notes and accounts
     payable  approximate  carrying  value due to the short-term maturity of the
     instruments.  The  fair  value of short-term and long-term debt approximate
     carrying  value  base on their effective interest rates compared to current
     market  rates.

     Other

     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.  The  Langan  Agreement  contains  a
     confidentiality  provision  and  an  agreement by Mr. Langan not to compete
     upon  the  expiration  of  the  Langan  Agreement.  The  Company  has  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.

7.   EMPLOYEE  STOCK  OPTION  PLAN

     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 maybe either Incentive Stock Options, as
     that  term is defined in Section 422A of the Internal Revenue Code of 1986,
     as amended, or non-statutory options taxed under Section 83 of the Internal
     Revenue  Code  of 1986, as amended. 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 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 Plan. A total of 300,000
     shares  could  be  optioned and sold under the 1995 Plan and 500,000 shares
     under  the  1999 Plan. The Company does not plan to issue any other options
     under  the  1995  Plan.


                                      F-14
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   EMPLOYEE  STOCK  OPTION  PLAN  (CONTINUED)

     During  the year ended September 30, 2001 and 2000, options were granted as
     follows:

                                                   Weighted           Weighted
                                                   Average             Average
                                                   Exercise            Exercise
                                         2001       Price      2000     Price
                                       ---------  ---------  --------  -------
     Outstanding at beginning of year   590,500   $    2.37   192,500  $ 2.23
     Granted                            129,000   $    2.44   398,000  $ 2.48
     Expired                           (115,000)  $    2.36         -  $    -
     Exercised                                -           -         -
                                       ---------             --------
     Outstanding at end of year         604,500   $    2.39   590,500  $ 2.37
                                       ---------             --------
     Exercisable at end of year         421,500   $    2.35   280,000  $ 2.27
                                       ---------             --------

     SFAS  123

     In  October  1995, the Financial Accounting Standards Board ("FASB") issued
     SFAS  123,  "Accounting  for  Stock-Based Compensation." SFAS 123 defines a
     fair  value  based  method  of  accounting  for an employee stock option or
     similar  equity instrument and encourages all entities to adopt that method
     of accounting for all of their employee stock compensation plans. Under the
     fair  value  based  method, compensation cost is measured at the grant date
     based on the value of the award. However, SFAS 123 also allows an entity to
     continue  to  measure compensation cost for those plans using the intrinsic
     value  based  method  of  accounting  prescribed  by  APB  Opinion  No. 25,
     "Accounting  for  Stock  Issued  to  Employees."

     Under the intrinsic value based method, compensation cost is the excess, if
     any,  of  the  quoted  market  price  of  the  stock at grant date or other
     measurement date over the amount an employee must pay to acquire the stock.
     Entities electing to remain with the accounting in Opinion 25 must make pro
     forma disclosures of net income and earnings per share as if the fair value
     based  method  of  accounting  had been applied. The Company has elected to
     measure  compensation cost, including options issued, under Opinion 25. The
     Company  recorded  an additional $13,648 in expense for 2000 under SFAS 123
     for  options  issued to non-employees. Pro forma disclosures as required by
     SFAS  123  for  the  fiscal  years ended September 30, 2001 and 2000 are as
     follows:

                                                2001        2000
                                             ----------  ----------
     Pro forma net income (loss)             $1,203,210  $(187,705)
                                             ==========  ==========
     Pro forma net income (loss) per share   $     0.27  $   (0.04)
                                             ==========  ==========


                                      F-15
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.   EMPLOYEE  STOCK  OPTION  PLAN  (CONTINUED)

     The  fair  value  of  the  awards  was  estimated at the grant date using a
     Black-Scholes  option  pricing  model  with  the following weighted average
     assumptions for 2001: risk-free interest rate of 4.5%; volatility factor of
     124%;  and an expected life of the awards of one year. The weighted average
     assumptions  for  2000  were:  risk-free  interest rate of 5.5%; volatility
     factor of 80%; and an expected life of the awards of one year. The weighted
     average  contractual  life of the outstanding options at September 30, 2001
     and  2000  was  2.40  and  3.9  years,  respectively.

8.   OTHER  INCOME

     Other  income  in 2001 includes $155,000 representing settlement of a claim
     in  connection  with  the  Company's  agreement not to open a certain club.


9.   SEGMENT  INFORMATION

     Beginning  in  2000,  the  Company  is  operating  in two industries: adult
     nightclubs  and  adult  Internet  web  sites.

     Following  is a summary of segment information for the year ended September
     30,  2001  and  2000:

                                      2001          2000
                                  ------------  ------------
     Sales:
       Night clubs                $12,864,428   $11,157,040
       Internet                     6,795,213     1,582,276
                                  ------------  ------------
                                  $19,659,641   $12,739,316
                                  ============  ============
     Operating income (loss):
       Night clubs                $ 1,544,537   $ 1,152,591
       Internet                       649,888      (309,201)
                                  ------------  ------------
                                    2,194,425       843,390
     General corporate expenses      (664,567)     (698,626)
     Other income (expense), net     (215,140)       57,823
                                  ------------  ------------
     Net income                   $ 1,314,718   $   202,587
                                  ============  ============

     Identifiable assets:
       Night clubs                $10,287,040   $ 9,578,012
       Internet                     1,912,557     1,030,608
                                  ------------  ------------
                                   12,199,597    10,608,620
     General corporate assets       2,748,903     2,805,037
                                  ------------  ------------
       Total assets               $14,948,500   $13,413,657
                                  ============  ============


                                      F-16
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Capital expenditures:             2001      2000
                                     --------  --------
       Night clubs                   $384,249  $312,762
       Internet                        37,512   175,614
       General corporate              229,287    63,885
                                     --------  --------
                                     $651,048  $552,261
                                     ========  ========

     Depreciation and amortization:
       Night clubs                   $544,017  $474,756
       Internet                       268,185    92,774
       General corporate               37,660    18,267
                                     --------  --------
                                     $849,862  $585,797
                                     ========  ========

     Operating  income  represents  revenues  less  operating  expenses for each
     segment  and  excludes  income  and expenses of a general corporate nature.
     Identifiable  assets  by  segment  are  those  assets  that are used in the
     Company's  operations within that industry but exclude investments in other
     industry  segments.  General  corporate  assets  consist  principally  of
     corporate  cash,  land  and  other  assets.

10.  NEW  ACCOUNTING  STANDARD

     In  June 2001, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standard  No.  142,  "Goodwill  and Other Intangible
     Assets"  ("SFAS No. 142"). As its title implies, SFAS No. 142 addresses the
     accounting  for  goodwill and other intangible assets and will be effective
     for  the  Company's  fiscal year beginning October 1, 2001. Under SFAS 142,
     goodwill  will no longer be amortized. Instead, goodwill will be tested for
     impairment  initially  and  on  an  annual  basis  thereafter at a level of
     reporting referred to as the reporting unit. The first step of the goodwill
     impairment  test,  used to identify potential impairment, compares the fair
     value  of a reporting unit with its carrying amount, including goodwill. If
     the fair value of a reporting unit exceeds its carrying amount, goodwill of
     the  reporting unit is considered not impaired, thus the second step of the
     impairment  test is unnecessary. If the carrying amount of a reporting unit
     exceeds  its  fair  value,  the second step of the goodwill impairment test
     shall  be  performed  to  measure  the  amount  of impairment loss, if any.

     The second step of the goodwill impairment test, used to measure the amount
     of  impairment  loss,  compares  the  implied  fair value of reporting unit
     goodwill  with the carrying amount of that goodwill. If the carrying amount
     of reporting unit goodwill exceeds the implied fair value of that goodwill,
     an  impairment  loss shall be recognized in an amount equal to that excess.
     The  loss recognized cannot exceed the carrying amount of goodwill. After a
     goodwill  impairment  loss  is  recognized, the adjusted carrying amount of
     goodwill  shall  be  its  new  accounting  basis.  Subsequent reversal of a
     previously  recognized  goodwill  impairment  loss  is  prohibited once the
     measurement  of  that  loss  is  completed.


                                      F-17
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.  NEW  ACCOUNTING  STANDARD  (CONTINUED)

     The  implied  fair value of goodwill shall be determined in the same manner
     as  the  amount  of  goodwill  recognized  in  a  business  combination  is
     determined. That is, an entity shall allocate the fair value of a reporting
     unit  to  all  of  the  assets  and liabilities of that unit (including any
     unrecognized  intangible assets) as if the reporting unit had been acquired
     in  a business combination and the fair value of the reporting unit was the
     price paid to acquire the reporting unit. The excess of the fair value of a
     reporting  unit  over the amounts assigned to its assets and liabilities is
     the  implied  fair  value  of  goodwill.

     The  Company  has  not  begun its goodwill impairment test. Amortization of
     goodwill  amounted  to  $429,544 and $196,155 for the years ended September
     30,  2001  and  2000,  respectively.

11.  RELATED  PARTY  TRANSACTIONS

     Taurus  purchased  real  estate  in  Houston,  Texas  from Ralph McElroy, a
     principal stockholder of the Company, where Taurus operates an XTC Cabaret.
     The  Company acquired the property from Mr. McElroy for the same price that
     Mr. McElroy paid for the property. The Company financed the purchase of the
     property  by  the  issuance  of  a six-year $286,744 Convertible Debenture,
     secured  by  the  real  estate acquired. The Company is a guarantor of this
     Convertible  Debenture.  The principal balance of the Convertible Debenture
     is  due in July, 2004, in one lump sum payment. Interest is due and payable
     monthly,  with  the first interest payment beginning in September 1998. The
     Convertible  Debenture  is  convertible  into shares of Common Stock of the
     Company  at any time prior to maturity at the Conversion Price of $5.50 per
     share.

     In  connection  with  the sale of a Company subsidiary in 1999, the Company
     received  a  note  receivable  from  the holder of the two debentures above
     which  is equal in amount and rate to the debentures above. The Company has
     offset  these  notes  receivable  and  payable  in the accompanying balance
     sheets.

     On  March  29,  1999,  Robert  L.  Watters,  a  Director,  purchased  RCI
     Entertainment  Louisiana,  Inc.  ("RCI  Louisiana"),  a subsidiary, for the
     purchase  price  of  $2,200,000  consisting  of  $1,057,327  in  cash,  the
     endorsement  over to us of a $652,744 secured promissory note (the "McElroy
     Note")  (see above), a guaranteed promissory note in the amount of $326,773
     made  by  Mr.  Watters  (the  "Watters  Note"), and the cancellation by Mr.
     Watters  of  the  Company's  $163,156 indebtedness to him. The Watters Note
     ($134,890  at  September  30,  2001) is due and payable in 48 equal monthly
     installments  of  principal  and  interest in the amount of $7,977 with the
     final  payment  due  March 29, 2003. The Watters Note bears interest at the
     rate  of  eight  percent (8%) per annum and is guaranteed by RCI Louisiana,
     which  operates  a  Rick's  Cabaret  in  New  Orleans,  Louisiana.


                                      F-18
<PAGE>