Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB


[X]     Annual Report under Section 13 Or 15(d) of the Securities Exchange Act
        of 1934
        For the fiscal year ended September 30, 2002

[ ]     Transition report under Section 13 or 15(d) of the Securities Exchange
        Act of 1934

Commission File Number: 0-26958


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

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

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

                                 (281) 820-1181
                           (Issuer's Telephone Number)

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

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

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

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

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

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


<PAGE>
The Issuer's revenues for the year ended September 30, 2002 were $15,557,302.

     The aggregate market value of Common Stock held by non-affiliates of the
registrant at December 9, 2002, based upon the last reported sales prices on the
Nasdaq SmallCap Market, was $6,675,567.

     As of December 9, 2002, there were approximately 3,736,506 shares of Common
Stock outstanding (this amount excludes treasury shares).


<PAGE>
                                TABLE OF CONTENTS

PART I                                                              Page

Item 1.     Business                                                 1

Item 2.     Properties                                               6

Item 3.     Legal Proceedings                                        8

Item 4.     Submission of Matters to a Vote of Security Holders     10

PART II

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

Item 6.     Management's Discussion and Analysis of
            Financial Condition and Results of Operations           13

Item 7.     Financial Statements                                    17

Item 8.     Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosures                 17

PART III

Item 9.     Directors, Executive Officers, Promoters and
            Control Persons; Compliance with Section 16(a) of
            The Exchange Act                                        18

Item 10.    Executive Compensation                                  21

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

Item 12.    Certain Relationships and Related Transactions          26

Item 13.    Exhibits and Reports on Form 8-K                        26

Item. 14    Controls and Procedures                                 26


<PAGE>
                                     PART I

ITEM 1.     BUSINESS

INTRODUCTION

     Our name is Rick's Cabaret International, Inc.  We currently own and
operate six adult nightclubs under the names "Rick's Cabaret" and "XTC" that
offer live adult entertainment, restaurant and bar operations.  Our night clubs
are in Houston, Austin and San Antonio, Texas, and Minneapolis, Minnesota.  We
also own and operate an adults only "couples" night club in Houston called
"Encounters," which is a club for adult couples who enjoy the swingers'
lifestyle.  We also own 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.couplestouch.com and
xxxpassword.com.  All live content on our web sites is licensed from third
parties. Our web site  xxxpassword.com  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.eroticbids.com,
www.naughtybids.com, www.pornauction.com, www.xxxauctionville.com,
www.xxxbids.com, www.xxxgayauction.com, and 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 approximately 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. (OTCBB
symbol: "TAUR.OB")

BUSINESS ACTIVITIES--NIGHTCLUBS

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

     FEMALE ENTERTAINMENT. Our policy is to maintain high standards for both
personal appearance and personality for the topless entertainers and waitresses.


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Of equal importance is a performer's ability to present herself attractively and
to talk with customers. We prefer that the performers we hire be experienced
dancers. We make a determination as to whether a particular applicant is
suitable based on such factors of appearance, attitude, dress, communication
skills and demeanor. At all clubs except for our Minnesota location, the
entertainers are independent contractors. We do not schedule their work hours.

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

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

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

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

     CONTROLS. Operational and accounting controls are essential to the
successful operation of a cash intensive nightclub and bar business. We have
designed and implemented internal procedures and controls designed to ensure the
integrity of our operational and accounting records. 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


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all cash and credit card transactions occurring at the front door, the bars in
the club and the cashier station, (ii) a summary of the daily bartenders'
check-out reports, and (iii) a daily cash requirements analysis which reconciles
the previous day's cash on hand to the requirements for the next day's
operations. These daily computer reports alert management of any variances from
expected financial results based on historical norms. We conduct a monthly
independent overview of our financial condition and have engaged independent
accountants to conduct an annual audit 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
highly targeted methods to reach our customers: hotel publications, local radio,
cable television, newspapers, billboards, taxi-cab reader boards, and the
Internet, as well as a variety of promotional campaigns. These campaigns ensure
that the Rick's Cabaret name is kept before the public.

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

     NIGHTCLUB LOCATIONS. We 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 of XTC. Our
93%-owned subsidiary, Taurus Entertainment Companies, Inc., owns a nightclub in
Austin, Texas named XTC. We also own and operate an adults only "couples" night
club in Houston called "Encounters," which is a club for adult couples who enjoy
the swingers' lifestyle.

     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 continually explore expansion opportunities to open or acquire more
nightclubs in strategically valuable locations in the United States.


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

     In 1999, we began adult Internet Web site operations. Our
www.couplestouch.com and www.xxxpassword.com web site features adult content
licensed through Voice Media, Inc. Our Internet efforts include 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 that we compete with.

     In May 2002, we purchased 700,000 shares of our own common stock from Voice
Media, Inc. for an aggregate price of $918,700 that equals approximately $1.32
per share.  That purchase price was below market value on the date of the
purchase.  Voice Media. Inc. presently owns none of our shares of common stock.
These shares are presently treasury shares.  We may cancel these shares at a
later date. The control person of Voice Media, Inc. is Ron Levi, who was a
director until June 2002.   The terms of this transaction were the result of
arms-length negotiations between us and Voice Media, Inc.  We believe the
transaction was favorable to us in view of the market value of our common stock
and the payment terms, although no appraisal or fairness opinion was done.  All
management contracts previously signed relating to the management of
www.xxxpassword will remain in effect.  We will pay Voice Media, Inc. for the
700,000 shares as per the following schedule:

(a)     The amount of $229,675.00 due on January 10, 2003;
(b)     The amount of $229,675.00 due on January 10, 2004;
(c)     The amount of $229,675.00 due on January 10, 2005; and
(d)     A final payment in the amount of $229,675.00 due on January 10, 2006.

BUSINESS ACTIVITIES--INTERNET ADULT AUCTION WEB SITES

     Our adult auction web sites feature erotica and other adult materials that
are purchased in a bid-ask method. We charge the seller a fee for each
successful auction. 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 sites
contain new and used adult oriented consumer initiated auctions for items such
as adult videos, apparel, photo sets and adult paraphernalia. We also develop
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. NaughtyBids.com and our other web sites offer third party webmasters an
opportunity to create residual income from web surfers through the NaughtyBids
Affiliate Program, which pays third party webmasters a percentage of every
closing auction sale in which the buyer originally came from the affiliate
webmaster's site. There are numerous auction 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


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restrictions on the location of a so-called "sexually oriented business", there
are no barriers to entry into the adult cabaret entertainment market. For
example, there are approximately 50 adult nightclubs located in the Houston
area, all of which are in direct competition with our three Houston cabarets. In
Minneapolis, Rick's Cabaret is favorably located downtown and is a short walk
from the Metrodome Stadium and the Target Center. There is only one adult
nightclub in Minneapolis in direct competition with us.

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

GOVERNMENTAL REGULATIONS

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

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

     In Minneapolis, we are required to be in compliance with state and city
liquor licensing laws. Our location in Minneapolis is presently zoned to enable
the operation of a topless cabaret. We are presently a plaintiff in civil
litigation against the defendant City of Minneapolis. The City of Minneapolis
has filed a motion with the court, which is pending, in connection with matters
that could adversely effect our ability to conduct after hours business (1 a.m.
through 3 a.m.) in Minneapolis. See Item 3. Legal Proceedings-City of
Minneapolis After Hours Ordinance.


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     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, 2002, we had approximately 675 employees of which 46
are in management positions, including corporate and administrative operation,
and approximately 629 are engaged in entertainment, food and beverage service,
including bartenders and waitresses. None of our employees are represented by a
union and we consider our employee relations to be good. Additionally, we have
independent contractor relationships with more than 600 entertainers, who are
self-employed and perform at our locations on a non-exclusive basis as
independent contractors. Our entertainers in Minneapolis, Minnesota act as
commissioned employees.

SHARE REPURCHASES

     As of November 22, 2002, we owned 869,030 treasury shares of our common
stock that we acquired in open market purchases and from investors who
originally acquired the shares from us in private transactions. We may use these
shares to acquire assets in the future although we have no definitive
arrangements at this time to acquire any assets.

ITEM 2.     PROPERTIES

     Our principal executive offices are co-located at 505 North Belt, Houston,
Texas 77060 with our subsidiary, Taurus Entertainment Companies, Inc., in leased
facilities consisting of a total of 3,680 square feet.  We pay rent of
approximately $3,284 per month for this space.  We believe that our offices are
adequate for our present needs and that suitable space will be available to
accommodate our future needs.

     We own the three locations of Rick's Cabaret (two in Houston and one in
Minneapolis) and the two locations of XTC (one in Austin and one in San
Antonio).  We lease the South Houston location, formerly known as the Chesapeake
Bay Club. We own the location of our Encounters couples club in Houston.


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     The Rick's Cabaret located on Bering Drive in Houston has aggregate 12,300
square feet of space.  The balance as of September 30, 2002, that we owe on the
mortgage is $364,167 and the interest rate is prime plus 1%.  Currently, we pay
$4,289 in monthly principal and interest payments. The last mortgage payment is
due in 2004 with a balloon payment of $297,893.

     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.  We recently
paid off the mortgage and we now own the property free and clear.

     The Rick's Cabaret located in Minneapolis has 15,400 square feet of space.
The balance as of September 30, 2002, that we owe on the mortgage is $2,270,095
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. The balance of the mortgage that we owe as of September 30,
2002 is $ 278,590 and the interest rate of 11%. Currently the monthly principal
and interest payment is $ 9,822. The last payment is due in June 2005.

     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
to Mr. McElroy 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.

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

     Our 93%-owned subsidiary, Taurus Entertainment Companies, Inc. 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, 2002 that we owe on the Brazoria County
ranch mortgage is $300,052 and the interest rate is 9.25%. We pay $2,573 in
monthly principal and interest payments. The last mortgage payment is due in
February 2006 with a balloon payment of $287,920.

     The balance as of September 30, 2002 that we owe on the Wise County raw
land mortgage is $144,708 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 have entered into a contract to sell the raw land in Wise County, Texas for
approximately $162,450. We presently intend to close this transaction on or
about December 31, 2002. We will use the proceeds from this sale to pay off the
mortgage on the property and for closing costs.


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     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
"Amortization Period") if the owner were unable to recoup, by the effective date
of the Ordinance, its investment in the business that was incurred through the
date of the passage and approval of the Ordinance.

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

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

     The City of Houston has appealed the District Court's rulings with the
Fifth Circuit Court of Appeals. A hearing was held in December 2002, but the
Court rendered no opinion. 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


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adverse impact on our future. Our nightclub in our south Houston location has a
valid permit/license that will expire in December 2005. The permits for our
north Houston location and our Bering Drive location have expired.

     There are other provisions in the Houston, Texas Ordinance, such as
provisions governing the level of lighting in a sexually oriented business, the
distance between a customer and dancer while the dancer is performing in a state
of undress and provisions regarding the licensing of dancers and club managers
that were upheld by the court which may be detrimental to our business. We, in
concert with other sexually oriented businesses, are appealing these aspects of
the Houston, Texas 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 requirement between a customer and a dancer
while dancing, and the requirement that dancers be licensed. The City of
Houston's enforcement of the Ordinance could have an adverse impact on the
Rick's locations in Houston, Texas. The current requirement of a three-foot
distance between a dancer and a customer could reduce customer satisfaction and
could result in fewer customers at the Houston location. The requirement that a
dancer be licensed could result in fewer dancers working, which could have an
adverse impact on the Houston location. It is unknown what future impact the
enforcement of the Ordinance may have our Houston locations.

CITY OF MINNEAPOLIS AFTER HOURS ORDINANCE

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

     The City of Minneapolis took no appeal from the temporary injunction, the
appeal time has expired, and the injunction remains in full force and effect.
Also included in the lawsuit was a claim for damages from having wrongfully been
denied the right to conduct after-hours entertainment for over one year. We
estimate that our 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 Minnesota Court of Appeals
dismissed the City of Minneapolis's appeal for lack of appellate jurisdiction.
The City of Minneapolis has also repealed the ordinance that permits liquor
establishments in the central business district to remain open from 1:00 a.m. to
3:00 a.m., for the purpose of conducting entertainment. Liquor establishments
having such a license will be required to cease operating from 1:00 a.m. until
3:00 a.m. as of December 31, 2001. However, since we remain open, not pursuant
to a license, but pursuant to the temporary injunction, we will remain open
until 3 a.m. until the injunction is dissolved by a court. The City of
Minneapolis has filed a motion to dissolve the injunction, which is presently
pending. We have filed a motion for summary judgment on the issue of our damage
claim. Our Minneapolis location is also a full service restaurant and food


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<PAGE>
service establishment. We believe that we can continue to remain open as a food
service establishment (with entertainment) until our usual 3:00 a.m. closing
time pursuant to our being a food service establishment.

OTHER LEGAL MATTERS

     In April 2002, we were named a defendant in a civil lawsuit named Callender
v. Rick's Cabaret International, Inc. et al, No. SA02CA0321FB, U.S. District
Court, San Antonio Division. The plaintiff alleges gender discrimination related
to our allegedly not promoting females to management positions. This lawsuit was
transferred to the Houston Division of the Court which has not assigned a case
number or judge at this time. We believe that this matter will be resolved in
our favor because the allegations are unfounded and there is no basis in law or
in fact for the allegations.

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

     None.


                                       10
<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 ended September 30, 2002.

COMMON STOCK PRICE RANGE

Our fiscal year ends September 30.

                       HIGH          LOW

Fiscal 2001
-----------

First Quarter          $3.00         $0.87
Second Quarter         $3.37         $1.12
Third Quarter          $2.75         $2.00
Fourth Quarter         $3.94         $1.95

Fiscal 2002
-----------

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


     On December 9, 2002, the last sales price for the common stock as reported
on the Nasdaq SmallCap Market was $2.28.  On December 9, 2002, there were
approximately 300 stockholders of record of the common stock.

TRANSFER AGENT AND REGISTRAR

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

DIVIDEND POLICY

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


                                       11
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES

     During the quarter ended September 30, 2002, we sold unregistered shares of
our common stock in reliance upon exemptions from registration under the
Securities Act of 1933 as amended (the "Act") as provided in Section 4(2) of the
Act.  Each certificate issued for unregistered securities contained a legend
stating that the securities have not been registered under the Act and setting
forth the restrictions on the transferability and the sale of the securities.
No underwriter participated in, nor did we pay any commissions or fees to any
underwriter in connection with any of these transactions.  None of the
transactions involved a public offering.

     In August 2002, we issued 10,000 shares of our restricted common stock to
WMF Investments, Inc. as payment-in-kind for improvements to the real estate at
our Chesapeake Bay Cabaret in Houston.  We made this transaction in reliance
upon exemptions from registration under Section 4(2) of the Act.

EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                      NUMBER OF SECURITIES
                                                                                                    REMAINING AVAILABLE FOR
                                 NUMBER OF SECURITIES TO BE                                       FUTURE ISSUANCE UNDER EQUITY
                                  ISSUED UPON EXERCISE OF         WEIGHTED-AVERAGE EXERCISE            COMPENSATION PLANS
                               OUTSTANDING OPTIONS, WARRANTS    PRICE OF OUTSTANDING OPTIONS,   (EXCLUDING SECURITIES REFLECTED
                                         AND RIGHTS                  WARRANTS AND RIGHTS                 IN COLUMN (a))

      PLAN CATEGORY                         (a)                              (b)                              (c)
--------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                             <C>                              <C>
Equity compensation plans
approved by security holders                          476,000  $                          2.52                               -0-
--------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders                          167,500  $                          1.87                               -0-
--------------------------------------------------------------------------------------------------------------------------------
          TOTAL                                       643,500  $                          2.40                               -0-
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

DIRECTOR COMPENSATION

     We do not currently pay any cash directors' fees, but we pay the expenses
of our directors in attending board meetings. In 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


                                       12
<PAGE>
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, 2002,
476,000  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.

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

     The following discussion should be read in conjunction with our audited
consolidated financial statements and the related notes to the financial
statements included in this annual report.

FORWARD LOOKING STATEMENT AND INFORMATION

     We are including the following cautionary statement in this Form 10-KSB to
make applicable and take advantage of the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by us or on behalf of us.  Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements, which are other than statements
of historical facts.  Certain statements in this Form 10-KSB are forward-looking
statements.  Words such as "expects," "believes," "anticipates," "may," and
"estimates" and similar expressions are intended to identify forward-looking
statements.  Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. Such risks and
uncertainties are set forth below.  Our expectations, beliefs and projections
are expressed in good faith and we believed that they have a reasonable basis,


                                       13
<PAGE>
including without limitation, our examination of historical operating trends,
data contained in our records and other data available from third parties.
There can be no assurance that our expectations, beliefs or projections will
result, be achieved, or be accomplished.  In addition to other factors and
matters discussed elsewhere in this Form 10-KSB, the following are important
factors that in our view could cause material adverse affects on our financial
condition and results of operations: the risks and uncertainties related to our
future operational and financial results, the risks and uncertainties relating
to our Internet operations, competitive factors, the timing of the openings of
other clubs, the availability of acceptable financing to fund corporate
expansion efforts, our dependence on key personnel, the ability to manage
operations and the future operational strength of management, and the laws
governing the operation of adult entertainment businesses.  We have no
obligation to update or revise these forward-looking statements to reflect the
occurrence of future events or circumstances.

GENERAL

     We operate in two businesses in the adult entertainment industry:

1.   We own and operate upscale adult nightclubs serving primarily businessmen
     and professionals. Our nightclubs offer live adult entertainment,
     restaurant and bar operations. We own and operate six adult nightclubs
     under the name "Rick's Cabaret" and "XTC" in Houston, Austin and San
     Antonio, Texas, and Minneapolis, Minnesota. We also own and operate an
     adult-themed club called "Encounters" that serves the couples or
     "swingers'" market in Houston. No sexual contact is permitted at any of our
     locations.

2.   We have extensive Internet activities.

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

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

     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.

     In fiscal 2002, we took a one time charge of $2,532,384 as a result of the
cumulative effect of the change in accounting for goodwill.


                                       14
<PAGE>
     In fiscal 2002, we greatly reduced our usage of promotional pricing for
membership fees for our adult entertainment web sites. This reduced our revenues
from these web sites.

RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002 AS COMPARED
TO THE FISCAL YEAR ENDED SEPTEMBER 30, 2001

     For the fiscal year ended September 30, 2002, we had consolidated total
revenues of $15,557,302, compared to consolidated total revenues of $19,659,641
for the year ended September 30, 2001.  This was a decrease of $4,102,339 or
20.87%.  While we had an increase in total revenues in our existing and new
nightclub operations of $578,678, the decrease in total revenues resulted from
our Internet businesses was $4,681,017.  Revenues from nightclub operations for
same-location same-period increased by 4.51%, while revenues of Internet
businesses for same-sites same-period decreased by 68.90%.  The overall decrease
was primarily due to the decrease in our Internet activities and the general
decrease in revenues in the entertainment industry post September 11, 2001.

     Our net income before the cumulative effect of an accounting change for the
year ended September 30, 2002 was $261,204 compared to $1,314,718 for the year
ended September 30, 2001. The decrease in net income was primarily the decrease
in revenues from our Internet activities. Our net income for nightclub
operations was $1,315,422 for the year ended September 30,2002 compared with
$1,544,537 for the year ended September 30, 2001. Our net income for our
Internet businesses was $498,851 for the year ended September 30, 2002 compared
with $649,888 for the year ended September 30, 2001. Our net income for our
nightclub operations for the same-location-same-period decreased by 28.12%. Our
net income for our Internet operations for the same-web-site-same-period
decreased by 23.24%. We had a net loss of $2,271,180 for the year ended
September 30,2002 as a result of the cumulative effect of the change in the
accounting for goodwill of $2,532,384.

     Our cost of goods sold for the year ended September 30, 2002 was 19.09% of
total revenues compared to 33.51 % of related revenues for the year ended
September 30, 2001.  The decrease was due primarily to decrease in costs of our
Internet activities.  Our cost of goods sold for the nightclub operations for
the year ended September 30, 2002 was 25.86% of our sales of alcoholic beverages
and food compared to 24.80% for the year ended September 30, 2001.  We continued
our efforts to achieve reductions in cost of goods sold of the club operations
through improved inventory management.  We are continuing a program to improve
margins from liquor and food sales and food service efficiency.  Our cost of
sales from our Internet operation for the year ended September 30, 2002 was
43.08% compared to 70.02% of related revenues for the year ended September 30,
2001.  We have implemented measures to reduce expenses in our Internet
operations.

     Our payroll and related costs for the year ended September 30, 2002 were
$5,143,549 compared to $4,774,118 for the year ended September 30, 2001. The
increase was primarily due to the increase in payroll in our club and corporate
activities. Our payroll for our nightclub operations for
same-location-same-period increased by 10.95%. Our payroll for
same-site-same-period Internet operations decreased by 48.11%. We believe that
our labor and management staff levels are at appropriate levels.


                                       15
<PAGE>
     Our other selling, general and administrative expenses for the year ended
September 30, 2002 were $6,819,634 compared to $6,768,779 for the year ended
September 30, 2001. The increase was primarily due to the increase in taxes &
permit and advertising & marketing expenses.    Other selling, general and
administrative expenses for same-location-same-period for the nightclub
operations increased by 2.18%, while the same expenses for same-site same-period
for Internet operations decreased by 49.70%.

     Our interest expense for the year ended September 30, 2002 was $370,401
compared to $354,726 for the year ended September 30, 2001.  The increase was
primarily due to the increase in debt related to our purchase of 750,000 of our
shares in a private transaction (these share are now treasury shares).  We have
increased our debt to $4,607,353 as of September 30, 2002 compared to debt of
$3,837,076 as of September 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2002, we had working capital deficit of $32,997 compared
to working capital of $301,256 as of September 30, 2001. Because of the large
volume of cash we handle, stringent cash controls have been implemented. At
September 30, 2002, our cash and cash equivalents were $733,366 compared to
$704,628 at September 30, 2001.

     Our net cash provided by operating activities in the year ended September
30, 2002 was $1,285,545 compared to $2,169,490 for the year ended September 30,
2001. The decrease in cash provided by operating activities was primarily due to
the net loss.

     Our depreciation and amortization for the year ended September 30, 2002 was
$815,797 compared to $849,862 for the year ended September 30, 2001.  The
decrease in depreciation and amortization was primarily due to the decrease in
amortization expenses through the application of SFAS No. 142 "Goodwill and
Other Intangible Assets".  Under SFAS No. 142, goodwill and intangible assets
with indefinite lives are no longer amortized but are reviewed at least annually
for impairment.

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

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

     We believe that the adult entertainment industry standard of treating
entertainers as independent contractors provides us with safe harbor protection
to preclude payroll tax assessment for prior years. We have prepared plans that


                                       16
<PAGE>
we believe will protect our profitability in the event that sexually oriented
business industry is required in all states to convert dancers who are now
independent contractors into employees.

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

SEASONALITY

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

GROWTH STRATEGY

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

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

ITEM 7.     FINANCIAL STATEMENTS

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

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

     There have been no changes in or disagreements with accountants on
accounting and financial disclosure. Our independent auditors are now named
Whitley Penn. The former name of our independent auditors was Jackson & Rhodes.
In 2002, the accounting and audit division of Jackson & Rhodes merged with
Whitley Penn. Our independent auditors have been advised by the Securities and
Exchange Commission that for purposes of this Item 8 there has been no
reportable change in independent auditors. The CPA at Whitley Penn who
supervised our audit for the fiscal year ended September 30, 2002 is the same
CPA who supervised our prior year's audit at Jackson & Rhodes.


                                       17
<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 five
persons.


Name                  Age      Position
-------------------------------------------------------------------------------
Eric S. Langan        34       Director, Chief Executive Officer, President and
                               Chief Financial Officer
Travis Reese          33       Director and V.P.-Director of Technology
Robert L. Watters     51       Director
Alan Bergstrom        56       Director
Steven Jenkins        46       Director
Loren Wheeler         38       V.P.-Operations

     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.

     On October 28, 2002, in the matter in the Circuit Court of Mobile, Alabama,
against Eric Langan, our President and Director, the State of Alabama prosecutor
made a motion not to prosecute the case against Mr. Langan which was granted by
the Court. The State's declining to prosecute Mr. Langan concluded the matter.
The charges had been in connection with a tanning salon that Mr. Langan
previously owned and sold more than five years ago. The charges were completely
and totally unrelated to our operations or activities, or Mr. Langan's
relationship as our President and Director. The charges related to a recently
enacted statute in Alabama aimed at the adult entertainment business. The
charges had been 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.


                                       18
<PAGE>
     Robert L. Watters is our founder and has been our Director since 1986. Mr.
Watters was our president and our chief executive officer from 1991 until March
1999. He was also a founder in 1989 and operator until 1993 of the Colorado Bar
& Grill, an adult club located in Houston, Texas and in 1988 performed site
selection, negotiated the property purchase and oversaw the design and
permitting for the club that became the Cabaret Royale, in Dallas, Texas. Mr.
Watters practiced law as a solicitor in London, England and is qualified to
practice law in New York State. Mr. Watters worked in the international tax
group of the accounting firm of Touche, Ross & Co. (now succeeded by Deloitte &
Touche) from 1979 to 1983 and was engaged in the private practice of law in
Houston, Texas from 1983 to 1986, when he became involved in our full time
management. Mr. Watters graduated from the London School of Economics and
Political Science, University of London, in 1973 with a Bachelor of Laws
(Honours) degree and in 1975 with a Master of Laws degree from Osgoode Hall Law
School, York University.

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

     Alan Bergstrom became our Director in 1999. Since 1997, Mr. Bergstrom has
been the Chief Operating Officer of Eagle Securities, which is an investment
consulting firm. Mr. Bergstrom is also 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.

     Loren Wheeler became our V.P.-Operations in 2002.  From 1999 through 2002,
Mr. Wheeler was the General Manager of our Minneapolis nightclub.  From 1994
through 1999, Mr. Wheeler was an entertainment and music coordinator for Classic
Affairs, Inc.  From 1990 through 1994, Mr. Wheeler was an entertainment and
music coordinator for Michael J. Peters Management's Solid Gold, Inc.

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


                                       19
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS

     We have no compensation committee and no nominating committee. Decisions
concerning executive officer compensation for fiscal 2002 were made by the full
Board of Directors. Eric S. Langan and Travis Reese are our only directors who
are also our officers.

     We have an Audit Committee of independent directors whose members are
Robert L. Watters, Alan Bergstrom and Steven Jenkins. The primary purpose of our
Audit Committee is to oversee our financial reporting process on behalf of the
Board of Directors. Our Audit Committee meets with our Chief Accounting Officer
and with our independent public accountants. Our Audit Committee evaluates the
responses by the Chief Accounting Officer both to the facts presented and to the
judgments made by the outside independent accountants. Our Audit Committee
reports its activities to the full Board after each such meeting so that the
Board is kept informed of the Audit Committee's activities on a current basis.
The activities and responsibilities of our Audit Committee include: the
nomination or selection of the independent auditors; the review of the results
of the audit; and a detailed, overall corporate review of the adequacy of our
internal controls.

     Our Board of Directors has adopted a Charter for our Audit Committee. The
Charter establishes the independence of our Audit Committee and sets forth the
scope of our Audit Committee's duties. The Purpose of our Audit Committee is to
conduct continuing oversight of our financial affairs. Our Audit Committee
conducts an ongoing review of our financial reports and other financial
information prior to their being filed with the Securities and Exchange
Commission, or otherwise provided to the public. Our Audit Committee also
reviews our systems, methods and procedures of internal controls in the areas
of: financial reporting, audits, treasury operations, corporate finance,
managerial, financial and SEC accounting, compliance with law, and ethical
conduct. Our Audit Committee is objective, and reviews and assesses the work of
our independent accountants and our internal audit department.

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

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.


                                       20
<PAGE>
ITEM 10.     EXECUTIVE COMPENSATION

     The following table reflects all forms of compensation for services to us
for the fiscal years ended September 30, 2002, 2001 and 2000 of certain
executive officers. No other executive officers received compensation that
exceeded $100,000 during fiscal 2002.

<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>
Eric Langan
              2002  $260,000     -0-         -0-         -0-         -0-      -0-        -0-
              2001  $239,600     -0-         -0-         -0-       5,000      -0-        -0-
              2000  $175,890  $1,000         -0-         -0-       5,000      -0-        -0-

Mr. Langan is our Chairman, a Director, Chief Executive Officer, President and Acting Chief
Financial Officer.

Travis Reese
              2002  $137,500     -0-         -0-         -0-         -0-      -0-        -0-
              2001  $102,000     -0-         -0-         -0-       5,000      -0-        -0-
              2000  $ 93,460     -0-         -0-         -0-       5,000      -0-        -0-

Mr. Reese is a Director and V.P.-Director of Technology
<FN>
----------------------------------
(1)  We provide certain executive officers certain personal benefits. Since the
     value of such benefits does not exceed the lesser of $50,000 or 10% of
     annual compensation, the amounts are omitted.
</TABLE>
<TABLE>
<CAPTION>
            OPTION/SAR GRANTS IN LAST FISCAL YEAR (Individual Grants)


               Number of      Percent of Total
               Securities     Options/SARs
               Underlying     Granted To
               Options/SARs   Employees In      Exercise of     Expiration
Name           Granted        Fiscal Year       Base Price      Date
               #              %                 $/share
------------------------------------------------------------------------------
<S>           <C>             <C>               <C>             <C>

Eric Langan   -0- shares (1)             -0-%   Not Applicable  Not Applicable

Travis Reese  -0- shares (1)             -0-%   Not Applicable  Not Applicable
<FN>
------------------------------
(1)  There were no grants of options to these persons during the fiscal year
     ended September 30, 2002
</TABLE>


                                       21
<PAGE>
<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-       $ 66,000  /  $-0-



Travis Reese      -0- (1)       -0-         45,000  /  -0-       $  2,250  /  $-0-
<FN>
-----------------------------------
(1)  There were no exercises of options by these persons during the fiscal year
     ended September 30, 2002
</TABLE>

DIRECTOR COMPENSATION

     We do not currently pay any cash directors' fees, but we pay the expenses
of our directors in attending board meetings.

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


                                       22
<PAGE>
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 9, 2002, 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 December 9, 2002,
476,000 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.


                                       23
<PAGE>
ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
             RELATED STOCKHOLDER MATTERS

     The following table sets forth certain information at December 9, 2002,
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 (9)
-------------------------------------------------------------------------------
<S>                                 <C>             <C>            <C>
Eric S. Langan
505 North Belt, Suite 630
Houston, Texas 77060                1,046,950  (1)  Common Stock      26.1%

Robert L. Watters
315 Bourbon Street
New Orleans, Louisiana 70130           25,000  (2)  Common Stock      0 .7%

Steven L. Jenkins
16815 Royal Crest Drive, Suite 160
Houston, Texas 77058                   10,000  (3)  Common Stock       0.3%

Travis Reese
505 North Belt, Suite 630
Houston, Texas 77060                   45,330  (4)  Common Stock       1.2%

Alan Bergstrom
707 Rio Grande, Suite 200
Austin, Texas 78701                    30,000  (2)  Common Stock       0.8%

Loren Wheeler
505 North Belt, Suite 630
Houston, Texas 77060                   11,300  (5)  Common Stock       0.3%

E. S. Langan. L.P.
505 North Belt, Suite 630
Houston, Texas 77060                  578,632       Common Stock      15.4%

Ralph McElroy
1211 Choquette
Austin, Texas, 78757                  817,147  (6)  Common Stock      21.1%


                                       24
<PAGE>
William Friedrichs
16815 Royal Crest Dr., Suite 260
Houston, Texas 77058                  401,850  (7)  Common Stock      10.7%

All of our Directors and
Officers as a
Group of five persons               1,168,580  (8)  Common Stock      28.4%
<FN>
_____________________________
(1) Mr. Langan has sole voting and investment power for 223,318 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 245,000 shares of common stock that are presently exercisable.

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

(3) Includes options to purchase up to 10,000 shares of common stock that are
presently exercisable.

(4) Includes options to purchase up to 45,000 shares of common stock that are
presently exercisable.

(5) Includes options to purchase up to 10,000 shares of common stock that are
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 170,000 shares owned by WMF Investments, Inc.  Mr. Friedrichs is a
control person of WMF Investments, Inc.

(8) Includes options to purchase up to 360,000 shares of common stock that are
presently exercisable.

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

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

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


                                       25
<PAGE>
ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

     In  May  2002, we loaned $100,000 to Eric Langan who is our Chief Executive
Officer.  The  promissory  note  is  unsecured,  bears  interest  at  11% and is
amortized over a period of ten years.  The note contains a provision that in the
event Mr. Langan leaves the Company for any reason, the note immediately becomes
due  and  payable in full.  The balance of the note was $98,605 at September 30,
2002  and  is  included  in  other  assets  in  our  balance  sheet.

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

          None.

(b)  Reports on Form 8-K.

          None.

ITEM 14.     CONTROLS AND PROCEDURES

     Eric Langan, our Chief Executive Officer and Chief Financial Officer, has
concluded that our disclosure controls and procedures are appropriate and
effective.  He has evaluated these controls and procedures as of a date within
90 days of the filing date of this report on Form 10-KSB.  There were no
significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.


                                       26
<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 30, 2002.


                               Rick's Cabaret International, Inc.

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

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

Signature                Title                                Date


----------------------
/s/ Eric Langan          Director, Chief Executive Officer,   December 30, 2002
Eric Langan              President and Chief Financial
                         Officer


----------------------
/s/ Travis Reese         Director and                         December 30, 2002
Travis Reese             V.P.-Director of Technology


----------------------
/s/ Robert L. Watters    Director                             December 30, 2002
Robert L. Watters



----------------------
/s/ Alan Bergstrom       Director                             December 30, 2002
Alan Bergstrom


----------------------
/s/ Steven Jenkins       Director                             December 30, 2002
Steven Jenkins


                                       27
<PAGE>
Certification of Chief Executive Officer of Rick's Cabaret International, Inc.
------------------------------------------------------------------------------
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18
--------------------------------------------------------------------------------
U.S.C. 63.
----------

     I, Eric Langan, the Chief Executive Officer of Rick's Cabaret
International, Inc. hereby certify that Rick's Cabaret International, Inc.
periodic report on Form 10-KSB and the financial statements contained therein
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d) and that information contained in
the periodic report on Form 10-KSB and the financial statements contained
therein fairly represents, in all material respects, the financial condition and
results of the operations of Rick's Cabaret International, Inc.


                                  ------------------------------------------
Date:  December 30, 2002          /s/     Eric Langan
                                          Eric Langan
                                          Chief Executive Officer of
                                          Rick's Cabaret International, Inc.




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


     I, Eric Langan, the Chief Financial Officer of Rick's Cabaret
International, Inc. hereby certify that Rick's Cabaret International, Inc.
periodic report on Form 10-KSB and the financial statements contained therein
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d) and that information contained in
the periodic report on Form 10-KSB and the financial statements contained
therein fairly represents, in all material respects, the financial condition and
results of the operations of Rick's Cabaret International, Inc.



                                  ------------------------------------------
Date:  December 30, 2002          /s/     Eric Langan
                                          Eric Langan
                                          Chief Financial Officer of
                                          Rick's Cabaret International, Inc.


                                       28
<PAGE>
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Eric Langan, certify that:
1. I have reviewed this annual report on Form 10-KSB of Rick's Cabaret
International, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: December 30, 2002

_______________________
/s/ Eric Langan
Eric Langan
Chief Executive Officer


                                       29
<PAGE>
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Eric Langan, certify that:
1. I have reviewed this annual report on Form 10-KSB of Rick's Cabaret
International, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: December 30, 2002

_______________________
/s/ Eric Langan
Eric Langan
Chief Financial Officer


                                       30
<PAGE>
<TABLE>
<CAPTION>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

                          AUDITED FINANCIAL INFORMATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                  PAGE
                                                                  ----
<S>                                                               <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . .  F-2

Consolidated Balance Sheets as of
     September 30, 2002 and 2001 . . . . . . . . . . . . . . . .  F-3

Consolidated Statements of Operations for the years ended
     September 30, 2002 and 2001 . . . . . . . . . . . . . . . .  F-4

Consolidated Statements of Changes in Stockholders' Equity
     for the years ended September 30, 2002 and 2001 . . . . . .  F-5

Consolidated Statements of Cash Flows for the years ended
     September 30, 2002 and 2001 . . . . . . . . . . . . . . . .  F-6

Notes to Consolidated Financial Statements . . . . . . . . . . .  F-7
</TABLE>


                                      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, 2002 and 2001, and the
related  consolidated  statements of operations, changes in stockholders' equity
and  cash  flows  for  the  years then ended. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audits.

We  conducted our audit 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, 2002 and 2001,
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.

As  discussed in Note 4 to the financial statements, in 2002 the Company changed
its  method  of  accounting  for goodwill to conform with Statement of Financial
Accounting  Standards  No.  142.


                                      Whitley  Penn


Dallas,  Texas
November  7,  2002


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

                                               ASSETS

                                                                               September 30,
                                                                            2002          2001
                                                                        ------------  ------------
<S>                                                                     <C>           <C>
 Current assets:
   Cash                                                                 $   733,366   $   704,628
   Accounts receivable                                                      226,637       379,653
   Inventories                                                              210,802       196,300
   Prepaid expenses                                                          63,897        81,477
                                                                        ------------  ------------
     Total current assets                                                 1,234,702     1,362,058
 Property and equipment:
   Buildings, land and leasehold improvements                             9,278,260     9,174,252
   Furniture and equipment                                                1,938,705     1,545,876
                                                                        ------------  ------------
                                                                         11,216,965    10,720,128
   Less accumulated depreciation                                         (2,094,712)   (1,717,214)
                                                                        ------------  ------------
                                                                          9,122,253     9,002,914
 Other assets:
   Goodwill, less accumulated amortization of $764,930 and $1,011,766     1,883,007     4,415,391
   Other                                                                    197,358       168,137
                                                                        ------------  ------------
                                                                          2,080,365     4,583,528
                                                                        ------------  ------------
                                                                        $12,437,320   $14,948,500
                                                                        ============  ============


                                 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Current portion of long-term debt                                    $   459,972   $   327,162
   Accounts payable - trade                                                 274,659       234,591
   Accrued expenses                                                         533,068       499,049
                                                                        ------------  ------------
     Total current liabilities                                            1,267,699     1,060,802
 Long-term debt, less current portion                                     4,147,381     3,509,914
                                                                        ------------  ------------
         Total liabilities                                                5,415,080     4,570,716
 Commitments and contingencies                                                    -             -
 Minority interests                                                          80,164        78,816
 Stockholders' equity:
   Preferred stock - $.10 par, authorized
     1,000,000 shares; none issued                                                -             -
   Common stock - $.01 par, authorized
     15,000,000 shares; 4,598,678 shares issued;
     3,747,648 and 4,577,978 shares outstanding                              46,087        45,987
   Additional paid-in capital                                            11,273,149    11,257,449
   Retained earnings (deficit)                                           (3,202,029)     (930,849)
   Treasury stock, 851,030 and 30,700 shares, at cost                    (1,175,131)      (73,619)
                                                                        ------------  ------------
     Total stockholders' equity                                           6,942,076    10,298,968
                                                                        ------------  ------------
                                                                        $12,437,320   $14,948,500
                                                                        ============  ============
<FN>
                    See accompanying notes to consolidated financial statements.
</TABLE>


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                 RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           Year Ended September 30,
                                                              2002          2001
                                                          ------------  ------------
<S>                                                       <C>           <C>
 Revenues:
   Sales of alcoholic beverages                           $ 6,380,914   $ 5,816,999
   Sales of food and merchandise                            1,583,433     1,560,270
   Service revenues                                         5,210,950     5,205,917
   Internet revenues                                        2,112,823     6,793,840
   Other                                                      269,182       282,615
                                                          ------------  ------------

                                                           15,557,302    19,659,641

 Operating expenses:
   Cost of goods sold                                       2,970,139     6,586,886
   Salaries and wages                                       5,143,549     4,774,118
   Other general and administrative:
     Taxes and permits                                      1,978,360     1,874,442
     Charge card fees                                         261,952       299,691
     Rent                                                     219,209       261,258
     Legal and professional                                   665,677       752,819
     Advertising and marketing                                653,884       535,370
      Impairment of goodwill                                  325,776             -
     Other                                                  2,714,776     3,045,199
                                                          ------------  ------------

                                                           14,933,322    18,129,783
                                                          ------------  ------------

 Income from operations                                       623,980     1,529,858

 Other income (expense)
   Interest expense                                          (370,401)     (354,726)
   Interest income                                             22,245        30,267
   Gain/(loss) on sale/disposition of assets                  (14,037)      (45,681)
   Other                                                         (583)      155,000
                                                          ------------  ------------

 Income before cumulative effect of accounting change         261,204     1,314,718
   Cumulative effect of accounting change (Note 4)         (2,532,384)            -
                                                          ------------  ------------
 Net income (loss)                                        $(2,271,180)  $ 1,314,718
                                                          ============  ============
 Basic income (loss) per common share:
   Income before cumulative effect of accounting change   $      0.06   $      0.30
                                                          ============  ============
   Net income (loss)                                      $     (0.54)  $      0.30
                                                          ============  ============

 Weighted average shares outstanding                        4,241,483     4,411,178
                                                          ============  ============
<FN>
             See accompanying notes to consolidated financial statements.
</TABLE>


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


                                           Common Stock
                                         -----------------    Additional                 Retained
                                         Number of             Paid-in     Treasury      Earnings
                                          Shares    Amount     Capital       Stock       (Deficit)       Total
                                         ---------  -------  -----------  ------------  ------------  ------------
<S>                                      <C>        <C>      <C>          <C>           <C>           <C>
 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
                                         ---------  -------  -----------  ------------  ------------  ------------
 Balance, September 30, 2001             4,598,678   45,987   11,257,449      (73,619)     (930,849)   10,298,968

 Purchase of treasury stock                      -        -            -   (1,101,512)            -    (1,101,512)

 Net loss                                        -        -            -            -    (2,271,180)   (2,271,180)
                                         ---------  -------  -----------  ------------  ------------  ------------
  Balance, September 30, 2002            4,598,678  $45,987  $11,257,449  $(1,175,131)  $(3,202,029)  $ 6,926,276
                                         =========  =======  ===========  ============  ============  ============
<FN>
                            See accompanying notes to consolidated financial statements.
</TABLE>


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


                                                           Year Ended September 30,
                                                              2002          2001
                                                          ------------  ------------
<S>                                                       <C>           <C>
 Net income (loss)                                        $(2,271,180)  $ 1,314,718

 Adjustments to reconcile net income (loss) to net
   cash provided (used) by operating activities:
   Depreciation and amortization                              490,021       849,862
    Impairment of goodwill                                    325,776
   Minority interest                                            1,348        14,406
   Gain/(loss) on sale/disposition of assets                    6,240        45,681
   Accounting change -- impairment of goodwill              2,532,384             -
   Changes in assets and liabilities:
     Accounts receivable                                      153,015       (81,892)
     Inventories                                              (14,502)        4,171
     Prepaid expenses and other assets                         17,580       106,271
     Accounts payable and accrued expenses                     44,863       (83,727)
                                                          ------------  ------------
       Net cash provided (used) by operating activities     1,285,545     2,169,490

 Cash flows from investing activities:
   Additions to property and equipment and goodwill          (933,472)   (1,736,340)
   Proceeds from sale of assets                                 7,900             -
                                                          ------------  ------------
       Net cash provided (used) by investing activities      (925,572)   (1,736,340)

 Cash flows from financing activities:
   Purchase of treasury stock                                (156,211)      (73,619)
   Increase in long-term debt                                 150,000       464,475
   Payments on long-term debt                                (325,024)     (493,910)
                                                          ------------  ------------
       Net cash used by financing activities                 (331,235)     (103,054)
                                                          ------------  ------------

 Net increase (decrease) in cash                               28,738       330,096

 Cash at beginning of year                                    704,628       374,532
                                                          ------------  ------------

 Cash at end of year                                      $   733,366   $   704,628
                                                          ============  ============

 Cash paid during the period for:
   Interest                                               $   370,401   $   354,726
                                                          ============  ============

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

             See accompanying notes to consolidated financial statements.
</TABLE>


                                      F-6
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2002 AND 2001

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 through 2002
     (Note  3).

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     Earnings  Per  Common  Share

     The Company computes earnings 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  consolidated  financial  statements  in
     conformity  with  accounting  principles generally  accepted  in the United
     States  of  America  requires  management to make estimates and assumptions
     that  affect  certain reported amounts 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 leasehold improvements      31  years
          Furniture and 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  income  taxes in accordance with SFAS 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

     Before  October  1,  2001  (see  Note  4),  goodwill  acquired  in business
     acquisitions  was  stated  at  cost and amortized over the estimated useful
     lives  of  fifteen  years  for  nightclubs  and five years for Internet web
     sites.

     Reclassifications

     Certain  reclassifications  have been made to the 2001 financial statements
     to  conform  to  the  presentation  for  2002.

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  had 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 $296,000
     and  $645,000  has  been  paid and added to goodwill during the years ended
     September  30, 2002 and 2001, respectively, in connection with the Earn Out
     Amount.  An  owner  of  the  seller  of  XXXPassword,  Ron Levi, was on the
     Company's  Board  of  Directors  until  June  2002.


                                      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                            1,008,649
                                                                ------------
          Amount  charged  to  goodwill                         $  2,070,524
                                                                ============

     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
                                                                ============


4.   CHANGE  IN  ACCOUNTING  PRINCIPLE

     In  June 2001, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standard  No.  142,  "Goodwill  and Other Intangible
     Assets".  As  its  title implies, SFAS No. 142 addresses the accounting for
     goodwill  and  other  intangible  assets.  Under SFAS No. 142, goodwill and
     intangible  assets  with  indefinite  lives are no longer amortized but are
     reviewed  at  least  annually  for  impairment.  With  respect  to goodwill
     amortization,  the  Company  adopted SFAS No.142 effective October 1, 2001.

     The  Company performed a transitional impairment test of its goodwill as of
     October  1,  2001  and determined there should be an impairment of goodwill
     recorded  relating  to certain of its goodwill. In accordance with SFAS No.
     142,  the  writeoff,  amounting  to $2,532,384, has been accounted for as a
     change  in  accounting  principle. The cumulative effect of this accounting
     change  was  to  decrease net income for the year ended September 30, 2002.
     Additions to goodwill amounting to $325,776 during the year ended September
     30,  2002  were  also  written  off  against  income  during  that  year.


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


4.   CHANGE  IN  ACCOUNTING  PRINCIPLE  (CONTINUED)

     The  following  is a reconciliation of goodwill in the accompanying balance
     sheet  for  the  year  ended  September  30,  2002:

     Beginning net goodwill at
       September 30, 2001                      $ 4,415,391
     Impairment of goodwill at
       September 30, 2001                       (2,532,384)
     Addition of goodwill during the
       year ended September 30, 2002               325,776
     Impairment of goodwill - year ended
       September 30, 2002                         (325,776)
                                               ------------
     Goodwill as of September 30, 2002         $ 1,883,007
                                               ============


The  following  schedule  shows  the  effect  of  this  change on the year ended
September  30,  2001:

     Reported net income                   $1,314,718
      Add back goodwill amortization          429,544
                                           ----------
      Adjusted net income                  $1,744,262
                                           ==========
      Adjusted net income per share        $     0.40
                                           ==========


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:

                                                  2002        2001
                                               ----------  ----------
     Tax on income before income taxes and
       cumulative effect of accounting change  $ 212,153   $ 279,286
     Utilization of loss carryforward           (212,153)   (279,286)
                                               ----------  ----------
                                               $       -   $       -
                                               ==========  ==========

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


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


5.   INCOME  TAXES  (CONTINUED)

<TABLE>
<CAPTION>
                                            2002         2001
                                        ------------  ----------
<S>                                     <C>           <C>
Operating loss carryforwards            $   234,321   $ 307,527
Goodwill basis                          $ 1,065,953        -
Property and equipment bases            $    21,310        -
Deferred tax asset valuation allowance   (1,321,584)   (307,527)
                                        ------------  ----------
                                        $         -   $       -
                                        ============  ==========
</TABLE>

For tax purposes, the Company has a net operating loss carryforward amounting to
approximately  $600,000  which  will expire, if not utilized, beginning in 2012.

6.     LONG-TERM  DEBT

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

<TABLE>
<CAPTION>
                                                                   2002         2001
                                                                -----------  -----------
<S>                                                             <C>          <C>
Note payable to a bank, payable at $4,289 per month,
including interest at the prime rate plus 1%, matures
December 2004, collateralized by land and building              $  364,167   $  397,571
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.                                                       2,270,095    2,335,336
Notes payable to partnerships, due in monthly
installments of $1,229 including interest at 12%,
collateralized by real estate.                                     115,489      116,325
Note payable to individual maturing March 2006,
Due in monthly installments of $2,573, plus interest at
9.25%; collateralized by real estate.                              300,052      303,023
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
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                           230,365      248,564


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


6.   LONG TERM DEBTS (CONTINUED)

Noninterest-bearing note payable to an individual; payable
in four annual installments of $229,675 beginning in
January 2003; discounted at 7%; unsecured.                         795,301            -
11% note payable to a corporation; principal and interest
Due in monthly installments of $9,822 through June 2005,
collateralized by real estate.                                     278,590            -
Various notes, at interest rates ranging from 6% to 12%,
payable in monthly installments, including interest,
aggregating approximately $12,650, collateralized by
Real estate.                                                       253,294      297,962
                                                                -----------  -----------
                                                                 4,607,353    3,837,076
Less current maturities                                           (459,972)    (327,162)
                                                                -----------  -----------
                                                                $4,147,381   $3,509,914
                                                                ===========  ===========
</TABLE>


     Substantially  all  the  Company's  assets  are pledged to secure the above
     debt.  The  prime  rate  was 4.75% at September 30, 2002. Following are the
     maturities  of  long-term  debt  for  the  years  ending  September  30:

          2003           $    459,972
          2004                481,962
          2005                511,690
          2006                705,556
          2007                914,189
          Thereafter        1,533,984
                          -----------
                          $ 4,607,353
                          ===========


7.     COMMITMENTS  AND  CONTINGENCIES

     Leases

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

          2003           $  36,432
          2004              36,432
          2005              18,216


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


7.   COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

     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.

     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


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


7.   COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

     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. A hearing has been set for December 2002. 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.

     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, its
     Chief Executive  Officer, (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


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


7.   COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

     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.

8.   EMPLOYEE  STOCK  OPTION  PLANS

     In  1995  the  Company adopted the 1995 Stock Option Plan (the "1995 Plan")
     for  employees  and  directors. In August 1999 the Company adopted the 1999
     Stock  Option  Plan  (the  "1999  Plan")  (collectively,  "the Plans"). The
     options  granted  under the Plans may be either Incentive Stock Options, 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.

     During  the year ended September 30, 2002 and 2001, options were granted as
     follows:

<TABLE>
<CAPTION>
                                                 Weighted             Weighted
                                                 Average              Average
                                                 Exercise             Exercise
                                         2002     Price      2001      Price
                                       --------  --------  ---------  --------
<S>                                    <C>       <C>     <C>        <C>
     Outstanding at beginning of year  604,500   $   2.39   590,500   $   2.37
     Granted                            64,000   $   2.56   129,000   $   2.44
     Expired                           (25,000)  $      -  (115,000)  $   2.36
     Exercised                               -   $      -         -   $      -
                                       --------            ---------
     Outstanding at end of year        643,500   $   2.40   604,500   $   2.39
                                       --------            ---------
     Exercisable at end of year        582,000   $   2.37   421,500   $   2.35
                                       --------            ---------
</TABLE>

     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 instruments and encourages all entities to adopt that method
     of  accounting  for  all  of  their  employee  stock  compensation


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


8.   EMPLOYEE  STOCK  OPTION  PLANS (CONTINUED)

     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. Pro
     forma  disclosures  as  required  by  SFAS  123  for  the fiscal year ended
     September  30,  2001  are  as  follows  (no  expense  during  2002):

          Pro  forma  net  income  (loss)                    $ 1,203,210
                                                             ===========
          Pro  forma  net  income  (loss)  per  share        $      0.27
                                                             ===========


     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 exercise prices
     of the options range from $1.88 to $2.70 and the weighted average remaining
     contractual  life of outstanding options was 1.9 and 1.7 years at September
     30,  2002  and  2001,  respectively.

9.   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.

10.  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,  2002  and  2001:

<TABLE>
<CAPTION>
                                          2002          2001
                                      ------------  ------------
<S>                                   <C>           <C>
Sales:
  Night clubs                         $13,444,479   $12,864,428
  Internet                              2,112,823     6,795,213
                                      ------------  ------------


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


10.  SEGMENT INFORMATION (CONTINUED)  $15,557,302   $19,659,641
                                      ============  ============

Operating income (loss):
  Night clubs                         $   969,742   $ 1,544,537
  Internet                                498,851       649,888
                                      ------------  ------------
                                        1,468,593     2,194,425
General corporate expenses               (844,613)     (664,567)
Other income (expense), net            (2,895,160)     (215,140)
                                      ------------  ------------
Net income                            $(2,271,180)  $ 1,314,718
                                      ============  ============

Identifiable assets:
  Night clubs                         $10,070,665   $10,287,040
  Internet                                200,456     1,912,557
                                       10,271,121    12,199,597
General corporate assets                2,150,399     2,748,903
                                      ------------  ------------
  Total assets                        $12,421,520   $14,948,500
                                      ============  ============
</TABLE>

<TABLE>
<CAPTION>
                                  2002      2001
                                --------  --------
<S>                             <C>       <C>
Capital expenditures:
  Night clubs                   $495,043  $384,249
  Internet                       357,500    37,512
  General corporate               80,929   229,287
                                --------  --------
                                $933,472  $651,048
                                ========  ========


                                      F-18
<PAGE>
               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Depreciation and amortization:
  Night clubs                   $338,053  $544,017
  Internet                       413,074   268,185
  General corporate               64,670    37,660
                                --------  --------
                                $815,797  $849,862
                                ========  ========
</TABLE>

     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.


11.  RELATED  PARTY  TRANSACTIONS

     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 the company 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 Watters Note ($45,992 at
     September  30, 2002) 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.

     In  May  2002,  the Company loaned $100,000 to Eric Langan, Chief Executive
     Officer of the Company. The note is unsecured, bears interest at 11% and is
     amortized over a period of ten years. The note contains a provision that in
     the  event  Mr.  Langan  leaves  the  Company  for  any  reason,  the  note
     immediately  becomes  due  and payable in full. The balance of the note was
     $98,605  at  September  30,  2002  and  is  included in other assets in the
     accompanying  consolidated  balance  sheet.



                                      F-19
<PAGE>