Filed Pursuant to Rule 424(b)(3)
                                                     Registration No. 333-127799


Prospectus


                       RICK'S CABARET INTERNATIONAL, INC.
                         552,100 SHARES OF COMMON STOCK

This  prospectus  relates  to the offering for resale of up to 222,100 shares of
our  common  stock,  $0.01  par value ("Common Stock") currently held by certain
selling  stockholders,  220,000  shares  of  Common  Stock  issuable  upon  the
conversion of a Debenture currently held by a selling stockholder, 60,000 shares
of  Common  Stock  issuable  upon the conversion of a Convertible Note currently
held  by  a selling stockholder, and 50,000 shares of Common Stock issuable upon
the  conversion  of warrants. For a list of the selling stockholders, please see
"Selling  Stockholders."  We  are  not selling any shares of our Common Stock in
this offering and therefore will not receive any proceeds from the sale thereof.
We  may,  however,  receive  the  benefit of proceeds upon the conversion of the
Debenture  and/or  the Convertible Note held by certain selling stockholders for
which  we  are  registering  the  underlying  shares  of  Common  Stock.   Upon
conversion  of any portion of the Debenture and/or the Convertible Note, we will
apply  the proceeds received directly to the debt for which the Debenture and/or
Convertible  Note  was issued and the principal amount(s) of the Note and/or the
Debenture will be reduced accordingly.  Additionally, we may receive proceeds of
approximately  $300,000  upon  the  exercise  of  warrants, which we would apply
toward  general  operating  expenses.  We  will  bear  all  expenses, other than
selling commissions and fees of the selling stockholders, in connection with the
registration  and  sale  of  the  shares  being  offered  by  this  prospectus.

These  shares  may  be sold by the selling stockholders from time to time in the
over-the-counter  market  or  other  national  securities  exchange or automated
interdealer quotation system on which our Common Stock is then listed or quoted,
through  negotiated transactions or otherwise at market prices prevailing at the
time  of  sale  or  at  negotiated  prices.

Our  common  stock  is  quoted  on  the  NASDAQ SmallCap Market under the symbol
"RICK."  On  May 11, 2006, the last reported sales price of our Common Stock was
$7.33  per  share.

INVESTING  IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISKS.  PLEASE REFER TO
THE  "RISK  FACTORS"  BEGINNING  ON  PAGE  2.

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION  HAS  APPROVED  OR  DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL  OFFENSE.

               THE DATE OF THIS PROSPECTUS IS MAY 26, 2006.





                                TABLE OF CONTENTS
                                -----------------

                                                           
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . .   1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . .   2
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS .   8
THE BUSINESS . . . . . . . . . . . . . . . . . . . . . . . .   9
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . .   18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATION . . . . . . . . . . . .   20
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . .   31
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
  ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . .   32
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . .   32
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS   33
SECURITY OWNERSHIP OF CERTAIN
  BENEFICAL OWNERS AND MANAGEMENT. . . . . . . . . . . . . .   39
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . .   40
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . .   41
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . .   43
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . .   45
INTEREST OF NAMED EXPERTS AND COUNSEL. . . . . . . . . . . .   47
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . .   47
COMMISSION POSITION OF INDEMNIFICATION FOR
  SECURITIES ACT LIABILITIES . . . . . . . . . . . . . . . .   48
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . .   48
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .   F-1




                               PROSPECTUS SUMMARY

The  following  summary  highlights  selected  information  contained  in  this
prospectus.  This  summary  does  not  contain all of the information you should
consider  before  investing  in  the  securities.  Before  making  an investment
decision,  you  should  read the entire prospectus carefully, including the risk
factors  section,  the  financial  statements  and  the  notes  to the financial
statements.  You  should also review the other available information referred to
in  the  section  entitled  ""Where you can find more information" on page 48 in
this  prospectus  and  any  amendment  or  supplement  hereto.  Unless otherwise
indicated,  the  terms  the "Company," "we," "us," and "our" refer and relate to
Rick's  Cabaret  International,  Inc.  and  its  consolidated  subsidiaries.

THE  COMPANY

Our  name  is Rick's Cabaret International, Inc.  We currently own and operate a
total  of  ten  adult nightclubs that offer live adult entertainment, restaurant
and  bar  operations.  Five of our clubs operate under the name "Rick's Cabaret"
and  four  of  the  clubs  operate  under the name "XTC".  Our nightclubs are in
Houston,  Austin and San Antonio, Texas; Charlotte, North Carolina; Minneapolis,
Minnesota;  and  New York, New York.  In January 2005, we acquired a club in New
York,  New  York which opened in September 2005.  In June 2004, we converted our
original  Rick's  Cabaret  nightclub  in  Houston's Galleria District into "Club
Onyx",  an  upscale  venue  that  welcomes all customers but cater especially to
urban  professionals,  businessmen  and  professional  athletes.  We also own or
operate  premiere  adult  entertainment  Internet  websites.

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

                                  THE OFFERING

Outstanding    4,901,148 shares (as of May 11, 2006).
Common Stock

Common Stock   Up  to  222,100  shares  of  Common Stock held by certain selling
Offered        stockholders,  220,000  shares  of Common Stock issuable upon the
               conversion  of  a  Convertible Debenture, 60,000 shares of common
               stock  issuable  upon  the  exercise  of a Convertible Note (with
               conversion  prices  ranging  from  $7.00 to $7.50 per share), and
               50,000  shares  of  Common  Stock  issuable  upon the exercise of
               warrants.

Offering Price Determined  at  the  time  of  sale  by the selling stockholders.


                                     Page 1

Proceeds       We  are  not  selling  any  shares  of  our  Common Stock in this
               offering  and  therefore  will  not receive any proceeds from the
               sale  thereof.  We  may, however, receive the benefit of proceeds
               upon  the conversion of the Debenture and/or the Convertible Note
               held by certain selling stockholders for which we are registering
               the  underlying  shares  of  Common Stock. Upon conversion of any
               portion  of  the  Debenture  and/or the Convertible Note, we will
               apply  the  proceeds  received directly to the debt for which the
               Debenture  and/or  Convertible  Note was issued and the principal
               amount(s)  of  the  Note  and/or  the  Debenture  will be reduced
               accordingly.  Additionally,  we  may  receive  proceeds  of
               approximately  $300,000  upon  the exercise of warrants, which we
               would  apply  toward  general  operating  expenses.

               The  selling  shareholders  will  pay  any underwriting discounts
               and commissions and expenses incurred by the selling shareholders
               for  brokerage,  accounting,  tax  or legal services or any other
               expenses incurred by the selling shareholders in disposing of the
               shares.  We will bear all other costs, fees and expenses incurred
               in  effecting  the  registration  of  the  shares covered by this
               prospectus,  including,  without limitation, all registration and
               filing  fees,  Nasdaq  Small  Cap  Market  listing fees, blue sky
               registration  and  filing  fees,  and  fees  and  expenses of our
               counsel  and  our  accountants.

Risk  Factors  The  securities  offered  hereby  involve  a high degree of risk.
               See  "Risk  Factors"  herein.


                                  RISK FACTORS

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

                  RISKS RELATED TO THE COMPANY AND THE OFFERING

OUR BUSINESS OPERATIONS ARE SUBJECT TO REGULATORY UNCERTAINTIES WHICH MAY AFFECT
OUR  ABILITY  TO  CONTINUE  OPERATIONS OF EXISTING NIGHTCLUBS ACQUIRE ADDITIONAL
NIGHTCLUBS  OR  BE  PROFITABLE.

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


                                     Page 2

WE  MAY  NEED  ADDITIONAL  FINANCING  OR  OUR  BUSINESS  EXPANSION  PLANS MAY BE
SIGNIFICANTLY  LIMITED.

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

THERE  IS  SUBSTANTIAL COMPETITION IN THE NIGHTCLUB ENTERTAINMENT INDUSTRY WHICH
MAY  AFFECT  OUR  ABILITY  TO  OPERATE  PROFITABLY  OR ACQUIRE ADDITIONAL CLUBS.

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

RISK  OF  ADULT  NIGHTCLUB  OPERATIONS

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

PERMITS  RELATING  TO  THE  SALE  OF  ALCOHOL

We  derive  a  significant  portion  of  our revenues from the sale of alcoholic
beverages.  In  Texas,  the  authority  to  issue  a  permit  to  sell alcoholic
beverages  is  governed by the Texas Alcoholic Beverage Commission (the "TABC"),
which  has  the  authority, in its discretion, to issue the appropriate permits.
Rick's  presently  holds  a  Mixed  Beverage Permit and a Late Hours Permit (the
"Permits").  These  Permits  are  subject  to  annual  renewal, provided we have
complied  with  all  rules  and regulations governing the permits.  Renewal of a
permit  is  subject to protest, which may be made by a law enforcement agency or
by a member of the general public.  In the event of a protest, the TABC may hold
a hearing at which time the views of interested parties are expressed.  The TABC
has  the  authority  after  such hearing not to issue a renewal of the protested


                                     Page 3

alcoholic  beverage  permit.  While  we  have  never  been  subject to a protest
hearing  against the renewal of our Permits, there can be no assurance that such
a  protest  could not be made in the future, nor can there be any assurance that
the Permits would be granted in the event such a protest was made.  Other states
may  have  similar  laws  which  may  limit the availability of a permit to sell
alcoholic  beverages  or  which  may  provide  for suspension or revocation of a
permit  to  sell alcoholic beverages in certain circumstances.  The temporary or
permanent suspension or revocations of either of the Permits or the inability to
obtain permits in areas of expansion would have a material adverse effect on the
revenues,  financial  condition  and  results  of  operations  of  the  Company.

WE  MUST  CONTINUE  TO  MEET  THE  NASDAQ  SMALL  CAP  MARKET  CONTINUED LISTING
REQUIREMENTS  OR  WE  RISK  DELISTING.

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

IN  THE  FUTURE,  WE  WILL  INCUR  SIGNIFICANT  INCREASED  COSTS  AS A RESULT OF
OPERATING  AS  A  PUBLIC  COMPANY, AND OUR MANAGEMENT WILL BE REQUIRED TO DEVOTE
SUBSTANTIAL  TIME  TO  NEW  COMPLIANCE  INITIATIVES.

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

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


                                     Page 4

requirements  of  Section  404  in  a timely manner, or if we or our independent
registered  public  accounting  firm  identifies  deficiencies  in  our internal
controls over financial reporting that are deemed to be material weaknesses, the
market price of our stock could decline, and we could be subject to sanctions or
investigations  by  the SEC or other regulatory authorities, which would require
additional  financial  and  management  resources.

UNINSURED  RISKS

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

LIMITATIONS  ON  PROTECTION  OF  SERVICE  MARKS

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

ANTI-TAKEOVER  EFFECTS  OF  ISSUANCE  OF  PREFERRED  STOCK

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


                                     Page 5

Stock;  there  are no agreements or understandings for the issuance of Preferred
Stock,  and  the  Board of Directors has no present intention to issue Preferred
Stock.

WE  DO  NOT  ANTICIPATE  PAYING  DIVIDENDS  ON  COMMON SHARES IN THE FORESEEABLE
FUTURE.

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

FUTURE  SALES  OF  OUR  COMMON  STOCK  MAY  DEPRESS  OUR  STOCK  PRICE.

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

THERE  IS  A  LIMITED  PUBLIC  TRADING  MARKET  FOR  OUR  COMMON  STOCK.

Our  stock  is currently traded on the Nasdaq Small Cap Market under the trading
symbol  "RICK".  There  is a limited public trading market for our common stock.
Without  an active trading market, there can be no assurance of any liquidity or
resale  value  of  our  common  stock,  and stockholders may be required to hold
shares  of  our  common  stock  for  an  indefinite  period  of  time.

OUR  STOCK  PRICE  HAS  BEEN  VOLATILE  AND  MAY  FLUCTUATE  IN  THE  FUTURE.

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

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

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


                                     Page 6

OUR  MANAGEMENT  CONTROLS  A  SIGNIFICANT  PERCENTAGE OF OUR CURRENT OUTSTANDING
COMMON  STOCK  AND  THEIR INTERESTS MAY CONFLICT WITH THOSE OF OUR SHAREHOLDERS.

As  of  May  11, 2006, our Directors and executive officers and their respective
affiliates  collectively  and  beneficially  owned  approximately  23.6%  of our
outstanding  common  stock,  including  all warrants exercisable within 60 days.
This  concentration of voting control gives our Directors and executive officers
and  their  respective  affiliates  substantial influence over any matters which
require  a  shareholder  vote,  including,  without  limitation, the election of
Directors,  even  if  their  interests  may  conflict  with  those  of  other
shareholders.  It  could also have the effect of delaying or preventing a change
in  control of or otherwise discouraging a potential acquirer from attempting to
obtain  control  of us.  This could have a material adverse effect on the market
price  of  our common stock or prevent our shareholders from realizing a premium
over  the  then  prevailing  market  prices  for  their  shares of common stock.

WE  ARE  DEPENDENT  ON  KEY  PERSONNEL.

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

CUMULATIVE  VOTING  IS  NOT  AVAILABLE  TO  STOCKHOLDERS.

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

OUR  DIRECTORS  AND  OFFICERS  HAVE  LIMITED  LIABILITY  AND  HAVE  RIGHTS  TO
INDEMNIFICATION.

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

The  inclusion  of  these  provisions  in  the  Articles  may have the effect of
reducing the likelihood of derivative litigation against Directors and officers,
and  may  discourage or deter stockholders or management from bringing a lawsuit
against  Directors  and  officers  for  breach  of  their  duty  of


                                     Page 7

care,  even though such an action, if successful, might otherwise have benefited
us  and  our  stockholders.

The  Articles provide for the indemnification of our officers and Directors, and
the  advancement  to  them  of  expenses  in connection with any proceedings and
claims,  to  the  fullest  extent  permitted  by Texas law. The Articles include
related  provisions  meant  to  facilitate  the  indemnitee's  receipt  of  such
benefits.  These  provisions cover, among other things: (i) specification of the
method  of  determining  entitlement  to  indemnification  and  the selection of
independent  counsel  that  will  in  some  cases  make such determination, (ii)
specification  of  certain  time  periods  by  which  certain  payments  or
determinations  must  be  made  and  actions  must  be  taken,  and  (iii)  the
establishment  of  certain  presumptions  in  favor  of  an  indemnitee.

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


                         CAUTIONARY STATEMENT CONCERNING
                           FORWARD-LOOKING STATEMENTS

We  are  including  the following cautionary statement in this Form SB-2 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 SB-2 are forward-looking
statements.  These  statements  are  subject  to risks and uncertainties and are
based  on  the  beliefs  and assumptions of management and information currently
available  to  management.  The  use  of  words  such  as "believes," "expects,"
"anticipates,"  "intends,"  "plans,"  "estimates," "should," "likely" or similar
expressions, indicates a forward-looking statement.  Such statements are subject
to  risks and uncertainties that could cause actual results to differ materially
from  those  projected.  Such  risks and uncertainties are set forth below.  Our
expectations, beliefs and projections are expressed in good faith and we believe
that they have a reasonable basis, including without limitation, our examination
of  historical  operating  trends,  data contained in our records and other data
available  from third parties.  There can be no assurance that our expectations,
beliefs  or  projections  will  result,  be  achieved,  or  be accomplished.  In
addition to other factors and matters discussed elsewhere in this Form SB-2, 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.


                                     Page 8

For  a  discussion  of  some additional factors that may cause actual results to
differ materially from those suggested by the forward-looking statements, please
read  carefully  the  information  under "Risk Factors" beginning on page 2. The
identification  in  this  document of factors that may affect future performance
and  the  accuracy of forward-looking statements is meant to be illustrative and
by  no means exhaustive. All forward-looking statements should be evaluated with
the  understanding  of  their  inherent  uncertainty.

We  operate  in  a very competitive and rapidly changing environment.  New risks
emerge  from  time  to time and it is not possible for our management to predict
all  risks,  nor  can  we  assess the impact of all risks on our business or the
extent  to  which any risk, or combination of risks, may cause actual results to
differ  from  those  contained  in  any  forward-looking  statements.  All
forward-looking  statements included in this prospectus are based on information
available to us on the date of the prospectus.  Except to the extent required by
applicable  laws  or  rules,  we  undertake  no obligation to publicly update or
revise  any  forward-looking  statement, whether as a result of new information,
future  events  or  otherwise.  All  subsequent written and oral forward-looking
statements  attributable  to  us  or  persons acting on our behalf are expressly
qualified  in  their  entirety by the cautionary statements contained throughout
this  prospectus.

You  may  rely only on the information contained in this prospectus. We have not
authorized  anyone  to provide information different from that contained in this
prospectus. Neither the delivery of this prospectus nor the sale of Common Stock
means that information contained in this prospectus is correct after the date of
this  prospectus.  This prospectus is not an offer to sell or solicitation of an
offer  to  buy  these  securities  in any circumstances under which the offer or
solicitation  is  unlawful.

                                  THE BUSINESS

Our  name  is Rick's Cabaret International, Inc.  We currently own and operate a
total  of  ten  adult nightclubs that offer live adult entertainment, restaurant
and  bar  operations.  Five of our clubs operate under the name "Rick's Cabaret"
and  four  of  the  clubs  operate  under the name "XTC".  Our nightclubs are in
Houston,  Austin and San Antonio, Texas; Charlotte, North Carolina; Minneapolis,
Minnesota;  and  New York, New York.  In January 2005, we acquired a club in New
York,  New  York which opened in September 2005.  In June 2004, we converted our
original  Rick's  Cabaret  nightclub  in  Houston's Galleria District into "Club
Onyx",  an  upscale  venue  that  welcomes all customers but cater especially to
urban  professionals,  businessmen  and  professional  athletes.  We also own or
operate  premiere  adult  entertainment  Internet  websites.

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


                                     Page 9

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

References  to  us  include our 100%-owned, 85%-owned and 51%-owned consolidated
subsidiaries.

BUSINESS ACTIVITIES--NIGHTCLUBS

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

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

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

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


                                   Page 10

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

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

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

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

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


                                   Page 11

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

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

NIGHTCLUB  LOCATIONS

We  currently  operate  clubs under the name "Rick's Cabaret" in Houston, Texas,
Minneapolis,  Minnesota;  Charlotte, North Carolina, and New York, New York.  We
also  operate  a  nightclub  in  Houston's  Galleria District as "Club Onyx", an
upscale  venue  that  welcomes  all  customers  but  caters  especially to urban
professionals, businessmen and professional athletes.  Additionally, we own four
nightclubs  in  San  Antonio,  Austin, and Houston, Texas that operate under the
name  XTC.  We also own and operate a sports bar called "Rick's Sports Cabaret".
We  sold  our  New  Orleans nightclub in March 1999, but it continues to use the
name  "Rick's  Cabaret"  under  a  licensing  agreement.

RECENT  NIGHTCLUB  TRANSACTIONS

1.   On May  9, 2006, the Company purchased Joint Ventures, Inc., an operator of
     an  adult  nightclub  in  South  Houston, Texas, formerly known as Dreamers
     Cabaret  &  Sports  Bar located at 802 Houston Blvd. The purchase price was
     for  $840,000  paid in cash. The club, located in Houston suburbs, has been
     converted  to  an  XTC  Cabaret.

2.   On April 5, 2006, the Company's wholly owned subsidiary, RCI Holdings, Inc.
     completed  the  acquisition of real property located at 9009 Airport Blvd.,
     Houston,  Texas  where the Company currently operates Rick's Sports Cabaret
     (previously  Hummers Sports Bar and XTC South clubs). Pursuant to the terms
     of  the Agreement, the Company paid a total sales price of $1,300,000 which
     consisted  of  $500,000  in  cash  and  160,000  shares  of  the  Company's
     restricted common stock. As part of the transaction, the Company has agreed
     to  file  a registration statement for the resale of such restricted common
     stock.  Additionally,  nine  months  after  the  filing of the Registration
     Statement, the Seller shall have the right, but not the obligation, to have
     the  Company  buy  the shares at a price of $5.00 per share at a rate of no
     more  than 10,000 shares per month until such time as the Seller receives a
     total  of  $800,000  from  the  sale  of  such  shares.  Alternatively, the
     Seller  shall  have  the option to sell such shares in the open market upon
     the  effectiveness  of  the Registration Statement. The transaction was the
     result  of  arms-length


                                   Page 12

     negotiations  between  the  parties.

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

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

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

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

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

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


                                   Page 13

     Under  the  terms  of  the  Stock Purchase Agreement, the purchase price of
     the  transaction  was $7,625,000, payable $2,500,000 in cash at closing and
     $5,125,000 payable in a promissory note bearing simple interest at the rate
     of 4.0% per annum. The Promissory Note is payable commencing 120 days after
     Closing as follows: (a) the payment of $58,333.33 per month for twenty-four
     (24) consecutive months; (b) the payment of $63,333.33 for twenty-four (24)
     consecutive  months;  (c)  the  payment  of  $68,333.33  for  twelve  (12)
     consecutive  months; and (d) a lump sum payment of the remaining balance to
     be paid on the sixty-first (61st) month. $2,000,000 of the principal amount
     of  the Promissory Note is convertible into shares of our restricted common
     stock  at prices ranging from $4.00 to $7.50 per share. As of May 11, 2006,
     the Holder of the Note had converted a total of $1,575,000 of the debt into
     shares  of  our  restricted  common stock. The parties also entered a Stock
     Pledge  Agreement  and  Security  Agreement  to secure the Promissory Note.

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

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

6.   On March  3,  2004,  we  acquired the assets and business of a 7,000 square
     foot  gentlemen's  club  in  North  Houston,  which  became  our fourth XTC
     Cabaret.  As  a  part  of  the transaction, we entered into a new five-year
     lease  with  an  option  for  five  additional years. The $265,000 all-cash
     purchase  transaction  generated  goodwill  of  $20,000  and  property  and
     equipment  at  $245,000.

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

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

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


                                   Page 14

BUSINESS ACTIVITIES--INTERNET ADULT ENTERTAINMENT WEB SITES

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

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

BUSINESS ACTIVITIES--INTERNET ADULT AUCTION WEB SITES

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

TRANSACTION  WITH  VOICE  MEDIA

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


                                   Page 15

(a)  The amount  of  $229,675  due  on  January  10,  2003;

(b)  The amount  of  $229,675  due  on  January  10,  2004;

(c)  The amount  of  $229,675  due  on  January  10,  2005;  and

(d)  A final  payment  in  the  amount  of  $229,675  due  on  January 10, 2006.

We  have  made  all  payments  due  under  this  transaction.

TRANSACTION  WITH  TAURUS  ENTERTAINMENT

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

COMPETITION

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

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


                                   Page 16

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

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

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

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

TRADEMARKS

Our rights to the trademarks "Rick's" and "Rick's Cabaret" are established under
common law, based upon our substantial and continuous use of these trademarks in
interstate  commerce  since  at  least as early as 1987.  We have registered our
service  mark,  'RICK'S  AND  STARS  DESIGN",  with the United States Patent and
Trademark  Office.  We  have  also  obtained service mark registrations from the
Patent  and  Trademark  Office  for  the  "RICK'S  CABARET"  service


                                   Page 17

mark.  There  can  be  no  assurance that the steps we have taken to protect our
service  marks  will  be  adequate  to  deter  misappropriation.

EMPLOYEES  AND  INDEPENDENT  CONTRACTORS

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

SHARE REPURCHASES

As of May 11, 2006, we owned 908,530 treasury shares of our common stock that we
acquired in open market purchases and from investors who originally acquired the
shares  from  us in private transactions.  At this time, we do not have any plan
to  use  these  shares  to  acquire  any  assets.

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


                                LEGAL PROCEEDINGS
                                -----------------

SEXUALLY  ORIENTED  BUSINESS  ORDINANCE  OF  HOUSTON,  TEXAS

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

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

We  filed  a  request  with  the City of Houston requesting an extension of time
during  which  operations at our north Houston facility could continue under the
Amortization  Period  provisions of the Ordinance since we were unable to recoup
our  investment  prior to the effective date of the Ordinance. An administrative
hearing  was  held  by  the  City  of  Houston  to  determine  the  appropriate
Amortization  Period  to  be  granted to us.  At the Hearing, we were granted an


                                   Page 18

amortization  period  that  has since been reached.  We have the right to appeal
any  decision  of  the  Hearing  official  to the district court in the State of
Texas.

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

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

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

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

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

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


                                   Page 19

OTHER LEGAL MATTERS

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

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

Management  believes  that  we are not liable for any of the damages and that we
are  covered  by  the  safe harbor provisions of the Dram Shop Act, which render
certain  compliant  establishments not liable for the acts of their patrons.  We
are  not  aware  of any insurance coverage for this claim.  We deny that we have
any  liability  for  the  accident  and  are  vigorously  defending  the matter.
Discovery  is  ongoing and we have filed a Motion for Summary Judgment on behalf
of  Rick's  which  is  currently  pending.


                     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  registration  statement.

FORWARD  LOOKING  STATEMENT  AND  INFORMATION

We  are  including  the  following  cautionary  statement  in  this  Form  SB-2
registration  statement to make applicable and take advantage of the safe harbor
provision  of  the  Private  Securities  Litigation  Reform  Act of 1995 for any
forward-looking  statements  made  by  us  or  on behalf of us.  Forward-looking
statements  include  statements concerning plans, objectives, goals, strategies,
future  events  or  performance and underlying assumptions and other statements,
which are other than statements of historical facts.  Certain statements in this
prospectus are forward-looking statements.  Words such as "expects," "believes,"
"anticipates,"  "may,"  and  "estimates" and similar expressions are intended to
identify  forward-looking  statements.  Such  statements  are


                                   Page 20

subject  to  risks  and  uncertainties that could cause actual results to differ
materially  from  those  projected.  Such  risks and uncertainties are set forth
below.  Our  expectations,  beliefs  and projections are expressed in good faith
and  we believe that they have a reasonable basis, including without limitation,
our  examination  of  historical operating trends, data contained in our records
and other data available from third parties.  There can be no assurance that our
expectations,  beliefs  or  projections  will  result,  be  achieved,  or  be
accomplished.  In  addition  to other factors and matters discussed elsewhere in
this  prospectus,  the  following  are  important factors that in our view could
cause  material  adverse  affects  on  our  financial  condition  and results of
operations:  the  risks  and uncertainties related to our future operational and
financial  results,  the  risks  and  uncertainties  relating  to  our  Internet
operations,  competitive factors, the timing of the openings of other clubs, the
availability  of  acceptable  financing to fund corporate expansion efforts, our
dependence  on  key  personnel,  the ability to manage operations and the future
operational  strength  of  management,  and  the laws governing the operation of
adult entertainment businesses.  We have no obligation to update or revise these
forward-looking  statements  to  reflect  the  occurrence  of  future  events or
circumstances.


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

2.   We  have  extensive  Internet  activities.

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

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

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


                                   Page 21

Beginning  in fiscal 2002 and continuing through fiscal 2005, 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.

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

CRITICAL  ACCOUNTING  POLICIES

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

Accounts  and  Notes  Receivable

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

Inventories

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

Marketable Securities

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


                                   Page 22

Property  and  Equipment

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

Goodwill  and  Intangible  Assets

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

Revenue Recognition

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

Advertising and Marketing

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

Income Taxes

Deferred  tax  assets  and  liabilities  are  recognized  for  the  future  tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets  and  liabilities  of  a  change


                                   Page 23

in  tax  rates is recognized in income in the period that includes the enactment
date.  In  addition, a valuation allowance is established to reduce any deferred
tax  asset  for which it is determined that it is more likely than not that some
portion  of  the  deferred  tax  asset  will  not  be  realized.

Stock  Options

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

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



                                                      YEAR ENDED SEPTEMBER 30,
                                                        2005           2004
                                                    ------------  ---------------
                                                            
     Net income (loss), as reported                 $  (215,148)  $      775,253
     Less total stock-based employee compensation
       expense determined under the fair value
       based method for all awards                     (549,165)        (216,616)
                                                    ------------  ---------------
     Pro forma net income (loss)                    $  (764,313)  $      558,637
                                                    ============  ===============
     Earnings (loss) per share:
       Basic and diluted  - as reported             $     (0.05)  $         0.21
                                                    ============  ===============

       Basic and diluted  - pro forma               $     (0.19)  $         0.15
                                                    ============  ===============


Common Stock

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

Impact of Recently Issued Accounting Standards

In  December  2003,  the  Financial  Accounting  Standards Board ("FASB") issued
interpretation  46R  ("FIN  46R"),  a  revision to interpretation 46 ("FIN 46"),
Consolidation  of  Variable  Interest


                                   Page 24

Entities.  FIN  46R  clarifies  some  of  the  provisions  of FIN 46 and exempts
certain entities from its requirements.  FIN 46R was effective at the end of the
first  interim  period  ending after March 15, 2004.  The adoption of FIN 46 and
FIN  46R  did not have a material impact on the Company's consolidated financial
statements.

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

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

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

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

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


                                   Page 25

related  revenues  for  the  year ended September 30, 2004.  We have implemented
measures  to  reduce  expenses  in  our  Internet  operations.

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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


                                   Page 26

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

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

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

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

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

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

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

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


                                   Page 27

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

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

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

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


RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2006 AS COMPARED TO THE
SIX MONTHS ENDED MARCH 31, 2005

For  the  six months ended March 31, 2006, we had consolidated total revenues of
$11,899,253  compared  to  consolidated total revenues of $6,775,600 for the six
months  ended March 31, 2005, an increase of $5,123,653 or 75.62%.  The increase
in  total  revenues  was  primarily  attributable  to  the  increase in revenues
generated by our new clubs in Charlotte, North Carolina, and New York, New York,
in  the  amount  of  $3,264,866;  by  the  increase in revenues generated by our
existing  clubs  in  the  amount  of  $1,811,791,  a 28.81% increase; and by the
increase in internet operations in the amount of $46,996, a 12.77% increase from
a  year  ago.  Our  club  operations  in Houston benefited from the NBA All-Star
weekend.  Total  revenues  for  same-location-same-period  of  club  operations
increased  to $8,788,016 for the six months ended March 31, 2006 from $5,945,885
for  same  period ended March 31, 2005.  The increase was primarily attributable
to  the  overall  increase  in  revenues  in  our  club  operations.

The  cost  of  goods  sold for the six months ended March 31, 2006 was 12.22% of
total  revenues compared to 12.48% for the six months ended March 31, 2005.  The
decrease  was  due primarily to the reduction of cost of goods sold in alcoholic
beverages  and  food  at  Rick's clubs and reduction in costs of maintaining our
internet operations.  The cost of goods sold for the club operations for the six
months  ended  March 31, 2006 was 12.51% compared to 12.93% for the three months
ended  March 31, 2005.  We continue a program to improve margins from liquor and
food  sales  and  food  service  efficiency.  The  cost  of  goods sold from our
internet  operations  for the six months ended March 31, 2006 was 4.32% compared
to  4.68%  for  the  six  months


                                   Page 28

ended  March  31, 2005.  The cost of goods sold for same-location-same-period of
club  operations for the six months ended March 31, 2006 was 13.39%, compared to
13.03%  for  the  same  period  ended  March  31,  2005.

Payroll  and  related  costs  for  the  six  months  ended  March  31, 2006 were
$3,348,524  compared  to  $2,411,544  for  the  six months ended March 31, 2005.
Payroll for same-location-same-period of club operations increased to $2,185,588
for  the  six  months  ended  March 31, 2006 from $1,710,976 for the same period
ended  March  31,  2005.  The  increase  was  primarily  due  to  an increase in
entertainers  payroll  in  our  club in Minnesota and the addition of new clubs.
Management  currently  believes  that  its labor and management staff levels are
appropriate.

Other  general  and  administrative  expenses for the six months ended March 31,
2006  were  $5,348,545 compared to $3,362,868 for the six months ended March 31,
2005.  The  increase  was due primarily to increase in taxes and permits, credit
card  fees,  rent,  advertising  and  marketing,  indirect  operating  expenses,
insurance,  and  utilities  from  adding new locations in New York, New York and
Charlotte,  North  Carolina.

Interest  expense  for the six months ended March 31, 2006 was $534,521 compared
to  $256,949  for  the  six  months  ended  March  31,  2005.  The  increase was
attributable to our obtaining new debt to finance the purchase and renovation of
the  club  in New York.  As of March 31, 2006, the balance of long-term debt was
$12,599,743  compared  to  $12,558,047  a  year  earlier.

Net  income  for  the six months ended March 31, 2006 was $1,231,526 compared to
$55,594 for the six months ended March 31, 2005.  The increase in net income was
primarily due to increase in overall revenues in our existing clubs.  Net income
for same-location-same-period of club operations increased to $2,132,747 for the
six  months ended March 31, 2006 from $1,136,087 for same period ended March 31,
2005,  or  by  87.73%.  Management currently believes that the Company is in the
position  to  continue to be profitable by the end of fiscal 2006, but there are
no  guarantees  with  the  uncertainties  of  our  new  clubs.

LIQUIDITY  AND  CAPITAL  RESOURCES

At March 31, 2006, we had a working capital of $217,899 compared to a deficit of
$2,047,725 at September 30, 2005.  The increase in working capital was primarily
due  to  increases  in  cash  and  cash  equivalents and prepaid expenses, other
current  assets,  and  by  decreases  in  accounts payable, accrued liabilities,
current  portion  of long term debt, and line of credit as a result of increased
cash  flow  from  operations.  The  value  of  available-for-sale  marketable
securities  increased  by  $22,245.

Including  cash  provided  by  discontinued  operations,  net  cash  provided by
operating  activities  in  the  six  months  ended March 31, 2006 was $1,021,885
compared to $1,226,299 for the six months ended March 31, 2005.  The decrease in
cash  provided  by  operating activities was primarily due to the disposition of
discontinued  operations.

Including  cash  used  by  discontinued  operations, we used $268,275 of cash in
investing  activities  during  the  six  months ended March 31, 2006 compared to
$3,501,223  during  the six months ended March 31, 2005.  Including cash used by
discontinued  operations,  cash  of  $239,246  was


                                   Page 29

provided  by  financing  activities  during  the six months ended March 31, 2006
compared  to  $3,611,588  during  the  six  months  ended  March  31,  2005.

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

On  February  6,  2006,  we  issued  an  unsecured  Convertible  Debenture  (the
"Debenture")  to  an  unrelated  investment  group  for  the  principal  sum  of
$1,000,950  bearing  interest at the rate of 10% per annum, with a maturity date
of  February 1, 2009.  Under the terms of the Debenture, we are required to make
three  quarterly  interest  payments  beginning May 1, 2006.  Thereafter, we are
required  to  make nine equal quarterly principal and interest payments.  At any
time  after  366  days  from the date of issuance of this Debenture, we have the
right to redeem the Debenture in whole or in part at any time during the term of
the  Debenture.  At  the election of the Holder, the Holder has the right at any
time  to  convert  all or any portion of the principal or interest amount of the
Debenture  into  shares  of our common stock at a rate of $4.75 per share, which
approximates  the closing price of the Company's stock on February 6, 2006.  The
proceeds  of  the  Debenture  was  used  to payoff certain debt and increase our
working  capital.

On  April  28,  2006, the Company entered into convertible debentures with three
shareholders for a principal sum of $825,000.  The term is for two years and the
interest  rate  is  12% per annum.   At the election of the holders, the holders
have  the  right  at  any time to convert all or any portion of the principal or
interest  amount  of  the debenture into shares of our common stock at a rate of
$6.55  per share.  The debenture provides, absent shareholder approval, that the
number of shares of our common stock that may be issued by us or acquired by the
holders  upon  conversion  of the debenture shall not exceed 19.99% of the total
number  of issued and outstanding shares of our common stock.  The proceeds were
partially  used  to fund the purchase of Joint Ventures, Inc., an operator of an
adult  nightclub  in  South Houston, Texas, formerly known as Dreamers Cabaret &
Sports  Bar  located  at  802 Houston Blvd.  The purchase price was for $840,000
paid  in  cash.  The club, located in the Houston suburbs, has been converted to
an  XTC  Cabaret.

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

We have available a $100,000 unsecured line-of-credit with a bank other than our
existing  debt.  Interest  is  payable  monthly  on the outstanding balance at a
floating  rate  of  prime  plus 1.5%.  This arrangement is subject to renewal in
June  2006.  There  was no outstanding balance under this agreement at March 31,
2006.  However,  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.

In  the  event the sexually oriented business industry is required in all states
to convert the entertainers who perform at our locations, from being independent
contractors  to  employee


                                   Page 30

status,  we  have  prepared  alternative  plans that we believe will protect our
profitability.  We  believe  that  the  industry  standard  of  treating  the
entertainers  as  independent  contractors  provides  sufficient  safe  harbor
protection  to  preclude  payroll  tax  assessment  for  prior  years.

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

SEASONALITY

Our  nightclub  operations  are  affected by seasonal factors.  Historically, we
have  experienced  reduced  revenues  from  April  through  September  with  the
strongest  operating  results  occurring  during  October  through  March.  Our
experience  to  date  indicates  that  there  does  not  appear to be a seasonal
fluctuation  in  our  Internet  activities.

GROWTH  STRATEGY

We believe that our club operations can continue to grow organically and through
careful  entry into markets and demographic segments with high growth potential.
Upon  careful  market  research, we may open new clubs.  As is the case with the
acquisition  of  the  New York and North Carolina 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
our  Company  contributing  assets  in the form of our brand name and management
expertise.  We  may  also develop new club concepts that are consistent with our
management  and marketing skills.  We may also acquire real estate in connection
with  club  operations,  although  some  clubs  may  be  on  leased  premises.

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


                          MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS
                           ---------------------------

MARKET  INFORMATION

Our common stock is quoted on the NASDAQ SmallCap Market under the symbol "RICK"
The  following  table  sets  forth  the quarterly high and low closing price per
share  for  our  common  stock.  Our  fiscal  year  ends  September  30.


                                   Page 31






                               HIGH         LOW
                               -----       -----
                                     
     First Quarter 2004        $1.84       $1.50
     Second Quarter 2004       $2.84       $1.74
     Third Quarter 2004        $3.30       $2.40
     Fourth Quarter 2004       $2.79       $2.21
     First Quarter 2005        $3.03       $2.20
     Second Quarter 2005       $4.61       $2.85
     Third Quarter 2005        $3.19       $2.65
     Fourth Quarter 2005       $3.55       $2.70
     First Quarter 2006        $3.84       $2.93
     Second Quarter 2006       $5.99       $3.77


On  May  11,  2006, the closing price for a share of our common stock was $7.33.

RECORD  HOLDERS.

As  of  May  11,  2006,  there were approximately 2,300 holders of record of our
common  stock.

DIVIDENDS

We  have  never  declared  or paid any dividends on our common stock.  We do not
have any plans to pay cash dividends on our common stock.  We plan to retain our
future  earnings,  if  any,  to finance operations and expand our business.  The
decision  whether  to pay cash dividends on our common stock will be made by our
Board  of  Directors,  in  its  discretion,  and  will  depend  on our financial
condition,  operating  results,  capital requirements and other factors that our
Board  of  Directors  considers  relevant.


                        CHANGES IN AND DISAGREEMENTS WITH
               ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
               --------------------------------------------------

     We  have  had no changes in or disagreements with accountants on accounting
and  financial  disclosure.

                                 USE OF PROCEEDS
                                 ---------------

We are not selling any shares of our Common Stock in this offering and therefore
will  not  receive any proceeds from the sale thereof.  We may, however, receive
the  benefit  of  proceeds  upon  the  conversion  of  the  Debenture and/or the
Convertible  Note  held  by  certain  selling  stockholders  for  which  we  are
registering  the  underlying  shares  of  Common Stock.   Upon conversion of any
portion of the Debenture and/or the Convertible Note, we will apply the proceeds
received  directly  to  the debt for which the Debenture and/or Convertible Note
was  issued and the principal amount(s) of the Note and/or the Debenture will be
reduced  accordingly.  Additionally,  we  may  receive proceeds of approximately
$300,000  upon  the  exercise  of  warrants, which we would apply toward general
operating  expenses.


                                   Page 32

The selling shareholders will pay any underwriting discounts and commissions and
expenses  incurred by the selling shareholders for brokerage, accounting, tax or
legal  services  or  any  other expenses incurred by the selling shareholders in
disposing  of  the  shares.  We  will  bear  all  other costs, fees and expenses
incurred in effecting the registration of the shares covered by this prospectus,
including,  without  limitation,  all registration and filing fees, Nasdaq Small
Cap  Market  listing  fees,  blue sky registration and filing fees, and fees and
expenses  of  our  counsel  and  our  accountants.


                         DIRECTORS, EXECUTIVE OFFICERS,
                          PROMOTERS AND CONTROL PERSONS
                          -----------------------------

DIRECTORS AND EXECUTIVE OFFICERS

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



Name               Age  Position
----------------------------------------------------------------------------------
                  
Eric S. Langan      38  Director, Chairman, Chief Executive Officer, President and
                        Chief Financial Officer
Travis Reese        36  Director and V.P.-Director of Technology
Robert L. Watters   55  Director
Alan Bergstrom      60  Director
Steven Jenkins      48  Director


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

Robert  L.  Watters  is  our  founder  and has been our Director since 1986. Mr.
Watters  was our President and our Chief Executive Officer from 1991 until March
1999.  Since  1999, Mr. Watters has owned and operated Rick's Cabaret, and adult
entertainment  club  in New Orleans, Louisiana, which licenses our name.  He was
also  a  founder in 1989 and operator until 1993 of the Colorado Bar & Grill, an
adult  club  located  in  Houston,  Texas  and in 1988 performed site selection,
negotiated  the  property purchase and oversaw the design and permitting for the
club that became the Cabaret Royale, in Dallas, Texas. Mr. Watters practiced law
as  a solicitor in London, England and is qualified to practice law in New York.
Mr.  Watters  worked  in  the  international


                                   Page 33

tax  group  of  the  accounting  firm  of  Touche,  Ross & Co. (now succeeded by
Deloitte  & Touche) from 1979 to 1983 and was engaged in the private practice of
law  in  Houston,  Texas  from  1983  to  1986,  when  he became involved in our
full-time  management. Mr. Watters graduated from the London School of Economics
and  Political  Science,  University  of London, in 1973 with a Bachelor of Laws
(Honours)  degree and in 1975 with a Master of Laws degree from Osgoode Hall Law
School,  York  University.

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

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

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

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

COMMITTEES OF THE BOARD OF DIRECTORS

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

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


                                   Page 34

accounting,  compliance  with  law, and ethical conduct.  Our Audit Committee is
objective,  and  reviews  and  assesses  the  work of our independent registered
public  accounting  firm

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

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

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

Section  16(a) of the Securities Exchange Act of 1934 requires our directors and
executive  officers,  and  persons who own beneficially more than ten percent of
our common stock, to file reports of ownership and changes of ownership with the
Securities  and  Exchange  Commission.  Based  solely  on  the  reports  we have
received  and  on  written  representations  from  certain reporting persons, we
believe  that  the  directors,  executive officers, and greater than ten percent
beneficial  owners  have  complied with all applicable filing requirements, with
the  exception  of  one  greater than 10% shareholder who was late with a Form 4
filing  for  one  transaction.

CODE OF ETHICS

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

EXECUTIVE COMPENSATION

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


                                   Page 35



                                      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
                         ($)          ($)        ($)          ($)          (#)        ($)        ($)
--------------------------------------------------------------------------------------------------------
                                                                      
Eric Langan
              2005  $     344,100        -0-         -0-          -0-        5,000       -0-         -0-
              2004  $     326,038        -0-         -0-          -0-      280,000       -0-         -0-
              2003  $     260,000        -0-         -0-          -0-        5,000       -0-         -0-

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

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

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

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

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



            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
---------------------------------------------------------------------------
                                                     
Eric Langan   5,000 shares (1)             5.56 %  $       2.80   7/20/2010

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


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


                                   Page 36

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

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

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

(1)     There were 27,500 shares of options exercised by these persons during
the fiscal year ended September 30, 2005


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 the Company, thus enhancing
their  personal  interest in our continued success and progress.  The Plans also
assist  the  Company  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 September 30, 2001, 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 (the "1999 Plan") with
500,000 shares authorized to be granted and sold under the 1999 Plan.  In August
2004,  shareholders  approved  an  Amendment  to the 1999 Plan (the "Amendment")
which  increased  the  total  number  of  shares authorized to 1,000,000.  As of
September  30, 2005, 878,000 stock options were outstanding under the 1999 Plan.
As  of  May  11,  2006,  169,000  of  these  stock  options have been exercised.


                                   Page 37

EQUITY COMPENSATION PLAN INFORMATION

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



--------------------------------------------------------------------------------------------------------------------------------
                                                                                                      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)
-----------------------------  ------------------------------  -------------------------------  --------------------------------
                                                                                       
Equity compensation plans
approved by security holders                          878,000  $                          2.47                            52,000
-----------------------------  ------------------------------  -------------------------------  --------------------------------
Equity compensation plans not
approved by security holders                                0                                0                           300,000
-----------------------------  ------------------------------  -------------------------------  --------------------------------
            TOTAL                                     878,000  $                          2.47                           352,000
--------------------------------------------------------------------------------------------------------------------------------


DIRECTOR COMPENSATION

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

EMPLOYMENT AGREEMENTS

We  have  a  two-year  employment agreement with Mr. Eric S. Langan (the "Langan
Agreement"). The Langan Agreement extends through April 1, 2008 and provides for
an  annual  base  salary  of  $400,000.  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.

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

CODE  OF  ETHICS

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


                                   Page 38

                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

The following table sets forth certain information at May 11, 2006, with respect
to  the  beneficial ownership of shares of Common Stock by (i) each person known
to  us  who  owns  beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each of our directors, (iii) each of our executive officers and (iv)
all  of  our  executive  officers  and  directors  as  a group. Unless otherwise
indicated, each stockholder has sole voting and investment power with respect to
the  shares  shown.   As  of May 11, 2006, there were 4,901,148 shares of common
stock  outstanding.



--------------------------------------------------------------------------------
NAME/ADDRESS                      NUMBER OF SHARES   TITLE OF CLASS  PERCENT OF
                                                                      CLASS (9)
--------------------------------  -----------------  --------------  -----------
                                                            
Eric S. Langan                        1,133,010 (1)  Common stock          21.8%
10959 Cutten Road
Houston, Texas 77066
--------------------------------  -----------------  --------------  -----------
Robert L. Watters                        35,000 (2)  Common stock            <1%
315 Bourbon Street
New Orleans, Louisiana 70130
--------------------------------  -----------------  --------------  -----------
Steven L. Jenkins                              -0-   Common stock             0%
16815 Royal Crest Drive
Suite 160
Houston, Texas 77058
--------------------------------  -----------------  --------------  -----------
Travis Reese                             57,275 (3)  Common stock           1.0%
10959 Cutten Road
Houston, Texas 77066
--------------------------------  -----------------  --------------  -----------
Alan Bergstrom                           25,000 (4)  Common stock            <1%
904 West Ave.-Suite 100
Austin, Texas 78701
--------------------------------  -----------------  --------------  -----------
All of our Directors and              1,250,285 (5)  Common stock          23.6%
Officers as a
Group of five (5) persons
--------------------------------  -----------------  --------------  -----------

--------------------------------  -----------------  --------------  -----------
E. S. Langan. L.P.                         578,632   Common stock          11.8%
10959 Cutten Road
Houston, Texas 77066
--------------------------------  -----------------  --------------  -----------
Ralph McElroy                           748,467 (6)  Common stock          15.1%
1211 Choquette
Austin, Texas, 78757
--------------------------------  -----------------  --------------  -----------
William Friedrichs                      287,890 (7)  Common stock           5.8%
16815 Royal Crest Dr., Suite 260
Houston, Texas 77058
--------------------------------  -----------------  --------------  -----------
Jeffrey W. Benton                       280,773 (8)  Common stock           5.7%
47 Summit Avenue
Summit, NJ
--------------------------------------------------------------------------------

(1)  Mr. Langan  has sole voting and investment power for 264,378 shares that he
     owns  directly.  Mr.  Langan  has  shared  voting  and investment power for
     578,632  shares  that  he  owns  indirectly  through E. S. Langan, L.P. Mr.
     Langan  is  the  general  partner  of  E.  S. Langan, L.P. This amount also
     includes  options to purchase up to 290,000 shares of common stock that are
     presently  exercisable.  This number specifically excludes 15,050 shares of
     common  stock  held  by  his  wife  which  is  separate  property.


                                   Page 39

(2)  Includes  5,000 shares of common stock and options to purchase up to 30,000
     shares  of  common  stock  that  are  presently  exercisable.

(3)  Includes  9,775 shares of common stock and options to purchase up to 47,500
     shares  of  common  stock  that  are  presently  exercisable.

(4)  Includes  5,000 shares of common stock and options to purchase up to 20,000
     shares  of  common  stock  that  are  presently  exercisable.

(5)  Includes  options to purchase up to 387,500 shares of common stock that are
     presently  exercisable.

(6)  Mr. McElroy  is  a greater than 10% shareholder of the Company. Mr. McElroy
     is the beneficial owner of 698,467 shares of Common Stock and 50,000 shares
     of  Common  Stock  issuable  upon  the  exercise  of  warrants. This number
     excludes 220,000 shares of Common Stock (which are being registered herein)
     issuable  upon  the conversion of a Secured Convertible Debenture at a rate
     of $3.00 per share and also excludes 91,603 shares of Common Stock issuable
     upon the conversion of a Convertible Debenture at a rate of $6.55 per share
     as  these  Debentures provide, absent shareholder approval, that the number
     of  shares  of our common stock that may be issued by us or acquired by the
     Mr. McElroy upon conversion of the Debenture shall not exceed 19.99% of the
     total  number  of  issued  and  outstanding  shares  of  our  common stock.

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

(8)  Includes 60,299 shares of common stock held individually, 210,726 shares of
     common  stock  held  indirectly by Fairfield Investment Group, LLC that are
     issuable  upon  the  conversion  of a convertible debenture, and 9,748 held
     indirectly  by  Fairfield Investment Group, LLC. Mr. Benton is the Managing
     Director  of  Fairfield  Advisors  and  has  investment decision and voting
     authority  for  this  entity.

(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.

              CERTAIN RELATIONSHIPS AND RELATED PARTY 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.  As  of  May  11, 2006, the balance of the note was
$73,077.

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


                                   Page 40

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

On  April  28, 2006, the Company entered into a convertible debenture with Ralph
McElroy,  a  greater than 10% shareholder of the Company, for a principal sum of
$600,000.  The term is for two years and the interest rate is 12% per annum.  At
the election of the holder, the holder have the right at any time to convert all
or  any portion of the principal or interest amount of the debenture into shares
of  our  common  stock  at  a  rate of $6.55 per share.  The debenture provides,
absent  shareholder  approval, that the number of shares of the Company's common
stock  that  may  be  issued  by  the  Company  or  acquired  by the holder upon
conversion  of  the  debenture  shall  not  exceed 19.99% of the total number of
issued  and  outstanding  shares  of  the  Company's  common  stock.


                              SELLING STOCKHOLDERS

The  following is a list of the selling stockholders who own or who have a right
to  acquire  the  552,100  shares  of  Common  Stock covered by this prospectus.
Currently,  222,100  shares  of  Common  Stock  are  held  by  certain  selling
stockholders.  Up  to  220,000  Shares  of  Common  Stock  are issuable upon the
conversion  of  a Secured Convertible Debenture held by one selling stockholder.
Up  to 60,000 Shares are issuable upon the conversion of a Convertible Note held
by  one  selling  stockholder.  Up to 50,000 Shares of Common Stock are issuable
upon  the  exercise  of  Warrants  held by one selling stockholder  As set forth
below and elsewhere in this prospectus, some of these selling stockholders hold,
or  within  the past three years have held, a position, office or other material
relationship  with  us  or  our  predecessors  or  affiliates.

Beneficial  ownership is determined in accordance with Rule 13d-3 promulgated by
the  Securities  and  Exchange  Commission,  and  generally  includes  voting or
investment  power  with respect to securities. In computing the number of shares
beneficially  owned  by  the  holder and the percentage ownership of the holder,
shares  of common stock issuable upon exercise of the warrant held by the holder
that  are  currently exercisable or exercisable within 60 days after the date of
the  table  are  deemed  outstanding.

The  percent  of  beneficial  ownership for the selling stockholders is based on
4,901,148  shares  of  common  stock  outstanding  as of May 11, 2006. Shares of
common  stock subject to warrants, options and other convertible securities that
are  currently  exercisable  or  exercisable  within  60


                                   Page 41

days  of  May  11,  2006, are considered outstanding and beneficially owned by a
selling  stockholders  who  holds  those  warrants, options or other convertible
securities for the purpose of computing the percentage ownership of that selling
stockholders but are not treated as outstanding for the purpose of computing the
percentage  ownership  of  any  other  stockholder.

The  shares  of  common stock being offered under this prospectus may be offered
for sale from time to time during the period the registration statement of which
this  prospectus  is  a  part  remains  effective,  by or for the account of the
selling  stockholders.  After  the  date  of  effectiveness  of the registration
statement  of  which this prospectus is a part, the selling stockholder may have
sold  or  transferred,  in  transactions  covered  by  this  prospectus  or  in
transactions  exempt  from  the registration requirements of the Securities Act,
some  or all of its common stock. Information about the selling stockholders may
change  over time.  Any changed information will be set forth in an amendment to
the  registration  statement  or  supplement  to  this prospectus, to the extent
required  by  law.

The  following table sets forth information concerning the selling stockholders,
including  the  number of shares currently held and the number of shares offered
by  each  selling security holder, to our knowledge as of May 11, 2006.   At the
time of the acquisition there were no agreements, understandings or arrangements
with  any  other  persons,  either  directly  or  indirectly,  to distribute the
securities.



--------------------------------------------------------------------------------------------------------
                                                 BEFORE THE                    AFTER THE
                                                  OFFERING                     OFFERING
                                               ---------------                -----------
----------------------------  ---------------  ---------------  ------------  -----------  -------------
                                                    Total
                                                  Number of      Number of                  Percentage
                                                  Shares of      Shares to      Number         to be
                                                   common        be Offered    of Shares   Beneficially
                                 Position,          stock         for the        to be         Owned
                                 Office or      Beneficially     Account of      Owned      after this
                                   Other       Owned Prior to   the Selling   after this     Offering
                                 Material       the Offering    Stockholder    Offering         (3)
Name of Selling Stockholder    Relationship          (1)            (2)           (3)           (4)
----------------------------  ---------------  ---------------  ------------  -----------  -------------

COMMON STOCK
----------------------------  ---------------  ---------------  ------------  -----------  -------------
                                                                            
Ralph McElroy                      >10%
                                shareholder        748,467 (5)      270,000   698,467 (5)          15.3%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Jay Teitelbaum                     None             26,100           26,100        -0-              -0-
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Philip Eisenberg                   None            110,000 (6)      110,000        -0-              -0-
----------------------------  ---------------  ---------------  ------------  -----------  -------------
American Dream Media (7)           None             29,650           10,000    19,650                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
William M. Friedrichs, Jr.          >5%
                                shareholder        287,890           50,000   237,890               5.7%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Wade McElroy                    Son of >10%
                                shareholder         38,500           17,500    21,000                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Timothy Winata                   Employee           71,350 (8)       25,000    46,350               1.4%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Jante Simoneaux                 Wife of CEO         15,050(9)         5,000    10,050                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Anderson Studebaker              Employee           36,945(10)        5,000    31,945                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Jackie Markham                     None              5,225            5,000       225                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Wayne Fenlon                     Employee           11,000 (11)       2,500     8,500                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Doris Jane King                 Sister of a
                                   >10%
                                shareholder          7,000            5,000     2,000                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Robert Axelrod                    Outside
                                  Counsel           90,300           20,000    70,300                <1%
----------------------------  ---------------  ---------------  ------------  -----------  -------------
Zachary Axelrod               Son of Outside
                                  Counsel            1,000            1,000        -0-              -0-
----------------------------  ---------------  ---------------  ------------  -----------  -------------

----------------------------  ---------------  ---------------  ------------  -----------  -------------
                                                     TOTAL          552,100
--------------------------------------------------------------------------------------------------------



                                   Page 42

(1)  Includes  shares  of common stock for which the selling security holder has
     the  right  to  acquire  beneficial  ownership  within  60  days.

(2)  This table  assumes  that each selling security holder will sell all shares
     offered  for sale by it under this registration statement. Security holders
     are  not  required  to  sell  their  shares.

(3)  Assumes  that  all  shares  of  Common  Stock registered for resale by this
     prospectus  have  been  sold.

(4)  Based on  4,901,148 shares of Common stock issued and outstanding as of May
     11,  2006.

(5)  Mr. McElroy  is  a greater than 10% shareholder of the Company. Mr. McElroy
     is the beneficial owner of 698,467 shares of Common Stock and 50,000 shares
     of  Common  Stock  issuable  upon  the  exercise  of  warrants. This number
     excludes 220,000 shares of Common Stock (which are being registered herein)
     issuable  upon  the conversion of a Secured Convertible Debenture at a rate
     of $3.00 per share and also excludes 91,603 shares of Common Stock issuable
     upon the conversion of a Convertible Debenture at a rate of $6.55 per share
     as  these  Debentures  provide  that, absent shareholder approval, that the
     number  of  shares of our common stock that may be issued by us or acquired
     by Mr. McElroy upon conversion of the Debentures shall not exceed 19.99% of
     the  total  number  of  issued  and outstanding shares of our common stock.

(6)  Consists of 50,000 shares of Common Stock and 60,000 shares of Common Stock
     which  may be acquired upon conversion of the outstanding principal under a
     secured  convertible  note with exercise prices ranging from $7.00 to $7.50
     per  share.

(7)  John Gray  is  the individual with investment decision and voting power for
     this  non-natural  entity.

(8)  Includes  25,000  shares  of  common  stock  issuable  upon the exercise of
     options  that  are  exercisable  within  60  days.

(9)  Ms. Simoneaux  is the wife of Eric Langan, our Chief Executive Officer. Mr.
     Langan  disclaims  beneficial  ownership  of  Ms.  Simoneaux's  shares.

(10) Includes  27,500  shares  of  common  stock  issuable  upon the exercise of
     options  that  are  exercisable  within  60  days.

(11) Includes 5,000 shares of common stock issuable upon the exercise of options
     that  are  exercisable  within  60  days.


                               PLAN OF DISTRIBUTION

     As  of the date of this prospectus, we have not been advised by the selling
stockholders  as  to  any  plan  of  distribution.  Shares  owned by the selling
stockholders,  or  by  their  partners,  pledgees,  donees (including charitable
organizations),  transferees  or  other successors in interest, may from time to
time  be  offered  for  sale  either  directly  by  such  individual, or through
underwriters,  dealers or agents or on any exchange on which the shares may from
time  to  time  be  traded,  in the over-the-counter market, or in independently
negotiated  transactions  or  otherwise.  The methods by which the shares may be
sold  include:

     -    a block  trade  (which  may  involve  crosses)  in which the broker or
          dealer so engaged will attempt to sell the securities as agent but may
          position  and resell a portion of the block as principal to facilitate
          the  transaction;

     -    purchases  by  a  broker  or  dealer  as  principal and resale by such
          broker  or  dealer  for  its  own account pursuant to this prospectus;


                                   Page 43

     -    exchange  distributions  and/or  secondary  distributions;

     -    sales  in  the  over-the-counter  market;

     -    underwritten  transactions;

     -    ordinary  brokerage  transactions  and  transactions  in  which  the
          broker  solicits  purchasers;  and

     -    privately  negotiated  transactions.

Such  transactions  may be effected by the selling stockholders at market prices
prevailing  at  the  time  of  sale  or  at  negotiated  prices.  The  selling
stockholders  may  effect  such  transactions  by  selling  the  common stock to
underwriters  or  to  or  through  broker-dealers,  and  such  underwriters  or
broker-dealers may receive compensations in the form of discounts or commissions
from the selling stockholders and may receive commissions from the purchasers of
the  common  stock for whom they may act as agent.  The selling stockholders may
agree  to indemnify any underwriter, broker-dealer or agent that participates in
transactions  involving  sales  of  the  shares  against  certain  liabilities,
including  liabilities  arising  under  the  Securities  Act.  We have agreed to
register  the  shares  for  sale  under  the Securities Act and to indemnify the
selling  stockholders,  certain  representatives of the selling stockholders and
each  person  who  participates  as an underwriter in the offering of the shares
against  certain  civil  liabilities,  including  certain  liabilities under the
Securities Act.  We are required to pay certain fees and expenses incurred by us
incident  to  the  registration  of  the  shares.

In  connection  with  sales  of  the  common  stock  under this prospectus, upon
effectiveness  of the registration statement, the selling stockholders may enter
into  hedging  transactions with broker-dealers, who may in turn engage in short
sales  of  the  common stock in the course of hedging the positions they assume.
The  selling stockholders also may sell shares of common stock short and deliver
them  to  close  out the short positions, or loan or pledge the shares of common
stock  to  broker-dealers  that  in  turn  may  sell  them.

Because selling stockholders may be deemed to be statutory "underwriters" within
the  meaning  of  the  Securities  Act,  they  will be subject to the prospectus
delivery  requirements  of  the  Securities  Act.  The  selling stockholders are
subject  to  the  applicable  provisions  of the Exchange Act, and the rules and
regulations  thereunder  which may restrict certain activities of, and limit the
timing  of  purchases and sales of securities by, selling stockholders and other
persons participating in a distribution of securities.  The selling stockholders
may  also sell shares under Rule 144 of the Securities Act, if available, rather
than  under  this  prospectus.  There  is  no underwriter or coordinating broker
acting  in  connection  with  the  proposed  sale  of  the shares by the selling
stockholders.

The  selling  stockholders  and  any  underwriters,  dealers  or  agents  that
participate  in distribution of the shares may be deemed to be underwriters, and
any  profit  on  sale  of  the  shares by them and any discounts, commissions or
concessions  received  by  any  underwriter, dealer or agent may be deemed to be
underwriting  discounts  and commissions under the Securities Act.   The selling
stockholders  do  not  expect  these commissions and discounts to exceed what is
customary  in  the  types  of  transactions  involved.


                                   Page 44

We agreed to keep this prospectus effective until the earlier of (i) January 18,
2010,  or  (ii)  the  time that all of the shares have been sold pursuant to the
prospectus  or  Rule  144  under the Securities Act or any other rule of similar
effect.

There can be no assurances that the selling stockholders will sell any or all of
the  shares  offered  under  this  prospectus.

                            DESCRIPTION OF SECURITIES
                            -------------------------

GENERAL

The  following  description  of our capital stock is subject to and qualified in
its  entirety by our certificate of incorporation and bylaws, which are included
as exhibits to the registration statement of which this prospectus forms a part,
and  by  the  applicable  provisions  of  Texas  law.

Our  authorized  capital  stock consists of 16,000,000 shares of which there are
15,000,000  shares  of  common  stock,  par  value $.01 per share, and 1,000,000
shares  of  preferred  stock,  par  value  $.10  per  share.

COMMON STOCK

As  of  May  11,  2006, there were 4,901,148 shares of common stock outstanding.
The  rights  of  all  holders of the common stock are identical in all respects.
The  holders of the common stock are entitled to receive ratably such dividends,
if  any,  as  may be declared by the Board of Directors out of legally available
funds.  The  current  policy  of  the  Board of Directors, however, is to retain
earnings,  if  any,  for  reinvestment.

Upon  liquidation,  dissolution or winding up of the Company, the holders of the
common  stock  are  entitled to share ratably in all aspects of the Company that
are  legally  available  for distribution, after payment of or provision for all
debts  and  liabilities.

The  holders of the common stock do not have preemptive subscription, redemption
or  conversion rights under our Articles of Incorporation.  Cumulative voting in
the  election  of  Directors is not permitted.  The outstanding shares of common
stock are validly issued, fully paid and nonassessable.  The rights, preferences
and  privileges  of  holders  of  common  stock  will  be subject to, and may be
adversely  affected  by,  the  rights  of  holders  of  shares  of any series of
preferred  stock  that  are  presently outstanding or that may be designated and
issued  by  us  in  the  future.

PREFERRED  STOCK

Our  Board  of  Directors,  without  further  action  by  the  shareholders,  is
authorized  to  issue  up  to 1,000,000 shares of preferred stock in one or more
series.  The  Board  may,  without  shareholder approval, determine the dividend
rates,  redemption prices, preferences on liquidation or dissolution, conversion
rights,  voting  rights  and  any  other  preferences.  As  of  the date of this
prospectus,  our  Board  has  not  authorized any series of preferred stock, and
there  are  no  agreements  or  understandings for the issuance of any shares of
preferred  stock.  Because  of  its


                                   Page 45

broad  discretion  with  respect to the creation and issuance of preferred stock
without  shareholder approval, our Board could adversely affect the voting power
of  the  holders  of  our  common and, by issuing shares of preferred stock with
certain  voting,  conversion  and/or  redemption  rights,  could delay, defer or
prevent  an  attempt  to  obtain  control  of  our  company.

SECURED  CONVERTIBLE  DEBENTURE

On  July 22, 2005, we issued a Secured Convertible Debenture to Ralph McElroy, a
greater  than  10% shareholder of the Company, for the principal sum of $660,000
bearing interest at the rate of 12% per annum, with a maturity date of August 1,
2008.  Under  the  terms  of  the  Debenture,  we  are  required to make monthly
interest  payments beginning September 1, 2005.  We have the right to redeem the
Debenture  in whole or in part at any time during the term of the Debenture.  At
the election of the Holder, the Holder has the right to require the Debenture to
be  repaid  in  thirty (30) equal monthly installments commencing February 2006.
The  Holder has the option to convert all or any portion of the principal amount
of  the  Debenture into shares of our common stock at a rate of $3.00 per share,
subject  to adjustment under certain conditions.  The Debenture provides, absent
shareholder  approval, that the number of shares of our common stock that may be
issued  by  us  or acquired by the Holder upon conversion of the Debenture shall
not  exceed  19.99%  of the total number of issued and outstanding shares of our
common stock.  The Debenture is secured by certain of our assets.  Additionally,
we issued Mr. McElroy a Warrant to purchase 50,000 shares of our common stock at
an exercise price of $3.00 per share until July 22, 2008.   The shares of Common
Stock  underlying  the  principal  amount of the Debenture and the Warrants have
piggyback  registration  rights.

On  April  28,  2006, the Company entered into convertible debentures with three
shareholders for a principal sum of $825,000.  The term is for two years and the
interest  rate  is  12%  per annum.  At the election of the holders, the holders
have  the  right  at  any time to convert all or any portion of the principal or
interest  amount of the debenture into shares of the Company's common stock at a
rate  of  $6.55 per share.  The debenture provides, absent shareholder approval,
that  the  number  of shares of the Company's common stock that may be issued by
the  Company  or  acquired by the holders upon conversion of the debenture shall
not  exceed  19.99%  of the total number of issued and outstanding shares of the
Company's  common  stock.

On  February  6,  2006,  we  issued  an  unsecured  Convertible  Debenture to an
unrelated  investment group for the principal sum of $1,000,950 bearing interest
at  the  rate of 10% per annum, with a maturity date of February 1, 2009.  Under
the  terms  of  this Debenture, we are required to make three quarterly interest
payments  beginning May 1, 2006.  Thereafter, we are required to make nine equal
quarterly  principal and interest payments.  At any time after 366 days from the
date of issuance of this Debenture, we have the right to redeem the Debenture in
whole  or in part at any time during the term of the Debenture.  At the election
of  the  Holder,  the  Holder  has  the  right at any time to convert all or any
portion  of the principal or interest amount of the Debenture into shares of our
common  stock at a rate of $4.75 per share, which approximates the closing price
of  the  Company's stock on February 6, 2006.  The proceeds of the Debenture was
used  to  payoff  certain  debt  and  increase  our  working  capital.


                                   Page 46

SECURED  CONVERTIBLE  NOTE

On  January  18,  2005, we entered a Secured Convertible Note with the Seller of
Peregrine  Enterprises, Inc. in the amount of $5,125,000 bearing simple interest
at  the  rate  of  4.0% per annum. The Note is payable commencing 120 days after
Closing as follows: (a) the payment of $58,333.33 per month for twenty-four (24)
consecutive  months;  (b)  the  payment  of  $63,333.33  for  twenty-four  (24)
consecutive  months;  (c)  the payment of $68,333.33 for twelve (12) consecutive
months;  and  (d)  a lump sum payment of the remaining balance to be paid on the
sixty-first  (61st)  month.  $2,000,000  of  the principal amount of the Note is
convertible  into  shares  of our restricted common stock at prices ranging from
$4.00  to  $7.50  per  share.  As of May 11, 2006, the Holder of the Convertible
Note has converted a total of $1,575,000 of the principal sum from the note, for
which we have issued 300,000 shares of our restricted common stock.  The parties
also entered a Stock Pledge Agreement and Security Agreement to secure the Note.

OUTSTANDING  WARRANTS

In  addition  to  the  stock  options  discussed herein, we have 50,000 warrants
outstanding  at  an  exercise price of $3.00 per share (for which the underlying
shares  have  been  registered  herein).

TRANSFER  AGENT

The transfer agent for our Common Stock is American Stock Transfer located at 59
Maiden Lane, New York, New York  10038.  Their telephone number is 718-921-8275.


                      INTEREST OF NAMED EXPERTS AND COUNSEL
                      -------------------------------------

Axelrod,  Smith  & Kirshbaum, P.C., who has prepared this Registration Statement
and  Opinion  regarding  the  authorization,  issuance  and  fully-paid  and
non-assessable  status of the securities covered by this Registration Statement,
has  represented us in the past on certain legal matters.  Mr. Robert D. Axelrod
presently  owns 90,300 shares of our common stock.  His entire relationship with
us  has  been  as legal counsel, and there are no arrangements or understandings
which  would in any way cause him to be deemed an affiliate of the Registrant or
a  person  associated  with  an  affiliate  of  the  Registrant.

                                     EXPERTS
                                     -------

The  financial statements of Rick's Cabaret International, Inc. at September 30,
2005  and 2004 included in and made a part of this document have been audited by
Whitley  Penn,  LLP, independent registered public accounting firm, as set forth
in  their  report  appearing elsewhere herein, and are included in reliance upon
such  report  given  on  the authority of such firm as experts in accounting and
auditing.


                                   Page 47

                             COMMISSION POSITION ON
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
                 ----------------------------------------------

Our  certificate of incorporation provides that we shall indemnify our directors
and  officers  to the fullest extent permitted by Texas law and that none of our
directors  will  be  personally  liable  to  the Company or its stockholders for
monetary  damages  for  breach  of  fiduciary  duty  as  a  director, except for
liability:

     -    for any  breach  of  the  director's  duty  of  loyalty to the Company
          or  its  stockholders;
     -    for acts  or  omissions  not  in  good  faith  or  that  involve
          intentional  misconduct  or  a  knowing  violation  of  the  law;
     -    under the  Texas  Business  Corporation  Act  for the unlawful payment
          of  dividends;  or
     -    for any  transaction  from  which  the  director  derives  an improper
          personal  benefit.

These  provisions  require  us  to  indemnify  our directors and officers unless
restricted  by  Texas law and eliminate our rights and those of our stockholders
to  recover monetary damages from a director for breach of his fiduciary duty of
care  as  a  director  except in the situations described above. The limitations
summarized above, however, do not affect our ability or that of our stockholders
to  seek  non-monetary  remedies, such as an injunction or rescission, against a
director  for  breach  of  his  fiduciary  duty.

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

                       WHERE YOU CAN FIND MORE INFORMATION

     We  have filed with the SEC a registration statement on Form SB-2 under the
Securities  Act,  and  the  rules  and  regulations promulgated thereunder, with
respect to the common stock offered hereby. This prospectus, which constitutes a
part  of the registration statement, does not contain all of the information set
forth  in  the  registration  statement  and  the  exhibits thereto.  Statements
contained  in  this  prospectus  as  to  the  contents  of any contract or other
document  that  is  filed  as  an exhibit to the registration statement  are not
necessarily  complete  and each such  statement  is qualified in all respects by
reference to the full text of such contract or document. For further information
with  respect  to  us  and the common stock,  reference  is  hereby  made to the
registration  statement  and the exhibits  thereto,  which may be inspected  and
copied at the principal office of the SEC, 450 Fifth Street,  N.W.,  Washington,
D.C. 20549,  and copies of all or any part thereof may be obtained at prescribed
rates from the Commission's  Public Reference  Section at such addresses.  Also,
the  SEC  maintains a World Wide Web site on the  Internet at http://www.sec.gov
                                                              ------------------
that  contains  reports, proxy and information  statements and other information
regarding  registrants  that  file  electronically  with  the  SEC.  Additional
information  can also be obtained through our website at www.Ricks.com.  We also
                                                         -------------
make  available  free of charge our annual, quarterly and current reports, proxy
statements  and  other  information  upon  request.  To  request such materials,
please  contact  Mr.  Eric Langan, our President and Chief Executive Officer, at
10959  Cutten  Road,  Houston,  Texas  77066.


                                   Page 48

     We  are  in  compliance  with  the  information  and  periodic   reporting
requirements  of the  Exchange  Act and,  in  accordance  therewith,  will  file
periodic  reports,  proxy and information  statements and other information with
the SEC. Such  periodic  reports,  proxy and  information  statements  and other
information  will be  available  for  inspection  and  copying at the  principal
office,  public  reference facilities and Web site of the SEC referred to above.


                                   Page 49



                       RICK'S CABARET INTERNATIONAL, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED SEPTEMBER 30, 2005 AND 2004



                                TABLE OF CONTENTS


                                                                     
Report of Independent Registered Public Accounting Firm. . . . . . . .  F-2

Audited Consolidated Financial Statements:

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

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

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

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

        Notes to Consolidated Financial Statements . . . . . . . . . .  F-8



                                      F - 1

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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


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

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

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


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


                                      F - 2



                               RICK'S CABARET INTERNATIONAL, INC.

                                  CONSOLIDATED BALANCE SHEETS

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

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

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

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

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

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

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

Commitments and contingencies                                                  -             -

Minority interest                                                         31,337        40,808

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

Total liabilities and stockholders' equity                           $25,029,018   $12,760,877
                                                                     ============  ============


See accompanying notes to consolidated financial statements.


                                      F - 3



                                RICK'S CABARET INTERNATIONAL, INC.

                                 CONSOLIDATED STATEMENTS OF INCOME

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

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

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

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

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

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

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

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

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

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

Weighted average number of common shares outstanding                    3,937,565       3,700,148
                                                                    ==============  ==============


See accompanying notes to consolidated financial statements.


                                      F - 4



                                                RICK'S CABARET INTERNATIONAL, INC.

                                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                             YEARS ENDED SEPTEMBER 30, 2005 AND 2004

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

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

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


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

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

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


                                            TOTAL
                                        STOCKHOLDERS'
                                           EQUITY
                                       ---------------
                                    
Balance at September 30, 2003          $    7,381,721

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

Balance at September 30, 2004               8,145,976

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

Balance at September 30, 2005          $    9,574,936
                                       ===============


See accompanying notes to consolidated financial statements.


                                      F - 5



                             RICK'S CABARET INTERNATIONAL, INC.

                            CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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

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

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

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

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

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


See accompanying notes to consolidated financial statements.


                                      F - 6

                       RICK'S CABARET INTERNATIONAL, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


NON-CASH TRANSACTIONS

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

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

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

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

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

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

See accompanying notes to consolidated financial statements.


                                      F - 7

                       RICK'S CABARET INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2005 AND 2004


A.   NATURE OF BUSINESS

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


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

BASIS OF ACCOUNTING

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

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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


                                      F - 8

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ACCOUNTS AND NOTES RECEIVABLE

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

MARKETABLE SECURITIES

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

INVENTORIES

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

PROPERTY AND EQUIPMENT

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


                                      F - 9

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

GOODWILL AND INTANGIBLE ASSETS

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

REVENUE RECOGNITION

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

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

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

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


                                     F - 10

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ADVERTISING AND MARKETING

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

INCOME TAXES

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

COMPREHENSIVE INCOME

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

EARNINGS PER COMMON SHARE

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

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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


                                     F - 11

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

STOCK OPTIONS

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

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



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

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

       Basic and diluted  - pro forma               $       (0.19)  $        0.15
                                                    ==============  ==============



IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

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


                                     F - 12

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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


C.   PROPERTY AND EQUIPMENT

Property  and  equipment  consisted  of  the  following:



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

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



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


                                     F - 13

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


D.   GOODWILL AND INTANGIBLE ASSETS

Goodwill  and  intangible  assets  consisted  of  the  following:



                                                              SEPTEMBER 30,
                                                            2005         2004
                                                         -----------  ----------
                                                             
     Indefinite useful lives:
       Goodwill                                          $1,898,926   $1,898,926
       Licenses                                           7,937,634            -

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

     Total goodwill and intangible assets                $9,962,822   $1,898,926
                                                         ===========  ==========


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


                                     F - 14

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT

Long-term  debt  consisted  of  the  following:



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

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

     Total long-term debt                              $11,896,942  $3,201,250
                                                       ===========  ==========


     * Collateralized by real estate

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

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


                                     F - 15

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT - CONTINUED

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

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

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

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

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


                                     F - 16

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


E.   LONG-TERM DEBT - CONTINUED

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

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

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



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



F.   INCOME TAXES

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



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



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



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



                                     F - 17

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


F.   INCOME TAXES - CONTINUED

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


G.   STOCK OPTIONS

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

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



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



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

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


                                     F - 18

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


G.   STOCK OPTIONS - CONTINUED

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

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



                             2005       2004
                           --------------------
                               
  Volatility                   137%        137%
  Expected lives           3 years   3.3 years
  Expected dividend yield        -           -
  Risk free rates             4.31%       3.45%



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


H.   COMMITMENTS AND CONTINGENCIES

LEASES

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

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


                                     F - 19

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

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



                                                
           2006                                    $   964,307
           2007                                        984,472
           2008                                        929,076
           2009                                        788,114
           2010                                        552,882
           Thereafter                                8,517,755
                                                   -----------

           Total future minimum lease obligations  $12,736,606
                                                   ===========



LEGAL MATTERS

Sexually Oriented Business Ordinance Of Houston, Texas

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

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

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

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


                                     F - 20

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

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

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

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

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

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

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


                                     F - 21

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


H.   COMMITMENTS AND CONTINGENCIES - CONTINUED

OTHER LEGAL MATTERS

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

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

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

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

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

I.   LINE-OF-CREDIT

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


                                     F - 22

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


J.   SEGMENT INFORMATION

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

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



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

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

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

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

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



                                     F - 23

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


K.   COMMON STOCK

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


L.   RELATED PARTY TRANSACTIONS

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


M.   EMPLOYEE RETIREMENT PLAN

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


N.   ACQUISITIONS AND DISPOSITIONS

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

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


                                     F - 24

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

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

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

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



                              
          Current assets         $  150,000
          Discounted lease           43,022
          Non-compete agreement     100,000
          License                 7,481,978
                                 ----------

          Net assets acquired    $7,775,000



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


                                     F - 25

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

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



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

  Net income (loss) per share - basic and diluted   $     (0.13)  $      0.02



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

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

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


                                     F - 26

                       RICK'S CABARET INTERNATIONAL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


N.   ACQUISITIONS AND DISPOSITIONS - CONTINUED

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

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



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



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


                                     F - 27



                       RICK'S CABARET INTERNATIONAL, INC.


                                TABLE OF CONTENTS
                                -----------------


PART  I          FINANCIAL  INFORMATION

                                                                            
Item 1.      Financial Statements

             Consolidated Balance Sheets as of March 31, 2006 (unaudited)
             and September 30, 2005 (audited)                                  F - 29

             Consolidated Statements of Operations for the three months and
             six months ended March 31, 2006 and 2005 (unaudited)              F - 31

             Consolidated Statements of Cash Flows for the six months
             ended March 31, 2006 and 2005 (unaudited)                         F - 32

             Notes to Consolidated Financial Statements                        F - 33



                                     F - 28

                          PART I FINANCIAL INFORMATION

Item  1.          Financial  Statements.



               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                     ------


                                                   3/31/06       9/30/05
                                               (UNAUDITED)     (AUDITED)
                                                      
CURRENT ASSETS:
  Cash and cash equivalents                   $ 1,473,186   $   480,330
  Accounts receivable
    Trade                                         231,152       310,692
    Other, net                                    140,009       118,872
  Marketable securities                            51,164        28,919
  Inventories                                     226,254       257,626
  Prepaid expenses and other current assets       257,802        87,991
                                              ------------  ------------
    Total current assets                        2,379,567     1,284,430

PROPERTY AND EQUIPMENT:
  Buildings, land and leasehold improvements   13,663,451    13,630,778
  Furniture and equipment                       3,276,540     3,019,445
                                              ------------  ------------
                                               16,939,991    16,650,223

  Accumulated depreciation                     (3,690,565)   (3,233,468)
                                              ------------  ------------
    Total property and equipment, net          13,249,426    13,416,755

OTHER ASSETS:
  Goodwill and indefinite lived intangibles     9,836,560     9,836,560
  Definite lived intangibles, net                 115,089       126,262
  Other                                           350,936       365,011
                                              ------------  ------------
    Total other assets                         10,302,585    10,327,833
                                              ------------  ------------
    Total assets                              $25,931,578   $25,029,018
                                              ============  ============


          See accompanying notes to consolidated financial statements.


                                     F - 29



                RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS

                        LIABILITIES AND STOCKHOLDERS' EQUITY


                                                            3/31/06        9/30/05
                                                         (UNAUDITED)      (AUDITED)
                                                                 

CURRENT LIABILITIES:
  Accounts payable - trade                               $   510,442   $ 1,034,508
  Accrued liabilities                                        702,328       852,865
  Current portion of long-term debt                          948,898     1,349,894
  Line of credit                                                 ---        94,888
                                                         ------------  ------------
    Total current liabilities                              2,161,668     3,332,155

Other long-term liabilities                                  258,674       193,648
Long-term debt less current portion                       11,650,845    11,896,942
                                                         ------------  ------------
    Total liabilities                                     14,071,187    15,422,745

COMMITMENTS AND CONTINGENCIES                                    ---           ---

MINORITY INTERESTS                                            32,681        31,337

STOCKHOLDERS' EQUITY:
  Preferred stock, $.10 par, 1,000,000 shares
    authorized; none issued and outstanding                      ---           ---
  Common stock, $.01 par, 15,000,000 shares
    authorized; 5,499,678 and 5,220,678 shares issued         54,997        52,207
  Additional paid-in capital                              14,000,780    13,004,567
  Accumulated other comprehensive income                      37,817        15,572
  Accumulated deficit                                       (972,104)   (2,203,630)
  Less 908,530 shares of common stock held in treasury,
    at cost                                               (1,293,780)   (1,293,780)
                                                         ------------  ------------
    Total stockholders' equity                            11,827,710     9,574,936
                                                         ------------  ------------

    Total liabilities and stockholders' equity           $25,931,578   $25,029,018
                                                         ============  ============


          See accompanying notes to consolidated financial statements.


                                     F - 30



                       RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS

                                                  FOR THE THREE MONTHS         FOR THE SIX MONTHS
                                                       ENDED MARCH 31,            ENDED MARCH 31,
                                                     2006         2005          2006         2005
                                                        (UNAUDITED)                (UNAUDITED)

                                                                          
Continuing Operations:
Revenues:
Sales of alcoholic beverages                  $2,215,489   $1,192,768    $4,385,484   $2,403,044
  Sales of food and merchandise                  677,275      413,996     1,315,999      791,098
  Service revenues                             2,841,119    1,586,890     5,435,920    3,092,841
  Internet revenues                              203,751      180,729       412,909      367,960
  Other                                          181,882       69,007       348,941      120,657
                                              -----------  -----------  ------------  -----------
        Total revenues                         6,119,516    3,443,390    11,899,253    6,775,600

Operating expenses:
  Cost of goods sold                             745,295      448,165     1,454,533      845,935
  Salaries and wages                           1,678,813    1,203,595     3,348,524    2,411,544
  Other general and administrative:
    Taxes and permits                            779,450      477,037     1,474,765      921,627
    Charge card fees                             104,074       55,609       206,310      115,296
    Rent                                         296,732      105,875       593,578      177,823
    Legal and professional                       185,288      178,753       335,946      346,079
    Advertising and marketing                    315,882      215,796       606,550      357,602
    Depreciation and amortization                235,788      140,453       468,269      267,242
    Other                                        814,713      618,081     1,663,127    1,177,199
                                              -----------  -----------  ------------  -----------
      Total operating expenses                 5,156,035    3,443,364    10,151,602    6,620,347
                                              -----------  -----------  ------------  -----------

Income from continuing operations                963,481           26     1,747,651      155,253

Other income (expense):
  Interest income                                  8,950       11,556        15,386       20,745
  Interest expense                              (271,469)    (167,835)     (534,521)    (256,949)
  Minority interests                              (2,731)      (6,877)       (1,344)      (6,414)
  Other                                            7,839           46         4,354         (734)
                                              -----------  -----------  ------------  -----------
Net income (loss) from continuing
  operations                                     706,070     (163,084)    1,231,526      (88,099)

Discontinued operations:
  Loss from discontinued operations                  ---      (66,825)          ---     (148,294)
  Gain on sale of subsidiary                         ---      291,987           ---      291,987
                                              -----------  -----------  ------------  -----------
    Net income                                $  706,070   $   62,078   $ 1,231,526   $   55,594
                                              ===========  ===========  ============  ===========
Basic and diluted earnings (loss) per share:
Income (loss) from continuing operations      $     0.16   $    (0.04)  $      0.28   $    (0.02)
Income from discontinued operations                  ---         0.06           ---         0.04
                                              -----------  -----------  ------------  -----------
Net income, basic                             $     0.16   $     0.02   $      0.28   $     0.02
                                              ===========  ===========  ============  ===========
Net income, diluted                           $     0.14   $     0.02   $      0.26   $     0.01
                                              ===========  ===========  ============  ===========
Weighted average number of common
  shares outstanding:
      Basic                                    4,408,237    3,782,481     4,364,649    3,741,315
                                              ===========  ===========  ============  ===========
      Diluted                                  5,347,386    3,964,987     4,973,583    3,923,821
                                              ===========  ===========  ============  ===========


Comprehensive income (loss) for the three months ended March 31, 2006 and 2005
were $728,315 and $28,710, and for the six months were $1,253,771 and ($22,265),
respectively.  This includes the changes in available-for-sale securities and
net income (loss).

          See accompanying notes to consolidated financial statements.


                                     F - 31



                RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         SIX MONTHS ENDED MARCH 31,
                                                                2006          2005
                                                          (UNAUDITED)   (UNAUDITED)
                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
    Income (loss) from continuing operations             $ 1,231,526   $   (88,099)
    Adjustments to reconcile income (loss) from
    continuing operations to cash provided by operating
    activities:
      Depreciation and amortization                          468,269       267,242
      Issuance of warrants                                    17,777           ---
      Minority interests                                       1,344         6,414
        Stocks issued for professional services                  ---        27,120
        Changes in operating assets and liabilities         (697,031)      813,580
                                                         ------------  ------------
    Cash provided by operating activities                  1,021,885     1,026,257

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property and equipment                     (289,768)     (988,626)
    Proceeds from sale of discontinued operations                ---       550,000
    Acquisition of business, net of cash acquired                ---    (2,650,000)
    Payments for notes receivable                             21,493       (10,012)
                                                         ------------  ------------
    Cash used in investing activities                       (268,275)   (3,098,638)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of common stock                        75,000       474,650
    Proceeds from stock options exercised                    249,003           ---
    Proceeds from long-term debt                           1,035,425     3,802,000
    Payments on line-of-credit                               (94,888)          ---
    Payments on long-term debt                            (1,025,294)     (488,973)
                                                         ------------  ------------
    Cash provided by financing activities                    239,246     3,787,677

CASH FLOW FROM DISCONTINUED OPERATIONS:
    Cash provided by operating activities                        ---       200,042
    Cash used in investing activities                            ---      (402,585)
    Cash used in financing activities                            ---      (176,089)
                                                         ------------  ------------
    Cash used in discontinued operations                         ---      (378,632)

NET INCREASE IN CASH                                         992,856     1,336,664

CASH AT BEGINNING OF PERIOD                                  480,330       275,243
                                                         ------------  ------------
CASH AT END OF PERIOD                                    $ 1,473,186   $ 1,611,907
                                                         ============  ============
CASH PAID DURING PERIOD FOR:
    Interest                                             $   552,227   $   242,151
                                                         ============  ============



Non-cash transactions:
     During the quarter ended December 31, 2004, the Company purchased a 9,000
square foot office building for $516,499, payable with $90,039 cash at closing
and a fifteen-year promissory note, bearing interest rate at 7%, in the amount
of $426,460.

     In March 2006, the seller of the New York club converted $675,000 of
principal from the related promissory note into 150,000 shares of restricted
common stock.

          See accompanying notes to consolidated financial statements.


                                     F - 32

              RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

1.  BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with  accounting  principles  generally accepted in the United States of America
for  interim  financial  information and with the instructions to Form 10-QSB of
Regulation  S-B.  They  do not include all information and footnotes required by
accounting  principles  generally  accepted  in the United States of America for
complete  financial  statements.  However, except as disclosed herein, there has
been  no  material  change  in  the  information  disclosed  in the notes to the
financial  statements  for  the  year  ended  September 30, 2005 included in the
Company's Annual Report on Form 10-KSB, as amended and filed with the Securities
and  Exchange  Commission.  The interim unaudited financial statements should be
read in conjunction with those financial statements included in the Form 10-KSB.
In  the  opinion  of management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating  results  for the three months and six months ended March 31, 2006 are
not  necessarily  indicative  of  the  results that may be expected for the year
ending  September  30,  2006.

2.  STOCK OPTIONS

The Company accounts for its stock options under the recognition and measurement
principles of Accounting Principles Board ("APB") opinion No. 25, Accounting for
Stock  Issued  to  Employees,  and  related Interpretations. The following table
illustrates the effect on net income (loss) and earnings (loss) per share if the
Company  had  applied  the  fair  value  recognition  provisions of Statement of
Financial  Accounting  Standard  ("SFAS")  No.  123,  Accounting for Stock Based
Compensation,  to  stock-based employee compensation. The following presents pro
forma  net income (loss) and per share data as if a fair value accounting method
had  been  used  to  account  for  stock-based  compensation:



                                                  FOR THE THREE MONTHS       FOR THE SIX MONTHS
                                                       ENDED MARCH 31,          ENDED MARCH 31,
                                                      2006        2005        2006         2005
                                                                          
  Net income, as reported                        $ 706,070   $  62,078   $1,231,526   $  55,594
  Less total stock-based employee compensation
  expense determined under the fair value
  based method for all awards                     (135,630)   (128,393)    (271,260)   (256,786)
                                                 ----------  ----------  -----------  ----------
  Pro forma net income (loss)                    $ 570,440   $ (66,315)  $  960,266   $(201,192)
                                                 ==========  ==========  ===========  ==========

  Earnings (loss) per share:
    Basic - as reported                          $    0.16   $    0.02   $     0.28   $    0.02
                                                 ==========  ==========  ===========  ==========
    Diluted - as reported                        $    0.14   $    0.02   $     0.26   $    0.01
                                                 ==========  ==========  ===========  ==========

    Basic - pro forma                            $    0.13   $   (0.02)  $     0.22   $   (0.05)
                                                 ==========  ==========  ===========  ==========
    Diluted - pro forma                          $    0.11   $   (0.02)  $     0.19   $   (0.05)
                                                 ==========  ==========  ===========  ==========



                                     F - 33

               RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

3.  RECLASSIFICATIONS

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

4.  COMPREHENSIVE INCOME

The  Company  reports  comprehensive income in accordance with the provisions of
SFAS  No.  130,  Reporting  Comprehensive  Income.  Comprehensive  income (loss)
consists  of  net  income  (loss)  and  gains  (losses)  on  available-for-sale
marketable  securities.

5.  COMMON STOCK

On October 11, 2005, 10,000 stock options were exercised by one of the Company's
directors  for  proceeds  of $21,300. In January 2006, 54,000 stock options were
exercised  by  the  Company's employees for proceeds of $138,240 and in February
2006,  10,000 stock options by one of the Company's directors for $25,400. Also,
30,000  shares  of  the  Company's  common  stock was sold to a non-employee for
$75,000  in  January  2006. In March 2006, a non-employee exercised 25,000 stock
options  for  $64,063  and the seller of the New York club converted $675,000 of
principal  from  the  related  promissory note into 150,000 shares of restricted
common  stock.

6.  SEGMENT INFORMATION

Below is the financial information related to the Company's segments:



                              FOR THE THREE MONTHS          FOR THE SIX MONTHS
                                   ENDED MARCH 31,             ENDED MARCH 31,
                                 2006         2005          2006          2005
                                                       
REVENUES
  Club operations          $5,915,580   $3,262,661   $11,484,298   $ 6,407,640
  Internet websites           203,936      180,729       414,955       367,960
                           -----------  -----------  ------------  ------------
                           $6,119,516   $3,443,390   $11,899,253   $ 6,775,600
                           ===========  ===========  ============  ============
NET INCOME
  Club operations          $1,317,697   $  317,999   $ 2,340,205   $   947,568
  Internet websites            30,447       27,226        79,296        58,412
  Corporate expenses         (642,074)    (508,309)   (1,187,975)   (1,094,079)
  Discontinued operations         ---      225,162           ---       143,693
                           -----------  -----------  ------------  ------------
                           $  706,070   $   62,078   $ 1,231,526   $    55,594
                           ===========  ===========  ============  ============



                                     F - 34

              RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

7.  REVENUE RECOGNITION

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

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

If  the  Company  had deferred membership revenue and recognized it based on the
lives  above, the impact on revenue and net income recognized would have been an
increase  of approximately $0 and $4,243 for the three months and an increase of
$0  and  $3,936  for the six months ended March 31, 2006 and 2005, respectively.
This  would have also resulted in a deferred revenue balance of approximately $0
and  $2,066  as  of  March  31, 2006 and 2005, respectively. Management does not
believe the impact of this difference in accounting treatment is material to the
Company's  annual and quarterly financial statements. However, the Company began
to  record  revenues  in  such manner effective January 1, 2004, and hence as of
March  31,  2006  deferred  revenues of approximately $19,200 have been recorded
related  to  such  memberships.

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

8.  LONG-TERM DEBT

On  February  6,  2006,  the  Company  issued  a  Convertible  Debenture  (the
"Debenture")  to  an  unrelated  investment  group  for  the  principal  sum  of
$1,000,950  bearing  interest at the rate of 10% per annum, with a maturity date
of  February  1, 2009. Under the terms of the Debenture, the Company is required
to make three quarterly interest payments beginning May 1, 2006. Thereafter, the
Company  is  required  to  make  nine  equal  quarterly  principal  and interest
payments.  At  any  time  after  366  days  from  the  date  of issuance of this
Debenture, the Company has the right to redeem the Debenture in whole or in part
at any time during the term of the Debenture. At the election of the Holder, the
Holder  has the right at any time to convert all or any portion of the principal
or interest amount of the Debenture into shares of our common stock at a rate of
$4.75  per share, which approximates the closing price of the Company's stock on
February  6,  2006.  The  proceeds  of  the  Debenture  was  used  to


                                     F - 35

              RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

8.  LONG-TERM DEBT (CONTINUED)

payoff  certain  debt  and  increase  our  working  capital.

9.  ACQUISITIONS AND DISPOSITIONS

On  January  18,  2005,  the  Company  completed  the  acquisition  of Peregrine
Enterprises,  Inc.,  which  operated the Paradise Club in Midtown Manhattan, New
York  (50  West 33rd Street). The total consideration was for $7.775 million for
the assets and stock of the former Paradise Club, which had operated on the site
for  more  than  a decade. The transaction consisted of $2.5 million in cash and
$5.125  million in a promissory note bearing simple interest at the rate of 4.0%
per  annum  with  a  balloon  payment  at  end  of  five years, part of which is
convertible  to  restricted  shares  of  Rick's  Cabaret  common stock at prices
ranging  from  $4.00  to $7.50 per share, and transaction costs of $150,000. The
results  of operations of the club are included in our consolidated statement of
operations  from  January  18,  2005.

The following unaudited pro forma information presents the results of operations
as  if  the  acquisition  had  occurred  as  of  the  beginning of the immediate
preceding  period.  The  pro  forma information is not necessarily indicative of
what  would  have occurred had the acquisition been made as of such periods, nor
is  it  indicative  of  future results of operations. The pro forma amounts give
effect  to  appropriate  adjustments  for the fair value of the assets acquired,
amortization  of  intangibles  and  interest  expense.



                                                  FOR THE THREE MONTHS   FOR THE SIX MONTHS
                                                       ENDED MARCH 31,      ENDED MARCH 31,
                                                                  2005                 2005
                                                                   
Revenues                                          $          3,443,390   $       7,261,600
Net income (loss) from continuing
  operations                                      $           (163,084)  $        (368,099)
Net income (loss)                                 $             62,078   $        (224,406)

Net income (loss) per share - basic and diluted   $               0.02   $           (0.06)


On  March  31, 2005, the Company completed the sale of one of its clubs known as
'Rick's  South' to MBG Acquisition LLC for $550,000 cash. In connection with the
sale, the Company recorded a gain of $291,987. The club's business was accounted
for as discontinued operations under accounting principles generally accepted in
the United States of America and therefore, the club's results of operations and
such  assets  and  liabilities  as  of March 31, 2005 have been removed from the
Company's  consolidated  results  of continuing operations and balance sheet for
all  periods  presented  in  this document and the cash flows for the six months
ended  March  31,  2005 have been provided in the consolidated statement of cash
flows.



              RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006

10.  SUBSEQUENT EVENTS

On April 17, May 1, and May 3, 2006, the seller of the New York club converted a
total  of  $900,000  of  principal from the related promissory note into 150,000
shares  of  restricted  stock.

On  April  5,  2006,  the  Company's wholly owned subsidiary, RCI Holdings, Inc.
completed  the  acquisition  of  real  property  located  at 9009 Airport Blvd.,
Houston,  Texas  where  the  Company  currently  operates  Rick's  Sports  Bar
(previously  Hummers  Sports  Bar and XTC South clubs). Pursuant to the terms of
the  Agreement,  the  Company  paid  a  total  sales  price  of $1,300,000 which
consisted  of  $500,000  in  cash and 160,000 shares of the Company's restricted
common  stock.  As  part  of  the  transaction, the Company has agreed to file a
registration  statement for the resale of such restricted common stock within 45
days  after  the  closing.  Additionally,  nine  months  after the filing of the
Registration Statement, the Seller shall have the right, but not the obligation,
to have the Company buy the shares at a price of $5.00 per share at a rate of no
more than 10,000 shares per month until such time as the Seller receives a total
of  $800,000  from the sale of such shares. Alternatively, the Seller shall have
the  option to sell such shares in the open market upon the effectiveness of the
Registration  Statement.  The  transaction  was  the  result  of  arms-length
negotiations  between  the  parties.

On  May  9,  2006, the Company purchased Joint Ventures, Inc., an operator of an
adult  nightclub  in  South Houston, Texas, formerly known as Dreamers Cabaret &
Sports Bar located at 802 Houston Blvd. The purchase price was for $840,000 paid
in  cash.  The  club,  located  in Houston suburbs, has been converted to an XTC
Cabaret.

On  April  28,  2006, the Company entered into convertible debentures with three
shareholders  for a principal sum of $825,000. The term is for two years and the
interest rate is 12% per annum. At the election of the holders, the holders have
the right at any time to convert all or any portion of the principal or interest
amount  of  the debenture into shares of the Company's common stock at a rate of
$6.55  per  share. The debenture provides, absent shareholder approval, that the
number of shares of the Company's common stock that may be issued by the Company
or  acquired  by  the  holders upon conversion of the debenture shall not exceed
19.99%  of  the  total  number of issued and outstanding shares of the Company's
common  stock.