-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rxq4ZslGuFbRxsiARqIy+Q/h2DhAHMifWTgSL0pQLWN2E5vwp+ChSTK5wzSpgyeN vhTJ3GSP4zrc/ueZqPalbg== 0001015402-99-000170.txt : 19990217 0001015402-99-000170.hdr.sgml : 19990217 ACCESSION NUMBER: 0001015402-99-000170 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICKS CABARET INTERNATIONAL INC CENTRAL INDEX KEY: 0000935419 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 760037324 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13992 FILM NUMBER: 99539693 BUSINESS ADDRESS: STREET 1: 3113 BERING DR CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7137850444 MAIL ADDRESS: STREET 1: 3113 BERING DR CITY: HOUSTON STATE: TX ZIP: 77057 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-QSB ----------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934; For the Quarterly Period Ended: December 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-26958 RICK'S CABARET INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Texas 76-0037324 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 3113 Bering Drive Houston, Texas 77057 (Address of principal executive offices, including zip code) (713) 785-0444 (Registrant's telephone number, including area code) ----------------- Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS On February 11, 1999, there were aproxmimately 6,547,453 shares of common stock, $.01 par value, outstanding. Transitional Small Business Disclosure Format (check one); Yes [ ] No [x] RICK'S CABARET INTERNATIONAL, INC. CONTENTS -------- Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 1998 (unaudited) and September 30, 1998 Consolidated Statements of Operations for the three months ended December 31, 1998 and 1997 ( unaudited) Consolidated Statements of Cash Flows for the three months ended December 31, 1998 and 1997 ( unaudited) Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION - ------------------------------- Item 2. Changes in Securities Item 6. Exhibits and Reports on Form 8-K SIGNATURES
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS ------ 12/31/98 9/30/98 (UNAUDITED) (AUDITED) CURRENT ASSETS Cash $ 512,220 $ 597,644 Accounts receivable 110,252 58,023 Prepaid expenses 208,009 34,876 Inventories 96,174 94,633 Land held for sale 569,069 569,069 ------------ ------------ Total current assets 1,495,724 1,354,245 ------------ ------------ PROPERTY AND EQUIPMENT Buildings, lands and leasehold improvements 10,424,163 9,851,789 Furniture and equipment 1,367,147 1,609,031 ------------ ------------ 11,791,310 11,460,820 Accumulated depreciation (1,308,266) (1,213,558) ------------ ------------ 10,483,044 10,247,262 ------------ ------------ OTHER ASSETS Goodwill less accumulated amortization 3,092,444 3,154,804 Other 124,971 112,025 ------------ ------------ 3,217,415 3,266,829 ------------ ------------ $15,196,183 $14,868,336 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long term debt $ 713,811 $ 718,636 Accounts payable - trade 1,492,990 1,179,410 Accrued expenses 422,966 344,032 ------------ ------------ Total current liabilities 2,629,767 2,242,078 LONG TERM DEBT, LESS CURRENT PORTION Long-term debts less current portion 5,680,173 6,015,903 ------------ ------------ Total Liabilities 8,309,940 8,257,981 ------------ ------------ COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS 4,700 11,896 STOCKHOLDERS' EQUITY Preferred stock - $.10 par, authorized 1,000,000shares; none outstanding --- --- Common stock - $.01 par, authorized 15,000,000 shares issued 6,547,453 and 6,467,353 65,475 64,673 Additional paid in capital 8,940,576 8,941,378 Retained earnings (deficit) (2,124,508) (2,407,582) ------------ ------------ Total stockholder's equity 6,881,543 6,598,469 ------------ ------------ $15,196,183 $14,868,346 ============ ============
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 1998 1997 (UNAUDITED) (UNAUDITED) REVENUES Sales of alcoholic beverages $ 1,390,370 $ 856,274 Sales of food 149,532 101,217 Service revenues 1,344,725 345,917 Other 433,342 365,018 ------------- ------------- 3,317,969 1,668,426 ------------- ------------- OPERATING EXPENSES Cost of goods sold 487,859 213,182 Salaries and wages 1,004,943 448,644 Other general and administrative Taxes and permits 288,696 183,354 Charge card fees 57,507 31,133 Rent 135,155 150,722 Legal and accounting 142,108 54,842 Advertising 198,423 206,910 Other 577,471 299,929 ------------- ------------- 2,892,162 1,588,716 ------------- ------------- INCOME (LOSS) FROM OPERATIONS 425,807 79,710 Interest income 511 0 Interest Expense (143,244) (44,157) Net Income $ 283,074 $ 35,553 ============= ============= NET INCOME (LOSS) PER COMMON SHARE $ 0.04 $ 0.00 ============= ============= WEIGHTED AVERAGE SHARES OUTSTANDING 6,507,403 4,174,830 ============= =============
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 1998 1997 (UNAUDITED) (UNAUDITED) NET INCOME (LOSS) $ 283,074 $ 35,553 ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH (USED) BY OPERATING ACTIVITIES: Depreciation 94,708 66,650 Amortization of goodwill 62,360 - Minority interests (7,186) - Changes in assets and liabilities: Accounts receivable (52,229) (24,083) Prepaid expenses (173,133) (37,869) Inventories (1,541) (8,122) Land held for sale 815,652 Accounts payable and accrued expenses 392,514 (209,703) Income tax payable/receivable (5,572) ------------ ------------ Cash provided (used) by operating expenses 598,567 632,506 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property equipment (330,490) (1,925,488) Increase in other assets (12,946) (1,221,053) ------------ ------------ Cash used by investing activities (343,436) (3,146,541) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Common stock issued, less offering costs 103,000 Increase in long term debt (96,703) 2,342,043 Payments on long term debt (243,852) (22,800) ------------ ------------ Cash provided (used) by financing activites (340,555) 2,422,243 ------------ ------------ NET (DECREASE) IN CASH (85,424) (91,792) CASH AT BEGINNING OF PERIOD 597,644 357,410 ------------ ------------ CASH AT END OF PERIOD $ 512,220 $ 265,618 ============ ============ CASH PAID DURING PERIOD FOR: Interest 143,244 44,157
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31,1998 1. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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, 1998 included in the Company's Annual Report on Form 10-KSB 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 ended December 31, 1998 are not necessarily indicative of the results that may be expected for the year ending September 30, 1999. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following discussion should be read in conjunction with the Company's unaudited consolidated financial statements and related notes thereto included in this quarterly report and in the audited consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contained in the Company's 10 KSB for the year ended September 30, 1998. Certain statements in the following MD&A are forward looking statements. Words such as "expects", "anticipates", "estimates", and similar expressions are intended to identify forward looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties are set forth below and under "Special Note Regarding Forward Looking Information". GENERAL The Company was formed in December 1994 to acquire all of the outstanding capital stock of Trumps, Inc., a Texas corporation ("Trumps") formed in 1982. Since 1983, Trumps has operated Rick's Cabaret, a premier adult nightclub offering topless entertainment in Houston, Texas. Rick s Cabaret International, Inc. ("Rick s" or the "Company") currently owns and operates premiere adult nightclubs offering adult entertainment and restaurant and bar operations. The Company has two adult nightclubs in operation in Houston, Texas as well as a non-sexually oriented discotheque, Tantra. Additionally, the Company has adult nightclubs in operation in New Orleans, Louisiana and Minneapolis, Minnesota. The Company owns the original location of Rick's Cabaret on Bering Drive in Houston, Texas, the location of Tantra discotheque, in Houston, Texas the location in Minneapolis, Minnesota and the location in north Houston, Texas located near George Bush Intercontinental Airport, which opened in December, 1998. The Company leases its New Orleans facility. Revenues are derived from the sale of liquor, beer, wine and food, as well as from dancer performances, cover charges and other income. Results of Operations Three months ended December 31, 1998 as compared to the three months ended December 31, 1997. For the quarter ended December 31, 1998, the Company had consolidated total revenues of $3,317,969 an increase of $ 1,649,543 from the fiscal quarter ended December 31, 1997 of $1,668,426. The increase in revenues compared to the first quarter ended December 31, 1997 is due to increased sales at a number of the company s locations. The company s newest location near George Bush Intercontinental Airport opened in mid-December, 1998. Cost of goods sold were 31.7% and 22.2% of sales of alcoholic beverages and food for the first quarters of fiscal 1999 and 1998, respectively. The increase in fiscal 1999 is due primarily to start-up complimentary expenses at the new location in North Houston as well as higher than usual complimentary expenses during the holiday season. Payroll and related costs were $1,004,943 for the first quarter in 1999 compared to $448,644 for the same fiscal period in 1998. The increase is a reflection of the additional personnel experienced by the company as it adds more locations. Management currently believes that its labor and management staff levels are of appropriate levels. Other selling, general and administrative expenses increased 44% from the first quarter of fiscal 1998 to the first quarter of fiscal 1999. The increase was due primarily to additional administrative costs incurred due to the expanded operations of the company. Interest expense in the first quarter of fiscal 1999 was $143,244. Net income for the first quarter of fiscal 1999 was $283,074 compared to income of $35,553 for the first quarter of fiscal 1998. Liquidity and Capital Resources At December 31, 1998 the Company has negative working capital of $(1,134,043) compared to negative working capital $(887,833) at September 30, 1998. The decrease in working capital is due primarily to the expenditure of cash resources in building and opening the company's newest location in North Houston, which opened in mid-December, 1998. Net cash provided by operating activities in the first quarter of fiscal 1999 was $598,567 compared to $632,506 for the same period in fiscal 1998. The decrease in cash provided by operating activities was due primarily to the sale of land in the FY 1998 quarter which provided cash of $815,162. Net cash used in investing activities was $(343,436) which resulted from additions to property and equipment. The Company's new location in North Houston opened in December, 1998. The Minneapolis, Minnesota location opened in March, 1998 and the increase in revenues arose primarily from the sales for these new locations as well as increased sales at the company s location in New Orleans. In August, 1998, the Company acquired Taurus Entertainment Companies, Inc. The Company continues to study potential acquisition candidates which would contribute to overall revenue growth and profitability. The slight increase in cost of goods sold is believed to be a seasonal variation. Management is continuing to develop programs to control cost of goods sold. The Company continues to aggressively decrease costs throughout all of its locations by improving menu offerings, reducing food inventory stocks and spoilage, and by modifying buying procedures. Depreciation and Amortization was $157,068 for the quarter ended 12/31/98 compared to $66,650 for the comparable quarter in the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES In the opinion of management, working capital is not a true indicator of the financial status. Typically, the Company carries current liabilities in excess of current assets because the business receives substantially immediate payment for sales, with nominal receivables, while inventories and other current liabilities normally carry longer payment terms. Vendors and purveyors often remain flexible with payment terms providing the Company 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 and mix of sales revenues, overall cash flow and profitability from operations and the level of long term debt. During the three months ended December 31, 1998, the Company provided $598,567 cash from operations. Amortization and depreciation expense recorded during the period ended December 31, 1998 was $157,068. Management believes that the cash provided by operation is a positive trend indicating the impact which an additional locations can have on overall overhead coverage and operating results The Company continually reviews potential acquisition candidates for suitability. SEASONALITY The Company is significantly affected by seasonal factors. Typically, the Company has experienced reduced revenues from April through September with the strongest operating results occurring during October through March. SPECIAL NOTE REGARDING FORWARD LOOKING INFORMATION The Company is including the following cautionary statement in this Quarterly Report on Form 10 QSB to make applicable and take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 for any forward looking statements made by, or on behalf of the Company. Forward looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Certain statements contained herein are forward looking statements and, accordingly, involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result, or be achieved, or be accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause material adverse affects on the Company's financial condition and results of operations. Important factors that could cause actual results to differ materially from those indicated include risks and uncertainties relating to the impact and implementation of the sexually oriented business ordinance in the City of Houston, the recent opening of the club in Minneapolis, Minnesota and the availability of acceptable financing to fund corporate expansion efforts. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K II-2 Exhibit 27.1 Financial Data Schedule Reports on Form 8-K The Company filed a report on Form 8-K Amendment No. 1 on October 21, 1998 reporting Item 7 financial statements for a previous acquisition. The Company filed a report on Form 8-K on December 21, 1998 reporting Item 5 Other Events. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RICK'S CABARET INTERNATIONAL, INC. Date: February 12, 1999 By: /s/ Robert L. Watters ---------------------------------- Robert L. Watters, President and Chief Accounting Officer EX-27.1 2
5 1 3-MOS SEP-30-1999 OCT-01-1998 DEC-30-1998 512220 0 110252 0 96174 1495724 11791310 (1308266) 15196183 2629767 6393984 65475 0 0 6816068 15196183 3317969 3317969 487859 2892162 0 0 143244 283074 0 283074 0 0 0 283074 .04 .04
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