-----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, Uf+n59t4UV4LYVKUOP2smibLSUFnS5WDJnGx7HXHMzatWTdEQ6lWb1I5S0ALEvBN mT7LARMFdF2VI6PBQOdUhA== 0001015402-01-000364.txt : 20010213 0001015402-01-000364.hdr.sgml : 20010213 ACCESSION NUMBER: 0001015402-01-000364 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010212 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: 1534275 BUSINESS ADDRESS: STREET 1: 505 NORTH BELT SUITE 630 CITY: HOUSTON STATE: TX ZIP: 77060 BUSINESS PHONE: 2818201181 MAIL ADDRESS: STREET 1: 505 NORTH BELT SUITE 630 CITY: HOUSTON STATE: TX ZIP: 77060 10QSB 1 0001.txt UNITED STATES 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 nded: December 31, 2000 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-26958 RICK'S CABARET INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Texas 76-0458229 (State or other jurisdiction IRS Employer of incorporation or organization) Identification No.) 505 North Belt, Suite 630 Houston, Texas 77060 (Address of principal executive offices, including zip code) (281) 820-1181 (Registrant's telephone number, including area code) 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 January 25, 2000, there were 4,595,494 shares of common stock, $.01 par value, outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] RICK'S CABARET INTERNATIONAL, INC. TABLE OF CONTENTS ----------------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 2000 (unaudited) and September 30, 2000 (audited) Consolidated Statements of Operations for the three months ended December 31, 2000 and 1999 (unaudited) Consolidated Statements of Cash Flows for the three months ended December 31, 2000 and 1999 (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 6. Exhibits and Reports on Form 8-K Signatures
PART I FINANCIAL INFORMATION Item 1. Financial Statements. RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS ------ 12/31/00 9/30/00 (UNAUDITED) (AUDITED) CURRENT ASSETS Cash $ 359,303 $ 374,532 Accounts receivable 389,524 297,761 Prepaid expenses 25,615 67,661 Inventories 190,681 200,471 Land held for sale 200,000 200,000 ---------------- ---------------- Total current assets 1,165,123 1,140,425 ---------------- ---------------- PROPERTY AND EQUIPMENT Buildings, lands and leasehold improvements 8,422,956 8,360,090 Furniture and equipment 1,553,548 1,508,990 ---------------- ---------------- 9,976,504 9,869,080 Accumulated depreciation (1,396,529) (1,296,898) ---------------- ---------------- 8,579,975 8,572,182 ---------------- ---------------- OTHER ASSETS Goodwill less accumulated amortization 3,514,450 3,412,827 Other 259,501 288,223 ---------------- ---------------- 3,773,951 3,701,050 ---------------- ---------------- $ 13,519,049 $13,413,657 ================ ================
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY 12/31/00 9/30/00 (UNAUDITED) (AUDITED) CURRENT LIABILITIES Current portion of long term debt $ 397,542 $ 456,749 Accounts payable - trade 370,121 437,083 Accrued expenses 430,669 380,279 ---------------- ---------------- Total current liabilities 1,198,332 1,274,111 LONG TERM DEBT, LESS CURRENT PORTION Long-term debt less current portion 3,336,964 3,409,767 ---------------- ---------------- Total Liabilities 4,535,296 4,683,878 ---------------- ---------------- COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS 67,569 64,410 STOCKHOLDERS' EQUITY Preferred stock - $.10 par, authorized 1,000,000shares; none outstanding --- --- Common stock - $.01 par, authorized 15,000,000 shares issued 4,348,678 and 4,348,678 43,487 43,487 Additional paid in capital 10,867,499 10,867,449 Retained earnings (deficit) (1,994,802) (2,245,567) ---------------- ---------------- Total stockholder's equity 8,916,184 8,665,369 ---------------- ---------------- $ 13,519,049 $ 13,413,657 ================ ================
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 (UNAUDITED) (UNAUDITED) REVENUES Sales of alcoholic beverages $ 1,340,042 $ 1,104,583 Sales of food 191,945 150,376 Service revenues 1,272,716 1,218,678 Internet revenues 2,010,800 49,864 Other 235,910 194,674 --------------- --------------- 5,051,413 2,718,175 --------------- --------------- OPERATING EXPENSES Cost of goods sold 1,834,029 363,779 Salaries and wages 1,226,002 910,156 Other general and administrative Taxes and permits 479,888 405,501 Charge card fees 84,129 39,085 Rent 77,067 11,490 Legal and accounting 217,791 112,066 Advertising 132,273 197,405 Other 665,386 494,402 --------------- --------------- 4,716,565 2,533,884 --------------- --------------- INCOME FROM OPERATIONS 334,848 184,291 Interest income 8,730 8,412 Interest Expense (92,813) (108,677) --------------- --------------- Net Income $ 250,765 $ 84,026 =============== =============== NET INCOME PER COMMON SHARE $ 0.06 $ 0.03 =============== =============== WEIGHTED AVERAGE SHARES OUTSTANDING 4,348,678 3,613,678 =============== ===============
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 250,765 $ 84,026 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation 99,631 92,015 Amortization of goodwill 83,824 39,928 Minority interests 3,159 (6,604) Changes in assets and liabilities: Accounts receivable (91,763) (4,058) Prepaid expenses 42,046 63,418 Inventories 9,790 (15,863) Accounts payable and accrued expenses (16,572) 42,772 -------------- -------------- Cash provided by operating activities 380,880 295,634 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property equipment (107,424) (201,745) Increase in other assets (156,725) 34,548 -------------- -------------- Cash used by investing activities (264,149) (167,197) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Common stock issued 50 --- Payments on long term debt (132,010) (92,265) -------------- -------------- Cash used by financing activities (131,960) (92,265) -------------- -------------- NET INCREASE/(DECREASE) IN CASH (15,229) 36,172 CASH AT BEGINNING OF PERIOD 374,532 378,161 -------------- -------------- CASH AT END OF PERIOD $ 359,303 $ 414,333 ============== ============== CASH PAID DURING PERIOD FOR: Interest $ 92,813 $ 108,677 ============== ==============
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 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, 2000 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, 2000 are not necessarily indicative of the results that may be expected for the year ending September 30, 2001. 2. SEGMENT INFORMATION In October 1999, the Company launched its web-sites operation. This segment derives revenues from membership fees, traffic sold, and sale of feeds to other web-site operators. Below is the financial information on this segment.
FOR THE THREE MONTHS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 ENDED DECEMBER 31, 1999 REVENUES Internet Web-sites $ 2,010,800 $ 49,864 Clubs operation 3,040,613 2,668,311 ------------------------- ------------------------- $ 5,051,413 $ 2,718,175 ========================= ========================= NET INCOME/(LOSS) Internet Web-sites $ 269,464 $ (75,667) Clubs operation 156,755 271,974 Corporate expenses (175,454) (112,281) ------------------------- ------------------------- $ 250,765 $ 84,026 ========================= ========================= PROPERTY & EQUIPMENT, NET DEPRECIATION Internet Web-sites $ 248,941 $ 210,350 Clubs operation 8,331,034 8,453,102 ------------------------- ------------------------- $ 8,579,975 $ 8,663,452 ========================= =========================
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the Company's audited and unaudited consolidated financial statements and related notes thereto included in this quarterly report. FORWARD LOOKING STATEMENT AND INFORMATION The Company is including the following cautionary statement in this 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 in this Form 10-QSB are forward-looking statements. Words such as "expects", "anticipates" and "estimates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties are set forth below. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectation, beliefs or projections will result, be achieved, or be accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause material adverse affects on the Company's financial condition and results of operations: the risks and uncertainties relating to our Internet operations, the impact and implementation of the sexually oriented business ordinance in the City of Houston, competitive factors, the timing of the openings of other clubs, the integration of operations of Taurus Entertainment Companies, Inc. with our operations and management, the availability of acceptable financing to fund corporate expansion efforts, competitive factors, and the dependence on key personnel. The Company has no obligation to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances. GENERAL We currently own and operate three adult Internet membership web sites at www.dancerdorm.com, www.amateurdan.com, and www.xxxpassword.com. We also own and operate adult nightclubs under the name "Rick's Cabaret" and "XTC" which offer live adult entertainment, restaurant and bar operations. We own and operate our Internet content production studio and web site operations center, and three adult nightclubs in Houston, Texas. We also own and operate adult nightclubs in Austin and San Antonio, Texas, and Minneapolis, Minnesota. Our revenues are derived from subscriptions to adult content internet web sites and from the sale of liquor, beer, wine and food, cover charges and other income. Our fiscal year end is September 30. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1999 For the three months ended December 31, 2000, the Company had consolidated total revenues of $5,051,413 compared to consolidated total revenues of $2,718,175 for the three months ended December 31, 1999, or an increase of $2,333,238. The increase in total revenues was due to the increase in revenues in the Company's existing and new locations of $372,302 and to the increase in revenues generated by the Company's Internet businesses of $1,960,936. The cost of goods sold for the three months ended December 31, 2000 was 36.31% of total revenues compared to 13.39% for the three months ended December 31,1999. The increase was due primarily to the costs of maintaining our Internet operations and the addition of logo merchandise to our sales mix. The cost of goods sold for the club operation for the three months ended December 31, 2000 was 14.31% of the sales of alcoholic beverages and food compared to 13.03% for the three months ended December 31, 1999. The increase was due primarily to the increase in food costs and the addition of logo merchandise in our sales mix. We continued our efforts to achieve reductions in cost of goods sold of the club operations through improved inventory management. We continue a program to improve margins from liquor and food sales and food service efficiency. The cost of sales from our Internet operation for the three months ended December 31, 2000 was 69.58%. Payroll and related costs for the three months ended December 31, 2000 were $1,226,002 compared to $910,156 for the three months ended December 31, 1999. The increase was a reflection of the additional personnel experienced by the Company as it adds more locations and continues to increase the size and the scope of our internet operation. Management currently believes that its labor and management staff levels are of appropriate levels. Other selling, general and administrative expenses for the three months ended December 31, 2000 were $1,656,484 compared to $1,259,949 for the three months ended December 31, 1999. The increase was due to increased number of the Company's locations and the expansion of our Internet business. Interest expense for the three months ended December 31, 2000 was $92,813 compared to $ 108,677 for the three months ended December 31, 1999. The decrease was primarily due to the Company's position in not obtaining new debts, but to aggressively reduce its debt burden. Net income for the three months ended December 31, 2000 was $250,765 compared to a net income of $84,026 for the three months ended December 31, 1999. The increase in net income was primarily due to the increase in revenues in Company's locations and its internet business. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2000, the Company had working capital deficit of $33,209 compared to working capital deficit of $133,686 at September 30, 2000. Net cash provided by operating activities in the three months ended December 31, 2000 was $380,880 compared to net cash provided of $295,634 for the three months ended December 31, 1999. The increase in cash provided by operating activities was due to an increase in net income. Depreciation and Amortization for the three months ended December 31, 2000 were $183,455 compared to $131,943 for the three months ended December 31, 1999. 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. We have not established lines of credit other than the existing debt. There can be no assurance that we will be able to obtain additional financing on reasonable terms, if at all. Because of the large volume of cash we handle, stringent cash controls have been implemented. In the event the sexually oriented business industry is required in all states to convert the entertainers who perform from independent contractor to employee status, we have prepared alternative plans that we believe will protect our profitability. We believe that the industry standard of treating the entertainers as independent contractors provides sufficient safe harbor protection to preclude any payroll tax assessment for prior years. The sexually oriented business industry is highly competitive with respect to price, service and location, as well as the professionalism of the entertainment. Although we believe that we are well-positioned to compete successfully in the future, there can be no assurance that we will be able to maintain our high level of name recognition and prestige within the marketplace. SEASONALITY 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. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 99.1 -- Report of Independent Auditor on Review of Unaudited Financial Statements. (b) Reports on Form 8-K On November 29, 2000 we filed a report on Form 8-K dated November 27, 2000 reporting Item 2 Acquisition of Assets. 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 9, 2001 By: /s/ Eric S. Langan Eric S. Langan President and Chief Accounting Officer EX-99.1 2 0002.txt Exhibit 99.1 -- Report of Independent Auditor on Review of Unaudited Financial Statements. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS Board of Directors and Stockholders Rick's Cabaret International, Inc. and Subsidiaries We have reviewed the accompanying balance sheets of Rick's Cabaret International, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the related statements of income and cash flows for the three month periods then ended. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of analytical procedures applied to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Rick's Cabaret International, Inc. and Subsidiaries as of September 30, 2000, and the related statements of earnings and cash flows for the year then ended (not presented separately herein), and in our report dated November 30, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2000, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. Jackson & Rhodes P.C. Dallas, Texas February 6, 2001 -----END PRIVACY-ENHANCED MESSAGE-----