SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant |X|
Filed by a party other than the registrant | |
Check the appropriate box:
| | Preliminary proxy statement. | | Confidential for use of
the commission only (as
|X| Definitive proxy statement. permitted by Rule 14a-6(e)(2)).
| | Definitive additional materials.
| | Soliciting material pursuant to Rule 14a-12.
RICK'S CABARET INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee: (check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: ___
(2) Aggregate number of securities to which transaction applies: ___
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): ___
(4) Proposed maximum aggregate value of transaction: ___
(5) Total fee paid: ___
| | Fee paid previously with preliminary materials: ___
| | Check box if any part of the fee is offset as provided by Exchange Act Rule
0-1(a)(2) and identify the filing for which the offsetting fee was paid
previously, identify the previous filing by registration statement number, or
the form or schedule and the date its filing.
(1) Amount Previously Paid: ___
(2) Form, Schedule or Registration Statement No.: ___
(3) Filing Party: ___
(4) Date Filed: ___
RICK'S CABARET INTERNATIONAL, INC.
10959 CUTTEN ROAD
HOUSTON, TEXAS 77066
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 2005
The Annual Meeting of Stockholders (the "Annual Meeting") of Rick's Cabaret
International, Inc. (the "Company") will be held at 410 N. Sam Houston Parkway
(Beltway 8 at Imperial Valley), Houston, Texas 77060, on June 27, 2005 at 10:00
AM (CST) for the following purposes:
(1) To elect five (5) directors.
(2) To ratify the selection of Whitley Penn as the Company's independent
registered public accounting firm for the fiscal year ending September 30, 2005.
(3) To act upon such other business as may properly come before the Annual
Meeting.
Only holders of common stock of record at the close of business on May 11,
2005, will be entitled to vote at the Annual Meeting or any adjournment thereof.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, please sign, date and return your proxy to us
promptly. Your cooperation in signing and returning the proxy will help avoid
further solicitation expense.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ ERIC S. LANGAN
CHAIRMAN OF THE BOARD AND PRESIDENT
JUNE 3, 2005
HOUSTON, TEXAS
1
RICK'S CABARET INTERNATIONAL, INC.
10959 CUTTEN ROAD
HOUSTON, TEXAS 77066
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 2005
This proxy statement (the "Proxy Statement") is being furnished to
stockholders (the "Stockholders") in connection with the solicitation of proxies
by the Board of Directors of Rick's Cabaret International, Inc., a Texas
corporation (the "Company") for their use at the Annual Meeting (the "Annual
Meeting") of Stockholders of the Company to be held at 410 N. Sam Houston
Parkway (Beltway 8 at Imperial Valley, "Rick's North"), Houston, Texas 77060,
on June 27, 2005 at 10:00 AM (CST), and at any adjournments thereof, for the
purpose of considering and voting upon the matters set forth in the accompanying
Notice of Annual Meeting of Stockholders (the "Notice"). This Proxy Statement
and the accompanying form of proxy (the "Proxy") are first being mailed to
Stockholders on or about June 3, 2005. The cost of solicitation of proxies is
being borne by the Company.
The close of business on May 11, 2005 has been fixed as the record date for
the determination of Stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. As of the record date, there were
approximately 3,907,148 shares of the Company's common stock, par value $0.01
per share (the "Common Stock"), issued and outstanding. The presence, in person
or by proxy, of a majority of the outstanding shares of Common Stock on the
record date is necessary to constitute a quorum at the Annual Meeting. Each
share is entitled to one vote on all issues requiring a Stockholder vote at the
Annual Meeting. Each nominee for Director named in Proposal Number 1 must
receive a majority of the votes cast in person or by proxy in order to be
elected. Stockholders may not cumulate their votes for the election of
Directors. The affirmative vote of a majority of the shares of Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required for the ratification of Number 2 set forth in the accompanying Notice.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (I) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN AND (II) FOR THE
RATIFICATION OF WHITLEY PENN AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2005. The Board of
Directors is not aware of any other matters to be presented for action at the
Annual Meeting. However, if any other matter is properly presented at the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote in accordance with their best judgment on such matters.
The enclosed Proxy, even though executed and returned, may be revoked at
any time prior to the voting of the Proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company, or (c) by
voting in person at the Annual Meeting.
2
___________________________________________________________________
(1) TO ELECT FIVE (5) DIRECTORS FOR THE ENSUING YEAR
___________________________________________________________________
NOMINEES FOR DIRECTORS
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as proxies (the "Proxies") and will vote the shares
represented by valid proxies at the Annual Meeting of Stockholders and
adjournments thereof. They have indicated that, unless otherwise specified in
the Proxy, they intend to elect as Directors the nominees listed below. Each
duly elected Director will hold office until his successor shall have been
elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed Proxy will be voted for the election of the nominees listed below.
Although the Board of Directors of the Company does not contemplate that any of
the nominees will be unable to serve, if such a situation arises prior to the
Annual Meeting, the persons named in the enclosed Proxy will vote for the
election of such other person(s) as may be nominated by the Board of Directors.
The Board of Directors unanimously recommends a vote FOR the election of
each of the nominees listed below. All of the nominees are presently our
directors.
Eric S. Langan, age 37, has been a Director of the Company since 1998 and
the President of the Company since March 1999. Mr. Langan is also the Acting
Chief Financial Officer of the Company. He has been involved in the adult
entertainment business since 1989. From January 1997 through the present, he
has held the position of President with X.T.C. 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 the grand openings
and operations of more than twelve adult entertainment businesses. Through
these activities, Mr. Langan has acquired the knowledge and skills necessary to
successfully operate adult entertainment businesses.
Robert L. Watters, age 54, has been a director of the Company since 1986.
Mr. Watters was president and chief executive officer of the Company from 1991
until March 1999. He was also a founder in 1989 and operator until 1993 of the
Colorado Bar & Grill, an adult cabaret located in Houston, Texas and in 1988
performed site selection, negotiated the property purchase and oversaw the
design and permitting for the cabaret that became the Cabaret Royale, in Dallas,
Texas. Mr. Watters practiced law as a solicitor in London, England and is
qualified to practice law in New York state. Mr. Watters worked in the
international tax group of the accounting firm of Touche, Ross & Co. (now
succeeded by Deloitte & Touche) from 1979 to 1983 and was engaged in the private
practice of law in Houston, Texas from 1983 to 1986, when he became involved in
the full-time management of the Company. 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. Since 1999, Mr. Watters has operated
a cabaret in New Orleans.
3
Alan Bergstrom, age 59, has been a director of the Company since 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 Choice Investments, 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, age 35, has been a director of the Company since 1999 and is
the Company's Director of Technology. From 1997 through 1999, Mr. Reese was 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 a vice-president with Digital Publishing
Resources, Inc., an Internet Service Provider. From 1994 until 1995, Mr. Reese
was a pilot with Continental Airlines. From 1992 until 1994, Mr. Reese was a
pilot with Hang On, Inc., an airline company. Mr. Reese has an Associates
Degree in Aeronautical Science from Texas State Technical College.
Steven L. Jenkins, age 48, has been a director of the Company since 2001.
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.
OUR 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.
--------------------------------------------------------------
NAME AGE POSITION
--------------------------------------------------------------
Eric S. Langan 37 Director, CEO, President and Chief
Financial Officer
--------------------------------------------------------------
Travis Reese 35 Director and V.P.-Director of
Technology
--------------------------------------------------------------
Robert L. Watters 54 Director
--------------------------------------------------------------
Alan Bergstrom 59 Director
--------------------------------------------------------------
Steven L. Jenkins 48 Director
--------------------------------------------------------------
OUR OFFICERS
In addition to being Directors, Eric S. Langan is also our CEO, President
and Acting Chief Financial Officer, and Travis Reese is also our VP--Director of
Technology.
4
RELATED TRANSACTIONS
Our Board of Directors has adopted a policy that our business affairs will
be conducted in all respects by standards applicable to publicly held
corporations and that we will not enter into any future transactions and/or
loans between us and our officers, directors and 5% shareholders unless the
terms are no less favorable than could be obtained from independent, third
parties and will be approved by a majority of our independent and disinterested
directors. In our view, all of the transactions described below meet this
standard.
In May 2002, we loaned $100,000 to Eric Langan who is our Chief Executive
Officer. The promissory note is unsecured, bears interest at 11% and is
amortized over a period of ten years. The note contains a provision that in the
event Mr. Langan leaves the Company for any reason, the note immediately becomes
due and payable in full. The balance of the note was $81,084 as of May 11,
2005, and is included in other assets in our balance sheet.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company has an Audit Committee whose members are Robert L. Watters,
Alan Bergstrom and Steven L. Jenkins. Mr. Watters was our President until March
1999, and has not been an officer or employee since March 1999. Mr. Watters,
Mr. Bergstrom and Mr. Jenkins are independent Directors. The primary purpose of
the Audit Committee is to oversee the Company's financial reporting process on
behalf of the Board of Directors. The Audit Committee meets privately with our
Chief Accounting Officer and with our independent registered public accounting
firm and evaluates the responses by the Chief Accounting Officer both to the
facts presented and to the judgments made by our outside independent registered
public accounting firm. Our Audit Committee has reviewed and discussed our
audited financial statements for the year ended September 30, 2004 with our
management. Steven L. Jenkins serves as the Audit Committee's Financial
Expert.
In May 2000, our Board adopted a Charter for the Audit Committee. A copy
of the Audit Committee Charter is attached hereto as Exhibit "A." The Charter
establishes the independence of our Audit Committee and sets forth the scope of
the Audit Committee's duties. The Purpose of the Audit Committee is to conduct
continuing oversight of our financial affairs. The Audit Committee conducts an
ongoing review of our financial reports and other financial information prior to
their being filed with the Securities and Exchange Commission, or otherwise
provided to the public. The Audit Committee also reviews our systems, methods
and procedures of internal controls in the areas of: financial reporting,
audits, treasury operations, corporate finance, managerial, financial and SEC
accounting, compliance with law, and ethical conduct. A majority of the members
of the Audit Committee will be independent. The Audit Committee is objective,
and reviews and assesses the work of our independent registered public
accounting firm and our internal audit department.
The Audit Committee reviewed and discussed the matters required by SAS 61
and our audited financial statements for the fiscal year ended September 30,
2004 with management and our independent registered public accounting firm. The
Audit Committee has received the written disclosures and the letter from our
independent registered public accounting firm required by Independence Standards
Board No. 1, and the Audit Committee has discussed with
5
the independent registered public accounting firm the independent registered
public accounting firm's independence. The Audit Committee recommended to the
Board of Directors that the Company's audited financial statements for the
fiscal year September 30, 2004 be included in our Annual Report on Form 10-KSB
for the fiscal year ended September 30, 2004.
The Company has a Nominating Committee whose members are 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. A majority of the members of the Nominating Committee will be
independent. A copy of the Nominating Committee's Charter can be found on the
Company's website at www.ricks.com.
-------------
Subsequent to the fiscal year ending September 30, 2004, the Board of
Directors formed a Compensation Committee whose members are Robert Watters, Alan
Bergstrom and Steven L. Jenkins. Decisions concerning executive officer
compensation for the fiscal year ending September 30, 2004 were made by the full
Board of Directors. Eric S. Langan and Travis Reese are the only directors of
the Company who are also officers of the Company. The primary purpose of the
Compensation Committee is to evaluate and review the compensation of executive
officers.
The Board of Directors held nine (9) meetings during the fiscal year ended
September 30, 2004, one (1) of which was held by unanimous written consent. The
Audit Committee held four (4) meetings during the fiscal year ended September
30, 2004. All of our Directors attended at least 75% of our Board meetings.
All of our Audit Committee members attended at least 75% of our Audit Committee
meetings.
There is no family relationship between or among any of the directors and
executive officers of the Company.
DIRECTOR COMPENSATION
We do not currently pay any cash directors' fees, but we pay the expenses
of our directors in attending board meetings. In September 2004, 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 $2.54 per
share and expire in September 2009.
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.
6
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to us
for the fiscal years ended September 30, 2004, 2003 and 2002 certain executive
officers. No other executive officer of ours received compensation that
exceeded $100,000 during fiscal 2004. Mr. Langan is Chairman, a Director,
President and Acting Chief Financial Officer. Mr. Reese is Director and
V.P.-Director of Technology.
SUMMARY COMPENSATION TABLE
--------------------------
Long-Term Compensation
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Other Stock Underlying LTIP All
Principal Position Year Salary Bonus ($) Annual Awards Options/ Payout Other
($) Compensation ($) SARs (#) s Compen
($)(1) ($) sation ($)
---------------------------------------------------------------------------------------------------------------------
Eric Langan 2004 $ 326,038 -0- -0- -0- 280,000 -0- -0-
---------------------------------------------------------------------------------------------------------------------
2003 $ 260,000 -0- -0- -0- 5,000 -0- -0-
---------------------------------------------------------------------------------------------------------------------
2002 $ 260,000 -0- -0- -0- -0- -0- -0-
---------------------------------------------------------------------------------------------------------------------
Travis Reese 2004 $ 161,000 -0- -0- -0- 55,000 -0- -0-
---------------------------------------------------------------------------------------------------------------------
2003 $ 158,855 -0- -0- -0- 5,000 -0- -0-
---------------------------------------------------------------------------------------------------------------------
2002 $ 137,500 -0- -0- -0- -0- -0- -0-
---------------------------------------------------------------------------------------------------------------------
(1) We provide certain executive officers certain personal benefits. Since
the value of such benefits do not exceed the lesser of $50,000 or 10% of annual
compensation, the amounts are omitted.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
(INDIVIDUAL GRANTS)
--------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise of Base
Name Options/SARS Employees in Fiscal Price ($/Sh) Expiration Date
Granted (#) Year (%)
--------------------------------------------------------------------------------------
Eric Langan 75,000 13.04% $ 2.20 2/06/2009
--------------------------------------------------------------------------------------
5,000 (1) .86% $ 2.54 9/14/2009
--------------------------------------------------------------------------------------
200,000 34.78% $ 2.49 9/14/2009
--------------------------------------------------------------------------------------
Travis Reese 5,000 (1) .86% $ 2.54 9/14/2009
--------------------------------------------------------------------------------------
55,000 9.56% $ 2.49 9/14/2009
--------------------------------------------------------------------------------------
(1) These options were granted to Messrs. Langan and Reese for serving in their
capacity as Directors. There were no exercises of options by these persons
during the fiscal year ended September 30, 2004.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
---------------------------------------------
---------------------------------------------------------------------------------------------
Number of Value of Unexercised
Unexercised In-The-Money
Underlying Options/SARs at FY
Shares Acquired Options/SARs at FY end ($);
Name on Exercise (#) Value Realized ($) end (#); Exercisable/
Exercisable/ Unexercisable
Unexercisable
---------------------------------------------------------------------------------------------
Eric Langan -0- (1) -0- 190,000/205,000 $ 16,100/ -0-
---------------------------------------------------------------------------------------------
Travis Reese -0- (1) -0- 40,000/55,000 $ 6,350/ -0-
---------------------------------------------------------------------------------------------
(1) These persons did not exercise of options during the fiscal year ended
September 30, 2004.
7
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, 2004, 908,000 stock options are presently outstanding under the
1999 Plan. As of May 11, 2005, 45,000 of these stock options have been
exercised.
EQUITY COMPENSATION PLAN INFORMATION(1)
--------------------------------------------------------------------------------------------------------------------------------
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 908,000 $ 2.42 92,000
approved by security holders
--------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not 0 0 300,000
approved by security holders
--------------------------------------------------------------------------------------------------------------------------------
TOTAL 908,000 $ 2.42 392,000
--------------------------------------------------------------------------------------------------------------------------------
(1) As of September 30, 2004.
8
EMPLOYMENT AGREEMENTS
We have a one-year employment agreement with Eric S. Langan (the "Langan
Agreement"). The Langan Agreement extends through April 1, 2006 and provides
for an annual base salary of $340,000. The Langan Agreement also provides for
participation in all benefit plans maintained by us for salaried employees. The
Langan Agreement contains a confidentiality provision and an agreement by Mr.
Langan not to compete with us upon the expiration of the Langan Agreement. We
have not established long term incentive plans or defined benefit or actuarial
plans. Under a prior employment agreement which expired April 1, 2005, Mr.
Langan received options to purchase 75,000 shares at an exercise price of $2.20
per share, which are fully vested and expire on December 31, 2009.
We have a three-year employment agreement with 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.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information at May 11, 2005, 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, 2005, there were 3,907,148 shares
of common stock outstanding.
--------------------------------------------------------------------------------
NAME/ADDRESS NUMBER OF SHARES TITLE OF CLASS PERCENT OF
CLASS (8)
--------------------------------------------------------------------------------
Eric S. Langan 1,020,960 (1) Common stock 24.9%
10959 Cutten Road
Houston, Texas 77066
--------------------------------------------------------------------------------
Robert L. Watters 25,000 (2) Common stock 0.6%
315 Bourbon Street
New Orleans, Louisiana 70130
--------------------------------------------------------------------------------
Steven L. Jenkins 10,000 (3) Common stock 0.2%
16815 Royal Crest Drive
Suite 160
Houston, Texas 77058
--------------------------------------------------------------------------------
Travis Reese 29,775 (4) Common stock 0.7%
10959 Cutten Road
Houston, Texas 77066
--------------------------------------------------------------------------------
Alan Bergstrom 25,000 (2) Common stock 0.6%
707 Rio Grande, Suite 200
Austin, Texas 78701
--------------------------------------------------------------------------------
9
--------------------------------------------------------------------------------
All of our Directors and 1,110,735 (7) Common stock 26.5%
Officers as a
Group of five persons
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
E. S. Langan. L.P. 578,632 Common stock 14.8%
10959 Cutten Road
Houston, Texas 77066
--------------------------------------------------------------------------------
Ralph McElroy 817,147 (5) Common stock 20.9%
1211 Choquette
Austin, Texas, 78757
--------------------------------------------------------------------------------
William Friedrichs 401,850 (6) Common stock 10.2%
16815 Royal Crest Dr., Suite 260
Houston, Texas 77058
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
_____________________________
(1) Mr. Langan has sole voting and investment power for 252,328 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 190,000 shares of common stock that are presently exercisable.
(2) Includes options to purchase up to 25,000 shares of common stock that are
presently exercisable.
(3) Includes options to purchase up to 10,000 shares of common stock that are
presently exercisable.
(4) Includes 7,275 shares of common stock and options to purchase up to 22,500
shares of common stock that are presently exercisable.
(5) Includes 66,545 shares of common stock that would be issuable upon
conversion of a convertible debenture held by Mr. McElroy. Also includes 52,135
shares of common stock that would be issuable upon conversion of a convertible
promissory note held by Mr. McElroy.
(6) Includes 170,000 shares owned by WMF Investments, Inc. Mr. Friedrichs is a
control person of WMF Investments, Inc.
(7) Includes options to purchase up to 272,500 shares of common stock that are
presently exercisable.
(8) 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.
________________________________________________________________________
(2) TO RATIFY THE SELECTION OF WHITLEY PENN
AS THE COMPANY'S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2005
________________________________________________________________________
The Board of Directors has selected Whitley Penn as the Company's
independent registered public accounting firm for the current fiscal year.
Although not required by law or
10
otherwise, the selection is being submitted to the Stockholders of the Company
as a matter of corporate policy for their approval. The Board of Directors
wishes to obtain from the Stockholders a ratification of their action in
appointing their existing independent registered public accounting firm, Whitley
Penn, for the fiscal year ending September 30, 2005. Such ratification requires
the affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
In the event the appointment of Whitley Penn as the Company's independent
registered public accounting firm is not ratified by the Stockholders, the
adverse vote will be considered as a direction to the Board of Directors to
select another independent registered public accounting firm for the fiscal year
ending September 30, 2005. A representative of Whitley Penn is expected to be
present at the Annual Meeting with the opportunity to make a statement if he so
desires and to respond to appropriate questions. The Board of Directors
unanimously recommends a vote FOR the ratification of Whitley Penn as
independent registered public accounting firm for fiscal year ending September
30, 2005.
The following table sets forth the aggregate fees paid or accrued for
professional services rendered by Whitley Penn for the audit of our annual
financial statements for fiscal year 2004 and fiscal year 2003 and the aggregate
fees paid or accrued for audit-related services and all other services rendered
by Whitley Penn for fiscal year 2004 and fiscal year 2003.
2004 2003
------ ------
Audit fees 77,613 30,891
Audit-related fees - -
Tax fees - -
All other fees - -
------ ------
Total 77,613 30,891
------ ------
The category of "Audit fees" includes fees for our annual audit, quarterly
reviews and services rendered in connection with regulatory filings with the
SEC, such as the issuance of comfort letters and consents.
The category of "Audit-related fees" includes employee benefit plan audits,
internal control reviews and accounting consultation.
The category of "Tax fees" includes consultation related to corporate
development activities.
All above audit services, audit-related services and tax services were
pre-approved by the Audit Committee, which concluded that the provision of such
services by Whitley Penn was compatible with the maintenance of that firm's
independence in the conduct of its auditing functions. The Audit Committee's
outside auditor independence policy provides for pre-approval of all services
performed by the outside auditors.
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AUDITOR INDEPENDENCE
Our Audit Committee considered that the work done for us in fiscal 2004 by
Whitley Penn was compatible with maintaining Whitley Penn's independence.
AUDITOR'S TIME ON TASK
All of the work expended by Whitley Penn on our fiscal 2004 audit was
attributed to work performed by Whitley Penn's full-time, permanent employees.
___________________________________________________________________
(3)
OTHER MATTERS
___________________________________________________________________
The Board of Directors is not aware of any other matters to be presented
for action at the Annual Meeting. However, if any other matter is properly
presented at the Annual Meeting, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment on such matters.
FUTURE PROPOSALS OF STOCKHOLDERS
The deadline for stockholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2005 Annual Meeting of Stockholders is
January 15, 2006.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ ERIC S. LANGAN
------------------
CHAIRMAN OF THE BOARD AND PRESIDENT
JUNE 3, 2005
HOUSTON, TEXAS
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EXHIBIT "A"
RICK'S CABARET INTERNATIONAL, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
1. Purpose. The Audit Committee of the Board of Directors shall conduct
continuing oversight of the financial affairs of Rick's Cabaret
International, Inc.
2. Scope of Review. The Audit Committee shall conduct an ongoing review the
Corporation's:
* Financial reports and other financial information prior to their being
filed with the U.S. Securities and Exchange Commission or otherwise
provided to the public.
* Systems, methods and procedures of internal controls in the areas of:
financial reporting, audits, treasury operations, corporate finance,
managerial, financial and SEC accounting, compliance with law, and
ethical conduct.
3. General Tasks. The Audit Committee shall:
* Be objective. A majority of the Audit Committee shall be independent.
* Recommend and encourage improvements in the Corporation's financial
affairs.
* Review and assess the work of the Corporation's independent accountant
and internal audit department.
* Solicit and encourage comments from the Corporation's independent
accountant, financial and senior management, internal audit department
and the Board of Directors.
4. Audit Committee Members. The Audit Committee shall consist of one or more
Members (the "Members"), a majority of whom are independent Directors. The
Board of Directors shall elect the Members annually. Members shall serve
until their successors are duly elected and qualified. Unless an Audit
Committee Chairperson is elected by the full Board, the Members of the
Committee may designate a Chairperson by majority vote of the all Members.
5. The independent members shall be free from any relationship that could
conflict with an independent member's independent judgment. Any
non-independent member shall exercise judgment as if that member was
independent. All Members must be able to read and understand fundamental
financial statements, including a balance sheet, income statement, and cash
flow statement. At least one member must have past employment
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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.
6. Independence. Independent Director is defined as a director who has:
* Not been employed by the Corporation or its affiliates in the current
or past three years.
* Not accepted any compensation from the Corporation or its affiliates
in excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary compensation).
* No immediate family member who is, or has been in the past three
years, employed by the Corporation or its affiliates as an executive
officer.
* Not been a partner, controlling shareholder or an executive officer of
any other for-profit entity to which the Corporation made, or from
which it received, payments (other than those which arise solely from
investments in the Corporation's securities) that exceed five percent
of the other entity's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years.
* Not been employed as an executive of another entity where the
Corporation's executives serve on the other entity's compensation
committee.
7. Meetings. The Audit Committee shall meet at least four times per year, and
may meet as frequently as deemed necessary. The Audit Committee shall meet
separately in closed meetings at least once each year with management, the
director of internal audit and the independent accountant to discuss any
matter. The Audit Committee shall select one of its Members each quarter to
meet with management, the director of internal audit and the independent
accountant for the purposes set forth below.
8. Specific Tasks. The Audit Committee shall:
(a) Assess and, if necessary, update this Charter at least annually.
(b) Review the Corporation's annual, quarterly and other financial
statements and any other reports, financial information or other
material filed with any governmental body (except for litigation
matters in the ordinary course of business) or announced to the
public, including the independent accountant's certifications,
reports, opinions, or reviews.
(c) Review the regular internal reports to management prepared by the
internal audit department and management's response thereto.
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(d) Review with management and the independent accountant all Form
10-QSB's prior to the filing or prior to the release of earnings
information to the public. The Chairperson of the Audit Committee may
represent the entire Audit Committee for the review of the Form
10-QSB.
(e) Recommend to the Board of Directors the selection of the independent
accountant for each fiscal year, considering independence and
effectiveness, and approve the fees and other compensation to be paid
to the independent accountant. On an annual basis, the Audit Committee
shall review and discuss with the independent accountant all
significant relationships the independent accountant has with the
Corporation to determine the accountant's independence.
(f) Review the performance of the independent accountant and approve any
proposed discharge of the independent accountant when circumstances
warrant.
(g) Periodically consult with the independent accountant, out of the
presence of management, about internal controls and the completeness
and accuracy of the Corporation's financial statements.
(h) Continually review the integrity of the Corporation's internal and
external financial reporting processes. The Audit Committee shall
consult with the independent accountant and the internal auditors for
this review.
(i) Consider the independent accountant's judgments about the quality and
appropriateness of the Corporation's accounting principles in relation
to the Corporation's internal and external financial reporting.
(j) Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices.
(k) Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountant and the
internal auditors in connection with the appropriateness and
application of accounting principles made in management's preparation
of the financial statements.
(l) Following completion of the annual audit, review separately with each
of management, the independent accountant and the internal audit
department whether any difficulties were encountered during the course
of the audit, including any restrictions on the scope of work or
access to required information.
(m) Review any disagreement among management and the independent or the
internal auditing department in connection with the preparation of the
financial statements or the appropriateness and application of
accounting principles made in management's preparation of the
financial statements.
(n) Review with the independent accountant, the internal audit department
and management whether and how changes or improvements in the
Corporation's financial or accounting practices, as approved by the
Audit Committee, have been
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implemented. The Audit Committee shall conduct this review promptly
after the implementation of the changes or improvements.
(o) Establish a code of corporate compliance with law and a code of
ethical conduct, and review the Corporation's implementation and
enforcement of these codes.
(p) Review activities, organizational structure, and qualifications of the
internal audit department.
(q) Review, with the Corporation's counsel, legal compliance matters
including policies regarding trading in the Corporation's securities.
(r) Review, with the Corporation's counsel, any legal matter that could
have a material impact on the Corporation's financial statements.
(s) Perform any other activities consistent with this Charter, the
Corporation's Articles of Incorporation, By-laws and governing law, as
the Audit Committee or the Board of Directors deems necessary or
appropriate.
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