SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission File Number _____________
RICK'S CABARET INTERNATIONAL, INC.
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(Exact name of small Business Issuer as specified in its charter)
TEXAS 76-0458229
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5810
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(Primary Standard Industrial
Classification Code)
10959 CUTTEN ROAD
HOUSTON, TEXAS 77066
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(Address of principal executive offices) (Zip Code)
(281) 397-6730
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Issuer's telephone number, including area code
ERIC LANGAN
CHIEF EXECUTIVE OFFICER AND PRESIDENT
RICK'S CABARET INTERNATIONAL, INC.
10959 CUTTEN ROAD
HOUSTON, TEXAS 77066
Copies to:
ROBERT D. AXELROD, ESQ.
AXELROD, SMITH & KIRSHBAUM, P.C.
5300 MEMORIAL DRIVE, SUITE 700
HOUSTON, TEXAS 77007
(713) 861-1996
Approximate Date of Commencement of Proposed Sale to the Public: From time to
time after the effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER UNIT OFFERING PRICE FEE (2)
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Common Stock, $.01 par value/ 210,727 $ 4.75 $ 1,000,950 $ 107.10
Underlying a Convertible
Debenture (3)
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Common Stock, $.01 par value/ 125,926 $ 6.55 $ 825,011 $ 88.28
Underlying Convertible
Debentures (3)
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Common Stock, $.01 par value 160,000 $ 5.00 $ 800,000 $ 85.60
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Common Stock, $.01 pa value 4,829 $ 4.75 $ 22,938 $ 2.45
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TOTAL 501,482 N/A $ 2,648,899 $ 283.43
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(1) In accordance with Rule 416 under the Securities Act of 1933, as amended
(the "Act"), this registration statement also covers any additional shares
of common stock which may become issuable under by reason of any stock
dividends, stock splits, or similar transactions which results in an
increase in the number of registrant's outstanding shares of common stock.
This registration statement does not cover any shares of common stock
issuable for the payment of future interest or dividends pursuant to the
Convertible Debenture with Fairfield Investments, LLC (as further described
herein).
(2) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457 under the
Securities Act of 1933, as amended.
(3) Shares of Common Stock issuable upon the conversion of a Convertible
Debenture.
DELAYING AMENDMENT UNDER RULE 473(A): The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the Commission
acting pursuant to section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND THE SELLING STOCKHOLDERS
ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 21, 2006
RICK'S CABARET INTERNATIONAL, INC.
501,482 SHARES OF COMMON STOCK
This prospectus relates to the offering for resale of up to 164,829 shares of
our common stock, $0.01 par value ("Common Stock") currently held by certain
selling stockholders and 336,653 shares of Common Stock issuable upon the
conversion of convertible debentures currently held by certain selling
stockholders. 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 the conversion of the convertible
debentures held by certain selling stockholders for which we are registering the
underlying shares of Common Stock. Upon conversion of any portion of the
convertible debentures, we will make the appropriate reduction in the debt for
which the convertible debenture was issued. 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 June 12, 2006, the last reported sales price of our Common Stock was
$6.56 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISKS. PLEASE REFER TO
THE "RISK FACTORS" BEGINNING ON PAGE 3.
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 _____________ ___, 2006.
TABLE OF CONTENTS
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PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 1
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS . . . 2
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 3
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . 9
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . 9
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 11
DESCRIPTION OF SECURITIES TO BE REGISTERED . . . . . . . . . . . 13
INTEREST OF NAMED EXPERTS AND COUNSEL. . . . . . . . . . . . . . 14
MATERIAL CHANGES . . . . . . . . . . . . . . . . . . . . . . . . 14
COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES . . . . . . . . . . . . . . . . . 14
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . . 15
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . 16
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 3 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",
four of the clubs operate under the name "XTC" and one club operates under the
name "Club Onyx." 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 4,920,367 shares (as of June 12, 2006).
Common Stock
Common Stock Up to 164,829 shares of Common Stock held by certain selling stockholders
Offered and 336,653 shares of Common Stock issuable upon the conversion of a
Convertible Debenture.
Offering Price Determined at the time of sale by the selling stockholders.
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 the conversion of the convertible debentures
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held by certain selling stockholders for which we are registering the underlying
shares of Common Stock. Upon conversion of any portion of the convertible
debentures, we will make the appropriate reduction in the debt for which the
convertible debenture was issued.
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.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
We are including the following cautionary statement in this Form S-3 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 S-3 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 S-3, 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 2
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 3. 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.
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
Page 3
licensing and other regulations will permit our nightclubs to remain in
operation or profitable in the future.
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
Page 4
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 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
Page 5
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 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
Page 6
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 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 convertible debentures;
- 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 7
OUR MANAGEMENT CONTROLS A SIGNIFICANT PERCENTAGE OF OUR CURRENT OUTSTANDING
COMMON STOCK AND THEIR INTERESTS MAY CONFLICT WITH THOSE OF OUR SHAREHOLDERS.
As of June 12, 2006, our Directors and executive officers and their respective
affiliates collectively and beneficially owned approximately 23% 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 8
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.
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 the conversion of the convertible debentures held by certain
selling stockholders for which we are registering the underlying shares of
Common Stock. Upon conversion of any portion of the convertible debentures, we
will make the appropriate reduction in the debt for which the convertible
debenture was issued.
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.
SELLING SECURITY HOLDERS
------------------------
The following is a list of the selling stockholders who own or who have a right
to acquire the 501,482 shares of Common Stock covered by this prospectus.
Currently, 164,829 shares of Common Stock are held by certain selling
stockholders. Up to 336,653 shares of Common Stock are issuable upon the
conversion of a Convertible Debentures held by certain selling stockholder.
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.
Page 9
The percent of beneficial ownership for the selling stockholders is based on
4,920,367 shares of common stock outstanding as of June 12, 2006. Shares of
common stock subject to warrants, options and other convertible securities that
are currently exercisable or exercisable within 60 days of June 12, 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 June 12, 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
---------------------------- ------------- --------------- ------------ ----------- -------------
McNeil Interests(5) None -0- 160,000 -0- -0-
---------------------------- ------------- --------------- ------------ ----------- -------------
Fairfield Investments None 292,655 (6) 215,555 77,100 1.5%
---------------------------- ------------- --------------- ------------ ----------- -------------
Ralph McElroy >10%
shareholder 748,467 (7) 91,604 748,467 (7) 15.0%
---------------------------- ------------- --------------- ------------ ----------- -------------
Ryan McElroy Son of >10%
shareholder 15,268 (8) 15,268 -0- -0-
---------------------------- ------------- --------------- ------------ ----------- -------------
Wade McElroy Son of >10%
shareholder 57,584 (9) 19,084 38,500 <1%
---------------------------- ------------- --------------- ------------ ----------- -------------
---------------------------- ------------- --------------- ------------ ----------- -------------
TOTAL 501,512
------------------------------------------------------------------------------------------------------
Page 10
(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 4,920,367 shares of Common stock issued and outstanding as of June
12, 2006.
(5) Ricky McNeil is the individual responsible for investment decisions and
voting authority for this entity.
(6) Includes 62,300 shares of common stock held by Jeff Benton 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 19,629 held indirectly by Fairfield Investment Group, LLC.
Jeff Benton is the Managing Director of Fairfield Advisors and has
investment decision and voting authority for this entity.
(7) 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 91,603 shares of Common Stock (which are being registered herein)
issuable upon the conversion of a convertible debenture at a rate of $6.55
per share and also excludes 200,000 shares of Common Stock issuable upon
the conversion of a secured convertible debenture at a rate of $3.00 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 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.
(8) Includes 15,268 shares of common stock issuable upon the conversion of a
convertible debenture at a rate of $6.55 per share.
(9) Includes 38,500 shares of common stock and 19,084 shares of common stock
issuable upon the conversion of a convertible debenture at a rate of $6.55
per share.
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;
- exchange distributions and/or secondary distributions;
Page 11
- 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.
We agreed to keep this prospectus effective until the earlier of (i) the
three-year anniversary of the effective date, 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.
Page 12
There can be no assurances that the selling stockholders will sell any or all of
the shares offered under this prospectus.
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.
DESCRIPTION OF SECURITIES TO BE REGISTERED
------------------------------------------
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 June 12, 2006, there were 4,920,367 shares of common stock outstanding. We
are registering 164,829 shares of common stock herewith. 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.
Page 13
SECURED CONVERTIBLE DEBENTURES
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. We are not registering any shares
of common stock for future issuances of interest or dividends under this
Debenture. The proceeds of the Debenture was used to payoff certain debt and
increase our working capital.
On April 28, 2006, we issued 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
debentures provide, absent shareholder approval, that the number of shares of
our common stock that may be 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.
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 89,300 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.
MATERIAL CHANGES
----------------
There have been no material changes in the Registrant's affairs since the end of
the last fiscal year.
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:
Page 14
- 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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------
This prospectus is a part of a registration statement on Form S-3 that we filed
with the SEC with respect to the shares offered by this prospectus. This
prospectus does not contain all of the information that is in the registration
statement. We omitted certain parts of the registration statement as allowed by
the SEC. We refer you to the registration statement and its exhibits for further
information about us and the shares offered by the selling shareholders.
The SEC allows us to "incorporate by reference" the information we file with the
SEC, which means that we can disclose important information to you by referring
to those documents. The information incorporated by reference is an important
part of this prospectus, and the information that we file later with the SEC
will automatically update The SEC allows us to "incorporate by reference" the
information we file with the SEC (File No. 000-13992), which means that we can
disclose important information to you by referring to those documents. The
information incorporated by reference is an important part of this prospectus,
and the information that we file later with the SEC will automatically update
and supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until this offering is completed:
- our Annual Report on Form 10-KSB for the year ended September 30,
2005, as amended;
- our Quarterly Report on Form 10-QSB for the quarter ended December 31,
2005;
- our Quarterly Report on Form 10-QSB for the quarter ended March 31,
2006;
- our Current Reports on Form 8-K filed on October 7, 2005, March 27,
2006, April 6, 2006, April 14, 2006 and May 11, 2006; and
Page 15
- our Proxy Statement for the 2006 Annual Meeting of Shareholders.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the address below. However, we will not provide copies of the
exhibits to these filings unless we specifically incorporated by reference the
exhibits in this prospectus.
Eric Langan, CEO/President
Rick's Cabaret International, Inc.
10959 Cutten Road
Houston, Texas 77066
(281) 397-6730
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We have filed with the SEC a registration statement on Form S-3 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.
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 16
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth estimated expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered. All such expenses will be paid by us.
Securities and Exchange Commission Registration Fee $ 283.30
Printing and Engraving Expenses -0-
Accounting Fees and Expenses $ 3,000
Legal Fees and Expenses $ 10,000
Blue Sky Qualification Fees and Expenses -0-
Miscellaneous -0-
TOTAL $13,283.30
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The officers and directors of the Company are indemnified as provided by the
Texas Business Corporation Act (the "TBCA") and the Bylaws of the Company.
Unless specifically limited by a corporation's articles of incorporation, the
TBCA automatically provides directors with immunity from monetary liabilities.
Our Articles of Incorporation do not contain any such limiting language.
Excepted from that immunity are:
a. willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a
material conflict of interest;
b. a violation of criminal law unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful;
c. a transaction from which the director derived an improper personal
profit; and
d. willful misconduct.
The Articles of Incorporation provide that the Company will indemnify its
officers, directors, legal representative, and persons serving at the request of
the Company as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise to the
fullest extent legally permissible under the laws of the State of Texas against
all expenses, liability and loss (including attorney's fees, judgments, fines
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
that person as a result of that connection to the Company. This right
of indemnification under the Articles is a contract right which may be enforced
in any manner by such person and extends for such persons benefit to all actions
undertaken on behalf of the Company.
The Bylaws of the Company provide that the Company will indemnify its directors
and officers to the fullest extent not prohibited by Texas law; provided,
however, that the Company may modify the extent of such indemnification by
individual contracts with its directors and officers; and, provided, further,
that the Company shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such person unless
(i) such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the Company, (iii) such
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the
Page 17
Company under Texas law or (iv) such indemnification is required to be made
pursuant to the Bylaws.
The Bylaws of the Company provide that the Company will advance to any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer, of the Company, or is or was serving at the request of the
Company as a director or executive officer of another Company, partnership,
joint venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
the Bylaws of the Company or otherwise.
Our Bylaws provide that no advance shall be made by the Company to an officer of
the Company (except by reason of the fact that such officer is or was a director
of the Company in which event this paragraph shall not apply) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion, that the facts known to the decision-making party at the
time such determination is made demonstrate clearly and convincingly that
such person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of the Company.
ITEM 16. EXHIBITS.
The following is a list of exhibits filed as part of this registration
statement. Where so indicated by footnote, exhibits which were previously filed
are incorporated herein by reference. Any statement contained in an
Incorporated Document shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent that a statement contained herein
or in any other subsequently filed Incorporated Document modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Exhibit
Number Description
------- -----------
3.1 Articles of Incorporation of Rick's Cabaret International, Inc. (1)
3.2 Bylaws of Rick's Cabaret International, Inc. (1)
4.1 Stock Purchase Agreement with Philip Einsenberg dated September 14, 2004 (2)
4.2 Secured Convertible Promissory Note with Philip Eisenberg dated January 18, 2005 (2)
4.3 Purchase Agreement with Tony Hege dated June 11, 2005 (3)
4.4 Promissory Note (Tony Hege) dated June 10, 2005 (3)
4.5 Subscription Agreement (Jay Teitelbaum) dated February 24, 2005 (4)
4.6 Secured Convertible Debenture with Ralph McElroy dated July 22, 2005 (4)
4.7 Warrant Agreement (Ralph McElroy) dated July 22, 2005 (5)
4.8 Subscription Agreement [Form Of] (4)
4.9 Convertible Debenture with Fairfield Investments dated February 6, 2006 (8)
4.10 Convertible Debenture with Ralph McElroy dated April 28, 2006 (8)
4.11 Convertible Debenture with Wade McElroy dated April 28, 2006 (8)
4.12 Convertible Debenture with Ryan McElroy dated April 28, 2006 (8)
Page 18
5.1 Legal Opinion of Axelrod, Smith & Kirshbaum, P.C. (9)
10.1 Employment Agreement with Eric Langan (6)
10.2 Employment Agreement with Travis Reese (4)
10.3 Improved Real Property Commercial Contract (5)
10.4 Stock Purchase Agreement with Joint Ventures, Inc. (7)
21.1 List of Subsidiaries (8)
23.1 Consent of Whitley Penn LLP, Independent Registered Public Accounting Firm (filed herewith)
Footnotes to Exhibits:
-----------------------
(1) Previously filed as an exhibit to the Company's Form SB-2 on January 11,
1995, and incorporated herein by reference.
(2) Previously filed with the Company's Form 8-K on January 24, 2005, and
incorporated herein by reference.
(3) Previously filed with the Company's Form 8-K on June 15, 2005, and
incorporated herein by reference.
(4) Previously filed with the Company's Form SB-2 Registration Statement on
August 24, 2005, and incorporated herein by reference.
(5) Previously filed with the Company's Form 8-K on March 27, 2006, and
incorporated herein by reference.
(6) Previously filed with the Company's Form 8-K on April 14, 2006, and
incorporated herein by reference.
(7) Previously filed with the Company's Form 8-K on May 11, 2006, and
incorporated herein by reference.
(8) Previously filed with the Company's Post-Effective Amendment on Form SB-2
on May 23, 2006, and incorporated herein by reference.
(9) Previously filed with the Company's Form S-3 Registration Statement on June
15, 2006 and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(1) The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration:
(1) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(2) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
(3) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(2) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
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(3) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by the director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of the counsel the
matter has been settled by controlling precedent, submit to the appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 21st day of June, 2006.
RICK'S CABARET INTERNATIONAL, INC.
By /s/ Eric Langan
---------------
Eric Langan
President and Chief Executive Officer
POWER OF ATTORNEY
Rick's Cabaret International, Inc. and each of the undersigned do hereby appoint
Eric Langan his true and lawful attorney to execute on behalf of Rick's Cabaret
International, Inc. and the undersigned any and all amendments to this
Registration Statement on Form S-3 and to file the same with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission; each of such persons shall have the power to act hereunder
with or without the other.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
By /s/ Eric Langan Chairman of the Board, Director, June 21, 2006
---------------
Eric Langan President, Chief Executive Officer,
And Chief Financial Officer and
Principal Accounting Officer
By /s/ Travis Reese * Vice President and Director June 21, 2006
----------------
Travis Reese
By /s/ Steven L. Jenkins * Director June 21, 2006
---------------------
Steven L. Jenkins
By /s/ Alan Bergstrom * Director June 21, 2006
------------------
Alan Bergstrom
By Director
------------------
Robert Watters
* By Eric Langan, Attorney-in-fact
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