Greetings and welcome to the RCI Hospitality Holdings Inc., formerly Rick's Cabaret International Inc. Third Quarter 2014 Earnings Conference Call and webcast. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It's my pleasure to introduce Gary Fishman, Investor Relations for RCI. Thank you, sir. You may begin.

Thank you. Please turn to Slide 2. Thank you, everybody, I just wanted to remind you that our Safe Harbor statement is posted at the beginning of our conference call presentation. It reminds you that you may hear or see forward-looking statements that involve a number of risks and uncertainties. I urge you to read it. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments which occur afterwards. And please turn to Slide 3. I also urge you to read the explanation of non-GAAP and adjusted EBITDA measurements that we use and that we are including in our presentation and news release. Finally, I’d like to invite everyone in the New York City area to join us at Rick's Cabaret, New York tonight at 6 o' clock to get a firsthand look at one of our flagship clubs. Rick's Cabaret, New York is located at 50 West 33 Street, between Fifth and Broadway. If you have an RSVP, ask for me name at the door. Now here is Eric Langan, President and CEO of RCI Hospitality.

Thank you, Gary. Thank you for joining us today. We've got a lot to discuss. If you'll please turn to Slide 4, number one, welcome to our first earnings conference call for RCI Hospitality Holdings Incorporated, our new corporate name. RCI Hospitality reflects how far we've come since we first began as a publically traded company in 1995. Back then we had just one adult club and modest revenues. Today, we have 39 adult clubs and are well on our way towards owning and operating 10 sports bars and restaurants. We have in all 15 major brands and formats with operations across the country. Changing our name represents a significant step. It marks our company's transformation into a profitable and growth oriented player in the hospitality field, and one focused on solid niche market with what we believe is a highly promising future. As for the quarter, we are pleased to report that our core performance increased nicely year-over-year. Revenues reached a new record, core operating margin was up and we continue to generate a healthy amount of cash. Let me provide a little perspective on these results. Our second quarter of this year was a turnaround quarter. We significantly increased our level of revenues, core operating margin and cash flow. The recent third quarter on the other hand was a clean-up quarter. We took advantage of our higher level of performance to resolve a number of outstanding issues, particularly on the legal front. Based on our results year-to-date we are comfortable reaffirming our fiscal 2014 guidance for revenues, GAAP and non-GAAP EPS. In addition, we have spent some time reviewing and updating our capital allocation strategy to achieve maximum benefits for our shareholders of our strong and growing cash flow. We are focused on using excess cash to produce…

Thank you. Now, we'll be conducting a question-and-answer session. (Operator Instructions) Our first question today is coming from Steven Martin from Slater. Please proceed with your question. Steven Martin – Slater Capital Management LLC: Hi, guys.

Hey, Steve, how are you doing? Steven Martin – Slater Capital Management LLC: Good, good. Your legal expenses, what amount of the current quarter would you guess is more non-recurring in nature and related to all the settlements?

Oh, gosh, good question. Probably the extra 0.8% or so that would get us back down to that. I want to keep it under 3%, and I know it went a little over this quarter, but we did have several attorneys working on multiple things to clear all this stuff up. So one more quarter of high legal if we work on the couple of issues that we still have out there. Steven Martin – Slater Capital Management LLC: And I assume the legal expenses on the REIT are in there as well?

Some, yes. Steven Martin – Slater Capital Management LLC: Okay. Can you update us on the Texas Pole facts?

Right now the attorneys are filing the appeal and, basically, we're just in hurry up and a wait mode, and that’s basically all we know at this time. I think there's another meeting next week, where I'll be meeting with some of the attorneys and other club owners to see if we can try to figure out something to move this thing forward. Steven Martin – Slater Capital Management LLC: Okay. And can you comment on how the – now that some of the Bombshells have been opened for a while, can you comment on how they have been doing?

Yes, the first two locations, the Dallas location is still about the same as it’s been for the last couple of quarters, so it’s holding. Webster peak had a slight decline and now we're starting to build back up there a little bit. And the Austin location, which I consider an A-location, I think the first two locations are more of a B restaurant area, whether or not surrounded by lots of other restaurants and shopping, where the Austin location is definitely an A-location, surrounded by restaurants, shopping and whatnot, and it’s doing way better than we anticipated or either of the other two locations have done. The Spring location and the South Houston location are both I think A-type locations as well, where we have other major restaurant brands basically in the same parking lot or directly across the street from us. So, I think that's going to help draw a lot more dinners to those locations. Steven Martin – Slater Capital Management LLC: All right, thank you very much.

Yes.

(Operator Instructions) Our next question today is coming from Mike Mork from Mork Capital Management. Please proceed with your question. Michael Mork – Mork Capital Management: Yes, my question regards, you just add the one line there, decided not to proceed with the acquisition of Club O. That was going to be a pretty big acquisition for you guys. What caused you not to go ahead with that?

As we got farther into the due diligence process and some of the licensing issues with the city, the grandfathered license not necessarily as safe as we anticipated in the beginning; we just decided that we couldn't pay $11 million for it. Michael Mork – Mork Capital Management: Okay. And then we're in your fourth quarter right now, so investors are going to start looking at your following year. And you more or less indicated this revenue growth looks like about 15%, you'd be buying back stock, you won't have some of the problems with insurance, et cetera. If you have the 20% increase in your EPS that would indicate about $2 for the New Year, does that sound reasonable?

Yes, it sounds reasonable. We haven't really gone into it a whole lot this time. I wanted to try to get – we've got a couple of issues that I want to try to get through. I would guess that hopefully with the annual report we'll be able to issue guidance for 2015, if not sooner. Michael Mork – Mork Capital Management: Okay. Sounds good. Thank you.

You bet.

(Operator Instructions) Our next question today is coming from Bob Rand [ph] a private investor. Please proceed with your question.

Yes, I have a few just short questions. First of all, can you comment at this point in terms of how much stock is already been purchased in this quarter?

No, we only can report that in the quarterly reports or annual reports.

Okay. And as far as the REIT is concerned, has an investment bank have been retained to help, start raising funds or how is that…?

We're talking with several right now. We're still waiting on the final offering memorandum documents to be done and once we get those put together then we will – we hired a consultant on it, but we haven't actually decided whether we're going to use an investment bank or we're going to try to raise some of the money ourselves at this point.

And got it, and do you have a sense in terms of timing when you would like that done?

Right, now we wait on attorneys and appraisals and just little things that are out of – really out of our control. I'm hoping that by year-end we'll have a much better update and some progress on this.

Sorry is that…

We're working on it for a long time, I know and – but still we actually got the plan and now that we've structured the entity, did all the tax work and now we're working on the offering memorandum, so.

Sorry, we got fiscal year-end or calendar year-end?

Calendar year-end.

Okay. And finally, can you give us a sense of how we're tracking so far in terms of this quarter, in terms of same store sales?

Yeah, July was in line with the quarter – the previous quarter that we're in – that we just reported. I believe we were going to be able to – we got some pricing increases. We're having decent customer counts. We're very happy with the way our business is going right now. So, I don't see any reason – as we move into the prime season I'm hoping to get into mid-September – as we get about mid-September through March or May it nearly runs pretty good. So I'm very excited about the numbers going forward based on where we're at in this month.

Right, so you think so far we're good. Have you continued to see little turnaround in Club Onyx?

Yes, Philadelphia is doing very well. Charlotte is doing well. Houston is doing okay. The Dallas location, we're still working on, but we've made some more changes there in the last few weeks and I think it's even going to get better there as well. I mean it's better but it's – we think it will get a lot better with some of those concepts that we're working on right now.

And last one is, have you seen – I know last quarter you talked about how you're working on LA and I was wondering how you've – what you're seeing there?

LA is doing okay. It's not the homerun that we thought it would be, so we're little disappointed with that but like I said, we're working on the new concept. As we move into this quarter, we're going to be looking at underperforming assets. We may sell some of them. We may disclose some of the location if we're not happy with the results that we're getting out of them. But we're really. We've been focused too much on the top-line and not enough on the bottom-line and so we've been what I call carrying little bit of dead-weight. We're going to work on eliminating some of that dead-weight as we move forward.

Okay. Great. Thank you.

Thank you. Our next question today is coming from Steven Martin from Slater. Please proceed with your question. Steven Martin – Slater Capital Management LLC: Yes, housekeeping detail. Phil, can you comment on what the actual shares outstanding were at the end of the quarter and then obviously on the 10-Q it says that there were 10.138 million at the end of July. So something increased the share count?

Yes, we had a conversion from debt. Steven Martin – Slater Capital Management LLC: Okay. And any – were your options exercised as well?

Not in July, all those finished. Well, we issued some shares – those didn't actually go in, never mind, no – yes, we had no more options in exercised.

All the options expired July 2 and I think they were all exercised or exchanged that way before then.

Yes. Steven Martin – Slater Capital Management LLC: So, the difference between the end of the quarter and the 10.138 was conversion of debt less whatever shares you bought back.

Correct. Steven Martin – Slater Capital Management LLC: Okay. Thank you.

Thank you. (Operator Instructions) Our next question today is coming from Als Harman [ph], a Private Investor. Please proceed with your question.

Hello. I was wondering if you could discuss anything about structure like how – is Rick's going to receive a management feedback, or is it just going to be LT – limited liability of distributions that you will get back for managing the assets of the real estate?

No, we will actually – we'll have a subsidiary that will be the management company for the REIT and we will be paid a management fee.

Okay. And is that going to be like a percentage or too early to tell?

The structures all being worked out with the lawyers right now. We have to be very, very careful on control issues, you can't – no one can control – you can't have a voting group that controls 50%, there is all types of rules for REITs for the tax status, so all that’s being worked out right now.

Okay. And then on New York City lawsuit, is that something you're looking to settle, or is that something you can pretty much fight on until you – towards the end or…

I mean, I never say never on settling something, but selling our reasonable and something we consider reasonable versus the fight at this point, we just don’t know, we have some motion for summary judgment that are out there right now that just come back with any day could be against us, could be for us, we just don’t know. I think, right now there is too many moving parts to really consider selling the case at this point, it’s maybe something that we go all the way to U.S. Supreme Court on i.e., we just don’t know at this point.

And on that one is – most of the legal expenses (inaudible) things like that, does it mean – does it feels actually costs lot to go forward, or is it just – is mostly cost?

It’s New York, it’s never cheap, but…

Of course, yes.

I mean, yes, relatively speaking compared to what we spent on discovery and depositions, and that. Yes, I think we're through the major cost of it, obviously, there is lots of motions that had to be filed and oral argument those types of things, which do cost – which do cost money, but nothing compared to doing 20 depositions in a month.

Okay. I appreciate it. Thank you.

Thank you. (Operator Instructions) Our next question is coming from (inaudible). Please proceed with your question.

Hey, Eric. Just curious about the kind of change in the – change of pace in terms of you guys focusing on the bottom line. I'm curious what kind of conversations you’ve had and what you’ve been seeing out in the market that has kind of turned the direction a little bit there?

Well, I think a lot has to do with – we're just not being rewarded, the stocks not being rewarded for the growth, the top line growth. We met with some group that showed us, hey, this is your cash on cash, your free cash flow return based on your current stock price with the growth that you are discussing and talking about, it's cheaper or it’s more cash efficient for you to buy back your stock than it is to pay 14% debt down because your free cash flow returns, exceeds 14% below a certain stock price. And so, we started looking at it, and we started doing the math on it, and we had always calculated similarly, but we had been taken into tax consequences fully. And when you fully take the tax consequences into it, it’s pretty eye opening that how cheap our stock is relative to our debt right now.

Okay. And then any type of target amounts in terms of returning cash to shareholders on your percent of sale?

It’s a free cash flow generated per share is how we're doing the math on it.

Okay.

You take our free cash flow generated per share and do it on an annualized percentage basis against the stock price is how you do the calculation. And basically, it’s over 14%, and under I think it's $11.38 or something. So, basically, up to about $11.80, we can buy back our stock and earn more. But specifically, I think, we're going to continue to buy back our stock probably up to $15 a share at this point based on the math that we were looking at.

Okay. Thank you.

Thank you. (Operator Instructions) We've reached the end of our question-and-answer session. I would like to turn the call back over to management for any further or closing comments.

Yes, this is Gary. Thank you, Eric. I want to remind everybody again that we do have a due diligence event at Rick's Cabaret, New York from 6 'o clock to 8 'o clock tonight. That’s at 50 West 33rd Street between Fifth Avenue Broadway. If you have an RSVP already ask from me at the door. Later this month, the company will be at the Gentlemen's Club Expo & Tradeshow at the Mandalay Bay Resort and Casino in Las Vegas, and we look forward to reporting our fiscal fourth quarter sales in October and then our year-end results in December. Thank you, everybody, and good night, and have a good summer.

Thank you. That does conclude this evening's conference call. Thank you for your participation today. You may disconnect your lines at this time and have a wonderful day.