Greetings and welcome to RCI Hospitality Holdings' Fiscal Fourth Quarter and 2014 Year-end Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Mr. Gary Fishman who handles Investor Relations for RCI. Thank you. Mr. Fishman, you may now begin.

Thank you. For those of you online or have a copy of the slides, please turn to Slide 2. Thank you. I just want 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, and 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. Please turn to Slide 3. I also direct you to the explanation of our non-GAAP and adjusted EBITDA measurements that we use and that we are included 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 33rd Street, between Fifth and Broadway. If you have an RSVP, to ask for me name at the door. Now here is Eric Langan, President and CEO of RCI Hospitality. Eric?

Thank you for joining us today. We've got a lot to discuss, so please turn to Slide 4. We'll go through our fourth quarter and fiscal year income statement and balance sheet. We'll update you on the status of our capital allocation strategy. Then we'll provide you with a more detailed update on two major legal issues and our robust energy drink business. We'll also update you on the status of the REIT, new locations and acquisitions, and the growing success of our Bombshell sports bars and restaurants. Then we'll wrap up with our bullish outlook for fiscal 2015. Please turn to Slide 5 for the summary of the fourth quarter and yearend results. We continue to make solid progress, generally in line with our expectations for both the fourth quarter and fiscal 2014. Total revenues were up close to 20% in the fourth quarter year over year and up 15% for the year. GAAP EPS was $0.42 for the quarter, a significant increase over last year. For the year, it was $1.14, an increase of close to 19%. GAAP EPS for the quarter and year included a gain from a contractual debt reduction. It was partially offset by an asset impairment charge related to the sale of one club and the closing of another. For the year, GAAP EPS also included several major legal settlements in the third quarter. It was the non-recurring items that largely affected GAAP operating margin in both periods. Excluding them GAAP operating margin would have been about level for both periods. As you know, we provide non-GAAP calculations for better comparability of our core operation. On a non-GAAP basis, we earned $0.28 for the quarter, similar to the year ago, $1.44 for the year, which is a little bit -- a little bit better…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. The first question is from John Rolfe of Argand Capital. Please go ahead.

Hi guys. A few questions for you. One, the gain on the debt write-off in the quarter, it looked like, I think your disclosure with that was tied to enforcement of the poll [ph] tax. What changed this quarter that triggered that debt write-down? Was it the fact that the Texas Supreme Court elected not to hear the arguments or why this quarter as opposed to past quarters?

Sure. Technically the answer to that question is the state council sent out letters demanding all reports to be filed and all payments be made. We are currently -- we hired a law firm out of Austin, Texas to represent us, who then negotiates with the state on those taxes at this time. We've not paid them at this point. We're negotiating some type of payment plan or a discount to get caught up. Really their goal is to start collecting the tax on a go-forward basis. It's what we're being told. But they have to do something with all the past amounts out as well. So we have our lawyer negotiating that for us right now and could have updates, I'm expecting, probably maybe by the end of the year, definitely in the next quarter, on how that's being handled.

So that is proceeding on a parallel track with the application to the Supreme Court?

Yes.

Okay. In terms of the insurance savings, what was sort of the quid pro quo? Did you guys decide to take a larger sort of first loss or deductible or was the market just more competitive from the last time you had been out bidding for the business or having the business bid for, or what was the driver there?

Yeah. Well, what happened to us last year, the insurance company went bankrupt, and so the market was -- and everybody kind of knew indemnity. We actually got away from indemnity and started with our insurance provider before they announced that they were insolvent, but -- once they went insolvent. But a lot of insurers kind of knew that was coming and they didn't know what the market was going to be. So, last year rates jumped through the roof. There were only a couple of people actually writing -- even writing new policies. And so by this year, when insolvency happened in a lot of people, but entered the market, so rates have come down somewhat, we actually lowered our self-insured risks with this new policy, as well as lowered our rates about 40%. So it's actually a really good -- a really good benefit for us. We're buying more coverage. We've increased our rider as well, and clarified that our rider is per unit, so it's very significant, both with $3 billion plus A-graded companies with very well-known names. And so we're very happy with what we've able to achieve this year versus last year we're kind of in a hurry to protect ourselves, so to speak. So this time we had a little more time, we [indiscernible] a little bit better. We actually stayed with the company that rode us the previous year, just that very significant discount.

Okay, okay. And my last question for you. I think I -- you mentioned that you thought there might be $40 million to $50 million of equity value in the real estate that you would drop down into the REIT. I just want to be clear. So I'm presuming as well that there would be some club-level debt that would be dropped down into that REIT as well. I mean I think you guys had talked in the past about sort of total value of the real estate being dropped down there as sort of $80 million plus. I mean, has anything changed, or are we just talking about --

Well, we would lose -- we would -- not only we'd bring in $40 million to $50 million cash -- $40 million to $50 million, well, probably about $40 million in debt with -- I think the real estate debt is right around $40 million.

Okay, okay. So we're still talking about a total real estate value of $80 million plus, we're just --

$80 million to $100 million is what -- 90 to 100 really, the real value of the real estate.

Okay.

We've gotten a couple of appraisals that have come in a lot higher on two pieces of property that were kind of the first two we kind of want to move in to REIT. And both appraisals came back much higher than we estimated the property was worth. It looks like real estate market's recovering a little bit right now.

And any issues? I mean obviously with what's going on with the American, ARCAP, the company that does all the private REITs, I mean has that impacted in terms of what your advisers are telling you, you know, your ability to potentially get this done, or if that's just sort of --

No. We waited until January, when we probably could have filed everything in November, but then we would have had to have -- we had to meet all the qualifications by January of 2015 -- by waiting to file in January of 2015 with everything, we have until January of 2016 to come in full compliance. It gives us basically 12 full months to do everything instead of two. So that was part of the reason that we've waited.

Okay. But the blow-up at American Realty Capital has not really impacted --

No, it hasn't changed anything on our stuff at all, at this point. We don't know -- I mean obviously we don't know what kind of funding we're going to be able to take in in the REIT, we know we want to take in and what we -- where we want to be, you know, a year from now, but it really, you know, that's why we've got to get it started and see what -- so we've got a couple of pieces of property, rather than going to have all, you know, 30 pieces of our property appraised and spend all that money, we've done a couple and we'll say, look, we raised the money, we'll put these in, and as more money comes available, you know, we'll use it. And of course, for acquisition purposes, we want the REIT to be purchasing our future real estate and our future acquisitions. That's the big thing for us right now.

Okay, great. Thanks very much.

Yeah.

Thank you. The next question is from Steven Martin of Slater. Please go ahead. Excuse me, Mr. Martin, your line is closed [ph].

I'm sorry, I had [indiscernible]. Can you give us an idea on the clubs that you have closed or sold, both for revenues and [indiscernible] for 2014?

I don't have from the top of my head. Probably either revenues pretty quickly -- revenues of those subs are probably about $1.9 million [indiscernible] XTC Fort Worth -- probably about $2.4 million of revenues, $2.6 million maybe in revenues. And on -- they had losses, so there were no -- there was no income.

And proceeds from the sale of those clubs when you eventually sell them?

Well, they're sold. We have the property for sale, the Houston, we owned a property in Houston, the other two were both leased location. We own the property in Houston. That property is for sale. We've owned that property since 1997. We paid about $600,000 for it, we've depreciated it all this time, so it's probably on our books for next to nothing. I mean our ask price is $2.2 million, you know, I don't know the market. We haven't got a formal written offer, but I've heard there's an offer coming in at $1.88 million. I don't know if we'll take it or not. We have to do little research on it. But it'll probably sell between $1.8 million and the $2.2 million ask price.

Okay. Can you talk a little more about Robust? And you issued 200,000 shares, what are the restrictions on those shares?

Well, they're fully restricted for one year, and then they're in a leak-out agreement for the next year. So technically it will take them two full years to realize, if they started selling, that that first day they could, they could actually have all their money in about two years. But both of the founders seem to be very interested in the growth potential of the company. The problem they had is they couldn't add distributors fast enough because they didn't have enough inventory and they didn't -- they're basically [indiscernible] inventory. So we're able to provide, with our huge cash flow and the line of credit with the manufacturer, a much better product flow for them, so they add distributors as they want now. And I think you'll see, as we move after the holidays, it's very hard for distributors to pick up new products during the holidays since they're very busy times. But as we move into January and February, you're going to see a lot of new distributors that we've been negotiating with that their contracts will probably start in January, February, March, that's going to expand our distribution to a lot of new states and new territories.

Can you give us some idea of what, and recognizing that you've just taken over the business, can you give us some idea of what robust revenues might have been in the most recent 12 months and some idea of what you expect them to be in the next 12 months?

Yeah, they're basically without giving out, because we don't want to let our competitors know exactly what's going on there either, but basically in the $2 million to $3 million range, and we estimate revenues this year will be in the $6 million, $8 million range, for the first year that we have -- that we are in control of the company.

And would you expect it to be profitable?

Yes, yes. It will be profitable in this fiscal year. I don't see how they can't.

All right. One last question and then I'll let somebody else. Looking at your 10-K and the debt schedule, and maybe you can't but maybe somebody can get back to me, can you tell me which line item of debt the write-off occurred on? And what was -- was the gross amount of the write-off the same as the gain?

Technically no, because there was a piece of property that we owed. So that was kind of a weird note. It's actually in the club. It's actually in the Jaguars -- it's in the Jaguars debt on a club level, not on the real estate level. And basically what we did is it was a $6 million write-down, but because one of the properties that we put in there we paid $660,000 in a lump sum cash payment at the end of the 12 years, and as a favor to the owner we agreed to write that off first, but that was on our books for -- because we had to do calculated interests and, you know, stuff for GAAP purposes, it ended up being -- that write-off ended up being $5.6 million instead of $6 million, because about $400,000 and some that would have been interest that would have accrued over the 12 years on that piece of property in Odessa.

Okay. And maybe Phil can send me an email or get back to me on -- because you have 20 line items of debt on your -- in your 10-K, which line item that would have been.

Yes, Steve, call me about that.

Okay, that'd be great.

Yeah.

Thanks.

You bet.

Thank you. [Operator Instructions] And the next question is from Bob Brown [ph], a private investor. Please go ahead.

Thanks. Just a few questions. First of all, I know in the tax piece [ph] you said, it sounds like, parallel track with the litigation, appeal to the Supreme Court, at the same time trying to negotiate something on the past payments. In terms of a potential third option, any, based on the elections in terms of the new tax legislative session, any chance of getting any political relief going backwards anyway?

Well, we're certainly trying. You know, we -- the legislative session will start January, run through May, you know, who knows? They're going to be so busy this year, there's so much going on. In fact, we don't know what we'll be able to do. But yes, we're certainly going to try again. You know, we passed a bill in the past and had to pull it off the governor's desk because he threatened to veto it. If we could get that bill passed again, it'd be great. We just don't know, in this legislative session, if that's going to be possible or not. But it's definitely -- we'd definitely love to see it happen. We'll definitely be trying.

Okay. And on the REIT, so, in terms of, A, confidence level, I know you've been -- we've been talking about this for close to about a year now, so, confidence level in terms of launching in January, and at the same time, in terms of -- I mean, where are we in terms of facilitating raising money for at least starting with a couple of clubs? I mean, has there been an investment advisor then retained or banker retained?

We've been talking with a couple of different people. We haven't retained anyone at this point. And of course, you know, our current financial advisor is interested in doing some of the raising as well, plus people that we know and have dealt with in the past that have shown interest once we get an offering to run and put together, that they'd like to see it. Yeah, I just don't know. I mean I'm pretty confident that we'll get it started, we'll get it going. How fast it will fund is unknown at this point. That's the unknown. I think it's going to go pretty rapidly based on the people I've talked to and, you know, people we've discussed things with, on how some of these other REITs are functioning and operating, how they're able to raise capital. You know, there's a lot of people looking for fixed income. Our target is to guarantee 5% and to target an 8% yield, which should be pretty easy to do because we already, you know, we already know what properties we're putting in, at least for the first $100 million in properties, and we know what, you know, we know what interest rates -- and we know what the interest expense and rent we're currently paying. So it's pretty easy to, you know, to line that up.

So in terms of confidence level, about at least started getting an offering, then random out in January.

I don't see why we won't. In the first quarter for sure, I don't want to [indiscernible] myself in January just in case something comes up, but as of right now, I mean everything's ready to go. We've had -- we got to pull the trigger in November on advice of council, we waited till January, till after the first of the year, just to make sure that we have more time in case we run into any issues with the capital raising and giving the -- only have to have 100 shareholders and some other legal requirements to be considered a REIT, so we want to make sure we meet all those, give us a year to be so that way.

Okay. And on your 2015 outlook, both first quarter and second quarter, talked about, in terms of looking at continued record revenues. Any thoughts on profitability?

Well, I mean we continue to, you know, we continue to, on adjusted EBITDA, continue to grow. I think we'll continue to see those. By losing the three locations that were costing us significant money, I think we'll see, you know, our margins increase definitely in those quarters year over year.

Okay. And can I ask just to come back to Robust? So in terms of your expectations for this year, I know you commented already in terms of revenue and this thing, and it will be profitable, and we -- are we assuming that for 2015 that that will be accretive?

I don't know. I have to really kind of look. We only gave a few hundred thousand shares, so I would assume it would be -- if we do the $6 million to $8 million in revenue, we should, you know, we should come in $1 million plus on the bottom line, which would definitely be accretive. So, you know, our -- I'll have better information probably in the February quarter and definitely in the May quarter on that. I mean it's just too new for me. I mean I can consider and guess, but I want to be able to tell you these are the contracts we signed, this is [indiscernible] taken up, you know, this is the amount of new cases a month that are going out, which we'll be able to really do starting in February and definitely in the May conference call we'll have all of that laid out, the last six months solid information under our belt.

So --

Right now I have to go on what -- I'm being told by the, you know, the people we purchased it from versus being able to see with my own eyes and being in there myself, and kind of seeing what's going on. They definitely believe that they're going to hit the -- and they're, of course, they're incentivized to do $8 million in revenue and net $1 million, because there's additional -- there's additional earn-out for them if they can -- and bonus if they can hit those numbers in calendar -- I think it's calendar 2015. So they're very motivated to do it.

I appreciate those comments. I'd like to ask, last question on Robust, which is maybe a little bit more philosophical and I'd like you -- I'd like to hear from you on this. I've been a very long-term shareholder, and one of the things that was, I don't know, taken aback when the announcement came out, and I think it was shared by people because stock started to take a decline even before the New York judgment issue, in other words, the issue has been in terms of our capital allocation. And for a long time we've been very disciplined about being adult clubs, and that was a niche, and then we branched out into the Bombshells which seems to be a very good complement. And yet when this came out, it just seemed like, where did this come from? A, what do we know about this business? Why are we in another business when, you know, we finally gotten to a point where you guys did such a good job over the last five years of getting your revenues back on track, being much more disciplined in terms of profitability, generating cash? And if anything, the issues seemed to be revolving around either we're going to grow faster or we're going to just start returning more cash to shareholders. And then this announcement of just going into a new business that, you know, what do we know about this business? I think it was a lot of -- it was a bit of a shock to a large number of long-term shareholders.

Yeah, I agree. We could have done a much better rollout and explanation of the Robust energy purchase. I think a lot of people misunderstood it. We value it two different ways. Our downside. Okay, our downside is we got a 10-year contract for this product which we sell thousands and thousands and thousands of cases for. And just on product discount, worst case is we prepaid for our product for 10 years, actually probably more like four or five, but based on how much product we use. So there was really not a lot of downside for us in that regard, because like I said, we use the product and that, you know, now we're paying -- instead of paying retail for it, we get it for cost with our locations with the worst-case scenario for us. But we really believe with what we were seeing happen in the energy drink market, with the beer distributors that Red Bull was going to private distribution and canceling contracts with lots of distributors. So they had to stake [ph] on their trucks. They already have the customer base that they're already delivering to all these bars and nightclubs. And then when Monster took Anheuser Busch out, of the energy drink business with Monster, we said, well, wait, now we can -- now we got MillerCoors distributors, we have, you know, Budweiser distributors as well, and that was before we talked to -- our original deal was to get with the liquor distributors because if they're going to deliver the liquor, they can take the energy drink products with them. And we're negotiating with one of the major liquor distributors and we'll start distribution in Florida in the January, February, March quarter, and that one contact there alone could turn around and -- could launch the product in 42 states when we're successful in that market -- in the Florida market. So it can grow very rapidly. And that was the real upside for the Robust, is just how rapid it could grow through simply just by creating distribution for it. The product is already proven. It sells in the club. You know, Dallas-Fort-Worth where the company started, it's a hot product. You'd go into a lot of bars and a lot of nightclubs and you're getting Robust there. And as we push into these other markets with distribution, I think you're going to see the same type of growth rate for it, which is just a phenomenal growth rate.

But the bottom line is, from a, I guess, what I want to -- what I'm happy to hear is that, A, we have very limited downside because of the discounts we're getting on the cost side of what we're buying anyway; and B, this is -- you're not looking to -- in other words, we're not looking to become a conglomerate here, right? I mean this is -- philosophy is to say where we -- we know what we're doing and what we're good at.

You get it to $100 million in sales and everybody in the, you know, in the bottling business and distribution beverage business will want to buy it from us. So that was, you know, there's going to be a lot of opportunity with this product if we continue to grow, push it in into the market. And it's got very limited competition because Red Bull is really the only product that mixes well with liquor, which is what, you know, when you get your bombs or your energy drink and vodka, with a very similar flavor profile, our product will do just as well, and cost of our, you know, 30% to 40% less.

All right. So I'm just saying, in terms of philosophically, I understand potential upside, but in other words, we're not looking to get into other businesses, right? If we have capital --

No, no. This is just complementary. I mean it was already -- we already bought, we're familiar with it. There was very little downside for it. And we have the connections with some of the liquor distributors and some of the beer distributors to immediately increase product distribution which maybe could be done overnight. Since we stepped forward we already added eight distributors. We'll probably add somewhere between 14 and 16 in the next quarter. We add distributors like that, say, we add 50 distributors this year, you're going from $2 million to $3 million in sales to $6 million to $8 million, maybe $10 million to $12 million. So it was an easy fix -- it was easy setup for us to do, with very limited potential downside. We're not looking to do other business. You're going to see us do some more acquisitions in the adult club market probably in the next quarter. We've got some deals we're working, and we'll get them -- we want to go back to our REIT a little bit. They had to get rid of some locations that were underperforming. And so now we're ready to pick up some new ones.

And lastly, I guess, given the -- where the stock is, are we looking to accelerate some of that money that's already been allocated for issuances?

I'm sorry, for -- oh, the stock buyback. Oh yeah, we're buying back stock. We're aggressively buying back stock under $10.

Right. Great. Yeah.

Thank you. The next question is from Gerald Scaterino [ph], a private investor. Please go ahead.

Yes. How do you view the impending job cuts in the oil drilling areas? How will that affect financial results?

Yeah. Well, you know, Odessa may be affected. That's really the only real market we're really energy-dependent, so to speak. However, the $2.50 gas, or even I bought gas the other day for $2.09 a gallon, I had to check -- make sure the line wasn't burnt out there was an eight, I couldn't believe the price. And I think that's going to put a lot of cash, disposable income, in our customers' pockets, you know, the $50 customers, I call them the $50 customers [indiscernible] spend 50 bucks. Now maybe he's going to come in twice a week or he's going to spend $60 on his visit. And there's a lot of those guys, say, 15,000 visits a week, you know, all of a sudden those 15,000 visits a week, an extra 10 bucks, another $150,000 a week in sales. So it can add up quick. And I think you'll see that as we move into the next two quarters, which is why I think record revenue in the next two quarters very easy to say, you know, and very believable. This is one of the reasons why. So whatever effect we have from job cuts in the oil industry, we're going to make up ten-fold with the cheaper gas.

Thank you.

Yeah.

Thank you. The next question is from Peter Rugai [ph], a private investor. Please go ahead.

Hi, thank you. I'm encouraged to hear that there seems to be interest in franchising the Bombshells. I was wondering if you could talk a little bit more about that, how much interest there is and how aggressive are you, you know --

Unfortunately, we can't talk to anybody. Under the federal law, we -- until we have our franchising documents done, we can't -- all we can say is, yeah, we're looking to franchise. We've taken any number, we'll let you know when we can talk to you. So we don't know, you know, we can't give the true interest because we're not allowed to talk to people about it. But hopefully that we'll have that all done in the next quarter, and by February, by February conference call, I'd give you a better idea of how that's looking. But I know we're getting a lot of calls. A lot of people talk to our restaurant managers and brought me several phone numbers in contact. I just -- I really can't call them and talk to them about it at this point. But really it's working for us, and once we get everything filed, then we'll be able to get a better idea.

Okay. Another question, in terms of the Robust. So you don't actually -- we don't actually own the product, correct? It's only distribution?

It's a distribution contract, right.

So if this ends up becoming a big thing and someone wants to buy the product, it really doesn't do much for us, right?

Well, they don't need to make the product, they need the distribution rights. I mean the product is going to sell with a product sales force, the contract, it's a ten-year contract, auto-renewing as long as we meet case minimum, which I don't think we'll have any problem meeting the minimums. So that won't be an issue. In fact, we've already negotiated with actually manufacturing the products in the U.S. that -- at some point in the future. And so we can avoid some of the shipping costs.

Got it. Okay. Thank you.

And the time, as we grow, you know, start to take too much time to get the product here, is we want to build basically bottle it here in the U.S.

Okay. Thanks.

Thank you.

Operator?

Yes. We have no questions in the phone queue at this time.

Right. I'd received -- this is Gary Fishman -- I received last week and today, after the earnings have come out, a few emails from people asking questions, some of them have been answered, but I'd like to get through them and have Eric answer them. So let me just ask a couple of these questions. Who's the new insurance company?

The new insurance company is Aston [ph]. They tend to insure, through over I think $3 billion in assets, they tend to insure best-in-class insurance. We've got a great relationship with them, working through with them with the first year. And then our policy is we're pushing our hats away for our umbrella policy or override [ph].

Okay. And how come you don't have -- another question is, how come you don't have any class action labor lawsuits in other big states like Texas or Florida?

Actually we've been filed on in both Texas and in Florida, and there's a current pending case in Minneapolis, in Minnesota. The Texas case was dismissed and forced to arbitration. The Florida case was also dismissed and forced to arbitration. As an individual, both -- all individual cases, no classes. And that's because our contracts have been upheld. And that's why we believe, on a go-forward basis, that we're good in those states, and actually everywhere we operate in the U.S., that these arbitration agreements and the non-class participation agreements will protect us going forward.

And on a legal subject, what will be the trend in legal bills over the next several years?

I think will probably remain fairly steady this year. We're going to have the trial in the New York case, which will be a few hundred thousand dollars, and then of course we're dealing with the defunct [ph] insurance company, so we're going to be making claims on -- against them. So there'll be a little bit of legal bills there. And of course dealing with some of those cases. I think we'll probably going to be around the same this year as we were last year, so that'll remain steady. It will start to decline a little bit the following year, and then three years out, significant reductions in legal costs.

Operator, we see that we have somebody else wants to ask a question?

Yes. We have a question from the line of Nate Rusbosin of DePrince. Please go ahead. Nate Rusbosin - DePrince Race & Zollo: Yes. Hey, Eric, how are you doing?

Hey, Nate. Good. How are you? Nate Rusbosin - DePrince Race & Zollo: I'm doing pretty well. Thanks. Was -- one is to just kind of hear, you talked about the New York case and the Texas case. What could be the worst-case scenario for these trials?

Well, the Texas isn't really a trial. I mean I guess it is with the TEA. The Spring court doesn't hear the case, the tax is upheld, we got to pay the back taxes, and that's probably the worst-case scenario. I guess they can demand all the money today, which of course would, you know, with certain subsidiaries that are extremely profitable may go into bankruptcy. It's a subsidiary by subsidiary collection. It's not -- the parent company doesn't own or operate any clubs, it's only a holding company, so it's all the individual subsidiaries that actually owe all these taxes. So, basically go on a subsidiary by subsidiary basis and kind of figure out what we want to do on a worst-case basis. The lawyers are working on a settlement for us. I think that's not going to be an issue there. They're going to come up with some type of payment plan, whether it's discounted or not discounted remains to be seen, and the terms remain to be seen. But I'm guessing that three to seven-year payout or something along those lines. The New York case, the worst-case scenario is we go to trial, we lose again, which we don't -- we lose on every claim, so all of a sudden the claims are $18 million or $19 million or $20 million instead of $10.9 million. We appeal. The appeals court basically either upholds all the rulings or overturns certain things, forces it back into the trial of course, so we got more court costs and more expenses there. It just remains to be seen. But I think those are kind of worst-case. You put a worst-case dollar amount on the whole thing, over seven years, maybe $40 million for everything, for both cases, you know, over the next five to seven years, worst case. But I think more realistic -- and you got to remember, it's all going to be based on -- could be based on claims made as well. So, you know, how many of the 1,900 entertainers actually claim -- make a claim for the stuff [ph] could affect it, you know, whether we do a blanket mail-outing of checks. There are so many ways these cases go. And hopefully we settle before we ever get down that road, to get that far down the road, you know, three years from now, I don't want to still be dealing with this case. Nate Rusbosin - DePrince Race & Zollo: Yeah, exactly. And can you talk about what -- is there anything in particular holding settling before this happens right now?

Yeah, the other side. You know, they don't really -- I think that, in my opinion, the plaintiffs are using this case, they've got a great judge for them, and they're using this case to create wealth and to create a case to settle other cases. And until we can come up with some type of deal that works for everyone and we'll just have to wait and see. But it's years down the road. And we can win an appeal and then the whole thing gets thrown out. Who knows? It's just so hard to say. It's ongoing litigation. I probably shouldn't be discussing it, but I kind of want everybody to understand that, yes, this ruling was bad for the industry if it's bad for Rick's, but it's not the end of the world that our stock price reflects that, oh my gosh, all of a sudden we're out of business because of this. We've taken actions to protect ourselves. We've been protected since 2010. We haven't seen any other class actions. The ones that we've seen class actions been, case have been dismissed. They've been sent to arbitration. And these arbitration, we're selling these things for thousands of dollars, not even hundreds of thousands of dollars. So I mean, basically cause the defense settlement just to make them go away. It's pretty significant to the overall picture, versus, you know, what this New York case has done. Nate Rusbosin - DePrince Race & Zollo: Do you have any idea on the timeframe for both of these [indiscernible]?

For the [indiscernible] case? Nate Rusbosin - DePrince Race & Zollo: For the New York case?

Yeah, the New York case, who knows? We're going to go to trial this spring, the trial is set for this spring, I assume we're going to go to trial. In federal court, you can't appeal anything till the whole thing is over. So even though we have points of appeals, we can't make any of those appeals until after the whole case is settled. And so that's what we're waiting for, and the we'll go to appeals, and the appeals process is probably another two years or so. So, at least another three years will be my guess. Nate Rusbosin - DePrince Race & Zollo: Okay. And then just lastly, talking about the buyback, I know past quarters you've kind of indicated below $15 [indiscernible] buy back stock. You said $10 here. Anything changed there or?

Nope. We're buying back stock. You see we bought back stock in the last quarter 100,000 shares, or actually a little over 100,000 shares. We'll probably end up with more stock this quarter, bought back this quarter than last quarter. Because the price are, you know, under $10 we've been pretty aggressive. As aggressive as we can. I mean we are limited, Safe Harbor, amount of time we can buy, prices we can buy, and amounts we can buy in a day, so. Nate Rusbosin - DePrince Race & Zollo: Certainly. You bet. Thank you.

Yeah.

Thank you. The next question is from Mort Cohen [ph], a private investor. Please go ahead.

Hi, Eric. I was wondering if you had any guidance or projected sales and earnings per share for the coming year.

No, we're not issuing any guidance at this time, other than to say that we do believe that the next few quarters will both be record quarters. So we'll exceed $33.5 million this quarter, and then whatever we do in the next quarter, we'll exceed that in the January, February, March quarter. That's about the only guidance I have at this time.

Do you know when you'll have better guidance than that at this point or is this something -- because last year you guided and there was guidance last year and then --

Yeah. We discussed it. And until we -- really we want to pick up some analysts and get some analyst coverage, and then we can kind of work with them to kind of come up with some guidance maybe. But at this time, with the growth and some of the things that are going on with the legal issues and everything, I think we're better off just sticking to our revenue -- to our revenue numbers -- what we do with our revenues, and we've been generating certain amounts of cash based on revenues. You kind of do the math yourself and kind of figure out where you think we're going to come in at. We think that's a better guidance at this time.

Okay, thanks.

Okay.

All right. Thank you, operator. Operator?

Yes, I'm here. We have no further phone questions at this time.

Okay.

So let me wrap it up. We've got about an hour-long call here. Thank you, Eric, and thank you everybody for listening. Want to remind everybody again, we do have that due diligence event at Rick's Cabaret New York from 6 to 8 o'clock tonight, 50 West 33rd Street, between 5th and Broadway. If you have an RSVP, ask for me at the door. And we look forward to reporting our 2015 first quarter sales in January, and then our quarterly results in February. Thank you and good night. And on behalf of Eric, the company, and all our subsidiaries, best wishes for a happy holiday season. Please celebrate by going to one of our clubs or restaurants.