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Dave & Buster's for gentlemen's clubs.

The Marriott for adult entertainment venues and themed sports bars.

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• Adult Entertainment Clubs: RCI Hospitality operates a portfolio of gentlemen's clubs offering live adult entertainment, bottle service, and food and beverage services.
• Casual Dining & Sports Bars: The company owns and operates a chain of military-themed casual dining restaurants and sports bars under the "Bombshells Restaurant & Bar" brand.
• Franchising Services: RCI Hospitality offers franchising opportunities for its "Bombshells Restaurant & Bar" concept and other entertainment venues to independent operators.
• Digital Media & Entertainment: Through its subsidiaries, the company publishes industry-related magazines, operates adult-themed websites, and produces digital content.

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RCI Hospitality (symbol: RICK) primarily sells to individuals. The company serves the following categories of customers:

• Patrons of Adult Entertainment Venues: These customers visit RICK's gentlemen's clubs, such as Rick's Cabaret, XTC Cabaret, and Club Onyx. This category includes individuals seeking adult entertainment, social interaction, and experiences, often comprising business travelers, local residents, and groups celebrating events like bachelor parties.

• Diners and Bar Patrons of Casual Restaurants: This category encompasses individuals and groups frequenting RICK's restaurant and sports bar concepts, primarily Bombshells Restaurant & Bar. These customers visit for meals, drinks, to watch sporting events, and for a casual dining and bar experience.

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Eric S. Langan, President, CEO and Chairman
Mr. Langan began his career in the hospitality industry in 1989, developing expertise in sports bar/restaurants and adult entertainment nightclubs. He built the XTC Cabaret nightclub brand, which he later merged into RCI in 1998, expanding the company's scope. He has been instrumental in professionalizing the gentlemen's club industry with marketing, management, finance, and technology practices. Mr. Langan also founded a club in Fort Worth, Texas, in 1989, which grew to approximately 70 locations.

Bradley Chhay, Chief Financial Officer
Mr. Chhay joined RCI in November 2015 as Controller. He is a Certified Public Accountant (CPA), Certified Fraud Examiner (CFE), and Certified Information Systems Auditor (CISA). His prior experience includes auditing for Deloitte & Touche LLP (2007-2009), serving as Internal Audit Senior, IT Auditor, and Senior Fraud Auditor for Live Nation Entertainment, Inc. (2009-2013), and working as an Audit Supervisor and Global ERP Project Lead for RigNet, Inc. (2013-2015). Following his time at RigNet, he briefly held the position of CFO for a privately-held, multi-unit restaurant chain.

Travis Reese, Executive Vice President, Corporate Secretary, and Director
Mr. Reese became Executive Vice President, Corporate Secretary, and a Director in 1999. He previously served as the company's Director of Technology, responsible for developing intranet, permit tracking, and incident reporting systems, and was key in the implementation of the company's ERP system. In 2013, he created the Bombshells Restaurant and Sports Bar concept.

Ed Anakar, President and Director of Operations
Mr. Anakar brings over 30 years of management experience in the hospitality sector, covering restaurants, hotels, nightclubs, sports bars, and adult entertainment venues. He began his career at 16 as a waiter in his family's restaurant. He later became a district manager for a hotel management company and an operating partner for Nocturnal Concepts, a Houston-based company operating nightclubs. After a subsidiary of Rick's Cabaret International acquired a controlling interest in Nocturnal Concepts, Mr. Anakar joined the Rick's team, where he has since developed, launched, acquired, and overseen numerous successful venues, including the Club Onyx concept.

Yura Barabash, Director
Mr. Barabash has been a director since 2017. He currently serves as Chief Operating Officer of Gingko Online Learning LLC and a consultant to Chengdu Gingko Education Management. He possesses extensive corporate finance experience, participating in numerous equity and debt financings and M&A transactions for public and private companies globally. His background includes roles as Senior Vice President of Finance at Motorsport Network LLC (2016-2019) and as an investment banker at Primary Capital (2011-2016), Rodman & Renshaw, and Merrill Lynch.

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The key risks to RCI Hospitality (symbol: RICK) are primarily centered around its ongoing legal and governance crisis, compounded by concerns regarding its financial health and the challenges within its operating industry.

1. Legal and Governance Crisis: RCI Hospitality and its executives, including CEO Eric Langan, are facing a significant legal challenge. The company and several executives were indicted on 79 counts by the New York Attorney General's Office for alleged tax fraud, bribery, and conspiracy to evade approximately $8 million in sales taxes between 2010 and 2024. This indictment led to a substantial drop in the company's stock price and triggered class-action lawsuits from shareholders alleging misleading disclosures and governance failures. The potential penalties, including fines, executive resignations, and criminal convictions, could severely destabilize operations and damage long-term value and investor confidence.
2. Financial Health and High Debt Load: The company exhibits several indicators of financial vulnerability. RCI Hospitality has a high debt-to-free cash flow ratio and a significant debt-to-equity ratio. Its liquidity is a concern, with a current ratio below 1, suggesting potential difficulties in meeting short-term obligations. Furthermore, the company's Altman-Z score is deemed "bad," indicating a risk of bankruptcy. Overall, the company's financial health has been deteriorating, marked by rising debt/EBITDA ratios and negative sales trends, which could limit future growth prospects.
3. Declining Industry and Operational Challenges: RCI Hospitality operates in an industry, specifically nightclubs, that is experiencing structural decline, evidenced by persistent same-store sales decreases. Changing consumer preferences, particularly among younger generations like Millennials and Gen Z who show less interest in nightclubs, coupled with the rise of cheaper entertainment alternatives, pose significant headwinds. The company's restaurant segment, Bombshells, has also reported double-digit negative same-store sales for over two years, and nightclub sales are trending downwards. This is further highlighted by a recent delay in filing its annual report and preliminary unaudited results showing a decline in total revenues for the fourth quarter and full fiscal year 2025.

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• Emergence and rapid growth of direct-to-consumer adult content and entertainment platforms (e.g., OnlyFans). These platforms allow adult entertainers to directly monetize content and interact with fans, potentially drawing talent away from physical clubs and offering customers a discreet, convenient, and often more personalized alternative to in-person entertainment. This directly competes with RCI's core gentlemen's club business model for both talent and customer spend.
• Increasing scrutiny and potential restrictions driven by Environmental, Social, and Governance (ESG) factors. Growing investor, financial institution, and public focus on ESG criteria can make it more challenging for companies in the adult entertainment sector to access capital, secure insurance, maintain banking relationships, or obtain/renew operating licenses due to perceived social risks.

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For RCI Hospitality (RICK), the addressable markets for their main products and services are as follows:

Adult Nightclubs (Gentlemen's Clubs)

The market size for the Strip Clubs industry in the United States is estimated at $4.2 billion in 2025.

Another estimate for the gentlemen's club niche in the U.S. indicates an $8 billion annual market.

Sports Bars/Restaurants (Bombshells Restaurant & Bar)

The market size for the Sports Bars industry in the United States is estimated at $2.2 billion in 2025.

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RCI Hospitality (RICK) is expected to drive future revenue growth over the next 2-3 years through several key strategies:

1. Strategic Acquisitions of Nightclubs: RCI Hospitality aims to expand its portfolio through opportunistic acquisitions, particularly of independent nightclubs. This M&A strategy is a core component of its "Back to Basics" five-year capital allocation plan, with 50% of free cash flow allocated to club acquisitions.

2. Development of New Properties: The company plans for new property openings and continued development within its existing brands, such as new Bombshells locations. This organic growth through new venues is anticipated to contribute to increased revenue.

3. Improved Operational Efficiencies and "Back to Basics" Strategy in Nightclubs: RCI Hospitality is focusing on enhancing the performance and profitability of its core nightclub business through a "Back to Basics" strategy. This involves running each location more efficiently and is expected to lead to a recovery and growth in nightclub same-store sales.

4. Divestiture of Underperforming Assets: While initially impacting top-line revenue, the strategic sale and closure of underperforming Bombshells locations and other non-core assets are designed to streamline operations, improve overall profitability, and reallocate capital to higher-growth opportunities.

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Share Repurchases

• Since the start of fiscal year 2025, RCI Hospitality has bought back 198,200 shares at an aggregate cost of $9.2 million.
• During Q2 2025 (January 1 to March 31, 2025), the company repurchased 56,875 common shares for $2.9 million.
• RCI Hospitality's capital allocation strategy dedicates 60% of free cash flow to share buybacks, debt reduction, and dividends, with a long-term goal to reduce the outstanding share count to 7.5 million by fiscal year 2029.

Share Issuance

• In March 2023, RCI Hospitality issued 200,000 restricted shares of common stock, valued at $16.0 million, as part of the $66.5 million acquisition of five adult nightclubs in Texas.
• The company's weighted average outstanding shares have fluctuated over the last few years, standing at 9.4 million in fiscal year 2021, 9.23 million in fiscal year 2022, 9.36 million in fiscal year 2023, and 8.92 million in fiscal year 2024.
• RCI Hospitality has generally reduced its fully diluted share count over time, despite issuing shares for certain acquisitions.

Outbound Investments

• In fiscal year 2025, RCI Hospitality completed several club acquisitions, including Platinum Plus Gentlemen's Club in Allentown, PA for $2.0 million in June 2025, Platinum West Gentlemen's Club in West Columbia, SC for $8 million in April 2025, and Flight Club in Detroit for $11 million (including real estate) in January 2025.
• In March 2023, the company acquired five adult nightclubs (two Baby Dolls and three Chicas Locas) and their associated real estate in Dallas-Fort Worth and Houston for a total of $66.5 million.
• RCI Hospitality's capital allocation strategy allocates 40% of its free cash flow to club acquisitions, targeting businesses at 3-5 times EBITDA with an aim for a 100% cash-on-cash return within three to five years.

Capital Expenditures

• In fiscal year 2023, RCI Hospitality deployed significant capital, including $77.9 million into nightclubs, $17.3 million for Bombshells restaurants, and $7.5 million for casino investments.
• The company's capital allocation plan focuses on growth investments through acquiring or developing clubs and restaurants, emphasizing ownership of the underlying real estate.
• Maintenance capital expenditures, which are related to capitalized replacement of assets in existing locations, increased by nearly 30% in Q1 fiscal year 2025, impacting free cash flow.