Mysteryman161

Rick’s: Q1 Earnings Leave Something to Be Desired, Turnaround in Place

Same sales flat, no more acqusitions means sales are not going to continue to climb. Stocks value have fallen from 24.00 a share to 3.00 a share, cap rate is now below 30 million down from 150 million a year ago.

CEO Eric is trying to get the PUT options to be pushed back since the company needs to make up the difference on shares given at 23.0 to 25.00 a share for the clubs purchased. Well when your stock is valued at 3.00 a share thats a 20.00 or more that Ricks has to pay out of its pocket instead of the open market.

CEO Eric has demostrated once again his management team is lacking and unabel to control its clubs.

Ricks Dallas converted to XTC after surrendering its liquor license. This makes no sense at all after paying over 9 million for business and property. A liquor license allows a club to generate over 50% of its sales and profits since this is the major stream of income for a club. Now that this club is called XTC it is a BYOB. Sure the door fees will be 20.00 per person and its th largest BYOB in the state of Texas currently.

This will all change because if Silver City Cabaret in Dallas changes to BYOB it will be the largest BYOB in Texas and in Dallas. This club is better located easier access and has a better following then Ricks/XTC. Ricks needs to be concerned since CEO Eric stated in previous Vcall said that Dallas Ricks has a debt service of $300,000.00 a month. Thats a big nut to crack!

Looking at Las Vegas I can see where CEO Eric is getting terrible advice from his management team. The Las Vegas club since take over has lost 70% of its income, which was before the economy really started to show major signs of decline in Las Vegas. The reason for the loss was no experienced management from other markets entering the Las Vegas market and ignoring the contracted consultant Dennis DeGori. Ricks is now involved in a lawsuit with Dennis Degori for breach of contract.

Currently Ricks Las Vegas is bleeding the company dry every day it is open. It was a bad acquisition done based on Ego not business sense. CEO Eric stated the company has decided that all advertising towards tourism will be cancelled. Day shift will end. The main focus is now on local customers, not tourists. To be blunt, this is insane! 37.5 million tourists came to Las Vegas in 2008. Current local population of Las Vegas is 552,000 and dropping daily. Which is easier to get a customer from, 37.5 million or 552,000? Las Vegas has been hit hard by housing foreclosures, and high unemployment, which is in the top 5 of the nation.

Ricks has major management problems at all levels of its company and it needs to be delt with ASAP. This is all demonstrated in its lack of fixing its problems at clubs and even deciding which ones to close so to stop the bleeding. Last Quarter report CEO Eric was saying closig a few clubs would be a one time hit and needs to be done. Well why one quarter later no closings and still major bleeding continues?

Ricks has to decide about closing or selling clubs in San Antonio, Austin, Houston, Dallas, and Las Vegas.

Once again I am stating the fact that the only thing holding this house of cards up is the revenue from Tootsies Miami and Ricks NYC locations. How much longer can this contnue?

Rick’s Earnings Preview: Time to Jump Ship?

As we all knew it to be true, Ricks is going down hill. CEO Eric sounded just as nervous this time as last call, only this time he was a little more organized. Eric knows he is the captain of a sinking ship, yet he still does not take action to plug the holes!!!

Those holes would be 2-4 locations that are bleeding the company dry!!! Austin, San Antonio, Las Vegas, and XTC Dallas.

We all know that finishing the Las Vegas deal during an economic down turn like the one were in now was a bad idea. Yet here we are earning losses at 70% from prior to purchase, closing down day shift, stopping all advertising for tourism, and focusing on locals for business.

OK THESE ACTIONS ARE CRAZY!!!! Locals are being layed off in the 1000s in Las Vegas from every Casino/Hotel/Resort. Las Vegas ranks in the top ten cities in the country for unemployment. Las Vegas is one of the highest foreclosure cities in the country. Wake up and smell the coffee Eric!!! Tourism is only down by 2.5 million last year, so that left 37.5 million visitors to target as customers verses the total population of Las Vegas 552,000. Do the math!!!

Ricks Dallas, which use to be the old Penthouse Club. Well Someone did not do his homework on this deal either. Eric you purchase a club that had been closed down voluntarily for 36 counts of prostitution and was also operating under the microscope of TABC and local law enforcement? How about the legal battle started in 2003 over the area changing from wet to dry putting the liquor licnese at risk. This challenge went all the way to the Supreme Court. Why risk investors money on a deal that at any moment the State of Texas could pull that liquor license? Why over pay for such a club that was well known in the media as being hated by the Ciy of Dallas?

Now Eric has to go make deals with the people who were over paid for these deals about PUTS as he refers to them during the Vcall. These are 25.00 shares of stock, which must be paid to the seller. you are talking 5000 shares a month at 25.00. Right now Eric is trying to get that bumped back to 3000 shares a month. Well asking for these favors sound great but what happens a few months from now when Eric goes back and asks for it to go to 2000 or even 1000??? Its not a pretty picture folks!

OK no mention about the lawsuits? This is where all the legal costs are going, yet not speaking about the drunk Ricks Entertainer that hit someone, nor mention about the "Breach of Contract" lawsuit filed by Dennis DeGori former partner of Scores Las Vegas.

Simply put, this company is a mess.

Rick's Has Great 2008, but Fails to Provide Guidance

Eric has made some very bad moves: Lots of new clubs purchased at very high prices, Bad management teams, closing clubs, and leaning on earnings of three clubs out of 19 to stay a float.

Acquisitions of The Executive Club in Dallas which was turned into a Ricks. Who did the background on this club for Ricks? This club was fighting a 4 year long legal battle all the way to the supreme court about being in a dry county. It is now understood from TABC that Ricks will not be allowed to have a liquor license. SO Eric is trying to spin this as "Oh well it will become a XTC and be a BYOB." People thats probably going to be the biggest and most expensive BYOB in Texas, at almost 20,000sqft and costing well over $9.5 million.

Closing 2-3 clubs due to the economy? No its due to bad management. When your talking about closing locations of which you have had established of years, or clubs you have taken over this year, you have a management infrastructure problem. Failure to command and control you stores/clubs means profits go away. Austin Ricks just finished that deal this year and now your talking about closing it? Eric is correct you will take a one time hit on the books from closing those clubs, but reality is that a major blemish on Ricks record after sitting here and spending $70 million in one year buying up clubs.

Ricks just purchased this Year Crazy Horse Too in Philly. Now its being converted to a Onyx? This club was purchased for over $7 Million.

How did the Las Vegas deal get messed up? Ricks had an agreement with Dennis Degori, previous partner of Scores Las Vegas about consulting the operations of this club. Ricks came in and completely messed this club up. Yes you can blame some on the economy but a lot falls on Ricks shoulders. When you have a drop from an established club from 250K a week to losing 50-70%, more towards 70% something is very wrong.

This brings me to ask why Dennis Degori is suing Ricks for breach of contract? This was not bought up in the phone conference, not disclosed in the 10K under legal.

Chris (author) brought up in a previous article about the lawsuit ricks is currently involved with about a wrongful death suit. This can be very damaging to Ricks. especially since it brings into question the sales of alcohol and how it is done involving entertainers.

A lawsuit that will affect Ricks in Houstons new tactics for getting rid of Adult Clubs. The Mayor of Houston is planning to shutdown 30-40 clubs in the city by using its nuisance law which just closed the Penthouse Club permanently. www.chron.com/disp/sto...

So out of 19 clubs operating under RCI, only NYC, Miami, and Ft.Worth locations are propping this company up???

I sat through the call and I can tell you now that Eric was failing to give direct answers, when he had the data right here in front of him. Eric got very flustered a few times when he could not find a good way to deliver info that people would want to hear. At one point an open microphone was allowing someone from RCI state" F@cking great now he has opened a can of worms". This was after Eric spoke about closing clubs.

1Q and 2Q of 2009 are not going to be pretty.

Reverse Mergers: The APO (Alternative Public Offerings) Part I

If a private company nets before taxes 50 million a year and has assets of 300 million, how would you value it for its common stock when doing an APO??? Also what would the estimated value of the stock be?