What changed in this filing

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Item 1. Business

2021-12-14 compared with 2020-12-14 · 218 added, 228 removed, 34 unchanged (93% of the section changed)

RCI Hospitality Holdings, Inc.

Through our subsidiaries, we engaged in a number of activities in the hospitality and related businesses.

September 30, 2020, our subsidiaries operated a total of 48 establishments that offer live adult entertainment and/or restaurant

and bar operations.

Together with its subsidiaries, RCI Hospitality Holdings, Inc.

is collectively referred to as “RCIHH,”

the “Company,” “we,” “us,” or “our” in this report.

We also operate a leading

business communications company serving the multibillion-dollar adult nightclubs industry.

RCIHH was incorporated in the State

of Texas in 1994 and became public in 1995.

Hospitality Holdings, Inc.

is a holding company.

Through our subsidiaries, we engaged in a number of activities in the hospitality and

other businesses.

As of September 30, 2021, our subsidiaries operated a total of 48 establishments that offer live adult entertainment

and/or restaurant and bar operations, including 2 locations that were temporarily closed.

Together with its subsidiaries, RCI

Hospitality Holdings, Inc.

is collectively referred to as “RCIHH,” the “Company,” “we,” “us,”

or “our” in this report.

We also operate a leading business communications company serving the multibillion-dollar adult

nightclubs industry.

RCIHH was incorporated in the State of Texas in 1994 and became public in 1995.

fiscal year ends on September 30.

References to years 2020, 2019, and 2018 are for fiscal years ended September 30, 2020, 2019,

and 2018, respectively.

References to years 2021, 2020, and 2019 are for fiscal years ended September 30, 2021, 2020, and 2019,

respectively.

Our fiscal quarters chronologically end on December 31, March 31, June 30 and September 30.

corporate website address is www.rcihospitality.com.

Upon written request, we make available free of charge our Annual Report

on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably

practicable after such material is electronically filed with the SEC under the Securities Exchange Act of 1934, as amended (www.sec.gov).

Information contained in the corporate website shall not be construed as part of this Form 10-K.

In March 2020, President Donald Trump declared

the coronavirus disease 2019 (“COVID-19”) pandemic as a national public health emergency.

The declaration resulted

in a significant reduction in customer traffic in our clubs and restaurants due to changes in consumer behavior as social distancing

practices, dining room closures and other restrictions were mandated or encouraged by federal, state and local governments.

March 2020, we have temporarily closed and reopened several of our clubs and restaurants.

temporary closure of our clubs and restaurants caused by the COVID-19 pandemic has presented operational challenges.

strategy is to open locations in accordance with local and state guidelines and it is too early to know when and if they will

generate positive cash flows for us.

Depending on the timing and number of locations we are allowed to open, and their

ability to generate positive cash flow, we may need to borrow funds to meet our obligations or consider selling certain assets.

The COVID-19 pandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no

guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19

pandemic lasts.

augment an expected decline in operating cash flows caused by the COVID-19 pandemic, we instituted the following measures:

and continue to arrange for deferment of principal and interest payment on certain of our debts;

employees working at our clubs and restaurants, except for a limited number of managers;

cut for all remaining salaried and hourly employees and deferral of board of director compensation;

or modified certain fixed monthly expenses such as insurance, rent, and taxes, among others;

certain non-essential expenses such as advertising, cable, pest control, point-of-sale system support, and investor relations

coverage, among others.

On May 8, 2020, the Company received approval

and funding under the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act

(the “CARES Act”) for its restaurants, shared service entity and lounge.

See Notes 3, 10 and 11 to our

consolidated financial statements.

Ten of our restaurant subsidiaries received amounts ranging from $271,000 to $579,000 for an

aggregate amount of $4.2 million;

our shared-services subsidiary received $1.1 million;

and one of our lounges received $124,000.

None of our adult nightclub and other non-core business subsidiaries received funding under the PPP.

The Company believes it has

used the entire loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the loan may be forgiven if

they are used for qualifying expenses as described in the CARES Act.

The Company has currently utilized all of the PPP funds and

has submitted its forgiveness applications.

As of the filing of this report, we have received ten Notices of PPP Forgiveness

Payment from the Small Business Administration out of the twelve of our PPP loans granted.

All of the notices received forgave

100% of each of the ten PPP loans totaling the amount of $4.9 million.

No assurance can be provided that the Company will

in fact obtain forgiveness of the remaining two PPP loans in whole or in part.

As of the release of this report, we do not

know the future extent and duration of the impact of COVID-19 on our businesses.

Lower sales, as caused by local, state

and national guidelines, could lead to adverse financial results.

However, we will continually monitor and evaluate the situation

and will determine any further measures to be instituted, including refinancing several of our debt obligations.

continue to adhere to state and local government mandates regarding the pandemic and, since March 2020, have closed and reopened

several of our locations depending on changing government mandates.

As of the release of this report, we have reopened many of

our club and Bombshells locations with certain operating hour restrictions and with limited occupancy.

operate several businesses, which we aggregate for financial reporting purposes into two reportable segments – Nightclubs

and Bombshells.

Upon written request, we make available free of charge our Annual Report on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable

after such material is electronically filed with the SEC under the Securities Exchange Act of 1934, as amended (www.sec.gov).

contained in the corporate website shall not be construed as part of this Form 10-K.

declaration of COVID-19 as a pandemic in March 2020, we have had a major disruption in our business operations that threatened

to significantly impact our cash flow.

The declaration resulted in a significant reduction in customer traffic in our clubs and restaurants

due to changes in consumer behavior as social distancing practices, dining room closures, and other restrictions were mandated or encouraged

by federal, state, and local governments.

To adapt to the situation, we took significant steps to augment an anticipated decline in operating

cash flows, including negotiating deferment of some of our debts, reducing the number of our employees and related payroll costs where

necessary, and deferring or modifying certain fixed and variable monthly expenses, among others.

The temporary closure

of our clubs and restaurants caused by the COVID-19 pandemic presented operational challenges.

Our strategy has been to open locations

and operate in accordance with local and state guidelines.

As of the date of this report, all locations closed due to pandemic-related

restrictions were open.

We believe that we can borrow capital if needed but currently we do not have unused credit facilities

so there can be no guarantee that additional liquidity will be readily available or available on favorable terms.

May 8, 2020, the Company received approval and funding under the Paycheck Protection Program (“PPP”) of the Coronavirus Aid,

Relief, and Economic Security Act (the “CARES Act”) for its restaurants, shared service entity, and lounge.

9 and 10 to our consolidated financial statements.

of the release of this report, we do not know the future extent and duration of the impact of COVID-19 on our businesses.

operating restrictions, as caused by local, state, and national guidelines, could lead to adverse financial results.

However, we will

continually monitor and evaluate the situation and will determine any further measures to be instituted.

continue to adhere to state and local government mandates regarding the pandemic and, since March 2020, have closed and reopened a number

of our locations depending on changing government mandates, including operating hour and limited occupancy restrictions, where applicable.

operate several businesses, which we aggregate for financial reporting purposes into two reportable segments – Nightclubs and Bombshells.

Businesses not included as Nightclubs or Bombshells are combined as “Other.”

operate our adult entertainment nightclubs through several brands that target many different demographics of customers by providing

a unique, quality entertainment environment.

Our clubs do business as Rick’s Cabaret, Jaguars Club, Tootsie’s Cabaret,

XTC Cabaret, Club Onyx, Hoops Cabaret and Sports Bar, Scarlett’s Cabaret, Temptations Adult Cabaret, Foxy’s Cabaret,

Vivid Cabaret, Downtown Cabaret, Cabaret East, The Seville, Silver City Cabaret, and Kappa Men’s Club.

We also operate one

dance club under the brand name Studio 80.

fiscal 2021, 2020, and 2019, on a consolidated basis, revenues were $195.3 million, $132.3 million, and $181.1 million, respectively,

generating diluted earnings (loss) per share of $3.37, $(0.66), and $2.10, respectively.

Fiscal 2020 was heavily impacted by the

COVID-19 pandemic.

operate our adult entertainment nightclubs through several brands that target many different demographics of customers by providing a

unique, quality entertainment environment.

Our clubs do business as Rick’s Cabaret, Jaguars Club, Tootsie’s Cabaret, XTC

Cabaret, Club Onyx, Hoops Cabaret and Sports Bar, Scarlett’s Cabaret, Temptations Adult Cabaret, Foxy’s Cabaret, Vivid Cabaret,

Downtown Cabaret, Cabaret East, The Seville, Silver City Cabaret, and Kappa Men’s Club.

We also operate one dance club under the

brand name Studio 80.

generate revenue from our nightclubs through the sale of alcoholic beverages, food, and merchandise items;

service in the

form of cover charge, dance fees, and room rentals;

and through other related means such as ATM commissions and vending income,

among others.

service in the form

of cover charge, dance fees, and room rentals;

and through other related means such as ATM commissions and vending income, among others.

fiscal 2021, our Nightclub segment sales mix was 40% service revenue;

1 unchanged sentence

and 20% food, merchandise and other.

Segment gross margin (revenues less cost of goods sold, divided by revenues) was approximately 89%.

During the COVID-19 pandemic,

our Nightclubs segment revenue declined by 41% and income from operations declined by 74% from the prior year.

Same-stores sales

for Nightclubs in 2020 was -9.0% with the impact of the pandemic excluded from comparable sales.

With the impact of the pandemic

included in comparable sales (see Adjusted Same-Store Sales on page 23), same-store sales would be -41.7%.

Nightclubs segment continues to be heavily affected by the COVID-19 pandemic as most states have reissued directives for lockdowns

and stricter safety restrictions in the fall of 2020 due to the resurgence of cases.

November 5, 2019, the Company announced that its subsidiaries had signed definitive agreements to acquire the assets and related

real estate of a well-established, top gentlemen’s club located in the Northeast Corridor for $15.0 million.

The agreements

terminated prior to closing.

We provided the sellers notice of the termination in April 2020.

gross margin (revenues less cost of goods sold, divided by revenues) was approximately 88%.

Our Nightclubs segment revenue increased

by 55% and income from operations increased by more than 230% compared to prior year.

Same-stores sales for Nightclubs in 2021

was -2.1% with the impact of the pandemic excluded from comparable sales.

With the impact of the pandemic included in comparable sales

(see Adjusted Same-Store Sales on page 25), Nightclubs same-store sales would be +59.2%.

Nightclubs segment continues to be affected by the COVID-19 pandemic as most states we operate in have reissued directives for

strict safety restrictions due to the resurgence of cases.

On October 18, 2021, we and certain of our

subsidiaries completed our acquisition of eleven gentlemen’s clubs, six related real estate properties, and associated

intellectual property for a total agreed acquisition price of $88.0 million (with a total consideration preliminary fair

value of $88.4 million based on the Company’s stock price at acquisition date and discounted due to the lock-up period).

See Note 15 to our consolidated financial statements for details of the transaction.

list of our nightclub locations is in Item 2— “Properties.”

Bombshells segment operates a restaurant and bar concept that sets itself apart with décor that pays homage to all branches

Locations feature local DJs, large outdoor patios, and more than 75 state-of-the-art flat screen TVs for

watching your favorite sports.

Bombshells segment operates a restaurant and bar concept that sets itself apart with décor that pays homage to all branches of

Locations feature local DJs, large outdoor patios, and more than 75 state-of-the-art flat screen TVs for watching

your favorite sports.

All food and drink menu items have military names.

Bombshell Girls, with their military-inspired

uniforms, are a key attraction.

Bombshell Girls, with their military-inspired uniforms, are

a key attraction.

Their mission, in addition to waitressing, is to interact with guests and generate a fun atmosphere.

Bombshells is also open to franchising under our subsidiary, BMB Franchising Services, Inc., which has been approved to sell franchises

in all 50 states.

As of September 30, 2020, we operated ten Bombshells locations, all in Texas with one in Dallas, one in Austin,

and eight in the Greater Houston area.

During fiscal 2020, Bombshells sales mix was

63% alcoholic beverages and 37% food, merchandise and other.

Segment gross margin (revenues less cost of goods sold, divided by

revenues) was approximately 77%.

We grew Bombshells segment revenue by 40% and income from operations by 300% from prior year

despite the COVID-19 pandemic.

This was a result of being able to open the Bombshells locations as restaurants while bars were

closed and the contribution of two new locations that opened in fiscal 2020.

Same-stores sales for Bombshells in 2020 was +18.3%

with the impact of the pandemic excluded from comparable sales.

With the impact of the pandemic included in comparable sales (see

Adjusted Same-Store Sales on page 23), same-store sales would be +6.5%.

Bombshells is

also franchising under our subsidiary, BMB Franchising Services, Inc., which has been approved to sell franchises in all 50 states.

December 22, 2020, the Company signed a franchise development agreement with a group of private investors to open three Bombshells locations

in San Antonio, Texas over a period of five years, and the right of first refusal for three more locations in Corpus Christi, New Braunfels,

and San Marcos, all in Texas.

See Note 4 to our consolidated financial statements.

As of September 30, 2021, we operated ten Bombshells

locations, all in Texas with one in Dallas, one in Austin, and eight in the Greater Houston area.

fiscal 2021, Bombshells sales mix was 57% alcoholic beverages and 43% food, merchandise, and other.

Segment gross margin (revenues

less cost of goods sold, divided by revenues) was approximately 76%.

We grew Bombshells segment revenue by 31% and income from operations

by 44% from prior year despite the lingering effect of the COVID-19 pandemic.

Same-stores sales for Bombshells in 2021 was +7.7% with

the impact of the pandemic excluded from comparable sales.

With the impact of the pandemic included in comparable sales (see Adjusted

Same-Store Sales on page 25), Bombshells same-store sales would be +24.8%.

opened the first Bombshells in March 2013 in Dallas, quickly becoming one of the most popular restaurant destinations in the area.

Within six years, eight more opened in the Austin and Houston, Texas areas, including two that were opened in fiscal

In September 2016, we closed one Bombshells location in Webster, Texas.

We opened one Bombshells on Interstate 10 (BMB I-10),

east of Houston in December 2018, and another one on State Highway 249 (BMB 249), northwest of Houston in March 2019.

In the current

fiscal 2020, we opened one Bombshells in Katy, Texas (BMB Katy) in October 2019, and another on Southwest Freeway (BMB

59) in Houston, Texas in January 2020.

Of the ten active Bombshells as of September 30, 2020, eight are freestanding pad sites and two are inline

six years, eight more opened in the Austin and Houston, Texas areas, including two that were opened in fiscal 2019.

In September 2016,

we closed one Bombshells location in Webster, Texas.

We opened one Bombshells on Interstate 10 (BMB I-10), east of Houston in December

2018, and another one on State Highway 249 (BMB 249), northwest of Houston in March 2019.

In fiscal 2020, we opened one Bombshells in

Katy, Texas (BMB Katy) in October 2019, and another on U.S.

Highway 59 (BMB 59) in Houston, Texas in January

Of the ten active Bombshells as of September 30, 2021, eight are freestanding pad sites and two are inline locations.

2021, we opened a new Bombshells location in Arlington, Texas.

Currently, we have one Bombshells franchised location

that is under construction.

a list of our Bombshells locations, refer to Item 2—“Properties.”

group together all businesses not belonging to either Nightclubs and Bombshells as Other reportable segment.

This is made up of

several wholly-owned subsidiaries composed primarily of our Media Group and Drink Robust.

Our Media Group is the leading business

communications company serving the multibillion-dollar adult nightclubs industry and the adult retail products industry.

a national industry convention and tradeshow;

This is made up of several

wholly-owned subsidiaries composed primarily of our Media Group and Drink Robust.

Our Media Group is the leading business communications

company serving the multibillion-dollar adult nightclubs industry and the adult retail products industry.

It owns a national industry

convention and tradeshow;

two national industry trade publications;

two national industry award shows;

more than a dozen industry and social media websites.

Included in the Media Group is ED Publications, publishers of the bimonthly

ED Club Bulletin, the only national business magazine serving the 2,200-plus adult nightclubs in North America, which collectively

have annual revenues in excess of $5 billion, according to the Association of Club Executives.

ED Publications, founded in 1991,

also publishes the Annual VIP Guide of adult nightclubs, touring entertainers and industry vendors;

produces the Annual Gentlemen’s

Club Owners EXPO, a national convention and tradeshow;

and offers the exclusive ED VIP Club Card, honored at more than 850 adult

The Media Group produces two nationally recognized industry award shows for the readers of both ED Club Bulletin and

StorErotica magazines, and maintains a number of B-to-B and consumer websites for both industries.

Drink Robust is licensed to

sell Robust Energy Drink in the United States.

overall objective is to create value for our shareholders by developing and operating profitable businesses in the hospitality

and related space.

We strive to achieve that by providing an attractive price-value entertainment and dining experience;

by attracting

and retaining quality personnel;

and more than a dozen industry

and social media websites.

Included in the Media Group is ED Publications, publishers of the bimonthly ED Club Bulletin, the only national

business magazine serving the 2,200-plus adult nightclubs in North America, which collectively have annual revenues in excess of $5 billion,

according to the Association of Club Executives.

ED Publications, founded in 1991, also publishes the Annual VIP Guide of adult nightclubs,

touring entertainers and industry vendors;

and produces the Annual Gentlemen’s Club Owners EXPO, a national convention and

The Media Group produces two nationally

recognized industry award shows for the readers of both ED Club Bulletin and StorErotica magazines, and maintains a number of B-to-B

and consumer websites for both industries.

Drink Robust is licensed to sell Robust Energy Drink in the United States.

overall objective is to create value for our shareholders by developing and operating profitable businesses in the hospitality and related

We strive to achieve that by providing an attractive price-value entertainment, dining experience, and top-notch service;

by attracting and retaining quality personnel;

and by focusing on unit-level operating performance.

Aside from our operating strategy, we employ

a capital allocation strategy.

Aside from our operating strategy,

we employ a capital allocation strategy.

Allocation Strategy

capital allocation strategy provides us with disciplined guidelines on how we should use our free cash flows;

provided however,

that we may deviate from this strategy if other strategic rationale warrants.

We calculate free cash flow as net cash flows

from operating activities minus maintenance capital expenditures.

Using the after-tax yield of buying our own stock as baseline,

management believes that we are able to make better investment decisions.

provided however, that

we may deviate from this strategy if other strategic rationale warrants.

We calculate free cash flow as net cash flows from operating

activities minus maintenance capital expenditures.

Using the after-tax yield of buying our own stock as baseline, management believes

that we are able to make better investment decisions.

on our current capital allocation strategy:

consider acquiring or developing our own clubs or restaurants that we believe have the potential to provide a minimum cash

on cash return of 25%-33%, absent an otherwise strategic rationale;

consider acquiring or developing our own clubs or restaurants that we believe have the potential to provide a minimum cash on cash

return of 25%-33%, absent an otherwise strategic rationale;

consider disposing of underperforming units to free up capital for more productive use;

We consider buying back our own stock if the

after-tax yield on free cash flow is above 10%;

consider paying down our most expensive debt if it makes sense on a tax-adjusted basis, or there is an otherwise strategic

consider buying back our own stock if the after-tax yield on free cash flow is above 10%;

consider paying down our most expensive debt if it makes sense on a tax-adjusted basis, or there is an otherwise strategic rationale.

Since the first full year of implementing our capital allocation strategy in fiscal 2016

up to fiscal 2021, we improved diluted earnings per share at a compounded annual growth rate (“CAGR”) of 24.9%, which was

mainly caused by increasing revenue at a CAGR of 7.7%, flowing through net income at a CAGR of 23.6%.

As a result, net cash provided

by operating activities improved at 12.8% and free cash flow at 12.0% CAGR for the same period.

See discussions of our non-GAAP financial measures starting on page 35.

adult entertainment and the restaurant/sports bar businesses are highly competitive with respect to price, service and location.

All of our nightclubs compete with a number of locally owned adult clubs, some of whose brands may have name recognition that

equals that of ours.

The names “Rick’s” and “Rick’s Cabaret,” “Tootsie’s Cabaret,”

“XTC Cabaret,” “Scarlett’s,” “Silver City,” “Club Onyx,” “Downtown

Cabaret,” “Temptations,” “The Seville,” “Jaguars,” “Hoops Cabaret,” and

“Foxy’s Cabaret” are proprietary.

of our nightclubs compete with a number of locally owned adult clubs, some of whose brands may have name recognition that equals that

The names “Rick’s” and “Rick’s Cabaret,” “Tootsie’s Cabaret,” “XTC

Cabaret,” “Scarlett’s,” “Silver City,” “Club Onyx,” “Downtown Cabaret,” “Temptations,”

“The Seville,” “Jaguars,” “Hoops Cabaret,” “Foxy’s Cabaret,” “Mile

High Men’s Club,” “Country Rock Cabaret,” “PT’s,” and “Diamond Cabaret” are

In the restaurant/sports bar business, “Bombshells” is also proprietary.

We believe that the combination of our existing brand name recognition and the distinctive entertainment environment that we have

created allows us to compete effectively in the industry and within the cities where we operate.

Although we believe that we are

well positioned to compete successfully, there can be no assurance that we will be able to maintain our high level of name recognition

and prestige within the marketplace.

We believe that the combination of

our existing brand name recognition and the distinctive entertainment environment that we have created allows us to compete effectively

in the industry and within the cities where we operate.

Although we believe that we are well positioned to compete successfully, there

can be no assurance that we will be able to maintain our high level of name recognition and prestige within the marketplace.

are subject to various federal, state and local laws affecting our business activities.

Particularly in Texas, the authority to

issue a permit to sell alcoholic beverages is governed by the Texas Alcoholic Beverage Commission (“TABC”), which

has the authority, in its discretion, to issue the appropriate permits.

We presently hold a Mixed Beverage Permit and a Late Hour

Permit at numerous Texas locations.

Minnesota, North Carolina, Louisiana, Arizona, Pennsylvania, Florida, New York, and Illinois

have similar laws that may limit the availability of a permit to sell alcoholic beverages or that may provide for suspension or

revocation of a permit to sell alcoholic beverages in certain circumstances.

It is our policy, prior to expanding into any new

market, to take steps to ensure compliance with all licensing and regulatory requirements for the sale of alcoholic beverages,

as well as the sale of food.

Particularly in Texas, the authority to issue

a permit to sell alcoholic beverages is governed by the Texas Alcoholic Beverage Commission (“TABC”), which has the authority,

in its discretion, to issue the appropriate permits.

We presently hold a Mixed Beverage Permit and a Late Hour Permit at numerous Texas

Minnesota, North Carolina, Louisiana, Arizona, Pennsylvania, Florida, New York, and Illinois have similar laws that may limit

the availability of a permit to sell alcoholic beverages or that may provide for suspension or revocation of a permit to sell alcoholic

beverages in certain circumstances.

It is our policy, prior to expanding into any new market, to take steps to ensure compliance with

all licensing and regulatory requirements for the sale of alcoholic beverages, as well as the sale of food.

addition to various regulatory requirements affecting the sale of alcoholic beverages, in many cities where we operate, the location

of an adult entertainment cabaret is subject to restriction by city, county or other governmental ordinance.

The prohibitions

deal generally with distance from schools, churches and other sexually oriented businesses, and contain restrictions based on

the percentage of residences within the immediate vicinity of the sexually oriented business.

The granting of a sexually oriented

business permit is not subject to discretion;

the permit must be granted if the proposed operation satisfies the requirements

of the ordinance.

In all states where we operate, management believes we are in compliance with applicable city, county, state

or other local laws governing the sale of alcohol and sexually oriented businesses.

The prohibitions deal generally

with distance from schools, churches and other sexually oriented businesses, and contain restrictions based on the percentage of residences

within the immediate vicinity of the sexually oriented business.

The granting of a sexually oriented business permit is not subject to

the permit must be granted if the proposed operation satisfies the requirements of the ordinance.

In all states where we

operate, management believes we are in compliance with applicable city, county, state or other local laws governing the sale of alcohol

and sexually oriented businesses.

In relation to acquisitions that closed in October

and November 2021, we now have club locations in Denver, Colorado;

Louisville, Kentucky;

Raleigh, North Carolina;

Portland, Maine;

Indianapolis,

Sauget, Illinois;

and Newburgh, New York.

Our rights to the trade names “RCI Hospitality

Holdings, Inc.,” “Rick’s,” “Rick’s Cabaret,” “Tootsie’s Cabaret,”

“Club Onyx,” “XTC Cabaret,” “Temptations,” “Jaguars,” “Downtown Cabaret,”

“Cabaret East,” “Bombshells Restaurant and Bar,” and “Vee Lounge” are established under

common law, based upon our substantial and continuous use of these trade names in interstate commerce, some of which have been

in use at least as early as 1987.

We have registered our service mark, “RICK’S AND STARS DESIGN,” and the “BOMBSHELLS

RESTAURANT & BAR” logo design with the United States Patent and Trademark Office.

We have also obtained service mark

registrations from the Patent and Trademark Office for “RICK’S AND STARS DESIGN” logo, “RCI HOSPITALITY

HOLDINGS, INC.,” “RICK’S,” “RICK’S CABARET,” “CLUB ONYX,” “XTC CABARET,”

“SCARLETT’S CABARET,” “SILVER CITY CABARET,” “BOMBSHELLS RESTAURANT AND BAR,”

“THE SEVILLE CLUB,” “DOWN IN TEXAS SALOON,” “CLUB DULCE,” “THE

BLACK ORCHID,” “HOOPS CABARET,” “VEE LOUNGE,” “STUDIO 80,” “FOXY’S

CABARET,” “EXOTIC DANCER,” and “TOYS FOR TATAS” are registered through service mark registrations

issued by the United States Patent and Trademark Office.

As of this date, we have pending registration applications for the names

“TOOTSIES CABARET,” “In The Biz,” and “Bombshells Officer’s Club.”

We also own the rights to numerous trade names associated with our media division.

There can be no assurance that these steps

we have taken to protect our service marks will be adequate to deter misappropriation of our protected intellectual property rights.

Holdings, Inc.,” “Rick’s,” “Rick’s Cabaret,” “Tootsie’s Cabaret,” “Club

Onyx,” “XTC Cabaret,” “Temptations,” “Jaguars,” “Downtown Cabaret,” “Cabaret

East,” “Bombshells Restaurant and Bar,” “Vee Lounge,” “Mile High Men’s Club,” “Country

Rock Cabaret,” “PT’s,” and “Diamond Cabaret” are established under common law, based upon our

substantial and continuous use of these trade names in interstate commerce, some of which have been in use at least as early as 1987.

We have registered our service mark, “RICK’S AND STARS DESIGN,” and the “BOMBSHELLS RESTAURANT & BAR”

logo design with the United States Patent and Trademark Office.

We have also obtained service mark registrations from the Patent and

Trademark Office for “RICK’S AND STARS DESIGN” logo, “RCI HOSPITALITY HOLDINGS, INC.,” “RICK’S,”

“RICK’S CABARET,” “CLUB ONYX,” “XTC CABARET,” “SCARLETT’S CABARET,” “SILVER

CITY CABARET,” “BOMBSHELLS RESTAURANT AND BAR,” “THE SEVILLE CLUB,” “DOWN IN TEXAS SALOON,”

“CLUB DULCE,” “THE BLACK ORCHID,” “HOOPS CABARET,” “VEE LOUNGE,” “STUDIO 80,”

“FOXY’S CABARET,” “EXOTIC DANCER,” “TOYS FOR TATAS,” and “BOMBSHELLS OFFICER’S

CLUB” are registered through service mark registrations issued by the United States Patent and Trademark Office.

date, we have pending registration applications for the names “TOOTSIES CABARET,” “IN THE BIZ,” “JAGUARS,”

“THE MANSION,” and ‘LA BOHEME GENTLEMAN’S CLUB.” We also own the rights to numerous trade names

associated with our media division.

There can be no assurance that these steps we have taken to protect our service marks will be adequate

to deter misappropriation of our protected intellectual property rights.

As a result of an acquisition that closed on October 18, 2021 (see

Note 15 to our consolidated financial statements), we obtained the rights to the following service mark registrations from the Patent

and Trademark Office:

“MILE HIGH MEN’S CLUB,” “MHMC logo,” “AFTER DARK,” “COUNTRY ROCK

CABARET,” “PT’S,” “DIAMOND CABARET,” and “NAUGHTY MOMMIES NIGHT OUT.”

AND INDEPENDENT CONTRACTORS

Our people are employed by the parent company

or by any of its subsidiaries.

people are employed by the parent company or by any of its subsidiaries.

Executive officers are employed by the parent company;

shared services personnel and managers responsible

for multiple clubs or restaurants are employed by RCI Management Services, Inc.;

and the rest are employed by the individual operating

services personnel and managers responsible for multiple clubs or restaurants are employed by RCI Management Services, Inc.;

rest are employed by the individual operating entities.

As of September 30, 2021, we had the following employees:

Additionally, as of September 30, 2020,

we had independent contractor entertainers who are self-employed and conduct business at our locations on a non-exclusive

Additionally,

as of September 30, 2021, we had independent contractor entertainers who are self-employed and conduct business at our locations on a

non-exclusive basis.

Our entertainers at Rick’s Cabaret in Minneapolis, Minnesota and at Jaguars Club in Phoenix, Arizona act as

commissioned employees.

All employees and independent contractors sign arbitration non-class-action participation agreements

where allowed by federal and state laws.

All employees and independent contractors sign arbitration non-class-action participation agreements, where allowed

by federal and state laws.

None of our employees are represented by a union.

We consider our employee relations

believe that the adult entertainment industry standard of treating entertainers as independent contractors provides us with safe

harbor protection to preclude payroll tax assessment.

We have prepared plans that we believe will protect our profitability in

the event that the sexually oriented business industry is required in all states to convert entertainers, who are now independent

contractors, into employees.

We consider our employee relations to be good.

believe that the adult entertainment industry standard of treating entertainers as independent contractors provides us with safe harbor

protection to preclude payroll tax assessment.

We have prepared plans that we believe will protect our profitability in the event that

the sexually oriented business industry is required in all states to convert entertainers, who are now independent contractors, into

See related discussion in “Risk Factors” below.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business