The 72-unit, Pompano Beach, FL-based restaurant chain and its two top executives, chairman Vincent Tan and president/CEO Ayman Sabi have 20 days from April 11 to answer the suit filed in U.S. District Court, Fort Lauderdale, FL.
Tan and Sabi are named as defendants along with the corporation. KPMG was Roadhouse Grill's auditor but is not named as a defendant. Judge Donald M. Middlebrooks is hearing the case. Tan and Sabi couldn't be reached at GlobeSt.com's publication deadline.
The suit says Roadhouse Grill "shocked the investing community" by announcing Aug. 1, 2001 the company would review its financial statements and likely restate its earnings for at least the prior two years. The NASDAQ halted trading of the company's stock the same day.
Roadhouse Grill restated its earnings for fiscal 1999 and 2001 on Aug. 14, 2001 with the Securities and Exchange Commission. The company's stock resumed trading Sept. 10, 2001.
The suit alleges the net impact of the restatement resulted in a decrease in net income and basic and diluted earnings per share for the 53 weeks ended April 30, 2000 of $906,000 and 10 cents and nine cents per share respectively.
The restatement also caused a decrease in net income and both basic and diluted earnings per share for the 52 weeks ended April 25, 1999 of $300,000 and three cents per share, the suit alleges.
The suit also alleges Sabi issued a false press release Aug. 15, 2001 when he purportedly said, "We believe our cash flows from operations will satisfy liquidity requirements in fiscal 2002."
At the same time, the company was reporting a net loss of $2.1 million or 22 cents per diluted share in the fourth quarter ended April 29, 2001, compared with a profit of $2.5 million or 25 cents per share a year ago.
Tied in with the net loss reporting was a company press release stating its auditors "expressed doubt about its ability to continue as a going concern due to significant cash flow problems, a fiscal 2001 net loss and other factors," Reuters reported Aug. 15, 2001.
The suit follows five class-action complaints filed in the past 30 days against another South Florida corporation, Boca Raton, FL-based Eagle Building Technologies Inc. Those suits allege former Eagle chairman Anthony M. D'Amato fabricated company earnings from April 18, 2001 through Feb. 14, 2002.
The Evansville, IN-based law firm of Fine & Hatfield PC represents shareholders in both the Eagle and Roadhouse Grill suits. The suits are being filed for all of the shareholders whose specific number can't be determined now, Scott Daugherty of Fine & Hatfield tells GlobeSt.com. Daugherty says there are about 9.71 million shares outstanding with 2.4 million shares of float.
Roadhouse Grill's stock Monday was trading at 28 cents per share, up one cent from April 12 on volume of 700. The company's market capitalization is $2.71 million. The stock's 52-week high-low is $2 and 11 cents.
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