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In the course of its investigation, the Audit Committee did not find any evidence of fraudulent conduct on the part of members of the Company's Board of Directors, Compensation Committee, or senior management team in the granting of stock options. However, the Audit Committee concluded that the measurement dates previously used by the company with respect to certain stock option grants made during the 13-year period under review differed from the appropriate measurement dates that should have been used with respect to such awards. As a result, revised measurement dates were applied to the affected option grants, and the company has recorded a total of $311,000 (net of a tax benefit of $118,000) of cumulative additional stock-based compensation expense relating to the years covered by the Audit Committee's review.
As a result of this review, the Company's Audit Committee has also adopted certain remedial actions considered necessary to strengthen the Company's internal controls. A detailed explanation of the review conducted by the Audit Committee and the findings of that review are contained in the Company's Quarterly Report which the company filed with the Securities and Exchange Commission on March 30, 2007. The Company believes that by filing its Form 10-Q, it is now in compliance with Nasdaq Marketplace Rules and that, as such, its common stock is no longer subject to possible delisting from the Nasdaq Stock Market.
The company also announced today that it has filed Form 12b-25 with the Securities and Exchange Commission indicating that it would not be able to complete and file its Annual Report on Form 10-K with the SEC by March 30, 2007, due to the time required to complete the company's stock-option review, record the appropriate financial statement adjustments, and complete its third quarter Form 10-Q. The company expects to file its Form 10-K as soon as practicable and, in any event, within the 15 calendar days provided by Rule 12b-25 of the SEC's Rules and Regulations.
Back Yard Burgers operates and franchises quick-service restaurants in 20 states, primarily in markets throughout the Southeast region of the U.S. As its name implies, Back Yard Burgers strives to offer the same high-quality ingredients and special care typified by outdoor grilling in the backyard.