Opinion ID: 1038518
Heading Depth: 3
Heading Rank: 4

Heading: Magnitude of the Restatement

Text: Zoo restated 3% of revenue for the first quarter of 2010, 6% for the second quarter of 2010, and 2% for the third quarter. The reduced revenues negatively affected diluted-net-income per share and diluted-net-loss per share. The restatement caused Zoo’s diluted-net-income per share to fall from $0.10 to $0.01 for the first quarter of 2010; diluted-net-loss per share to rise from $0.11 to $0.22 during the second quarter of 2010; and diluted-net-income per share to fall from $0.04 to $0.01 during the third quarter of 2010. Ricker acknowledges the modest level of these revenue restatements, but posits that the “relatively small overstatement of revenue” caused “a massive overstatement of net income and . . . [earnings per share],” allowing Zoo the “ability to manipulate -6- No. 12-3951 Ricker v. Zoo Entm’t Inc. revenue numbers . . . and report positive earnings.” This overstatement of income and earnings per share, Ricker argues, supports a strong inference of scienter.