A Medical Device Daily
The law firm of Shalov Stone & Bonner has initiated a class action on behalf of purchasers of the securities ofPainCare Holdings (Orlando, Florida), during the period Aug. 27, 2002, to March 15, 2006. The lawsuit will be pending in the U.S. District Court for the Middle District of Florida and names as defendants PainCare and certain of its ranking executives.
The complaint alleges that PainCare and the individual defendants violated the federal securities laws by overstating and exaggerating the company's financial health. In particular, it alleges that PainCare went on a buying spree, growing its business by acquisition but accounting for such acquisitions in violation of generally accepted accounting principles (GAAP). Accordingly, the complaint alleges, the company overstated its earnings by failing to comply with GAAP in recording non-cash growth.
On March 15, the last day of the class period, the company reported that it would have to restate its financial figures going back to its founding in 2000 in order to adjust for the improper accounting of its corporate acquisitions.
With this revelation, the company's stock fell to new lows, having recently traded at under $1.75 per share – down from its class period high of $5.25 a share. In the first day of trading following the announced restatement, PainCare's stock dropped 12.6%, on heavy volume, down more than 50% from its class period high.
PainCare provides high-tech pain relief services.