COLCHESTER, Conn., April 3, 2006 (PRIMEZONE) -- On April 3, 2006, Scott+Scott, LLC, filed a securities class action on behalf of securities purchasers of PainCare Holdings, Inc. (AMEX:PRZ) ("PainCare" or the "Company") during the period August 27, 2002 through March 15, 2006, inclusive (the "Class Period"), pursuing remedies under the Securities Exchange Act of 1934. PainCare operates as a professional health services organization specializing in pain management medical and surgical solutions. According to the complaint, prior to and during the Class Period, Defendants engaged in an aggressive growth strategy through rapid acquisition of medical facilities and providers. Unbeknownst to investors, however, Defendants were accounting improperly for certain expenses associated with these acquisitions in order to bolster the Company's stock price to facilitate these Class Period acquisitions. As a result of this improper accounting, PainCare announced it has lowered its previously announced 2006 earnings forecasts, must delay its 2005 earnings release and will restate its financial results for fiscal 2000 through 2004, and the first three quarters of 2005. The complaint also alleges that Defendants' false and misleading financial guidance artificially inflated PainCare's share prices, thereby harming investors who purchased their PainCare shares during the Class Period.
If you purchased PainCare securities during the Class Period and wish to serve as a lead plaintiff in the action, you must move the Court no later than May 19, 2006. Any purported class member may move the Court to serve as lead plaintiff through counsel of its choice, or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have questions concerning this notice or your rights, please contact Scott+Scott partner David R. Scott (drscott@scott-scott.com, (800) 404-7770, (860) 537-5537) or visit the Scott+Scott website, www.scott-scott.com, for more information. There is no cost or fee to you.
The complaint alleges that during the Class Period Defendants violated Generally Accepted Accounting Principles ("GAAP") through improper accounting involving convertible term notes, derivatives and other non-cash expenses. As alleged, Defendants' understatement of these expenses served to validate the Company's growth-oriented business model, which relied in significant part on the acquisition of medical practices and service providers. Yet, these wayward accounting practices served to conceal the Company's net-negative earnings during the Class Period.
As a result of these violations, the Company announced on March 15, 2006, that it is now forced to restate its financial results for fiscal years 2000 - 2005, its entire corporate existence. The Company intends to incur $17.5 million in non-cash expenses as a result of restatement of its term note, derivative and warrant-related expenses, from previously reported financial statements for 2003 through 2005. In addition, the Company also will restate compensation expense over the preceding five years, totaling another $20 million. On this shocking news, the price of PainCare stock plummeted from its closing price of $2.50 on March 15, 2006, to close on March 16, 2006, at $2.01, for a loss of $0.49 or 19.6%, on volume of 2.3 million shares or nine times average daily volume.
On March 30, 2006, the Company further announced it will delay its 2005 results due to complexities in reviewing its new or revised accounting methods and also has lowered its 2006 earnings outlook. PainCare had earlier forecast earnings of $0.30 to $0.31 per share on revenue of $100 million to $103 million. The Company now expects 2006 earnings of $0.20 to $0.22 per share, on revenue of $85 million to $88 million. PainCare said the new 2006 outlook excluded any additional acquisitions in 2006, any non-cash charges that it may incur in 2006 due to the impact of derivative securities accounting and any costs arising from the defense of pending legal actions.
The plaintiff is represented by Scott+Scott, a firm with significant experience in prosecuting investor class actions. The firm dedicates itself to client communication and satisfaction and currently is litigating major securities, antitrust and employee retirement plan actions throughout the United States. The firm represents pension funds, charities, foundations, individuals and other entities worldwide.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca