It's been almost a year since I penned an article about PainCareHoldings (AMEX:PRZ) called "With PainCare, Beware." In it, I suggested that investors not get overly excited about the firm's reported "growth" because it came through a complex pile of acquisitions funded by a mix of cash and -- at the time -- a popular stock.

Since then, the stock is down 40%, with at least 10% of that today.

The reason for that is that investors found out that PainCare is going to have to restate its financials, and more than just a bit. The company will restate yearlies back to 2000, along with the first three quarters of this year. I believe that pretty much covers the firm's entire existence. According to the press release today, the restatement came after a review by the SEC, which wasn't a complete surprise since the November 10-Q did acknowledge a "comment letter."

Must have been some comment. If I'm reading this press release correctly (careful -- the positive numbers are negatives, according to the fine print) PainCare estimates that the total restatement for years 2000 to 2004 will be a net negative $23.5 million.

Should that matter to investors? I'd say so, since the firm's entire previously reported earnings over that period were $7.4 million.

Should investors be assuaged by the fact that these are "noncash" adjustments? Umm. I'd say no to that as well. The fact is, accounting for acquisitions (as you ought in a company that depends on acquisitions for growth), this thing isn't generating free cash flow anyway. So what ... "Don't worry, investors, your cashless profits are no more cashless than they were before"? Not much comfort there.

Let me try and summarize. You have a company issuing shares like crazy to fund growth -- uncertain growth -- now, restating away all the past earnings growth, and people are still willing to shell out $144 million for the whole shebang? Now, given the difficulty of accounting for all of these warrants, options, and other derivative interest expenses (which does sound like a pain), we can't be sure what the growth actually costs? How do I know the fair value isn't zero?

Unfortunately, that is about the current price of a company called CyberCare (OTC BB: CYBR.PK), previously Medical Industries of America, which is a Florida medical roll-up that's a common thread woven through the history of PainCare's big three in management -- CEO Randy Lubinsky, CFO Mark Szporka, and President Ronald Riewold.

I suggest that anyone interested in this complex, stumbling roll-up take a look at the fates (and filings) of management's past affiliates, as listed in their biographies, starting with Cybercare, Ivanhoe Medical Systems, BackGenesis, Heart Labs of America, American Enterprise Solutions, and Nation's Flooring.

At the time of publication, Seth Jayson had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.