PureCycle Technologies, Inc.
PureCycle Technologies, Inc. (“PureCycle” or the “Company”) provides recycling services, and is developing a plastic purification recycling technology originally developed and patented by The Procter & Gamble Company (“P&G”). PureCycle claims its process recycles waste polypropylene into resin with “near-virgin” characteristics. PureCycle calls its resin ultra-pure recycled polypropylene (“UPRP”), and states that it can take used plastic feedstock and remove color, odor, and other contaminants, creating UPRP that has nearly identical properties and applicability for reuse as virgin polypropylene. Through its global license with P&G, PureCycle claims to have the only patented, solvent-based purification recycling technology available for this process.
Through November 2020, ROCH was a publicly traded special purpose acquisition company (“SPAC”). On November 16, 2020, PureCycle announced that PureCycle would list its common stock on the NASDAQ through a reverse merger with the ROCH SPAC. At that time, PureCycle claimed that PureCycle was then modeling for its revenues to hit $8 million in 2022 as its first plant came on line. Revenues would then ramp up significantly to $224 million in 2023 with the first five plants coming on line. By 2024, PureCycle said it was modeling to hit $800 million in revenues, with earnings before interest, taxes, depreciation and amortization margins of over 50%. The price of PureCycle common stock (then still trading as ROCH) spiraled up as PureCycle made additional statements about the merger, which its shareholders approved at a special meeting held virtually on March 16, 2021.
A securities class action has been filed against PureCycle on behalf of shareholders that purchased Purecycle shares between November 16, 2020 through May 5, 2021. This case has been filed in the U.S. District Court for the Middle District of Florida.
The Complaint alleges that Defendants failed to disclose to investors: (i) that the management team bringing PureCycle public had previously
brought six other failed business public only to have each implode thereafter; (ii) that the management team bringing PureCycle public had characterized rank speculation as financial projections to investors in the past; (iii) that the primary motivation of the management team bringing PureCycle public was to complete any transaction, good or bad, in order to obtain tens of millions of dollars in cash and tradable shares; (iv) that PureCycle faces higher competition for high quality feedstock than it has led investors to believe, materially undermining the management team’s financial projections; (v) that PureCycle’s patent is nowhere as cogent or valuable as it has led investors to believe, and the technology underlying its business operations is unproven and presents serious issues even at lab scale; (vi) that, in reality, the Company’s flammable pressurized process is not yet functional, especially at scale, and is dangerous; (vii) that the Company purports to be advancing to commercial production scale despite still having operational issues at a lab scale; and (viii) that as a result of the foregoing, Defendants’ positive statements during the Class Period about the Company’s business performance, financial and operational metrics, and financial prospects were false and misleading and/or lacked a reasonable basis.
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