An investigation for investors of Telestone Technologies Corporation (NASDAQ:TSTC) concerning possible violations of Federal Securities Laws by Telestone Technologies Corp was announced.

The investigation by a law firm concerns whether Telestone Technologies Corp violated Federal securities laws by issuing between January 2005 and the present false and misleading financial statements to investors.
Telestone Technologies Corp reported increasing 12 month Total Revenue from 2006 to 20009. Telestone Technologies Corps 12 months Total Revenue went from $21.71million in 2006 to $71.88million in 2009. Its Net Income rose from $4.61million in 2006 to $12.54million in 2009. For the first three quarters in 2010 Telestone Technologies Corp. reported a combined 9months Total Revenue of $70.82million with a Net Income of $12.61million.
Shares of Telestone Technologies Corporation traded in 2006 as low as $3.45 in July and increased until the end of 06 top $8.20 per TSTC shares. During 2007 TSTC shares fell to as low as $4.65 per share and in 2008 to as low as $0.88 per share. During 2009 TSTC shares increased to almost $20 per share. During February 2010 TSTC shares traded at almost $20 per share before falling to $7.91 per share in July 201. TSTC shares were able to regain value and traded during Nov. 2010 as high as almost $15 per share. Telestones annual report for its 2009 fiscal year, filed March 31, 2010, with the U.S. Securities and Exchange Commission, disclosed that as of December 31, 2009, the Companys disclosure controls and procedures were not effective due to certain control weaknesses and control deficiencies in our internal control over financial reporting. The annual financial statement stated that a review of internal controls found five control deficiencies that constitute material weaknesses, as defined by the U.S. Public Company Accounting Oversight Board and these control deficiencies 'could result in more than a remote likelihood that a material misstatement in our annual or interim financial statements would not be prevented or detected on a timely basis by our internal controls.'
Then shares of Telestone Technologies Corporation (NASDAQ: TSTC) fell from over $10 per share to almost $7 per shareon January 11, 2011 after a financial analyst The Forensic Factor issued a report detailing alarming inconsistencies in Telestones financial statements and raising serious questions as to whether Telestones financial accounting complies with Generally Accepted Accounting Principles and whether much of the revenue reported by Telestone is genuine. In addition, the forensic report disclosed that one of Telestones major customers was not even incorporated at the time it claimed the relationship had begun. Of particular concern of the investigation by a law firm is the accounts receivable issues relating to long-term receivables. Telestone stated in an investor presentation in February 2010 that they receive 10% of their cash from a typical project after twenty-four months. However, Telestone only reported a long term receivable once in its quarterly financials for the past twenty-three quarters.