Following a substantial decline in stock value an investigation on behalf of investors of Yuhe International, Inc (NASDAQ: YUII) over potential violations of Federal Securities Laws by Yuhe Intl, Inc was announced.

The investigation by a law firm concerns potential securities claims against Yuhe International Inc. (NASDAQ: YUII) resulting from allegations that the company may have issued materially misleading business information to the investing public.
Yuhe Intl, INc reported a significant increase in its annual Revenue while its Net Income substantially decreased. It reported an increase in its 12months Total Revenue from $34.63million in 08 to $67.48million in 2010, while its Net Income fell from $10.52million in 08, respectively $13.79million in 09 to a Net Loss of $34.34million in 2010.
For the first quarter in 2011 Yuhe International, Inc then reporter a quarterly Revenue of $26.86million compared to $11.76million on year earlier, or an increase by over 100% Its reported quarterly Net Income rose from $2.93million for the first quarter in 2010 to $6.07million for the first quarter in 2011, or an increase by over 100% as well.

Shares of Yuhe International, Inc (Public, NASDAQ: YUII) rose from $6 in December 09 to as high as $11.35 in February, respectively $10.41 in November 2010, but then fell to as low as $1.21 on June 17, 2011 following a report by the GeoInvesting Team raised questions into the financial statements, recent acquisitions, and overall validity as a business of Yuhe International, Inc.
Among the reports numerous findings, GeoInvesting said:

- it has evidence that Yuhe International, Inc has misrepresented the details surrounding its acquisition of 13 breeder farms. More specifically, GeoInvesting believes they have compelling evidence that Yuhe International, Inc never reached or executed an agreement with the owner of the Dajiang farms, as stated in December 2009 and it leads GeoInvesting to believe that the $12.1 million deposit allegedly paid to acquire the farms may have been misappropriated.

- Yuhe International, Inc uses company-controlled personal bank accounts of certain of its employees for transit purposes to transact a substantial amount of its business and the company transacts a significant amount of its business in cash without using bank accounts.

- During the attempt to complete the 2009 audit Grant Thornton discovered prohibited related party loans and material internal control weaknesses during the firm's initial audit work. Management caused the related party loans to be paid prior to the end of 2009. Despite management's best efforts to resolve the related party issues, ongoing material weaknesses in Yuhe Intl's internal controls compelled Grant Thornton to resign as independent auditor effective March 5, 2010.

The same day, on June 17, NASDAQ halted trading of Yuhe International, Inc (NASDAQ: YUII) shares and has requested more information.