NEW YORK, March 27, 2015 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a class action lawsuit has been filed in the United States District Court for the District of New Jersey on behalf of a class (the "Class") comprising purchasers of the securities of Telestone Technologies Corporation ("Telestone" or the "Company") (OTCBB:TSTC) between March 31, 2010 and April 16, 2013, inclusive (the "Class Period")
Telestone provides wireless local-access network technologies and solutions primarily in the People's Republic of China. The Complaint alleges that the Company misrepresented that its financial statements were presented in accordance with Generally Accepted Accounting Principles and that its policy was to recognize revenues only if collectability was reasonably assured. However, the Complaint further alleges that defendants knew or recklessly disregarded and failed to disclose that: (1) in one of Telestone's main segments, it had only collected 0.8%, 22.9%, and 21.5%, of its 2009, 2010, and 2011 revenues, respectively; (2) Telestone's average collections period exceeds one year, even though payments were purportedly due upon customers' acceptance of Telestone's products or service; (3) Telestone only invoiced customers after it received payment, purportedly for tax reasons, and its China-filed tax returns claimed far less revenues than its financial statements filed with the U.S. Securities and Exchange Commission; (4) as of December 31, 2009, over $26.6 million of Telestone's accounts receivable were at least one year old, with the amounts increasing to $49.2 million and $66.6 million by December 31, 2010 and 2011, respectively; and (5), Telestone did not keep centralized records of its accounts receivable, and to obtain a purported accounting of its accounts receivable took two months' work from a 10-member team.
The complaint further alleges that the market gradually learned that there may have been an issue with Telestone's revenues when its accounts receivable ballooned, which resulted in the Company's stock price declining during the Class Period from $2.48 to $2.01, or 19.0%, on May 15, 2012, $1.62 to $1.38, or 14.8%, on November 19, 2012, and from $0.84 to $0.30, or 64.2%, following resumption of trading after a trading halt on June 3, 2013.
If you wish to serve as lead plaintiff, you must move the Court no later than April 3, 2015. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to join the litigation, or to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.