EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2012

EARNINGS PER SHARE

NOTE 6 - EARNINGS PER SHARE

The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants and stock options outstanding (using the treasury method). Holder of Class A convertible preferred stock participate in dividends of the Company on the same basis as holders of the Company's common stock and is therefore included in the calculation of basic earnings per share using the two class method.

The following table sets forth the computation of basic and diluted net income per common share:

	(Unaudited)
	Three Months Ended March 31,
	2012		2011
Net income to QKL Stores, Inc. for computing basic net income per share		830,601		2,587,128
Undistributed earnings allocated to Series A Convertible Preferred Stock		127,700		507,767
Net income attributable to ordinary shareholders for computing basic net income per ordinary share		702,901		2,079,361
Weighted-average shares of common stock outstanding in computing net income per common stock
Basic		31,344,590		29,768,444
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		5,694,549		7,270,695
Dilutive effect of stock warrants and options
Anti-dilutive effect of preferred stock
Diluted		37,039,139		37,039,139
Basic earnings per share of common stock	$	0.02	$	0.07
Diluted earnings per share	$	0.02	$	0.07

The 11,768,860 shares of stock warrants and 2,033,000 options were not included in the computation of diluted net earnings per share as their effects would have been anti-dilutive since the average share price for the three months ended March 31, 2012 were lower than the options and warrants exercise price.