10-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 2)

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2012

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ________ to __________

Commission file number 033-10893

QKL STORES INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-2180652
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

4 Nanreyuan Street

Dongfeng Road

Sartu District

163300 Daqing, P.R. China

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (011) 86-459-460-7987

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   ¨       No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes   ¨       No  þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ        No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ        No  ¨

Indicate by check mark if disclosure of delinguent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer  ¨ Non-accelerated filer   ¨ Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes  ¨       No  þ

The aggregate market value of the registrant’s common stock, $0.001 par value per share, held by non-affiliates of the registrant on June 30, 2012 was approximately $16,633,666 (based on the closing sales price of the registrant’s common stock on that date $12.64).  Shares of the registrant’s common stock held by each officer and director and each person known to the registrant to own 10% or more of the outstanding voting power of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not a determination for other purposes.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes  ¨   No ¨

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of April 12, 2013, there were 1,522,326 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the Registrant’s Proxy Statement relating to the Registrant’s 2013 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

Explanatory Note

We are filing this Amendment No. 2 on Form 10-K/A (the “Amendment No. 2”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which was originally filed with the Securities and Exchange Commission (“SEC”) on April 15, 2013 (the “Original 2012 Form 10-K”). We are amending a Consolidated Balance Sheet Item, Deferred income tax assets.

This amendment was to re-classify $3,259,129 and $2,577,593 as of December 31, 2012 and 2011 from current deferred income tax to non-current deferred income tax so as to reflect the long-term effect of the temporary difference of these items.

Except as specifically referenced herein, this Amendment No. 2 to the Original 2012 Form 10-K does not reflect any event occurring subsequent to April 15, 2013, the filing date of the Original 2012 Form 10-K.

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to the Original 2012 Form 10-K have been re-executed and re-filed as of the date of this Amendment No. 2 and are included as exhibits hereto.

QKL STORES INC.

ANNUAL REPORT ON FORM 10-K/A

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012

TABLE OF CONTENTS

	PART II
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

i

PART II

Item 8.                  Financial Statements and Supplementary Data

The financial statements and supplementary data required by this item are included in a separate section of this Report. See “Index to Consolidated Financial Statements” on Page F-1.

QKL STORES INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS	PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1
CONSOLIDATED BALANCE SHEETS	F-2
CONSOLIDATED STATEMENTS OF OPERATIONS	F-3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F6 – F37
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE:	SCHEDULE
VALUATION AND QUALIFYING ACCOUNTS	II

ALBERT WONG & CO. LLP

CERTIFIED PUBLIC ACCOUNTANTS

139 Fulton Street, Suite 818B

New York, NY 10038-2532

Tel : 1-212-226-9088

Fax: 1-212-437-2193

Report of Independent Registered Public Accounting Firm

To:	The Board of Directors and Shareholders of
	QKL Stores Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of QKL Stores Inc. and Subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, shareholders' equity and cash flows for each of the years ended December 31, 2012 and 2011. These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and comprehensive loss, and its cash flows for each of the years ended December 31, 2012 and 2011 in conformity with accounting principles generally accepted in the United States of America.

	/s/ Albert Wong & Co. LLP
New York, United States of America	Albert Wong & Co. LLP
December 9, 2013	Certified Public Accountants
Except for Note 18 which was dated at January 2, 2014

F-1

QKL STORES INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	December 31, 2012			December 31, 2011
	(Restated)			(Restated)
ASSETS
Cash	$	8,479,413		$	9,037,550
Restricted cash		253			253
Accounts receivable		796,897			115,163
Inventories		59,812,645			54,336,501
Other receivables		18,042,360			11,991,134
Prepaid expenses		11,083,708			6,085,379
Advances to suppliers		9,525,250			10,160,552
Deferred income tax assets – current portion		3,068,803			394,977
Total current assets		110,809,329			92,121,509
Property, plant equipment, net		45,439,360			43,042,136
Land use rights, net		724,760			748,410
Goodwill		-			26,346,942
Deferred income tax assets – non-current portion		3,259,129			2,577,593
Other assets		12,976			520,559
Total assets	$	160,245,554		$	165,357,149
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short term bank loans		15,832,555			10,998,162
Accounts payable		30,900,586			28,417,894
Cash card and coupon liabilities		18,604,188			16,024,437
Customer deposits received		1,248,278			931,604
Accrued expenses and other payables		28,097,212			14,328,656
Income taxes payable		2,726			227,016
Total current liabilities		94,685,545			70,927,769
Warrant liabilities		-			-
Total liabilities		94,685,545			70,927,769
Commitments and contingencies		-			-
Shareholders’ equity
Common stock, $.001 par value per share, authorized 100,000,000, shares, issued and outstanding 11,551,587 and 10,448,197 at December 31, 2012 and December 31, 2011, respectively		11,552			10,448
Series A convertible preferred stock, par value $0.01, 10,000,000 shares authorized, 2,386,110 and 5,694,549 shares outstanding at December 31, 2012 and December 31, 2011, respectively		23,861			56,945
Additional paid-in capital		92,492,892			91,610,531
Retained earnings – appropriated		8,323,312			7,282,560
Retained earnings		(47,841,708	)		(15,758,416	)
Accumulated other comprehensive income		12,550,100			11,227,312
Total shareholders’ equity		65,560,009			94,429,380
Total liabilities and shareholders’ equity	$	160,245,554		$	165,357,149

*The number of shares of common stock has been retroactively restated to reflect the Reverse Stock Split effected on June 11, 2012.

See notes to audited consolidated financial statements.

F-2

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Loss

	Years Ended December 31,
	2012			2011
Net sales	$	365,624,781		$	370,500,420
Cost of sales		303,198,690			306,770,553
Gross profit		62,426,091			63,729,867
Operating expenses:
Selling expenses		59,084,865			51,651,713
General and administrative expenses		9,231,987			8,543,023
Impairment of goodwill		26,697,561			19,219,870
Total operating expenses		95,014,413			79,414,606
Loss from operations		(32,588,322	)		(15,684,739	)
Non-operating income(expense):
Interest income		259,713			676,186
Interest expense		(1,014,145	)		(121,425	)
Total non-operating income		(754,432	)		554,761
Loss before income tax		(33,342,754	)		(15,129,978	)
Income taxes		(2,300,214	)		1,453,403
Net loss	$	(31,042,540	)	$	(16,583,381	)
Comprehensive loss statement:
Net loss	$	(31,042,540	)	$	(16,583,381	)
Foreign currency translation adjustment		1,322,788			4,033,171
Comprehensive loss	$	(29,719,752	)	$	(12,550,210	)
*Basic earnings per share of common stock	$	(2.95	)	$	(1.63	)
*Diluted earnings per share	$	(2.95	)	$	(1.63	)
*Weighted average shares used in calculating net income per ordinary share – basic		10,509,469			10,166,618
*Weighted average shares used in calculating net income per ordinary share – diluted		10,509,469			10,166,618
**Basic earnings per share of common stock	$	(23.63	)	$	(13.05	)
**Diluted earnings per share	$	(23.63	)	$	(13.05	)
**Weighted average shares used in calculating net income per ordinary share – basic		1,313,684			1,270,827
**Weighted average shares used in calculating net income per ordinary share – diluted		1,313,684			1,270,827

* The earnings (losses) per share data and the weighted average shares outstanding for all periods have been retroactively restated to reflect the 1-for-3 Reverse Stock Split effected on June 11, 2012.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

See notes to audited consolidated financial statements.

F-3

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

	Common stock				Series A convertible preferred stock						Additional paid-in		Retained Earnings –		Retained earnings			Accumulated other comprehensive
	Share		Amount		Share			Amount			capital		appropriated		(accumulated deficit)			income		Total
January 1, 2011		9,914,604		9,915		7,295,328			72,953			90,730,448		6,012,675		2,094,850			7,194,141		106,114,982
Net income		-		-		-			-			-		-		(16,583,381	)		-		(16,583,381	)
Compensation expense for stock option granted		-		-		-			-			864,608		-		-			-		864,608
Preferred stock convert to common stock		533,593		533		(1,600,779	)		(16,008	)		15,475		-		-			-		-
Appropriation to statutory reserves		-		-		-			-			-		1,269,885		(1,269,885	)		-		-
Foreign currency translation adjustment		-		-		-			-			-		-		-			4,033,171		4,033,171
December 31, 2011		10,448,197		10,448		5,694,549			56,945			91,610,531		7,282,560		(15,758,416	)		11,227,312		94,429,380
January 1, 2012		10,448,197		10,448		5,694,549			56,945			91,610,531		7,282,560		(15,758,416	)		11,227,312		94,429,380
Net income		-		-		-			-			-		-		(31,042,540	)		-		(31,042,540
Compensation expense for stock option granted		-		-		-			-			850,381		-		-			-		850,381
Preferred stock convert to common stock		1,103,390		1,104		(3,308,439	)		(33,084	)		31,980		-		-			-		-
Appropriation to statutory reserves		-		-		-			-			-		1,040,752		(1,040,752	)		-		-
Foreign currency translation adjustment		-		-		-			-			-		-		-			1,322,788		1,322,788
December 31, 2012		11,551,587		11,552		2,386,110			23,861			92,492,892		8,323,312		(47,841,708	)		12,550,100		65,560,009

*The number of shares of common stock has been retroactively restated to reflect the Reverse Stock Split effected on June 11, 2012.

See notes to audited consolidated financial statements.

F-4

QKL STORES INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	(31,042,540	)	$	(16,583,381	)
Depreciation-property, plant and equipment		6,702,740			6,065,858
Amortization		29,391			28,693
Deferred income tax		(3,330,517	)		(2,403,124	)
Loss on disposal of property, plant and equipment		(303,396	)		27,310
Share-based compensation		850,381			864,608
Impairment of goodwill		26,697,561			19,219,870
Provision on inventory and sales return		453,311			-
Adjustments to reconcile net income to net cash provided by operating activities:
Accounts receivable		(680,445	)		58,849
Inventories		(5,481,236	)		(8,142,931	)
Other receivables		(5,289,513	)		17,341,478
Prepaid expenses		(4,437,289	)		(833,463	)
Advances to suppliers		713,061			(6,275,018	)
Accounts payable		2,262,687			(12,038,941	)
Cash card and coupon liabilities		2,454,996			4,790,050
Customer deposits received		309,322			(621,496	)
Accrued expenses and other payables		13,357,512			4,069,493
Income taxes payable		(225,903	)		(2,230,766	)
Net cash provided by operating activities		3,040,123			3,337,089
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(9,411,202	)		(23,640,152	)
Sales proceeds of fixed assets disposal		947,049			155,310
Decrease of restricted cash		-			76,952
Net cash used in investing activities		(8,464,153	)		(23,407,890	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank repayment		(11,076,230	)		-
Bank borrowings		15,823,185			10,998,162
Net cash provided by financing activities		4,746,955			10,998,162
Net decrease in cash		(677,075	)		(9,072,639	)
Effect of foreign currency translation		118,938			650,155
Cash at beginning of period		9,037,550			17,460,034
Cash at end of period	$	8,479,413		$	9,037,550
Supplemental disclosures of cash flow information:
Interest paid		1,014,145			121,425
Income taxes paid	$	822,923		$	5,995,442

See notes to audited consolidated financial statements .

F-5

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

QKL Stores, Inc. (“QKL”) (formerly known as Forme Capital, Inc.) was incorporated under the laws of the State of Delaware on December 2, 1986. From 1989 to 2000, Store created and spun off to its stockholders nine blind pool companies for two years, then operated as a real estate company for eight years, then sold substantially all of its assets and ceased operations. From 2000 until March 28, 2008, QKL was a shell company with no substantial operations or assets. QKL currently operates through (1) itself, (2) one directly wholly-owned subsidiary in the British Virgin Islands: Speedy Brilliant Group Ltd. (“Speedy Brilliant (BVI)”), (3) one directly wholly-owned subsidiary of Speedy Brilliant (BVI) located in Mainland China: Speedy Brilliant (Daqing) Ltd. (“Speedy Brilliant (Daqing)” or “WFOE”), (4) one operating company located in Mainland China: Daqing Qingkelong Chain Commerce & Trade Co., Ltd. (“QKL-China”), which QKL controls, through contractual arrangements between WFOE and QKL-China, as if QKL-China were a wholly-owned subsidiary of QKL, (5) one wholly-owned operating subsidiary of QKL-China located in Mainland China:  Daqing Qinglongxin Commerce & Trade Co., Ltd (“Qinglongxin Commerce”), and (6) one operating company located in Mainland China: Daqing Longqing Microcredit Co., Ltd. (“QKL-LQ”), which QKL-China controls, through arrangement that absorbs operations risk, as if QKL-LQ were a wholly-owned subsidiary of QKL-China.

Speedy Brilliant (BVI) was established in the British Virgin Islands as a BVI business company on February 23, 2007. Speedy Brilliant (Daqing) was established in the Heilongjiang Province of the People’s Republic of China (the PRC) as a limited company on August 1, 2007. QKL-China was established in the Heilongjiang Province of the PRC as a limited company on November 2, 1998. Qinglongxin Commerce was established in the Heilongjiang Province of the PRC as a limited company on July 10, 2006.

QKL and its subsidiaries (hereinafter, collectively referred to as “the Company”) are engaged in the operation of retail chain stores in the PRC.

The Company is a regional supermarket chain that currently operates 30 supermarkets, 14 hypermarkets and 4 department stores in northeastern China and Inner Mongolia. The Company’s supermarkets and hypermarkets sell a broad selection of merchandise including groceries, fresh food and non-food items. A supermarket offers various daily necessities on a self-service basis and averages 2,500 square meters in sales area. A hypermarket is similar to a supermarket but has a larger operating scale, and is typically over 4,500 square meters in sales area. The Company currently has three distribution centers servicing its supermarkets. 

The Company is the first supermarket chain in northeastern China and Inner Mongolia that is a licensee of the Independent Grocers Alliance, or IGA, a United States-based global grocery network. As a licensee of IGA, the Company is able to engage in group bargaining with suppliers and have access to more than 2,000 private IGA brands, including many that are exclusive IGA brands.

The Company completed the initial steps in the execution of its expansion plan in March 2008, when the Company raised financing through the combination of a reverse merger and private placement, and also raised additional financing in our public offering in the fourth quarter of 2009. Under that plan, the Company opened one new store in 2012 that has approximately 5,700 square meters of space, fourteen new stores in 2011 that have, in the aggregate, approximately 101,000 square meters of space, nine new stores in 2010 that have, in the aggregate, approximately 74,189 square meters of space, seven new stores in 2009 that have, in the aggregate, approximately 32,000 square meters of space, and ten new stores in 2008 that have, in the aggregate, approximately 42,000 square meters of space.

F-6

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

PRC Restructuring Agreements

The PRC restructuring transaction was effected by the execution of five agreements between Speedy Brilliant (Daqing), on the one hand, and QKL-China (and in some cases the shareholders of QKL-China), on the other hand. Those five agreements and their consequences are described below.

· Consigned Management Agreement

The Consigned Management Agreement among Speedy Brilliant (Daqing), QKL-China and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will provide financial, business management and human resources management services to QKL-China that will enable Speedy Brilliant (Daqing) to control QKL-China’s operations, assets and cash flow, and in exchange, QKL-China will pay a management fee to Speedy Brilliant (Daqing) equal to 4.5% of QKL-China’s annual revenue. The management fee for each year is due by January 31 of the following year. The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China.

· Technology Service Agreement

The Technology Service Agreement among Speedy Brilliant (Daqing), QKL-China and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will provide technology services, including the selection and maintenance of QKL-China’s computer hardware and software systems and training of QKL-China employees in the use of those systems, and in exchange QKL-China will pay a technology service fee to Speedy Brilliant (Daqing) equal to 1.5% of QKL-China’s annual revenue. The technology service fee for each year is due by January 31 of the following year. The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China.

· Loan Agreement

The Loan Agreement among Speedy Brilliant (Daqing) and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will make a loan in the aggregate principal amount of RMB 77 million (approximately $11.2 million) to the shareholders of QKL-China, each shareholder receiving a share of the loan proceeds proportional to its shareholding in QKL-China, and in exchange each shareholder agreed (i) to contribute all of its proceeds from the loan to the registered capital of QKL-China in order to increase the registered capital of QKL-China, (ii) to cause QKL-China to complete the process of registering the increase in its registered capital with PRC regulatory authorities within 30 days after receiving the loan, and (iii) to pledge their equity to Speedy Brilliant (Daqing) under the Equity Pledge Agreement described below. 

F-7

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The loan is repayable by the shareholders at the option of Speedy Brilliant (Daqing) either by the transfer of QKL-China’s equity to Speedy Brilliant (Daqing) or through proceeds indirectly from the transfer of QKL-China assets to Speedy Brilliant (Daqing). The loan does not bear interest, except that if (x) Speedy Brilliant (Daqing) is able to purchase the equity or assets of QKL-China, and (y) the lowest allowable purchase price for that equity or those assets under PRC law is greater than the principal amount of the loan, then, insofar as it is allowable under PRC law, interest will be deemed to have accrued on the loan in an amount equal to the difference between the lowest allowable purchase price for QKL-China and the principal amount of the loan. The effect of this interest provision is that, if and when permitted under PRC law, Speedy Brilliant (Daqing) may acquire all of the equity or assets of QKL-China by forgiving the loan, without making any further payment. If the principal amount of the loan is greater than the lowest allowable purchase price for the equity or assets of QKL-China under PRC law, then Speedy Brilliant (Daqing) would exempt the shareholders from paying the difference between the two amounts. The effect of this provision is that (insofar as allowable under PRC law) the shareholders of QKL-China may satisfy their repayment obligations under the loan by transferring all of QKL-China’s equity or assets to Speedy Brilliant (Daqing), without making any further payment.

The Loan Agreement also contains promises from the shareholders of QKL-China that during the term of the agreement they will elect as directors of QKL-China only candidates nominated by Speedy Brilliant (Daqing), and they will use their best efforts to ensure that QKL-China does not take certain actions without the prior written consent of Speedy Brilliant (Daqing), including (i) supplementing or amending the articles of association or rules of QKL-China, or of any subsidiary controlled or wholly owned by it, (ii) increasing or decreasing its registered capital or shareholding structure, (iii) transferring, mortgaging or disposing of any interests in its assets or income, or encumbering its assets or income in a way that would affect Speedy Brilliant (Daqing)’s security interest unless required for QKL-China’s normal business operations, (iv) incurring or succeeding to any debts and liabilities, (v) entering into any material contract (exceeding RMB 5.0 million, or approximately $0.7 million, in value); (vi) providing any loan or guarantee to any third party; (vii) acquiring or consolidating with any third party, or investing in any third party; and (viii) distributing any dividends to the shareholders in any manner. In addition, the Loan Agreement provides that at Speedy Brilliant (Daqing)’s request, QKL-China will promptly distribute all distributable dividends to its shareholders.

The funds that Speedy Brilliant (Daqing) used to make the loan came from the proceeds received by us, its indirect parent company, in the private placement transaction completed in March 2008.

· Exclusive Purchase Option Agreement

The Exclusive Purchase Option Agreement, among Speedy Brilliant (Daqing), QKL-China, and all of the shareholders of QKL-China, provides that QKL-China will grant Speedy Brilliant (Daqing) or its designated third party an irrevocable and exclusive right to purchase all or part of QKL-China’s assets, and the shareholders of QKL-China will grant Speedy Brilliant (Daqing) or its designated third party an irrevocable and exclusive right to purchase all or part of their equity interests in QKL-China. Either right may be exercised by Speedy Brilliant (Daqing) in its sole discretion at any time that the exercise would be permissible under PRC law, and the purchase price for Speedy Brilliant (Daqing)’s acquisition of equity or assets will be the lowest price permissible under PRC law. QKL-China and its shareholders are required to execute purchase agreements and related documentation within 30 days of receiving notice from Speedy Brilliant (Daqing) that it intends to exercise its right to purchase.

The Exclusive Purchase Option Agreement contains promises from QKL-China and its shareholders that they will refrain from taking actions, such as voting to dissolve or declaring dividends, that could impair Speedy Brilliant (Daqing)’s security interest in the equity of QKL-China or reduce its value. These promises are substantially the same as those contained in the Loan Agreement described above.

The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China. The exclusive purchase options were granted under the agreement on the closing date.

F-8

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

· Equity Pledge Agreement

The Equity Pledge Agreement, among Speedy Brilliant (Daqing), QKL-China, and all of the shareholders of QKL-China, provides that the shareholders of QKL-China will pledge all of their equity interests in QKL-China to Speedy Brilliant (Daqing) as a guarantee of the performance of the shareholders’ obligations and QKL-China’s obligations under each of the other PRC Restructuring Agreements. Under the Equity Pledge Agreement, the shareholders of QKL-China have also agreed (i) to cause QKL-China to have the pledge recorded at the appropriate office of the PRC Bureau of Industry and Commerce, (ii) to deliver any dividends received from QKL-China during the term of the agreement into an escrow account under the supervision of Speedy Brilliant (Daqing), and (iii) to deliver QKL-China’s official shareholder registry and certificate of equity contribution to Speedy Brilliant (Daqing).

The Equity Pledge Agreement contains promises from QKL-China and its shareholders that they will refrain from taking actions, such as voting to dissolve or declaring dividends, that could impair Speedy Brilliant (Daqing)’s security interest in the equity of QKL-China or reduce its value. These promises are substantially the same as those contained in the Loan Agreement described above.

Under the advice of our PRC legal counsel, we believe each of the significant control and economic benefits agreements is enforceable under PRC and local law. ASC 810-10-50-2AA through 50-2AC collectively require the reporting entity to disclose the significant judgments and assumptions used in determining whether to consolidate a variable interest entity. One of the most significant assumptions the Company applied in consolidating its VIE is the interpretation of the provisions of applicable PRC laws and regulations. However, any changes in PRC laws and regulations that affect our ability to control QKL-China might preclude us from consolidating QKL-China in the future.

Mr. Zhuangyi Wang, our Chairman of the board and Chief Executive Officer owns 96% of QKL China. Through contractual arrangements between Speedy Brilliant (Daqing) and QKL-China and its respective registered shareholders, we bear the economic risks and receive the economic benefits of QKL-China as their primary beneficiary. The financial results of QKL-China are consolidated into our financial statements despite the lack of our equity interest in them. We believe the consolidation is necessary to fairly present the financial position and results of operations of our company, because of the existence of a parent-subsidiary relationship through contractual arrangements. Speedy Brilliant (Daqing) has entered into contractual arrangements with QKL-China and its respective registered shareholders. Consigned Management Agreement and Technology Service Agreement enable us to receive substantially all of the economic benefits from QKL-China. Loan Agreement and Equity Pledge Agreement enable us to exercise effective control over QKL-China. And Exclusive Purchase Option Agreement enables us to have an exclusive option to purchase all of the equity interests in QKL-China when and to the extent permitted by PRC law.

QKL-China is financed by means of capital contributions from its shareholders. Subsequent to the payment of funds under the Loan Agreement, we have provided additional financial support by means of loan of approximately $1.2 million to QKL-China in November 2010 for the provision of working capital to our principal business in PRC. There are no specific terms or arrangements that require the Company to provide financial support to QKL-China. The creditors of QKL-China do not have recourse to the general credit of the QKL Stores Inc., Speedy Brilliant (BVI) or Speedy Brilliant (Daqing).

Under PRC law, QKL-China must set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, companies may not distribute the reserve funds as cash dividends except upon a liquidation of these subsidiaries.

Noncontrolling interest

Effective January 1, 2009, the Company adopted an authoritative pronouncement issued by the Financial Accounting Standards Board (the "FASB") regarding noncontrolling interests in consolidated financial statements. The pronouncement requires noncontrolling interests to be separately presented as a component of equity in the consolidated financial statements. The presentation regarding noncontrolling interest was retroactively applied for all the presented periods. As at December 31, 2012 and 2011, the Company did not have any noncontrolling interests.

The following consolidated financial statement balances and amounts of the Company's VIE and its subsidiary were included in the accompanying consolidated balance sheets as of and for the years ended:

	December 31,
	2012		2011
Total current assets	$	68,332,510	$	94,572,493
Total noncurrent assets		46,177,096		70,658,046
Total assets		114,509,606		165,230,539
Total current liabilities		101,340,678		77,475,533
Total noncurrent liabilities		-		-
Total liabilities	$	101,340,678	$	77,475,533

F-9

QKL STORES INC. AND SUBSIDIARIES

 Notes to Consolidated Financial Statements

	December 31,
	2012			2011
Net sales	$	365,624,781		$	370,500,420
Gross profit		62,426,091			63,729,867
Loss from operations		(32,107,932	)		(13,643,245	)
Net loss		(29,807,718	)		(15,096,648	)
VIE retained earnings	$	(2,634,541	)	$	31,288,763

As a result of the contractual arrangements above, Speedy Brilliant (Daqing) bears the majority of economic risks and receives the economic benefits of the VIE, QKL-China, and is the primary beneficiary of the VIE. Therefore, the Company has consolidated the financial results of the VIE and their subsidiary in its consolidated financial statements.

The Company believes that Speedy Brilliant (Daqing)'s contractual arrangements with the VIE are in compliance with PRC law and are legally enforceable. The majority shareholder of the VIE, our Chairman and CEO, Mr. Wang, is also the majority shareholder of the Company and therefore has no current interest in seeking to act contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit the Company's ability to enforce these contractual arrangements, which in turns, may lead to the potential of deconsolidation.

Completion of the PRC Restructuring

The PRC restructuring transaction closed on March 28, 2008 and after the closing date, Speedy Brilliant (Daqing) completed all required post-closing steps, including the payment and verification of all the installments of Speedy Brilliant (Daqing)’s registered capital.

The remaining portion of Speedy Brilliant (Daqing)’s registered capital was contributed and verified by August 1, 2009, two years after the issuance of its business license.

Share Exchange Transaction

In the share exchange transaction, Forme acquired control of Speedy Brilliant (BVI), a British Virgin Islands holding company and the parent company of Speedy Brilliant (Daqing), by issuing to the stockholders of Speedy Brilliant (BVI) shares of common stock in exchange for all of the outstanding capital stock of Speedy Brilliant (BVI). The stockholders of Speedy Brilliant (BVI) with whom we completed the share exchange were (i) the majority holder, Winning State International Limited, a British Virgin Islands holding company (“Winning State (BVI)”) all of whose stock was acquired by our Chief Executive Officer, Mr. Zhuangyi Wang, pursuant to a call option held by Mr. Wang and (ii) three minority stockholders, Ms. Fang Chen, Mr. Yang Miao, and Ms. Ying Zhang, Mr. Wang has exercised his call option and all of the shares of Winning State (BVI) were transferred from Mr. Yap to Mr. Wang on February 2, 2010.

F-10

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Share Exchange Agreement

On March 28, 2008, Forme entered into a share exchange agreement with (i) Speedy Brilliant (BVI); (ii) Speedy Brilliant (Daqing); (iii) the owners of all of the outstanding voting stock of Speedy Brilliant (BVI), namely (a) Winning State (BVI) (a company that is wholly owned and controlled by Mr. Chin Yoke Yap (all of whose stock was acquired by our CEO, Mr. Zhuangyi Wang, pursuant to a call option held by Mr. Wang that he exercised on February 2, 2010)), which owned approximately 98.5% of the Speedy Brilliant (BVI) stock, and (b) three individuals, Ms. Fang Chen, Ms. Yang Miao and Ms. Ying Zhang, who collectively owned approximately 1.5% of the Speedy Brilliant (BVI) stock; and (iv) Forme’s then controlling stockholders, Vision Opportunity China LP, Stallion Ventures, LLC, and Castle Bison, Inc. Under the terms of the share exchange agreement, the Speedy Brilliant (BVI) stockholders exchanged all of the outstanding shares of Speedy Brilliant (BVI) for a total of 6,460,766 (**807,596) newly issued shares of Forme common stock. As a result of the share exchange, Forme acquired Speedy Brilliant (BVI) as a wholly owned subsidiary, and the Speedy Brilliant (BVI) stockholders became holders of 92.8% of our common stock on a non-diluted basis (64.6% of our common stock assuming conversion of our newly-issued Series A Preferred Stock and 46.3% of our common stock assuming conversion of our newly-issued Series A Preferred Stock and exercise of all of the Series A Warrants and Series B Warrants).

In the PRC restructuring transaction described above, Speedy Brilliant (BVI) gained control of our operating company, QKL-China. Therefore, when we acquired control of Speedy Brilliant (BVI) in the share exchange, we acquired indirect control of QKL-China. As a result, at the time of the share exchange, (i) we ceased to be a shell company as that term is defined in Rule 12b-2 under the Exchange Act, (ii) Speedy Brilliant (BVI) became our wholly owned subsidiary, and (iii) through our newly-acquired indirect subsidiary Speedy Brilliant (Daqing) we now control, through the contractual arrangements described above.

On March 28, 2012, QKL-China formed QKL-LQ, a PRC company, together with 5 other affiliated individuals. Under certain contractual arrangements among QKL-China and these equity investors of QKL-LQ, QKL-China is entitled to income earned by QKL-LQ and is obligated to absorb a majority of the risk of loss from QKL-LQ, as if QKL-LQ were a wholly-owned subsidiary of QKL-China.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-11

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company’s current structure is set forth in the diagram below:

 

Private Placement Transaction

The other transaction we completed on March 28, 2008 was a private placement in which we raised funds through a private sale of securities that was exempt from the registration requirements under Section 4(2) of the Securities Act as a result of our compliance with Rule 506 of Regulation D promulgated under the Securities Act. In the private placement we sold to certain accredited investors, for gross proceeds to us of $15.5 million, 9,117,647 units at a purchase price of $1.70 per unit, each unit consisting of one share of Series A Preferred Stock (each of which is convertible (subject to adjustment) into one share of our common stock), a 0.625 interest in a Series A Warrant and a 0.625 interest in a Series B Warrant.

The agreements through which the private placement were carried out are described in detail below, all of which were entered into on March 28, 2008 unless otherwise indicated.

Securities Purchase Agreement

The securities purchase agreement among Vision Opportunity Master Fund Ltd. (“Vision Master”), Vision Opportunity China Fund Limited (together with Vision Master, “Vision”) and certain other investors listed in Exhibit A thereto involved the sale of an aggregate of 9,117,647 units, each unit consisting of one share of Series A Preferred Stock, a 0.625 interest in a Series A Warrant and a 0.625 interest in a Series B Warrant. The closing of the private placement transaction and the securities purchase agreement was contingent upon and dependent on the closing of the reverse merger transaction. Each share of Series A Preferred Stock is convertible into one share of common stock subject to adjustment as described below. Each warrant is exercisable for one of common stock or an aggregate of up to 3,799,020 (**474,877) shares of common stock. The Series A Warrants are exercisable for up to 1,899,510 (**237,439) shares of common stock and have an exercise price of $10.20 (**$81.60) per share, subject to adjustment. The Series B Warrants are exercisable for up to 1,899,510 (**237,439) shares of common stock and have an exercise price of $12.75 (**$102.00) per share, subject to adjustment. The warrants expire on March 28, 2013, which is five years from the date of issuance.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-12

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The terms of our Series A Preferred Stock are set forth in a Certificate of Designations, which we filed with the Secretary of State of the State of Delaware on March 13, 2008. For more information regarding the material terms of Series A Preferred Stock, see the section of this report entitled “Description of our Securities” under the subheadings “Preferred Stock” and “Terms of Series A Preferred Stock.”

Securities Escrow Agreement

The securities escrow agreement among Vision, as representative of the purchasers under the securities purchase agreement, Winning State (BVI), and Loeb & Loeb LLP, as escrow agent, was entered into as an inducement to the purchasers to enter into the securities purchase agreement. Winning State (BVI) agreed to deliver 6,078,431 (**759,804) shares of our common stock owned by Winning State (BVI) as escrow shares (the “Escrow Shares”) to the escrow agent for the benefit of the purchasers, and to deliver some or all of those shares to the purchasers in the event the Company fails to achieve certain financial performance thresholds for the 12-month periods ending December 31, 2008 and December 31, 2009.

The financial performance thresholds for 2008 required that the Company achieve (i) both net income and cash from operations greater than $9.4 million and (ii) fully diluted earnings per share equal to or greater than $0.69. Under the terms of the agreement these thresholds were met if the Company achieved at least 95% thereof. The Company reported net income of $9.0 million, cash from operations of $18.7 million and diluted earnings per share of $0.87 (**$6.96) for 2008, and therefore the thresholds for 2008 were met by the Company. Accordingly, all of the Escrow Shares remain in escrow, pending the performance of the 2009 performance thresholds described below.

The financial performance thresholds for 2009 will be satisfied if the Company achieves (i) both net income and cash from operations of greater than $11.15 million and (ii) fully diluted earnings per share of $0.81(**$6.48). On April 1, 2010 the securities escrow agreement was amended to exclude amounts recorded as liabilities under ASC815. At December 31, 2009, excluding amounts recorded as liabilities under ASC815, the Company had net income of $10.8 million, cash from operations of $10.8 million and fully diluted earnings per share of $1.02(**$8.16).

Because we achieved at least 95% of each of the 2009 performance thresholds, all of the 2009 escrow shares have been returned to Winning State (BVI).

For purposes of determining the performance thresholds described above, fully diluted earnings per share was calculated by (x) dividing the lesser of net income and cash from operations, as reported in our 2009 financial statements plus any amounts that may have been recorded as charges or liabilities on the 2009 financial statements due to the application of Emerging Issues Task Force Issue No. 00-19 that are associated with (1) any outstanding warrants issued in connection with the Securities Purchase Agreement or (2) any liabilities created as a result of the escrow shares being released to any of our officers or directors by (y) the aggregate number of shares of our then outstanding common stock on a fully-diluted basis which number includes, without limitation, the number of shares of common stock issuable upon conversion of the then outstanding shares of Series A Preferred Stock and the number of shares of common stock issuable upon the exercise of any then outstanding preferred stock, warrants or options of the Company.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-13

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Investor and Public Relations Escrow Agreement

We also entered into an investor and public relations agreement with Vision Opportunity China LP, as representative of the purchasers under the securities purchase agreement, and Loeb & Loeb LLP, as escrow agent. Under the agreement, $300,000 of the proceeds of the private placement was deposited into an escrow account with Loeb & Loeb LLP for use in investor and public relations.

Settlement Agreement

On January 22, 2008, QKL terminated its engagement agreement with Kuhns Brothers to provide QKL with investment banking services, on an exclusive basis, with respect to the private placement transaction and the share exchange transaction, and the parties executed a settlement agreement. Under the terms of the settlement agreement, we were required to pay Khuns Brothers (i) a cash fee equal to 8.5% of the gross proceeds invested in the financing by investors introduced to the Company by Kuhns Brothers, Inc. (“Introduced Investors”), and (ii) warrants to purchase up to a number of shares of common stock of the Company equal to 8.5% of the dollar amount of the shares purchased by the Introduced Investors divided by the per-share purchase price of the common stock or preferred stock in the financing. The warrants have the same terms as warrants received by the Introduced Investors. Accordingly, Kuhns Brothers received from us a cash fee of $1,300,500, Series A Warrants to purchase 63,750 (**7,969) shares of our common stock and Series B Warrants to purchase 51,000 (**6,375) shares of our common stock.

Lock-Up Agreement

In connection with the private placement we also entered into an agreement with Winning State (BVI) under which, in order to induce Forme to enter into the share exchange agreement, certain stockholders including Mr. Zhuangyi Wang, our CEO and Mr. Xudong Wang, our former CFO, agreed that (i) they would not sell or transfer any shares of our common stock until at least 12 months after the effective date of a registration statement filed with the SEC registering for resale the shares of common stock underlying the Series A Preferred Stock issued in the private placement transaction and (ii) for an additional 24 months after the end of that 12 month period, would not sell or transfer more than one-twelfth of its total shares of that common stock during any one month.

Agreements Executed in Connection with Our Public Offering

Waiver to Registration Rights Agreement

On October 16, 2009, Vision Opportunity China LP, as representative of the purchasers listed on Schedule I to the Registration Rights Agreement dated as of March 28, 2008, agreed to waive the notice and piggyback registration rights provided by the Registration Rights Agreement solely with respect to our public offering in the fourth quarter of 2009 of 2,300,000 (**287,500) shares of our common stock at a price of $17.25 ($138.00) per share that raised aggregate net proceeds of $39.7 million.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-14

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Waiver to Securities Purchase Agreement

On October 16, 2009, Vision Opportunity China LP, as representative of the purchasers listed on Schedule A to the Securities Purchase Agreement dated as of March 28, 2008, agreed to waive the notice and preemption rights provided by the Securities Purchase Agreement, solely with respect to our public offering in the fourth quarter of 2009 of 2,300,000 (**287,500) shares of our common stock at a price of $17.25 (**$138.00) per share that raised aggregate net proceeds of $39.7 million.

Amendment to Securities Escrow Agreement

On October 15, 2009, we entered into an Amendment to Securities Escrow Agreement, amending the Securities Escrow Agreement dated March 28, 2008, by and among the Company, Vision Opportunity China LP as representative of the Purchasers, Winning  State Investment Limited and Loeb & Loeb LLP, as escrow agent, to revise the definition of “Net income” and “Cash from Operations” for the fiscal year ended December 31, 2009 to exclude the one time non-recurring cash expenses incurred by us in connection with our public offering in the fourth quarter of 2009 and the transactions contemplated by our public offering that were not contemplated by the Securities Escrow Agreement.

Lock-Up Letters

On October 15, 2009, in connection with our public offering and in order to induce Roth Capital Partners, LLC to act as our underwriter, each of our directors and executive officers, and Winning State (BVI) agreed that, without the prior written consent of Roth Capital Partners, LLC, they would not, during the period commencing on October 15, 2009 and ending 180 days after the date of the final prospectus relating to our public offering (i) either directly or indirectly sell, pledge, lend or transfer any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, subject to certain exclusions, or (ii) make any demand for or exercise any right with respect to the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for shares of common stock.

Anti-dilution Agreements

On March 24, 2010, we entered into a Warrant Amendment (“Series A Warrant Amendment”) to the Series A Warrant to Purchase Shares of Common Stock of the Company (“Series A Warrant”) with Vision Opportunity China LP, pursuant to which certain anti-dilution provisions of the Series A Warrants were removed on behalf of the Series A Warrant holders.  Pursuant to the Series A Warrant Amendment, we agreed not to issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Series A Warrant, at a per share price less than the exercise price then in effect, without the prior written consent of holders of a majority of the Series A Warrants at such time.

On March 24, 2010, we entered into a Warrant Amendment (“Series B Warrant Amendment”) to the Series B Warrant to Purchase Shares of Common Stock of the Company (“Series B Warrant”) with Vision Opportunity China LP, pursuant to which certain anti-dilution provisions of the Series A Warrants were removed on behalf of the Series A Warrant holders.  Pursuant to the Series B Warrant Amendment, we agreed not to issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Series B Warrant, at a per share price less than the exercise price then in effect, without the prior written consent of holders of a majority of the Series B Warrants at such time.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-15

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On March 25, 2010, we entered into a Waiver (“Waiver”) to the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (“Certificate”) with the holders of our Series A Convertible Preferred Stock, pursuant to which certain anti-dilution protections of the Certificate were waived.  We plan to amend the Certificate to state that we will not issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Certificate, at a conversion price less than the conversion price then in effect for the Series A Preferred Stock, without the prior written consent of holders of a majority of the Series A Warrants at such time.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Presentation

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).  The consolidated financial statements include the financial statements of QKL Stores Inc, and its wholly-owned subsidiaries (collectively referred to herein as the “Company”).  All intercompany accounts, transactions, and profits have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

F-16

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Foreign Currency Translation

The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency, while its functional currency is Chinese Renminbi (RMB). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $  using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period.  Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.

F-17

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Foreign Currency Translation (continued)

Below is a table with foreign exchange rates used for translation:

	(Average Rate) Years Ended December 31,
	2012		2011
Chinese Renminbi (RMB)		RMB 6.3198		RMB 6.4735
United States dollar ($)	$	1.0000	$	1.0000

As of December 31,	2012		2011
Chinese Renminbi (RMB)		RMB 6.3161		RMB 6.3647
United States dollar ($)	$	1.0000	$	1.0000

Segment Reporting

The Company operates in one industry segment, operating retail chain stores.  ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Revenue Recognition

The Company earns revenue by selling merchandise primarily through its retail stores. Revenue is recognized when merchandise is purchased by and delivered to the customer and is shown net of estimated returns during the relevant period. The allowance for sales returns is estimated based upon historical experience.

Cash received from the sale of cash card (aka “gift card”) is recorded as a liability, and revenue is recognized upon the redemption of the cash card or when it is determined that the likelihood of redemption is remote (“cash card breakage”) and no liability to relevant jurisdictions exists. The Company determines the cash card breakage rate based upon historical redemption patterns and recognizes cash card breakage on a straight-line basis over the estimated cash card redemption period.  The Company recognized approximately nil in cash card breakage revenue for fiscal 2012 and 2011, respectively.

F-18

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.

Included in revenue are sales of returned merchandise to vendors specializing in the resale of defective or used products, which accounted for less than 0.5% of net sales in each of the periods reported.

Cost of Sales

Cost of sales includes the cost of merchandise, related cost of packaging and shipping cost and the distribution center costs.

Selling Expenses

Selling expenses include store-related expense, other than store occupancy costs, as well as advertising, depreciation and amortization, and certain expenses associated with operating the Company’s corporate headquarters.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $135,877 and $192,779 for fiscal 2012 and 2011, respectively. Advertising expense is included in selling expense in the accompanying consolidated statements of income. The Company receives co-operative advertising allowances from product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors’ products. These advertising allowances are recognized as a reduction to selling expense when the Company incurs the advertising cost eligible for the credit. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to nil for fiscal 2012 and 2011 respectively.

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable, in accordance with ASC 605. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. Amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction in selling and administrative expense. The Company performs detailed analyses to determine the appropriate amount of vendor allowances to be applied as a reduction of merchandise cost and selling expenses.

F-19

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Leases

The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company’s operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for store remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.

F-20

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Restricted Cash

Restricted cash are cash deposited in a trust account maintained in the United States for the purpose of investor and public relation affairs.

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products or co-operative advertising and amounts due from lessors for tenant improvement allowances. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Inventories

Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.

Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

F-21

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Buildings	30 to 40 years
Shop equipment	5 years
Office equipment	3 years
Motor vehicles	5 years
Car park	43 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Land Use Rights

According to the laws of the PRC, the government owns all the land in the PRC.  Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 30 to 40 years.

Goodwill

Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles — Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.

The Company performed an annual impairment test as of the end of fiscal 2012 and 2011, and determined that an impairment loss in the amount of $26,697,561 and $19,219,870 were recorded in 2012 and 2011 respectively.

Long-lived Assets

The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.

F-22

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance and economic conditions.

The Company’s evaluation resulted in no long-lived asset impairment charges during fiscal 2012 and 2011.

Concentration of Credit Risk

The Company maintains cash in bank deposit accounts in PRC, except one restricted cash deposit account in the U.S. for the sole purpose of disbursements of investor relations expenses.  The account in the U.S. is uninsured by the Federal Deposit Insurance Corporation (“FDIC”) up to nil. The Company performs ongoing evaluations of this institution to limit its concentration risk exposure.

The Company operates retail stores located principally in the Northeast China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.

The Company relies on three distribution centers located in Daqing, Shenyang and Harbin, China, which service its stores. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company’s ability to adequately stock its stores.

Accrual and Disclosure of Loss Contingencies

We determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated. We analyze, if any, our litigation and regulatory matters based on available information to assess the potential liabilities. Our assessment is developed based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we will disclose the potential range of the loss, if estimable. We record losses related to contingencies in cost of operations or selling, general and administrative expenses, depending on the nature of the underlying transaction leading to the loss contingency.

Retirement Benefit Plans

Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation—Retirement Benefits.

The total amounts for such employee benefits which were expensed were $4,708,372 and $3,370,869 for the years ended December 31, 2012 and 2011, respectively.

F-23

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Retained Earnings - Appropriated

The income of the Company’s PRC subsidiaries is distributable to their shareholder after transfer to reserves as required by relevant PRC laws and regulations and the subsidiary’s Articles of Association.  As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors.

Reserves include statutory surplus reserves and discretionary reserves.  Statutory surplus reserves can be used to make good previous years’ losses, if any, and may be converted into capital in proportion to the existing equity interests of shareholders, provided that the balance after such conversion is not less than 25% of the registered capital.  The appropriation to the statutory surplus reserves must not be less than 10% of net profit after taxation.  Such appropriation may cease to apply if the balance of the fund is equal to 50% of the entity’s registered capital.  The annual appropriations of reserves of QKL-China and Qinglongxin Commerce are 10% and 10% for the years ended December 31, 2012 and 2011, respectively.

Income Taxes

The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted ASC 740-10-25 on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position.  The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.

F-24

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Fair Value Measurements

ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 establishes three levels of inputs that may be used to measure fair value:

· Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2 – Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly.

· Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company adopted ASC 820, Fair Value Measurements and Disclosures, on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company has also adopted ASC 820, on January 1, 2009 for non financial assets and non financial liabilities, as these items are not recognized at fair value on a recurring basis. The adoption of ASC 820 for all financial assets and liabilities and non-financial assets and non-financial liabilities did not have any impact on the Company’s consolidated financial statements.

Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. See footnote 10 regarding the fair value of the Company’s warrants, which are classified as Level 3 liabilities in the fair value hierarchy.

The fair value of warrants was calculated using the Black-Scholes option pricing model. The assumptions that were used to calculate fair value as of December 31, 2009 were as follows:

Investor Warrants:	12/31/2009
Expected volatility		54	%
Risk free rate		1.82	%
Expected terms		3.24
Expected dividend yield		-

Expected volatility is based on average peer group volatility with comparable size and operations. The Company did not have enough historical share trade period and was thinly traded. The Company believes this method produces an estimate that is representative of the Company’s expectations of future volatility over the expected term of these warrants. The Company has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities according to the remaining term of the warrants.

F-25

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Recently Issued Accounting Guidance

In July 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-02, Intangibles--Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification Subtopic 350-30, Intangibles--Goodwill and Other, General Intangibles Other than Goodwill. Under the guidance in this ASU, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

In August 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-03, Technical Amendments and Corrections to SEC Sections. This ASU amends various SEC paragraphs pursuant to SAB 114, SEC Release No. 33-9250, and ASU 2010-22, which amend or rescind portions of certain SAB Topics.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-05, Statement of Cash Flows (Topic 230). This ASU addresses how cash receipts arising from the sale of certain donated financial assets, such as securities, should be classified in the statement of cash flows of not-for-profit entities (NFPs). Some NFPs classify those cash receipts as investing cash inflows, while other entities classify them as either operating cash inflows or financing cash inflows, consistent with their treatment of inflows arising from cash contributions. The objective of this Update is for an NFP to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without the NFP imposing any limitations for sale and were converted nearly immediately into cash. The amendments in the ASU are effective prospectively for fiscal years, and interim fiscal periods within those years, beginning after June 15, 2013. Retrospective application to all periods presented upon the date of adoption is permitted. Early adoption from the beginning of the fiscal year of adoption is permitted.

F-26

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 3 – OTHER RECEIVABLES

Other receivables consisted of the following: 

December 31,	2012		2011
Deposits (1)	$	2,860,232	$	666,207
Purchase deposits (2)		240,174		1,324,056
Input value added tax recoverable (3)		4,420,456		7,331,965
Rebates receivables (4)		2,366,521		2,363,854
Loans to customers (5)		7,844,421		-
Others		310,556		305,052
Total	$	18,042,360	$	11,991,134

(1)	Deposits are cash held by cashiers of retail stores for day to day operations.
(2)	Purchase deposits are cash held by employees in retail stores for the equipment purchase.
(3)	Input VAT arises when the group purchases products from suppliers and input VAT can be deducted from output VAT on sales.
(4)	Rebates receivables represent promotional allowances provided by vendors for promotions incurred by the company.
(5)	Loans to customers are short term loans with interest rates ranging from 0.6% to 1.0% per month made by QKL-LQ. All loans to customers will be collected within one year.

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following:

December 31,	2012			2011
Buildings	$	6,773,312		$	6,861,043
Shop equipment		19,483,024			19,815,360
Office equipment		4,243,396			4,028,789
Motor vehicles		1,460,327			1,642,125
Car park		20,392			20,237
Leasehold improvements		27,150,156			27,515,996
Construction in progress		10,008,740			2,087,368
Total property, plant and equipment		69,139,347			61,970,918
Less:  accumulated depreciation and amortization		(23,699,987	)		(18,928,782	)
Total property, plant and equipment, net	$	45,439,360		$	43,042,136

F-27

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Buildings with net book value of approximately $5,255,580 were used as collateral of short term bank loans.

The depreciation expenses for the years ended December 31, 2012 and 2011 were $6,702,740 and $6,065,858, respectively

NOTE 5 – LAND USE RIGHTS

Land use rights consisted of the following:

December 31,	2012			2011
Land use rights	$	930,118		$	923,016
Less – accumulated amortization		(205,358	)		(174,606	)
Total intangible assets, net	$	724,760		$	748,410

The amortization expenses of land use rights for the years ended December 31, 2012 and 2011 were $29,391 and $28,693 respectively.

Future amortization of land use rights is as follows:

Years ending December 31,	Amount
2013	$	29,391
2014		29,391
2015		29,391
2016		29,391
2017		29,391
Thereafter		577,805
Total	$	724,760

Land use rights with net book value of $724,760 were used as collateral of short term bank loans.

NOTE 6 – GOODWILL

Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination at the date of acquisition.

Goodwill for impairment has been tested annually, or whenever events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. The test to evaluate for impairment is a two-step process. In the first step, we compare the fair value of each of our reporting units to its carrying value. If the fair value of any reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of goodwill associated with that reporting unit. If the carrying value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment.

In 2012, we recorded an impairment loss in the amount $26,697,561 reducing goodwill attributed to our acquisition of business operations in 2010 and 2008 from a carrying amount of $26,346,942 to a fair value of $0. The circumstances leading to the impairment are attributed to the changes in the competitive environment and forecasted results of our business operations. The material assumptions used for the income approach for 2012 were a discount rate of 19.5% and a long-term growth rate of 8% for the first 5 years and 3% hereafter. We considered historical rates and current market conditions when determining the discount and growth rates to use in our analyses.

In 2011, we recorded an impairment loss in the amount $19,219,870 reducing goodwill attributed to our acquisition of business operations in 2010 and 2008 from a carrying amount of $45,566,812 to a fair value of $26,346,942. The circumstances leading to the impairment are attributed to the changes in the competitive environment and forecasted results of our business operations. The material assumptions used for the income approach for 2011 were a discount rate of 19.5% and a long-term growth rate of 8% for the first 5 years and 3% hereafter. We considered historical rates and current market conditions when determining the discount and growth rates to use in our analyses. If these estimates or their related assumptions change in the future, we may be required to record further impairment charges for goodwill.

F-28

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

A summary of changes in the Company’s goodwill is as follows:

	2012					2011
	(RMB)			(USD)			(RMB)			(USD)
Balance – beginning of year:
Goodwill	290,019,086			45,566,812			290,019,086			43,863,929
Accumulated impairment charges	(122,328,706	)		(19,219,870	)		-			-
	167,690,380		$	26,346,942			290,019,086		$	43,863,929
Activity during the year:
Additions	-			-			-			-
Impairment charge	(167,690,380	)	$	(26,533,960	)		(122,328,706	)		(19,219,870	)
Other adjustments*	-			187,018			-			1,702,883
	(167,690,380	)	$	(26,346,942	)		(122,328,706	)		(17,516,987	)
Balance – end of year:
Goodwill	290,019,086			45,917,431			290,019,086			45,566,812
Accumulated impairment charges	(290,019,086	)		(45,917,431	)		(122,328,706	)		(19,219,870	)
	-			-			167,690,380		$	26,346,942

* Other adjustments are the exchange differences arising during the year.

The goodwill was generated from the acquisition of a number of businesses in Northeast China through the purchases of assets and the business operations from unrelated parties. According to ASC 805 “business combinations”, the acquisition of these businesses should be treated as acquisition of a business.

During 2008, the Company purchased the business operations and certain assets of stores that sell grocery, food and non-food products in the local region from five independent third parties: (1) Heilongjiang Longmei Commerce Co., Ltd (the “Anda Store”); (2) Nehe Wanlong Commercial Building Co., Ltd. (the “Nehe Store”); (3) Fuyu Xinshuguang Real Estate Development Co., Ltd (the “Fuyu Store”); (4) Daqing Xinguangtiandi Shopping Center Co., Ltd (the “Xinguang tiandi Store”); and (5) Hulunbeier Huahui Department Store Co., Ltd. (the “Hailaer Store”).  The consideration for the acquisitions was settled in cash and was accounted for as follows (presented in RMB):

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Anda Store	08/31/2008	22,740,000	970,404	21,769,596	$	3,180,272
2	Nehe Store	09/30/2008	16,800,000	828,500	15,971,500		2,329,871
3	Fuyu Store	10/31/2008	17,400,000	1,042,010	16,357,990		2,387,324
4	Xinguangtiandi Store	09/30/2008	13,800,000	880,000	12,920,000		1,884,728
5	Hailaer Store	10/31/2008	66,000,000	1,580,000	64,420,000		9,401,607
	Total		136,740,000	5,300,914	131,439,086

*converted into U.S. dollars using the date of acquisition exchange rate

F-29

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During 2010, the Company acquired the business operations and certain assets of stores that sell grocery, food and non-food products in the local region from seven independent third parties:(1) Jian County Great Wall Operating Management Co., Ltd  (the “Jian Store”); (2) Inner Mongolia Fada Property Development Group Co., Ltd (the “Manzhouli Store”); (3) Taian County Jiahemei Commercial Co., Ltd (the “Taian Store”); (4) ARongQi Naji Town Shopping Center (the “Arongqi Store”); (5) Tianlong Shopping Mall (the “Mulan Store”); (6) Liaoyang LeWanJia Shopping Center (the “Liaoyang Store”); and (7) Siping Wanxi Commercial Co., Ltd (the “Siping Store”). After the closing of the acquisition, these businesses ceased their operations as retail stores and the Company was licensed to operate in these locations. The operating results of these businesses have been included in the consolidated financial statements since the acquisition dates. The consideration for the acquisitions was settled in cash and was accounted for as follows (presented in RMB):

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Jian Store	08/01/10	31,500,000	-	31,500,000	$	4,647,080
2	Manzhouli Store	07/01/10	18,380,000	-	18,380,000		2,705,611
3	Taian Store	07/01/10	28,000,000	-	28,000,000		4,121,714
4	Arongqi Store	11/01/10	16,100,000	-	16,100,000		2,409,927
5	Mulan Store	12/01/10	14,000,000	-	14,000,000		2,096,923
6	Liaoyang Store	10/01/10	27,600,000	-	27,600,000		4,117,866
7	Siping Store	11/01/10	23,000,000	-	23,000,000		3,442,753
	Total		158,580,000	-	158,580,000

*   converted into U.S. dollars using the date of acquisition exchange rate

No supplemental pro forma information is presented for the acquisitions due to the immaterial effect of each acquisition on the Company’s results of operations.

Acquisition-related expenses in connection with the 2010 acquisitions are classified within the general and administrative expenses and amounted to $117,747, which included the expenses for investigating and researching, evaluating, coordinating and directing the acquisition transactions.

NOTE 7 – SHORT TERM BANK LOANS

Short term bank loans consisted of the following:

December 31,			2012		2011
	Due date	Interest rate
Longjiang Commercial Bank	4/18/2013	6.941%	$	7,916,278	$	7,855,830
Longjiang Commercial Bank	4/25/2013	7.544%		7,916,277		3,142,332
Total short term bank loans			$	15,832,555	$	10,998,162

The loans provided by Longjiang Commercial Bank were secured by buildings and land use rights with net book value of approximately $5,255,580 and $724,760 respectively.

NOTE 8 – ACCRUED EXPENSES AND OTHER PAYABLES

Other payables consisted of the following:

December 31,	2012		2011
Accrued expenses	$	16,146,809	$	8,184,785
VAT and other PRC tax payable		134,483		1,695,669
Repair, maintenance, and purchase of equipment payable		500,280		2,535,486
Amount due to a director – unsecured, interest free and no repayment date		7,916,277		-
Employee promoters bond deposit		3,399,363		1,912,716
Total other payables	$	28,097,212	$	14,328,656

F-30

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 9 – 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:

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

Years Ended December 31,	2012			2011
Net loss to QKL Stores, Inc. for computing basic net loss per share	$	(31,042,540	)	$	(16,583,381	)
Undistributed earnings allocated to Series A Convertible Preferred Stock		-			-
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share	$	(31,042,540	)	$	(16,583,381	)
Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		10,509,469			10,166,618
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		1,837,215			2,179,761
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(1,837,215	)		(2,179,761	)
Diluted		10,509,469			10,166,618
Basic earnings per share of common stock	$	(2.95	)	$	(1.63	)
Diluted earnings per share	$	(2.95	)	$	(1.63	)

The 3,922,953 shares of stock warrants and 677,666 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 years ended December, 2012 and 2011 were lower than the options and warrants exercise price.

The following earnings per share computation data are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		1,313,684			1,270,827
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		229,652			272,470
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(229,652	)		(272,470	)
Diluted		1,313,684			1,270,827
Basic earnings per share of common stock	$	(23.63	)	$	(13.05	)
Diluted earnings per share	$	(23.63	)	$	(13.05	)

F-31

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 10 – PREFERRED STOCK AND STOCK WARRANTS

Series A Preferred Stock

The terms of the Company’s Series A Preferred Stock are set forth in a Certificate of Designations, which we filed with the Secretary of State of the State of Delaware on March 13, 2008. Set forth below are the material terms of our Series A Preferred Stock:

Conversion and Anti-Dilution: Each share of Series A Preferred Stock is convertible at any time into one share of the Company’s common stock. A holder of Series A Preferred Stock may not convert those shares if as a result of the conversion, that holder would beneficially own more than 4.99% of the Company’s common stock outstanding at that time. A holder may, however, waive this provision by providing the Company with 61 days’ notice that such holder wishes to waive this restriction with regard to any or all shares of common stock issuable upon conversion of such holder’s Series A Preferred Stock.

Voting: Holders of the Series A Preferred Stock vote on an “as converted” basis together with the common stock, as a single class, in connection with any proposal submitted to stockholders to: (i) increase the number of authorized shares, (ii) approve the sale of any capital stock of the Company, (iii) adopt an employee stock option plan, and (iv) effect any merger, consolidation, sale of all or substantially all of the assets of the Company, or related consolidation or combination transaction. Holders of the Series A Preferred Stock have a separate class vote on all matters that impact the rights, value, or ranking of the Series A Preferred Stock.

Liquidation Preference: In the event of a liquidation, dissolution or winding up, voluntary or involuntary, of the Company, the holders of Series A Preferred Stock then outstanding will be entitled to receive, out of the Company’s assets available for distribution to the Company’s stockholders, an amount equal to $5.10 (**40.80) per share before any payment is made or any assets distributed to the holders of the common stock or any other stock that ranks junior to the Series A Preferred Stock. The holders rank (a) senior to the common stock and to any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments on a liquidation event and (b) pari passu with any other class or series of stock of the Company, the terms of which specifically provide that such class or series will rank pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments on a liquidation event.

Dividends: The shares of Series A Preferred Stock are not entitled to dividends unless the Company pays dividends, in cash or other property, to holders of outstanding shares of common stock. If the Company does pay dividends, each outstanding share of Series A Preferred Stock will entitle its holder to receive dividends out of available funds equal to the dividends to which the common stock into which such share was convertible on the record date would have been entitled, had such common stock been issued.

Series A and Series B Stock Warrants

As a result of a completed sale of 9,117,647 units for cash proceeds of $15,500,000 on March 28, 2008, the Company issued Series A stock warrants of 1,940,885 and Series B stock warrants of 1,933,637 which can be converted on a one-for-one basis into shares of the Company’s common stock.  The stock warrants have a five year life and the Series A warrants are exercisable at an equivalent price of $10.20 (**$81.60) per share and the Series B are exercisable at an equivalent price of $12.75 (**$102.00) per share.  These stock warrants will expire on March 28, 2013 pursuant to the warrant agreements.

The Company used the Black-Scholes option pricing model to determine the fair value of the Series A and B stock warrants on March 28, 2008 (assumptions used – expected life of 5 years, volatility of 89%, risk free interest rate of 2.51%, and expected dividend yield of 0%).

Effective January 1, 2009, the Company adopted the provisions of FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”) (previously EITF 07-5, “Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity’s Own Stock”). As a result of adopting ASC 815, warrants to purchase 11,623,566 of the Company’s common stock previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment as there was a down-round protection (full-ratchet down round protection).   As a result, the warrants were not considered indexed to the Company’s own stock, and as such, all future changes in the fair value of these warrants were recognized in earnings until such time as the warrants are exercised or expire.  The Company reclassified the fair value of these warrants from equity to liability, as if these warrants were treated as a derivative liability. On January 1, 2009, the Company recorded as a cumulative effect adjustment of decreasing additional paid-in capital of $6,020,000 and beginning retained earnings of $2,792,017 and $8,812,017 to warrant liabilities to recognize the fair value of such warrants. The fair value of the warrants was $44,304,034 on December 31, 2009. The Company recognized $35,492,017 loss from the change in fair value of warrants for the year ended December 31, 2009.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-32

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company amended Series A and Series B stock warrant agreements deleting the down-round protection (full-ratchet down round protection) provision on March 24, 2010. As a result of this amendment, the Company is no longer required to treat Series A and Series B warrants as a liability and was reclassified to equity as of March 24, 2010 (assumption used – expected life of 3 years, volatility of 57%, and risk free interest rate of 1.67%, and expected dividend yield of 0%). Based on the revaluation, the Company recognized $7,801,649 of income related to this transaction and reclassified $36,502,385 to equity.

Warrant C

On January 22, 2010, the Company issued a warrant (“Warrant C”) to a non-related individual in exchange for consulting services relating to operational and managerial experience. Warrant C can be converted into 66,666 (**8,333) shares of the Company’s common stock at an exercise price of $15.00 (**$120) per share. Warrants C has a five year term and became exercisable 180 days from the date of issuance of Warrant C.

The Company recognized share-based compensation cost based on the grant-date fair value estimated in accordance with ASC 505-50   “equity based payments to non-employees”.  The fair value of these stock warrants on the date of grant was estimated using the Black-Scholes method (assumption used – expected life of 2.75 years, volatility of 54%, and risk free interest rate of 1.25%, and expected dividend yield of 0%).  The Company recognized $558,180 of compensation expense related to this transaction.

A summary of the Company’s stock warrant activities are as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance – December 31, 2011		3,922,953	$	11.53	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance – December 31, 2012		3,922,953	$	11.53	$	0.27

The following summary of the Company’s stock warrant activities are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance – December 31, 2011		490,369	$	92.24	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance – December 31, 2012		490,369	$	92.24	$	0.27

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-33

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 11 – SHARE BASED COMPENSATION

Under the 2009 Omnibus Securities and Incentive Plan, on September 14, 2009, the Company entered into stock option agreements with its three independent directors, granting each director options to purchase 6,666 (**833) shares of the Company’s common stock at an exercise price of $24.00 (**$192.00) per share.  The options vest in approximately equal amounts on the three subsequent anniversary dates of the grant and expire on the fifth anniversary of the date of agreement of or the date the option is fully exercised. On January 30, 2010, the Company entered into amendment agreements with its three directors to correct the exercise price to $22.50(**$180.00), which was the fair market value on the date of the grant. The correction of this error was considered immaterial.

Under the 2009 Omnibus Securities and Incentive Plan, on June 26, 2010, the Company granted the its Chief Operating Officer, Alan Stewart and 20 employees options to acquire 690,000 (**86,250) shares of the Company's common stock at an exercise price of $13.20 (**$105.60) per share.  The options vest in approximately equal amounts on the four subsequent anniversary dates of the grant and expire on the eighth anniversary of the date of agreement of or the date the option is fully exercised.

Under the 2009 Omnibus Securities and Incentive Plan, on December 2, 2010, the Company granted its Chief Financial Officer, Tsz-Kit Chan options to acquire 33,333 (**4,167) shares of the Company's common stock at an exercise price of $10.26 (**$82.08) per share.  The options vest in approximately equal amounts on the four subsequent anniversary dates of the grant and expire on the eighth anniversary of the date of agreement of or the date the option is fully exercised.

The Company accounts for its share-based compensation in accordance with ASC 718 and recognizes compensation expense using the fair-value method on a straight-line basis over the requisite service period for share option awards and non-vested share awards granted which vested during the period.  The fair value for these awards was estimated using the Black-Scholes option pricing model on the date of grant with the following assumptions:

	September 14, 2009			June 26, 2010			December 2, 2010
Expected life (years)		3.5			3.25			3.25
Expected volatility		41.2	%		53	%		44.9	%
Risk-free interest rate		1.69	%		1.49	%		0.96	%
Dividend yield		-			-			-

The expected volatilities are based on the historical volatility of the Company’s common stock.  The observation is made on a weekly basis.  The observation period covered is consistent with the expected life of the options.  The expected life of stock options is based on the minimum vesting period required.  The risk-free rate is consistent with the expected terms of the stock options and is based on the United States Treasury yield curve in effect at the time of grant.

Stock-based compensation expenses recognized was $850,381 for the year ended December 31, 2012. A summary of the Company’s stock options activities under the 2009 Omnibus Securities and Incentive Plan are as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding – December 31, 2011		677,666	$	13.33		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding– December 31, 2012		677,666	$	13.33		1.46	$	-
Exercisable - December 31, 2012		414,600	$	13.51		1.43	$	-

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

F-34

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following summary of the Company’s stock options activities under the 2009 Omnibus Securities and Incentive Plan are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding – December 31, 2011		84,708	$	106.64		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding– December 31, 2012		84,708	$	106.64		1.46	$	-
Exercisable - December 31, 2012		51,825	$	108.08		1.43	$	-

The weighted average grant date fair value of options granted during year of 2012 and 2011 were nil.

As of December 31, 2012, there was $1,224,525 of total unrecognized compensation cost related to non-vested share option awards granted.  Such cost is expected to be recognized over a weighted-average period of 1-2 years.

NOTE 12 – INCOME TAXES

The income tax provision consisted of the following:

Years Ended December 31,	2012			2011
Current:
Foreign	$	(198,092	)	$	3,856,527
Federal		-			-
State		-			-
Deferred:
Foreign		(2,102,122	)		(2,403,124	)
Federal		-			-
State		-			-
Provision for income taxes	$	(2,300,214	)	$	1,453,403

F-35

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components that give rise to deferred tax as of December 31, 2012 and 2011 were as follows:

December 31,	2012		2011
Current:
Accrued liabilities	$	2,877,333	$	394,977
Inventory provision		191,470		-
Non-current:
Depreciation on property, plant and equipment		70,442		77,347
Net operating loss carry-forward		3,188,687		2,500,246
Total deferred income taxes		6,327,932		2,972,570
Less: valuation allowance		-		-
Net deferred income taxes	$	6,327,932	$	2,972,570

The difference between the effective income tax rate and the expected federal statutory rate was as follows:

Years Ended December 31,	2012			2011
Statutory rate		34.0	%		34.0	%
Income tax rate reduction		(9.0	)%		(9.0	)%
Permanent differences		-	%		-	%
Valuation allowance		-	%		-	%
Impairment of goodwill		(20.0	)%		(31.8	)%
Warrant liability		-	%		-	%
Other		1.9	%		(2.8	)%
Effective income tax rate		6.9	%		(9.6	)%

The permanent differences were related to the non-deductible expenses under China taxation law.

Dividends paid by Speedy Brilliant (Daqing) to Speedy Brilliant BVI are subject to the withholding tax of 10%. Distributions made out of pre January 1, 2008 retained earnings will not be subject to the withholding tax. The Company's PRC entities historically have not declared or paid any dividends.

Aggregate losses of the Company's subsidiary, variable interests entity and its subsidiary located in the PRC that are available for distribution to the Company of approximately $2.63 million at December 31, 2012 are considered to be indefinitely reinvested, and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to the Company.

F-36

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 13 – SEGMENT INFORMATION

The Company is principally engaged in the operation of retail chain store in the PRC. Nearly all identifiable assets of the Company are located in the PRC. All revenues are derived from customers in the PRC. Accordingly, no analysis of the Company’s sales and assets by geographical market is presented.

For the years ended December 31, 2012 and 2011, the Company’s net revenues from external customers for products and services are as follows:

Years Ended December 31,	2012		2011
Sale of general merchandise	$	359,625,745	$	365,230,321
Department store income		4,832,718		4,060,540
Other income		1,166,318		1,209,559
Total	$	365,624,781	$	370,500,420

For the years ended December 31, 2012 and 2011, the Company’s net revenues from external customers for sale of general merchandise by categories of product are as follows:

Years Ended December 31,	2012		2011
Grocery	$	134,599,622	$	125,176,060
Fresh food		172,059,718		172,554,315
Non-food		52,966,405		67,499,946
Total	$	359,625,745	$	365,230,321

NOTE 14 –COMPREHENSIVE INCOME

Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of income and are recorded directly into a separate section of shareholders’ equity on the consolidated balance sheets.  Comprehensive income and its components consist of the following:

Years Ended December 31,	2012			2011
Net income	$	(31,042,540	)	$	(16,583,381	)
Other comprehensive income, net of tax
Foreign currency translation adjustment		1,322,788			4,033,171
Comprehensive income	$	(29,719,752	)	$	(12,550,210	)

F-37

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Operating Leases

Certain of our real properties and equipment are operated under lease agreements. Rental expense under operating leases was as follows:

Years Ended December 31,	2012		2011
Rent expense	$	9,846,142	$	9,857,879
Less: Sublease income		2,135,839		1,983,347
Total rent expense, net	$	7,710,303	$	7,874,532

Annual minimum payments under operating leases are as follows:

Years Ended December 31,	Minimum Lease Payment		Sublease Income		Net Minimum Lease Payment
2013	$	8,430,420	$	1,098,557		7,331,863
2014		8,427,482		4,082		8,423,400
2015		8,333,014		-		8,333,014
2016		8,135,968		-		8,135,968
2017		7,936,970		-		7,936,970
Thereafter		72,993,791		-		72,993,791
Total	$	114,257,645	$	1,102,639	$	113,155,006

NOTE 16 – AMENDMENT TO ARTICLES OF INCORPORATION

On June 11, 2012, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation, as amended to date, with the Secretary of State of the State of Delaware to effect a one-for-three reverse stock split (the “Reverse Stock Split”) of the issued and outstanding common stock of the Company, so that every three (3) outstanding shares of common stock before the Reverse Stock Split represents one (1) share of common stock after the Reverse Stock Split. The Reverse Stock Split became effective on and as of June 11, 2012. The Reverse Stock Split was duly approved by the Board of Directors of the Company and the Company’s shareholders entitled to vote a majority of the shares of common stock pursuant to Delaware General Corporation Law.

As a result of the Reverse Stock Split, the number of outstanding shares of common stock of the Company was reduced to 10,527,637 shares. Fractional stockholdings were rounded up to the nearest whole number. Each shareholder's percentage ownership interest in the Company and proportional voting power remains unchanged after the Reverse Stock Split except for minor changes and adjustments resulting from rounding of fractional interests. The rights and privileges of the holders of common stock are substantially unaffected by the Reverse Stock Split.

All common stock based data in our consolidated financial statements and the accompanying notes has been retroactively restated to reflect this Reverse Stock Split.

NOTE 17 – SUBSEQUENT EVENTS

On February 4, 2013, QKL Stores Inc. (the “Company”) filed a Certificate of Amendment to the Company’s Certificate of Incorporation, as amended to date (the “Certificate of Amendment”), with the Secretary of State of the State of Delaware to effect a one-for-eight reverse stock split (the “Reverse Split”) of the issued and outstanding common stock of the Company, so that every eight (8) outstanding shares of common stock before the Reverse Split represents one (1) share of common stock after the Reverse Split. The Reverse Split became effective on and as of February 4, 2013. As a result of the Reverse Split, the number of outstanding shares of common stock of the Company will be reduced to approximately 1.44 million shares. The rights and privileges of the holders of common stock are substantially unaffected by the Reverse Split.

F-38

QKL STORES INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 18 - RESTATEMENT OF FINANCIAL STATEMENTS

The restatement is to amend the deferred income tax assets of the consolidated balance sheet which were split into current and noncurrent in accordance with the guidance of ASC 740-10-45:

Ÿ In a classified statement of financial position, an entity shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. (ASC 740-10-45-4)

Ÿ A deferred tax liability or asset for a temporary difference that is related to an asset or liability shall be classified as current or noncurrent based on the classification of the related asset or liability. (ASC 740-10-45-7)

Ÿ A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. (ASC 740-10-45-9)

This amendment was made to re-classify $3,259,129 and $2,577,593 as of December 31, 2012 and 2011 from the current deferred income tax to non-current deferred income tax so as to reflect the long-term effect of the temporary difference of these items.

The impact of the affected line items of the Company's financial statements is set forth below:

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2012

	As previously reported		As restated
Deferred income tax assets – current portion	$	6,327,932	$	3,068,803
Total current assets		114,068,458		110,809,329
Deferred income tax assets – non-current portion		-		3,259,129
Total assets	$	160,245,554	$	160,245,554

As a result of the restatement of the consolidated balance sheet as of December 31, 2012, the deferred income tax assets – current portion was reduced by $3,259,129 and changed from $6,327,932 to $3,068,803; the total current assets also reduced by $3,259,129 and changed from $114,068,458 to $110,809,329. The deferred income tax assets – noncurrent portion was increased by $3,259,129 and changed from $0 to $3,259,129. The total assets did not have any changes.

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2011

	As previously reported		As restated
Deferred income tax assets – current portion	$	2,972,570	$	394,977
Total current assets		94,699,102		92,121,509
Deferred income tax assets – non-current portion		-		2,577,593
Total assets	$	165,357,149	$	165,357,149

As a result of the restatement of the consolidated balance sheet as of December 31, 2011, the deferred income tax assets – current portion was reduced by $2,577,593 and changed from $2,972,570 to $394,977; the total current assets also reduced by $2,577,593 and changed from $94,699,102 to $92,121,509. The deferred income tax assets – noncurrent portion was increased by $2,577,593 and changed from $0 to $2,577,593. The total assets did not have any changes.

F-39

QKL STORES INC. AND SUBSIDIARIES

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

	Balance at		Charged to				Balance at
	Beginning of		Costs and				End of
	Period		Expenses		Deductions		Period
December 31, 2011
Allowance for doubtful receivables	$	-	$	-	$	-	$	-
Allowance for sales returns		15,077		2,379,040		2,347,160		46,957
Inventory reserves		55,780		372,777		97,366		331,191
December 31, 2012
Allowance for doubtful receivables	$	-	$	-	$	-	$	-
Allowance for sales returns		46,957		2,407,567		2,427,381		27,143
Inventory reserves		331,191		434,690		-		765,882

II

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on January 2, 2014.

QKL STORES INC.

/s/ Zhuangyi Wangi

By: Zhuangyi Wang

Chief Executive Officer and Director

(principal executive officer)

In accordance with the requirements of the Securities Exchange Act of 1934, this Report was signed by the following persons in the capacities and on the dates indicated.

Name and Title	Date
/s/ Zhuangyi Wang	January 2, 2014
Zhuangyi Wang
Chief Executive Officer and Director
(principal executive officer)
/s/ Tsz-Kit Chan	January 2, 2014
Tsz-Kit Chan
Chief Financial Officer
(principal financial officer and accounting officer)
/s/ Xishuang Fan	January 2, 2014
Xishuang Fan
Chief Operating Officer and Director
/s/ Tsz Fung Philip Lo	January 2, 2014
Tsz Fung Philip Lo
Director
/s/ Jingyuan Gao	January 2, 2014
Jingyuan Gao
Director

EX-23.1

ALBERT WONG & CO. LLP

CERTIFIED PUBLIC ACCOUNTANTS

139 FULTON STREET, SUITE 818B

NEW YORK, NY 10038-2532

TEL: 212-226-9088

FAX: 212-437-2193

Consent of Independent Registered Public Accounting Firm

QKL Stores Inc.

4 Nanreyuan Street

Dongfeng Road

Sartu District

163300 Daqing P.R.

China

We hereby consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-168251 dated July 21, 2010) of QKL Stores Inc. and in the related Prospectus included therein, of our report dated December 9, 2013 except for Note 18 which was dated at January 2, 2014, relating to the consolidated financial statements of QKL Stores Inc. appearing in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2012.

/s/Albert Wong & Co. LLP

Albert Wong & Co. LLP

New York

January 2, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Zhuangyi Wang, certify that:

1.	I have reviewed this Amendment No. 2 to the annual report on Form 10-K of QKL Stores Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 2, 2014

/s/ Zhuangyi Wang

Zhuangyi Wang

Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Tsz-Kit Chan, certify that:

1.	I have reviewed this Amendment No. 2 to the annual report on Form 10-K of QKL Stores Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 2, 2014

/s/ Tsz-Kit Chan

Tsz-Kit Chan

Chief Financial Officer

(principal financial officer and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, in his capacity as an officer of QKL Stores Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)  Amendment No.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in this Amendment No. 2 to the Company’s Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 2, 2014

/s/ Zhuangyi Wang

Zhuangyi Wang

Chief Executive Officer

(principal executive officer)

/s/ Tsz-Kit Chan

Tsz-Kit Chan

Chief Financial Officer

(principal financial officer and accounting officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Subsequent Events (Details)				0 Months Ended
	Dec. 31, 2012	Jun. 11, 2012	Dec. 31, 2011	Feb. 04, 2013 Subsequent Event [Member]
Subsequent Event [Line Items]
Reverse stock split				On February 4, 2013, QKL Stores Inc. (the "Company") filed a Certificate of Amendment to the Company's Certificate of Incorporation, as amended to date (the "Certificate of Amendment"), with the Secretary of State of the State of Delaware to effect a one-for-eight reverse stock split (the "Reverse Split") of the issued and outstanding common stock of the Company, so that every eight (8) outstanding shares of common stock before the Reverse Split represents one (1) share of common stock after the Reverse Split.
Common stock, outstanding	11,551,587	10,527,637	10,448,197	1,440,000

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Allowance for Doubtful Accounts [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance
Charged to Costs and Expenses
Deductions
Balance
Allowance for Sales Returns [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	46,957	15,077
Charged to Costs and Expenses	2,407,567	2,379,040
Deductions	2,427,381	2,347,160
Balance	27,143	46,957
Inventory Valuation Reserve [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	331,191	55,780
Charged to Costs and Expenses	434,690	372,777
Deductions		97,366
Balance	$ 765,882	$ 331,191

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Shared Based Compensation

12 Months Ended

Dec. 31, 2012

Share Based Compensation [Abstract]

Share Based Compensation

NOTE 11 - SHARE BASED COMPENSATION

Under the 2009 Omnibus Securities and Incentive Plan, on September 14, 2009, the Company entered into stock option agreements with its three independent directors, granting each director options to purchase 6,666 (**833) shares of the Company's common stock at an exercise price of $24.00 (**$192.00) per share.  The options vest in approximately equal amounts on the three subsequent anniversary dates of the grant and expire on the fifth anniversary of the date of agreement of or the date the option is fully exercised. On January 30, 2010, the Company entered into amendment agreements with its three directors to correct the exercise price to $22.50(**$180.00), which was the fair market value on the date of the grant. The correction of this error was considered immaterial.

Under the 2009 Omnibus Securities and Incentive Plan, on June 26, 2010, the Company granted the its Chief Operating Officer, Alan Stewart and 20 employees options to acquire 690,000 (**86,250) shares of the Company's common stock at an exercise price of $13.20 (**$105.60) per share.  The options vest in approximately equal amounts on the four subsequent anniversary dates of the grant and expire on the eighth anniversary of the date of agreement of or the date the option is fully exercised.

Under the 2009 Omnibus Securities and Incentive Plan, on December 2, 2010, the Company granted its Chief Financial Officer, Tsz-Kit Chan options to acquire 33,333 (**4,167) shares of the Company's common stock at an exercise price of $10.26 (**$82.08) per share.  The options vest in approximately equal amounts on the four subsequent anniversary dates of the grant and expire on the eighth anniversary of the date of agreement of or the date the option is fully exercised.

The Company accounts for its share-based compensation in accordance with ASC 718 and recognizes compensation expense using the fair-value method on a straight-line basis over the requisite service period for share option awards and non-vested share awards granted which vested during the period.  The fair value for these awards was estimated using the Black-Scholes option pricing model on the date of grant with the following assumptions:

	September 14, 2009			June 26, 2010			December 2, 2010
Expected life (years)		3.5			3.25			3.25
Expected volatility		41.2	%		53	%		44.9	%
Risk-free interest rate		1.69	%		1.49	%		0.96	%
Dividend yield		-			-			-

The expected volatilities are based on the historical volatility of the Company's common stock.  The observation is made on a weekly basis.  The observation period covered is consistent with the expected life of the options.  The expected life of stock options is based on the minimum vesting period required.  The risk-free rate is consistent with the expected terms of the stock options and is based on the United States Treasury yield curve in effect at the time of grant.

Stock-based compensation expenses recognized was $850,381 for the year ended December 31, 2012. A summary of the Company's stock options activities under the 2009 Omnibus Securities and Incentive Plan are as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding - December 31, 2011		677,666	$	13.33		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding- December 31, 2012		677,666	$	13.33		1.46	$	-
Exercisable - December 31, 2012		414,600	$	13.51		1.43	$	-

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

The following summary of the Company's stock options activities under the 2009 Omnibus Securities and Incentive Plan are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding - December 31, 2011		84,708	$	106.64		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding- December 31, 2012		84,708	$	106.64		1.46	$	-
Exercisable - December 31, 2012		51,825	$	108.08		1.43	$	-

The weighted average grant date fair value of options granted during year of 2012 and 2011 were nil.

As of December 31, 2012, there was $1,224,525 of total unrecognized compensation cost related to non-vested share option awards granted.  Such cost is expected to be recognized over a weighted-average period of 1-2 years.

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Land Use Rights (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Land Use Rights [Abstract]
Land use rights	$ 930,118	$ 923,016
Less - accumulated amortization	(205,358)	(174,606)
Total intangible assets, net	724,760	748,410
Amortization expense	$ 29,391	$ 28,693

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Consolidated Statements of Operations and Comprehensive Loss (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net sales	$ 365,624,781	$ 370,500,420
Cost of sales	303,198,690	306,770,553
Gross profit	62,426,091	63,729,867
Operating expenses:
Selling expenses	59,084,865	51,651,713
General and administrative expense	9,231,987	8,543,023
Impairment of goodwill	26,533,960	19,219,870
Total operating expenses	95,014,413	79,414,606
Loss from operations	(32,588,322)	(15,684,739)
Non-operating income (expense):
Interest income	259,713	676,186
Interest expense	(1,014,145)	(121,425)
Total non-operating income	(754,432)	554,761
Loss before income tax	(33,342,754)	(15,129,978)
Income taxes	(2,300,214)	1,453,403
Net loss	(31,042,540)	(16,583,381)
Comprehensive income statement:
Net loss	(31,042,540)	(16,583,381)
Foreign currency translation adjustment	1,322,788	4,033,171
Comprehensive loss	$ (29,719,752)	$ (12,550,210)
Basic earnings per share of common stock	$ (2.95)	$ (1.63)
Diluted earnings per share	$ (2.95)	$ (1.63)
Weighted average shares used in calculating net income per ordinary share - basic	10,509,469	10,166,618
Weighted average shares used in calculating net income per ordinary share - diluted	10,509,469	10,166,618
Basic earnings per share of common stock	$ (23.63)	$ (13.05)
Diluted earnings per share	$ (23.63)	$ (13.05)
Weighted average shares used in calculating net income per ordinary share ? basic	1,313,684	1,270,827
Weighted average shares used in calculating net income per ordinary share ? diluted	1,313,684	1,270,827

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Property, Plant And Equipment, Net

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment, Net [Abstract]

Property, plant and equipment, Net

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following:

December 31,	2012			2011
Buildings	$	6,773,312		$	6,861,043
Shop equipment		19,483,024			19,815,360
Office equipment		4,243,396			4,028,789
Motor vehicles		1,460,327			1,642,125
Car park		20,392			20,237
Leasehold improvements		27,150,156			27,515,996
Construction in progress		10,008,740			2,087,368
Total property, plant and equipment		69,139,347			61,970,918
Less:  accumulated depreciation and amortization		(23,699,987	)		(18,928,782	)
Total property, plant and equipment, net	$	45,439,360		$	43,042,136

Buildings with net book value of approximately $5,255,580 were used as collateral of short term bank loans.

The depreciation expenses for the years ended December 31, 2012 and 2011 were $6,702,740 and $6,065,858, respectively

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Restatement Of Financial Statements

12 Months Ended

Dec. 31, 2012

Restatement of Financial Statements [Abstract]

Restatement of Financial Statements

NOTE 18 - RESTATEMENT OF FINANCIAL STATEMENTS

The restatement is to amend the deferred income tax assets of the consolidated balance sheet which were split into current and noncurrent in accordance with the guidance of ASC 740-10-45:

Ÿ In a classified statement of financial position, an entity shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. (ASC 740-10-45-4)

Ÿ A deferred tax liability or asset for a temporary difference that is related to an asset or liability shall be classified as current or noncurrent based on the classification of the related asset or liability. (ASC 740-10-45-7)

Ÿ A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. (ASC 740-10-45-9)

This amendment was made to re-classify $3,259,129 and $2,577,593 as of December 31, 2012 and 2011 from the current deferred income tax to non-current deferred income tax so as to reflect the long-term effect of the temporary difference of these items.

The impact of the affected line items of the Company's financial statements is set forth below:

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2012

	As previously reported		As restated
Deferred income tax assets - current portion	$	6,327,932	$	3,068,803
Total current assets		114,068,458		110,809,329
Deferred income tax assets - non-current portion		-		3,259,129
Total assets	$	160,245,554	$	160,245,554

As a result of the restatement of the consolidated balance sheet as of December 31, 2012, the deferred income tax assets - current portion was reduced by $3,259,129 and changed from $6,327,932 to $3,068,803; the total current assets also reduced by $3,259,129 and changed from $114,068,458 to $110,809,329. The deferred income tax assets - noncurrent portion was increased by $3,259,129 and changed from $0 to $3,259,129. The total assets did not have any changes.

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2011

	As previously reported		As restated
Deferred income tax assets - current portion	$	2,972,570	$	394,977
Total current assets		94,699,102		92,121,509
Deferred income tax assets - non-current portion		-		2,577,593
Total assets	$	165,357,149	$	165,357,149

As a result of the restatement of the consolidated balance sheet as of December 31, 2011, the deferred income tax assets - current portion was reduced by $2,577,593 and changed from $2,972,570 to $394,977; the total current assets also reduced by $2,577,593 and changed from $94,699,102 to $92,121,509. The deferred income tax assets - noncurrent portion was increased by $2,577,593 and changed from $0 to $2,577,593. The total assets did not have any changes.

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Income Taxes (Deferred Tax Assets) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Accrued liabilities	$ 2,877,333	$ 394,977
Inventory provision	191,470
Depreciation on property, plant and equipment	70,442	77,347
Net operating loss carry-forward	3,188,687	2,500,246
Total deferred income taxes	6,327,932	2,972,570
Less: valuation allowance
Net deferred income taxes	$ 6,327,932	$ 2,972,570

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Goodwill (Consideration for Acquisitions) (Details)	12 Months Ended			12 Months Ended
	Dec. 31, 2012 USD ($)	Dec. 31, 2010 USD ($)	Dec. 31, 2008 USD ($)	Dec. 31, 2008 Anda Store [Member] CNY	Dec. 31, 2008 Nehe Store [Member] CNY	Dec. 31, 2008 Fuyu Store [Member] CNY	Dec. 31, 2008 Xinguangtiandi Store [Member] CNY	Dec. 31, 2008 Hailaer Store [Member] CNY	Dec. 31, 2010 Jian Store [Member] CNY	Dec. 31, 2010 Manzhouli Store [Member] CNY	Dec. 31, 2010 Taian Store [Member] CNY	Dec. 31, 2010 Arongqi Store [Member] CNY	Dec. 31, 2010 Mulan Store [Member] CNY	Dec. 31, 2010 Liaoyang Store [Member] CNY	Dec. 31, 2010 Siping Store [Member] CNY
Business Acquisition [Line Items]
Business acquisition effective date				Aug. 31, 2008	Sep. 30, 2008	Oct. 31, 2008	Sep. 30, 2008	Oct. 31, 2008	Aug. 01, 2010	Jul. 01, 2010	Jul. 01, 2010	Nov. 01, 2010	Dec. 01, 2010	Oct. 01, 2010	Nov. 01, 2010
Consideration paid with cash		$ 158,580,000	$ 136,740,000	22,740,000	16,800,000	17,400,000	13,800,000	66,000,000	31,500,000	18,380,000	28,000,000	16,100,000	14,000,000	27,600,000	23,000,000
Fair value of net assets			5,300,914	970,404	828,500	1,042,010	880,000	1,580,000
Goodwill		158,580,000	131,439,086	21,769,596	15,971,500	16,357,990	12,920,000	64,420,000	31,500,000	18,380,000	28,000,000	16,100,000	14,000,000	27,600,000	23,000,000
Acquisition-related costs	$ 117,747

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

NOTE 12 - INCOME TAXES

The income tax provision consisted of the following:

Years Ended December 31,	2012			2011
Current:
Foreign	$	(198,092	)	$	3,856,527
Federal		-			-
State		-			-
Deferred:
Foreign		(2,102,122	)		(2,403,124	)
Federal		-			-
State		-			-
Provision for income taxes	$	(2,300,214	)	$	1,453,403

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components that give rise to deferred tax as of December 31, 2012 and 2011 were as follows:

December 31,	2012		2011
Current:
Accrued liabilities	$	2,877,333	$	394,977
Inventory provision		191,470		-
Non-current:
Depreciation on property, plant and equipment		70,442		77,347
Net operating loss carry-forward		3,188,687		2,500,246
Total deferred income taxes		6,327,932		2,972,570
Less: valuation allowance		-		-
Net deferred income taxes	$	6,327,932	$	2,972,570

The difference between the effective income tax rate and the expected federal statutory rate was as follows:

Years Ended December 31,	2012			2011
Statutory rate		34.0	%		34.0	%
Income tax rate reduction		(9.0	)%		(9.0	)%
Permanent differences		-	%		-	%
Valuation allowance		-	%		-	%
Impairment of goodwill		(20.0	)%		(31.8	)%
Warrant liability		-	%		-	%
Other		1.9	%		(2.8	)%
Effective income tax rate		6.9	%		(9.6	)%

The permanent differences were related to the non-deductible expenses under China taxation law.

Dividends paid by Speedy Brilliant (Daqing) to Speedy Brilliant BVI are subject to the withholding tax of 10%. Distributions made out of pre January 1, 2008 retained earnings will not be subject to the withholding tax. The Company's PRC entities historically have not declared or paid any dividends.

Aggregate losses of the Company's subsidiary, variable interests entity and its subsidiary located in the PRC that are available for distribution to the Company of approximately $2.63 million at December 31, 2012 are considered to be indefinitely reinvested, and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to the Company.

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Summary of Significant Accounting Policies (Foreign Exchange Rates) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
China, Yuan Renminbi [Member]
Foreign Exchange Translation [Line Items]
Foreign exchange rate	6.3161	6.3647
Foreign exchange rate	6.3198	6.4735
United States of America, Dollars [Member]
Foreign Exchange Translation [Line Items]
Foreign exchange rate	1.000	1.000
Foreign exchange rate	1.000	1.000

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Short Term Bank Loans (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Short-term Debt [Line Items]
Short-term bank loans	$ 15,832,555	$ 10,998,162
Land rights used as collateral for short term debt	724,760	748,410
Property used as collateral for short term borrowings	45,439,360	43,042,136
Longjiang Commercial Bank, Due April 18, 2013[Member]
Short-term Debt [Line Items]
Short-term bank loans	7,916,278	7,855,830
Due date	Apr. 24, 2013
Interest rate	7.544%
Longjiang Commercial Bank, Due April 25, 2013[Member]
Short-term Debt [Line Items]
Short-term bank loans	7,916,277	3,142,332
Due date	Apr. 24, 2013
Interest rate	7.544%
Short-Term [Member]
Short-term Debt [Line Items]
Land rights used as collateral for short term debt	724,760
Property used as collateral for short term borrowings	5,255,580
Short-Term [Member] | Building [Member]
Short-term Debt [Line Items]
Property used as collateral for short term borrowings	$ 5,255,580

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Schedule of Income Tax Provision

Years Ended December 31,	2012			2011
Current:
Foreign	$	(198,092	)	$	3,856,527
Federal		-			-
State		-			-
Deferred:
Foreign		(2,102,122	)		(2,403,124	)
Federal		-			-
State		-			-
Provision for income taxes	$	(2,300,214	)	$	1,453,403

Schedule of Deferred Tax Asset

December 31,	2012		2011
Current:
Accrued liabilities	$	2,877,333	$	394,977
Inventory provision		191,470		-
Non-current:
Depreciation on property, plant and equipment		70,442		77,347
Net operating loss carry-forward		3,188,687		2,500,246
Total deferred income taxes		6,327,932		2,972,570
Less: valuation allowance		-		-
Net deferred income taxes	$	6,327,932	$	2,972,570

Schedule of Effective Income Tax Rate Reconciliation

Years Ended December 31,	2012			2011
Statutory rate		34.0	%		34.0	%
Income tax rate reduction		(9.0	)%		(9.0	)%
Permanent differences		-	%		-	%
Valuation allowance		-	%		-	%
Impairment of goodwill		(20.0	)%		(31.8	)%
Warrant liability		-	%		-	%
Other		1.9	%		(2.8	)%
Effective income tax rate		6.9	%		(9.6	)%

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Organization and Business Operations (Tables)

12 Months Ended

Dec. 31, 2012

Organization and Business Operations [Abstract]

Variable Interest Entities And Subsidiaries Consolidated Financial Information

	December 31,
	2012		2011
Total current assets	$	68,332,510	$	94,572,493
Total noncurrent assets		46,177,096		70,658,046
Total assets		114,509,606		165,230,539
Total current liabilities		101,340,678		77,475,533
Total noncurrent liabilities		-		-
Total liabilities	$	101,340,678	$	77,475,533

	December 31,
	2012			2011
Net sales	$	365,624,781		$	370,500,420
Gross profit		62,426,091			63,729,867
Loss from operations		(32,107,932	)		(13,643,245	)
Net loss		(29,807,718	)		(15,096,648	)
VIE retained earnings	$	(2,634,541	)	$	31,288,763

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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Functional Currency Translation

The Company's financial statements are presented in the U.S. dollar ($), which is the Company's reporting currency, while its functional currency is Chinese Renminbi (RMB). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $  using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period.  Adjustments resulting from the translation are recorded in shareholders' equity as part of accumulated other comprehensive income.

Segments Reporting

The Company operates in one industry segment, operating retail chain stores.  ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Revenue Recognition

The Company earns revenue by selling merchandise primarily through its retail stores. Revenue is recognized when merchandise is purchased by and delivered to the customer and is shown net of estimated returns during the relevant period. The allowance for sales returns is estimated based upon historical experience.

Cash received from the sale of cash card (aka "gift card") is recorded as a liability, and revenue is recognized upon the redemption of the cash card or when it is determined that the likelihood of redemption is remote ("cash card breakage") and no liability to relevant jurisdictions exists. The Company determines the cash card breakage rate based upon historical redemption patterns and recognizes cash card breakage on a straight-line basis over the estimated cash card redemption period.  The Company recognized approximately nil in cash card breakage revenue for fiscal 2012 and 2011, respectively.

The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.

Included in revenue are sales of returned merchandise to vendors specializing in the resale of defective or used products, which accounted for less than 0.5% of net sales in each of the periods reported.

Cost of Sales

Cost of sales includes the cost of merchandise, related cost of packaging and shipping cost and the distribution center costs.

Selling Expenses

Selling expenses include store-related expense, other than store occupancy costs, as well as advertising, depreciation and amortization, and certain expenses associated with operating the Company's corporate headquarters.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $135,877 and $192,779 for fiscal 2012 and 2011, respectively. Advertising expense is included in selling expense in the accompanying consolidated statements of income. The Company receives co-operative advertising allowances from product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors' products. These advertising allowances are recognized as a reduction to selling expense when the Company incurs the advertising cost eligible for the credit. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to nil for fiscal 2012 and 2011 respectively.

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable, in accordance with ASC 605. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. Amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction in selling and administrative expense. The Company performs detailed analyses to determine the appropriate amount of vendor allowances to be applied as a reduction of merchandise cost and selling expenses.

Leases

The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company's operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for store remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.

Restricted cash

Restricted cash are cash deposited in a trust account maintained in the United States for the purpose of investor and public relation affairs.

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products or co-operative advertising and amounts due from lessors for tenant improvement allowances. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Inventories

Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.

Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

Buildings	30 to 40 years
Shop equipment	5 years
Office equipment	3 years
Motor vehicles	5 years
Car park	43 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Land Use Rights

According to the laws of the PRC, the government owns all the land in the PRC.  Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 30 to 40 years.

Goodwill

Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles - Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.

The Company performed an annual impairment test as of the end of fiscal 2012 and 2011, and determined that an impairment loss in the amount of $26,697,561 and $19,219,870 were recorded in 2012 and 2011 respectively.

Long-Lived Assets

The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.

The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management's estimates due to changes in business conditions, operating performance and economic conditions.

The Company's evaluation resulted in no long-lived asset impairment charges during fiscal 2012 and 2011.

Concentrations of credit risk

The Company maintains cash in bank deposit accounts in PRC, except one restricted cash deposit account in the U.S. for the sole purpose of disbursements of investor relations expenses.  The account in the U.S. is uninsured by the Federal Deposit Insurance Corporation ("FDIC") up to nil. The Company performs ongoing evaluations of this institution to limit its concentration risk exposure.

The Company operates retail stores located principally in the Northeast China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.

The Company relies on three distribution centers located in Daqing, Shenyang and Harbin, China, which service its stores. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company's ability to adequately stock its stores.

Accrual and Disclosure of Loss Contingencies

We determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated. We analyze, if any, our litigation and regulatory matters based on available information to assess the potential liabilities. Our assessment is developed based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we will disclose the potential range of the loss, if estimable. We record losses related to contingencies in cost of operations or selling, general and administrative expenses, depending on the nature of the underlying transaction leading to the loss contingency.

Retirement Benefit Plans

Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees' salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation-Retirement Benefits.

The total amounts for such employee benefits which were expensed were $4,708,372 and $3,370,869 for the years ended December 31, 2012 and 2011, respectively.

Retained Earnings - Appropriated

The income of the Company's PRC subsidiaries is distributable to their shareholder after transfer to reserves as required by relevant PRC laws and regulations and the subsidiary's Articles of Association.  As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors.

Reserves include statutory surplus reserves and discretionary reserves.  Statutory surplus reserves can be used to make good previous years' losses, if any, and may be converted into capital in proportion to the existing equity interests of shareholders, provided that the balance after such conversion is not less than 25% of the registered capital.  The appropriation to the statutory surplus reserves must not be less than 10% of net profit after taxation.  Such appropriation may cease to apply if the balance of the fund is equal to 50% of the entity's registered capital.  The annual appropriations of reserves of QKL-China and Qinglongxin Commerce are 10% and 10% for the years ended December 31, 2012 and 2011, respectively.

Income Taxes

The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted ASC 740-10-25 on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position.  The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.

Fair Value Measurements

ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 establishes three levels of inputs that may be used to measure fair value:

· Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2 - Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly.

· Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company adopted ASC 820, Fair Value Measurements and Disclosures, on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company has also adopted ASC 820, on January 1, 2009 for non financial assets and non financial liabilities, as these items are not recognized at fair value on a recurring basis. The adoption of ASC 820 for all financial assets and liabilities and non-financial assets and non-financial liabilities did not have any impact on the Company's consolidated financial statements.

Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. See footnote 10 regarding the fair value of the Company's warrants, which are classified as Level 3 liabilities in the fair value hierarchy.

The fair value of warrants was calculated using the Black-Scholes option pricing model. The assumptions that were used to calculate fair value as of December 31, 2009 were as follows:

Investor Warrants:	12/31/2009
Expected volatility		54	%
Risk free rate		1.82	%
Expected terms		3.24
Expected dividend yield		-

Expected volatility is based on average peer group volatility with comparable size and operations. The Company did not have enough historical share trade period and was thinly traded. The Company believes this method produces an estimate that is representative of the Company's expectations of future volatility over the expected term of these warrants. The Company has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities according to the remaining term of the warrants.

Recently Issued Accounting Guidance

In July 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-02, Intangibles--Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification Subtopic 350-30, Intangibles--Goodwill and Other, General Intangibles Other than Goodwill. Under the guidance in this ASU, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

In August 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-03, Technical Amendments and Corrections to SEC Sections. This ASU amends various SEC paragraphs pursuant to SAB 114, SEC Release No. 33-9250, and ASU 2010-22, which amend or rescind portions of certain SAB Topics.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-05, Statement of Cash Flows (Topic 230). This ASU addresses how cash receipts arising from the sale of certain donated financial assets, such as securities, should be classified in the statement of cash flows of not-for-profit entities (NFPs). Some NFPs classify those cash receipts as investing cash inflows, while other entities classify them as either operating cash inflows or financing cash inflows, consistent with their treatment of inflows arising from cash contributions. The objective of this Update is for an NFP to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without the NFP imposing any limitations for sale and were converted nearly immediately into cash. The amendments in the ASU are effective prospectively for fiscal years, and interim fiscal periods within those years, beginning after June 15, 2013. Retrospective application to all periods presented upon the date of adoption is permitted. Early adoption from the beginning of the fiscal year of adoption is permitted.

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Organization and Business Operations (VIE's and Subsidiaries Amounts - Income Statement) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Noncontrolling Interest [Line Items]
Net Sales	$ 365,624,781	$ 370,500,420
Gross Profit	62,426,091	63,729,867
(Loss) income from operations	(32,588,322)	(15,684,739)
Net (loss) income	(31,042,540)	(16,583,381)
Subsidiaries And VIEs [Member]
Noncontrolling Interest [Line Items]
Net Sales	365,624,781	370,500,420
Gross Profit	62,426,091	63,729,867
(Loss) income from operations	(32,107,932)	(13,643,245)
Net (loss) income	(29,807,718)	(15,096,648)
Variable Interest [Member]
Noncontrolling Interest [Line Items]
Retained earnings	$ (2,634,541)	$ 31,288,763

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Accrued Expenses and Other Payables (Tables)

12 Months Ended

Dec. 31, 2012

Accrued Expenses and Other Payables [Abstract]

Components of Accrued Expenses and Other Payables

December 31,	2012		2011
Accrued expenses	$	16,146,809	$	8,184,785
VAT and other PRC tax payable		134,483		1,695,669
Repair, maintenance, and purchase of equipment payable		500,280		2,535,486
Amount due to a director - unsecured, interest free and no repayment date		7,916,277		-
Employee promoters bond deposit		3,399,363		1,912,716
Total other payables	$	28,097,212	$	14,328,656

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Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2012

Comprehensive Income [Abstract]

Schedule of Comprehensive Income

Years Ended December 31,	2012			2011
Net income	$	(31,042,540	)	$	(16,583,381	)
Other comprehensive income, net of tax
Foreign currency translation adjustment		1,322,788			4,033,171
Comprehensive income	$	(29,719,752	)	$	(12,550,210	)

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Summary of Significant Accounting Policies (Useful Lives) (Details)	12 Months Ended
	Dec. 31, 2012
Buildings [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	30 years
Buildings [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	40 years
Shop equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Motor Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Car Park [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	43 years

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Land Use Rights (Tables)

12 Months Ended

Dec. 31, 2012

Land Use Rights [Abstract]

Schedule Of Land Use Rights

December 31,	2012			2011
Land use rights	$	930,118		$	923,016
Less - accumulated amortization		(205,358	)		(174,606	)
Total intangible assets, net	$	724,760		$	748,410

Schedule Of Land Use Rights Future Amortization

Years ending December 31,	Amount
2013	$	29,391
2014		29,391
2015		29,391
2016		29,391
2017		29,391
Thereafter		577,805
Total	$	724,760

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Shared Based Compensation (Fair Value Assumptions) (Details)	0 Months Ended
	Dec. 02, 2010	Jun. 26, 2010	Sep. 14, 2009
Share Based Compensation [Abstract]
Expected life (years)	3 years 3 months	3 years 3 months	3 years 6 months
Expected volatility	44.90%	53.00%	41.20%
Risk-free interest rate	0.96%	1.49%	1.69%
Dividend yield

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Comprehensive Income (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Comprehensive Income [Abstract]
Net income to QKL Stores, Inc. for computing basic net income (loss) per share	$ (31,042,540)	$ (16,583,381)
Foreign currency translation adjustment	1,322,788	4,033,171
Comprehensive loss	$ (29,719,752)	$ (12,550,210)

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Shared Based Compensation (Details) (USD $)	0 Months Ended			12 Months Ended
	Dec. 02, 2010	Jun. 26, 2010	Sep. 14, 2009	Dec. 31, 2012	Dec. 31, 2011	Jan. 30, 2010
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of independent directors entered into option agreement			3			3
Stock option granted	33,333	690,000	6,666
Stock option granted, exercise price	$ 10.26	$ 13.20	$ 24.00			$ 22.50
Options vesting installments	4	4	3
Options expiration period	8 years	8 years
Number of employee granted		21
Stock-based compensation				$ 850,381
Total unrecognized compensation cost				1,224,525
Weighted average grant date fair value of options granted during year
Restated Amount Reflecting Reverse Stock Split Member [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted	4,167	86,250	833
Stock option granted, exercise price	$ 82.08	$ 105.60	$ 192
Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost expected to be recognized over a weighted - average period				1 year
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cost expected to be recognized over a weighted - average period				2 years

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Organization and Business Operations (Details) (USD $)	12 Months Ended				12 Months Ended						12 Months Ended
	Dec. 31, 2012 sqft	Dec. 31, 2011 sqft	Dec. 31, 2010 sqft	Dec. 31, 2009 sqft	Dec. 31, 2010 Common Stock Assuming Conversionof Series APreferred Stock [Member] Forme [Member]	Dec. 31, 2010 Common Stock Assuming Conversion Of Series APreferred Stock Warrants A And B [Member] Forme [Member]	Dec. 31, 2012 Consigned Management Agreement [Member]	Dec. 31, 2012 Technology Service Agreement [Member]	Dec. 31, 2012 Loan Agreement [Member]	Dec. 31, 2010 Equity Pledge Agreement [Member]	Dec. 31, 2012 Equity Pledge Agreement [Member] Zhuangyi Wang [Member]	Dec. 31, 2010 Share Exchange Agreement [Member] Forme [Member]	Dec. 31, 2010 Share Exchange Agreement [Member] Restated Amount Reflecting Reverse Stock Split Member [Member] Forme [Member]	Dec. 31, 2010 Share Exchange Agreement [Member] Zhuangyi Wang [Member] Speedy Brilliant [Member]	Dec. 31, 2010 Share Exchange Agreement [Member] Three Individuals [Member] Speedy Brilliant [Member]	Dec. 31, 2012 Supermarket [Member] sqft	Dec. 31, 2012 Hypermarket [Member] sqft	Dec. 31, 2012 Department Stores in Northeastern China and Inner Mongolia [Member]
Organization and Nature of Operations [Line Items]
Number of regional market	1	14	9	7												30	14	4
Sales area square meters	5,700	101,000	74,189	32,000												2,500	4,500
Number of Distribution Centers	3
Number of brands that the company has access to engage in group bargaining																		2,000
Mandatory appropriation to statutory reserve	10.00%
Percentage of registered capital to meet in order to discontinue revenue appropriations	50.00%
Restructuring Cost and Reserve [Line Items]
Percentage of revenues paid							4.50%	1.50%
Percentage of ownership that must be met in order to hault revenue payments under agreements							100.00%	100.00%
Loans payable									$ 11,200,000	$ 1,200,000
Material contract amount									$ 7,000,000
Stock issued, shares												6,460,766	807,596
Percentage of shares owned					64.60%	46.30%					96.00%	92.80%		98.50%	1.50%

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Income Taxes (Narrative) (Details) (USD $)			12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Subsidiaries And VIEs [Member]
Income Tax Disclosure [Line Items]
Dividend witholding tax rate			10.00%
Retained earnings - appropriated	$ 8,323,312	$ 7,282,560	$ 2,630,000

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

Valuation and Qualifying Accounts [Abstract]

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES

QKL STORES INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

	Balance at		Charged to				Balance at
	Beginning of		Costs and				End of
	Period		Expenses		Deductions		Period
December 31, 2011
Allowance for doubtful receivables	$	-	$	-	$	-	$	-
Allowance for sales returns		15,077		2,379,040		2,347,160		46,957
Inventory reserves		55,780		372,777		97,366		331,191
December 31, 2012
Allowance for doubtful receivables	$	-	$	-	$	-	$	-
Allowance for sales returns		46,957		2,407,567		2,427,381		27,143
Inventory reserves		331,191		434,690		-		765,882

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Consolidated Statement of Cash Flow (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (31,042,540)	$ (16,583,381)
Depreciation-property, plant and equipment	6,702,740	6,065,858
Amortization	29,391	28,693
Deferred income tax	(3,330,517)	(2,403,124)
Loss on disposal of property, plant and equipment	(303,396)	27,310
Share-based compensation	850,381	864,608
Impairment of goodwill	26,533,960	19,219,870
Provision on inventory and sales return	453,311
Adjustments to reconcile net income to net cash provided by operating activities:
Accounts receivable	(680,445)	58,849
Inventories	(5,481,236)	(8,142,931)
Other receivables	(5,289,513)	17,341,478
Prepaid expenses	(4,437,289)	(833,463)
Advances to suppliers	713,061	(6,275,018)
Accounts payable	2,262,687	(12,038,941)
Cash card and coupon liabilities	2,454,996	4,790,050
Customer deposits received	309,322	(621,496)
Accrued expenses and other payables	13,357,512	4,069,493
Income taxes payable	(225,903)	(2,230,766)
Net cash provided by operating activities	3,040,123	3,337,089
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	9,411,202	23,640,152
Sales proceeds of fixed assets disposal	947,049	155,310
Decrease of restricted cash		76,952
Net cash used in investing activities	(8,464,153)	(23,407,890)
CASH FLOW FROM FINANCING ACTIVITIES:
Bank loan repayment	(11,076,230)
Bank borrowings	15,823,185	10,998,162
Net cash used in financing activities	4,746,955	10,998,162
Net decrease in cash	(677,075)	(9,072,639)
Cash at beginning of period	9,037,550	17,460,034
Cash at end of period	8,479,413	9,037,550
Supplemental disclosure of cash flow information:
Interest paid	1,014,145	121,425
Income taxes paid	$ 822,923	$ 5,995,442

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accouting Policies

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Presentation

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").  The consolidated financial statements include the financial statements of QKL Stores Inc, and its wholly-owned subsidiaries (collectively referred to herein as the "Company").  All intercompany accounts, transactions, and profits have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Foreign Currency Translation

The Company's financial statements are presented in the U.S. dollar ($), which is the Company's reporting currency, while its functional currency is Chinese Renminbi (RMB). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $  using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period.  Adjustments resulting from the translation are recorded in shareholders' equity as part of accumulated other comprehensive income.

Below is a table with foreign exchange rates used for translation:

	(Average Rate) Years Ended December 31,
	2012		2011
Chinese Renminbi (RMB)	RMB	6.3198	RMB	6.4735
United States dollar ($)	$	1.0000	$	1.0000

As of December 31,	2012		2011
Chinese Renminbi (RMB)	RMB	6.3161	RMB	6.3647
United States dollar ($)	$	1.0000	$	1.0000

Segment Reporting

The Company operates in one industry segment, operating retail chain stores.  ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Given the economic characteristics of the similar nature of the products sold, the type of customer and the method of distribution, the Company operates as one reportable segment as defined by ASC 280, Segment Reporting.

Revenue Recognition

The Company earns revenue by selling merchandise primarily through its retail stores. Revenue is recognized when merchandise is purchased by and delivered to the customer and is shown net of estimated returns during the relevant period. The allowance for sales returns is estimated based upon historical experience.

Cash received from the sale of cash card (aka "gift card") is recorded as a liability, and revenue is recognized upon the redemption of the cash card or when it is determined that the likelihood of redemption is remote ("cash card breakage") and no liability to relevant jurisdictions exists. The Company determines the cash card breakage rate based upon historical redemption patterns and recognizes cash card breakage on a straight-line basis over the estimated cash card redemption period.  The Company recognized approximately nil in cash card breakage revenue for fiscal 2012 and 2011, respectively.

The Company records sales tax collected from its customers on a net basis, and therefore excludes it from revenue as defined in ASC 605, Revenue Recognition.

Included in revenue are sales of returned merchandise to vendors specializing in the resale of defective or used products, which accounted for less than 0.5% of net sales in each of the periods reported.

Cost of Sales

Cost of sales includes the cost of merchandise, related cost of packaging and shipping cost and the distribution center costs.

Selling Expenses

Selling expenses include store-related expense, other than store occupancy costs, as well as advertising, depreciation and amortization, and certain expenses associated with operating the Company's corporate headquarters.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense, net of reimbursement from suppliers, amounted to $135,877 and $192,779 for fiscal 2012 and 2011, respectively. Advertising expense is included in selling expense in the accompanying consolidated statements of income. The Company receives co-operative advertising allowances from product vendors in order to subsidize qualifying advertising and similar promotional expenditures made relating to vendors' products. These advertising allowances are recognized as a reduction to selling expense when the Company incurs the advertising cost eligible for the credit. Co-operative advertising allowances recognized as a reduction to selling and administrative expense amounted to nil for fiscal 2012 and 2011 respectively.

Vendor Allowances

The Company receives allowances for co-operative advertising and volume purchase rebates earned through programs with certain vendors. The Company records a receivable for these allowances which are earned but not yet received when it is determined the amounts are probable and reasonably estimable, in accordance with ASC 605. Amounts relating to the purchase of merchandise are treated as a reduction of inventory cost and reduce cost of goods sold as the merchandise is sold. Amounts that represent a reimbursement of costs incurred, such as advertising, are recorded as a reduction in selling and administrative expense. The Company performs detailed analyses to determine the appropriate amount of vendor allowances to be applied as a reduction of merchandise cost and selling expenses.

Leases

The Company accounts for its leases under the provisions of ASC 840, Leases. Certain of the Company's operating leases provide for minimum annual payments that change over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for minimum step rents when the amount of rent expense exceeds the actual lease payments and it reduces the deferred rent liability when the actual lease payments exceeds the amount of straight-line rent expense. Rent holidays and tenant improvement allowances for store remodels are amortized on the straight-line basis over the initial term of the lease and any option period that is reasonably assured of being exercised.

Restricted Cash

Restricted cash are cash deposited in a trust account maintained in the United States for the purpose of investor and public relation affairs.

Accounts Receivable

Accounts receivable consist primarily of third party purchasing card receivables, amounts due from inventory vendors for returned products or co-operative advertising and amounts due from lessors for tenant improvement allowances. Accounts receivable have not historically resulted in any material credit losses. An allowance for doubtful accounts is provided when accounts are determined to be uncollectible.

Inventories

Inventories primarily consist of merchandise inventories and are stated at lower of cost or market and net realizable value. Cost of inventories is calculated on the weighted average basis which approximates cost.

Management regularly reviews inventories and records valuation reserves for damaged and defective returns, inventories with slow-moving or obsolescence exposure and inventories with carrying value that exceeds market value. Because of its product mix, the Company has not historically experienced significant occurrences of obsolescence.

Inventory shrinkage is accrued as a percentage of revenues based on historical inventory shrinkage trends. The Company performs physical inventory count of its stores once per quarter and cycle counts inventories at its distribution centers once per quarter throughout the year. The reserve for inventory shrinkage represents an estimate for inventory shrinkage for each store since the last physical inventory date through the reporting date.

These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual results if future economic conditions, consumer demand and competitive environments differ from expectations.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

Buildings	30 to 40 years
Shop equipment	5 years
Office equipment	3 years
Motor vehicles	5 years
Car park	43 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Land Use Rights

According to the laws of the PRC, the government owns all the land in the PRC.  Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 30 to 40 years.

Goodwill

Goodwill represents the excess of purchase price over fair value of net assets acquired. Under ASC 350, Intangibles - Goodwill and Other, goodwill is not amortized but evaluated for impairment annually or whenever events or changes in circumstances indicate that the value may not be recoverable.

The Company performed an annual impairment test as of the end of fiscal 2012 and 2011, and determined that an impairment loss in the amount of $26,697,561 and $19,219,870 were recorded in 2012 and 2011 respectively.

Long-lived Assets

The Company reviews long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, usually at the store level. The carrying amount of a long-lived asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. If the asset is determined not to be recoverable, then it is considered to be impaired and the impairment to be recognized is the amount by which the carrying amount of the asset exceeds the fair value of the asset, determined using discounted cash flow valuation techniques, as defined in ASC 360, Property, Plant, and Equipment.

The Company determined the sum of the undiscounted cash flows expected to result from the use of the asset by projecting future revenue and operating expense for each store under consideration for impairment. The estimates of future cash flows involve management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management's estimates due to changes in business conditions, operating performance and economic conditions.

The Company's evaluation resulted in no long-lived asset impairment charges during fiscal 2012 and 2011.

Concentration of Credit Risk

The Company maintains cash in bank deposit accounts in PRC, except one restricted cash deposit account in the U.S. for the sole purpose of disbursements of investor relations expenses.  The account in the U.S. is uninsured by the Federal Deposit Insurance Corporation ("FDIC") up to nil. The Company performs ongoing evaluations of this institution to limit its concentration risk exposure.

The Company operates retail stores located principally in the Northeast China. Because of this, the Company is subject to regional risks, such as the economy, regional financial conditions and unemployment, weather conditions, power outages, and other natural disasters specific to the region in which the Company operates.

The Company relies on three distribution centers located in Daqing, Shenyang and Harbin, China, which service its stores. Any natural disaster or other serious disruption to the distribution center due to fire, earthquake or any other cause could damage a significant portion of inventory and could materially impair the Company's ability to adequately stock its stores.

Accrual and Disclosure of Loss Contingencies

We determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated. We analyze, if any, our litigation and regulatory matters based on available information to assess the potential liabilities. Our assessment is developed based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we will disclose the potential range of the loss, if estimable. We record losses related to contingencies in cost of operations or selling, general and administrative expenses, depending on the nature of the underlying transaction leading to the loss contingency.

Retirement Benefit Plans

Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees' salaries. The Company accounts the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of ASC 715, Compensation-Retirement Benefits.

The total amounts for such employee benefits which were expensed were $4,708,372 and $3,370,869 for the years ended December 31, 2012 and 2011, respectively.

Retained Earnings - Appropriated

The income of the Company's PRC subsidiaries is distributable to their shareholder after transfer to reserves as required by relevant PRC laws and regulations and the subsidiary's Articles of Association.  As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors.

Reserves include statutory surplus reserves and discretionary reserves.  Statutory surplus reserves can be used to make good previous years' losses, if any, and may be converted into capital in proportion to the existing equity interests of shareholders, provided that the balance after such conversion is not less than 25% of the registered capital.  The appropriation to the statutory surplus reserves must not be less than 10% of net profit after taxation.  Such appropriation may cease to apply if the balance of the fund is equal to 50% of the entity's registered capital.  The annual appropriations of reserves of QKL-China and Qinglongxin Commerce are 10% and 10% for the years ended December 31, 2012 and 2011, respectively.

Income Taxes

The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted ASC 740-10-25 on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position.  The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.

Fair Value Measurements

ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 establishes three levels of inputs that may be used to measure fair value:

· Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2 - Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly.

· Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company adopted ASC 820, Fair Value Measurements and Disclosures, on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company has also adopted ASC 820, on January 1, 2009 for non financial assets and non financial liabilities, as these items are not recognized at fair value on a recurring basis. The adoption of ASC 820 for all financial assets and liabilities and non-financial assets and non-financial liabilities did not have any impact on the Company's consolidated financial statements.

Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments. See footnote 10 regarding the fair value of the Company's warrants, which are classified as Level 3 liabilities in the fair value hierarchy.

The fair value of warrants was calculated using the Black-Scholes option pricing model. The assumptions that were used to calculate fair value as of December 31, 2009 were as follows:

Investor Warrants:	12/31/2009
Expected volatility		54	%
Risk free rate		1.82	%
Expected terms		3.24
Expected dividend yield		-

Expected volatility is based on average peer group volatility with comparable size and operations. The Company did not have enough historical share trade period and was thinly traded. The Company believes this method produces an estimate that is representative of the Company's expectations of future volatility over the expected term of these warrants. The Company has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities according to the remaining term of the warrants.

Recently Issued Accounting Guidance

In July 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-02, Intangibles--Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification Subtopic 350-30, Intangibles--Goodwill and Other, General Intangibles Other than Goodwill. Under the guidance in this ASU, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

In August 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-03, Technical Amendments and Corrections to SEC Sections. This ASU amends various SEC paragraphs pursuant to SAB 114, SEC Release No. 33-9250, and ASU 2010-22, which amend or rescind portions of certain SAB Topics.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013.

In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-05, Statement of Cash Flows (Topic 230). This ASU addresses how cash receipts arising from the sale of certain donated financial assets, such as securities, should be classified in the statement of cash flows of not-for-profit entities (NFPs). Some NFPs classify those cash receipts as investing cash inflows, while other entities classify them as either operating cash inflows or financing cash inflows, consistent with their treatment of inflows arising from cash contributions. The objective of this Update is for an NFP to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without the NFP imposing any limitations for sale and were converted nearly immediately into cash. The amendments in the ASU are effective prospectively for fiscal years, and interim fiscal periods within those years, beginning after June 15, 2013. Retrospective application to all periods presented upon the date of adoption is permitted. Early adoption from the beginning of the fiscal year of adoption is permitted.

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Land Use Rights

12 Months Ended

Dec. 31, 2012

Land Use Rights [Abstract]

Land Use Rights

NOTE 5 - LAND USE RIGHTS

Land use rights consisted of the following:

December 31,	2012			2011
Land use rights	$	930,118		$	923,016
Less - accumulated amortization		(205,358	)		(174,606	)
Total intangible assets, net	$	724,760		$	748,410

The amortization expenses of land use rights for the years ended December 31, 2012 and 2011 were $29,391 and $28,693 respectively.

Future amortization of land use rights is as follows:

Years ending December 31,	Amount
2013	$	29,391
2014		29,391
2015		29,391
2016		29,391
2017		29,391
Thereafter		577,805
Total	$	724,760

Land use rights with net book value of $724,760 were used as collateral of short term bank loans.

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Commitments and Contingencies (Rental Expense Under Operating Leases) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Commitments and Contingencies [Abstract]
Rent expense	$ 9,846,142	$ 9,857,879
Less: Sublease income	2,135,839	1,983,347
Total rent expense, net	$ 7,710,303	$ 7,874,532

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Other Receivables

12 Months Ended

Dec. 31, 2012

Other Receivables [Abstract]

Other Receivables

NOTE 3 - OTHER RECEIVABLES

Other receivables consisted of the following: 

December 31,	2012		2011
Deposits (1)	$	2,860,232	$	666,207
Purchase deposits (2)		240,174		1,324,056
Input value added tax recoverable (3)		4,420,456		7,331,965
Rebates receivables (4)		2,366,521		2,363,854
Loans to customers (5)		7,844,421		-
Others		310,556		305,052
Total	$	18,042,360	$	11,991,134

(1)	Deposits are cash held by cashiers of retail stores for day to day operations.
(2)	Purchase deposits are cash held by employees in retail stores for the equipment purchase.
(3)	Input VAT arises when the group purchases products from suppliers and input VAT can be deducted from output VAT on sales.
(4)	Rebates receivables represent promotional allowances provided by vendors for promotions incurred by the company.
(5)	Loans to customers are short term loans with interest rates ranging from 0.6% to 1.0% per month made by QKL-LQ. All loans to customers will be collected within one year.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Rental Expense Under Operating Leases

Years Ended December 31,	2012		2011
Rent expense	$	9,846,142	$	9,857,879
Less: Sublease income		2,135,839		1,983,347
Total rent expense, net	$	7,710,303	$	7,874,532

Annual Minimum Payments Under OPerating Leases

Years Ended December 31,	Minimum Lease Payment		Sublease Income		Net Minimum Lease Payment
2013	$	8,430,420	$	1,098,557		7,331,863
2014		8,427,482		4,082		8,423,400
2015		8,333,014		-		8,333,014
2016		8,135,968		-		8,135,968
2017		7,936,970		-		7,936,970
Thereafter		72,993,791		-		72,993,791
Total	$	114,257,645	$	1,102,639	$	113,155,006

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Schedule Of Foreign Exchange Rates

	(Average Rate) Years Ended December 31,
	2012		2011
Chinese Renminbi (RMB)	RMB	6.3198	RMB	6.4735
United States dollar ($)	$	1.0000	$	1.0000

As of December 31,	2012		2011
Chinese Renminbi (RMB)	RMB	6.3161	RMB	6.3647
United States dollar ($)	$	1.0000	$	1.0000

Schedule Of Useful Lives Of Property Pland And Equipment

Buildings	30 to 40 years
Shop equipment	5 years
Office equipment	3 years
Motor vehicles	5 years
Car park	43 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Schedule Of Fair Value Of Warrants

Investor Warrants:	12/31/2009
Expected volatility		54	%
Risk free rate		1.82	%
Expected terms		3.24
Expected dividend yield		-

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill [Abstract]

Schedule of Goodwill Activity

	2012						2011
	(RMB)			(USD)			(RMB)			(USD)
Balance - beginning of year:
Goodwill		290,019,086			45,566,812			290,019,086			43,863,929
Accumulated impairment charges		(122,328,706	)		(19,219,870	)		-			-
		167,690,380		$	26,346,942			290,019,086		$	43,863,929
Activity during the year:
Additions		-			-			-			-
Impairment charge		(167,690,380	)	$	(26,533,960	)		(122,328,706	)		(19,219,870	)
Other adjustments*		-			187,018			-			1,702,883
		(167,690,380	)	$	(26,346,942	)		(122,328,706	)		(17,516,987	)
Balance - end of year:
Goodwill		290,019,086			45,917,431			290,019,086			45,566,812
Accumulated impairment charges		(290,019,086	)		(45,917,431	)		(122,328,706	)		(19,219,870	)
		-			-			167,690,380		$	26,346,942

Schedule Of Goodwill For Business Acquired

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Anda Store	08/31/2008	22,740,000	970,404	21,769,596	$	3,180,272
2	Nehe Store	09/30/2008	16,800,000	828,500	15,971,500		2,329,871
3	Fuyu Store	10/31/2008	17,400,000	1,042,010	16,357,990		2,387,324
4	Xinguangtiandi Store	09/30/2008	13,800,000	880,000	12,920,000		1,884,728
5	Hailaer Store	10/31/2008	66,000,000	1,580,000	64,420,000		9,401,607
	Total		136,740,000	5,300,914	131,439,086

*converted into U.S. dollars using the date of acquisition exchange rate

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Jian Store	08/01/10	31,500,000	-	31,500,000	$	4,647,080
2	Manzhouli Store	07/01/10	18,380,000	-	18,380,000		2,705,611
3	Taian Store	07/01/10	28,000,000	-	28,000,000		4,121,714
4	Arongqi Store	11/01/10	16,100,000	-	16,100,000		2,409,927
5	Mulan Store	12/01/10	14,000,000	-	14,000,000		2,096,923
6	Liaoyang Store	10/01/10	27,600,000	-	27,600,000		4,117,866
7	Siping Store	11/01/10	23,000,000	-	23,000,000		3,442,753
	Total		158,580,000	-	158,580,000

*   converted into U.S. dollars using the date of acquisition exchange rate

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Segment Information (Revenue by Merchandise Category) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Revenue [Line Items]
Net Sales	$ 365,624,781	$ 370,500,420
Sale Of General Merchandise [Member]
Segment Reporting Revenue [Line Items]
Net Sales	359,625,745	365,230,321
Sale Of General Merchandise [Member] | Grocery [Member]
Segment Reporting Revenue [Line Items]
Net Sales	134,599,622	125,176,060
Sale Of General Merchandise [Member] | Fresh Food [Member]
Segment Reporting Revenue [Line Items]
Net Sales	172,059,718	172,554,315
Sale Of General Merchandise [Member] | Non Food [Member]
Segment Reporting Revenue [Line Items]
Net Sales	$ 52,966,405	$ 67,499,946

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Shared Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Share Based Compensation [Abstract]

Assumptions Used to Estimate Fair Value of Awards Using Black-Scholes Option Pricing Model

	September 14, 2009			June 26, 2010			December 2, 2010
Expected life (years)		3.5			3.25			3.25
Expected volatility		41.2	%		53	%		44.9	%
Risk-free interest rate		1.69	%		1.49	%		0.96	%
Dividend yield		-			-			-

Summary of Stock Options Activities and Incentive Plans

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding - December 31, 2011		677,666	$	13.33		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding- December 31, 2012		677,666	$	13.33		1.46	$	-
Exercisable - December 31, 2012		414,600	$	13.51		1.43	$	-

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

The following summary of the Company's stock options activities under the 2009 Omnibus Securities and Incentive Plan are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term(Years)		Intrinsic Value
Outstanding - December 31, 2011		84,708	$	106.64		2.52	$	-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding- December 31, 2012		84,708	$	106.64		1.46	$	-
Exercisable - December 31, 2012		51,825	$	108.08		1.43	$	-

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Segment Information (Revenues by Products and Services) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Revenue [Line Items]
Net revenue	$ 365,624,781	$ 370,500,420
Sale Of General Merchandise [Member]
Segment Reporting Revenue [Line Items]
Net revenue	359,625,745	365,230,321
Department Store Income [Member]
Segment Reporting Revenue [Line Items]
Net revenue	4,832,718	4,060,540
Other Income [Member]
Segment Reporting Revenue [Line Items]
Net revenue	$ 1,166,318	$ 1,209,559

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Goodwill (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Abstract]
Goodwill balance at beginning of year	$ 45,566,812	$ 43,863,929
Accumulated impairment charges	(45,917,431)	(19,219,870)
Goodwill, net		26,346,942
Impairment charge	(26,533,960)	(19,219,870)
Other adjustments	187,018	1,702,883
Increase (decrease) in goodwill	(26,346,942)	(17,516,987)
Goodwill, gross - End balance		$ 45,566,812

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Summary of Significant Accounting Policies (Warrant Fair Value Assumptions) (Details) (Warrant [Member])	12 Months Ended
	Dec. 31, 2009
Warrant [Member]
Class Of Warrant Or Right [Line Items]
Fair value assumption, expected volatility	54.00%
Fair value assumption, risk-free interest rate	1.82%
Fair value assumption, expected lives	3 years 2 months 27 days
Fair value assumption, dividend yield	0.00%

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Organization and Business Operations (VIE's and Subsidiaries Amounts - Balance Sheet) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Noncontrolling Interest [Line Items]
Total current assets	$ 110,809,329	$ 92,121,509
Total assets	160,245,554	165,357,149
Total liabilities current	94,685,545	70,927,769
Total liabilities	94,685,545	70,927,769
Subsidiaries And VIEs [Member]
Noncontrolling Interest [Line Items]
Total current assets	68,332,510	94,572,493
Total noncurrent assets	46,177,096	70,658,046
Total assets	114,509,606	165,230,539
Total liabilities current	101,340,678	77,475,533
Total noncurrent liabilities
Total liabilities	$ 101,340,678	$ 77,475,533

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Consolidated Balance Sheet (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	11,551,587	10,448,197
Common stock, outstanding	11,551,587	10,448,197
Series A convertible preferred stock, par value	$ 0.01	$ 0.01
Series A convertible preferred stock, authorized	10,000,000	10,000,000
Series A convertible preferred stock, outstanding	2,386,110	5,694,549

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Accrued Expenses and Other Payable

12 Months Ended

Dec. 31, 2012

Accrued Expenses and Other Payables [Abstract]

Accrued Expenses and Other Payables

NOTE 8 - ACCRUED EXPENSES AND OTHER PAYABLES

Other payables consisted of the following:

December 31,	2012		2011
Accrued expenses	$	16,146,809	$	8,184,785
VAT and other PRC tax payable		134,483		1,695,669
Repair, maintenance, and purchase of equipment payable		500,280		2,535,486
Amount due to a director - unsecured, interest free and no repayment date		7,916,277		-
Employee promoters bond deposit		3,399,363		1,912,716
Total other payables	$	28,097,212	$	14,328,656

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Consolidated Statements of Shareholders' Equity (USD $)	Total	Common Stock [Member]	Series A Preferred Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings, Appropriated [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2010	$ 106,114,982	$ 9,915	$ 72,953	$ 90,730,448	$ 6,012,675	$ 2,094,850	$ 7,194,141
Balance, shares at Dec. 31, 2010		9,914,604	7,295,328
Net (loss) income	(16,583,381)					(16,853,381)
Compensation expense for stock option granted	864,608			864,608
Preferred stock converted to common stock, shares		533,593	(1,600,779)	15,475
Preferred stock converted to common stock		533	(16,008)
Appropriation to statutory reserves					1,269,885	(1,269,885)
Foreign currency translation adjustment	4,033,171						4,033,171
Balance at Dec. 31, 2011	94,429,380	10,448	56,945	91,610,531	7,282,560	(15,758,416)	11,227,312
Balance, shares at Dec. 31, 2011		10,448,197	5,694,549
Net (loss) income	(31,042,540)					(31,042,540)
Compensation expense for stock option granted	850,381			850,381
Preferred stock converted to common stock, shares		1,103,390	(3,308,439)
Preferred stock converted to common stock		1,104	(33,084)	31,980
Appropriation to statutory reserves					1,040,752	(1,040,752)
Foreign currency translation adjustment	1,322,798						1,322,788
Balance at Dec. 31, 2012	$ 65,560,009	$ 11,552	$ 23,861	$ 92,492,892	$ 8,323,312	$ (47,841,708)	$ 12,550,100
Balance, shares at Dec. 31, 2012		11,551,587	2,386,110

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Accrued Expenses and Other Payables(Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Accrued Expenses and Other Payables [Abstract]
Accrued expenses	$ 16,146,809	$ 8,184,785
VAT and other PRC tax payable	134,483	1,695,669
Repair, maintenance, and purchase of equipment payable	500,280	2,535,486
Amount due to a director - unsecured, interest free and no repayment date	7,916,277
Employee promoters bond deposit	3,399,363	1,912,716
Total other payables	$ 28,097,212	$ 14,328,656

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Consolidated Balance Sheet (USD $)	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash	$ 8,479,413	$ 9,037,550
Restricted cash	253	253
Accounts receivable	796,897	115,163
Inventories	59,812,645	54,336,501
Other receivables	18,042,360	11,991,134
Prepaid expenses	11,083,708	6,085,379
Advances to suppliers	9,525,250	10,160,552
Deferred income tax assets - current portion	3,068,803	394,977
Total current assets	110,809,329	92,121,509
Property, plant and equipment, net	45,439,360	43,042,136
Land use rights, net	724,760	748,410
Goodwill		26,346,942
Deferred income tax assets - non-current portion	3,259,129	2,577,593
Other assets	12,976	520,559
Total assets	160,245,554	165,357,149
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term bank loans	15,832,555	10,998,162
Accounts payable	30,900,586	28,417,894
Cash card and coupon liabilities	18,604,188	16,024,437
Customer deposits received	1,248,278	931,604
Accrued expenses and other payables	28,097,212	14,328,656
Income taxes payable	2,726	227,016
Total current liabilities	94,685,545	70,927,769
Total liabilities	94,685,545	70,927,769
Shareholders' equity
Common stock, $.001 par value per share, authorized 100,000,000, shares, issued and outstanding 11,551,587 and 10,448,197 at December 31, 2012 and December 31, 2011, respectively	11,552	10,448
Series A convertible preferred stock, par value $0.01, 10,000,000 shares authorized, 2,386,110 and 5,694,549 shares outstanding at December 31, 2012 and December 31, 2011, respectively	23,861	56,945
Additional paid-in capital	92,492,892	91,610,531
Retained earnings - appropriated	8,323,312	7,282,560
Retained earnings	(47,841,708)	(15,758,416)
Accumulated other comprehensive income	12,550,100	11,227,312
Total shareholders' equity	65,560,009	94,429,380
Total liabilities and shareholders' equity	$ 160,245,554	$ 165,357,149

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Other Receivables (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Other Receivables [Abstract]
Deposits	$ 2,170,239	$ 666,207
Purchase deposits	1,220,620	1,324,056
Input value added tax receivable	4,420,456	7,331,965
Rebate receivables	2,366,521	2,363,854
Loans to customers	7,844,421
Others	310,556	305,052
Total	$ 18,042,360	$ 11,991,134
Minimum interest rate	0.60%
Maximum interest rate	1.00%

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Amendment to Articles of Incorporation (Details)	Dec. 31, 2012	Jun. 11, 2012	Dec. 31, 2011
Amendment to Articles of Incorporation [Abstract]
Common shares outstanding after reverse split	11,551,587	10,527,637	10,448,197

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Other Receivables (Tables)

12 Months Ended

Dec. 31, 2012

Other Receivables [Abstract]

Other Receivable

December 31,	2012		2011
Deposits (1)	$	2,860,232	$	666,207
Purchase deposits (2)		240,174		1,324,056
Input value added tax recoverable (3)		4,420,456		7,331,965
Rebates receivables (4)		2,366,521		2,363,854
Loans to customers (5)		7,844,421		-
Others		310,556		305,052
Total	$	18,042,360	$	11,991,134

(1)	Deposits are cash held by cashiers of retail stores for day to day operations.
(2)	Purchase deposits are cash held by employees in retail stores for the equipment purchase.
(3)	Input VAT arises when the group purchases products from suppliers and input VAT can be deducted from output VAT on sales.
(4)	Rebates receivables represent promotional allowances provided by vendors for promotions incurred by the company.
(5)	Loans to customers are short term loans with interest rates ranging from 0.6% to 1.0% per month made by QKL-LQ. All loans to customers will be collected within one year.

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Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events

NOTE 17 - SUBSEQUENT EVENTS

On February 4, 2013, QKL Stores Inc. (the "Company") filed a Certificate of Amendment to the Company's Certificate of Incorporation, as amended to date (the "Certificate of Amendment"), with the Secretary of State of the State of Delaware to effect a one-for-eight reverse stock split (the "Reverse Split") of the issued and outstanding common stock of the Company, so that every eight (8) outstanding shares of common stock before the Reverse Split represents one (1) share of common stock after the Reverse Split. The Reverse Split became effective on and as of February 4, 2013. As a result of the Reverse Split, the number of outstanding shares of common stock of the Company will be reduced to approximately 1.44 million shares. The rights and privileges of the holders of common stock are substantially unaffected by the Reverse Split.

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Organization and Business Operations (Narrative) (Details) (USD $)	12 Months Ended			0 Months Ended	3 Months Ended		12 Months Ended				3 Months Ended	12 Months Ended											0 Months Ended							0 Months Ended		0 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Mar. 28, 2008	Mar. 28, 2008 Private Placement [Member]	Dec. 31, 2009 IPO [Member]	Oct. 16, 2009 IPO [Member]	Dec. 31, 2012 Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2011 Restated Amount Reflecting Reverse Stock Split Member [Member]	Oct. 16, 2009 Restated Amount Reflecting Reverse Stock Split Member [Member] Private Placement [Member]	Mar. 28, 2008 Restated Amount Reflecting Reverse Stock Split Member [Member] Private Placement [Member]	Dec. 31, 2009 Restated Amount Reflecting Reverse Stock Split Member [Member] IPO [Member]	Dec. 31, 2012 Investor And Public Relations Escrow Agreement [Member]	Dec. 31, 2009 Securities Escrow Agreement [Member]	Dec. 31, 2009 Securities Escrow Agreement [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2008 Performance Threshold 2008 [Member]	Dec. 31, 2009 Performance Threshold 2009 [Member]	Dec. 31, 2009 Performance Threshold 2009 [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2009 Performance Thresholds Actual [Member]	Dec. 31, 2008 Performance Thresholds Actual [Member]	Dec. 31, 2009 Performance Thresholds Actual [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2008 Performance Thresholds Actual [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2008 Settlement Agreement [Member]	Mar. 28, 2008 Series A Preferred Stock [Member] Private Placement [Member]	Mar. 28, 2008 Series A Warrant [Member]	Mar. 28, 2008 Series A Warrant [Member] Private Placement [Member]	Mar. 28, 2008 Series A Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series A Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member] Private Placement [Member]	Dec. 31, 2008 Series A Warrant [Member] Settlement Agreement [Member]	Dec. 31, 2008 Series A Warrant [Member] Settlement Agreement [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series B Warrant [Member]	Mar. 28, 2008 Series B Warrant [Member] Private Placement [Member]	Mar. 28, 2008 Series B Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series B Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member] Private Placement [Member]	Dec. 31, 2008 Series B Warrant [Member] Settlement Agreement [Member]	Dec. 31, 2008 Series B Warrant [Member] Settlement Agreement [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]
Organization and Nature of Operations [Line Items]
Proceeds from Issuance of Private Placement				$ 15,500,000	$ 39,700,000
Issuance of common stock in exchange for cash, shares					2,300,000						287,500
Preferred Units, Issued			9,117,647	9,117,647																				1,940,885						1,933,637
Common stock price per share				$ 1.70		$ 17.25			$ 138
Warrant, exercise price																							$ 10.20	$ 10.20	$ 12.75	$ 81.60	$ 81.60			$ 12.75		$ 102	$ 102
Share conversion ratio				0.625
Warrant rights of exercisable amount of comon stock				3,799,020						474,877															1,899,510		273,439	63,750	7,969		1,899,510		237,439	51,000	6,375
Warrant expiration date				Mar. 28, 2013																				Mar. 28, 2013						Mar. 28, 2013
Escrow shares relating to agreement with Vision													6,078,431	759,804
Net sales	365,624,781	370,500,420													9,400,000	11,150,000		10,800,000	9,000,000
Diluted earnings per share	$ (2.95)	$ (1.63)					$ (23.63)	$ (13.05)							$ 0.69	$ 0.81	$ 6.48	$ 1.02	$ 0.87	$ 8.16	$ 6.96
Net cash from operations																			18,700,000
Professional fee																						1,300,500
Amount raised through the sale of common stock												$ 300,000

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Restatement Of Financial Statements (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Deferred income tax assets - current portion	$ 3,068,803	$ 394,977
Total current assets	110,809,329	92,121,509
Deferred income tax assets - non-current portion	3,259,129	2,577,593
Total assets	160,245,554	165,357,149
Change in deferred income tax assets - current portion	(3,259,129)	(2,577,593)
Change in total current assets	(3,259,129)	(2,577,593)
Change in deferred income tax assets - non-current portion	3,259,129	2,577,593
As previously reported [Member]
Deferred income tax assets - current portion	6,327,932	2,972,570
Total current assets	114,068,458	94,699,102
Deferred income tax assets - non-current portion
Total assets	160,245,554	165,357,149
As restated [Member]
Deferred income tax assets - current portion	3,068,803	394,977
Total current assets	110,809,329	92,121,509
Deferred income tax assets - non-current portion	3,259,129	2,577,593
Total assets	$ 160,245,554	$ 165,357,149

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Land Use Rights (Future Ammortization of Land Use Rights) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, net	$ 724,760	$ 748,410
Collateral For Short Term Loans [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, net	724,760
Use Rights [Member]
Finite-Lived Intangible Assets [Line Items]
2014	29,391
2014	29,391
2015	29,391
2016	29,391
2017	29,391
Thereafter	577,805
Total intangible assets, net	$ 724,760

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Shared Based Compensation (Stock Options Activities and Incentive Plan) (Details) (2009 Omnibus Securities and Incentive Plan [Member], USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Shares:
Outstanding - at the beginning of period	677,666
Granted
Exercised
Forfeited
Outstanding- at the end of period	677,666	677,666
Exercisable - at the end of period	414,600
Weighted Average Exercise Price:
Outstanding - at the beginning of period	$ 13.33
Granted
Exercised
Forfeited
Outstanding- at the end of period	$ 13.33	$ 13.33
Exercisable - at the end of period	$ 13.51
Weighted Average Remaining Contractual Term(Years):
Outstanding- at the end of period	1 year 5 months 16 days	2 years 6 months 7 days
Exercisable - at the end of period	1 year 5 months 5 days
Intrinsic Value:
Outstanding - at the beginning of period
Granted
Exercised
Forfeited
Outstanding- at the end of period
Exercisable - at the end of period
Restated Amount Reflecting Reverse Stock Split Member [Member]
Shares:
Outstanding - at the beginning of period	84,708
Outstanding- at the end of period	84,708	84,708
Weighted Average Exercise Price:
Outstanding - at the beginning of period	$ 106.64
Outstanding- at the end of period	$ 106.64	$ 106.64
Exercisable - at the end of period	$ 108.08
Weighted Average Remaining Contractual Term(Years):
Outstanding- at the end of period	1 year 5 months 16 days	2 years 6 months 7 days
Exercisable - at the end of period	1 year 5 months 5 days

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Schedule of Revenuesby Products and Services

Years Ended December 31,	2012		2011
Sale of general merchandise	$	359,625,745	$	365,230,321
Department store income		4,832,718		4,060,540
Other income		1,166,318		1,209,559
Total	$	365,624,781	$	370,500,420

Schedule Of Entity Wide Information Revenue From External Customers By Categories Of Product

Years Ended December 31,	2012		2011
Grocery	$	134,599,622	$	125,176,060
Fresh food		172,059,718		172,554,315
Non-food		52,966,405		67,499,946
Total	$	359,625,745	$	365,230,321

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Common Share

Years Ended December 31,	2012			2011
Net loss to QKL Stores, Inc. for computing basic net loss per share	$	(31,042,540	)	$	(16,583,381	)
Undistributed earnings allocated to Series A Convertible Preferred Stock		-			-
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share	$	(31,042,540	)	$	(16,583,381	)
Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		10,509,469			10,166,618
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		1,837,215			2,179,761
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(1,837,215	)		(2,179,761	)
Diluted		10,509,469			10,166,618
Basic earnings per share of common stock	$	(2.95	)	$	(1.63	)
Diluted earnings per share	$	(2.95	)	$	(1.63	)

The following earnings per share computation data are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		1,313,684			1,270,827
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		229,652			272,470
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(229,652	)		(272,470	)
Diluted		1,313,684			1,270,827
Basic earnings per share of common stock	$	(23.63	)	$	(13.05	)
Diluted earnings per share	$	(23.63	)	$	(13.05	)

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Preferred Stock and Stock Warrants (Tables)

12 Months Ended

Dec. 31, 2012

Preferred Stock and Stock Warrants [Abstract]

Summary of the Company's Stock Warrant Activities

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance - December 31, 2011		3,922,953	$	11.53	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance - December 31, 2012		3,922,953	$	11.53	$	0.27

The following summary of the Company's stock warrant activities are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance - December 31, 2011		490,369	$	92.24	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance - December 31, 2012		490,369	$	92.24	$	0.27

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

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Short Term Bank Loans

12 Months Ended

Dec. 31, 2012

Short term Bank Loans [Abstract]

Short term bank loans

NOTE 7 - SHORT TERM BANK LOANS

Short term bank loans consisted of the following:

December 31,					2012		2011
	Due date	Interest rate
Longjiang Commercial Bank	4/18/2013		6.941	%	$	7,916,278	$	7,855,830
Longjiang Commercial Bank	4/25/2013		7.544	%		7,916,277		3,142,332
Total short term bank loans					$	15,832,555	$	10,998,162

The loans provided by Longjiang Commercial Bank were secured by buildings and land use rights with net book value of approximately $5,255,580 and $724,760 respectively.

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Preferred Stock and Stock Warrants (Stock Warrant Actitvities) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Dec. 31, 2011 Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]
Class of Warrant or Right [Line Items]
Share beginning of period	3,922,953	490,369	490,369
Exercised	0
Cancelled	0
Shares - end of period	3,922,953	490,369	490,369
Weighted average exercise price - beginning of period	11.53	92.24	92.24
Weighted average exercise price - end of period	11.53	92.24	92.24
Weighted average remaining contractual term - beginning of period	1 year 3 months 7 days	3 months 7 days	1 year 3 months 7 days
Weighted average remaining contractual term - end of period	3 months 7 days	3 months 7 days	1 year 3 months 7 days

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Property, Plant and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment, Net [Abstract]

Components of Property, Plant and Equipment

December 31,	2012			2011
Buildings	$	6,773,312		$	6,861,043
Shop equipment		19,483,024			19,815,360
Office equipment		4,243,396			4,028,789
Motor vehicles		1,460,327			1,642,125
Car park		20,392			20,237
Leasehold improvements		27,150,156			27,515,996
Construction in progress		10,008,740			2,087,368
Total property, plant and equipment		69,139,347			61,970,918
Less:  accumulated depreciation and amortization		(23,699,987	)		(18,928,782	)
Total property, plant and equipment, net	$	45,439,360		$	43,042,136

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Restatement Of Financial Statements (Tables)

12 Months Ended

Dec. 31, 2012

Restatement of Financial Statements [Abstract]

Schedule of Impact of Affected Line Items to Consolidated Balance Sheet

The impact of the affected line items of the Company's financial statements is set forth below:

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2012

	As previously reported		As restated
Deferred income tax assets - current portion	$	6,327,932	$	3,068,803
Total current assets		114,068,458		110,809,329
Deferred income tax assets - non-current portion		-		3,259,129
Total assets	$	160,245,554	$	160,245,554

Extract to the Consolidated Balance Sheet

For the year ended December 31, 2011

	As previously reported		As restated
Deferred income tax assets - current portion	$	2,972,570	$	394,977
Total current assets		94,699,102		92,121,509
Deferred income tax assets - non-current portion		-		2,577,593
Total assets	$	165,357,149	$	165,357,149

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Preferred Stock and Stock Warrants

12 Months Ended

Dec. 31, 2012

Preferred Stock and Stock Warrants [Abstract]

Preferred Stock and Stock Warrants

NOTE 10 - PREFERRED STOCK AND STOCK WARRANTS

Series A Preferred Stock

The terms of the Company's Series A Preferred Stock are set forth in a Certificate of Designations, which we filed with the Secretary of State of the State of Delaware on March 13, 2008. Set forth below are the material terms of our Series A Preferred Stock:

Conversion and Anti-Dilution: Each share of Series A Preferred Stock is convertible at any time into one share of the Company's common stock. A holder of Series A Preferred Stock may not convert those shares if as a result of the conversion, that holder would beneficially own more than 4.99% of the Company's common stock outstanding at that time. A holder may, however, waive this provision by providing the Company with 61 days' notice that such holder wishes to waive this restriction with regard to any or all shares of common stock issuable upon conversion of such holder's Series A Preferred Stock.

Voting: Holders of the Series A Preferred Stock vote on an "as converted" basis together with the common stock, as a single class, in connection with any proposal submitted to stockholders to: (i) increase the number of authorized shares, (ii) approve the sale of any capital stock of the Company, (iii) adopt an employee stock option plan, and (iv) effect any merger, consolidation, sale of all or substantially all of the assets of the Company, or related consolidation or combination transaction. Holders of the Series A Preferred Stock have a separate class vote on all matters that impact the rights, value, or ranking of the Series A Preferred Stock.

Liquidation Preference: In the event of a liquidation, dissolution or winding up, voluntary or involuntary, of the Company, the holders of Series A Preferred Stock then outstanding will be entitled to receive, out of the Company's assets available for distribution to the Company's stockholders, an amount equal to $5.10 (**40.80) per share before any payment is made or any assets distributed to the holders of the common stock or any other stock that ranks junior to the Series A Preferred Stock. The holders rank (a) senior to the common stock and to any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments on a liquidation event and (b) pari passu with any other class or series of stock of the Company, the terms of which specifically provide that such class or series will rank pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments on a liquidation event.

Dividends: The shares of Series A Preferred Stock are not entitled to dividends unless the Company pays dividends, in cash or other property, to holders of outstanding shares of common stock. If the Company does pay dividends, each outstanding share of Series A Preferred Stock will entitle its holder to receive dividends out of available funds equal to the dividends to which the common stock into which such share was convertible on the record date would have been entitled, had such common stock been issued.

Series A and Series B Stock Warrants

As a result of a completed sale of 9,117,647 units for cash proceeds of $15,500,000 on March 28, 2008, the Company issued Series A stock warrants of 1,940,885 and Series B stock warrants of 1,933,637 which can be converted on a one-for-one basis into shares of the Company's common stock.  The stock warrants have a five year life and the Series A warrants are exercisable at an equivalent price of $10.20 (**$81.60) per share and the Series B are exercisable at an equivalent price of $12.75 (**$102.00) per share.  These stock warrants will expire on March 28, 2013 pursuant to the warrant agreements.

The Company used the Black-Scholes option pricing model to determine the fair value of the Series A and B stock warrants on March 28, 2008 (assumptions used - expected life of 5 years, volatility of 89%, risk free interest rate of 2.51%, and expected dividend yield of 0%).

Effective January 1, 2009, the Company adopted the provisions of FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815") (previously EITF 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock"). As a result of adopting ASC 815, warrants to purchase 11,623,566 of the Company's common stock previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment as there was a down-round protection (full-ratchet down round protection).   As a result, the warrants were not considered indexed to the Company's own stock, and as such, all future changes in the fair value of these warrants were recognized in earnings until such time as the warrants are exercised or expire.  The Company reclassified the fair value of these warrants from equity to liability, as if these warrants were treated as a derivative liability. On January 1, 2009, the Company recorded as a cumulative effect adjustment of decreasing additional paid-in capital of $6,020,000 and beginning retained earnings of $2,792,017 and $8,812,017 to warrant liabilities to recognize the fair value of such warrants. The fair value of the warrants was $44,304,034 on December 31, 2009. The Company recognized $35,492,017 loss from the change in fair value of warrants for the year ended December 31, 2009.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

The Company amended Series A and Series B stock warrant agreements deleting the down-round protection (full-ratchet down round protection) provision on March 24, 2010. As a result of this amendment, the Company is no longer required to treat Series A and Series B warrants as a liability and was reclassified to equity as of March 24, 2010 (assumption used - expected life of 3 years, volatility of 57%, and risk free interest rate of 1.67%, and expected dividend yield of 0%). Based on the revaluation, the Company recognized $7,801,649 of income related to this transaction and reclassified $36,502,385 to equity.

Warrant C

On January 22, 2010, the Company issued a warrant ("Warrant C") to a non-related individual in exchange for consulting services relating to operational and managerial experience. Warrant C can be converted into 66,666 (**8,333) shares of the Company's common stock at an exercise price of $15.00 (**$120) per share. Warrants C has a five year term and became exercisable 180 days from the date of issuance of Warrant C.

The Company recognized share-based compensation cost based on the grant-date fair value estimated in accordance with ASC 505-50   "equity based payments to non-employees".  The fair value of these stock warrants on the date of grant was estimated using the Black-Scholes method (assumption used - expected life of 2.75 years, volatility of 54%, and risk free interest rate of 1.25%, and expected dividend yield of 0%).  The Company recognized $558,180 of compensation expense related to this transaction.

A summary of the Company's stock warrant activities are as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance - December 31, 2011		3,922,953	$	11.53	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance - December 31, 2012		3,922,953	$	11.53	$	0.27

The following summary of the Company's stock warrant activities are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Balance - December 31, 2011		490,369	$	92.24	$	1.27
Exercised		-		-		-
Cancelled		-		-		-
Balance - December 31, 2012		490,369	$	92.24	$	0.27

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

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Commitments and Contingencies (Annual Minimum Payments under Operating Leases) (Details) (USD $)	Dec. 31, 2012
Minimum Lease Payment
2013	$ 8,430,420
2014	8,427,482
2015	8,333,014
2016	8,135,968
2017	7,936,970
Thereafter	72,993,791
Total	114,257,645
Sublease Income
2013	1,098,557
2014	4,082
2015
2016
2017
Thereafter
Total	1,102,639
Net Minimum Lease Payment
2013	7,331,863
2014	8,423,400
2015	8,333,014
2016	8,135,968
2017	7,936,970
Thereafter	72,993,791
Total	$ 113,155,006

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Goodwill

12 Months Ended

Dec. 31, 2012

Goodwill [Abstract]

Goodwill

NOTE 6 - GOODWILL

Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination at the date of acquisition.

Goodwill for impairment has been tested annually, or whenever events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. The test to evaluate for impairment is a two-step process. In the first step, we compare the fair value of each of our reporting units to its carrying value. If the fair value of any reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of goodwill associated with that reporting unit. If the carrying value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment.

In 2012, we recorded an impairment loss in the amount $26,697,561 reducing goodwill attributed to our acquisition of business operations in 2010 and 2008 from a carrying amount of $26,346,942 to a fair value of $0. The circumstances leading to the impairment are attributed to the changes in the competitive environment and forecasted results of our business operations. The material assumptions used for the income approach for 2012 were a discount rate of 19.5% and a long-term growth rate of 8% for the first 5 years and 3% hereafter. We considered historical rates and current market conditions when determining the discount and growth rates to use in our analyses.

In 2011, we recorded an impairment loss in the amount $19,219,870 reducing goodwill attributed to our acquisition of business operations in 2010 and 2008 from a carrying amount of $45,566,812 to a fair value of $26,346,942. The circumstances leading to the impairment are attributed to the changes in the competitive environment and forecasted results of our business operations. The material assumptions used for the income approach for 2011 were a discount rate of 19.5% and a long-term growth rate of 8% for the first 5 years and 3% hereafter. We considered historical rates and current market conditions when determining the discount and growth rates to use in our analyses. If these estimates or their related assumptions change in the future, we may be required to record further impairment charges for goodwill.

A summary of changes in the Company's goodwill is as follows:

	2012					2011
	(RMB)			(USD)			(RMB)			(USD)
Balance - beginning of year:
Goodwill	290,019,086			45,566,812			290,019,086			43,863,929
Accumulated impairment charges	(122,328,706	)		(19,219,870	)		-			-
	167,690,380		$	26,346,942			290,019,086		$	43,863,929
Activity during the year:
Additions	-			-			-			-
Impairment charge	(167,690,380	)	$	(26,533,960	)		(122,328,706	)		(19,219,870	)
Other adjustments*	-			187,018			-			1,702,883
	(167,690,380	)	$	(26,346,942	)		(122,328,706	)		(17,516,987	)
Balance - end of year:
Goodwill	290,019,086			45,917,431			290,019,086			45,566,812
Accumulated impairment charges	(290,019,086	)		(45,917,431	)		(122,328,706	)		(19,219,870	)
	-			-			167,690,380		$	26,346,942

* Other adjustments are the exchange differences arising during the year.

The goodwill was generated from the acquisition of a number of businesses in Northeast China through the purchases of assets and the business operations from unrelated parties. According to ASC 805 "business combinations", the acquisition of these businesses should be treated as acquisition of a business.

During 2008, the Company purchased the business operations and certain assets of stores that sell grocery, food and non-food products in the local region from five independent third parties: (1) Heilongjiang Longmei Commerce Co., Ltd (the "Anda Store"); (2) Nehe Wanlong Commercial Building Co., Ltd. (the "Nehe Store"); (3) Fuyu Xinshuguang Real Estate Development Co., Ltd (the "Fuyu Store"); (4) Daqing Xinguangtiandi Shopping Center Co., Ltd (the "Xinguang tiandi Store"); and (5) Hulunbeier Huahui Department Store Co., Ltd. (the "Hailaer Store").  The consideration for the acquisitions was settled in cash and was accounted for as follows (presented in RMB):

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Anda Store	08/31/2008	22,740,000	970,404	21,769,596	$	3,180,272
2	Nehe Store	09/30/2008	16,800,000	828,500	15,971,500		2,329,871
3	Fuyu Store	10/31/2008	17,400,000	1,042,010	16,357,990		2,387,324
4	Xinguangtiandi Store	09/30/2008	13,800,000	880,000	12,920,000		1,884,728
5	Hailaer Store	10/31/2008	66,000,000	1,580,000	64,420,000		9,401,607
	Total		136,740,000	5,300,914	131,439,086

*converted into U.S. dollars using the date of acquisition exchange rate

During 2010, the Company acquired the business operations and certain assets of stores that sell grocery, food and non-food products in the local region from seven independent third parties:(1) Jian County Great Wall Operating Management Co., Ltd  (the "Jian Store"); (2) Inner Mongolia Fada Property Development Group Co., Ltd (the "Manzhouli Store"); (3) Taian County Jiahemei Commercial Co., Ltd (the "Taian Store"); (4) ARongQi Naji Town Shopping Center (the "Arongqi Store"); (5) Tianlong Shopping Mall (the "Mulan Store"); (6) Liaoyang LeWanJia Shopping Center (the "Liaoyang Store"); and (7) Siping Wanxi Commercial Co., Ltd (the "Siping Store"). After the closing of the acquisition, these businesses ceased their operations as retail stores and the Company was licensed to operate in these locations. The operating results of these businesses have been included in the consolidated financial statements since the acquisition dates. The consideration for the acquisitions was settled in cash and was accounted for as follows (presented in RMB):

No.	Store Name	Acquisition Date	Consideration	The fair value of  net assets	Goodwill
			(RMB)	(RMB)	(RMB)		(USD)*
1	Jian Store	08/01/10	31,500,000	-	31,500,000	$	4,647,080
2	Manzhouli Store	07/01/10	18,380,000	-	18,380,000		2,705,611
3	Taian Store	07/01/10	28,000,000	-	28,000,000		4,121,714
4	Arongqi Store	11/01/10	16,100,000	-	16,100,000		2,409,927
5	Mulan Store	12/01/10	14,000,000	-	14,000,000		2,096,923
6	Liaoyang Store	10/01/10	27,600,000	-	27,600,000		4,117,866
7	Siping Store	11/01/10	23,000,000	-	23,000,000		3,442,753
	Total		158,580,000	-	158,580,000

*   converted into U.S. dollars using the date of acquisition exchange rate

No supplemental pro forma information is presented for the acquisitions due to the immaterial effect of each acquisition on the Company's results of operations.

Acquisition-related expenses in connection with the 2010 acquisitions are classified within the general and administrative expenses and amounted to $117,747, which included the expenses for investigating and researching, evaluating, coordinating and directing the acquisition transactions.

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Organization and Business Operations

12 Months Ended

Dec. 31, 2012

Organization and Business Operations [Abstract]

Organization and Business Operations

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

QKL Stores, Inc. ("QKL") (formerly known as Forme Capital, Inc.) was incorporated under the laws of the State of Delaware on December 2, 1986. From 1989 to 2000, Store created and spun off to its stockholders nine blind pool companies for two years, then operated as a real estate company for eight years, then sold substantially all of its assets and ceased operations. From 2000 until March 28, 2008, QKL was a shell company with no substantial operations or assets. QKL currently operates through (1) itself, (2) one directly wholly-owned subsidiary in the British Virgin Islands: Speedy Brilliant Group Ltd. ("Speedy Brilliant (BVI)"), (3) one directly wholly-owned subsidiary of Speedy Brilliant (BVI) located in Mainland China: Speedy Brilliant (Daqing) Ltd. ("Speedy Brilliant (Daqing)" or "WFOE"), (4) one operating company located in Mainland China: Daqing Qingkelong Chain Commerce & Trade Co., Ltd. ("QKL-China"), which QKL controls, through contractual arrangements between WFOE and QKL-China, as if QKL-China were a wholly-owned subsidiary of QKL, (5) one wholly-owned operating subsidiary of QKL-China located in Mainland China:  Daqing Qinglongxin Commerce & Trade Co., Ltd ("Qinglongxin Commerce"), and (6) one operating company located in Mainland China: Daqing Longqing Microcredit Co., Ltd. ("QKL-LQ"), which QKL-China controls, through arrangement that absorbs operations risk, as if QKL-LQ were a wholly-owned subsidiary of QKL-China.

Speedy Brilliant (BVI) was established in the British Virgin Islands as a BVI business company on February 23, 2007. Speedy Brilliant (Daqing) was established in the Heilongjiang Province of the People's Republic of China (the PRC) as a limited company on August 1, 2007. QKL-China was established in the Heilongjiang Province of the PRC as a limited company on November 2, 1998. Qinglongxin Commerce was established in the Heilongjiang Province of the PRC as a limited company on July 10, 2006.

QKL and its subsidiaries (hereinafter, collectively referred to as "the Company") are engaged in the operation of retail chain stores in the PRC.

The Company is a regional supermarket chain that currently operates 30 supermarkets, 14 hypermarkets and 4 department stores in northeastern China and Inner Mongolia. The Company's supermarkets and hypermarkets sell a broad selection of merchandise including groceries, fresh food and non-food items. A supermarket offers various daily necessities on a self-service basis and averages 2,500 square meters in sales area. A hypermarket is similar to a supermarket but has a larger operating scale, and is typically over 4,500 square meters in sales area. The Company currently has three distribution centers servicing its supermarkets. 

The Company is the first supermarket chain in northeastern China and Inner Mongolia that is a licensee of the Independent Grocers Alliance, or IGA, a United States-based global grocery network. As a licensee of IGA, the Company is able to engage in group bargaining with suppliers and have access to more than 2,000 private IGA brands, including many that are exclusive IGA brands.

The Company completed the initial steps in the execution of its expansion plan in March 2008, when the Company raised financing through the combination of a reverse merger and private placement, and also raised additional financing in our public offering in the fourth quarter of 2009. Under that plan, the Company opened one new store in 2012 that has approximately 5,700 square meters of space, fourteen new stores in 2011 that have, in the aggregate, approximately 101,000 square meters of space, nine new stores in 2010 that have, in the aggregate, approximately 74,189 square meters of space, seven new stores in 2009 that have, in the aggregate, approximately 32,000 square meters of space, and ten new stores in 2008 that have, in the aggregate, approximately 42,000 square meters of space.

PRC Restructuring Agreements

The PRC restructuring transaction was effected by the execution of five agreements between Speedy Brilliant (Daqing), on the one hand, and QKL-China (and in some cases the shareholders of QKL-China), on the other hand. Those five agreements and their consequences are described below.

· Consigned Management Agreement

The Consigned Management Agreement among Speedy Brilliant (Daqing), QKL-China and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will provide financial, business management and human resources management services to QKL-China that will enable Speedy Brilliant (Daqing) to control QKL-China's operations, assets and cash flow, and in exchange, QKL-China will pay a management fee to Speedy Brilliant (Daqing) equal to 4.5% of QKL-China's annual revenue. The management fee for each year is due by January 31 of the following year. The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China.

· Technology Service Agreement

The Technology Service Agreement among Speedy Brilliant (Daqing), QKL-China and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will provide technology services, including the selection and maintenance of QKL-China's computer hardware and software systems and training of QKL-China employees in the use of those systems, and in exchange QKL-China will pay a technology service fee to Speedy Brilliant (Daqing) equal to 1.5% of QKL-China's annual revenue. The technology service fee for each year is due by January 31 of the following year. The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China.

· Loan Agreement

The Loan Agreement among Speedy Brilliant (Daqing) and all of the shareholders of QKL-China, provides that Speedy Brilliant (Daqing) will make a loan in the aggregate principal amount of RMB 77 million (approximately $11.2 million) to the shareholders of QKL-China, each shareholder receiving a share of the loan proceeds proportional to its shareholding in QKL-China, and in exchange each shareholder agreed (i) to contribute all of its proceeds from the loan to the registered capital of QKL-China in order to increase the registered capital of QKL-China, (ii) to cause QKL-China to complete the process of registering the increase in its registered capital with PRC regulatory authorities within 30 days after receiving the loan, and (iii) to pledge their equity to Speedy Brilliant (Daqing) under the Equity Pledge Agreement described below. 

The loan is repayable by the shareholders at the option of Speedy Brilliant (Daqing) either by the transfer of QKL-China's equity to Speedy Brilliant (Daqing) or through proceeds indirectly from the transfer of QKL-China assets to Speedy Brilliant (Daqing). The loan does not bear interest, except that if (x) Speedy Brilliant (Daqing) is able to purchase the equity or assets of QKL-China, and (y) the lowest allowable purchase price for that equity or those assets under PRC law is greater than the principal amount of the loan, then, insofar as it is allowable under PRC law, interest will be deemed to have accrued on the loan in an amount equal to the difference between the lowest allowable purchase price for QKL-China and the principal amount of the loan. The effect of this interest provision is that, if and when permitted under PRC law, Speedy Brilliant (Daqing) may acquire all of the equity or assets of QKL-China by forgiving the loan, without making any further payment. If the principal amount of the loan is greater than the lowest allowable purchase price for the equity or assets of QKL-China under PRC law, then Speedy Brilliant (Daqing) would exempt the shareholders from paying the difference between the two amounts. The effect of this provision is that (insofar as allowable under PRC law) the shareholders of QKL-China may satisfy their repayment obligations under the loan by transferring all of QKL-China's equity or assets to Speedy Brilliant (Daqing), without making any further payment.

The Loan Agreement also contains promises from the shareholders of QKL-China that during the term of the agreement they will elect as directors of QKL-China only candidates nominated by Speedy Brilliant (Daqing), and they will use their best efforts to ensure that QKL-China does not take certain actions without the prior written consent of Speedy Brilliant (Daqing), including (i) supplementing or amending the articles of association or rules of QKL-China, or of any subsidiary controlled or wholly owned by it, (ii) increasing or decreasing its registered capital or shareholding structure, (iii) transferring, mortgaging or disposing of any interests in its assets or income, or encumbering its assets or income in a way that would affect Speedy Brilliant (Daqing)'s security interest unless required for QKL-China's normal business operations, (iv) incurring or succeeding to any debts and liabilities, (v) entering into any material contract (exceeding RMB 5.0 million, or approximately $0.7 million, in value); (vi) providing any loan or guarantee to any third party; (vii) acquiring or consolidating with any third party, or investing in any third party; and (viii) distributing any dividends to the shareholders in any manner. In addition, the Loan Agreement provides that at Speedy Brilliant (Daqing)'s request, QKL-China will promptly distribute all distributable dividends to its shareholders.

The funds that Speedy Brilliant (Daqing) used to make the loan came from the proceeds received by us, its indirect parent company, in the private placement transaction completed in March 2008.

· Exclusive Purchase Option Agreement

The Exclusive Purchase Option Agreement, among Speedy Brilliant (Daqing), QKL-China, and all of the shareholders of QKL-China, provides that QKL-China will grant Speedy Brilliant (Daqing) or its designated third party an irrevocable and exclusive right to purchase all or part of QKL-China's assets, and the shareholders of QKL-China will grant Speedy Brilliant (Daqing) or its designated third party an irrevocable and exclusive right to purchase all or part of their equity interests in QKL-China. Either right may be exercised by Speedy Brilliant (Daqing) in its sole discretion at any time that the exercise would be permissible under PRC law, and the purchase price for Speedy Brilliant (Daqing)'s acquisition of equity or assets will be the lowest price permissible under PRC law. QKL-China and its shareholders are required to execute purchase agreements and related documentation within 30 days of receiving notice from Speedy Brilliant (Daqing) that it intends to exercise its right to purchase.

The Exclusive Purchase Option Agreement contains promises from QKL-China and its shareholders that they will refrain from taking actions, such as voting to dissolve or declaring dividends, that could impair Speedy Brilliant (Daqing)'s security interest in the equity of QKL-China or reduce its value. These promises are substantially the same as those contained in the Loan Agreement described above.

The agreement will remain effective until Speedy Brilliant (Daqing) or its designees have acquired 100% of the equity interests of QKL-China or substantially all of the assets of QKL-China. The exclusive purchase options were granted under the agreement on the closing date.

· Equity Pledge Agreement

The Equity Pledge Agreement, among Speedy Brilliant (Daqing), QKL-China, and all of the shareholders of QKL-China, provides that the shareholders of QKL-China will pledge all of their equity interests in QKL-China to Speedy Brilliant (Daqing) as a guarantee of the performance of the shareholders' obligations and QKL-China's obligations under each of the other PRC Restructuring Agreements. Under the Equity Pledge Agreement, the shareholders of QKL-China have also agreed (i) to cause QKL-China to have the pledge recorded at the appropriate office of the PRC Bureau of Industry and Commerce, (ii) to deliver any dividends received from QKL-China during the term of the agreement into an escrow account under the supervision of Speedy Brilliant (Daqing), and (iii) to deliver QKL-China's official shareholder registry and certificate of equity contribution to Speedy Brilliant (Daqing).

The Equity Pledge Agreement contains promises from QKL-China and its shareholders that they will refrain from taking actions, such as voting to dissolve or declaring dividends, that could impair Speedy Brilliant (Daqing)'s security interest in the equity of QKL-China or reduce its value. These promises are substantially the same as those contained in the Loan Agreement described above.

Under the advice of our PRC legal counsel, we believe each of the significant control and economic benefits agreements is enforceable under PRC and local law. ASC 810-10-50-2AA through 50-2AC collectively require the reporting entity to disclose the significant judgments and assumptions used in determining whether to consolidate a variable interest entity. One of the most significant assumptions the Company applied in consolidating its VIE is the interpretation of the provisions of applicable PRC laws and regulations. However, any changes in PRC laws and regulations that affect our ability to control QKL-China might preclude us from consolidating QKL-China in the future.

Mr. Zhuangyi Wang, our Chairman of the board and Chief Executive Officer owns 96% of QKL China. Through contractual arrangements between Speedy Brilliant (Daqing) and QKL-China and its respective registered shareholders, we bear the economic risks and receive the economic benefits of QKL-China as their primary beneficiary. The financial results of QKL-China are consolidated into our financial statements despite the lack of our equity interest in them. We believe the consolidation is necessary to fairly present the financial position and results of operations of our company, because of the existence of a parent-subsidiary relationship through contractual arrangements. Speedy Brilliant (Daqing) has entered into contractual arrangements with QKL-China and its respective registered shareholders. Consigned Management Agreement and Technology Service Agreement enable us to receive substantially all of the economic benefits from QKL-China. Loan Agreement and Equity Pledge Agreement enable us to exercise effective control over QKL-China. And Exclusive Purchase Option Agreement enables us to have an exclusive option to purchase all of the equity interests in QKL-China when and to the extent permitted by PRC law.

QKL-China is financed by means of capital contributions from its shareholders. Subsequent to the payment of funds under the Loan Agreement, we have provided additional financial support by means of loan of approximately $1.2 million to QKL-China in November 2010 for the provision of working capital to our principal business in PRC. There are no specific terms or arrangements that require the Company to provide financial support to QKL-China. The creditors of QKL-China do not have recourse to the general credit of the QKL Stores Inc., Speedy Brilliant (BVI) or Speedy Brilliant (Daqing).

Under PRC law, QKL-China must set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other things, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, companies may not distribute the reserve funds as cash dividends except upon a liquidation of these subsidiaries.

Noncontrolling interest

Effective January 1, 2009, the Company adopted an authoritative pronouncement issued by the Financial Accounting Standards Board (the "FASB") regarding noncontrolling interests in consolidated financial statements. The pronouncement requires noncontrolling interests to be separately presented as a component of equity in the consolidated financial statements. The presentation regarding noncontrolling interest was retroactively applied for all the presented periods. As at December 31, 2012 and 2011, the Company did not have any noncontrolling interests.

The following consolidated financial statement balances and amounts of the Company's VIE and its subsidiary were included in the accompanying consolidated balance sheets as of and for the years ended:

	December 31,
	2012		2011
Total current assets	$	68,332,510	$	94,572,493
Total noncurrent assets		46,177,096		70,658,046
Total assets		114,509,606		165,230,539
Total current liabilities		101,340,678		77,475,533
Total noncurrent liabilities		-		-
Total liabilities	$	101,340,678	$	77,475,533

	December 31,
	2012			2011
Net sales	$	365,624,781		$	370,500,420
Gross profit		62,426,091			63,729,867
Loss from operations		(32,107,932	)		(13,643,245	)
Net loss		(29,807,718	)		(15,096,648	)
VIE retained earnings	$	(2,634,541	)	$	31,288,763

As a result of the contractual arrangements above, Speedy Brilliant (Daqing) bears the majority of economic risks and receives the economic benefits of the VIE, QKL-China, and is the primary beneficiary of the VIE. Therefore, the Company has consolidated the financial results of the VIE and their subsidiary in its consolidated financial statements.

The Company believes that Speedy Brilliant (Daqing)'s contractual arrangements with the VIE are in compliance with PRC law and are legally enforceable. The majority shareholder of the VIE, our Chairman and CEO, Mr. Wang, is also the majority shareholder of the Company and therefore has no current interest in seeking to act contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit the Company's ability to enforce these contractual arrangements, which in turns, may lead to the potential of deconsolidation.

Completion of the PRC Restructuring

The PRC restructuring transaction closed on March 28, 2008 and after the closing date, Speedy Brilliant (Daqing) completed all required post-closing steps, including the payment and verification of all the installments of Speedy Brilliant (Daqing)'s registered capital.

The remaining portion of Speedy Brilliant (Daqing)'s registered capital was contributed and verified by August 1, 2009, two years after the issuance of its business license.

Share Exchange Transaction

In the share exchange transaction, Forme acquired control of Speedy Brilliant (BVI), a British Virgin Islands holding company and the parent company of Speedy Brilliant (Daqing), by issuing to the stockholders of Speedy Brilliant (BVI) shares of common stock in exchange for all of the outstanding capital stock of Speedy Brilliant (BVI). The stockholders of Speedy Brilliant (BVI) with whom we completed the share exchange were (i) the majority holder, Winning State International Limited, a British Virgin Islands holding company ("Winning State (BVI)") all of whose stock was acquired by our Chief Executive Officer, Mr. Zhuangyi Wang, pursuant to a call option held by Mr. Wang and (ii) three minority stockholders, Ms. Fang Chen, Mr. Yang Miao, and Ms. Ying Zhang, Mr. Wang has exercised his call option and all of the shares of Winning State (BVI) were transferred from Mr. Yap to Mr. Wang on February 2, 2010.

Share Exchange Agreement

On March 28, 2008, Forme entered into a share exchange agreement with (i) Speedy Brilliant (BVI); (ii) Speedy Brilliant (Daqing); (iii) the owners of all of the outstanding voting stock of Speedy Brilliant (BVI), namely (a) Winning State (BVI) (a company that is wholly owned and controlled by Mr. Chin Yoke Yap (all of whose stock was acquired by our CEO, Mr. Zhuangyi Wang, pursuant to a call option held by Mr. Wang that he exercised on February 2, 2010)), which owned approximately 98.5% of the Speedy Brilliant (BVI) stock, and (b) three individuals, Ms. Fang Chen, Ms. Yang Miao and Ms. Ying Zhang, who collectively owned approximately 1.5% of the Speedy Brilliant (BVI) stock; and (iv) Forme's then controlling stockholders, Vision Opportunity China LP, Stallion Ventures, LLC, and Castle Bison, Inc. Under the terms of the share exchange agreement, the Speedy Brilliant (BVI) stockholders exchanged all of the outstanding shares of Speedy Brilliant (BVI) for a total of 6,460,766 (**807,596) newly issued shares of Forme common stock. As a result of the share exchange, Forme acquired Speedy Brilliant (BVI) as a wholly owned subsidiary, and the Speedy Brilliant (BVI) stockholders became holders of 92.8% of our common stock on a non-diluted basis (64.6% of our common stock assuming conversion of our newly-issued Series A Preferred Stock and 46.3% of our common stock assuming conversion of our newly-issued Series A Preferred Stock and exercise of all of the Series A Warrants and Series B Warrants).

In the PRC restructuring transaction described above, Speedy Brilliant (BVI) gained control of our operating company, QKL-China. Therefore, when we acquired control of Speedy Brilliant (BVI) in the share exchange, we acquired indirect control of QKL-China. As a result, at the time of the share exchange, (i) we ceased to be a shell company as that term is defined in Rule 12b-2 under the Exchange Act, (ii) Speedy Brilliant (BVI) became our wholly owned subsidiary, and (iii) through our newly-acquired indirect subsidiary Speedy Brilliant (Daqing) we now control, through the contractual arrangements described above.

On March 28, 2012, QKL-China formed QKL-LQ, a PRC company, together with 5 other affiliated individuals. Under certain contractual arrangements among QKL-China and these equity investors of QKL-LQ, QKL-China is entitled to income earned by QKL-LQ and is obligated to absorb a majority of the risk of loss from QKL-LQ, as if QKL-LQ were a wholly-owned subsidiary of QKL-China.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

The Company's current structure is set forth in the diagram below:

Private Placement Transaction

The other transaction we completed on March 28, 2008 was a private placement in which we raised funds through a private sale of securities that was exempt from the registration requirements under Section 4(2) of the Securities Act as a result of our compliance with Rule 506 of Regulation D promulgated under the Securities Act. In the private placement we sold to certain accredited investors, for gross proceeds to us of $15.5 million, 9,117,647 units at a purchase price of $1.70 per unit, each unit consisting of one share of Series A Preferred Stock (each of which is convertible (subject to adjustment) into one share of our common stock), a 0.625 interest in a Series A Warrant and a 0.625 interest in a Series B Warrant.

The agreements through which the private placement were carried out are described in detail below, all of which were entered into on March 28, 2008 unless otherwise indicated.

Securities Purchase Agreement

The securities purchase agreement among Vision Opportunity Master Fund Ltd. ("Vision Master"), Vision Opportunity China Fund Limited (together with Vision Master, "Vision") and certain other investors listed in Exhibit A thereto involved the sale of an aggregate of 9,117,647 units, each unit consisting of one share of Series A Preferred Stock, a 0.625 interest in a Series A Warrant and a 0.625 interest in a Series B Warrant. The closing of the private placement transaction and the securities purchase agreement was contingent upon and dependent on the closing of the reverse merger transaction. Each share of Series A Preferred Stock is convertible into one share of common stock subject to adjustment as described below. Each warrant is exercisable for one of common stock or an aggregate of up to 3,799,020 (**474,877) shares of common stock. The Series A Warrants are exercisable for up to 1,899,510 (**237,439) shares of common stock and have an exercise price of $10.20 (**$81.60) per share, subject to adjustment. The Series B Warrants are exercisable for up to 1,899,510 (**237,439) shares of common stock and have an exercise price of $12.75 (**$102.00) per share, subject to adjustment. The warrants expire on March 28, 2013, which is five years from the date of issuance.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

The terms of our Series A Preferred Stock are set forth in a Certificate of Designations, which we filed with the Secretary of State of the State of Delaware on March 13, 2008. For more information regarding the material terms of Series A Preferred Stock, see the section of this report entitled "Description of our Securities" under the subheadings "Preferred Stock" and "Terms of Series A Preferred Stock."

Securities Escrow Agreement

The securities escrow agreement among Vision, as representative of the purchasers under the securities purchase agreement, Winning State (BVI), and Loeb & Loeb LLP, as escrow agent, was entered into as an inducement to the purchasers to enter into the securities purchase agreement. Winning State (BVI) agreed to deliver 6,078,431 (**759,804) shares of our common stock owned by Winning State (BVI) as escrow shares (the "Escrow Shares") to the escrow agent for the benefit of the purchasers, and to deliver some or all of those shares to the purchasers in the event the Company fails to achieve certain financial performance thresholds for the 12-month periods ending December 31, 2008 and December 31, 2009.

The financial performance thresholds for 2008 required that the Company achieve (i) both net income and cash from operations greater than $9.4 million and (ii) fully diluted earnings per share equal to or greater than $0.69. Under the terms of the agreement these thresholds were met if the Company achieved at least 95% thereof. The Company reported net income of $9.0 million, cash from operations of $18.7 million and diluted earnings per share of $0.87 (**$6.96) for 2008, and therefore the thresholds for 2008 were met by the Company. Accordingly, all of the Escrow Shares remain in escrow, pending the performance of the 2009 performance thresholds described below.

The financial performance thresholds for 2009 will be satisfied if the Company achieves (i) both net income and cash from operations of greater than $11.15 million and (ii) fully diluted earnings per share of $0.81(**$6.48). On April 1, 2010 the securities escrow agreement was amended to exclude amounts recorded as liabilities under ASC815. At December 31, 2009, excluding amounts recorded as liabilities under ASC815, the Company had net income of $10.8 million, cash from operations of $10.8 million and fully diluted earnings per share of $1.02(**$8.16).

Because we achieved at least 95% of each of the 2009 performance thresholds, all of the 2009 escrow shares have been returned to Winning State (BVI).

For purposes of determining the performance thresholds described above, fully diluted earnings per share was calculated by (x) dividing the lesser of net income and cash from operations, as reported in our 2009 financial statements plus any amounts that may have been recorded as charges or liabilities on the 2009 financial statements due to the application of Emerging Issues Task Force Issue No. 00-19 that are associated with (1) any outstanding warrants issued in connection with the Securities Purchase Agreement or (2) any liabilities created as a result of the escrow shares being released to any of our officers or directors by (y) the aggregate number of shares of our then outstanding common stock on a fully-diluted basis which number includes, without limitation, the number of shares of common stock issuable upon conversion of the then outstanding shares of Series A Preferred Stock and the number of shares of common stock issuable upon the exercise of any then outstanding preferred stock, warrants or options of the Company.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

Investor and Public Relations Escrow Agreement

We also entered into an investor and public relations agreement with Vision Opportunity China LP, as representative of the purchasers under the securities purchase agreement, and Loeb & Loeb LLP, as escrow agent. Under the agreement, $300,000 of the proceeds of the private placement was deposited into an escrow account with Loeb & Loeb LLP for use in investor and public relations.

Settlement Agreement

On January 22, 2008, QKL terminated its engagement agreement with Kuhns Brothers to provide QKL with investment banking services, on an exclusive basis, with respect to the private placement transaction and the share exchange transaction, and the parties executed a settlement agreement. Under the terms of the settlement agreement, we were required to pay Khuns Brothers (i) a cash fee equal to 8.5% of the gross proceeds invested in the financing by investors introduced to the Company by Kuhns Brothers, Inc. ("Introduced Investors"), and (ii) warrants to purchase up to a number of shares of common stock of the Company equal to 8.5% of the dollar amount of the shares purchased by the Introduced Investors divided by the per-share purchase price of the common stock or preferred stock in the financing. The warrants have the same terms as warrants received by the Introduced Investors. Accordingly, Kuhns Brothers received from us a cash fee of $1,300,500, Series A Warrants to purchase 63,750 (**7,969) shares of our common stock and Series B Warrants to purchase 51,000 (**6,375) shares of our common stock.

Lock-Up Agreement

In connection with the private placement we also entered into an agreement with Winning State (BVI) under which, in order to induce Forme to enter into the share exchange agreement, certain stockholders including Mr. Zhuangyi Wang, our CEO and Mr. Xudong Wang, our former CFO, agreed that (i) they would not sell or transfer any shares of our common stock until at least 12 months after the effective date of a registration statement filed with the SEC registering for resale the shares of common stock underlying the Series A Preferred Stock issued in the private placement transaction and (ii) for an additional 24 months after the end of that 12 month period, would not sell or transfer more than one-twelfth of its total shares of that common stock during any one month.

Agreements Executed in Connection with Our Public Offering

Waiver to Registration Rights Agreement

On October 16, 2009, Vision Opportunity China LP, as representative of the purchasers listed on Schedule I to the Registration Rights Agreement dated as of March 28, 2008, agreed to waive the notice and piggyback registration rights provided by the Registration Rights Agreement solely with respect to our public offering in the fourth quarter of 2009 of 2,300,000 (**287,500) shares of our common stock at a price of $17.25 ($138.00) per share that raised aggregate net proceeds of $39.7 million.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

Waiver to Securities Purchase Agreement

On October 16, 2009, Vision Opportunity China LP, as representative of the purchasers listed on Schedule A to the Securities Purchase Agreement dated as of March 28, 2008, agreed to waive the notice and preemption rights provided by the Securities Purchase Agreement, solely with respect to our public offering in the fourth quarter of 2009 of 2,300,000 (**287,500) shares of our common stock at a price of $17.25 (**$138.00) per share that raised aggregate net proceeds of $39.7 million.

Amendment to Securities Escrow Agreement

On October 15, 2009, we entered into an Amendment to Securities Escrow Agreement, amending the Securities Escrow Agreement dated March 28, 2008, by and among the Company, Vision Opportunity China LP as representative of the Purchasers, Winning  State Investment Limited and Loeb & Loeb LLP, as escrow agent, to revise the definition of "Net income" and "Cash from Operations" for the fiscal year ended December 31, 2009 to exclude the one time non-recurring cash expenses incurred by us in connection with our public offering in the fourth quarter of 2009 and the transactions contemplated by our public offering that were not contemplated by the Securities Escrow Agreement.

Lock-Up Letters

On October 15, 2009, in connection with our public offering and in order to induce Roth Capital Partners, LLC to act as our underwriter, each of our directors and executive officers, and Winning State (BVI) agreed that, without the prior written consent of Roth Capital Partners, LLC, they would not, during the period commencing on October 15, 2009 and ending 180 days after the date of the final prospectus relating to our public offering (i) either directly or indirectly sell, pledge, lend or transfer any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, subject to certain exclusions, or (ii) make any demand for or exercise any right with respect to the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for shares of common stock.

Anti-dilution Agreements

On March 24, 2010, we entered into a Warrant Amendment ("Series A Warrant Amendment") to the Series A Warrant to Purchase Shares of Common Stock of the Company ("Series A Warrant") with Vision Opportunity China LP, pursuant to which certain anti-dilution provisions of the Series A Warrants were removed on behalf of the Series A Warrant holders.  Pursuant to the Series A Warrant Amendment, we agreed not to issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Series A Warrant, at a per share price less than the exercise price then in effect, without the prior written consent of holders of a majority of the Series A Warrants at such time.

On March 24, 2010, we entered into a Warrant Amendment ("Series B Warrant Amendment") to the Series B Warrant to Purchase Shares of Common Stock of the Company ("Series B Warrant") with Vision Opportunity China LP, pursuant to which certain anti-dilution provisions of the Series A Warrants were removed on behalf of the Series A Warrant holders.  Pursuant to the Series B Warrant Amendment, we agreed not to issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Series B Warrant, at a per share price less than the exercise price then in effect, without the prior written consent of holders of a majority of the Series B Warrants at such time.

**Reference for amount restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See note 17 Subsequent Events.

On March 25, 2010, we entered into a Waiver ("Waiver") to the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock ("Certificate") with the holders of our Series A Convertible Preferred Stock, pursuant to which certain anti-dilution protections of the Certificate were waived.  We plan to amend the Certificate to state that we will not issue any additional shares of common stock or common stock equivalents, except as otherwise contemplated by the Certificate, at a conversion price less than the conversion price then in effect for the Series A Preferred Stock, without the prior written consent of holders of a majority of the Series A Warrants at such time.

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Property, Plant and Equipment, Net (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Property Plant And Equipment [Line Items]
Property, plant and equipment	$ 69,139,347	$ 61,970,918
Less: accumulated depreciation and amortization	(23,699,987)	(18,928,782)
Total property, plant and equipment, net	45,439,360	43,042,136
Depreciation-property, plant and equipment	6,702,740	6,065,858
Short-term Debt [Member]
Property Plant And Equipment [Line Items]
Total property, plant and equipment, net	5,255,580
Buildings [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	6,773,312	6,861,043
Buildings [Member] | Short-term Debt [Member]
Property Plant And Equipment [Line Items]
Total property, plant and equipment, net	5,255,580
Shop equipment [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	19,483,024	19,815,360
Office equipment [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	4,243,396	19,815,360
Motor Vehicles [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	1,460,327	1,642,125
Car park [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	20,392	20,237
Leasehold improvements
Property Plant And Equipment [Line Items]
Property, plant and equipment	27,150,156	27,515,996
Construction In Progress [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment	$ 10,008,740	$ 2,087,368

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Summary of Significant Accounting Policies (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Summary of Significant Accounting Policies [Line Items]
Advertising expense	$ 135,877	$ 192,779
Property and equipment impairment charges	26,697,561	19,219,870
Retirement benefit plans expense	$ 4,708,372	$ 3,370,869
Registered capital	50.00%
Required statutory reserve appropriations	10.00%
Minimum [Member]
Summary of Significant Accounting Policies [Line Items]
Amortization period of land rights	30 years
Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Amortization period of land rights	40 years

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Short Term Bank Loans (Tables)

12 Months Ended

Dec. 31, 2012

Short term Bank Loans [Abstract]

Schedule of Short-Term Loans

December 31,					2012		2011
	Due date	Interest rate
Longjiang Commercial Bank	4/18/2013		6.941	%	$	7,916,278	$	7,855,830
Longjiang Commercial Bank	4/25/2013		7.544	%		7,916,277		3,142,332
Total short term bank loans					$	15,832,555	$	10,998,162

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Income Taxes (Components of Income Tax Provision) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Current
Foreign	$ (198,092)	$ 3,856,527
Federal
State
Deferred
Foreign	(2,102,122)	(2,403,124)
Federal
State
Provision for income taxes	$ (2,300,214)	$ 1,453,403

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Earnings Per Share (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share Basic And Diluted [Line Items]
Net income to QKL Stores, Inc. for computing basic net income (loss) per share	$ (31,042,540)	$ (16,583,381)
Undistributed earnings allocated to Series A Convertible Preferred Stock
Net income (loss) attributable to ordinary shareholders for computing basic net income (loss) per ordinary share	$ (31,042,510)	$ (16,583,381)
Weighted-average number of common shares
Weighted average shares used in calculating net income per ordinary share - basic	10,509,469	10,166,618
Dilutive shares:
Conversion of series A convertible preferred stock	1,837,215	2,179,761
Dilutive effect of stock warrants and options
Anti-dilutive effect of preferred stock	(1,837,215)	(2,179,761)
Weighted average shares used in calculating net income per ordinary share - diluted	10,509,469	10,166,618
Basic earnings per share of common stock	$ (2.95)	$ (1.63)
Diluted earnings per share	$ (2.95)	$ (1.63)
Restated Amount Reflecting Reverse Stock Split Member [Member]
Weighted-average number of common shares
Weighted average shares used in calculating net income per ordinary share - basic	1,313,684	1,270,827
Dilutive shares:
Conversion of series A convertible preferred stock	229,652	272,470
Anti-dilutive effect of preferred stock	(229,652)	(272,470)
Weighted average shares used in calculating net income per ordinary share - diluted	1,313,684	1,270,827
Basic earnings per share of common stock	$ (23.63)	$ (13.05)
Diluted earnings per share	$ (23.63)	$ (13.05)

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Segment Information

NOTE 13 - SEGMENT INFORMATION

The Company is principally engaged in the operation of retail chain store in the PRC. Nearly all identifiable assets of the Company are located in the PRC. All revenues are derived from customers in the PRC. Accordingly, no analysis of the Company's sales and assets by geographical market is presented.

For the years ended December 31, 2012 and 2011, the Company's net revenues from external customers for products and services are as follows:

Years Ended December 31,	2012		2011
Sale of general merchandise	$	359,625,745	$	365,230,321
Department store income		4,832,718		4,060,540
Other income		1,166,318		1,209,559
Total	$	365,624,781	$	370,500,420

For the years ended December 31, 2012 and 2011, the Company's net revenues from external customers for sale of general merchandise by categories of product are as follows:

Years Ended December 31,	2012		2011
Grocery	$	134,599,622	$	125,176,060
Fresh food		172,059,718		172,554,315
Non-food		52,966,405		67,499,946
Total	$	359,625,745	$	365,230,321

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Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 9 - 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:

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

Years Ended December 31,	2012			2011
Net loss to QKL Stores, Inc. for computing basic net loss per share	$	(31,042,540	)	$	(16,583,381	)
Undistributed earnings allocated to Series A Convertible Preferred Stock		-			-
Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share	$	(31,042,540	)	$	(16,583,381	)
Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		10,509,469			10,166,618
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		1,837,215			2,179,761
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(1,837,215	)		(2,179,761	)
Diluted		10,509,469			10,166,618
Basic earnings per share of common stock	$	(2.95	)	$	(1.63	)
Diluted earnings per share	$	(2.95	)	$	(1.63	)

The 3,922,953 shares of stock warrants and 677,666 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 years ended December, 2012 and 2011 were lower than the options and warrants exercise price.

The following earnings per share computation data are restated to reflect the 1-for-8 Reverse Stock Split effected on February 4, 2013. See also note 17 Subsequent Events.

Weighted-average shares of common stock outstanding in computing net loss per common stock
Basic		1,313,684			1,270,827
Dilutive shares:
Conversion of Series A Convertible Preferred Stock		229,652			272,470
Dilutive effect of stock warrants and options		-			-
Anti-dilutive effect of preferred stock		(229,652	)		(272,470	)
Diluted		1,313,684			1,270,827
Basic earnings per share of common stock	$	(23.63	)	$	(13.05	)
Diluted earnings per share	$	(23.63	)	$	(13.05	)

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Income Taxes (Effective Income Tax Rate Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Statutory rate	34.00%	34.00%
Income tax rate reduction	(9.00%)	(9.00%)
Impairment of goodwill	(20.00%)	(31.80%)
Other	1.90%	(2.80%)
Effective income tax rate	6.90%	(9.60%)

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Amendment to Articles of Incorporation

12 Months Ended

Dec. 31, 2012

Amendment to Articles of Incorporation [Abstract]

Amendment to Articles of Incorporation

NOTE 16 - AMENDMENT TO ARTICLES OF INCORPORATION

On June 11, 2012, the Company filed a Certificate of Amendment to the Company's Certificate of Incorporation, as amended to date, with the Secretary of State of the State of Delaware to effect a one-for-three reverse stock split (the "Reverse Stock Split") of the issued and outstanding common stock of the Company, so that every three (3) outstanding shares of common stock before the Reverse Stock Split represents one (1) share of common stock after the Reverse Stock Split. The Reverse Stock Split became effective on and as of June 11, 2012. The Reverse Stock Split was duly approved by the Board of Directors of the Company and the Company's shareholders entitled to vote a majority of the shares of common stock pursuant to Delaware General Corporation Law.

As a result of the Reverse Stock Split, the number of outstanding shares of common stock of the Company was reduced to 10,527,637 shares. Fractional stockholdings were rounded up to the nearest whole number. Each shareholder's percentage ownership interest in the Company and proportional voting power remains unchanged after the Reverse Stock Split except for minor changes and adjustments resulting from rounding of fractional interests. The rights and privileges of the holders of common stock are substantially unaffected by the Reverse Stock Split.

All common stock based data in our consolidated financial statements and the accompanying notes has been retroactively restated to reflect this Reverse Stock Split.

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Comprehensive Income

12 Months Ended

Dec. 31, 2012

Comprehensive Income [Abstract]

Comprehensive Income

NOTE 14 -COMPREHENSIVE INCOME

Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of income and are recorded directly into a separate section of shareholders' equity on the consolidated balance sheets.  Comprehensive income and its components consist of the following:

Years Ended December 31,	2012			2011
Net income	$	(31,042,540	)	$	(16,583,381	)
Other comprehensive income, net of tax
Foreign currency translation adjustment		1,322,788			4,033,171
Comprehensive income	$	(29,719,752	)	$	(12,550,210	)

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Document and Entity Information (USD $)

12 Months Ended

Dec. 31, 2012

Apr. 12, 2013

Jun. 30, 2012

Document Information [Line Items]

Document Period End Date

Dec. 31, 2012

Document Type

10-K

Amendment Flag

true

Document Fiscal Year Focus

2012

Document Fiscal Period Focus

FY

Trading Symbol

QKLS

Entity Registrant Name

QKL Stores Inc.

Entity Central Index Key

0000808047

Current Fiscal Year End Date

--12-31

Entity Filer Category

Smaller Reporting Company

Entity Common Stock, Shares Outstanding

1,522,326

Entity Public Float

$ 16,633,666

Entity Current Reporting Status

Yes

Entity Voluntary Filers

No

Entity Well-known Seasoned Issuer

No

Amendment Description

Explanatory Note

We are filing this Amendment No. 2 on Form 10-K/A (the "Amendment No. 2") to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which was originally filed with the Securities and Exchange Commission ("SEC") on April 15, 2013 (the "Original 2012 Form 10-K"). We are amending a Consolidated Balance Sheet Item, Deferred income tax assets.

This amendment was to re-classify $3,259,129 and $2,577,593 as of December 31, 2012 and 2011 from current deferred income tax to non-current deferred income tax so as to reflect the long-term effect of the temporary difference of these items.

Except as specifically referenced herein, this Amendment No. 2 to the Original 2012 Form 10-K does not reflect any event occurring subsequent to April 15, 2013, the filing date of the Original 2012 Form 10-K.

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to the Original 2012 Form 10-K have been re-executed and re-filed as of the date of this Amendment No. 2 and are included as exhibits hereto.

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Operating Leases

Certain of our real properties and equipment are operated under lease agreements. Rental expense under operating leases was as follows:

Years Ended December 31,	2012		2011
Rent expense	$	9,846,142	$	9,857,879
Less: Sublease income		2,135,839		1,983,347
Total rent expense, net	$	7,710,303	$	7,874,532

Annual minimum payments under operating leases are as follows:

Years Ended December 31,	Minimum Lease Payment		Sublease Income		Net Minimum Lease Payment
2013	$	8,430,420	$	1,098,557		7,331,863
2014		8,427,482		4,082		8,423,400
2015		8,333,014		-		8,333,014
2016		8,135,968		-		8,135,968
2017		7,936,970		-		7,936,970
Thereafter		72,993,791		-		72,993,791
Total	$	114,257,645	$	1,102,639	$	113,155,006

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Preferred Stock and Stock Warrants (Details) (USD $)	0 Months Ended	12 Months Ended			0 Months Ended					12 Months Ended
	Mar. 28, 2008	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series A Warrant [Member]	Mar. 28, 2008 Series A Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series B Warrant [Member]	Mar. 28, 2008 Series B Warrant [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]	Mar. 28, 2008 Series A and B Warrant [Member]	Dec. 31, 2010 Series A and B Warrant [Member]	Dec. 31, 2009 Series A and B Warrant [Member]	Dec. 31, 2008 Series A and B Warrant [Member]	Dec. 31, 2010 Class C Warrants [Member]	Dec. 31, 2010 Class C Warrants [Member] Restated Amount Reflecting Reverse Stock Split Member [Member]
Class of Stock [Line Items]
Conversion cannot surpass total Company's common stock outstanding at that time		4.99%
Preferred stock liquidation preference		$ 5.10		$ 40.80
Preferred Units, Issued	9,117,647				1,940,885		1,933,637
Warrant, exercise price					$ 10.20	$ 81.60	$ 12.75	$ 102					$ 15	$ 120
Proceeds from issuance of common stock and warrants	$ 15,500,000
Warrant rights of exercisable amount of comon stock													66,666	8,333
Warrant expiration date					Mar. 28, 2013		Mar. 28, 2013
Fair value assumption, expected lives									5 years	3 years			2 years 9 months
Fair value assumption, expected volatility									89.00%	57.00%			54.00%
Fair value assumption, risk-free interest rate									2.51%	1.67%			1.25%
Fair value assumption, dividend yield									0.00%	0.00%			0.00%
Common stock rights relinquished due to warrant equity treatment change												11,623,566
Adjustment to additional paid in capital												6,020,000
Retained earnings (accumulated deficit)										36,502,385		2,792,017
Warrant liabilities												8,812,017
Fair value of the warrants											44,304,034
Gain (loss) recognized from change in fair value of warrants										7,801,649	(35,492,017)
Retirement benefit plans expense		$ 4,708,372	$ 3,370,869										$ 558,180

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Earnings Per Share (Narrative) (Details)	12 Months Ended
	Dec. 31, 2012
Stock Options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were not included in the computation of diluted net earnings per share	3,922,953
Warrant [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares that were not included in the computation of diluted net earnings per share	677,666

CORRESP

QKL Stores Inc.
4 Nanreyuan Street,
Dongfeng Road, Sartu District
Daqing, China 163300

January 2, 2014

William H. Thompson
Division of Corporate Finance
Mail Stop 7010
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re:	QKL Stores Inc.
	Form 10-K for Fiscal Year Ended December 31, 2012 Filed April 15, 2013
	Response dated December 11, 2013
	File No. 1-34498

Dear Mr. Thompson:

QKL Stores, Inc. (“We” or the “Company”) is submitting this correspondence via the EDGAR system in response to a comment letter issued by the Staff of the Securities and Exchange Commission (the “Commission”) on December 17, 2013 (the “Comment Letter”). In order to facilitate your review, we have restated and responded, to each of the comments set forth in the Staff’s Letter, on a point-by-point basis. The numbered paragraphs set forth below correspond to the numbered paragraphs in the Staff’s Letter.

Form 10-K for Fiscal Year Ended December 31, 2012 Consolidated Financial Statements

Consolidated Financial Statements

Note 12 – Income Taxes, page F-35

1.We read your response to comment 3 in our letter dated November 26, 2013. We note that property, plant and equipment are classified as non-current assets in your consolidated balance sheets. As such, it appears that the related deferred tax asset should be classified as a non-current asset. Please tell us why your classification complies with the guidance in ASC 740-10-45-4 and 7. In addition, please provide us with your analysis of the expected reversal dates of net operating loss carry-forwards supporting the current classification of the related deferred asset at each balance sheet date. Please refer to the guidance in ASC 740-10-45-9.

Response to Comment 1:

In response to the Staff’s comments and further to our internal investigation on our accounting treatment for the classifying deferred tax assets, the Company has wrongly applied the guidance in ASC 740-10-45-4 and 7, and has wrongly determined the expected reversal dates of the net operating loss carry-forwards in responding to comment 3 in your comment letter dated November 26, 2013.

The expected reversal dates of the net operating loss carry-forwards as at December 31, 2012 are as follows:

Expected reversal date	USD
December 31, 2013		-
December 31, 2014		791,628
December 31, 2015		910,372
December 31, 2016		1,046,928
December 31, 2017		439,759
		3,188,687

To correct the error, we amended our financial statements in 2012 Form 10-K in accordance with the following GAAP:

740-10-45-4: In a classified statement of financial position, we shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting.

740-10-45-7: A deferred tax liability or asset for a temporary difference that is related to an asset or liability shall be classified as current or noncurrent based on the classification of the related asset or liability.

740-10-4-9: A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carry-forwards, shall be classified according to the expected reversal date of the temporary difference.

Your prompt attention to this filing would be greatly appreciated. Should you have any questions concerning any of the foregoing please contact Mr. Lawrence Venick, Esq. at +86 10 5954 3688, or Ms. Vivien Bai, Esq. at +86 10 59543557, our legal counsel.

Sincerely,

QKL Stores Inc.

By : /s/Tsz-Kit Chan____________

Name: Tsz-Kit Chan

Title: Chief Financial Officer