NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS QKL Stores Inc. ("Store") was incorporated under the laws of the State of Delaware on December 2, 1986. Store currently operates through a wholly owned subsidiary in the British Virgin Islands: Speedy Brilliant Group Ltd. ("Speedy Brilliant (BVI)"), wholly owned subsidiary of Speedy Brilliant (BVI) located in Mainland China: Speedy Brilliant (Daqing) Ltd. ("Speedy Brilliant (Daqing)" or "WFOE"), operating company located in Mainland China: Daqing Qingkelong Chain Commerce &amp; Trade Co., Ltd. ("Qingkelong Chain"), which Store controls, through contractual arrangements between WFOE and Qingkelong Chain, as if Qingkelong Chain were a wholly owned subsidiary of Store, wholly owned operating subsidiary of Qingkelong Chain located in Mainland China: Daqing Qinglongxin Commerce &amp; Trade Co., Ltd ("Qinglongxin Commerce") and wholly owned 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. The Store and its subsidiaries (hereinafter, collectively referred to as the "Company") are engaged in the operation of retail chain stores in the PRC. The principal business activity of QKL-LQ is money lending. The Company is a regional supermarket chain that currently operates 33 supermarkets, 16 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 Mongo