Attached files
| file | filename |
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| EX-99.1 - QKL Stores Inc. | v189259_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K/A
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act 1934
Date of
Report (date of earliest event reported): March 31, 2010
QKL
STORES INC.
(Exact
name of registrant as specified in charter)
|
Delaware
|
033-10893
|
75-2180652
|
|
(State
of Incorporation)
|
(Commission
File No.)
|
(IRS
Employer
Identification
No.)
|
Jingqi
Street
Dongfeng
Xincun
Sartu
District
163311
Daqing, PRC
(Address
Of Principal Executive Offices) (Zip Code)
(011)
86-459-460-7987
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, is Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
EXPLANATORY
NOTE
This
Amendment No. 1 to the Current Report on Form 8-K filed by QKL Stores Inc. on
April 1, 2010 is being filed solely to correct the “Date of Report (date of
earliest event reported)” on the cover page of the Form 8-K from March 31, 2009
to March 31, 2010.
ITEM
4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT
REPORT OR COMPLETED INTERIM REVIEW.
On March
31, 2010, the Audit Committee of the Board of Directors of QKL Stores Inc. (the
“Company”), after consultation with and upon recommendation from management of
the Company, concluded the Company’s previously issued unaudited financial
statements for the three months ended March 31, 2009, June 30, 2009 and
September 30, 2009 included in its Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission on May 15, 2009 (as amended on August 22,
2009), August 14, 2009 and November 16, 2009 should no longer be relied upon and
that disclosure should be made and action should be taken to prevent future
reliance. The Company will restate its financial statements for the three months
ended March 31, 2009 and the three and six months ended June 30, 2009 and the
three and nine months ended September 30, 2009 due to issues raised by its
auditor, BDO China Li Xin Da Hua CPA Co., Ltd. (“BDO”) regarding the accounting
treatment of certain “down round” provisions of Series A and Series B
Warrants previously issued to investors in a March 28, 2008 private placement
(the “Private Placement”).
During
the audit process for the Company’s 2009 financial statements, BDO inquired as
to the Company’s accounting treatment as of January 1, 2009 for warrants issued
in the Private Placement which include anti-dilution provisions for adjustment
of the exercise price in the event additional shares of common stock or
securities convertible into common stock at a price less than $3.40 per share
with respect Series A Warrants and $4.25 per share with respect to the Series B
Warrants (also referred to as down-round provisions). The question
was raised in light of EITF 07-5, “Determining Whether an Instrument (or
Embedded Feature) Is Indexed to an Entity’s Own Stock” (FASB ASC 815-40-15-5)
(“ASC 815”) effective as of January 1, 2009, which outlines new guidance for
being indexed to an entity’s own stock and the resulting liability or equity
classification based on that conclusion. Down-round provisions reduce
the exercise price of a warrant or convertible instrument if a company either
issues new warrants or convertible instruments that have a lower exercise
price.
We have
performed a complete assessment of our warrants and concluded that the warrants
issued in the Private Placement are within the scope of ASC 815 due to the
down-round provisions included in the terms of the
agreements. Accordingly, ASC 815 should have been adopted as of
January 1, 2009 by classifying the warrant as a liability measured at fair value
with changes in fair value recognized in earnings each reporting and recording a
cumulative-effect adjustment to the opening balance of retained
earnings. We have calculated the fair value of the warrants at the
date of adoption as well as the March 31, 200, June 30, 2009 and September 30,
2009 reporting periods utilizing a Black-Scholes-Merton stock option valuation
model. Based on our calculations and assessment of the materiality,
we have concluded that our previously filed Form 10-Qs for the March 31, 2009,
June 30, 2009 and September 30, 2009 periods require restatement and amended
Form 10-Qs will be filed.
The
Company, including the Audit Committee of the Board of Directors, has discussed
the foregoing matters with the Company’s independent registered public
accounting firm, BDO. The Board of Directors has authorized and directed that
the officers of the Company take the appropriate and necessary actions to
restate the Quarterly Reports on Form 10-Q for the quarters ended March 31,
2009, June 30, 2009 and September 30, 2009.
ITEM 8.01
OTHER EVENTS.
On April
1, 2010 we issued a press release regarding our financial results for the year
ended December 31, 2009. A copy of the press release is filed
herewith as Exhibit 99.1 to this Current Report and is incorporated herein by
reference.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits
99.1 Press
Release dated April 1, 2010
SIGNATURES
Pursuant
to 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 hereunto
duly authorized.
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QKL
STORES INC.
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By:
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/s/ Zhuangyi Wang
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Name: Zhuangyi
Wang
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Title: Chief
Executive Officer
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Dated:
June 28, 2010