"We will continue to manage our business prudently through the second half of this year," added Mr. Gu. "The sector remains fiercely competitive, with e-commerce verticals vying to hold market share and brand position. We are confident that our strategic focus on preserving cash, improving operating efficiency and enhancing customer satisfaction will allow us to withstand these challenging market conditions and ultimately deliver value to our shareholders."

Second Quarter 201 2 Results

Due to the seasonal nature of its business, the Company presents its financial results on a year-over-year basis between the second quarter of 2012 and the second quarter of 2011 as in the following paragraphs.

Total Net Revenues

Total net revenues were $39.0 million in the second quarter of 2012, representing a decrease of 33.6% from $58.7 million in the second quarter of 2011. The decrease was primarily due to the decrease in net revenues from the Company's Internet platform, as well as lower revenues from the Company's call center and stores.

Internet Platform

Net revenues from the Internet platform were $19.6 million in the second quarter of 2012, representing a decrease of 40.0% from $32.7 million in the second quarter of 2011. The decrease was primarily attributed to a 45% decrease in the number of average monthly unique visitors as a result of the Company's decision to continue to scale back our online advertising.

Call Center

Net revenues from the call center were $11.4 million in the second quarter of 2012, representing a decrease of 23.3% from $14.8 million in the second quarter of 2011. The decrease was primarily attributed to a decline in orders placed through the call center, which is consistent with the market-wide trend in consumer behavior in China in favor of e-commerce shopping, along with the reduction in the Company's catalog circulation.

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