CHINA EXECUTIVE EDUCATION (GREY:CECX)

On November 15, 2011, the Company was advised by Albert Wong that the  financial statements as of the years ended December 31, 2009 and 2010 in the Form 10-K filed on April 15, 2011 have the following accounting issues:

1)   Our net revenues for the years ended December 31, 2009 and 2010 were overstated due to improper recording of revenue and deferred revenue;

2)   Improper accounting treatment regarding consolidating variable interests entity (the “VIE”);

3)   Improper disclosure of VIE;

4)   Improper accounting treatment of deferred tax assets;

5)   Under and over accrual for certain liabilities as well as expenses; and

6)   Certain accounts were improperly classified.

The net effect of the above factors on the net income attributable to the Company’s shareholders for the years ended December 31, 2009 and 2010 were decreases of approximately $2.97 million and $7.49 million, respectively.

On March 25, 2011, China Executive Education Corp. (the “Company”) and the Audit Committee of the Board of Directors concluded that the financial statements of Surmounting Limit Marketing Adviser Limited for the fiscal year ended December 31, 2009, as presented in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 12, 2010 , (the “2009 Financial Statements”), should no longer be relied upon due to the accounting issues described below.
 
    On February 12, 2010, we consummated a reverse merger with Surmounting Limit Marketing Adviser Limited, a Hong Kong corporation (“SLM”) and as a result of the reverse merger, persons affiliated with SLM became the owner of approximately 98% of our equity. The 2009 financial statements were audited by another auditor Stan J.H. Lee, CPA, SLM’s auditor before the reverse merger and contained the following misstatements:
 
    During our year-end audits, our current auditors discovered that:
 
(1)   Our net revenues for the year ended December 31, 2009 were overstated as a result of under accruing certain sales taxes.

(2)   Our costs of revenue were overstated due to improper classification of certain selling, general and administrative expenses in the costs of revenues.

(3)   In addition, the Company did not record certain legal fees, consulting fees, and employee annual bonus incurred before the year-end in the correct period. As a result, its general and administrative expenses were understated for the fiscal year ended December 31, 2009.

(4)   Certain accounts were improperly classified.

Accordingly, the Company has decided to have our current auditor, Friedman LLP, re-audit its financial statements for the fiscal year ended December 31, 2009. The 2009 financial statements will be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The Company will also restate its quarterly financial information for the first three quarters of 2010 in the upcoming Form 10-K filing by disclosing the effect of the restatement in the quarterly financial information footnote.

On December 2, 2010, China Executive Education Corp. entered into a Securities Purchase Agreement with certain investors relating to the issuance and sale of 73,900 shares of the Company’s common stock, par value $0.001 per share, at a price of $2.50 per share, in a private placement transaction. The aggregate purchase price for the Shares was $184,750. The sale of the Shares to the Purchasers closed on December 2, 2010.

2010 Third quarter 10Q

Based on our current operating plan, we believe that existing cash and cash equivalents balances, as well as cash forecast by management to be generated by operations, will be sufficient to meet our working capital and capital requirements for our current operations.

Reverse merger transaction 8K.

Based on our current operating plan, we believe that our existing resources, including cash generated from operations, will be sufficient to meet our working capital requirement for our current operations. In order to fully implement our business plan and continue our growth, however, we will require additional capital either from our shareholders or from outside sources.

Third Quarter 2010 Financial Highlights

• Revenues for the third quarter of fiscal year 2010 increased by 76.6% year-over-year to $6.5 million, up from $3.7 millionin the third quarter of 2009.

• Net income attributable to the Company for the third quarter decreased 19.7% year-over-year to $1.2 million, compared with $1.5 millionfor the third quarter of 2009.

• Gross margin for the third quarter was 65.5% based on gross profit of $4.2 million, compared with a 70.5% margin in the same period last year.

• Operating income and operating margin for the third quarter were $2.1 million and 32.7%, respectively, compared to $2.2 million and 60.0%, respectively, in the third quarter of 2009.

• Earnings per diluted share were $0.06for the quarter, compared with diluted EPS of $0.07achieved in the same period a year ago.

"Thanks to the success of our recent marketing efforts, we achieved impressive sales growth this quarter, and our margins and balance sheet remain strong," commented Kaien Liang, Chairman and Chief Executive Officer of China Executive Education Corp. "We ramped up our operating expenses during the third quarter to support the aggressive expansion of our sales and marketing efforts in response to rising demand for executive training services in China. We expect to continue investing in our sales and marketing campaigns over the next few quarters as we remain focused on expanding our operations and building national brand recognition. China Executive Education recently participated in a hybrid concert and motivational speech event at Shanghai Stadium, which attracted nearly 50,000 attendees and was very well-received. We are confident that our short-term expenditures on building the foundation of our business will ultimately result in greater visibility, increased market share, and sustained top- and bottom-line growth."

On February 17, 2010 China Executive Education Corp. became a public company via a reverse merger transaction.

Business Snapshot:

• Founded in April 23, 2009, China Executive Education sells its training programs through its own sales team which consists of 220 self-motivated sales staff. It also promotes its services through the Internet via www.magicyourlife101.com and www.myl101.com.

Industry Snapshot:

• China’s professional training industry is one of the fastest growing sectors in China’s education industry. According to the China Education Yearbook, China’s total educational expenditures were approximately RMB1, 214.8 billion in 2007 (approximately $178.6 billion), representing a compound annual growth rate, or CAGR, of approximately 15.4%, since 2000, as illustrated in the following chart. The school system run by the State and local government accounts for over 60% of the funding and expenditure.

Financial Snapshot: (From inception;  April 23,2009 to December 31, 2009):

• Sales: $9.1 million
• Net Income: $3.5 million

Post Merger Share Calculation:

•   6,510,000: Pre reverse merger outstanding shares
•  3,000,000 : Shares cancelled as part of the Share Exchange
• 21,560,000: Newly issued shares of Common Stock

GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions:  25,000,000 (8k indicates that there are 22 million shares outstanding).