Mr. Philip Lo reports

UPDATES ANNOUNCEMENT ABOUT 2014 AUDITED FINANCIAL STATEMENTS AND THE SUBSEQUENT UNAUDITED INTERIM FINANCIAL STATEMENTS

China Keli Electric Company Ltd. has provided an update to its news release of Sept. 26, 2014, relating to the completion of its audit for the financial year ended April 30, 2014, and the subsequent unaudited interim financial statements.

After the company filed the 2014 audited annual financial statements and the management discussion and analysis, the unaudited interim financial statements for the three months ended July 31, 2014, and the management discussion and analysis on Oct. 6, 2014, the unaudited interim financial statements for the six months ended Oct. 31, 2014, and the management discussion and analysis on Jan. 7, 2015, and the unaudited interim financial statements for the nine months ended Jan. 31, 2015, and the management discussion and analysis on April 16, 2015, there have been several comments from British Columbia Securities Commission (BCSC) concerning the details and disclosure in the statements. The company has gone through several rounds of response with the BCSC to clarify the comments and moving forward to prepare for any restatements necessary.

Until the BCSC is satisfied with all of the company's response to all the comments and the restatements to the related financial statements already filed, the company will continue to be subject to a cease trade order. The company believes that the remaining concerns of the BCSC will be cleared and restatements to the related financial statements will be completed and be filed soon. The board has been assured by management that they are providing full co-operation in an effort to undertake all steps necessary to respond to the comments from BCSC and prepare for the amendment and restatement of the previously filed financial statements. It is the goal and expectation of the board that the audit for the fiscal year ended April 30, 2015, will also be completed in due course.

According to BCSC comments, the significant items proposed to be revised or amended in the aforementioned financial statements and management discussions and analyses are as below:

1. In the 2014 audited annual financial statements filed on Oct. 6, 2014, the excess payment to the agents as at April 30, 2013, with amount of 5,143,400 renminbi ($840,432) was restated as amount due to related parties; as the documents received indicate the actual fund transfers from agents to the shareholders were made after April 30, 2013, the funds to be transferred in fiscal 2014 should be recorded as advance to agents for purpose of payments to shareholders, instead of amount due to related parties;
2. The holdback from installation service, which is 5 per cent of the total contract amount, was originally recognized as installation service revenue when the project was completed; the holdback is the quality guarantee held by the customer and will be paid back to the company after a 1.5-to-two-year quality guarantee period; according to IAS8, revenue, the holdback should be deferred and recognized as revenue over the period during which the company is responsible for quality problems (1.5 to two years);
3. Clarification on the revenue recognition accounting policies and the cash collection terms;
4. Reclassify the accounts receivable balances greater than one year as non-current assets;
5. Revision and more detailed aging analysis on accounts receivable;
6. More detailed disclosure on sales and marketing expenses and general and administrative expenses in 2014 audited annual financial statements and management discussion and analysis;
7. Revision and amendment on the disclosure of long-term receivables, loans and prepayments, and related party transactions.

This update does not mean that the company has completed all its work related to the comments from BCSC, nor can it provide any assurance on the timing or the likelihood of the resumption of trade. The company will provide further updates as information becomes available and matters are clarified.

We seek Safe Harbor.