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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 001-34993
 
 CTPARTNERS EXECUTIVE SEARCH INC.
  Delaware
    
    52-2404079(State or other Jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1166 Avenue of the Americas, 3rd Fl., New York, NY
    
    10036(Address of principal executive offices)
    
    (Zip Code)
 (212) 588-3500
 Securities registered pursuant to Section 12(b) of the Act:Common Stock, par value $0.001 per share
    
    NYSE AMEX(Title of each Class)
    
    (Name of each exchange on which registered)
  o þ
 o þ
 þ o
 o o
 þ o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PAGEPART IITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    6ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    12ITEM 2. PROPERTIES
    
    
    12ITEM 3. LEGAL PROCEEDINGS
    
    
    13ITEM 4. (REMOVED AND RESERVED)
    
    
    13PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    13ITEM 6. SELECTED FINANCIAL DATA
    
    
    16ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    17ITEM 8. FINANCIAL STATEMENTS
    
    
    22ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    47ITEM 9A. CONTROLS AND PROCEDURES
    
    
    47ITEM 9B. OTHER INFORMATION
    
    
    47PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    48ITEM 11. EXECUTIVE COMPENSATION
    
    
    48ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    48ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    48ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    48PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    48EX-21EX-23.1EX-24EX-31.1EX-31.2EX-32.1EX-32.2




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PART I
 
 ITEM 1. BUSINESS.
 The Company
   Business Overview
      1




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Executive Search Industry Overview
 :
  Our Services
 Retained Executive Search
   2




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Milestone #1  Forty-eight hours.
 Milestone #2  Seven days.
 Milestone #3  Fourteen days.
  Milestone #4  Forty days.
 Milestone #5  Seventy-five days.
 Milestone #6  One-hundred days.
 Board Advisory
   3




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Our Industry-Focused Practice Areas
   Number ofPercentage of
    
    Executive SearchIndustry Practice Group
    
    2010 Net Revenue
    
    ConsultantsFinancial services
    
    
    41
    %
    
    
    38Professional services
    
    
    16
    %
    
    
    13Life sciences
    
    
    16
    %
    
    
    13Technology/media/telecom
    
    
    16
    %
    
    
    16Consumer/industrial
    
    
    11
    %
    
    
    8
   
    
    Association & Not-for-Profit
    
    Cleantech & Alternative Energy
    
    Commercial Banking
    
    Conservation
    
    Federal Consulting, Government Relations & Public Policy
    
    Financial Technology
    
    Global Security/Risk Management
    
    Inclusion
    
    Insurance
    
    Legal, Compliance, Regulatory & Governance
    
    Legal Services
    
    Real Estate
    
    Semiconductor
 4




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Our Executive Search Consultants and Other Employees
    Clients
   Seasonality
  Marketing
  5




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Research and Information Management
    Competition
  
 ITEM 1A. RISK FACTORS.
 In addition to the other information in this Form 10-K , the following risk factors should be
considered in evaluating our business because such factors may have a significant impact on our
business, financial condition, operating results, cash flows and results of operations. As a
result of the risk set forth below and elsewhere in this Form 10-K , and the risk discussed in our
other Securities and Exchange Commission filings, actual results could differ materially from those
projected in any forward-looking statements.
 Risks Related to Our Business
 Our inability to attract and retain qualified executive search consultants would adversely affect
our business, financial condition and results of operations.
  6




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A significant or prolonged economic downturn would have a material adverse effect on our
results of operations.
  Global economic developments and conditions in the geographic regions and industries from which we
derive a significant portion of our revenue could negatively affect our business, financial
condition and results of operations.
  We depend substantially on a limited number of key personnel who would be difficult to replace.
If we lose the services of these individuals, our business would be adversely affected.
  If we are unable to prevent our executive search consultants from taking our clients or our
executive search consultants with them to a competitor our business, financial condition and
results of operations could suffer.
   7




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If we are unable to maintain our professional reputation and brand name our business would be
adversely affected.
  Because existing clients may restrict us from recruiting their employees we may be unable, or be
perceived by prospective clients as being unable, to fill existing or prospective executive
search assignments, and prospective clients may not engage us, impeding our growth.
  We face aggressive competition and if we are unable to compete effectively, it would have a
material adverse affect on our business, financial condition and results of operations.
  We rely heavily on information management systems and any interruptions or loss of key client
data could adversely affect our business.
  We face the risk of liability in the services we perform and significant uninsured liabilities
could have a material adverse affect on our business, financial condition and results of
operations.
  8




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Our inability to successfully integrate executive search consultants may have an adverse effect
on our business.
  We may not be able to manage effectively our expanding operations, which may impede our growth
and/or negatively impact our performance.
  Our multinational operations may be adversely affected by economic, social, political and legal
risks.
  A significant currency fluctuation between the U.S. dollar and other currencies could adversely
impact our operating income.
  The failure to timely align our cost structure with net revenue could have a material adverse
affect on our business, financial condition and results of operations.
  Our inability to access credit, or if we are only able to do so at significantly higher costs,
could limit our ability to grow and harm our business, financial condition and results of
operations.
  9




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Risks Related to Ownership of Our Common Stock
 The market price of our common stock may be highly volatile or may decline regardless of our
operating performance.
   
    
    general economic conditions;
    
    actual or anticipated variations in our financial condition and operating results;
    
    overall conditions or trends in our industry;
    
    addition or loss of significant clients;
    
    changes in the market valuations of companies perceived by investors to be comparable
to us;
    
    announcements by us or our competitors of significant acquisitions, strategic
partnerships or divestitures;
    
    announcements of lawsuits filed against us;
    
    additions or departures of key personnel;
    
    changes in the estimates of our operating results or changes in recommendations by any
securities or industry analysts that elect to follow our common stock; and
    
    sales of our common stock by us or our stockholders, including sales by our directors
and officers.
  Our principal stockholders may exert substantial influence over us and may exercise their control
in a manner adverse to your interests.
  Future sales of our common stock may cause our stock price to decline.
  10




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
    
    commencing December 7, 2011, each such person may sell up to one-third of the shares of
common stock held by such person as of December 7, 2010;
    
    commencing December 7, 2012, each such person may sell up to two-thirds of the shares
of common stock held by such person as of December 7, 2010; and
    
    commencing December 7, 2013, each such person may sell one hundred percent of the
shares of common stock held by such person as of December 7, 2010.
   If securities or industry analysts do not publish research or reports about our business, if
they adversely change their recommendations regarding our common stock, or if our operating
results do not meet their expectations, our stock price and trading volume could decline.
  We currently do not intend to pay dividends on our common stock and, as a result, your only
opportunity to achieve a return on your investment is if the price of our common stock
appreciates.
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Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition
of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by
our stockholders to replace or remove our current management.
  
    
    a board of directors whose members can only be dismissed for cause;
    
    the right of the board of directors to elect a director to fill a vacancy created by
the expansion of the board of directors;
    
    the ability of the board of directors to alter our bylaws without obtaining stockholder
approval;
    
    the prohibition on actions by written consent of our stockholders;
    
    the limitation on who may call a special meeting of stockholders;
    
    the establishment of advance notice requirements for nominations for election to our
board of directors or for proposing matters that can be acted upon at stockholder meetings;
    
    the ability of our board of directors to issue preferred stock without stockholder
approval, which would increase the number of outstanding shares and could thwart a takeover
attempt; and
    
    the requirement of at least seventy-five percent of the outstanding common stock to amend any of the
foregoing provisions.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
 Offices
  U.S. Locations
    
    Non-U.S. Locations
    
    Associated OfficesBoston, MA
    
    Geneva, Switzerland
    
    Bogota, ColombiaChicago, IL
    
    Hong Kong
    
    Caracas, VenezuelaCleveland, OH
    
    London, United Kingdom
    
    Lima, PeruColumbia, MD
    
    Paris, France
    
    Mexico City, MexicoMiami, FL
    
    Shanghai, China
    
    Santiago, ChileNew York, NY
    
    Singapore
    
    Sao Paulo, BrazilRedwood Shores, CA
    
    Toronto, CanadaWashington, DC
  12




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ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. (REMOVED AND RESERVED).
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
 Market for Our Common Stock
  High
    
    LowDecember 7, 2010, through December 31, 2010
    
    $
    15.75
    
    
    $
    12.94
 Holders
  Dividend Policy
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Equity Compensation Plan Information
 Number of securitiesremaining available forNumber of securities to be
    
    
    
    
    
    future issuance under equityissued upon exercise of
    
    Weighted-average exercise
    
    compensation plansoutstanding options,
    
    price of outstanding options,
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    warrants and rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Equity compensation plans
approved by security holders
    
    
    0
    
    
    
    N/A
    
    
    
    1,000,000Equity compensation plans not
approved by security holders
    
    
    0
    
    
    
    N/A
    
    
    
    0Total
    
    
    0
    
    
    
    N/A
    
    
    
    1,000,000
 Sales of Unregistered Securities
  1.
    
    On August 4, 2010, we granted an executive search consultant 2,000 member units, which
vest on the first, second and third anniversary of the date of grant. This grant was made
as part of renegotiating the compensation package for one of our executive search
consultants. This grant was exempt from registration under Section 4(2) of the Securities
Act, as a sale not involving a public offering, or pursuant to Rule 701 under the
Securities Act.2.
    
    On August 3, 2010, we granted an executive search consultant 1,700 member units, which
vest on the first, second and third anniversary of the date of grant. The grant was made as
part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.3.
    
    On August 2, 2010, we granted an executive search consultant 2,000 member units, which
vest on the first, second and third anniversary of the date of grant. The grant was made as
part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.4.
    
    On August 1, 2010, we granted an executive search consultant 20,000 member units, 6,668
of which vested immediately and are subject to a one-year clawback. The remaining member
units vest on the first and second anniversary of the date of grant. The grant was made as
part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.
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5.
    
    On July 14, 2010, we granted an executive search consultant 3,000 member units. 1,000
member units vest on April 1 of each of 2011, 2012 and 2013. This grant was made as part of
renegotiating the compensation package for one of our executive search consultants. This
grant was exempt from registration under Section 4(2) of the Securities Act, as a sale not
involving a public offering, or pursuant to Rule 701 under the Securities Act.6.
    
    On June 8, 2010, we granted an executive search consultant 1,000 member units, which
vest on the first, second and third anniversary of the date of grant. This grant was made
as part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.7.
    
    On April 1, 2010, we granted an executive search consultant 9,500 member units, which
vest on the first, second and third anniversary of the date of grant. This grant was made
as part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.8.
    
    On March 1, 2010, we issued an aggregate of 29,100 performance units to executive
search consultants pursuant to our performance unit plan, which was terminated prior to the
effectiveness of this registration statement. The grants made in 2010 were made with a
grant price of $30.28 per member unit. These grants were made in connection with the
employment of certain executive search consultants and we received no consideration in
connection therewith. The grants were exempt from registration pursuant to Rule 701 under
the Securities Act or pursuant to Section 4(2) under the Securities Act.9.
    
    On January 18, 2010, we granted an executive search consultant 1,500 member units,
which vest on the first, second and third anniversary of the date of grant. This grant was
made as part of an offer of employment for an executive search consultant. This grant was
exempt from registration under Section 4(2) of the Securities Act, as a sale not involving
a public offering, or pursuant to Rule 701 under the Securities Act.10.
    
    On January 6, 2010, we granted an executive search consultant 1,000 member units, which
vest on the first, second and third anniversary of the date of grant. This grant was made
as part of an offer of employment for an executive search consultant. This grant was exempt
from registration under Section 4(2) of the Securities Act, as a sale not involving a
public offering, or pursuant to Rule 701 under the Securities Act.
 Use of Proceeds from Registered Securities
    
    
    approximately $4.7 million of cash, including the related payroll taxes, was used to pay out the value of performance units granted to
certain of our executive search consultants (including payments of $207,679 to Brian M.
Sullivan, our chief executive officer, $197,602 to David C. Nocifora, our chief
operating and chief financial officer);
    
    approximately $1.9 million to prepay in full a promissory note issued by the Company
to the former chief executive officer of the Company and his family trust; and
    
    approximately $1.6 million to prepay certain convertible promissory notes with
certain employees (including a payment of $453,400 to Brian M. Sullivan, our chief
executive officer).
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Issuer Purchases of Equity Securities
  
 ITEM 6. SELECTED FINANCIAL DATA.
  16




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 Managements Discussion and Analysis of Financial Condition and Results of Operations as well
as other sections of this annual report on Form 10-K contain forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. The forward-looking statements are based on current expectations, estimates, forecasts
and projections about the industry in which we operate and managements beliefs and assumptions.
Forward-looking statements may be identified by the use of words such as expects, anticipates,
intends, plans, believes, seeks, estimates, projects, forecasts, and similar
expressions. Forward-looking statements are not guarantees of future performance and involve
certain known and unknown risks, uncertainties and assumptions that are difficult to predict.
Actual outcomes and results may differ materially from what is expressed, forecasted or implied in
the forward-looking statements. Factors that may affect the outcome of the forward-looking
statements include, among other things, our expectations regarding our revenues, expenses and
operations and our ability to sustain profitability; our ability to recruit and retain qualified
executive search consultants to staff our operations appropriately; our ability to expand our
customer base and relationships, especially given the off-limit arrangements we are required to
enter into with certain of our clients; further declines in the global economy and our ability to
execute successfully through business cycles; our anticipated cash needs; our anticipated growth
strategies and sources of new revenues; unanticipated trends and challenges in our business and the
markets in which we operate; social or political instability in markets where we operate; the
impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast,
on a quarterly basis, variable compensation accruals that ultimately are determined based on the
achievement of annual results; the mix of profit and loss by country; and our ability to estimate
accurately for purposes of preparing our consolidated financial statements. For more information on
the factors that could affect the outcome of forward-looking statements, see Risk Factors in Item
1A of this Form 10-K . We caution the reader that the list of factors may not be exhaustive. We
undertake no obligation to update publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
 Managements Discussion and Analysis of Financial Condition and Results of Operation has been
prepared for the twelve-month periods ending December 31, 2010, and 2009. The Companys financial
statements have been prepared on a successor and predecessor basis due to the Companys conversion
from a limited liability company to a corporation on December 1, 2010.
 Components of Our Statement of Operations
 Revenue
 Net Revenue.
 
    
    Fee Revenue.The vast majority of our revenue for retained executive search and
board advisory services is received as retainer fees (which we refer to as fee revenue).
Our retainer fee is typically equal to thirty-three percent of the first year total cash compensation for
the position being filled. Generally, our retainer fee is paid in three sequential monthly
installments commencing in the month of our engagement by the client.
    
    Indirect Expenses Billed to Clients.For each engagement, we are paid a flat
fee, generally $9,000, to cover certain costs associated with the search process. These
costs include:
 
    
    research and research tools;
    
    legal, human resource and other outside services; and
    
    the development and maintenance of our proprietary database and communication
systems.
 
    
    Supplemental Fees.We are paid supplemental fees in the following
circumstances:
 
    
    Uptick:in the event that the actual total cash compensation paid to a placed
candidate exceeds the estimated compensation on which our retained fees were based,
we typically are paid, at the time of placement, an amount equal to thirty-three percent of the
difference between the actual total cash compensation paid and the estimate; and
    
    Pick-Up:in the event that a client hires a candidate for a position other than
the position identified in the original search assignment, we typically are paid thirty percent
of the first years total cash compensation for the position filled.
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
    
    License Revenue.For services rendered by our associated offices in Latin
America, we are paid a license fee equal to a percentage of the gross fees billed to
clients. The license fee is three percent  for the first year of affiliation and six percent  thereafter.
  
    
    the number of search assignments;
    
    the number of executive search consultants;
    
    executive search consultant productivity, measured by average annualized net
revenue per executive search consultant; and
    
    average revenue per executive search.
  Reimbursements and Reimbursed Expenses.
 Operating Expenses
 Compensation and Benefits Expenses.
 
    
    Base Salary.Each executive search consultants base salary is determined based
upon his or her prior experience and history of revenue generation. Under the revenue and
volume bonus plans described below, we deduct the base salary of each executive search
consultant from any bonus paid.
    
    Revenue Bonus.Each executive search consultant is paid a tiered bonus based
upon the amount of collected revenue that is credited to such consultant. The higher the
revenue credited, the higher the percentage of such revenue that is paid to the executive
search consultant as a bonus and thus accrued by us as an expense. As a result of this
tiered bonus system, the mix of individual consultants performance levels can
significantly affect the total amount of compensation expense we record. All collected fee
revenue is credited to executive search consultants as follows: twenty percent to the originator, thirty percent
to the executive search consultant or team of executive search consultants that contributed
to converting a lead into a committed engagement and fifty percent to the executive search
consultants that execute the search. Our revenue bonus is not discretionary and is not
based upon total firm profitability.
    
    Volume Bonus.We pay a volume bonus to our executive search consultants based
upon the total amount of collected revenue originated by an executive search consultant.
Our volume bonus is not discretionary and is not based upon total firm profitability.
    
    Signing Bonus.We may pay a signing bonus as part of recruiting new executive
search consultants to the Company.
    
    Equity Compensation.We may grant equity compensation to our executive officers
and executive search consultants in order to:
 
    
    align our employees interest with those of our stockholders;
    
    facilitate ownership of our common stock by our executive officers and executive
search consultants; and
    
    attract and retain talent.
 
    
    Other Employee Compensation:We pay our associates, researchers and
administrative and support staff based upon a combination of base salary, performance-based
bonuses and discretionary bonuses.
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General and Administrative Expenses.
 Income Tax Expense.
 Results of Operations
  Twelve Month Period Ending December 31,2009
    
    
    2010Revenue:Net revenue
    
    $
    73,860,740
    
    
    $
    113,706,519Reimbursable expenses
    
    
    2,727,182
    
    
    
    3,950,825Total revenue
    
    $
    76,587,922
    
    
    $
    117,657,344Operating Expenses:Compensation and benefits
    
    $
    48,571,747
    
    
    $
    88,134,877General and administrative
    
    
    19,412,165
    
    
    
    22,561,876Reimbursable expenses
    
    
    2,942,669
    
    
    
    4,204,188Total operating expenses
    
    $
    70,926,581
    
    
    $
    114,900,941Operating income (loss)
    
    $
    5,661,341
    
    
    
    2,756,403Net interest expense
    
    
    409,034
    
    
    
    306,891Income (loss) before income taxes
    
    $
    5,252,307
    
    
    $
    2,449,512Income tax expense
    
    
    463,698
    
    
    
    638,184Net income (loss)
    
    $
    4,788,609
    
    
    $
    1,811,328
 Twelve Month Period Ended December 31, 2010 Compared to Twelve Month Period Ended December 31, 2009
 Net Revenue.
 PercentageYear Ended December 31,
    
    Increase/
    
    Increase/Performance Metrics
    
    2009
    
    2010
    
    (Decrease)
    
    (Decrease)Number of new search assignments
    
    
    667
    
    
    
    1,103
    
    
    
    436
    
    
    
    65.3
    %Number of executive search
consultants (as of period end)
    
    
    77
    
    
    
    88
    
    
    
    11
    
    
    
    14.3
    %Productivity, as measured by average
annualized net revenue per executive
search consultant
    
    $
    959,000
    
    
    $
    1,292,000
    
    
    $
    333,000
    
    
    
    34.7
    %Average revenue per executive search
    
    $
    103,500
    
    
    $
    102,900
    
    
    $
    (600
    )
    
    
    (0.6
    %)
 Compensation and Benefits Expenses.
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General and Administrative Expenses.
 Operating Income.
 Net
Interest Expense.
 Income Before
Taxes and Income Tax Expense.
   Liquidity and Capital Resources
 General.
  Year Ended December 31,2009
    
    
    2010Net cash provided by operating activities
    
    $
    89,281
    
    
    $
    6,179,932Net cash (used in) investing activities
    
    
    (129,692
    )
    
    
    (1,152,864
    )Net cash provided by financing activities
    
    
    1,207,493
    
    
    
    14,066,907Net increase in cash
    
    $
    1,167,082
    
    
    $
    19,093,975
 Cash.
 Cash Flow from Operating Activities.
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Cash from Investing Activities.
 Cash from Financing Activities.
 Off-Balance Sheet Arrangements.
 Application of Critical Accounting Policies and Estimates
 General.
  Revenue Recognition.
 Accounts Receivable and Allowances for Doubtful Accounts.
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Income Taxes.
 Share/Equity-Based
Compensation.
 Recently Adopted Financial Accounting Standards
  
 ITEM 8. FINANCIAL STATEMENTS.
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Report of Independent Registered Public Accounting Firm


















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CTPartners Executive Search Inc. and Subsidiaries
 
 Consolidated Balance Sheets
December 31, 2010 and 2009
 Successor
    
    Predecessor2010
    
    2009AssetsCurrent AssetsCash
    
    $
    24,030,543
    
    
    $
    5,093,700Accounts receivable, net
    
    
    21,197,842
    
    
    
    15,351,547Other receivables
    
    
    326,542
    
    
    
    790,975Prepaid expenses
    
    
    2,430,879
    
    
    
    1,671,510Deferred income taxes
    
    
    1,219,024
    
    
    
    Other
    
    
    1,003,051
    
    
    
    550,425Total current assets
    
    
    50,207,881
    
    
    
    23,458,157Leasehold Improvements and Equipment, Net
    
    
    3,147,192
    
    
    
    3,714,657Other assets
    
    
    1,393,823
    
    
    
    703,286Deferred income taxes
    
    
    346,026
    
    
    
    $
    55,094,922
    
    
    $
    27,876,100Liabilities, Redeemable Member Units and Stockholders/Members Equity (Deficit)Current LiabilitiesCurrent portion of long-term debt
    
    $
    181,962
    
    
    $
    960,742Line of credit
    
    
    
    
    
    
    4,660,027Accounts payable
    
    
    1,574,493
    
    
    
    647,473Accrued compensation
    
    
    18,132,980
    
    
    
    13,425,668Accrued business taxes
    
    
    1,419,338
    
    
    
    938,488Income taxes payable
    
    
    1,172,649
    
    
    
    177,209Accrued expenses
    
    
    3,845,685
    
    
    
    1,414,786Total current liabilities
    
    
    26,327,107
    
    
    
    22,224,393Long-Term LiabilitiesLong-term debt, less current maturities
    
    
    622,929
    
    
    
    4,240,053Deferred rent, less current maturities
    
    
    1,667,473
    
    
    
    1,697,122Pension liability
    
    
    
    
    
    
    569,005Mandatorily redeemable member units
    
    
    
    
    
    
    628,810Other
    
    
    
    
    
    
    191,148Total long-term liabilities
    
    
    2,290,402
    
    
    
    7,326,138Redeemable Member Units
    
    
    
    
    
    
    30,937,827Stockholders/Members Equity (Deficit)Preferred stock: 1,000,000 shares authorized, no shares issued and outstanding
    
    
    
    
    
    
    Common stock: $0.001 par value, 30,000,000 shares authorized, 7,176,920
issued and outstanding
    
    
    7,177
    
    
    
    Additional paid-in capital
    
    
    33,622,796
    
    
    
    Accumulated deficit
    
    
    (5,791,728
    )
    
    
    Accumulated other comprehensive income (loss)
    
    
    (1,360,832
    )Members equity (deficit)
    
    
    
    
    
    
    (32,612,258
    )26,477,413
    
    
    
    (32,612,258
    )$
    55,094,922
    
    
    $
    27,876,100
  24




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##### Table of Contents



CTPartners Executive Search Inc. and Subsidiaries
 
 Consolidated Statements of Operations
 Successor
    
    
    PredecessorFor the Period
    
    
    For the PeriodDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Net revenue
    
    $
    8,978,583
    
    
    $
    104,727,936
    
    
    $
    73,860,740Reimbursable expenses
    
    
    417,421
    
    
    
    3,533,404
    
    
    
    2,727,182Total revenue
    
    
    9,396,004
    
    
    
    108,261,340
    
    
    
    76,587,922Operating expensesCompensation and benefits
    
    
    11,376,950
    
    
    
    76,757,927
    
    
    
    48,571,747General and administrative
    
    
    2,801,705
    
    
    
    19,760,171
    
    
    
    19,412,165Reimbursable expenses
    
    
    496,442
    
    
    
    3,707,746
    
    
    
    2,942,66914,675,097
    
    
    
    100,225,844
    
    
    
    70,926,581Operating income (loss)
    
    
    (5,279,093
    )
    
    
    8,035,496
    
    
    
    5,661,341Financial income (expense)Interest expense
    
    
    (146,867
    )
    
    
    (215,450
    )
    
    
    (499,838
    )Interest income
    
    
    55,426
    
    
    
    
    
    
    
    90,804(91,441
    )
    
    
    (215,450
    )
    
    
    (409,034
    )Income (loss) before income taxes
    
    
    (5,370,534
    )
    
    
    7,820,046
    
    
    
    5,252,307Income tax expense
    
    
    (421,194
    )
    
    
    (216,990
    )
    
    
    (463,698
    )Net income (loss)
    
    $
    (5,791,728
    )
    
    $
    7,603,056
    
    
    $
    4,788,609Basic and diluted loss per common share
    
    $
    (0.89
    )Basic and diluted weighted average common shares
    
    
    6,524,808
  25




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##### Table of Contents



CTPartners Executive Search Inc. and Subsidiaries
 
 Consolidated Statements of Stockholders/Members Equity (Deficit)
 Notes
    
    
    Accumulated
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedReceivable
    
    
    Other
    
    
    Members
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalMembers
    
    
    from Members
    
    
    Comprehensive
    
    
    Equity
    
    
    Common Stock
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersUnits
    
    
    Equity (Deficit)
    
    
    Purchase of Units
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    Shares
    
    
    Amount
    
    
    Paid-in Capital
    
    
    Earnings/(Deficit)
    
    
    Income (Loss)
    
    
    EquityPREDECESSORBalance, January 1, 2009
    
    
    961,387
    
    
    
    (49,487,393
    )
    
    
    (101,159
    )
    
    
    (3,172,342
    )
    
    
    (52,760,894
    )Net income
    
    
    
    
    
    
    4,788,609
    
    
    
    
    
    
    
    
    
    
    
    4,788,609Comprehensive income (loss)Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    530,342
    
    
    
    530,342Defined benefit pension plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    187,327
    
    
    
    187,327Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,790
    )
    
    
    (7,790
    )Forgiveness of intercompany debt
    
    
    
    
    
    
    (171,877
    )
    
    
    
    
    
    
    171,877
    
    
    
    Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,498,488Change in fair value of redeemable member units
    
    
    
    
    
    
    13,801,303
    
    
    
    
    
    
    
    
    
    
    
    13,801,303Equity-based compensation
    
    
    (77
    )
    
    
    827,370
    
    
    
    
    
    
    
    
    
    
    
    827,370Member units redeemed
    
    
    (16,387
    )
    
    
    (12,988
    )
    
    
    
    
    
    
    
    
    
    
    (12,988
    )Member payments received on notes receivable
    
    
    
    
    
    
    
    
    
    
    34,463
    
    
    
    
    
    
    
    34,463Balance, December 31, 2009
    
    
    944,923
    
    
    
    (30,254,976
    )
    
    
    (66,696
    )
    
    
    (2,290,586
    )
    
    
    (32,612,258
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    7,603,056
    
    
    
    
    
    
    
    
    
    
    
    7,603,056Comprehensive income (loss)Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117,859
    )
    
    
    (117,859
    )Defined benefit pension plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    309,672
    
    
    
    309,672Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,794,869Change in fair value of redeemable member units
    
    
    
    
    
    
    (23,985,620
    )
    
    
    
    
    
    
    
    
    
    
    (23,985,620
    )Equity-based compensation
    
    
    13,412
    
    
    
    1,227,360
    
    
    
    
    
    
    
    
    
    
    
    1,227,360Member units redeemed
    
    
    (34,332
    )
    
    
    (850,102
    )
    
    
    
    
    
    
    
    
    
    
    (850,102
    )Member distributions
    
    
    
    
    
    
    (1,550,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,550,000
    )Payments received on members notes receivable
    
    
    
    
    
    
    
    
    
    
    66,696
    
    
    
    
    
    
    
    66,696Conversion of convertible notes to member units
    
    
    17,687
    
    
    
    891,600
    
    
    
    
    
    
    
    
    
    
    
    891,600Recapitalization/conversion of members equity (deficit)
    
    
    (941,690
    )
    
    
    46,918,682
    
    
    
    
    
    
    
    2,098,773
    
    
    
    49,017,455
    
    
    
    4,961,547
    
    
    
    4,962
    
    
    
    9,135,628
    
    
    
    
    
    
    
    (2,098,773
    )
    
    
    7,041,817Balance, November 30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,961,547
    
    
    
    4,962
    
    
    
    9,135,628
    
    
    
    
    
    
    
    (2,098,773
    )
    
    
    7,041,817SUCCESSORBalance, December 1, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,961,547
    
    
    $
    4,962
    
    
    $
    9,135,628
    
    
    $
    
    
    
    $
    (2,098,773
    )
    
    $
    7,041,817Tax effect of accumulated other comprehensive income (loss) at conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    754,663
    
    
    
    754,663Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,791,728
    )
    
    
    
    
    
    
    (5,791,728
    )Comprehensive income (loss), net of taxForeign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,120
    )
    
    
    (34,120
    )Defined benefit pension plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,398
    
    
    
    17,398Comprehensive (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,791,728
    )
    
    
    
    
    
    
    (5,053,787
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,875
    
    
    
    
    
    
    
    
    
    
    
    119,875Issuance of common shares related to initial public offering, net of offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,215,373
    
    
    
    2,215
    
    
    
    24,367,293
    
    
    
    
    
    
    
    
    
    
    
    24,369,508Balance, December 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,176,920
    
    
    
    7,177
    
    
    
    33,622,796
    
    
    
    (5,791,728
    )
    
    
    (1,360,832
    )
    
    
    26,477,413
  26




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##### Table of Contents



CTPartners Executive Search Inc. and Subsidiaries
 
 Consolidated Statements of Cashflow
For the Years Ended December 31, 2010 and 2009
 Years Ended December 31,2010
    
    2009Cash Flows From Operating ActivitiesNet income
    
    $
    1,811,328
    
    
    $
    4,788,609Adjustments to reconcile net income to net cash
provided by operating activitiesDepreciation and amortization
    
    
    1,625,751
    
    
    
    1,470,787Share/equity-based compensation
    
    
    1,347,235
    
    
    
    827,370Amortization of discount on convertible promissory notes
    
    
    104,864
    
    
    
    34,307Forgiveness of convertible promissory notes
    
    
    
    
    
    
    (75,000
    )Deferred income taxes
    
    
    (800,050
    )
    
    
    Change in fair value mandatorily redeemable member units
    
    
    502,053
    
    
    
    (297,971
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (5,884,931
    )
    
    
    (4,288,444
    )Prepaid expenses
    
    
    (1,140,057
    )
    
    
    502,835Other assets
    
    
    (139,501
    )
    
    
    (21,459
    )Accounts payables
    
    
    877,567
    
    
    
    (2,322,945
    )Accrued compensation
    
    
    4,613,044
    
    
    
    122,147Accrued business taxes
    
    
    23,495
    
    
    
    (59,353
    )Income taxes payable
    
    
    1,172,649
    
    
    
    Accrued expenses
    
    
    2,992,067
    
    
    
    (970,365
    )Deferred rent
    
    
    (356,573
    )
    
    
    191,436Pension liability
    
    
    (569,005
    )
    
    
    187,327Net cash provided by operating activities
    
    
    6,179,932
    
    
    
    89,281Cash Flows From Investing ActivitiesPurchase of leasehold improvements and equipment
    
    
    (1,152,864
    )
    
    
    (129,692
    )Cash Flows From Financing ActivitiesPayments on notes payable-redemption of members equity
    
    
    (2,802,870
    )
    
    
    (370,169
    )Net (payments) proceeds on revolving credit facility
    
    
    (4,660,027
    )
    
    
    1,948,311Principal payments on note payable-bank
    
    
    
    
    
    
    (392,124
    )Redemption of member units
    
    
    
    
    
    
    (12,988
    )Payments received on members notes receivable
    
    
    66,696
    
    
    
    34,463Redemptions of convertible notes
    
    
    (1,656,400
    )
    
    
    Net proceeds from initial public offering
    
    
    24,369,508
    
    
    
    Member distributions
    
    
    (1,250,000
    )
    
    
    Net cash provided by financing activities
    
    
    14,066,907
    
    
    
    1,207,493Net increase in cash
    
    
    19,093,975
    
    
    
    1,167,082Effect of foreign currency on cash
    
    
    (157,132
    )
    
    
    260,248Cash:Beginning
    
    
    5,093,700
    
    
    
    3,666,370Ending
    
    $
    24,030,543
    
    
    $
    5,093,700Supplemental Disclosures of Cash Flow InformationCash paid during the year forInterest
    
    $
    265,180
    
    
    $
    563,500Taxes
    
    $
    84,643
    
    
    $
    490,276Supplemental Disclosures of Non Cash Financing InformationChange in fair value of redeemable member units
    
    $
    23,985,620
    
    
    $
    (13,801,303
    )Non-cash distributions recorded as accrued liabilities
    
    $
    300,000
    
    
    $
    Redemption of member units in exchange for notes payable
    
    $
    850,102
    
    
    $
    Conversion of convertible notes to member units
    
    $
    891,600
    
    
    $
    Redeemable member units and mandatorily redeemable
member units reclassified to equity
    
    $
    56,054,308
    
    
    $
    
  27




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Significant Accounting Policies
 Description of Business
   Principles of Consolidation
  Concentration of Risk
 Revenue Recognition
 Reimbursements
 Accounts Receivable
 28




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Significant Accounting Policies (Continued)
  Leasehold Improvements and Equipment
 Leasehold improvements
    
    3-10 yearsOffice furniture, fixtures and equipment
    
    5-7 yearsComputer equipment
    
    3-5 years
  Deferred Rent
 Mandatorily Redeemable Member Units and Redeemable Member Units
  29




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Significant Accounting Policies (Continued)
  Balance as of January 1, 2008
    
    $
    44,739,130Change in fair value redeemable units
    
    
    (13,801,303
    )Balance as of December 31, 2009
    
    
    30,937,827Change in fair value redeemable units through November 30, 2010
    
    
    23,985,620Reclassification to equity on the Conversion Date
    
    
    (54,923,447
    )Balance as of December 31, 2010
    
    $
    
  2010
    
    
    2009Balance, beginning of year
    
    $
    628,810
    
    
    $
    926,781Unrealized (gains) losses
    
    
    502,053
    
    
    
    (297,971
    )Reclassification to equity on the Conversion Date
    
    
    (1,130,863
    )
    
    
    Balance, end of year
    
    $
    
    
    
    $
    628,810
 Share/Equity-Based Compensation
 Income Taxes
   30




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Significant Accounting Policies (Continued)
 Foreign Currency Remeasurement and Transactions
 Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Net foreign currency loss
    
    $
    (250,000
    )
    
    $
    (52,000
    )
    
    $
    (915,000
    )
    Successor
    
    
    PredecessorDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Foreign currency translation adjustments
    
    $
    (757,203
    )
    
    $
    (1,169,497
    )
    
    $
    (1,051,638
    )Defined benefit pension plan
    
    
    (481,574
    )
    
    
    (807,221
    )
    
    
    (1,116,893
    )Other
    
    
    (122,055
    )
    
    
    (122,055
    )
    
    
    (122,055
    )$
    (1,360,832
    )
    
    $
    (2,098,773
    )
    
    $
    (2,290,586
    )
 Financial Instruments
 
    
    Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are
accessible at the measurement date for identical, unrestricted assets or liabilities.
 31




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Significant Accounting Policies (Continued)
 
    
    Level 2: Inputs other than quoted prices that are observable for the asset or liability,
either directly or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.
    
    Level 3: Unobservable inputs that reflect the reporting entitys own assumptions.
  Basic and Diluted Earnings per Share
 Reclassifications
 Note 2. Initial Public Offering (IPO)
      Total
members equity (deficit) prior to Conversion Date
    
    $
    (49,017,455
    )Conversion
of member units to common stock
    
    
    4,962Reclassification
of redeemable member units
    
    
    54,923,447Reclassification
of mandatorily redeemable member units
    
    
    1,130,863Total
stockholders equity at December 1, 2010
    
    $
    7,041,817
 Note 3. Leasehold Improvements and Equipment
  2010
    
    
    2009Leasehold improvements
    
    $
    2,723,762
    
    
    $
    3,522,433Office furniture, fixtures and equipment
    
    
    2,268,582
    
    
    
    2,201,861Computer equipment and software
    
    
    4,017,124
    
    
    
    3,182,4939,009,468
    
    
    
    8,906,787Accumulated depreciation and amortization
    
    
    (5,862,276
    )
    
    
    (5,192,130
    )$
    3,147,192
    
    
    $
    3,714,657
 32




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Leasehold Improvements and Equipment (Continued)
  Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Depreciation and amortization expense
    
    $
    164,480
    
    
    $
    1,461,271
    
    
    $
    1,470,787
 Note 4. Long-Term Debt
 Notes Payable  Bank
  Notes Payable Redemption of Members Units
  Convertible Promissory Notes
 33




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Long-Term Debt (Continued)
     2010
    
    
    2009Notes payable  redemption of members units
    
    $
    804,891
    
    
    $
    2,757,659Convertible promissory notes, net of discount in 2009
of $104,864
    
    
    
    
    
    
    2,443,136804,891
    
    
    
    5,200,795Less current portion of long-term debt
    
    
    181,962
    
    
    
    960,742$
    622,929
    
    
    $
    4,240,053
  2011
    
    $
    181,9622012
    
    
    155,3402013
    
    
    159,8102014
    
    
    153,0682015
    
    
    154,711$
    804,891
 34




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 5. Commitments
  OfficeSpace
    
    
    Equipment
    
    
    Total2011
    
    $
    7,690,225
    
    
    $
    32,689
    
    
    $
    7,722,9142012
    
    
    7,216,739
    
    
    
    12,284
    
    
    
    7,229,0232013
    
    
    6,866,671
    
    
    
    1,024
    
    
    
    6,867,6952014
    
    
    6,535,952
    
    
    
    
    
    
    
    6,535,9522015
    
    
    6,143,755
    
    
    
    
    
    
    
    6,143,755Thereafter
    
    
    10,956,351
    
    
    
    
    
    
    
    10,956,351$
    45,409,693
    
    
    $
    45,997
    
    
    $
    45,455,690
   Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Rent expense
    
    $
    567,228
    
    
    $
    8,316,058
    
    
    $
    9,707,223
  Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Sublease rental income
    
    $
    36,063
    
    
    $
    1,033,825
    
    
    $
    1,460,307
 Note 6. Non-Qualified Unit Purchase Plan and Performance Unit Plan
  35




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Non-Qualified Unit Purchase Plan and Performance Unit Plan (Continued)
   Weighted-AverageMember
    
    Grant-DateMember Units Subject to Clawback
    
    Units
    
    Fair ValueMember units subject to clawback at December 31, 2009
    
    
    21,985
    
    
    $
    44.88Granted
    
    
    6,668
    
    
    
    55.80Expiration of clawback provisions
    
    
    (17,815
    )
    
    
    43.21Forfeited
    
    
    
    
    
    
    Units converted to common stock on Conversion Date at
5.269 shares per unit
    
    
    (10,838
    )
    
    
    29.52Member units subject to clawback at November 30, 2010
    
    
    
    
    
    $
    
   36




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Non-Qualified Unit Purchase Plan and Performance Unit Plan (Continued)
  Weighted-AverageGrant-DatePerformance Units
    
    Units
    
    Intrinsic ValueTotal non-vested performance units at December 31, 2009
    
    
    100,149
    
    
    $
    4.79Granted
    
    
    29,100
    
    
    
    3.92Vested
    
    
    (42,344
    )
    
    
    Forfeited
    
    
    (200
    )
    
    
    Total non-vested performance units at November 30, 2010
    
    
    86,705
    
    
    
    4.87Total non-vested performance units converted at 5.269 shares per unit at November
30, 2010 (previously 86,705 units)
    
    
    456,849
    
    
    
    8.13Units paid out upon plan termination in December 2010
    
    
    (456,849
    )
    
    
    8.13Total non-vested units at December 31, 2010
    
    
    
    
    
    $
    
  2010
    
    
    2009Balance, beginning of year
    
    $
    45,033
    
    
    $
    123,638Unrealized (gains) losses
    
    
    4,348,151
    
    
    
    (78,605
    )Termination of plan and payout to participants in December 2010
    
    
    (4,393,184
    )
    
    
    Balance, end of year
    
    $
    
    
    
    $
    45,033
  Note 7. Share-Based Compensation
   Weighted-AverageCommon
    
    Grant-DateCommon Stock Subject to Clawback
    
    Stock
    
    Fair ValueTotal shares subject to clawback at November
30, 2010 (previously 10,838 units)
    
    
    57,105
    
    
    $
    13.00Granted
    
    
    
    
    
    
    Expiration of clawback provisions
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Total shares subject to clawback at December 31, 2010
    
    
    57,105
    
    
    $
    13.00
 37




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Share Based Compensation (Continued)
    Member

    
    Weighted-Units/

    
    AverageCommon
    
    Grant-DateNon-Vested Member Units/Common Stock
    
    Stock
    
    Fair ValueTotal non-vested units at December 31, 2009
    
    
    
    
    
    $
    Granted
    
    
    55,337
    
    
    
    48.12Vested
    
    
    (6,744
    )
    
    
    47.06Forfeited
    
    
    (1,000
    )
    
    
    34.20Total non-vested units at November 30, 2010
    
    
    47,593
    
    
    $
    48.00Total non-vested member units converted to common
stock at 5.269 shares
per unit at November 30, 2010 (previously 47,593 units)
    
    
    250,768
    
    
    $
    13.00Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Total non-vested common stock at December 31, 2010
    
    
    250,768
    
    
    $
    13.00
   Note 8. Retirement Plans
  38




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Retirement Plans (Continued)
      Asset Classes
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Equities:Fixed income mutual funds
    
    $
    260,605
    
    
    $
    260,605
    
    
    $
    
    
    
    $
    Fixed Income:U.S. government obligations
    
    
    438,224
    
    
    
    438,224
    
    
    
    
    
    
    
    Corporate bonds
    
    
    1,538,821
    
    
    
    
    
    
    
    1,538,821
    
    
    
    Money market funds
    
    
    1,757,555
    
    
    
    1,757,555
    
    
    
    
    
    
    
    Total
    
    $
    3,995,205
    
    
    $
    2,456,384
    
    
    $
    1,538,821
    
    
    $
    
  Mutual funds
 Corporate bonds
 U.S. government obligations
 Money market funds
 39




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Retirement Plans (Continued)
  Plan Assets2010
    
    2009Asset Category:Mutual funds
    
    
    6
    %
    
    
    41
    %Stocks
    
    
    
    
    
    
    7
    %Fixed income
    
    
    50
    %
    
    
    50
    %Money market funds
    
    
    44
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
  2010
    
    
    2009Change in Benefit ObligationAccumulated benefit obligation, beginning of year
    
    $
    5,555,970
    
    
    $
    5,427,348Service cost
    
    
    
    
    
    
    Interest cost
    
    
    221,155
    
    
    
    270,858Actuarial cost
    
    
    278,551
    
    
    
    (123,433
    )Benefits paid
    
    
    (2,091,454
    )
    
    
    (18,803
    )Benefit obligation at end of year
    
    $
    3,964,222
    
    
    $
    5,555,970
 2010
    
    
    2009Change in Plan AssetsFair value of plan assets at beginning of year
    
    $
    4,986,965
    
    
    $
    4,742,407Actual return on plan assets
    
    
    379,694
    
    
    
    263,361Company contribution
    
    
    720,000
    
    
    
    Benefits paid
    
    
    (2,091,454
    )
    
    
    (18,803
    )Fair value of plan assets at end of year
    
    $
    3,995,205
    
    
    $
    4,986,965
 2010
    
    
    2009Funded StatusAccumulated benefit obligation at end of year
    
    $
    (3,964,222
    )
    
    $
    (5,555,970
    )Fair value of plan assets at end of year
    
    
    3,995,205
    
    
    
    4,986,965(Underfunded) status, amount recognized as a long-term liability
on the consolidated balance sheet
    
    $
    
    
    
    $
    (569,005
    )Overfunded status, amount recognized in prepaid expenses on
the consolidated balance sheet
    
    $
    30,983
    
    
    $
    
 40




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Retirement Plans (Continued)
   Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Net Periodic Benefit Cost:Service cost
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    18,430
    
    
    
    202,725
    
    
    
    270,858Expected return on plan assets
    
    
    (17,623
    )
    
    
    (193,850
    )
    
    
    (236,611
    )Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    2,310
    
    
    
    25,408
    
    
    
    37,146Net periodic benefit cost
    
    $
    3,117
    
    
    $
    34,283
    
    
    $
    71,393
  Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Net (gain) loss
    
    $
    (10,091
    )
    
    $
    (179,611
    )
    
    $
    (187,327
    )Prior service cost (credit)
    
    
    
    
    
    
    
    
    
    
    Curtailments/settlements
    
    
    (7,307
    )
    
    
    (130,061
    )
    
    
    Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    Total recognized in other comprehensive
income (loss)
    
    $
    (17,398
    )
    
    $
    (309,672
    )
    
    $
    (187,327
    )Total recognized in net periodic benefit cost
and other comprehensive income (loss)
    
    $
    (14,281
    )
    
    $
    (275,389
    )
    
    $
    (115,934
    )
 41




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Retirement Plans (Continued)
   2010
    
    2009Discount rate
    
    
    5.00
    %
    
    
    5.00
    %Expected return on assets
    
    
    5.00
    %
    
    
    5.00
    %Rate of compensation increases
    
    
    0.00
    %
    
    
    0.00
    %
    Note 9. Income Taxes
   42




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9. Income Taxes (Continued)
 Successor
    
    
    SuccessorDecember 31,
    
    
    Opening Balance2010
    
    
    December 1, 2010Deferred tax assets:Accounts payable
    
    $
    5,897,348
    
    
    $
    7,265,235Equity bonus expense
    
    
    107,173
    
    
    
    Accumulated other comprehensive income (loss)
    
    
    765,000
    
    
    
    754,663Net operating loss carryfoward
    
    
    4,259,617
    
    
    
    3,889,779Gross deferred tax assets
    
    
    11,029,138
    
    
    
    11,909,677Deferred tax liabilities:Accounts receivable
    
    
    (3,972,547
    )
    
    
    (8,080,762
    )Other current assets
    
    
    (1,011,804
    )
    
    
    (1,202,646
    )Depreciation
    
    
    (220,120
    )
    
    
    (159,241
    )Gross deferred tax liabilities
    
    
    (5,204,471
    )
    
    
    (9,442,649
    )Less: Valuation allowance
    
    
    (4,259,617
    )
    
    
    (3,889,779
    )Net deferred tax asset (liability)
    
    $
    1,565,050
    
    
    $
    (1,422,751
    )
  Current assets
    
    $
    1,219,024Long-term assets
    
    
    346,026$
    1,565,050
 43




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CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9. Income Taxes (Continued)
  Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009United States
    
    $
    (3,701,967
    )
    
    $
    6,436,601
    
    
    $
    5,505,343Foreign
    
    
    (1,668,567
    )
    
    
    1,383,445
    
    
    
    (253,036
    )Income (loss) before income taxes
    
    $
    (5,370,534
    )
    
    $
    7,820,046
    
    
    $
    5,252,307
  December 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009CurrentFederal
    
    $
    1,039,922
    
    
    $
    
    
    
    $
    State and local
    
    
    132,726
    
    
    
    131,844
    
    
    
    423,026Foreign
    
    
    48,596
    
    
    
    85,146
    
    
    
    40,672DeferredFederal
    
    
    (778,050
    )
    
    
    
    
    
    
    State and local
    
    
    (22,000
    )
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    Total provision for income taxes
    
    $
    421,194
    
    
    $
    216,990
    
    
    $
    463,698
  Income tax benefit at the statutory U.S. federal rate
    
    $
    (1,825,982
    )State tax
benefit, net of federal tax effect
    
    
    (148,871
    )Permanent tax differences
    
    
    23,982Tax effect of conversion to corporation
    
    
    2,177,414Increase in valuation allowance
    
    
    369,838Effect of foreign currency on net operating loss carryforwards
    
    
    (118,210
    )Other
    
    
    (56,977
    )$
    421,194
 44




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9. Income Taxes (Continued)
   At December 31,2010
    
    
    ExpirationUnited Kingdom
    
    $
    16,777,700
    
    
    No expirationFrance
    
    
    849,300
    
    
    No expirationSwitzerland
    
    
    236,600
    
    
    2015Hong Kong
    
    
    148,000
    
    
    No expirationChina
    
    
    367,600
    
    
    No expirationCanada
    
    
    838,600
    
    
    2014$
    19,217,800
  Note 10. Enterprise Geographic Concentrations
  Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009RevenueAmericas
    
    $
    5,421,795
    
    
    $
    67,359,633
    
    
    $
    46,374,844Europe
    
    
    2,324,128
    
    
    
    25,736,797
    
    
    
    22,753,379Asia Pacific
    
    
    1,232,660
    
    
    
    11,631,506
    
    
    
    4,732,517Net revenue before reimbursable expenses
    
    
    8,978,583
    
    
    
    104,727,936
    
    
    
    73,860,740Reimbursable expenses
    
    
    417,421
    
    
    
    3,533,404
    
    
    
    2,727,182Total
    
    $
    9,396,004
    
    
    $
    108,261,340
    
    
    $
    76,587,922
 45




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##### Table of Contents



CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10. Enterprise Geographic Concentrations (Continued)
 Successor
    
    
    PredecessorPeriod from
    
    
    Period fromDecember 1 to
    
    
    January 1 to
    
    
    Year EndedDecember 31,
    
    
    November 30,
    
    
    December 31,2010
    
    
    2010
    
    
    2009Operating income (loss)Americas
    
    $
    (3,119,919
    )
    
    $
    5,213,799
    
    
    $
    5,854,660Europe
    
    
    (1,257,061
    )
    
    
    818,112
    
    
    
    435,142Asia Pacific
    
    
    (902,113
    )
    
    
    2,003,585
    
    
    
    (628,461
    )Total
    
    $
    (5,279,093
    )
    
    $
    8,035,496
    
    
    $
    5,661,341Depreciation and amortizationAmericas
    
    $
    60,085
    
    
    $
    998,570
    
    
    $
    983,246Europe
    
    
    95,144
    
    
    
    367,031
    
    
    
    428,127Asia Pacific
    
    
    9,251
    
    
    
    95,670
    
    
    
    59,414Total
    
    $
    164,480
    
    
    $
    1,461,271
    
    
    $
    1,470,787
 2010
    
    
    2009Capital expendituresAmericas
    
    $
    610,114
    
    
    $
    126,948Europe
    
    
    402,564
    
    
    
    2,002Asia Pacific
    
    
    140,186
    
    
    
    742Total
    
    $
    1,152,864
    
    
    $
    129,692
  Successor
    
    
    PredecessorDecember 31,
    
    
    December 31,2010
    
    
    2009Identifiable assetsAmericas
    
    $
    36,543,510
    
    
    $
    14,763,726Europe
    
    
    12,760,043
    
    
    
    10,309,723Asia Pacific
    
    
    5,791,369
    
    
    
    2,802,651Total regions
    
    $
    55,094,922
    
    
    $
    27,876,100
 46




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
  Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION.
  47




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
  
 PART IV
 
 ITEM 15. EXHIBITS.
 (a)(1)
 48




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##### Table of Contents



(a)(2)
  (a)(3)
  ExhibitNo.
    
    Description of Document2.1
    
    
    Form of Plan of Conversion of CTPartners Executive Search LLC
into CTPartners Executive Search Inc. (incorporated herein by
reference to Exhibit 2.1 to Amendment No. 5 to CTPartners
Executive Search LLCs Registration Statement on Form S-1
filed with the Commission on December 2, 2010 (Registration
No. 333-169224))3.1
    
    
    Form of Certificate of Incorporation of CTPartners Executive
Search Inc. (incorporated herein by reference to Exhibit 3.1
to Amendment No. 2 to CTPartners Executive Search LLCs
Registration Statement on Form S-1 filed with the Commission
on October 14, 2010 (Registration No. 333-169224))3.2
    
    
    Form of Bylaws of CTPartners Executive Search Inc.
(incorporated herein by reference to Exhibit 3.2 to Amendment
No. 2 to CTPartners Executive Search LLCs Registration
Statement on Form S-1 filed with the Commission on October
14, 2010 (Registration No. 333-169224))4.1
    
    
    Form of CTPartners Executive Search Inc.s Common Stock
Certificate (incorporated herein by reference to Exhibit 4.1
to Amendment No. 4 to CTPartners Executive Search LLCs
Registration Statement on Form S-1 filed with the Commission
on November 24, 2010 (Registration No. 333-169224))10.1
    
    
    Form of Indemnification Agreement, by and between CTPartners
Executive Search Inc. and each of its Directors and Executive
Officers (incorporated herein by reference to Exhibit 10.1 to
Amendment No. 2 to CTPartners Executive Search LLCs
Registration Statement on Form S-1 filed with the Commission
on October 14, 2010 (Registration No. 333-169224))10.2
    
    
    Employment Agreement with Brian M. Sullivan dated September
1, 2010 (incorporated herein by reference to Exhibit 10.2 to
Amendment No. 3 to CTPartners Executive Search LLCs
Registration Statement on Form S-1 filed with the Commission
on November 17, 2010 (Registration No. 333-169224))10.3
    
    
    Employment Agreement with David C. Nocifora dated September 1, 2010
(incorporated herein by reference to Exhibit 10.3 to Amendment No. 3 to
CTPartners Executive Search LLCs Registration Statement on Form S-1 filed
with the Commission on November 17, 2010 (Registration No. 333-169224))10.4
    
    
    Form of 2010 Equity Incentive Plan of CTPartners Executive Search Inc. to be
in effect upon effectiveness of conversion (incorporated herein by reference
to Exhibit 10.4 to Amendment No. 3 to CTPartners Executive Search LLCs
Registration Statement on Form S-1 filed with the Commission on November 17,
2010 (Registration No. 333-169224))10.5
    
    
    Amended and Restated Credit and Security Agreement by and between JPMorgan
Chase Bank, NA and Christian & Timbers LLC dated October 17, 2006
(incorporated herein by reference to Exhibit 10.5 to Amendment No. 4 to
CTPartners Executive Search LLCs Registration Statement on Form S-1 filed
with the Commission on November 24, 2010 (Registration No. 333-169224))10.6
    
    
    Revised Letter Agreement (Affiliation and License Agreement) between
CTPartners Executive Search LLC and HS Andean Holding Corporation dated April
26, 2007 (incorporated herein by reference to Exhibit 10.6 to CTPartners
Executive Search LLCs Registration Statement on Form S-1 filed with the
Commission on
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##### Table of Contents



ExhibitNo.
    
    Description of DocumentSeptember 3, 2010 (Registration No. 333-169224))10.7
    
    
    Form of Convertible Promissory Note of CTPartners Executive Search LLC
(incorporated herein by reference to Exhibit 10.7 to Amendment No. 2 to
CTPartners Executive Search LLCs Registration Statement on Form S-1 filed
with the Commission on October 14, 2010 (Registration No. 333-169224))10.8
    
    
    Form of Note Prepayment and Conversion Agreement (incorporated herein by
reference to Exhibit 10.8 to Amendment No. 2 to CTPartners Executive Search
LLCs Registration Statement on Form S-1 filed with the Commission on October
14, 2010 (Registration No. 333-169224))*21
    
    
    List of Subsidiaries*23.1
    
    
    Consent of Independent Registered Public Accounting Firm, McGladrey & Pullen,
LLP*24
    
    
    Power of Attorney*31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15d-14(a)*31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15d-14(a)*32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350*32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
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##### Table of Contents



SIGNATURES
  CTPARTNERS EXECUTIVE SEARCH INC./s/ David C. Nocifora
By: David C. NociforaTitle: Chief Financial Officer
  Signature
    
    
    
    Title* /s/ Brian M. Sullivan

Brian M. Sullivan
    
    
    
    Chief Executive Officer(principal executive officer)/s/ David C. Nocifora

David C. Nocifora
    
    
    
    Chief Operating Officer, Chief Financial Officer and Secretary(principal financial officer)* /s/ L. Christopher Lund

L. Christopher Lund
    
    
    
    Vice President  Finance(principal accounting officer)* /s/ Scott M. Birnbaum


Scott M. Birnbaum
    
    
    
    Director* /s/ Michael C. Feiner

Michael C. Feiner
    
    
    
    Director* /s/ Thomas R. Testwuide, Sr.

Thomas R. Testwuide, Sr.
    
    
    
    Director* /s/ Betsy L. Morgan

Betsy L. Morgan
    
    
    
    Director
  *
 /s/ David C. Nocifora
David C. NociforaAttorney-in-Fact
 51