SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549









FORM
10-K









(Mark
One)


[
      X ]
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.




For
the fiscal year ended December 31, 2008


OR


[     ]
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.For
      the transition period from _________ to
  _________





Commission
file number   000-52407







CHINA
EDUCATION TECHNOLOGY, INC.


(F.K.A.
ENVIROSAFE CORPORATION)


(Name of
Small Business Issuer in its Charter)







NEVADA


(State or
Other Jurisdiction of Incorporation of Organization)





94-3251254


(I.R.S. Employer Identification No.)





8/F,
Tower B, National Software Industry Zone,


Gao
Tang Xin Jian Zone, Tian He District


Guangzhou,
P.R.China  510663


(Address
of principal executive offices)




(8620)
6108-8998 - Tel


(8620)
6108-8999 - Fax


(Issuer's
telephone number)




Securities
registered under Section 12(b) of the Exchange Act:  None


Securities
registered under Section 12(g) of the Exchange Act:


Common
Stock, par value $.0001 per share


Preferred
Stock, par value $.0001 per share


(Title of
Class)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.


Yes
[x]                                No
[  ]





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 if
Regulation S-K (229.405 of this Chapter) is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K.


Yes
[  ]                                No
[x]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a none-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer
              oNon-accelerated
      filer
              o(Do not check if a
      smaller reporting company)Accelerated
      filer
              oSmaller
      reporting company
              þ




Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the exchange act).


Yes
[  ]                                No
[X]




The
Registrant’s revenues for its fiscal year ended December 31, 2008 were
$2,910,453.




The
aggregate market value of the issuer’s Common Stock held by non-affiliates
(280,766 shares) was approximately $101,075, based on the average closing bid
and ask price for the Common Stock on March 11, 2009.





As of
March 11, 2009, there were outstanding 4,117,798 shares of the issuer’s Common
Stock, par value $.0001.







Table of Contents




DOCUMENTS
INCORPORATED BY REFERENCE




Current
Report on Form 8-K filed on August 1, 2008 pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 and amended August 13,
2008




Information
Statement on Schedule 14C pursuant to Section 14(c) of the Securities Exchange
Act of 1934 filed on December 9, 2008




CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION




The
discussion contained in this 10-K under the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”) contains forward-looking statements that involve
risks and uncertainties. The issuer’s actual results could differ significantly
from those discussed herein. These include statements about our expectations,
beliefs, intentions or strategies for the future, which we indicate by words or
phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,”
“the Company believes,” “management believes” and similar language, including
those set forth in the discussion under “Description of Business,” including the
“Risk Factors” described in that section, and “Management’s Discussion and
Analysis or Plan of Operation” as well as those discussed elsewhere in this Form
10-K.  We base our forward-looking statements on information currently
available to us, and we assume no obligation to update them. Statements
contained in this Form 10-K that are not historical facts are forward-looking
statements that are subject to the “safe harbor” created by the Private
Securities Litigation Reform Act of 1995.




2




TABLE OF CONTENTS




Part IItem1.
                                                                                                                Description
      of Business
                                                                                                                41A.
                                                                                                                Risk
      Factors
                                                                                                                101B.
                                                                                                                Unresolved
      Staff Comments
                                                                                                                172.
                                                                                                                Description
      of Property
                                                                                                                173.
                                                                                                                Legal
      Proceedings
                                                                                                                174.
                                                                                                                Submission
      of Matters to a Vote of Security Holders
                                                                                                                17Part II5.
                                                                                                                Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                                                                                                                176.
                                                                                                                Selected
      Financial Data
                                                                                                                197.
                                                                                                                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                                                                                                                197A.
                                                                                                                Quantitative
      and Qualitative Disclosures About Market Risk
                                                                                                                218.
                                                                                                                Financial
      Statements and Supplementary Data
                                                                                                                229.
                                                                                                                Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                                                                                                                409A.
                                                                                                                Controls
      and Procedures
                                                                                                                419A(T).
                                                                                                                Controls
      and Procedures
                                                                                                                419B.
                                                                                                                Other
      Information
                                                                                                                42Part III10.
                                                                                                                Directors,
      Executive Officers and Corporate Governance
                                                                                                                4211.
                                                                                                                Executive
      Compensation
                                                                                                                4412.
                                                                                                                Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                                                                                                                4513.
                                                                                                                Certain
      Relationships and Related Transactions, and Director
      Independence
                                                                                                                4614.
                                                                                                                Principal
      Accountant Fees and Services
                                                                                                                46Part IV15.
                                                                                                                Exhibits,
      Financial Statement Schedules
                                                                                                                47Signature
      Page
                                                                                                                48


3
 Table of Contents




PART I




Item
1.  Description of Business




History




Envirosafe
Corporation (“ENVS”) was originally incorporated in Delaware in 1996. On
September 19, 2008 the Company redomiciled to the State of Nevada. ENVS was
formed to produce a comprehensive suite of disinfecting, cleaning, and
bioremediation products for the consumer, commercial, institutional and
municipal markets.  ENVS was not successful in developing this
business model due to limited resources and as result began to look for merger
candidates.




As of
June 18, 2007, the Registrant and predecessor of the Registrant, executed a plan
of exchange, between and among the Registrant, Si Chuan Da Zhu Fu Da Zhu Ma Fang
Zhi You Xian Gong Si, a corporation organized and existing under the laws of the
Peoples' Republic of China ("Da Zhu Fu Da"), the shareholders of Da Zhu Fu Da
and the majority shareholder of the Registrant.  Pursuant to the plan
of exchange former management resigned and was replaced by a new board and new
officers and directors.  After financing fell through on the Da Zhu Fu
Da plan of exchange the company decided to move in a new direction and entered
into talks to execute a reverse merger with ADDE Education Hlds Ltd, a
corporation organized and existing under the laws of the Hong Kong Special
Administrative Region of the People’s Republic of China
(“ADDE”).  ADDE is a holding company of Hao Yu Education Technology
Co. Ltd., a corporation organized and existing under the laws of the Peoples’
Republic of China ("Hao Yu"). The share exchange transaction was consummated on
July 31, 2008, and as a result, Hao Yu became a wholly owned subsidiary of
ADDE. Please
see the Current Report on Form 8-K filed on August 1, 2008 pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 and amended August 13, 2008
which is incorporated by reference herein for further information on this share
exchange.




Introduction
to the Business of Hao Yu




Hao Yu
was incorporated in connection with the innovation and modernization of Chinese
education. It is located in the TianHe Software Zone, Guangzhou, under which
there are three manufacturing bases of R&D and six modernization production
lines. Hao Yu set up branches and offices in mainland China and established labs
in Beijing Normal University, Capital Normal University,
East China Normal University,
South China Normal University, and
GuangXi Normal University.  It also cooperates with
other foreign universities and institutes.




Hao Yu is
a high-tech company specializing in the R&D of education products and
technology applications. The brand names “Discover the
World,” a portable multimedia system, and the “Learn and
Test” computer application for students maintain a strong reputation in
China. Hao Yu also participated in the research of PDA applications in
education, which provide not only the theory but also the service support in
connection with informative education.




After
only a few years, Hao Yu has obtained ISO9001 recognition. With a strong
educational background, extensive cooperative resources and a professional team,
Hao Yu has become one of the leading education modernizers in China and in its
approach to the international education technology industry.




Hao Yu is
equipped with a professional team with extensive experience. Most of the team
has participated in drafting industry benchmarks and has a comprehensive
understanding of foreign and domestic lab facilities. Moreover, Hao Yu has a
developed customer service group which provides us with a competitive advantage
in the industry.




Along
with the development of comprehensive educational research, service and product
programs, Hao Yu has also strives to develop scientific and technological
innovations and research resulting in educational products and services for our
core business. Hao Yu resolves to develop and have its own intelligent
property rights in their mission to produce one of the most advanced
information-based educational products all around the world. This company is
currently developing a new phase for China’s national teaching and information
construction. This program not only provides great benefits to schools, but it
may also encourage a profound social interest and a deep educational
reform.




In 2002,
Hao Yu developed and produced a range of “Learn and Test” functional calculators
and obtained a certificate of new technology from Guangdong Education Equipment
Center.  In 2003, Hao Yu obtained certification from the Guangdong
Information Industry Bureau. Later
in 2003, the “Learn and Test” calculator program also obtained similar
certification from the Guangdong Information Industry Bureau.  Hao
Yu’s science calculators, the XK-150 and XK-80 were highly recommended in 2003
by the education departments of Guangdong, Guangxi, Yunnan, Shanxi, Xinjiang,
Hebei and Shangai among others.  Hao Yu also registered a trademark
for “Explore the World” in 2003 and had it approved by the National Trademark
Bureau.  In 2003, Hao Yu registered the software of its
multifunctional collector system and the patent thereof.  In 2004, the
general manager of Hao Yu, Mr. Yanbin Guo, was nominated as an engineering
consultant for chemistry education materials edited by
Beijing Normal University and the Company began to produce chemistry
and physics products for high schools.  Hao Yu also applied for and
obtained a patent for its new sensor technology in 2005.  Finally,
also in 2005, Hao Yu registered their experimental system software called
“Explore the World” which was also approved by the Guangzhou Software
Association.




4
 Table of Contents




Detail
of Hao Yu’s Operations




The
experimental systems developed by Hao Yu are in conformity to the “new
educational purpose” of China. Hao Yu products use advanced technology for data
collection, sensor and wireless control and video imaging which can virtually
upload live experiments and analyze the information collected.




The
system is designed to be used in new middle school science courses. Teachers and
students may perform experiments automatically with the experiment systems
instead of performing them in the traditional method. This not only ensures the
accuracy of the collected data, but the system also analyzes the information
accordingly. Through uploads directly from “Discover the World,” software
to the computer, students may study and research under the instruction of
teachers and arrive at the proper conclusions.




Through
the use of physics, chemistry and biology applications, the system provides more
senses and chances for students to practice the procedure of experiments. As the
newly designed education facility, the system enables students to have a better
understanding of experiments and to realize the importance of practical
experience.




Hao
Yu currently has four product categories.  These include:




·
            Information
      collectors
              o “Discover the World” portable
      multimedia system
              o Precision measurement
      system:  The system can measure the time, real-time
      speed, average speed and acceleration of the moving object.
              o Scientific collector
      system:  The system is designed in compliance with
      experiment courses in primary schools and middle schools.  It
      consists of five sensors for students to test the temperature, humidity,
      pressure, light and sound both indoors and outdoors.  When
      connected with a computer, the collective information can be transferred
      to analysis, which is one of the tools for students to monitor their
      environment and to discover science.·
            Sensors
              o Chroma
      sensors:  This type of sensor assists with researching
      and/or testing reaction speed research, liquor pH indicator tests, the
      saturation concentration of a compound, Vitamin C reducibility,
      oxygenation reducibility, temperature concentration and balanceable
      effects to bromine and I-hydronium match, COD tests, and tests through
      color contrast to determine the iron content in anti-anemia
      drugs.
              o Breathe
      sensors:  This type of sensor assists with studying
      aspiratory models when students remain at rest, aspiratory models when
      students perform simple activities such as breathing and drinking,
      aspiratory rates of athletes versus non-athletes, aspiratory rates of
      males versus females, aspiration before and after exercise, aspiration
      before and after caffeinated drinks, the effects of an increase in carbon
      dioxide on aspiratory rates, and the aspiratory rate of students versus
      their heartbeat rate.
              o CO2sensors:  This
      type of sensor aids in the study of botanic photosynthesis, human breath,
      animal breath, automobile emission, whether budded seeds produce carbon
      dioxide, the budded seed’s breath out of oxygen, the respiration of the
      sugar in yeast, how temperature affects respiration, how light affects the
      carbon dioxide transition of plants, yeast respiration, and
      catalase.
              o Relative humidity
      sensors:  This type of sensor assists with the study of
      energy transition, liquid evaporation and distillation, boiling points and
      freezing points of water, the melting curve of crystals and non-crystals,
      refrigerant speed and efficiency, the evaporation of liquid, the
      absorption and release of heat by the three states of matter, the relation
      between air pressure and temperature, heat radiation and exchange, the
      relationship between boiling point and pressure, Charles’ Law, and
      Gay-Lussac’s Law.
              o pH
      sensors:  This type of sensor aids in the study of the pH
      of different drinks and different brands of drinking water, edaphic pH,
      the study and simulation of acid rain, the study of water pollution, the
      purification of water, how acid rain affects growing plants, the pH of
      saliva before and after eating sugar, the buffer action in the biological
      system, film permeation, how pH affects active enzymes, the environmental
      research on biology, and muscular fatigue.
              o Electrical conductivity
      sensors:  These sensors aid in the study of the
      conductance rate of different liquids, the purification of water,
      proliferate film, muscular fatigue, and resistance to water and
      soil.
              o Land humidity
      sensors
              o Flow rate
      sensors
              o Angular rotation
      sensors
              o Controlling switch
      sensors  5
 Table of Contents
  ·
            Digital
      meteorological station on campus·
            Digital
      analyzing software
              o Software of “Discover the
      World”:  This software deals with and analyzes dates by
      sensor.  It can also form curves and figures, and it works with
      an oscillograph.  This software helps students coordinate,
      analyze and apply data through experiments.
              o Functions and features of
      digital analyzing software (for primary schools)
              ·Digital
      display:  digital form, stimulator form (finger),
      curve
              
              ·Trigger
      alarm:  collect data above or below the set number, music has
      been triggered, including 100 kinds of interesting sounds, and can be
      edited freely
              
              ·Sound
      play:  can play all sound that formed from different
      digitals
              
              ·Automatic
      calculations:  can calculate the average rate curve, the
      difference between the two points, and the difference between the maximum
      and minimum automatically
              
              ·May
      designate any time difference between two points, the countdown to the
      time difference (frequency) and amplitude difference, the interface
      background, observation, gridlines, data, text color can be set
      freely
              
              ·Can
      be collected through experimental data output to Excel for a more in-depth
      analysis and application
              
              o Functions and features of
      digital analyzing software (for high schools)
              ·Digital
      display:  digital form, stimulator form (finger), curve in real
      time
              
              ·System
      can collect 1-3 group sensor data automatically, simultaneously, and
      continuously and unread data can also be entered into the sensor
      manually
              
              ·Built-in
      harmonic-frequency generator can be set; the second, third, fourth, fifth
      and sixth homonym output can be produced and displayed
      simultaneously
              
              ·The
      curve on the screen can be rolling, zooming and lessening up and down,
      left and right, or choose to observe freely
              
              ·Can
      be collected by the experimental data output to Excel from a more in-depth
      analysis and application


Hao Yu’s
education system is composed of four parts:  (1) the core operating
system, of which the multimedia information collector, “Discover the World,” is
the core system.  It is small but has three working modules and
adaptable functions; (2) system accessories—there are approximately 60
categories of sensors; (3) application software that connects the computer and
hardware of the system to strengthen the experimental information collection and
data processing; and (4) accessories selection through which the user may set up
a webcam for distant learning.




The most
prominent technological innovation of the system is the combination of modern
information technology and hands on education into the
system. Its technical instrument not only conforms to the national
curriculum standard, but it is also innovative, distinctive and applicable to
the education industry in the following aspects:




·
            The
      Collector has three working modules.
              o Independent working module
      (i.e., offline portable)
              o Normal online working module
      (i.e., the connective module between the “Discover the World” system and
      the PC)
              o Wireless online working
      module.  The wireless online working module is a unique
      innovative technology of “Discover the World,” the palm synthesized
      scientific laboratory system.  Under this working module, the
      signal sensed by the collector transmits through its built-in wireless
      radio frequency (RF) launcher to distant places (within 300 meters), such
      as to receivers on computers, and then processes the data
      afterwards.  This working module is suitable for the experiment
      under particular circumstances.  It allows the operator to be
      away from a certain spot and still have a real time monitor on the
      experimental process.  6
 Table of Contents
  ·
            The
      experiment data are real-time and are represented in different
      ways.Presently, many
      universities and scientific institutions use precision measurement
      instruments without intelligent adaptors, but they depend on paper records
      to show measurement results.  What schools need mostly are
      facilities having automatic data procession, dynamic display and cost
      effective analysis.  Based on the great demand, the R&D
      staff added the new function of display analysis from the collector to the
      chip, which displays the collected graph, form and virtual instruments
      associated with the educational purpose in real time.·
            Automatic
      recognition on sensors.“Discover the World” collectors
      may identify more than 50 different sensors automatically, whether
      developed by Hao Yu or other domestic or foreign
      manufacturers.  This new function is designed related to the
      requirement of educational technical innovation.  It relieves
      the workload for teachers and students to complete the complex
      identification and setting, which lowers the difficulty in the experiment
      process and spares more time to focus on the result.  Up until
      now, among other similar Chinese products, only “Discover the World” can
      realize the automatic identification.·
            The
      triggering function can collect information in real time
      automatically.  The highlight of this function allows the
      operator to edit the data collection program in advance and to set up the
      time to start working.  The collector may work automatically
      upon the message received, and the operator is free from doing
      anything.  Due to this strong feature, students may largely
      extend their research in accordance with educational
      innovation.  For example, a student needs to study the light
      changes between daytime and midnight to further study the phenomenon of
      the earth’s rotation.  He may edit a program to make the
      collector work every 30 minutes and process 48 hours of continuous
      time.  Then, the collector will be set in a proposed place and
      work on the desired task without disturbance.·
            Monitor
      different experiments simultaneously.  According to a
      range of requirements for the scientific experiments, one collector may
      affect four groups of virtual input data entry independently and
      simultaneously (for a total of eight groups) in compliance with the
      teaching requirements for middle schools and universities.  This
      is the leading technology in the domestic market compared to other similar
      products that can only provide a maximum of six groups of virtual
      inputs.  The technology enables the system to affect real time
      monitoring, record and repeat the video or audio
      experiments.  If the system is facilitated with a camera, by
      means of the “Discover the World” software, teachers can record the
      experiment and store the successful ones for educational
      purposes.  This function aims at establishing an education
      platform for experience communication and research materials in the
      future.




Where
Hao Yu is Headed




Our
strategies for achieving continued success include:




·
            Being
      first in new technological innovations·
            Providing
      a high quality and stable product·
            Improving
      our marketing efforts in exhibitions and local
  media




Hao
Yu’s sources of revenues




The
revenues of Hao Yu’s educational system operations will come from increased
usage of its products and the development of new technological innovations for
sale.




Factors that affect sales volumes for
the educational system include:




·
            Chinese
      laws and regulations·
            World
      gross domestic product growth·
            Development
      of additional value-added products and
services




Factors
that affect the prices for the educational system include:




·
            World
      economic environment·
            Relative
      strength of the Chinese RMB·
            Quality
      of products and services provided·
            Abundance
      of products and services provided




7
 Table of Contents




Analysis
of the Markets for the educational system




With an
increase in both Chinese gross domestic product (GDP) and national education
input from 2001-2005, there seems to exist a positive outlook for the market of
the educational system.




The
projected value of the target market is approximately US$1.8 billion, which is
only one third of the overall market volume in China. Pursuant to the latest
notice released from the Office of the Ministry of Education in 2007, in 2010,
all Chinese high schools must be equipped with the educationally innovative lab
system.




In 2005,
there were 366,200 primary schools, 62,486 junior middle schools, 31,532 high
schools, and 2,273 universities and colleges in China. The demand for the
educational system is projected to double or triple in the coming five
years.




In the
eleventh Five-Year Plan, the idea of speeding up the innovation of the education
course had been mentioned in the article, “Strengthen the education innovation,”
and students were encouraged to think more creatively and to develop practical
abilities. As a result, the sensors and collectors are widely used. In 2004,
some of the institutes began to adopt this new project and made plans to
purchase the system. Under the instruction of the government in 2006,
approximately 50%-60% of institutes will be involved in some way with this
creative experiment system.




In 2004,
there were four provinces, Shan Dong, Ning Xia, Guangdong, and Hai Nan, that
began the innovation of new courses. In the following three years up to 2007,
there were 14 provinces involved in the project including Jiang Su, Tian Jing,
Zhe Jiang, An Hui, Liao Ning, Beijing, Hu Nan, Hei Long Jiang, Ji Lin, Shan
Xi.




Competition




Currently,
there are similar products used in the world.  The two main
manufacturers in the US are TI Company and PASCO Company while Shan Dong Yuan Da
and Beijing Kemingyuan have a more mature technology on product development in
China.




The
overall technology of foreign products is more stable and has advanced functions
for application in the education industry, but it is not applicable for the
Chinese market.  This is because foreign products are more expensive,
foreign products are not applicable to the current Chinese education, there’s
only English instruction for the foreign software and experiment designs, and
customer service for foreign products cannot immediately assist professors in
China to solve the usage problem.




There are
also several problems with similar products in China.  Similar Chinese
products only focus on presentation without any program designed to give the
student hands on experience.  These products also have unstable
functions and a high maintenance cost.




Products
competing with Hao Yu’s educational system include:




·
            Lang
      Wei.  This product captures 15% of the market and is sold
      by ShanDong Yuan Da Network Multi-media Company, Ltd.  Lang Wei
      comes with complete accessories and was developed in middle schools to
      meet with the education requirements.  However, the technology
      is easily imitated.·
            GQY.  GQY
      captures 7% of the market and is sold by GQY Digital Education Equipment
      Company Ltd.  This product is made in China, and its appearance
      is similar to PASCO with sound material and LCD.  However, the
      technology is not stable, and the marketing is not mature.  The
      product lacks style.·
            SuWeiEr.  SuWeiEr
      captures 8% of the market and is sold by Nan Jin SuWeiEr Technology
      Company Ltd.  This product is made in China, has a certain
      market in NanJing, and is priced the cheapest out of all the educational
      products.  Nevertheless, the technology is not stable, and the
      marketing is unsatisfactory.·
            Shanghai
      Zhong Ke. This product captures 4% of the market and is sold by
      Shanghai Zhong Ke Modern Lab Equipment Company, Ltd.  Shanghai
      Zhong Ke is made in China, and the price falls approximately in the median
      of educational system prices.  It offers no special advantages,
      and the technology is low and unstable.  The market share is
      limited.·
            SuperLab.  SuperLab
      captures 10% of the market and is sold by Ning BoHua Mao.  This
      product has better marketing channels than some of the other
      products.  However, its technology is
  unstable.·
            PASCO.  This
      product captures 10% of the market and is sold by Guangdong MaiDaWei
      Education Instrument Company, Ltd.  PASCO is an import product
      with stable technology, scientific design, and sound
      appearance.  It is the most expensive, and it is too
      professional to be used by students.·
            Vernier.  This
      product captures 7% of the market and is sold by ShenZheng KangXinDa
      Electricity Company, Ltd.  Vernier is an import product with
      stable technology, but it is expensive.  The product does not
      fully comply with the educational material.·
            Korea
      KD.  Korea KD captures 12% of the market and is sold by
      ShangHai DongFang Education Tool Company, Ltd.  This product is
      an import product with stable technology, but it is
      expensive.  Its sales are mostly in
  Shanghai.




Hao Yu’s
“Discover the World” product captures 20% of the market.  Hao Yu was
the first manufacturer to develop this product, and the product is stable and
maintains a high reputation based on foreign technology and cooperation with
many universities in China.  However, it lacks advertisements on
exhibitions and local media.




8
 Table of Contents




Competitive
Advantages and Strategy




Currently,
there are similar products used in the world. The two main manufacturers in the
US are TI company and PASCO company while Shan Dong Yuan Da and Beijing
Kemingyuan have a more mature technology on product development in China. The
digital education system named “Discover the World” developed by Hao Yu has the
following competitive advantages:




1)
            Equipped
      with a professional team able to participate in product developments in
      compliance with the innovation of national education;2)
            Has
      many technologies of strong competition to compare with similar products
      in quality, feature and price;3)
            Set
      up education resource centers and a complete system of sales, service and
      training in many cities, which establishes a platform to share with the
      schools and provide the advanced products for educational
      purposes;4)
            Maintain
      a long-term relationship with local education departments and institutes
      to train up to 53,000 teachers for the company’s future product marketing
      and application.




In
comparison to Chinese competitors, the Company believes it possesses superior
technological expertise, products, marketing knowledge, and global
relationships.




Growth
Strategy




The
Company’s vision is to further increase its market share and to remain the
market leader in the educational systems industry by continuing to offer the
best quality and most technologically advanced products in its market.
Management intends to grow the Company’s business by pursuing the following
strategies:




·
            Grow
      capacity and capabilities in line with market demand
      increases·
            Enhance
      leading-edge technology through continuous innovation, research and
      study·
            Continue
      to improve operational efficiencies and use of nearly all technical
      advantages.·
            Further
      expand into higher value-added segments of the educational system
      industry.·
            Build
      a strong market reputation to foster and capture future growth in
      China.




Existing
Facilities




Hao Yu is
located in TianHe Software Zone, Guangzhou Province, People’s Republic of
China.  It has also set up other branches and offices in mainland
China and established labs in Beijing Normal University, Capital Normal
University, East China Normal University, South China Normal University, and
GuangXi Normal University.  Hao Yu also cooperates with other foreign
universities and institutes.




Sales
and Marketing




We employ
sales persons who market our products to the Ministry of Education and the
provincial education commissions.  Although the government agencies do not
purchase our product, we need to obtain their approval of the use of our
programs for use in connection with the curriculum taught in the schools under
their jurisdiction.  We also use these marketing calls to generate
information to assist us in developing new educational products and
opportunities.  Our sales force is also actively involved with educators in
developing curriculums based on the products we produce.  In addition,
we plan to maintain long-term relationships with local education departments and
institutes to train 53,000 teachers for the Company’s future product marketing
and application.




Intellectual
Property




Hao Yu’s
product is developed by Hao Yu independently, and all techniques are owned by
Hao Yu, including all intelligent property rights of “Discover the World,” the
palm synthesized scientific laboratory system.  Hao Yu has a patent on
the appearance and design of its sensor, distance sensor, power sensor and
special experiment car for kinetics.  It also has a patent for the all
powerful data collector, and a copyright on the computer software for “Discover
the World.”




9
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Regulation




The
education industry in China is heavily regulated at all levels - national,
provincial and local.  Our business is subject to numerous Chinese
rules and regulations, including restrictions on foreign ownership of education
companies.  Many of the rules and regulations that we face are not
explicitly communicated, but arise from the fact that education is a politically
sensitive area of the economy. Since its inception, the Company has been in
compliance with applicable regulations.




Legal
Proceedings




The
Company is not aware of any significant pending legal proceedings against
it.




Employees




As of
December 31, 2008, we have approximately 64 employees, consisting of 13
employees in the administrative and financing department, 15 marketing and sales
personnel, 10 quality inspectors, 23 employees in the research and development
department, and 3 employees in the purchasing department. None of our personnel
are represented under collective bargaining agreements and we believe that we
have good relations with our employees.




Item
1A. Risk Factors




Investing
in ENVS’s common stock involves a high degree of risk.  Prospective
investors should carefully consider the risks described below, together with all
of the other information included or referred to in this Current Report on Form
8-K, before purchasing shares of ENVS’s common stock.  There are
numerous and varied risks, known and unknown, that may prevent the Registrant
from achieving its goals.  The risks described below are not the only
ones ENVS will face.  If any of these risks actually occurs, ENVS’S
business, financial condition or results of operation may be materially
adversely affected.  In such case, the trading price of ENVS’s common
stock could decline and investors in ENVS’s common stock could lose all or part
of their investment.  The risks and uncertainties described below are
not exclusive and are intended to reflect the material risks that are specific
to ENVS, material risks related to ENVS’s industry and material risks related to
companies that undertake a public offering or seek to maintain a class of
securities that is registered or traded on any exchange or over-the-counter
market.




ENVS’s
future revenues will be derived from the sale of its technologically advanced
educational products in several cities of Guangdong Province and
elsewhere.  There are numerous risks, known and unknown, that may
prevent ENVS from achieving its goals including, but not limited to, those
described below.  Additional unknown risks may also impair ENVS’s
financial performance and business operations.  ENVS’s business,
financial condition and/or results of operations may be materially adversely
affected by the nature and impact of these risks.  In such case, the market
value of ENVS’s securities could be detrimentally affected, and investors may
lose part or all of their investment. Please refer to the information contained
under “Business” in this report for further details pertaining to ENVS’s
business and financial condition.




Risks
Related To Our Business




Our
business is dependent upon the Chinese government’s educational policies and
programs.




As a
provider of educational services, we are dependent upon government educational
policies. Almost all of our revenue to date has been generated from the sale of
educational systems relating to courses at different educational levels. To the
extent that the government adopts policies or curriculum changes that
significantly alter the curriculum used in the Chinese educational system, our
products could become obsolete, which would affect our ability to generate
revenue and operate profitably. We cannot assure you that the Chinese government
agencies would not adopt such changes.




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We
are subject to numerous Chinese rules and regulations which restrict the scope
of our business and could have a material adverse impact on us.




We are
subject to numerous rules and regulations in China, including, without
limitation, restrictions on foreign ownership of education companies. Many of
the rules and regulations that we face are not explicitly communicated, but
arise from the fact that education is a politically sensitive area of the
economy.  We are not aware that any of our agreements or our current
organizational structure is in violation of any governmental requirements or
restrictions, explicit or implicit.  However, there can be no assurance
that we are in compliance now, or will be in the future.  Moreover,
operating in China involves a high risk that restrictive rules and regulations
could change.  Indeed, even changes of personnel at certain ministries of
the government could have a negative impact on us.  The determination that
our structure or agreements are in violation of governmental rules or
regulations in China would have a material adverse impact on us, our business
and on our financial results.




Our
business may be subject to seasonal and cyclical fluctuations in
sales.




We may
experience seasonal fluctuations in our revenue in some regions in China, based
on the academic year and the tendency of our customers to make purchases
relating to their education just prior to or at the beginning of the school year
in the autumn.  Any seasonality may cause significant pressure on us to
monitor the development of materials accurately and to anticipate and satisfy
these requirements.




Our
business is subject to the health of the Chinese economy.




The
purchase of an educational system such as ours is currently discretionary and
dependant upon the ability and willingness of consumers to spend available funds
on extra educational products. A general economic downturn either in our market
or a general economic downturn in China could have a material adverse effect on
our revenue, earnings, cash flow and working capital.




We
depend on our senior officers to manage and develop our business.




Our
success depends on the management skills of Mr. Yanbin Guo, our president,
and his relationships with educators, administrators and other business
contacts.  We also depend on successfully recruiting and retaining highly
skilled and experienced authors, teachers, managers, sales persons and other
personnel who can function effectively in China.  In some cases, the market
for these skilled employees is highly competitive.  We may not be able to
retain or recruit such personnel, which could materially and adversely affect
our business, prospects and financial condition.  We do not maintain key
person insurance on these individuals.  We do not have employment contracts
with Mr. Guo or any other officers or employees. The loss of Mr. Guo would delay
our ability to implement our business plan and would adversely affect our
business.




We
may not be successful in protecting our intellectual property and proprietary
rights.




Our
proprietary software products are primarily protected by trade secret laws.
 Although we require our authors and software development employees to sign
confidentiality and non-disclosure agreements, we cannot assure you that we will
be able to enforce those agreements or that our authors and software development
employees will not be able to develop competitive products that do not infringe
upon our proprietary rights. We do not know the extent that Chinese courts will
enforce our proprietary rights.




Others
may bring defamation and infringement actions against us, which could be
time-consuming, difficult and expensive to defend.




As a
distributor of educational materials, we face potential liability for
negligence, copyright, patent or trademark infringement and other claims based
on the nature and content of the materials that we publish or distribute.
 Any claims could result in us incurring significant costs to investigate
and defend regardless of the final outcome.  We do not carry general
liability insurance that would cover any potential or actual claims. The
commencement of any legal action against us or any of our affiliates, whether or
not we are successful in defending the action, could both require us to suspend
or discontinue the distribution of some or a significant portion of our
educational material and require us to allocate resources to investigating or
defending claims.




We
depend upon the acquisition and maintenance of licenses to conduct our business
in China.




In order
to conduct business in China, we need licenses from the appropriate government
authorities, including general business licenses and an education service
provider license.  The loss or failure to obtain or maintain these licenses
in full force and effect will have a material adverse impact on our ability to
conduct our business and on our financial condition.




Our
growth may be inhibited by the inability of potential customers to fund
purchases of our products and services.




Many
schools in China, especially those in rural areas, do not have sufficient funds
to purchase textbooks, educational materials or computers to use our products.
 In addition, provincial and local governments may not have the funds to
support the implementation of a curriculum using our educational products or may
allocate funds to programs which are different from our products. Our failure to
be able to sell our products and services in certain areas of China may inhibit
our growth and our ability to operate profitably.




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Changes
in the policies of the government in China could significantly impact our
ability to operate profitably.




The
economy of China is a planned economy subject to five-year and annual plans
adopted by the government that set down national economic development goals.
 Government policies can have significant effect on the economic conditions
of China generally and the educational system in particular.  Although the
government in China has confirmed that economic development will follow a model
of market economy under socialism, a change in the direction of government
planning may materially affect our business, prospects and financial
condition.




Inflation in China could negatively
affect our profitability and growth.




While the
economy in China has experienced rapid growth, such growth has been uneven among
various sectors of the economy and in different geographical areas of the
country. Rapid economic growth can lead to growth in the money supply and rising
inflation. If prices for our products rise at a rate that is insufficient
to compensate for the rise in our costs, it may have an adverse effect on
profitability. In order to control inflation in the past, the government has
imposed controls in bank credits, limits on loans for fixed assets, and
restrictions on state bank lending. Such an austerity policy can lead to a
slowing of economic growth which could impair our ability to operate
profitably.




If
we make any acquisitions, they may disrupt or have a negative impact on our
business.




If we
make acquisitions, we could have difficulty integrating the acquired companies’
personnel and operations with our own. In addition, the key personnel of the
acquired business may not be willing to work for us. We cannot predict the
effect expansion may have on our core business. Regardless of whether we are
successful in making an acquisition, the negotiations could disrupt our ongoing
business, distract our management and employees and increase our expenses. In
addition to the risks described above, acquisitions are accompanied by a number
of inherent risks, including, without limitation, the following:




·
            the
      difficulty of integrating acquired products, services or
      operations;·
            the
      potential disruption of the ongoing businesses and distraction of our
      management and the management of acquired companies;·
            the
      difficulty of incorporating acquired rights or products into our existing
      business;·
            difficulties
      in disposing of the excess or idle facilities of an acquired company or
      business and expenses in maintaining such facilities;·
            difficulties
      in maintaining uniform standards, controls, procedures and
      policies;·
            the
      potential impairment of relationships with employees and customers as a
      result of any integration of new management personnel;·
            the
      potential inability or failure to achieve additional sales and enhance our
      customer base through cross-marketing of the products to new and existing
      customers;·
            the
      effect of any government regulations which relate to the business
      acquired;·
            potential
      unknown liabilities associated with acquired businesses or product lines,
      or the need to spend significant amounts to retool, reposition or modify
      the marketing and sales of acquired products or the defense of any
      litigation, whether or not successful, resulting from actions of the
      acquired company prior to our
acquisition.




Our
business could be severely impaired if and to the extent that we are unable to
succeed in addressing any of these risks or other problems encountered in
connection with these acquisitions, many of which cannot be presently
identified, these risks and problems could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our results of operations.




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Our
operations and assets in China are subject to significant political and economic
uncertainties.




Government
policies are subject to rapid change, and the government of the PRC may adopt
policies which have the effect of hindering private economic activity and
greater economic decentralization. There is no assurance that the government of
China will not significantly alter its policies from time to time without notice
in a manner that reduces or eliminates any benefits from its present policies of
economic reform. In addition, a substantial portion of productive assets in
China remains government-owned. For instance, all lands are state owned and
leased to business entities or individuals through governmental granting of
state-owned land use rights. The granting process is typically based on
government policies at the time of granting, which could be lengthy and complex.
The government of China also exercises significant control over China’s economic
growth through the allocation of resources, controlling payment of foreign
currency and providing preferential treatment to particular industries or
companies. Uncertainties may arise with changing of governmental policies and
measures. In addition, changes in laws and regulations, or their interpretation,
or the imposition of confiscatory taxation, restrictions on currency conversion,
imports and sources of supply, devaluations of currency, the nationalization or
other expropriation of private enterprises, as well as adverse changes in the
political, economic or social conditions in China, could have a material adverse
effect on our business, results of operations and financial
condition.




Price
controls may affect both our revenues and net income.




The laws
of China give the government broad power to fix and adjust prices. We need to
obtain government approval in setting our prices for classroom coursework and
tutorials. Although the sale of our educational system is not presently subject
to price controls, we cannot give you any assurance that they will not be
subject to controls in the future. To the extent that we are subject to price
control, our revenue, gross profit, gross margin and net income will be affected
since the revenue we derive from our services will be limited and we may face no
limitation on our costs. As a result, we may not be able to pass on to our
consumers any increases in costs we incur. Further, if price controls affect
both our revenue and our costs, our ability to be profitable and the extent of
our profitability will be effectively subject to determination by the applicable
Chinese regulatory authorities.




Our
operations may not develop in the same way or at the same rate as might be
expected if the PRC economy were similar to the market-oriented economies of
most developed countries.




The
economy of the PRC has historically been a nationalistic, “planned economy,”
meaning it functions and produces according to governmental plans and pre-set
targets or quotas. In certain aspects, the PRC’s economy has been making a
transition to a more market-oriented economy, although the government imposes
price controls on certain products and in certain industries. However, we cannot
predict the future direction of these economic reforms or the effects these
measures may have. The economy of the PRC also differs from the economies
of most developed countries including with respect to the amount of government
involvement, level of development, growth rate, control of foreign exchange and
allocation of resources. As a result of these differences, our business may not
develop in the same way or at the same rate as might be expected if the economy
of the PRC were similar to those of other developed countries.




Because
our officers and directors reside outside of the United States, it may be
difficult for you to enforce your rights against them or enforce United States
court judgments against them in China.




Our
directors and our executive officers reside in the PRC and all of our assets are
located in China. It may therefore be difficult for United States investors to
enforce their legal rights, to effect service of process upon our directors or
officers or to enforce judgments of United States courts predicated upon civil
liabilities and criminal penalties of our directors and officers under federal
securities laws. Further, it is unclear if extradition treaties now in
effect between the United States and China would permit effective enforcement of
criminal penalties of the federal securities laws.




We
may have limited legal recourse under Chinese law if disputes arise under
contracts with third parties.




All of
our agreements, which are made by our Chinese subsidiaries, are governed by the
laws of China. The Chinese legal system is a civil law system based on written
statutes. Accordingly decided legal cases have little precedential value. The
government of China has enacted some laws and regulations dealing with matters
such as corporate organization and governance, foreign investment, commerce,
taxation and trade. However, these laws are relatively new and their experience
in implementing, interpreting and enforcing these laws and regulations is
limited. Therefore, our ability to enforce commercial claims or to resolve
commercial disputes may be uncertain. The resolution of these matters may be
subject to the exercise of considerable discretion by the parties charged with
enforcement of the applicable laws. Any rights we may have to specific
performance or to seek an injunction under Chinese law may be limited, and
without a means of recourse, we may be unable to prevent these situations from
occurring. The occurrence of any such events could have a material adverse
effect on our business, financial condition and results of
operations.




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Because
we may not be able to obtain business insurance in the PRC, we may not be
protected from risks that are customarily covered by insurance in the United
States.




Business
insurance is not readily available in China. To the extent that we suffer a loss
of a type which would normally be covered by insurance in the United States,
such as product liability and general liability insurance, we would incur
significant expenses in both defending any action and in paying any claims that
result from a settlement or judgment.




Because
our funds are held in banks which do not provide insurance, the failure of any
bank in which we deposit our funds could affect our ability to continue in
business.




Banks and
other financial institutions in the PRC do not provide insurance for funds held
on deposit. As a result, in the event of a bank failure, we may not have access
to funds on deposit. Depending upon the amount of money we maintain in a bank
that fails, our inability to have access to our cash could impair our
operations, and, if we are not able to access funds to pay our suppliers,
employees and other creditors, we may be unable to continue in
business.




Failure
to comply with the United States Foreign Corrupt Practices Act could subject us
to penalties and other adverse consequences.




We are
subject to the United States Foreign Corrupt Practices Act, which generally
prohibits United States companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining
business. Foreign companies, including some that may compete with us, are not
subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft
and other fraudulent practices occur from time-to-time in China. We can make no
assurance, however, that our employees or other agents will not engage in such
conduct for which we might be held responsible. If our employees or other agents
are found to have engaged in such practices, we could suffer severe penalties
and other consequences that may have a material adverse effect on our business,
financial condition and results of operations.




Fluctuations
in the exchange rate could have a material adverse effect upon our
business.




We
conduct our business in the Renminbi. The value of the Renminbi against the U.S.
dollar and other currencies may fluctuate and is affected by, among other
things, changes in political and economic conditions. On July 21, 2005, the PRC
government changed its decade old policy of pegging its currency to the U.S.
currency. Under the current policy, the Renminbi is permitted to fluctuate
within a narrow and managed band against a basket of certain foreign currencies.
This change in policy has resulted in an approximately 6.5% appreciation of the
Renminbi against the U.S. dollar between July 21, 2005 and August 31, 2007.
However, there remains significant international pressure on the PRC government
to adopt an even more flexible currency policy, which could result in a further
and more significant appreciation of the RMB against the U.S. dollar. To the
extent our future revenues are denominated in currencies other than United
States dollars, we would be subject to increased risks relating to foreign
currency exchange rate fluctuations which could have a material adverse affect
on our financial condition and operating results since our operating results are
reported in United States dollars and significant changes in the exchange rate
could materially impact our reported earnings.




Recent
recalls of Chinese products may affect the market for our stock.




Although
we do not sell consumer products in the international market, the recent recalls
of Chinese products in the United States and elsewhere could affect the market
for our stock by causing investors to invest in companies that are not based in
China.




Our
corporate actions are substantially controlled by a single
stockholder.




As a
result of the share exchange transaction Mr. Yanbin Guo currently owns
approximately 75.6% of our outstanding common shares, representing approximately
75.6% of our voting power. This stockholder could exert substantial influence
over matters such as electing directors and approving mergers or other business
combination transactions. In addition, because of the percentage of ownership
and voting concentration in the principal stockholder, elections of our board of
directors will generally be within the control of this stockholder. While all of
our shareholders are entitled to vote on matters submitted to our shareholders
for approval, the concentration of shares and voting control presently lies with
this principal stockholder. As such, it would be extremely difficult for
shareholders to propose and have approved proposals not supported by Mr. Guo.
There can be no assurances that matters voted upon by the Mr. Guo will be viewed
favorably by all shareholders of our company.




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The terms on which we may raise
additional capital may result in significant dilution and may impair our stock
price.




We cannot
assure you that we will be able to get additional financing on any terms, and,
if we are able to raise funds, it may be necessary for us to sell our securities
at a price which is at a significant discount from the market price and on other
terms which may be disadvantageous to us. In connection with any such financing,
we may be required to provide registration rights to the investors and pay
damages to the investor in the event that the registration statement is not
filed or declared effective by specified dates. The price and terms of any
financing which would be available to us could result in both the issuance of a
significant number of shares and significant downward pressure on our stock
price and could result in a significant dilution to or impair our stock
price.




Risks
Associated with Investing in our Common Stock




The
rights of the holders of common stock may be impaired by the potential issuance
of preferred stock.




Our board
of directors has the right, without stockholder approval, to issue preferred
stock with voting, dividend, conversion, liquidation or other rights which could
adversely affect the voting power and equity interest of the holders of common
stock., which could be issued with the right to more than one vote per share,
could be utilized as a method of discouraging, delaying or preventing a change
of control. The possible impact on takeover attempts could adversely affect the
price of our common stock. Although we have no present intention to issue any
additional shares of preferred stock or to create any new series of preferred
stock, we may issue such shares in the future.




Failure
to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act could have a material adverse effect on our
business and operating results and stockholders could lose confidence in our
financial reporting.




Internal
controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, our operating results could be harmed. Under the current SEC
regulations, we will be required to include an auditor’s report on internal
controls over financial reporting for the year ended December 31, 2008.
Failure to achieve and maintain an effective internal control environment,
regardless of whether we are required to maintain such controls, could also
cause investors to lose confidence in our reported financial information, which
could have a material adverse effect on our stock price. Although we are not
aware of anything that would impact our ability to maintain effective internal
controls, we have not obtained an independent audit of our internal controls,
and, as a result, we are not aware of any deficiencies which would result from
such an audit. Further, at such time as we are required to comply with the
internal controls requirements of Sarbanes Oxley, we may incur significant
expenses in having our internal controls audited and in implementing any changes
which are required.




We
do not pay dividends and there are no plans to pay dividends in the
future.


We do not
currently pay dividends and there are no plans to pay dividends in the
future.  Even if we were to pay dividends to our shareholders it would
require payment of dividends by our China subsidiaries to us. This, in turn,
would require a conversion of Renminbi into US dollars and repatriation of funds
to the United States. Although our subsidiaries’ classification as wholly-owned
foreign enterprises under Chinese law permits them to declare dividends and
repatriate their funds to us in the United States, any change in this status or
the regulations permitting such repatriation could prevent them from doing so.
Any inability to repatriate funds to us would in turn prevent payments of
dividends to our shareholders.




Because
we may be subject to the “penny stock” rules, you may have difficulty in selling
our common stock.




Because
our stock price is less than $5.00 per share, our stock may be subject to the
SEC’s penny stock rules, which impose additional sales practice requirements and
restrictions on broker-dealers that sell our stock to persons other than
established customers and institutional accredited investors. The application of
these rules may affect the ability of broker-dealers to sell our common
stock and may affect your ability to sell any common stock you may
own.




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According
to the SEC, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include:




·
            Control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or issuer;·
            Manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;·
            “Boiler
      room” practices involving high pressure sales tactics and unrealistic
      price projections by inexperienced sales persons;·
            Excessive
      and undisclosed bid-ask differentials and markups by selling
      broker-dealers; and·
            The
      wholesale dumping of the same securities by promoters and broker-dealers
      after prices have been manipulated to a desired level, along with the
      inevitable collapse of those prices with consequent investor
      losses.




As an issuer of “penny stock” the
protection provided by the federal securities laws relating to forward looking
statements does not apply to us.




Although
the federal securities laws provide a safe harbor for forward-looking statements
made by a public company that files reports under the federal securities laws,
this safe harbor is not available to issuers of penny stocks. As a result, if we
are a penny stock, we will not have the benefit of this safe harbor protection
in the event of any claim that the material provided by us contained a material
misstatement of fact or was misleading in any material respect because of our
failure to include any statements necessary to make the statements not
misleading.




Our
stock price may be affected by our failure to meet projections and estimates of
earnings developed either by us or by independent securities
analysts.




Although
we do not make projections relating to our future operating results, our
operating results may fall below the expectations of securities analysts and
investors. In this event, the market price of our common stock would likely be
materially adversely affected.




The
volatility of and limited trading market in our common stock may make it
difficult for you to sell our common stock for a positive return on your
investment.




The
public market for our common stock has historically been very volatile. Over the
past year, the market price for our common stock has ranged from $0.14 to $1.50.
Any future market price for our shares is likely to continue to be very
volatile. Further, our common stock is not actively traded, which may amplify
the volatility of our stock. These factors may make it more difficult for you to
sell shares of common stock.




There
is currently no liquid trading market for ENVS’s common stock and ENVS cannot
ensure that one will ever develop or be sustained.




There is
currently no liquid trading market for ENVS’s common stock. ENVS cannot predict
how liquid the market for ENVS’s common stock might become. ENVS’s common stock
is currently approved for quotation on the OTC Bulletin Board trading under the
symbol “ENVS.” ENVS currently does not satisfy the initial listing standards,
and cannot ensure that it will be able to satisfy such listing standards on a
higher exchange, or that its common stock will be accepted for listing on any
such exchange. Should ENVS fail to satisfy the initial listing standards of such
exchanges, or its common stock be otherwise rejected for listing and remain on
the OTC Bulletin Board or be suspended from the OTC Bulletin Board, the trading
price of ENVS’s common stock could suffer, the trading market for ENVS’s common
stock may be less liquid and ENVS’s common stock price may be subject to
increased volatility.




16
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The
registration and potential sale by the selling stockholders of a significant
number of shares could encourage short sales by third parties.




There may
be significant downward pressure on our stock price caused by the sale or
potential sale of a significant number of shares pursuant to this prospectus,
which could allow short sellers of our stock an opportunity to take advantage of
any decrease in the value of our stock. The presence of short sellers in our
common stock may further depress the price of our common stock.




If the
selling stockholders sell a significant number of shares of common stock, the
market price of our common stock may decline.




Declining
economic conditions could negatively impact our business




Our
operations are affected by local, national and worldwide economic
conditions.  Markets in the United States and elsewhere have been
experiencing extreme volatility and disruption for more than 12 months, due in
part to the financial stresses affecting the liquidity of the banking system and
the financial markets generally.  In recent weeks, this volatility and
disruption has reached unprecedented levels.  The consequences of a
potential or prolonged recession may include a lower level of economic activity
and uncertainty regarding energy prices and the capital and commodity markets.
While the ultimate outcome and impact of the current economic conditions cannot
be predicted, a lower level of economic activity might result in a decline in
energy consumption, which may adversely affect the price of oil, liquidity and
future growth.  Instability in the financial markets, as a result of
recession or otherwise, also may affect the cost of capital and our ability to
raise capital.




Item1B. Unresolved Staff
Comments




None.




Item
2. Description of Property




Our
corporate headquarters are approximately 1,097 square meters, located at 8/F,
No. 1033, Gaopu Road, Gaotang New Building Zone, Tianhe Technology Software
Park, Guangzhou City, Guangdong Province, P.R. China. Pursuant to a 2-year lease
agreement, our rental payment is $27,000 per year, which is paid annually and
will be increased by 8% every subsequent year. This space is adequate for our
present and planned future operations. The lease agreement will expire on May
31, 2009 and afterwards the we plan to negotiate a new lease or pay on a month
to month basis. No other businesses operate from this office
space.





Item
3. Legal Proceedings




None




Item 4. Submission of Matters to a Vote of Security
Holders




Holders
of 2,500,000 shares of our Common Stock, representing approximately 90.33% of
our shares entitled to vote executed a written consent in favor of the name
change, adoption of the plan of exchange and reverse split proposals described
in an Information Statement on Schedule 14C pursuant to Section 14(c) of the
Securities Exchange Act of 1934 filed on December 9, 2008.  For more
information on these proposals please refer to the Information Statement which
has been incorporated by reference.




PART II






Item 5.
            Market for Common Equity and Related and
      Stockholder




Market
for Common Stock




Our
Common Stock is quoted on the Over the Counter Bulletin Board quotation service,
a service maintained by The NASDAQ Stock Market, Inc., under the symbol
“ENVS.OB”. Trading in our common stock has been limited and sporadic and the
quotations set forth below are not necessarily indicative of actual market
conditions. Further, these quotations reflect inter-dealer prices, without
retail mark-up, markdown, or commission, and do not necessarily reflect actual
transactions. Set forth below is the range high and low bid information for our
common stock for each quarter of the years ended December 31, 2008, 2007 and
2006.




17
 Table of Contents




High
                                                                        
                                                                        
                                                                        Low2008Quarter
      Ended March 31, 2008
                                                                        
                                                                        $
                                                                        .37
                                                                        
                                                                        
                                                                        $
                                                                        .12Quarter
      Ended June 30, 2008
                                                                        
                                                                        $
                                                                        .27
                                                                        
                                                                        
                                                                        $
                                                                        .15Quarter
      Ended September 30, 2008
                                                                        
                                                                        $
                                                                        .25
                                                                        
                                                                        
                                                                        $
                                                                        .15Quarter
      Ended December 31, 2008
                                                                        
                                                                        $
                                                                        1.50
                                                                        
                                                                        
                                                                        $
                                                                        .14High
                                                                        
                                                                        
                                                                        Low2007Quarter
      Ended March 31, 2007
                                                                        
                                                                        $
                                                                        0.01
                                                                        
                                                                        
                                                                        $
                                                                        0.05Quarter
      Ended June 30, 2007
                                                                        
                                                                        $
                                                                        0.20
                                                                        
                                                                        
                                                                        $
                                                                        0.45Quarter
      Ended September 30, 2007
                                                                        
                                                                        $
                                                                        0.10
                                                                        
                                                                        
                                                                        $
                                                                        0.25Quarter
      Ended December 31, 2007
                                                                        
                                                                        $
                                                                        0.10
                                                                        
                                                                        
                                                                        $
                                                                        0.20High
                                                                        
                                                                        
                                                                        Low2006Quarter
      Ended March 31, 2006
                                                                        
                                                                        $
                                                                        0.06
                                                                        
                                                                        
                                                                        $
                                                                        0.01Quarter
      Ended June 30, 2006
                                                                        
                                                                        $
                                                                        0.11
                                                                        
                                                                        
                                                                        $
                                                                        0.02Quarter
      Ended September 30, 2006
                                                                        
                                                                        $
                                                                        0.04
                                                                        
                                                                        
                                                                        $
                                                                        0.01Quarter
      Ended December 31, 2006
                                                                        
                                                                        $
                                                                        0.02
                                                                        
                                                                        
                                                                        $
                                                                        0.004


On March
11, 2009, the closing price of our Common Stock was $.40 per share.




As of
March 11, 2009, there were approximately 135 stockholders of record of our
common stock. Our registrar and transfer agent is Guardian Registrar &
Transfer Agency, Inc., located at 7951 S.W. 6th Street,
Suite #216, Plantation, Florida, 33324. Their telephone number is (954)
915-0105, and their facsimile number is (954) 449-0582.




Limited
Market for Common Stock




There is
currently a limited trading market for our shares of Common Stock, and there can
be no assurance that a more substantial market will ever develop or be
maintained. Any market price for our shares of Common Stock is likely to be very
volatile, and numerous factors beyond our control may have a significant adverse
effect.  In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies.  These
broad market fluctuations, as well as general economic and political conditions,
may also adversely affect the market price of our Common Stock. Further, there
is no correlation between the present limited market price of our Common Stock
and our revenues, book value, assets or other established criteria of value. The
present limited quotations of our Common Stock should not be considered
indicative of the actual value of the Company or our Common Stock.




Dividends




We have
not paid any cash dividends to date and does not anticipate or contemplate
paying cash dividends in the foreseeable future until earnings would generate
funds in excess of those required to provide for our growth needs. We currently
intend to retain any future earnings to fund the development and growth of our
business.




18
 Table of Contents




Recent
Sales of Unregistered Securities




Pursuant
to the Plan of Exchange between the Registrant and Hao Yu, 20,000,000 shares of
common stock and 1,350,000 shares of preferred stock with a conversion ratio of
1:50 were issued to Hao Yu Shareholders in consideration of the exchange of
shares under the plan.  For more detailed information concerning these
issuances please refer to the Current Report on Form 8-K filed on August 1, 2008
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 and
amended August 13, 2008 which is incorporated by reference.




Item
6. Selected Financial Data







If the
registrant qualifies as a smaller reporting company as defined byRule 229.10(f)(1),
it is not required to provide the information required by this
Item.




Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations





Forward
Looking Statements




Certain
statements in this report, including statements of our expectations, intentions,
plans and beliefs, including those contained in or implied by "Management's
Discussion and Analysis" and the Notes to Consolidated Financial Statements, are
"forward-looking statements", within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
subject to certain events, risks and uncertainties that may be outside our
control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”,
“will”, and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. We undertake no obligation to
update or revise any forward-looking statements. These forward-looking
statements include statements of management's plans and objectives for our
future operations and statements of future economic performance, information
regarding our expansion and possible results from expansion, our expected
growth, our capital budget and future capital requirements, the availability of
funds and our ability to meet future capital needs, the realization of our
deferred tax assets, and the assumptions described in this report underlying
such forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including, without limitation, those described in the context of
such forward-looking statements, our expansion strategy, our ability to achieve
operating efficiencies, our dependence on distributors, capacity, suppliers,
industry pricing and industry trends, evolving industry standards, domestic and
international regulatory matters, general economic and business conditions, the
strength and financial resources of our competitors, our ability to find and
retain skilled personnel, the political and economic climate in which we conduct
operations and the risk factors described from time to time in our other
documents and reports filed with the Securities and Exchange Commission (the
"Commission"). Additional factors that could cause actual results to differ
materially from the forward-looking statements include, but are not limited to:
1) our ability to successfully develop, manufacture and deliver our magazines on
a timely basis and in the prescribed condition; 2) our ability to compete
effectively with other companies in the same industry; 3) our ability to raise
sufficient capital in order to effectuate our business plan; and 4) our ability
to retain our key executives.




Critical
Accounting Policies and Estimates




The
discussion and analysis of Hao Yu’s financial condition presented in this
section are based upon the unaudited financial statements of Hao Yu, which have
been prepared in accordance with the generally accepted accounting principles in
the United States. During the preparation of the financial statements, Hao Yu
was required to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an ongoing basis, Hao Yu evaluates its estimates and
judgments, including those related to investments, fixed assets, income taxes
and other contingencies. Hao Yu bases its estimates on historical experience and
on various other assumptions that it believes are reasonable under current
conditions. Actual results may differ from these estimates under different
assumptions or conditions.




In
response to the SEC’s Release No. 33-8040, “Cautionary Advice Regarding
Disclosure About Critical Accounting Policy,” Hao Yu identified the most
critical accounting principals upon which its financial status depends. Hao Yu
determined that those critical accounting principles are related to the use of
estimates, inventory valuation, revenue recognition, income tax and impairment
of intangibles and other long-lived assets. Hao Yu presents these accounting
policies in the relevant sections in this management’s discussion and analysis,
including the Recently Issued Accounting Pronouncements discussed
below.




19
 Table of Contents




Revenue
recognition


Revenue
from sales of the Company’s products is recognized when the significant risks
and rewards of ownership have been transferred to the customers at the time when
the products are delivered to and accepted by them, the sales price is fixed or
determinable and collection is reasonably assured.
  Allowance for doubtful
accounts
  The
Company establishes an allowance for doubtful accounts based on management’s
assessment of the collectibility of trade receivables.  A considerable
amount of judgment is required in assessing the amount of the allowance. 
The Company considers the historical level of credit losses and applies
percentages to aged receivables categories.  The Company makes judgments
about the creditworthiness of each customer based on ongoing credit evaluations,
and monitors current economic trends that might impact the level of credit
losses in the future.  If the financial condition of the customers were to
deteriorate, resulting in their inability to make payments, a larger allowance
may be required.
  Based on
the above assessment, during the reporting periods, the management establishes
the general provisioning policy to make allowance equivalent to 5% of gross
amount of trade receivables due from 1 to 2 years, 10% of gross amount of trade
receivables due from 2 to 3 years and 15% of gross amount of trade receivables
due over 3 years.  Additional specific provision is made against trade
receivables to the extent which they are considered to be
doubtful.
  Bad debts
are written off when identified.  The Company does not accrue interest on
trade receivables.
  Historically, losses from uncollectible
accounts have not significantly deviated from the general allowance estimated by
the management and no significant additional bad debts have been written off
directly to theprofit and
loss.  This general
provisioning policy has not changed in the past since establishment and the
management considers that the aforementioned general provisioning policy is
adequate and not too excessive and does not expect to change this established
policy in the near future.
  Inventories
  Inventories
are stated at the lower of cost or market.  Cost is determined on a first
in first out basis and includes all expenditures incurred in bringing the goods
to the point of sale and putting them in a saleable condition.  In case of
manufacturing inventories, cost includes an appropriate share of production
overheads based on normal operating capacity.  In assessing the ultimate
realization of inventories, the management makes judgments as to future demand
requirements compared to current or committed inventory levels.  The
Company estimates the demand requirements based on market conditions, forecasts
prepared by its customers, sales contracts and orders in
hand.
  In
addition, the Company estimates net realizable value based on intended use,
current market value and inventory ageing analyses.  The Company writes
down the inventories for estimated obsolescence or unmarketable inventories
equal to the difference between the cost of inventories and the estimated market
value based upon assumptions about future demand and market
conditions.
  Based on
the above assessment, the Company establishes a general policy to make a 10%
provision for inventories aged over 1 to 2 years, a 25% provision for
inventories aged over 2 to 3 years and a 35% provision for inventories aged over
3 years.
  Property, plant and
equipment
  Property,
plant and equipment are stated at cost less accumulated depreciation.  Cost
represents the purchase price of the asset and other costs incurred to bring the
asset into its existing use.
  Depreciation
is provided on a straight-line basis over the estimated useful lives of
property, plant and equipment at an annual rate of 20% with a residual value of
5%.
  Maintenance or repairs are charged to
expense as incurred.  Upon sale or disposition, the applicable amounts of
asset cost and accumulated depreciation are removed from the accounts and the
net amount less proceeds from disposal is charged or credited to
income.
  Warranty
  The
Company maintains a policy of providing after sales support for certain products
by way of a warranty program. The Company provided 3 years warranties for the
software products to certain customers.  Further, the relevant customers
are allowed to defer the settlement of certain percentage (normally 5%) of the
billed amount for certain period of time (normally three year) after acceptance
of the Company’s products under the warranty program.
  Since the
aforementioned products were well developed, the Company did not encounter any
claims from such customers. However, the Company will periodically assess the
estimation of its warranty liability and recognize the reserve when necessary
based on the actual experience.
  As of
December 31, 2008 and 2007, the Company had warranty and maintenance reserves of
$30,203 and $0, respectively.


20
 Table of Contents




RESULTS
OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007




Revenues




Gross
profits were $1,483,732 and $210,991 for the years ended December 31, 2008 and
2007, respectively, due primarily to sales of information collectors, sensors,
digital meteorological stations, and digital analyzing software. We did not
record any product returns for the year ended December 31, 2008. The increase in
gross revenues by $1,272,741 in 2008 was due primarily to an increase in sales
of our specialized products. We expect sales to increase during 2009 as our
moves toward implementing our business plan, including the increase in research
and development, the increase in marketing budgets.




Income /
Loss




We had a
net gain of $504,890 and $(113,578) for the years ended December 31, 2008 and
2007, respectively. The increase by $618,468 in net loss in 2008 was due
primarily to the increase in sales of $2,910,453, and a subsidy income of
$265,421.




We hope
to incur profits from operations during fiscal year 2009. There can be no
assurance that we will achieve or maintain profitability, or that any revenue
growth will take place in the future.




Expenses




Operating
expenses for the years ended December 31, 2008 and 2007 were $1,005,112 and
$366,546, respectively. The increase in 2008 was due primarily to the increase
in selling and administrative expense increasing to $551,826 and $140,639 for
2008 and 2007 respectively. Also, research and development expenses increased
from $121,346 in 2007 to $247,101 in 2008. The selling expenses in 2008 were
$206,186 compared to $104,561 in 2007. The increase in these operating expenses
can be attributed to the overall increase in business.




Cost of Goods
Sold




Cost of
goods sold included expenses directly related to the manufacturing and selling
our products. Product delivery and direct labor would be examples of cost of
goods sold items. During the year ended December 31, 2008, we had $1,426,721 in
cost of goods sold, or 49% of sales revenue. During the year ended December 31,
2007, we had $845,611 in cost of goods sold, or 80% of sales revenue. The lower
cost of goods sold as a percentage during 2008 was due to the increase in sales
revenue by $1,853,851.




Impact of
Inflation




We
believe that inflation has had a negligible effect on operations during this
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.




Liquidity and Capital
Resources




Cash
flows provided (used in) by operating activities were $(345,178) for the year
ended December 31, 2008, compared to cash flows of $50,039 used in operating
activities for the year ended December 31, 2007. Negative cash flows used in
operations in 2008 were due primarily to a change in trade receivables by
$662,445 and a decrease in trade payables of $581,735. Lesser negative cash
flows from operations in 2007 were due primarily to the net loss of $113,578 and
the increase in trade payables to $616,129 as compared to $(581,735) for
2008.




Cash
flows used in investing activities were $8,304 and $7,471 for the years ended
December 31, 2008 and 2007, respectively. This increase in cash flows used in
investing is attributable to payments to acquire property, plant, and
equipment.




Cash
flows provided by financing activities were $272,679 and $123,799 for the years
ended December 31, 2008 and 2007, respectively. Cash flows from financing
activities in 2008 due primarily to loan proceeds of $439,734 partially offset
by the payments of $167,055 to the advance from the director. Cash flows from
financing activities in 2007 due primarily to advances from a director in the
amount of $123,799.




21
 Table of Contents




Overall,
we have funded our cash needs from inception through December 31, 2008 with a
series of debt and equity transactions, primarily with related parties. If we
are unable to receive additional cash from our related parties, we may need to
rely on financing from outside sources through debt or equity transactions. Our
related parties are under no legal obligation to provide us with capital
infusions. Failure to obtain such financing could have a material adverse effect
on operations and financial condition.




We had
cash of $87,254 on hand and a working capital of $793,225 as of December 31,
2008. Currently, we have enough cash to fund our operations for about six
months. This is based on current cash flows from financing activities and
projected revenues. Also, if the projected revenues fall short of needed capital
we may not be able to sustain our capital needs. We will then need to obtain
additional capital through equity or debt financing to sustain operations for an
additional year. Our current level of operations would require capital of
approximately $500,000 to sustain operations through year 2009 and approximately
$700,000 per year thereafter. Modifications to our business plans may require
additional capital for us to operate. For example, if we are unable to raise
additional capital in the future we may need to curtail our number of product
offers or limit our marketing efforts to the most profitable geographical areas.
This may result in lower revenues and market share for us. In addition, there
can be no assurance that additional capital will be available to us when needed
or available on terms favorable to us.




Item 7A. Quantitative and Qualitative Disclosures
About Market Risk





Quantitative and Qualitative
Disclosures about Market Risk




We do not
use derivative financial instruments in our investment portfolio and has no
foreign exchange contracts. Our financial instruments consist of cash and cash
equivalents, trade accounts receivable, accounts payable and long-term
obligations. We consider investments in highly liquid instruments purchased with
a remaining maturity of 90 days or less at the date of purchase to be cash
equivalents. However, in order to manage the foreign exchange risks, we may
engage in hedging activities to manage our financial exposure related to
currency exchange fluctuation. In these hedging activities, we might use
fixed-price, forward, futures, financial swaps and option contracts traded in
the over-the-counter markets or on exchanges, as well as long-term structured
transactions when feasible.




Foreign
Exchange Rates




All of
our sales are denominated in Renminbi (“RMB”). As a result, changes in the
relative values of U.S. Dollars and RMB affect our reported levels of revenues
and profitability as the results are translated into U.S. Dollars for reporting
purposes. Fluctuations in exchange rates between the U.S. dollar and RMB
affect our gross and net profit margins and could result in foreign exchange and
operating losses.




Our
results of operations and cash flow are translated at average exchange rates
during the period, and assets and liabilities are translated at the unified
exchange rate as quoted by the People’s Bank of China at the end of the period.
Translation adjustments resulting from this process are included in accumulated
other comprehensive income in our statement of shareholders’ equity. We recorded
net foreign currency gains of $31,616 and $21,879 in fiscal 2008 and 2007. We
have not used any forward contracts, currency options or borrowings to hedge our
exposure to foreign currency exchange risk. We cannot predict the impact of
future exchange rate fluctuations on our results of operations and may incur net
foreign currency losses in the future.




Our
financial statements are expressed in U.S. dollars but the functional
currency of our operating subsidiary is RMB. The value of your investment in our
stock will be affected by the foreign exchange rate between U.S. dollars
and RMB. To the extent we hold assets denominated in U.S. dollars,
including the net proceeds to us from this offering, any appreciation of the RMB
against the U.S. dollar could result in a change to our statement of
operations and a reduction in the value of our U.S. dollar denominated
assets. On the other hand, a decline in the value of RMB against the
U.S. dollar could reduce the U.S. dollar equivalent amounts of our
financial results, the value of your investment in our company and the dividends
we may pay in the future, if any, all of which may have a material adverse
effect on the price of our stock.




The
exchange rates used to translate amounts in RMB into U.S. Dollars for the
purposes of preparing the consolidated financial statements or otherwise stated
in this MD&A were as follows:




2008
              
              2007Balance
      sheet items, except for the registered and paid-up capital as of December
      31, 2008 and 2007
              USD
      0.147:RMB1
              
              USD
      0.137:RMB1Amounts
      included in the statement of operations, statement of changes in
      stockholders’ equity and statement of cash flows for the year and December
      31, 2008 and the period August 31, 2007 (inception) to December 31,
      2007
              USD
      0.144:RMB1
              
              USD
      0.135:RMB1




22
 Table of Contents




Item
8. Financial Statements and Supplementary Data





Financial
Summary Information




Because
this is only a financial summary, it does not contain all the financial
information that may be important to you. It should be read in conjunction with
the consolidated financial statements and related notes presented in this
section.




Audited
Financial Summary Information for the Years Ended December 31, 2008 and
2007




Statements
      of Operations
                                    
                                    For
      the year ended December 31, 2008
                                    
                                    
                                    For
      the year ended December 31, 2007Revenues
                                    
                                    $
                                    2,910,453
                                    
                                    
                                    $
                                    1,056,602Cost
      of Sales
                                    
                                    $
                                    (1,426,721)
                                    
                                    
                                    $
                                    (845,611)Gross
      profit
                                    
                                    $
                                    1,483,732
                                    
                                    
                                    $
                                    210,991Operating
      expenses
                                    
                                    $
                                    1,005,112
                                    
                                    
                                    $
                                    366,546(Loss)
      from operations
                                    
                                    $
                                    478,619
                                    
                                    
                                    $
                                    (155,555)Interest
      expense
                                    
                                    $
                                    (31,793)
                                    
                                    
                                    $
                                    0Net
      income (loss)
                                    
                                    $
                                    504,890
                                    
                                    
                                    $
                                    (113,578)Net earning (loss)
      per share - basic
                                    
                                    $
                                    0.41
                                    
                                    
                                    $
                                    (0.50
                                    )Net
      earning per share - diluted
                                    
                                    $
                                    0.02
                                    
                                    
                                    
                                    N/A




Balance
      Sheet
                            
                            As
      of December 31, 2008
                            
                            
                            As
      of December 31, 2007Cash
                            
                            $
                            87,254
                            
                            
                            $
                            136,441Total
      current assets
                            
                            $
                            1,698,557
                            
                            
                            $
                            1,186,549Other
      assets
                            
                            $
                            51,135
                            
                            
                            $
                            -Total
      Assets
                            
                            $
                            1,787,779
                            
                            
                            $
                            1,263,162Current
      liabilities
                            
                            $
                            905,332
                            
                            
                            $
                            968,588Long
      term liabilities
                            
                            $
                            30,203
                            
                            
                            $
                            -Stockholders’
      equity
                            
                            $
                            852,243
                            
                            
                            $
                            294,574Total
      liabilities and stockholders’ equity
                            
                            $
                            1,787,779
                            
                            
                            $
                            1,263,162




23
 Table of Contents




INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 PageReport
      of Independent Registered Public Accounting Firm
                
                24Consolidated
      Balance Sheets
                
                25Consolidated
      Statements of Operations And Comprehensive Loss
                
                26Consolidated
      Statements of Cash Flows
                
                27Consolidated
      Statements of Stockholders’ Equity
                
                28Notes
      to Consolidated Financial Statements
                
                29-39





24
 Table of Contents




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and
 Stockholders
of China Education Technology Inc. and Subsidiaries
 Guangzhou,
P. R. China
 
 We have
audited the accompanying consolidated balance sheet of China Education
Technology Inc. and Subsidiaries (formerly Envirosafe Corporation and
Subsidiaries)  (the “Company”) as of December 31, 2008 and related
consolidated statements of operations and comprehensive income, stockholders’
equity, and cash flows for the year ended December 31, 2008. These consolidated
financial statements are the responsibility of the company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The financial statements as of December 31, 2007
and for the year ended December 31, 2007 were audited by other auditors whose
reports dated April 10, 2008 and June 30, 2008 expressed an unqualified opinions
on those statements.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of China Education Technology
Inc. and Subsidiaries (formerly Envirosafe Corporation and Subsidiaries) (a
Delaware corporation) as of December 31, 2008 and the results of its operations
and its cash flows for the year ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of
America.
 
  /s/Lake
& Associates CPA’s LLC
 Lake
& Associates, CPA’s LLC
 Boca
Raton Florida
 April 10,
2009


20283
State Road 7 Suite #300
 Boca Raton Florida 33498
 561-982-9874
 Fax
561-982-7985




25
 Table of Contents




CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESFORMERLY
      ENVIROSAFE CORPORATIONCONSOLIDATED
      BALANCE SHEETSAS
      OF DECEMBER 31, 2008 AND 2007As
      of December 31,2008
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2007ASSETSCurrent assets:Cash
      and cash equivalents
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        87,254
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        136,441Trade
      receivables
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,224,879
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        550,046Other
      receivables and prepayments
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        132,978
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        84,540Inventories
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        253,446
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        415,522Total
      current assets
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,698,557
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,186,549Property, plant and equipment,
      net
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        38,087
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        76,613Non-current assets:Warranty
      receivable
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        15,633
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Others
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        35,502
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Total
      non-current assests
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        51,135
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Total
      assets
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1,787,779
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1,263,162LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent liabilities:Notes
      payable - short term
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        439,734
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        -Trade
      payables
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        106,212
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        641,689Other
      payables and accrued expenses
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        112,966
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        132,788Amount
      due to a director
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        35,663
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        189,087Income
      tax payable
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        210,757
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        5,024Total
      current liabilities
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        905,332
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        968,588Long-term liabilities:Warranty
      and maintenance reserves
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        30,203
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -STOCKHOLDERS’
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized,
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        135
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -1,350,000
      and 0 shares issued and outstanding as of December 31, 2008 and
      2007Common
      stock, $0.0001 par value, 50,000,000 shares authorized,
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        277
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        272,767,798
      and 267,672 shares issued and outstanding as of December 31, 2008 and
      2007Additional
      paid in captial
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        122,790
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        120,774Statutory
      and other reserves
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        69,565
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        50,803Accumulated
      other comprehensive income
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        76,908
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        45,292Retained
      earnings
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        582,568
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        77,678Total
      stockholders’ equity
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        852,243
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        294,574Total
      liabilities and stockholders’ equity
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,787,779
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,263,162See
      accompanying notes to consolidated financial
  statements.




26
 Table of Contents


CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESFORMERLY
      ENVIROSAFE CORPORATIONCONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007Years
      ended December 31,2008
                                                                                                                                
                                                                                                                                
                                                                                                                                2007Sales
                                                                                                                                
                                                                                                                                $
                                                                                                                                2,910,453
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                1,056,602Cost
      of goods sold
                                                                                                                                
                                                                                                                                
                                                                                                                                (1,426,721
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (845,611
                                                                                                                                )Gross
      profit
                                                                                                                                
                                                                                                                                
                                                                                                                                1,483,732
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                210,991Operating
      expensesGeneral
      and administrative expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                551,826
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                140,639Research
      and development expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                247,101
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                121,346Selling
      expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                206,186
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                104,561Total
      operating expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                1,005,112
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                366,546Net
      operating Income (loss)
                                                                                                                                
                                                                                                                                
                                                                                                                                478,619
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (155,555
                                                                                                                                )Other
      incomeSubsidy
      income from the PRC authorities for general operations
                                                                                                                                
                                                                                                                                
                                                                                                                                265,421
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                39,847Interest
      income
                                                                                                                                
                                                                                                                                
                                                                                                                                575
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                130Interest
      (expenses)
                                                                                                                                
                                                                                                                                
                                                                                                                                (31,793
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                -Other
      income (expenses)
                                                                                                                                
                                                                                                                                
                                                                                                                                (366
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                6,823Total
      other income
                                                                                                                                
                                                                                                                                
                                                                                                                                233,838
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                46,800Income
      before income taxes
                                                                                                                                
                                                                                                                                
                                                                                                                                712,457
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (108,755
                                                                                                                                )Income
      taxes
                                                                                                                                
                                                                                                                                
                                                                                                                                (207,567
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (4,823
                                                                                                                                )Net
      Income (loss)
                                                                                                                                
                                                                                                                                $
                                                                                                                                504,890
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                (113,578
                                                                                                                                )Other
      comprehensive incomeForeign
      currency translation adjustment
                                                                                                                                
                                                                                                                                
                                                                                                                                31,616
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                21,879Total
      comprehensive income (loss)
                                                                                                                                
                                                                                                                                $
                                                                                                                                536,506
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                (91,699
                                                                                                                                )Earnings
      (loss) per shareBasic
                                                                                                                                
                                                                                                                                $
                                                                                                                                0.41
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                (0.50
                                                                                                                                )Diluted
                                                                                                                                
                                                                                                                                $
                                                                                                                                0.02
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                N/AWeighted
      average number of shares outstandingBasic
                                                                                                                                
                                                                                                                                
                                                                                                                                1,309,360
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                182,869Diluted
                                                                                                                                
                                                                                                                                
                                                                                                                                29,434,360
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                N/ASee
      accompanying notes to consolidated financial
  statements.


27
 Table of Contents




CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESFORMERLY
      ENVIROSAFE CORPORATIONCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007Year
      ended December 312008
                                                                                                                                
                                                                                                                                
                                                                                                                                2007Cash
      flows from operating activitiesNet
      income (loss)
                                                                                                                                
                                                                                                                                $
                                                                                                                                504,890
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                (113,578
                                                                                                                                )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                                                                                                                                
                                                                                                                                
                                                                                                                                22,246
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                28,884Gain
      on disposal of fixed assets
                                                                                                                                
                                                                                                                                
                                                                                                                                39,872
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -Provision
      for doubtful debts
                                                                                                                                
                                                                                                                                
                                                                                                                                27,264
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                28,094Provision
      for obsolete inventories
                                                                                                                                
                                                                                                                                
                                                                                                                                -
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                24,510Changes
      in operating assets and liabilities:Trade
      receivables
                                                                                                                                
                                                                                                                                
                                                                                                                                (662,445
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (464,355
                                                                                                                                )Other
      receivables and prepayments
                                                                                                                                
                                                                                                                                
                                                                                                                                (42,344
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (62,824
                                                                                                                                )Inventories
                                                                                                                                
                                                                                                                                
                                                                                                                                192,030
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                (117,300
                                                                                                                                )Warranty
      receivable
                                                                                                                                
                                                                                                                                
                                                                                                                                (15,633
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                -Other
      noncurrent assets
                                                                                                                                
                                                                                                                                
                                                                                                                                (35,502
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                -Warranty
      and maintenance reserves
                                                                                                                                
                                                                                                                                
                                                                                                                                30,203
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -Trade
      payables
                                                                                                                                
                                                                                                                                
                                                                                                                                (581,735
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                616,129Other
      payables and accrued expenses
                                                                                                                                
                                                                                                                                
                                                                                                                                (28,453
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                5,577Income
      tax payable
                                                                                                                                
                                                                                                                                
                                                                                                                                204,429
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                4,824Net
      cash flows used in operating activities
                                                                                                                                
                                                                                                                                
                                                                                                                                (345,178
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (50,039
                                                                                                                                )Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                                                                                                                                
                                                                                                                                
                                                                                                                                (8,304
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (7,471
                                                                                                                                )Net
      cash flows used in investing activities
                                                                                                                                
                                                                                                                                
                                                                                                                                (8,304
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                (7,471
                                                                                                                                )Cash
      flows from financing activitiesProceeds
      from short-term loan
                                                                                                                                
                                                                                                                                
                                                                                                                                439,734
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                -Advances
      from a director
                                                                                                                                
                                                                                                                                
                                                                                                                                (167,055
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                123,799Net
      cash flows provided by financing activities
                                                                                                                                
                                                                                                                                
                                                                                                                                272,679
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                123,799Effect
      of foreign currency translation on cash and cash
    equivalents
                                                                                                                                
                                                                                                                                
                                                                                                                                31,616
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                7,087Net
      increase in cash and cash equivalents
                                                                                                                                
                                                                                                                                
                                                                                                                                (49,187
                                                                                                                                )
                                                                                                                                
                                                                                                                                
                                                                                                                                73,376Cash
      and cash equivalents - beginning of year
                                                                                                                                
                                                                                                                                
                                                                                                                                136,441
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                63,065Cash
      and cash equivalents - end of year
                                                                                                                                
                                                                                                                                
                                                                                                                                87,254
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                136,441Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
                                                                                                                                
                                                                                                                                $
                                                                                                                                31,793
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                -Income
      taxes
                                                                                                                                
                                                                                                                                $
                                                                                                                                4,496
                                                                                                                                
                                                                                                                                
                                                                                                                                $
                                                                                                                                -See
      accompanying notes to consolidated financial
  statements.


28
 Table of Contents




CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESFORMERLY
      ENVIROSAFE CORPORATIONCONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007Preferred
      Stock
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        Common
      stockAccumulatedAdditional
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        Statutory
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        other
      comprehensive
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        RetainedNo.
      of shares
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        Amount
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        No.
      of shares
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        Amount
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        paid-in
      capital
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        reserves
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        income
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        earnings
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        TotalBalance
      as of January 1, 2007
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        120,801
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        48,534
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        23,413
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        193,525
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        386,273Foreign
      currency adjustment
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        21,879
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        21,879Appropriation
      to
                                                                                                                                                                                                                          reserves
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        2,269
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        (2,269
                                                                                                                                                                                                                        )
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -Recapitalization
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        267,672
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        (120,774
                                                                                                                                                                                                                        )
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        120,774
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -Net
      loss
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        (113,578
                                                                                                                                                                                                                        )
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        (113,578
                                                                                                                                                                                                                        )Balance
      as of December 31, 2007
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        267,672
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        27
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        120,774
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        50,803
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        45,292
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        77,678
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        294,574Shares
      issued to complete reverse acquisition
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        1,350,000
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        135
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        2,500,000
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        250
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        2,016
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        2,401Shares
      issued for rounding due to reverse split
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        126
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        -Statutory
      reserves
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        18,762
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        18,762Foreign
      currency adjustment
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        31,616
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        31,616Net
      Income
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        504,890
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        504,890Balance
      as of December 31, 2008
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        1,350,000
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        135
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        2,767,798
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        277
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        122,790
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        69,565
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        76,908
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        582,568
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        
                                                                                                                                                                                                                        $
                                                                                                                                                                                                                        852,243


See
accompanying notes to consolidated financial statements.




29
 Table of Contents


CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 
  1.
                  Corporate
      information
  Envirosafe
Corporation (the “Company”) was incorporated in the state of Delaware in 1996.
Its shares were traded on the OTC Bulletin Board of the United States of
America.
  On
October 6, 2008, the Company redomiciled from Delaware to
Nevada.  Additionally, on October 9, 2008, the Company’s board of
directors authorized and approved a reverse stock split (the “Reverse Split”) of
the Company’s common stock on the basis of one share for eight shares currently
authorized or issued and outstanding. Accordingly, the number of authorized
shares of common stock decreased from 400,000,000 shares to 50,000,000 shares
and the number of issued and outstanding shares decreased from 22,141,375 shares
to 2,767,672 shares. The Reverse Split was effective on October 31, 2008. The
Company has retroactively adjusted all the share information to reflect the
reverse stock split in the audited condensed consolidated financial
statements.
  The
Company is an investment holding company, whose only asset is 100% equity
interest in ADDE Education Hldgs Limited (“ADDE”). ADDE is a corporation
organized and existing under the laws of Hong Kong Special Administrative Region
of People’s Republic of China (the “PRC”) and is an investment holding company
whose only asset is 100% equity interest in Guangzhou Haoyu Educational
Technology Company Limited (“Haoyu”).  Haoyu was established in the
PRC on March 27, 2001 as a domestic enterprise.
  On March
1, 2008, ADDE entered into an agreement with the then sole stockholder of Haoyu
to acquire the stockholder’s entire interest in Haoyu (the “Transfer”) at a
consideration of Renminbi (“RMB”) 1 million.  Haoyu was wholly owned
by the spouse of ADDE’s sole stockholder before the consummation of the
Transfer.  The Transfer was subsequently approved by the government
bureau in May 2008.  Haoyu re-registered as a wholly foreign owned
enterprise and obtained its business license in August 2008.
  On March
4, 2008, a Plan of Exchange (the “Exchange”) was executed between and among the
Company, ADDE, the majority stockholder of the Company and the stockholder of
ADDE.  The Exchange was consummated on July 31, 2008, pursuant to
which 2,500,000 (after taking into account the Reverse Split) shares of the
Company’s common stock and 1,350,000 shares of the Company’s preferred stock
were issued to the stockholder of ADDE.  Thereafter, ADDE and Haoyu
became the Company’s wholly-owned subsidiaries and the former stockholder of
ADDE owned 93.2% of the Company’s issued and outstanding shares.
  The
Exchange and the Transfer have been respectively accounted for as reverse
acquisition and recapitalization of the Company and ADDE whereby ADDE is deemed
to be the accounting acquirer (legal acquiree) and the Company to be the
accounting acquiree (legal acquirer) under the Exchange, and Haoyu is deemed to
be the accounting acquirer (legal acquiree) and ADDE to be the accounting
acquiree (legal acquirer) under the Transfer. The audited condensed consolidated
financial statements are in substance those of Haoyu, with the assets and
liabilities, and revenues and expenses, of the Company and ADDE being included
effective from the respective consummation dates of the Exchange and the
Transfer.
  On April
3, 2008, the Company changed its corporate name to China Education Technology
Inc. to more accurately reflect its business after the Exchange transaction with
ADDE and Hao Yu.
   30
 Table of Contents
  CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 2.
                Description
      of business
  The
Company’s primary business operations are conducted through Haoyu, which is
specialized in the research and development of educational products and
technology applications.  Haoyu is located in the Guangzhou Province
of the PRC with three manufacture bases for research and development
purpose.
 The
educational software developed by Haoyu is in conformity to the new educational
purpose.  The software uses the advanced technology of data
collection, sensor and wireless control and video image with handy appearance,
which can virtually upload the live experiment and analyze the information
collected.  Teachers and students can have the experiments done
automatically instead of the traditional method by hand.
  Haoyu
also engages in the trading of hardware and computer products such as monitors
and computer notebooks.
 
 
 3. Summary
of significant accounting policies
  Basis of
presentation
  The
accompanying audited condensed consolidated financial statements of the Company
and its subsidiaries have been prepared in accordance with accounting principles
generally accepted in the United States of America.
  Principles of
consolidation
  The
consolidated financial statements include the financial statements of the
Company and its subsidiaries.  All significant inter-company accounts
and transactions have been eliminated in consolidation.
  Use of
estimates
  In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting periods.  These accounts and estimates include, but are not
limited to, the valuation of trade receivables, other receivables, inventories,
warranty reserve, deferred income taxes and the estimation on useful lives of
property, plant and equipment.  Actual results could differ from these
estimates.
  31
 Table of Contents
  CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 3. Summary
of significant accounting policies (Cont’d)
  Concentrations of credit
risk
 Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and cash equivalents, and trade and
other receivables.  As of December 31, 2008 and 2007, substantially
all of the Company’s cash and cash equivalents were held by major financial
institutions located in the PRC, which management believes are of high credit
quality.  With respect to trade receivables, the Company extends
credit based on an evaluation of the customer’s financial
condition.  The Company generally does not require collateral for
trade and other receivables and maintains an allowance for doubtful accounts of
trade and other receivables.  The Company had four customers that
individually comprised 10% or more of net revenue for the year ended December
31, 2008:
 
 Customer
A                                                                                     $767,276
(21%)
 Customer
C                                                                                     $598,930
(16%)
 Customer
B                                                                                     $508,395
(14%)
 Customer
D                                                                                     $399,169
(11%)
  Comprehensive income
(loss)
  SFAS
No. 130, “Reporting Comprehensive
Income”, establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income as
defined includes all changes in equity during the year from non-owner sources.
Accumulated comprehensive income, as presented in the accompanying consolidated
statement of stockholders’ equity consists of changes in unrealized gains and
losses on foreign currency translation.  This comprehensive income is
not included in the computation of income tax expense or benefit.
  Income
taxes
  The
Company accounts for income tax using SFAS No. 109 “Accounting for Income
Taxes”, which requires the asset and liability approach for financial
accounting and reporting for income taxes. Under this approach, deferred income
taxes are provided for the estimated future tax effects attributable to
temporary differences between financial statement carrying amounts of assets and
liabilities and their respective tax bases, and for the expected future tax
benefits from loss carry-forwards and provisions, if any. Deferred tax assets
and liabilities are measured using the enacted tax rates expected in the years
of recovery or reversal and the effect from a change in tax rates is recognized
in the consolidated statement of operations and comprehensive income in the
period of enactment. A valuation allowance is provided to reduce the amount of
deferred tax assets if it is considered more likely than not that some portion
of, or all of the deferred tax assets will not be realized.
  Segment
reporting
  SFAS No.
131 “Disclosures about Segments of an
Enterprise and Related Information” establishes standards for reporting
information about operating segments on a basis consistent with the Company’s
internal organization structure as well as information about geographical areas,
business segments and major customers in financial statements. The Company
operates in one reportable segment.
  Fair value of financial
instruments
  The
Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments”.  The estimated
fair value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies.
  32
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 3. Summary
of significant accounting policies (Cont’d)
  The
estimates presented herein are not necessarily indicative of amounts that the
Company could realize in a current market exchange.
 The
Company’s financial instruments primarily include cash and cash equivalents,
accounts receivable, advance to suppliers, inventories, accounts payable, other
payables and accrued liabilities.
  As of the
balance sheet date, the estimated fair values of financial instruments were not
materially different from their carrying values as presented due to short
maturities of these instruments.
  Allowance for doubtful
accounts
  The
Company establishes an allowance for doubtful accounts based on management’s
assessment of the collectibility of trade receivables.  A considerable
amount of judgment is required in assessing the amount of the
allowance.  The Company considers the historical level of credit
losses and applies percentages to aged receivables categories.  The
Company makes judgments about the creditworthiness of each customer based on
ongoing credit evaluations, and monitors current economic trends that might
impact the level of credit losses in the future.  If the financial
condition of the customers were to deteriorate, resulting in their inability to
make payments, a larger allowance may be required.
  Based on
the above assessment, during the reporting periods, the management establishes
the general provisioning policy to make allowance equivalent to 5% of gross
amount of trade receivables due from 1 to 2 years, 10% of gross amount of trade
receivables due from 2 to 3 years and 15% of gross amount of trade receivables
due over 3 years.  Additional specific provision is made against trade
receivables to the extent which they are considered to be doubtful.
  Bad debts
are written off when identified.  The Company does not accrue interest
on trade receivables.
  Historically,
losses from uncollectible accounts have not significantly deviated from the
general allowance estimated by the management and no significant additional bad
debts have been written off directly to the profit and loss.  This
general provisioning policy has not changed in the past since establishment and
the management considers that the aforementioned general provisioning policy is
adequate and not too excessive and does not expect to change this established
policy in the near future.
  Cash and cash
equivalents
  Cash and
cash equivalents are carried at cost and represent cash on hand, demand deposits
placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase
date of such investments.
  33
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 3. Summary
of significant accounting policies (Cont’d)
  Inventories
 Inventories
are stated at the lower of cost or market.  Cost is determined on a
first in first out basis and includes all expenditures incurred in bringing the
goods to the point of sale and putting them in a saleable
condition.  In case of manufacturing inventories, cost includes an
appropriate share of production overheads based on normal operating
capacity.  In assessing the ultimate realization of inventories, the
management makes judgments as to future demand requirements compared to current
or committed inventory levels.  The Company estimates the demand
requirements based on market conditions, forecasts prepared by its customers,
sales contracts and orders in hand.
  In
addition, the Company estimates net realizable value based on intended use,
current market value and inventory ageing analyses.  The Company
writes down the inventories for estimated obsolescence or unmarketable
inventories equal to the difference between the cost of inventories and the
estimated market value based upon assumptions about future demand and market
conditions.
  Based on
the above assessment, the Company establishes a general policy to make a 10%
provision for inventories aged over 1 to 2 years, a 25% provision for
inventories aged over 2 to 3 years and a 35% provision for inventories aged over
3 years.
  Property, plant and
equipment
  Property,
plant and equipment are stated at cost less accumulated
depreciation.  Cost represents the purchase price of the asset and
other costs incurred to bring the asset into its existing use.
  Depreciation
is provided on a straight-line basis over the estimated useful lives of
property, plant and equipment at an annual rate of 20% with a residual value of
5%.
  Maintenance
or repairs are charged to expense as incurred.  Upon sale or
disposition, the applicable amounts of asset cost and accumulated depreciation
are removed from the accounts and the net amount less proceeds from disposal is
charged or credited to income.
  Impairment of long-lived
assets
  In
accordance with SFAS No.144, “Accounting for the Impairment or Disposal of
Long-lived Assets”, the Company assesses long-lived assets, such as property and
equipment and intangible assets subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset group may not be fully recoverable. Recoverability
of asset groups to be held and used in measured by a comparison of the carrying
amount of an asset group to estimated undiscounted future cash flows expected to
be generated by the asset group.  If the carrying amount exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of an asset group exceeds the fair value of the asset
group. The Company evaluated its long-lived assets and no impairment charges
were recorded for any of the periods presented
  Retirement plan
costs
  Contributions
to retirement schemes (which are defined contribution plans) are charged to
general and administrative expenses in the consolidated statements of income and
comprehensive income as and when the related employee service is
provided.
  34
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 3. Summary
of significant accounting policies (Cont’d)
  Revenue
recognition
 Revenue
from sales of the Company’s products is recognized when the significant risks
and rewards of ownership have been transferred to the customers at the time when
the products are delivered to and accepted by them, the sales price is fixed or
determinable and collection is reasonably assured.
 
 Government
grant
  Subsidy
income for both reporting periods represents refund of value-added tax from
State Administration of Taxation of the PRC for the sales of software products
and is recognized in the statements of operations and comprehensive income
(loss) when the income is received.
  Warranty
  The
Company maintains a policy of providing after sales support for certain products
by way of a warranty program. The Company provided 3 years warranties for the
software products to certain customers.  Further, the relevant
customers are allowed to defer the settlement of certain percentage (normally
5%) of the billed amount for certain period of time (normally three year) after
acceptance of the Company’s products under the warranty program.
  Since the
aforementioned products were well developed, the Company did not encounter any
claims from such customers. However, the Company will periodically assess the
estimation of its warranty liability and recognize the reserve when necessary
based on the actual experience.
  As of
December 31, 2008 and 2007, the Company had warranty and maintenance reserves of
$30,203 and $0, respectively.
  Foreign currencies
translation
  The
reporting currency of the Company is the United States dollar (“U.S.
dollars”).  Transactions denominated in currencies other than U.S.
dollar are calculated at the average rate for the period.  Monetary
assets and liabilities denominated in currencies other than U.S. dollar are
translated into U.S. dollar at the rates of exchange ruling at the balance sheet
date.  The resulting exchange differences are recorded in the other
expenses in the consolidated statement of operations and comprehensive
income.
  The
Company’s subsidiary maintains its books and records in its local currency, the
Renminbi Yuan (“RMB”), which is functional currency as being the primary
currency of the economic environment in which its operations are
conducted.  In general, for consolidation purposes, the Company
translates the subsidiary’s assets and liabilities into U.S. dollars using the
applicable exchange rates prevailing at the balance sheet date, and the
statement of operations is translated at average exchange rates during the
reporting period.  Adjustments resulting from the translation of the
subsidiary’s financial statements are recorded as accumulated other
comprehensive income.
  35
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 3. Summary
of significant accounting policies (Cont’d)
  Recently issued accounting
pronouncements
 In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities"("SFAS No. 161"). SFAS No. 161
requires companies with derivative instruments to disclose information that
should enable financial-statement users to understand how and why a company uses
derivative instruments, how derivative instruments and related hedged items are
accounted for under FASB Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities" and how derivative instruments and
related hedged items affect a company's financial position, financial
performance and cash flows. SFAS No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.
The adoption of this statement is not expected to have a material effect on the
Company's future financial position or results of operations.
  In May,
2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162,
"The Hierarchy of Generally
Accepted Accounting Principles," ("SFAS No. 162"). SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
SFAS No. 162 will be effective 60 days following the SEC's approval of the
Public Company Accounting Oversight Board's amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles." The FASB has
stated that it does not expect SFAS No. 162 will result in a change in current
practice. The application
of SFAS No. 162 will have no effect on the Company's financial position, results
of operations or cash flows.
  Also in
May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS
No. 163"). SFAS No. 163 interprets Statement 60 and amends existing accounting
pronouncements to clarify their application to the financial guarantee insurance
contracts included within the scope of that Statement.
  SFAS No.
163 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years. As
such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2009. The Company is currently evaluating the
impact of SFAS No. 163 on its financial statements but does not expect it to
have an effect on the Company's financial position, results of operations or
cash flows.
  In May
2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt
Instruments that may be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to convertibledebt securities that, upon
conversion, may be settled by the issuer fully or partially in cash. FSP APB
14-1 specifies that issuers of such instruments should separately account for
the liability and equity components in a manner that will reflect the entity's
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements issued
for fiscal years after December 15, 2008, and must be applied on a
retrospective basis. Early adoption is not permitted. The Company is assessing
the potential impact of this FSP on theconvertibledebt issuances.
  In June
2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the earnings
allocation in computing earnings per share under the two-class method as
described in
  36
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 
  3. Summary
of significant accounting policies (Cont’d)
  SFAS No.
128, Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings-per-share pursuant to the
two-class method. FSP EITF 03-6-1 is effective for financial statements issued
for fiscal years beginning after December 15, 2008 and all prior-period earnings
per share data presented shall be adjusted retrospectively. Earlyapplication
is not permitted. The Company is assessing the potential impact of this FSP on
the earnings per share calculation.
 In June
2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or an
Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF 07-5"). EITF 07-5
provides that an entity should use a two-step approach to evaluate whether an
equity-linked financial instrument (or embedded feature) is indexed to its own
stock, including evaluating the instrument's contingent exercise and settlement
provisions. EITF 07-5 is effective for financial statements issued for fiscal
years beginning after December 15, 2008. Early application is not permitted. The
Company is assessing the potential impact of this EITF 07-5 on the financial
condition and results of operations.
  In
October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a
Financial Asset in a Market That Is Not Active” (FSP 157-3), which clarifies the
application of SFAS 157 when the market for a financial asset is inactive.
Specifically, FSP 157-3 clarifies how (1) management’s internal assumptions
should be considered in measuring fair value when observable data are not
present, (2) observable market information from an inactive market should be
taken into account, and (3) the use of broker quotes or pricing services should
be considered in assessing the relevance of observable and unobservable data to
measure fair value. The Company adopted the provisions of FSP 157-3, which did
not impact the Company’s financial position or results of
operations.
  In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, “Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities” (“FSP FAS 140-4 and FIN 46(R)-8”). FSP FAS 140-4
and FIN 46(R)-8 amends FAS 140 and FIN
46(R) to require additional disclosures regarding transfers of financial assets
and interest in
variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for
interim or annual reporting periods ending after December 15, 2008. FSP FAS
140-4 and FIN 46(R)-8 did not have any impact on the
Company's financial statements.
  In
January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the Impairment
Guidance of EITF Issue No. 99-20, and EITF Issue No. 99-20, Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets”. FSP EITF 99-20-1 changes the impairment model
included within EITF 99-20 to be more consistent with the impairment model of
SFAS 115. FSP EITF 99-20-1 achieves this by amending the impairment model in
EITF 99-20 to remove its exclusive reliance on “market participant” estimates
of future cash flows used in determining fair value. Changing the cash flows
used to analyze other-than-temporary impairment from the “market participant”
view to a holder’s estimate of whether there has been a “probable” adverse
change in estimated cash flows allows companies to apply reasonable judgment in
assessing whether an other-than-temporary impairment has occurred. The adoption
of FSP EITF 99-20-1, which is effective for annual reporting periods
ending.
 
 4.
                        Inventories
                        
                        December
      31,
                        
                        
                        December
      31,2008
                        
                        
                        2007(Audited)
                        
                        
                        (Audited)Raw
      materials
                        
                        $
                        13,330
                        
                        
                        $
                        20,041Finished
      goods
                        
                        
                        240,116
                        
                        
                        
                        436,914253,446
                        
                        
                        
                        456,955Provision
      for obsolete inventories
                        
                        
                        -
                        
                        
                        
                        (41,433
                        )$
                        253,446
                        
                        
                        $
                        415,522
 
 Provision
for obsolete inventories charged to the statements of operations for the years
ended December 31, 2008 and 2007 amounted to $0 and $41,433,
respectively.
  37
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 5. Amount
due to a director
  The
amount is interest-free, unsecured and repayable when the Company is in a
position to do so.
  6. Secured
bank loan
  The bank
loan is denominated in RMB and repayable within one year.  It carries
interest at 110% of the benchmark rate of the People’s Bank of China (the
“PBOC”) for six-month to one-year short-term loans per annum.
  The bank
loan is secured by a guarantee put up by an independent party and a deposit of
$21,881 (RMB 150,000) placed with the bank in the name of the guarantor, with no
other covenants.  The guarantor received $12,859 from the Company for
issuing the guarantee.  The Company had also paid the required deposit
to the bank on behalf of the guarantor.  The receivable due from the
guarantor was included in other receivables and prepayments under current assets
as of December 31, 2008.
  7.
Commitments and contingencies
  The
Company had no commitments or contingencies as of December 31, 2008 and
2007.
  8.
Common stock
  On August
1, 2008, the Company issued 2,500,000 shares of its common stock to the sole
stockholder of ADDE to consummate the Exchange (see Note 1).
  The
Company’s issued and outstanding number of common stock immediately prior to the
Exchange was 267,672 (after taking into account the Reverse Split) shares, which
had been accounted for at its net book value at the time of the
Exchange.
  9.
Preferred stock
  On August
1, 2008, the Company issued 1,350,000 shares of preferred stock to the sole
stockholder of ADDE to effect the Exchange (Note 1).
  The
preferred stock, at the option of the holder, is convertible at any time after
one year from the date of issuance into 50 shares of fully paid and
non-assessable shares of common stock without further
consideration.  The holders of preferred stock are entitled to vote
together with the common stock on all matters presented to a vote on an as
converted basis, which is each preferred shares convertible into 50 shares of
common stock.  The dividends on outstanding shares of preferred stock
shall be paid or declared and set apart for payment before any dividends shall
be paid or declared and set apart for payment on common shares with respect to
the same dividend period.  The board of directors is empowered to fix
and determine the designations, powers, preferences and rights of the shares of
each series and the qualifications, limitations or restrictions
thereof.
  10.
Income taxes
  The
Company is subject to the United States of America Tax law at tax rate of
34%.  It has no assessable profit for both reporting
periods.  The Company has not provided deferred taxes on undistributed
earnings of its non-U.S. subsidiaries as of December 31, 2008 as it is the
Company’s current policy to reinvest these earnings in non-U.S.
operations.
  ADDE is
subject to Hong Kong profits tax.  No provision for Hong Kong profits
tax has been made as ADDE had no taxable income for the reporting
period.
  Commencing
from the fiscal year 2008, Haoyu is subject to the PRC Enterprise Income Tax
(“EIT”) at the statutory rate of 25% (under the new law as detailed below) on
the profits as reported in its PRC statutory financial statements adjusted by
profit and loss items that are not taxable or deductible.
  38
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
  10. Income
taxes (Cont’d)
 PRC’s
legislative body, the National People’s Congress, adopted the unified EIT Law on
March 16, 2007. This new tax law replaces the existing separate income tax
laws for domestic enterprises and foreign-invested enterprises and became
effective on January 1, 2008. Under the new tax law, a unified income tax
rate is set at 25% for both domestic enterprises and foreign-invested
enterprises. However, there will be a transition period for enterprises, whether
foreign-invested or domestic, that are currently receiving preferential tax
treatments granted by relevant tax authorities. Enterprises that are subject to
an enterprise income tax rate lower than 25% may continue to enjoy the lower
rate and will transit into the new tax rate over a five year period beginning on
the effective date of the EIT Law. Enterprises that are currently entitled to
exemptions for a fixed term may continue to enjoy such treatment until the
exemption term expires. Preferential tax treatments may continue to be granted
to industries and projects that qualify for such preferential treatments under
the new law.
  Income
taxes in the statements of operations and comprehensive income (loss) for the
reporting periods represent provision for EIT for the Company’s continuing
operations in the PRC.
  In July
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”).  This interpretation requires recognition
and measurement of uncertain income tax positions using a “more-likely-than-not”
approach.  The Company adopted FIN 48 on January 1,
2007.  The management evaluated the Company’s tax positions and
considered that no additional provision for uncertainty in income taxes is
necessary as of December 31, 2008.
 
 11. Earnings
(loss) per share
  The
following table sets forth the computation of basic and diluted earnings (loss)
per share for the periods indicated:
 
 For
      the years ended2008
                          
                          
                          2007Numerator:Total
      comprehensive income (loss)
                          
                          $
                          536,506
                          
                          
                          $
                          (91,699
                          )Denominator:Weighted
      average number of shares outstandingBasic
                          
                          
                          1,309,360
                          
                          
                          
                          182,869Diluted
                          
                          
                          29,434,360
                          
                          
                          
                          N/AEarnings
      (loss) per shareBasic
                          
                          $
                          0.41
                          
                          
                          $
                          (0.50
                          )Diluted
                          
                          $
                          0.02
                          
                          
                          
                          N/A
  The basic
and diluted earnings (loss) per share were calculated using the
comprehensive income (loss) and the weighted average number of shares
outstanding during the reporting periods.  All share and per share data
have been adjusted to reflect the recapitalization of the Company in the
Exchange and the Reverse Split.
  39
 Table of Contents
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 FORMERLY
ENVIROSAFE CORPORATION
 Notes
to Audited Condensed Consolidated Financial Statements
 For
the years ended December 31, 2008 and 2007
 (Stated
in US Dollars)
 12. Defined
contribution plan
  The
Company has a defined contribution plan for all qualified employees in the
PRC.  The employer and its employees are each required to make
contributions to the plan at the rates specified in the plan.  The
only obligation of the Company with respect to retirement scheme is to make the
required contributions under the plan.  No forfeited contribution is
available to reduce the contribution payable in the future years.  The
defined contribution plan contributions were charged to the audited condensed
statements of income.  The Company contributed $1,040 and $14,404 for
the years ended December 31, 2008 and 2007, respectively.
  13. Related
party transactions
  Apart
from the transaction as disclosed in note 5 to the audited condensed financial
statements, the Company had no other material transactions carried out with its
related parties during the reporting periods.
 
 14. Segment
information
  The
Company uses the “management approach” in determining reportable operating
segments.  The management approach considers the internal organization
and reporting used by the Company’s chief operating decision maker for making
operating decisions and assessing performance as the source for determining the
Company’s reportable segments.  Management, including the chief
operating decision maker, reviews operating results solely by monthly revenue of
hardware and software and the overall operating results of the
Company.  The revenue of hardware and software for the reporting
periods is as follows:
 
 Hardware
                        
                        
                        Software
                        
                        
                        TotalYears
      ended
                          December
      31,
                        
                        
                        Years
      ended
                          December
      31,
                        
                        
                        Years
      ended
                          December
      31,2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007Revenue
      from external customers, net of warranty and maintenance
      reserves
                        
                        $
                        1,147,160
                        
                        
                        $
                        869,321
                        
                        
                        $
                        1,763,293
                        
                        
                        $
                        187,281
                        
                        
                        $
                        2,910,453
                        
                        
                        $
                        1,056,602
  All of
the Company’s long-lived assets and customersare located in the
PRC.
 
 15.
                Building
      Lease
  The
Company leases it business location.  The lease expires on May 31,
2009.  The monthly lease expense is $2,250.  Total lease
expense for the year ended December 31, 2008 was $27,000
 40
 Table of Contents




Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure





On
January 21, 2009, Registrant's Board of Directors approved to dismiss PKF CPA
(“PKF”) as its independent auditor, and engaged Lake & Associates CPA’s LLC
as independent auditor to audit Registrant's financial statements for the year
ended December 31, 2008 and to review Registrant's the quarterly reports for
2009. The decision to make the change was approved by Registrant's Board of
Directors. The Registrant does not have an audit committee.





Prior to
making the decision to retain Lake & Associates CPA’s LLC, the Registrant
had no prior relationship with Lake & Associates CPA’s LLC or any of its
members.





PKF did
not render any audit reports on the Registrant's consolidated financial
statements with the exception that PKF was retained as independent auditor to
audit ADDE EDUCATION HLDS LTD., a wholly-owned subsidiary of the Registrant
incorporated under the laws of Hong Kong Special Administrative Region of
People's Republic of China in April 2008. At no time has PKF advised the
Registrant of any of the enumerated items described in Item 304(a)(1)(iv) of
Regulation S-B.





The
Registrant and PKF have not, during the Registrant 's two most recent fiscal
years or any subsequent period through the date of PKF's termination, had any
disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement, if not
resolved to PKF's satisfaction, would have caused PKF to make reference to the
subject matter of the disagreement in connection with its reports.





The
Registrant has requested that PKF furnish a letter addressed to the Securities
Exchange Commission stating whether or not PKF agrees with the statements in the
8-K filed with the SEC on February 12, 2009.  A copy of such letter is
filed as exhibit 16 on the 8-K filed with the SEC on February 12,
2009.





On
October 15, 2008, Registrant's Board of Directors approved to dismiss Traci J.
Anderson, CPA as its independent auditor, and engaged PKF CPA as independent
auditor to audit Registrant's financial statements for the year ended December
31, 2008 and to review Registrant's the third quarterly report ended September
30, 2008. The decision to make the change was approved by Registrant's Board of
Directors. The Registrant does not have an audit committee.





During
Registrant's two most recent fiscal years ended December 31, 2007 and 2006, the
Registrant did not consult PKF CPAs with respect to any of the matters described
in Item 304(a)(2) of Regulation S-K. In April 2008, PKF was retained as
independent auditor to audit ADDE EDUCATION HLDS LTD., a wholly-owned subsidiary
of the Registrant incorporated under the laws of Hong Kong Special
Administrative Region of People's Republic of China.





Traci J.
Anderson, CPA's audit reports regarding the Registrant's financial statements
for the fiscal years ended December 31, 2007 and 2006, contained no adverse
opinion or disclaimer of opinion nor were they qualified or modified as to the
uncertainty, audit scope or accounting principles, except that their audit
reports for the years ended December 31, 2007 and 2006 contained a going concern
qualification.





In
connection with the prior audit for the fiscal years ended December 31, 2007 and
2006, and the review for the interim periods ended March 31, 2008 and June 30,
2008, there have been no disagreements with Traci J. Anderson, CPA on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which if not resolved to the satisfaction of Traci
J. Anderson, CPA would have caused it to make reference to the subject matter of
the disagreement in connection with its report on these financial statements for
those periods. In addition, Traci J. Anderson, CPA had no disagreements with
Registrant for the interim period up to October 15, 2008.




41
 Table of Contents





Item
9A. Controls and Procedures




We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and its Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and
forms.




As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required
disclosure.




The
Certifying Officers have also concluded, based on their evaluation of our
controls and procedures that as of December 31, 2008, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.




The
Certifying Officers have also concluded that there was no change in our internal
controls over financial reporting identified in connection with the evaluation
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.




Item 9A(T). Controls and
Procedures




(a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting.




Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Exchange Act as of December 31, 2008,
and, based on their evaluation, as of the end of such period, the our disclosure
controls and procedures were effective as of the end of the period covered by
the Annual Report,




(b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:




•           Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and




•           Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the issuer are being
made only in accordance with authorizations of management of the issuer;
and




•           Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the financial statements.




42
 Table of Contents




As of the
end of the period covered by the Annual Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.




Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework.




Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.




This
Annual Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Annual
Report.




(c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




Item
9B. Other Information




None.




PART III




Item
10. Directors, Executive Officers and Corporate Governance




Identification
of Directors and Executive Officers




The
following table sets forth the names and ages of our directors and executive
officers, the positions and offices held with us, and the period during which
each served in such positions and offices.  Each director and
executive officer serves for a term of one (1) year and until his successor is
duly elected and qualified.




DIRECTORS
AND OFFICERS




Name
              Age
              Position
              CommencedYanbin
      Guo
              42
              President,
      CEO and Director
              6/1/2008*Liena
      Fu
              50
              CFO
              10/6/2008Changping
      Yan
              35
              Director
              6/1/2008*


* Mr.
Yanbin Guo and Ms. Changping Yan were appointed to the board effective as of
June 1, 2008, the effective date of the resignation of Mr. Guoqiang Zhan as
former President.


43
 Table of Contents




The
following is a summary of the business experience and other biographical
information with respect to each of the Company’s officers and directors listed
in the above-referenced table.




Since
2008 Yanbin Guo has been our largest shareholder. He is also our President, CEO
and Director. Mr. Guo received his bachelor’s degree in precise instruments from
Harbin Industrial University in 1988 and obtained his master’s degree in robot
sensoring from the same university in 1991.  He once served as officer
in Fu Jian Shi Da Computer Company Guangzhou Office, a public company in China
and as IT manager in Guangzhou Wen Dong Technical Company.  From 1998,
for three years, Mr. Guo served as the manager of TI Company South China
Office.  With a strong technology background and a sound understanding
of modern education trends and products, in 2001, Mr. Guo set up Guangzhou Hao
Yu Education Technology Company Ltd. for the purpose of specializing in the
application technology of precise instruments.  His most recent
research focuses on chemical lab equipment, particularly in data collector and
sensor technology.




Ms. Liena
Fu was Director and Supervisor of Financial Sector in China Construction Bank,
Guangdong Branch from 1980 to 1992. Ms. Fu worked in Guangdong Zhongchuang
Technology Equipment Lease Company as the chief accountant and vice general
manager in charge of financial department from 1992 to 1999. Ms. Fu served as
the general manager and financial officer of Guangdong Security Share Company
Limited from 1999 to 2007. Ms. Fu is experienced in the laws and regulations in
connection with finance, public finance, auditing and taxation in China
attributable to her strong financial management background. As the Chief
Financial Officer of the Registrant, Ms. Fu will be in charge of internal
control of corporate finance, tax planning, fund raising, financing and
accounting management. Ms. Fu obtained her bachelor degree of Finance in 1987
from Guangdong Vocational University of Finance, and her Master degree of
Commercial Economics in 1998 from Dongbei University of Finance & Economics.
Ms. Fu also completed the two-year MBA program in 1998 in Asia (Macau) Public
University.





After
obtaining her bachelor’s degree in computer applications from ZhongShan
University in 1996, Ms. ChangPing Yan served as the principle IT backup for at
Taiwan ZhongHua Computer, South China area, and she later joined TELECOM and
GaoYang Technology Holding Company to work in sales and customer
service.  From 1997 to 2000, Ms. Yan continued her overseas study of
accounting in New Zealand.  With extensive PC technology, management
experience and capital operation, she set up Guangzhou Hao Yu Education
Technology Company Ltd. to engage in, self-develop, and industrialize
educational software.




Meetings
of Our Board of Directors




The
Registrant’s Board of Directors took all actions by unanimous written consent
without a meeting during the fiscal year ended December 31, 2008. Hao Yu’s Board
of Directors held no formal meetings during the period commencing on January 1,
2008 and ending on December 31, 2008.




Audit
Committee Financial Expert




We do not
have a separately designated standing audit committee. The entire Board of
Directors acts as an audit committee for the purpose of overseeing our
accounting and financial reporting processes, and audits of the financial
statements. The Commission recently adopted new regulations relating to audit
committee composition and functions, including disclosure requirements relating
to the presence of an “audit committee financial expert” serving on its audit
committee. In connection with these new requirements, our Board of Directors
examined the Commission’s definition of “audit committee financial expert” and
concluded that we do not currently have a person that qualifies as such  
an expert.  Presently, there are only one (1) directors serving on our
Board, and we are not in a position at this time to attract, retain and
compensate additional directors in order to acquire a director who qualifies as
an “audit committee financial expert”, but we intend to retain an additional
director who will qualify as such an expert, as soon as reasonably practicable.
While our current director does not meet the qualifications of an “audit
committee financial expert”, the director, by virtue of his past employment
experience, has considerable knowledge of financial statements, finance, and
accounting, and has significant employment experience involving financial
oversight responsibilities. Accordingly, we believe that our current director
capably fulfills the duties and responsibilities of an audit committee in the
absence of such an expert.




44
 Table of Contents




Code
of Ethics




We have
adopted a code of ethics that applies to our principal chief executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions (the “Code of Ethics”). The Code of Ethics
is designed to deter wrongdoing, and to promote the following:




·
            Honest
      and ethical conduct, including the ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships.




·
            Full,
      fair, accurate, timely and understandable disclosure in reports and
      documents that a small business issuer files with, or submits to, the
      Commission and in other public communications made by the small business
      issuer.




·
            Compliance
      with applicable governmental laws, rules and
  regulations.




·
            The
      prompt internal reporting of violations of the code to an appropriate
      person or persons identified in the
code.




·
            Accountability
      for adherence to the code.




Section
16(a) Beneficial Ownership Reporting Compliance




Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each
person who is the beneficial owner of more than 10% of the common stock of a
company that files reports pursuant to Section 12 of the Exchange Act, are
required to report the ownership of such common stock, options, and stock
appreciation rights (other than certain cash-only rights) and any changes in
that ownership with the Commission. Specific due dates for these reports have
been established, and we are required to report, in this Form 10-K, any failure
to comply therewith during the fiscal year ended December 2008. We believe that
Mr. Guo, Yan Bin still needs to file his Form 3 and Form 4, which are expected
to be filed on or before April 20, 2009




Item 11. Executive Compensation




The
following table sets forth certain information regarding the annual and
long-term compensation for services in all capacities to us for the prior fiscal
years ended December 31, 2008 and 2007, of those persons who were either
the chief executive officer during the last completed fiscal year or any other
compensated executive officers as of the end of the last completed fiscal
year.




Name
      of Officer
                                            
                                            Year
                                            
                                            
                                            Salary
                                            
                                            
                                            Bonus
                                            
                                            
                                            Stock
      Awards
                                            
                                            
                                            Option
      Awards
                                            
                                            
                                            Non-Equity
      Incentive Plan Compensation
                                            
                                            
                                            Nonqualified
      Deferred Compensation
                                            
                                            
                                            All
      Other Compensation
                                            
                                            
                                            TotalGuoqiang
      Zhan
                                              former president
                                            
                                            
                                            2008
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -2007
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -2006
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Yanbin
      Guo
                                                President, CEO and
                                                Director
                                            
                                            
                                            2008
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Liena
      Fu
                                                CFO
                                            
                                            
                                            2008
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -




45
 Table of Contents





Employment
Contracts




There is
no employment agreement in place for the year 2008 between us and Yarbin Guo,
our President and chief executive officer.




Stock
Option Awards




There
were no options granted to our Chief Executive Officer during 2008, 2007 or
2006.




Item
12.  Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters




The
following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of April 15, 2009 (i) each person known to us
to be the beneficial owner of more than 5% of our Common Stock, (ii) each
director and executive officer, and (iii) all directors and executive officers
as a group. As of April 15, 2009, there were 2,767,798 shares of Common Stock
issued and outstanding.




Name and Address of Beneficial Owner(1)
                    
                    Amount
      and Nature
                      of
      Beneficial Ownership (2)(3)
                    
                    
                    Percentage
                      of
      ClassYanbin
      Guo
                      RM.
      805, Tower B, No. 108
                      Taojin
      Dong Road, Yuexiu District
                      Guangzhou,
      Guangdong
                      P.R.
      China
                    
                    
                    2,500,000
                    
                    
                    
                    90.3
                    %Changping
      Yan
                      RM.
      302, Tower 7, Baihe Street
                      Jincui
      Yuan, Li Jiang Garden, Pan Yu District
                      Guangzhou,
      Guangdong
                      P.R.
      China
                    
                    
                    79,032
                    
                    
                    
                    2.9
                    %Officers
      and directors as a group (2 persons)
                    
                    
                    2,579,032
                    
                    
                    
                    93.2
                    %




(1)
            As
      used herein, a person is deemed to be the “beneficial owner” of a security
      if he or she has or shares voting or investment power with respect to such
      security, or has the right to acquire such ownership within sixty (60)
      days. As used herein, “voting power” includes the power to vote or to
      direct the voting of shares, and “investment power” includes the power to
      dispose or to direct the disposition of shares, irrespective of any
      economic interest therein.


(2)
            Except
      as otherwise indicated by footnote, the persons named in the table have
      sole voting and investment power with respect to all Common Stock
      beneficially owned by them.


(3)
            Percentage
      ownership for a given individual or group is calculated on the basis of
      (i) the amount of outstanding shares owned as of April 15, 2009 plus , (ii) the number
      of shares that such individual or group has the right to acquire within
      sixty (60) days pursuant to options, warrants, conversion privileges or
      other rights, of which none exist.




46
 Table of Contents




Item
13. Certain Relationships and Related Transactions





None





Item
14.  Principal Accountant Fees and
Services




Fees
Billed For Audit and Non-Audit Services




The
following table represents the aggregate fees billed for professional audit
services rendered to us by Traci J. Anderson, CPA and PKF CPA for the years 2007
and Lake & Associates, CPA for year 2008.







Year Ended December 31
                                
                                2008(2)
                                
                                
                                2007(3)Lake
                                
                                
                                Anderson/PKFAudit
      Fees (1)
                                
                                $
                                41,000
                                
                                
                                $
                                10,000Audit-Related
      Fees (4)
                                
                                $
                                --
                                
                                
                                $
                                35,000Tax
      Fees (5)
                                
                                
                                --
                                
                                
                                
                                --All
      Other Fees (6)
                                
                                
                                --
                                
                                
                                
                                --Total
      Accounting Fees and Services
                                
                                $
                                41,000
                                
                                
                                $
                                45,000




(1)
            Audit Fees. These are
      fees for professional services for the audit of our annual financial
      statements, and for the review of the financial statements included in our
      filings on Form 10-K, and for services that are normally provided in
      connection with statutory and regulatory filings or
      engagements.


(2)
            The
      amounts shown in 2008 relate to (i) the audit of our annual financial
      statements for the fiscal year ended December 31, 2008, and (ii) the
      review of the financial statements included in our filings on Form 10-Q
      for the quarters of 2008.


(3)
            The
      amounts shown in 2007 relate to (i) the audit of our annual financial
      statements for the fiscal year ended December 31, 2007, and (ii) the
      review of the financial statements included in our filings on Form 10-Q
      for the quarters of 2008.


(4)
            Audit-Related Fees. The
      amount shown hereto relate to the audit of Hao Yu’s annual financial
      statements for the fiscal years ended December 31, 2007, and 2006 in
      connection with the acquisition of Hao Yu. These financial statements were
      audited by PKF CPA.


(5)
            Tax Fees. These are
      fees for professional services with respect to tax compliance, tax advice,
      and tax planning.


(6)
            All Other Fees. These
      are fees for permissible work that does not fall within any of the other
      fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
      Fees.





Pre-Approval
Policy for Audit and Non-Audit Services




We do not have a standing audit committee, and the full Board performs
all functions of an audit committee, including the pre-approval of all audit and
non-audit services before we engage an accountant. All of the services rendered
to us by the independent accountants during 2008 were
pre-approved by our Board of Directors.




Item
15.  Exhibits and Reports on Form
8-K




(a)  
Exhibits.  The
exhibit list required by Item 13 of Form 10-K is provided in the “Index to Exhibits ”
located herein, immediately following Item 14.




(b)
              Reports
      on Form 8-K Filed in Last Quarter of Fiscal Year
      2008.
                
                An
      8-K Filed on March 11, 2008, the Registrant executed a Plan of Exchange,
      between and among the Registrant, ADDE EDUCATION HLDS LTD., a corporation
      organized and existing under the laws ofHong Kong Special
      Administrative Region of People’s Republic of China("ADDE"), the
      shareholders of ADDE (the "ADDE Shareholders") and the Majority
      Shareholder of the Registrant (the "ENVS
Shareholders").
                
                An
      8-K and related amendment, filed on August 1, 2008, the Registrant
      executed a Share Exchange, between and among the Registrant, ADDE
      Education Hlds, Ltd, and Guoqiang Zhan.
                
                An
      8-K, filed on August 13, 2008, announcing the appointment of Mr. Liu,
      Baolong to the position of Chief Financial Officer of the Registrant as
      approved by the Board of Directors, and effective
      immediately.
                
                An
      8-K, filed on October 9, 2008, announcing the appointment of Ms. Fu, Liena
      to the position of Chief Financial Officer of the Registrant as approved
      by the Board of Directors, and effective immediately.
                
                An
      8-K, filed on October 21, 2008, dismissing Traci J. Anderson, CPA as its
      independent auditor, and engaged PKF CPA as independent auditor to audit
      Registrant's financial statements for the year ended December 31, 2008 and
      to review Registrant's the third quarterly report ended September 30,
      2008. The decision to make the change was approved by Registrant's Board
      of Directors. The Registrant does not have an audit
    committee.





47
 Table of Contents


INDEX
TO EXHIBITS


Exhibit
      #
                                                                                                                                                                                    Description3.1
                                                                                                                                                                                    Articles
      of Incorporation of China Education Technology, Inc. (F.K.A. Envirosafe
      Corporation) **3.2
                                                                                                                                                                                    Bylaws
      of China Education Technology, Inc. (F.K.A. Envirosafe Corporation)
      **4.1
                                                                                                                                                                                    See
      Exhibits 3.1 and 3.2 for the provisions of our Articles of Incorporation
      and Bylaws that define the rights of holders of our Common
      Stock4.2
                                                                                                                                                                                    Specimen
      of Common Stock Certificate **14.1
                                                                                                                                                                                    Code
      of Ethics **31.1
                                                                                                                                                                                    Rule
      13a-14(a)/15d–14(a) Certifications of Yanbin Guo, Chief Executive
      Officer*31.2
                                                                                                                                                                                    Rule
      13a-14(a)/15d–14(a) Certifications of Liena Fu, Chief Financial Officer
      *32.1
                                                                                                                                                                                    Section
      1350 Certifications of Yanbin Guo, Chief Executive Officer
    *32.2
                                                                                                                                                                                    Section
      1350 Certifications of Liena Fu, Chief Financial Officer
  *99.1
                                                                                                                                                                                    Cautionary
      Statements for Purposes of the Safe Harbor Provision of the Private
      Securities Litigation Reform Act of
1995*




* Filed
herewith.


**Contained
in our Form 10-SB, as filed with the Commission on January 18,
2007.




48
 Table of Contents





SIGNATURES




In
accordance with the Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




China
      Education Technology, Inc. (F.K.A. Envirosafe Corporation)Date:  April 15, 2009
              By:
              /s/ Yanbin GuoYanbin Guo




In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.









49