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, 2009
 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.
 (Name
of Small Business Issuer in Its Charter)
  
 
 NEVADA                                                                      
94-3251254
 (State or
Other Jurisdiction
of                        
(I.R.S. Employer Identification
No.)
 Incorporation of Organization)
 
 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 if the registrant is a well-know seasoned issuer, as defined in
Rule 405 of the Securities Act.
 Yes
[  ]                                No
[x]
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act
 Yes
[  ]                                No
[x]
 
 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 whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).
 Yes
[  ]                                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 non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer
              Non-accelerated
      filer
              (Do
      not check if a smaller reporting company)Accelerated
      filer
              Smaller
      reporting company
              x
 
 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, 2009 were
$1,130,662.
 
 The
aggregate market value of the voting stock and non-voting common equity on May
11, 2010 (consisting of Common Stock, $0.0001 par value per share) held by
non-affiliates was approximately $32,959 based upon the most recent sales price
for such Common Stock on said date ($0.0325). On May 11, 2010, there were
26,767,798 shares of our Common Stock issued and outstanding, of which
approximately 1,014,122 shares were held by non-affiliates.
 
 Number of
shares of preferred stock, par value $.0001, outstanding as of May 11,
2010:         870,000
 Number of
shares of common stock, par value $.0001, outstanding as of May 11,
2010:    26,767,798
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 None
 
 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.
 
 
 TABLE OF
CONTENTS
  PART
      I:Item
      1.                  Business
                    
                    
                    3Item
      1A.               Risk
      Factors
                    
                    
                    6Item
      1B.               Unresolved
      Staff Comments
                    
                    
                    10Item
      2.                  Properties
                    
                    
                    10Item
      3.                  Legal
      Proceedings
                    
                    
                    10Item
      4.                  Submission
      of Matters to a Vote of Security Holders
                    
                    
                    10PART
      II:Item
      5.                 
      Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                    
                    
                    11Item
      6.                  Selected
      Financial Data
                    
                    
                    12Item
      7.                 
      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    
                    
                    12Item
      7A.               Quantitative
      and Qualitative Disclosures About Market Risk
                    
                    
                    14Item
      8.                  Financial
      Statements and Supplementary Data
                    
                    
                    15Item
      9.                 
      Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                    
                    
                    28Item
      9A.               Controls
      and Procedures
                    
                    
                    28Item
      9A(T).          Controls
      and Procedures
                    
                    
                    29Item
      9B.              
      Other Information
                    
                    
                    29PART
      III:Item
      10.                Directors,
      Executive Officers and Corporate Governance
                    
                    
                    30Item
      11.                Executive
      Compensation
                    
                    
                    31Item
      12.               
      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                    
                    
                    31Item
      13.               
      Certain
      Relationships and Related Transactions, and Director
      Independence
                    
                    
                    32Item
      14.               
      Principal
      Accounting Fees and Services
                    
                    
                    32PART
      IV:Item
      15.               
      Exhibits,
      Financial Statement Schedules
                    
                    
                    32SIGNATURES:
                    
                    
                    34
  2
 
 PART I
 
 Item
1. Description of
Business
 
 History
 
 As used
herein the terms "We", the "Company", "CEDT", the "Registrant," or the "Issuer"
refers to Envirosafe Corporation, its subsidiary and predecessors, unless
indicated otherwise. We were originally incorporated in Delaware in 1996 as
Envirosafe Corporation. On October 6, 2008, our board decided to redomicile from
the State of Delaware to the State of Nevada. Their decision was approved by the
holders of a majority of the voting rights of our common stock. On April 3,
2009, we changed our name to China Education Technology, Inc. to more accurately
reflect our business after the Exchange (as defined below) between ADDE and
Haoyu.
 
 We are an
investment holding company, whose only asset is a 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 the People’s
Republic of China (the “PRC”) and is an investment holding company whose only
asset is a 100% equity interest in Guangzhou Haoyu Educational Technology
Company Limited (“Haoyu”).  Haoyu was originally 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”) for
consideration of 1,000,000 Renminbi (“RMB”).  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 majority
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 a 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.
 
 Since the
reverse merger was consummated, we have continued operation conducted through
Haoyu, which is specializes 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 the Company is in conformity to the new
educational purpose.  The software uses advanced technology of data
collection, sensor and wireless control and video imaging, which can virtually
upload live media and analyze the information collected.  Our software
allows teachers and students to conduct experiments automatically instead of the
traditional method by hand.
 
 The
Company also engages in the trading of hardware and computer products such as
monitors and computer notebooks.
  Business
Description
 
 The
Company is devoted to 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. The
Company 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.
  The
Company 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. The Company 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, the Company has obtained ISO9001 recognition. With a strong
educational background, extensive cooperative resources and a professional team,
the Company has become one of the leading education modernizers in China and in
its approach to the international education technology industry.
  The
Company 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,
the Company 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, the Company has also strives to develop scientific and technological
innovations and research resulting in educational products and services for our
core business. The Company 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,
the Company 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, the Company 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.  The
Company’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.  The Company also registered
a trademark for “Explore the World” in 2003 and had it approved by the National
Trademark Bureau.  In 2003, the Company registered the software of its
multifunctional collector system and the patent thereof.  In 2004, the
president of the Company, 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.  The Company also applied for
and obtained a patent for its new sensor technology in 2005.  Finally,
also in 2005, the Company registered their experimental system software called
“Explore the World” which was also approved by the Guangzhou Software
Association.
  3
 
 Detail
of the Company’s Operations
  The
experimental systems developed by the Company are in conformity to the “new
educational purpose” of China. The Company’s 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.
  The
Company 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·
              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
 
 The
Company’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.·
              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 the Company 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.
 
 4
 
 Where
the Company 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
 
 The
Company’s sources of revenues
  The
revenues of the Company’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
 
 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 the Company’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.
 
 the
Company’s “Discover the World” product captures 20% of the
market.  The Company 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.
  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 the Company 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.
 
 5
 
 Existing
Facilities
  The
Company 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.  The Company 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
  The
Company’s product is developed by the Company independently, and all techniques
are owned by the Company, including all intelligent property rights of “Discover
the World,” the palm synthesized scientific laboratory system.  the
Company 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.”
  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, 2009, we have approximately 40 employees, consisting of 6
employees in the administrative and financing department, 15 marketing and sales
personnel, 3 quality inspectors, 14 employees in the research and
development department, and 2 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 CEDT’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 annual report, before
purchasing shares of CEDT’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 CEDT will
face.  If any of these risks actually occurs, CEDT’S business,
financial condition or results of operation may be materially adversely
affected.  In such case, the trading price of CEDT’s common stock
could decline and investors in CEDT’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
CEDT, material risks related to CEDT’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.
 
 CEDT’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 CEDT from achieving its goals including, but not limited to, those
described below.  Additional unknown risks may also impair CEDT’s
financial performance and business operations.  CEDT’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 CEDT’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 CEDT’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.
 
 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.
 
 6
 
 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.
 
 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.
 
 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.
 
 7
 
 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.
 
 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.
 
 Our
corporate actions are substantially controlled by the management.
 
 As a
result of the share exchange transaction, the management of the Company
currently owns approximately 84.35% of our outstanding common shares,
representing approximately 84.35% of our voting power. The management 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
management, elections of our board of directors will generally be within the
control of the management. On the other hand, it may therefore be difficult for
United States investors to monitor the performance of management. 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
the management. As such, it would be extremely difficult for shareholders to
propose and have approved proposals not supported by the Management. There can
be no assurances that matters voted upon by the management will be viewed
favorably by all shareholders of our company.
 
 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.
 
 8
 
 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, 2009. 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.
 
 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 $0.02 to $1.53.
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 CEDT’s common stock and CEDT cannot
ensure that one will ever develop or be sustained.
 
 There is
currently no liquid trading market for CEDT’s common stock. CEDT cannot predict
how liquid the market for CEDT’s common stock might become. CEDT’s common stock
is currently approved for quotation on the OTC Bulletin Board trading under the
symbol “CEDT.” CEDT 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 CEDT 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 CEDT’s common stock could suffer, the trading market for CEDT’s common
stock may be less liquid and CEDT’s common stock price may be subject to
increased volatility.
 
 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.
 
 9
 
 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, which expired on May
31, 2009. And we extended the lease contract at May 25, 2009, according the new
contract, the rent expenses are $34,412 per year which is paid annually and will
be increase 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 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
 
 None
  
 10
 
 PART II
 
 Item 5.
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
 
 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
“CEDT.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, 2009 and
2008.
 
 
 High
              
              
              Low2009Quarter
      Ended March 31, 2009
              $
              0.21
              
              
              $
              0.21Quarter
      Ended June 30, 2009
              $
              0.70
              
              
              $
              0.70Quarter
      Ended September 30, 2009
              $
              0.20
              
              
              $
              0.20Quarter
      Ended December 31, 2009
              $
              0.08
              
              
              $
              0.082008Quarter
      Ended March 31, 2008
              
              $
              1.68
              
              
              $
              1.52Quarter
      Ended June 30, 2008
              
              $
              1.44
              
              
              $
              1.44Quarter
      Ended September 30, 2008
              
              $
              1.20
              
              
              $
              1.20Quarter
      Ended December 31, 2008
              
              $
              1.50
              
              
              $
              1.50
 
 On May
11, 2010, the closing price of our Common Stock was $0.031 per
share.
 
 As of May
11, 2010, 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.
 
 Preferred
stock
 
 Simultaneously
upon the change of the domicile of the Company from Delaware to Nevada, we
created Convertible Preferred Stock in the amount of 10,000,000 shares having
par value of $0.0001 each. The designation, powers, including voting rights,
preferences and any qualifications, limitations, or restrictions of the
Preferred Stock of Corporation, and the conversion procedures from preferred
stock to common stock are set forth as follows:
 
 (1)
              Conversion into Common
      Stock.
 
  (a)
              Right
      to Convert. Each share of Convertible Preferred Stock shall be
      convertible, at the option of the holder thereof, at any time after one
      year from the date of issuance (the “Conversion Date”) into fifty (50)
      shares of fully paid and non-assessable shares of Common Stock (the
      “Conversion Ration”).
 
  (b)
              Mechanics
      of Conversion. Before any holder shall be entitled to convert, he shall
      surrender the certificate or certificates representing Convertible
      Preferred Stock to be converted, duly endorsed or the Corporation or of
      any transfer agent, and shall give written notice to the Corporation at
      such office that he elects to convert the same. The Corporation shall, as
      soon as practicable thereafter, issue a certificate or certificates for
      the number of shares of Common Stock to which the holder shall be
      entitled. The Corporation shall, as soon as practicable after delivery of
      such certificates, or such agreement and indemnification in the case of a
      lost, stolen or destroyed certificate, issue and deliver to such holder of
      Convertible Preferred Stock a certificate or certificates for the number
      of shares of Common Stock to which such holder is entitled as aforesaid
      and a check payable to the holder in the amount of any cash amounts
      payable as the result of a conversion into fractional shares of Common
      Stock. Such conversion shall be deemed to have been made immediately prior
      to the close of business on the date of such surrender of the shares of
      Convertible Preferred Stock to be
converted.
 
  (c)
              Adjustment
      to Conversion Ratio.
 
  (i)
              Merger
      or Reorganization. In case of any consolidation or merger of the
      Corporation as a result of which holder of Common Stock become entitled to
      receive other stock or securities or property, or in case of any
      conveyance of all or substantially all of the assets of the Corporation to
      another corporation, the Corporation shall mail to each holder of
      Convertible Preferred Stock at least thirty (30) days prior to the
      consummation of such event a notice thereof, and each such holder shall
      have the option to either (i) convert such holder’s shares of Convertible
      Preferred Stock into shares of Common Stock pursuant to this Section 3 and
      thereafter receive the number of shares of stock or other securities or
      property to which a holder of the number of shares of Common Stock of the
      Corporation deliverable upon conversion of such Convertible Preferred
      Stock would have been entitled upon such consolidation, merger or
      conveyance, or (ii) exercise such holder’s rights pursuant to Section 4
      (a). Unless otherwise set forth by the Board of Directors, the Conversion
      Ratio shall not be affected by a stock dividend or subdivision (stock
      split) on the Common Stock of the corporation, or a stock combination
      (reverse stock split) or stock consolidation by reclassification of the
      Common Stock. However, once the Convertible Preferred Stock has been
      converted to Common Stock, it shall be subject to all corporate actions
      that affect or modify the common
stock.
 
  (d)
              No
      Impairment. The Corporation will not, by amendment of its Articles of
      Incorporation, this Certificate of Designation or through any
      reorganization, transfer of assets, consolidation, merger, dissolution,
      issue or sale of securities or any other voluntary action, avoid or seek
      to avoid the observance or performance of any of the terms to be observed
      or performed hereunder by the Corporation, but will at all times in good
      faith assist in the carrying out of all the provisions of this Section 4
      and in the taking of all such action as may be necessary or appropriate in
      order to protect the Conversion Rights of the holders of the Convertible
      Preferred Stock against impairment.
 
  (e)
              Certificate
      as to Adjustments. Upon the occurrence of each adjustment or readjustment
      of the Conversion Ratio of the Convertible Preferred Stock pursuant to
      this Section 3, the Corporation at its expense shall promptly compute such
      adjustment or readjustment in accordance with the terms hereof and furnish
      to each holder of Convertible Preferred Stock a certificate setting forth
      such adjustment or readjustment and the calculation on which such
      adjustment or readjustment is based. The Corporation shall, upon the
      written request at any time of any holder of Convertible Preferred Stock,
      furnish or cause to be furnished to such holder a like certificate setting
      forth (i) such adjustment and readjustment, (ii) the Conversion Ratio for
      the Convertible Preferred Stock at the time in effect and (iii) the number
      of share of Common Stock and the amount, if any, of other property which
      at the time would be received upon the conversion of the Convertible
      Preferred Stock.
 
  (f)
              Notice
      of Record Date. In the event of any taking by the Corporation of a record
      of the holders of any class of securities for the purpose of determining
      the holders thereof who are entitled to receive any dividend (other than a
      cash dividend which is the same as cash dividends paid in previous
      quarter) or other distribution, the Corporation shall mail to each holder
      of Convertible Preferred Stock at least ten (10) days prior to the date
      specified herein, a notice specifying the date on which any such record is
      to be taken for the purpose of such dividend or
    distribution.
 
  (g)
              Common
      Stock Reserve. The corporation shall reserve and keep available out of its
      authorized but unissued Common Stock such number of shares of Common Stock
      as shall from time to time be sufficient to effect conversion of the
      Convertible Preferred Stock.
 
  (2)
              Voting Rights.
      Except as otherwise required by law, the holders of Convertible Preferred
      Stock and the holders of Common Stock shall be entitled to notice of any
      stockholders’ meeting and to vote as a single class upon any matter
      submitted to the stockholders for a vote as follows: (i) the holders of
      each series of Preferred Stock shall have one vote for each full share of
      Common Stock into which a share of such series would be convertible on the
      record date for the vote, or, if no such record date is established, at
      the date such vote is taken or any written consent of stockholders is
      solicited; and (ii) the holders of Common Stock shall have one vote per
      share of Common Stock held as of such
date.
 
 (3)
              Reissuance. No
      share or shares of Convertible Preferred Stock acquired by the Corporation
      by reason of conversion, all such shares thereafter shall be returned to
      be the status of unissued shares of Convertible Preferred Stock of the
      Corporation.
  As of May
11, 2010, we had 870,000 shares of convertible preferred stock issued and
outstanding.
 
 Recent
Sales of Unregistered Securities
  None.
 
 11
 
 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 product 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
 
 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.
 
 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, 2009 and 2008, the Company had warranty and maintenance reserves of
$50,976 and $30,203, respectively.
 
 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 current trade
receivables.  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.
 
 12
 
 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.
 
 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.
  RESULTS
OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
  Revenues
  Gross
profits were $1,017,314 and $2,910,453 for the years ended December 31, 2009 and
2008, 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, 2009. The decrease in
gross revenues by $1,893,139 in 2009 was because the government educational
department reduced the input in digital labs of schools, resulting in the
decrease in customers demand.
  Income /
Loss
  We had
net income of $62,215 and $504,890 for the years ended December 31, 2009 and
2008, respectively. The net income during 2009 was attributable to our efficient
control in operating expenses, which were reduced tremendously in 2009,
offsetting the negative impact from our sale revenues dropped.
  Expenses
  Operating
expenses for the years ended December 31, 2009 and 2008 were $803,899 and
$1,005,112, respectively. The decrease in 2009 was due primarily to the research
and development expenses decreased from $247,100 in 2008 to $85,046 in 2009. The
selling expenses in 2009 were $90,425 compared to $206,186 in 2008. The decrease
was partially offset by the increase in general and administrative expense to
$628,428 from $551,826 in 2008. The decrease in these operating expenses in 2009
could be attributed to the overall decrease in sales.
  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, 2009, we had $306,310 in
cost of goods sold, or 30% of sales revenue. During the year ended December 31,
2008, we had $1,426,721 in cost of goods sold, or 49% of sales revenue. The
lower cost of goods sold as a percentage of sales revenue during 2009 was due to
the signaficant decrease in total sales revenue.
  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 used in operating activities were $296,270 and $345,178 for the years
ended December 31, 2009 and 2008, respectively. Negative cash flows used in
operations in 2009 were due primarily to the increase in prepayments and
refundable deposits by $356,137 and $220,755, respectively, partially offset by
the net income of $63,215 and the increase in trade payables by $165,892.
Negative cash flows from operations in 2008 were due primarily to the increase
in trade receivable and prepayments by $662,445 and $42,344, respectively, plus
the decrease in trade payables by $581,735, partially offset by the net income
of $504,890, the decrease in inventories by $192,030 and the increase in income
tax payable by $204,429.
 Cash
flows used in investing activities were $115,668 and $8,304 for the years ended
December 31, 2009 and 2008, respectively, attributable to payments to acquire
property, plant, and equipment for both years.
  Cash
flows provided by financing activities were $354,369 and $272,679 for the years
ended December 31, 2009 and 2008, respectively. Positive cash flows from
financing activities in 2009 were attributable to the proceeds from short-term
loan of $292,779, plus $61,590 due to a director. Cash flows from financing
activities in 2008 were due primarily to the short-term loan proceeds of
$439,734, offset by the payments of $167,055 to the advance from the
director.
  Overall,
we have funded our cash needs from inception through December 31, 2009 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 $29,656 on hand and a working capital of $766,854 as of December 31, 2009. 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 2010 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 loss of $662 in 2009, compared to net foreign currency gain
of $31,616 in fiscal 2008. 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.
  2009
              
              2008Balance
      sheet items, except for the registered and paid-up capital as of December
      31, 2009 and 2008
              USD
      0.146:RMB 1
              
              USD
      0.147:RMB 1Amounts
      included in the statement of operations, statement of changes in
      stockholders’ equity and statement of cash flows for the years ended
      December 31, 2009 and 2008
              USD
      0.146:RMB 1
              
              USD
      0.144:RMB 1
 
 14
 
 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, 2009 and
2008
  Statements
      of Operations2009
              
              
              2008Revenues
              
              $
              1,017,314
              
              
              $
              2,910,453Cost of Sales
              
              $
              (306,310)
              
              
              $
              (1,426,721)Gross profit
              
              $
              711,005
              
              
              $
              1,483,732Operating expenses
              
              $
              803,899
              
              
              $
              1,005,112Income from operations
              
              $
              (92,894)
              
              
              $
              478,620Interest expense
              
              $
              (32,955)
              
              
              $
              (31,793)Net income
              
              $
              63,215
              
              
              $
              504,890Net income per common share – basic
              
              $
              0.01
              
              
              $
              0.39Net income per common share - diluted
              
              $
              < 0.01
              
              
              $
              0.02
 
  Balance
      Sheet
              
              As
      of December 31, 2009Cash
              
              $
              29,656Total current assets
              
              $
              1,935,552Property, plant and equipment, net
              
              $
              131,867Other assets
              
              $
              67,050Total Assets
              
              $
              2,134,470Current liabilities
              
              $
              1,168,698Long term liabilities
              
              $
              50,976Stockholders’ equity
              
              $
              914,796Total liabilities and stockholders’
      equity
              
              $
              2,134,470
 
 15
 INDEX
TO FINANCIAL STATEMENTS
  PageAudited
      Condensed Consolidated Balance Sheets
                  
                  F-4Audited
      Condensed Consolidated Statements of Operations And Comprehensive
      Income
                  
                  F-5Audited
      Condensed Consolidated Statements of Cash
Flows
                  
                  F-6Audited
      Condensed Consolidated Statements of Stockholders’ Equity
                  
                  F-7Notes
      to Unaudited Financial Statements
                  
                  F-8
      to F-21
  16
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
the Board of Directors and
 Stockholders
of China Education Technology Inc.
  We
have audited the accompanying consolidated balance sheets of China Education
Technology Inc. and Subsidiaries (the “Company”) as of December 31, 2009 and
2008, and related consolidated statements of operations, stockholders’ deficit,
and cash flows for the years ending December 31, 2009 and 2008. These financial
statements are the responsibility of the company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
  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 financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Logistics, Inc. as of
December 31, 2009 and 2008 and the results of its operations and its cash flows
for years ended December 31, 2009 and 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
 May
12, 2010
 
 17
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEETSAS
      OF DECEMBER 31, 2009 AND 2008ASSETS2009
                  
                  
                  2008Current assets:Cash
      and cash equivalents
                  
                  $
                  29,656
                  
                  
                  $
                  87,254Trade
      receivables, net
                  
                  
                  822,926
                  
                  
                  
                  1,224,879Inventories
                  
                  
                  372,971
                  
                  
                  
                  253,446Prepayments
                  
                  
                  483,812
                  
                  
                  
                  132,978Other
      receivables
                  
                  
                  5,339
                  
                  
                  
                  -Refundable
      deposit
                  
                  
                  220,849
                  
                  
                  
                  -Total
      current assets
                  
                  
                  1,935,552
                  
                  
                  
                  1,698,557Property, plant and equipment,
      net
                  
                  
                  131,867
                  
                  
                  
                  38,087Non-current assets:Warranty
      receivable
                  
                  
                  -
                  
                  
                  
                  15,633Others
                  
                  
                  67,050
                  
                  
                  
                  35,502Total
      non-current assests
                  
                  
                  67,050
                  
                  
                  
                  51,135Total
      assets
                  
                  $
                  2,134,470
                  
                  
                  $
                  1,787,779LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent liabilities:Short-term
      note payable
                  
                  
                  732,257
                  
                  
                  
                  439,734Trade
      payables
                  
                  
                  272,083
                  
                  
                  
                  106,212Salary
      payable
                  
                  
                  4,936
                  
                  
                  
                  -Other
      payables and accrued expenses
                  
                  
                  32,865
                  
                  
                  
                  112,966Amount
      due to a director
                  
                  
                  97,279
                  
                  
                  
                  35,663Income
      tax payable
                  
                  
                  29,277
                  
                  
                  
                  210,757Total
      current liabilities
                  
                  
                  1,168,698
                  
                  
                  
                  905,332Long-term liabilities:Warranty
      and maintenance reserves
                  
                  
                  50,976
                  
                  
                  
                  30,203STOCKHOLDERS’
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized,
                  
                  
                  87
                  
                  
                  
                  135870,000
      shares and 1,350,000 shares issued and outstanding as of December 31, 2009
      and 2008, respectivelyCommon
      stock, $0.0001 par value, 50,000,000 shares authorized,
                  
                  
                  2,677
                  
                  
                  
                  27726,767,798
      shares and 2,767,798 shares issued and outstanding as of December 31, 2009
      and 2008, respectivelyAdditional
      paid in captial
                  
                  
                  120,438
                  
                  
                  
                  122,790Statutory
      and other reserves
                  
                  
                  69,565
                  
                  
                  
                  69,565Accumulated
      other comprehensive income
                  
                  
                  76,246
                  
                  
                  
                  76,908Retained
      earnings
                  
                  
                  645,782
                  
                  
                  
                  582,568Total
      stockholders’ equity
                  
                  
                  914,796
                  
                  
                  
                  852,243Total
      liabilities and stockholders’ equity
                  
                  
                  2,134,470
                  
                  
                  
                  1,787,779See
      accompanying notes to consolidated financial
  statements.
  18
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      INCOMEFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 2008For
      the Years EndedDecember
      31, 2009
                    
                    
                    December
      31, 2008Sales
                    
                    $
                    1,017,314
                    
                    
                    $
                    2,910,453Cost
      of goods sold
                    
                    
                    (306,310
                    )
                    
                    
                    (1,426,721
                    )Gross
      profit
                    
                    
                    711,005
                    
                    
                    
                    1,483,732Operating
      expensesGeneral
      and administrative expenses
                    
                    
                    628,428
                    
                    
                    
                    551,826Research
      and development expenses
                    
                    
                    85,046
                    
                    
                    
                    247,100Selling
      expenses
                    
                    
                    90,425
                    
                    
                    
                    206,186Total
      operating expenses
                    
                    
                    803,899
                    
                    
                    
                    1,005,112Net
      operating Income (loss)
                    
                    
                    (92,894
                    )
                    
                    
                    478,620Other
      incomeSubsidy
      income from the PRC authorities for general operations
                    
                    
                    184,710
                    
                    
                    
                    265,421Interest
      income (expenses)
                    
                    
                    (32,955
                    )
                    
                    
                    (31,218
                    )Other
      income (expenses)
                    
                    
                    34,907
                    
                    
                    
                    (366
                    )Total
      other income
                    
                    
                    186,662
                    
                    
                    
                    233,837Income
      before income taxes
                    
                    
                    93,768
                    
                    
                    
                    712,457Income
      taxes
                    
                    
                    (30,554
                    )
                    
                    
                    (207,567
                    )Net
      Income (loss)
                    
                    $
                    63,215
                    
                    
                    $
                    504,890Other
      comprehensive income (loss)Foreign
      currency translation adjustment
                    
                    
                    (662
                    )
                    
                    
                    31,616Total
      comprehensive income (loss)
                    
                    $
                    62,553
                    
                    
                    $
                    536,506Earnings
      (loss) per shareBasic
                    
                    $
                    0.01
                    
                    
                    $
                    0.39Diluted
                    
                    
                    **
                    
                    
                    $
                    0.02Weighted
      average number of shares outstandingBasic
                    
                    
                    8,903,626
                    
                    
                    
                    1,309,360Diluted
                    
                    
                    70,267,798
                    
                    
                    
                    29,434,360**
      Less than $.01See
      accompanying notes to consolidated financial
  statements.
 
 19
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
  EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 2008Preferred
      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
                      
                      
                      $
                      852,243Conversion
      of preferred stock
                      
                      
                      (480,000
                      )
                      
                      
                      (48
                      )
                      
                      
                      24,000,000
                      
                      
                      
                      2,400
                      
                      
                      
                      (2,352
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      -Foreign
      currency adjustment
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (662
                      )
                      
                      
                      
                      
                      
                      
                      (662
                      )Net
      Income
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      63,215
                      
                      
                      
                      63,215Balance
      as of December 31, 2009
                      
                      
                      870,000
                      
                      
                      $
                      87
                      
                      
                      
                      26,767,798
                      
                      
                      $
                      2,677
                      
                      
                      $
                      120,438
                      
                      
                      $
                      69,565
                      
                      
                      $
                      76,246
                      
                      
                      $
                      645,783
                      
                      
                      $
                      914,796
 
 20
 CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 2008For
      the Years EndedDecember
      31, 2009
                      
                      
                      December
      31, 2008Cash
      flows from operating activitiesNet
      income (loss)
                      
                      $
                      63,215
                      
                      
                      $
                      504,890Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                      
                      
                      21,895
                      
                      
                      
                      22,246Gain
      on disposal of fixed assets
                      
                      
                      -
                      
                      
                      
                      39,872Provision
      for doubtful debts
                      
                      
                      (15,247
                      )
                      
                      
                      27,264Changes
      in operating assets and liabilities:Trade
      receivables
                      
                      
                      415,971
                      
                      
                      
                      (662,445
                      )Inventories
                      
                      
                      (119,693
                      )
                      
                      
                      192,030Other
      receivables and prepayments
                      
                      
                      (356,137
                      )
                      
                      
                      (42,344
                      )Refundable
      deposits
                      
                      
                      (220,755
                      )Warranty
      receivable
                      
                      
                      15,613
                      
                      
                      
                      (15,633
                      )Other
      noncurrent assets
                      
                      
                      (31,566
                      )
                      
                      
                      (35,502
                      )Warranty
      and maintenance reserves
                      
                      
                      20,790
                      
                      
                      
                      30,203Trade
      payables
                      
                      
                      165,892
                      
                      
                      
                      (581,735
                      )Salary
      payable
                      
                      
                      4,934
                      
                      
                      
                      -Other
      payables and accrued expenses
                      
                      
                      (79,960
                      )
                      
                      
                      (28,453
                      )Income
      tax payable
                      
                      
                      (181,221
                      )
                      
                      
                      204,429Net
      cash flows used in operating activities
                      
                      
                      (296,270
                      )
                      
                      
                      (345,178
                      )Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                      
                      
                      (115,668
                      )
                      
                      
                      (8,304
                      )Net
      cash flows used in investing activities
                      
                      
                      (115,668
                      )
                      
                      
                      (8,304
                      )Cash
      flows from financing activitiesProceeds
      from (repayment to) short-term loan
                      
                      
                      292,779
                      
                      
                      
                      439,734Due
      to (repayment to) a director
                      
                      
                      61,590
                      
                      
                      
                      (167,055
                      )Net
      cash flows provided by financing activities
                      
                      
                      354,369
                      
                      
                      
                      272,679Effect
      of foreign currency translation on cash and cash
    equivalents
                      
                      
                      (30
                      )
                      
                      
                      31,616Net
      increase in cash and cash equivalents
                      
                      
                      (57,598
                      )
                      
                      
                      (49,187
                      )Cash
      and cash equivalents - beginning of year
                      
                      
                      87,254
                      
                      
                      
                      136,441Cash
      and cash equivalents - end of year
                      
                      
                      29,656
                      
                      
                      $
                      87,254Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
                      
                      $
                      32,761
                      
                      
                      $
                      31,793Income
      taxes
                      
                      $
                      10,449
                      
                      
                      $
                      4,496See
      accompanying notes to consolidated financial
  statements.
 
 21
 1.
                    ORGANIZATION
      AND BUSINESS BACKGROUND
 
 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.
 
 Envirosafe
Corporation and its wholly-owned subsidiaries, ADDE and Haoyu, are hereafter
referred to as (the “Company”).
  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.
  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 the Company 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.
 
 The
Company 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.
 
 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.
 
 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 current trade receivables.
 
 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.
 
 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.
 
 There was
no provision for obsolete inventories recorded by the Company as of December 31,
2009 and 2008, respectively.
  22
 
 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.
 
 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.
 
 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, prepayments, 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.
 
 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, 2009 and 2008, the Company had warranty and maintenance reserves of
$50,976 and $30,203, respectively.
  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.
  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.
 
 23
 
 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.
 
 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, 2009 and 2008, 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 three customers that
individually comprised 10% or more of gross revenue for the year ended December
31, 2009:
 
 Shenzhen
Jiaoyi euqipment
co.                                                      $396,808
(34%)
 Guangzhou
Guangyu Digital Tech
co.                                            $346,383
(29%)
 Shenzhen
Xundatong Tech
co.                                                      
 $330,765 (17%)
  Recently issued accounting
pronouncements
 
 Fair Value Measurements and
Disclosures
  (Accounting
Standards Update (“ASU”) 2010-06)
  In
January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and
Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements.”
ASU 2010-06 requires new disclosures regarding transfers in and out of the Level
1 and 2 and activity within Level 3 fair value measurements and clarifies
existing disclosures of inputs and valuation techniques for Level 2 and 3 fair
value measurements. ASU 2010-06 also includes conforming amendments to
employers’ disclosures about postretirement benefit plan assets. The new
disclosures and clarifications of existing disclosures are effective for interim
and annual reporting periods beginning after December 15, 2009, except for
the disclosure of activity within Level 3 fair value measurements, which is
effective for fiscal years beginning after December 15, 2010, and for
interim periods within those years. The adoption of this statement is not
expected to have a material impact on our consolidated financial position or
results of operation.
 
 FASB Accounting Standards
Codification
  (Accounting
Standards Update (“ASU”) 2009-01)
  In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s financial statements as all future references to authoritative
accounting literature will be referenced in accordance with the Codification.
There have been no changes to the content of the Company’s financial statements
or disclosures as a result of implementing the Codification during the year
ended December 31, 2009.   As a result of the Company’s
implementation of the Codification during the year ended December 31, 2009,
previous references to new accounting standards and literature are no longer
applicable. In the current annual financial statements, the Company will provide
reference to both new and old guidance to assist in understanding the impacts of
recently adopted accounting literature, particularly for guidance adopted since
the beginning of the current fiscal year but prior to the
Codification.
  24
 
 Subsequent
Events
  (Included
in Accounting Standards Codification (“ASC”) 855 “Subsequent Events”, previously
SFAS No. 165 “Subsequent Events”)
  SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued (“subsequent events”). An entity
is required to disclose the date through which subsequent events have been
evaluated and the basis for that date. For public entities, this is the date the
financial statements are issued. SFAS No. 165 does not apply to subsequent
events or transactions that are within the scope of other GAAP and did not
result in significant changes in the subsequent events reported by the Company.
SFAS No. 165 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s financial statements. The
Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.
  Determination of the Useful
Life of Intangible Assets
  (Included
in ASC 350 “Intangibles – Goodwill and Other”, previously FSP SFAS No. 142-3
“Determination of the Useful Lives of Intangible Assets”)
  FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The adoption of FSP SFAS No. 142-3 did not impact the
Company’s financial statements.
  Noncontrolling
Interests
  (Included
in ASC 810 “Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51”)
  SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. Any excess or shortfall for
buyouts of noncontrolling interests in mature restaurants is recognized as an
adjustment to additional paid-in capital in stockholders’ equity. Any shortfall
resulting from the early buyout of noncontrolling interests will continue to be
recognized as a benefit in partner investment expense up to the initial amount
recognized at the time of buy-in. Additionally, operating losses can be
allocated to noncontrolling interests even when such allocation results in a
deficit balance (i.e.,
book value can go negative).  The Company presents noncontrolling
interests (previously shown as minority interest) as a component of equity on
its consolidated balance sheets. Minority interest expense is no longer
separately reported as a reduction to net income on the consolidated income
statement, but is instead shown below net income under the heading “net income
attributable to noncontrolling interests.” The adoption of SFAS No. 160 did
not have any other material impact on the Company’s financial
statements.
  Consolidation of Variable
Interest Entities – Amended
  (To be
included in ASC 810 “Consolidation”, SFAS No. 167 “Amendments to FASB
Interpretation No. 46(R)”)
  SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.
  Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
  4.
                    INVENTORIES
  As
      of December 31,2009
                    
                    
                    2008Raw
      materials
                    
                    $
                    7,243
                    
                    
                    $
                    13,330Finished
      goods
                    
                    
                    365,728
                    
                    
                    
                    240,116372,971
                    
                    
                    
                    253,446Provision
      for obsolete inventories
                    
                    
                    -
                    
                    
                    
                    -$
                    372,971
                    
                    
                    $
                    253,446
 
 There was
no provision for obsolete inventories recorded by the Company as of March 31,
2010 and December 31, 2009, respectively.
  5.
                    PREPAYMENTS
 
 The
balances of $483,812 and $132,978 as of December 31, 2009 and December 31, 2008,
respectively, represented prepaid goods, supplies and other items used in
packaging of the products.
 
 25
  6.
                    REFUNDABLE
      DEPOSIT
 
 The
balance of 220,849 as of December 31, 2009 represents the deposit to an
independent party, which acts as a guarantor issuing the guarantee to the
Company in connection with a short-term loan from a bank. (see Note
8)
 
 7.
                    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, 2009 and 2008, the Company had warranty and maintenance reserves of
$50,976 and $30,203, respectively.
 
 8.
                    SHORT-TERM
      NOTE PAYABLE
 
 The
short-term note payable was the loan from a bank denominated in RMB and
repayable within one year.  It carries annual interest at 6.903%,
which is determined by the benchmark rate of 5.31% in the People’s Bank of China
(the “PBOC”) for six-month to one-year short-term loans per annum, and the
floating rate of 30%.
  The bank
loan is secured by a guarantee put up by an independent party, as well as a real
estate with the market value of approximately $295,000 deposited to the bank as
collateral.  The guarantor received $220,849 from the Company for
issuing the guarantee. The receivable due from the guarantor was recorded as
refundable deposit under current assets as of December 31, 2009.
 
 9.
                    AMOUNT
      DUE TO A DIRECTOR
 
 The
balances due to a director represented unsecured advances which are
interest-free and repayable on demand. As of December 31, 2009 and 2008, the
balances of due to a director are $97,279 and $35,663,
respectively.
 
 10.
                    COMMITMENTS
      AND CONTINGENCIES
 
 The
Company had no commitments or contingencies as of December 31, 2009 and
2008.
  11.
                    CAPITAL
      STOCK
 
 The
preferred stock of the Company, 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.
 
 As of
December 31, 2009, 480,000 shares of the Company’s preferred stock had been
converted into 24,000,000 shares of the Company’s common stock, per the request
of the preferred stock holders.
 
 12.
                    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, 2009 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.
 
 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, 2009.
  26
  13.
                    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 ended2009
                    
                    
                    2008Numerator:Net
      income (loss)
                    
                    $
                    62,553
                    
                    
                    $
                    536,506Denominator:Weighted
      average number of shares outstandingBasic
                    
                    
                    8,903,626
                    
                    
                    
                    1,309,360Diluted
                    
                    
                    70,267,798
                    
                    
                    
                    29,434,360Earnings
      (loss) per shareBasic
                    
                    $
                    0.01
                    
                    
                    $
                    0.39Diluted
                    
                    $
                    0.00
                    
                    
                    
                    0.02
 
 The basic
and diluted earnings (loss) per share were calculated using the
net 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.
 
 14.
                    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 $11,710 and $1,040 for
the years ended December 31, 2009 and 2008, respectively.
  15.
                    RELATED
      PARTY TRANSACTIONS
 
 Apart
from the transaction as disclosed in note 9 to the audited condensed financial
statements, the Company had no other material transactions carried out with its
related parties during the reporting periods.
 
 16.
                    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
      31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Revenue
      from external customers, net of warranty and maintenance
      reserves
                    
                    $
                    506,519
                    
                    
                    $
                    1,147,160
                    
                    
                    $
                    624,143
                    
                    
                    $
                    1,763,293
                    
                    
                    $
                    1,130,662
                    
                    
                    $
                    2,910,453
 
 All of
the Company’s long-lived assets and customers are located in the
PRC.
  17.
                    BUILDING
      LEASE
 
 The
Company leases it business location.  The lease expires on May 31,
2009.  The monthly lease expense is $3,822.  Total lease
expense for the year ended December 31, 2009 was $19,112.
  18.
                    SUBSEQUENT
      EVENTS
 
 We
evaluated subsequent events through the date and time our financial statements
were issued on May 12, 2010. There are no subsequent events through May 12,
2010.
 
 27
 
 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, 2009 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.
 
 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, 2009, 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.
  28
 
 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, 2009,
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.
  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, 2009. 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.
  29
 
 
 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
              
              PositionYanbin
      Guo
              
              
              43
              
              President,
      CEO, and DirectorLiena
      Fu
              
              
              51
              
              CFOChangping
      Yan
              
              
              36
              
              Director
 
 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.
 
 Yanbin
Guo, President, CEO, and Director – 43
 
 Yanbin
Guo has been our largest shareholder since 2008. 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.
  Liena
Fu, CFO – 51
 
 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.
 
 Ms.
Changping Yan, Director – 36
 
 After Ms.
Changping Yan obtained her bachelor’s degree in computer applications from
ZhongShan University in 1996, she 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, 2009. The Company’s
Board of Directors held no formal meetings during the period commencing on
January 1, 2009 and ending on December 31, 2009.
 
 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.
  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 2009. We believe that
all of these filing requirements were satisfied by our executive officer,
director and by the beneficial owners of more than 10% of our Common
Stock.
 
 30
 
 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, 2009, 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
              
              
              TotalYanbin
      Guo
                President,
      CEO & Director
              
              
              2009
      2008
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -2007
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Liena
      Fu
                CFO
              
              
              2009
      2008
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -2007
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Changping
      Yan
                Director
              
              
              2009
      2008
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -
              
              
              
              -
      -2007
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
  Employment
Contracts
 
 There is
no employment agreement in place for the year 2009 between us and Yanbin Guo,
our President and Chief Executive Officer.
 
 Stock
Option Awards
 
 There
were no options granted to our Chief Executive Officer during 2009, 2008 or
2007.
 
 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 May 11, 2010 (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 May 11, 2010, there were 26,767,798 shares of Common Stock issued
and outstanding.
 
  Title
      of Class
              
              Name
              
              Number
      of Shares Owned(1)
              
              Percent
      of Class (1)Preferred
              
              Yanbin
      Guo
                Rm.805,
      Tower B, No.108,
                TaoJin
      Dong Road, YueXiu District, Guangzhou, P.R. China
              
              214,000
              
              24.60%Preferred
              
              Changping
      Yan
                Rm.302,
      Tower 7, BaiHe St.,
                JinCui
      Yuan, Li Jiang Garden, PanYu District, Guangzhou, P.R.
    China
              
              444,000
              
              51.03%Preferred
              
              JPF
      Securities Law LLC Escrow account
                19720
      Jetton Road, Suite 300
                Cornelius,
      NC  28031
              
              120,000
      (3)
              
              13.79%Preferred
              
              All
      directors, nominees, and executive officers as a group (three
      people)
              
              658,000
              
              75.63%Common
              
              Yanbin
      Guo
                Rm.805,Tower
      B, No.108,
                TaoJin
      Dong Road, YueXiu District, Guangzhou, P.R. China
              
              12,500,000
              
              46.70%Common
              
              Changping
      Yan
                Rm.302,
      Tower 7, BaiHe St.,
                JinCui
      Yuan, Li Jiang Garden, PanYu District, Guangzhou, P.R.
    China
              
              10,079,032
              
              37.65%Common
              
              All
      directors, nominees, and executive officers as a group (three
      people)
              
              22,579,032
              
              84.35%
 
 (1)
Calculation based on 870,000 preferred shares and 26,767,798 common shares
issued and outstanding as of May 11, 2010, respectively.
 (2)
Except as otherwise indicated, the shares are owned of record and beneficially
by the persons named in the table.
 (3) The
shares held in JPF Securities Law LLC Escrow account represented the collateral
shares for the promissory note, dated March 4, 2008, signed by Ms. Changping
Yan. The beneficial owner of the collateral shares is Guoqiang Zhan, our former
president.
 
 31
 
 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 the independent auditor, Lake & Associates CPA’s LLC
(“Lake”), for our audit of the annual financial statements for the years ended
December 31, 2009 and 2008. Audit fees and other fees of auditors are listed as
follows:
  Year Ended December 31
                
                2009(2)
                
                
                2008(3)Lake
                
                
                LakeAudit
      Fees (1)
                
                $
                27,500
                
                
                $
                41,000Audit-Related
      Fees (4)
                
                $
                --
                
                
                $
                --Tax
      Fees (5)
                
                
                --
                
                
                
                --All
      Other Fees (6)
                
                
                --
                
                
                
                --Total
      Accounting Fees and Service
                
                $
                27,500
                
                
                $
                41,000
   (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 2009 relate to (i) the audit of our annual financial
      statements for the fiscal year ended December 31, 2009, and (ii) the
      review of the financial statements included in our filings on Form 10-Q
      for the quarters of 2010.
 
 (3)
              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 2009.
 
 (4)
              Audit-Related Fees.
      These are fees for the assurance and related services reasonably related
      to the performance of the audit or the review of our financial
      statements.
 
 (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 2009
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 2009.
 
 None
  32
 
 INDEX
TO EXHIBITS
 
 Exhibit
#                      Description
 
 
 3.1                      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
      Stock
 4.2                      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 *
 
 *                         
Filed herewith.
 
 **
              Contained
      in our Form 10-SB, as filed with the Commission on January 18,
      2007.
 
 33
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned majority of the Board of Directors, thereunto duly
authorized.
 CHINA
      EDUCATION TECHNOLOGY, INC.Date:
      May 13, 2010
              
              /s/ Yanbin GuoYanbin
      GuoPresident