U.S.
Securities and Exchange Commission
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 [X]           QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
 
 For the Quarterly Period Ended
September 30, 2009
 
 
 [
]            TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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
 (State or
Other Jurisdiction of Incorporation of Organization)
 
 94-3251254
 (I.R.S.
Employer Identification No.)
 
 8/F,
Tower B, National Software Industry Zone,
 Gao
Tang Xin Jian Zone, Tian He District
 Guangzhou,
P.R.China  510663
 (Address
of principal executive offices)
 
 (8620)
6108-8998 - Tel
 (8620) 6108-8999 -
Fax
 (Issuer's
telephone number)
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 Date File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes [ ] No [ ]
  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
              þ
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [  ] No [X]
 
 Number of
shares of common stock outstanding as of November 18, 2009:24,767,798
 Number of
shares of preferred stock outstanding as of November 18, 2009:     910,000
 
 CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
 
 The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, 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 discussions under "Notes to Consolidated financial statements"
and "Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-Q. 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-Q 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
      CONTENTSPART
      I. FINANCIAL INFORMATIONITEM
      1. CONSOLIDATED FINANCIAL STATEMENTS
              3ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
              9ITEM
      3. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
              10ITEM
      4. CONTROLS AND PROCEDURES
                
                ITEM
      4T. CONTROLS AND PROCEDURES
              10
                
                10PART
      II. OTHER INFORMATIONITEM
      1. LEGAL PROCEEDINGS
              11ITEM
      1A. RISK FACTORS
              11ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
              11ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
              11ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              11ITEM
      5. OTHER INFORMATION
              11ITEM
      6. EXHIBITS
              11SIGNATURES
              12
 2
 Table of Contents
 
 
 ITEM 1.CONSOLIDATED FINANCIAL
STATEMENTS
 INDEX TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  PageUnaudited
      Consolidated Balance Sheets
                
                F-4Unaudited
      Consolidated Statements of Operations And Comprehensive
    Loss
                
                F-5Unaudited
      Consolidated Statements of Cash Flows
                
                F-6Notes
      to Unaudited Consolidated Financial Statements
                
                F-7
  
 3
 Table of Contents
  
 CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESUNAUDITED
      CONSOLIDATED BALANCE SHEETSAS
      OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008(UNAUDITED)September 30, 2009
                  
                  
                  December 31, 2008(Audited)ASSETSCurrent assets:Cash
      and cash equivalents
                  
                  $
                  101,958
                  
                  
                  $
                  87,254Trade
      receivables, net
                  
                  
                  1,270,924
                  
                  
                  
                  1,224,879Inventories
                  
                  
                  377,450
                  
                  
                  
                  253,446Prepayments
                  
                  
                  649,680
                  
                  
                  
                  132,978Other
      receivables
                  
                  
                  113,986
                  
                  
                  
                  -Refundable
      deposit
                  
                  
                  220,823
                  
                  
                  
                  -Total
      current assets
                  
                  
                  2,734,821
                  
                  
                  
                  1,698,557Property, plant and equipment,
      net
                  
                  
                  243,070
                  
                  
                  
                  38,087Non-current assets:Warranty
      receivable
                  
                  
                  15,617
                  
                  
                  
                  15,633Others
                  
                  
                  37,306
                  
                  
                  
                  35,502Total
      non-current assests
                  
                  
                  52,923
                  
                  
                  
                  51,135Total
      assets
                  
                  $
                  3,030,815
                  
                  
                  $
                  1,787,779LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent liabilities:Short-term
      note payable
                  
                  
                  732,172
                  
                  
                  
                  439,734Trade
      payables
                  
                  
                  314,455
                  
                  
                  
                  106,212Other
      payables and accrued expenses
                  
                  
                  196,222
                  
                  
                  
                  112,966Amount
      due to a director
                  
                  
                  35,663
                  
                  
                  
                  35,663Income
      tax payable
                  
                  
                  299,794
                  
                  
                  
                  210,757Total
      current liabilities
                  
                  
                  1,578,305
                  
                  
                  
                  905,332Long-term liabilities:Warranty
      and maintenance reserves
                  
                  
                  19,819
                  
                  
                  
                  30,203STOCKHOLDERS’
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized,
                  
                  
                  91
                  
                  
                  
                  135910,000
      shares issued and outstanding as of June 30, 2009 and 1,350,000 shares
      issued and outstanding as of December 31, 2008Common
      stock, $0.0001 par value, 50,000,000 shares authorized,
                  
                  
                  2,477
                  
                  
                  
                  27724,767,798
      shares issued and outstanding as of June 30, 2009 and 2,767,798 shares
      issued and outstanding as of December 31, 2008Additional
      paid in captial
                  
                  
                  120,634
                  
                  
                  
                  122,790Statutory
      and other reserves
                  
                  
                  69,565
                  
                  
                  
                  69,565Accumulated
      other comprehensive income
                  
                  
                  76,095
                  
                  
                  
                  76,908Retained
      earnings
                  
                  
                  1,163,828
                  
                  
                  
                  582,568Total
      stockholders’ equity
                  
                  
                  1,432,690
                  
                  
                  
                  852,243Total
      liabilities and stockholders’ equity
                  
                  
                  3,030,815
                  
                  
                  
                  1,787,779See
      accompanying notes to consolidated financial statements.
  4
 Table of Contents
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR
      THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND
2008(UNAUDITED)For
      the three months ended
                
                
                For
      the nine months endedSeptember
      30, 2009
                
                
                September
      30, 2008
                
                
                September
      30, 2009
                
                
                September
      30, 2008Sales
                
                $
                194,821
                
                
                $
                695,307
                
                
                $
                1,166,281
                
                
                $
                2,576,508Cost
      of goods sold
                
                
                (33,843
                )
                
                
                (231,858
                )
                
                
                (431,728
                )
                
                
                (1,170,573
                )Gross
      profit
                
                
                160,978
                
                
                
                463,449
                
                
                
                734,553
                
                
                
                1,405,935Operating
      expensesGeneral
      and administrative expenses
                
                
                68,735
                
                
                
                126,551
                
                
                
                171,490
                
                
                
                236,613Research
      and development expenses
                
                
                -
                
                
                
                43,762
                
                
                
                46,675
                
                
                
                106,193Selling
      expenses
                
                
                8,313
                
                
                
                19,545
                
                
                
                33,939
                
                
                
                55,007Total
      operating expenses
                
                
                77,047
                
                
                
                189,858
                
                
                
                252,104
                
                
                
                397,813Net
      operating Income (loss)
                
                
                83,931
                
                
                
                273,591
                
                
                
                482,450
                
                
                
                1,008,122Other
      incomeSubsidy
      income from the PRC authorities for general operations
                
                
                84,460
                
                
                
                68,778
                
                
                
                184,769
                
                
                
                233,567Interest
      income (expenses)
                
                
                (7,360
                )
                
                
                (8,886
                )
                
                
                (16,890
                )
                
                
                (22,854
                )Other
      income (expenses)
                
                
                20
                
                
                
                194
                
                
                
                34,918
                
                
                
                18,632Total
      other income
                
                
                77,119
                
                
                
                60,086
                
                
                
                202,797
                
                
                
                229,345Income
      before income taxes
                
                
                161,050
                
                
                
                333,677
                
                
                
                685,247
                
                
                
                1,237,467Income
      taxes
                
                
                (24,415.8
                )
                
                
                (74,473
                )
                
                
                (103,987
                )
                
                
                (295,552
                )Net
      Income (loss)
                
                $
                136,634
                
                
                $
                259,204
                
                
                $
                581,260
                
                
                $
                941,915Other
      comprehensive income (loss)Foreign
      currency translation adjustment
                
                
                360
                
                
                
                651
                
                
                
                (813
                )
                
                
                39,560Total
      comprehensive income (loss)
                
                $
                136,994
                
                
                $
                259,855
                
                
                $
                580,447
                
                
                $
                981,475Earnings
      (loss) per shareBasic
                
                $
                0.01
                
                
                $
                0.10
                
                
                $
                0.05
                
                
                $
                0.37Diluted
                
                
                **
                
                
                
                **
                
                
                $
                0.01
                
                
                $
                0.01Weighted
      average number of shares outstandingBasic
                
                
                24,767,798
                
                
                
                2,680,388
                
                
                
                11,730,761
                
                
                
                2,560,790Diluted
                
                
                70,267,798
                
                
                
                70,180,388
                
                
                
                70,267,798
                
                
                
                70,060,790**
      Less than $.01See
      accompanying notes to consolidated financial
  statements.
   5
 Table of Contents
 CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008(UNAUDITED)For
      the nine months endedSeptember
      30, 2009
                
                
                September
      30, 2008Cash
      flows from operating activitiesNet
      income (loss)
                
                $
                581,260
                
                
                $
                941,915Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                
                
                16,116
                
                
                
                25,079Provision
      for doubtful debts
                
                
                
                
                
                
                23,055Provision
      for obsolete inventories
                
                
                
                
                
                
                2,424Changes
      in operating assets and liabilities:Trade
      receivables
                
                
                (47,247
                )
                
                
                (786,533
                )Inventories
                
                
                (124,253
                )
                
                
                142,293Prepayments
                
                
                (516,833
                )
                
                
                (216,993
                )Other
      receivables
                
                
                (113,986
                )Refundable
      deposits
                
                
                (220,823
                )Other
      noncurrent assets
                
                
                (1,839
                )
                
                
                -Warranty
      and maintenance reserves
                
                
                (10,355
                )
                
                
                -Trade
      payables
                
                
                208,347
                
                
                
                (630,528
                )Other
      payables and accrued expenses
                
                
                83,364
                
                
                
                18,412Income
      tax payable
                
                
                89,243
                
                
                
                288,819Net
      cash flows used in operating activities
                
                
                (57,006
                )
                
                
                (192,057
                )Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                
                
                (221,136
                )
                
                
                (8,094
                )Net
      cash flows used in investing activities
                
                
                (221,136
                )
                
                
                (8,094
                )Cash
      flows from financing activitiesProceeds
      from (repayment to) short-term loan
                
                
                292,869
                
                
                
                428,639Cash
      acquired from the exchange
                
                
                -
                
                
                
                13,532(Repayment
      to) a director
                
                
                -
                
                
                
                (197,355
                )Net
      cash flows provided by financing activities
                
                
                292,869
                
                
                
                244,816Effect
      of foreign currency translation on cash and cash
    equivalents
                
                
                (23
                )
                
                
                9,788Net
      increase in cash and cash equivalents
                
                
                14,704
                
                
                
                54,453Cash
      and cash equivalents - beginning of year
                
                
                87,254
                
                
                
                136,441Cash
      and cash equivalents - end of year
                
                
                101,958
                
                
                $
                190,894Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
                
                $
                20,501
                
                
                $
                10,451Income
      taxes
                
                $
                1,368
                
                
                $
                6,733See
      accompanying notes to consolidated financial
  statements.
  6
 Table of Contents
 CHINA EDUCATION
TECHNOLOGY INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
 FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
 (Stated in US
Dollars)
 1.
                BASIS
      OF PRESENTATION
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with both generally accepted accounting principles for
interim financial information, and the instructions to Form 10-Q and Article 8
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, considered necessary for a
fair presentation of the results for the interim periods presented. Interim
results are not necessarily indicative of results for a full year.
 
 The
unaudited condensed consolidated financial statements and related disclosures
have been prepared with the presumption that users of the interim financial
information have read or have access to our annual audited consolidated
financial statements for the preceding fiscal year. Accordingly, these unaudited
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and the related notes thereto
contained in the Annual Report on Form 10-K for the year ended December 31,
2008.
 
 2.
                ORGANIZATION
      BACKGROUND
 
 China
Education Technology Inc. (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.
 
 The
Company and its subsidiaries are hereinafter 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.
  3.
                DESCRIPTION
      OF BUSINESS
 
 The
Company’s primary business operations are conducted through Haoyu, which is
specialized in the research and development of educational products and
technology applications.  Haoyu is located in the Guangzhou Province
of the PRC with three manufacture bases for research and development
purpose.
 
 The
educational software developed by Haoyu is in conformity to the new educational
purpose.  The software uses the advanced technology of data
collection, sensor and wireless control and video image with handy appearance,
which can virtually upload the live experiment and analyze the information
collected.  Teachers and students can have the experiments done
automatically instead of the traditional method by hand.
 
 Haoyu
also engages in the trading of hardware and computer products such as monitors
and computer notebooks.
 
 4.
                RECENTLY
      ISSUED ACCOUNTING STANDARS
 
 The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the
results of its operations.
 
 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 quarter
ended September 30, 2009.
 
 As a
result of the Company’s implementation of the Codification during the quarter
ended September 30, 2009, previous references to new accounting standards and
literature are no longer applicable. In the current quarter 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.
 
 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. 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.
  7
 Table of Contents
  CHINA EDUCATION
TECHNOLOGY INC. AND SUBSIDIARIES
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
 FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008
 (Stated in US
Dollars)
 5.
INVENTORIES
 September
      30,
                
                
                December
      31,2009
                
                
                
                2008(Unaudited)
                
                
                (Audited)Raw
      materials
                
                $
                3,947
                
                
                $
                13,330Finished
      goods
                
                
                373,503
                
                
                
                240,116377,450
                
                
                
                253,446Provision
      for obsolete inventories
                
                
                -
                
                
                
                -$
                377,450
                
                
                $
                253,446
 
 The
Company had no provision for obsolete inventories charged to the statements of
operations for the nine months ended September 30, 2009 and for the year ended
December 31, 2008.
 
 6. PREPAYMENTS
 
 The
balances of $649,680 and $132,978 as of September 30, 2009 and December 31,
2008, respectively, represent prepaid goods, supplies and other items used in
packaging of the products.
 
 7.
                REFUNDABLE
      DEPOSIT
 
 The
balance of 220,823 as of September 30, 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
10)
 
 8.
                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
September 30, 2009 and December 31, 2008, the Company had warranty and
maintenance reserves of $19,819 and $30,203, respectively.
 
 9.
                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 September 30, 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 September 30, 2009.
 
 10.
                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 $220,823 from the Company for
issuing the guarantee. The receivable due from the guarantor was recorded as
refundable deposit under current assets as of September 30, 2009.
 
 11.
                EARNINGS
      PER SHARE
 
 The
following table sets forth the computation of basic and diluted earnings per
share for the periods indicated:
 
 For
      three months ended
                
                
                For
      nine months ended9/30/2009
                
                
                9/30/2008
                
                
                9/30/2009
                
                
                9/30/2008Net
      income (loss)
                
                $
                136,634
                
                
                $
                259,204
                
                
                $
                581,260
                
                
                $
                941,915Earnings
      (loss) per shareBasic
                
                $
                0.01
                
                
                $
                0.10
                
                
                $
                0.05
                
                
                $
                0.37Diluted
                
                
                **
                
                
                
                **
                
                
                $
                0.01
                
                
                $
                0.01Weighted
      average number of shares outstandingBasic
                
                
                24,767,798
                
                
                
                2,680,388
                
                
                
                11,730,761
                
                
                
                2,560,790Diluted
                
                
                70,267,798
                
                
                
                70,180,388
                
                
                
                70,267,798
                
                
                
                70,060,790
 ** Less
than $.01
 
 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.
 
 
 9.
                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
                
                
                TotalThree
      months ended
                  September
      30,
                
                
                Three
      months ended
                  September
      30,
                
                
                Three
      months ended
                  September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Revenue
      from external customers, net of warranty and maintenance
      reserves
                
                $
                1,571
                
                
                $
                368,032
                
                
                $
                193,250
                
                
                $
                510,515
                
                
                $
                194,821
                
                
                $
                878,547
 
 
 Hardware
                
                
                Software
                
                
                TotalNine
      months ended
                  September
      30,
                
                
                Nine
      months ended
                  September
      30,
                
                
                Nine
      months ended
                  September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008
                
                
                2009
                
                
                2008Revenue
      from external customers, net of warranty and maintenance
      reserves
                
                $
                370,092
                
                
                $
                786,867
                
                
                $
                796,189
                
                
                $
                1,094,334
                
                
                $
                1,166,281
                
                
                $
                1,881,201
 
 All of
the Company’s long-lived assets and customers are located in the
PRC.
 8
 Table of Contents
 
 ITEM 2.  
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 Management’s
Discussion and Analysis contains various “forward looking statements” within
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. Management will elect additional changes to
revenue recognition to comply with the most conservative SEC recognition on a
forward going accrual basis as the model is replicated with other similar
markets (i.e. SBDC). The Company’s actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth therein.
 
 Management’s
Discussion and Analysis of Results of Financial Condition and Results of
Operations (“MD&A”) should be read in conjunction with the consolidated
financial statements included herein.
 
 As used
herein the terms "We", the "Company", "CEDT", the "Registrant," or the "Issuer"
refers to China Education Technology, Inc., its subsidiaries 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 Haoyu 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.
 
 Haoyu
also engages in the trading of hardware and computer products such as monitors
and computer notebooks.
 
 RESULTS OF OPERATIONS -
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
 
 Revenues
 
 We had
revenues of $194,821 and $695,307 for the three months ended September 30, 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 three months ended September 30, 2009.
The decrease in gross profits by $500,486 in the three months ended September
30, 2009 is due primarily to the decrease in sales of our specialized
products.
 
 We had
revenues of $1,166,281 and $2,576,508 for the nine months ended September 30,
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 nine months ended September 30, 2009. The
decrease in gross profits by $1,410,227 in 2009 is due primarily to the decrease
in sales for our specialized products.
 
 Income /
Loss
 
 We had a
net gain of $136,634 and $259,204 for the three months ended September 30, 2009
and 2008, respectively. The decrease by $122,570 in net income for the three
months ended September 30, 2009 compared to September 30, 2008 is due primarily
to the decrease in overall sales of our products.
 
 We had a
net gain of $581,260 and $941,915 for the nine months ended September 30, 2009
and 2008, respectively. The decrease by $360,655 in net income for the nine
months ended September 30, 2009 compared to September 30, 2008 is due primarily
to the decrease in overall sales of our products.
 
 We hope
to continue to incur profits from operations during fiscal year 2009. There can
be no assurance that we will achieve or maintain profitability, or that any
revenue growth will take place in the future.
 
 Expenses
 
 Operating
expenses for the three months ended September 30, 2009 and 2008 were $77,047 and
$189,858 respectively. The decrease of $112,811 in operating expenses for the
three months ended September 30, 2009 compared to September 30, 2008 is due
primarily to the decrease in research and development costs in the amount of
$43,762. Our selling expenses also decreased in the amount of $11,232. The
decrease in these operating expenses can be attributed to the decrease in
overall sales.
 
 Operating
expenses for the nine months ended September 30, 2009 and 2008 were $252,104 and
$397,813 respectively. The decrease by $145,709 in operating expenses for the
nine months ended September 30, 2009 compared to the same period ended September
30, 2008 is due primarily to the decrease in research and development costs in
the amount of $59,518. Additionally, we had decrease in general and
administrative expenses in the amount of $65,123. The decrease in these
operating expenses can be attributed to the decrease in overall
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 three months ended September 30, 2009, we had
$33,843 in cost of goods sold, or 17.37% of sales revenue. During the three
months ended September 30, 2008, we had $231,858 in cost of goods sold, or
33.34% of sales revenue. The lower cost of goods sold as a percentage during the
three months ended September 30, 2009 was due to the decrease in sales revenue
by $500,486.
 
 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 nine months ended September 30, 2009, we had
$431,728 in cost of goods sold, or 37.02% of sales revenue. During the nine
months ended September 30, 2008, we had $1,170,573 in cost of goods sold, or
45.43% of sales revenue. The lower cost of goods sold as a percentage during the
nine months ended September 30, 2009 was due to the decrease in sales revenue by
$1,410,227.
 
 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 $(57,006) for the nine months ended
September 30, 2009, compared to cash flows of $(192,057) used in operating
activities for the nine months ended September 30, 2008. Negative cash flows
from operations for the nine months ended September 30, 2009 were due primarily
to the net income of $581,260, plus the increase in trade payables by
$208,347, partially offset by the increases in prepayments by $516,833, the
increase in other receivables by $113,986, the increase in refundable deposits
by $220,823, and the increase in inventories by $124,253. Negative cash flows
from operations for the nine months ended September 30, 2008 were due primarily
to the net income of $941,915 and the decrease in inventories by $142,293,
partially offset by the increase in trade receivables by $786,533, the increase
in prepayment by $216,993 and the decrease in trade payables by
$630,528.
 
 Cash
flows (used in) investing activities were $(221,136) and $(8,094) for the nine
months ended September 30, 2009 and 2008, respectively. This change in cash
flows used in investing is attributable to payments to acquire property, plant,
and equipment.
 
 Cash
flows provided by financing activities were $292,869 and $244,816 for the nine
months ended September 30, 2009 and 2008, respectively. Cash flows from
financing activities in 2009 were due primarily to proceeds from short term loan
in the amount of $292,869.
 
 Overall,
we have funded our cash needs from inception through September 30, 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 $101,958 on hand and a working capital of $1,156,516 as of September 30,
2009. Currently, we have enough cash to fund our operations for about nine
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 $250,000 to sustain operations through year 2009 and approximately
$700,000 per year thereafter. Modifications to our business plans may require
additional capital for us to operate. For example, if we are unable to raise
additional capital in the future we may need to curtail our number of product
offers or limit our marketing efforts to the most profitable geographical areas.
This may result in lower revenues and market share for us. In addition, there
can be no assurance that additional capital will be available to us when needed
or available on terms favorable to us.
 
 On a
long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. However, there can be no assurance that we will be able to obtain
additional equity or debt financing in the future, if at all. If we are unable
to raise additional capital, our growth potential will be adversely affected.
Additionally, we will have to significantly modify our business
plan.
 
 9
 Table of Contents
 
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK
 
 The information to be reported under this item is
not required of smaller reporting companies.
 
 ITEM 4. 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 September 30, 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.
 
 ITEM 4T. 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 September 30,
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 Quarterly 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 consolidated 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 consolidated 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 consolidated financial statements.
 
 As of the
end of the period covered by the Quarterly 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 September 30, 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
Quarterly 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 Quarterly
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.
 
 10
 Table of Contents
 
 PART II.  OTHER
INFORMATION
 
 ITEM
1.      LEGAL PROCEEDINGS
 
 As of the
date of this report, we are not a party to any pending legal proceeding and are
not aware of any threatened legal proceeding.
 
 ITEM
1A.   RISK FACTORS
 
 The
information to be reported under this item has not changed since the previously
filed 10K, for the year ended December 31, 2008.
 
 ITEM
2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
 
 We have
not had any sales of unregistered securities.
 
 ITEM
3.      DEFAULTS UPON SENIOR SECURITIES
 
 We have
not had any default upon senior securities.
 
 ITEM
4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 We have
not had any submissions of matters to a vote of security holders.
 
 ITEM
5.      OTHER INFORMATION
 
 We do not
have any other information to report.
 
 ITEM
6.      EXHIBITS
 
 31.1 CEO
Certification Pursuant to Section 302
 31.2 CFO Certification Pursuant to Section
302
 32.1
CEO Certification Pursuant to Section 906
 32.2 CFO
Certification Pursuant to Section 906
 
 Reports on Form8-K
 
 (b)
None
 
 11
 Table of Contents
 
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
 
 CHINA
      EDUCATION TECHNOLOGY, INC.
                (Registrant)Date:
      November 18, 2009
              By:
              Yan
      Bin GuoYan
      Bin Guo
                President,
      Chief Executive Officer