UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION
 Washington, D.C.
20549
  FORM
10-Q
  [X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934:
  For
the Quarterly Period ended June 30, 2008
  [  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE
ACT
  For the
transition period from __________________ to __________________
 
 Commission
File Number: 0-52407
 
 ENVIROSAFE
CORPORATION
  (Exact
name of registrant as specified in its charter)
 
 Delaware
              94-3251254(State
      or other jurisdiction of
              (IRS
      Employer Identification No.)incorporation
      or 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)
  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 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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
  Large
accelerated filer [
]                                                                           Accelerated
filer   [ ]
  Non-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]
 
 As of the
close of business on August 13, 2008, 22,141,375 shares of our common stock, par
value $.0001 per share, were outstanding.
 
 As of the
close of business on August 13, 2008, 1,350,000 shares of our preferred stock,
par value $.0001 per share, were outstanding.
 
  Copies
to:
 Jared P.
Febbroriello, Esq. LL.M. - Principal
 JPF
Securities Law, LLC
 19720
Jetton Road, 3rd Floor
 Cornelius,
NC 28031
 Phone:
(704) 897-8334
 Fax:
(888) 608-5705
  CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
 
 The
discussion contained in this Form 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 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.
 
 
  1
  TABLE
OF CONTENTS
  PART
      I  FINANCIAL INFORMATIONItem 1.  Financial
      Statements.
              3•
      Balance Sheet
              3•
      Statements of Operations
              4•
      Statements of Cash Flows
              5•
      Condensed Notes to Financial Statements
              61.
      Organization and Basis for Presentation
              62.
      Summary of Significant Accounting Policies
              63.
      Earnings (Loss) Per Common Share
              64.
      Income Taxes
              6Item
      2.  Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
              19•
      Overview
              19•
      Overall Operating Results
              19•
      Financial Position and Liquidity
              19•
      Going Concern
              19Item
      3.  Controls and Procedures
              19Forward-Looking
      Statements
              19PART
      II  OTHER INFORMATIONItem
      1. Legal Proceedings
              20Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              20Item
      3. Defaults Upon Senior Securities
              20Item
      4. Submission of Matters to a Vote of Security Holder
              20Item
      5. Other Information
              20Item
      6. Exhibits and Reports on Form 8-K
              20SIGNATURES
              21
  2
 Table of Contents
  Item
1.  Financial Statements.
  ENVIROSAFE
      CORPORATIONUnaudited
      Condensed Balance SheetsAs
      of June 30, 2008 and December 31, 2007Assets
                
                
                
                
                
                June 30, 2008
                
                December 31, 2007Current
      assets:Cash
      and cash equivalents
                $
                -
                
                -Total
      current assets
                
                -
                
                -Total
      assets
                $
                -
                
                -Liabilities
      and Shareholders’ DeficitCurrent
      liabilities:Accounts
      payable and accrued expenses
                $
                2,315
                
                10,000Total
      current liabilities
                
                2,315
                
                10,000Commitments
      and contingencies (note 8)Shareholders’
      deficit:Common
      stock, $0.0001 par, 500,000,000 shares authorized2,141,375
      shares issued and outstanding
                
                214
                
                214Preferred
      stock, $0.0001 par, 10,000,000 shares authorizedno
      shares issued and outstanding
                
                -
                
                -Additional
      paid in capital
                
                2,322,230
                
                2,312,230Retained
      deficit
                
                (2,324,759)
                
                (2,322,444)Total
      shareholders' deficit
                
                (2,315)
                
                (10,000)Total
      liabilities and shareholders’ deficit
                $
                0
                
                0See
      acompanying notes to financial
statements.
  3
 Table of Contents
  ENVIROSAFE
      CORPORATIONUnaudited
      Condensed Statements of OperationsFOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007For
      the Three Months
                
                
                For
      the Six MonthsEnded
      June 30,
                
                
                Ended
      June 30,2008
                
                
                2007
                
                
                2008
                
                
                2007REVENUESSales
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Cost
      of sales
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -GROSS
      PROFIT
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -OPERATING
      EXPENSESGeneral
      and administrative expenses
                
                
                2,100
                
                
                
                -
                
                
                
                2,100
                
                
                
                62Professional
      fees
                
                
                215
                
                
                
                153,000
                
                
                
                215
                
                
                
                303,544TOTAL
      OPERATING EXPENSES
                
                
                2,315
                
                
                
                153,000
                
                
                
                2,315
                
                
                
                303,606OPERATING
      (LOSS)
                
                
                (2,315
                )
                
                
                (153,000
                )
                
                
                (2,315
                )
                
                
                (303,606
                )OTHER
      INCOME (EXPENSE)Interest
      expense
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -NET
      (LOSS) BEFORE TAXES
                
                
                (2,315
                )
                
                
                (153,000
                )
                
                
                (2,315
                )
                
                
                (303,606
                )NET
      (LOSS)
                
                
                (2,315
                )
                
                $
                (153,000
                )
                
                
                (2,315
                )
                
                $
                (303,606
                )NET
      LOSS PER COMMON SHAREBasic
      and fully diluted
                
                
                **
                
                
                $
                (0.13
                )
                
                
                **
                
                
                $
                (0.27
                )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING
                
                
                2,141,375
                
                
                
                1,196,806
                
                
                
                2,141,375
                
                
                
                1,145,139**
      Less than $.01The
      accompanying notes are an integral part of these financial
      statements.
  4
 Table of Contents
  ENVIROSAFE
      CORPORATIONUnaudited
      Condensed Statements of Cash FlowsFOR
      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007For
      the Six MonthsEnded
      June 30,2008
                
                
                2007Cash
      flows from operating activities:Net
      (loss)
                
                $
                (2,315
                )
                
                $
                (303,606
                )Adjustments
      to reconcile net loss to net cash (used in)operating
      activities:Issuance
      of common stock for services rendered
                
                
                -
                
                
                
                300,544Changes
      in operating assets and liabilities:Accounts
      payable and accrued expenses
                
                
                (7,685
                )
                
                
                (5,868
                )Net
      cash (used in) operating activities
                
                
                (10,000
                )
                
                
                (8,930
                )Cash
      flows from financing activities:Addition
      in paid-in capital
                
                $
                10,000
                
                
                $
                -Net
      cash provided by financing activities
                
                
                10,000
                
                
                
                -Net
      increase (decrease) in cash and cash equivalents
                
                
                -
                
                
                
                (8,930
                )Cash
      and cash equivalents at beginning of period
                
                
                -
                
                
                
                8,951Cash
      and cash equivalents at end of period
                
                $
                -
                
                
                $
                21Supplemental
      disclosure of non-cash information:Common
      stock issued for services
                
                
                -
                
                
                
                300,544See
      accompanying notes to financial
statements.
  5
 Table of Contents
  ENVIROSAFE CORPORATION
 NOTES TO
UNAUDITED CONDENSED FINANCIAL STATEMENTS
 For the
Three and Six Months Ended June 30, 2008 and 2007
  1.Basis of
Presentation
 
 The
accompanying unaudited condensed 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 Item 310(b) of
Regulation S-B. 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 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 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 financial statements for the
preceding fiscal year. Accordingly, these unaudited condensed financial
statements should be read in conjunction with the financial statements and the
related notes thereto contained in the Annual Report on Form 10-KSB for the
year ended December 31, 2007.
 
 2.Organization and Business
Background
 
 We were
incorporated in the state of Delaware in 1996. We were formed to produce a
comprehensive suite of disinfecting, cleaning, and bioremediation products for
the consumer, commercial, institutional and municipal markets. We were not
successful in developing this business model and had very limited
revenues.
 
 In 2007,
former management resigned and was replaced by a new board and new officers and
directors. Recognizing the need to increase
shareholder  value,  the  new  Board was
determined that the only way to enhance
shareholder  value  was  to  seek  potential  business
opportunities and effect a
business  combination  with  a target business
with significant growth potential
which,  in  the  opinion  of  our
management, could provide a profit to both the Company and our
shareholders.
 
 As of
March 4, 2008, we executed a Plan of Exchange (the "Agreement"), between and
among us ("EVSF"), ADDE EDUCATION HLDS LTD., a corporation organized and
existing under the laws ofHong Kong Special
Administrative Region of People’s Republic of China("ADDE"), the
shareholders of ADDE (the "ADDE Shareholders") and our majority shareholder (the
"EVSF Shareholders").
  Pursuant
to the terms of the Agreement, the transaction will not immediately close but
shall be conditioned upon: (1) EVSF shall eliminate all know or potential
liabilities of EVSF as of the closing date. This shall include, but is not
limited to, any accounts payable, accrued expenses, as well as any liabilities
shown on its annual report for the fiscal year of 2007 in FORM 10-KSB filed with
the Securities and Exchange Commission prior to the closing; (2)
EVSF  and EVSF shareholders shall pledge that any expenses concerning
any known or unknown lawsuits, legal disputes or any correlation expenses caused
by original EVSF Corporation and their shareholders, EVSF shall undertake full
responsibility and afford the correlation expenses after the closing. A comfort
letter referencing  EVSF prepared by a third party law firm confirming
that to the best of their knowledge after reasonable due diligence, EVSF has no
pending or threatened litigation; (3) a deposit of 632,253 shares of common
stock of EVSF into the escrow account of Greentree Financial Group, Inc.
("Escrow Agent") in exchange for the cash payment of $260,000 and $260,000
promissory note made by ADDE Shareholders to Guoqiang Zhan ("Mr. Zhan"), the new
president of EVSF, which shall also be simultaneously deposited into the escrow
account of escrow agent, (4) the issuance of 20,000,000 new shares of common
stock and 1,350,000 new shares of preferred stock of EVSF to the ADDE
shareholders, which should take no longer than 60 days, (5) the resignation of
Mr. Zhan from the board of directors and as officer of EVSF and appointment of
his successor(s) as designated by ADDE and/or the ADDE Shareholders, (6) a
pledge of 10,000,000 shares of EVSF common stock to be used as collateral on the
above mentioned promissory note, (7) a fully executed guarantee of the
promissory note from EVSF in favor of Mr. Zhan. Upon completion of the exchange,
ADDE will be our 100% owned subsidiary.
  Upon the
delivery of 20,632,253 shares of common stock (including 632,253 common shares
from the EVSF Shareholders), and 1,350,000 new shares of our preferred stock, to
ADDE Shareholders, ADDE Shareholders will hold a 'controlling interest' in us
representing approximately 93.2% of the then issued and outstanding our common
shares. Furthermore, the designees of ADDE will be appointed to the Board of
Directors after the closing. Subsequent to the appointment of ADDE designees,
our current management will resign from the Board of Directors.
  We have
agreed to use our best efforts to insure the escrow conditions under the escrow
agreement will be satisfied as promptly as practicable so that the closing
conditions under the agreement will occur. The closing did not occur until the
third quarter of 2008, which was announced in an additional current report on
Form 8-K, as amended, dated August 13, 2008. The detailed business description
and audited financials of ADDE and its subsidiary were also included in the Form
8-K/A as required by the federal securities laws.
 
 Accordingly,
the unaudited condensed consolidated financial statements as of June 30, 2008
are disclosed in note 7 as pro forma financial information.
 
 3.Summary of Significant
Accounting Policies
 
 Cash and Cash
Equivalents
 
 We
consider all highly liquid debt instruments and other short-term investments
with an initial maturity of three months or less to be cash or cash
equivalents.
 
 We may in
the future maintain cash and cash equivalents with a financial institution that
exceeds the limit of insurability under the Federal Deposit Insurance
Corporation. Management’s evaluation of the financial strength of its financial
institution, we believe the risk of maintaining deposits in excess of federal
deposit limits at its financial institution is limited and does not pose a
material risk.
  Revenue
Recognition
 
 We record
our transactions under the accrual method of accounting whereby income is
recognized when the services are performed.
 
 Income
Taxes
 
 We
adopted the provisions of Statement of Financial Accounting Standards (“SFAS”)
No. 109, Accounting for Income Taxes. The Statement requires an asset and
liability approach for financial accounting and reporting of income taxes, and
the recognition of deferred tax assets and liabilities for the temporary
differences between the financial reporting bases and tax bases of our assets
and liabilities at enacted tax rates expected to be in effect when such amounts
are realized or settled.
  6
 Table of Contents
   ENVIROSAFE
CORPORATION
 NOTES TO
UNAUDITED CONDENSED FINANCIAL STATEMENTS
 For the
Three and Six Months Ended June 30, 2008 and 2007
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with the accounting principles
generally accepted in the Untied States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
 
 Fair Value of Financial
Instruments
 
 The
carrying amounts reported in the balance sheets for cash and cash equivalents,
and accounts payable approximate fair value because of the immediate or
short-term maturity of these financial instruments. No other new accounting
pronouncement issued or effective has had or is expected to have a material
impact on the company’s financial statements.
 
 Stock-Based
Compensation
 
 We
measure compensation expense for our non-employee stock-based compensation under
the Financial Accounting Standards Board (FASB) Emerging Issues Task Force
(EITF) Issue No. 96-18, “Accountingfor Equity Instruments that are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services”. The fair value of the option issued is used to
measure the transaction, as this is more reliable than the fair value of the
services received. The fair value is measured at the value of our common stock
on the date that the commitment for performance by the counterparty has been
reached or the counterparty’s performance is complete. The fair value of the
equity instrument is charged directly to compensation expense and additional
paid-in capital.
  Common Stock Issued For
Other Than Cash
  Services
purchased and other transactions settled in our stock are recorded at the
estimated fair value of the stock issued if that value is more readily
determinable than the fair value of the consideration received.
 
 Recent Accounting
Pronouncements
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133”
(“SFAS 161”). This new standard requires enhanced disclosures for derivative
instruments, including those used in hedging activities. It is effective for
fiscal years and interim periods beginning after November 15, 2008, and
will be applicable to us in the first quarter of fiscal 2009. We are currently
evaluating the impact this statement and we do not anticipate that it will have
an impact on our financial position and results of operations.
  4.    
Income
Taxes
 
 Effective
July 14, 2000, we adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, “Accounting for Income Taxes”. The statement requires
an asset and liability approach for financial accounting and reporting for
income taxes, and the recognition of deferred tax assets and liabilities for the
temporary differences between the financial reporting basis and tax basis of the
Company’s assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. Because of its history of losses, we
have not had any material federal or state income tax obligations. Due to the
anticipated use of net operating loss carryforwards to offset future year
income, no provision for income taxes was recorded for the six-month period
ended June 30, 2008. The Company’s net operating loss carryforwards totaled
($2,324,759) at June 30, 2008, expiring through June 30, 2028. When there has
been a change in an entity’s ownership, utilization of net operating loss
carryforwards may be limited. Because of the changes in the ownership of our
prior acquisitions, the use of these acquired net operating losses will be
limited and may not be available to offset future taxable income.
 
 There
were no provisions for income taxes for the six-month period ended June 30,
2008.
 
 At June
30, 2008, deferred tax assets approximated the following:
  Deferred
      tax assets
              
              $
              970,000Valuation
      for deferred asset
              
              
              (970,000
              )Net
      deferred tax assets
              
              $
              —
  At June
30, 2008, we had accumulated deficits approximating $2,324,000, available to
offset future taxable income through 2028. We established valuation allowances
equal to the full amount of the deferred tax assets due to the uncertainty of
the utilization of the operating losses in the future period.
 
 7
 Table of Contents
   ENVIROSAFE
CORPORATION
 NOTES TO
UNAUDITED CONDENSED FINANCIAL STATEMENTS
 For the
Three and Six Months Ended June 30, 2008 and 2007
  5.    
Capital
Transactions
 
 On April
23, 2007, we performed a one-for-three-hundred (1:300) reverse stock split of
our outstanding shares of common stock. The number of our outstanding shares of
common stock at that date was reduced from 342,375,000 to 1,141,375 shares and
the par value of our common stock was unchanged at $0.0001. The financial
statements amounts and shares herein have been retroactively adjusted thereto
for the reverse split.
 
 6.    
Going
Concern
  Our
financial statements have been prepared on the basis that we will continue as a
going concern, which contemplates the realization of asset values and the
satisfaction of liabilities in the normal course of business. Certain conditions
indicate that we may be unable to continue as a going concern:
 
 ·
              We
      reported net losses of $2,315 and $303,606, respectively for the six
      months ended June 30, 2008 and 2007.·
              At
      June 30, 2008, stockholder's deficit was ($2,315) and included an
      accumulated deficit of
($2,324,759).
 
 ·
              At
      June 30, 2008 there was a working capital deficit of $2,315.·
              We
      have limited revenue prospects and have had no revenue in the past two
      years.
 
 ·
              Our
      ability to continue as a going concern is dependent upon our generating
      revenues and profit margins to cover cost of revenues and other operating
      expenses, generating positive cash flows from operations, obtaining debt
      or equity capital to fund expected negative operating cash flows and
      returning to profitable operations.·
              We
      may be forced to liquidate our assets and cease operations if we are
      unable to raise sufficient capital to support operations and to satisfy
      its obligations.
 
 In
connection with these issues, we are implementing the following operating and
management plans to in order to provide positive cash flow from operations
during the subsequent periods:
 
 ·
              Develop
      our primary business products and develop a customer base and production
      facilities and capacity to manufacture products.·
              Develop
      strategic partnerships with major companies to support our sales and
      marketing strategy, and production and manufacturing
    capacity.
 
 ·
              Negotiate
      with capital and debt funding sources to provide working capital to fund
      the growth and operations.
 
 8
 Table of Contents
  7.Unaudited Pro Forma
Condensed Consolidated Financial Statements
  ENVIROSAFE
CORP.
 Unaudited
Pro Forma Condensed Consolidated Financial Statements
 For
the six months ended June 30, 2008 and 2007
  Index to
Unaudited Pro Forma Condensed Consolidated Financial Statements
  PagesIntroduction
      to Unaudited Pro Forma Condensed Consolidated Financial
      Statements
                
                10Unaudited
      Pro Forma Condensed Consolidated Balance Sheet
                
                11Unaudited
      Pro Forma Condensed Consolidated Statement of Operations
                
                12Unaudited
      Pro Forma Condensed Consolidated Statements of Cash Flows
                
                13Notes
      to Unaudited Pro Forma Condensed Consolidated Financial
      Statements
                
                14
 
 9
 Table of Contents
 
 ENVIROSAFE
CORP.
 Introduction
to Unaudited Pro Forma Condensed Consolidated Financial Statements
 
 
 The
following unaudited pro forma condensed consolidated financial statements are
presented to illustrate the estimated effects of the acquisition of ADDE
Education Hldgs Limited (“ADDE”) and Guangzhou Hao Yu Educational Technology
Company Limited (“Hao Yu”) by Envirosafe Corp. (“EVSF”) (the “Transaction”) on
the historical financial position and results of operations of
EVSF.
 
 The
unaudited pro forma balance sheet as of June 30, 2008 is based on the unaudited
balance sheets of EVSF, ADDE and Haoyu as of June 30, 2008.
 
 The
unaudited pro forma statement of operations for the six months ended June 30,
2008 is based on the unaudited statements of operations of EVSF for the six
months ended June 30, 2008, of ADDE for the period from February 12, 2008 (date
of inception) to June 30, 2008 and of Haoyu for the six months ended June 30,
2008.  The unaudited pro forma statement of operations for the six
months ended June 30, 2007 is based on the unaudited statements of operations of
EVSF for the six months ended June 30, 2007, and of Haoyu for the six months
ended June 30, 2007. As ADDE was incorporated on February 12, 2008, the
financial data of the statement of operations of ADDE for the six months ended
June 30, 2007 were reported nil.
 
 The
unaudited pro forma statement of cash flow for the six months ended June 30,
2008 is based on the unaudited statements of cash flow of EVSF for the six
months ended June 30, 2008, of ADDE for the period from February 12, 2008 (date
of inception) to June 30, 2008 and of Haoyu for the six months ended June 30,
2008.  The unaudited pro forma statement of cash flow for the six
months ended June 30, 2007 is based on the unaudited statements of cash flow of
EVSF for the six months ended June 30, 2007, and of Haoyu for the six months
ended June 30, 2007. As ADDE was incorporated on February 12, 2008, the
financial data of the statement of cash flow of ADDE for the six months ended
June 30, 2007 were reported nil.
 
 The
unaudited pro forma condensed consolidated statements of operations for the six
months ended June 30, 2008 and 2007, and the unaudited pro forma condensed
consolidated statements of cash flow for the six months ended June 30, 2008 and
2007 assume that the Transaction was consummated on January 1, 2007. The
unaudited pro forma condensed consolidated balance sheet as of June 30, 2008
assumes the Transaction was consummated on that date. The Transaction was
actually consummated on July 31, 2008.
 
 The
information presented in the unaudited pro forma condensed consolidated
financial statements are presented for informational purposes only and does not
purport to represent what the financial position or results of operations of
EVSF would have been had the Transaction occurred as of the dates indicated, nor
is it indicative of the future financial position or results of operations for
any period of EVSF.
 
 The pro
forma adjustments are based upon available information and certain assumptions
that the management of EVSF believes are reasonable under the
circumstances.
 
 These
unaudited pro forma condensed consolidated financial statements should be read
in conjunction with the accompanying notes and assumptions and the historical
financial statements and related notes of EVSF, ADDE and Haoyu.
  10
 Table of Contents
  ENVIROSAFE
CORP.
 Unaudited
Pro Forma Condensed Consolidated Balance Sheet
 As
of June 30, 2008
 (Stated
in US Dollars)
  EVSF
                
                
                ADDEAs
      of
                
                
                As
      of
                
                
                
                
                
                
                Pro
      formaJune
      30,
                
                
                June
      30,
                
                
                Pro
      forma
                
                
                
                consolidated2008
                
                
                2008
                
                
                adjustment
                
                
                
                totalASSETSCurrent assets:Cash and cash
      equivalents
                
                $
                -
                
                
                $
                150,624
                
                
                
                
                
                
                $
                150,624Trade receivables (net of
      allowance for doubtful
                  accounts
      of $31,142)
                
                
                -
                
                
                
                1,011,102
                
                
                
                
                
                
                
                1,011,102Other receivables and
      prepayments
                
                
                -
                
                
                
                302,376
                
                
                
                
                
                
                
                302,376Inventories
                
                
                -
                
                
                
                386,315
                
                
                
                
                
                
                
                386,315Total current
      assets
                
                
                -
                
                
                
                1,850,417
                
                
                
                
                
                
                
                1,850,417Property, plant and equipment,
      net
                
                
                -
                
                
                
                72,795
                
                
                
                
                
                
                
                72,795Total assets
                
                $
                -
                
                
                $
                1,923,212
                
                
                
                
                
                
                $
                1,923,212LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Trade payables
                
                $
                -
                
                
                $
                22,661
                
                
                
                
                
                
                $
                22,661Other payables and accrued
      expenses
                
                
                2,315
                
                
                
                148,653
                
                
                
                
                
                
                
                150,968Amount
      due to a director
                
                
                -
                
                
                
                72,411
                
                
                
                
                
                
                
                72,411Secured
      bank loan
                
                
                
                
                
                
                436,567
                
                
                
                
                
                
                
                436,567Income tax
    payable
                
                
                -
                
                
                
                228,474
                
                
                
                
                
                
                
                228,474Total current
      liabilities
                
                
                2,315
                
                
                
                908,766
                
                
                
                
                
                
                
                911,081COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      (DEFICIT) EQUITYPreferred
      stock, $.0001 par, 10,000,000 shares authorized, no shares issued and
      outstanding at June 30, 2008 and 1,350,000 subsequent to
                
                
                -
                
                
                
                -
                
                
                
                135
                
                Note
      3(b)
                
                
                135Common
      stock, $.0001 par, 500,000,000 shares authorized, 2,141,375 shares issued
      and outstanding at June 30, 2008 and 22,141,375 subsequent
    to
                
                
                214
                
                
                
                1,351
                
                
                
                649
                
                Note
      3(b)
                
                
                2,214Additional paid-in
      capital
                
                
                2,322,230
                
                
                
                117,702
                
                
                
                (2,325,543
                )
                Note
      3(a), 3(b)
                
                
                114,389Statutory and other
      reserves
                
                
                -
                
                
                
                50,803
                
                
                
                
                
                
                
                
                50,803Accumulated other comprehensive
      income
                
                
                -
                
                
                
                84,201
                
                
                
                
                
                
                
                
                84,201(Accumulated deficit) retained
      earnings
                
                
                (2,324,759
                )
                
                
                760,389
                
                
                
                2,324,759
                
                Note
      3(a)
                
                
                760,389Total stockholders’ (deficit)
      equity
                
                
                (2,315
                )
                
                
                1,014,446
                
                
                
                
                
                
                
                
                1,012,131Total
      liabilities and stockholders’ (deficit) equity
                
                $
                -
                
                
                $
                1,923,212
                
                
                
                
                
                
                
                $
                1,923,212
  11
 Table of Contents
  ENVIROSAFE
      CORP.Unaudited
      Pro Forma Condensed Consolidated Statements of OperationsFor
      the six months ended June 30, 2008 and 2007(Stated
      in US Dollars)EVSF
                  
                  
                  ADDE
                  
                  
                  Pro
      forma
                  
                  
                  EVSF
                  
                  
                  ADDE
                  
                  
                  Pro
      formaSix
      months ended
                  
                  
                  Six
      months ended
                  
                  
                  consolidated
                  
                  
                  Six
      months ended
                  
                  
                  Six
      months ended
                  
                  
                  consolidatedJune
      30, 2008
                  
                  
                  June
      30, 2008
                  
                  
                  total
                  
                  
                  June
      30, 2007
                  
                  
                  June
      30, 2007
                  
                  
                  totalSales
                  
                  $
                  -
                  
                  
                  $
                  1,881,201
                  
                  
                  $
                  1,881,201
                  
                  
                  $
                  -
                  
                  
                  $
                  314,573
                  
                  
                  $
                  314,573Cost
      of sales
                  
                  
                  -
                  
                  
                  
                  938,715
                  
                  
                  
                  938,715
                  
                  
                  
                  -
                  
                  
                  
                  222,615
                  
                  
                  
                  222,615Gross
      profit
                  
                  
                  -
                  
                  
                  
                  942,486
                  
                  
                  
                  942,486
                  
                  
                  
                  -
                  
                  
                  
                  91,958
                  
                  
                  
                  91,958Operating
      expensesGeneral
      and administrative expenses
                  
                  
                  2,100
                  
                  
                  
                  110,062
                  
                  
                  
                  112,162
                  
                  
                  
                  62
                  
                  
                  
                  56,946
                  
                  
                  
                  57,008Research
      and development expenses
                  
                  
                  215
                  
                  
                  
                  62,431
                  
                  
                  
                  62,646
                  
                  
                  
                  303,544
                  
                  
                  
                  67,179
                  
                  
                  
                  370,723Selling
      expenses
                  
                  
                  -
                  
                  
                  
                  35,462
                  
                  
                  
                  35,462
                  
                  
                  
                  -
                  
                  
                  
                  76,868
                  
                  
                  
                  76,868Total
      operating expenses
                  
                  
                  2,315
                  
                  
                  
                  207,955
                  
                  
                  
                  210,270
                  
                  
                  
                  303,606
                  
                  
                  
                  200,993
                  
                  
                  
                  504,599Net
      operating income (loss)
                  
                  
                  (2,315
                  )
                  
                  
                  734,531
                  
                  
                  
                  732,216
                  
                  
                  
                  (303,606
                  )
                  
                  
                  (109,035
                  )
                  
                  
                  (412,641
                  )Other
      income (expenses)Subsidy
      income from the PRC authoritiesfor
      general operations
                  
                  
                  -
                  
                  
                  
                  164,789
                  
                  
                  
                  164,789
                  
                  
                  
                  -
                  
                  
                  
                  27,841
                  
                  
                  
                  27,841Interest
      income
                  
                  
                  -
                  
                  
                  
                  209
                  
                  
                  
                  209
                  
                  
                  
                  -
                  
                  
                  
                  109
                  
                  
                  
                  109Other
      income
                  
                  
                  -
                  
                  
                  
                  18,438
                  
                  
                  
                  18,438
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Financial
      cost
                  
                  
                  -
                  
                  
                  
                  (14,177
                  )
                  
                  
                  (14,177
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total
      other income
                  
                  
                  -
                  
                  
                  
                  169,259
                  
                  
                  
                  169,259
                  
                  
                  
                  -
                  
                  
                  
                  27,950
                  
                  
                  
                  27,950Income
      (loss) before income taxes
                  
                  
                  (2,315
                  )
                  
                  
                  903,790
                  
                  
                  
                  901,475
                  
                  
                  
                  (303,606
                  )
                  
                  
                  (81,085
                  )
                  
                  
                  (384,691
                  )Income
      taxes
                  
                  
                  -
                  
                  
                  
                  221,079
                  
                  
                  
                  221,079
                  
                  
                  
                  -
                  
                  
                  
                  9,111
                  
                  
                  
                  9,111Net
      income (loss)
                  
                  $
                  (2,315
                  )
                  
                  $
                  682,711
                  
                  
                  $
                  680,396
                  
                  
                  $
                  (303,606
                  )
                  
                  $
                  (90,196
                  )
                  
                  $
                  (393,802
                  )Other
      comprehensive incomeForeign
      currency translation adjustments
                  
                  
                  -
                  
                  
                  
                  38,909
                  
                  
                  
                  38,909
                  
                  
                  
                  -
                  
                  
                  
                  8,517
                  
                  
                  
                  8,517Total
      comprehensive income (loss)
                  
                  $
                  (2,315
                  )
                  
                  $
                  721,620
                  
                  
                  $
                  719,305
                  
                  
                  $
                  (303,606
                  )
                  
                  $
                  (81,679
                  )
                  
                  $
                  (385,285
                  )Pro
      forma income (loss) per share
                  
                  
                  **
                  
                  
                  $
                  68.27
                  
                  
                  $
                  0.34
                  
                  
                  $
                  (0.27
                  )
                  
                  $
                  (9.02
                  )
                  
                  $
                  (0.34
                  )Weighted
      average common shares outstanding
                  
                  
                  2,141,375
                  
                  
                  
                  
                  
                  
                  
                  2,141,375
                  
                  
                  
                  1,145,139
                  
                  
                  
                  
                  
                  
                  
                  1,145,139**
      Less than $.01
  12
 Table of Contents
  ENVIROSAFE
      CORP.Unaudited
      Pro Forma Condensed Consolidated Statements of Cash FlowsFor
      the six months ended June 30, 2008 and 2007(Stated
      in US Dollars)EVSF
                  
                  
                  ADDE
                  
                  
                  Pro
      forma
                  
                  
                  EVSF
                  
                  
                  ADDE
                  
                  
                  Pro
      formaSix
      months ended
                  
                  
                  Six
      months ended
                  
                  
                  consolidated
                  
                  
                  Six
      months ended
                  
                  
                  Six
      months ended
                  
                  
                  consolidatedJune
      30, 2008
                  
                  
                  June
      30, 2008
                  
                  
                  total
                  
                  
                  June
      30, 2007
                  
                  
                  June
      30, 2007
                  
                  
                  totalCash
      flows from operating activitiesNet
      income (loss)
                  
                  $
                  (2,315
                  )
                  
                  $
                  682,711
                  
                  
                  $
                  680,396
                  
                  
                  $
                  (303,606
                  )
                  
                  $
                  (90,196
                  )
                  
                  $
                  (393,802
                  )Adjustments
      to reconcile net income to net cashused
      in operating activities:Depreciation
                  
                  
                  -
                  
                  
                  
                  16,511
                  
                  
                  
                  16,511
                  
                  
                  
                  -
                  
                  
                  
                  14,102
                  
                  
                  
                  14,102Issuance
      of common stock for services rendered
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  300,544
                  
                  
                  
                  -
                  
                  
                  
                  300,544Provision
      for doubtful debts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,825
                  
                  
                  
                  9,825Provision
      for obsolete inventories
                  
                  
                  -
                  
                  
                  
                  2,398
                  
                  
                  
                  2,398
                  
                  
                  
                  -
                  
                  
                  
                  12,076
                  
                  
                  
                  12,076Changes
      in operating assets and liabilities:
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -Trade
      receivables
                  
                  
                  -
                  
                  
                  
                  (413,567
                  )
                  
                  
                  (413,567
                  )
                  
                  
                  -
                  
                  
                  
                  (81,315
                  )
                  
                  
                  (81,315
                  )Other
      receivables and prepayments
                  
                  
                  -
                  
                  
                  
                  (190,690
                  )
                  
                  
                  (190,690
                  )
                  
                  
                  -
                  
                  
                  
                  (244,679
                  )
                  
                  
                  (244,679
                  )Inventories
                  
                  
                  -
                  
                  
                  
                  51,965
                  
                  
                  
                  51,965
                  
                  
                  
                  -
                  
                  
                  
                  54,668
                  
                  
                  
                  54,668Trade
      payables
                  
                  
                  -
                  
                  
                  
                  (641,583
                  )
                  
                  
                  (641,583
                  )
                  
                  
                  -
                  
                  
                  
                  229,233
                  
                  
                  
                  229,233Other
      payables and accrued expenses
                  
                  
                  (7,685
                  )
                  
                  
                  7,109
                  
                  
                  
                  (576
                  )
                  
                  
                  (5,868
                  )
                  
                  
                  (44,433
                  )
                  
                  
                  (50,301
                  )Income
      tax payable
                  
                  
                  -
                  
                  
                  
                  216,793
                  
                  
                  
                  216,793
                  
                  
                  
                  -
                  
                  
                  
                  9,111
                  
                  
                  
                  9,111Net
      cash flows used in operating activities
                  
                  
                  (10,000
                  )
                  
                  
                  (268,353
                  )
                  
                  
                  (278,353
                  )
                  
                  
                  (8,930
                  )
                  
                  
                  (131,608
                  )
                  
                  
                  (140,538
                  )Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                  
                  
                  -
                  
                  
                  
                  (8,010
                  )
                  
                  
                  (8,010
                  )
                  
                  
                  -
                  
                  
                  
                  (3,953
                  )
                  
                  
                  (3,953
                  )Net
      cash flows used in investing activities
                  
                  
                  -
                  
                  
                  
                  (8,010
                  )
                  
                  
                  (8,010
                  )
                  
                  
                  -
                  
                  
                  
                  (3,953
                  )
                  
                  
                  (3,953
                  )Cash
      flows from financing activitiesCash
      acquired from RTO
                  
                  
                  -
                  
                  
                  
                  13,532
                  
                  
                  
                  13,532
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -New
      bank loan
                  
                  
                  -
                  
                  
                  
                  424,172
                  
                  
                  
                  424,172
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -(Repayment
      to) advances from a director
                  
                  
                  -
                  
                  
                  
                  (155,709
                  )
                  
                  
                  (155,709
                  )
                  
                  
                  -
                  
                  
                  
                  109,314Addition
      in paid-in capital
                  
                  
                  10,000
                  
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      cash flows provided by financing activities
                  
                  
                  10,000
                  
                  
                  
                  281,995
                  
                  
                  
                  291,995
                  
                  
                  
                  -
                  
                  
                  
                  109,314
                  
                  
                  
                  109,314Effect
      of foreign currency translation on
                    cash
      and cash equivalents
                  
                  
                  -
                  
                  
                  
                  8,551
                  
                  
                  
                  8,551
                  
                  
                  
                  -
                  
                  
                  
                  1,232
                  
                  
                  
                  1,232Net
      increase (decrease) in cash and cash equivalents
                  
                  
                  -
                  
                  
                  
                  14,183
                  
                  
                  
                  14,183
                  
                  
                  
                  (8,930
                  )
                  
                  
                  (25,015
                  )
                  
                  
                  (33,945
                  )Cash
      and cash equivalents - beginning of period
                  
                  
                  -
                  
                  
                  
                  136,441
                  
                  
                  
                  136,441
                  
                  
                  
                  8,951
                  
                  
                  
                  63,065
                  
                  
                  
                  72,016Cash
      and cash equivalents - end of period
                  
                  $
                  -
                  
                  
                  $
                  150,624
                  
                  
                  $
                  150,624
                  
                  
                  $
                  21
                  
                  
                  $
                  38,050
                  
                  
                  $
                  38,071Supplemental
      disclosures for cash flow information:Cash
      paid for:Interest
                  
                  $
                  -
                  
                  
                  $
                  1,452
                  
                  
                  $
                  1,452
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Income
      taxes
                  
                  $
                  -
                  
                  
                  $
                  5,195
                  
                  
                  $
                  5,195
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Common
      stock issued for services
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  300,544
                  
                  
                  $
                  -
                  
                  
                  $
                  300,544
  13
 Table of Contents
  ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
 
 1.
                Basis
      of Presentation
 
 The
accompanying unaudited pro forma 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 Item 310(b) of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. The accompanying unaudited pro
forma 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 pro forma 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 financial
statements for the preceding fiscal year. Accordingly, these unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
the financial statements and the related notes thereto contained in
the Annual Report on Form 10-KSB for the year ended December 31,
2007.
 
 2.
                Organization
      and Business Background
 
 We were
incorporated in the state of Delaware in 1996. On July 31, 2008, we
completed a stock exchange transaction withADDE Education Hldgs
Limited(“ADDE”).
ADDEwas incorporated on February 12, 2008 under the laws of Hong Kong
Special Administrative Region of the People’s Republic of China, which isan
investment holding company whose only asset is 100% equity interest in Guangzhou
Haoyu Educational Technology Company Limited (“Haoyu”), pursuant to an
agreement, dated March 1, 2008, with the then sole stockholder of Haoyu, the
spouse of ADDE’s sole stockholder.
 
 Upon
completion of the exchange, ADDE and Haoyu became our wholly-owned subsidiaries
and the former owners of ADDE then owned 93.2% of our issued and outstanding
shares.
 
 The stock
exchange transaction has been accounted for as a reverse acquisition and
recapitalization of the EVSF whereby ADDE is deemed to be the accounting
acquirer (legal acquiree) and EVSF to be the accounting acquiree (legal
acquirer). The accompanying unaudited pro forma condensed consolidated financial
statements are in substance those of ADDE, with the assets and liabilities, and
revenues and expenses, of EVSF being included effective from the date of stock
exchange transaction.
 
 In addition,as
ADDE and Haoyu were under the control of same controlling stockholders and
management, and the transaction between ADDE and Haoyu was deemed to be a
recapitalization of ADDE, the historical financial statements and operations of
Haoyu become the historical financial statements of ADDE, which is deemed to be
a continuation of the business of Haoyu.
  EVSF and
ADDE and Haoyu are hereinafter referred to as (the “Company”).
 
 ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
 
 3.
                Pro
      Forma Adjustments
 
 (a)  Pursuant
to the stock exchange transaction disclosed in Note 2, the ADDE stockholders
acquired the majority of the outstanding common stock of EVSF. The transaction
is accounted for as a reverse purchase acquisition / merger wherein ADDE is the
accounting acquirer and EVSF is the legal acquirer. Accordingly, the accounting
acquirer records the assets purchased and liabilities assumed as part of the
merger and the entire stockholders equity section of the legal acquirer is
eliminated with negative book value acquired offset against the paid in capital
of the accounting acquirer.
 
 (b) To
subsequently record 1,350,000 new preferred shares and 20,000,000 new common
shares issued to ADDE shareholders per the stock exchange
transaction disclosed in Note 2.
 
 4.
                Description
      of Business
 
 The
Company, through Haoyu, is specialized in the research and development of
educational products and technology applications.
 
 Haoyu was
established in the PRC on March 27, 2001 and is a high-tech company specialized
in the research and development of educational products and technology
application.  It 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.
 
 5.
                Summary
      of significant accounting policies
 
 Principles of
consolidation
 
 The
consolidated financial statements include the accounts 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.
 
 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.
  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 June 30, 2008 and December 31, 2007,
substantially all of the Company’s cash and cash equivalents were held by major
financial institutions located in the PRC, which management believes are of high
credit quality.  With respect to trade receivables, the Company
extends credit based on an evaluation of the customer’s financial
condition.  The Company generally does not require collateral for
trade and other receivables and maintains an allowance for doubtful accounts of
trade and other receivables.  The Company had three customers that
individually comprised 10% or more of net revenue for the six months ended June
30, 2008: Shen Zhen Jiao Yi Equipment Ltd. (深圳教仪设备有限公司)
$490,979 (26%), Shen Zhen Wei Er De Technological Equipment Ltd. (深圳市唯尔德科技设备有限公司)
$215,019 (11%) and Shen Zhen Xun Da Tong Technology Ltd. (深圳市迅达通科技有限公司)
$191,191 (10%).
 
 14
 Table of Contents
  ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
  5.         Summary
of significant accounting policies (Cont’d)
 
 Allowance for doubtful
accounts
 
 The
Company establishes an allowance for doubtful accounts based on management’s
assessment of the collectibility of trade receivables.  A considerable
amount of judgment is required in assessing the amount of the
allowance.  The Company considers the historical level of credit
losses and applies percentages to aged receivables categories.  The
Company makes judgments about the creditworthiness of each customer based on
ongoing credit evaluations, and monitors current economic trends that might
impact the level of credit losses in the future.  If the financial
condition of the customers were to deteriorate, resulting in their inability to
make payments, a larger allowance may be required.
 
 Based on
the above assessment, during the reporting periods, the management establishes
the general provisioning policy to make allowance equivalent to 5% of gross
amount of trade receivables due from 1 to 2 years, 10% of gross amount of trade
receivables due from 2 to 3 years and 15% of gross amount of trade receivables
due over 3 years.  Additional specific provision is made against trade
receivables to the extent which they are considered to be doubtful.
 
 Bad debts
are written off when identified.  The Company does not accrue interest
on trade receivables.
 
 Historically,
losses from uncollectible accounts have not significantly deviated from the
general allowance estimated by the management and no significant additional bad
debts have been written off directly to the profit and loss.  This
general provisioning policy has not changed in the past since establishment and
the management considers that the aforementioned general provisioning policy is
adequate and not too excessive and does not expect to change this established
policy in the near future.
 
 Inventories
 
 Inventories
are stated at the lower of cost or market.  Cost is determined on a
first in first out basis and includes all expenditures incurred in bringing the
goods to the point of sale and putting them in a saleable
condition.  In case of manufacturing inventories, cost includes an
appropriate share of production overheads based on normal operating
capacity.  In assessing the ultimate realization of inventories, the
management makes judgments as to future demand requirements compared to current
or committed inventory levels.  The Company estimates the demand
requirements based on market conditions, forecasts prepared by its customers,
sales contracts and orders in hand.
 
 In
addition, the Company estimates net realizable value based on intended use,
current market value and inventory ageing analyses.  The Company
writes down the inventories for estimated obsolescence or unmarketable
inventories equal to the difference between the cost of inventories and the
estimated market value based upon assumptions about future demand and market
conditions.
 
 Based on
the above assessment, the Company establishes a general policy to make a 10%
provision for inventories aged over 1 to 2 years, a 25% provision for
inventories aged over 2 to 3 years and a 35% provision for inventories aged over
3 years.
 
 15
 Table of Contents
  ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
  5.         Summary
of significant accounting policies (Cont’d)
 
 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.  As
of June 30, 2008 and December 31, 2007, such receivables amounted to $14,938 and
$14,035 respectively and are included in trade receivables.
 
 Since the
aforementioned products were well developed, the Company did not encounter any
claims from such customers.  Accordingly, the Company did not maintain
a warranty reserve during the reporting periods.  However, the Company
will periodically assess the estimation of its warranty liability and recognize
the reserve when necessary based on the actual experience.
 
 Recently issued accounting
pronouncements
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepting accounting principles in the
United States.  This statement will be become effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411 “The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles”.  The management does not
expect the adoption of this statement will have any material effect on the
Company’s financial statements.
  6.
                Inventories
                
                June
      30,
                
                
                December
      31,2008
                
                
                2007(Unaudited)
                
                
                (Audited)Raw
      materials
                
                $
                16,447
                
                
                $
                20,041Finished
      goods
                
                
                416,436
                
                
                
                436,914432,883
                
                
                
                456,955Provision
      for obsolete inventories
                
                
                (46,568
                )
                
                
                (41,433
                )$
                386,315
                
                
                $
                415,522
  7.          Amount
due to a director
 
 The
amount is interest-free, unsecured and repayable when the Company is in a
position to do so.
 
 16
 Table of Contents
  ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
  8.          Secured
bank loan
 
 The bank
loan is denominated in RMB and repayable within one year.  It carries
interest at 110% of the benchmark rate of the People’s Bank of China (the
“PBOC”) for six-month to one-year short-term loans per annum.
 
 The bank
loan is secured by a guarantee put up by an independent party and a deposit of
$21,828 (RMB150,000) placed with the bank in the name of the guarantor, with no
other covenants.  The guarantor received $12,913 from the Company for
issuing the guarantee.  The Company had also paid the required deposit
to the bank on behalf of the guarantor.  The receivable due from the
guarantor was included in other receivables and prepayments under current assets
as of June 30, 2008.
  9.         Commitments
and contingencies
 
 The
Company had no commitments or contingencies as of June 30, 2008 and December 31,
2007.
  10.       Income
taxes
 
 The
Company is subject to Hong Kong profits tax.  No provision for Hong
Kong profits tax has been made as the Company had no taxable income for the
reporting periods.
 
 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 June 30, 2008.
  17
 Table of Contents
  ENVIROSAFE
CORP.
 Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
 
 
 11.       Earnings
(loss) per share
 
 The basic
and diluted earnings (loss) per share is 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 RTO.
 
 The
Company had no dilutive instruments during the reporting periods.
  12.       Defined
contribution plan
 
 The
Company has a defined contribution plan for all qualified employees in the
PRC.  The employer and its employees are each required to make
contributions to the plan at the rates specified in the plan.  The
only obligation of the Company with respect to retirement scheme is to make the
required contributions under the plan.  No forfeited contribution is
available to reduce the contribution payable in the future years.  The
defined contribution plan contributions were charged to the condensed
consolidated statements of income.  The Company contributed $8,059 and
$6,038 for the six months ended June 30, 2008 and 2007
respectively.
  13.       Related
party transactions
 
 Apart
from the transaction as disclosed in note 5 to the condensed consolidated
financial statements, the Company had no other material transactions carried out
with its related parties during the reporting periods.
  14.        Segment
information
 
 The
Company uses the “management approach” in determining reportable operating
segments.  The management approach considers the internal organization
and reporting used by the Company’s chief operating decision maker for making
operating decisions and assessing performance as the source for determining the
Company’s reportable segments.  Management, including the chief
operating decision maker, reviews operating results solely by monthly revenue of
hardware and software and the overall operating results of the
Company.  The revenue of hardware and software for the reporting
periods is as follows:
 
 Hardware
                
                
                Software
                
                
                TotalSix
      months ended June 30,
                  (Unaudited)
                
                
                Six
      months ended June 30,
                  (Unaudited)
                
                
                Six
      months ended June 30,
                  (Unaudited)2008
                
                
                2007
                
                
                2008
                
                
                2007
                
                
                2008
                
                
                2007Revenue
      from external customers
                
                $
                786,867
                
                
                $
                212,409
                
                
                $
                1,094,334
                
                
                $
                102,164
                
                
                $
                1,881,201
                
                
                $
                314,573
 
 Hardware
                
                
                Software
                
                
                TotalThree
      months ended June 30,
                  (Unaudited)
                
                
                Three
      months ended June 30,
                  (Unaudited)
                
                
                Three
      months ended June 30,
                  (Unaudited)2008
                
                
                2007
                
                
                2008
                
                
                2007
                
                
                2008
                
                
                2007Revenue
      from external customers
                
                $
                368,032
                
                
                $
                135,559
                
                
                $
                510,515
                
                
                $
                50,078
                
                
                $
                878,547
                
                
                $
                185,637
 
 All of
the Company’s long-lived assets and customers are located in the
PRC.
 18
 Table of Contents
  Item 2.    Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
  The
following discussion and analysis provides information that management believes
may be useful in understanding our operating results, cash flows and financial
condition. This discussion should be read in conjunction with the unaudited
financial information and related notes included in this Form 10-Q.
  The
following discussion contains various “Forward-Looking Statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. The readers are
referred to the statement entitled “Forward-Looking Statements” located at the
end of Part I of this report.
  We have
adopted the provisions of Statement of Financial Accounting Standard No. 123
(Revised 2004), Share-Based
Payment (SFAS No. 123R), and the new accounting standard for expensing
stock options, in the three and six months ended June 30, 2008. All financial
results presented in this Form 10-Q include the impact of expensing stock
options.
 
 Overview
 
 Our
financial statements have been prepared on the basis that we will continue as a
going concern, which contemplates the realization of asset values and the
satisfaction of liabilities in the normal course of business. Certain conditions
indicate that we may be unable to continue as a going concern:
 
 - We
reported net losses of $2,315 and $303,606 for the six months ended June 30,
2008 and 2007, respectively.
 
 - Net
cash used in our operating activities was $10,000 and $8,930 the six month
periods ended June 30, 2008 and 2007, respectively.
 
 - We are
unable to generate business opportunities.
 
 - At June
30, 2008, stockholder's deficit was $(2,315) and included an accumulated deficit
of $(2,324,759).
 
 - At June
30, 2008, there was a working capital deficit of $2,315.
 
 - We had
no revenues for the three and six months ended June 30, 2008 and
2007.
 
 We do not
expect positive cash flow from operations for the 2008 fiscal year and we may
require additional funding to cover expected negative cash flows until the end
of fiscal year 2008.
 
 Our
ability to continue as a going concern is dependent upon generating revenues and
gross profit margins to cover cost of services and other operating
expenses, generating positive cash flows from operations, obtaining debt or
equity capital to fund expected negative operating cash flows and returning us
to profitable operations.
  Operating
results:
  We have
not generated any revenues during the three and six months ended June 30, 2008
and 2007.
 
 We
generated net losses of $2,315 and $2,315 for the three and six months ended
June 30, 2008, respectively, compared to net losses of $153,000 and $303,606 for
the three and six months ended June 30, 2007, respectively. The losses for
the periods were due to general and administrative expenses and the non-cash
professional fees resulting from the issuance of shares of common stock for
services rendered in 2007. .
 
 In 2007,
the Company issued 1,143,458 shares of common stock as follows:
 
 133,000      —shares
issued for consulting and executive services performed by the Company’s CEO in
2006; valued at $120,000.
 10,000      —shares issued for professional
services; valued at $7,000.
 500,000      —shares issued for consulting and
executive services performed by the Company’s CEO in 2007; valued at
$150,000
 500,000     
---shares issued for consulting services; valued at $50,000.
 
 The
expenses were booked pro rata due
to the service periods.
 
 As of
June 30, 2008 we had accumulated $2,324,759 in operating losses that may, on a
limited basis, be offset against future taxable income. There are limitations on
the amount of net operating loss carryforwards that can be used. No tax benefit
has been reported in the financial statements.
  Financial Position and
Liquidity
  Total
assets were $-0- at June 30, 2008, no decrease from total assets at year-end
2007.
  Total
liabilities were $2,315 at June 30, 2008, compared to total liabilities of
$10,000 at year-end 2007. The liability was due to the monthly fees to the
transfer agent and the miscellaneous expenses..
 
 As of
June 30, 2008 and at December 31, 2007, we had $-0- in cash and cash
equivalents.
 
 Going
Concern
  Our
financial statements have been prepared on the basis that we will continue as a
going concern, which contemplates the realization of asset values and the
satisfaction of liabilities in the normal course of business. Certain conditions
indicate that we may be unable to continue as a going concern:
 
 ·
              We
      reported net losses of $2,315 and $303,606, respectively, for the six
      months ended June 30, 2008 and 2007.·
              At
      June 30, 2008, stockholder's deficit was ($2,315) and included an
      accumulated deficit of
($2,324,759).
  ·
              At
      June 30, 2008 there was a working capital deficit of $2,315.·
              We
      have limited revenue prospects and have had no revenue in the past two
      years.
 
 ·
              Our
      ability to continue as a going concern is dependent upon our generating
      revenues and profit margins to cover cost of revenues and other operating
      expenses, generating positive cash flows from operations, obtaining debt
      or equity capital to fund expected negative operating cash flows and
      returning to profitable operations.·
              We
      may be forced to liquidate our assets and cease operations if we are
      unable to raise sufficient capital to support operations and to satisfy
      its obligations.
 
 In
connection with these issues, we are implementing the following operating and
management plans to in order to provide positive cash flow from operations
during the subsequent periods:
 
 ·
              Develop
      our primary business products and develop a customer base and production
      facilities and capacity to manufacture products.·
              Develop
      strategic partnerships with major companies to support our sales and
      marketing strategy, and production and manufacturing
    capacity.
 
 ·
              Negotiate
      with capital and debt funding sources to provide working capital to fund
      the growth and operations.
  Item 3.    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 our 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 are recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
  During the six months ended June 30, 2008, our Certifying Officers
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. 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. These conclusions
notwithstanding you are advised that no system is 100%
foolproof.
 
 Changes
in Internal Control over Financial Reporting
  There
were no changes in the our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
 
 Forward-Looking
Statements
  This
Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis
of Financial Condition and Results of Operation” in Item 2, contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include expectations concerning
gross margin improvements, increasing raw material costs, contributions to our
U.S. and international pension and benefit plans, borrowing capacity, plans to
re-finance existing debt and favorable short-term liquidity requirements.
Without limiting the foregoing, words or phrases such as “will likely result,”
“are expected to,” “will continue,” “is anticipated,” “we believe,” “estimate,”
“project” (including the negative or variations thereof) or similar terminology,
generally identify forward-looking statements. Forward-looking statements may
also represent challenging goals for us. Management cautions that undue reliance
should not be placed on such forward-looking statements, which speak only as of
the date made.
  19
 Table of Contents
   PART II.
OTHER INFORMATION
  Item
1.        Legal
Proceedings.
 
 None.
 
 Item
2.        Unregistered Sales of Equity
Securities and Use of Proceeds.
 
 None.
 
 Item
3.        Defaults Upon Senior
Securities.
 
 None.
 
 Item
4.        Submission of Matters to a
Vote of Security Holders.
  None.
  Item
5.        Other
Information
 
 As of
March 4, 2008, we executed a Plan of Exchange (the “Agreement”) between and
among us, ADDE EDUCATION HLDS LTD., a corporation organized and existing under
the laws of Hong Kong Special Administrative Region of People’s Republic of
China (“ADDE”), the shareholders of ADDE (the “ADDE Shareholders”) and our
Majority Shareholders (the “EVSF Shareholders”). ADDE is the holding
company of Hao Yu Education Technology Co. Ltd., a corporation organized and
existing under the laws of the Peoples’ Republic of China ("Hao Yu"), pursuant
to a Share Exchange Agreement, dated March 1, 2008.
 
 The share
exchange transaction was consummated on July 31, 2008. As a result of the above
exchange, ADDE has a total of 20,632,253 shares of the Common Stock and
1,350,000 shares of the Preferred Stock (1:50) of EVSF, or a ‘controlling
interest’ in EVSF representing approximately 93.2% of the issued and outstanding
shares of Common Stock and has appointed their candidate(s) to the board of
directors at Closing.
 
 Accordingly,
Mr. Guo, Yan Bin (Mr. Guo) and Ms. Yan, Chang Ping (Ms. Yan) were appointed as
Directors, and Mr. Guo was also appointed as President at Closing.
 
 At
Closing, Mr. Zhan, Guoqiang resigned his office as President and resigned his
position as a director effective upon the expiration of the ten day period after
a Schedule 14F-1 has been mailed to the shareholders of record.  The
new board of directors consists of Mr. Guo and Ms. Yan.
 
 On August
7, 2008, the board of directors of the Company approved the appointment of Mr.
Liu, Bao Long to the position of Chief Financial Officer of the Company,
effective immediately.
 
 The
detailed business description and audited financials of ADDE and its subsidiary
were announced in a current report on Form 8-K, as amended, filed with the
Commission on August 13, 2008 as required by the federal securities
laws.
  Item 6. Exhibits and Reports on Form
8-K
 
 (a)
              Exhibits
 
 (1)
              Exhibits:
      Exhibits required to be attached by Item 601 of Regulation S-B are listed
      in the Index to Exhibits Beginning on page 22
      of this Form 10-Q, which is incorporated herein by
    reference.
  (b)    Reports on Form 8-K filed
subsequent to the second quarter of 2008
 
 (1)
              On
      August 1, 2008, we filed a current report on Form 8-K to announce the
      completion of the transaction with ADDE EDUCATION HLDS LTD., a corporation
      organized and existing under the laws of Hong Kong Special Administrative
      Region of People’s Republic of
China.
 
 (2)
              On
      August 8, 2008, we filed a current report on Form 8-K to announce the
      appointment of our Chief Financial
Officer.
 
 (3)
              On
      August 13, 2008, we filed an amendment to the current report, which was
      initially filed on August 1, 2008, on Form 8-K/A to correct the
      information regarding the appointment of our Chief Financial
      Officer.
 
 20
 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, there
unto duly authorized.
  
 ENVIROSAFE
      CORPORATIONDate:
      August 15, 2008
              By:
              /s/ Guo,
      Yan BinGuo,
      Yan Bin
                President
 
 21
 Table of Contents
  INDEX
TO EXHIBITS
  Exhibit
      No.
              
              Description31.1
              
              Certification of Chief
      Executive Officer31.2
              
              Certification of Chief
      Financial Officer32.1
              
              Statement required by 18
      U.S.C. Section 1350, as adopted pursuant to section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Statement required by 18
      U.S.C. Section 1350, as adopted pursuant to section 906 of the
      Sarbanes-Oxley Act of
2002