U.S.
Securities and Exchange Commission
 Washington,
D.C. 20549
  
  FORM
10 Q
  
 [X]           QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934
 
 For the Quarterly Period Ended March
31, 2009
 
  [
]            TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934
  For
the Transition Period From ____to _____
 
 Commission
file number   000-52407
 
 CHINA EDUCATION TECHNOLOGY,
INC.
 (F.K.A.
ENVIROSAFE CORPORATION)
 (Name of
Small Business Issuer in its Charter)
  
 NEVADA
 (State or
Other Jurisdiction of Incorporation of Organization)
 
 94-3251254
 (I.R.S.
Employer Identification No.)
 
 8/F,
Tower B, National Software Industry Zone,
 Gao
Tang Xin Jian Zone, Tian He District
 Guangzhou ,
P.R.China  510663
 (Address
of principal executive offices)
  (8620)
6108-8998 - Tel
 (8620) 6108-8999 -
Fax
 (Issuer's
telephone number)
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [x] No [ ]
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Date File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes [  ] No [
]
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
               ̈Non-accelerated
      filer
               ̈(Do
      not check if a smaller reporting company)Accelerated
      filer
               ̈Smaller
      reporting company
              þ
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [  ] No [X]
 
 Number of
shares of common stock outstanding as of May 19,
2009:     2,767,798
  CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
  The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties. The issuer's actual results could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to 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.
  
 
 
  INDEX TO FORM 10-Q
  PART
I                                                                                                                                                                                                                                                                                                         Page
No.
  Item
1.  Financial
Statements                                                                                                                                                                                                                                                                                 2
 
 Item
2.  Management's Discussion and Analysis of Financial Condition and
Results of
Operations                                                                                                                                                     
9
  Item
3.  Quantitative and Qualitative Disclosures About Market
Risk                                                                                                                                                                                                         
10
 
 Item 4.
Controls and
Procedures                                                                                                                                                                                                                                                                          10
  Item 4T.
Controls and
Procedures                                                                                                                                                                                                                                                                      
10
  PART
II
  Item
1.  Legal
Proceedings                                                                                                                                                                                                                                                                                   
11
  Item 1A.
Risk
Factors                                                                                                                                                                                                                                                                                           
11
 
 Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds                                                                                                                                                                                                          11
  Item
3.  Defaults Upon Senior
Securities                                                                                                                                                                                                                                                            11
  Item
4.  Submission of Matters to a Vote of Security
Holders                                                                                                                                                                                                                        11
  Item
5.  Other
Information                                                                                                                                                                                                                                                                                     11
  Item
6.  Exhibits                                                                                                                                                                                                                                                                                                       11
 
 2
 Table of Contents
 
 ITEM 1.FINANCIAL
STATEMENTS
  INDEX
TOCHINA EDUCATION
TECHNOLOGY, INC. FINANCIAL STATEMENTS
 
 CHINA EDUCATION TECHNOLOGY,
INC.                                                                                                                                                                                                                                               PAGE
 
 Consolidated Balance
Sheet                                                                                                                                                                                                                                                                4
 
 ConsolidatedStatement of
Operations                                                                                                                                                                                                                                              5
 
 ConsolidatedStatement of Cash
Flows                                                                                                                                                                                                                                             6
 
 Notes to
ConsolidatedFinancial
Statements                                                                                                                                                                                                                                    7
 
 3
 Table of Contents
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSAS
      OF MARCH 31, 2009 AND DECEMBER 31, 2008March 31, 2009
                                                                  
                                                                  
                                                                  December 31, 2008(Audited)ASSETSCurrent assets:Cash
      and cash equivalents
                                                                  
                                                                  $
                                                                  122,866
                                                                  
                                                                  
                                                                  $
                                                                  87,254Trade
      receivables
                                                                  
                                                                  
                                                                  1,172,555
                                                                  
                                                                  
                                                                  
                                                                  1,224,879Other
      receivables and prepayments
                                                                  
                                                                  
                                                                  299,926
                                                                  
                                                                  
                                                                  
                                                                  132,978Inventories
                                                                  
                                                                  
                                                                  291,090
                                                                  
                                                                  
                                                                  
                                                                  253,446Total
      current assets
                                                                  
                                                                  
                                                                  1,886,437
                                                                  
                                                                  
                                                                  
                                                                  1,698,557Property, plant and equipment,
      net
                                                                  
                                                                  
                                                                  35,762
                                                                  
                                                                  
                                                                  
                                                                  38,087Non-current assets:Warranty
      receivable
                                                                  
                                                                  
                                                                  15,606
                                                                  
                                                                  
                                                                  
                                                                  15,633Others
                                                                  
                                                                  
                                                                  37,279
                                                                  
                                                                  
                                                                  
                                                                  35,502Total
      non-current assests
                                                                  
                                                                  
                                                                  52,884
                                                                  
                                                                  
                                                                  
                                                                  51,135Total
      assets
                                                                  
                                                                  $
                                                                  1,975,083
                                                                  
                                                                  
                                                                  $
                                                                  1,787,779LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent liabilities:Notes
      payable - short term
                                                                  
                                                                  
                                                                  438,975
                                                                  
                                                                  
                                                                  
                                                                  439,734Trade
      payables
                                                                  
                                                                  
                                                                  174,176
                                                                  
                                                                  
                                                                  
                                                                  106,212Other
      payables and accrued expenses
                                                                  
                                                                  
                                                                  153,652
                                                                  
                                                                  
                                                                  
                                                                  112,966Amount
      due to a director
                                                                  
                                                                  
                                                                  35,663
                                                                  
                                                                  
                                                                  
                                                                  35,663Income
      tax payable
                                                                  
                                                                  
                                                                  224,637
                                                                  
                                                                  
                                                                  
                                                                  210,757Total
      current liabilities
                                                                  
                                                                  
                                                                  1,027,103
                                                                  
                                                                  
                                                                  
                                                                  905,332Long-term liabilities:Warranty
      and maintenance reserves
                                                                  
                                                                  
                                                                  26,655
                                                                  
                                                                  
                                                                  
                                                                  30,203STOCKHOLDERS’
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized,
                                                                  
                                                                  
                                                                  135
                                                                  
                                                                  
                                                                  
                                                                  1351,350,000
      shares issued and outstanding as of March 31, 2009 and December 31,
      2008)Common
      stock, $0.0001 par value, 50,000,000 shares authorized,
                                                                  
                                                                  
                                                                  277
                                                                  
                                                                  
                                                                  
                                                                  2772,767,798
      shares issued and outstanding as of March 31,2009 and December 31,
      2008)Additional
      paid in captial
                                                                  
                                                                  
                                                                  122,790
                                                                  
                                                                  
                                                                  
                                                                  122,790Statutory
      and other reserves
                                                                  
                                                                  
                                                                  69,565
                                                                  
                                                                  
                                                                  
                                                                  69,565Accumulated
      other comprehensive income
                                                                  
                                                                  
                                                                  75,390
                                                                  
                                                                  
                                                                  
                                                                  76,908Retained
      earnings
                                                                  
                                                                  
                                                                  653,167
                                                                  
                                                                  
                                                                  
                                                                  582,568Total
      stockholders’ equity
                                                                  
                                                                  
                                                                  921,324
                                                                  
                                                                  
                                                                  
                                                                  852,243Total
      liabilities and stockholders’ equity
                                                                  
                                                                  
                                                                  1,975,083
                                                                  
                                                                  
                                                                  
                                                                  1,787,779See
      accompanying notes to consolidated financial
  statements.
  4
 Table of Contents
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008For
      the three months endedMarch
      31, 2009
                                                          
                                                          
                                                          March
      31, 2008Sales
                                                          
                                                          $
                                                          223,865
                                                          
                                                          
                                                          $
                                                          1,002,654Cost
      of goods sold
                                                          
                                                          
                                                          (90,207
                                                          )
                                                          
                                                          
                                                          (496,021
                                                          )Gross
      profit
                                                          
                                                          
                                                          133,658
                                                          
                                                          
                                                          
                                                          506,633Operating
      expensesGeneral
      and administrative expenses
                                                          
                                                          
                                                          51,019
                                                          
                                                          
                                                          
                                                          52,499Research
      and development expenses
                                                          
                                                          
                                                          28,564
                                                          
                                                          
                                                          
                                                          17,076Selling
      expenses
                                                          
                                                          
                                                          18,603
                                                          
                                                          
                                                          
                                                          15,624Total
      operating expenses
                                                          
                                                          
                                                          98,185
                                                          
                                                          
                                                          
                                                          85,199Net
      operating Income (loss)
                                                          
                                                          
                                                          35,473
                                                          
                                                          
                                                          
                                                          421,434Other
      incomeSubsidy
      income from the PRC authorities for general operations
                                                          
                                                          
                                                          19,571
                                                          
                                                          
                                                          
                                                          97,261Interest
      income (expenses)
                                                          
                                                          
                                                          (6,330
                                                          )
                                                          
                                                          
                                                          164Other
      income (expenses)
                                                          
                                                          
                                                          35,089
                                                          
                                                          
                                                          
                                                          18,174Total
      other income
                                                          
                                                          
                                                          48,330
                                                          
                                                          
                                                          
                                                          115,599Income
      before income taxes
                                                          
                                                          
                                                          83,803
                                                          
                                                          
                                                          
                                                          537,033Income
      taxes
                                                          
                                                          
                                                          (13,204
                                                          )
                                                          
                                                          
                                                          (120,728
                                                          )Net
      Income (loss)
                                                          
                                                          $
                                                          70,599
                                                          
                                                          
                                                          $
                                                          416,305Other
      comprehensive income (loss)Foreign
      currency translation adjustment
                                                          
                                                          
                                                          (1,518
                                                          )
                                                          
                                                          
                                                          21,412Total
      comprehensive income (loss)
                                                          
                                                          $
                                                          69,081
                                                          
                                                          
                                                          $
                                                          437,717Earnings
      (loss) per shareBasic
                                                          
                                                          $
                                                          0.02
                                                          
                                                          
                                                          $
                                                          1.64Diluted
                                                          
                                                          
                                                          **
                                                          
                                                          
                                                          $
                                                          1.64Weighted
      average number of shares outstandingBasic
                                                          
                                                          
                                                          2,767,798
                                                          
                                                          
                                                          
                                                          267,672Diluted
                                                          
                                                          
                                                          70,267,798
                                                          
                                                          
                                                          
                                                          267,672**
      Less than $.01See
      accompanying notes to consolidated financial
  statements.
  5
 Table of Contents
  CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008For
      the three months endedMarch
      31, 2009
                                                    
                                                    
                                                    March
      31, 2008Cash
      flows from operating activitiesNet
      income (loss)
                                                    
                                                    $
                                                    70,599
                                                    
                                                    
                                                    $
                                                    416,305Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                                                    
                                                    
                                                    3,518
                                                    
                                                    
                                                    
                                                    8,086Changes
      in operating assets and liabilities:Trade
      receivables
                                                    
                                                    
                                                    50,209
                                                    
                                                    
                                                    
                                                    87,895Other
      receivables and prepayments
                                                    
                                                    
                                                    (167,178
                                                    )
                                                    
                                                    
                                                    (150,500
                                                    )Inventories
                                                    
                                                    
                                                    (38,082
                                                    )
                                                    
                                                    
                                                    148,708Other
      noncurrent assets
                                                    
                                                    
                                                    (1,838
                                                    )
                                                    
                                                    
                                                    -Warranty
      and maintenance reserves
                                                    
                                                    
                                                    (3,496
                                                    )
                                                    
                                                    
                                                    -Trade
      payables
                                                    
                                                    
                                                    68,147
                                                    
                                                    
                                                    
                                                    (653,301
                                                    )Other
      payables and accrued expenses
                                                    
                                                    
                                                    40,876
                                                    
                                                    
                                                    
                                                    18,049Income
      tax payable
                                                    
                                                    
                                                    14,244
                                                    
                                                    
                                                    
                                                    120,729Net
      cash flows used in operating activities
                                                    
                                                    
                                                    36,999
                                                    
                                                    
                                                    
                                                    (4,029
                                                    )Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                                                    
                                                    
                                                    (1,258
                                                    )
                                                    
                                                    
                                                    (7,895
                                                    )Net
      cash flows used in investing activities
                                                    
                                                    
                                                    (1,258
                                                    )
                                                    
                                                    
                                                    (7,895
                                                    )Cash
      flows from financing activitiesCapital
      contribution
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,351Repayment
      to due to director
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (79,973
                                                    )Net
      cash flows provided by financing activities
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (78,622
                                                    )Effect
      of foreign currency translation on cash and cash
    equivalents
                                                    
                                                    
                                                    (129
                                                    )
                                                    
                                                    
                                                    3,395Net
      increase in cash and cash equivalents
                                                    
                                                    
                                                    35,612
                                                    
                                                    
                                                    
                                                    (87,151
                                                    )Cash
      and cash equivalents - beginning of year
                                                    
                                                    
                                                    87,254
                                                    
                                                    
                                                    
                                                    136,441Cash
      and cash equivalents - end of year
                                                    
                                                    
                                                    122,866
                                                    
                                                    
                                                    
                                                    49,290Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -Income
      taxes
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    $
                                                    -See
      accompanying notes to consolidated financial
  statements.
  6
 Table of Contents
  CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)
  1.
                BASIS
      OF PRESENTATION
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with both generally accepted accounting principles for
interim financial information, and the instructions to Form 10-Q and Article 8
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, considered necessary for a
fair presentation of the results for the interim periods presented. Interim
results are not necessarily indicative of results for a full year.
 
 The
condensed consolidated financial statements and related disclosures have been
prepared with the presumption that users of the interim financial information
have read or have access to our annual audited consolidated financial statements
for the preceding fiscal year. Accordingly, these condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the related notes thereto contained in the Annual
Report on Form 10-K for the year ended December 31, 2008.
 
 2.
                ORGANIZATION
      BACKGROUND
 
 Envirosafe
Corporation (the “Company”) was incorporated in the state of Delaware in 1996.
Its shares were traded on the OTC Bulletin Board of the United States of
America.
 
 On
October 6, 2008, the Company redomiciled from Delaware to
Nevada.  Additionally, on October 9, 2008, the Company’s board of
directors authorized and approved a reverse stock split (the “Reverse Split”) of
the Company’s common stock on the basis of one share for eight shares currently
authorized or issued and outstanding. Accordingly, the number of authorized
shares of common stock decreased from 400,000,000 shares to 50,000,000 shares
and the number of issued and outstanding shares decreased from 22,141,375 shares
to 2,767,672 shares. The Reverse Split was effective on October 31, 2008. The
Company has retroactively adjusted all the share information to reflect the
reverse stock split in the audited condensed consolidated financial
statements.
 
 The
Company is an investment holding company, whose only asset is 100% equity
interest in ADDE Education Hldgs Limited (“ADDE”). ADDE is a corporation
organized and existing under the laws of Hong Kong Special Administrative Region
of People’s Republic of China (the “PRC”) and is an investment holding company
whose only asset is 100% equity interest in Guangzhou Haoyu Educational
Technology Company Limited (“Haoyu”).  Haoyu was established in the
PRC on March 27, 2001 as a
domestic enterprise.
 
 On March
1, 2008, ADDE entered into an agreement with the then sole stockholder of Haoyu
to acquire the stockholder’s entire interest in Haoyu (the “Transfer”) at a
consideration of Renminbi (“RMB”) 1 million.  Haoyu was wholly owned
by the spouse of ADDE’s sole stockholder before the consummation of the
Transfer.  The Transfer was subsequently approved by the government
bureau in May 2008.  Haoyu re-registered as a wholly foreign owned
enterprise and obtained its business license in August 2008.
 
 On March
4, 2008, a Plan of Exchange (the “Exchange”) was executed between and among the
Company, ADDE, the majority stockholder of the Company and the stockholder of
ADDE.  The Exchange was consummated on July 31, 2008, pursuant to
which 2,500,000 (after taking into account the Reverse Split) shares of the
Company’s common stock and 1,350,000 shares of the Company’s preferred stock
were issued to the stockholder of ADDE.  Thereafter, ADDE and Haoyu
became the Company’s wholly-owned subsidiaries and the former stockholder of
ADDE owned 93.2% of the Company’s issued and outstanding shares.
 
 The
Exchange and the Transfer have been respectively accounted for as reverse
acquisition and recapitalization of the Company and ADDE whereby ADDE is deemed
to be the accounting acquirer (legal acquiree) and the Company to be the
accounting acquiree (legal acquirer) under the Exchange, and Haoyu is deemed to
be the accounting acquirer (legal acquiree) and ADDE to be the accounting
acquiree (legal acquirer) under the Transfer. The audited condensed consolidated
financial statements are in substance those of Haoyu, with the assets and
liabilities, and revenues and expenses, of the Company and ADDE being included
effective from the respective consummation dates of the Exchange and the
Transfer.
 
 On April
3, 2008, the Company changed its corporate name to China Education Technology
Inc. to more accurately reflect its business after the Exchange transaction with
ADDE and Hao Yu.
 
 3.
                DESCRIPTION
      OF BUSINESS
 
 The
Company’s primary business operations are conducted through Haoyu, which is
specialized in the research and development of educational products and
technology applications.  Haoyu is located in the Guangzhou Province
of the PRC with three manufacture bases for research and development
purpose.
 
 The
educational software developed by Haoyu is in conformity to the new educational
purpose.  The software uses the advanced technology of data
collection, sensor and wireless control and video image with handy appearance,
which can virtually upload the live experiment and analyze the information
collected.  Teachers and students can have the experiments done
automatically instead of the traditional method by hand.
 
 Haoyu
also engages in the trading of hardware and computer products such as monitors
and computer notebooks.
 
 4.
                RECENTLY
      ISSUED ACCOUNTING STANDARS
 
 In May
2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States of America.  SFAS No. 162 will be effective 60 days
following the SEC’s approval of the PCAOB amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.”  The Company does not believe SFAS No. 162 will have a
significant impact on the Company’s financial statements.
 
 In April
2009, the FASB issued FSP 107-1, “Interim Disclosures about Fair Value of
Financial Instruments” (“FSP 107-1”), which requires disclosures about fair
value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements.  FSP 107-1 also amends
APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures
in summarized financial information at interim reporting. FSP 107-1 is effective
for interim reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009.  The Company is
currently evaluating the potential impact of FSP 107-1 on its consolidated
financial statement presentation and disclosures.
 Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
 
 7
 Table of Contents
 
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 (Stated
in US Dollars)
 
 5.
                  INVENTORIES
                  
                  March31,
                  
                  
                  December
      31,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Audited)Raw
      materials
                  
                  $
                  3,945
                  
                  
                  $
                  13,330Finished
      goods
                  
                  
                  287,145
                  
                  
                  
                  240,116291,090
                  
                  
                  
                  253,446Provision
      for obsolete inventories
                  
                  
                  -
                  
                  
                  
                  -$
                  291,090
                  
                  
                  $
                  253,446
 
 The
Company had no provision for obsolete inventories charged to the statements of
operations forthethreemonthsended March 31, 2009 andfor the year ended December 31,2008.
 
 6.
                WARRANTY
 
 The
Company maintains a policy of providing after sales support for certain products
by way of a warranty program. The Company provided 3 years warranties for the
software products to certain customers.  Further, the relevant
customers are allowed to defer the settlement of certain percentage (normally
5%) of the billed amount for certain period of time (normally three year) after
acceptance of the Company’s products under the warranty program.
 
 Since the
aforementioned products were well developed, the Company did not encounter any
claims from such customers. However, the Company will periodically assess the
estimation of its warranty liability and recognize the reserve when necessary
based on the actual experience.
 
 As of
March 31, 2009 and December 31, 2008, the Company had warranty and maintenance
reserves of 26,655 and $30,203, respectively.
 
 7.
                INCOME
      TAXES
 
 The
Company is subject to the United States of America Tax law at tax rate of
34%.  It has no assessable profit for both reporting
periods.  The Company has not provided deferred taxes on undistributed
earnings of its non-U.S. subsidiaries as of March 31, 2009 as it is the
Company’s current policy to reinvest these earnings in non-U.S.
operations.
 
 ADDE is
subject to Hong Kong profits tax.  No provision for Hong Kong profits
tax has been made as ADDE had no taxable income for the reporting
period.
 
 Commencing
from the fiscal year 2008, Haoyu is subject to the PRC Enterprise Income Tax
(“EIT”) at the statutory rate of 25% (under the new law as detailed below) on
the profits as reported in its PRC statutory financial statements adjusted by
profit and loss items that are not taxable or deductible.
  PRC’s
legislative body, the National People’s Congress, adopted the unified EIT Law on
March 16, 2007. This new tax law replaces the existing separate income tax
laws for domestic enterprises and foreign-invested enterprises and became
effective on January 1, 2008. Under the new tax law, a unified income tax
rate is set at 25% for both domestic enterprises and foreign-invested
enterprises. However, there will be a transition period for enterprises, whether
foreign-invested or domestic, that are currently receiving preferential tax
treatments granted by relevant tax authorities. Enterprises that are subject to
an enterprise income tax rate lower than 25% may continue to enjoy the lower
rate and will transit into the new tax rate over a five year period beginning on
the effective date of the EIT Law. Enterprises that are currently entitled to
exemptions for a fixed term may continue to enjoy such treatment until the
exemption term expires. Preferential tax treatments may continue to be granted
to industries and projects that qualify for such preferential treatments under
the new law.
 
 Income
taxes in the statements of operations and comprehensive income (loss) for the
reporting periods represent provision for EIT for the Company’s continuing
operations in the PRC.
 
 In July
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”).  This interpretation requires recognition
and measurement of uncertain income tax positions using a “more-likely-than-not”
approach.  The Company adopted FIN 48 on January 1,
2007.  The management evaluated the Company’s tax positions and
considered that no additional provision for uncertainty in income taxes is
necessary as of March 31, 2009.
 
 8.
                EARNINGS
      PER SHARE
 
 The
following table sets forth the computation of basic and diluted earnings per
share for the periods indicated:
  For
      the three months endedMarch 31, 2009
                    
                    
                    March 31, 2008Numerator:Total
      comprehensive income
                    
                    $
                    69,081
                    
                    
                    $
                    437,717Denominator:Weighted
      average number of shares outstandingBasic
                    
                    
                    2,767,798
                    
                    
                    
                    267,672Diluted
                    
                    
                    70,267,798
                    
                    
                    
                    267,672Earnings
      (loss) per shareBasic
                    
                    $
                    0.02
                    
                    
                    $
                    1.64Diluted
                    
                    
                    **
                    
                    
                    $
                    1.64
 
 ** Less
than $.01
 
 The basic
and diluted earnings (loss) per share were calculated using the
comprehensive income (loss) and the weighted average number of shares
outstanding during the reporting periods.  All share and per share data
have been adjusted to reflect the recapitalization of the Company in the
Exchange and the Reverse Split.
 
 9.
                SEGMENT
      INFORMATION
 
 The
Company uses the “management approach” in determining reportable operating
segments.  The management approach considers the internal organization
and reporting used by the Company’s chief operating decision maker for making
operating decisions and assessing performance as the source for determining the
Company’s reportable segments.  Management, including the chief
operating decision maker, reviews operating results solely by monthly revenue of
hardware and software and the overall operating results of the
Company.  The revenue of hardware and software for the reporting
periods is as follows:
 
 Hardware
                    
                    
                    Software
                    
                    
                    TotalThree
      months ended
                      March
      31,
                    
                    
                    Three
      months ended
                      March
      31,
                    
                    
                    Three
      months ended
                      March
      31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Revenue
      from external customers, net of warranty and maintenance
      reserves
                    
                    $
                    84,115
                    
                    
                    $
                    418,835
                    
                    
                    $
                    139,750
                    
                    
                    $
                    583,819
                    
                    
                    $
                    223,865
                    
                    
                    $
                    1,002,654
 
 All of
the Company’s long-lived assets and customersare located in the
PRC.
  8
 Table of Contents
  ITEM 2.  
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
  Management’s
Discussion and Analysis contains various “forward looking statements” within
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. Management will elect additional changes to
revenue recognition to comply with the most conservative SEC recognition on a
forward going accrual basis as the model is replicated with other similar
markets (i.e. SBDC). The Company’s actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth therein.
  Management’s
Discussion and Analysis of Results of Financial Condition and Results of
Operations (“MD&A”) should be read in conjunction with the financial
statements included herein.
  GENERAL
DESCRIPTION OF BUSINESS
 
 As used
herein the terms "We", the "Company", "CEDT", the "Registrant," or the "Issuer"
refers to China Education Technology, Inc., its subsidiaries and predecessors,
unless indicated otherwise. We were originally incorporated in Delaware in 1996
as Envirosafe Corporation. On October 6, 2008, our board decided to redomicile
from the State of Delaware to the State of Nevada. Their decision was approved
by the holders of a majority of the voting rights of our common stock. On April
3, 2009, we changed our name to China Education Technology, Inc. to more
accurately reflect our business after the Exchange (as defined below) between
ADDE and Haoyu.
 
 We are an
investment holding company, whose only asset is a 100% equity interest in ADDE
Education Hldgs Limited (“ADDE”). ADDE is a corporation organized and existing
under the laws of Hong Kong Special Administrative Region of the People’s
Republic of China (the “PRC”) and is an investment holding company whose only
asset is a 100% equity interest in Guangzhou Haoyu Educational Technology
Company Limited (“Haoyu”).  Haoyu was originally established in the
PRC on March 27, 2001 as a domestic enterprise.
 
 On March
1, 2008, ADDE entered into an agreement with the then sole stockholder of Haoyu
to acquire the stockholder’s entire interest in Haoyu (the “Transfer”) for
consideration of 1,000,000 Renminbi (“RMB”).  Haoyu was wholly owned
by the spouse of ADDE’s sole stockholder before the consummation of the
Transfer.  The Transfer was subsequently approved by the government
bureau in May 2008.  Haoyu re-registered as a wholly foreign owned
enterprise and obtained its business license in August 2008.
 
 On March
4, 2008, a Plan of Exchange (the “Exchange”) was executed between and among the
Company, ADDE, the majority stockholder of the Company and the majority
stockholder of ADDE.  The Exchange was consummated on July 31, 2008,
pursuant to which 2,500,000 (after taking into account the Reverse Split) shares
of the Company’s common stock and 1,350,000 shares of the Company’s preferred
stock were issued to the stockholder of ADDE.  Thereafter, ADDE and
Haoyu became the Company’s wholly-owned subsidiaries and the former stockholder
of ADDE owned 93.2% of the Company’s issued and outstanding shares.
 
 The
Exchange and the Transfer have been respectively accounted for as a reverse
acquisition and recapitalization of the Company and ADDE whereby ADDE is deemed
to be the accounting acquirer (legal acquiree) and the Company to be the
accounting acquiree (legal acquirer) under the Exchange, and Haoyu is deemed to
be the accounting acquirer (legal acquiree) and ADDE to be the accounting
acquiree (legal acquirer) under the Transfer. The audited condensed consolidated
financial statements are in substance those of Haoyu, with the assets and
liabilities, and revenues and expenses, of the Company and ADDE being included
effective from the respective consummation dates of the Exchange and the
Transfer.
 
 Since the
reverse merger was consummated, we have continued operations conducted through
Haoyu, which is specializes in the research and development of educational
products and technology applications.  Haoyu is located in the
Guangzhou Province of the PRC with three manufacture bases for research and
development purpose.
 
 The
educational software developed by Haoyu is in conformity to the new educational
purpose.  The software uses advanced technology of data collection,
sensor and wireless control and video imaging, which can virtually upload live
media and analyze the information collected.  Our software allows
teachers and students to conduct experiments automatically instead of the
traditional method by hand.
 
 Haoyu
also engages in the trading of hardware and computer products such as monitors
and computer notebooks.
 RESULTS OF OPERATIONS -
THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)
  Revenues
  We had
revenues of $223,865 and $1,002,654 for the three months ended March 31, 2009
and 2008, respectively, due primarily to sales of information collectors,
sensors, digital meteorological stations, and digital analyzing software. We did
not record any product returns for the three months ended March 31, 2009. The
decrease in revenues by $778,789 in the first quarter of 2009, compared to the
comparable period in 2008, was due primarily to adecreasein sales of our specialized
products.
  Income /
Loss
  We had a
net income of $70,599 and $416,305 for the three months ended March 31, 2009 and
2008, respectively. The decrease by $345,706 in net income during the three
months ended March 31, 2009 was due primarily to the decrease in sales to
$223,865. Our subsidy income from the PRC authorities also decreased to $19,571,
versus the subsidy income of $97,261 for the comparable period in 2008. In
addition, our general and administrative expenses remained constant while our
research and development expenses increased by $11,488 in the first quarter of
2009.
  We hope
to incur profits from operations during fiscal year 2009. There can be no
assurance that we will achieve or maintain profitability, or that any revenue
growth will take place in the future.
 
 9
 Table of Contents
  Expenses
  Operating
expenses for the three months ended March 31, 2009 and 2008 were $98,185 and
$85,199 respectively. The increase in the first quarter of 2009 was due
primarily to the increase in research and development expenses to $28,564 in the
first quarter of 2009, from $17,076 during the comparable period in 2008. The
selling expenses were $18,603 in the first quarter of 2009, increased by $2,979
compared to the selling expenses of $15,624 in the comparable period of 2008.
The increase in these operating expenses can be attributed to the implementation
of our business plan.
  Cost of Goods
Sold
  Cost of
goods sold included expenses directly related to the manufacturing and selling
our products. Product delivery and direct labor would be examples of cost of
goods sold items. During the three months ended March 31, 2009, we had $90,207
in cost of goods sold, or 38.6% of sales revenue. During the three months ended
March 31, 2008, we had $496,021 in cost of goods sold, or 49.5% of sales
revenue. The lower cost of goods sold as a percentage of sales revenues during
the first quarter of 2009 was due to thedecreasein
sales of our specialized products which had low gross
margin.
  Impact of
Inflation
  We
believe that inflation has had a negligible effect on operations during this
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
  Liquidity and Capital
Resources
  Cash
flows provided by operating activities were $36,999 for the three months ended
March 31, 2009, compared to cash flows of $4,029 used in operating activities
for the three months ended March 31, 2008. Positive cash flows from operations
in 2009 were due primarily to the net income of $70,599, the collection of trade
receivables of $50,209, and the increase in trade payables, other payables and
accrued expenses by $68,147 and $40,876, respectively, partially offset by the
increase in other receivables and prepayments by $167,178. Negative cash flows
used in operations during the first quarter of 2008 were due primarily to the
net income of $416,305 offset by the increase in other receivables and
prepayments by $150,500, and the decrease in trade payables by the amount of
$653,301.
  Cash
flows used in investing activities were $1,258 and $7,895 for the three months
ended March 31, 2009 and 2008, respectively, attributable to payments to acquire
property, plant, and equipment for both periods.
  We had no
cash flows from financing activities during the three months ended March 31,
2009, compared to cash flow of $78,622 used in financing activities for the
three months ended March 31, 2008. Cash flows used in financing activities
during the three months ended March 31, 2008 were due primarily to repayments of
$79,973 to the advance from a director.
  Overall,
we have funded our cash needs from inception through March 31, 2009 with a
series of debt and equity transactions, primarily with related parties. If we
are unable to receive additional cash from our related parties, we may need to
rely on financing from outside sources through debt or equity transactions. Our
related parties are under no legal obligation to provide us with capital
infusions. Failure to obtain such financing could have a material adverse effect
on operations and financial condition.
  We had
cash of $122,866 on hand and a working capital of $859,334 as of March 31, 2009.
Currently, we have enough cash to fund our operations for about six months. This
is based on current cash flows from financing activities and projected revenues.
Also, if the projected revenues fall short of needed capital we may not be able
to sustain our capital needs. We will then need to obtain additional capital
through equity or debt financing to sustain operations for an additional year.
Our current level of operations would require capital of approximately $500,000
to sustain operations through year 2009 and approximately $700,000 per year
thereafter. Modifications to our business plans may require additional capital
for us to operate. For example, if we are unable to raise additional capital in
the future we may need to curtail our number of product offers or limit our
marketing efforts to the most profitable geographical areas. This may result in
lower revenues and market share for us. In addition, there can be no assurance
that additional capital will be available to us when needed or available on
terms favorable to us.
  ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK
 
 The information to be reported under this item is
not required of smaller reporting companies.
  ITEM 4. CONTROLS AND
PROCEDURES
 
 We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and its Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
  As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required
disclosure.
  The
Certifying Officers have also concluded, based on their evaluation of our
controls and procedures that as of March 31, 2009, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.
  The
Certifying Officers have also concluded that there was no change in our internal
controls over financial reporting identified in connection with the evaluation
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
 
 ITEM 4T. CONTROLS AND
PROCEDURES
  (a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting.
  Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Exchange Act as of March 31, 2009,
and, based on their evaluation, as of the end of such period, the our disclosure
controls and procedures were effective as of the end of the period covered by
the Quarterly Report,
  (b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:
 
 •           Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and
 
 •           Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the issuer are being
made only in accordance with authorizations of management of the issuer;
and
 
 •           Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the financial statements.
 
 As of the
end of the period covered by the Quarterly Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.
  Management
assessed the effectiveness of our internal control over financial reporting as
of March 31, 2009. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated Framework.
  Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
  This
Quarterly Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Quarterly
Report.
  (c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
 
 10
 Table of Contents
  PART II.  OTHER
INFORMATION
 
 ITEM
1.      LEGAL PROCEEDINGS
 
 As of the
date of this report, we are not a party to any pending legal proceeding and are
not aware of any threatened legal proceeding.
 
 ITEM
1A.   RISK FACTORS
 
 Information regarding risk factors appears in Part I,
“Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” under the captions “General Description of Business” and
“Cautionary Note Regarding Forward-Looking Statements” contained in this
Quarterly Report on Form 10-Q and in “Item 1A. RISK FACTORS” of our 2008
Annual Report on Form 10-K. There have been no material changes from the risk
factors previously disclosed in our 2008 Annual Report on
Form 10-K.
 
 ITEM
2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
 
 None.
 
 ITEM
3.      DEFAULTS UPON SENIOR SECURITIES
 
 We have
not had any default upon senior securities.
 
 ITEM
4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None.
 
 ITEM
5.      OTHER INFORMATION
 
 We do not
have any other information to report.
  ITEM
6.      EXHIBITS
 
 31.1 CEO
Certification Pursuant to Section 302
 31.2 CFO Certification Pursuant to Section
302
 32.1
CEO Certification Pursuant to Section 906
 32.2 CFO
Certification Pursuant to Section 906
 
 (b)
Report on Form 8-K Filed in First Quarter of Fiscal Year 2009
  1.
              An
      8-K and related amendment filed on February 12, 2009 and February 26,
      2009, dismissing PKF CPA as
      its independent auditor, and engaged Lake & Associates CPA’s LLC as
      independent auditor to audit Registrant's financial statements for the
      three months ended March 31, 2009  and to review Registrant's
      quarterly reports for 2009. The decision to make the change was approved
      by Registrant's Board of Directors. The Registrant does not have an audit
      committee.
 
 11
 Table of Contents
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
  CHINA
      EDUCATION TECHNOLOGY, INC.
                (Registrant)Date:
      May 19, 2009
              By:
              /s/
      Yan Bin GuoYan
      Bin Guo
                President,
      Chief Executive Officer