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, 2010








[    ]        TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934





For
the Transition Period From ____to _____





Commission
file number   000-52407





CHINA EDUCATION TECHNOLOGY,
INC.


(Name
of Small Business Issuer in its Charter)





NEVADA


(State or
Other Jurisdiction of Incorporation of Organization)





94-3251254


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





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


Gao
Tang Xin Jian Zone, Tian He District


Guangzhou,
P.R.China  510663


(Address
of principal executive offices)





(8620)
6108-8998 - Tel


(8620) 6108-8999 -
Fax


(Issuer's
telephone number)





Indicate
by check mark if the registrant is a well-know seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes
[  ]                                No
[x]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act


Yes
[  ]                                No
[x]





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


Yes
[x]                              
 No [  ]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).


Yes
[  ]                                No
[  ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer
             ̈Non-accelerated
      filer
             ̈(Do not check
      if a smaller reporting company)Accelerated
      filer
             ̈Smaller
      reporting company
            x





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


Yes
[  ]                                No
[x]





Number of
shares of preferred stock, par value $.0001, outstanding as of May 18,
2010:          870,000


Number of
shares of common stock, par value $.0001, outstanding as of May 18,
2010:      26,767,798








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
              3Item
      2.  Management's Discussion and Analysis of Financial Condition
      and Results of Operations
              10Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
              12Item
      4. Controls and Procedures
              12Item
      4T. Controls and Procedures
              12PART
      IIItem
      1.  Legal Proceedings
              13Item
      1A. Risk Factors
              13Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
              13Item
      3.  Defaults Upon Senior Securities
              13Item
      4.  Submission of Matters to a Vote of Security
      Holders
              13Item
      5.  Other Information
              13Item
      6.  Exhibits
              14





2




ITEM 1.FINANCIAL
STATEMENTS





INDEX
TOCHINA EDUCATION
TECHNOLOGY, INC. FINANCIAL STATEMENTS




PageUnaudited
      Condensed Consolidated Balance Sheets
              
              4Unaudited
      Condensed Consolidated Statements of Operations And Comprehensive
      Income
              
              5Unaudited
      Condensed Consolidated Statements of Cash
Flows
              
              6Notes
      to Unaudited Financial Statements
              
              7


3


CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESUNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEETSAS
      OF MARCH 31, 2010 AND DECEMBER 31, 2009ASSETSMarch
      31, 2010
              
              
              December
      31, 2009Current
      assets:
              
              
              
              
              AuditedCash
      and cash equivalents
              
              $
              41,074
              
              
              $
              29,656Trade
      receivables, net
              
              
              796,868
              
              
              
              822,926Inventories
              
              
              412,893
              
              
              
              372,971Prepayments
              
              
              483,947
              
              
              
              483,812Other
      receivables
              
              
              2,475
              
              
              
              5,339Refundable
      deposit
              
              
              220,910
              
              
              
              220,849Total
      current assets
              
              
              1,958,167
              
              
              
              1,935,552Property, plant and equipment,
      net
              
              
              123,909
              
              
              
              131,867Non-current assets:Others
              
              
              67,069
              
              
              
              67,050Total
      non-current assests
              
              
              67,069
              
              
              
              67,050Total
      assets
              
              $
              2,149,145
              
              
              $
              2,134,470LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent liabilities:Short-term
      note payable
              
              
              732,461
              
              
              
              732,257Trade
      payables
              
              
              272,158
              
              
              
              272,083Salary
      payable
              
              
              4,395
              
              
              
              4,936Other
      payables and accrued expenses
              
              
              94,172
              
              
              
              32,865Amount
      due to a director
              
              
              97,297
              
              
              
              97,279Income
      tax payable
              
              
              29,044
              
              
              
              29,277Total
      current liabilities
              
              
              1,229,527
              
              
              
              1,168,698Long-term liabilities:Warranty
      and maintenance reserves
              
              
              44,308
              
              
              
              50,976STOCKHOLDERS’
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized,
              
              
              87
              
              
              
              87870,000
      shares issued and outstanding as of March 31, 2010 and December 31,
      2009Common
      stock, $0.0001 par value, 50,000,000 shares authorized,
              
              
              2,677
              
              
              
              2,67726,767,798
      shares issued and outstanding as of March 31, 2010 and December 31,
      2009Additional
      paid in captial
              
              
              120,438
              
              
              
              120,438Statutory
      and other reserves
              
              
              69,565
              
              
              
              69,565Accumulated
      other comprehensive income
              
              
              76,512
              
              
              
              76,246Retained
      earnings
              
              
              606,031
              
              
              
              645,783Total
      stockholders’ equity
              
              
              875,311
              
              
              
              914,796Total
      liabilities and stockholders’ equity
              
              
              2,149,145
              
              
              
              2,134,470See
      accompanying notes to consolidated financial
  statements.
 
 4


CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIESUNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      INCOMEFOR
      THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009For
      the Three Months EndedMarch
      31, 2010
              
              
              March
      31, 2009Sales
              
              $
              6,682
              
              
              $
              223,865Cost
      of goods sold
              
              
              -
              
              
              
              (90,207
              )Gross
      profit
              
              
              6,682
              
              
              
              133,658Operating
      expensesGeneral
      and administrative expenses
              
              
              19,892
              
              
              
              51,019Research
      and development expenses
              
              
              -
              
              
              
              28,564Selling
      expenses
              
              
              26,304
              
              
              
              18,603Total
      operating expenses
              
              
              46,196
              
              
              
              98,185Net
      operating Income (loss)
              
              
              (39,514
              )
              
              
              35,473Other
      incomeSubsidy
      income from the PRC authorities for general operations
              
              
              -
              
              
              
              19,571Interest
      income (expenses)
              
              
              (237
              )
              
              
              (6,330
              )Other
      income (expenses)
              
              
              -
              
              
              
              35,089Total
      other income
              
              
              (237
              )
              
              
              48,330Income
      before income taxes
              
              
              (39,752
              )
              
              
              83,803Income
      taxes
              
              
              -
              
              
              
              (13,204
              )Net
      Income (loss)
              
              $
              (39,752
              )
              
              $
              70,599Other
      comprehensive income (loss)Foreign
      currency translation adjustment
              
              
              266
              
              
              
              (1,518
              )Total
      comprehensive income (loss)
              
              $
              (39,486
              )
              
              $
              69,081Earnings
      (loss) per shareBasic
              
              
              **
              
              
              $
              0.02Diluted
              
              
              **
              
              
              
              **Weighted
      average number of shares outstandingBasic
              
              
              26,767,798
              
              
              
              2,767,798Diluted
              
              
              70,267,798
              
              
              
              70,267,798**
      Less than $.01See
      accompanying notes to consolidated financial
  statements.
 
 5
 CHINA
      EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
                  UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009For
      the Three Months EndedMarch
      31, 2010
                
                
                March
      31, 2009Cash
      flows from operating activitiesNet
      income (loss)
                
                $
                (39,752
                )
                
                $
                70,599Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                
                
                7,994
                
                
                
                3,518Changes
      in operating assets and liabilities:Trade
      receivables
                
                
                26,286
                
                
                
                50,209Inventories
                
                
                (39,816
                )
                
                
                (38,082
                )Other
      receivables and prepayments
                
                
                2,866
                
                
                
                (167,178
                )Refundable
      deposits
                
                
                -
                
                
                
                -Other
      noncurrent assets
                
                
                -
                
                
                
                (1,838
                )Warranty
      and maintenance reserves
                
                
                (6,682
                )
                
                
                (3,496
                )Trade
      payables
                
                
                -
                
                
                
                68,147Salary
      payable
                
                
                (543
                )
                
                
                -Other
      payables and accrued expenses
                
                
                61,302
                
                
                
                40,876Income
      tax payable
                
                
                (241
                )
                
                
                14,244Net
      cash flows used in operating activities
                
                
                11,414
                
                
                
                36,999Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment
                
                
                -
                
                
                
                (1,258
                )Net
      cash flows used in investing activities
                
                
                -
                
                
                
                (1,258
                )Cash
      flows from financing activitiesNet
      cash flows provided by financing activities
                
                
                -
                
                
                
                -Effect
      of foreign currency translation on cash and cash
    equivalents
                
                
                4
                
                
                
                (129
                )Net
      increase in cash and cash equivalents
                
                
                11,418
                
                
                
                35,612Cash
      and cash equivalents - beginning of year
                
                
                29,656
                
                
                
                87,254Cash
      and cash equivalents - end of year
                
                
                41,074
                
                
                
                122,866Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
                
                $
                -
                
                
                $
                -Income
      taxes
                
                $
                -
                
                
                $
                -See
      accompanying notes to consolidated financial
  statements.
 6
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2010 and 2009
 (Stated
in US Dollars)
 1.
                BASIS
      OF PRESENTATION
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with both generally accepted accounting principles for
interim financial information, and the instructions to Form 10-Q and Article 8
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, considered necessary for a
fair presentation of the results for the interim periods presented. Interim
results are not necessarily indicative of results for a full year.
 
 The
unaudited condensed consolidated financial statements and related disclosures
have been prepared with the presumption that users of the interim financial
information have read or have access to the Company’s annual audited
consolidated financial statements for the preceding fiscal year. Accordingly,
these unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and the related
notes for the years ended December 31, 2009 and 2008 thereto contained in the
Annual Report on Form 10-K for the year ended December 31, 2009.
 
 2.
                ORGANIZATION
      AND BUSINESS BACKGROUND
 
 China
Education Technology Inc. (the “Company”) was incorporated in the state of
Delaware in 1996 in name of Envirosafe Corporation. 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.
 
 China
Education Technology Inc. and its wholly-owned subsidiaries, ADDE and Haoyu, are
hereafter referred to as (the “Company”).
  On April
3, 2008, the Company changed its corporate name to China Education Technology
Inc. to more accurately reflect its business after the Exchange transaction with
ADDE and Hao Yu.
 
 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 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.
  7
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2010 and 2009
 (Stated
in US Dollars)
 4.
                RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS
 
 Fair Value Measurements and
Disclosures
  (Accounting
Standards Update (“ASU”) 2010-06)
  In
January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and
Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements.”
ASU 2010-06 requires new disclosures regarding transfers in and out of the Level
1 and 2 and activity within Level 3 fair value measurements and clarifies
existing disclosures of inputs and valuation techniques for Level 2 and 3 fair
value measurements. ASU 2010-06 also includes conforming amendments to
employers’ disclosures about postretirement benefit plan assets. The new
disclosures and clarifications of existing disclosures are effective for interim
and annual reporting periods beginning after December 15, 2009, except for
the disclosure of activity within Level 3 fair value measurements, which is
effective for fiscal years beginning after December 15, 2010, and for
interim periods within those years. The adoption of this statement is not
expected to have a material impact on our consolidated financial position or
results of operation.
 
 FASB Accounting Standards
Codification
  (Accounting
Standards Update (“ASU”) 2009-01)
  In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s financial statements as all future references to authoritative
accounting literature will be referenced in accordance with the Codification.
There have been no changes to the content of the Company’s financial statements
or disclosures as a result of implementing the Codification during the year
ended December 31, 2009.   As a result of the Company’s
implementation of the Codification during the three months ended March 31, 2010,
previous references to new accounting standards and literature are no longer
applicable. In the current annual financial statements, the Company will provide
reference to both new and old guidance to assist in understanding the impacts of
recently adopted accounting literature, particularly for guidance adopted since
the beginning of the current fiscal year but prior to the
Codification.
  Subsequent
Events
  (Included
in Accounting Standards Codification (“ASC”) 855 “Subsequent Events”, previously
SFAS No. 165 “Subsequent Events”)
  SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the financial
statements are issued or available to be issued (“subsequent events”). An entity
is required to disclose the date through which subsequent events have been
evaluated and the basis for that date. For public entities, this is the date the
financial statements are issued. SFAS No. 165 does not apply to subsequent
events or transactions that are within the scope of other GAAP and did not
result in significant changes in the subsequent events reported by the Company.
SFAS No. 165 became effective for interim or annual periods ending after
June 15, 2009 and did not impact the Company’s financial statements. The
Company evaluated for subsequent events through the issuance date of the
Company’s financial statements. No recognized or non-recognized subsequent
events were noted.
  Determination of the Useful
Life of Intangible Assets
  (Included
in ASC 350 “Intangibles – Goodwill and Other”, previously FSP SFAS No. 142-3
“Determination of the Useful Lives of Intangible Assets”)
  FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The adoption of FSP SFAS No. 142-3 did not impact the
Company’s financial statements.
  Noncontrolling
Interests
  (Included
in ASC 810 “Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51”)
  SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. Any excess or shortfall for
buyouts of noncontrolling interests in mature restaurants is recognized as an
adjustment to additional paid-in capital in stockholders’ equity. Any shortfall
resulting from the early buyout of noncontrolling interests will continue to be
recognized as a benefit in partner investment expense up to the initial amount
recognized at the time of buy-in. Additionally, operating losses can be
allocated to noncontrolling interests even when such allocation results in a
deficit balance (i.e.,
book value can go negative).  The Company presents noncontrolling
interests (previously shown as minority interest) as a component of equity on
its consolidated balance sheets. Minority interest expense is no longer
separately reported as a reduction to net income on the consolidated income
statement, but is instead shown below net income under the heading “net income
attributable to noncontrolling interests.” The adoption of SFAS No. 160 did
not have any other material impact on the Company’s financial
statements.
  Consolidation of Variable
Interest Entities – Amended
  (To be
included in ASC 810 “Consolidation”, SFAS No. 167 “Amendments to FASB
Interpretation No. 46(R)”)
  SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.
  Management
does not believe that any other recently issued, but not yet effective,
accounting standards or pronouncements, if currently adopted, would have a
material effect on the Company’s financial statements.
  8
 
 CHINA
EDUCATION TECHNOLOGY INC. AND SUBSIDIARIES
 Notes
to Unaudited Condensed Consolidated Financial Statements
 For
the Three Months Ended March 31, 2010 and 2009
 (Stated
in US Dollars)
  5.
                INVENTORIES
 
 March
      31, 2010
                
                
                December
      31, 2009(Unaudited)
                
                
                (Audited)Raw
      materials
                
                $
                47,063
                
                
                $
                7,243Finished
      goods
                
                
                365,830
                
                
                
                365,728412,893
                
                
                
                372,971Provision
      for obsolete inventories
                
                
                -
                
                
                
                -$
                412,893
                
                
                $
                372,971
 
 The
Company had no provision for obsolete inventories charged to the statements of
operations for the three months ended March 31, 2010 and for the year ended
December 31, 2009.
  6.
                PREPAYMENTS
 
 The
balances of $483,947 and $483,812 as of March 31, 2010 and December 31, 2009,
respectively, represented prepaid goods, supplies and other items used in
packaging of the products.
 
 7.
                REFUNDABLE
      DEPOSIT
 
 The
balance of $220,910 and $220,849 as of March 31, 2010 and December 31, 2009,
respectively, represented the deposit to an independent party, which acts as a
guarantor issuing the guarantee to the Company in connection with a short-term
loan from a bank. (see Note 9)
 
 8.
                WARRANTY
 
 The
Company maintains a policy of providing after sales support for certain products
by way of a warranty program. The Company provided 3 years warranties for the
software products to certain customers.  Further, the relevant
customers are allowed to defer the settlement of certain percentage (normally
5%) of the billed amount for certain period of time (normally three year) after
acceptance of the Company’s products under the warranty program.
 
 Since the
aforementioned products were well developed, the Company did not encounter any
claims from such customers. However, the Company will periodically assess the
estimation of its warranty liability and recognize the reserve when necessary
based on the actual experience.
 
 As of
March 31, 2010 and December 31, 2009, the Company had warranty and maintenance
reserves of $44,308 and $50,976, respectively.
 
 9.
                SHORT-TERM
      NOTE PAYABLE
 
 The
short-term note payable was the loan from a bank denominated in RMB and
repayable within one year.  It carries annual interest at 6.903%,
which is determined by the benchmark rate of 5.31% in the People’s Bank of China
(the “PBOC”) for six-month to one-year short-term loans per annum, and the
floating rate of 30%.
  The bank
loan is secured by a guarantee put up by an independent party, as well as a real
estate with the market value of approximately $295,000 deposited to the bank as
collateral.  The guarantor received $220,910 from the Company for
issuing the guarantee. The receivable due from the guarantor was recorded as
refundable deposit under current assets as of March 31, 2010.
  10.
                AMOUNT
      DUE TO A DIRECTOR
 
 The
balances due to a director represented unsecured advances which are
interest-free and repayable on demand. As of March 31, 2010 and December 31,
2009, the balances of due to a director were $97,297 and $97,279,
respectively.
  11.
                SUBSEQUENT
      EVENTS
 
 We
evaluated subsequent events through the date and time our financial statements
were issued on May 18, 2010. There are no subsequent events through May 18,
2010.


9





ITEM 2.  
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





FORWARD
LOOKING STATEMENTS





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.





OVERVIEW





As used
herein the terms "We", the "Company", "CEDT", the "Registrant," or the "Issuer"
refers to China Education Technology Inc., its subsidiary and predecessors,
unless indicated otherwise. We were originally incorporated in Delaware in 1996
as Envirosafe Corporation. On October 6, 2008, our board decided to redomicile
from the State of Delaware to the State of Nevada. Their decision was approved
by the holders of a majority of the voting rights of our common stock. On April
3, 2009, we changed our name to China Education Technology, Inc. to more
accurately reflect our business after the Exchange (as defined below) between
ADDE and Haoyu.





We are an
investment holding company, whose only asset is a 100% equity interest in ADDE
Education Hldgs Limited (“ADDE”). ADDE is a corporation organized and existing
under the laws of Hong Kong Special Administrative Region of the People’s
Republic of China (the “PRC”) and is an investment holding company whose only
asset is a 100% equity interest in Guangzhou Haoyu Educational Technology
Company Limited (“Haoyu”).  Haoyu was originally established in the
PRC on March 27, 2001 as a domestic enterprise.





On March
1, 2008, ADDE entered into an agreement with the then sole stockholder of Haoyu
to acquire the stockholder’s entire interest in Haoyu (the “Transfer”) for
consideration of 1,000,000 Renminbi (“RMB”).  Haoyu was wholly owned
by the spouse of ADDE’s sole stockholder before the consummation of the
Transfer.  The Transfer was subsequently approved by the government
bureau in May 2008.  Haoyu re-registered as a wholly foreign owned
enterprise and obtained its business license in August 2008.





On March
4, 2008, a Plan of Exchange (the “Exchange”) was executed between and among the
Company, ADDE, the majority stockholder of the Company and the majority
stockholder of ADDE.  The Exchange was consummated on July 31, 2008,
pursuant to which 2,500,000 (after taking into account the Reverse Split) shares
of the Company’s common stock and 1,350,000 shares of the Company’s preferred
stock were issued to the stockholder of ADDE.  Thereafter, ADDE and
Haoyu became the Company’s wholly-owned subsidiaries and the former stockholder
of ADDE owned 93.2% of the Company’s issued and outstanding shares.





The
Exchange and the Transfer have been respectively accounted for as a reverse
acquisition and recapitalization of the Company and ADDE whereby ADDE is deemed
to be the accounting acquirer (legal acquiree) and the Company to be the
accounting acquiree (legal acquirer) under the Exchange, and Haoyu is deemed to
be the accounting acquirer (legal acquiree) and ADDE to be the accounting
acquiree (legal acquirer) under the Transfer. The audited condensed consolidated
financial statements are in substance those of Haoyu, with the assets and
liabilities, and revenues and expenses, of the Company and ADDE being included
effective from the respective consummation dates of the Exchange and the
Transfer.





Since the
reverse merger was consummated, we have continued operation conducted through
Haoyu, which is specializes in the research and development of educational
products and technology applications.  Haoyu is located in the
Guangzhou Province of the PRC with three manufacture bases for research and
development purpose.





The
educational software developed by the Company is in conformity to the new
educational purpose.  The software uses advanced technology of data
collection, sensor and wireless control and video imaging, which can virtually
upload live media and analyze the information collected.  Our software
allows teachers and students to conduct experiments automatically instead of the
traditional method by hand.





The
Company also engages in the trading of hardware and computer products such as
monitors and computer notebooks.





10





CRITICAL
ACCOUNTING POLICIES AND ESTIMATES





Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our Unaudited Condensed Consolidated Financial Statements, which we
have prepared in accordance with U.S. generally accepted accounting principles.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent assets
and liabilities. Estimates are based on historical experience, knowledge of
economic and market factors and various other assumptions that management
believes to be reasonable under the circumstances. Actual results may differ
from those estimates.





On a
regular basis we evaluate our estimates, assumptions and judgments and make
changes accordingly. An accounting policy is deemed to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, if different
estimates reasonably could have been used, or if changes in the estimate that
are reasonably likely to occur could materially impact the financial statements.
We believe that the estimates, assumptions and judgments involved in revenue
recognition, receivables and allowances for doubtful accounts, accruals,
inventories, income taxes, warranty, warranty and maintenance reserves have the
greatest potential impact on our condensed consolidated financial statements, so
we consider these to be our critical accounting policies.





RECENT
ACCOUNTING PRONOUNCEMENTS





For a
description of the new accounting standards that affect us, see Note 4 of notes
to our unaudited condensed consolidated financial statements included under Part
I, Item 1 of this Quarterly Report on Form 10-Q.




RESULTS
OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)





Revenues





We had
sales of $6,682 and $223,865 for the three months ended March 31, 2010 and 2009,
respectively. We generated our revenues from sales of information collectors,
sensors, digital meteorological stations, and digital analyzing software,
certain products of which were covered by a warranty program for 3 years
provided by the Company. The warranty liability will be assessed periodically
and amortized overtime when no actual claims occurred. We had no actual sales
for the three months ended March 31, 2010 since the current market demand for
digital labs dropped significantly as results of the decrease in government
subsidy. The revenues of $6,682 for this period were due primarily to the
amortization of the warranty liabilities.





Income /
Loss





We had a
net loss of $39,752 for the three months ended March 31, 2010, compared to the
net income of $70,599 for the three months ended March 31, 2009. The increase by
$110,351 in net loss in the first quarter of 2010 was due primarily to the
decrease in sales by $217,183, and a decrease in subsidy income by $19,629. In
addition, our selling expenses increased by $7,701 in the first quarter of
2010.





Expenses





Operating
expenses for the three months ended March 31, 2010 and 2009 were $46,196 and
$98,185 respectively. The decrease in the first quarter of 2010 was due
primarily to the decrease in research and development expenses to $0 in 2010
from $28,564 in 2009. The general and administrative expenses also decreased to
$19,892 in the first quarter of 2010 from $51,019 during the same period in
2009. The decrease in these operating expenses can be attributed to the decrease
in sales as set forth above.





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. We had no cost of goods sold during the three months ended
March 31, 2010 due to the revenues for this period primarily from the
amortization of the warranty liabilities. Comparably, we had $90,207 in cost of
goods sold, or 40.30% of sales revenue during the three months ended March 31,
2009.





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 $11,414 and $36,999 for the three
months ended March 31, 2010 and 2009, respectively. Positive cash flows used in
operations in the first quarter of 2010 were due primarily to the collection in
trade receivables in amount of $26,286, and the increase in other payables in
the amount of $61,302, partially offset by the net loss of $39,752 and increase
in inventories by $39,816. Positive cash flows from operations in the first
quarter of 2009 were due primarily to the net income of $70,599, plus the
increase in trade payables, other payables and income tax payables in the
amounts of $68,147, $40,876 and $14,244, respectively.





We had no
cash flows from investing activities during the three months ended March 31,
2010. Cash flows of $1,258 used in investing activities during the three months
ended March 31, 2009 were attributable to payments to acquire property, plant,
and equipment.





We did
not have any cash flows from financing activities for both three months ended
March 31, 2010 and 2009.





Overall,
we have funded our cash needs from inception through March 31, 2010 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 $41,074 on hand and a working capital of $728,640 as of March 31, 2010.
Currently, we do not have enough cash to fund our operations for about six
months. This is based on our projected revenues. 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 $300,000 to sustain operations through year 2010 and approximately
$500,000 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.





11





ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK





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





Foreign
Exchange Rates





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





Our
results of operations and cash flow are translated at average exchange rates
during the period, and assets and liabilities are translated at the unified
exchange rate as quoted by the People’s Bank of China at the end of the period.
Translation adjustments resulting from this process are included in accumulated
other comprehensive income in our statement of shareholders’ equity. We recorded
net foreign currency gain of $323 for the three months ended March 31, 2010,
compared to net foreign currency loss of $1,518 for the three months ended March
31, 2009. We have not used any forward contracts, currency options or borrowings
to hedge our exposure to foreign currency exchange risk. We cannot predict the
impact of future exchange rate fluctuations on our results of operations and may
incur net foreign currency losses in the future.





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





2010
            2009Balance
      sheet items, except for the registered and paid-up capital as of March 31,
      2010 and 2009
            USD
      0.146:RMB 1
            USD
      0.146:RMB 1Amounts
      included in the statements of operations, and statements of cash flows for
      the three months ended March 31, 2010 and 2009
            USD
      0.146:RMB 1
            USD
      0.146:RMB 1





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, 2010, 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, 2010,
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, 2010. 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.





12





PART II.  OTHER
INFORMATION





ITEM
1.      LEGAL PROCEEDINGS





As of the
date of this report, we are not a party to any pending legal proceeding and are
not aware of any threatened legal proceeding.





ITEM
1A.   RISK FACTORS





The
information to be reported under this item has not changed since the previously
filed 10K, for the year ended December 31, 2009.





ITEM
3.      DEFAULTS UPON SENIOR SECURITIES





We have
not had any default upon senior securities.





ITEM
4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





We have
not had any submission of matters to a vote of security holders.





ITEM
5.      OTHER INFORMATION





We do not
have any other information to report.





ITEM
6.      EXHIBITS





31.1 CEO
Certification Pursuant to Section 302


31.2 CFO Certification Pursuant to Section
302


32.1
CEO Certification Pursuant to Section 906


32.2 CFO
Certification Pursuant to Section 906





Reports on Form8-K





None








13




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 18, 2010
            By:
            /s/
      Yan Bin GuoYan
      Bin Guo
              President,
      Chief Executive Officer