**UNITED
      STATES**


**SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **FORM
        10-QSB**


x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                FOR THE QUARTERLY PERIOD ENDED JUNE 30,
                2007**





o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**


For
      the transition period
      from   to





Commission
      File Number: 333-121034







**Jayhawk
      Energy, Inc.**


(Exact
      name of small business issuer as specified in its charter)





**Colorado**
            **20-0990109**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





**370
                Interlocken Blvd, Suite 400, Broomfield CO
                80021**(Address
                of principal executive offices)





**(303)
                327-1571**(Issuer’s
                Telephone Number)





Indicate
      by check mark whether the issuer (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.   xYes
oNo





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  o Yes xNo





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practical date.  As of August 13, 2007, there were
      36,882,659 shares of the issuer's $.001 par value common stock issued and
      outstanding.






Transitional
      Small Business Disclosure format (check one):  oYes   xNo







**PART
      I - FINANCIAL INFORMATION**





**Item
      1.  Financial Statements**





**JAYHAWK
      ENERGY, INC.**


**(Formerly
      Bella Trading Company, Inc.)**


**(A
      Development Stage Company)**


**Condensed
      Balance Sheet**


**June
      30, 2007**




**Assets**Current
                assets:Cash
            
            $
            526,420Inventory,
                at cost
            
            
            -Total
                assets
            
            $
            526,420**Liabilities
                and Shareholders’ Equity**Current
                liabilities:Accounts
                Payable
            
            $
            1,443Total
                current
                liabilities
            
            
            1,443Non-current
                liabilities:Interest
                payable
            
            
            3,667Notes
                payable (Notes 3 and 6)
            
            
            550,000Total  non-current
                liabilities
            
            
            553,667Shareholders’
                equity (Notes 2, 4, and 6):Preferred
                stock, $.001 par value; 10,000,000 shares authorized, -0- shares
                issued
                and outstanding, respectively
            
            
            -Common
                stock, $.001 par value; 200,000,000 shares authorized, 90,000,000
                shares
                issued and outstanding
            
            
            90,000Deficit
                of paid-in capital
            
            
            (10,795
            )Deficit
                accumulated during the development stage
            
            
            (107,895
            )Total
                stockholders’
                equity
            
            
            (28,690
            )Total
                liabilities and
                stockholders’ equity
            
            $
            526,420






**See
      accompanying notes to condensed, unaudited financial
      statements.**












**JAYHAWK
      ENERGY, INC.**


**(Formerly
      Bella Trading Company, Inc.)**


**(A
      Development Stage Company)**


**Condensed
      Statement of Operations**


**(Unaudited)**




**April
                5, 2004****(Inception)****For
                The Three Months Ended**
            
            
            **For
                The Nine Months Ended**
            
            
            **Through****June
                30,**
            
            
            **June
                30,**
            
            
            **June
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**
            
            
            **2007**Sales
            
            $
            -
            
            
            $
            432
            
            
            $
            242
            
            
            $
            2,955
            
            
            $
            19,000Cost
                of goods sold
            
            
            -
            
            
            
            (297
            )
            
            
            (79
            )
            
            
            (1,620
            )
            
            
            (8,036
            )Gross
                profit
            
            
            -
            
            
            
            135
            
            
            
            163
            
            
            
            1,355
            
            
            
            10,964Operating
                expenses:Stock-based
                compensation (Note 2):Officer
                compensation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            400Interest
                expense
            
            
            3,667
            
            
            
            -
            
            
            
            3,667
            
            
            
            -
            
            
            
            3,667Professional
                fees
            
            
            17,675
            
            
            
            2,235
            
            
            
            25,665
            
            
            
            4,981
            
            
            
            48,226Payroll
                expenses
            
            
            -
            
            
            
            -
            
            
            
            36,155
            
            
            
            -
            
            
            
            48,932Other
                general and administrative expenses
            
            
            173
            
            
            
            1,203
            
            
            
            9,538
            
            
            
            2,378
            
            
            
            13,734Contributed
                rent (Note 2)
            
            
            300
            
            
            
            300
            
            
            
            900
            
            
            
            900
            
            
            
            3,900Total
                operating
                expenses
            
            
            21,815
            
            
            
            3,738
            
            
            
            75,925
            
            
            
            8,259
            
            
            
            118,859Loss
                before income
                taxes
            
            
            (21,815
            )
            
            
            (3,034
            )
            
            
            (75,762
            )
            
            
            (6,924
            )
            
            
            (107,895
            )Provision
                for income taxes (Note 5)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                loss
            
            $
            (21,815
            )
            
            $
            (3,034
            )
            
            $
            (75,762
            )
            
            $
            (6,924
            )
            
            $
            (107,895
            )Basic
                and diluted loss per share
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )Basic
                and diluted weighted averagecommon
                shares outstanding
            
            
            90,000,000
            
            
            
            83,312,505
            
            
            
            90,000,000
            
            
            
            68,908,335






**See
      accompanying notes to condensed, unaudited financial
      statements.**







**JAYHAWK
      ENERGY, INC.**


**(Formerly
      Bella Trading Company, Inc.)**


**(A
      Development Stage Company)**


**Condensed
      Statement of Cash Flows**


**(Unaudited)**




**April
                5,
                2004****(Inception)****For
                The Nine Months Ended**
            
            
            **Through****June
                30,**
            
            
            **June
                30,****2007**
            
            
            **2006**
            
            
            **2007**Cash
                flow from operating activities:Net
                income (loss)
            
            $
            (75,762
            )
            
            $
            (6,924
            )
            
            $
            (108,195
            )Changes
                in operating assets and liabilities:Accounts
                payable
            
            
            614
            
            
            
            2,570
            
            
            
            5,743Interest
                payable
            
            
            3,667
            
            
            
            -
            
            
            
            3,667Net
                cash provided by (used in) operating activities
            
            
            (71,481
            )
            
            
            (4,354
            )
            
            
            (98,785
            )Cash
                flows from financing activities:Proceeds
                from the sale of common stock
            
            
            -
            
            
            
            62,500
            
            
            
            100,000Payments
                for offering costs
            
            
            -
            
            
            
            (10,185
            )
            
            
            (24,795
            )Borrowings
                on note payable
            
            
            550,000
            
            
            
            -
            
            
            
            550,000Net
                cash provided by (used in) financing activities
            
            
            550,000
            
            
            
            52,315
            
            
            
            625,205Net
                change in cash
            
            
            478,519
            
            
            
            (47,961
            )
            
            
            526,420Cash,
                beginning of period
            
            
            47,901
            
            
            
            1,226
            
            
            
            -Cash,
                end of period
            
            $
            526,420
            
            
            $
            49,187
            
            
            $
            526,420Supplemental
                disclosure of cash flow information:Cash
                paid during the period for:Income
                taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -Interest
            
            $
            -
            
            
            $
            -
            
            
            $
            -






**See
      accompanying notes to condensed, unaudited financial
      statements.**





**JAYHAWK
      ENERGY, INC.**


**(Formerly
      Bella Trading Company, Inc.)**


**(A
      Development Stage Company)**


**Notes
      to Condensed Financial Statements**


**(Unaudited)**




**Note
      1:  Basis of presentation**




The
      accompanying interim condensed financial statements of Jayhawk Energy, Inc.
      (the
“Company”) have been prepared pursuant to the rules of the Securities and
      Exchange Commission (the “SEC”) for quarterly reports on Form 10-QSB and do not
      include all of the information and note disclosures required by generally
      accepted accounting principles. These condensed financial statements and notes
      herein are unaudited, but in the opinion of management, include all the
      adjustments (consisting only of normal recurring adjustments) necessary for
      a
      fair presentation of the Company’s financial position, results of operations,
      and cash flows for the periods presented. These condensed financial statements
      should be read in conjunction with the Company's audited financial statements
      and notes thereto included in the Company’s Form 10-KSB for the year ended
      September 30, 2006 as filed with the SEC. Interim operating results are not
      necessarily indicative of operating results for any future interim period or
      for
      the full year.




From
      inception through March 31, 2007, the Company’s operations have consisted of the
      purchase of jewelry and other accessories from its Asian suppliers, which are
      then sold at arts and crafts shows and on the Internet. In April 2007, the
      Company appointed a new president and changed its plan of
      operations.  The Company's new business plan is to
      acquire oil and gas properties for exploration and development with
      the intent to bring the projects to feasibility at which time the
      Company will either contract out the operations or joint venture the
      project to qualified interested parties.  The Company's main priority
      will be given to projects with near term cash flow potential, although
      consideration will be given to projects that may not be as advanced from a
      technical standpoint but demonstrate the potential for significant upside.
      The
      Company is currently negotiating with various third parties regarding the
      acquisition of certain oil and gas interests but no agreements,
      understanding or arrangements (written or oral) have been
      reached.





**Proxy
      Statement**





On
      April
      5, 2007, the Company filed a proxy statement to approve the following amendments
      to its Articles of Incorporation:





·
            A
                name change from Bella Trading Company, Inc. to Jayhawk Energy, Inc.;
                and


·
            An
                increase in the number of authorized common stock from 50,000,000
                shares
                to 200,000,000 shares.





On
      June
      21, 2007, the Company changed its name from Bella Trading Company, Inc. to
      Jayhawk Energy, Inc. and increased the authorized number of shares of common
      stock from 50,000,000 shares to 200,000,000 shares.  The changes
      became effective with the filing of a Certificate of Amendment to the
      Registrant’s Articles of Incorporation with the Colorado Secretary of
      State.  The Company’s purpose in changing its name was to reflect a
      change in its business focus.  The Company’s purpose in increasing its
      authorized common stock was to allow flexibility in future financings and stock
      issuances and other corporate purposes. The actions to effect the name change
      and increase in authorized common stock were approved on April 3, 2007, by
      unanimous approval of the Registrant’s Board of Directors. In addition,
      shareholders holding a majority of the Registrant’s outstanding common stock
      approved those actions at a meeting of shareholders on June 21, 2007, held
      in
      accordance with the relevant sections of the Colorado Revised
      Statutes.





**Stock
      Split**





On
      June
      11, 2007, the Company’s Board of Directors approved a 15 for 1 stock split of
      the Company’s issued and outstanding common stock which shall be effectuated
      through the issuance of 14 shares for each share of common stock outstanding
      as
      of the record date.  The Company’s intent of the stock split was to
      increase the marketability and liquidity of its common stock and hopefully
      increase the value of its common stock. The pay date was June 25, 2007 for
      shareholders of record on June 21, 2007.  After the split, the total
      number of the Company’s issued and outstanding shares of common stock became
      90,000,000 shares.  The par value of the Company’s common stock will
      continue to be $.001.  Fractional shares will be rounded
      upward.  This action was facilitated by a recent amendment to the
      Company’s Articles of Incorporation, increasing the number of shares of the
      Company's authorized stock to 200,000,000 shares of common stock, which was
      given effect on June 21, 2007 by filing a Certificate of Amendment to the







**JAYHAWK
        ENERGY, INC.**
 **(Formerly
        Bella Trading Company, Inc.)**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Financial Statements**
 **(Unaudited)**


Company’s
      Articles of Incorporation with the Colorado Secretary of State.




**Change
      in Officers**





On
      April
      30, 2007, the Company’s board of directors accepted the resignation of Sara
      Preston as President and Chief Executive Officer and appointed Joseph B. Young
      to the office of President, Chief Executive Officer and as a director of the
      Company.





As
      of
      July 9, 2007, the board of directors of Jayhawk Energy, Inc., accepted the
      resignation of Sara Preston as Secretary, Treasurer and a director of the
      Company, as well as the resignation of Joseph B. Young as the President and
      Chief Executive Officer of the Company, retaining his position as a director,
      and appointed Mr. Young to the office of Chief Financial Officer.  The
      Company then appointed Lindsay E. Gorrill to the office of President, Chief
      Executive Officer, Secretary and director.




**Note
      2:  Related party transactions**




The
      Company’s president contributed office space to the Company for all periods
      presented.  The office space was valued at $100 per month based on the
      market rate in the local area and is included in the accompanying financial
      statements as contributed rent expense with a corresponding credit to additional
      paid-in capital.





During
      April 2004, the Company issued 4,000,000 shares of its restricted common stock
      to its president in exchange for business planning and organization
      services.  The shares issued in the transaction were recorded at the
      fair value of the services provided as determined in good faith by the Board
      of
      Directors.  Stock-based compensation expense of $400 was recognized in
      the accompanying financial statements.




**Note
      3:  Note payable**




On
      April
      12, 2006, the Company executed a promissory note for $550,000 with Berigan
      Portfolio, Inc. (“Berigan”).  The note is payable on demand by Berigan
      and carries an 8% interest rate.  Proceeds from the note will be used
      for working capital purposes.  Accrued interest payable on the note
      totaled $3,667 at June 30, 2007.  Please refer to subsequent event Note 6
      for payoff of note payable.




**Note
      4:  Shareholders’ equity**




Between
      March and July 2006, the Company offered for sale 1,600,000 shares at of its
      common stock at a price of $0.05 per share.  The Company closed the
      offering after selling all 1,600,000 shares for net proceeds of $59,205 after
      deducting $20,795 of offering costs.  The offering was made in
      reliance on an exemption from registration of a trade in the United States
      under
      Rule 504 of Regulation D of the United States Securities Act of 1933, as
      amended.  All sales were conducted through the Company’s officers and
      directors.





Between
      May and July 2004, the Company offered for sale 400,000 shares at of its common
      stock at a price of $0.05 per share.  The Company closed the offering
      after selling all 400,000 shares for net proceeds of $16,000 after deducting
      $4,000 of offering costs.  The offering was made in reliance on an
      exemption from registration of a trade in the United States under Rule 504
      of
      Regulation D of the United States Securities Act of 1933, as
      amended.  All sales were conducted through the Company’s officers and
      directors.


Please
      also refer to subsequent event Note
      6.







**JAYHAWK
        ENERGY, INC.**
 **(Formerly
        Bella Trading Company, Inc.)**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Financial Statements**
 **(Unaudited)**




**Note
      5:  Income taxes**




The
      Company records its income taxes in accordance with SFAS No. 109, “Accounting
      for Income Taxes”.  The Company incurred net operating losses during
      all periods presented resulting in a deferred tax asset, which was fully allowed
      for; therefore, the net benefit and expense resulted in $-0- income
      taxes.




**Note
      6:  Subsequent events**




On
      July
      9, 2007, the board of directors of Jayhawk Energy, Inc., accepted the
      resignation of Sara Preston as Secretary, Treasurer and a director of the
      Company, as well as the resignation of Joseph B. Young as the President and
      Chief Executive Officer of the Company, retaining his position as a director,
      and appointed Mr. Young to the office of Chief Financial Officer.  The
      Company then appointed Lindsay E. Gorrill to the office of President, Chief
      Executive Officer, Secretary and director.





On
      July
      25, 2007, the Company entered into an Asset Purchase and Sale Agreement with
      Armstrong Investments Incorporated, pursuant to which the Company acquired
      the
      Uniontown project, which includes gas and mineral leases and other mineral
      rights and interests located in Bourbon County, Kansas in exchange for
      $2,200,000 in cash. Concurrent with the execution of the Asset Purchase and
      Sale
      Agreement, the Company completed a private placement of approximately
      $2,882,659, in which the Company sold 2,882,659 Units at a purchase price of
      $1.00 per Unit, each Unit consisting of (a) one share of common stock, $.001
      par
      value per share and (b) one warrant which will provide to the holder the right
      to purchase one share of the Company’s common stock at a purchase price of $1.00
      and which shall expire two years from the date that the Company accepts the
      subscription. Approximately 562,679 of the Units of the Private Placement were
      issued to Berigan Portfolio, Inc. to repay the principal and interest accrued
      as
      of July 25, 2007, on the promissory note dated April 12, 2007 between the
      Company and Berigan Portfolio, Inc. and 20,000 of the Units were issued to
      Berigan Portfolio, Inc. to repay $20,000 that Berigan paid on the behalf of
      the
      Company.





As
      a
      condition to the consummation of the transactions contemplated under the Asset
      Purchase and Sale Agreement and the Private Placement, Sara Preston, our former
      officer and director, agreed to have 56,000,000 shares of her common stock
      cancelled in exchange for $20,000 and the inventory of the Registrant relating
      to the Registrant’s former jewelry business. Simultaneously with the closing of
      the Asset Purchase and Sale Agreement, the Registrant cancelled those 56,000,000
      shares of common stock and returned such shares to the Registrant’s
      treasury.





As
      of
      July 25, 2007 and as a result of the transactions disclosed above, 36,882,659
      shares of the Registrant’s****common stock were issued and
      outstanding.





**Item
      2.  Plan of Operation**





**This
      following information specifies certain forward-looking statements of management
      of the company. Forward-looking statements are statements that estimate the
      happening of future events and are not based on historical fact. Forward-looking
      statements may be identified by the use of forward-looking terminology, such
      as
“may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”,
“probable”, “possible”, “should”, “continue”, or similar terms, variations of
      those terms or the negative of those terms. The forward-looking statements
      specified in the following information have been compiled by our management
      on
      the basis of assumptions made by management and considered by management to
      be
      reasonable. Our future operating results, however, are impossible to predict
      and
      no representation, guaranty, or warranty is to be inferred from those
      forward-looking statements.**





**The
      assumptions used for purposes of the forward-looking statements specified in
      the
      following information represent estimates of future events and are subject
      to
      uncertainty as to possible changes in economic, legislative, industry, and
      other
      circumstances. As a result, the identification and interpretation of data and
      other information and their use in developing and selecting assumptions from
      and
      among reasonable alternatives require the exercise of judgment. To the extent
      that the** **assumed
      events do not occur, the outcome may vary substantially from anticipated or
      projected results, and, accordingly, no opinion is expressed on the
      achievability of those forward-looking statements. We cannot guaranty that
      any
      of the assumptions relating to the forward-looking statements specified in
      the
      following information are accurate, and we assume no obligation to update any
      such forward-looking statements.**





**Critical
      Accounting Policies and Estimates.**Our Management’s Discussion and
      Analysis of Financial Condition and Results of Operations section discusses
      our
      financial statements, which have been prepared in accordance with accounting
      principles generally accepted in the United States of America. The preparation
      of these financial statements requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities at the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. On an on-going basis, management evaluates
      its estimates and judgments, including those related to revenue recognition,
      accrued expenses, financing operations, and contingencies and litigation.
      Management bases its estimates and judgments on historical experience and on
      various other factors that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying value of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions. The most significant accounting estimates inherent
      in
      the preparation of our financial statements include estimates as to the
      appropriate carrying value of certain assets and liabilities which are not
      readily apparent from other sources.





These
      accounting policies are described at relevant sections in this discussion and
      analysis and in the notes to the financial statements included in our Annual
      Report on Form 10-KSB for the period ended September 30, 2006.





From
      inception through March 31, 2007, our operations have consisted of the purchase
      of jewelry and other accessories from our Asian suppliers, which are then sold
      at arts and crafts shows and on the Internet. In April 2007, we appointed Joseph
      B. Young as our new president and a director and changed our business plan.
      Our
      new business plan is to acquire oil and gas properties for exploration and
      development with the intent to determine the feasibility of drilling at those
      properties with success,at which time we will either contract out the
      operations or joint venture the project to qualified interested
      parties.  Our main priority will be given to projects with near term
      cash flow potential, although consideration will be given to projects that
      may
      not be as advanced from a technical standpoint but demonstrate the potential
      for
      significant upside.





On
      June
      21, 2007, we changed our name from Bella Trading Company, Inc. to Jayhawk
      Energy, Inc. and increased the authorized number of shares of common stock
      from
      50,000,000 shares to 200,000,000 shares.  The changes became effective
      with the filing of a Certificate of Amendment to the Registrant’s Articles of
      Incorporation with the Colorado Secretary of State.  Our purpose in
      changing our name was to reflect a change in our business focus.  Our
      purpose in increasing our authorized common stock was to allow flexibility
      in
      future financings and stock issuances and other corporate purposes. The actions
      to effect the name change and increase in authorized common stock were approved
      on April 3, 2007, by unanimous approval of our Board of Directors. In
      addition, shareholders holding a majority of our outstanding common stock
      approved those actions at a meeting of shareholders on June 21, 2007, held
      in
      accordance with the relevant sections of the Colorado Revised
      Statutes.





On
      July
      25, 2007, we entered into an Asset Purchase and Sale Agreement with Armstrong
      Investments Incorporated, pursuant to which we acquired the Uniontown project,
      which includes gas and mineral leases and other mineral rights and interests
      located in Bourbon County, Kansas (“Uniontown Project”) in exchange for
      $2,200,000 in cash.





Concurrent
      with the execution of the Asset Purchase and Sale Agreement as disclosed above,
      we completed a private placement of approximately $2,882,659, in which we sold
      2,882,659 Units at a purchase price of $1.00 per Unit, each Unit consisting
      of
      (a) one share of common stock, $.001 par value per share and (b) one warrant
      which will provide to the holder the right to purchase one share of our common
      stock at a purchase price of $1.00 and which shall expire two years from the
      date that we accept the subscription (“Private Placement”). Approximately
      562,679 of the Units of the Private Placement were issued to Berigan Portfolio,
      Inc. to repay the principal and interest accrued as of July 25, 2007, on the
      promissory note dated April 12, 2007 between us and Berigan Portfolio, Inc.
      and
      20,000 of the Units were issued to Berigan Portfolio, Inc. to repay $20,000
      that
      Berigan paid on our behalf.





**Results
      of Operations.**





**For
      the three months ended June 30, 2007 and June 30,
      2006.**





**Revenues.**
      We had no sales for the three months ended June 30, 2007, as compared sales
      of
      $432 for the three months ended June 30, 2006.  For the three months
      ended June 30, 2006, we had $297 in cost of goods sold, resulting in gross
      profit of $135 for the period.  Since we had no sales during the most
      recent period, we had no gross profit. We do not expect that we will generate
      any revenues from our jewelry business as we are discontinuing the operations
      related to our jewelry business. Going forward, we hope to generate larger
      revenues as we implement our new business plan, which we adopted in April
      2007.




**Operating
      Expenses.**For the three months ended June 30, 2007, our total operating
      expenses were $21,815, as compared to $3,738 total operating expenses for the
      three months ended June 30, 2006. The increase in total operating expenses
      is
      primarily due to the increase in legal and professional fees, attributable
      to
      the costs associated with our name change and change of focus. We expect that
      we
      will continue to incur significant professional fees related to being a public
      company. For the three months ended June 30, 2007, our operating expenses
      consisted of Interest expense of $3,667 related to our promissory note,
      professional fees of $17,675, other general and administrative expenses of
      $173,
      and contributed rent of $300.  In comparison, for the three months
      ended June 30, 2006, we had professional fees of $2,235, other general and
      administrative expenses of $1,203 and contributed rent of $300.





**Net
      Income or Loss.**For the three months ended June 30, 2007,
      our net loss from operations was $21,815, as was our net loss.  This
      is in comparison to the three months ended June 30, 2006, where our net loss
      from operations and net loss was $3,034.  The increase in our net loss
      for the three months ended June 30, 2007, was due an increase in operating
      expenses between the two periods, which was primarily represented by interest
      and professional services expenses.





**For
      the nine months ended June 30, 2007 as compared to the nine months ended June
      30, 2006.**





**Revenues.**  We
      had sales of $242 for the nine months ended June 30, 2007, as compared sales
      of
      $2,995 to the nine months ended June 30, 2006.  For the nine months
      ended June 30, 2007, we had $79 in cost of goods sold for a gross profit of
      $163.  This is in comparison to the nine months ended June 30, 2006,
      where we had $1,620 in cost of goods sold, resulting in gross profit of $1,335
      for the period. Our volume of sales decreased, resulting in lower sales, lower
      cost of goods sold, and lower gross profit. Going forward, we hope to generate
      larger revenues as we implement our new business plan adopted in May
      2007.





**Operating
      Expenses.**For the nine months ended June 30, 2007, our total operating
      expenses were $75,925 as compared to $8,259 total operating expenses for the
      nine months ended June 30, 2006. The increase in total operating expenses is
      primarily due to the increase in payroll expenses and professional fees, which
      is attributed to the increased legal expenses and accounting expenses related
      to
      the audit of our financial statements and the one time compensation payment
      to
      Ms. Barry. We expect that we will continue to incur significant legal and
      accounting expenses related to being a public company. For the nine months
      ended
      June 30, 2007, our operating expenses consisted of interest expense of $3,667,
      professional fees of $25,665, payroll expenses of $36,155, other general and
      administrative expenses of $9,538, and contributed rent of $900.  In
      comparison, for the nine months ended June 30, 2006, we had professional fees
      of
      $4,981, other general and administrative expenses of $2,378 and contributed
      rent
      of $900.





**Net
      Income or Loss.**For the nine months ended June 30, 2007, our
      net loss was $75,762, as compared to the nine months ended June 30, 2006, where
      our net loss was $6,924.  The increase in our net loss for the nine
      months ended June 30, 2007, was due an increase in operating expenses between
      the two periods, which was primarily represented by payroll expenses and
      professional services expenses.





**Liquidity
      and Capital Resources.**As of June 30, 2007, we had cash of
      $526,420 and no other assets.  We granted our former President, Sara
      Preston, all rights to the remaining inventory of $1,481 as part of the stock
      cancellation agreement. In April 2007, when Mr. Young joined our management
      team, we decided to abandon our business plan of imported jewelry sales and
      pursue other opportunities.





Our
      current liabilities were $1,443 as of June 30, 2007, which was represented
      solely by accounts payable for professional services.  Other than our
      promissory note payable, we had no other liabilities including long term
      commitments or contingencies as of June 30, 2007.





In
      2006,
      and by means of registration statement on Form SB-2, we sold 1,600,000 shares
      of
      its common stock at a price of $0.05 per share, or $80,000.  We used
      these funds for operating expenses, which included significant accounting costs
      associated with the audit of our financial statements.  In April 2007,
      we executed a promissory note for $550,000 at interest of 8%, which we believe
      will satisfy our working capital requirements for the next twelve
      months.  Please refer to subsequent event Note 6, for payoff of this
      note in July 2007.  We expect that the legal and accounting costs of
      becoming a public company will continue to impact our liquidity and we may
      need
      to obtain funds to pay those expenses. Other than the expenses of exploring
      other business opportunities as described above, and the anticipated increases
      in legal and accounting costs due to the reporting requirements of becoming
      a
      reporting company, we are not aware of any other known trends, events or
      uncertainties, which may affect our future liquidity.





As
      described above, in July 2007, we completed the Private Placement pursuant
      to
      which we raised approximately $2,882,659, of which $2,200,000 were used to
      acquire the Uniontown Project.




**Our
      Plan of Operation for the Next Twelve Months.** In April 2007, we
      discontinued the operations related to our jewelry business. We do not expect
      that we will generate any future revenues from our jewelry business. Our new
      business plan is to acquire oil and gas properties for exploration and
      development with the intent to bring the projects to feasibility at which time
      we will either contract out the operations or joint venture the project to
      qualified interested parties.





As
      described above, on July 25, 2007, we entered into an Asset Purchase and Sale
      Agreement with Armstrong Investments Incorporated, pursuant to which we acquired
      the Uniontown Project, which includes gas and mineral leases and other mineral
      rights and interests located in Bourbon County, Kansas in exchange for
      $2,200,000 in cash.





The
      acquisition of the Uniontown Project is the initial step of our new business
      plan is to acquire oil and gas properties for exploration and development.
      We
      intend to engage in the exploration, acquisition, development, production and
      sale of natural gas, crude oil and natural gas liquids primarily from
      conventional reservoirs within North America.





We
      had
      cash of $526,420 as of June 30, 2007. In April 2007, we executed a promissory
      note for $550,000, which we believe will satisfy our working capital
      requirements for the next twelve months. As described above, approximately
      562,679 of the Units of the Private Placement were issued to Berigan Portfolio,
      Inc. to repay the principal and interest accrued as of July 25,
      2007.  As of June 30, 2007, we do not have any commitments or
      arrangements to provide any additional capital. Even if our new operations
      can
      generate cash, our future plans will, in part, be dependent upon additional
      capital which may be available to us. If additional financing is not available
      when needed, we may continue to operate in our present mode or we may need
      to
      cease operations.





Our
      forecast for the period for which our financial resources will be adequate
      to
      support our operations involves risks and uncertainties and actual results
      could
      fail as a result of a number of factors. In the event that we experience a
      shortfall in our capital, we intend to pursue capital through public or private
      financing as well as borrowings and other sources, such as our officers,
      director and principal shareholders. We cannot guaranty that additional funding
      will be available on favorable terms, if at all. If adequate funds are not
      available, we hope that our officers, director and principal shareholders will
      contribute funds to pay for our expenses to achieve our objectives over the
      next
      twelve months.





We
      are
      not currently conducting any research and development activities. We do not
      anticipate that we will purchase or sell any significant equipment. In the
      event
      that we generate significant revenues and expand our operations, then we may
      need to hire additional employees or independent contractors as well as purchase
      or lease additional equipment.





**Off-Balance
      Sheet Arrangements.**We have no off-balance sheet
      arrangements.





**Item
      3. Controls and Procedures**





(a)
      Evaluation of disclosure controls and procedures. We maintain controls and
      procedures designed to ensure that information required to be disclosed in
      the
      reports that we file or submit under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. Based upon
      their evaluation of those controls and procedures performed as of June 30,
      2007,
      the date of this report, our chief executive officer and the principal financial
      officer concluded that our disclosure controls and procedures were
      effective.





(b)
      Changes in internal controls. There were no significant changes in our internal
      controls or in other factors that could significantly affect these controls
      subsequent to the date of the evaluation of those controls by the chief
      executive officer and principal financial officer.







**PART
      II — OTHER INFORMATION**





**Item
      1. Legal Proceedings.**





None.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**





None.





**Item
      3.  Defaults Upon Senior Securities**





None.





**Item
      4.  Submission of Matters to Vote of Security
      Holders**





On
      June
      21, 2007, we held a special shareholder’s meeting pursuant to which the
      shareholders approved the amendment to our Articles of Incorporation pursuant
      to
      which we changed our name from Bella Trading Company, Inc. to Jayhawk Energy,
      Inc. and increased the authorized number of shares of common stock from
      50,000,000 shares to 200,000,000 shares. Approximately 4,000,003 shares, or
      66% of the issued and outstanding shares at that time, were cast in favor of
      the
      name change and increase in the number of authorized shares. No shares were
      cast
      against the name change and increase in the number of authorized shares and
      there was one vote abstaining.





**Item
      5.  Other Information**





None.





**Item
      6.  Exhibits**







31.
      Rule 13a-14(a)/15d-14(a) Certifications.






32.
      Section 1350 Certifications.







**SIGNATURES**





In
      accordance with the requirements of the Securities Exchange Act of 1934, the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





Jayhawk
                Energy, Inc.,


a
      Colorado corporation











August
      13,
      2007                                                                                  
By:          /s/ Lindsay
      E. Gorrill


Lindsay
      Gorrill


Its:           Principal
      Executive Officer,


President
      and a Director











August
      13,
      2007                                                                               
   By:          /s/
      Joseph B. Young


Joseph
      B. Young


Its:           Principal
      Accounting Officer,


Chief
      Financial Officer and a Director