UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


_____________________





FORM 10-Q


_____________________











x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended September 30, 2010





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: 000-52496





CHINA JIANYE FUEL, INC.


(Exact name of registrant as specified in its charter)





Delaware
20-8296010(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer Identification Number)100 Wall Street, 15th Floor, New York, NY, 10005(Address of principal executive office and zip code)212-232-0120(Registrant’s telephone number, including area code)





Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o   No o





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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer o

Accelerated filer oNon-accelerated filer o

x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x








As of November 15, 2010, 29,976,923 shares of the Registrant’s common stock, $0.001 par value, were outstanding.














CHINA JIANYE FUEL, INC.





FORM 10-Q





For the quarter ended September 30, 2010








TABLE OF CONTENTS





PART I— FINANCIAL INFORMATIONItem 1.
Financial Statements
1Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
7Item 3.
Quantitative and Qualitative Disclosures About Market Risk
11Item 4T.
Controls and Procedures
11PART II— OTHER INFORMATIONItem 1.
Legal Proceedings
12Item 1A.
Risk Factors
12Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
12Item 3.
Defaults Upon Senior Securities
12Item 4.
(Removed and Reserved)
13Item 5.
Other Information
13Item 6.
Exhibits
13SIGNATURES
13

























ITEM 1. Financial Information





FINANCIAL STATEMENTS
Page #Condensed Consolidated Balance Sheetsas of September 30, 2010 (Unaudited) and June 30, 2010
2Condensed ConsolidatedStatements of Operations for the three months ended September 30, 2010 and 2009 (Unaudited)
3Condensed ConsolidatedStatements of Operations for the three months ended September 30, 2010 and 2009 (Unaudited)
3Condensed Consolidated Statement of Cash Flows for the threemonths ended September 30, 2010 and 2009 (Unaudited)
4Notes to the Financial Statements (Unaudited)
5-6














1


CHINA JIANYE FUEL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS





September 30, 2010


June 30, 2010AssetsCurrent assets:Cash and cash equivalents

$
5,644


$
6,312Accounts receivable, net of allowance for doubtful accounts of


44,553



43,881nil and $4,485,305 at September 30, 2010 and June 30, 2010, respectivelyInventory, net


1,679,740



1,599,140Advances to suppliers


58,817



57,854Due from related parties


35,437



57,307Prepaid expenses and other current assets


306,278



299,434Total current assets


2,130,469



2,063,928Property and equipment, net


2,294,238



2,315,009Intangibles, net


45,763



45,596Total assets

$
4,470,470


$
4,424,533Liabilities and stockholders’ equityCurrent liabilities:Accounts payable and accrued expenses

$
145,053


$
144,535VAT tax payable


462,352



458,314Income tax payable


539,053



530,304Due to related parties


1,242,469



1,188,006Other current liabilities


35,948



35,560Total current liabilities


2,424,875



2,356,719Total liabilities


2,424,875



2,356,719Stockholders’ equity:Common Stock, $0.001 par value, 200,000,000 shares


29,977



29,977Authorized, 29,976,923 shares issued and outstanding atJune 30, 2010 and 2010Additional paid-in capital


5,695,058



5,695,058Retained Earnings


(4,519,967
)


(4,464,118
)Accumulated other comprehensive income


840,527



806,897Total stockholders’ equity


2,045,595



2,067,814Total liabilities and stockholders' equity

$
4,470,470


$
4,424,533




The Accompanying Notes Are an Integral Part of the Financial Statements.




2





CHINA JIANYE FUEL, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(Unaudited)





For the Three Months EndedSeptember 30, 2010


September 30, 2009Sales

$
698


$
2,541,000Cost of sales


(35,263
)


2,386,690Gross profit


(34,565
)


154,310Operating expensesSelling, general and administrative


21,284



23,592(Loss) income from operations


(55,849
)


130,718Other expenses


-



(286
)(Loss) income before provision for income tax


(55,849
)


130,432Provision for income tax


-



32,608Net (loss) income


(55,849
)


97,824Other comprehensive incomeForeign currency translation adjustment


33,630



11,578Comprehensive income

$
(22,219
)

$
109,402Basic earnings (loss) per share

$
(0.00
)

$
0.00Diluted earnings (loss) per share

$
(0.00
)

$
0.00Weighted average number of common shares outstanding:Basic


29,976,923



29,976,923Diluted


29,976,923



29,976,923





The Accompanying Notes Are an Integral Part of the Financial Statements.




3


CHINA JIANYE FUEL, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)





For the Three Months EndedSeptember 30, 2010


September 30, 2009Cash flows from operating activities:Net (Loss) Income

$
(55,849
)

$
97,824Adjustments to reconcile net (loss) income to net cashused in operating activities:Depreciation and amortization


61,815



62,089Changes in current assets and current liabilities:Accounts receivable


(675
)


827,759Inventory, net


(80,936
)


(508,990
)Advances to suppliers


(967
)


(929,668
)Prepaid expense and other current assets


(6,873
)


41,425Accounts payable and accrued expenses


520



(693,768
)Increase in customer deposits


-



1,083,247VAT tax payable


4,055



(16,333
)Income tax payable


8,785



32,608Other current liabilities


390



68,848Total adjustments


(75,701
)


(94,872
)Net cash (used in) provided by operating activities


(69,735
)


65,041Cash flows from investing activities:Acquisition of property and equipment


(41,124
)


-Net cash used in investing activities


(41,124
)


-Cash flows from financing activities:Due to related parties


76,651



(68,414
)Net cash provided by financing activities


76,651



(68,414
)Effect of foreign currency translation on cash


33,540



74Net decrease in cash and cash equivalents


(668
)


(3,299
)Cash and cash equivalents at beginning of year


6,312



55,202Cash and cash equivalents at end of year

$
5,644


$
51,903Supplemental disclosure of cash flowsInterest paid

$
-


$
286




The Accompanying Notes Are an Integral Part of the Financial Statements.




4





CHINA JIANYE FUEL, INC.


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September 30, 2010








Note 1 – Organization and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis of Presentation— The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 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. In the opinion of management, the unaudited condensed consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited, condensed consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2010.





Organization — China Jianye Fuel Inc. was incorporated as Standard Commerce, Inc. (“Standard Commerce”) in December 1994 in Nevada. On November 13, 2007, Standard Commerce acquired the outstanding capital stock of American Jianye Ethanol Company, Inc., a Delaware corporation (“American Jianye”) and changed its name to China Jianye Fuel Inc. For accounting purposes, the acquisition was treated as a recapitalization of American Jianye. American Jianye is a holding company that owns 100% of Zhao Dong Jianye Fuel Co., Ltd. (“Zhao Dong”), a corporation organized under the laws of the People’s Republic of China. The accompanying consolidated financial statements include the financial statements of China Jianye Fuel Inc. and its subsidiaries (the “Company”). The Company’s primary business is to manufacture and distribute ethanol and methanol as alternative fuel for automobile use.





Basis of Consolidation — The consolidated financial statements include the accounts of China Jianye Fuel, Inc. and its wholly owned subsidiaries.  All significant intercompany accounts and transactions are eliminated.





Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





Cash and Cash Equivalents— Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.





Inventory — Inventory is stated at the lower of cost or market. Cost is determined by using the weighted-average method. The Company periodically reviews the age and turnover of its inventory to determine whether any inventory has become obsolete or has declined in value, and charges to operations for known and anticipated inventory obsolescence. The Company did not record any provision for slow-moving and obsolete inventory as of September 30, 2010 and June 30, 2010.





Intangible Assets — Intangible assets consist of “Rights to use land” for 32 years in China and therefore amortized over 32 years based on straight-line method.




5





Recently Issued Accounting Guidance —In April 2010, the FASB issued an Accounting Standard Update (“ASU”) No.2010-13,”Compensation-Stock Compensation” (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” which address the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. ASU 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or results of the operations.




In April 2010, the FASB issued an Accounting Standard Update (“ASU”) No. 2010-17, “Revenue Recognition – Milestone Method (Topic 605), which provides guidance on defining milestones under Topic 605 and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development deliverables in an arrangement in which one or more payments are contingent upon achieving uncertain future events or circumstances. ASU 2010-17 is effective for the fiscal years beginning on or after June 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or results of operation.





The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.








Note 2 – Inventory





Inventory at September 30, 2010 and June 30, 2009 consists of the following:





September 30, 2010


June 30, 2010Raw materials

$
537,257


$
475,880Packaging supplies


28,587



29,211Finished goods


1,113,896



1,094,049Total

$
1,679,740


$
1,599,140








Note 3 – Due From/To Related Parties





The Company and its affiliated entities regularly borrow money from each other, which is unsecured and non-interest bearing. The balance due to these entities at September 30, 2010 and June 30, 2009 was $1,242,469 and $1,188,006, respectively.  The balance due from these entities at September 30, 2010 and June 30, 2009 was $35,437 and $57,307, respectively.





Note 4 - Subsequent Events





None.




6


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation
 
 This Quarterly Report on Form 10-Q contains “forward-looking” statements, as such term is defined in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements consist of information relating to the Company that is based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein and in other filings made by the Company with the Securities and Exchange Commission. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward-looking statements.
 
 BUSINESS OVERVIEW
 
 China Jianye Fuel, Inc. (“China Jianye”) was originally incorporated as Standard Commerce, Inc. (“Standard Commerce”) in December 1994 in Nevada.  On November 13, 2007, Standard Commerce acquired the outstanding capital stock of American Jianye Ethanol Company, Inc. (“American Jianye”), a Delaware Corporation, and changed its name to China Jianye Fuel, Inc.  (“China Jianye”).  China Jianye, through its wholly-owned subsidiary, American Jianye, owns 100% of the registered capital of Zhao Dong Jianye Fuel Co., Ltd. (“Zhao Dong Jianye Fuel”), a corporation organized in 2004 under the laws of The People’s Republic of China.  Zhao Dong Jianye Fuel is engaged in the business of developing, manufacturing and distributing alcohol-based automobile fuel products in the People’s Republic of China.
 
 American Jianye was organized under the laws of the State of Delaware in March 2007.  It never initiated any business activity.  In November 2007, American Jianye acquired 100% of the net assets of Zhao Dong Jianye Fuel in exchange for debt and equity in American Jianye.  Those shares represent the only asset of American Jianye.
 
 Zhao Dong Jianye Fuel Co., Ltd. was founded in April 2004 under the laws of the People’s Republic of China with registered capital of RMB 9 million Yuan (US$1.3 million). The offices and manufacturing facility operated by Zhao Dong Jianye Fuel are located at 47 Huagong Road, Zhaodong City, Heilongjiang Province, in northeastern China. Zhao Dong Jianye Fuel engages in the development, manufacture, and distribution of alcohol based automobile fuel.  The Company’s products are designed to function as a lower-cost, more environmentally friendly alternative to conventional gasoline-based auto fuel.
 
 Zhao Dong Jianye Fuel was among the first China-based fuel manufacturers to bring to market alcohol-based automobile fuel. Alcohol-based fuel is an attractive alternative to gasoline for several reasons, including its environmental benefits.  Alcohol-based fuel burns with higher efficiency and significantly lower toxic waste emissions than any lead-free gasoline that meets China’s national GB17930-1999 fuel quality standards. With its average total toxic waste emission level being only 1% of the maximum toxic emission level mandated by Chinese industry regulators, the quality of alcohol-based fuel is on par with or exceeds the international fuel quality standards for Type IV lead-free gasoline. In addition, due to the lower costs of the raw materials used in the manufacturing process, the average integrated cost of such fuels is only about 4,000-4,150 Renminbi (“RMB”) ($590-610) per ton, lower than the prevailing wholesale price of #93 lead-free gasoline in China by as much as 1,000 RMB ($147) per ton.
 
 Zhao Dong Jianye Fuel has, since its formation, been engaged in developing its products and its refinery.  The Company now has a facility capable of producing 300,000 tons of fuel annually, and has developed the core staff needed for full production operations.  In the Spring of 2008, the Company began to ship commercial quantities of fuel to customers, although it continues to operate at only a small fraction of its capacity due to a need for working capital to fund the launch of full-scale operations.
 
 7
  The Company is currently capable of producing alcohol-based fuels comparable to lead-free gasoline with octane ratings ranging from #90 to #98. The Company’s products include both ethanol-based fuels (E10, E30, E50, E60, E70, E80 and E85), and methanol-based fuels (M10, M30, M50, M60, M70, M80 and M85), although the primary focus of its business plan is on methanol-based fuels due to their environmental and economic advantages. Recently, the Company has also been engaged in research and development of methanol/ethanol blended fuels, including ME80 and ME85.
 
 Zhao Dong Jianye Fuel commenced operations in 2004.  Until the Spring of 2008, however, its activities were essentially developmental.  Its research and development efforts have led to the development of a series of fuel products and the award of several patents.  With funds provided by its Chairman, Jianye Wang, it has developed a state-of-the-art refinery for the production of methanol-based and ethanol-based fuels.  In addition, it has organized a staff of engineers, managers and sales professionals that will be able to support its full-scale entry into the fuel market.
 
 Until the year ended June 30, 2008, the Company’s revenue-producing activities had been incidental to the company’s research and development activities.  Prior to September 30, 2007, Zhao Dong Jianye Fuel sold modest amounts of fuel to a variety of customers, primarily to (a) develop the channels through which it will market when it commences full scale production and (b) introduce new products to those markets for testing and publicity.  In the fiscal year ended June 30, 2006 this incidental marketing effort generated $541,103 in revenue.  In the year ended on June 30, 2007, however, Zhao Dong Jianye Fuel suspended most of its revenue-producing activities in order to focus on internal organization activities.  As a result, only $61,555 in revenue was generated during the 2007 fiscal year.
 
 During the quarter ended December 31, 2007, Zhao Dong Jianye Fuel recorded its first significant revenue - $3,449,434.  This occurred because Zhao Dong Jianye Fuel completed a sale and delivery of fuel additives to Zhanjiang Runtong Trading Corp.  In the quarter ended March 31, 2008, we realized additional significant revenue from the sale of fuel, as we sold 4,200 tons of methanol-based fuel to CIPC Heilongjiang HuBei, a fuel distributor, for $3,249,795.  These two sales represented approximately 97% of our revenues for the year ended June 30, 2008.  Zhanjiang Runtong Trading Corp. and CIPC Heilongjiang HuBei are unrelated third parties, and the transactions were the result of arms length negotiation.  After year ended June 30, 2008, however, our sales to Zhanjiang Runtong Trading Corp. and CIPC Heilongjiang HuBei consisted only incidental sales of sales batches.
 
 We expect to develop more consistent revenue streams in the current fiscal year.  In July 2008, Zhao Dong Jianye Fuel entered into a contract with Zhuhai Zhonghuan Oil Ltd., which contemplates that the customer will purchase 15,000 tons of ethanol-based automobile fuel per month. Then, in September 2008, Zhao Dong Jianye Fuel entered into contract with Shanxi Province Hanzhong Xilan Liquefied Petroleum Limited to provide the company 200 to 300 tons of M30 fuel each month.  Neither of these contracts represents a binding purchase commitment as the customers commit to purchase fuel for only one month at a time.  However, these contracts suggest that we are beginning to achieve a consistent stream of revenue.
 
 Our business operates primarily in Chinese Renminbi (“RMB”), but we report our results in our SEC filings in U.S. Dollars.  The conversion of our accounts from RMB to U.S. dollars results in translation adjustments.  While our net income is added to the retained earnings on our balance sheet, the translation adjustments are added to a line item on our balance sheet labeled “accumulated other comprehensive income,” since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business.  During the year ended March 31, 2010, the effect of converting our financial results to U.S. Dollars added $33,092 to our accumulated other comprehensive income.
  8
  RESULTS OF OPERATIONS
 
 Results of Operations for the Three Months Ended September 30, 2010 and September 30, 2009:
  For the Three Months

Ended

September ,


Increase /

(Decrease)2010


2009Revenues

$
698


$
2,541,000



(2,540,302)Cost of Sales


35,263



2,386,690



(2,351,427)Gross Profit


(34,565)



154,310



(188,875)Selling, General and Administrative Expenses


21,284



23,592



(2,308)Income (loss)  from operations


(55,849)



130,718



(186,567)Other Income (expenses)


-



(286)



286Income (loss) before provision for income taxes


(55,849)



130,432



(186,281)Income taxes


-



32,608



32,608Net Income (loss)


(55,849)



97,824



(153,673)Total other income (expense)


33,630



11,578



(22,052)Comprehensive Income (Loss)

$
(22,219)



109,402



(131,621)
 
 
 Revenues.  Revenues decreased approximately $2,540,302, or 100%, to $ 698 for the three months ended September 30, 2010 from $2,541,000 for the same period in 2009.
 
 Cost of Sales.  Our cost of sales decreased approximately $2,351,427, or 99%, to $ 35,263 for the three months ended September 30, 2010 from $2,386,690 for the same period in 2009.  This decrease was mainly due to sales decrease.
 
 Gross Profit.  Our gross profit decreased approximately $188,875, or 122%, to a gross loss of $34,565 for the three months ended September 30, 2010 from a gross profit of $154,310 for the same period in 2009.  This decrease was mainly due to a decrease in sale revenue.
 
 Other Selling, General and Administrative Expenses.  Other selling, general and administrative expenses decreased approximately $2,308, or 10%, to $21,284 for the three months ended September 30, 2010 from $23,592 for the same period in 2009.  Such decrease was due to an increase in sales revenue.
 
 Income (loss) from operations.  Income (loss) from operations decreased approximately $186,567 or 143 %, to $(55,849) for the three months ended September 30, 2010 from $130,718 for the same period in 2009.  This decrease was mainly due to a decrease in sale revenue.
 
 Other Income (expenses).  Other expenses decreased approximately $286, or 100%, to nil for the three months ended September 30, 2010 from approximately $286 for the same period in 2009.  The change was not significant.
 
 Income(loss) Before Provision of Income Taxes.  Income before income taxes decreased approximately $186,281, or 143 %, to $(55,849) for the three months ended September 30, 2010 from $130,432 for the same period in 2009.  This decrease was mainly due to an increase in revenues, a decrease in operating profits, and a decrease in operating expenses.
 
 9
  Income Taxes.  Income taxes decreased approximately $32,608, or 100 %, to nil for the three months ended September 30, 2010 from approximately $32,608 for the same period in 2009.  This decrease was mainly due to a decrease in net income.
  Net Income (loss).  Net income decreased approximately $153,673, or 157 %, to $(55,849) for the three months ended September 30, 2010 from $97,824 for the same period in 2009.  This decrease in profitability for the period ended September 30, 2010 was due to the reasons described above.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 Our operations to date have been funded primarily by capital contributions and short-term loans from our Chairman, Jianye Wang, which have been adequate to bring us to the point where we are prepared to commence full scale production.
 
 For the three months ended September 30, 2010, our operations in that period decreased our cash position by $69,735.
 
 CRITICAL ACCOUNTING POLICIES
 
 In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values.  In our preparation of the financial statements there were two estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results.  These estimates were:
 
 
Our decision, indicated in the Consolidated Financial Statements, to record a provision of  $0 for uncollectible accounts, against total related accounts receivable of $44,553.  This decision was based on our relationship with the debtors and our knowledge of their capacity to repay the debts.
 
 
Our decision, described in Note 1 to the Consolidated Financial Statements, to record no provision for obsolete inventories.  This decision was based on fact that our inventory at September 30, 2010 amounted to less than two months’ sales and was primarily usable raw materials.
 
 We have made no material changes to our critical accounting policies in connection with the preparation of financial statements included in this Quarterly Report on Form 10-Q.
 
 Impact of Accounting Pronouncements
 
 There were no recent accounting pronouncements that have had a material effect on the Company’s financial position or results of operations.
 
 Recently Issued Accounting Policies
 
 In June 2009, the Financial Accounting Standards Board issued guidance, which contains amendments to Accounting Standards Codification 810, "Consolidation," relating to how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. These provisions became effective for us on January 1, 2010, but did not have a material impact on our financial position or results of operations.
 
 10
  In October 2009, the FASB issued Accounting Standards Updated (“ASU”) No. 2009-13, “Multiple-Deliverable Revenue Arrangements,” which amends existing revenue recognition accounting pronouncements that are currently within the scope of ASC 605. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. ASU 2009-13 is effective for the Company prospectively for revenue arrangements entered into or materially modified beginning January 1, 2011. The Company is currently evaluating the impact, if any, that the adoption of this amendment will have on its consolidated financial statements.
 
 In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements , which, among other things, amends Accounting Standards Topic 820 Fair Value Measurements and Disclosures (ASC 820) to require entities to separately present purchases, sales, issuances, and settlements in their reconciliation of Level 3 fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and which clarifies existing disclosure requirements provided by ASC 820 regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy. ASU No. 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company’s adoption of this standard had no impact on its consolidated financial position, results of operations or cash flows.
 
 OFF-BALANCE SHEET ARRANGEMENTS
 
 We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risks
 
 Not applicable due to smaller reporting company status.
 
 Item 4T. Controls and Procedures
 
 Evaluation of disclosure controls and procedures.
 
 The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, such controls and procedures were effective.
 
 Changes in internal controls.
 
 The term “internal control over financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed 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. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of the year covered by this annual report, and they have concluded that there was no change to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 Management’s Report on Internal Control over Financial Reporting.
 
 Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.  We have assessed the effectiveness of those internal controls as of June 30, 2009, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework as a basis for our assessment.
 
 Because of 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 and 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.
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  A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified two material weaknesses in our internal control over financial reporting.  These material weaknesses consisted of:
 
 a.           Lack of expertise in U.S accounting principles among the personnel in our Chinese headquarters.  Our books are maintained and our financial statements are prepared by the personnel employed at our executive offices in Heilongjiang Province in the People’s Republic of China.  Few of our employees have experience or familiarity with U.S accounting principles.  The lack of personnel in our Heilongjiang office who are trained in U.S. accounting principles is a weakness because it could lead to improper classification of items and other failures to make the entries and adjustments necessary to comply with U.S. GAAP.
 
 b.           Lack of independent control over related party transactions.  Jianye Wang is the sole director of China Jianye Fuel and of its subsidiary, Zhao Dong Jianye Fuel.  From time to time Mr. Wang has made loans and capital contributions to finance the operations of Zhao Dong Jianye Fuel.  The absence of other directors to review these transactions is a weakness because it could lead to improper classification of such related party transactions.
 
 Management is currently reviewing its staffing and their training in order to remedy the weaknesses identified in this assessment.  To date, we are not aware of significant accounting problems resulting from these weaknesses; so we have to weigh the cost of improvement against the benefit of strengthened controls.  However, because of the above conditions, management’s assessment is that the Company’s internal controls over financial reporting were not effective as of June 30, 2010.
 
 This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
 
 
 PART II - OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 
 From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.
 
 Item 1A. Risk Factors
 
 Not required for smaller reporting companies.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 None.
 
 Item 3. Defaults Upon Senior Securities.
 
 None
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  Item 4.  (Removed and Reserved)
 
 
 Item 5. Other Information.
 
 None.
 
 
 Item 6. Exhibits.
 
 Exhibit No.
Description31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.32.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 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 JIANYE FUEL INC.By:
/s/ Shobu YuName:  Shobu YuTitle: Chief Executive Officer(principal executive officer)Date: November 15, 2010
 
 
 
 By:
/s/ Haishen FeiName:  Haishen FeiTitle:  Chief Financial Officer(principal accounting officer)Date: November 15, 2010
 
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