UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  FORM
10-KSB
  (Mark
one)
 
 |X|           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
fiscal year ended: June 30, 2008
 
 or
 
 |   |           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934
 
 For
the transition period from ______________ to _____________
 
 
 Commission
file number: 0-52496
 
 CHINA
JIANYE FUEL, INC.
 (Exact
name of small business issuer in its charter)
 
  
  Delaware____                                                       
                                                                 
0-8296010
 (State
or other jurisdiction of incorporation or
organization)                                                                          
(IRS Employer Identification No.)
  
 100 Wall
Street, 15th Floor,
New York, NY, 10005
 (Address
of principal executive offices)     (Zip
Code)
 
 Issuer's
telephone number: 212-232-0120
 
 Securities
registered pursuant to Section 12(b) of the Exchange Act: None
 
 Securities
registered pursuant to Section 12(g) of the Exchange Act:
  Common
Stock, $ 0.001 par value
  
 Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  Yes |  |   No | X
|
 
 Check
whether the issuer (1) 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 [  ]
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the  best of  registrant's  knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any  amendment to this Form
10-KSB.  |  |
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes [  ]   No
[X]
 
 The
issuer’s revenues for its most recent fiscal year were $6,917,508.
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of October
13, 2008 was $119,907,692.
 
 The
number of shares outstanding of the issuer’s common stock, as of October 13,
2008 was 29,976,923.
 
 
 DOCUMENTS
INCORPORATED BY REFERENCE:  None
 
 
 Transitional
Small Business Disclosure Format (check one): Yes |  | No
|X|
 
 
   
 TABLE
OF CONTENTS
  PagePart
      IITEM
      1.
                  DESCRIPTION
      OF BUSINESS
                  3ITEM
      2.
                  DESCRIPTION
      OF PROPERTY
                  6ITEM
      3.
                  LEGAL
      PROCEEDINGS
                  6ITEM
      4.
                  SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  6Part
      IIITEM
      5.
                  MARKET
      FOR COMMON EQUITY RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES
                  7ITEM
      6.
                  MANAGEMENTS
      DISCUSSION AND ANALYSIS
                  8ITEM
      7.
                  FINANCIAL
      STATEMENTS
                  F-1ITEM
      8.
                  CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                  12ITEM
      8A.
                  CONTROLS
      AND PROCEDURES
                  12ITEM
      8B.
                  OTHER
      INFORMATION
                  12Part
      IIIITEM
      9.
                  DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERANCE;
      COMPLIANCE WITH SECTION 16(a)
                  13ITEM
      10.
                  EXECUTIVE
      COMPENSATION
                  14ITEM
      11.
                  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                  15ITEM
      12.
                  CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                  16ITEM
      13.
                  EXHIBITS
                  17ITEM
      14.
                  PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                  18
 
 
 PART
I
 
 CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
 
 This
Report contains certain forward-looking statements regarding China Jianye Fuel,
Inc. (“China Jianye Fuel”), its business and its financial
prospects.  These statements represent Management’s present intentions
and its present belief regarding the Company’s future.  Nevertheless,
there are numerous risks and uncertainties that could cause our actual results
to differ from the results suggested in this Report.  A number of
those risks are set forth in the section of this report titled “Managements
Discussion and Analysis – Risk Factors That May Affect Future
Results.”
 
 Because
these and other risks may cause China Jianye Fuel’s actual results to differ
from those anticipated by Management, the reader should not place undue reliance
on any forward-looking statements that appear in this Report.  Readers
should also take note that China Jianye Fuel will not necessarily make any
public announcement of changes affecting these forward-looking statements, which
should be considered accurate on this date only.
 
 ITEM
1.                      DESCRIPTION
OF BUSINESS
 
 The
Structure of our Business
  China Jianye Fuel, Inc., through its wholly-owned subsidiary, American Jianye
Ethanol Company, Inc., 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 Peoples Republic of
China.
  American Jianye Ethanol Company, Inc. 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 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 the Chinese industry regulators, the quality of alcohol 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 manufacture 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.
 
 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.
 
 The
Market for Alcohol-based Fuel
  Alcohol fuel is an attractive alternative to gasoline for several reasons,
including its environmental benefits.  Alcohol-based fuels burn 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 the Chinese industry regulators,
the quality of alcohol fuel is on par with or exceeds the international fuel
quality standardsfor Type IV lead-free gasoline. In
addition, due to the lower costs of the raw materials used in the manufacture
process, the average integrated cost of such fuels is only about 4,000-4,150
Renminbi (“RMB”) ($540-560) per ton, lower than the prevailing wholesale price
of #93 lead-free gasoline in China by as much as 1,000 RMB ($135) per
ton.
  China encourages the use of alcohol fuel as the substitute for gasoline due to
the economic and environmental reasons, which provides a strong impetus for the
development of alcohol fuel industry in the country. It is estimated that by
2010 the annual production capacity of domestic alcohol-based automobile fuel in
China will reach 2 million tons. Meanwhile, worldwide demand for alcohol fuel is
also gradually increasing, due to the limited supply and high cost of gasoline,
and for environmental reasons. The increased demand has caused an increase in
both the  price and the profit margin for alcohol-based
fuel.
   
 
  Research
and Development:  Our Products
  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.  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.
  Through June 30, 2008 we have invested approximately $143,000  in
research and development.  In addition, our Chairman, Jianye Wang,
controls Heilongjiang Jianye Fuel Co., Ltd.  That company has licensed
to Zhao Dong Jianye Fuel a portfolio of patents, including technologies to
manufacture:
 
 ·
              M80-M90
      alcohol-based automobile fuels (No. 2006100105225);·
              E80-E90
      Alcohol-based automobile fuel (No.
  200610010523X);
 
 ·
              an
      ethanol-based clean automobile fuel (No. 2004100480448);·
              an
      ethyl/methyl alcohol based fuels manufacturing method (No.
      2006100105244);
 
 ·
              an
      M80-M90/E80-E90 alcohol-based automobile fuel catalyst manufacturing
      method (No. 2006100105102);·
              an
      ethanol/methanol degeneration method (No. 20061009907X);
    and
 
 ·
              a
      manufacturing method of high-efficiency alcohol-gasoline blended fuel
      catalyst (No. 2006100099050).
 
 The
licenses are indefinite and royalty-free.
 
 As a
forerunner in the alcohol-based fuels industry, the Company itself has set the
leading enterprise standards in China, and has been actively engaged in the
development of national as well as provincial industry standards. During 2008
China’s National Standardization Committee formulated the first set of national
standards for alcohol-based fuels.  These will standardize the
manufacturing practice and quality control of alcohol-based automobile
fuel.  Because of the Company’s involvement in the development of the
standards, we are in full compliance with the new standards.
 
 The
efficacy of the Company’s M85 and E85 fuels in conventional automobiles was
tested positively in April 2007 by the Heilongjiang Provincial Control &
Test Institute.  The efficacy of its ME60, M30, M50, M85 and E85 fuels
in conventional automobiles was tested with positive results in January 2007 by
the Heilongjiang Automobile Products Quality Control Center.  The
Company has also been granted High-tech Product and Environmentally Friendly
Product certifications by the Heilongjiang Provincial Government and the Zhao
Dong Municipal Government.
  Operations
to Date
 
 Until
this year, our sales had consisted of samples of our alcohol-based fuels, and
occasional resale of fuel additives.  In the Spring of 2008, however,
Zhao Dong Jianye Fuel commenced shipments of alcohol-based fuels in commercial
quantities.  Our revenue for the year ended June 30, 2008, therefore,
includes the following:
 
 Product                      Tons                                Revenue
 #90                              
90.5                                 
$36,000
 #93                              
4,195.8                            
$3,500,000
 #97                            
minimal                             
$5,000
 Additives                    1,233                                $3,600,000
 
 Most of
our sales are large bulk shipments that we manufacture to
order.  Currently our backlog of firm orders amounts to only $15,000,
since we fabricate the products as soon as orders arrive.  At this
time last year, we had no backlog.  At the same time, however, we have
two significant production contracts:
 
 -
              Agreement
      for the sale of #97 ethanol fuel to Zhuhai Zhonghuan Oil
      Limited.  This agreement contemplates the sale by us of 15,000
      tons of fuel per month for a price of $1,110 per
  ton.
  -
              Agreement
      for sale of M30 fuel to Shanxi Province Hanzhong Xilan Liquified Petroleum
      Limited.  This agreement contemplates the sale by us of 200 to
      300 tons per month at prices between $1,050 and $1,110 per
      ton.
 
 These
contracts do not qualify as backlog, because neither customer has a binding
purchase obligation – the customers have the option to place monthly orders
accompanied by payment of a deposit.  Nevertheless, the contracts are
indicative of the kind of production agreements that we are pursuing and
gradually obtaining.
   
 
 
 Facilities
  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.
  The
Company’s refinery is located on Tiewei Street, Tiedong District of Zhao Dong
City, with a total usable area of 84737.32 m2 (912,105
square feet). Zhao Dong Jianye Fuel holds 30-year use rights on the land that
will expire in 2035. The Company’s production facilities cover a total area of
16,000 m2 (172,223
square feet), including 12,000 m2(129,167
square feet) of actually used area. The physical plant uses clean fuel blending
and manufacturing equipment independently developed by the Company
itself.  The plant has ready access to utilities, including water and
electricity, as well as a dedicated railroad siding. The Company has obtained
from the government all of the operational safety permits and environmental
compliance certificates necessary to engage in production.   Our
annual expense for compliance with Chinese environmental regulations is
$350.
 
 The
Company has developed a patented method for blending the raw materials in its
manufacture process. This processing technique enables production of Methanol
automobile fuel under normal atmospheric conditions and temperatures, as well as
at temperatures as low as -30°C (-22 degrees
Fahrenheit).  The Company’s refining process produces no significant
amount of hazardous waste or pollution.  These qualities, which are
superior to those of lead-free gasoline fuel, have been certified by a team
of experts organized by the Heilongjiang Province Science & Technology
Department.
 
 The key
to the efficacy of the Company’s fuels is the unique combination of catalysts
with methanol to raise the oxygen content and increase the octane rating of the
fuels.  Prior to September 2006, the Company used methyl
tertiary-butyl ether (MTBE) as the primary catalyst in its alcohol fuels,
following the then-standard international manufacturing practice.  As
information became available regarding the risk to the environment of MTBE
run-off, the Company had ceased using MTBE as an oxygenate, switching to
different, environmental friendly and non-toxic high-carbon derivatives to
fulfill the same functions.
 
 To
date, the Company has developed six different types of catalysts, which are
added into different types of alcohol–based fuels. These catalysts have proven
to enhance fuel octane rating and engine power, inhibit the premature oxidation
of the fuel, help remove sediment in the carburetor, and prevent the erosion of
the engine cylinder surface. Whereas conventional alcohol-based automobile fuels
can be used only in specially designed automobile engines, due to problems of
corrosion and engine wear, the Company’s fuels can be readily used in ordinary
motor vehicle engines, either independently or in combination with gasoline of
comparable octane rating. The Company manufactures all six types of catalysts in
its factory in Zhao Dong City, Heilongjiang Province.
 
 Marketing
  Currently
Zhao Dong Jianye Fuel’s sales network have five sales companies in the major
cities five provinces, including Harbin, Dalian, Shenyang, Qinhuangdao, and
Beijing. Each of these five sales companies has 6 full-time sales persons. The
Beijing-based sales company coordinates the Company’s overall sales
efforts.
 
 The Company plans to sell its fuel products primarily through three
channels:
 
 1. Direct to private gas stations;
 2. Direct
to state-owned refined fuel storage and retail facilities;
 3.
Distribution through CNPC and PetroChina’s nationwide network.
 
 We expect
the largest channel for distribution will be through the regional branches of
CNPC and PetroChina, which have indicated a willingness to distribute our fuels
to their affiliated gas stations.
 
 Employees
  The
Company consists of six operational departments: technologies, sales, supply,
planning, finance and the general office. There are currently 64 full-time
employees, including 12 in management and administrative work, and 16 in
R&D. 42% of the Company’s employees have at least a junior college degree or
higher. The average age of the employees is 43.
   
 
 ITEM
2.                      DESCRIPTION
OF PROPERTY
 
 The
Company’s refinery is located on Tiewei Street, Tiedong District of Zhao Dong
City, with a total usable area of 84737.32 m2 (912,105
square feet). Zhao Dong Jianye Fuel holds 30-year use rights on the land that
will expire in 2035. The Company’s production facilities cover a total area of
16,000 m2 (172,223
square feet), including 12,000 m2(129,167
square feet) of actually used area.
  China
Jianye Fuel maintains a mail-drop at the offices of American Union Securities,
Inc. in New York City.  We do not compensate American Union Securities
for this concession.
 
 ITEM
3.                      LEGAL
PROCEEDINGS
 
 None.
 
 
 ITEM
4.                      SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 No matter
was submitted to a vote of our shareholders during the fourth quarter of fiscal
2008.
   
 
 PART
II
  ITEM
5.                      MARKET
FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES
 
 (a)  Market
Information.
 
 The
Company's common stock has been traded on the OTC Bulletin Board since December
28, 2006. At approximately the time that this report is filed, however, our
common stock will be delisted from the OTC Bulletin Board, due to our failure to
satisfy our SEC filing requirements in a timely fashion.  We expect
that until we are eligible to re-apply for listing on the OTC Bulletin Board,
our common stock will be quoted on the "Pink Sheets."
 
 Set forth below are the high and low bid prices for each of the quarters in the
past two fiscal years. The reported bid quotations reflect inter-dealer prices
without retail markup, markdown or commissions, and may not necessarily
represent actual transactions.   The prices reflect the effect of
a 1-for-20 reverse split of our common stock (which occurred on January 29,
2007) and a 2-for-13 reverse split of our common stock (which occurred on
January 17, 2008) as if they had occurred on July 1, 2006.
  Period
              
              High
              
              
              LowJuly
      1, 2006 - Sept 30, 2006
              
              $
              13.00
              
              
              $
              13.00Oct.
      1, 2006 - Dec. 31, 2006
              
              $
              13.00
              
              
              $
              13.00Jan.
      1, 2007 - Mar. 31, 2007
              
              $
              17.33
              
              
              $
              0.86
 Apr.
      1, 2007 -June 30, 2007
              
              $
              2.60
              
              
              $
              0.86
 July
      1, 2007 - Sept 30, 2007
              
              $
              22.10
              
              
              $
              2.60Oct.
      1, 2007 - Dec. 31, 2007
              
              $
              43.76
              
              
              $
              3.46
 Jan.
      1, 2008 - Mar. 31, 2008
              
              $
              13.00
              
              
              $
              1.25
 Apr.1,
      2008 - June 30, 2008
              
              $
              4.00
              
              
              $
              4.00
 
   (b)  Holders. Our
shareholders list contains the names of 29 registered stockholders of
record of the Company’s Common Stock.
 
 (c)  Dividend
Policy.  China Jianye Fuel has  not declared or paid
cash  dividends or made distributions  in
the  past,  and we do
not  anticipate  that we will  pay  cash
dividends or make  distributions in the foreseeable  future.
We currently intend to retain and reinvest future earnings, if any, to finance
our operations.
 
 (d) Recent Sales of Unregistered
Securities. None.
  (e) Repurchase of Equity
Securities.  The Company did not repurchase any of its equity
securities that were registered under Section 12 of the Securities Act during
the 4th quarter
of fiscal 2008.
   
 
 ITEM
6.                      MANAGEMENT'S
DISCUSSION AND ANALYSIS.
   Results
of Operations
  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.  And 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, however, 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 our first 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.  In the 4th quarter
of the year ended June 30, 2008, however, our sales totaled only $212,335,
primarily consisting of incidental sales of sample 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 – the customer’s commit to one month of
purchases at a time.  But they suggest that we are beginning to
achieve a consistent stream of revenue.
  Our gross profit margin during the year ended June 30, 2008 was
36%.  This figure is not meaningful, however, since almost half of our
sales consisted of resale of fuel additives   When we commence
full scale production, we expect our gross profit margin to be significantly
higher than that which is customary for refiners of petroleum-based
fuels.  This should occur because the market price of the raw
materials for methanol-based fuels (i.e.  methanol and petroleum
distillate) are substantially lower than the market price for
gasoline.  At current market prices, we believe that we will be able
to produce methanol-based fuel for $27 to $40 per ton less than the prevailing
cost of refining gasoline with comparable octane levels.  The price
advantage can only be achieved, however, when we produce our fuels in quantities
that make efficient use of our refinery and ship it in quantities that enable us
to obtain wholesale shipping charges.  Those conditions will be
achieved only after we obtain the funds necessary to bring our operations up to
the full production level.
  Our selling, general and administrative expenses remained relatively modest
(7.8% of sales) in the fiscal 2008, primarily because almost all of our revenue
came from a few customers.  When we commence full-scale production,
these expenses will increase significantly, primarily due to (a) increased staff
required for production and marketing, (b) increased selling expense required to
develop and expanded market for our products, and (c) increased depreciation
expense.  Currently, we only depreciate the portion of our facility
that has been put into active use.  The denominator for our
depreciation calculation will increase when our entire facility is engaged in
production.
  During the two fiscal years that ended on June 30, 2007, as we organized our
business, our net loss remained modest, despite our lack of gross
profit.  In fiscal 2007 we realized a net loss of
$58,111.  Our net loss for fiscal 2006 was $91,261.  In
fiscal 2008 we recorded net income of $1,487,782 as a result of the sale of
methanol based fuel and fuel additives.  During the same period,
however, our operations reduced our cash position by $383,384, due to the fact
that neither of our major customers has paid any significant portion of the
purchase price for the additives it purchased.  The primary factor
enabling us to reach our current condition without incurring large losses and to
carry on operations with negative cash flow was the willingness of our
shareholders to serve our company for minimal compensation and the fact that our
creditors are tolerating an increase in our accounts payable.
  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 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 June 30,
2008, the effect of converting our financial results to Dollars was to add
$421,991 to our accumulated other comprehensive income.
   
 
 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.
  Our working capital at June 30, 2008 totaled $4,917,716. Included in our working
capital, however, was $5,793,568 in accounts receivable, almost all of which are
owed by the two customers who were the source of 97% of our 2008
revenue.  We are not certain when those receivables will be
paid.  Also included in working capital was an advance payment to
Qinhuangdao Far East Petroleum Refinery Co., Ltd. in the amount of
$1,031,406.  The recipient of this advance payment will be our primary
source of petroleum distillate, and we made this payment in accord with Chinese
custom, to enable the refinery to expand its production capacity in anticipation
of doing a large amount of business with us.  We have, therefore, only
a small amount of liquid assets.
  In order to commence full scale operations, we will need approximately
$4,000,000 to purchase raw materials and fund our initial
receivables.  On our June 30, 2008 balance sheet, we have property and
equipment with a book value of $2,833,086 on which there is no
lien.  We expect that some amount of the funds that we require can be
obtained by pledging those assets to secure a loan.  The remainder,
however, will be obtained from the sale of equity.  To date we have no
commitment from any source for either debt or equity financing.
   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.
   Critical
Accounting Policies and Estimates
  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 for fiscal year 2008, 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, described in Note 2 to the Consolidated Financial Statements, to
      record a provision of only $29,113 for uncollectible accounts, against
      total related accounts receivable of $5,822,681.  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 2 to the Consolidated Financial Statements, to
      record no provision for obsolete inventories.  This decision was
      based on fact that our inventory at June 30, 2008 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 for fiscal year
2008.
   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.
 
 
 Risk
Factors That May Affect Future Results
 
 You should carefully consider the risks described below before buying our common
stock.  If any of the risks described below actually occurs, that
event could cause the trading price of our common stock to decline, and you
could lose all or part of your investment.
  Because we have not yet commenced our full scale production operations,
unexpected factors may hamper our efforts to implement our business
plan.
  Our business plan contemplates that we will become a fully-integrated refiner
and marketer of methanol-based fuel oil.  To date, however, we have
produced and marketed our fuels only in limited quantities.  If the
necessary funding can be obtained, we will commence operations on a much larger
scale.  The complexity of this undertaking means that we are likely to
face many challenges, some of which are not yet foreseeable.  Problems
may occur with our raw material acquisition, with the roll-out of efficient
manufacturing processes, and with our ability to deliver fuel
efficiently.  If we are not able to minimize the costs and delays that
result, our business plan may fall short of its goals, and we will be unable to
achieve profitability.
  The capital investments that we plan may result in dilution of the equity of our
present shareholders.
  Our business plan contemplates that we will invest approximately $4 million in
the start-up of our full-scale operations.  We intend to raise a large
portion of the necessary funds by selling equity in our company.  At
present we have no commitment from any source for those funds.  We
cannot determine, therefore, the terms on which we will be able to raise the
necessary funds.  It is possible that we will be required to dilute
the value of our current shareholders’ equity in order to obtain the
funds.  If, however, we are unable to raise the necessary funds, our
growth will be limited, as will our ability to compete effectively.
  The market for methanol-based fuel is not developed in China.
  One of the greater challenges that we will face in the implementation of our
business plan will be the development of widespread acceptance of methanol as
automobile fuel.  Because our products perform as an alternative to
conventional gasoline-based fuel, we will be challenged by the inertial effect
of the association of gasoline with automobiles.  Until we commence
widespread marketing activities, we will not know the extent to which we will be
able to persuade distributors and, ultimately, consumers, to trust our fuels in
their automobiles.  If we are unable to effect a change in the public
concept of automobile fuel, our business plan may fail.
   
 
  Zhao Dong Jianye Fuel’s profitability will be dependent on market prices for
methanol, ethanol and gasoline.
  Zhao Dong Jianye Fuel’s profitability and financial condition will be
significantly affected by the selling price for methanol-based
fuel.  That price, in turn, will depend on the market prices for
competitive products, specifically gasoline and ethanol.  Uncontrolled
market forces ultimately drive the price and supply of each of these
fuels.  Factors that affect these market prices include the level of
consumer product demand, governmental regulations and taxes, the level of
foreign imports of oil and natural gas, and the overall economic environment.
Significant declines in world wide prices for oil could have a material adverse
effect on our success in introducing methanol-based fuels.
  Zhao Dong Jianye Fuel creates products that may have harmful effects on the
environment if not stored and handled properly prior to use, which could result
in significant liability and compliance expense.
  The distribution of methanol-based fuel involves the controlled use of materials
that are hazardous to the environment. Zhao Dong Jianye Fuel cannot eliminate
the risk of accidental contamination or discharge and any resulting problems
that occur. Government regulations govern the use, manufacture, storage,
handling and disposal of these materials. Zhao Dong Jianye Fuel may be named a
defendant in any suit that arises from the improper handling, storage or
disposal of these products. Zhao Dong Jianye Fuel could also be subject to civil
damages in the event of an improper or unauthorized release of, or exposure of
individuals to, hazardous materials. Compliance with environmental laws and
regulations may be expensive, and current or future environmental regulations
may impair Zhao Dong Jianye Fuel’ research, development and production
efforts.
 
 An
increase in raw material prices could increase Zhao Dong Jianye Fuel’s costs and
decrease its profits.
  Changes
in the cost of raw materials could significantly affect Zhao Dong Jianye Fuel’s
business. Although the cost of methanol has traditionally been relatively
stable, increased use of methanol for fuel would create increased demand and
could introduce volatility into the market for methanol.  Our other
two primary raw materials, gasoline distillate and ethanol, already trade in
volatile markets.  The market price for gasoline distillate is a
function of the market price of oil, which has been highly volatile in recent
years.  The market price of ethanol depends primarily on the
availability of feedstocks, which again has become volatile in recent years due
to the heightened demand caused by the widespread acceptance of ethanol as a
fuel supplement.   Increased prices in any of these markets could
decrease Zhao Dong Jianye Fuel’s profitability.  Zhao Dong Jianye Fuel
does not expect to enter into hedging contracts with respect to raw material
prices, but will rely on its Chairman’s network of industry relationships to
obtain the best available prices.
 
 Reliance
on third party suppliers for raw materials may affect Zhao Dong Jianye Fuel’s
production and profitability.
 
 To date,
Zhao Dong Jianye Fuel has no binding commitments for the supply of raw
materials, although it has established a favourable relationship with its
primary distillate supplier by making a large advance payment.  Even
as it develops supply arrangements, Zhao Dong Jianye Fuel’s suppliers could
terminate the contracts and sell to other buyers, or enter into the
methanol-based fuel production business in direct competition with Zhao Dong
Jianye Fuel.  If Zhao Dong Jianye Fuel’s suppliers do not perform
their obligations as agreed, Zhao Dong Jianye Fuel will not be able to maintain
its refinery operations at an efficient level, and may itself default in
satisfying deliver orders, all of which would adversely affect Zhao Dong Jianye
Fuel’ profitability.
 
 Increased government regulation of our production and/or marketing operations
could diminish our profits.
  The fuel production and supply business is highly
regulated.  Government authorities are concerned with effect of fuel
distribution on the national and local economy.  To achieve optimal
availability of fuel, governments regulate many key elements of both production
and distribution of fuel.  Increased government regulation may affect
our business in ways that cannot be predicted at this time, potentially
involving price regulation, distribution regulation, and regulation of
manufacturing processes.  Any such regulation or a combination could
have an adverse effect on our profitability.
 
 In addition, the day-to-day operations of our business will require frequent
interaction with representatives of the Chinese government
institutions.  The national, provincial and local governments in the
People’s Republic of China are highly bureaucratized.  The effort to
obtain the registrations, licenses and permits necessary to carry out our
business activities can be daunting.  Significant delays can result
from the need to obtain governmental approval of our
activities.  These delays can have an adverse effect on the
profitability of our operations.  In addition, compliance with
regulatory requirements applicable to fuel manufacturing and distribution may
increase the cost of our operations, which would adversely affect our
profitability.
   
 
 
 Our business and growth will suffer if we are unable to hire and retain key
personnel that are in high demand.
  Our
future success depends on our ability to attract and retain highly skilled
engineers, chemists, industrial technicians, production supervisors, and
marketing personnel.  In general, qualified individuals are in high
demand in China, and there are insufficient experienced personnel to fill the
demand.  In a specialized scientific field, such as ours, the demand
for qualified individuals is even greater.  If we are unable to
successfully attract or retain the personnel we need to succeed, we will be
unable to implement our business plan.
 
 We may have difficulty establishing adequate management and financial controls
in China.
  The People’s Republic of China has only recently begun to adopt the management
and financial reporting concepts and practices that investors in the United
States are familiar with.  We may have difficulty in hiring and
retaining employees in China who have the experience necessary to implement the
kind of management and financial controls that are expected of a United States
public company.  If we cannot establish such controls, we may
experience difficulty in collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet U.S. standards.
 
  Capital
outflow policies in China may hamper our ability to pay dividends to
shareholders in the United States.
  The People’s Republic of China has adopted currency and capital transfer
regulations. These regulations require that we comply with complex regulations
for the movement of capital. Although Chinese governmental policies were
introduced in 1996 to allow the convertibility of RMB into foreign currency for
current account items, conversion of RMB into foreign exchange for capital
items, such as foreign direct investment, loans or securities, requires the
approval of the State Administration of Foreign Exchange. We may be unable to
obtain all of the required conversion approvals for our operations, and Chinese
regulatory authorities may impose greater restrictions on the convertibility of
the RMB in the future. Because most of our future revenues will be in RMB, any
inability to obtain the requisite approvals or any future restrictions on
currency exchanges will limit our ability to pay dividends to our
shareholders.
 
 Currency
fluctuations may adversely affect our operating results.
  Zhao Dong Jianye Fuel generates revenues and incurs expenses and liabilities in
Renminbi, the currency of the People’s Republic of China.  However, as
a subsidiary of China Jianye Fuel, it will report its financial results in the
United States in U.S. Dollars.  As a result, our financial results
will be subject to the effects of exchange rate fluctuations between these
currencies.  From time to time, the government of China may take
action to stimulate the Chinese economy that will have the effect of reducing
the value of Renminbi.  In addition, international currency markets
may cause significant adjustments to occur in the value of the
Renminbi.  Any such events that result in a devaluation of the
Renminbi versus the U.S. Dollar will have an adverse effect on our reported
results.  We have not entered into agreements or purchased instruments
to hedge our exchange rate risks.
 
 We have limited business insurance coverage.
  The insurance industry in China is still at an early stage of development.
Insurance companies in China offer limited business insurance products, and do
not, to our knowledge, offer business liability insurance. As a result, we do
not have any business liability insurance coverage for our operations. Moreover,
while business disruption insurance is available, we have determined that the
risks of disruption and cost of the insurance are such that we do not require it
at this time. Any business disruption, litigation or natural disaster might
result in substantial costs and diversion of resources.
 
 China
Jianye Fuel is not likely to hold annual shareholder meetings in the next few
years.
  Management does not expect to hold annual meetings of shareholders in the next
few years, due to the expense involved.  The current members of the
Board of Directors were appointed to that position by the previous
directors.  If other directors are added to the Board in the future,
it is likely that the current directors will appoint them.  As a
result, the shareholders of China Jianye Fuel will have no effective means of
exercising control over the operations of China Jianye Fuel.
   
 
 
 ITEM
7.                      FINANCIAL
STATEMENTS
  CHINA
JIANYE FUEL, INC.
  TABLE
OF CONTENTS
          Reports
      of Independent Registered Public Accounting Firm
                    F-1Consolidated
      Balance Sheets as of June 30, 2008 and June 30, 2007
                    F-2Consolidated
      Statements of Operations and Comprehensive Income for the years ended
      June 30, 2008 and 2007
                    F-3Consolidated
      Statements of Changes in Stockholders’ Equity for the years ended June 30,
      2008 and 2007
                    F-4Consolidated
      Statements of Cash Flows for the years ended June 30, 2008 and
      2007
                    F-5Notes
      to Consolidated Financial Statements
                    F6-F12
 
  
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 China
Jianye Fuel Inc.:
 
 
 We have audited the accompanying
consolidated balance sheets of China Jianye Fuel Inc. and subsidiaries (the
“Company”) as of June 30, 2008 and 2007, and the related statements of
operations and comprehensive income, stockholders’ equity, and cash flows for
the years ended June 30, 2008 and 2007. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
 
 We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
 
 In our opinion, the financial
statements referred to above present fairly, in all material respects, the
financial position of China Jianye Fuel Inc. and subsidiaries as of June 30,
2008 and 2007, and the consolidated results of their operations and
comprehensive income and cash flows for the years ended June 30, 2008 and 2007
in conformity with accounting principles generally accepted in the United States
of America.
  
  /s/ Patrizio & Zhao,
LLC
 
 Parsippany,
New Jersey
 October
12, 2008
    
  CHINA
      JIANYE FUEL, INC.
                      
                      CONSOLIDATED
      BALANCE SHEET
                      
                      YEARS
      ENDED JUNE 30, 2008 AND 2007June
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2007ASSETSCURRENT
      ASSETSCash and cash
      equivalents
                    
                    $
                    129,635
                    
                    
                    $
                    561Accounts receivable, net of
      allowance for doubtful accounts of
                    
                    
                    5,793,568
                    
                    
                    
                    -$29,113 and $-0- at
      June 30, 2008 and 2007, respectivelyInventory
                    
                    
                    662,571
                    
                    
                    
                    160,997Advances to
    suppliers
                    
                    
                    1,031,406
                    
                    
                    
                    2,630,000Prepaid expenses
                    
                    
                    203,793
                    
                    
                    
                    18,938Due from
    shareholders
                    
                    
                    -
                    
                    
                    
                    15,296Other Current
    assets
                    
                    
                    147,481
                    
                    
                    
                    1,292Total Current
    Assets
                    
                    
                    7,968,454
                    
                    
                    
                    2,827,084PROPERTY
      AND EQUIPMENT, NET
                    
                    
                    2,833,086
                    
                    
                    
                    3,588,660OTHER
      ASSETSIntangibles, net
                    
                    
                    55,040
                    
                    
                    
                    57,876Deferred production
    costs
                    
                    
                    -
                    
                    
                    
                    242,881Total Other Assets
                    
                    
                    55,040
                    
                    
                    
                    300,757Total Assets
                    
                    $
                    10,856,580
                    
                    
                    $
                    6,716,501LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
                    
                    $
                    1,215,896
                    
                    
                    $
                    67,088VAT tax payable
                    
                    
                    434,580
                    
                    
                    
                    -Income tax payable
                    
                    
                    526,791
                    
                    
                    
                    -Due to related parties
                    
                    
                    -
                    
                    
                    
                    138,246Other current
    liabilities
                    
                    
                    873,471
                    
                    
                    
                    70,720Total Current Liabilities
                    
                    
                    3,050,738
                    
                    
                    
                    276,054Total Liabilities
                    
                    
                    3,050,738
                    
                    
                    
                    276,054STOCKHOLDERS’
      EQUITYCommon Stock, $0.001 par value, 200,000,000
      shares
                    
                    
                    29,977
                    
                    
                    
                    4,949Authorized, 29,976,923 and
      4,948,500 shares issued andoutstanding at June 30, 2008 and
      2007Additional paid-in
    capital
                    
                    
                    5,695,058
                    
                    
                    
                    6,264,464Retained Earnings
                    
                    
                    1,343,116
                    
                    
                    
                    (144,666
                    )Accumulated other comprehensive
      income
                    
                    
                    737,691
                    
                    
                    
                    315,700Total Stockholders’
Equity
                    
                    
                    7,805,842
                    
                    
                    
                    6,440,447Total Liabilities and Stockholders'
      Equity
                    
                    $
                    10,856,580
                    
                    
                    $
                    6,716,501The accompanying notes are an
      integral part of these consolidated financial statements.
  F-2
 CHINA
      JIANYE FUEL, INC.
                      
                      CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                      
                      YEARS
      ENDED JUNE 30, 2008 AND 2007June
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2007SALES
                    
                    $
                    6,917,508
                    
                    
                    $
                    61,555COST
      OF GOODS SOLD
                    
                    
                    4,391,202
                    
                    
                    
                    61,605GROSS
      PROFIT
                    
                    
                    2,526,306
                    
                    
                    
                    (50
                    )OPERATING
      EXPENSESSelling, general and
      administrative
                    
                    
                    541,308
                    
                    
                    
                    63,276INCOME
      (LOSS) FROM OPERATIONS
                    
                    
                    1,984,998
                    
                    
                    
                    (63,326
                    )OTHER
      INCOME (EXPENSES)Other expense
                    
                    
                    (69
                    )
                    
                    
                    5,215INCOME
      BEFORE PROVISION FOR
                    
                    
                    1,984,929
                    
                    
                    
                    (58,111
                    )INCOME
      TAXPROVISION
      FOR INCOME TAX
                    
                    
                    497,147
                    
                    
                    
                    -NET
      INCOME (LOSS)
                    
                    
                    1,487,782
                    
                    
                    
                    (58,111
                    )OTHER
      COMPREHENSIVE INCOMEForeign currency translation
      adjustment
                    
                    
                    421,991
                    
                    
                    
                    253,332COMPREHENSIVE
      INCOME
                    
                    $
                    1,909,773
                    
                    
                    $
                    195,221BASIC
      EARNINGS PER SHARE
                    
                    $
                    .05
                    
                    
                    $
                    ( .01
                    )DILUTED
      EARNINGS PER SHARE
                    
                    $
                    .05
                    
                    
                    $
                    ( .01
                    )WEIGHTED
      AVERAGESHARES
      OUTSTANDINGBASIC
                    
                    
                    29,976,923
                    
                    
                    
                    4,948,500DILUTED
                    
                    
                    29,976,923
                    
                    
                    
                    4,948,500
 The accompanying notes are an
integral part of these consolidated financial statements.
  F-3
 CHINA
      JIANYE FUEL, INC.
                        
                        CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                        
                        YEARS
      ENDED JUNE 30, 2008 AND 2007AccumulatedAdditional
                      
                      other
                      TotalCommon
      Stock
                      Paid-in
                      Retained
                      Comprehensive
                      Stockholders’Number
                      Par Value
                      Capital
                      Earnings
                      Income
                      EquityBalance
      at June 30, 2006
                      4,948,500
                      $        4,949
                      $3,702,664
                      ($
      86,555)
                      $    62,368
                      $3,683,426Net
      loss
                      -
                      -
                      -
                      (58,111)
                      -
                      (58,111)Additional
      paid-in capital
                      -
                      -
                      2,561,800
                      -
                      -
                      2,561,800Other
      comprehensive income
                      -
                      -
                      -
                      -
                      253,332
                      253,332Balance
      at June 30, 2007
                      4,948,500
                      $         4,949
                      $
      6,264,464
                      ($144,666)
                      $   315,700
                      $
      6,440,447Common
      stock issued inrecapitalization
      of American Jianye
                      25,028,423
                      25,028
                      (25,028)
                      -
                      -
                      -Effect
      of business combination
                      -
                      -
                      (544,378)
                      -
                      -
                      (544,378)Net
      income
                      -
                      -
                      -
                      1,487,782
                      -
                      1,487,782Other
      comprehensive income
                      -
                      -
                      -
                      -
                      421,991
                      421,991Balance
      at June 30, 2008
                      29,976,923
                      $       29,977
                      $5,695,058
                      $1,343,116
                      $    737,691
                      $
      7,805,842
 The accompanying notes are an
integral part of these consolidated financial statements.
  F-4
 CHINA
      JIANYE FUEL, INC.
                      
                      CONSOLIDATED
      STATEMENTS OF CASH FLOW
                      
                      YEARS
      ENDED JUNE 30, 2008 AND 2007June
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income (Loss)
                    
                    $
                    1,487,782
                    
                    
                    $
                    ( 58,111
                    )Adjustments
      to reconcile net income (loss) to net cash
                    
                    
                    -
                    
                    
                    
                    -provided by (used in) operating
      activities:Depreciation and
      amortization
                    
                    
                    229,526
                    
                    
                    
                    81,658Bad debt expense
                    
                    
                    27,475
                    
                    
                    
                    -Write down of fixed assets due to
      business combination
                    
                    
                    (544,378
                    )
                    
                    
                    -Deferred production
      costs
                    
                    
                    254,314
                    
                    
                    
                    (98,382
                    )Changes in current assets and
      current liabilities:Accounts
      receivable
                    
                    
                    (5,495,030
                    )
                    
                    
                    -Inventory
                    
                    
                    (456,712
                    )
                    
                    
                    (34,361
                    )Advances
      to suppliers
                    
                    
                    1,780,433
                    
                    
                    
                    (2,561,800
                    )Prepaid
      expense
                    
                    
                    (192,325
                    )
                    
                    
                    (18,457
                    )Other
      current assets
                    
                    
                    (137,829
                    )
                    
                    
                    (128
                    )Accounts
      payable and accrued expenses
                    
                    
                    1,130,557
                    
                    
                    
                    56,400VAT
      tax payable
                    
                    
                    429,954
                    
                    
                    
                    -Income
      tax payable
                    
                    
                    497,147
                    
                    
                    
                    -Due
      to related parties
                    
                    
                    (144,754
                    )
                    
                    
                    98,396Other
      current liabilities
                    
                    
                    750,456
                    
                    
                    
                    (7,543
                    )Total Adjustments
                    
                    
                    (1,871,166
                    )
                    
                    
                    (2,484,217
                    )Net Cash Provided by (Used in) Operating
      Activities
                    
                    
                    (383,384
                    )
                    
                    
                    (2,542,328
                    )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
                    
                    
                    (54,752
                    )
                    
                    
                    (31,022
                    )Net Cash Used in Investing
      Activities
                    
                    
                    (54,752
                    )
                    
                    
                    (31,022
                    )CASH
      FLOWS FROM FINANCING ACTIVITIESCollection from shareholder
      loans
                    
                    
                    16,017
                    
                    
                    
                    11,351Effect of business
      combination
                    
                    
                    544,378Additional paid-in
    capital
                    
                    
                    -
                    
                    
                    
                    2,561,800Net Cash Provided by Financing
      Activities
                    
                    
                    560,395
                    
                    
                    
                    2,573,151EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
                    
                    
                    6,815
                    
                    
                    
                    32NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                    
                    
                    129,074
                    
                    
                    
                    (167
                    )CASH
      AND CASH EQUIVALENTS – BEGINNING
                    
                    
                    561
                    
                    
                    
                    728CASH
      AND CASH EQUIVALENTS – ENDING
                    
                    $
                    129,635
                    
                    
                    $
                    561The accompanying notes are an
      integral part of these consolidated financial statements.
  F-5
 CHINA JIANYE
FUEL, INC NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
 
 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.
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 BASIS
OF PRESENTATION AND CONSOLIDATEION
 
 The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United Stated of America.
The consolidated financial statements include the accounts of China Jianye Fuel
Inc. and its wholly-owned subsidiaries. All inter-company transactions and
balances have been eliminated in consolidation.
 
 USE
OF ESTIMATES
 
 The
preparation of financial statements in conformity with US.GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, expenses, and related disclosures at the date of
the financial statements and during the reporting period. Actual results could
differ from those estimates.
 
 CASH
AND CASH EQUIVALENTS
 
 In
accordance with Statement of Financial Accounting Standards No. 95, "Statement
of Cash Flows," the Company considers all highly liquid instruments with
original maturities of three months or less to be cash and cash
equivalents.
 
 ACCOUNTS
RECEIVABLE
 
 Accounts
receivable are stated at the amount management expects to collect from balances
outstanding at the end of the period. Based on its assessment of the credit
history with customers having outstanding balances and current relationships
with them, management makes conclusions whether any realization of losses on
balances outstanding at the end of the period will be deemed uncollectible based
on the age of the receivables. The Company reserves 0.5% of accounts receivable
balances that have been outstanding less than one year, 50% of accounts
receivable balances that have been outstanding between one year and two years,
and 100% of receivable balances that have been outstanding more than two years.
The allowance for doubtful accounts at June 30, 2008 and 2007 was $29,113 and
$-0-, respectively.
  F-6
 CHINA JIANYE FUEL,
INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  INVENTORY
 
 Inventory
is stated at the lower of cost or market. Cost is determined using the
weighted-average cost method. Provisions are made for excess, slow moving and
obsolete inventory as well as inventory whose carrying value is   in
excess of net realizable value. Management continually evaluates the
recoverability based on assumptions about customer demand and market conditions.
If actual market conditions are less favorable than those projected by
management, additional inventory reserves or write-downs may be required that
could negatively impact our gross margin and operating results. The Company did
not record any provision for slow-moving and obsolete inventory as of June 30,
2007 and 2008.
 
 PROPERTY
AND EQUIPMENT
 
 Property
and equipment are stated at cost and depreciation is provided using the
straight-line method over 5, 10 and 15 years, respectively. The carrying value
of long lived assets is evaluated whenever changes in circumstances indicate the
carrying amount of such assets may not be recoverable. If necessary, the Company
recognizes an impairment loss for the difference between the carrying amount of
the assets and their estimated fair value. Fair value is based upon current and
anticipated future undiscounted cash flows. Expenditures for maintenance and
repairs are charged to operations as incurred; additions, renewals and
betterments are capitalized. Based upon its most recent analysis, the Company
believes that no impairment of property and equipment was needed for the years
ended June 30, 2008 and 2007.
 
 LONG-LIVED
ASSETS
 
 The
Company adopted Statement of Financial Accounting Standards No.
144,  "Accounting for the Impairment or Disposal of Long-Lived Assets"
("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets Per SFAS 144, the Company is
required to periodically evaluate the carrying value of long-lived assets and to
record an impairment loss when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amounts.
 
 In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company concluded that as of June 30, 2008 and 2007 there were no
significant impairments of its long-lived assets.
 
 INTANGIBLE
ASSETS
 
 Intangible
assets consist of “Rights to use land” for 32 years. The method to amortize
intangible assets is a 32-year straight-line method. The Company also evaluates
intangible assets for impairment, at least on an annual basis and whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable from its estimated future cash flows.  Recoverability of
intangible assets, other long-lived assets and goodwill is measured by comparing
their net book value to the related projected undiscounted cash flows from these
assets, considering a number of factors including past operating results,
budgets, economic projections, market trends and product development
cycles.  If the net book value of the asset exceeds the related
undiscounted cash flows, the asset is considered impaired, and a second test is
performed to measure the amount of impairment loss.
 
 REVENUE
RECOGNITION
 
 The
Company recognizes revenue at the date of shipment to customers when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations of the Company exist and
collectability is reasonably assured.
 
 ADVERTISING
COSTS
 
 The
Company expenses the cost of advertising as incurred. Advertising costs for the
years ended June 30, 2008 and 2007 were insignificant.
  F-7
 
 CHINA JIANYE
FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  INCOME
TAXES
  Deferred income taxes are computed using the asset
and liability method, such that deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between financial reporting amount amounts and the tax basis of existing assets
and liabilities based on currently enacted tax laws and tax rateds in effect in
the People's Republic of China for the periods in which the differences are
expected to reverse. Income tax expense is the tax payable for the period plus
the change during period in deferred income taxes. Avaluation allowance is
provided when it is more likely than not that some portion or all of the
deferred tax assets will not be realized. No differences were noted between the
book and tax bases of the Company's assets and liablilities, respectively.
Therefore, there were no deferred tax assets or liablities ended June 30, 2008
and 2007.
  The Company is subject to PRC Enterprise Income Tax
on net income at a rate of 25% for the fiscal year ended June 30, 2008 and 33%
for the fiscal year ended June30, 2007.
  VALUE
ADDED TAX
  The
Company is subject to value added tax (“VAT”) for manufacturing
products.  The applicable VAT tax rate is 17% for products sold in the
PRC.  The amount of VAT liability is determined by applying the
applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT
paid on purchases (input VAT).  Normally, output VAT is recorded as a
payable, but when the Company has more purchases than sales, input VAT is
recorded as an asset.
  FAIR
VALUE OF FINANCIAL INSTRUMENTS
  The
Company considers the carrying amounts reported in the balance sheet for current
assets and current liabilities qualifying as financial instruments and
approximating fair value.
  FOREIGN
CURRENCY TRANSLATION AND TRANSACTIONS
  The
financial position and results of operations of the Company are determined using
local currency (Chinese Yuan) as the functional currency. Assets and liabilities
are translated at the prevailing exchange rate in effect at each year end.
Income statement accounts are translated at the average exchange rate during the
year.  Translation adjustments arising from the use of different
exchange rates from period to period are included in the cumulative translation
adjustment account in shareholders' equity.  Gains and losses
resulting from foreign currency transactions are included in
operations.
  COMPREHENSIVE
INCOME
  The
Company has adopted SFAS No. 130, Reporting Comprehensive Income, which
establishes rules for the reporting and display of comprehensive income, its
components and accumulated balances. SFAS No. 130 defines comprehensive income
to include all changes in equity, including adjustments to minimum pension
liabilities, accumulated foreign currency translation, and unrealized gains or
losses on available-for-sale marketable securities, except those resulting from
investments by owners and distributions to owners.
  RECENT ACCOUNTING
PRONOUNCEMENTS
  In
December 2007, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 110 (“SAB 110”). SAB 110 states that the staff will continue
to accept, under certain circumstances, the use of the simplified method for
estimating the expected term of “plain vanilla” share options in accordance with
SFAS 123(R) beyond December 31, 2007. The Company believed there will be no
material impact on the Company’s financial statements upon adoption of this
standard.
 F-8
 
 CHINA JIANYE
FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  RECENT
ACCOUNTING PRONOUNCEMENTS (continued)
  In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB Statement No. 51.” SFAS
No. 160 amends Accounting Research Bulletin (ARB) No. 51, “Consolidated
Financial Statements,” to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary.  SFAS No. 160 clarifies that a non-controlling interest in
a subsidiary, which is sometimes referred to as a minority interest, is an
ownership interest in the consolidated entity that should be reported as a
component of equity in the consolidated financial statements.  Among
other requirements, SFAS No. 160 requires consolidated net income to be reported
at amounts that include the amounts attributable to both the parent and the
non-controlling interest. It also requires disclosure, on the face of the
consolidated income statement, of the amounts of consolidated net income
attributable to the parent and the non-controlling interest. SFAS No. 160 will
be effective for the Company on January 1, 2009, and is not expected to have a
significant impact on the Company’s financial condition or results of
operations.
  In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations
(Revised)”, to replace SFAS No. 141, “Business Combinations. SFAS No. 141(R)
requires the use of the acquisition method of accounting, defines the acquirer,
establishes the acquisition date and broadens the scope to all transactions and
other events in which one entity obtains control over one or more other
businesses. This statement is effective for business combinations or
transactions entered into for fiscal years beginning on or after December 15,
2008. The Company is evaluating the impact of SFAS No. 141 (R).
  EARNINGS
(LOSS) PER SHARE
  In
accordance with SFAS No. 128, “Computation of Earnings Per Share” (“SFAS No.
128”) and EITF No. 03-6, “Participating Securities and the Two-Class Method
under FASB Statement No. 128” (“EITF No. 03-6”), basic earnings per share is
computed by dividing net income attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year. Diluted
earnings per share is calculated by dividing net income attributable to ordinary
shareholders as adjusted for the effect of dilutive ordinary equivalent shares,
if any, by the weighted average number of ordinary and dilutive ordinary
equivalent shares outstanding during the year. Ordinary equivalent shares
consist of the ordinary shares issuable upon the conversion of the convertible
preferred shares (using the if-converted method) and ordinary shares issuable
upon the exercise of outstanding share options (using the treasury stock
method).
  NOTE
3 – INVENTORY
  Inventory
at June 30, 2008 and 2007 consisted of the following:
 June 30,2008
                                  
                                  
                                  June 30,2007Raw
      materials
                                  
                                  $
                                  594,495
                                  
                                  
                                  $
                                  97,239Packaging
      supplies
                                  
                                  
                                  32,058
                                  
                                  
                                  
                                  1,739Finished
      goods
                                  
                                  
                                  36,018
                                  
                                  
                                  
                                  62,019Total
                                  
                                  $
                                  662,571
                                  
                                  
                                  $
                                  160,997
  NOTE
4 – ADVANCES TO SUPPLIERS
  As a
common business practice in China, the Company is required to make advance
payments to certain suppliers for raw material procurement and construction.
Such advances are interest-free and unsecured.
 
 CHINA JIANYE
FUEL, INC
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 NOTE
5– PROPERTY AND EQUIPMENT
 
 Property
and equipment at June 30, 2008 and 2007 consisted of the following:
 June 30,2008
                
                
                June 30,2007Property
      and equipment
                
                $
                3,386,419
                
                
                $
                3,876,441Less:
      accumulated depreciation
                
                
                553,333
                
                
                
                287,781Total
                
                $
                2,833,086
                
                
                $
                3,588,660
 Depreciation
expense for the years ended June 30, 2008 and 2007 was $220,868 and $79,644,
respectively.
 
 NOTE
6– INTANGIBLE ASSETS
 
 Net
intangible assets at June 30, 2008 and 2007 were as follows:
 
 June 30,2008
                
                
                June 30,2007Rights
      to use land
                
                $
                73,387
                
                
                $
                66,145Less:
      accumulated amortization
                
                
                18,347
                
                
                
                8,269Total
                
                $
                55,040
                
                
                $
                57,876
 Amortization
expense for the years ended June 30, 2008 and 2007 amounted to $8,657 and
$2,014, respectively.
 
 The
following is a list of approximate amortization expense for the Company’s
intangible assets over their useful lives:
 2009
                
                $
                8,6572010
                
                
                8,6572011
                
                
                8,6572012
                
                
                8,6572013
                
                
                8,6572014
      and thereafter
                
                
                11,755Total
                
                $
                55,040
 
 NOTE
7 – DEFERRED PRODUCTION COST
 
 The
deferred production cost represents depreciation taken of factory building and
manufacturing equipment when the Company was in the development stage, and such
depreciation would benefit future periods. In accordance with SFAS 7 “Accounting
and Reporting by Development Stage Enterprises”, the production cost was
capitalized and amortized over 3 years using straight-line method. As the
company is now no longer in the development stage, the remaining balance of
deferred production cost was recorded as part of the cost of goods sold for the
fiscal year ended June 30, 2008.
 
 NOTE
8 – OTHER PAYABLE
 
 Other
payable represents a short-term loan from a third party individual for
purchasing raw materials. It is unsecured and non-interest bearing.
  CHINA JIANYE
FUEL, INC NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 
 NOTE
9 – EARNINGS (LOSS) PER SHARE
 
 The
Company presents earnings per share on a basic and diluted basis. Basic earnings
per share have been computed by dividing net earnings by the weighted average
number of common shares outstanding. Diluted earnings per share has been
computed by dividing net earnings plus convertible preferred dividends and
interest expense (after-tax) on convertible debt by the weighted average number
of common shares outstanding including the dilutive effect of equity securities.
The weighted average number of common shares calculated for Diluted EPS excludes
the potential common stock that would be exercised under the options and
warrants granted to officers because the inclusion of the potential shares from
these options and warrants would cause an anti-dilutive effect by increasing the
net earnings per share.
 
 June 30, 2008
                
                
                June 30, 2007Net
      income (loss)
                
                $
                1,487,782
                
                
                $
                ( 58,111
                )Weighted
      average common shares
                
                
                29,976,923
                
                
                
                4,948,500Effect
      of diluted securities:
                
                
                -
                
                
                
                -Weighted
      average common shares
                
                
                29,976,923
                
                
                
                4,948,500Basic
      net income per share
                
                $
                0.05
                
                
                $
                ( 0.01
                )Diluted
      net income per share
                
                $
                0.05
                
                
                $
                ( 0.01
                )
 
 NOTE
10 – EMPLOYEE WELFARE PLAN
 
 The
Company has established an employee welfare plan in accordance with Chinese law
and regulations. The Company makes annual contributions of 14% of all employees'
salaries to the employee welfare plan.
 
 NOTE
11 – STATUTORY COMMON WELFARE FUND
 
 As
stipulated by the People’s Republic of China (PRC), net income after taxation
can only be distributed as dividends after appropriation has been made for the
following:
 (i)
                  Making
      up cumulative prior years’ losses, if
any;
 (ii)
                Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, as
      determined under PRC accounting rules and regulations, until the fund
      amounts to 50% of the Company's registered
  capital;
 (iii)
                Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to the Company's “Statutory common welfare fund”, which is
      established for the purpose of providing employee facilities and other
      collective benefits to the Company's
employees
 
 Allocations
to the discretionary surplus reserve must be approved by the Company’s Board of
Directors.
 
 NOTE
12 – RISK FACTORS
 
 For the
fiscal year ended June 30, 2008, the Company had three vendors that provided
approximately 60% of the Company’s raw materials.  Total purchases
from these vendors amounted to $2,613,231. For the fiscal year ended June 30,
2007, the Company had one major vendor (the related party in Note 9) that
provided approximately 16% of the Company’s raw materials. Total purchases from
this vendor were $77,922 for the year ended June 30, 2007.
  
 CHINA JIANYE
FUEL, INC NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007
 NOTE
12 – RISK FACTORS (continued)
 
 For the
fiscal year ended June 30, 2008, two customers accounted for approximately 97%
of the Company’s net sales. Total sales made to these two customers amounted to
$6,679,730.  For the fiscal year ended June 30, 2007, one major
customer (the related party in Note 9) accounted for approximately 69% of the
net sales for the year ended June 30, 2007. Total sales made to this customer
were $42,806 for the year ended June 30, 2007.
 
 The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
 
 NOTE
13 - CONCENTRATIONS OF CREDIT RISK
 
 Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with financial institutions of
$99,740.
 
 NOTE
14 - SUBSEQUENT EVENTS
 
 None.
 ITEM
8.                      CHANGES
IN AND DISAGREEMENTS WITH   ACCOUNTANTS ONACCOUNTING AND
FINANCIAL DISCLOSURE.
 
 Not applicable.
 
 
 
 ITEM
8A.                  
CONTROLS AND PROCEDURES.
 
 (a)           Evaluation of disclosure controls and
procedures.
  The term
“disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to
the controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,
processed, summarized and reported within required time periods. 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.
 
 (b)           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.
  
 (c)           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 December 31, 2007, 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.
  A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Company’s
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in the
United States of America such that there is more than a remote likelihood that a
material misstatement of the Company’s annual or interim financial statements
that is more than inconsequential will not be prevented or detected. 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
and Chief Executive Officer 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, 2008.
  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 temporary rules of the Securities and Exchange Commission that
permit the Company to provide only management’s report in this annual
report.
  ITEM
8B.                     OTHER
INFORMATION.
 
 None.
   
 
 PART
III
 
 ITEM
9.                      DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
 The
following individuals are the members of China Jianye Fuel’s Board of Directors
and its executive officers.
  Name                                                                        Age                                                       Position
with the
Company                                                                                                      
Director Since
 Jianye
Wang                                57                                                         
Chairman, Chief Executive Officer, Chief Financial
Officer                                                   
2007
 
 All directors hold office until the next annual meeting of our shareholders and
until their successors have been elected and qualify.  Officers serve
at the pleasure of the Board of Directors.
  Jianye
Wangfounded
Zhao Dong Jianye Fuel Co., Ltd. in the People’s Republic of China in 2004, and
has served as its Chairman and majority shareholder since that time. For the
twenty years prior to founding Zhao Dong Jianye Fuel Co., Ltd., Mr. Wang was
engaged in a variety of entrepreneurial activities involving real estate or the
civil engineering services industry.  Mr. Wang presently serves on the
boards of the China National Methanol/Ethanol Fuel and Clean Fuel Automobile
Professional Committee, the Heilongjiang Petroleum Association, and the
Petroleum Business Committee of the China Federation of Industry and Commerce.
 Mr. Wang was awarded a certificate in civil engineering by the Harbin
Architectural and Civil Engineering Institute.
 
 Nominating, Compensation and Audit Committees
  The Board of Directors does not have an audit committee, a compensation
committee or a nominating committee, due to the small size of the
Board.  The Board will also not have an “audit committee financial
expert” within the definition given by the Regulations of the Securities and
Exchange Commission.
 
 Code of Ethics
  The Board of Directors has not adopted a code of ethics applicable to the
Company’s executive officers.  The Board believes that the small
number of individuals involved in the Company’s management makes such a code
unnecessary.
 
 Section 16(a) Beneficial Ownership Reporting Compliance
  None of
the officers, directors or beneficial owners of more than 10% of the Company’s
common stock failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during the year ended June 30, 2008, except that
Jianye Wang failed to file a Form 3 when due.
   
 
 
 ITEM
10.                  EXECUTIVE
COMPENSATION
 
 The
following table sets forth all compensation awarded to, earned by, or paid by
China Jianye Fuel, Inc. and its subsidiaries to Jianye Wang, its Chief Executive
Officer, during the three years since Zhao Dong Jianye Fuel commenced
operations.  There were no executive officers whose total salary and
bonus for the fiscal year ended June 30, 2008 exceeded $100,000.
 
 
 Fiscal
                Year
              
              Salary
              
              
              Bonus
              
              
              Stock
                Awards
              
              
              Option
                Awards
              
              
              Other
                CompensationJianye
      Wang
              2008
              
              $
              30,770
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              02007
              
              $
              40,000
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              20,0002006
              
              $
              40,000
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              20,000
  Equity Awards
 
 The
following tables set forth certain information regarding the stock options
acquired by the executive officer named in the table above during the year ended
June 30, 2008 and those options held by him on June 30, 2008.
  Option Grants in the Last
Fiscal Year
 
 Potential
      realizable value at annual appreciation for option termNumber
      of securities underlying option granted
              Percent
      of total options granted to employees in fiscal year
              Exercise
      Price
                ($/share)
              Expiration
      Date5%
              10%Jianye
      Wang
              --
              --
              --
              --
              --
              --
 
  The
following tables set forth certain information regarding the stock grants
received by the executive officer named in the table above during the year ended
June 30, 2008 and held by him unvested at June 30, 2008.
  Unvested Stock Awards in the
Last Fiscal Year
 Number
      of
                Shares
      That
                Have
      Not
                Vested
              Market
      Value
                of
      Shares That
                Have
      Not
                VestedJianye
      Wang
              0
              --
 
 Remuneration of Directors
  None of the members of the Board of Directors receives remuneration for service
on the Board.
   
 
 ITEM
11.                                SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT
 
 The
following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of the date of this prospectus by
the following:
  ·
              each
      shareholder known by us to own beneficially more than 5% of our common
      stock;
  ·
              Jianye
      Wang, our Chief Executive Officer
  ·
              each
      of our directors; and
  ·
              all
      directors and executive officers as a
group.
  Except as
otherwise indicated, we believe that the beneficial owners of the common stock
listed below have sole voting power and investment power with respect to their
shares,  subject to community property laws where
applicable.  Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission.
  Amount
      and Nature
              
              Percentage
      ofName
      and Address of Benficial Owner (1)
              
              of
      Benficial Owership (2)
              
              ClassJianye
      Wang
              
              
              15,288,231
              
              
              50.66
              %All
      officers and directors as a group (1 person)
              
              
              15,288,231
              
              
              50.66
              %Meili
      Xu
              
              
              2,997,692
              
              
              9.93
              %Haipeng
      Wang
              
              
              2,697,923
              
              
              8.94
              %Shubo
      Yu
              
              
              1,798,615
              
              
              5.96
              %
 
 (1)
              Except
      as otherwise noted, each shareholder’s address is c/o Zhao Dong Jianye
      Fuel Co., Ltd., 47 Huagong Road, Zhao Dong City, Heilongjiang Province,
      P.R. China.(2)
              Except
      as otherwise noted, all shares are owned of record and
      beneficially.
 
  Equity Compensation Plan Information
  The
information set forth in the table below regarding equity compensation plans
(which include individual compensation arrangements) was determined as of June
30, 2008.
  Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              Weighted
      average exercise price of outstanding options, warrants and
      rights
              Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders
              0
              --
              0Equity
      compensation plans not approved by security holders
              0
              --
              500,000Total
              0
              --
              500,000
 
   
 
 ITEM
12.                               CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
 Certain Relationships
 
 Our Chairman, Jianye Wang, has a majority equity interest in Heilongjiang Jianye
Fuel Co., Ltd.  Approximately 70% of the revenue realized by Zhao Dong
Jianye Fuel during the 2007 fiscal year resulted from sales to Heilongjiang
Jianye Fuel Co., Ltd.  The parties had this arrangement because at
that time Zhao Dong Jianye Fuel has not yet received the government
authorization necessary for issuing certain invoices.  For that
reason, the sales were processed through Heilongjiang Jianye Fuel Co., which had
the requisite government authorization.
  Jianye
Wang has loaned money to Zhao Dong Jianye Fuel from time to time to provide it
working capital.  At June 30, 2008 all amounts due from Zhao Dong
Jianye Fuel to Jianye Wang had been repaid.  In the future, however,
until Zhao Dong Jianye Fuel obtains adequate financing, Mr. Wang may continue to
provide it working capital loans, when needed.  The loans are due on
demand and do not bear interest.
  Other
than the aforesaid relationship, Jianye Wang has not engaged in any transaction
with China Jianye Fuel, American Jianye or Zhao Dong Jianye Fuel during the past
two fiscal years or the current fiscal year that had a transaction value in
excess of $60,000.
 
 Director Independence
 
 None of the members of the Board of Directors is independent, as “independent”
is defined in the rules of the NASDAQ Stock Market.
   
 
 
 ITEM
13.                                EXHIBITS
  (a)
Financial Statements
  Report of
Independent Registered Public Accounting Firm
  Consolidated
Balance Sheets – June 30, 2008 and 2007
  Consolidated
Statements of Operations and Comprehensive Income - Years ended June 30, 2008
and 2007.
  Consolidated
Statements of Stockholders’ Equity - Years ended June 30, 2008 and
2007.
  Consolidated
Statements of Cash Flows - Years ended June 30, 2008 and 2007.
  Notes to
Consolidated Financial Statements
  (b)
Exhibit List
 
 3-a
              Articles
      of Incorporation – filed as an exhibit to the Registration Statement on
      Form 10-SB (File No. 000-52496) filed on March 12,
  2007.
 3-a(1)
              Certificate
      of Amendment of Articles of Incorporation effective on January 17, 2008 –
      filed as an exhibit to the Current Report on Form 8-K filed on January 18,
      2008.
 3-b
              By-laws–
      filed as an exhibit to the Registration Statement on Form 10-SB (File No.
      000-52496) filed on March 12, 2007.
 10-a
              2008
      Equity Incentive Plan – filed as an exhibit to the S-8 Registration
      Statement (File No. 333-148895) filed on January 28,
  2008.
 21
              Subsidiaries
      –  American Jianye Ethanol Company, Inc., a Delaware
      corporation
 Zhao Dong Jianye Fuel Co., Ltd., a P.R. China
  corporation
 31
              Rule
      13a-14(a) Certification
 32
              Rule
      13a-14(b) Certification
   
 
 
 ITEM
14                      PRINCIPAL
ACCOUNTANT FEES AND SERVICES
 
 China
Jianye Fuel (the “Company”) engaged Patrizio & Zhao, LLC to serve as its
independent registered public accountant in November 2007.
 
 Audit
Fees
 
 Patrizio & Zhao, LLC billed $50,000 to the Company for professional services
rendered for the audit of fiscal 2008 financial statements and review of the
financial statements included in the 10-QSB filings for the second and third
quarters of fiscal 2008.
 
 Audit-Related
Fees
 
 Patrizio & Zhao, LLC billed $0 to the Company during fiscal 2008 for
assurance and related services that are reasonably related to the performance of
the fiscal 2008 audit or review of the quarterly financial
statements.
 
 Tax Fees
 
 Patrizio & Zhao, LLC billed $0 to the Company during fiscal 2008 for
professional services rendered for tax compliance, tax advice and tax
planning.
 
 All Other Fees
 
 Patrizio & Zhao, LLC billed $0 to the Company in fiscal 2008  for
services not described above.
 
 It is the
policy of the Company that all services other than audit, review or attest
services must be pre-approved by the Board of Directors.  No such
services have been performed by Patrizio & Zhao, LLC.
   
 
 SIGNATURES
  In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 CHINA
      Jianye Fuel, Inc.By:
                /s/
      Jianye WangMr. Jianye
      WangChief
      Executive Officer and Chief Financial
Officer
  In
accordance with the Exchange Act, this Report has been signed below on October
29, 2008 by the following persons, on behalf of the Registrant and in the
capacities and on the dates indicated.
 
 
 /s/
      Jianye WangJianye
      Wang
              Chief
      Executive Officer and Chief Financial Officer