UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C.
20549






FORM
10-K






þANNUAL
REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For
the fiscal year ended July 31, 2008






oTRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ___________ to
___________.






Commission file number 333-141271






CHINA
WIND ENERGY INC.


(Exact name of
registrant as specified in its charter)




Nevada
            
            None(State or
      Other Jurisdiction of Incorporation of Organization)
            
            (I.R.S.
      Employer Identification No.)No.2 Haibin
      Road, Binxi Developing Area
              Heilongjiang
      Province, China
            
            +86 451
      87009618(Address of
      principal executive offices) (ZIP Code)
            
            (Registrant’s
      telephone number, including area
code)




Securities registered pursuant
      to Section 12(b) of the Act: None
              Securities registered pursuant
      to Section12 (g) of the Act:Common Stock, $0.0001 par
  value




Indicate by check mark whether the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes oNoþ




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




Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
shorter period that the registrant as required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes oNoþ




Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not 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-K or any amendment to this
Form 10-K. Yes oNoþ




Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer o   Accelerated
filer o 
Non-accelerated filer o    Smaller
reporting company þ




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




Aggregate market value of the voting
stock of the registrant held by non-affiliates of the registrant at January 31,
2008 (computed by reference to the closing price of $1.24 per share as of the
last business day of the second fiscal quarter):$58,034,244




Number of common shares outstanding
at November
10, 2008:  51,902,250











TABLE
OF CONTENTS




PART IItem 1.  Description of Business
              3Item 1A.  Risk Factors
              10Item 1B.  Unresolved Staff
      Comments
              10Item 2.  Properties
              10Item 3.  Legal Proceedings
              10Item 4.  Submission of Matters to a Vote of
      Security Holders
              10PART IIItem 5.  Market for Common Equity and Related
      Stockholder Matters
              11Item 6.  Selected Financial
    Data
              12Item 7.  Management's Discussion and Analysis or
      Plan of Operation
              12Item 7A.  Quantitative and Qualitative Disclosures
      about Market Risk
              17Item 8.  Financial Statements and Supplementary
      Data
              17Item 9.  Changes In and Disagreements with
      Accountants on Accounting and Financial Disclosure
              18Item 9A(T).  Controls and
    Procedures
              19Item 9B.  Other Information
              19PART IIIItem 10.  Directors, Executive Officers,
      Promoters and Control Persons; Compliance with Section 16(a) of the
      Exchange Act
              20Item 11.  Executive
    Compensation
              23Item 12.  Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
              25Item 13.  Certain Relationships, Related
      Transactions and Director Independence
              26Item 14.  Principal Accountant Fees and
      Services
              27PART IVItem 15.  Exhibits and Financial Statement
      Schedules
              28Exhibits
              28




2






PART I






Item
1.  Descriptionof Business






Forward-looking
Statements






This annual report
contains forward-looking statements. These statements relate to future events or
our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements.






Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable laws, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements so as to conform these statements to actual results.






As
used in this annual report, the terms "we", "us", "our", “the Company”, and
"China Wind" mean China Wind Energy Inc. and all of our subsidiaries, unless
otherwise indicated.






All dollar amounts
refer to US dollars unless otherwise indicated.






Overview
and Recent Business Developments






We
were incorporated in Nevada on May 8, 2006.  Prior to November 20,
2007 we were a shell company with nominal assets and operations.  On
November 20, 2007 we completed a reverse merger transaction with China Wind
Energy Ltd., a Hong Kong company (“China Wind HK”). The closing of this reverse
takeover transaction resulted in:






a)
            the
      acquisition of China Wind HK, and its wholly owned subsidiary XingYe Wind
      Energy Technology Limited (“XingYe”),  becoming our wholly owned
      subsidiaries;




b)
            Jian Ren
      becoming the holder of 81% of all of our issued and outstanding common
      stock;




c)
            the
      appointment of Jian Ren as our director, President, Chief Executive
      Officers, Chief Financial Officer, Chief Accounting Officer, Secretary,
      and Treasurer to replace our former sole officer and director;
      and




d)
            the changing
      our fiscal year end from October 31 to July 31 in order to adjust to the
      fiscal year end of our subsidiary, China Wind
  HK.




3




On
December 5, 2007 we filed a certificate of change to effect a 5 for 1 forward
split of our common stock. This forward split increased our issued common shares
and authorized common stock, on a basis of five new common shares for every one
existing common share and resulted in an increase from 7,377,450 issued and
outstanding common shares to 36,887,250 issued and outstanding common shares. It
also increased our authorized common stock from 80,000,000 to 400,000,000
shares.






On
May 16, 2008 we entered into a share exchange agreement with Power Profit
Technology Development Limited, a Hong Kong company (“Power Profit”), and Wan Yi
Tse, the holder of 100% of the issued and outstanding share capital of Power
Profit.  The closing of this share exchange agreement on May 26, 2008
resulted in:






a)
            the
      acquisition of 100% of the equity interests of Power
    Profit;




b)
            the
      acquisition of 82.14% of the equity interests of Power Profit’s majority
      owned subsidiary, Harbin SQ Wind Power Ltd. (formerly Harbin Sanye Wind
      Energy Technology Co., Ltd.) (“Harbin
SQ”);




c)
            Wan Yi Tse’s
      designees becoming the holders of 29% of all of our issued and outstanding
      common stock;




d)
            Power Profit
      becoming our wholly owned subsidiary and Harbin SQ becoming our
      majority-owned subsidiary;




e)
            the
      termination of an agreement for the provision of management services by
      XingYe, our subsidiary, to Harbin SQ;
and




f)
            the
      appointment of Shouquan Sun as our President, Chief Executive Officer,
      Chief Financial Officer, Chief Accounting Officer, Secretary, Treasurer,
      and director to replace Jian Ren who resigned from all of his positions
      with us.






Description
of Business




Harbin SQ, our
majority-owned subsidiary, focuses primarily on the production of turbine blades
and combine harvesters.  Our primary product is a blade for wind
turbine generators which allows for variable pitch and
speed.  Different from other blades of the 600KW and 750KW type
produced in China, our blade products provide variable speed and pitch
adjustments to achieve high efficiency.  We have 5 individual patents
on our wind turbine blades.




4


Organizational
Structure




Our current
organizational structure is summarized by the illustration below:











Sales
of Blades




We
generate revenues from sales of our wind turbine blades to customers who install
turbines and other equipment in wind farms as well as occasional sales of
combine harvesters.




Factors that affect
sales volumes for our wind turbine blades include:


·
            world gross
      domestic product growth;


·
            the
      availability of alternative sources of energy;
  and


·
            the growth in
      demand for wind powered energy.




Factors that affect
the prices for our wind turbine blades include:


·
            world
      economic environment;


·
            industry
      operating rate, which is based on the supply and demand;
    and


·
            relative
      strength of the Chinese currency.




5


The
Market for Wind Turbine Blades




Wind energy is
considered a “green” energy that does not pollute the environment, and is
attractive to many countries in the world.  China has a shortage of
energy resources.  The Chinese wind energy industry, while in its
infancy, could grow to be an important source of energy
production.  On the eve of the 2005 Beijing International Renewable
Energy Conference, a report released by the Chinese Renewable Energy Industries
Association and sponsored by Greenpeace and the European Wind Energy Association
showed that China could at least double its current wind production by
2020.




Wind energy is a rapidly growing market segment for
the composites industry and is a fast growing energy sector. According to
researchandmarkets.com, on average, the global wind energy market has grown at a
rate of 23% per year for the last ten years.According to the German Engineering Federation,
worldwide, 15,200 megawatts of new wind generating capacity was installed in
2006, with about 15 billion Euros (US$19.5 billion) invested, an increase of 32
percent compared to the previous year.  We are initially focusing on
the domestic market in China, but will be looking to distribute our products
throughout the world, with a focus on Europe.




Raw
Materials




Our manufacturing
facilities are located at 2 Haibin Road, Binxi Development, Heilongjiang
Province, China, which is also our principal executive office.  We
will continue to operate at these facilities until our growth requires
additional capacity and equipment.  We source our raw materials from
various metal smelting and electronics manufacturers in our local
vicinity.  Although we have not been subject to shortages of any of
the components used in the fabrication of our wind turbines, we may be subject
to cutbacks and price increases as we do not currently have any long term
contracts with our supplies.  In the even that prices do increase; we
may not be able to pass these increases on to our customers.








6


Competition




The table below
contains a description of our principal competitors in mainland
China.




No
            Enterprises
            Form
            Shareholders
            Location
            Date
      of Establishment
            Output
      and Scale1
            LM Fiber
      Reinforced Plastics(Tianjin)
      Ltd
            Foreign
      Capital
            Denmark LM
      Co.
            Wuqing
      Development, Tientsin
            August
      2001
            600 Sets per
      year2
            LM Urumchi
      Blade Works
            Joint Venture
      using Chinese and foreign investment
            Denmark LM
      Co. and Sinkiang Jinfeng Stock-joint Co.
            Urumchi
            Started
      production in August 2007
            Supply
      products for Sinkiang Jinfeng joint venture.3
            Denmark
      VESTAS Wind Energy Electricity Equipment Limited
            Foreign
      Capital
            Denmark
      VESTAS Limited
            West District
      in Tientsin Development
            May
      2005
            1.5MW 200
      sets of blades per year4
            SUZLON
      Resource Limited (Tientsin)
            Foreign
      Capital
            India
      SUZLON
            HuaYuan
      Technology Development, Tientsin Development
            2006
            300-500 sets
      of blades per year5
            Tientsin
      Dongqi Wind Energy Blade Engineering Co.
            Joint-stock
            Orient
      Electric Group
            Chemic
      Industry Garden in Tientsin Development
            August
      2006
            Invested
      279,000,000 RMB in first period, 1.5MW600 per year6
            Baoding China
      Air Huiteng Wind Power Equipment Limited
            Joint-Venture
      using Chinese and Foreign Investment
            NORDEX German
      Co.
            Baoding New
      High-technology Development
            August
      2005
            1.3MW Blades
      and provide to customers of Nordex in
China




7


Competitive
Advantages and Strategy




We
believe that our unique technology, price points, relationships, infrastructure,
proven quality control standards, and reputation represent substantial
competitive advantages.  We are currently able to maintain a lower
costs of manufacturing than competitors based in the United States and
Europe.  Furthermore, our competitive advantage in China is protected
by our significant knowledge of government regulations, business practices,
strong relationships, and patent protection.




We
have been developing and plan to implement the following strategies to aide in
the growth of our business:




1.
            Management
      and Innovation Strategies


We
have implemented a scientific approach to blade manufacture which relies on
innovation.  We also have a rigorous quality control program in
place.




2.
            Broaden
      Development Strategies


We
have improved the reputation of our products by developing and implementing a
marketing plan which will allow us to increase the value of our
brand.




3.
            Optimize
      Work Environment


We
have implemented standardized safety procedures for our
employees.  Together with our quality control program, we hope this
will result in high quality products for our customers.




4.
            Cost
      Strategies


We
plan to implement cost control measures in order to be more competitive in our
domestic markets.




5.
            Grow
      Capacity


We
anticipate growing demand and have prepared to increase our production capacity
in our current facility as well considered offsite manufacturing
possibilities.




6.
            Widen
      Sales Channels


We
are actively seeking distribution contracts and increased sales through
international channels.




8






Intellectual
Property




We
have received five patents in the wind energy industry from the China Patent and
Trademark Office:




1.
ZL200620021590.7-
This patent relates to a belt drive accelerator which is fitted to wind power
electricity equipment. This patent was obtained in 2006 and expires in
2016.  The belt drive accelerator is especially important to us
because it speeds up the blades in a dynamotor. This patent lowers the cost and
increases the useful life of our blades.




2.
ZL200520020555.9-This
patent relates to a frame structure tower for wind energy
equipment.  The patent was obtained in 2005 and expires in
2015.


3.
ZL200220020019.9-
This patent relates to an integer-stand wind energy dynamotor. This patent was
obtained in 2002 and expires in 2012.




4.
ZL200220020018.4 - This patent relates to a super-high-binding and
auto-rising tower crane for the wind energy dynamotor.  This patent
was obtained in 2002 and expires in 2012.




5.
ZL200520020020.1 – This patent relates to equipment for motional wind
energy blade production.  This patent was obtained in 2005 and expires
in 2015.




Customers




For the year ending
July 31, 2008, we generated revenues of approximately $148,383. These revenues
resulted from the sales of our harvester products.  We began
manufacturing our wind turbines in September 2008.  We plan to
distribute our products to various customers including private companies as well
as government backed entities.  As of October 29, 2008 we have not
sold any of our wind turbines.




A
significant percentage of our revenues for the year ending July 31, 2008 came
from a small number of customers.  The following table sets forth
information as to the revenue derived from those customers that accounted for
more than 5% of our revenue for the year ended July 31, 2008:




YearEndedCustomer
            
            July 31, 2008Dong Si
      Ping
            $
            41,492
            28%Ma Yu
      Jin
            
            32,113
            22%Jiang Zhen
      Tao
            
            15,933
            11%Lu Nian
      Guo
            
            11,797
            8%Liang
      Hua
            
            11,432
            8%Liu Wan
      Bin
            
            9,168
            6%Feng
      Kui
            
            9,029
            6%






Employees




As
of October 29, 2008 we had 157 employees, one of which is Shouquan Sun, our
President, Chief Executive Officer, Chief Financial Officer, Secretary,
Treasurer, and director. Mr. Sun provides us with services in the areas of
management, administration and business development. We also engage consultants
in the areas of business development consulting, legal and
accounting.




Harbin SQ, one of
our subsidiaries, accounts for 155 employees, 130 of whom are full time
employees and 25 of whom are part time. Of the part time employees, 2 are in
sales and administration, and 23 are engineers and technicians.  To
the best of our knowledge, we are compliant with local prevailing wage,
contractor licensing and insurance regulations.




China Wind HK,
another one of our subsidiaries, has 1 full time employee. To the best of our
knowledge, we are compliant with local prevailing wage, contractor licensing and
insurance regulations.






Government
Regulations






We
are subject to environmental regulation by both the Chinese central government
and by provincial or local government agencies in China.  Since our
inception we have been in compliance with all applicable
regulations.




Our manufacturing
processes generate noise, wastewater, gaseous and other industrial wastes, and
we use, generate and discharge toxic, volatile and otherwise hazardous chemicals
and wastes in our operations. As a result, we are required to comply with all
national and local regulations regarding protection of the environment. Our
operations are subject to regulations promulgated by China’s Environmental
Protection Administration, as well as local pollution regulations.  We
are also subject to periodic monitoring by local environmental protection
authorities in Harbin.  We believe that our manufacturing facilities
and equipment are in substantial compliance with all applicable environmental
regulations.  Based on the requirements of present law, additional
measures to maintain compliance are not expected to materially affect our
capital expenditures, competitive position, financial position or results of
operations.




The Chinese
government has expressed concern about pollution and other environmental
hazards. Although we believe that we comply with current national and local
government regulations, if it is determined that we are in violation of these
regulations, we can be subject to financial penalties as well as the loss of our
business license, in which event we would be unable to continue in business.
Further, if the national or local government adopts more stringent regulations,
we may incur significant costs in complying with such regulations. If we fail to
comply with present or future environmental regulations, we may be required to
pay substantial fines, suspend production or cease operations. Any failure by us
to control the use of, or to restrict adequately the discharge of, hazardous
substances could subject us to potentially significant monetary damages and
fines or suspensions of our business operations.




Regulations
Governing Electrical Equipment




Our products are
subject to regulations that pertain to electrical equipment, which may
materially adversely affect our business. These regulations influence the
design, components or operation of our products. New regulations and changes to
current regulations are always possible and, in some jurisdictions, regulations
may be introduced with little or no time to bring related products into
compliance with these regulations. Our failure to comply with these regulations
may restrict our ability to sell our products in China. In addition, these
regulations may increase our cost of supplying the products by forcing us to
redesign existing products or to use more expensive designs or components. In
these cases, we may experience unexpected disruptions in our ability to supply
customers with products, or we may incur unexpected costs or operational
complexities to bring products into compliance. This could have an adverse
effect on our revenues, gross profit margins and results of operations and
increase the volatility of our financial results.




Business
License




We, and all of our
subsidiaries, have been issued business licenses with the appropriate municipal
and provincial governments which specifically authorize the companies to operate
their respective businesses. All of these business licenses, which are subject
to annual review by the issuing agencies, are current as of the date of this
prospectus. No additional approval or license is required
for the manufacturing and sale of the textile dyeing and finishing machines, the
auxiliary electrical power equipment or the rolled rings.




Beneficial
Regulations




In
its current 5-Year Plan (covering 2006-2011) and in the National Science Mid to
Long-Term Development Plan (2006-2020), the Chinese government identified wind
power as a viable “green” energy technology that will reduce emissions while
increasing the energy supply. The central government’s official recognition of
the value of wind power has created substantial interest in the
market.


9






Item
1A.  Risk Factors






Not
Applicable.






Item
1B.  Unresolved Staff Comments






None.






Item
2.  Properties




Our principal
executive offices are located at 2 Haibin Road, Binxi Development, Harbin,
Heilongjiang Province, China, where we carry out the management of our
manufacturing factory. We own this property through our majority owned
subsidiary: Harbin SQ. The property consists of a factory of 63,638 square
meters (approximately 208,787 square feet) and an office building of 20,000
square meters (approximately 65,616 square feet). Harbin SQ carries out the
manufacturing of our wind turbine blades at this location.




Item
3.  Legal Proceedings






We
know of no material, active or pending legal proceedings against us, our
subsidiaries or our property, nor are we involved as a plaintiff in any material
proceedings or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholders
are an adverse party or have a material interest adverse to us.






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






None.




10




PART II






Item 5.  Market for Common Equity and Related Stockholder
Matters






Market
Information






There is a limited
public market for our common shares. Our common shares are quoted for trading on
the OTC Bulletin Board under the symbol “CWEY”.  The market for our
stock is highly volatile. We cannot assure you that there will be a market in
the future for our common stock.  OTC Bulletin Board securities are
not listed and traded on the floor of an organized national or regional stock
exchange. Instead, OTC Bulletin Board securities transactions are conducted
through a telephone and computer network connecting dealers in stocks. OTC
Bulletin Board stocks are traditionally smaller companies that do not meet the
financial and other listing requirements of a regional or national stock
exchange.




Our common shares
became eligible for quotation on the OTC Bulletin Board on August 2, 2007, but
no trades were made until September 11, 2007.




The following table
shows the high and low prices of our common shares on the OTC Bulletin Board.
The following quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions:




Period
            High
            LowMay 1, 2008 –
      July 31, 2008
            $1.65
            $0.51February 1,
      2008 – April 30, 2008
            $1.75
            $1.05November 1,
      2007 – January 31, 2008
            $1.38
            $0.51August 2,
      2007 – October 31, 2007
            $0.08
            $0.05




During September
2008, the highest and lowest prices of our common shares on the OTC Bulletin
Board were $1.30 per share and $0.25 per share. On September 26, 2008, the
closing price of our common stock on the OTC Bulletin Board on the last day it
traded before the filing of this Annual Report was $0.60 per share.




We
have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future.






Holders




As of October 29,
2008, there were 3,488 holders of record of our common stock.






Dividends




Holders of our
common stock are entitled to dividends if declared by the Board of Directors out
of funds legally available therefore. As of October 29, 2008 no cash dividends
have been declared.


We
do not intend to issue any cash or stock dividends in the near future. We intend
to retain earnings, if any, to finance the development and expansion of our
business. Our future dividend policy will be subject to the discretion of the
Board of Directors and will be contingent upon future earnings, if any, our
financial condition, capital requirements, general business conditions and other
factors.




11




Equity
Compensation Plans






As
of October 29, 2008, we did not have any equity compensation plans.






Recent
Sales of Unregistered Securities






We
have not made any previously unreported sales from May 1, 2008 to October 29,
2008.






Recent
Purchases of Equity Securities by us and our Affiliated
Purchases






We
have not repurchased any of our common stock and have no publicly announced
repurchase plans or programs as of October 29, 2008.






Item
6.  SelectedFinancial Data




Not
applicable.




Item
7.  Management's Discussion and Analysis or Plan of
Operation




We
are an exploration stage company with limited operations and no revenues from
our business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months unless we obtain additional
financing to fund our operations. Our only source of cash at this time is
investments by others in our company.




Forward-Looking
Statements




This report
contains forward-looking statements that involve risks and uncertainties. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology including,
"could" "may", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict", "potential" and the negative of these terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially.




While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested in this Prospectus.




12


Liquidity
and Capital Resources




As
of July 31, 2008 we had cash of $80,348, total current assets of $1,271,615,
total current liabilities of $8,274,345 and a working capital deficit of
$7,002,730. Since November 27, 2006 (inception) to July 31, 2008, our
accumulated deficit was $401,624. We are dependent on the funds raised through
our equity or debt financing, investing activities, and revenue generated
through the sales of our products to fund our operations.  We
anticipate that we will incur substantial losses over the next year and our
ability to generate any revenues in the next 12 months continues to be
uncertain.




As
of July 31, 2008 we had total assets of $30,865,947 and total liabilities of
$8,274,345.  Our total assets were primarily made up of land usage
rights and goodwill.




On
November 6, 2007, we entered into a contract with Heilongjiang Nongkentaixing
Real Estate Development Co. Ltd to sell our land usage rights in Harbin City,
China. The total contract price is approximately $10,090,000.  We have
received $7,603,673 in advance payments for this sale as of July 31,
2008.  These advance payments are listed as a liability on our balance
sheets due to the fact that we have not completed the transfer of our land usage
rights to the buyer due to partial payment.  Because the transfer has
not been completed these land usage rights are listed as an intangible asset on
our balance sheets.  Once we receive full payment for the sale of
these land usage rights, we will complete the transfer to the buyer and no
longer account for these rights as an asset.




We
used net cash of $403,041 in operating activities for the year ended July 31,
2008, $21,267 for the period from inception to July 31, 2007 and $424,308 from
inception to July 31, 2008.   The large increase in cash used in
operating activities for the year ended July 31, 2008 is attributed to an
increase in operations and the acquisition of Harbin SQ, our majority owned
subsidiary.






We
received net cash of $110,638 from investing activities for the year ended July
31, 2008, and for the period from inception to July 31, 2008.  We did
not receive any cash from investing activities for the period from inception to
July 31, 2007. The cash received from investing activities during the year ended
July 31, 2008 was due to cash received as a result of the acquisition of Harbin
SQ as well as repayment of related party loans.






We
received net cash of $172,040 from financing activities for the year ended May
31, 2008, $22,665 for the period from inception to July 31, 2007 and $194,705
for the period from inception to July 31, 2008.  Cash received from
financing activities resulted from issuance of common stock, repayment of short
term loans and proceeds from short term loans.






As of July 31,
2008 Shouquan Sun, our President and Chief Executive Officer, owed the Company
$947,315.  From April 30, 2008 to July 31, 2008, Mr. Sun has repaid a
total of $965,942 on the original loan.  $269,961 of that repayment
has been received by us since our acquisition of Harbin SQ and before July 31,
2008, our fiscal year end. This loan was provided to Mr. Sun by Harbin SQ prior
to us acquiring it and no monies have been forwarded to Mr. Sun since our
acquisition of Harbin SQ.  Mr. Sun has promised to repay the
outstanding balance as soon as possible and no later than December 31,
2008.




13




On
May 16, 2008 we entered into a share exchange agreement with Power Profit and
Wan Yi Tse, the holder of 100% of the issued and outstanding share capital of
Power Profit.  The closing of this share exchange agreement on May 26,
2008 resulted in:






a)
            the
      acquisition of 100% of the equity interests of Power
    Profit;




b)
            the
      acquisition of 82.14% of the equity interests of Power Profit’s majority
      owned subsidiary, Harbin;




c)
            Wan Yi Tse’s
      designees becoming the holders of 29% of all of our issued and outstanding
      common stock;




d)
            Power Profit
      becoming our wholly owned subsidiary and Harbin SQ becoming our
      majority-owned subsidiary;




e)
            the
      termination of an agreement for the provision of management services by
      XingYe, our subsidiary, to Harbin SQ;
and




f)
            the
      appointment of Shouquan Sun as our President, Chief Executive Officer,
      Chief Financial Officer, Chief Accounting Officer, Secretary, Treasurer,
      and director to replace Jian Ren who resigned from all of his positions
      with us.






We
expect that our total expenses will increase over the next year as we increase
our business operations through Harbin SQ, our majority owned subsidiary. We
have not been able to reach the break-even point since our inception and have
had to rely on outside capital resources.  Over the next 12 months, we
plan to begin manufacturing and selling of our wind
turbines.  However, we do not anticipate that we will generate
sufficient revenues to fund our proposed operations.






We
expect to require approximately $1,355,000 in financing to acquire and develop
technologies and launch the online carbon reduction marketplace over the next 12
months (beginning November 2008), as follows:






Description
            Estimated
      expenses
              ($)Research and
      development of new technologies
            450,000Marketing
            300,000Salaries
            250,000Equipment
      maintenance
            50,000Development
      of distribution chain
            75,000Utilities
            30,000Professional
      Fees
            120,000General and
      administrative expenses
            80,000Total
            1,355,000






14


At
present, our cash requirements for the next 12 months outweigh the funds
available to maintain or develop our operations. Of the $1,355,000 that we
require for the next 12 months, we had $80,348 in cash as of July 31,
2008.  In order to improve our liquidity, we intend to pursue
additional equity financing from private investors or possibly a registered
public offering. We currently do not have any arrangements in place for the
completion of any further private placement financings and there is no assurance
that we will be successful in completing any further private placement
financings. If we are unable to achieve the necessary additional financing, then
we plan to reduce the amounts that we spend on our exploration activities and
administrative expenses in order to be within the amount of capital resources
that are available to us.




Results
of Operations




Revenues




Since our inception
to July 31, 2008 we have generated gross revenues of $148,383 from the sale of
combine harvesters which we manufactured.  All of these revenues were
generated during the year ended July 31, 2008 and we did not generate any
revenues from inception to July 31, 2007.




Expenses




For the year ended
July 31, 2008, we have total operating expenses of $304,688, including $3,785 in
selling expenses, $405,169 in general and administrative and a gain of $104,266
in a reversal on allowance of obsolescence.   By comparison, for
the period from inception to July 31, 2007, we had total operating expenses of
$37,817 which were made up entirely of general and administrative
costs.  For the period from inception to July 31, 2008 our total
operating expenses were $342,505.




The main reason for
the increase in expenses is due to the significant increase in the activity of
the company due to the acquisition of Harbin SQ.  Our general and
administrative expenses for the period from inception to July 31, 2008 were made
up mainly of: $179,106 for professional fees, $76,837 for salary and wages,
$51,319 in amortization, and $78,590 for other ancillary
expenses.   Our general and administrative expenses also include
office expenses, employee insurance, utilities and depreciation.




Net
Loss




Since our inception
on November 27, 2006 to July 31, 2008, we incurred net a loss of $401,624. For
the year ended July 31, 2008, we incurred net loss of $363,807. For the period
from November 27, 2006 (Date of Inception) to July 31, 2007, we incurred a net
loss of $37,817.  Our net loss per share was $0.01 for the year ended
July 31, 2008 and $37,817 for the period from November 27, 2006 (Date of
Inception) to July 31, 2007 as we only had one share issued and
outstanding.




15




Off-Balance
Sheet Arrangements






We
have no significant off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
our financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to our
stockholders.






Inflation






The effect of
inflation on our revenue and operating results has not been
significant.






Critical
Accounting Policies




Our financial
statements are impacted by the accounting policies used and the estimates and
assumptions made by management during their preparation. A complete summary of
these policies is included in note 2 of the notes to our financial
statements. We have identified below the accounting policies that are of
particular importance in the presentation of our financial position, results of
operations and cash flows, and which require the application of significant
judgment by management.




Impairment
of Long-Lived Assets




We
account for impairment of plant and equipment and amortizable intangible assets
in accordance with SFAS No. 144, “Accounting for
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”,
which requires us to evaluate a long-lived asset for recoverability when there
is event or circumstance that indicates the carrying value of the asset may not
be recoverable. An impairment loss is recognized when the carrying amount of a
long-lived asset or asset group is not recoverable (when carrying amount exceeds
the gross, undiscounted cash flows from use and disposition) and is measured as
the excess of the carrying amount over the asset’s (or asset group’s) fair
value.




Goodwill




Goodwill represents
costs in excess of fair values assigned to the underlying net assets of acquired
businesses.  We recorded significant goodwill upon the acquisition of
Harbin SQ, our majority owned subsidiary. Goodwill deemed to have indefinite
lives is not amortized, but is tested for impairment annually and at any time
when events suggest impairment may have occurred. To assess goodwill for
impairment, we determine the fair value of our reporting units, which are
primarily determined using our management’s assumptions about future cash flows
based on long-range strategic plans. This approach incorporates many assumptions
including future growth rates, discount factors and tax rates. In the event the
carrying value of a reporting unit exceeded its fair value, an impairment loss
would be recognized to the extent the carrying amount of the reporting unit’s
goodwill exceeded its implied fair value. No goodwill impairment was recorded
for the year ended July 31, 2008 and for the period from November 27, 2006
(inception) to July 31, 2007.




16


Foreign
currency translation




Our reporting
currency is the US dollar.  Our functional currency is the local
currency, the Chinese Renminbi (“RMB”).  Our financial statements are
translated into United States dollars in accordance with Statement of Financial
Accounts Standards (“SFAS”) No. 52, “Foreign Currency
Translation”, using year-end rates of exchange for assets and
liabilities, and average rates of exchange for the period for revenues, costs,
and expenses and historical rates for the equity. Translation adjustments
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining comprehensive income.
At July 31, 2008 and 2007, the cumulative translation adjustment of $44,369 and
$(120) were classified as an item of other comprehensive income (loss) in the
stockholders’ equity section of the balance sheet respectively. For the year
ended July 31, 2008 and for the period from November 27, 2006 (date of
inception) to July 31, 2007, other comprehensive income (loss) was $44,489 and
$(120), respectively.




The exchange rates
used to translate amounts in RMB into US Dollars for the purposes of preparing
the financial statements were as follows:  As of July 31, 2008 and
2007, we used the period-end rates of exchange for assets and liabilities of $1
to RMB6.839 and $1 to RMB7.572 respectively. For the year ended July 31, 2008
and for the period from November 27, 2006 (date of inception) to July 31, 2007,
we used the period’s average rate of exchange to convert revenues, costs, and
expenses of $1 to RMB7.209939 and $1 to RMB7.709943, respectively. We used
historical rates for equity.




Item 7A.  Quantitative and Qualitative Disclosures about
Market Risk






Not
Applicable.






Item
8.  Financial Statements and Supplementary Data










CHINA
WIND ENERGY INC. AND SUBSIDIARIES


(A
DEVELOPMENT STAGE COMPANY)








CONTENTS








PAGE          F-1~2           REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




PAGE          F-3               CONSOLIDATED
BALANCE SHEETS




PAGE          F-4               CONSOLIDATED
STATEMENTS OF OPERATIONS




PAGE          F-5               CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)




PAGE          F-6               CONSOLIDATED
STATEMENTS OF CASH FLOWS




PAGE          F-7~21         NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




17


REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of
      DirectorsChina Wind
      Energy Inc. and Subsidiaries(A
      development stage company)We have
      audited the accompanying consolidated balance sheets of China Wind Energy
      Inc. and subsidiaries as of July 31, 2008 and the related consolidated
      statements of operations, changes in stockholders’ equity (deficit) and
      cash flows for the year ended July 31, 2008. These 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 audit 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 at this time, to have, nor were we engaged to perform, an
      audit of its internal control over financial reporting. Our audit 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 includes examining, on a test basis,
      evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles
      used and significant estimates made by management, as well as evaluating
      the overall financial statement presentation. We believe that our audit
      provides a reasonable basis for our opinion.
              
              In our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of China Wind
      Energy Inc. and subsidiaries at July 31, 2008 and the consolidated results
      of its operations and its cash flows for the year ended July 31, 2008 in
      conformity with accounting principles generally accepted in the in the
      United States of America.
              
              The
      accompanying financial statements have been prepared assuming that the
      Company will continue as a going concern. As discussed in Note 2 to the
      financial statements, the Company has incurred accumulated deficits of
      $401,624 as of July 31, 2008 that include losses of $363,807 for the year
      ended July 31, 2008. The Company also had a working capital deficiency of
      $7,002,730 as of July 31, 2008. These factors raise substantial doubt
      about its ability to continue as a going concern. Management’s plans
      concerning this matter are also described in Note 2. The accompanying
      financial statements do not include any adjustments that might result from
      the outcome of this uncertainty./s/
      Yichien YehYichien Yeh,
      CPARego Park,
      New YorkOctober 9,
      2008




The accompanying
notes are an integral part of these financial statements.
 F-1


KEITH
K. ZHEN, CPA
 CERTIFIED PUBLIC
ACCOUNTANT
 
 2070 WEST 6TH
STREET - BROOKLYN, NY 11223 - TEL (347) 408-0693 - FAX (347) 602-4868 - EMAIL
:KEITHZHEN@GMAIL.
      REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Board
of Directors
 China
Wind Energy Limited
 (A
development stage company)
   We
have audited the accompanying consolidated balance sheet of China Wind Energy
Limited and subsidiary ( a development stage company) as of July 31, 2007 and
the related statements of income, stockholders' equity and comprehensive income,
and cash flows for the period November 27, 2006 (Inception) through July 31,
2007. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated 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 audit 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 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.
  As
discussed in Note 1 to the consolidated financial statements, the consolidated
statement of changes in shareholders' equity (deficit) for the period November
27, 2006 (inception) through July 31, 2007 has been restated to correct some
misspellings and errors in dates in order to be consistent with other
information in the consolidated financial statements, but the financial numbers
have not been changed.
  In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Wind Energy Limited and
subsidiary ( a development stage company) as of July 31, 2007 and the results of
its operations and its cash flows for the period November 27, 2006 through July
31, 2007 in conformity with accounting principles generally accepted in the
United States of America.
  The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern. As discussed in Note 3to the financial
statements, the Company had an accumulated deficit of $37,817 at July 31, 2007
that includes all net losses of $37,817 since its inception. The Company also
had a working capital deficiency of $57,732 as of July 31, 2007. These factors
raise substantial doubt about its ability to continue as a going concern.
Management’s plans concerning these matters are also described in Note
3. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
     /s/Keith
      K. Zhen,
      CPA
                Keith
      K. Zhen, CPA
                Brooklyn, New
      York
                August 31,
      2007 (Except for Note 1, December 24,
2007)






The accompanying
notes are an integral part of these financial statements.
 F-2










China
      Wind Energy Inc. And Subsidiaries(A
      Development Stage Company)Consolidated
      Balance SheetsJuly
      31,2008
            
            
            July
      31,2007AssetsCurrent AssetsCash and cash equivalents
            
            $
            80,348
            
            
            $
            1,278Accounts receivable, net
            
            
            28,970
            
            
            
            -Advances to suppliers (Note 5)
            
            
            416,210
            
            
            
            -Inventories, net (Note 6)
            
            
            563,851
            
            
            
            -Prepaid expenses
            
            
            182,236
            
            
            
            -Total current assets
            
            
            1,271,615
            
            
            
            1,278Prepayment and deposit (Note 7)
            
            
            1,064,710
            
            
            
            -Due
      from related parties (Note 8)
            
            
            1,020,049
            
            
            
            -Property and equipment, net (Note 9)
            
            
            7,225,540
            
            
            
            19,796Goodwill (Note 10)
            
            
            8,110,960
            
            
            
            -Intangible assets, net (Note 11)
            
            
            12,166,785
            
            
            
            -Deferred charges
            
            
            6,288
            
            
            
            -Total
      Assets
            
            $
            30,865,947
            
            
            $
            21,074Liabilities
      & Shareholders' EquityCurrent
      LiabilitiesAccounts payable and accrued liabilities
            
            $
            338,429
            
            
            $
            36,346Customer deposit
            
            
            11,676
            
            
            
            -Other payables
            
            
            116,636
            
            
            
            -Short term loans (Note 12)
            
            
            120,582
            
            
            
            -Due to related parties (Note 13)
            
            
            56,363
            
            
            
            22,664Wages payable
            
            
            26,986
            
            
            
            -Other advance receipts (Note 14)
            
            
            7,603,673
            
            
            
            -Total current liabilities
            
            
            8,274,345
            
            
            
            59,010Minority
      Interests
            
            
            2,607,965
            
            
            
            -Stockholders'
      EquityCommon stock;
      400,000,000 and 10,000 sharesauthorized, respectively; 0.0001 and
      0.13 par value, respectively; 51,902,250 and 1 shares issued and
      outstanding, respectively
            
            
            5,191
            
            
            
            1Additional
      paid-in capital
            
            
            20,335,701
            
            
            
            10,000Subscription
      receivable
            
            
            -
            
            
            
            (10,000
            )Accumulated
      other comprehensive income
            
            
            44,369
            
            
            
            (120
            )Accumulated
      deficit during development stage
            
            
            (401,624
            )
            
            
            (37,817
            )Total
      Stockholders' Equity
            
            
            19,983,637
            
            
            
            (37,936
            )Total
      Liabilities & Stockholders' Equity
            
            $
            30,865,947
            
            
            $
            21,074






The accompanying
notes are an integral part of these financial
statements.
 F-3








China
      Wind Energy Inc. And Subsidiaries
              (A
      Development Stage Company)
              Consolidated
      Statements of OperationsYear
      Ended July 31, 2008
            
            
            Nov. 27,
      2006 (Inception) toJuly 31,
      2007
            
            
            Nov. 27,
      2006 (Inception) toJuly 31,
      2008Revenue
            
            $
            148,383
            
            
            $
            -
            
            
            $
            148,383Cost
      of Goods Sold
            
            
            (204,873
            )
            
            
            -
            
            
            
            (204,873
            )Gross
      Profit
            
            
            (56,490
            )
            
            
            -
            
            
            
            (56,490
            )Operating
      ExpensesSelling
      Expenses
            
            
            3,785
            
            
            
            -
            
            
            
            3,785General
      and administrative (Note 15)
            
            
            405,169
            
            
            
            37,817
            
            
            
            442,986Provision(Reversal)
      on allowance of obsolescence
            
            
            (104,266
            )
            
            
            -
            
            
            
            (104,266
            )Total
      operating expenses
            
            
            304,688
            
            
            
            37,817
            
            
            
            342,505Loss
      from operations
            
            
            (361,178
            )
            
            
            (37,817
            )
            
            
            (398,995
            )Other
      income (expenses)Interest
      income
            
            
            194
            
            
            
            -
            
            
            
            194Interest
      expense
            
            
            (8,738
            )
            
            
            -
            
            
            
            (8,738
            )Gain(Loss)
      on physical count of inventories
            
            
            (26,831
            )
            
            
            -
            
            
            
            (26,831
            )Total
      other income (expenses)
            
            
            (35,375
            )
            
            
            -
            
            
            
            (35,375
            )Loss
      before and income taxes and minority interests
            
            
            (396,553
            )
            
            
            (37,817
            )
            
            
            (434,370
            )Income
      taxes
            
            
            -
            
            
            
            -
            
            
            
            -Minority
      interests
            
            
            32,746
            
            
            
            -
            
            
            
            32,746Net
      Loss
            
            
            (363,807
            )
            
            
            (37,817
            )
            
            
            (401,624
            )Other
      Comprehensive IncomeForeign
      currency translation
            
            
            44,489
            
            
            
            (120
            )
            
            
            44,369Comprehensive
      Income
            
            $
            (319,318
            )
            
            $
            (37,937
            )
            
            $
            (357,255
            )Net
      Loss Per Share, Basic and Diluted
            
            $
            (0.01
            )
            
            $
            (37,817
            )Weighted
      Average Shares Outstanding,Basic
      and Diluted
            
            
            27,606,000
            
            
            
            1






The accompanying
notes are an integral part of these financial statements.
 F-4


China
Wind Energy Inc. And Subsidiaries
 (A
Development Stage Company)
 Consolidated
Statements of Changes in Stockholders' Equity (Deficit)
 For the
period from November 27, 2006 (Date of Inception) to July 31,
2008






Common
      Stock
            
            
            Additional
      Paid-in Capital
            
            
            Stock
      Subscriptions Receivable
            
            
            Accumulated Other
      Comprehensive Income
            
            
            Accumulated
      Deficit During the Development Stage
            
            
            Total
      Stockholders' EquityShares
            
            
            AmtBalance
      at November 27, 2006 (Date of Inception)
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Issuance of
      common stock for cash
            
            
            1
            
            
            
            1
            
            
            
            100,000
            
            
            
            (100,000
            )
            
            
            -
            
            
            
            -
            
            
            
            1Foreign
      Currency Translation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (120
            )
            
            
            -
            
            
            
            (120
            )Net loss for
      the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (37,817
            )
            
            
            (37,817
            )Balance
      at July 31, 2007
            
            
            1
            
            
            
            1
            
            
            
            100,000
            
            
            
            (100,000
            )
            
            
            (120
            )
            
            
            (37,817
            )
            
            
            (37,936
            )Proceeds from
      issuance of common stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            100,000
            
            
            
            -
            
            
            
            -
            
            
            
            100,000Adjustment to
      number of shares of common stock issued and outstanding as a result of
      reverse merger take over of China Wind Energy Ltd.Recapitalization
      related to reverse merger
            
            
            36,887,249
            
            
            
            3,688
            
            
            
            (3,688
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net assets
      acquired in reverse merger
            
            
            -
            
            
            
            -
            
            
            
            3,041
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,041Issuance of
      common shares for services
            
            
            15,000
            
            
            
            2
            
            
            
            17,848
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            17,850Issuance of
      common shares for acquisition
            
            
            15,000,000
            
            
            
            1,500
            
            
            
            20,218,500
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            20,220,000Foreign
      Currency Translation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            44,489
            
            
            
            -
            
            
            
            44,489Net loss for
      the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (363,807
            )
            
            
            (363,807
            )Balance
      at July 31, 2008
            
            
            51,902,250
            
            
            $
            5,191
            
            
            $
            20,335,701
            
            
            
            -
            
            
            
            44,369
            
            
            $
            (401,624
            )
            
            $
            19,983,637






The accompanying
notes are an integral part of these financial statements.
 F-5







China
      Wind Energy Inc. And Subsidiaries(A
      Development Stage Company)Consolidated
      Statements of Cash FlowsYearEnded
              July
      31,2008
            
            
            Nov.
      27, 2006
              (Inception)
              to
      July 31,2007
            
            
            Nov.
      27, 2006
              (Inception)
              to
      July 31,2008Cash
      Flows From Operating ActivitiesNet
      Loss
            
            $
            (363,807
            )
            
            $
            (37,817
            )
            
            $
            (401,624
            )Adjustments
      to reconcile net income to net cash provided byoperating
      activities:Minority
      interest
            
            
            (32,746
            )
            
            
            -
            
            
            
            (32,746
            )Depreciation
            
            
            14,483
            
            
            
            -
            
            
            
            14,483Amortization
            
            
            51,319
            
            
            
            -
            
            
            
            51,319Loss(Gain) on
      physical count of inventories
            
            
            26,831
            
            
            
            -
            
            
            
            26,831Provision(Reversal)
      on allowance of obsolescence
            
            
            (30,124
            )
            
            
            -
            
            
            
            (30,124
            )Common stock
      issued for services
            
            
            17,850
            
            
            
            -
            
            
            
            17,850Changes in
      operating assets and liabilities:Accounts
      receivable, net
            
            
            (426
            )
            
            
            -
            
            
            
            (426
            )Advances
      to suppliers
            
            
            (53,090
            )
            
            
            -
            
            
            
            (53,090
            )Inventories
            
            
            98,447
            
            
            
            -
            
            
            
            98,447Prepaid
      Expenses
            
            
            1,748
            
            
            
            -
            
            
            
            1,748Prepayment
      and deposit
            
            
            (160,658
            )
            
            
            (19,796
            )
            
            
            (180,454
            )Accounts
      payable and accrued liabilities
            
            
            31,612
            
            
            
            36,346
            
            
            
            67,958Customer
      deposit
            
            
            (36,702
            )
            
            
            -
            
            
            
            (36,702
            )Other
      payables
            
            
            5,236
            
            
            
            -
            
            
            
            5,236Wages
      payable
            
            
            26,986
            
            
            
            -
            
            
            
            26,986Net
      cash provided by operating activities
            
            
            (403,041
            )
            
            
            (21,267
            )
            
            
            (424,308
            )Cash
      Flows From Investing ActivitiesPurchases of
      property and equipment
            
            
            (474,036
            )
            
            
            -
            
            
            
            (474,036
            )Cash acquired
      on acquisition
            
            
            314,713
            
            
            
            -
            
            
            
            314,713Proceeds from
      repayment of related parties loan
            
            
            269,961
            
            
            
            -
            
            
            
            269,961Net
      cash used in investing activities
            
            
            110,638
            
            
            
            -
            
            
            
            110,638Cash
      Flows From Financing ActivitiesProceeds from
      short term loans
            
            
            27,041
            
            
            
            22,664
            
            
            
            49,705Repayment of
      short term loans
            
            
            44,999
            
            
            
            -
            
            
            
            44,999Proceeds from
      issuance of common stock
            
            
            100,000
            
            
            
            1
            
            
            
            100,001Net
      cash provided by (used in) financing activities
            
            
            172,040
            
            
            
            22,665
            
            
            
            194,705Effect
      of exchange rate changes on cash
            
            
            199,433
            
            
            
            (120
            )
            
            
            199,313Net
      increase in cash and cash equivalents
            
            
            79,070
            
            
            
            1,278
            
            
            
            80,348Cash
      and cash equivalents, beginning of period
            
            
            1,278
            
            
            
            -
            
            
            
            -Cash
      and cash equivalents, end of period
            
            $
            80,348
            
            
            $
            1,278
            
            
            $
            80,348Supplemental
      disclosure information:Interest
      expense paid
            
            $
            8,738
            
            
            $
            -
            
            
            $
            8,738Income taxes
      paid
            
            $
            -
            
            
            $
            -
            
            
            $
            -





The accompanying
notes are an integral part of these financial statements.
 F-6


China
Wind Energy Inc. And Subsidiaries


Notes to
Consolidated Financial Statements






1.
            ORGANIZATION
      AND BUSINESS BACKGROUND




The Company was
incorporated in Nevada on May 8, 2006, under the name Pooch Pal Beverages Inc.,
and changed its name to K-Care Nutritional Products Inc. On November 29, 2007,
the Company changed its name to China Wind Energy Inc.




On November 20,
2007, the former President of the Company entered into a Stock Purchase
Agreement with Jian Ren, a resident and citizen of the Hong Kong SAR of the
People’s Republic of China (the “Purchaser”), pursuant to which the Purchaser
agreed to purchase 5,950,000 shares of the Company’s common stock, $0.0001 par
value, from the former President of the Company for $50,000. These shares
represented 81% of the issued and outstanding common stock of the Company. The
Stock Purchase Agreement closed on November 27, 2007.




Also, on November
20, 2007, the Company entered into an Acquisition Agreement with the Purchaser,
who is the owner of all of the share capital of China Wind Energy Limited, a
corporation organized and existing under the laws of the Hong Kong SAR of the
People’s Republic of China, pursuant to which the Purchaser agreed to transfer
all of his share capital in China Wind Energy Limited to the Company for $1.
Upon closing of the Acquisition agreement on November 27, 2007, China Wind
Energy Limited became a wholly owned subsidiary of the Company. China Wind
Energy Limited has one wholly owned subsidiary, Harbin XingYe Wind Energy
Technology Limited (“XingYe”), a company established under the Law of the
People’s Republic of China (“PRC”).




The Acquisition was
accounted for as a reverse merger, since the Purchaser owned a majority of the
outstanding shares of the Company’s common stock immediately following the
Acquisition. China Wind Energy Limited is deemed to be the acquirer in the
merger. Consequently, the assets and liabilities and the historical operations
that are reflected in the financial statements prior to the Acquisition are
those of China Wind Energy Limited and are recorded at the historical cost basis
of China Wind Energy Limited, whereas, the consolidated financial statements
after completion of the Acquisition will include the assets and liabilities of
the Company and China Wind Energy Limited, the historical operations of China
Wind Energy Limited, and the Company’s operations from the closing date of the
Acquisition.




On May 16, 2008,
the Company entered into a Share Exchange Agreement with Power Profit Technology
Development Limited, a company incorporated under the laws of Hong Kong,
People’s Republic of China (“Power Profit”), and Wan Yi Tse, the holder of 100%
of the issued and outstanding registered share capital of Power
Profit.






Pursuant to the
share exchange agreement, on May 26, 2008, the Company completed the acquisition
of 100% of the equity interests of Power Profit and 82.14% of the equity
interests of its subsidiary, Harbin Sanye Wind Energy Technology Co., Ltd.
(formerly Harbin Lian Chuang Co., Ltd)(“Harbin Sanye”). Harbin Sanye is a
company incorporated under the laws of the People’s Republic of China, engaged
in the business of harvesters and blades for wind generators. Together, Power
Profit and Harbin Sanye become the subsidiaries of the Company. Power Profit
becomes the Company’s wholly owned subsidiary and Harbin Sanye becomes the
Company’s majority owned subsidiary.




The Company has not
yet generated significant revenues from planned principal operations and is
considered a Development Stage Company, as defined by Statement of Financial
Accounting Standard (“SFAS”) No.7 “Accounting and Reporting for Development
Stage Enterprises”.






2. GOING
CONCERN




As reflected
in the accompanying combined financial statements, the Company has accumulated
deficits of $401,624 and $37,817 at July 31, 2008 and 2007, respectively that
include losses of $363,807 and $37,817 for the year ended July 31, 2008 and for
the period from November 27, 2006 (inception date) to July 31,
2007.  The Company also had a working capital deficiency of $7,002,730
and $57,732 as of July 31, 2008 and 2007.  The Company’s stockholders
have funded the losses and cash shortfalls allowing management to develop sales
and contingencies plans. The Company is also arranging for additional funding.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.






3.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES




a.
            Basis
      of Presentation and Use of
Estimates




The consolidated
financial statements include the accounts of the Company and its majority-owned
subsidiaries which require consolidation, after the elimination of intercompany
accounts and transactions. The Company’s fiscal year ends on July
31.




The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America (“US GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, as well as certain financial statement
disclosures. While management believes that the estimates and assumptions used
in the preparation of the financial statements are appropriate, actual results
could differ from these estimates.




b.
            Fair
      values of financial instruments




The carrying amount
reported in the balance sheet for cash, accounts receivable, inventory, accounts
payable and accrued expenses approximate fair value because of the immediate or
short-term maturity of these financial instruments.




c.
            Cash
      and Cash Equivalents




Cash and cash
equivalents include cash on hand, demand deposits with banks and liquid
investments with an original maturity of three months or less.




d.
            Accounts
      Receivable




Accounts receivable
are stated at the amount management expects to collect from outstanding
balances.  Management provides for probable uncollected amounts
through a charge to earnings and a credit to an allowance for bad debts based on
its assessment of the current status of individual accounts.  Balances
that are still outstanding after management has used reasonable collection
efforts are written off through a charge to the allowance for bad debts and a
credit to accounts receivable.




e.
            Inventories




Inventories are
stated at the lower of cost, as determined on a weighted average basis, or
market.  Costs of inventories include purchase and related costs
incurred in bringing the products to their present location and condition.
Market value is determined by reference to selling prices after the balance
sheet date or to management’s estimates based on prevailing market conditions.
The management writes down the inventories to market value if market value is
below cost. The management also regularly evaluates the composition of its
inventories to identify slow-moving and obsolete inventories to determine if a
valuation allowance is required.


F-7






f. Property
and Equipment





Property and
equipment are initially recognized recorded at cost.  Gains or losses
on disposals are reflected as gain or loss in the period of
disposal.  The cost of improvements that extend the life of plant and
equipment are capitalized.  These capitalized costs may include
structural improvements, equipment and fixtures. All ordinary repairs and
maintenance costs are expensed as incurred.




Depreciation for
financial reporting purposes is provided using the straight-line method over the
estimated useful lives of the assets:




Machinery and
      equipment
            14
      yearsTransportation
      equipment
            12
      yearsOffice
      equipment
            10
      years




g. Impairment
of Long-Lived Assets




The Company
accounts for impairment of plant and equipment and amortizable intangible assets
in accordance with SFAS No. 144, “Accounting for Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of”, which requires the Group to evaluate a
long-lived asset for recoverability when there is event or circumstance that
indicate the carrying value of the asset may not be recoverable. An impairment
loss is recognized when the carrying amount of a long-lived asset or asset group
is not recoverable (when carrying amount exceeds the gross, undiscounted cash
flows from use and disposition) and is measured as the excess of the carrying
amount over the asset’s (or asset group’s) fair value.




h. Intangible
Assets




The Company’s
intangible assets are stated at cost less accumulated amortization and are
comprised of land user rights.  Land user rights are related to land
the Company occupies in Heilongjiang Province, PRC and are being amortized on a
straight-line basis over a period of 40 years.




i. Goodwill




Goodwill represents
costs in excess of fair values assigned to the underlying net assets of acquired
businesses. Goodwill deemed to have indefinite lives is not amortized, but is
tested for impairment annually and at any time when events suggest impairment
may have occurred. To assess goodwill for impairment, the Company determines the
fair value of its reporting units, which are primarily determined using
management’s assumptions about future cash flows based on long-range strategic
plans. This approach incorporates many assumptions including future growth
rates, discount factors and tax rates. In the event the carrying value of a
reporting unit exceeded its fair value, an impairment loss would be recognized
to the extent the carrying amount of the reporting unit’s goodwill exceeded its
implied fair value. No goodwill impairment was recorded for the year ended July
31, 2008 and for the period from November 27, 2006 (inception date) to July 31,
2007.




j. Comprehensive
income




SFAS No.130,
“Reporting Comprehensive Income”, requires disclosure of all components of
comprehensive income and loss on an annual and interim basis. Comprehensive
income and loss is defined as the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources.  The comprehensive income arose from the effect of
foreign currency translation adjustments.




k. Revenue
recognition




The Company
generates revenues from the sales of harvesters.  Sales are recognized
when the following four revenue criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred, the selling price is fixed or
determinable, and collectability is reasonably assured.  Sales are
presented net of value added tax (VAT). No return allowance is made as products
returns are insignificant based on historical experience.




l. Research
and development costs




Research and development costs are expensed to
operations as incurred.




m. Income
taxes




The Company
accounts for income taxes in accordance with SFAS No. 109, "Accounting for
Income Taxes."  SFAS No. 109 requires an asset and liability approach
for financial accounting and reporting for income taxes and allows recognition
and measurement of deferred tax assets based upon the likelihood of realization
of tax benefits in future years.  Under the asset and liability
approach, deferred taxes are provided for the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.  A
valuation allowance is provided for deferred tax assets if it is more likely
than not these items will either expire before the Group is able to realize
their benefits, or that future deductibility is uncertain.




n. Foreign
currency translation




The reporting
currency is the U.S. dollar.  The functional currency of the Company
is the local currency, the Chinese Renminbi (“RMB”). The financial statements of
the Company are translated into United States dollars in accordance with
Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency
Translation”, using year-end rates of exchange for assets and liabilities, and
average rates of exchange for the period for revenues, costs, and expenses and
historical rates for the equity. Translation adjustments resulting from the
process of translating the local currency financial statements into U.S. dollars
are included in determining comprehensive income. At July 31, 2008 and 2007, the
cumulative translation adjustment of $44,369 and $(120) were classified as an
item of other comprehensive income (loss) in the stockholders’ equity section of
the balance sheet respectively. For the year ended July 31, 2008 and for the
period from November 27, 2006 (date of inception) to July 31, 2007, other
comprehensive income (loss) was $44,489 and $(120),
respectively.




The exchange rates
used to translate amounts in RMB into U.S. Dollars for the purposes of preparing
the financial statements were as follows:  As of July 31, 2008 and
2007, the Company used the period-end rates of exchange for assets and
liabilities of $1 to RMB6.839 and $1 to RMB7.572 respectively. For the year
ended July 31, 2008 and for the period from November 27, 2006 (date of
inception) to July 31, 2007, the Company used the period’s average rate of
exchange to convert revenues, costs, and expenses of $1 to RMB7.209939 and $1 to
RMB7.709943, respectively. The Company used historical rates for
equity.




o. Related
parties




A party is
considered to be related to the Company if the party directly or indirectly or
through one or more intermediaries, controls, is controlled by, or is under
common control with the Company.  Related parties also include
principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties
with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that
one of the transacting parties might be prevented from fully pursuing its own
separate interests. A party which can significantly influence the management or
operating policies of the transacting parties or if it has an ownership interest
in one of the transacting parties and can significantly influence the other to
an extent that one or more of the transacting parties might be prevented from
fully pursuing its own separate interests is also a related
party.


F-8






p.
                Earnings
      per share


The Company
accounts for income (loss) per share in accordance with SFAS No. 128, “Earnings
per Share.” Basic income per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding during the periods
presented. Diluted income per share reflects the potential dilution that could
occur if outstanding stock options were exercised utilizing the treasury stock
method. The calculation of the weighted average number of shares outstanding and
earnings per share are as follows:




YearEnded
              July
      31,2008
            
            
            Nov.
      27, 2006
              (Inception)
              to
      July 31,2007Numerator for
      basic and diluted earnings per shareNet income
      (loss)
            
            $
            (365,120
            )
            
            $
            (37,817
            )Denominator
      for basic earnings per share - weighted average shares
      outstanding
            
            
            27,606,000
            
            
            
            1Adjustment
      for dilutive effect
            
            
            -
            
            
            
            -Denominator
      for diluted earnings per share - adjusted weighted average
      shares outstanding
            
            
            27,606,000
            
            
            
            1Net income
      (loss) per common shareBasic
            
            $
            (0.01
            )
            
            $
            (37,817
            )Diluted
            
            $
            (0.01
            )
            
            $
            (37,817
            )




q.
            Recently
      adopted accounting principles




In September 2006,
the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, "Fair
Value Measurements".  SFAS No. 157 defines fair value, establishes a
framework and gives guidance regarding the methods used for measuring fair
value, and expands disclosures about fair value measurements.  In
February 2008, the FASB issued FASB Staff Position 157-1, "Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13" ("FSP 157-1") and FASB Staff Position 157-2,
"Effective Date of FASB Statement No. 157" ("FSP 157-2").  FSP 157-1
amends SFAS No. 157 to remove certain leasing transactions from its
scope.  FSP 157-2 delays the effective date of SFAS No. 157 for all
non-financial assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually), until fiscal years beginning after November 15,
2008.  SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years.  The Company adopted SFAS No. 157 effective January 1,
2008 for all financial assets and liabilities as required.  The
adoption of SFAS No. 157 was not material to the Company's financial statements
or results of operations.




In February 2007,
the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities — Including an Amendment of FASB Statement No. 115”, which
is effective for fiscal years beginning after November 15, 2007.  SFAS
No. 159 is an elective standard which permits an entity to choose to measure
many financial instruments and certain other items at fair value at specified
election dates.  Subsequent unrealized gains and losses on items for
which the fair value option has been elected will be reported in
earnings.  The Company has not elected the fair value option for any
assets or liabilities under SFAS No. 159.






F-9




r.
            Recent
      accounting pronouncements





On December 4,
2007, the FASB issued SFAS No. 160, “Noncontrolling interest in Consolidated
Financial Statements”.  SFAS No. 160 requires all entities to report
noncontrolling (minority) interests in subsidiaries as equity in the
consolidated financial statements.  The statement establishes a single
method of accounting for changes in a parent’s ownership interest in a
subsidiary that do not result in deconsolidation and expands disclosures in the
consolidated financial statements.  SFAS No. 160 is effective for
fiscal years beginning after December 15, 2008 and interim periods within those
fiscal years.  We have not yet determined the impact of the adoption
of SFAS No. 160 on our consolidated financial statements and footnote
disclosures.




On December 4,
2007, the FASB issued SFAS No.141R, “Business Combinations”.  SFAS No.
141R requires the acquiring entity in a business combination to recognize all
the assets acquired and liabilities assumed, establishes the acquisition date
fair value as the measurement objective for all assets acquired and liabilities
assumed, and requires the acquirer to expand disclosures about the nature and
financial effect of the business combination.  SFAS No. 141R is
effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008.  We have not yet determined the impact of the
adoption of SFAS No. 141R on our consolidated financial statements and footnote
disclosures.




In March 2008,
the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and
Hedging Activities”.  The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows.  It is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged.  The Company is currently evaluating the
impact of adopting SFAS No. 161 on its consolidated financial
statements.




In April 2008, the
FASB issued Staff Position FAS 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP FAS 142-3”) which amends the factors an entity should
consider in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FAS No. 142, “Goodwill and
Other Intangible Assets” (“FAS No. 142”).  FSP FAS 142-3 applies to
intangible assets that are acquired individually or with a group of assets and
intangible assets acquired in both business combinations and asset
acquisitions.  It removes a provision under FAS No. 142, requiring an
entity to consider whether a contractual renewal or extension clause can be
accomplished without substantial cost or material modifications of the existing
terms and conditions associated with the asset.  Instead, FSP FAS
142-3 requires that an entity consider its own experience in renewing similar
arrangements.  An entity would consider market participant assumptions
regarding renewal if no such relevant experience exists.  FSP FAS
142-3 is effective for year ends beginning after December 15, 2008 with early
adoption prohibited.  We have not yet determined the effect, if any,
of the adoption of this statement on our financial condition or results of
operations.




In June 2008,
the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP
EITF 03-6-1”).  FSP EITF 03-6-1 concludes that unvested share-based
payment awards that contain rights to receive non-forfeitable dividends or
dividend equivalents are participating securities, and thus, should be included
in the two-class method of computing earnings per share (“EPS”).  FSP
EITF 03-6-1 is effective for fiscal years beginning after December 15,
2008, and interim periods within those years.  Early application of
EITF 03-6-1 is prohibited.  It also requires that all prior-period EPS
data be adjusted retrospectively.  We have not yet determined the
effect, if any, of the adoption of this statement on our financial condition or
results of operations.






4.CONCENTRATION OF CREDIT RISK




Financial
instruments which potentially expose the Company to concentrations of credit
risk, consist of cash and accounts receivable as of July 31, 2008 and 2007. The
Company performs ongoing evaluations of its cash position and credit evaluations
to ensure collections and minimize losses.




A portion of the
Company’s cash at July 31, 2008 and 2007 is maintained at various financial
institutions in the PRC which do not provide insurance for amounts on
deposit.  The Company has not experienced any losses in such accounts
and believes it is not exposed to significant credit risk in this
area.


.


For the year ended
July 31, 2008, the Company’s sales were mainly made to customers located in the
PRC.In
addition, total accounts receivables as of July 31, 2008 also arose from
customers located in the PRC.




A significant
percentage of the Company’s business is generated from a small number of
customers.  The following table sets forth information as to the
revenue derived from those customers that accounted for more than 5% of our
revenue for the year ended July 31, 2008.




YearEnded
              July
      31,2008Dong Si
      Ping
            $
            41,492
            28%Ma Yu
      Jin
            
            32,113
            22%Jiang Zhen
      Tao
            
            15,933
            11%Lu Nian
      Guo
            
            11,797
            8%Liang
      Hua
            
            11,432
            8%Liu Wan
      Bin
            
            9,168
            6%Feng
      Kui
            
            9,029
            6%






5. ADVANCES TO
SUPPLIERS




Advances to
suppliers are mainly for deposit in advance for purchase of raw materials. The
term of the advances is from 30 days to 180 days.






6. INVENTORIES




Inventories consist
of the following:




July
      31,2008
            
            
            2007Raw
      material
            
            $
            357,696
            
            
            $
            -Work-in-progress
            
            
            635,457
            
            
            
            -Finished
      goods
            
            
            114,320
            
            
            
            -Others
            
            
            20,229
            
            
            
            -1,127,702
            
            
            
            -Less:
      Allowance for obsolescence
            
            
            (563,851
            )
            
            
            -Inventory,
      net
            
            $
            563,851
            
            
            $
            -






F-10
   7. PREPAYMENT
AND DEPOSIT


Prepayment and
deposit are payments made to contractors engaged in construction in
progress.  After the Company ensures the fulfillment of the contracts
by verifying required quality, the accumulated payment will be transferred to
construction in progress in property and equipment.






8. DUE
FROM RELATED PARTIES




Due from related
parties consist of the following:




July
      31,Name and
      Description of Related Parties
            
            2008
            
            
            2007Sun, Shouquan
      -CEO;
      Stockholder
            
            $
            811,764
            
            
            $
            -Sun, Shouan -Sun,
      Shouquan's brother; Stockholder
            
            
            18,366
            
            
            
            -Wang, Guangyu
      - Stockholder
            
            
            1,782
            
            
            
            -Zhang, Luming
      - Stockholder
            
            
            52,586
            
            
            
            -Harbin New
      World Real Estate Co., Ltd. -A company
      controlled by Sun, Shouquan
            
            
            135,551
            
            
            
            -Total
            
            $
            1,020,049
            
            
            $
            -




"Due from related
parties" represents loans receivable that are unsecured, non-interest bearing
and have no fixed terms of repayment, and therefore are not considered current
assets.




The balance owed by
the President and CEO, and the real estate company under his control, totaled
$947,315 as of July 31, 2008.  The loans were made by Harbin Sanye
before the acquisition of Harbin Sanye by the Company and there has been no
material modification or renewal of the loan after the date of acquisition. The
Company has changed its related policy and procedures in line with the
prohibition on personal loans to executives contained in Section 402 of the
Sarbanes-Oxley Act of 2002




Since April 30,
2008 to July 31, 2008, the Company’s President and CEO has repaid $965,942 of
the original loan ($269,961 since the acquisition of Harbin Sanye by the
Company).  The Company plans to settle all outstanding balance of this
loan as soon as possible and no later than December 31, 2008.




F-11






9.
PROPERTY AND EQUIPMENT




Property and
equipment consist of the following:




July
      31,2008
            
            
            2007Machinery and
      equipment
            
            $
            130,357
            
            
            $
            -Transportation
      equipment
            
            
            467,538
            
            
            
            -Office
      equipment
            
            
            468,051
            
            
            
            -Construction
      in progress
            
            
            6,243,097
            
            
            
            -7,309,043
            
            
            
            -Less:
      Accumulated depreciation
            
            
            (83,503
            )
            
            
            -Property and
      equipments, net
            
            $
            7,225,540
            
            
            $
            -




The depreciation
was $14,483 and $0 for the year ended July 31, 2008 and for the period from
November 27, 2006 (inception date) to July 31, 2007, respectively. They are
broken down as follows:




YearEnded
              July
      31,2008
            
            
            Nov.
      27, 2006
              (Inception)
              to
      July 31,2007Cost of
      sales
            
            $
            5,422
            
            
            $
            -Operating
      expenses
            
            
            9,061
            
            
            
            -Total
            
            $
            14,483
            
            
            $
            -




10. ACQUISITION




On May 26,
2008,  the Company completed the acquisition of 100% of the equity
interests of Power Profit Technology Development Limited (“Power Profit”) and
82.14% of the equity interests of its subsidiary, Harbin Sanye Wind Energy
Technology Co., Ltd. (formerly Harbin Lian Chuang Co., Ltd)(“Harbin Sanye”). The
results of operation of Power Profit and Harbin Sanye have been included in the
consolidated financial statements since that date.




Power Profit is a
company incorporated under the laws of Hong Kong, People’s Republic of China.
Harbin Sanye, located in Harbin, Heilongjiang, is a company incorporated under
the laws of the People’s Republic of China and principally engaged in the
business of harvesters and blades for wind generators. As a result of the
acquisition, the Company has placed itself at the forefront of an emerging
industry in an emerging market.  The Company anticipates that the
acquisition of a revenue producing, sustainable energy company will facilitate
its growth and expansion.




The aggregate
purchase price was the Company’s 15,000,000 common shares which was valued at
$20,220,000 based upon the Company’s average common stock price of $1.348. The
average stock price was based upon the average closing prices of the Company’s
common stock during the five business days commencing two days before the
acquisition was announced.




F-12


The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the date of acquisition:




May
      26,2008Current
      assets
            
            $
            1,543,803Prepayment
      and deposit
            
            
            884,256Due from
      related parties
            
            
            1,290,010Property and
      equipment
            
            
            6,812,281Goodwill
            
            
            8,110,960Intangible
      assets
            
            
            12,207,135Deferred
      charges
            
            
            6,195Total
      assets acquired
            
            
            30,854,640Current
      liabilities
            
            
            8,001,469Total
      liabilities assumed
            
            
            8,001,469Net assets
      acquired
            
            $
            22,853,871




The $12,207,135 of
acquired intangible assets was land user rights which have a weighted-average
useful life of 40 years.




The $8,110,960 of
goodwill represents the excess of the purchase price over the fair market value
of acquired net assets. Goodwill was assigned to only one industry segment the
Company operates and is not deductible for tax purposes.




11. INTANGIBLE
ASSETS




Intangible assets
consist of the following:




July
      31,2008
            
            
            2007Land User
      Rights
            
            $
            12,319,806
            
            
            $
            -Less:
      Accumulated amortization
            
            
            (153,021
            )
            
            
            -Intangible
      assets, net
            
            $
            12,166,785
            
            
            $
            -




The amortization
was $51,319 and $0 for the year ended July 31, 2008 and for the period from
November 27, 2006 (inception date) to July 31, 2007, respectively.






12. SHORT
TERM LOAN




Short term loans
were made by individuals to cover the Company’s temporary cash shortages. The
short term loans are unsecured and have no fixed terms of repayment. Not all of
the loans are interest bearing. For interest bearing loans, the average interest
rate is 36%. Interest expenses for short term loans are $8,738 and $0 for the
year ended July 31, 2008 and for the period from November 27, 2006 (inception
date) to July 31, 2007, respectively.




13. DUE
TO RELATED PARTIES




Due to related
parties consist of the following:




July
      31,Name and
      Description of Related Parties
            
            2008
            
            
            2007Ren, Jian –
      Prior CEO
            
            $
            51,859
            
            
            $
            -Zhang, Luhui
      - Stockholder
            
            
            4,504
            
            
            
            -Man, Ha -
      China Wind Energy Ltd's prior stockholder
            
            
            -
            
            
            
            22,664Total
            
            $
            56,363
            
            
            $
            22,664




"Due to related
parties" represents loans payable that are unsecured, non-interest bearing and
have no fixed terms of repayment, and are therefore, deemed payable on
demand.






F-13


14. OTHER
ADVANCE RECEIPTS




On November 6,
2007, the Company signed a contract with Heilongjiang Nongkentaixing Real Estate
Development Co. Ltd to sell the Company’s land user rights in Harbin City. The
total contract price is approximately $10,090,000. On July 31, 2008 the cost of
the land user rights to the Company was 598,517. The Company is obligated to
clear the original buildings on the land before transfer of the land user rights
can be completed.




As of July 31,
2008, the Company had received net proceeds of $7,603,673 from this sale. Since
the legal process for title transfer has not been completed, the proceeds were
recorded as other advance receipts.  After the completion of title
transfer by getting government approval, the Company will receive the remaining
balance of the contract price and record the sale of the land user
rights.






15. GERNERAL
AND ADMINISTRATIVE




For the year ended
July 31, 2008 and for the period from November 27, 2006 (inception date) to July
31, 2007, the amount of general and administrative expenses mainly composed of
the following:




Year Ended July
      31, 2008
            
            
            Nov.
      27, 2006 (Inception)
              to July
      31, 2007Professional
      fees
            
            $
            179,106
            
            
            $
            35,077Office
      expenses
            
            
            8,155
            
            
            
            -Salary and
      wages
            
            
            76,837
            
            
            
            1,303Employee
      insurance
            
            
            1,392
            
            
            
            -Utilities
            
            
            709
            
            
            
            -Amortization
            
            
            51,319
            
            
            
            -Depreciation
            
            
            9,061
            
            
            
            -Others
            
            
            78,590
            
            
            
            1,437$
            405,169
            
            
            $
            37,817






16. CHINA
CONTRIBUTION PLAN




Full time employees
of the Company participate in a government-mandated multi-employer defined
contribution plan pursuant to which certain retirement, medical and other
welfare benefits are provided to employees. Chinese labor regulations require
the Company’s subsidiaries to pay to the local labor bureau a monthly
contribution at a stated contribution rate based on the monthly basic
compensation of qualified employees. The relevant local labor bureau is
responsible for meeting all retirement benefit obligations; the Company has no
further commitments beyond its monthly contribution.




The Company made
the provisions based on the number of qualified employees and the rate and base
regulated by the government. However, the Company did not make full monthly
contribution to these funds.  In the event that any current or former
employee files a complaint with the PRC government, the Company may be subject
to administrative fines. As the Company believes that these fines would not be
material, no accrual for such fines has been made in this regard.








17. STATUTORY
RESERVES




Pursuant to the
laws applicable to the PRC, PRC entities must make appropriations from after-tax
profit to the non-distributable “statutory surplus reserve fund”. Subject to
certain cumulative limits, the “statutory surplus reserve fund” requires annual
appropriations of 10% of after-tax profit until the aggregated appropriations
reach 50% of the registered capital (as determined under accounting principles
generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign
invested enterprises and joint ventures in the PRC, annual appropriations should
be made to the “reserve fund”. For foreign invested enterprises, the annual
appropriation for the “reserve fund” cannot be less than 10% of after-tax
profits until the aggregated appropriations reach 50% of the registered capital
(as determined under PRC GAAP at each year-end). The Company did not make any
appropriations to the reserve funds mentioned above due to lack of profit after
tax since commencement of operations.




F-14






18. INCOME
TAX




Prior to
January 1, 2008, the Company was governed by the Income Tax Law of the
People’s Republic of China concerning Foreign Investment Enterprises and Foreign
Enterprises and local income tax laws (the previous income tax laws and rules).
Pursuant to the previous income tax laws and rules, wholly-owned foreign
enterprises were subject to tax at a statutory rate of 33% (30% state income tax
plus 3% local income tax). Due to the Company’s net loss, there was no provision
for income taxes.




In March 2007, the
Chinese government enacted the Corporate Income Tax Law, and promulgated related
regulations, which were effective January 1, 2008. The Corporate Income Tax
Law, among other things, imposes a unified income tax rate of 25% for both
domestic and foreign invested enterprises. The previous income tax laws and
rules, which stipulated income tax rates for domestic and foreign invested
enterprises at different rates, expired upon the effectiveness of the Corporate
Income Tax Law.




The components of
the Company’s Tax provision were as follows:




Nov.
      27, 2006YearEnded
            
            
            (Inception)July
      31,2008
            
            
            to
      July 31, 2007Current
      income tax expense (benefit)PRC
      Enterprise Income Tax
            
            $
            -
            
            
            $
            -United
      States Federal Income Tax
            
            
            -
            
            
            
            -Deferred
      income tax expense (benefit)PRC
      Enterprise Income Tax
            
            
            -
            
            
            
            -United
      States Federal Income Tax
            
            
            -
            
            
            
            -Total
      provision for income taxes
            
            $
            -
            
            
            $
            -




A
reconciliation between the income tax computed at the U.S. statutory rate and
the Company’s provision for income tax is as follows:




July
      31,2008
            2007U.S.
      statutory rate
            34%
            34%PRC
      enterprise income tax rate
            25%
            33%Provision for
      income tax
            25%
            33%




Deferred income
taxes reflect the net income tax effect of temporary differences between the
carrying amounts of the assets and liabilities for financial reporting purposes
and amounts used for income taxes.  No material deferred tax
liabilities or assets existed as of July 31, 2008 and 2007.




The tax authority
of the PRC Government conducts periodic and ad hoc tax filing reviews on
business enterprises operating in the PRC after those enterprises had completed
their relevant tax filings, hence the Company’s tax filings may not be
finalized.  It is therefore uncertain as to whether the PRC tax
authority may take different views about the Company’s tax filings which may
lead to additional tax liabilities.




The Company has no
United States corporate income tax liability as of July 31, 2008 and
2007.




19.SEGMENT
INFORMATION




The Company
operates in one industry segment – research, development, manufacture, marketing
and sales of harvesters.  Substantially all of the Company’s
identifiable assets and operations for all periods presented were located in the
PRC.








F-15




20. CONTINGENCIES,
RISKS AND UNCERTAINTIES




Litigation




Harbin Sanye is
currently named as defendant in the lawsuit in which the plaintiffs allege
illegal transfer and misleading promotion of Harbin Sanye’s shares to the public
through security brokers. The plaintiffs, 51current stockholders representing
1,018,000 outstanding shares, acquired the Harbin Sanye’s shares through
security brokers from the Harbin Sanye’s initial stockholders and are currently
seeking monetary damage from Harbin Sanye including the shares acquiring cost,
expenses and imputed interest. Harbin Sanye is defending the lawsuit
vigorously.




In September 2008,
the claims of the plaintiffs were refuted in the judgment of Court, Bin County,
Heilongjiang Province. The plaintiffs have the option to appeal the
decision.






Country
Risk




The Company has
significant investments in the PRC. The operating results of the Company may be
adversely affected by changes in the political and social conditions in the PRC
and by changes in Chinese government policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things. The Company can
give no assurance that those changes in political and other conditions will not
result in have a material adverse effect upon the Company’s business and
financial condition.




Source
of Supply




The Company
purchases components for its products from a number of
suppliers.  However, on occasion, a customer’s specifications may
require us to purchase components from a specific supplier.  The
Company does not have any long term contracts with any of its suppliers, and the
Company believes that alternative suppliers are available.  Although
the Company has not been subject to shortages for any of its components, since
it does not have long-term contracts, the Company may be subject to cutbacks and
price increases which it may not be able to pass on to its customers in the
event that the demand for components generally exceeds the capacity of its
suppliers.






Loan to
Officer




Prior to the
acquisition by the Company, Harbin Sanye forwarded a loan to Shouquan Sun, the
Company’s President and CEO.  This loan was not fully repaid at the
time of acquisition and $947,315 was outstanding as of July 31,
2008.  Section 402 of the Sarbanese-Oxley Act of 2002 prohibits loans
or the extension of credit to officers and directors of a publicly traded
company or any of its subsidiaries.  The Company is currently in
contravention of these provisions and faces possible regulatory action by the
SEC.




The Company’s
management believes that the following will militate against potential action by
the SEC:




·
            The loan was
      provided to Mr. Sun prior to its acquisition by the
    Company;




·
            no monies
      have been forwarded to the Company’s President since he became an officer
      and director of the Company;




·
            from April
      30, 2008 to July 31, 2008 a total of $965,942 of the outstanding balance
      of the loan has been repaid by the Company’s President;
  and




·
            the Company
      and its President have agreed that the entire outstanding balance of the
      loan will be repaid as soon as possible and no later than December 31,
      2008.






21. SUBSEQUENT
EVENTS
   On September 16,
2008, Harbin Sanye Wind Energy Technology Co., Ltd. changed its name to Harbin
SQ Wind Power Ltd.
 F-16




Item 9.  Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure






On
November 27, 2007 we closed a reverse merger transaction with China Wind Energy
Ltd. (HK).  Keith Zhen, CPA was the registered independent public
accountant for China Wind HK and Malone & Bailey, PA was the registered
independent public accountant for us in this transaction.  On January
10, 2008 we decided to retain Malone & Bailey, PA as our sole registered
independent public accounting firm for us and our subsidiaries and dismissed
Keith Zhen, CPA.






The reports of
Keith Zhen on our subsidiary, China Wind HK, consolidated financial statements
as of and for the period ended July 31, 2006, contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle except that their report was modified to
indicate that there was substantial doubt about our ability to continue as a
going concern.  During the period ended November 27, 2006 (inception
of China Wind HK) and through January 10, 2008, there were no disagreements with
Keith Zhen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Keith Zhen would have caused it to make
reference thereto in connection with its report on the financial statements for
such years.






On
May 26, 2008 we closed the acquisition of Power Profit and acquired Harbin SQ as
a majority owned subsidiary. Yichien Yeh, CPA, was the registered independent
public accountant for Harbin SQ and Malone & Bailey, PA was our registered
independent public accountant. On August 21, 2008 we decided to retain Yichien
Yeh, CPA as our sole registered independent public accountant and dismissed
Malone & Bailey, PA.






The reports of
Malone & Bailey, PC on our consolidated financial statements as of and for
the period ended October 31, 2007 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle except to indicate that there was substantial doubt about
the Company ability to continue as a going concern. During the period from
November 27, 2006 and through August 21, 2008, there have been no disagreements
with Malone & Bailey, PC on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Malone & Bailey, PC
would have caused it to make reference thereto in connection with its report on
the financial statements for such years.






Item
9A.  Controls and Procedures






Not
Applicable.




18




Item 9A(T).  Controls and Procedures






Evaluation
of Disclosure Controls and Procedures




We
maintain disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. We carried out an evaluation, under the supervision and
with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2007. Based on the
evaluation of these disclosure controls and procedures, and in light of the
material weaknesses found in our internal controls, the Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures were not effective.






Management
Report on Internal Control Over Financial Reporting




Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting. Under the supervision of our Chief Executive Officer, the
Company conducted an evaluation of the effectiveness of our internal control
over financial reporting as of July 31, 2008 using the criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).




A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will
not be prevented or detected on a timely basis. In its assessment of the
effectiveness of internal control over financial reporting as of July 31, 2008,
we determined that control deficiencies existed that constituted material
weaknesses, as described below.




1. We have no audit committee as
none of our directors is considered independent as each is also an officer of us
or our subsidiaries.






2.
There is a risk of management override given that our officers have a high
degree of involvement in our day to day operations.






3.
There is no policy on fraud and no code of ethics at this time, though we plan
to implement such policies in fiscal 2008.




Management is
currently evaluating remediation plans for the above control
deficiencies.




Accordingly, we
concluded that these control deficiencies resulted in a reasonable possibility
that a material misstatement of the annual or interim financial statements will
not be prevented or detected on a timely basis by the company’s internal
controls.




As
a result of the material weaknesses described above, management has concluded
that the Company did not maintain effective internal control over financial
reporting as of July 31, 2008 based on criteria established in Internal
Control—Integrated Frameworkissued by COSO.




Manning Elliott
LLP, an independent registered public accounting firm, was not required to and
has not issued a report concerning the effectiveness of our internal control
over financial reporting as of July 31, 2008.




Changes
in Internal Controls




During the quarter
ended July 31, 2008 there were no changes in our internal control over financial
reporting that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.




Item
9B.  Other Information




None.


19




PART
III






Item
10.  Directors, ExecutiveOfficers, Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act.




The following table
sets forth the name, age, and position of our executive officers and directors
of as of October 29, 2008.




Name
            Age
            PositionShouquan Sun
            50
            President,
      Chief Executive Officer, Chief Financial Officer, Principal Accounting
      Officer, Treasurer, Secretary and DirectorPresident and
      director of Harbin SQ, our majority owned
    subsidiary.Xiya
      Sun
            21
            Director

              Director  XingYe,
      our wholly owned subsidiaryHuaiwen
      Zheng
            27
            Director






The directors will
serve as directors until our next annual shareholder meeting or until a
successor is elected who accepts the position. Officers hold their positions at
the will of the Board of Directors, absent any employment agreement. There are
no arrangements, agreements or understandings between non-management
shareholders and management under which non-management shareholders may directly
or indirectly participate in or influence the management of our
affairs.





Biographies




Shouquan
Sun, President, Chief Executive Officer, Chief Financial Officer, Secretary,
Treasurer and Director




Shouquan Sun has
been our President, Chief Executive Officer, Chief Financial Officer, Principal
Accounting Officer, Secretary, Treasurer and director since May 26, 2008. Mr.
Sun founded Harbin SQ in 2000 and has been Chairman, Chief Executive Officer and
director of Harbin SQ from its inception to the present. Mr. Sun has over 19
years experience in business development and management. Mr. Sun is also the
inventor, or co-inventor, of several patents secured by Harbin SQ relating to
our wind turbine blades. Mr. Sun was also awarded two national-level scientific
technology honors in 1992: the Provincial Technology Leader and National Expert
with Outstanding Contribution entitled to Government Special Allowance for life
in 1995. Shouquan Sun holds no other directorships in other public
companies.




20


Xiya
Sun, Director




Xiya Sun was
appointed as our director on November 29, 2007.  In April 2007, Ms.
Sun was appointed as a director of XingYe, one of our
subsidiaries.  Ms. Sun obtained a bachelor degree from Northeast
Agriculture University in Harbin, which she attended from 2002 to
2006.  During her time there, Ms. Sun received a number of
scholarships and awards.  She followed up her degree with training in
administrative skills, including human resource management and organizational
structures, management training, rewarding and performance; and recruitment
schedule planning from 2006 to April 2007.




Huaiwen
Zheng, Director




We
appointed Huaiwen Zheng as our director on November 29, 2007.  Mr.
Zheng attended Harbin Industrial University in Harbin from September 1998 to
July 2002, where he received a degree in engineering.  Thereafter,
from July 2002 to July 2006, he worked at XingYe, one of our subsidiaries, where
he played a key role in the quality control of blade designing and
three-dimensional sculpting of the blades, as well as supervising the blade
shaking analysis, module tire processing and production, and blade production
and testing.  From July 2006 to April 2007, he completed an
administrative skills training course in human resource management and
organization structure, management training, rewarding and performance; and
recruitment schedule planning.  In April 2007, he became the assistant
head engineer at XingYe, overseeing blade design.




Board
of Directors and Director Nominees




Our Board of
Directors met in person or via telephone occasionally during our fiscal year
ended July 31, 2008.




We do not have a nominating committee. The Board of
Directors, sitting as a Board, selects individuals to stand for election as
members of the Board. Since the Board of Directors does not include a majority
of independent directors, the decision of the Board as to director nominees is
made by persons who have an interest in the outcome of the determination. The
Board will consider candidates for directors proposed by security holders,
although no formal procedures for submitting candidates have been adopted.
Unless otherwise determined, not less than 90 days prior to the next annual
Board of Directors' meeting at which the slate of Board nominees is adopted, the
Board will accept written submissions of proposed nominees that include the
name, address and telephone number of the proposed nominee; a brief statement of
the nominee’squalifications to serve as a director; and a
statement as to why the shareholder submitting the proposed nominee believes
that the nomination would be in the best interests of shareholders. If the
proposed nominee is not the same person as the shareholder submitting the name
of the nominee, a letter from the nominee agreeing to the submission of his or
her name for consideration should be provided at the time of submission. The
letter should be accompanied by a résumé supporting the nominee's qualifications
to serve on the Board of Directors, as well as a list of
references.




21




The Board
identifies director nominees through a combination of referrals from different
people, including management, existing Board members and security holders. Once
a candidate has been identified, the Board reviews the individual's experience
and background and may discuss the proposed nominee with the source of the
recommendation. If the Board believes it to be appropriate, Board members may
meet with the proposed nominee before making a final determination whether to
include the proposed nominee as a member of management's slate of director
nominees submitted to shareholders for election to the Board.






Among the factors
that the Board considers when evaluating proposed nominees are their knowledge
of, and experience in business matters, finance, capital markets and mergers and
acquisitions. The Board may request additional information from the candidate
prior to reaching a determination. The Board is under no obligation to formally
respond to all recommendations, although as a matter of practice, it will
endeavor to do so.






Director
Independence






Our securities are
quoted on the OTC Bulletin Board which does not have any director independence
requirements.  Once we engage further directors and officers, we will
develop a definition of independence and scrutinize our Board of Directors with
regard to this definition.






Audit
Committee






The functions of
the Audit Committee are currently carried out by our Board of Directors. Our
Board of Directors has determined that we do not have an audit committee
financial expert on our Board of Directors carrying out the duties of the Audit
Committee. The Board of Directors has determined that the cost of hiring a
financial expert to act as a director of us and to be a member of the Audit
Committee or otherwise perform Audit Committee functions outweighs the benefits
of having a financial expert on the Audit Committee.






Significant
Employees






Other than the
directors and officer described above, we do not expect any other individuals to
make a significant contribution to our business.






Family
Relationships






There are no family
relationships among our officers or directors.






No
Legal Proceedings






None of our
directors, executive officers, promoters or control persons have been involved
in any of the following events during the past five years:






·
            any
      bankruptcy petition filed by or against any business of which such person
      was a general partner or executive officer either at the time of the
      bankruptcy or within two years prior to that
  time;




·
            any
      conviction in a criminal proceeding or being subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offenses);




·
            being subject
      to any order, judgment, or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or




·
            being found
      by a court of competent jurisdiction (in a civil action), the SEC or the
      Commodity Futures Trading Commission to have violated a federal or state
      securities or commodities law, and the judgment has not been reversed,
      suspended, or vacated.




22




Section
16(a) Beneficial Ownership Compliance Reporting






Section 16(a) of
the Exchange Act requires a company’s directors and officers, and persons who
own more than ten-percent (10%) of the company’s common stock, to file with the
Securities and Exchange Commission reports of ownership on Form 3 and reports of
change in ownership on Forms 4 and 5 if the company has a class of securities
registered under Section 12 of the Exchange Act.   We did not
have a class of securities registered under Section 12 of the Exchange Act
during the year ended July 31, 2008 and as such none of our officers, directors
or 10% shareholders were required to file ownership reports.






On
October 30, 2008 we filed a Form 8-A to register our common shares under Section
12 of the Exchange Act.  This event triggered the requirement under
Section 16(a) of the Exchange Act for the company’s directors and officers, and
persons who own more than ten-percent (10%) of our common stock, to file with
the Securities and Exchange Commission reports of ownership on Form 3 and
reports of change in ownership on Forms 4 and 5.






Code
of Ethics






We
have not yet adopted a code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions because we have not yet
finalized the content of such a code.






Item 11.  Executive Compensation






The following table
sets forth, as of July 31, 2008, the compensation paid to our President and
Chief Executive Officer and our Chief Financial Officer during the last three
completed fiscal years. No other officers or directors received annual
compensation in excess of $100,000 during the last three complete fiscal
years.




Summary
      Compensation Table (1)Name
      and Principal Position
            Year
            Salary
      ($)
            Other
            Total
      ($)Jian Ren
      (2)
            2008
            3,329
            
            3,3292007
            116
            
            116Shouquan Sun
      (3)
            2008
            5,243
            (4)
            5,243




(1)
            Pursuant to
      Item 402(5) of Regulation S-K tables and columns have been omitted where
      no compensation has been awarded.




(2)
            Jian Ren was
      our director, President, Chief Executive Officer, Chief Financial Officer,
      Secretary and Treasurer from November 29, 2007 to May 26,
      2008.






(3)
            Shouquan Sun
      was appointed as our director, President, Chief Executive Officer, Chief
      Financial Officer, Secretary and Treasurer on May 26, 2008. We did not
      enter into any management or consulting agreements with Shouquan Sun, but
      Harbin SQ, our subsidiary, agreed to pay Shouquan Sun $440 per month as
      consideration for his management
services.






(4)
            Shouquan Sun,
      our director and sole officer, as well as a real estate company under his
      control, owed were provided the benefit of a loan by our majority owned
      subsidiary, Harbin SQ before our acquisition of Harbin SQ.  As
      of July 31, 2008 $947,315 was the outstanding balance of this
      loan. We plan to settle all outstanding balance on this loan as soon
      as possible and no later than December 31,
2008.






We
made no grants of stock options or stock appreciation rights since our inception
to July 31, 2008.   23




Pension,
Retirement or Similar Benefit Plans






There are no
arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers. We have no material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that stock options may be
granted at the discretion of the Board of Directors or a committee
thereof.






Compensation
Committee




We
currently do not have a compensation committee of the Board of Directors. The
Board of Directors as a whole determines executive compensation.




Compensation
of Directors






We
reimburse our directors for expenses incurred in connection with attending board
meetings but did not pay director's fees or other cash compensation for services
rendered as a director in the year ended July 31, 2008.






We
have no standard arrangement pursuant to which our directors are compensated for
their services in their capacity as directors. The Board of Directors may award
special remuneration to any director undertaking any special services on behalf
of our company other than services ordinarily required of a director. No
director received and/or accrued any compensation for his services as a
director, including committee participation and/or special
assignments.






Change
of Control






As of October 29, 2008 we had no pension plans or
compensatory plans or other arrangements which provide compensation on the event
of termination of employment or change in control of us.




24




Item
12.  Security Ownership of Certain Beneficial Owners and Management
and RelatedStockholder Matters






The following table
sets forth certain information concerning the number of shares of our common
stock owned beneficially as of October 29, 2008 by: (i) each of our directors,
(ii) each of our named executive officers and (iii) owners of 5% or more of our
common shares. There was no other person or group known by us to beneficially
own more than 5% of our outstanding shares of common stock.  Unless
otherwise indicated, the shareholders listed below possess sole voting and
investment power with respect to the shares they own. All persons named have
sole voting and investment power with respect to the shares, except as otherwise
noted.  The number of shares described below includes shares which the
beneficial owner described has the right to acquire within 60 days of the date
of this Annual Report on Form 10-K.




Title
      of Class
            Name
      & address of beneficial owner
            Number
      of Shares of Common Stock (1)
            Percentage
      of Common Stock
              (%)
      (2)Common
      Stock
            Shouquan Sun
      (3)
              
              No2, Haibin
      Road
              Binxi Economy
      Development
              Harbin,
      China
            5,000,000
            10Common
      Stock
            Xiya Sun
      (4)
              
              No2, Haibin
      Road
              Binxi Economy
      Development
              Harbin,
      China
            100,440
            (5)Common
      Stock
            Huaiwen Zheng
      (6)
              
              No2, Haibin
      Road
              Binxi Economy
      Development
              Harbin,
      China
            0
            0All
      Officers and Directors as a Group
            5,100,440
            10Common
      Stock
            Luming
      Zhang
              
              No. 4 4ZU,
      8WEI
              Luobei
      County, Heilongjiang Province, Fengxiang Town, China
            3,513.276
            6.8Common
      Stock
            Shitian
      Wu
              
              Team 39
      Suibin Farm Suibin County, Heilongjiang Province, China
            2,900,000
            5.6






(1)
            The number and percentage of
      shares beneficially owned is determined under rules of the SEC and the
      information is not necessarily indicative of beneficial ownership for any
      other purpose.  Under such rules, beneficial ownership includes
      any shares as to which the individual has sole or shared voting power or
      investment power and also any shares which the individual has the right to
      acquire within 60 days through the exercise of any stock option or other
      right. The persons named in the table have sole voting and investment
      power with respect to all sharesof Common Stock shown as
      beneficially owned by them, subject to community property laws where
      applicable and the information contained in the footnotes to this
      table.




(2)
            Based on
      51,902,250issued
      and outstanding shares of common stock as of October 29,
    2008.




(3)
            Shouquan Sun
      is our director, President, Chief Executive Officer, Chief Financial
      Officer, Secretary and Treasurer.




(4)
            Xiya Sun is
      our director.




(5)
            Less than
      1%




(6)
            Huaiwen Zheng
      is our director.






25




Item
13.  Certain Relationships, Related Transactions and Director Independence




Shouquan Sun, our
director and sole officer, as well as a real estate company under his control,
owed us a total $947,315 as of July 31, 2008.  The loans were made by
Harbin SQ before our acquisition of Harbin SQ.  There has been no
material modification or renewal of the loan after the date of
acquisition.  Since April 30, 2008 to July 31, 2008, Mr. Sun has
repaid $965,942 of the original loan ($269,961 since our acquisition of Harbin
Sanye to July 31, 2008).    We plan to settle all
outstanding balance on this loan as soon as possible and no later than December
31, 2008.




As
of July 31, 2008 Shouquan Sun’s (our director and sole officer) brother, Shouan
Sun, owed us $18,366.  This loan is not interest bearing and has no
set terms of repayment.




As
of July 31, 2008 we owed $51,859 to Jian Ren, our former President and Chief
Executive Officer.  This loan is not interest bearing and has no set
terms of repayment.




On
November 20, 2007 Jian Ren, our former sole director and officer, entered into a
Share Capital Transfer Agreement with us and China Wind HK, pursuant to which
Mr. Ren agreed to transfer all of his share capital in China Wind HK to
us.  The result of the closing of this transaction was that China Wind
HK became our wholly owned subsidiary.




We
have not entered into any transactions with our officers, directors, persons
nominated for these positions, beneficial owners of 5% or more of our common
stock, or family members of these persons wherein the amount involved in the
transaction or a series of similar transactions exceeded the lesser of $120,000
or 1% of the average of our total assets for the last three fiscal
years.


26




Item
14.  Principal AccountantFees and
Services.






Audit
and Non-Audit Fees






The following table
represents fees for the professional audit services and fees billed for other
services rendered by our auditors for the audit of our annual financial
statements for the years ended October 31, 2007 and July 31, 2008 (we changed
our fiscal year end from October 31 to July 31 following the reverse merger
transaction on November 27, 2007) and any other fees billed for other services
rendered by our auditors during these periods.




Malone
      & Bailey, PAPeriod
      from May 8, 2006 to October 31, 2006Audit
      fees
            $
            4,250Audit-related
      fees
            $
            0Tax
      fees
            $
            0All other
      fees
            $
            0Total
            $
            4,250








Malone
      & Bailey, PAPeriod
      from November 1, 2006 to October 31, 2007Audit
      fees
            $
            17,624Audit-related
      fees
            $
            0Tax
      fees
            $
            0All other
      fees
            $
            0Total
            $
            17,624








Yichien
      Yeh, CPAPeriod
      from July 31, 2007 to July 31, 2008Audit
      fees
            $
            35,000Audit-related
      fees
            $
            0Tax
      fees
            $
            0All other
      fees
            $
            0Total
            $
            35,000




Since our
inception, our Board of Directors, performing the duties of the Audit Committee,
reviews all audit and non-audit related fees at least annually. The Board of
Directors as the Audit Committee pre-approved all audit related services in the
year ended July 31, 2008.




27






PART IV






Item
15.  Exhibits and Financial Statement Schedules






(a)
(1) Financial Statements






See “Index to
Consolidated Financial Statements” set forth on page F-1.






(a)
(2) Financial Statement Schedules






None. The financial
statement schedules are omitted because they are inapplicable or the requested
information is shown in our financial statements or related notes
thereto.






Exhibits




Exhibit
              Number
            Exhibit
              Description10.1
            Acquisition
      Agreement by and among K-Care and China Wind HK
  (1)10.2
            Share
      Purchase Agreement by and among Eva Dudas and Jian
      Ren (1)10.3
            Share
      Exchange Agreement by and among China Wind, Power Profit and Wan Yi
      Tse dated May 16. 2008 (2)21.1
            List of
      SubsidiariesChina Wind
      Energy Ltd. (HK), incorporated in Hong KongHarbin YingYe
      Wind Energy Technology Limited, incorporated in ChinaPower Profit
      Technology Development Limited, incorporated in Hong
  KongHarbin SQ
      Wind Energy Technology Co., Ltd., incorporated in China31.1
            Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 200232.1
            Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002




(1) Included as
exhibits on our Form 8-K filed November 30, 2007.


(2) Included as an
exhibit on our Form 8-K filed May 27, 2008.




28






SIGNATURES






Pursuant to the
requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized.




CHINA
      WIND ENERGY INC.Date:
      November 12, 2008
            By:
            /s/
      Shouquan SunShouquan
      SunDirector,
      President, Chief Executive Officer, Chief Financial Officer, Principal
      Accounting Officer




Pursuant to the
requirements of the Exchange Act this Report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.




SIGNATURES
            
            TITLE
            
            DATE/s/
      Shouquan SunShouquan
      Sun
            
            Director,
      President, Chief Executive Officer, Chief Financial Officer, Principal
      Accounting Officer
            
            November 12,
      2008/s/
      Xiya SunXiya
      Sun
            
            Director
            
            November 12,
      2008/s/
      Huaiwen ZhengHuaiwen
      Zheng
            
            Director
            
            November 12,
      2008