UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended ~~January~~ October 31, 2009

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

For the transition period from ______________________To ______________________

Commission file number: 000-53480

CHINA WIND ENERGY INC.

(Exact name of registrant as specified in its charter)

Nevada		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


No.2 Haibin Road, Binxi Developing Area Heilongjiang Province People’s Republic of China 150000		+86 451 87009618
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See ~~definition~~the definitions of “large accelerated filer”, “accelerated filer” and ~~large accelerated~~“smaller ~~filer~~reporting company” 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 Exchange Act). Yes o No x

Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

~~Check~~Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o Yes o No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of ~~March~~December 1310, 2009, the registrant’s outstanding common stock consisted of 51,902,250 shares.

Table of Contents

PART I FINANCIAL INFORMATION F-ITEM 1.FINANCIAL STATEMENTS Consolidated Balance Sheets (unaudited) F-–1 Consolidated Statements of Operations (unaudited) F-–2 Consolidated Statements of Cash Flows (unaudited) F-–3 Notes to the Consolidated Financial Statements (unaudited) F-–4 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 32 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 85 ITEM 4. CONTROLS AND PROCEDURES 85 PART II – OTHER INFORMATION 96 ITEM 1. LEGAL PROCEEDINGS 96 ITEM ~~1A. RISK FACTORS 9 ITEM~~ 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCCEDS 96 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 96 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 96 ITEM 5. OTHER INFORMATION 106 ITEM 6. EXHIBITS 106

~~PART~~China ~~I –~~Wind ~~FINANCIAL~~Energy ~~INFORMATION~~Inc. and Subsidiaries

China Wind Energy Inc. And Subsidiaries

(A Development Stage Company)

Consolidated Balance Sheets

	January 31, 2009			July 31, 2008
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	319,013		$	80,348
Accounts receivable, net		20,779			28,970
Advances to suppliers (Note 5)		406,617			416,210
Inventories, net (Note 6)		433,054			563,851
Prepaid expenses		165,067			182,236
Total current assets		1,344,530			1,271,615
Prepayment and deposit (Note 7)		897,880			1,064,710
Due from related parties (Note 8)		834,360			1,020,049
Property and equipment, net (Note 9)		7,852,572			7,225,540
Goodwill		8,110,960			8,110,960
Intangible assets, net (Note 10)		12,012,356			12,166,785
Deferred charges		7,186			6,288
Total Assets	$	31,059,844		$	30,865,947
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities	$	581,813		$	338,429
Customer deposit		91,023			11,676
Other payables		183,805			116,636
Short term loans (Note 11)		1,125,330			120,582
Due to related parties (Note 12)		73,647			56,363
Wages payable		49,069			26,986
Other advance receipts (Note 13)		7,677,672			7,603,673
Total current liabilities		9,782,359			8,274,345
Minority Interests		2,400,075			2,607,965
Stockholders' Equity
Common stock; 400,000,000 and 10,000 shares authorized, respectively; 0.0001 and 0.13 par value, respectively; 51,902,250 and 1 shares issued and outstanding, respectively		5,191			5,191
Additional paid-in capital		20,335,701			20,335,701
Subscription receivable		-			-
Accumulated other comprehensive income		43,682			44,369
Accumulated deficit during development stage		(1,507,164	)		(401,624
Total Stockholders' Equity		18,877,410			19,983,637
Total Liabilities & Stockholders' Equity	$	31,059,844		$	30,865,947

(Unaudited)

	October 31, 2009			July 31, 2009
Assets
Current Assets
Cash and cash equivalents	$	19,938		$	65,233
Accounts receivable, net of allowance for doubtful account of $- and $-, respectively		599,167			891,776
Inventories, net of allowance for obsolescence of $1,021,934 and $1,021,028, respectively		684,665			648,043
Prepaid expenses		188,054			125,899
Total current assets		1,491,824			1,730,951

Prepayment and deposit		39,070			10,945
Due from related parties		299,149			298,884
Property and equipment, net of accumulated depreciation of $679,642 and $549,659, respectively		9,139,413			9,214,594
Construction in progress		819,623			797,016
Goodwill		8,110,960			8,110,960
Intangible assets, net of accumulated amortization of $71,247 and $66,902, respectively		1,827,235			1,839,116
Total Assets	$	21,727,274		$	22,002,466

Liabilities & Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities	$	2,091,139		$	1,962,075
Customer deposit		14,513			131,333
Other payables		17,178			18,056
Short term loans		2,190,265			2,111,505
Due to related parties		76,161			76,108
Wages payable		51,801			66,081
Total current liabilities		4,441,057			4,365,158

Stockholders' Equity
Common stock; 400,000,000 shares authorized; 0.0001 par value; 51,902,250 shares issued and outstanding, respectively		5,191			5,191
Additional paid-in capital		20,335,701			20,335,701
Accumulated other comprehensive income		56,018			50,301
Accumulated deficit during development stage		(4,772,950	)		(4,478,842	)
Total China Wind Energy Stockholders' Equity		15,623,960			15,912,351
Non-controlling interest		1,662,257			1,724,957
Total Stockholders' Equity		17,286,217			17,637,308
Total Liabilities & Stockholders' Equity	$	21,727,274		$	22,002,466

The accompanying notes are an integral part of these financial statements

F-1

China Wind Energy Inc. ~~And~~and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

	Three Months			Three Months			Six Months			Six Months			Nov. 27, 2006
	Three Months Ended October 31, 2009			Three Months Ended October 31, 2008			November 27, 2006 (Inception) to October 31, 2009
	Ended			Ended			Ended			Ended			(Inception) to
Revenue	$	184,438		$	-		$	415,129
	January 31, 2009			January 31, 2008			January 31, 2009			January 31, 2008			January 31, 2009
Cost of goods sold		(173,713	)		(111,194	)		(932,658	)
Revenue	$	-		$	-		$	-		$	-		$	148,383
Gross profit (Loss)		10,725			(111,194	)		(517,529	)
Cost of goods sold								-			-			(204,873	)
Operating expenses
Gross profit		-			-			-			-			(56,490	)
Selling expenses		8,345			22,835			113,481
Operating expenses
General and administrative		294,905			580,197			3,319,286
Selling expenses		23,217			-			46,052			-			49,837
Total operating expenses		303,250			603,032			3,432,767
General and administrative		347,807			70,143			668,191			94,967			1,111,177
Loss from operations		(292,525	)		(714,226	)		(3,950,296	)
Research and development		132,419			-			392,232			-			392,232
Other income (expenses)
Provision (Reversal) on allowance of obsolescence		121,785			-			232,979			-			128,713
Interest income		71			265			1,071
Total operating expenses		625,228			70,143			1,339,454			94,967			1,681,959
Interest expense		(65,603	)		(14,329	)		(313,482	)
Income(Loss) from operations		(625,228	)		(70,143	)		(1,339,454	)		(94,967	)		(1,738,449	)
Loss on disposal of assets		-			(9,263	)		(1,651,934	)
Other income (expenses)
Government subsidy income		-			-			161,205
Interest income		36			-			301			-			495
Total other expenses		(65,532	)		(23,327	)		(1,803,140	)
Interest expense		(39,544	)		-			(53,873	)		-			(62,611	)
Net loss		(358,057	)		(737,553	)		(5,753,436	)
Loss on disposal of assets		2			(331	)		(9,261	)		(331	)		(9,261	)
Less: Net loss attributable to non-controlling interest		(63,949	)		(118,848	)		(980,486	)
Gain(Loss) on physical count of inventories		-			-			-			-			(26,831	)
Net loss attributable to China Wind Energy Inc.		(294,108	)		(618,705	)		(4,772,950	)
Government grant income		87,738			-			87,738			-			87,738
Other comprehensive income (loss)
Total other income (expenses)		48,232			(331	)		24,905			(331	)		(10,470	)
Foreign currency translation		5,717			(1,376	)		56,018
Income(Loss) before and income taxes and minority interests		(576,996	)		(70,474	)		(1,314,549	)		(95,298	)		(1,748,919	)
Comprehensive loss		(352,340	)		(738,929	)		(5,697,418	)
Income taxes		-			-			-			-			-
Comprehensive loss attibutabe to Non – controlling interest		(63,949	)		(118,848	)		(980,486	)
Minority interests		90,161			-			209,009			-			241,755
Comprehensive loss attributable to China Wind Energy Inc.		(288,391	)		(620,081	)		(4,716,932	)
Net income (loss)		(486,835	)		(70,474	)		(1,105,540	)		(95,298	)		(1,507,164	)
Net Loss Per Share, Basic and Diluted		(0.01	)		(0.01	)
Other comprehensive income (loss)
Weighted Average Shares Outstanding, Basic and Diluted		51,902,250			51,902,250
Foreign currency translation		689			2,186			(687	)		2,391			43,682
Comprehensive income (loss)	$	(486,146	)	$	(68,288	)	$	(1,106,227	)	$	(92,907	)	$	(1,463,482	)
Earnings (Loss) Per Share, Basic and Diluted		(0.01	)		-			(0.02	)		(0.01	)
Weighted Average Shares Outstanding, Basic and Diluted		51,902,250			22,863,555			51,902,250			13,030,823

The accompanying notes are an integral part of these financial statements

F-2

China Wind Energy Inc. ~~And~~and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months			Six Months			Nov. 27, 2006
	Three Months Ended October 31, 2009			Three Months Ended October 31, 2008			November 27, 2006 (Inception) to October 31, 2009
	Ended			Ended			(Inception) to
	January 31, 2009			January 31, 2008			to January 31, 2009
Cash Flows From Operating Activities
Net Loss	$	(1358,~~105,540~~057	)	$	(95737,~~298~~553	)	$	(15,~~507~~753,~~164~~436	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities
Minority interest		(209,009	)		-			(241,755	)
Depreciation		129,989			21,539			619,814
Depreciation		41,703			204			56,186
Amortization		12,091			77,000			111,744
Amortization		155,020			-			206,339
Loss on disposal of assets		-			9,263			1,651,934
Loss on disposal of assets		9,261			-			9,261
Loss (Gain) on physical count of inventories		-			-			26,831
Loss(Gain) on physical count of inventories		-			331			26,831
Provision (Reversal) on allowance of obsolescence		-			111,194			-
Provision(Reversal) on allowance of obsolescence		232,979			-			202,855
Common stock issued for services		-						17,850
Common stock issued for services		-			-			17,850
Changes in operating assets and liabilities:
Accounts receivable, net		8293,~~191~~400			-(3,427	)		7312,~~765~~588
Advances to suppliers		9,593			-			(43,497	)
Prepaid expenses		(62,046	)		1,409			204,258
Inventories		(102,266	)		-			(3,819	)
Advances to suppliers		-			(76,856	)		-
Prepaid Expenses		17,169			-			18,917
Inventories		(36,047	)		(222,171	)		(172,491	)
Prepayment and deposit		~~166~~(28,~~830~~116	)		19245,~~796~~587			~~(13~~529,~~624~~634	)
Deferred charges		(898	)		-			(898	)
Accounts payable and accrued liabilities		127,371			183,756			331,629
Accounts payable and accrued liabilities		243,384			25,158			311,342
Customer deposit		(116,936	)		79,772			(34,009	)
Customer deposit		79,347			-			42,645
Other payables		(893	)		81,998			(18,370	)
Other payables		67,169			-			72,405
Wages payable		(14,339	)		16,218			51,679
Wages payable		22,083			-			49,069
Deferred charges		-			(656	)		-
Net cash provided by operating activities		(364,984	)		(49,809	)		(789,292	)
Net cash used in operating activities		(53,583	)		(212,927	)		(2,120,345	)
Cash Flows From Investing Activities
Cash Flows from Investing Activities
Purchases of property and equipment		(~~684~~46,~~449~~683	)		(5216,~~121~~395	)		(1,~~158~~320,~~485~~457	)
Proceeds from disposal of assets		7,311			-			7,311
Cash paid for construction in progress		(21,900	)		-			(420,458	)
Cash acquired on acquisition		-			173			314,713
Proceeds from sale of land use right		-			-			73,285
Proceeds from repayment of related parties loan		185,689			-			455,650
Proceeds from sale of fixed assets		-			7,313			99,278
Net cash used in investing activities		(491,449	)		(4,948	)		(380,811	)
Cash paid to acquire intangibles		-			-			(1,407	)
Cash acquired on acquisition		-			-			314,713
Collection of loans made to related parties		-			35,345			993,502
Net cash used in investing activities		(68,583	)		(173,737	)		(261,544	)
Cash Flows From Financing Activities
Proceeds from short term loans		1,004,748			-			1,049,747
Proceeds from related party loans		-			-			69,319
Loan from (repayment to) shareholder		-			(20,000	)		-
Proceeds from short term loans		76,888			675,325			2,584,823
Proceeds from related parties		17,284			-			66,989
Repyament of short term loans		-			-			(548,441	)
Proceeds from issuance of common stock		-			~~100,000~~-			100,001
Net cash provided by (used in) financing activities		1,022,032			80,000			1,216,737
Net cash provided by financing activities		76,888			675,325			2,205,702
Effect of exchange rate changes on cash		~~73,066~~(17	)		~~2,391~~(517	)		~~272~~196,~~379~~125
Net increase in cash and cash equivalents		238,665			27,634			319,013
Net increase (decrease) in cash and cash equivalents		(45,295	)		288,144			19,938
Cash and cash equivalents, beginning of period		8065,~~348~~233			180,~~278~~348			-
Cash and cash equivalents, end of period	$	~~319~~19,~~013~~938		$	28368,~~912~~492		$	~~319~~19,~~013~~938
Supplemental disclosure information:
Interest expense paid	$	-21,890		$	-		$	859,~~738~~693
Income taxes paid	$	-		$	-		$	-

The accompanying notes are an integral part of these financial statements

F-3

China Wind Energy Inc. And Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION , BASIS OF PRESENTATION AND ~~BUSINESS~~SIGNIFICANT ~~BACKGROUND~~ACCOUNTING POLICIES

The ~~Company~~accompanying ~~was incorporated~~unaudited interim financial statements of China Wind Energy Inc. and Subsidiaries have been prepared in ~~Nevada~~accordance onwith ~~May~~accounting 8,principles ~~2006,~~generally ~~under~~accepted in the ~~name~~United ~~Pooch~~States ~~Pal~~of ~~Beverages~~America ~~Inc.~~and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in China Wind Energy’s ~~changed~~annual ~~its~~report ~~name~~on toForm K10-~~Care~~K ~~Nutritional~~for ~~Products~~the ~~Inc.~~year Onended ~~November~~July 31, 2009 filed with the SEC on October 29, ~~2007~~ 2009. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the ~~Company~~results ~~changed~~of ~~its~~operations ~~name~~ for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to ~~China~~be ~~Wind~~expected ~~Energy~~for ~~Inc~~the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the 2009 annual report on Form 10-K have been omitted.

OnBasis ~~November 20, 2007, a 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.Presentation

~~Also,~~The onconsolidated ~~November 20,~~financial ~~2007,~~statements ~~the~~include ~~Company entered into an Acquisition Agreement with the Purchaser, who is the owner of~~ all of the ~~share~~accounts ~~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.~~and ~~Upon~~its ~~closing of the Acquisition Agreement on November 27, 2007, China Wind Energy Limited became a~~ wholly -owned ~~subsidiary of~~and ~~the~~majority-owned ~~Company~~subsidiaries. ~~China~~ ~~Wind~~All ~~Energy~~significant ~~Limited~~intercompany ~~has~~balances ~~one~~and ~~wholly~~transactions ~~owned~~have ~~subsidiary,~~been ~~Harbin XingYe Wind Energy Technology Limited (“XingYe”), a company established under the Law of the People’s Republic of China (“PRC”)~~eliminated.

~~The~~Use ~~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.Estimates

OnThe ~~May~~preparation ~~16,~~of ~~2008,~~ financial statements in conformity with accounting principles generally accepted in the ~~Company~~United ~~entered~~States ~~into~~of aAmerica ~~Share~~(“US ~~Exchange~~GAAP”) ~~Agreement~~requires ~~with~~management ~~Power~~to ~~Profit~~make ~~Technology Development~~estimates ~~Limited~~and assumptions that affect the reported amounts of assets, aliabilities ~~company~~and ~~incorporated~~disclosure ~~under~~of contingent assets and liabilities at the ~~laws~~date of ~~Hong~~the ~~Kong,~~financial ~~People’s~~statements, ~~Republic~~and the reported amounts of ~~China~~revenues ~~(“Power~~and ~~Profit”)~~expenses during the reporting period. 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. The Company regularly evaluates estimates and ~~Wan~~assumptions Yirelated ~~Tse~~to obsolete inventory, ~~the~~useful ~~holder~~life and recoverability of ~~100%~~long lived assets, and goodwill. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the ~~issued~~basis for making judgments about the carrying values of assets and ~~outstanding~~liabilities ~~registered~~and ~~share~~the ~~capital~~accrual of ~~Power~~costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results ~~Profit~~of operations will be affected.

~~Pursuant~~Foreign tocurrency 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 manufacturing harvesters and blades for wind generators. Together, Power Profit and Harbin Sanye became the subsidiaries of the Company, Power Profit became the Company’s wholly owned subsidiary and Harbin Sanye became the Company’s majority owned subsidiary.translation

OnThe ~~September~~reporting 16currency 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 ASC 830, “Foreign Currency Translation”, using year-end rates of exchange for ~~2008~~assets and liabilities, ~~Harbin~~and ~~Sanye~~average ~~Wind~~rates ~~Energy~~of ~~Technology~~exchange ~~Co.~~for the period for revenues, ~~Ltd~~costs, and expenses and historical rates for the equity. ~~changed~~Translation ~~its~~adjustments ~~name~~resulting tofrom ~~Harbin SQ~~the ~~Wind~~process ~~Power~~of ~~Ltd~~translating ~~(“Harbin~~the ~~SQ”)~~local currency financial statements into U.S. dollars are included in determining comprehensive income.

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 Standards (“SFAS”) No.7 “Accounting and Reporting for Development Stage Enterprises”.Reclassifications

Certain October 31, 2008 amounts have been reclassified to conform to the current period presentation.

F-4

Recently adopted accounting pronouncements

In June 2009, the FASB issued new standards setting forth a single source of authoritative GAAP for all non-governmental entities (“Codification”). The Codification, which commenced July 1, 2009, changes the referencing and organization of accounting guidance. The Codification is effective for the Company beginning the quarter ended September 30, 2009. The Codification does not change GAAP and only affects how specific references to GAAP literature are disclosed in the notes to the Company’s consolidated financial statements.

During the first quarter of 2009, in accordance with U.S. GAAP, the Company adopted new accounting guidance on business combinations. This guidance requires an entity to measure the business acquired at fair value and to recognize goodwill attributable to any non-controlling interests (previously referred to as minority interests) rather than just the portion attributable to the acquirer. The standards also result in fewer exceptions to the principle of measuring assets acquired and liabilities assumed in a business combination at fair value. In addition, the standards require payments to third parties for consulting, legal, audit and similar services associated with an acquisition to be recognized as expenses when incurred rather than capitalized as part of the business combination. Its adoption did not have a material impact on our consolidated financial statements.

During the first quarter of fiscal 2010,in accordance with U.S. GAAP, the Company adopted the standard on consolidation as it relates to noncontrolling interests. The standard changed the accounting and reporting for minority interests, which were recharacterized as noncontrolling interests and classified as a component of equity. The standard requires retrospective adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of the standard will be applied prospectively. The adoption of the guidance did not have a material impact on the Company’s financial statements.

In May 2009, the FASB issued ASC 855, Subsequent Events. This standard is intended to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this standard sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. FASB ASC 855 is effective for fiscal years and interim periods ended after June 15, 2009. The Company adopted this standard effective June 15, 2009, and has evaluated any subsequent events through December 10, 2009.

2. GOING CONCERN

As reflected in the accompanying ~~combined~~consolidated financial statements, the Company has accumulated ~~a deficit~~deficits of $14,~~507~~772,~~164~~950 at ~~January~~October 31, 2009 that includes a loss of $1358,~~105,540~~057 for the ~~six~~three months ended ~~January~~October 3130, 2009. The Company also had a working capital deficiency of $82,~~437~~949,~~829~~233 as of ~~January~~October 3130, 2009. ~~The~~ ~~Company’s stockholders~~These ~~have~~factors ~~funded~~raise ~~the~~substantial ~~losses~~doubt ~~and~~about ~~cash~~the ~~shortfalls~~ability of ~~allowing~~the ~~management~~Company to ~~develop~~ ~~sales~~continue ~~and~~as ~~contingency~~a ~~plans.~~going ~~The Company is also arranging for additional funding~~concern. The consolidated financial statements dohave ~~not~~been ~~include~~prepared ~~any~~on ~~adjustments relating~~a togoing ~~the~~basis ~~recoverability~~ and ~~classification~~do ofnot ~~recorded~~include ~~asset~~any ~~amounts~~adjustments ~~or amounts and classification of liabilities~~ that might beresult ~~necessary~~from ~~should the~~outcome ~~Company~~of bethis ~~unable to continue as a going concern~~uncertainty.

3At October 31, 2009, the Company has suffered losses from development stage activities to date. ~~SUMMARY OF~~ ~~SIGNIFICANT~~Although ~~ACCOUNTING~~additional ~~POLICIES~~sources of equity or debt financing, there is no assurance these activities will be successful.

a3. ~~Basis~~SHORT ofTERM ~~Presentation~~LOANS

~~The~~Short ~~accompanying unaudited~~term ~~consolidated~~loans ~~financial~~consist ~~statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States~~ of ~~America (“U.S. GAAP”) for interim financial information, and with~~ the rules and regulations of the United States Securities and Exchange Commission to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. These consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended July 31, 2008 and notes thereto contained in the Report on Form 10-K of the Company as filed with the United States Securities and Exchange Commission (the “SEC”). Interim results are not necessarily indicative of the results for the full year.following:

The consolidated financial statements include all the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

	October 31, 2009		July 31, 2009

12-month Bank Loan bearing interest at 5.841% per annum and maturing in February 2010	$	1,467,000	$	1,465,700
Loans from individuals		723,265		645,805
Short term loan	$	2,190,265	$	2,111,505

b.The ~~Use~~Company pledged the building and land located in Binxi city as collateral of ~~Estimates~~the bank loan.

InLoans ~~preparing~~from ~~these financial~~individuals ~~statements,~~were ~~management~~made ~~makes~~by ~~estimates~~individuals ~~and~~to ~~assumptions~~cover ~~that affect~~ the ~~reported~~ ~~amounts~~Company’s oftemporary ~~assets~~cash ~~and~~shortages. ~~liabilities~~The inshort ~~the~~term ~~balance~~loans ~~sheets~~are ~~and~~unsecured ~~revenues~~ and ~~expenses~~due ~~during~~on demand. Not all of the ~~year~~loans ~~reported~~are interest-bearing. ~~Actual~~For ~~results~~interest ~~may~~bearing ~~differ~~loans, the interest rate is ranging from ~~these estimates~~14% to 40% per annum.

c.Interest ~~Fair~~expenses ~~values~~for ofshort ~~financial~~term ~~instruments~~loans are $65,603 and $14,329 for the quarter ended October 31, 2009 and 2008, respectively.

~~The~~4. ~~carrying~~SUBSEQUENT 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.EVENTS

d.The ~~Cash~~Company has evaluated subsequent events through December 10, 2009, which is the date the financial statements were issued, and ~~Cash~~has ~~Equivalents~~concluded that no such events or transactions took place which would require disclosure herein.

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

F-5

e. 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.

f. 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.

g. 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 years
Transportation equipment	12 years
Office equipment	10 years

h. 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.

F-6

i. 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.

j. 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 six months ended January 31, 2009 and 2008.

k. 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.

l. 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.

m. Research and development costs

Research and development costs are expensed to operations as incurred.

n. Government grants

Receipts of government grants to encourage comprehensive utilization of resources which are non-refundable are recorded government grant income upon receipt. Grants will be approved and released after the government’s examination. There is no regulated specific use for the received grants but the government may perform annual check for the Company’s qualification as a grantee.

o. 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.

F-7

p. 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 January 31, 2009, the cumulative translation adjustment of $43,682 was classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet. For the six months ended January 31, 2009 and 2008, other comprehensive income (loss) was $(687) and $2,391, 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 January 31, 2009, the Company used the period-end rates of exchange for assets and liabilities of $1 to RMB6.838. For the six months ended January 31, 2009 and 2008, the Company used the period’s average rate of exchange to convert revenues, costs, and expenses of $1 to RMB6.8386 and $1 to RMB7.4372, respectively. The Company used historical rates for equity.

q. 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.

r. 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:

	Six Months			Six Months
	Ended			Ended
	January 31, 2009			January 31, 2008
Numerator for basic and diluted earnings per share
Net income (loss)	$	(1,105,540	)	$	(95,298	)
Denominator for basic earnings per share - weighted average shares outstanding		51,902,250			13,030,823
Adjustment for dilutive effect		-			-
Denominator for diluted earnings per share- adjusted weighted average shares outstanding		51,902,250			13,030,823
Earnings (Loss) per common share
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)

F-8

s. 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.

t. 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. The Company believes there will be no material impact upon its financial statements.

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. The Company believes there will be no material impact upon its financial statements.

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.

F-9

4. CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. As of January 31, 2009, a portion of the Company's cash was held by major financial institutions located in the PRC, none of which are insured. However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

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:

	January 31, 2009			July 31, 2008
Raw material	$	339,585		$	357,696
Work-in-progress		635,531			635,457
Finished goods		114,333			114,320
Others		140,519			20,229
		1,229,968			1,127,702
Less: Allowance for obsolescence		(796,914	)		(563,851	)
Inventory, net	$	433,054		$	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:

Name and Description of Related Parties	January 31, 2009		July 31, 2008
Sun, Shouquan - CEO; Stockholder	$	644,185	$	811,764
Sun, Shouan - Sun, Shouquan's brother; Stockholder		-		18,366
Wang, Guangyu - Stockholder		1,782		1,782
Zhang, Luming - Stockholder		52,827		52,586
Harbin New World Real Estate Co., Ltd. - A company controlled by Sun, Shouquan		135,566		135,551
Total	$	834,360	$	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 $779,751 as of January 31, 2009. The loans were made by Harbin SQ before the acquisition of Harbin SQ 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 January 31, 2009, the Company’s President and CEO has repaid $1,133,506 of the original loan ($437,525 since the acquisition of Harbin SQ by the Company). The Company plans to settle the outstanding balance on this loan as soon as possible. In the revised action plan agreed between Shouquan Sun and the Company in March 2009, the parties agreed that the total outstanding balance will be settled by March 31, 2010.

F-11

9. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	January 31, 2009			July 31, 2008
Machinery and equipment	$	132,484		$	130,357
Transportation equipment		496,517			467,538
Office equipment		485,381			468,051
Construction in progress		6,861,285			6,243,097
		7,975,667			7,309,043
Less: Accumulated depreciation		(123,095	)		(83,503	)
Property and equipments, net	$	7,852,572		$	7,225,540

The depreciation was $41,703 and $204 for the six months ended October 31, 2009 and 2008, respectively. They are broken down as follows:

	Six Months		Six Months
	Ended		Ended
	January 31, 2009		January 31, 2008
Cost of sales	$	-	$	-
Operating expenses		41,703		204
Total	$	41,703	$	204

10. INTANGIBLE ASSETS

Intangible assets consist of the following:

	January 31, 2009			July 31, 2008
Land User Rights	$	12,319,904		$	12,319,806
Less: Accumulated amortization		(307,548	)		(153,021	)
Intangible assets, net	$	12,012,356		$	12,166,785

The amortization was $155,020 and $0 for the six months ended January 31, 2009 and 2008, respectively.

F-12

11. 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. The average interest rate is 15%~20%. Interest expenses for short term loans were $53,873 and $0 for the six months ended January 31, 2009 and 2008, respectively.

12. DUE TO RELATED PARTIES

Due to related parties consist of the following:

Name and Description of Related Parties	January 31, 2009		July 31, 2008
Ren, Jian - Prior CEO	$	51,589	$	51,859
Zhang, Luhui - Stockholder		3,411		4,504
Sun, Shouan - Sun, Shouquan's brother; Stockholder		18,647		-
Total	$	73,647	$	56,363

"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.

13. 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 January 31, 2009 the cost of the land user rights to the Company was $598,586. The Company is obligated to clear the original buildings on the land before transfer of the land user rights can be completed.

As of January 31, 2009, the Company had received net proceeds of $7,677,672 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.

F-13

14. 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.

15. 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.

16. INCOME TAX

The Company is subject to taxes in the United States at 34% and certain subsidiaries are subject to taxes in the People’s Republic of China at 25%.

For the six months ended January 31, 2009 and 2008, the Company has recorded $0 income tax expense and the Company has no United States corporate income tax liability as of January 31, 2009.

17. SEGMENT INFORMATION

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

F-14

18. CONTINGENCIES, RISKS AND UNCERTAINTIES

Litigation

Harbin SQ was named as a defendant in a lawsuit in which the plaintiffs alleged illegal transfer and misleading promotion of Harbin SQ’s shares to the public through security brokers. The plaintiffs, 51current stockholders representing 1,018,000 outstanding shares, acquired the Harbin SQ’s shares through security brokers from Harbin SQ’s initial stockholders and were seeking monetary damages from Harbin SQ including the costs of acquiring the shares, expenses and imputed interest.

In September 2008, the claims of the plaintiffs were refuted in the judgment of the Court of 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 SQ forwarded a loan to Shouquan Sun, the Company’s President and CEO. This loan was not fully repaid at the time of acquisition and $779,751 was outstanding as of January 31, 2009. 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 mitigate against potential action by the SEC:

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

· no monies have been forwarded to Mr. Sun since he became an officer and director of the Company;

· from April 30, 2008 to January 31, 2009 a total of $1,133,506 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. In the revised action plan made in March 2009, the parties agreed that the total outstanding balance will be settled by March 31, 2010.

F-15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Overview

China Wind Energy Inc. (the “Company”, “China Wind”, “we”, “our”, “us”) was incorporated in Nevada on May 8, 2006. Prior to November 20, 2007 we were a shell company with only 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 merger transaction resulted in:

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

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

c) the appointment of Jian Ren as our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and sole director, 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.

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 the number of issued and outstanding shares of our common stock and the number of authorized shares of our common stock on a basis of five new shares for every one existing share, and resulted in an increase in the number of issued and outstanding shares of our common stock from 7,377,450 to 36,887,250, and an increase in the number of authorized shares of our common stock from 80,000,000 to 400,000,000.

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 interest in Power Profit;

b) the acquisition of 82.14% of the equity interest in 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 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 wholly owned subsidiary, to Harbin SQ, our majority owned subsidiary; and

f) the appointment of Shouquan Sun as our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and sole director to replace Jian Ren.

Harbin SQ, our majority-owned subsidiary, focuses primarily on the production of turbine blades and combine harvesters. It produces our primary product, which is a blade for wind turbine generators that permits variable pitch and speed control. This blade product differs from other blades of the 600KW and 750KW type produced in China, as it allows variable speed and pitch adjustments to occur to achieve higher efficiency. We currently have 5 individual patents on our wind turbine blades.

Liquidity and Capital Resources

As of ~~January~~October 31, 2009 we had cash of $~~319~~19,~~013~~938, total current assets of $1,~~344~~491,~~530~~824, total current liabilities of $94,~~782~~441,~~359,~~057 and a working capital deficit of $82,~~437~~949,~~829. From~~233 ~~our~~compared ~~inception on November 27, 2006~~ to ~~January~~a ~~31, 2009~~working wecapital ~~have accumulated a~~ deficit of $12,~~507~~634,~~164. We~~207 ~~are~~as ~~dependent~~of ~~on funds~~July ~~raised through equity or debt financing~~31, ~~investing activities, and revenue generated through the sales of our products to fund our operations~~2009. WeThe ~~anticipate~~increase ~~that~~in weworking ~~will~~capital ~~incur~~deficit ~~substantial~~was ~~losses~~due ~~over the next year and our ability~~ to ~~generate~~a ~~any~~decrease ~~revenues~~ in ~~the~~accounts ~~next 12 months continues to be uncertain~~receivable.

~~As of~~Since ~~January~~November 27, 2006 (inception) to October 31, 2009, weour ~~had~~accumulated ~~total~~deficit ~~assets~~was of $314,~~059~~772,~~844~~950. ~~and~~We ~~total~~are ~~liabilities~~dependent ~~of $9~~on the funds raised through our equity or debt financing,~~782~~ investing activities,~~359~~ and revenue generated through the sales of our products to fund our operations. ~~Our~~We ~~total~~anticipate ~~assets~~that ~~were~~we ~~primarily~~will ~~made~~incur upsubstantial oflosses ~~land~~over ~~usage~~the next ~~rights,~~year ~~goodwill,~~and ~~property~~our ~~and~~ability ~~equipment~~to generate any revenues in the next 12 months continues to be uncertain.

~~On November~~As 6of October 31, ~~2007~~2009 we ~~entered~~had ~~into~~total aassets ~~contract~~of ~~with Heilongjiang Nongken Taixin Real Estate Development Ltd.~~$21,727,274 ~~Co.~~compared ~~(“Heilongjiang”)~~ to ~~sell~~$22,002,466 ~~our~~as ~~land~~of ~~usage~~July ~~rights in Harbin City~~31, ~~China~~2009. ~~The~~Our total ~~price~~liabilities ofincreased ~~the~~from ~~contract is approximately~~ $104,~~090~~365,~~000. As~~158 as of ~~January~~July 31, 2009 weto ~~had received~~ $74,~~677~~441,~~672 in advance~~057 ~~payments from Heilongjiang for this sale. These advance payments are listed~~ as ~~a liability on our balance sheets since we have only received partial payment for the transfer~~ of ~~the~~October ~~land~~31, ~~usage~~2009 ~~rights~~due to ~~Heilongjiang,~~ ~~and~~an weincrease ~~have~~in ~~not~~accounts ~~yet~~payable ~~completed~~and ~~the~~short ~~transfer~~term loans. ~~Because~~Our ~~we have~~total ~~not~~assets ~~yet~~as ~~completed~~of ~~the~~October ~~transfer~~31, ~~the~~2009 ~~land~~were ~~usage~~primarily ~~rights are listed as an~~made ~~intangible~~up ~~asset on our balance sheets. Once we receive full payment from Heilongjiang for the sale~~ of ~~these land usage rights~~property, weequipment ~~will complete the transfer to Heilongjiang~~ and ~~no longer account for these rights as an asset~~goodwill.

We used net cash of $~~364~~53,~~984~~583 in operating activities for the ~~six~~three months ended ~~January~~ October 31, 2009, compared to $49212,~~809~~927 ~~during~~for the ~~same~~three ~~period~~months inended October 31, 2008 and $~~789~~2,~~292~~120.345 from ~~our~~ inception ~~on November 27, 2006~~ to ~~January~~October 31, ~~2009. The~~ ~~large increase in operating expenses for the six months ended January 31,~~ 2009 ~~as compared to the same period in 2008 resulted from an increase in our operations and the acquisition of Harbin SQ, our majority owned subsidiary~~.

We used net cash of $~~491~~68,~~449~~583 in investing activities for the ~~six~~three months ended ~~January~~ October 31, 2009, ~~compared~~including to $446,~~948~~683 ~~during~~in ~~the~~purchases ~~same~~of ~~period~~property inand ~~2008,~~equipment and $~~380~~21,~~811~~900 ~~from~~in ~~our~~cash ~~inception~~paid onfor ~~November~~construction. This ~~27,~~compares ~~2006~~ to ~~January 31~~$173, ~~2009. The~~737 ~~cash~~spent ~~used~~on in investing activities ~~during~~for the ~~period~~three months ended ~~January~~ October 31, ~~2009~~2008, ~~was~~comprised ~~used~~primarily toof ~~purchase~~$216,395 in purchases of property and equipment ~~for~~which ~~our manufacturing~~are ~~facility~~offset by $7,313 gained in sales fixed assets and $35,345 proceed from related parties loans receivable.

We received net cash of $176,~~022,032~~888 from financing activities for the ~~six~~three ~~months~~ month period ended ~~January~~October 31, 2009, ~~compared~~comprised toentirely ~~$80,000~~of ~~during~~short ~~the~~term ~~same period in 2008 and $1,216,737 from our inception on November 27, 2006 to January 31, 2009~~loans. ~~The~~During ~~cash~~the ~~received~~three ~~from~~month ~~financing activities during the~~ period ended ~~January~~October 31, ~~2009~~2008 ~~resulted~~we ~~from~~received ~~the~~$675,325; ~~proceeds~~also ofentirely from short term loans. ~~During~~From ~~the~~our ~~six~~inception ~~months~~to ~~ended~~October ~~January~~ 31, 2009 ~~our~~we ~~cash~~received ~~position increased~~a bytotal of $~~238~~2,~~665~~205,702 from investing activities.

~~As of~~Our ~~January~~cash ~~31,~~position ~~2009~~decreased ~~Shouquan~~by ~~Sun~~$45,295 ~~our~~during ~~President,~~the ~~Chief~~three ~~Executive~~months ~~Officer,~~ended ~~Chief Financial~~October ~~Officer~~31, ~~Principal~~2009 ~~Accounting~~compared ~~Officer,~~to ~~Secretary,~~an ~~Treasurer~~increase ~~and~~of ~~sole director, owed us~~ $~~779~~288,~~751. This~~144 ~~loan~~during ~~was~~the ~~provided~~three tomonths ~~Mr.~~ended ~~Sun~~October ~~by Harbin~~31, ~~SQ prior to our acquisition of Harbin SQ~~2008. NoThis ~~funds~~is ~~have~~due ~~been forwarded~~in topart ~~Mr. Sun since our acquisition of Harbin SQ. From April 30, 2008~~ to ~~January~~significantly ~~31,~~higher ~~2009,~~amount ~~Mr. Sun repaid a total~~ of ~~$1,133,506~~cash ~~on the loan. We have~~ received ~~$437,525~~from ofshort ~~that~~term ~~repayment~~loans ~~since~~during ~~our acquisition of Harbin SQ. Mr. Sun has promised to repay~~ the ~~outstanding~~three ~~balance as~~month ~~soon~~period asended ~~possible~~October ~~and, in any event, no later than March~~ 31, ~~2010~~ 2008.

Our monthly cash requirement for the six months ended January 31, 2009 was $60,831. Given our present cash position, we have sufficient cash on hand to fund our operations for approximately the next 5 months.2

4During the three months ended October 31, 2009 we secured short term loans from an institutions and individuals to meet our ongoing cash requirements. Below is a table of these loans at October 31, 2009 and July 31, 2009.

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, marketing and selling our wind turbine blades. However, we do not anticipate that we will generate sufficient revenues to fund our proposed operations.

	October 31, 2009		July 31, 2009

12-month Bank Loan bearing interest at 5.841% per annum and maturing in February 2010	$	1,467,000	$	1,465,700
Loans from individuals		723,265		645,805
Total short term loans	$	2,190,265	$	2,111,505

~~We expect~~Not all of the loans from individuals are interest-bearing. For interest bearing loans, the interest rate is ranging from 14% to ~~require~~40% ~~approximately~~per annum. Interest expenses for short term loans were $265,~~175~~603 for the three months ended October 31,~~000~~ in2009 ~~financing~~compared ~~over~~to ~~the~~$14,329 ~~next~~for 12the three months ~~(beginning~~ ~~April~~ended ~~2009)~~October 31, ~~as follows:~~2008.

Description	Estimated expenses ($)
Research and development of new technologies	450,000
Marketing	300,000
Salaries	1,000,000
Equipment maintenance	50,000
Development of distribution chain	75,000
Utilities	100,000
Professional fees	120,000
General and administrative expenses	80,000
Total	2,175,000

We expect that our total expenses will increase over the next year as we increase our business operations. 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.

~~At present,~~Our ~~our~~approximate monthly cash ~~requirements~~requirement ~~for~~during the ~~next~~three 12month ~~months~~period ~~outweigh~~ended ~~the~~October ~~funds available~~31, to2009 ~~maintain~~was or$17,861 ~~develop~~compared ~~our~~to ~~operations. Of the~~ $270,~~175,000 that~~976 weduring ~~require for~~ the ~~next~~three 12 months, weended ~~had~~October ~~$319,013 in cash as of January~~ 31, ~~2009~~2008. InAt ~~order~~the ~~to improve our liquidity~~moment, we ~~intend to pursue additional equity financing from private investors or possibly a registered public offering. We~~ do not ~~currently~~ have ~~any~~sufficient ~~arrangements~~cash ~~in place~~ to ~~complete~~cover ~~any~~our ~~private~~expenses ~~placement~~for ~~financings~~one ~~and there is no assurance that we will be successful in completing any private placement financings~~month. If Additionally, we ~~are~~expect ~~unable~~ to ~~achieve~~require ~~the~~approximately ~~necessary additional financing~~$2,635,161 ~~then~~in ~~we plan to~~financing ~~reduce~~to ~~the~~fund ~~amounts that we spend on~~ our ~~research~~business ~~and~~operations ~~development~~over ~~activities,~~the ~~as well~~next as12 ~~our~~months ~~general~~(beginning ~~and~~December ~~administrative expenses~~2009), soas ~~that we do not exceed the capital resources available to us.~~follows:

Results of Operations for the Three Months Ended January 31, 2009 and from November 27, 2006 (inception) to January 31, 2009

Description	Estimated expenses $
Research and development of wind turbines	732,064
Marketing	117,130
Salaries	585,652
Equipment maintenance	29,283
Development of distribution chain	146,413
Utilities	219,619
Professional Fees	220,000
General and administrative expenses	585,000
Total	2,635,161

At present, our cash requirements for the next 12 months outweigh the funds available to maintain or develop our operations. Of the $2,635,161 that we require for the next 12 months, we had $19,938 in cash as of October 31, 2009. 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 business activities and administrative expenses in order to be within the amount of capital resources that are available to us.

Results of Operations for the Three Months Ended October 31, 2009 and from November 27, 2006 (inception) to October 31, 2009

Revenues

~~From~~Since our inception on ~~November 27, 2006~~ to ~~January~~October 31, 2009 we have generated gross revenues of $~~148~~415,~~383~~ 129 from the sale of combine harvesters manufactured by us. ~~The~~We ~~cost~~generated ~~of selling~~$184,438 ~~these~~in ~~combine~~revenue ~~harvesters~~during ~~was~~the ~~$204~~three months ended October 31,~~873,~~ ~~which~~2009 ~~resulted~~compared inno arevenues ~~negative gross~~during ~~profit~~the ofthree ~~$56~~months ended October 31,~~490~~ 2008. WeOur ~~did~~cost ~~not~~of ~~generate~~goods ~~any~~sold ~~revenues~~was ~~during~~$173,713 ~~the~~for ~~quarter~~the three months ended ~~January~~October 31, 2009 orcompared to $111,194 for the ~~same~~three months ended October 31, 2008. The reason that the cost of goods was so high during the period in 2008 was due to much of our combine harvester inventory being marked down on obsolescence. During the period ended in 2009, the reason for the high cost of good sold was large expenditures on labor, raw materials and overhead.

Expenses

~~We incurred~~During ~~total~~the ~~operating~~three ~~expenses~~months ofended ~~$625~~October 31,~~228~~ ~~for~~2009, ~~the~~we ~~quarter~~had ~~ended~~total ~~January~~operating 31expenses of $303, ~~2009~~250, ~~compared~~including to $708,~~143~~345 ~~for~~in ~~the~~selling ~~same~~expenses ~~period~~and $294,905 in ~~2008~~general and ~~$1,681,959~~administrative ~~from~~costs. By ~~our inception~~comparison, onfor ~~November~~the ~~27,~~three ~~2006~~months toended ~~January~~October 31, ~~2009. The~~2008, ~~large increase~~we inhad total operating expenses ~~for~~of ~~the~~$603,032 ~~period~~which ~~ended~~were ~~January~~made 31up of $580,197 ~~2009~~in ~~resulted~~general and administrative ~~from~~costs anand ~~increase~~$22,835 in ~~our~~selling ~~operations~~expenses. For ~~and~~ the ~~acquisition~~period offrom ~~Harbin~~inception SQto October 31, 2009 our ~~majority~~ ~~owned~~total ~~subsidiary~~operating expenses were $3,432,767.

~~We incurred~~The ~~$23,217~~main inreason ~~selling~~for ~~expenses,~~the ~~$132,419~~decrease in ~~research~~expenses ~~and~~is ~~development expenses~~the ~~and~~significant ~~$121,785~~decrease in ~~write~~the ~~downs~~activity ~~due to obsolescence~~ of ~~our manufacturing facilities for~~ the ~~quarter~~company ~~ended~~due ~~January~~to ~~31,~~having ~~2009. We~~completed ~~did~~a ~~not~~majority ~~incur any~~ of ~~these expenses during~~ the ~~same~~work ~~period~~to inswitch ~~2008 as we had not yet acquired an operating interest in Harbin SQ,~~ our ~~majority~~manufacturing ~~owned subsidiary. From~~facility ~~our~~from ~~inception~~the onproduction ~~November~~of ~~27,~~combine ~~2006~~harvesters to ~~January~~the ~~31, 2009~~production ~~we incurred $49,837 in selling expenses, $392,232 in research and development expenses and $128,713 in write downs due to obsolescence~~ of ~~our manufacturing~~wind ~~facilities~~turbines.

Our general and administrative expenses increased from $70,143 during the quarter ended January 31, 2008 to $347,807 during the period ended January 31, 2009. Our general and administrative expenses consist of bank charges, travel, meals and entertainment, foreign exchange, office rent and maintenance, salaries, communication (cellular, internet, fax, and telephone), courier and postage costs, and office supplies as well as legal, accounting and auditing fees. The large increase in general and administrative expenses was due to the increased operations related to our acquisition of Harbin SQ, our majority owned subsidiary.

Net Loss

~~From~~Since our inception on November 27, 2006 to ~~January~~October 31, 2009, we incurred ~~net~~ a net loss of $15,~~507~~753,~~164~~436. For the ~~quarter~~three months ended ~~January~~October 31, 2009, we incurred a net loss of $~~486~~358,~~835,~~057 compared to a$737,553 for the three months ended October 31, 2008. Our net loss ofper share was $~~70,474~~0.01 for the ~~same~~three ~~period~~months inended October 31, 2009 and $0.01 for the three months ended October 31, 2008.

~~Results~~Our ofnet ~~Operations~~loss for the ~~Six~~three ~~Months~~months ~~Ended~~ended ~~January~~October 31, 2009 was the result of limited revenue of $184,438 counted against $173,713 in cost of goods sold, $8,345 in selling expenses, $294,905 in general and administrative expenses and $65,603 in interest expenses. Comparatively, during the three months ended October 31, 2008 we generated no revenues and spent $111,194 in cost of goods sold, $22,835 in selling expenses and $714,226 in general and administrative expenses.

Revenues

We did not generate any revenues during the six months ended January 31, 2009 or the same period in 2008.

Expenses

We incurred total operating expenses of $1,339,454 for the six months ended January 31, 2009, compared to $94,967 for the same period in 2008. The large increase in operating expenses for the period ended January 31, 2009 resulted from an increase in our operations and the acquisition of Harbin SQ, our majority owned subsidiary.

We incurred $46,025 in selling expenses, $392,232 in research and development expenses and $232,979 in provision on allowance of obsolescence of our property and equipment for the six months ended January 31, 2009. We did not incur any of these expenses during the same period in 2008. Our general and administrative expenses increased from $94,967 during the six months ended January 31, 2008 to $668,191 during the six months ended January 31, 2009. The large increase in general and administrative expenses was due to the increased operations related to our acquisition of Harbin SQ, our majority owned subsidiary.

Our general and administrative expenses consist of bank charges, travel, meals and entertainment, foreign exchange, office rent and maintenance, salaries, communication (cellular, internet, fax, and telephone), courier and postage costs, and office supplies as well as legal, accounting and auditing fees.

Net Loss

For the six months ended January 31, 2009 we incurred a net loss of $1,105,540, compared to a net loss of $95,298 for the same period in 2008.

Research and Development

We incurred $132,419 in research and development expenses for the quarter ended January 31, 2009 and $392,232 for the six months ended January 31, 2009. These are the only research and development expenses we have incurred since our inception on November 27, 2006.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Off-Balance Sheet Arrangements

As of ~~January~~October 31, 2009 we had no off balance sheet transactions 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.

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 3~~the ofAnnual ~~the~~Report ~~notes~~on toForm ~~our~~10-K ~~financial statements~~filed with SEC on October 29, 2009. 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 our management.

~~Impairment~~Use of ~~Long-Lived Assets~~Estimates

~~We account~~The ~~for~~preparation ~~impairment~~ of ~~plant~~financial ~~and~~statements ~~equipment~~in ~~and~~conformity ~~amortizable~~with ~~intangible~~accounting ~~assets in~~principles ~~accordance~~generally ~~with~~accepted ~~Statement~~in ofthe ~~Financial~~United ~~Accounts~~States ~~Standards~~of America (“~~SFAS~~US GAAP”) ~~No.~~requires ~~144~~management to make estimates and assumptions that affect the reported amounts of assets, ~~“Accounting~~ ~~for~~liabilities ~~Impairment~~and disclosure of ~~Long-Lived~~ ~~Assets~~contingent assets and ~~Long-Lived~~liabilities ~~Assets~~at tothe bedate ~~Disposed~~of ~~Of”,~~the ~~which~~financial statements, ~~requires~~and usthe toreported ~~evaluate~~amounts aof ~~long-lived~~revenues ~~asset~~and ~~for~~expenses ~~recoverability~~during ~~when~~the ~~there~~reporting ~~is event~~period. While ormanagement ~~circumstance~~believes that ~~indicates~~ the ~~carrying~~estimates ~~value~~and assumptions used in the preparation of the ~~asset~~financial ~~may~~statements ~~not~~are ~~be recoverable~~appropriate, actual results could differ from these estimates. An ~~impairment~~We ~~loss~~regularly isevaluate ~~recognized~~estimates ~~when~~and ~~the~~assumptions ~~carrying amount~~related ofto aobsolete inventory, useful life and recoverability of long- lived ~~asset~~assets, orand ~~asset~~goodwill. ~~group~~We isbase ~~not~~our ~~recoverable~~estimates ~~(when~~and ~~the~~assumptions on current facts, historical experience and various other factors ~~carrying~~that ~~amount~~we ~~exceeds~~believes to be reasonable under the ~~gross~~circumstances, ~~undiscounted~~the ~~cash~~results ~~flows~~of ~~from~~which ~~use~~form ~~and disposition)~~the ~~and~~basis isfor ~~measured~~making asjudgments about the ~~excess~~carrying values of assets and liabilities and the ~~carrying~~accrual ~~amount~~of ~~over~~costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the ~~asset’s~~ ~~(or~~extent ~~asset~~there ~~group’s)~~are ~~fair~~material ~~value~~differences between the estimates and the actual results, future results of operations will be affected.

~~Property and Equipment~~4

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

Machinery and equipment	14 years
Transportation equipment	12 years
Office equipment	10 years

Foreign currency translation

~~Our~~The reporting currency is the U.S. 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~~ASC ~~of Financial Accounts Standards (“SFAS”) No. 52~~830, “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 January 31, 2009, the cumulative translation adjustment of $43,682 was classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet. For the six months ended January 31, 2009 and 2008, other comprehensive income (loss) was $(687) and $2,391, 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 January 31, 2009, we used the period-end rates of exchange for assets and liabilities of $1 to RMB6.838. For the six months ended January 31, 2009 and 2008, we used the period’s average rate of exchange to convert revenues, costs, and expenses of $1 to RMB6.8386 and $1 to RMB7.4372, respectively. We used historical rates for equity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, (as defined in ~~Rules~~ Rule 13a-15(e) ~~and~~ ~~15d-15(e)~~promulgated ofunder the Securities Exchange Act of 1934, ~~as amended~~ (the “"Exchange Act”")), that are designed to ~~provide~~ensure ~~reasonable~~that ~~assurance the~~ information required to be ~~reported~~ disclosed by us in ~~our~~the reports that we file or submit under the Exchange Act ~~filings~~ is recorded, processed, summarized and reported within the time periods specified ~~and~~in ~~pursuant~~the to Securities and Exchange Commission's rules and forms, ~~including controls~~ and ~~procedures designed to ensure~~ that ~~this~~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 October 31, 2009. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls and disclosed in our Annual Report for the year ended July 31, 2009, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded our disclosure controls and procedures were (1) designed to ensure material information relating to our Company is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, in a timely manner, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information we are required to disclose in the reports filed or submitted 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.

Changes in Internal Controls

During the quarter ~~ended~~ ~~January~~covered ~~31,~~by ~~2009~~this period there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Our majority owned subsidiary, Harbin SQ, was named as a defendant in a lawsuit in which the plaintiffs alleged that illegal transfers and misleading promotion of Harbin SQ’s shares to the public occurred through securities brokers. The plaintiffs, 51 current stockholders representing 1,018,000 outstanding shares, acquired Harbin SQ’s shares through securities brokers from Harbin SQ’s initial stockholders and sought monetary damages from Harbin SQ, including the costs of acquiring the shares, expenses and imputed interest.

In September 2008 the claims of the plaintiffs were refuted in a judgment of the Court of Bin County, Heilongjiang Province. ~~Several~~On May 25, 2009, several of the ~~plaintiff’s~~ ~~have~~plaintiffs ~~now~~ appealed the decision to a higher court, but a date offor the hearing has not been set ~~as of March 13, 2009~~.

Our management is not aware of any other legal proceedings that have been threatened against us or any of our subsidiaries.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCCEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description
31.1	Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the 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

SIGNATURES

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

	China Wind Energy Inc.
	(Registrant)
	/s/ Shouquan Sun
Date: March 13, 2009	Shouquan Sun
Date: December 10, 2009	Shouquan Sun
	President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

10 7

Filing Compare · China Wind Energy Inc.