**Exhibit      99.1**

**Harbin      Electric Announces Earnings for the Third Quarter of Fiscal Year      2006**

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**HARBIN      ELECTRIC, INC. & SUBSIDIARIES**

**CONSOLIDATED      BALANCE SHEET**

**(UNAUDITED)**

|   | **ASSETS**                    |        |
|--------|-------------------------------|--------|
|   | CURRENT                ASSETS |   |

| Cash                & cash equivalents                                    |   | $      | 60,593,769 |   |
|-------------------------------------------------------------------------------|--------|--------|------------|--------|
| Accounts                receivable, net of allowance of $29,837               |   |   | 9,586,547  |   |
| Inventory                                                                     |   |   | 464,116    |   |
| Advances                to suppliers                                          |   |   | 2,642,269  |   |
| Other                assets                                                   |   |   | 2,546,286  |   |
| Debt                issue cost, net of amortization of $39,656                |   |   | 2,914,977  |   |
| Total                current assets                                           |   |   | 78,747,964 |   |
|                                                                          |   |   |       |   |
| PROPERTY                AND EQUIPMENT, net                                    |   |   | 8,284,718  |   |
|                                                                          |   |   |       |   |
| INTANGIBLE                ASSETS, net                                         |   |   | 320,380    |   |
|                                                                          |   |   |       |   |
| TOTAL                ASSETS                                                   |   | $      | 87,353,062 |   |
|                                                                          |   |   |       |   |
|                                                                          |   |   |       |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                       |   |   |       |   |
| CURRENT                LIABILITIES                                            |   |   |       |   |
| Accounts                payable                                               |   | $      | 1,199,870  |   |
| Interest                payable                                               |   |   | 277,778    |   |
| Payment                in advance                                             |   |   | 435,165    |   |
| Total                current liabilities                                      |   |   | 1,912,813  |   |
|                                                                          |   |   |       |   |
| NOTES                PAYABLE, net of debt discount $22,543,435                |   |   | 27,456,565 |   |
|                                                                          |   |   |       |   |
| WARRANT                LIABILITY                                              |   |   | 20,740,142 |   |
|                                                                          |   |   |       |   |
| TOTAL                LIABILITIES                                              |   |   | 50,109,520 |   |
|                                                                          |   |   |       |   |
| STOCKHOLDERS'                EQUITY                                           |   |   |       |   |
| Common                stock, .00001 par value; authorized shares 100,000,000; |   |   |       |   |
| issued                and outstanding 16,600,451 shares                       |   |   | 166        |   |
| Additional                paid in capital                                     |   |   | 12,039,975 |   |
| Statutory                reserves                                             |   |   | 3,496,829  |   |
| Accumulated                other comprehensive income                         |   |   | 1,140,392  |   |
| Retained                earnings                                              |   |   | 20,566,179 |   |
| Total                stockholders' equity                                     |   |   | 37,243,541 |   |
|                                                                          |   |   |       |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                     |   | $      | 87,353,062 |   |

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**HARBIN      ELECTRIC, INC. & SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

|                                                          |   | **FOR                THE THREE MONTH** |       | **FOR                THE NINE MONTH** |   |
|---------------------------------------------------------------|--------|----------------------------------------|------------|---------------------------------------|--------|
|                                                          |   | **PERIODS                ENDED**       |       | **PERIODS                ENDED**      |   |
|                                                          |   | **Sept.                30, 2006**      |       | **Sept.                30, 2005**     |   | **Sept.                30, 2006** |   | **Sept.                30, 2005** |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |
| Net                revenue                                    |   | $                                      | 9,817,053  |                                  | $      | 7,044,014 |   | $ | 28,407,056 |   | $ | 16,446,753 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Cost                of revenue                                |   |                                   | 5,012,556  |                                  |   | 3,665,271 |   |   | 14,528,032 |   |   | 8,263,351 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Gross                profit                                   |   |                                   | 4,804,497  |                                  |   | 3,378,743 |   |   | 13,879,024 |   |   | 8,183,402 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                            |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Selling                expenses                               |   |                                   | 227,566    |                                  |   | 100,923 |   |   | 652,172 |   |   | 225,256 |   |
| General                and administrative expenses            |   |                                   | 1,804,274  |                                  |   | 302,586 |   |   | 3,637,275 |   |   | 696,587 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Total                operating expenses                       |   |                                   | 2,031,840  |                                  |   | 403,509 |   |   | 4,289,447 |   |   | 921,843 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Income                from operations                         |   |                                   | 2,772,657  |                                  |   | 2,975,234 |   |   | 9,589,577 |   |   | 7,261,559 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Non-operating                income                           |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Realized                gain on sale of marketable securities |   |                                   | -          |                                  |   | - |   |   | 571,143 |   |   | - |   |
| Interest                income                                |   |                                   | 26,569     |                                  |   | - |   |   | 57,601 |   |   | - |   |
| Other                expense                                  |   |                                   | (697,040   | )                                     |   | - |   |   | (643,893 | ) |   | - |   |
| Change                in fair value of warrants               |   |                                   | 2,180,970  |                                  |   | 8,810 |   |   | 2,180,970 |   |   | 22,928 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Net                income                                     |   |                                   | 4,283,156  |                                  |   | 2,984,044 |   |   | 11,755,399 |   |   | 7,284,487 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Other                comprehensive item:                      |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Unrealized                gain(loss) on marketable securities |   |                                   | -          |                                  |   | 120,400 |   |   | - |   |   | (25,245 | ) |
| Translation                gain                               |   |                                   | 407,742    |                                  |   | - |   |   | 730,097 |   |   | - |   |
| Reclassification                adjustment for gains          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| on                sale of marketable securities               |   |                                   | -          |                                  |   | - |   |   | (587,171 | ) |   | - |   |
| Comprehensive                income                           |   |                                   | 4,690,898  |                                  |   | 3,104,444 |   |   | 11,898,324 |   |   | 7,259,242 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Basic                weighted average shares outstanding      |   |                                   | 16,600,451 |                                  |   | 15,539,580 |   |   | 16,600,451 |   |   | 14,929,350 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Basic                net earnings per share                   |   | $                                      | 0.26       |                                  | $      | 0.19 |   | $ | 0.71 |   | $ | 0.49 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Diluted                weighted average shares outstanding    |   |                                   | 17,495,254 |                                  |   | 15,554,012 |   |   | 19,235,134 |   |   | 14,929,350 |   |
|                                                          |   |                                   |       |                                  |   |   |   |   |   |   |   |   |   |
| Diluted                net earnings per share                 |   | $                                      | 0.24       |                                  | $      | 0.19 |   | $ | 0.61 |   | $ | 0.49 |   |

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**HARBIN      ELECTRIC, INC. & SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

|                                                                         |   | **FOR                THE NINE MONTH** |        |
|------------------------------------------------------------------------------|--------|---------------------------------------|-------------|
|                                                                         |   | **PERIODS                ENDED**      |        |
|                                                                         |   | **September                30, 2006** |        | **September                30, 2005** |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                         |   |                                  |        |
| Net                income                                                    |   | $                                     | 11,755,399  |   | $ | 7,284,487 |   |
| Adjustments                to reconcile net income to net cash               |   |                                  |        |
| provided                by operating activities:                             |   |                                  |        |
| Depreciation                                                                 |   |                                  | 180,438     |   |   | 317,915 |   |
| Amortization                                                                 |   |                                  | 34,402      |   |   | 14,924 |   |
| Change                in fair value of warrants                              |   |                                  | (2,180,970  | ) |   | - |   |
| Realized                gain on sale of marketable securities                |   |                                  | (571,143    | ) |   | - |   |
| Stock                based compensation                                      |   |                                  | 701,918     |   |   | - |   |
| (Increase)                decrease in current assets:                        |   |                                  |        |
| Accounts                receivable                                           |   |                                  | (3,540,547  | ) |   | (3,888,253 | ) |
| Inventory                                                                    |   |                                  | 894,533     |   |   | (495,409 | ) |
| Advances                to suppliers                                         |   |                                  | 769,575     |   |   | (2,468,746 | ) |
| Other                assets                                                  |   |                                  | (3,134,032  | ) |   | - |   |
| Increase                in current liabilities:                              |   |                                  |        |
| Accounts                payable                                              |   |                                  | 773,880     |   |   | 326,322 |   |
| Payment                in advance                                            |   |                                  | 429,661     |   |   | - |   |
| Accrued                expenses                                              |   |                                  | -           |   |   | (208,096 | ) |
| Net                cash provided by operating activities                     |   |                                  | 6,113,114   |   |   | 883,144 |   |
|                                                                         |   |                                  |        |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES                          |   |                                  |        |
| Proceeds                from sale of marketable securities                   |   |                                  | 1,093,165   |   |   | - |   |
| Acquisition                of intangible assets                              |   |                                  | -           |   |   | (266,200 | ) |
| Acquisition                on property & equipment                       |   |                                  | (534,113    | ) |   | (2,108,171 | ) |
| Net                cash provided by (used in) investing activities           |   |                                  | 559,052     |   |   | (2,374,371 | ) |
|                                                                         |   |                                  |        |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                         |   |                                  |        |
| Debt                issuance cost                                            |   |                                  | (2,914,977  | ) |   | - |   |
| Debt                discounts                                                |   |                                  | (22,543,435 | ) |   | - |   |
| Notes                payable                                                 |   |                                  | 50,000,000  |   |   | - |   |
| Interest                payable                                              |   |                                  | 277,778     |   |   | - |   |
| Warrant                liabilities                                           |   |                                  | 22,921,112  |   |   | - |   |
| Capital                contribution                                          |   |                                  | 39,081      |   |   | - |   |
| Advances                to related party                                     |   |                                  | -           |   |   | 84,520 |   |
| Cash                received from shares                                     |   |                                  | -           |   |   | 4,800,000 |   |
| Net                cash provided by financing activities                     |   |                                  | 47,779,559  |   |   | 4,884,520 |   |
|                                                                         |   |                                  |        |   |   |   |   |
| EFFECT                OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS |   |                                  | 403,025     |   |   | - |   |
|                                                                         |   |                                  |        |   |   |   |   |
| NET                INCREASE IN CASH & CASH EQUIVALENTS                   |   |                                  | 54,854,750  |   |   | 3,393,293 |   |
|                                                                         |   |                                  |        |   |   |   |   |
| CASH                & CASH EQUIVALENTS, BEGINNING OF PERIOD              |   |                                  | 5,739,019   |   |   | 2,210,803 |   |
|                                                                         |   |                                  |        |   |   |   |   |
| CASH                & CASH EQUIVALENTS, END OF PERIOD                    |   | $                                     | 60,593,769  |   | $ | 5,604,096 |   |