|   | § | Total      revenues were $105.49 million, up 243% from $30.72 million in      1Q09 |
|--------|--------|------------------------------------------------------------------------------------|

|   | § | Operating      income totaled $27.73 million, up 246% from $8.03 million in      1Q09 |
|--------|--------|---------------------------------------------------------------------------------------|

|   | § | Adjusted      net income attributable to controlling interest (excluding non-cash item      due to change in fair value of warrant) was $20.79 million, up 242% from      $6.08 million in 1Q09 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | GAAP      earnings attributable to controlling interest were $0.66 per diluted      share, compared with $0.39 in 1Q09 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | § | Adjusted      earnings attributable to controlling interest (excluding non-cash item due      to change in fair value of warrant) were $0.66 per diluted share, compared      with $0.27 in 1Q09 |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                  |   |   | 1Q10        |   |   |   | 1Q09       |   |   | YoY%Change |   |
|-----------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|------------|--------|
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |
| Revenue                                                               |   | $      | 105,485,157 |   |   | $      | 30,724,893 |   |   |       | 243    | % |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |
| Gross      Profit                                                     |   | $      | 35,742,070  |   |   | $      | 10,923,778 |   |   |       | 227    | % |
| Gross      Profit Margin                                              |   |   | 33.9        | %      |   |   | 35.6       | %      |   |       |   |   |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |
| Operating      Income                                                 |   | $      | 27,731,117  |   |   | $      | 8,025,592  |   |   |       | 246    | % |
| Operating      Margin                                                 |   |   | 26.3        | %      |   |   | 26.1       | %      |   |       |   |   |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |
| Net      Income Attributable to Controlling Interest                  |   | $      | 20,553,688  |   |   | $      | 8,654,334  |   |   |       | 137    | % |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |
| Adjusted      Net Income Attributable to Controlling Interest*        |   | $      | 20,787,766  |   |   | $      | 6,080,913  |   |   |       | 242    | % |
| Adjust      Net Margin*                                               |   |   | 19.7        | %      |   |   | 19.8       | %      |   |       |   |   |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |
| Diluted      EPS Attributable to Controlling Interest                 |   | $      | 0.66        |   |   | $      | 0.39       |   |   |       | 69     | % |
|  Adjusted      Diluted EPS Attributable to Controlling Interest* |   | $      | 0.66        |   |   | $      | 0.27       |   |   |       | 144    | % |
|                                                                  |   |   |        |   |   |   |       |   |   |       |   |   |

----

|                                                                                |   |   | Percent      of Total Revenues |   |
|-------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|
| Product      Line                                                                   |   |   | 1Q10                           |   |   |   | 1Q09 |   |
| Linear      Motors and Related Systems                                              |   |   | 18.8                           | %      |   |   | 40.3 | % |
| Specialty      Micro-Motors                                                         |   |   | 15.4                           | %      |   |   | 19.9 | % |
| Rotary      Motors                                                                  |   |   | 64.0                           | %      |   | 35.3 | %  |
|             Weihai      |   |   | 21.3                           | %      |   |   | 35.3 | %  |
|                  Xi’an |   |   | 42.7                           | %      |   |   | NA |   |
| Others                                                                              |   |   | 1.8                            | %      |   |   | 4.5 | % |
| Total                                                                               |   |   | 100                            | %      |   |   | 100 | % |
|                                                                                |   |   |                           |   |   |   |   |   |
| International      Sales                                                            |   |   | 6.7                            | %      |   |   | 10.6 | % |

----

|                                                          |   |   | 1Q10       |   |   |   | 1Q09       |   |
|---------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
| Net      Income Attributable to Controlling Interest          |   | $      | 20,553,688 |   |   | $      | 8,654,334  |   |
| Add      back (Deduct):                                       |   |   |       |   |   |   |       |   |
| Change      in fair value of warrant                          |   | $      | 234,078    |   |   | $      | (2,573,421 | )      |
| Adjusted      Net Income Attributable to Controlling Interest |   | $      | 20,787,766 |   |   | $      | 6,080,913  |   |
|                                                          |   |   |       |   |   |   |       |   |
| Diluted      EPS Attributable to Controlling Interest         |   | $      | 0.66       |   |   | $      | 0.39       |   |
| Add      back (Deduct):                                       |   |   |       |   |   |   |       |   |
| Change      in fair value of warrant                          |   | $      | 0.00       |   |   | $      | (0.12      | )      |
| Adjusted      EPS Attributable to Controlling Interest        |   | $      | 0.66       |   |   | $      | 0.27       |   |

|                                                                                |   |   | Gross      Profit Margin |   |
|-------------------------------------------------------------------------------------|--------|--------|--------------------------|--------|
| Product      Line                                                                   |   |   | 1Q10                     |   |   |   | 1Q09 |   |
| Linear      Motors and Related Systems                                              |   |   | 59.8                     | %      |   |   | 54.1 | % |
| Specialty      Micro-Motors                                                         |   |   | 38.2                     | %      |   |   | 40.1 | % |
| Rotary      Motors                                                                  |   |   |                     |   |   |   |   |
|             Weihai      |   |   | 12.7                     | %      |   |   | 10.1 | % |
|                  Xi’an |   |   | 31.1                     | %      |   |   | NA |   |
| Others                                                                              |   |   | 41.3                     | %      |   |   | 49.3 | % |
| Corporate      Average                                                              |   |   | 33.9                     | %      |   |   | 35.6 | % |

----

----

|   | USA: | 1-800-603-1779 |
|--------|------|----------------|

|   | International: | 1-706-643-7429 |
|--------|----------------|----------------|

|   | North      China: | 10-800-713-0924 |
|--------|-------------------|-----------------|

|   | South      China: | 10-800-130-0748 |
|--------|-------------------|-----------------|

|   | USA: | 1-800-642-1687 |
|--------|------|----------------|

|   | International: | 1-706-645-9291 |
|--------|----------------|----------------|

----

----

HARBIN ELECTRIC, INC. AND SUBSIDIARIES

| ASSETS                                                                |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   | March      31, |   |   | December      31, |   |
|                                                                  |   | 2010 |   |   | 2009 |   |
|                                                                  |   | (Unaudited) |   |   |   |   |
| CURRENT      ASSETS:                                                  |   |   |   |   |   |   |
| Cash      and cash equivalents                                        |   | $ | 77,817,097 |   |   | $ | 92,902,400 |   |
| Restricted      cash                                                  |   |   | 3,004,892 |   |   |   | 3,522,009 |   |
| Notes      receivable                                                 |   |   | 1,290,371 |   |   |   | 1,086,929 |   |
| Accounts      receivable, net                                         |   |   | 104,919,312 |   |   |   | 93,322,885 |   |
| Inventories                                                           |   |   | 75,590,773 |   |   |   | 74,913,877 |   |
| Other      receivables & prepaid expenses                         |   |   | 4,783,373 |   |   |   | 5,828,453 |   |
| Advances      on inventory purchases                                  |   |   | 11,003,248 |   |   |   | 11,718,544 |   |
| Total      current assets                                             |   |   | 278,409,066 |   |   |   | 283,295,097 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| PLANT      AND EQUIPMENT, net                                         |   |   | 155,494,122 |   |   |   | 156,364,548 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| OTHER      ASSETS:                                                    |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Debt      issuance costs, net                                         |   |   | 218,287 |   |   |   | 359,255 |   |
| Advance      on non-current assets                                    |   |   | 13,659,178 |   |   |   | 13,666,414 |   |
| Goodwill                                                              |   |   | 54,073,754 |   |   |   | 54,073,754 |   |
| Other      intangible assets, net of accumulated amortization         |   |   | 21,174,757 |   |   |   | 21,472,471 |   |
| Other      assets                                                     |   |   | 1,351,103 |   |   |   | 1,722,693 |   |
| Total      other assets                                               |   |   | 90,477,079 |   |   |   | 91,294,587 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Total      assets                                                     |   | $ | 524,380,267 |   |   | $ | 530,954,232 |   |
|                                                                  |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |
| LIABILITIES AND      SHAREHOLDERS' EQUITY                             |   |
|                                                                  |   |   |   |   |   |   |   |   |
| CURRENT      LIABILITIES:                                             |   |   |   |   |   |   |   |   |
| Notes      payable - short term                                       |   | $ | 3,499,033 |   |   | $ | 4,533,268 |   |
| Accounts      payable                                                 |   |   | 48,963,748 |   |   |   | 47,099,135 |   |
| Short      term loans                                                 |   |   | 45,648,772 |   |   |   | 44,439,629 |   |
| Customer      deposits                                                |   |   | 17,668,799 |   |   |   | 18,455,842 |   |
| Accrued      liabilities and other payables                           |   |   | 10,661,137 |   |   |   | 12,329,394 |   |
| Taxes      payable                                                    |   |   | 9,427,232 |   |   |   | 8,233,862 |   |
| Amounts      due to original shareholders                             |   |   | 733,500 |   |   |   | 28,681,976 |   |
| Current      portion of notes payable, net                            |   |   | 4,770,745 |   |   |   | 7,660,210 |   |
| Current      portion of long term bank loans                          |   |   | 4,401,000 |   |   |   | - |   |
| Total      current liabilities                                        |   |   | 145,773,966 |   |   |   | 171,433,316 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| LONG      TERM LIABILITIES:                                           |   |   |   |   |   |   |   |   |
| Long      term bank loans                                             |   |   | - |   |   |   | 4,401,000 |   |
| Warrant      liability                                                |   |   | 4,857,636 |   |   |   | 4,623,558 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Total      liabilities                                                |   |   | 150,631,602 |   |   |   | 180,457,874 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                    |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |
| SHAREHOLDERS'      EQUITY:                                            |   |   |   |   |   |   |   |   |
| Common      Stock, $0.00001 par value, 100,000,000 shares authorized, |   |   |   |   |   |   |   |   |
| 31,067,471      and 31,067,471 shares issued and outstanding          |   |   |   |   |   |   |   |   |
| as      of March 31, 2010 and December 31, 2009, respectively         |   |   | 310 |   |   |   | 310 |   |
| Paid-in-capital                                                       |   |   | 218,349,044 |   |   |   | 218,094,374 |   |
| Retained      earnings                                                |   |   | 87,844,800 |   |   |   | 69,594,111 |   |
| Statutory      reserves                                               |   |   | 25,172,422 |   |   |   | 22,869,423 |   |
| Accumulated      other comprehensive income                           |   |   | 18,729,093 |   |   |   | 18,638,299 |   |
| Total      shareholders' equity                                       |   |   | 350,095,669 |   |   |   | 329,196,517 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| NONCONTROLLING      INTERESTS                                         |   |   | 23,652,996 |   |   |   | 21,299,841 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Total      liabilities and shareholders' equity                       |   | $ | 524,380,267 |   |   | $ | 530,954,232 |   |

----

|                                                                                      |   | 2010   |        |   | 2009   |   |
|-------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                                                      |   |   |        |   |   |   |
| REVENUES                                                                                  |   | $      | 105,485,157 |   |   | $      | 30,724,893 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| COST      OF SALES                                                                        |   |   | 69,743,087  |   |   |   | 19,801,115 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| GROSS      PROFIT                                                                         |   |   | 35,742,070  |   |   |   | 10,923,778 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| RESEARCH      AND DEVELOPMENT EXPENSE                                                     |   |   | 594,195     |   |   |   | 393,282 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| SELLING,      GENERAL AND  ADMINISTRATIVE EXPENSES                              |   |   | 7,416,758   |   |   |   | 2,504,904 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| INCOME      FROM OPERATIONS                                                               |   |   | 27,731,117  |   |   |   | 8,025,592 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| OTHER      EXPENSE (INCOME), NET                                                          |   |   |        |   |   |   |   |   |
| Other      income, net                                                                    |   |   | (1,119,286  | )      |   |   | (539,379 | ) |
| Interest      expense, net                                                                |   |   | 1,646,923   |   |   |   | 1,441,384 |   |
| Change      in fair value of warrants                                                     |   |   | 234,078     |   |   |   | (2,573,421 | ) |
|     Total      other expense (income), net                            |   |   | 761,715     |   |   |   | (1,671,416 | ) |
|                                                                                      |   |   |        |   |   |   |   |   |
| INCOME      BEFORE PROVISION FOR INCOME TAXES                                             |   |   | 26,969,402  |   |   |   | 9,697,008 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| PROVISION      FOR INCOME TAXES                                                           |   |   | 4,063,361   |   |   |   | 1,042,674 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| NET      INCOME BEFORE NONCONTROLLING INTEREST                                            |   |   | 22,906,041  |   |   |   | 8,654,334 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| LESS:      NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST                             |   |   | 2,352,353   |   |   |   | - |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| NET      INCOME ATTRIBUTABLE TO CONTROLLING INTEREST                                      |   |   | 20,553,688  |   |   |   | 8,654,334 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| OTHER      COMPREHENSIVE INCOME (LOSS)                                                    |   |   |        |   |   |   |   |   |
| Foreign      currency translation adjustment                                              |   |   | 91,596      |   |   |   | (285,368 | ) |
| Foreign      currency translation adjustment attributable to noncontrolling      interest |   |   | (802        | )      |   |   | - |   |
| Change      in fair value of derivative instrument                                        |   |   | -           |   |   |   | (2,529,076 | ) |
|                                                                                      |   |   |        |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                                 |   | $      | 20,644,482  |   |   | $      | 5,839,890 |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| EARNINGS      PER SHARE                                                                   |   |   |        |   |   |   |   |   |
| Basic                                                                                     |   |   |        |   |   |   |   |   |
|     Weighted      average number of shares                            |   |   | 31,067,471  |   |   |   | 22,102,078 |   |
|     Earnings      per share before noncontrolling interest            |   | $      | 0.74        |   |   | $      | 0.39 |   |
|     Earnings      per share attributable to controlling interest      |   | $      | 0.66        |   |   | $      | 0.39 |   |
|     Earnings      per share attributable to noncontrolling interest   |   | $      | 0.08        |   |   | $      | - |   |
|                                                                                      |   |   |        |   |   |   |   |   |
| Diluted                                                                                   |   |   |        |   |   |   |   |   |
|     Weighted      average number of shares                            |   |   | 31,353,863  |   |   |   | 22,158,573 |   |
|     Earnings      per share before noncontrolling interest            |   | $      | 0.73        |   |   | $      | 0.39 |   |
|     Earnings      per share attributable to controlling interest      |   | $      | 0.66        |   |   | $      | 0.39 |   |
|     Earnings      per share attributable to noncontrolling interest   |   | $      | 0.07        |   |   | $      | - |   |

----

HARBIN ELECTRIC, INC. AND SUBSIDIARIES

|                                                      |   | 2010   |        |   | 2009   |   |
|-----------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                |   |   |        |   |   |   |
| Net      income attributable to noncontrolling interest   |   | $      | 2,352,353   |   |   | $      | - |   |
| Net      income attributable to controlling interest      |   |   | 20,553,688  |   |   |   | 8,654,334 |   |
| Consolidated      net income                              |   |   | 22,906,041  |   |   |   | 8,654,334 |   |
| Adjustments      to reconcile net income to cash          |   |   |        |   |   |   |   |   |
| provided      by (used in) operating activities:          |   |   |        |   |   |   |   |   |
| Depreciation                                              |   |   | 1,888,108   |   |   |   | 667,780 |   |
| Amortization      of intangible assets                    |   |   | 365,848     |   |   |   | 292,927 |   |
| Amortization      of debt issuance costs                  |   |   | 140,968     |   |   |   | 135,610 |   |
| Amortization      of debt discount                        |   |   | 910,535     |   |   |   | 1,122,614 |   |
| Provision      for bad debt expense                       |   |   | 45,384      |   |   |   | - |   |
| Share-based      compensation                             |   |   | 254,669     |   |   |   | 341,362 |   |
| Loss      on derivative instrument                        |   |   | -           |   |   |   | 219,188 |   |
| Loss      on disposal of equipment                        |   |   | 45,880      |   |   |   | - |   |
| Change      in fair value of warrants                     |   |   | 234,078     |   |   |   | (2,573,421 | ) |
|        Change in operating assets and liabilities    |   |   |        |   |   |   |   |   |
| Notes      receivable                                     |   |   | (104,501    | )      |   |   | 1,354,449 |   |
| Accounts      receivable                                  |   |   | (11,637,766 | )      |   |   | 10,111,075 |   |
| Inventories                                               |   |   | (665,548    | )      |   |   | 3,250,970 |   |
| Other      receivables & prepaid expenses             |   |   | 1,044,592   |   |   |   | (1,379,675 | ) |
| Advances      on inventory purchases                      |   |   | 699,662     |   |   |   | 98,070 |   |
| Other      assets                                         |   |   | 371,477     |   |   |   | (37,918 | ) |
| Accounts      payable                                     |   |   | 2,039,115   |   |   |   | (298,129 | ) |
| Accrued      liabilities and other payables               |   |   | (1,599,798  | )      |   |   | (1,613,002 | ) |
| Customer      deposits                                    |   |   | (786,773    | )      |   |   | 1,865,532 |   |
| Taxes      payable                                        |   |   | 1,192,964   |   |   |   | 670,942 |   |
| Net      cash  provided by operating activities |   |   | 17,344,935  |   |   |   | 22,882,708 |   |
|                                                      |   |   |        |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                |   |   |        |   |   |   |   |   |
| Payment      for advances on intangible assets            |   |   | -           |   |   |   | (1,233,614 | ) |
| Payment      for advances on equipment purchases          |   |   | 22,623      |   |   |   | - |   |
| Purchase      of intangible assets                        |   |   | (68,236     | )      |   |   | (30,555 | ) |
| Purchase      of plant and equipment                      |   |   | (1,466,942  | )      |   |   | (175,791 | ) |
| Additions      to construction-in-progress                |   |   | 121,648     |   |   |   | (3,360,011 | ) |
| Proceeds      from disposal of equipments                 |   |   | 10,467      |   |   |   | - |   |
| Payment      to original shareholders for acquisition     |   |   | (27,938,951 | )      |   |   | - |   |
| Net      cash used in investing activities                |   |   | (29,319,391 | )      |   |   | (4,799,971 | ) |
|                                                      |   |   |        |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                |   |   |        |   |   |   |   |   |
| Decrease      in restricted cash                          |   |   | 516,941     |   |   |   | 512,785 |   |
| Payment      on cross currency hedge                      |   |   | -           |   |   |   | (332,027 | ) |
| Payment      on notes payable                             |   |   | (3,800,000  | )      |   |   | (2,000,000 | ) |
| Increase      of notes payable-short term                 |   |   | 1,019,218   |   |   |   | - |   |
| Payment      on notes payable-short term                  |   |   | (2,053,100  | )      |   |   | (1,025,570 | ) |
| Proceeds      from short term loan-bank                   |   |   | 3,372,950   |   |   |   | - |   |
| Repayment      of short term loan-bank                    |   |   | (2,199,750  | )      |   |   | - |   |
| Proceeds      from short term loan-other                  |   |   | 35,531      |   |   |   | - |   |
| Net      cash used in financing activities                |   |   | (3,108,210  | )      |   |   | (2,844,812 | ) |
|                                                      |   |   |        |   |   |   |   |   |
| EFFECTS      OF EXCHANGE RATE CHANGE ON CASH              |   |   | (2,637      | )      |   |   | (79,407 | ) |
|                                                      |   |   |        |   |   |   |   |   |
| (DECREASE)      INCREASE IN CASH                          |   |   | (15,085,303 | )      |   |   | 15,158,518 |   |
|                                                      |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents, beginning of period       |   |   | 92,902,400  |   |   |   | 48,412,263 |   |
|                                                      |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents, end of period             |   | $      | 77,817,097  |   |   | $      | 63,570,781 |   |

----