----

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**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**(Amendment      No.1)**

**Form      10-Q/A**

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| x | QUARTERLY                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|---|-----------------------------------------------------------------------------------------------------------------------|

| o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE                ACT OF 1934 |
|---|------------------------------------------------------------------------------------------------------------------------------|

**HARBIN      ELECTRIC, INC.**

| **Nevada**                                                                                  | **98-0403396**                                                       |
|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                EmployerIdentification                Number) |

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**      No. 9 Ha Ping Xi Lu, Ha Ping Lu Ji Zhong Qu**

**Harbin      Kai Fa Qu, Harbin, People’s Republic of China 150060**

**Telephone:      86-451-86116757**

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| Large                accelerated filer  o | Accelerated                filer x | Non-accelerated                filer o |
|-----------------------------------------------------|-----------------------------------------|---------------------------------------------|

|   | Yes                o                No                x |
|--------|---------------------------------------------------------|

**APPLICABLE      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS      DURING THE PRECEDING FIVE YEARS**

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

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**EXPLANATORY        NOTE **

| (i)   | Part                  I. Item 1. Financial Statements |
|-------|-------------------------------------------------------|
| (ii)  | Part                  II. Item 6. Exhibits            |
| (iii) | Signatures                                            |
| (iv)  | Index                  to Exhibits                    |

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**TABLE      OF CONTENTS**

|                                                                                                                                                                                                     |   |   **Page**                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|
| **Part                I. Financial Information**                                                                                                                                                         |   |                      |
|                                                                                                                                                                                                     |   |                      |
| Item                1. Financial Statements                                                                                                                                                              |   | 1                                   |
|                                                                                                                                                                                                     |   |                                |
| Consolidated                Balance SheetsAs                of June 30, 2008 (Unaudited) and December 31, 2007                                                                                           |   |                    1      |
|                                                                                                                                                                                                     |   |                                |
| Consolidated                Statements of Income and Other Comprehensive Income                (Unaudited)For                the Three Months and Six Months Ended June 30, 2008 and                2007 |   |                    2      |
|                                                                                                                                                                                                     |   |                                |
| Consolidated                Statements of Stockholders’ Equity (Unaudited)                                                                                                                         |   |                    3      |
|                                                                                                                                                                                                     |   |                                |
| Consolidated                Statements of Cash Flows (Unaudited)For                the Six Months Ended June 30, 2008 and 2007                                                                           |   |                    4      |
|                                                                                                                                                                                                     |   |                                |
| Notes                to the Consolidated Financial Statements (Unaudited)                                                                                                                                |   |                    5      |
|                                                                                                                                                                                                     |   |                           |
| **Part                II. Other Information**                                                                                                                                                            |   |                      |
|                                                                                                                                                                                                     |   |                                |
| Item                6. Exhibits.                                                                                                                                                                         |   |                    45     |
|                                                                                                                                                                                                     |   |                                |
| Signatures                                                                                                                                                                                               |   |     50          |
|                                                                                                                                                                                                     |   |                                |
| Index                to Exhibits                                                                                                                                                                         |   |     50          |

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**PART      I. FINANCIAL INFORMATION**

**Item      1. Financial Statements (Unaudited)**

|                                                                                                                                                                                                                                                                  |   | June                  30, |        | December                  31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|-------------------------------|--------|
|                                                                                                                                                                                                                                                                  |   | 2008                      |        | 2007                          |   |
|                                                                                                                                                                                                                                                                  |   | UNAUDITED                 |        |                          |   |
| A                  S S E T S                                                                                                                                                                                                                                          |   |                      |        |                          |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |
| CURRENT                  ASSETS:                                                                                                                                                                                                                                      |   |                      |        |                          |   |   |   |
| Cash                  and Cash equivalents                                                                                                                                                                                                                            |   | $                         | 87,775,039  |                          | $      | 45,533,893 |   |
| Accounts                  receivable, net of allowance for doubtful accounts of $123,699                  and                  $116,238 as of June 30, 2008 and December 31, 2007,                  respectively                                                      |   |                      | 26,151,560  |                          |   | 23,216,543 |   |
| Inventories                                                                                                                                                                                                                                                           |   |                      | 2,201,708   |                          |   | 2,570,929 |   |
| Other                  receivables                                                                                                                                                                                                                                    |   |                      | 140,023     |                          |   | 326,639 |   |
| Advances                  on inventory purchases                                                                                                                                                                                                                      |   |                      | 3,660,168   |                          |   | 1,772,204 |   |
| Total                  current assets                                                                                                                                                                                                                                 |   |                      | 119,928,498 |                          |   | 73,420,208 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| PLANT                  AND EQUIPMENT, net                                                                                                                                                                                                                             |   |                      | 32,252,654  |                          |   | 23,858,035 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| OTHER                  ASSETS:                                                                                                                                                                                                                                        |   |                      |        |                          |   |   |   |
| Debt                  issue costs, net of amortization                                                                                                                                                                                                                |   |                      | 1,862,770   |                          |   | 2,214,717 |   |
| Advances                  on equipment purchases                                                                                                                                                                                                                      |   |                      | 36,907,824  |                          |   | 24,328,386 |   |
| Advances                  on intangible assets                                                                                                                                                                                                                        |   |                      | 1,473,590   |                          |   | 1,384,710 |   |
| Deposits                  on acquisition                                                                                                                                                                                                                              |   |                      | 729,500     |                          |   | - |   |
| Intangible                  assets, net of accumulated amortization                                                                                                                                                                                                   |   |                      | 5,772,903   |                          |   | 5,899,989 |   |
| Other                  assets                                                                                                                                                                                                                                         |   |                      | 424,870     |                          |   | 397,263 |   |
| Cross                  currency hedge receivable                                                                                                                                                                                                                      |   |                      | 192,731     |                          |   | 145,945 |   |
| Deposit                  in derivative hedge                                                                                                                                                                                                                          |   |                      | 1,000,000   |                          |   | 1,000,000 |   |
| Total                  other assets                                                                                                                                                                                                                                   |   |                      | 48,364,188  |                          |   | 35,371,010 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| Total                  assets                                                                                                                                                                                                                                         |   | $                         | 200,545,340 |                          | $      | 132,649,253 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| L                  I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T                  Y                                                                                                                                                                    |   |                      |        |                          |   |   |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| CURRENT                  LIABILITIES:                                                                                                                                                                                                                                 |   |                      |        |                          |   |   |   |
| Accounts                  payable                                                                                                                                                                                                                                     |   | $                         | 163,182     |                          | $      | 263,314 |   |
| Other                  payables & Accrued Liabilities                                                                                                                                                                                                             |   |                      | 198,880     |                          |   | 1,463,218 |   |
| Other                  payables - related party                                                                                                                                                                                                                       |   |                      | -           |                          |   | 45,491 |   |
| Customer                  deposits                                                                                                                                                                                                                                    |   |                      | 306,925     |                          |   | 333,253 |   |
| Taxes                  payable                                                                                                                                                                                                                                        |   |                      | 2,020,409   |                          |   | 839,299 |   |
| Interest                  payable                                                                                                                                                                                                                                     |   |                      | 1,041,769   |                          |   | 1,122,000 |   |
| Total                  current liabilities                                                                                                                                                                                                                            |   |                      | 3,731,165   |                          |   | 4,066,575 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| NOTES                  PAYABLE, net of debt discount $14,575,398 and $16,878,269 as of                  June 30,                  2008 and December 31, 2007, respectively                                                                                            |   |                      | 33,424,602  |                          |   | 33,121,731 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| FAIR                  VALUE OF DERIVATIVE INSTRUMENT                                                                                                                                                                                                                  |   |                      | 11,094,006  |                          |   | 10,844,372 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
|  Total                  liabilities                                                                                                                                                                                                                              |   |                      | 48,249,773  |                          |   | 48,032,678 |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                                                                                                                                                                                                                        |   |                      | -           |                          |   | - |   |
|                                                                                                                                                                                                                                                                  |   |                      |        |                          |   |   |   |
| SHAREHOLDERS'                  EQUITY:                                                                                                                                                                                                                                |   |                      |        |                          |   |   |   |
| Common                  Stock, $0.00001 par value, 100,000,000 shares authorized, 21,870,456                  and                  18,143,156 shares issued and outstanding as of June 30, 2008 and                  December                  31, 2007, respectively |   |                      | 219         |                          |   | 181 |   |
| Paid-in-capital                                                                                                                                                                                                                                                       |   |                      | 92,959,310  |                          |   | 44,970,589 |   |
| Retained                  earnings                                                                                                                                                                                                                                    |   |                      | 41,815,734  |                          |   | 32,281,312 |   |
| Statutory                  reserves                                                                                                                                                                                                                                   |   |                      | 11,064,220  |                          |   | 9,014,462 |   |
| Accumulated                  other comprehensive loss                                                                                                                                                                                                                 |   |                      | 6,456,084   |                          |   | (1,649,969 | ) |
| Total                  shareholders' equity                                                                                                                                                                                                                           |   |                      | 152,295,567 |                          |   | 84,616,575 |   |
| Total                  liabilities and shareholders' equity                                                                                                                                                                                                           |   | $                         | 200,545,340 |                          | $      | 132,649,253 |   |

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|                                                           |   | FOR                  THE THREE MONTHS |       | FOR                  THE SIX MONTHS |   |
|----------------------------------------------------------------|--------|---------------------------------------|------------|-------------------------------------|--------|
|                                                           |   | ENDED                  JUNE 30,       |       | ENDED                  JUNE 30,     |   |
|                                                           |   | 2008                                  |       | 2007                                |   | 2008 |   | 2007 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |
| REVENUES                                                       |   | $                                     | 23,959,073 |                                | $      | 13,989,693 |   | $ | 46,417,258 |   | $ | 27,615,907 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| COST                  OF SALES                                 |   |                                  | 12,502,939 |                                |   | 6,769,323 |   |   | 24,201,647 |   |   | 13,537,609 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| GROSS                  PROFIT                                  |   |                                  | 11,456,134 |                                |   | 7,220,370 |   |   | 22,215,611 |   |   | 14,078,298 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| RESEARCH                  AND DEVELOPMENT EXPENSE              |   |                                  | 186,676    |                                |   | 235,519 |   |   | 284,371 |   |   | 453,359 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| SELLING,                  GENERAL AND ADMINISTRATIVE EXPENSES  |   |                                  | 3,044,821  |                                |   | 1,445,858 |   |   | 5,070,780 |   |   | 2,960,321 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| INCOME                  FROM OPERATIONS                        |   |                                  | 8,224,637  |                                |   | 5,538,993 |   |   | 16,860,460 |   |   | 10,664,618 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| OTHER                  EXPENSE (INCOME), NET                   |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Other                  income, net                             |   |                                  | (24,824    | )                                   |   | (6,854 | ) |   | (29,611 | ) |   | (9,310 | ) |
| Non-operating                  income, net                     |   |                                  | (231,555   | )                                   |   | (757,087 | ) |   | (217,578 | ) |   | (763,408 | ) |
| Interest                  expense, net                         |   |                                  | 1,194,731  |                                |   | 1,746,778 |   |   | 3,477,511 |   |   | 3,477,117 |   |
| Total                  other expense, net                      |   |                                  | 938,352    |                                |   | 982,837 |   |   | 3,230,322 |   |   | 2,704,399 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| INCOME                  BEFORE PROVISION FOR INCOME TAXES      |   |                                  | 7,286,285  |                                |   | 4,556,156 |   |   | 13,630,138 |   |   | 7,960,219 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR INCOME TAXES                    |   |                                  | 1,055,342  |                                |   | - |   |   | 2,045,959 |   |   | - |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| NET                  INCOME                                    |   |                                  | 6,230,943  |                                |   | 4,556,156 |   |   | 11,584,179 |   |   | 7,960,219 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| OTHER                  COMPREHENSIVE INCOME (LOSS)             |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Foreign                  currency translation adjustment       |   |                                  | 3,047,862  |                                |   | 1,638,750 |   |   | 8,355,687 |   |   | 2,343,418 |   |
| Change                  in fair value of derivative instrument |   |                                  | 4,244,252  |                                |   | (3,945,951 | ) |   | (249,634 | ) |   | (3,945,951 | ) |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE                  INCOME                          |   | $                                     | 13,523,057 |                                | $      | 2,248,955 |   | $ | 19,690,232 |   | $ | 6,357,686 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| EARNINGS                  PER SHARE                            |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of shares             |   |                                  | 18,639,687 |                                |   | 16,600,562 |   |   | 18,424,832 |   |   | 16,600,507 |   |
| Earning                  per share                             |   | $                                     | 0.33       |                                | $      | 0.27 |   | $ | 0.63 |   | $ | 0.48 |   |
|                                                           |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Diluted                                                        |   |                                  |       |                                |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of shares             |   |                                  | 20,023,990 |                                |   | 18,740,981 |   |   | 19,998,192 |   |   | 18,739,186 |   |
| Earning                  per share                             |   | $                                     | 0.31       |                                | $      | 0.24 |   | $ | 0.58 |   | $ | 0.42 |   |

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|                                                               |   | Common                  stock |         | Additional |   | Retained                  earnings |   | Accumulated                  other |         |      |   |
|--------------------------------------------------------------------|--------|-------------------------------|--------------|------------|--------|------------------------------------|--------|------------------------------------|--------------|-----------|--------|
|                                                               |   |                          |         | Par        |   | paid-in                            |   | Unrestricted                       |         | Statutory |   | comprehensive |   |   |   |
|                                                               |   | Shares                        |         | value      |   | capital                            |   | earnings                           |         | reserves  |   | income                  (loss) |   | Total |   |
|                                                               |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |
| BALANCE,                  December 31, 2006                        |   |                          | 16,600,451   |       | $      | 166                                |   | $                                  | 12,252,064   |      | $      | 26,222,408 |   | $ | 4,523,715 |   | $ | 2,031,891 |   | $ | 45,030,244 |   |
|                                                               |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification                  of warrant liabilities to equity |   |                          |         |       |   |                               |   |                               | 22,921,113   |      |   | (6,353,033 | ) |   |   |   |   |   |   |   | 16,568,080 |   |
| Exercise                  of warrants                              |   |                          | 2,500        |       |   |                               |   |                               | 8,750        |      |   |   |   |   |   |   |   |   |   |   | 8,750 |   |
| Stock                  based compensation                          |   |                          |         |       |   |                               |   |                               | 492,916      |      |   |   |   |   |   |   |   |   |   |   | 492,916 |   |
| Net                  income                                        |   |                          |         |       |   |                               |   |                               |         |      |   | 7,960,219 |   |   |   |   |   |   |   |   | 7,960,219 |   |
| Foreign                  currency translation gain                 |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   | 2,343,418 |   |   | 2,343,418 |   |
| Net                  change related to cash flow hedges            |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   | (3,945,951 | ) |   | (3,945,951 | ) |
| BALANCE,                  June 30, 2007 (Unaudited)                |   |                          | 16,602,951   |       |   | 166                                |   |                               | 35,674,843   |      |   | 27,829,594 |   |   | 4,523,715 |   |   | 429,358 |   |   | 68,457,676 |   |
|                                                               |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                  of stock warrants at $3.50               |   |                          | 152,698      |       |   | 2                                  |   |                               | 534,441      |      |   |   |   |   |   |   |   |   |   |   | 534,443 |   |
| Exercise                  of stock warrants at $7.80               |   |                          | 150,000      |       |   | 1                                  |   |                               | 1,169,999    |      |   |   |   |   |   |   |   |   |   |   | 1,170,000 |   |
| Stock                  based compensation                          |   |                          |         |       |   |                               |   |                               | 892,207      |      |   |   |   |   |   |   |   |   |   |   | 892,207 |   |
| Stock                  issued in acquisition                       |   |                          | 473,354      |       |   | 5                                  |   |                               | 6,499,995    |      |   |   |   |   |   |   |   |   |   |   | 6,500,000 |   |
| Cashless                  exercised of warrants / options          |   |                          | 764,153      |       |   | 7                                  |   |                               | (7           | )         |   |   |   |   |   |   |   |   |   |   | - |   |
| Capital                  contribution                              |   |                          |         |       |   |                               |   |                               | 199,111      |      |   |   |   |   |   |   |   |   |   |   | 199,111 |   |
| Net                  income                                        |   |                          |         |       |   |                               |   |                               |         |      |   | 8,942,465 |   |   |   |   |   |   |   |   | 8,942,465 |   |
| Adjustment                  to statutory reserve                   |   |                          |         |       |   |                               |   |                               |         |      |   | (4,490,747 | ) |   | 4,490,747 |   |   |   |   |   | - |   |
| Foreign                  currency translation gain                 |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   | 4,819,094 |   |   | 4,819,094 |   |
| Net                  change related to cash flow hedge             |   |                          |    |       |   |                          |   |                               |    |      |   |   |   |   |    |   |   | (6,898,421 | ) |   | (6,898,421 | ) |
| BALANCE,                  December 31, 2007                        |   |                          | 18,143,156   |       |   | 182                                |   |                               | 44,970,588   |      |   | 32,281,312 |   |   | 9,014,462 |   |   | (1,649,969 | ) |   | 84,616,575 |   |
|                                                               |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                  of stock warrants at $3.50               |   |                          | 202,300      |       |   | 2                                  |   |                               | 708,049      |      |   |   |   |   |   |   |   |   |   |   | 708,051 |   |
| Exercise                  of stock options at $3.10                |   |                          | 25,000       |       |   | 0.25                               |   |                               | 77,500       |      |   |   |   |   |   |   |   |   |   |   | 77,500 |   |
| Stock                  issuance for cash at $14.13                 |   |                          | 3,500,000    |       |   | 35                                 |   |                               | 46,290,708   |      |   |   |   |   |   |   |   |   |   |   | 46,290,743 |   |
| Amortization                  of stock compensation                |   |                          |         |       |   |                               |   |                               | 912,465      |      |   |   |   |   |   |   |   |   |   |   | 912,465 |   |
| Net                  income                                        |   |                          |         |       |   |                               |   |                               |         |      |   | 11,584,179 |   |   |   |   |   |   |   |   | 11,584,179 |   |
| Adjustment                  to statutory reserve                   |   |                          |         |       |   |                               |   |                               |         |      |   | (2,049,758 | ) |   | 2,049,758 |   |   |   |   |   | - |   |
| Foreign                  currency translation gain                 |   |                          |         |       |   |                               |   |                               |         |      |   |   |   |   |   |   |   | 8,355,687 |   |   | 8,355,687 |   |
| Net                  change related to cash flow hedge             |   |                          |    |       |   |                          |   |                               |    |      |   |    |   |   |    |   |   | (249,634 | ) |   | (249,634 | ) |
| BALANCE,                  June 30, 2008 (Unaudited)                |   |                          | 21,870,456   |       | $      | 219                                |   | $                                  | 92,959,310   |      | $      | 41,815,734 |   | $ | 11,064,220 |   | $ | 6,456,084 |   | $ | 152,295,567 |   |

----

|                                                                                                                      |   |   | 2008   |   |   | 2007   |    |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|---------|
|                                                                                                                      |   |   |        |   |   |        |    |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                                    |   |   |        |   |   |        |    |
| Net                  income                                                                                               |   | $      | 11,584,179  |   | $      | 7,960,219   |    |
| Adjustments                  to reconcile net income to cash provided by (used in) operating                  activities: |   |   |        |   |   |        |    |
| Depreciation                                                                                                              |   |   | 433,706     |   |   | 209,399     |    |
| Amortization                  of intangible assets                                                                        |   |   | 505,517     |   |   | 47,304      |    |
| Amortization                  of debt issuance costs                                                                      |   |   | 351,948     |   |   | 246,218     |    |
| Amortization                  of debt discount                                                                            |   |   | 2,302,871   |   |   | 2,266,066   |    |
| Gain                  on derivative instrument                                                                            |   |   | (192,731    | )      |   | (297,637    | )       |
| Stock                  based compensation                                                                                 |   |   | 912,465     |   |   | 492,916     |    |
| Change                  in operating assets and liabilities                                                               |   |   |        |   |   |        |    |
| Accounts                  receivable                                                                                      |   |   | (1,413,683  | )      |   | (1,473,337  | )       |
| Inventories                                                                                                               |   |   | 518,092     |   |   | (782,505    | )       |
| Other                  receivables                                                                                        |   |   | 199,856     |   |   | (108,294    | )       |
| Other                  receivables - related parties                                                                      |   |   | -           |   |   | 45,528      |    |
| Advances                  on inventory purchases                                                                          |   |   | (1,730,440  | )      |   | (1,650,174  | )       |
| Other                  assets                                                                                             |   |   | (589        | )      |   | (9,914      | )       |
| Accounts                  payable                                                                                         |   |   | (112,265    | )      |   | (74,302     | )       |
| Other                  payables & Accrued Liabilities                                                                 |   |   | (1,281,544  | )      |   | 88,634      |    |
| Other                  payables - Related Party                                                                           |   |   | (47,064     | )      |   | -           |    |
| Customer                  deposits                                                                                        |   |   | (46,390     | )      |   | 15,395      |    |
| Taxes                  payable                                                                                            |   |   | 1,096,594   |   |   | (69,427     | )       |
| Interest                  payable                                                                                         |   |   | (80,231     | )      |   | -           |    |
|  Net                  cash provided by operating activities                                                          |   |   | 13,000,291  |   |   | 6,906,089   |    |
|                                                                                                                      |   |   |        |   |   |        |    |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                                    |   |   |        |   |   |        |    |
| Decrease                  of advances on intangible assets                                                                |   |   | -           |   |   | 505,709     |    |
| Increase                  of advances on equipment purchases                                                              |   |   | (10,716,226 | )      |   | (11,741,760 | )       |
| Additions of                  intangible assets                                                                      |   |   | (707,875    | )      |   | (198,998    | )  |
| Additions                  to plant and equipment                                                                         |   |   | (7,114,655  | )      |   | (861,752    | )       |
| Deposit                  on acquisition                                                                                   |   |   | (698,850    | )      |   | -           |    |
|  Net                  cash used in investing activities                                                              |   |   | (19,237,606 | )      |   | (12,296,801 | )       |
|                                                                                                                      |   |   |        |   |   |        |    |
| CASH                  FLOWS FINANCING ACTIVITIES:                                                                         |   |   |        |   |   |        |    |
| Net                  proceeds from stock issuance 3.5 million shares                                                      |   |   | 46,290,743  |   |   | -           |    |
| Proceeds                  received from conversion of warrants and options                                                |   |   | 785,551     |   |   | 8,750       |    |
| Deposit                  to secure investment in cross currency hedge                                                     |   |   | -           |   |   | (1,000,000  | )       |
| Proceeds                  from cross currency hedge                                                                       |   |   | 145,945     |   |   | 297,637     |    |
| Repayment                  of notes payable                                                                               |   |   | (2,000,000  | )      |   | -           |    |
|  Net                  cash provided by (used in) financing activities                                                |   |   | 45,222,239  |   |   | (693,613    | )       |
|                                                                                                                      |   |   |        |   |   |        |    |
| EFFECTS                  OF EXCHANGE RATE CHANGE IN CASH                                                                  |   |   | 3,256,222   |   |   | 1,470,999   |    |
|                                                                                                                      |   |   |        |   |   |        |    |
| INCREASE                  (DECREASE) IN CASH                                                                              |   |   | 42,241,146  |   |   | (4,613,326  | )       |
|                                                                                                                      |   |   |        |   |   |        |    |
| Cash                  and Cash equivalents, beginning of period                                                           |   |   | 45,533,893  |   |   | 67,313,919  |    |
|                                                                                                                      |   |   |        |   |   |        |    |
| Cash                  and Cash equivalents, end of period                                                                 |   | $      | 87,775,039  |   | $      | 62,700,593  |    |

----

**Note      1 – Organization and description of business**

----

**Note        2 – Accounting policies**

|                                                |   | Place                incorporated |   | Ownership                percentage |   |
|-----------------------------------------------------|--------|-----------------------------------|--------|-------------------------------------|--------|
| Advanced                Electric Motors, Inc        |   | Delaware,                USA      |   | 100%                                |   |
| Harbin                Tech Full Electric Co., Ltd   |   | Harbin,                China      |   | 100%                                |   |
| Advanced                Automation Group, LLC       |   | Delaware,                USA      |   | 100%                                |   |
| Shanghai                Tech Full Electric Co., Ltd |   | Shanghai,                China    |   | 100%                                |   |

----

----

| Allowance                for doubtful accounts at December 31, 2007 |   | $      | 116,238 |   |
|---------------------------------------------------------------------|--------|--------|---------|--------|
| Effect                of foreign currency translation gain          |   |   | 7,461   |   |
| Allowance                for doubtful accounts at June 30, 2008     |   | $      | 123,699 |   |

|                                |   | Estimated Useful Life |                    |
|-------------------------------------|--------|---------------------------------|-------------------------|
| Buildings                           |   |                            | 20                years |   |
| Vehicle                             |   |                            | 5                years  |   |
| Office                equipment     |   |                            | 5                years  |   |
| Production                equipment |   |                            | 10                years |   |

----

----

----

|                                                |   | June                30, |   | June                30, |   |
|-----------------------------------------------------|--------|-------------------------|--------|-------------------------|--------|
|                                                |   | 2008                    |   | 2007                    |   |
| U.S.                Statutory rates                 |   |                    | 34     | %                       |   | 34 | % |
| Foreign                income not recognized in USA |   |                    | (34    | )                       |   | (34 | ) |
| China                income taxes                   |   |                    | 25     |                    |   | 33 |   |
| Tax                exemption                        |   |                    | (15    | )                       |   | (33 | ) |
| Total                provision for income taxes     |   |                    | 10     | %                       |   | - | % |

----

|                                          |   | June 30, 2008 |      | December 31, 2007 |   |
|-----------------------------------------------|--------|-------------------------|-----------|-----------------------------|--------|
| VAT                tax payable                |   | $                       | 856,060   |                        | $      | 781,372 |   |
| Individual                income tax payable  |   |                    | 3,083     |                        |   | 2,049 |   |
| Corporation                income tax payable |   |                    | 1,063,014 |                        |   | - |   |
| Others                misc. tax payable       |   |                    | 55,557    |                        |   | 55,878 |   |
| Total                                         |   | $                       | 1,977,714 |                        | $      | 839,299 |   |

----

----

----

----

* *
* *
* *
* *

----

* *

**Note      3 – Earnings per share**

----

|                                                               |   | 2008   |       | 2007   |   |
|--------------------------------------------------------------------|--------|--------|------------|--------|--------|
| For                the six months ended June 30, 2008 and 2007     |   |   |       |   |   |
| Net                income for basic and diluted earnings per share |   | $      | 11,584,179 |   | $      | 7,960,219 |   |
|                                                               |   |   |       |   |   |   |   |
| Weighted                average shares used in basic computation   |   |   | 18,424,832 |   |   | 16,600,507 |   |
| Diluted                effect of stock options and warrants        |   |   | 1,573,360  |   |   | 2,138,679 |   |
| Weighted                average shares used in diluted computation |   |   | 19,998,192 |   |   | 18,739,186 |   |
|                                                               |   |   |       |   |   |   |   |
| Earnings                per share:                                 |   |   |       |   |   |   |   |
| Basic                                                              |   | $      | 0.63       |   | $      | 0.48 |   |
| Diluted                                                            |   | $      | 0.58       |   | $      | 0.42 |   |
|                                                               |   |   |       |   |   |   |   |
| For                the three months ended June 30, 2008 and 2007   |   |   |       |   |   |   |   |
| Net                income for basic and diluted earnings per share |   | $      | 6,230,943  |   | $      | 4,556,156 |   |
|                                                               |   |   |       |   |   |   |   |
| Weighted                average shares used in basic computation   |   |   | 18,639,687 |   |   | 16,600,562 |   |
| Diluted                effect of stock options and warrants        |   |   | 1,384,303  |   |   | 2,140,419 |   |
| Weighted                average shares used in diluted computation |   |   | 20,023,990 |   |   | 18,740,981 |   |
|                                                               |   |   |       |   |   |   |   |
| Earnings                per share:                                 |   |   |       |   |   |   |   |
| Basic                                                              |   | $      | 0.33       |   | $      | 0.27 |   |
| Diluted                                                            |   | $      | 0.31       |   | $      | 0.24 |   |

**Note      4 – Inventories**

|                                     |   | June                30, 2008 |      | December 31, 2007 |   |
|------------------------------------------|--------|------------------------------|-----------|-----------------------------|--------|
|                                     |   | (unaudited)                  |      |                        |   |
| Raw                and packing materials |   | $                            | 1,251,009 |                        | $      | 925,085 |   |
| Work                in process           |   |                         | 649,551   |                        |   | 792,903 |   |
| Finished                goods            |   |                         | 301,148   |                        |   | 852,941 |   |
| Total                                    |   | $                            | 2,201,708 |                        | $      | 2,570,929 |   |

----

**Note      5 – Plant and equipment**

|                                          |   | June                30, 2008 |       | December 31, 2007 |   |
|-----------------------------------------------|--------|------------------------------|------------|-----------------------------|--------|
|                                          |   | (unaudited)                  |       |                        |   |
| Buildings                                     |   | $                            | 6,032,671  |                        | $      | 5,668,808 |   |
| Office                equipment               |   |                         | 437,723    |                        |   | 378,849 |   |
| Production                equipment           |   |                         | 4,950,983  |                        |   | 4,333,797 |   |
| Vehicles                                      |   |                         | 523,129    |                        |   | 348,485 |   |
| Construction                in progress       |   |                         | 22,293,438 |                        |   | 14,575,134 |   |
| Total                                         |   |                         | 34,237,944 |                        |   | 25,305,073 |   |
| Less:                accumulated depreciation |   |                         | (1,985,290 | )                           |   | (1,447,038 | ) |
| Property                and equipment, net    |   | $                            | 32,252,654 |                        | $      | 23,858,035 |   |

**Note      6 - Intangible assets**

----

|                                          |   | June                30, 2008 |       | December 31, 2007 |   |
|-----------------------------------------------|--------|------------------------------|------------|-----------------------------|--------|
|                                          |   | (unaudited)                  |       |                        |   |
| Land                use rights                |   | $                            | 428,148    |                        | $      | 394,451 |   |
| Patents                                       |   |                         | 6,592,878  |                        |   | 6,202,854 |   |
| Less:                accumulated amortization |   |                         | (1,248,123 | )                           |   | (697,316 | ) |
| Intangible                assets, net         |   | $                            | 5,772,903  |                        | $      | 5,899,989 |   |

**Note      7 – Advances to suppliers**

**Note      8 – Advance for intangible assets**

----

**Note      9 – Other assets**

|                                               |   | June                30, 2008 |    | December 31, 2007 |   |
|----------------------------------------------------|--------|------------------------------|---------|-----------------------------|--------|
|                                               |   | (unaudited)                  |    |                        |   |
| Research                and development prepayment |   | $                            | 405,194 |                        | $      | 380,754 |   |
| Deferred                expenses                   |   |                         | 19,676  |                        |   | 16,509 |   |
| Total                                              |   | $                            | 424,870 |                        | $      | 397,263 |   |

----

**Note      10**
** –      Additional product sales information**

|                                                             |   | 2008   |       | 2007   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|
| For                the six months ended June 30, 2008 and 2007   |   |   |       |   |   |   |   |
| China                                                            |   | $      | 39,521,395 |   | $      | 24,500,947 |   |
| International                                                    |   |   | 6,895,863  |   |   | 3,114,960 |   |
| Total                sales                                       |   |   | 46,417,258 |   |   | 27,615,907 |   |
| Cost                of sales - China                             |   |   | 20,336,133 |   |   | 12,159,184 |   |
| Cost                of sales - International                     |   |   | 3,865,514  |   |   | 1,378,425 |   |
| Total                cost of sales                               |   |   | 24,201,647 |   |   | 13,537,609 |   |
| Gross                profit                                      |   | $      | 22,215,611 |   | $      | 14,078,298 |   |
| For                the three months ended June 30, 2008 and 2007 |   |   |       |   |   |   |   |
| China                                                            |   | $      | 20,867,836 |   | $      | 12,282,841 |   |
| International                                                    |   |   | 3,091,237  |   |   | 1,706,852 |   |
| Total                sales                                       |   |   | 23,959,073 |   |   | 13,989,693 |   |
| Cost                of sales - China                             |   |   | 10,530,775 |   |   | 6,015,340 |   |
| Cost                of sales - International                     |   |   | 1,972,164  |   |   | 753,983 |   |
| Total                cost of sales                               |   |   | 12,502,939 |   |   | 6,769,323 |   |
| Gross                profit                                      |   | $      | 11,456,134 |   | $      | 7,220,370 |   |

**Note      11 – Financing**

----

----

----

|                                                       |   | June                30, 2008 |        | December                31, 2007 |   |
|------------------------------------------------------------|--------|------------------------------|-------------|----------------------------------|--------|
|                                                       |   | (unaudited)                  |        |                             |   |
| Principal                amount                            |   | $                            | 48,000,000  |                             | $      | 50,000,000 |   |
| Less                unamortized discount                   |   |                         | (14,575,398 | )                                |   | (16,878,269 | ) |
| Long-term                debt, net of unamortized discount |   | $                            | 33,424,602  |                             | $      | 33,121,731 |   |

----

|                                                             |   | 2008   |        | 2007   |   |
|------------------------------------------------------------------|--------|--------|-------------|--------|--------|
| For                the six months ended June 30, 2008 and 2007   |   |   | (Unaudited) |   |   | (Unaudited)  |   |
| Amortization                of debt discount                     |   | $      | 2,302,871   |   | $      | 2,266,066 |   |
| Amortization                of debt issuance costs               |   |   | 351,948     |   |   | 246,218 |   |
| Interest                expense                                  |   |   | 1,425,219   |   |   | 1,575,119 |   |
| Interest                earned on cash deposits                  |   |   | (409,796    | )      |   | (312,649 | ) |
| Interest                earned on derivative instrument          |   |   | (192,731    | )      |   | (297,637 | ) |
| Interest                expense, net                             |   | $      | 3,477,511   |   | $      | 3,477,117 |   |
| For                the three months ended June 30, 2008 and 2007 |   |   |        |   |   |   |   |
| Amortization                of debt discount                     |   | $      | 958,942     |   | $      | 1,133,033 |   |
| Amortization                of debt issuance costs               |   |   | 123,767     |   |   | 123,109 |   |
| Interest                expense                                  |   |   | 331,590     |   |   | 698,223 |   |
| Interest                earned on cash deposits                  |   |   | (195,051    | )      |   | 90,050 |   |
| Interest                earned on derivative instrument          |   |   | (24,517     | )      |   | (297,637 | ) |
| Interest                expense, net                             |   | $      | 1,194,731   |   | $      | 1,746,778 |   |

**Note      12 – Derivative instrument**

----

| Balance                at December 31, 2007       |   | $      | 145,945  |   |
|---------------------------------------------------|--------|--------|----------|--------|
| Proceeds                from cross currency hedge |   |   | (145,945 | )      |
| Gain                from derivative transactions  |   |   | 192,731  |   |
| Balance                at June 30, 2008           |   | $      | 192,731  |   |

**Note      13 – Accumulated other comprehensive income**

| Balance,                January 1, 2007                      |   | $      | 2,031,891  |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
| Foreign                currency translation gain             |   |   | 2,343,418  |   |
| Change                in fair value of derivative instrument |   |   | (3,945,951 | )      |
| Balance,                June 30, 2007                        |   |   | 429,358    |   |
| Foreign                currency translation gain             |   |   | 4,819,094  |   |
| Change                in fair value of derivative instrument |   |   | (6,898,421 | )      |
| Balance,                December 31, 2007                    |   |   | (1,649,969 | )      |
| Foreign                currency translation gain             |   |   | 8,355,687  |   |
| Change                in fair value of derivative instrument |   |   | (249,634   | )      |
| Balance                at June 30, 2008                      |   | $      | 6,456,084  |   |

**Note      14 – Commitments and contingencies**

----

**Note      15 – Shareholders’ equity**

----

| Outstanding                as of January 1, 2007   |   |   | 3,967,368  |   |
|----------------------------------------------------|--------|--------|------------|--------|
| Granted                                            |   |   | -          |   |
| Forfeited                                          |   |   | -          |   |
| Exercised                                          |   |   | -          |   |
| Outstanding                as of June 30, 2007     |   |   | 3,967,368  |   |
| Granted                                            |   |   | -          |   |
| Forfeited                                          |   |   | -          |   |
| Exercised                                          |   |   | (1,512,408 | )      |
| Outstanding                as of December 31, 2007 |   |   | 2,454,960  |   |
| Granted                                            |   |   | -          |   |
| Forfeited                                          |   |   | -          |   |
| Exercised                                          |   |   | (202,300   | )      |
| Outstanding                as of June 30, 2008     |   |   | 2,252,660  |   |

| Outstanding Warrants |   | Exercisable Warrants |      |
|---------------------------|--------|---------------------------|-----------|
| Exercise Price       |   | Number                    |      | AverageRemainingContractual Life |   | AverageExercise Price |   | Number |   | AverageRemainingContractual Life |   |
| $                         | 3.50   |                      |      | 122,502 |   |   | 2.77 |   | $ | 3.50 |   |   | 122,502 |   |   | 2.77 |   |
| $                         | 10.84  |                      |      | 366,697 |   |   | 4.52 |   | $ | 10.84 |   |   | 366,697 |   |   | 4.52 |   |
| $                         | 7.80   |                      |      | 1,528,846 |   |   | 1.52 |   | $ | 7.80 |   |   | 1,528,846 |   |   | 1.52 |   |
| $                         | 7.80   |                      |      | 234,615 |   |   | 1.46 |   | $ | 7.80 |   |   | 234,615 |   |   | 1.46 |   |
| Total                     |   |                      | 2,252,660 |   |   |   |   |   |   |   |   | 2,252,660 |   |   |   |   |

----

|                             |   | **Expected** |                   | **Expected**   |   | **Dividend** |          | **Risk Free**     |   | **Grant Date** |   |
|----------------------------------|--------|--------------|------------------------|----------------|--------|--------------|---------------|------------------------|--------|---------------------|--------|
|                             |   | **Life**     |                   | **Volatility** |   | **Yield**    |          | **Interest Rate** |   | **Fair Value** |   |
| Employees                - 2005  |   |         | 3.0                yrs |           |   | 66           | %   |                   | 0      | %         |   | 4.00 | %   | $ | 3.93 |   |
| Directors                - 2005  |   |         | 5.0                yrs |           |   | 66           | %             |                   | 0      | %                   |   | 4.13 | % | $ | 3.10 |   |
| Employees                - 2006  |   |         | 5.0                yrs |           |   | 66           | %             |                   | 0      | %                   |   | 4.13 | % | $ | 8.10 |   |
| Directors                - 2006  |   |         | 5.0                yrs |           |   | 66           | %             |                   | 0      | %                   |   | 4.13 | % | $ | 8.10 |   |
| Employees                - 2007  |   |         | 3.0                yrs |           |   | 81           | %             |                   | 0      | %                   |   | 4.50 | % | $ | 12.40 |   |
| Executives                - 2007 |   |         | 3.0                yrs |           |   | 77           | %             |                   | 0      | %                   |   | 4.50 | % | $ | 15.60 |   |

|                                               |   | OptionsOutstanding |     | WeightedAverageExercise Price |   | AggregateIntrinsicValue |   |
|----------------------------------------------------|--------|--------------------|----------|------------------------------------|--------|-------------------------|--------|
|                                               |   |               |     |                               |   |                    |   |   |   |   |
| Outstanding                as of January 1, 2007   |   |               | 900,000  |                               | $      | 6.08                    |   | $ | 1,863,000 |   |
| Granted                                            |   |               | 25,000   |                               |   | 12.40                   |   |   | - |   |
| Forfeited                                          |   |               | -        |                               |   | -                       |   |   | - |   |
| Exercised                                          |   |               | -        |                               |   | -                       |   |   | - |   |
| Outstanding                as of June 30, 2007     |   |               | 925,000  |                               | $      | 6.28                    |   | $ | 9,453,500 |   |
| Granted                                            |   |               | 260,000  |                               |   | 15.32                   |   |   |   |   |
| Forfeited                                          |   |               | (66,667  | )                                  |   | 3.93                    |   |   |   |   |
| Exercised                                          |   |               | (357,083 | )                                  |   | 5.96                    |   |   |   |   |
| Outstanding                as of December 31, 2007 |   |               | 761,250  |                               | $      | 9.69                    |   | $ | 12,370,313 |   |
| Granted                                            |   |               | -        |                               |   | -                       |   |   | - |   |
| Forfeited                                          |   |               | -        |                               |   |                    |   |   |   |   |
| Exercised                                          |   |               | (25,000  | )                                  |   | 3.10                    |   |   |   |   |
| Outstanding                as of June 30, 2008     |   |               | 736,250  |                               | $      | 10.05                   |   | $ | 3,062,800 |   |

----

| Outstanding                Options |   | Exercisable                Options |    |
|------------------------------------|--------|------------------------------------|---------|
| Exercise                Price      |   | Number                             |    | AverageRemainingContractual Life |   |  AverageExercise Price |   |   Number |   | AverageRemainingContractual Life |   |
| $                                  | 3.10   |                               |    | 125,000 |   |   | 1.58 |   | $ | 3.10 |   |   | 125,000 |   |   | 1.58 |   |
| $                                  | 8.10   |                               |    | 326,250 |   |   | 2.58 |   | $ | 8.10 |   |   | 221,250 |   |   | 2.58 |   |
| $                                  | 12.40  |                               |    | 25,000 |   |   | 1.92 |   | $ | 12.40 |   |   | 12,525 |   |   | 1.92 |   |
| $                                  | 15.60  |                               |    | 260,000 |   |   | 2.46 |   | $ | 15.60 |   |   | 85,800 |   |   | 2.46 |   |
| Total                              |   |                               | 736,250 |   |   |   |   |   |   |   |   | 444,575 |   |   |   |   |

**Note      16 – Supplemental disclosure of cash flows**

| Items                                |   | Book value |      | Assessed Fair Value |   |
|--------------------------------------|--------|-----------------|-----------|-------------------------------|--------|
| Current                assets        |   | $               | 2,186,039 |                          | $      | 2,186,039 |   |
| Equipment                            |   |            | 2,987,640 |                          |   | 2,987,640 |   |
| Patent                rights         |   |            | 1,223,522 |                          |   | 5,326,321 |   |
| Total                assets acquired |   | $               | 6,397,201 |                          | $      | 10,500,000 |   |

----

**Note      17 – Employee pension**

**Note      18 – Legal proceedings**

----

**Note      19 – Subsequent events**

----

**Item      6.**
**      Exhibits.**

| **Exhibit Number** |   | **Description**                                             |   | **Method of Filing**                                                                                                                                                                                                       |
|-------------------------|--------|-------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                        |   |                                                                                                                                                                                                                                 |
| 3.1                     |   | Articles                    of Incorporation of the Company |   | Filed                    as Exhibit 3.1 to the registration statement on Form SB-2 filed                    with the                    Commission on October 10, 2003 and incorporated herein by                    reference. |

----

| 3.2     |   | Amended                    and Restated Bylaws of the Company                                                                                                                                                                                        |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on July 6, 2005 and incorporated herein by                    reference.       |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 3.3     |   | Amendment                    to the Bylaws of the Company                                                                                                                                                                                            |   | Filed                    as Exhibit 4.1 to the current report on Form 8-K filed with the                    Commission on December 20, 2006 and incorporated herein by                    reference.                      |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.1    |   | Registration                    Rights Agreement dated as of August 31, 2005                                                                                                                                                                         |   | Filed                    as Exhibit 10.1 to the registration statement on Form SB-2 filed                    with the                    Commission on April 27, 2006 and incorporated herein by                    reference. |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.2    |   | Common                    Stock Purchase Agreement dated as of August 31, 2005                                                                                                                                                                       |   | Filed                    as Exhibit 10.2 to the registration statement on Form SB-2 filed                    with the                    Commission on April 27, 2006 and incorporated herein by                    reference. |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.3    |   | Option                    Agreement dated as of August 31, 2005                                                                                                                                                                                      |   | Filed                    as Exhibit 10.3 to the registration statement on Form SB-2 filed                    with the                    Commission on April 27, 2006 and incorporated herein by                    reference. |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.4    |   | Employment                    Agreement, dated October 12, 2005, between the Company and Mr.                    Barry                    Raeburn                                                                                                     |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on October 17, 2005 and incorporated herein by                    reference.        |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.5    |   | Term                    Sheet dated August 2, 2006                                                                                                                                                                                                   |   | Filed                    as Exhibit 10.5 to the current report on Form 8-K filed with                    the                    Commission on August 2, 2006 and incorporated herein by                    reference.          |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.6    |   | Agreement                    on Cooperation between Harbin Tech Full Electric Co., Ltd. and                    Institute                    of Electrical Engineering of the Chinese Academy of                    Sciences                          |   | Filed                    as Exhibit 10.6 to the current report on Form 8-K filed with                    the                    Commission on August 25, 2006 and incorporated herein by                    reference.         |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.7    |   | Purchase                    Agreement among the Company, Advanced Electric Motors, Inc.,                    Citadel                    Equity Fund Ltd. and Merrill Lynch International, dated August                    29,                    2006 |   | Filed                    as Exhibit 4.1 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2006 and incorporated herein by                    reference.        |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.8    |   | Indenture                    among the Company, Advanced Electric Motors, Inc. and The Bank                    of New                    York, as trustee, dated August 30, 2006                                                                     |   | Filed                    as Exhibit 4.2 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2006 and incorporated herein by                    reference.        |
|    |   |                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                           |
| 10.9(a) |   | 2010                    Global Note                                                                                                                                                                                                                  |   | Filed                    as Exhibit 4.3(a) to the current report on Form 8-K filed with                    the                    Commission on September 1, 2006 and incorporated herein by                    reference.     |

----

| 10.9(b)     |   | 2012                    Global Note                                                                                                                                                                     |   | Filed                    as Exhibit 4.3(b) to the current report on Form 8-K filed with                    the                    Commission on September 1, 2006 and incorporated herein by                    reference.  |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
|  10.10 |   | Registration                    Rights Agreement between the Company and the Investors, dated                    August 30,                    2006                                                     |   | Filed                    as Exhibit 4.4 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2006 and incorporated herein by                    reference.     |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.11       |   | Share                    Pledge Agreement between the Company and The Bank of New York,                    as                    collateral agent, dated August 30, 2006                                |   | Filed                    as Exhibit 4.5 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2006 and incorporated herein by                    reference.     |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.12       |   | Warrant                    Agreement between the Company and The Bank of New York, as warrant                    agent,                    dated August 30, 2006                                        |   | Filed                    as Exhibit 4.6 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2006 and incorporated herein by                    reference.     |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.13(a)    |   | Global                    First Tranche 2012 Warrants                                                                                                                                                   |   | Filed                    as Exhibit 4.7(a) to the current report on Form 8-K filed with                    the                    Commission on September 1, 2006 and incorporated herein by                    reference.  |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.13(b)    |   | Global                    Second Tranche 2012 Warrants                                                                                                                                                  |   | Filed                    as Exhibit 4.7(b) to the current report on Form 8-K filed with                    the                    Commission on September 1, 2006 and incorporated herein by                    reference.  |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.13(c)    |   | Global                    2009 Warrants                                                                                                                                                                 |   | Filed                    as Exhibit 4.7(c) to the current report on Form 8-K filed with                    the                    Commission on September 1, 2006 and incorporated herein by                    reference.  |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
|  10.14 |   | Voting                    Agreement among the Company, Tianfu Yang and Citadel Equity Fund                    Ltd.,                    dated August 30, 2006                                            |   | Filed                    as Exhibit 4.8 to the current report on Form 8-K filed with the                    Commission                    on September 1, 2001 and incorporated herein by                    reference.     |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.15       |   | Noncompetition                    Covenant and Agreement among Citadel Equity Fund Ltd., Merrill                    Lynch                    International and Tianfu Yang, dated August 30, 2006       |   | Filed                    as Exhibit 10.15 to the Registration Statement on SB-2 filed                    with the                    Commission on October 4, 2006 and incorporated herein by                    reference. |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
| 10.16       |   | Agreement                    between Harbin Tech Full Electric Co., Ltd. and Shanghai Lingang                    Investment and Development Company Limited, dated September 8,                    2006 |   | Filed                    as Exhibit 10.15 to the Registration Statement on SB-2 filed                    with the                    Commission on October 4, 2006 and incorporated herein by                    reference. |
|        |   |                                                                                                                                                                                                    |   |                                                                                                                                                                                                                        |
|  10.17 |   | Letter                    Agreement dated April 9, 2007 by and among Harbin Electric, Inc,                    Shelton                    Technology LLC, Shaotang Chen and Xioagang Luo                 |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on April 13, 2007 and incorporated herein by                    reference.       |

----

| 10.18       |   | License                    Agreement dated as of April 9, 2007 by and among Advanced Automation                    Group. LLC, Shelton Technology, LLC, Shaotang Chen and Xiaogang                    Luo                                                                                                                                                                                      |   | Filed                    as Exhibit 10.2 to the current report on Form 8-K filed with                    the                    Commission on April 13, 2007 and incorporated herein by                    reference.        |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.19       |   | Employment                    Agreement dated April 9, 2007 by and between Advanced Automation                    Group,                    LLC and Shaotang Chen                                                                                                                                                                                                                              |   | Filed                    as Exhibit 10.3 to the current report on Form 8-K filed with                    the                    Commission on April 13, 2007 and incorporated herein by                    reference.        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.20       |   | Employment                    Agreement dated April 9, 2007 by and between Advanced Automation                    Group,                    LLC and Xiaogang Luo.                                                                                                                                                                                                                              |   | Filed                    as Exhibit 10.4 to the current report on Form 8-K filed with                    the                    Commission on April 13, 2007 and incorporated herein by                    reference.        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.21       |   | Asset                    Purchase Agreement dated June 16, 2007, by and between the Company,                    Harbin                    Tech Full Electric Co., Ltd., Harbin Taifu Auto Electric Co.,                    Ltd., Tianfu                    Yang, Tianli Yang, Suofei Xu, Zedong Xu and Harbin Tech Full                    Industry Co.,                    Ltd.               |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on June 19, 2007 and incorporated herein by                    reference.         |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.22       |   | Equity                    Registration Rights Agreement, dated October 17, 2007, by and                    between the                    Company, Hero Wave Investment Limited a British Virgin Islands                    company,                    and Tianfu Yang, as guarantor.                                                                                                         |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on October 23, 2007 and incorporated herein by                    reference.      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.23       |   | Employment                    Agreement dated November 27, 2007 by and between the Company                    and Ms.                    Christy Young Shue                                                                                                                                                                                                                                    |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on November 30, 2007 and incorporated herein by                    reference.     |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.24       |   | Letter                    of Intent dated March 27, 2008, by and among Harbin Tech Full                    Electric                    Co., Ltd., Wendeng Second Electric Motor Factory, The Committee                    of Labor                    Union of Wendeng Second Eletric Motor Factory and The People’s Government                    of Zhangjiachan Town, Wendeng County. |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on March 31, 2008 and incorporated herein by                    reference.        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.25       |   | Purchase                      Agreement, dated June 24, 2008, by and among the Company and                      the investors                      party thereto.                                                                                                                                                                                                                              |   | Filed                      as Exhibit 10.1 to the current report on Form 8-K filed with                      the                      Commission on June 25, 2008 and incorporated herein by                      reference. |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 10.26  |   | Registration                    Rights Agreement, dated June 24, 2008, by and among the Company                    and the                    investors party thereto.                                                                                                                                                                                                                         |   | Filed                    as Exhibit 10.1 to the current report on Form 8-K filed with                    the                    Commission on June 25, 2008 and incorporated herein by                    reference.    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                         |
| 14.1        |   | Code                    of Ethics and Business Conduct                                                                                                                                                                                                                                                                                                                                         |   | Previously                    filed.                                                                                                                                                                                         |

----

| 21.1   |   | List                    of subsidiaries                                                                                                                                                                                                                                  |   | Filed                    as Exhibit 21.1 to the quarterly report on Form 10-QSB filed                    with the                    Commission on May 15, 2006 and incorporated herein by                    reference.  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                           |
| 31.1   |   | Certification                    by the Chief Executive Officer pursuant to Rule 13a-14(a) or                    15d-14(a)                                                                                                                                          |   | Filed                    herewith as Exhibit 31.1.                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                           |
| 31.2   |   | Certification                    by the Chief Financial Officer pursuant to Rule 13a-14(a) or                    15d-14(a)                                                                                                                                          |   | Filed                    herewith as Exhibit 31.2.                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                           |
| 32.1   |   | Certification                    of the Chief Executive Officer and the Chief Financial Officer                    pursuant 18                    U.S.C. Section 1350, as adopted pursuant to Section 906 of the                    Sarbanes-Oxley Act of 2002 |   | Filed                    herewith as Exhibit 32.1.                                                                                                                                                                             |

|     | (b) | Reports                    on Form 8-K during the first quarter ended June 30,                    2008: |
|--------------------|-----|---------------------------------------------------------------------------------------------------------|

|    | (i)    | Form                    8-K filed on February 6, 2008 disclosing the settlement of the                    action                    filed against the Company by Leong Sing Lye in the United States                    District                    Court for the District of Nevada.                                                             |
|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|    | (ii)   | Form                    8-K filed on March 13, 2008 disclosing the Company’s issuance of a press                    release containing the Company’s operating results for the fourth quarter                    of 2007 and the year ended December 31, 2007.                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|         | (iii)  | Form                    8-K filed on March 31, 2008 disclosing the Company’s entry into a Letter                    of Intent to acquire Weihai Hengda Electric Motor Co. Ltd. and                    Wendeng Second Electric Motor Factory.                                                                                           |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|         | (iv)   | Form                    8-K filed on May 19, 2008 disclosing that the Company held presentations                    at the Third Annual China Discovery Tour hosted by Roth Capital                    Partners                    in Beijing - China regarding the Company’s business and acquisition                    through May 2008. |
|         |   |                                                                                                                                                                                                                                                                                                                                              |
|         | (v)    | Form                    8-K filed on June 26, 2008 disclosing the Company’s entry into a Purchase                    Agreement with certain investors, pursuant to which the Company                    sold to                    the investors 3.5 million shares of the Company’s common                    stock.                 |

----

**SIGNATURES**

|                                   | **Harbin                  Electric, Inc.** |
|----------------------------------------|--------------------------------------------|
|                                   |                                       |   |
| Date:                  August 12, 2008 | By:                              | /s/ Tianfu                  Yang  |
|                                   |                                       | Tianfu                  Yang |
|                                   |                                       | Chief                  Executive Officer, Director and Chairman of the Board(Principal                  Executive Officer) |

| Date:                  August 12, 2008 | By:   | /s/ Zedong                  Xu                                                |
|----------------------------------------|-----------------|-----------------------------------------------------------------------------------------|
|                                   |            | Zedong                  Xu                                                              |
|                                   |            | Chief                  Financial Officer(Principal                  Accounting Officer) |

**EXHIBIT        INDEX**

| **Exhibit Number** |   | **Description**                                                              |   | **Method of Filing**                                                                                                                                                                                               |
|-------------------------|--------|------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 3.1                     |   | Articles                  of Incorporation of the Company                    |   | Filed                  as Exhibit 3.1 to the registration statement on Form SB-2 filed                  with the                  Commission on October 10, 2003 and incorporated herein by                  reference. |
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 3.2                     |   | Amended                  and Restated Bylaws of the Company                  |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on July 6, 2005 and incorporated herein by                  reference.                              |
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 3.3                     |   | Amendment                  to the Bylaws of the Company                      |   | Filed                  as Exhibit 4.1 to the current report on Form 8-K filed with the                  Commission on December 20, 2006 and incorporated herein by                  reference.                          |
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 10.1                    |   | Registration                  Rights Agreement dated as of August 31, 2005   |   | Filed                  as Exhibit 10.1 to the registration statement on Form SB-2 filed                  with the                  Commission on April 27, 2006 and incorporated herein by                  reference.       |
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 10.2                    |   | Common                  Stock Purchase Agreement dated as of August 31, 2005 |   | Filed                  as Exhibit 10.2 to the registration statement on Form SB-2 filed                  with the                  Commission on April 27, 2006 and incorporated herein by                  reference.       |
|                    |   |                                                                         |   |                                                                                                                                                                                                                         |
| 10.3                    |   | Option                  Agreement dated as of August 31, 2005                |   | Filed                  as Exhibit 10.3 to the registration statement on Form SB-2 filed                  with the                  Commission on April 27, 2006 and incorporated herein by                  reference.       |

----

| 10.4          |   | Employment                  Agreement, dated October 12, 2005, between the Company and Mr.                  Barry                  Raeburn                                                                                |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on October 17, 2005 and incorporated herein by                  reference.                     |
|---------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.5          |   | Term                  Sheet dated August 2, 2006                                                                                                                                                                          |   | Filed                  as Exhibit 10.5 to the current report on Form 8-K filed with the                  Commission on August 2, 2006 and incorporated herein by                  reference.                       |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.6          |   | Agreement                  on Cooperation between Harbin Tech Full Electric Co., Ltd. and                  Institute                  of Electrical Engineering of the Chinese Academy of                  Sciences       |   | Filed                  as Exhibit 10.6 to the current report on Form 8-K filed with the                  Commission on August 25, 2006 and incorporated herein by                  reference.                      |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.7          |   | Purchase                  Agreement among the Company, Advanced Electric Motors, Inc., Citadel                  Equity Fund Ltd. and Merrill Lynch International, dated August                  29,                  2006 |   | Filed                  as Exhibit 4.1 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2006 and incorporated herein by                  reference.    |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.8          |   | Indenture                  among the Company, Advanced Electric Motors, Inc. and The Bank                  of New                  York, as trustee, dated August 30, 2006                                                |   | Filed                  as Exhibit 4.2 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2006 and incorporated herein by                  reference.    |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.9(a)       |   | 2010                  Global Note                                                                                                                                                                                         |   | Filed                  as Exhibit 4.3(a) to the current report on Form 8-K filed with                  the                  Commission on September 1, 2006 and incorporated herein by                  reference. |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
|  10.9(b) |   | 2012                  Global Note                                                                                                                                                                                         |   | Filed                  as Exhibit 4.3(b) to the current report on Form 8-K filed with                  the                  Commission on September 1, 2006 and incorporated herein by                  reference. |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.10         |   | Registration                  Rights Agreement between the Company and the Investors, dated August                  30,                  2006                                                                             |   | Filed                  as Exhibit 4.4 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2006 and incorporated herein by                  reference.    |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.11         |   | Share                  Pledge Agreement between the Company and The Bank of New York,                  as                  collateral agent, dated August 30, 2006                                                        |   | Filed                  as Exhibit 4.5 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2006 and incorporated herein by                  reference.    |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.12         |   | Warrant                  Agreement between the Company and The Bank of New York, as warrant                  agent,                  dated August 30, 2006                                                                |   | Filed                  as Exhibit 4.6 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2006 and incorporated herein by                  reference.    |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.13(a)      |   | Global                  First Tranche 2012 Warrants                                                                                                                                                                       |   | Filed                  as Exhibit 4.7(a) to the current report on Form 8-K filed with                  the                  Commission on September 1, 2006 and incorporated herein by                  reference. |
|          |   |                                                                                                                                                                                                                      |   |                                                                                                                                                                                                               |
| 10.13(b)      |   | Global                  Second Tranche 2012 Warrants                                                                                                                                                                      |   | Filed                  as Exhibit 4.7(b) to the current report on Form 8-K filed with                  the                  Commission on September 1, 2006 and incorporated herein by                  reference. |

----

| 10.13(c)    |   | Global                  2009 Warrants                                                                                                                                                                                                                                                                                                                              |   | Filed                  as Exhibit 4.7(c) to the current report on Form 8-K filed with                  the                  Commission on September 1, 2006 and incorporated herein by                  reference.  |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.14       |   | Voting                  Agreement among the Company, Tianfu Yang and Citadel Equity Fund                  Ltd.,                  dated August 30, 2006                                                                                                                                                                                                             |   | Filed                  as Exhibit 4.8 to the current report on Form 8-K filed with the                  Commission                  on September 1, 2001 and incorporated herein by                  reference.     |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.15       |   | Noncompetition                  Covenant and Agreement among Citadel Equity Fund Ltd., Merrill                  Lynch                  International and Tianfu Yang, dated August 30, 2006                                                                                                                                                                        |   | Filed                  as Exhibit 10.15 to the Registration Statement on SB-2 filed with                  the                  Commission on October 4, 2006 and incorporated herein by                  reference. |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.16       |   | Agreement                  between Harbin Tech Full Electric Co., Ltd. and Shanghai Lingang                  Investment and Development Company Limited, dated September 8,                  2006                                                                                                                                                                  |   | Filed                  as Exhibit 10.15 to the Registration Statement on SB-2 filed with                  the                  Commission on October 4, 2006 and incorporated herein by                  reference. |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.17       |   | Letter                  Agreement dated April 9, 2007 by and among Harbin Electric, Inc,                  Shelton                  Technology LLC, Shaotang Chen and Xioagang Luo                                                                                                                                                                                  |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on April 13, 2007 and incorporated herein by                  reference.                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.18       |   | License                  Agreement dated as of April 9, 2007 by and among Advanced Automation                  Group. LLC, Shelton Technology, LLC, Shaotang Chen and Xiaogang                  Luo                                                                                                                                                                |   | Filed                  as Exhibit 10.2 to the current report on Form 8-K filed with the                  Commission on April 13, 2007 and incorporated herein by                  reference.                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.19       |   | Employment                  Agreement dated April 9, 2007 by and between Advanced Automation                  Group,                  LLC and Shaotang Chen                                                                                                                                                                                                        |   | Filed                  as Exhibit 10.3 to the current report on Form 8-K filed with the                  Commission on April 13, 2007 and incorporated herein by                  reference.                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
|  10.20 |   | Employment                  Agreement dated April 9, 2007 by and between Advanced Automation                  Group,                  LLC and Xiaogang Luo.                                                                                                                                                                                                        |   | Filed                  as Exhibit 10.4 to the current report on Form 8-K filed with the                  Commission on April 13, 2007 and incorporated herein by                  reference.                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                |
| 10.21       |   | Asset                  Purchase Agreement dated June 16, 2007, by and between the Company,                  Harbin                  Tech Full Electric Co., Ltd., Harbin Taifu Auto Electric Co., Ltd.,                  Tianfu                  Yang, Tianli Yang, Suofei Xu, Zedong Xu and Harbin Tech Full Industry                  Co.,                  Ltd. |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on June 19, 2007 and incorporated herein by                  reference.                         |

----

| 10.22       |   | Equity                  Registration Rights Agreement, dated October 17, 2007, by and between                  the                  Company, Hero Wave Investment Limited a British Virgin Islands                  company,                  and Tianfu Yang, as guarantor.                                                                                      |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on October 23, 2007 and incorporated herein by                  reference.                         |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 10.23       |   | Employment                  Agreement dated November 27, 2007 by and between the Company and                  Ms.                  Christy Young Shue                                                                                                                                                                                                             |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on November 30, 2007 and incorporated herein by                  reference.                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 10.24       |   | Letter                  of Intent dated March 27, 2008, by and among Harbin Tech Full Electric                  Co., Ltd., Wendeng Second Electric Motor Factory, The Committee                  of Labor                  Union of Wendeng Second Eletric Motor Factory and The People’s Government                  of Zhangjiachan Town, Wendeng County. |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on March 31, 2008 and incorporated herein by                  reference.                           |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 10.25  |   | Purchase                  Agreement, dated June 24, 2008, by and among the Company and the                  investors                  party thereto.                                                                                                                                                                                                   |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on June 25, 2008 and incorporated herein by                  reference.                       |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 10.26  |   | Registration                  Rights Agreement, dated June 24, 2008, by and among the Company                  and the                  investors party thereto.                                                                                                                                                                                             |   | Filed                  as Exhibit 10.1 to the current report on Form 8-K filed with the                  Commission on June 25, 2008 and incorporated herein by                  reference.                            |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 14.1        |   | Code                  of Ethics and Business Conduct                                                                                                                                                                                                                                                                                                              |   | Previously                  filed.                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 21.1        |   | List                  of subsidiaries                                                                                                                                                                                                                                                                                                                             |   | Filed                  as Exhibit 21.1 to the quarterly report on Form 10-QSB filed with                  the                  Commission on May 15, 2006 and incorporated herein by                  reference.  |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 31.1        |   | Certification                  by the Chief Executive Officer pursuant to Rule 13a-14(a) or                  15d-14(a)                                                                                                                                                                                                                                       |   | Filed                  herewith as Exhibit 31.1.                                                                                                                                                                       |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 31.2        |   | Certification                  by the Chief Financial Officer pursuant to Rule 13a-14(a) or                  15d-14(a)                                                                                                                                                                                                                                       |   | Filed                  herewith as Exhibit 31.2.                                                                                                                                                                       |
|        |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                   |
| 32.1        |   | Certification                  of the Chief Executive Officer and the Chief Financial Officer                  pursuant 18                  U.S.C. Section 1350, as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002                                                                                                  |   | Filed                  herewith as Exhibit 32.1.                                                                                                                                                                       |

|   | (b) | Reports                  on Form 8-K during the first quarter ended March 31,                  2008: |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

|    | (i)    | Form                  8-K filed on February 6, 2008 disclosing the settlement of the                  action                  filed against the Company by Leong Sing Lye in the United States                  District                  Court for the District of Nevada. |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                        |

|   | (ii)   | Form                  8-K filed on March 13, 2008 disclosing the Company’s issuance of a press                  release containing the Company’s operating results for the fourth quarter                  of 2007 and the year ended December 31, 2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                 |

|   | (iii)  | Form                  8-K filed on March 31, 2008 disclosing the Company’s entry into a Letter                  of Intent to acquire Weihai Hengda Electric Motor Co. Ltd. and                  Wendeng Second Electric Motor Factory.                                                                                       |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                    |
|   | (iv)   | Form                  8-K filed on May 19, 2008 disclosing that the Company held presentations                  at the Third Annual China Discovery Tour hosted by Roth Capital                  Partners                  in Beijing - China regarding the Company’s business and acquisition                  through May 2008. |
|   |   |                                                                                                                                                                                                                                                                                                                                    |
|   | (v)    | Form                  8-K filed on June 26, 2008 disclosing the Company’s entry into a Purchase                  Agreement with certain investors, pursuant to which the Company                  sold to                  the investors 3.5 million shares of the Company’s common                  stock.                 |

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