UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 For the quarterly period ended March 31, 2005

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

               For the transition period from ________ to ________

                        Commission File Number 000-51006

                              HARBIN ELECTRIC, INC.
                 (Name of small business issuer in its charter)

                 Delaware 98-040339 (State or other jurisdiction
               of incorporation) (IRS Employer Identification No.)

                   No. 9 Ha Ping Xi Lu, Ha Ping Lu Ji Zhong Qu
              Harbin Kai Fa Qu, Harbin, People's Republic of China
                                     150060
                    (Address of principal executive offices)

                                 86-451-86116757
                           (Issuer's telephone number)

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

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

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date:  15,787,335 shares of common stock,
par value $0.00001 per share





<PAGE>



                                Table of Contents
<TABLE>
<CAPTION>

                                                                                                             Page No.
Part I.  Financial Information
<S>                                                                                                           <C>
Item 1        Financial Statements (Unaudited):

              Consolidated Statements of Operations (unaudited)
              for the Three Months Ended March 31, 2005 and 2004................................................1

              Consolidated Balance Sheet
              as of March 31, 2005..............................................................................2

              Consolidated Cash Flow Statements
              For the Three Months Ended March 31, 2005 and 2004................................................3

              Notes to the Consolidated Financial Statements....................................................4

Item 2        Management's Discussion and Analysis or Plan of Operation.........................................16

Item 3        Controls and Procedures...........................................................................21

Part II. Other Information

Item 6        Exhibits and Reports on Form 8-K..................................................................21

Signatures......................................................................................................23

Index to Exhibits...............................................................................................24

</TABLE>
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item I.  Financial Statements

                      HARBIN ELECTRIC, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                   FOR THE THREE MONTH
                                                                                       PERIODS ENDED
                                                                           March 31, 2005            March 31, 2004
                                                                         --------------------    --------------------
<S>                                                                      <C>                     <C>
Net revenue                                                              $     4,128,297         $             -

Cost of revenue                                                                2,078,060                       -
                                                                         --------------------    --------------------
Gross profit                                                                   2,050,237                       -

Operating expenses
     Selling expenses                                                            106,588                       -
     General and administrative expenses                                         251,700                   3,357
                                                                         --------------------    --------------------
        Total operating expenses                                                 358,288                   3,357
                                                                         --------------------    --------------------
Income (loss) from operations                                                  1,691,948                  (3,357)


Non-operating Income
     Interest income                                                                 294                     388
                                                                         --------------------    --------------------
Net income (loss)                                                              1,692,242                  (2,969)

Other comprehensive loss - unrealized loss on marketable securities               14,000                       -
                                                                         --------------------    --------------------
Comprehensive Income (loss)                                              $     1,706,242         $        (2,969)
                                                                         ====================    ====================
Basic weighted average shares outstanding                                     15,000,450               1,698,050
                                                                         ====================    ====================
Basic net earnings per share                                             $          0.11         $         (0.00)
                                                                         ====================    ====================
Diluted weighted average shares outstanding                                   15,100,450               1,698,050
                                                                         ====================    ====================
Diluted net earnings per share                                           $          0.11         $         (0.00)
                                                                         ====================    ====================

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
                                       1
<PAGE>

                                      HARBIN ELECTRIC, INC. & SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
                                                  (UNAUDITED)

<TABLE>
<CAPTION>

ASSETS                                                                                 AS OF MARCH 31, 2005
                                                                                -----------------------------------
<S>                                                                                                  <C>
CURRENT ASSETS:
     Cash & cash equivalents                                                                         $   2,235,902
     Accounts receivable, net                                                                              845,157
     Inventory                                                                                              79,931
     Advances to suppliers                                                                                 601,035
     Marketable securities                                                                                 420,000
     Advance to related party                                                                              135,026
     Other assets                                                                                          161,237
                                                                                -----------------------------------

        Total current assets                                                                             4,478,288

PROPERTY AND EQUIPMENT, net                                                                              9,157,167

INTANGIBLE ASSETS, net                                                                                     600,920
                                                                                -----------------------------------


TOTAL ASSETS                                                                                         $  14,236,376
                                                                                ===================================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accrued expenses                                                                                $     334,943

Minority Interest
                                                                                                     $   1,218,000
STOCKHOLDERS' EQUITY
     Common stock, .00001 par value; authorized shares 100,000,000;
        issued and outstanding 15,000,450 shares                                                               150
     Additional paid in capital                                                                          6,497,692
     Shares to be issued, 786,885 shares of common stock                                                 2,400,000
     Subscription receivable                                                                              (125,859)
     Statutory reserves                                                                                    600,536
     Accumulated other comprehensive income:                                                               (88,245)
     Retained earnings                                                                                   3,399,159
                                                                                -----------------------------------

        Total stockholders' equity                                                                      12,683,433
                                                                                -----------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                           $  14,236,376
                                                                                ===================================

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                       2
<PAGE>

                                          HARBIN ELECTRIC, INC. & SUBSIDIARIES
                                           CONSOLIDATED CASH FLOW STATEMENTS
                                                      (UNAUDITED)
<TABLE>
<CAPTION>

                                                                            FOR THE THREE MONTH PERIODS ENDED
                                                                         MARCH 31, 2005          MARCH 31, 2004

<S>                                                                       <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                    $ 1,692,242            $     (2,969)

     Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
           Depreciation                                                        29,471                   1,003
           (Increase) decrease in current assets:
                      Accounts receivable                                    (819,162)               (567,058)
                      Inventory                                               189,373                    (266)
                      Advances to suppliers                                  (545,086)                      -
                      Advances to related parties                              71,283                 395,360
                      Other assets                                           (161,237)                    871
           Increase in current liabilities:
                      Accrued expenses                                         91,874                 168,493


     Net cash provided by (used in) operating activities                      548,758                  (4,566)

CASH FLOWS FROM INVESTING ACTIVITIES
                      Acquisition of intangible assets                       (266,200)                      -
                      Acquisition on property & equipment                    (131,600)                      -

     Net cash used in investing activities                                   (397,800)                      -

CASH FLOWS FROM FINANCING ACTIVITIES:
                      Increase in subscription Receivable                    (125,859)                      -


     Net cash used in financing activities                                   (125,859)                      -

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                             25,099                  (4,566)

CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                                2,210,803                 309,260
CASH & CASH EQUIVALENTS, END OF PERIOD                                    $ 2,235,902            $    304,694


The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
                                       3

<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)


1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Harbin  Tech Full  Electric  Co.,  Ltd.  ("HTFE")  was  founded in the  People's
Republic of China on April 10, 2003. HTFE was incorporated and formerly known as
Harbin Tech Full Technology  Development Co., Ltd. ("HTFTD").  On July 12, 2004,
the Board of Directors  of HTFTD  approved to change the name of HTFTD to Harbin
Tech Full Electric Co., Ltd. HTFE is located in the Nangang District,  Harbin of
Heilongjiang  Province.  The  business  license  of HTFE was  issued  by  Harbin
Business  and  Industrial  Management  Bureau on April 10, 2003.  The  operating
period of the business license is from August 17, 2004 to December 31, 2008.

HTFE is engaged in the  business  of  manufacturing  and  marketing  of advanced
Linear Motor  Systems  ("LIMs").  LIMs are a form of rotary motor which  operate
based upon  opposing  electrical  charges,  and are commonly  used in high speed
trains and conveyor belts. HTFE has domestic patents for commercial applications
of LIMs.

Tech Full International,  Inc. ("TFI") was a Delaware corporation,  incorporated
on August 24, 2004. TFI was a non-operative holding company of HTFE after August
31, 2005.

On August 31, 2004, TFI entered into an agreement with all the  shareholders  of
HTFE to exchange  all of the  outstanding  stock of TFI for all the  outstanding
stock of HTFE. After the consummation of the agreement,  the former shareholders
of HTFE owned 1,500 shares of common  stock of TFI,  which  represented  100% of
TFI's issued and outstanding  shares. For U.S. Federal income tax purposes,  the
transaction is intended to be qualified as a tax-free  transaction under section
351 of the Internal Revenue Code of 1986, as amended.

The  exchange  of  shares  between  TFI and the  shareholders  of HTFE  has been
accounted for as a reverse  acquisition  under the purchase method of accounting
since the  shareholders  of HTFE obtained  control of the  consolidated  entity.
Accordingly,   the  merger  of  the  two   companies  has  been  recorded  as  a
recapitalization  of HTFE, with HTFE being treated as the continuing entity. The
historical  financial  statements  presented are those of HTFE.  The  continuing
company  has  retained  December  31 as  its  fiscal  year  end.  The  financial
statements of the legal acquirer are not  significant;  therefore,  no pro forma
financial information is submitted.

On January 24, 2005, TFI consummated a merger agreement (the "Merger Agreement")
with Torch Executive Services Ltd. ("Torch"), a Nevada corporation,  under which
Torch issued  8,000,000  shares of Torch to the  shareholders  of TFI, and under
which TFI merged into Torch Subsidiary, Inc., a Delaware corporation ("TSI") and
an acquisition  subsidiary of Torch,  with TSI being the surviving  entity. As a
part  of  the  merger,  Torch  cancelled  5,000,000  shares  of its  issued  and
outstanding  stock owned by its former  president.  The  exchange of shares with
Torch has been accounted for as a reverse  acquisition under the purchase method
of  accounting  since  the  shareholders  of  TFI  obtained  control  of  Torch.
Accordingly,   the  merger  of  the  two   companies  has  been  recorded  as  a
recapitalization  of TFI, with TFI being treated as the continuing  entity.  The
financial  statements of legal acquiree are not significant;  therefore,  no pro
forma financial information is submitted.

                                       4
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)


Torch was  incorporated  in the State of  Nevada  on July 9,  2003.  Torch was a
development  stage  company  in the  business  of  providing  luxury  travel and
concierge  services on a  personalized  one-to-one  basis as well as through the
internet.

As a part of the merger, Torch was renamed Harbin Electric, Inc. (the "Company")
and the  Company  declared a stock  dividend  of 1.5 shares on each share of its
common stock outstanding for all shareholders on record as of January 26, 2005.

In connection with the  transactions  described  above,  the Company changed its
fiscal year end to December 31.

Joint Venture with Baldor Electric Company

On January  12,  2005,  HTFE  entered  into an  agreement  with Harbin Tech Full
Industry  Co., Ltd.  ("HTFI"),  pursuant to which HTFI agreed to transfer all of
its interests in a joint venture with Baldor  Electric  Company  ("Baldor"),  to
HTFE. In exchange for the transfer of the interests in the joint  venture,  HTFE
agreed to cause its publicly traded holding company to issue 1,000,000 shares of
Harbin  Electric,  Inc.'s  common stock to HTFI as a payment for the transfer of
the joint venture interests.  On May 12, 2005 HTFI, HTFE and the Company amended
the original share transfer  Agreement ("The Amended and Restated Share Transfer
Agreement")  whereby  HTFE and the  Company  agreed that the Company would issue
786,885 shares of the Company's common stock for the transfer of HTFE's interest
in the joint  venture,  as opposed to the  1,000,000  shares as set forth in the
original  Share Transfer  Agreement  dated January 12, 2005. The paid in capital
for the  shares to be  issued in  consideration  for the  interest  in the Joint
Venture is  $2,400,000.  By  agreement  of the  parties,  the value of the Joint
Venture was transferred to the Company effective January 12, 2005.

In accordance with the Joint Venture Agreement,  HTFI had a 65% equity ownership
in the joint venture  corporation  and Baldor had the  remaining  35%. HTFI will
receive 55% of the profits  from the joint  venture  with the  remainder  of the
profits going to Baldor.  The purpose of the joint venture is to manufacture and
market electric  machineries and related equipment in China,  utilizing Baldor's
technology.  The Chief  Executive  Officer  and  Chairman of the Company and the
Company's majority shareholder is also the principal owner of HTFI.

The  Joint  Venture  is in the  developmental  stage and has not  generated  any
revenue through March 31, 2005.

2. BASIS OF PRESENTATION

The  accompanying  unaudited  financial  statements  of the  Company  have  been
prepared in accordance with generally accepted accounting principles for interim
financial information.  Accordingly,  they do not include all of the information
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included.  Operating  results  for  the  interim  periods  are  not  necessarily
indicative of the results for any future period. These statements should be read
in conjunction with the Company's audited financial statements and notes thereto
for the fiscal year ended December 31, 2004.

                                       5
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

Accounts Receivable

The  Company's  policy is to maintain  reserves for  potential  credit losses on
accounts  receivable.  Management reviews the composition of accounts receivable
and analyzes  historical bad debts,  customer  concentrations,  customer  credit
worthiness,  current economic trends and changes in customer payment patterns to
evaluate  the  adequacy  of  these  reserves.  The  Company  had a net  accounts
receivable of $845,157,  after deducting allowance of $35, as of March 31, 2005.
The Company had a net  accounts  receivable  of  $567,058,  after  deducting  an
allowance of $2,350, as of March 31, 2004.

Advances to suppliers

The Company  advances  to certain  vendors for  purchase  of its  material.  The
advances to  suppliers  amounted to  $601,035 at March 31,  2005.  There were no
advances to suppliers at March 31, 2004.

Income Taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the  recognition of deferred tax assets and  liabilities for the expected future
tax  consequences of events that have been included in the financial  statements
or tax returns. Under this method,  deferred income taxes are recognized for the
tax consequences in future years of differences  between the tax bases of assets
and liabilities and their financial  reporting  amounts at each period end based
on enacted tax laws and statutory  tax rates  applicable to the periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established,  when  necessary,  to reduce  deferred  tax  assets  to the  amount
expected to be realized.

According to the  Provisional  Regulations of the People's  Republic of China on
Income Tax,  the Document of  Reductions  and  Exemptions  of Income Tax for the
Company has been approved by the local tax bureau and the Management  Regulation
of Harbin Economic and Technological  Development Zone for the reporting period.
The Company is exempted from income tax from July 1, 2004 through June 30, 2006.

Fair value of financial instruments

Statement of financial  accounting  standard  No. 107,  "Disclosures  about Fair
Value of Financial  Instruments,"  requires that the Company disclose  estimated
fair values of  financial  instruments.  The  carrying  amounts  reported in the
statements  of  financial  position for current  assets and current  liabilities
qualifying as financial instruments are a reasonable estimate of fair value.

                                       6
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

Foreign currency transactions and comprehensive income (loss)

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included  in net  income.  Certain  statements,  however,  require
entities to report specific changes in assets and  liabilities,  such as gain or
loss on foreign  currency  translation,  as a separate  component  of the equity
section of the balance sheet. Such items,  along with net income, are components
of comprehensive  income. The functional  currency of the Company is the Chinese
Renminbi.  The unit of Renminbi is in Yuan.  Cumulative  translation  adjustment
amount and translation  adjustment gain were  insignificant at and for the three
month periods ended, March 31, 2005 and 2004.

Segment Reporting

Statement of Financial  Accounting  Standards No. 131 ("SFAS 131"),  "Disclosure
About  Segments of an Enterprise  and Related  Information"  requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating  decisions and assessing  performance.  Reportable segments
are based on products  and  services,  geography,  legal  structure,  management
structure, or any other manner in which management disaggregates a company.

SFAS 131 has no effect on the Company's  financial  statements as  substantially
all of the  Company's  operations  are  conducted in one industry  segment.  The
Company  consists  of one  reportable  business  segment.  All  revenue  is from
customers in People's Republic of China. All of the Company's assets are located
in People's Republic of China.

Recent Pronouncements

On May 15, 2003,  the Financial  Accounting  Standards  Board (FASB) issued FASB
Statement No. 150 ("SFAS 150"),  "Accounting for Certain  Financial  Instruments
with  Characteristics  of Both  Liabilities  and  Equity."  SFAS 150 changes the
accounting for certain  financial  instruments  that,  under previous  guidance,
could be  classified as equity or  "mezzanine"  equity,  by now requiring  those
instruments to be classified as liabilities (or assets in some circumstances) in
the  statement  of financial  position.  Further,  SFAS 150 requires  disclosure
regarding the terms of those instruments and settlement  alternatives.  SFAS 150
affects an entity's  classification of the following  freestanding  instruments:
(a) Mandatorily redeemable instruments,  (b) Financial instruments to repurchase
an  entity's  own  equity  instruments,   (c)  Financial  instruments  embodying
obligations that the issuer must or could choose to settle by issuing a variable
number of its shares or other  equity  instruments  based  solely on (i) a fixed
monetary  amount known at inception or (ii) something  other than changes in its
own equity instruments and (d) SFAS 150 does not apply to features embedded in a
financial  instrument that is not a derivative in its entirety.  The guidance in
SFAS 150 is generally  effective for all financial  instruments  entered into or
modified after May 31, 2003, and is otherwise  effective at the beginning of the
first  interim  period  beginning  after June 15, 2003.  For private  companies,
mandatorily  redeemable  financial  instruments are subject to the provisions of
SFAS 150 for the fiscal period  beginning  after  December 15, 2003. The Company
does not expect the  adoption  of SFAS No. 150 to have a material  impact on its
financial position or results of operations or cash flows.

                                       7
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

In December 2003, FASB issued a revised Interpretation No. 46, "Consolidation of
Variable  Interest  Entities"  (FIN 46R).  FIN 46R  addresses  consolidation  by
business enterprises of variable interest entities and significantly changes the
consolidation   application  of  consolidation  policies  to  variable  interest
entities and, thus improves comparability between enterprises engaged in similar
activities  when  those  activities  are  conducted  through  variable  interest
entities. The Company does not hold any variable interest entities.

3. PRINCIPLES OF CONSOLIDATION

The  accompanying  consolidated  financial  statements  include the  accounts of
Harbin  Electric,  Inc.  (from the merger  date),  the joint venture with Baldor
(from the date of the  acquisition) and its 100%  wholly-owned  subsidiary HTFE.
All significant  inter-company accounts and transactions have been eliminated in
consolidation. The results for the first three month period ended March 31, 2005
include  both the  Company and HTFE while the  historical  results for the three
month period ended March 31, 2004 include only HTFE.

4. DUE FROM RELATED PARTIES

The Company  advanced  cash  amounting  to $135,026 to a major  shareholder  and
parties  related to  shareholders,  as of March 31,  2005.  The amount is due on
demand,  unsecured and bears an interest rate of 6% per annum.  Interest for the
three month period ended March 31, 2005 amounted to $4,455. There was no balance
outstanding due from related parties on March 31, 2004.

5.  MAJOR CUSTOMERS AND VENDORS

One major  customer  accounted  for 74% of the net  revenue  for the three month
period ended March 31, 2005. The total receivable balance due from this customer
was $842,160 at March 31,  2005.  The Company did not have revenue for the three
month period ended March 31, 2004.

Three  vendors  provided 83% of the  Company's raw materials for the three month
period ended March 31, 2005. The Company's accounts payable to these vendors was
$1,815 at March 31, 2005. The Company did not have any significant  purchases in
the three month period ended March 31, 2004.

The Company  extends credit to its customers  based upon its assessment of their
credit worthiness and generally does not require collateral.  Credit losses have
not been significant.

6. INVESTMENT IN MARKETABLE EQUITY SECURITIES

The Company's  investments in marketable securities are classified as "available
for sale" securities, and are carried on the financial statements at fair market
value.  Realized gains and losses are included in earnings,  unrealized  holding
gains and losses are reported as a separate component of stockholders' equity as
a component of "Other Comprehensive  Income." The average cost method is used to
determine cost of securities.

                                       8
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

The  following is a summary of the Company's  investment  in  marketable  equity
securities, all of which are classified as available-for-sale  securities, as of
March 31, 2005. The company had no marketable securities at March 31, 2004.

   ------------------- ------------------ -------------------- -----------------
                              Cost           Estimated Fair        Unrealized
                              ----           --------------        ----------
                                                 value                loss
                                                 -----                ----
   ------------------- ------------------ -------------------- -----------------
   Equity securities        $508,245            $420,000             $88,245
   ------------------- ------------------ -------------------- -----------------

7.  INTANGIBLE ASSETS

Intangible  assets consist of Patents.  The Company is amortizing the intangible
assets  over a 3 year  period.  The  Company  evaluates  intangible  assets  for
impairment,  at least on an annual  basis and  whenever  events  or  changes  in
circumstances  indicate that the carrying value may not be recoverable  from its
estimated  future  cash  flows.   Recoverability  of  intangible  assets,  other
long-lived assets and, goodwill is measured by comparing their net book value to
the related projected  undiscounted cash flows from these assets,  considering a
number  of  factors  including  past  operating   results,   budgets,   economic
projections, market trends and product development cycles. If the net book value
of the  asset  exceeds  the  related  undiscounted  cash  flows,  the  asset  is
considered  impaired,  and a second test is  performed  to measure the amount of
impairment  loss.  Potential  impairment  of  goodwill  is  being  evaluated  in
accordance with SFAS No. 142.

Net intangible assets at March 31, 2005 were as follows:

          Patents                                $          612,415
          Less Accumulated amortization                     (11,495)

                                                     ---------------
                                                 $          600,920
                                                     ===============

Amortization  expense for the quarter  ended March 31, 2005  amounted to $1,412.
The Company did not have amortization of intangible assets at March 31, 2004.

Amortization  expense for the Company's  current  amortizable  intangible assets
over the next three fiscal years is estimated to be: 2005-$40,333; 2006-$40,333;
2007-$30,250.

8. SHAREHOLDER'S EQUITY

HTFE was founded in the People's  Republic of China on April 10, 2003.  Upon its
inception, HTFE issued 6,000,000 shares of its common stock for $726,000 to four
shareholders.  On July 12,  2004,  HTFE issued  47,000,000  shares of its common
stock for  subscription  receivables in the amount of $5,771,842  from a related
party.  Immediately  after the  issuance,  HTFE had  53,000,000  shares of stock
issued  and  outstanding.  Through  December  31,  2004,  HTFE had  subscription
receivables  in the amount of  $4,862,256  from its  shareholders.  The  Company
accrued interest at 5.86% on the subscription  receivables amounting to $125,859
through March 31, 2005.

                                    9
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

On August 31, 2004 all  shareholders  of HTFE entered into an agreement with TFI
to exchange all of their  outstanding  shares of HTFE for 1,500 shares of common
stock of TFI which  constituted  100% of TFI's  issued and  outstanding  shares.
After the consummation of the agreement,  the former  shareholders of HTFE owned
all outstanding and issued shares of TFI.

On January 12, 2005, TFI and its shareholders  entered into the Merger Agreement
with Torch and a wholly owned  subsidiary  of Torch,  TSI. At the closing  which
occurred on January 24, 2005,  TFI was merged with and into TSI and the separate
existence of TFI ceased.  At that time TSI had 200 shares of common stock issued
and  outstanding.  On the date of the  merger,  there were  7,000,300  shares of
common stock of Torch outstanding. As a part of the merger, 8,000,000 restricted
shares of Torch were issued to the shareholders of TFI and the former president,
sole director and majority  shareholder  of Torch returned  5,000,000  shares of
Torch to the treasury which were subsequently cancelled. After the merger, there
were 10,000,300 shares of stock of Torch outstanding.

On January 26, 2005 Torch  declared a stock  dividend of one-half  share on each
share of its stock  outstanding to all  stockholders of record as of January 26,
2005, after the Merger Agreement.  The stock dividend was payable on January 27,
2005.  After the stock  dividend,  the Company had  15,000,450  shares of common
stock outstanding.  The Company has a total of 15,000,450 shares of common stock
outstanding as of March 31, 2005.

On January 12, 2005 HTFE  entered into an  agreement  with  related  party HTFI,
pursuant  to which  HTFI  agreed to  transfer  all of its  interests  in a joint
venture  with Baldor  Electric  Company  (note 18) to HTFE in  exchange  for the
Company to issue 1,000,000  shares of its common stock to HTFI. On May 12, 2005,
HTFE and the  Company  signed a written  Consent  amending  the  Share  Transfer
Agreement  whereby  HTFE and the Company  agreed  that the  Company  would issue
786,885 shares of the Company's common stock for the transfer of HTFE's interest
in the joint  venture,  as opposed to the  1,000,000  shares as set forth in the
original Share Transfer  Agreement dated January 12, 2005. The Company allocated
786,885  shares of its common  stock for the  issuance  in  connection  with the
transfer of the joint venture  interest.  As of May 13, 2005,  the Company has a
total of 15,787,335 shares of common stock outstanding.

9. STOCK OPTIONS

In  December  2002,  the FASB issued  SFAS No. 148  "Accounting  for Stock Based
Compensation-Transition  and  Disclosure".  SFAS No.  148 amends  SFAS No.  123,
"Accounting for Stock Based  Compensation",  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this Statement amends the
disclosure  requirements  of Statement 123 to require  prominent  disclosures in
both annual and interim financial  statements about the method of accounting for
stock based employee compensation and the effect of the method used, on reported
results.  The Statement is effective for the Companies' interim reporting period
ending January 31, 2003.

                                       10
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)


In  compliance  with SFAS No. 148, the Company has elected to continue to follow
the  intrinsic  value  method  in  accounting  for  its   stock-based   employee
compensation  plan  as  defined  by APB  No.  25 and  has  made  the  applicable
disclosures below.

Had the Company  determined  employee stock based  compensation  cost based on a
fair value  model at the grant date for its stock  options  under SFAS 123,  the
Company's  net  earnings  per share  would have been  adjusted  to the pro forma
amounts for three month periods ended March 31, 2005 as follows ($ in thousands,
except per share amounts):
                                                     Three month period ended
                                                           March 31, 2005

     Net Income - as reported                                 $1,692

     Stock-Based employee compensation expense included
     in reported net income, net of tax
     Total stock-based employee compensation under               (97)
     fair-value-based method for all rewards, net of tax
     Pro forma net income                                     $1,595

Earnings per share:

                                                      Three month period ended
                                                         March 31, 2005

          Basic, as reported                                   $0.11
          Diluted, as reported                                 $0.11
          Basic, pro forma                                     $0.11
          Diluted, pro forma                                   $0.11

On January 31, 2005,  the Company  granted a total of 150,000  stock  options to
purchase  shares of its common stock to three directors of the Company under the
Company's  2005 Stock Option Plan,  pursuant to a written  agreement (the "Award
Agreement").  The options  terminate  five (5) years from the date of the grant.
Per the Award Agreement,  the options shall become  exercisable  during the term
that the Optionee serves as a Director of the Company as follows: (i) 50% of the
shares of Stock subject to this Option became exercisable  immediately as of the
date of the Award Agreement; and (ii) the balance of the shares of Stock subject
to  this  Option  shall  become   exercisable  in  eight  (8)  equal   quarterly
installments  of three  thousand one hundred twenty five (3,125) shares of Stock
subject to this Option,  the first  installment to be exercisable as of the last
day of the first quarter of calendar year 2005, with an additional 3,125 of such
Shares becoming  exercisable as of the last day of each subsequent quarter.  The
Company  granted the  Optionees  the right to  purchase  the number of shares of
Stock set forth in the Award Agreement,  for cash (or other  consideration as is
authorized  under  the Plan and  acceptable  to the  Board of  Directors  of the
Company,  in their  sole  and  absolute  discretion)  at $3.10  per  share  (the
"Exercise  Price"),  such  Exercise  Price being the high price per share of the
Company's  common stock  reported to the NASD  Over-the-Counter  Bulletin  Board
under HRBN.OB on January 31, 2005.

                                       11
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

10. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company  prepares its statements of cash flows using the indirect  method as
defined under the Financial Accounting Standard No. 95.

The Company paid $0 for  interest and income tax during the three month  periods
ended March 31, 2005 and 2004.

11. STATUTORY COMMON WELFARE FUND

As  stipulated by the Company Law of the People's  Republic of China (PRC),  net
income after taxation can only be distributed as dividends  after  appropriation
has been made for the following:

     (i) Making up cumulative prior years' losses, if any;

     (ii)  Allocations  to the  "Statutory  surplus  reserve" of at least 10% of
income after tax, as  determined  under PRC  accounting  rules and  regulations,
until the fund amounts to 50% of the Company's registered capital;

     (iii)  Allocations  of 5-10% of income after tax, as  determined  under PRC
accounting rules and  regulations,  to the Company's  "Statutory  common welfare
fund", which is established for the purpose of providing employee facilities and
other collective benefits to the Company's employees; and

     (iv) Allocations to the discretionary  surplus reserve,  if approved in the
shareholders' general meeting.

The  Company  established  a reserve  for the annual  contribution  of 5% of net
income to the welfare fund. The amount included in the statutory reserve for the
three month  periods  ended March 31, 2005 and 2004  amounted to $84,612 and $0,
respectively.

12. STATUTORY RESERVE

In accordance  with the Chinese Company Law (note 11), the Company has allocated
10% of its annual net income, amounting to $169,224 and $0, as statutory surplus
reserve for the three month periods ended March 31, 2005 and 2004, respectively.
The Statutory  Surplus Reserve and Statutory  common welfare fund are aggregated
on the balance sheet as Statutory Reserve.

                                       12
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

13. EMPLOYEE PENSION

The employee pension in Harbin  generally  includes two parts: The first part to
be paid by the company is 20% of the employees' actual salary in the prior year.
If the average  salary  falls below $1,165 for each  individual,  $1,165 will be
used as the basis.  The other part paid by the  employees is 8% of actual salary
with  the  same  minimum  requirement.  The  Company  made no  contributions  of
employment  benefits,  including  pension in the three month periods ended March
31, 2004 and March 31, 2005.  The Company  agreed with the local  authorities to
commence these contributions in 2005.

14. EARNINGS PER SHARE

Earnings  per share for the three month  periods  ended March 31, 2005 and March
31, 2004 were  determined by dividing net income for the periods by the weighted
average number of both basic and diluted shares of common stock and common stock
equivalents outstanding.

The  following  is an  analysis  of the  differences  between  basic and diluted
earnings  per  common  share in  accordance  with  the  Statement  of  Financial
Accounting Standards No. 128, "Earnings Per Share".
<TABLE>
<CAPTION>
------------------------------------------------------ ------------------------------------------
                                                       For the three month periods ended March 31
------------------------------------------------------ ------------------------------------------
                                                                 2005                 2004
------------------------------------------------------ ------------------- ----------------------
<S>                                                           <C>                    <C>
Weighted average common shares outstanding                    15,000,450             1,698,050
------------------------------------------------------ ------------------- ----------------------
Effect of dilutive securities:
Stock options                                                    100,000
------------------------------------------------------ ------------------- ----------------------
Weighted average common shares
outstanding and common share equivalents                      15,100,450             1,698,050
------------------------------------------------------ ------------------- ----------------------
</TABLE>
15. MERGER AGREEMENT

On  January  12,  2004,  Torch  entered  into the Merger  Agreement  with TSI, a
wholly-owned  subsidiary of Torch,  TFI and the shareholders of TFI. TFI had one
100%  wholly-owned  subsidiary  in  Nangang  District,  Harbin  of  Heilongjiang
Province,  China,  HTFE.  Under the terms of the agreement,  TFI merged with and
into  TSI  and  Torch  issued  8,000,000  million  shares  of its  common  stock
("Acquisition  Shares")  to the  holders  of TFI and,  in  consideration  of the
payment of $5,000,  the former  president of Torch  returned  5,000,000  million
shares of common stock to the treasury which were  subsequently  cancelled.  The
new shares  constituted  approximately  80 percent of the outstanding  shares of
Torch, after the merger. The Merger Agreement was closed on January 24, 2004.

At the closing  Frank  Torchia was replaced as  president,  principal  executive
officer,  treasurer,  principal accounting officer, principal financial officer,
and  secretary  and the  officers  of TFI were  appointed  as officers of Torch.
Further,  at the closing of the transaction,  the existing president resigned as
Torch's sole  director  and the  officers of TFI were  appointed to the board of
directors of Torch.

                                       13
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

At the  effective  date of the  merger,  by virtue of the merger and without any
action on the part of TSI,  TFI or the TFI  shareholders,  the shares of capital
stock of each of TFI and TSI was converted as follows:

     (a)  Capital  Stock of TSI:  Each  issued  and  outstanding  share of TSI's
capital stock  continued to be issued and outstanding and was converted into one
share of validly issued, fully paid, and non-assessable  common stock of TSI, as
it existed from and after closing.  Each stock  certificate of TSI's  evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the TSI, as it existed from and after closing.

     (b)  Conversion of TFI. Each share issued and  outstanding  of TFI that was
issued and  outstanding  at the effective  date of the merger was  automatically
cancelled and extinguished and converted,  without any action on the part of the
holder  thereof,  into the  right  to  receive  at the  time and in the  amounts
described in the Merger  Agreement an amount of Acquisition  Shares equal to the
number of  Acquisition  Shares  divided by the number of TFI shares  outstanding
immediately prior to closing.  All such TFI shares,  when so converted,  were no
longer  outstanding and were  automatically  cancelled and retired and ceased to
exist,  and each holder of a certificate  representing any such shares ceased to
have  any  rights  with  respect  thereto,  except  the  right  to  receive  the
Acquisition  Shares paid in  consideration  therefore upon the surrender of such
certificate in accordance with the merger agreement.

On January 26,  2005,  Torch  changed  its name to Harbin  Electric,  Inc.  (the
"Company") and TSI merged with and into the Company,  with the Company remaining
as the surviving  corporation.  On January 26, 2005 the Company declared a stock
dividend  of  one-half  share on each  share  of its  stock  outstanding  to all
stockholders of record as of January 26, 2005, after the merger  agreement.  The
stock dividend was payable on January 27, 2005.

16. RELATED PARTY TRANSACTION

On January 12, 2005, HTFE entered into a Share Transfer Agreement (the "Original
Share Transfer  Agreement") with HTFI, pursuant to which HTFI agreed to transfer
all of its interests in a joint venture with Baldor, a U.S. company which trades
on the New York Stock Exchange,  to HTFE (note 18). In exchange for the transfer
of the interests in the joint venture,  HTFE agreed to cause its publicly traded
holding  company to issue  1,000,000  shares of its common  stock,  to HTFI as a
payment for the transfer of the joint venture interests.  On May 12, 2005, HTFI,
HTFE and the Company amended the Original Share Transfer Agreement (the "Amended
and Restated Share Transfer Agreement") whereby HTFE and the Company agreed that
the Company  would issue 786,885  shares of the  Company's  common stock for the
transfer of HTFI's  interest in the joint  venture,  as opposed to the 1,000,000
shares set forth in the Original  Share  Transfer  Agreement.  Tianfu Yang,  the
Chief Executive  Officer and Chairman of the Company and the Company's  majority
shareholder is also the principal owner of HTFI.

                                       14
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005
                                   (Unaudited)

17. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Company's operations are carried out in the PRC. Accordingly,  the Company's
business, financial condition and results of operations may be influenced by the
political,  economic and legal environments in the PRC, and by the general state
of the PRC's economy.

The Company's  operations in the PRC are subject to specific  considerations and
significant  risks not typically  associated with companies in the North America
and Western  Europe.  These include risks  associated  with,  among others,  the
political,  economic and legal environments and foreign currency  exchange.  The
Company's results may be adversely affected by changes in governmental  policies
with  respect  to laws and  regulations,  anti-inflationary  measures,  currency
conversion and remittance abroad, and rates and methods of taxation, among other
things.

The future  profitability of the Company is dependent upon the Company's ability
to purchase its raw  materials  at the current  rate and maintain the  operating
expense at the current level.

18. SUBSEQUENT EVENT

Subsequent to March 31, 2005,  the Company  issued  786,885 shares of its common
stock to HTFI.  Such shares  were  issued as a part of the Amended and  Restated
Share Transfer  Agreement  dated as of May 12, 2005,  between HTFE, HTFI and the
Company.  Under the Amended and Restated Share Transfer  Agreement,  in exchange
for the Company's  issuance of 786,885 shares of its common stock to HTFI,  HTFI
transferred to HTFE all of HTFI's interest in the Joint Venture between HTFI and
Baldor and all associated rights with respect to the Joint Venture. By agreement
of the parties,  the value of the Joint Venture was  transferred  to the Company
effective January 12, 2005.

19. RECLASSIFICATIONS

Certain  prior period  amounts have been  reclassified  to conform to the period
ended March 31, 2005 presentation.


                                       15
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
            Management's Discussion and Analysis or Plan of Operation


Item 2. Management's Discussion and Analysis or Plan of Operation

INFORMATION REGARDING FORWARD LOOKING STATEMENTS

The  following  discussion  should  be read in  conjunction  with the  unaudited
condensed  consolidated financial statements and notes thereto set forth in Item
1 of  this  Quarterly  Report.  In  addition  to  historical  information,  this
discussion and analysis contains forward-looking  statements that involve risks,
uncertainties  and  assumptions,  which  could  cause  actual  results to differ
materially from Management's expectations.  Factors that could cause differences
include,  but are not  limited  to,  expected  market  demand for the  Company's
services,  fluctuations  in pricing for products  distributed by the Company and
services offered by competitors,  as well as general  conditions of the electric
machinery marketplace.

Some of the information in this Form 10-QSB contains forward-looking  statements
that  involve  substantial  risks  and  uncertainties.  You can  identify  these
statements  by   forward-looking   words  such  as  "may,"   "will,"   "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. You should
read statements that contain these words carefully because they:

     o    discuss our future expectations;
     o    contain  projections  of our future  results of  operations  or of our
          financial condition; and
     o    state other "forward-looking" information.

We believe it is important to communicate our expectations.  However,  there may
be events in the future that we are not able to accurately predict or over which
we have no control.  Our actual  results and the timing of certain  events could
differ materially from those anticipated in these forward-looking  statements as
a result of certain  factors,  including those set forth in our filings with the
Securities and Exchange Commission.

Overview

We are incorporated  under the laws of the state of Nevada and are headquartered
in Harbin,  China.  We  manufacture,  research,  sell and service  linear motors
systems (LIMs) for the domestic and overseas  markets.  LIMs in concept  perform
similar  functions  to  rotary  motors,  but  differ  because  LIMs  are flat in
structure  and can be  configured  into a number  of  forms.  LIMs  also use the
principles  of magnetic  properties  to induce linear forces that range in power
suitable for many types of applications. We have domestic patents for commercial
applications  of LIMs.  Our  LIMs  represent  an  improvement  over  traditional
electric motors based on design,  energy output, energy efficiency and precision
movement.  Our products have applications in numerous industries,  including the
oil, postal, transportation, logistical and packaging industries.

Significant Accounting Policies

                                       16
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
            Management's Discussion and Analysis or Plan of Operation


Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles requires us to make estimates and assumptions that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from those estimates.

Accounts Receivable

We maintain  reserves for  potential  credit losses on accounts  receivable.  We
review the composition of accounts  receivable and analyze historical bad debts,
customer concentrations, customer credit worthiness, current economic trends and
changes in customer payment patterns to evaluate the adequacy of these reserves.
Reserves are recorded primarily on a specific identification basis.

Inventories

Inventories  are valued at the lower of cost  (determined on a weighted  average
basis) or market.  We compare the cost of inventories  with the market value and
allowance is made for writing down the  inventories  to their market  value,  if
lower.

Property & Equipment

Property and  equipment are stated at cost.  Expenditures  for  maintenance  and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized.  When property and equipment are retired or otherwise  disposed
of,  the  related  cost  and  accumulated  depreciation  are  removed  from  the
respective   accounts,   and  any  gain  or  loss  is  included  in  operations.
Depreciation  of property  and  equipment  is provided  using the  straight-line
method  for  substantially  all  assets  with  estimated  lives of: 30 years for
building,  10 years for machinery,  5 years for office equipment and 8 years for
vehicles.

Intangible Assets

Intangible  assets  consist  of  patents.  We  evaluate  intangible  assets  for
impairment,  at least on an annual  basis and  whenever  events  or  changes  in
circumstances  indicate that the carrying value may not be recoverable  from its
estimated  future  cash  flows.   Recoverability  of  intangible  assets,  other
long-lived assets and, goodwill is measured by comparing their net book value to
the related projected  undiscounted cash flows from these assets,  considering a
number  of  factors  including  past  operating   results,   budgets,   economic
projections, market trends and product development cycles. If the net book value
of the  asset  exceeds  the  related  undiscounted  cash  flows,  the  asset  is
considered  impaired,  and a second test is  performed  to measure the amount of
impairment  loss.  Potential  impairment of goodwill after July 1, 2002 is being
evaluated in accordance with SFAS No. 142.

Revenue Recognition

Our  revenue  recognition  policies  are in  compliance  with  Staff  accounting
bulletin  (SAB) 101.  Sales  revenue is  recognized  at the date of  shipment to
customers when a formal arrangement  exists, the price is fixed or determinable,
the delivery is  completed,  no other  significant  obligations  by us exist and
collectibility  is  reasonably  assured.  Payments  received  before  all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.

                                       17
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
            Management's Discussion and Analysis or Plan of Operation


Stock-based Compensation

In October  1995,  the FASB  issued SFAS No. 123,  "Accounting  for  Stock-Based
Compensation".  SFAS No. 123 prescribes  accounting and reporting  standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting  Principles
Board Opinion No. 25,  "Accounting  for stock issued to employees"  (APB 25) and
related interpretations with proforma disclosure of what net income and earnings
per share would have been had we adopted the new fair value  method.  We use the
intrinsic  value method  prescribed by APB 25 and have opted for the  disclosure
provisions of SFAS No. 123.

On January 31, 2005,  the Company  granted a total of 150,000  stock  options to
purchase  shares of its common stock to three directors of the Company under the
Company's  2005 Stock Option Plan,  pursuant to a written  agreement (the "Award
Agreement").  The options  terminate  five (5) years from the date of the grant.
Per the Award Agreement,  the options shall become  exercisable  during the term
that the Optionee serves as a Director of the Company as follows: (i) 50% of the
shares of Stock subject to this Option became exercisable  immediately as of the
date of the Award Agreement; and (ii) the balance of the shares of Stock subject
to  this  Option  shall  become   exercisable  in  eight  (8)  equal   quarterly
installments  of three  thousand one hundred twenty five (3,125) shares of Stock
subject to this Option,  the first  installment to be exercisable as of the last
day of the first quarter of calendar year 2005, with an additional 3,125 of such
Shares becoming  exercisable as of the last day of each subsequent quarter.  The
Company  granted the  Optionees  the right to  purchase  the number of shares of
Stock set forth in the Award Agreement,  for cash (or other  consideration as is
authorized  under  the Plan and  acceptable  to the  Board of  Directors  of the
Company,  in their  sole  and  absolute  discretion)  at $3.10  per  share  (the
"Exercise  Price"),  such  Exercise  Price being the high price per share of the
Company's  common stock  reported on the NASD  Over-The-Counter  Bulletin  Board
under HRBN.OB on January 31, 2005.

Income Taxes

We utilize  SFAS No. 109,  "Accounting  for Income  Taxes,"  which  requires the
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences  of events that have been included in the  financial  statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences  between the tax bases of assets and
liabilities  and their financial  reporting  amounts at each period end based on
enacted tax laws and statutory tax rates  applicable to the periods in which the
differences  are expected to affect  taxable  income.  Valuation  allowances are
established,  when  necessary,  to reduce  deferred  tax  assets  to the  amount
expected to be realized.

According to the  Provisional  Regulations of the People's  Republic of China on
Income Tax, the Document of Reductions  and Exemptions of Income Tax for us have
been  approved by the local tax bureau and the  Management  Regulation of Harbin
Economic and  Technological  Development  Zone.  We are exempted from income tax
from July 1, 2004 through June 30, 2006.

                                       18
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
            Management's Discussion and Analysis or Plan of Operation


Foreign Currency Transactions and Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included  in net  income.  Certain  statements,  however,  require
entities to report specific changes in assets and  liabilities,  such as gain or
loss on foreign  currency  translation,  as a separate  component  of the equity
section of the balance sheet. Such items,  along with net income, are components
of comprehensive income. Our transactions occur in Chinese Renminbi. The unit of
Renminbi is in Yuan.

Recent Accounting Pronouncements

On May 15 2003, the FASB issued FASB Statement No. 150 ("SFAS 150"),  Accounting
for Certain Financial  Instruments with  Characteristics of both Liabilities and
Equity. SFAS 150 changes the accounting for certain financial  instruments that,
under previous guidance, could be classified as equity or "mezzanine" equity, by
now requiring  those  instruments to be classified as liabilities  (or assets in
some  circumstances) in the statement of financial position.  Further,  SFAS 150
requires  disclosure  regarding the terms of those  instruments  and  settlement
alternatives.  SFAS 150  affects an  entity's  classification  of the  following
freestanding  instruments:  (a) Mandatorily redeemable instruments (b) Financial
instruments  to  repurchase  an entity's own equity  instruments  (c)  Financial
instruments embodying obligations that the issuer must or could choose to settle
by issuing a variable  number of its shares or other  equity  instruments  based
solely on (i) a fixed monetary amount known at inception or (ii) something other
than  changes in its own equity  instruments  and (d) SFAS 150 does not apply to
features  embedded in a financial  instrument  that is not a  derivative  in its
entirety.  The guidance in SFAS 150 is  generally  effective  for all  financial
instruments  entered  into or  modified  after May 31,  2003,  and is  otherwise
effective at the beginning of the first interim period  beginning after June 15,
2003. For private companies,  mandatorily  redeemable financial  instruments are
subject to the  provisions  of SFAS 150 for the fiscal  period  beginning  after
December 15,  2003.  The Company does not expect the adoption of SFAS No. 150 to
have a material  impact on its  financial  position or results of  operations or
cash flows.

In December  2003,  the  Financial  Accounting  Standards  Board (FASB) issued a
revised  Interpretation  No. 46,  "Consolidation of Variable Interest  Entities"
(FIN 46R). FIN 46R addresses  consolidation by business  enterprises of variable
interest  entities and significantly  changes the  consolidation  application of
consolidation   policies  to  variable  interest  entities  and,  thus  improves
comparability  between  enterprises  engaged  in similar  activities  when those
activities are conducted  through variable interest  entities.  The Company does
not hold any variable interest entities.

Three Months Ended March 31, 2005  Compared To Three Months Ended March 31, 2004
Revenue.

For the three month  period  ended March 31, 2005 we  generated  net revenues of
$4,128,297.  During  the three  month  period  ended  March 31,  2004 we did not
produce any operating revenue, as the initial production launch occurred in June
2004.

                                       19
<PAGE>
                     HARBIN ELECTRIC, INC. AND SUBSIDIARIES
            Management's Discussion and Analysis or Plan of Operation


Gross Profit.  The Company  achieved a gross profit of $2,050,237  for the three
months ended March 31, 2005. We had no gross profit, because we had no revenues,
and no cost of revenue for the three months ended March 31, 2004, as the initial
production  launch  occurred in June 2004.  Gross  margin,  as a  percentage  of
revenues, was 50% for the three months ended March 31, 2005.

Operating Expenses.  The Company incurred operating expenses of $358,288 for the
three months ended March 31, 2005,  an increase of $354,931,  compared to $3,357
for the three months ended March 31, 2004.  This  increase is a direct result of
full operation of the company during the first quarter of 2005 and no production
during the three  months ended March 31, 2004.  Aggregated  selling  expenses of
$106,588  account  for  expenses  related  to costs  associated  with  sales and
marketing of the Company's  products.  Operating  expenses  include  general and
administrative expenses of $251,700 for the first quarter 2005 and relate to the
cost  of  maintaining  the  company's  facilities,  salaries  and  research  and
development.

Net Income.  The Company's net income was  $1,692,242 for the three months ended
March 31,  2005,  compared to a loss of $2,969 for the three  months ended March
31, 2004.  The increase is attributed to the initial  production  launch in June
2004.

Liquidity and Capital Resources

As of March 31, 2005 the Company had $2,235,902 cash and cash  equivalents,  and
we believe that  current  cash needs for at least the next twelve  months can be
met from working capital.  The Company had net cash flows provided by operations
of $548,758  for the three month  period ended March 31, 2005 as compared to net
cash used in operations  of $4,566 in the  corresponding  period last year.  The
increase in net cash flows from  operations in the current period as compared to
the  corresponding  period  last year was mainly due to the  initiation  of full
operations  in June 2004.  The Company does not  currently  have any  contracts,
plans or  agreements  in place  for any  additional  financing.  There can be no
assurance that financing will be available in amounts or on terms  acceptable to
the Company, if at all.

Cashflows  from  investing  activities  resulted in net usage of $397,800 in the
current  period as compared to none in the  corresponding  period last year. The
usage in the  current  period  was  mainly due to  investments  in  patents  and
technology in the amount of $266,200,  and property and equipment of $131,600 in
the three month period ended March 31, 2005.  There were no investments in March
31, 2004.

The Company had a net  increase  in cash and cash  equivalent  of $25,099 in the
current  period as  compared to a net  decrease  of $4,566 in the  corresponding
period last year.

The majority of the Company's  revenues and expenses were denominated  primarily
in Renminbi ("RMB"), the currency of the People's Republic of China. There is no
assurance  that exchange  rates between the RMB and the U.S.  dollar will remain
stable.  A revaluation  of the RMB relative to the U.S.  dollar could  adversely
affect our business,  financial  condition and results of operations.  We do not
engage in currency hedging, therefore inflation has not had a material impact on
our business.

                                       20
<PAGE>
Item 3.  Controls and Procedures

The Company's Chief Executive  Officer and Chief Financial  Officer conducted an
evaluation  of the  effectiveness  of the design and  operation of the Company's
disclosure  controls and procedures as defined in Exchange Act Rule 13a-15(e) as
of the end of the period covered by this report.  Based on that evaluation,  the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure  controls and  procedures  were effective as of the end of the period
covered by this report.  There were no significant  changes in internal controls
over  financial  reporting  that occurred  during the first quarter of 2005 that
have materially  affected,  or are reasonably likely to materially  affect,  the
Company's internal control over financial reporting.


                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

  (a) Exhibits:

   3.1    Articles of Incorporation of the Company

   3.2    By-Laws of the Company

   10.1   Agreement and Plan of Merger by and among,  Torch  Executive  Services
          Ltd., Torch Subsidiary,  Inc., Tech Full International,  Inc, dated as
          of January 11, 2005

   10.2   Joint Venture Contract between Harbin Tech Full Industry Co., Ltd. and
          Baldor Electric Company, dated as of May 20, 2004

   10.3   Amended and Restated Share Transfer  Agreement dated as of January 12,
          2005 as amended and restated as of May 12,  2005,  by and among Harbin
          Tech Full Industry Co., Ltd.,  Harbin Tech Full Electric Co., Ltd. and
          Harbin Electric, Inc.

   10.4   Harbin  Electric,  Inc. 2005 Stock Option Plan  (including the Form of
          Nonstatutory Stock Option Award)

   31.1   Certification  by  the  Chief  Executive   Officer  pursuant  to  Rule
          13a-14(a) or 15d-14(a)

   31.2   Certification  by  the  Chief  Financial   Officer  pursuant  to  Rule
          13a-14(a) or 15d-14(a)

   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

                                       21
<PAGE>
     (b) Reports on Form 8-K during the quarter ended March 31, 2005:

        (i) Form 8-K filed May 12, 2005  disclosing  the  Amended  and  Restated
Share Transfer  Agreement as well as the issuance of the 786,885 shares from the
Company to Harbin Tech Full Industry Co., Ltd.

        (ii)  Form  8-K  filed  on May  12,  2005  disclosing  the  issuance  of
nonstatutory stock options

        (iii) Form 8-K/A dated March 4, 2005  disclosing  the audited  financial
statements of Tech Full International, Inc.

          (iv) Form 8-K dated March 3, 2005  disclosing  the  appointment of new
directors

        (v) Form 8-K dated  January 27, 2005  disclosing  the  completion of the
Agreement  and Plan of  Merger  of Tech  Full  International,  Inc.  into  Torch
Executive  Services  Ltd.,  as well as the  name  change  from  Torch  Executive
Services Ltd. to Harbin  Electric,  Inc., the Joint Venture with Baldor Electric
Co. and the addition of new executive officers and directors

          (vi) Form 8-K dated January 13, 2005 disclosing the Agreement and Plan
of Merger of Tech Full International, Inc. into Torch Executive Services Ltd.


                                       22
<PAGE>

                                   SIGNATURES

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

                                           Harbin Electric, Inc.

                                           By: /S/ Tianfu Yang
                                               ---------------------------
                                           Name: Tianfu Yang
                                           Title:  Chief Executive Officer


Date:  May 13, 2005                       /S/ Tianfu Yang
                                           -------------------------------
                                           Tianfu Yang
                                           Chief Executive Officer


Date:  May 13, 2005                       /S/ Zedong Xu
                                           -------------------------------
                                           Zedong Xu
                                           Chief Financial Officer



                                       23
<PAGE>

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number       Description                                           Method of Filing
--------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                     <C>
3.1                  Articles of Incorporation of the Company              Filed as Exhibit 3.1 to the Company's
                                                                           registration statement on Form SB-2 filed
                                                                           with the Commission on October 10, 2003

3.2                  By-Laws of the Company                                Filed as Exhibit 3.2 to the Company's
                                                                           registration statement on Form SB-2 filed
                                                                           with the Commission on October 10, 2003

10.1                 Agreement and Plan of Merger by and                   Filed as Exhibit 10.1 to the Company's
                     among, Torch Executive Services Ltd.,                 current report on Form 8-K filed with the
                     Torch Subsidiary, Inc., Tech Full                     Commission on January 13, 2005
                     International, Inc, dated as of January
                     11, 2005

10.2                 Joint Venture Contract between Harbin Tech            Filed as Exhibit 10.2 to the Company's
                     Full Industry Co., Ltd. and Baldor Electric           current report on Form 8-K filed with the
                     Company, dated as of May 20, 2004                     Commission on January 27, 2005

10.3                 Amended and Restated Share Transfer Agreement         Filed as Exhibit 10.1 to the Company's
                     dated as of January 12, 2005 as amended and           current report on Form 8-K filed with the
                     restated as of May 12, 2005, by and among             Commission on May 12, 2005
                     Harbin Tech Full Industry Co., Ltd., Harbin
                     Tech Full Electric Co., Ltd. and Harbin
                     Electric, Inc.

10.4                 Harbin Electric, Inc. 2005 Stock Option               Filed as Exhibit 10.1 to the Company's
                     Plan (including the Form of Nonstatutory              current report on Form 8-K filed with the
                     Stock Option Award)                                   Commission on May 12, 2005

31.1                 Certification by the Chief Executive Officer          Filed herewith as Exhibit 31.1
                     pursuant to Rule 13a-14(a) or 15d-14(a)

31.2                 Certification by the Chief Financial Officer          Filed herewith as Exhibit 31.2
                     pursuant to Rule 13a-14(a) or 15d-14(a)

32.1                 Certification of the Chief Executive Officer          Filed herewith as Exhibit 32.1
                     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

</TABLE>

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