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| NEVADA(State of Incorporation)                                                                                      | 33-0652593(I.R.S. Employer I.D. Number) |
|---------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
|                                                                                                                |                                    |
| 224 Tianmushan Road,Zhongrong Chengshi Huayuan 5-1-602,Hangzhou, P.R. China(Address of principal executive offices) | 310007(zip code)                        |

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|       |   |                                                                                                                  |   | Page No. |
|------------|--------|-----------------------------------------------------------------------------------------------------------------------|--------|----------|
|       |   |                                                                                                                  |   |     |
| PART I     |   | FINANCIAL INFORMATION                                                                                                 |   |     |
|       |   |                                                                                                                  |   |     |
| Item 1     |   | Financial Statements                                                                                                  |   |   1 |
|       |   | Unaudited Consolidated Balance Sheet as of March 31, 2011 and June 30, 2010                                           |   |   2 |
|       |   | Unaudited Consolidated Statements of Operations for the three and nine months ended March 31, 2011 and 2010           |   |   3 |
|       |   | Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2011 and 2010 |   |   4 |
|       |   | Unaudited Consolidated Statements of Cash Flows for the nine months ended March  31, 2011 and 2010          |   |   5 |
|       |   | Notes to Consolidated Financial Statements                                                                            |   |   6 |
| Item 2     |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           |   | 12       |
| Item 3     |   | Quantitative and Qualitative Disclosures about Market Risk                                                            |   | 14       |
| Item 4     |   | Controls and Procedures                                                                                               |   | 15       |
|       |   |                                                                                                                  |   |     |
| PART II    |   | OTHER INFORMATION                                                                                                     |   |     |
|       |   |                                                                                                                  |   |     |
| Item 5     |   | Exhibits                                                                                                              |   | 15       |
| Signatures |   |                                                                                                                  |   | 16       |

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|                                                                   |   | March 31,   |       |   | June 30, |   |
|------------------------------------------------------------------------|--------|-------------|------------|--------|----------|--------|
|                                                                   |   | 2011        |       |   | 2010     |   |
| Assets                                                                 |   | (Unaudited) |       |   |     |   |
| Current assets:                                                        |   |        |       |   |     |   |
| Cash and cash equivalents                                              |   | $           | 4,687,656  |   |     | $      | 1,495,597 |   |
| Restricted cash                                                        |   |        | 1,371,280  |   |     |   | 90,810 |   |
| Accounts receivable, net of allowance for doubtful accounts of $35,053 |   |        | 6,222,150  |   |     |   | 3,618,030 |   |
| and $37,670 at March 31, 2011 and June 30, 2010, respectively          |   |        |       |   |     |   |   |   |
| Inventory                                                              |   |        | 3,920,950  |   |     |   | 2,680,666 |   |
| Notes receivable                                                       |   |        | 2,761,806  |   |     |   | 463,465 |   |
| Advance payments                                                       |   |        | 130,247    |   |     |   | 33,132 |   |
| Other current assets                                                   |   |        | 321,313    |   |     |   | 110,131 |   |
| Total current assets                                                   |   |        | 19,415,402 |   |     |   | 8,491,831 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Property and equipment, net                                            |   |        | 5,791,640  |   |     |   | 3,017,569 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Goodwill                                                               |   |        | 3,546,808  |   |     |   | 3,425,868 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Advance payments – non current portion                           |   |        | 3,185,583  |   |     |   | 4,960,475 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Other assets                                                           |   |        | -          |   |     |   | 451 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Total assets                                                           |   | $           | 31,939,433 |   |     | $      | 19,896,194 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Liabilities                                                            |   |        |       |   |     |   |   |   |
| Current liabilities:                                                   |   |        |       |   |     |   |   |   |
| Accounts payable and accrued expenses                                  |   | $           | 6,832,919  |   |     | $      | 3,504,923 |   |
| Trade notes payable                                                    |   |        | 3,428,200  |   |     |   | 142,365 |   |
| Short-term bank loans                                                  |   |        | 5,893,510  |   |     |   | 1,428,810 |   |
| Taxes payable                                                          |   |        | 395,994    |   |     |   | 224,108 |   |
| Dividend payable                                                       |   |        | 389,250    |   |     |   | 381,201 |   |
| Other current liabilities                                              |   |        | 1,047,833  |   |     |   | 3,322,277 |   |
| Total current liabilities                                              |   |        | 17,987,706 |   |     |   | 9,003,684 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Total liabilities                                                      |   |        | 17,987,706 |   |     |   | 9,003,684 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Equity                                                                 |   |        |       |   |     |   |   |   |
| Stockholders’ equity:                                            |   |        |       |   |     |   |   |   |
| Common stock, $.001 par value, 500,000,000 shares authorized,          |   |        |       |   |     |   |   |   |
| 27,613,019 shares issued and outstanding at March 31, 2011 and         |   |        |       |   |     |   |   |   |
| June 30, 2010, respectively                                            |   |        | 27,613     |   |     |   | 27,613 |   |
| Stock subscription receivable                                          |   |        | (33,120    | )      |     |   | (33,120 | ) |
| Additional paid-in capital                                             |   |        | 16,487,924 |   |     |   | 16,484,097 |   |
| Statutory reserves                                                     |   |        | 315,152    |   |     |   | 315,152 |   |
| Accumulated deficit                                                    |   |        | (5,036,035 | )      |     |   | (7,558,542 | ) |
| Accumulated other comprehensive income                                 |   |        | 1,894,033  |   |     |   | 1,361,646 |   |
| Total stockholders’ equity                                       |   |        | 13,655,567 |   |     |   | 10,596,846 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Non-controlling interest                                               |   |        | 296,160    |   |     |   | 295,664 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Total equity                                                           |   |        | 13,951,727 |   |     |   | 10,892,510 |   |
|                                                                   |   |        |       |   |     |   |   |   |
| Total liabilities and equity                                           |   | $           | 31,939,433 |   |     | $      | 19,896,194 |   |

| The accompanying notes are an integral part of these consolidated financial statements. | 2 |
|-----------------------------------------------------------------------------------------|---|

----

|                                                     |   | For the Three Months Ended |       |   | For the Nine Months Ended |   |
|----------------------------------------------------------|--------|----------------------------|------------|--------|---------------------------|--------|
|                                                     |   | March 31,                  |       |   | March 31,                 |   |
|                                                     |   | 2011                       |       |   | 2010                      |   |   | 2011 |   |   | 2010 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |
| Sales                                                    |   | $                          | 7,044,067  |   |                      | $      | 3,202,350 |   |   | $ | 15,778,471 |   |   | $ | 7,040,579 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                            |   |                       | 5,128,888  |   |                      |   | 2,454,953 |   |   |   | 11,599,149 |   |   |   | 5,481,480 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                             |   |                       | 1,915,179  |   |                      |   | 747,397 |   |   |   | 4,179,322 |   |   |   | 1,559,099 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                       |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative                      |   |                       | 265,020    |   |                      |   | 284,340 |   |   |   | 1,213,875 |   |   |   | 916,530 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                   |   |                       | 1,650,159  |   |                      |   | 463,057 |   |   |   | 2,965,447 |   |   |   | 642,569 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses):                                 |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense, net                                    |   |                       | (15,197    | )      |                      |   | (29,095 | ) |   |   | (217,935 | ) |   |   | (63,364 | ) |
| Other income, net                                        |   |                       | 47,564     |   |                      |   | 16,289 |   |   |   | 190,663 |   |   |   | 56,598 |   |
| Total other income (expenses)                            |   |                       | 32,367     |   |                      |   | (12,806 | ) |   |   | (27,272 | ) |   |   | (6,766 | ) |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income before provision for income taxes                 |   |                       | 1,682,526  |   |                      |   | 450,251 |   |   |   | 2,938,175 |   |   |   | 635,803 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                               |   |                       | 230,742    |   |                      |   | 73,448 |   |   |   | 415,397 |   |   |   | 140,541 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                       | 1,451,784  |   |                      |   | 376,803 |   |   |   | 2,522,778 |   |   |   | 495,262 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net income attributable to noncontrolling interest |   |                       | 46         |   |                      |   | 112,942 |   |   |   | 271 |   |   |   | 213,424 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to Zhongchai Machinery, Inc.     |   |                       | 1,451,738  |   |                      |   | 263,861 |   |   |   | 2,522,507 |   |   |   | 281,838 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income per common share:                                 |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                    |   | $                          | 0.05       |   |                      | $      | 0.01 |   |   | $ | 0.09 |   |   | $ | 0.01 |   |
| Diluted                                                  |   | $                          | 0.05       |   |                      | $      | 0.01 |   |   | $ | 0.09 |   |   | $ | 0.01 |   |
|                                                     |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding:    |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                    |   |                       | 27,613,019 |   |                      |   | 27,613,019 |   |   |   | 27,613,019 |   |   |   | 27,613,019 |   |
| Diluted                                                  |   |                       | 27,904,892 |   |                      |   | 27,613,019 |   |   |   | 27,901,009 |   |   |   | 27,613,019 |   |

| The accompanying notes are an integral part of these consolidated financial statements. | 3 |
|-----------------------------------------------------------------------------------------|---|

----

|                                                           |   | For the Three Months EndedMarch 31, |      |   | For the Nine Months EndedMarch 31, |   |
|----------------------------------------------------------------|--------|-------------------------------------|-----------|--------|------------------------------------|--------|
|                                                           |   | 2011                                |      |   | 2010                               |   |   | 2011 |   |   | 2010 |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |
| Net income                                                     |   | $                                   | 1,451,784 |   |                               | $      | 376,803 |   |   | $ | 2,522,778 |   |   | $ | 495,262 |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                     |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                        |   |                                | 111,732   |   |                               |   | 398 |   |   |   | 532,387 |   |   |   | 16,521 |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Total other comprehensive income                               |   |                                | 111,732   |   |                               |   | 398 |   |   |   | 532,387 |   |   |   | 16,521 |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                           |   |                                | 1,563,516 |   |                               |   | 377,201 |   |   |   | 3,055,165 |   |   |   | 511,783 |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Less: Comprehensive income attributable to the                 |   |                                | 46        |   |                               |   | 112,942 |   |   |   | 271 |   |   |   | 213,424 |   |
| noncontrolling interest                                        |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income attributable to Zhongchai Machinery, Inc. |   | $                                   | 1,563,470 |   |                               | $      | 264,259 |   |   | $ | 3,054,894 |   |   | $ | 298,359 |   |

| The accompanying notes are an integral part of these consolidated financial statements. | 4 |
|-----------------------------------------------------------------------------------------|---|

----

|                                                          |   | For the Nine Months Ended |       |
|---------------------------------------------------------------|--------|---------------------------|------------|
|                                                          |   | March 31,                 |       |
|                                                          |   | 2011                      |       |   | 2010 |   |
| Cash flows from operating activities:                         |   |                      |       |   |   |   |
| Net income                                                    |   | $                         | 2,522,778  |   |   | $ | 495,262 |   |
| Adjustments to reconcile net income to net cash               |   |                      |       |   |   |   |   |   |
| Provided by (used in) operating activities:                   |   |                      |       |   |   |   |   |   |
| Depreciation and amortization                                 |   |                      | 272,806    |   |   |   | 229,508 |   |
| Loss on disposal of fixed assets                              |   |                      | -          |   |   |   | 4,846 |   |
| Provision for bad debts                                       |   |                      | (3,880     | ) |   |   | 10,442 |   |
| Share-based payments                                          |   |                      | 3,827      |   |   |   | 63,606 |   |
| Changes in assets and liabilities:                            |   |                      |       |   |   |   |   |   |
| Restricted cash                                               |   |                      | (1,255,487 | ) |   |   | 224,710 |   |
| Accounts receivable                                           |   |                      | (2,430,296 | ) |   |   | (894,050 | ) |
| Inventory                                                     |   |                      | (1,126,119 | ) |   |   | (636,675 | ) |
| Notes receivable                                              |   |                      | (2,265,971 | ) |   |   | (620,622 | ) |
| Advance payments for inventory                                |   |                      | (94,309    | ) |   |   | (136,150 | ) |
| Other current assets                                          |   |                      | (205,497   | ) |   |   | (494,611 | ) |
| Accounts payable and accrued expenses                         |   |                      | 3,151,777  |   |   |   | 1,557,049 |   |
| Trade notes payable                                           |   |                      | 3,224,874  |   |   |   | (225,048 | ) |
| Taxes payable                                                 |   |                      | 161,178    |   |   |   | 123,839 |   |
| Other current liabilities                                     |   |                      | (2,336,663 | ) |   |   | 44,461 |   |
| Total adjustments                                             |   |                      | (2,903,760 | ) |   |   | (748,695 | ) |
|                                                          |   |                      |       |   |   |   |   |   |
| Net cash used in operating activities                         |   |                      | (380,982   | ) |   |   | (253,433 | ) |
|                                                          |   |                      |       |   |   |   |   |   |
| Cash flows from investing activities:                         |   |                      |       |   |   |   |   |   |
| Advance payments for purchase of equipment                    |   |                      | (406,689   | ) |   |   | - |   |
| Advance payments for purchase of land use rights and building |   |                      | 2,323,450  |   |   |   | (2,199,600 | ) |
| Additions to property and equipment                           |   |                      | (2,894,422 | ) |   |   | (529,260 | ) |
| Proceeds from notes receivable                                |   |                      | 22,500     |   |   |   | 11,500 |   |
|                                                          |   |                      |       |   |   |   |   |   |
| Net cash used in investing activities                         |   |                      | (955,161   | ) |   |   | (2,717,360 | ) |
|                                                          |   |                      |       |   |   |   |   |   |
| Cash flows from financing activities:                         |   |                      |       |   |   |   |   |   |
| Proceeds from (repayment of) short-term bank loans            |   |                      | 4,437,345  |   |   |   | (777,192 | ) |
| Contribution from minority shareholders                       |   |                      | -          |   |   |   | 293,280 |   |
|                                                          |   |                      |       |   |   |   |   |   |
| Net cash provided by (used in) financing activities           |   |                      | 4,437,345  |   |   |   | (483,912 | ) |
|                                                          |   |                      |       |   |   |   |   |   |
| Effect of foreign currency translation on cash                |   |                      | 90,857     |   |   |   | 3,852 |   |
|                                                          |   |                      |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents          |   |                      | 3,192,059  |   |   |   | (3,450,853 | ) |
|                                                          |   |                      |       |   |   |   |   |   |
| Cash and cash equivalents – beginning              |   |                      | 1,495,597  |   |   |   | 3,990,767 |   |
|                                                          |   |                      |       |   |   |   |   |   |
| Cash and cash equivalents – ending                 |   | $                         | 4,687,656  |   |   | $ | 539,914 |   |

| The accompanying notes are an integral part of these consolidated financial statements. | 5 |
|-----------------------------------------------------------------------------------------|---|

----

----

----

|                |   | March 31, |      |   | June 30, |   |
|---------------------|--------|-----------|-----------|--------|----------|--------|
|                |   | 2011      |      |   | 2010     |   |
| By Type:            |   |      |      |   |     |   |
| Gears products      |   | $         | 2,318,298 |   |     | $      | 1,372,326 |   |
| Gearbox products    |   |      | 1,574,965 |   |     |   | 1,307,940 |   |
| Transaxles products |   |      | 27,687    |   |     |   | - |   |
| Other               |   |      | -         |   |     |   | 400 |   |
| Total               |   | $         | 3,920,950 |   |     | $      | 2,680,666 |   |

|            |   | March 31, |      |   | June 30, |   |
|-----------------|--------|-----------|-----------|--------|----------|--------|
|            |   | 2011      |      |   | 2010     |   |
| By Category:    |   |      |      |   |     |   |
| Raw materials   |   | $         | 1,700,232 |   |     | $      | 896,273 |   |
| Work in process |   |      | 733,173   |   |     |   | 487,235 |   |
| Finished goods  |   |      | 1,487,545 |   |     |   | 1,297,158 |   |
| Total           |   | $         | 3,920,950 |   |     | $      | 2,680,666 |   |

|                   |   | March 31,2011 |      |   | June 30,2010 |   |
|------------------------|--------|---------------|-----------|--------|--------------|--------|
|                   |   |          |      |   |         |   |
| Notes receivable-trade |   | $             | 2,761,806 |   |         | $      | 440,965 |   |
| Notes receivable-other |   |          | -         |   |         |   | 22,500 |   |
|                   |   |          |      |   |         |   |   |   |
| Total                  |   | $             | 2,761,806 |   |         | $      | 463,465 |   |

|                          |   | March 31,2011 |      |   | June 30,2010 |   |
|-------------------------------|--------|---------------|-----------|--------|--------------|--------|
|                          |   |          |      |   |         |   |
| Inventory                     |   | $             | 130,247   |   |         | $      | 33,132 |   |
| Equipment                     |   |          | 413,743   |   |         |   | - |   |
| Land use rights and buildings |   |          | 2,771,840 |   |         |   | 4,960,475 |   |
| Total                         |   |          | 3,315,830 |   |         |   | 4,993,607 |   |
| Less: Current portion         |   |          | 130,247   |   |         |   | 33,132 |   |
|                          |   |          |      |   |         |   |   |   |
| Total non current portion     |   | $             | 3,185,583 |   |         | $      | 4,960,475 |   |

|                           |   | March 31, |      |   | June 30, |   |
|--------------------------------|--------|-----------|-----------|--------|----------|--------|
|                           |   | 2011      |      |   | 2010     |   |
|                           |   |      |      |   |     |   |
| Manufacturing equipment        |   | $         | 3,863,765 |   |     | $      | 3,272,563 |   |
| Office equipment and furniture |   |      | 60,596    |   |     |   | 51,306 |   |
| Vehicles                       |   |      | 127,306   |   |     |   | 122,965 |   |
| Subtotal                       |   |      | 4,051,667 |   |     |   | 3,446,834 |   |
| Less: Accumulated depreciation |   |      | 1,004,747 |   |     |   | 702,871 |   |
|                           |   |      | 3,046,920 |   |     |   | 2,743,963 |   |

----

| Add: Construction in progress                                                 |   |   | 2,744,720 |   |   |   | 273,606   |   |
|-------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
|                                                                          |   |   |      |   |   |   |      |   |
|             Total |   | $      | 5,791,640 |   |   | $      | 3,017,569 |   |

| Balance as of June 30, 2009            |   | $      | 3,407,262 |   |
|----------------------------------------|--------|--------|-----------|--------|
| Goodwill acquired during the year      |   |   | -         |   |
| Effect of foreign currency translation |   |   | 18,606    |   |
| Impairment                             |   |   | -         |   |
| Balance as of June 30, 2010            |   |   | 3,425,868 |   |
| Goodwill acquired during the year      |   |   | -         |   |
| Effect of foreign currency translation |   |   | 120,940   |   |
| Impairment                             |   |   | -         |   |
| Balance as of March 31, 2011           |   | $      | 3,546,808 |   |

|             |   | March 31,2011 |      |   | June 30,2010 |   |
|------------------|--------|---------------|-----------|--------|--------------|--------|
|             |   |          |      |   |         |   |
| Accounts payable |   | $             | 6,789,211 |   |         | $      | 3,419,595 |   |
| Accrued expenses |   |          | 43,708    |   |         |   | 85,328 |   |
|             |   |          |      |   |         |   |   |   |
| Total            |   | $             | 6,832,919 |   |         | $      | 3,504,923 |   |

|                                                                    |   | March 31, |      |   | June 30, |   |
|-------------------------------------------------------------------------|--------|-----------|-----------|--------|----------|--------|
|                                                                    |   | 2011      |      |   | 2010     |   |
|                                                                    |   |      |      |   |     |   |
| On June 10, 2010, the Company obtained a loan from Agricultural Bank    |   |      |      |   |     |   |
| of China, the principal of which was paid in full before June 10, 2011. |   |      |      |   |     |   |
| Interest was paid monthly, at 5.31% per annum. The loan was guaranteed  |   |      |      |   |     |   |
| by a third party.                                                       |   | $         | -         |   |     | $      | 1,428,810 |   |
|                                                                    |   |      |      |   |     |   |   |   |
| On September 28, 2010, the Company obtained a loan from Agricultural    |   |      |      |   |     |   |   |   |
| Bank of China, the principal of which is due on September 20, 2011.     |   |      |      |   |     |   |   |   |
| Interest is paid monthly, at 5.31% per annum. The loan is guaranteed    |   |      |      |   |     |   |   |   |
| by a third party, Zhejiang Xinchai Co., Ltd.                            |   |      | 1,525,000 |   |     |   | - |   |
|                                                                    |   |      |      |   |     |   |   |   |
| On November 9, 2010, the Company obtained a loan from Agricultural      |   |      |      |   |     |   |   |   |
| Bank of China, the principal of which is due on November 7, 2011.       |   |      |      |   |     |   |   |   |
| Interest is paid monthly, at 5.56% per annum. The loan is guaranteed    |   |      |      |   |     |   |   |   |
| by a third party, Zhejiang Xinchai Co., Ltd.                            |   |      | 305,000   |   |     |   | - |   |

----

| On December 2, 2010, the Company obtained a loan from Agricultural       |   |   |      |   |   |   |
|--------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Bank of China, the principal of which is due on November 28, 2011.       |   |   |      |   |   |   |
| Interest is paid monthly, at 5.56% per annum. The loan is guaranteed     |   |   |      |   |   |   |
| by a third party, Zhejiang Xinchai Co., Ltd.                             |   |   | 1,372,500 |   |   |   | - |   |
|                                                                     |   |   |      |   |   |   |   |   |
| On December 29, 2010, the Company obtained a loan from Standard          |   |   |      |   |   |   |   |   |
| Chartered Bank (Hong Kong) Limited at 1.98% per annum. Accrued           |   |   |      |   |   |   |   |   |
| interest amounting to $53,701 together with principal is due and payable |   |   |      |   |   |   |   |   |
| on December 20, 2011.                                                    |   |   | 2,691,010 |   |   |   | - |   |
|                                                                     |   |   |      |   |   |   |   |   |
| Total short-term bank loans                                              |   | $      | 5,893,510 |   |   | $      | 1,428,810 |   |

|                       |   | For the Nine Months EndedMarch 31, |    |
|----------------------------|--------|------------------------------------|---------|
|                       |   | 2011                               |    |   | 2010 |   |
|                       |   |                               |    |   |   |   |
| Cash paid for interest     |   | $                                  | 251,140 |   |   | $ | 76,107 |   |
| Cash paid for income taxes |   | $                                  | 211,621 |   |   | $ | 93,222 |   |

----

|                                       |   | Three Months EndedMarch 31, |       |
|--------------------------------------------|--------|-----------------------------|------------|
|                                       |   | 2011                        |       |   | 2010 |   |
|                                       |   |                        |       |   |   |   |
| Net income attributable to Zhongchai       |   | $                           | 1,451,738  |   |   | $ | 263,861 |   |
| Machinery, Inc.                            |   |                        |       |   |   |   |   |   |
|                                       |   |                        |       |   |   |   |   |   |
| Weighted average common shares             |   |                        | 27,613,019 |   |   |   | 27,613,019 |   |
| (denominator for basic income per share)   |   |                        |       |   |   |   |   |   |
|                                       |   |                        |       |   |   |   |   |   |
| Effect of dilutive securities:             |   |                        | 291,873    |   |   |   | - |   |
|                                       |   |                        |       |   |   |   |   |   |
| Weighted average common shares             |   |                        | 27,904,892 |   |   |   | 27,613,019 |   |
| (denominator for diluted income per share) |   |                        |       |   |   |   |   |   |
|                                       |   |                        |       |   |   |   |   |   |
| Basic net income per share                 |   | $                           | 0.05       |   |   | $ | 0.01 |   |
| Diluted net income per share               |   | $                           | 0.05       |   |   | $ | 0.01 |   |

|                                       |   | Nine Months EndedMarch 31, |       |
|--------------------------------------------|--------|----------------------------|------------|
|                                       |   | 2011                       |       |   | 2010 |   |
|                                       |   |                       |       |   |   |   |
| Net income attributable to Zhongchai       |   | $                          | 2,522,507  |   |   | $ | 281,838 |   |
| Machinery, Inc.                            |   |                       |       |   |   |   |   |   |
|                                       |   |                       |       |   |   |   |   |   |
| Weighted average common shares             |   |                       | 27,613,019 |   |   |   | 27,613,019 |   |
| (denominator for basic income per share)   |   |                       |       |   |   |   |   |   |
|                                       |   |                       |       |   |   |   |   |   |
| Effect of dilutive securities:             |   |                       | 287,990    |   |   |   | - |   |
|                                       |   |                       |       |   |   |   |   |   |
| Weighted average common shares             |   |                       |       |   |   |   |   |   |
| (denominator for diluted income per share) |   |                       | 27,901,009 |   |   |   | 27,613,019 |   |
|                                       |   |                       |       |   |   |   |   |   |
| Basic net income per share                 |   | $                          | 0.09       |   |   | $ | 0.01 |   |
| Diluted net income per share               |   | $                          | 0.09       |   |   | $ | 0.01 |   |

----

----

----

| Professional Fees            |   | $ | 94,524  |   |
|------------------------------|--------|---|---------|--------|
| Accrued Consulting Fees      |   | $ | 123,601 |   |
| Tax Payment                  |   | $ | 84,236  |   |
| Pension Payment              |   | $ | 3,832   |   |
| Employee Rent Withhold       |   | $ | 5,767   |   |
| Rent Payment                 |   | $ | 9,471   |   |
| Working Meal Payment         |   | $ | 993     |   |
| Working Cloth Deposit        |   | $ | 2,333   |   |
| Other Trade Related Payments |   | $ | 282,464 |   |
| Total                        |   | $ | 607,221 |   |

----

| Exhibit | Description |
|---------|-------------|

| *31.1 | Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Peter Wang |
|-------|------------------------------------------------------------------------------------------|

| *32.1 | Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Peter Wang |
|-------|------------------------------------------------------------------------------------------|

----

|   |                      |                                           |
|--------|---------------------------|------------------------------------------------|
|   | ZHONGCHAI MACHINERY, INC. |                                           |
|   |                      |                                           |
|   |                      |                                           |   |
|   | By:                       | /s/ Peter Wang                            |   |
|   | Name:                     | Peter Wang                                     |   |
|   | Title:                    | President & Acting Chief Financial Officer |
|   |                      |                                           |   |

----