(EQPI)

Description:

Zhongchai Machinery, Inc. was incorporated in the State of Nevada on March 13, 2002. The Company through its operating subsidiaries is currently engaged in manufacturing and sale of gears and gearboxes in China. The Company primarily focuses on the domestic market in China. It is in direct competition with many entities in its efforts to locate suitable business opportunities. The Company, through its majority owned subsidiaries, is focused on the production and sale of gears and gearboxes. These products are primarily used in or together with diesel engines for industrial and agricultural machinery, fork lifts, excavators, construction equipment, tractors, pumps and other machinery. The main customers of the Company are manufacturers of engines, gearboxes and industrial equipment. The Company's major customers in its gear business are Chinese diesel engine producers, and the major customers in its gearbox business are Chinese original equipment manufactures. For the gear segment, two customers, Zhejiang Xinchai Co., Ltd. and Lonking (Shanghai) Forklift Co., Ltd., accounted for 69% and 17%, respectively, of the net revenue in China, for the fiscal year ended June 30, 2009. In the discontinued North American auto parts business, BBB/OCA and World Pac, accounted for approximately 73% and 12%, respectively, of the Company's net revenue for the fiscal year ended June 30, 2009. These four customers accounted for 16%, 3%, 54% and 13%, respectively, of the Company's consolidated revenue for the fiscal year ended June 30, 2009. For the gear segment, the Company sources parts and components and semi-finished products mainly from Zhejiang Yuyang Machinery Co., Ltd., Changzhou No. 2 Gears Co., Ltd., Xinchang Liyuan Foundry Co., Ltd., and Xinchang Zhisheng Machinery Co., Ltd. for Zhongchai JV's for further fine processing and assembly. For its gear and gearbox business, currently the Company ships finished products directly to its customers from the factory warehouse in Zhejiang, China. The Company's competitors are business development companies, venture capital partnerships and corporations, small business investment companies, venture capital affiliates of industrial and financial companies, broker-dealers and investment bankers, management consultant firms and private individual investors.