~~The Company does not have any long term supply agreements with~~acquisition of a target business that we may identify and seek to pursue. Further, any of these ~~companies,~~limitations may place us at a competitive disadvantage in successfully negotiating a business combination. Our Management believes, however, that our status as a reporting public entity with potential access to the United States public equity markets may give us a competitive advantage over certain privately-held entities having a similar business objective in acquiring a desirable target business with growth potential on favorable terms.

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from existing competitors of the business we acquire. In particular, certain industries which experience rapid growth frequently attract an increasingly larger number of competitors, including those with far greater financial, marketing, technical and ~~it purchases products on~~other resources than the ~~basis of purchase orders. None of our suppliers have any ownership~~initial competitors in the ~~Company or~~industry in which we seek to operate. The degree of competition characterizing the industry of any ~~relationship with~~prospective target business cannot presently be ascertained. We cannot assure you that, subsequent to a business combination, we will have the ~~insiders~~resources to compete effectively, especially to the extent that the target business is in a high-growth industry.

Employees

Xingtao Zhou -- President, Chief Executive Officer, Chief Financial Officer (Principal Accounting Officer), Chairman of the ~~Company.~~Board of Directors

~~Distribution~~

~~For our drivetrain business, currently~~

Mr. Zhou has served as the ~~Company ships finished products directly~~chairman and founder of Hainan Cang Bao Tian Xia Artwork Co. Ltd. since 2017 and Cang Bao Ge (Hong Kong) Arts Co., Ltd since 2012. From 2009 to ~~its customers~~2012, Mr. Zhou served as the president of Yi Hua Cultural Diffusion Co., Ltd. Mr. Zhou served as the curator of the Yin Yuan Min Su Museum from ~~the factory warehouse in Zhejiang, China, or customers pick up finished products from our factory warehouse.~~

~~Competition~~

As the demand for drivetrain products has grown in China, the competition within that market has also grown and has become intense. There are many local manufacturers making gears, transmission gearboxes, and transaxles, and most of them are willing2003 to compete for customers and market share through low pricing. These producers typically offer small production and their products vary greatly in quality. There are also many global manufacturers interested in the large Chinese market that are entering the market and selling gear and gearbox products having better quality and design than many Chinese suppliers. Zhongchai China faces the many challenges of being a new entrant to compete for new and existing customers. Management believes it will take Zhongchai China a few years to establish a solid customer base for itself. Zhongchai China competes on the basis of its quality and sales support,2009 and as the ~~Company develops,~~vice curator from 1999 to 2003. Mr. Zhou received a bachelor’s degree in International Business from Southwestern University of Finance and Economics.

Liang Tan, Director

Liang Tan has served as the general manager of Shanghai Qingsheng Investment Co., Ltd. since 2017. Mr. Tan served as the deputy general manager of Shanghai Daren Asset Management Co., Ltd. from 2013 to 2016.

Conflicts of Interest

The Company's Management is not required to commit its full time to the Company's affairs. As a result, pursuing new business opportunities may require a longer period of time than if Management would devote full time to the Company's affairs. Management is not precluded from serving as an officer or director of any other entity that is engaged in business activities similar to those of the Company. Management has not identified and is not currently negotiating a new business opportunity for us. In the future, Management may become associated or affiliated with entities engaged in business activities similar to those we intend to conduct. In such event, Management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. In the event that the Company's Management has multiple business affiliations, our Management may have legal obligations to present certain business opportunities to multiple entities. In the event that a conflict of interest shall arise, Management will consider factors such as reporting status, availability of audited financial statements, current capitalization and the laws of jurisdictions. If several business opportunities or operating entities approach Management with respect to a business combination, Management will consider the foregoing factors as well as the preferences of the Management of the operating company. However, Management will act in what it believes will ~~increasingly compete on the basis of diversified products and larger production capabilities.~~

~~Employees~~

~~As of June 30, 2010, the Company employed directly and through its subsidiaries approximately 151 individuals~~be in the United States and China, consisting of 4 executives and managers, 15 technical personnel, 6 sales and marketing personnel, and 21 administrative and support personnel, and 105 production personnel. The largest increase in the numberbest interests of the ~~employees was for production personnel due~~shareholders of the ~~increase of production capacity. Employees are~~Company. The Company shall not ~~represented by any labor union or similar collective bargaining group.~~

enter into a transaction with a target business that is affiliated with Management.

~~Item~~

ITEM 1A. RISK ~~FACTORS~~

~~An investment in our common stock is speculative and involves~~FACTORS.

We are a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including the consolidated financial statements and notes thereto, when evaluating our Company and our business before deciding to invest in our common stock. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we presently consider immaterial may also harm us. If anysmaller reporting company as defined by Rule 12b-2 of the ~~following risks occur, our business, financial condition and results~~Securities Exchange Act of ~~operations and the value of our common stock could be materially harmed.~~

~~Risks Related to Our Business~~

We anticipate that a significant portion of our revenue will be from the sale of gears and transmission gearboxes to a few customers. We have considerable risk related to the reliance on those few customers, which could have a detrimental consequence to our long-term viability.

We anticipate that a significant portion of our revenues will be from the sale of gear and transmission gearbox products to Zhejiang Xinchai Co., Ltd., Lonking (Shanghai) Forklift Co., Ltd., Hangcha Forklift Co., Ltd., Xiamen Xiagong Machinery co., Ltd., and Hunan Sunway Machinery Co., Ltd., which represents about 39.5%, 25.2%, 6.3%, 5%, and 4.1% of our sales respectively. If any of our significant customers experiences any events that affect their purchases of our products, there could be considerable detrimental consequences to our financial results and long term viability.

~~Our revenues will decrease if there is less demand for the kinds of products in which our products are component parts.~~

Our principal customers are manufacturers of engines, gearboxes and industrial equipment. Our products are part of the larger end product of these manufacturers, including things such as forklifts, excavators, construction equipment, tractors, and other machinery. If sales of these kinds of end products decrease, then the demand for our products and our revenues would likewise decrease. Therefore, we are dependent on a limited market segment.

~~Because of competition, we could experience downward pricing pressure on our products from our customers, which may adversely affect our growth, profit margins and net income.~~

We could face downward pricing pressure from our customers as a result of the intense competition in our industry. To retain our existing customers and gain new ones, we will have to continue to keep our unit prices competitive and possibly improve or expand our product offerings. In view of our need to maintain competitive prices on our products, our growth, profit margins and net income will be affected if we cannot effectively continue to control our sourcing and other costs.

~~We receive a significant portion of our revenues from a small number of customers which may make it difficult to negotiate price increases for our products.~~

A significant portion of our revenues depends on a small number of customers. Dependence on a few major customers could make it difficult to negotiate price increases for our products. Therefore, in addition to competitive pressures, we may face limitations on our ability to increase our prices to account for raw material price increases, increases in wages and production costs and other expenses of production. In such event, our profit margins may be reduced and our overall profitability reduced.

~~Our contracts with our customers generally are short-term and do not require the purchase of a minimum amount, which may result in periods of time during which we have limited orders for our products.~~

Our customers generally do not provide long-term volume purchase commitments. Although we anticipate receiving non-binding purchase plans from significant customers who will have continuing demand for certain products, these plans provide only purchase forecasts and state terms such as price, payment method, payment period, quality standards and inspection and similar matters rather than provide firm, long-term commitments to purchase products. As we are not likely to have many long term contracts for the majority of our sales, we could have periods during which we have no or only limited orders for our products, but will continue to have to pay the costs of maintaining our work force and our operating facilities and to service our indebtedness without the benefit of current revenues.

~~We face short lead-times for delivery of products to customers. Failure to meet delivery deadlines could result in the loss of customers and damage to our reputation and goodwill.~~

Our customers’ purchase agreements typically contain short lead-times for the delivery of products, leading to production and manufacturer supply schedules that can reduce our profit margins on the products procured from our suppliers. Our suppliers may lack sufficient capacity at any given time to meet all of our customers’ demands if orders exceed their production capacity. We will strive for rapid response to customer demand which can lead to reduced purchasing efficiency and increased procurement costs, therefore reducing margins. If we are unable to sufficiently meet our customers’ demands, we may lose our customers. Moreover, failure to meet customer demands may damage our reputation and goodwill.

~~If our selling efforts generate growth in demand, we may not be able to respond effectively if our capacity or sources of supply or capital are not adequate, resulting in lost business opportunity.~~

If our marketing plans result in market growth and demand for our products, we will be required to deliver larger volumes of products to our customers. Meeting customer order demand will require us to increase our capacity to produce, or ability to source quality products. Such demand would require us to expand our current production capacities, or it will necessitate our securing additional qualified suppliers. In addition, we may require more working capital than we currently have available to support new supply arrangements or additional inventory. The failure to meet demand for our products may result in customers seeking other sources of supply and may adversely affect our reputation as a ready and consistent supplier.

~~Because of market conditions, we will have to grant relatively long payment terms for accounts receivable which can adversely affect our cash flow.~~

As is customary in China, for competitive reasons, we grant relatively long payment terms to most of our customers. As a result of the size of many of our orders, these payment terms may adversely affect our cash flow and our ability to fund our operations out of our operating cash flow. In addition, the reserves we establish for our receivables may not prove to be adequate in view of an actual experience of bad debts. The failure of our customers to pay us timely would negatively affect our working capital, which could in turn adversely affect our cash flow.

Because our customers are likely to be large manufacturers, they generally will be placing large orders for our products and require their prompt delivery which will impact our working capital. If our customers do not use our products and sell the final end products in a timely fashion to generate their income, they, in turn may not pay us in a timely fashion. This failure to pay our invoices in a timely manner may defer or delay further product orders from us, which may adversely affect our cash flows, sales or income in subsequent periods.

~~We may not be able to finance the development of new products, which could negatively impact our competitiveness.~~

Our future operating results will depend, to some extent, on our ability to continue to provide new products that compare favorably on the basis of cost and performance with the products of our competitors. Some of our competitors have design and manufacturing capabilities and technologies that compete well with our products, particularly in markets outside of China. To remain competitive, we believe that in the future we will have to incur product development expense and invest in research for new products. These costs could result in greater operating expenses. All of these factors will create demands on our working capital and our ability to fund our current and future marketing and distribution activities and the expansion of our business.

Our ability to effectively implement our business strategy depends upon, among other factors, the successful recruitment and retention of additional skilled and experienced management and other key personnel, and we cannot assure that we will be able to hire or retain such employees.

We must attract, recruit and retain a sizeable workforce of technically competent management and employees, particularly in the areas of marketing and sales, production and technical personnel. These individuals can be difficult to find in China, and as the economy in China expands, there is increasing competition for these types of educated and trained workers. We cannot give assurance that we will be able to find, hire or retain such management persons and employees, or even if we are able to so hire such persons, that the financial costs associated with such persons may have an adverse effect on our net income.

~~It may be difficult to find or integrate acquisitions which could have an adverse effect on our expansion plans.~~

Although we have no commitments or agreements for any acquisitions at this time, a component of our growth strategy is to invest in or establish strategic alliances such as joint ventures with other companies, or acquire companies or divisions of companies that design, manufacture or distribute complementary products such as other sizes or designs of diesel engines, gearboxes or parts. We may be unable to identify suitable investments or acquisition candidates or to make these investments, alliances or acquisitions on a commercially reasonable basis, if at all. If we complete an investment, alliance or acquisition, we may not realize the anticipated benefits from the transaction.

Integrating an acquired company, division or product line is complex, distracting and time consuming, as well as a potentially expensive process. The successful integration of an acquisition would require us to:

~~integrate and retain key management, sales, research and development, and other personnel;~~

~~incorporate the acquired products or capabilities into our offerings both from an engineering and sales and marketing perspective;~~

~~coordinate research and development efforts;~~

~~integrate and support pre-existing supplier, distribution and customer relationships; and~~

~~consolidate duplicate facilities and functions and combine back office accounting, order processing and support functions.~~

The geographic distance between the companies, the complexity of the technologies and operations being integrated and the disparate corporate cultures being combined may increase the difficulties of combining an acquired company. Acquired businesses are likely to have different standards, controls, contracts, procedures and policies, making it more difficult to implement and harmonize company-wide financial, accounting, billing, information and other systems. Management’s focus on integrating operations may distract attention from our day-to-day business and may disrupt key research and development, marketing or sales efforts.

The cyclical nature of industrial and agricultural equipment and medium and light duty commercial vehicle production and sales could result in a reduction in gears and gearboxes sales, which could adversely affect our financial condition.

Our sales to manufacturers rely on industrial and agricultural equipment and medium and light duty commercial vehicle production and sales by our customers, which are cyclical and depend on general economic conditions and other factors, including consumer spending and preferences. They also can be affected by government policies, labor relations issues, regulatory requirements, and other factors. All or any one of these factors may result in fluctuations in the demand for our products with an impact on our financial condition.

~~Increasing costs of goods from our suppliers as a result of increasing costs for manufactured components and raw materials may adversely affect our profitability.~~

A broad range of manufactured components and raw materials are used in the production of gears and gearboxes. The prices of these products are increasing as a result of the growth of the Chinese economy. Our suppliers may further increase the price of raw materials and components we use in our production. Because it may be difficult for us to pass increased costs on to our customers, any significant increase in the prices of our purchased goods could materially increase our operating costs and adversely affect our profit margins and profitability.

~~We may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect our reputation, financial condition and liquidity.~~

We face an inherent business risk of exposure to product liability and warranty claims if our products actually or allegedly fail to perform as expected or the use of our products results, or are alleged to result, in bodily injury and/or property damage. We may be exposed to potential liability even if we have product liability insurance. We cannot give any assurance that we will not incur significant costs to defend these claims or that we will not experience any product liability losses in the future. In addition, if any of our designed products are or are alleged to be defective; we may be required to participate in a recall of such products. We cannot assure you that the future costs associated with providing product warranties and/or bearing the cost of repair or replacement of our products will not have an adverse effect on our financial condition and liquidity.

~~We are subject to environmental and safety regulations, which may increase our compliance costs.~~

We are subject to the requirements of environmental and occupational safety and health laws and regulations in China. To the extent that we expect to expand our operations into other geographic areas, we will become subject to such laws and regulations of those countries as well. We cannot provide assurance that at all times we have been or will be in full compliance with all of these requirements, or that we will not incur material costs or liabilities in connection with these requirements. The capital requirements and other expenditures that may be necessary to comply with environmental requirements could increase and become a material expense of doing business.

~~Our business depends on our ability to protect and enforce our intellectual property effectively which may be difficult particularly in China.~~

The success of our business depends in some measure on the legal protection of proprietary rights in the technology we hold. We will protect our proprietary rights in our products and operations through contractual obligations, including nondisclosure agreements. If these contractual measures fail to protect our proprietary rights, any advantage those proprietary rights provide us would be negated.

Monitoring infringement of intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our intellectual property and know-how, particularly in China and other countries in which the laws may not protect our proprietary rights as fully as the laws of the United States. Accordingly, other parties, including competitors, may duplicate our products using our proprietary technologies. Pursuing legal remedies against persons infringing our patents or otherwise improperly using our proprietary information is a costly and time consuming process that would divert management’s attention and other resources from the conduct of our other business, and could cause delays and other problems with the marketing and sales of our products, as well as delays in deliveries.

~~Our commercial viability depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.~~

In the event that our technologies infringe or violate the patent or other proprietary rights of third parties, we may be prevented from pursuing product development, commercialization or distribution of our products that utilize such technologies. There may be patents held by others of which we are unaware that contain claims that our products or operations infringe. In addition, given the complexities and uncertainties of patent laws, there may be patents of which we know that we may ultimately be held to infringe, particularly if the claims of the patent are determined to be broader than we believe them to be. As a result, avoiding patent infringement may be difficult.

~~If a third party claims that we infringe its patents, any of the following may occur:~~

~~we may become liable for substantial damages for past infringement if a court decides that our technologies infringe upon a competitor’s patent;~~

a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms or at all, or which may require us to pay substantial royalties or grant cross-licenses to our patents; and

~~we may have to redesign our product so that it does not infringe upon others’ patent rights, which may not be possible or could require substantial funds or time.~~

In addition, employees, consultants, contractors, suppliers and others may use the trade secret information of others in their work for us or disclose our trade secret information to others. Either of these events could lead to disputes over the ownership of inventions derived from that information or expose us to potential damages or other penalties. If any of these events occurs, our business will suffer and the market price of our common stock will likely decline.

International expansion may subject us to risks inherent in doing business internationally, such as protectionist limitations, higher sales costs and additional importation taxes, all of which could affect our profitability.

Our long-term business strategy includes plans to expand sales outside China by targeting markets, such as Europe and the United States. Risks affecting international expansion include challenges caused by distance, language and cultural differences, conflicting and changing laws and regulations, international import and export legislation, trading and investment policies, foreign currency fluctuations, the burdens of complying with a wide variety of laws and regulations, protectionist laws and business practices that favor local businesses, foreign tax consequences, higher costs associated with doing business internationally, restrictions on the export or import of technology, difficulties in staffing and managing international operations, trade and tariff restrictions, and variations in tariffs, quotas, taxes and other market barriers. These risks could restrain international expansion, which in turn could limit our opportunities and the sought benefits of international sales. Such expansion may require us to incur additional expenses, which are not recovered through improved sales.

~~We do not intend to pay dividends on shares of our common stock in the foreseeable future.~~

We have never paid cash dividends on our common stock. Our current board of directors does not anticipate that we will pay cash dividends in the foreseeable future. Instead, we intend to retain future earnings for reinvestment in our business and/or to fund future acquisitions. Determination of net income under PRC accounting standards and regulations may differ from determination under U.S. GAAP in significant aspects, such as the use of different principles for recognition of revenues and expenses. Under PRC law, our PRC subsidiary is required to set aside a portion of its net income each year to fund designated statutory reserve funds. Therefore, there may be limitations on the availability of cash for the payment of dividends.

~~Risks Related to Doing Business in China~~

~~We are subject to the risks associated with doing business in the People’s Republic of China.~~

Our operations, assets and sales are located in China. Therefore, we are subject to special considerations and significant risks not typically associated with companies operating in North America and Western Europe. These include risks associated with, among other things, the political, economic and legal environment of China which is a partially controlled economy. Our results may be adversely affected by changes in the political and social conditions in China and by changes in governmental policies with respect to social and commercial laws and regulations, anti-inflationary measures, currency controls, conversion restrictions and remittances abroad. The recent changes in the tax laws will also have an impact on the operations of the Company.

Although a large portion of the productive assets in China are owned by the Chinese government, in the past years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity. Because these economic reform measures may be inconsistent or ineffectual, there are no assurances that:

~~We will be able to capitalize on economic reforms;~~

~~The Chinese government will continue its pursuit of economic reform policies;~~

~~The economic policies, even if pursued, will be successful;~~

~~Economic policies will not be significantly altered from time to time; and~~

~~Business operations in China will not become subject to the risk of nationalization.~~

~~Economic reform policies or nationalization could result in a total loss of investment in our common stock.~~

Since 1979, the Chinese government has implemented policies to reform its economic system, which reforms have accelerated in the last 15 years. Because many reforms are unprecedented or experimental in the China context, they are expected to be changed over time. Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment or inflation, or in the disparities in per capita wealth between regions within China, could lead to readjustment of the reform measures so far taken. Any refining and readjustment may negatively affect our operations or our profits.

Over the last few years, China’s economy has registered a particularly high growth rate. Recently, there have been indications that rates of inflation have increased. For example, employee costs are increasing as are the costs of raw materials. In response, the Chinese government has taken some measures to regulate the growth of the economy. These measures include restrictions on the availability of domestic credit, monitoring international currency transactions, reducing the purchasing capability of certain of its customers, and limited re-centralization of the approval process for purchases of some foreign products. There has been some revaluation of the currency which has increased the costs of imported products. The Chinese government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets. These measures may adversely affect our manufacturing operations and margins.

~~To date, the basic reforms to China’s economic system have not adversely impacted our operations~~1934 and are not expected to adversely impact operations in the foreseeable future. We, however, will be affected by the change in the tax structure and rising costs of an expanding and increasingly sophisticated economy. We cannot assure you that the reforms to China’s economic system will continue or that we will not be adversely affected by changes in China’s political, economic, and social conditions and by changes in policies of the Chinese government, such as changes in laws and regulations, measures which may be introduced to control inflation and changes in the rate or method of taxation.

On November 11, 2001, China signed an agreement to become a member of the World Trade Organization, sometimes referred to as the WTO, the international body that sets most trade rules, further integrating China into the global economy and significantly reducing the barriers to international commerce. China’s membership in the WTO was effective on December 11, 2001. China has agreed upon its accession to the WTO to reduce tariffs and non-tariff barriers, remove investment restrictions and provide trading and distribution rights for foreign firms. The tariff rate reductions and other enhancements will enable us to develop better investment strategies. In addition, the WTO’s dispute settlement mechanism provides a credible and effective tool to enforce members’ commercial rights. Also, with China’s entry to the WTO, it is believed that the relevant laws on foreign investment in China will be amplified and will follow common practices.

The legal authorities in China are in the process of changing heretofore tax and fee benefits provided to foreign investors and companies to encourage development within the country such that these benefits will be lessened or removed with the consequence that expenses may rise and adversely impact margins and net income.

The legal authorities are in the process of changing business income tax and fee benefits that have been available to foreign investors and foreign companies operating in China and reducing the availability of tax holidays for new enterprises. In the near term, there will be changes that reduce or eliminate many, if not all, the tax and other governmental fee advantages that heretofore have been available to foreign entities and newly created entities whether or not such new entities are foreign. The goal is to institute greater equalization of tax and government fee treatment of all corporate and similar entities organized and operating in China. China is being encouraged to create this more equal treatment because of its WTO obligations and public opinion within China. There may be phase-ins of various taxes and fees for entities that currently benefit from either no or lower tax rates and fees compared to wholly Chinese companies and entities, but there can be no assurance of this. Even if there are phase-in periods, the length of such periods is not known. Some tax benefits may also be extended for certain industries. Overall, it is expected that the cost of operating in China will increase for those companies and entities that have had various tax and fee advantages in the past. As a result, Zhongchai Holding, a company which has had and expected to have benefits from some forms of preferential tax and fee rates, expects that in the near term certain of its costs will increase which may have an adverse impact on operating margins and will have an impact on net income.

~~The Chinese legal system is not fully developed and has inherent uncertainties that could limit the legal protections available to investors.~~

The Chinese legal system is a system based on written statutes and their interpretation by the Supreme People’s Court. Prior court decisions may be cited for reference but have limited legal precedents. Since 1979, the Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. Two examples are the promulgation of the Contract Law of the People’s Republic of China to unify the various economic contract laws into a single code, which went into effect on October 1, 1999, and the Securities Law of the People’s Republic of China, which went into effect on July 1, 1999. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties. In addition, as the Chinese legal system develops, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on our business operations.

~~Enforcement of regulations in China may be inconsistent.~~

Although the Chinese government has introduced new laws and regulations to modernize its securities and tax systems, China does not yet possess a comprehensive body of business law. As a result, the enforcement, interpretation and implementation of regulations may prove to be inconsistent and it may be difficult to enforce contracts.

~~We may experience lengthy delays in resolution of legal disputes.~~

As China has not developed a dispute resolution mechanism similar to the Western court system, dispute resolution over Chinese projects and joint ventures can be difficult and we cannot assure you that any dispute involving our business in China can be resolved expeditiously and satisfactorily.

~~Impact of the United States Foreign Corrupt Practices Act on our business.~~

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. We have attempted to implement safeguards to prevent and discourage such practices by our employees and agents. We cannot assure you, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

~~It may be difficult to serve us with legal process or enforce judgments against our management or us.~~

Most of our assets are located in China. In addition, some of our directors and officers are non-residents of the United States, and all, or substantial portions of the assets of such non-residents, are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon such persons. Moreover, there is doubt as to whether the courts of China would enforce:

~~Judgments of United States courts against us, our directors or our officers based on the civil liability provisions of the securities laws of the United States or any state; or~~

~~Original actions brought in China relating to liabilities against non-residents or us based upon the securities laws of the United States or any state.~~

~~The Chinese government could change its policies toward private enterprise or even nationalize or expropriate it, which could result in the total loss of your investment.~~

Our business may be adversely affected by political, economic and social developments in China. Over the past several years, the Chinese government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The Chinese government may not continue to pursue these policies or may significantly alter them to our detriment from time to time with little, if any, prior notice. Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business. Nationalization or expropriation could even result in the total loss of our investment in China and in the total loss of your investment.

~~The source of funds for any dividend and other equity based distributions will be from our operating subsidiary in China, which is subject to various legal and contractual restrictions.~~

We conduct our business operations through our wholly owned Chinese subsidiaries. As a result, our profits available for distribution to our shareholders are dependent on the profits available for distribution from our subsidiary. Under current PRC law, our PRC subsidiary is regarded as a foreign-invested enterprise in China. PRC law permits payment of dividends only out of net income as determined in accordance with PRC accounting standards and regulations. Determination of net income under PRC accounting standards and regulations may differ from determination under U.S. generally accepted accounting principles in significant aspects, such as the use of different principles for recognition of revenues and expenses. Under PRC law, our PRC subsidiary is required to set aside 10% of its net income each year to fund a designated statutory reserve fund until such funds reach 50% of registered share capital. These reserves are not distributable as cash dividends. As a result, our primary internal source of funds for dividend payments is subject to these and other legal and contractual restrictions, which may limit or impair our ability to pay dividends to our shareholders although we do not presently anticipate paying any dividends. Moreover, any transfer of funds from us to our PRC subsidiary, either as a shareholder loan or as an increase in registered capital, is subject to registration with or approval by PRC governmental authorities. These limitations on the flow of funds between us and our PRC subsidiary could restrict our ability to act in response to changing market conditions. Distributions will also be subject to taxation and withholding requirements, imposed by the PRC and under United States tax law.

~~Foreign Exchange Control Risks~~

~~Fluctuations in the value of the Chinese Renminbi relative to foreign currencies could affect our operating results.~~

Our revenues and expenses are China based, whose currency is the Chinese Renminbi. However, we use the United States dollar for financial reporting purposes. The value of Chinese Renminbi against the United States dollar and other currencies may fluctuate. The Chinese government is valuing the exchange rate of the Chinese Renminbi against a number of currencies, rather than just exclusively to the United States dollar. Although the Chinese government has stated its intention to support the current international value range of the Chinese Renminbi, we cannot assure you that the government will not take steps to revalue it. As our operations are in China, any significant revaluation of the Chinese Renminbi may materially and adversely affect our cash flows, revenues and financial condition. To date, we have not engaged in any hedging transactions in connection with our operations.

The PRC government imposes control over the conversion of the Chinese Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People’s Bank of China publishes an exchange rate, which we refer to as the PBOC exchange rate, based on the previous day’s dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the PBOC exchange rate according to market conditions.

Pursuant to the Foreign Exchange Control Regulations of the PRC issued by the State Council which came into effect on April 1, 1996, and the Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises, or FIEs, for use on current account items, including the distribution of dividends and profits to foreign investors, is permissible. FIEs are permitted to convert their after-tax dividends and profits to foreign exchange and remit such foreign exchange to their foreign exchange bank accounts in the PRC.

Conversion of Renminbi into foreign currencies for capital account items, including direct investment, loans, and security investment, is still subject to certain restrictions. On January 14, 1997, the State Council amended the Foreign Exchange Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions on recurring international payments and transfers under current account items.

Enterprises in the PRC (including FIEs) which require foreign exchange for transactions relating to current account items, may, without approval of the State Administration of Foreign Exchange, or SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks by providing valid receipts and proofs.

Convertibility of foreign exchange in respect of capital account items, such as direct investment and capital contribution, is still subject to certain restrictions, and prior approval from the SAFE or its relevant branches must be sought.

~~Risks Related to Our Common Stock~~

~~An active trading market for Zhongchai’s common stock may not develop or be sustained.~~

Currently, there is very limited trading in our common stock. There can be no assurance that an active trading market will develop for such shares. If an active public trading market does not develop or continue, you may have limited liquidity and may be forced to hold your investment in the Company for an indefinite period of time. Further, the prices and volume of trading in the common stock may be adversely affected if its securities are not listed or quoted.

~~There may be substantial sales of the common stock by stockholders, which could cause the price of the stock to fall.~~

Future sales of substantial amounts of the common stock in the public market, if one develops, or the perception that such sales might occur, could cause the market price for our common stock to decline and could prevent an active market developing. Such “overhang” could impair the value of an investment in the common stock. These factors could also restrict the Company’s ability to raise equity capital in the future. A relatively small proportion of the outstanding shares are free trading. All the shares that were issued as restricted stock and the shares held by our affiliates, which represent the majority of our outstanding shares of common stock, may be sold pursuant to Rule 144 as applicable to former shell companies, subject to the limitations on the number of shares held by affiliates that can be sold from time to time. The sales of common stock by the stockholders able to sell under Rule 144 may depress any trading market that develops.

~~The common stock of Zhongchai will be subject to the “penny stock” rules for the foreseeable future.~~

Zhongchai is subject now and expects in the future to be subject to the SEC’s “penny stock” rules if its common stock sells below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information ~~must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.~~

In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for the common stock. As long as the common stock is subject to the penny stock rules, the holders of its shares may find it more difficult to sell their securities.

~~Zhongchai’s articles of incorporation authorize the issuance of shares of preferred stock, the rights, preferences, designations and limitations of which may be set by the board of directors.~~

Zhongchai’s articles of incorporation have authorized the issuance of up to 10,000,000 shares of preferred stock in the discretion of its board of directors. Any undesignated shares of preferred stock may be issued by the Zhongchai board of directors; no further shareholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by the board of directors and could operate to the disadvantage of the holders of outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers.

under this item.

~~Item~~

ITEM 1B. UNRESOLVED STAFF ~~COMMENTS~~

COMMENTS.

None.

~~Item~~

ITEM 2. ~~DESCRIPTION OF PROPERTIES~~

~~The Company has an office in China and one operating facility in China.~~

The principal executive office of the Company is located in the city of Hangzhou in China, where the Company leases an aggregate of approximately 1,400 square feet at an approximate, aggregate annual rental of $6,160. The lease has term of one year, which can be renewed at similar rates. This office mainly handles general corporate affairs, administrative matters, accounting activities and other supporting functions.

The ZhongChai China and Shengte conduct operations from a facility in Xinchang County, Zhejiang Province in China, with an aggregate leased space of approximately 32,000 square feet, for an annual rental of approximately $38,633. The Company has reached an agreement to purchase the land with the building and some utility facility from Xinchai Holding Group. The Company has paid the deposit and is currently waiting for the value appraisal, government approval, and title transfer.

PROPERTIES.

None.

~~Item~~

ITEM 3. LEGAL ~~PROCEEDINGS~~

~~The Company is not currently a party to any material legal proceeding.~~

~~Item~~PROCEEDINGS.

None.

ITEM 4. ~~[RESERVED]~~MINE SAFETY DISCLOSURES.

Not applicable.

PART II

~~Item~~

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY ~~SECURITIES~~

SECURITIES.

Market Information

~~Our common stock price is quoted on the OTC Bulletin Board, or OTCBB, under the symbol “EQPI.OB”.~~

There is ~~a very limited~~no established public trading market for our ~~stock. There can~~securities and a regular trading market may not develop, or if developed, may not be ~~no assurance~~sustained. A stockholder in all likelihood, therefore, will not be able to resell his or her securities should he or he desire to do so when eligible for public resale. Furthermore, it is unlikely that a ~~liquid market for~~lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities.

Penny Stock Considerations

Our shares likely will ~~ever develop. The following table sets forth for the periods indicated the high and low prices per share traded for our common stock~~be “penny stocks” as ~~reported on the OTCBB.~~

Quarter Ended High Low
2008
September 30 $ 0.20 $ 0.05
December 31 $ 0.07 $ 0.01
2009
March 31 $ 0.05 $ 0.01
June 30 $ 0.06 $ 0.02
September 30 $ 0.12 $ 0.061
December 31 $ 0.25 $ 0.05
2010
March 31 $ 0.35 $ 0.18
June 30 $ 0.35 $ 0.06

~~The quotations shown above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.~~

~~Our common stock~~that term is ~~designated as “penny stock” and thus may be illiquid for that reason. The SEC has adopted rules (Rules 15g-2 through l5g-6 of~~generally defined in the Exchange ~~Act), which regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are any non-NASDAQ~~Act and the rules and regulations promulgated thereunder to mean equity securities with a price of less than ~~$5.00,~~$5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain ~~exceptions. The~~transactions involving a penny ~~stock rules require a broker-dealer to deliver a standardized risk disclosure document to provide the customer with current bid and offer quotations for~~stock.

Under the penny stock ~~the compensation of the~~regulations, a broker-dealer ~~and its salesperson in the transaction, monthly account statements showing the market value of each~~selling a penny stock ~~held in the customer’s account,~~ to anyone other than an established customer or accredited investor must make a special ~~written~~suitability determination ~~that the penny stock is a suitable investment for~~regarding the purchaser and must receive the purchaser’s written ~~agreement~~consent to the ~~transaction. These disclosure requirements~~transaction prior to the sale. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:


	·	Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
	·	Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
	·	Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and
	·	Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of Selling Stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity ~~if any,~~ in the secondary ~~market~~market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a ~~stock that is~~corresponding decrease in the price of our securities. Our shares in all probability will be subject to ~~the penny stock rules. Since our common shares are subject to the~~such penny stock rules ~~persons holding or receiving such shares may~~and our stockholders will, in all likelihood, find it ~~more~~ difficult to sell their ~~shares. The~~securities.

OTC Bulletin Board Qualification for Quotation

To have our shares of Common Stock on the OTC Bulletin Board, a market ~~liquidity~~maker must file an application on our behalf in order to make a market for ~~the shares could~~our Common Stock. We have not had conversations with nor engaged any market maker to file our application on Form 211 with FINRA. No Assurances can be ~~severely and adversely affected by limiting the ability of broker-dealers~~made that we will be able to ~~sell the shares and the ability of stockholders~~obtain a sponsor to ~~sell their stock in any secondary market.~~

~~The trading volume in~~file our ~~common stock has been and is extremely limited. The limited nature~~application.

Stockholders

As of the ~~trading market can create the potential for significant changes in the trading price for the common stock as a result~~date of ~~relatively minor changes in the supply and demand for our common stock and perhaps without regard to our business activities.~~

~~The market price~~this Annual Report, we had 45 holders of record of our common stock may be subject to significant fluctuations in response to numerous factors, including: variations in our annual or quarterly financial results or those of our competitors; conditions in the economy in general; announcements of key developments by competitors; loss of key personnel; unfavorable publicity affecting our industry or us; adverse legal events affecting us; and sales of our common stock by existing stockholders. Common Stock.

~~Holders~~

Dividends

We have ~~approximately 426 record holders of~~not declared any cash dividends on our common stock. In addition to the record ownership, there are additional beneficial owners who hold their shares in street name or through other nominees, but we have not ascertained the number of such persons.

~~Dividend Policy~~

~~We plan to retain all earnings generated by~~Common Stock since our ~~operations, if any, for use in our business. We~~inception and do not anticipate paying ~~any cash~~such dividends ~~to our stockholders~~ in the foreseeable future. ~~The payment~~Any decisions as to future payments of ~~future~~ dividends ~~on the common stock and the rate of such dividends, if any, and when not restricted,~~ will ~~be determined by our board of directors in light of~~depend on our earnings and financial ~~condition, capital requirements,~~position and such other facts, as the ~~requirements~~Board of ~~PRC law and other factors.~~

~~Recent Sales of Unregistered Securities~~

~~None.~~

~~Transfer Agent~~

~~The transfer agent and registrar for our common stock is Olde Monmouth Stock Transfer Co., Inc., 200 Memorial Parkway, Atlantic Highlands, NJ 07716.~~

~~Equity Compensation Plan Information~~

The following table gives information about our common stock that may be issued upon the exercise of options, warrants or rights under our existing equity compensation plans. The information in this table is as of June 30, 2010.

Plan Category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights

Weighted average
exercise price of
outstanding options,
warrants, and rights

Number of securities
remaining available

Equity compensation plans approved by security holders -0- -0- -0-
Equity compensation plans not approved by security holders 183,275 $ 1.065 1,604,148

Total 183,275 $ 1.065 1,604,148

Directors deems relevant.

ITEM 6. SELECTED FINANCIAL ~~DATA~~

~~The following selected financial data for~~DATA.

We are a smaller reporting company as defined by Rule 12b-2 of the ~~four years ended June 30~~Securities Exchange Act of 1934 and are ~~derived from~~not required to provide the audited consolidated financial statements of Zhongchai Machinery, Inc. after the Share Exchange between Equicap and Usunco in March 2007. Prior to the Share Exchange, Equicap was a shell company with nominal assets and operations and with a different fiscal year end. The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information.

~~SELECTED FINANCIAL DATA~~

Year ended June 30,

2010 2009 2008 2007

OPERATIONS DATA

Revenues $ 10.983,800 $ 4,923,918 $ 3,333,325 $ 1,817,264

Net income (Loss) $ 1,072,405 $ (1,132,190 ) $ (1,964,725 ) $ (5,279,437 )

Income/(loss) per common share (basic and diluted) $ 0.04 $ (0.04 ) $ (0.07 ) $ (0.24 )

BALANCE SHEET DATA
Total assets $ 19,896,194 $ 17,102,682 $ 14,790,817 $ 13,893,621
Shareholders' equity $ 10,892,510 $ 9,578,269 $ 10,701,893 $ 10,046,397

~~QUARTERLY FINANCIAL DATA~~

~~Unaudited quarterly results of operations for the fiscal years ended June 30, 2010 and 2009 should be read in conjunction with the consolidated financial statements, related notes and other financial~~ information ~~and the Company's quarterly reports on Forms 10-Q, for the fiscal years 2010 and 2009.~~

First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Year Ended June 30, 2010
Revenues $ 1,948,406 1,889,823 3,202,350 3,943,221 $ 10,983,800
Gross profit $ 405,232 406,470 747,397 1,065,215 $ 2,624,314
Net loss/Net Income $ (28,355 ) 46,332 263,861 790,567 $ 1,072,405
LoLoss per common share - basic and diluted $ (0.00 ) 0.00 0.01 0.03 $ 0.04

Year Ended June 30, 2009
Revenues $ 1,186,570 820,527 976,967 1,939,854 $ 4,923,918
Gross profit $ 334,483 126,630 206,421 416,895 $ 1,084,429
Net loss $ (130,538 ) (366,701 ) (319,817 ) (315,134 ) $ (1,132,190 )
Loss per common share -basic and diluted $ (0.00 ) (0.01 ) (0.01 ) (0.01 ) $ (0.04 )

under this item.

~~Item~~

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ~~RESULT~~RESULTS OF ~~OPERATIONS~~

OPERATIONS.

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended June 30, 2019 and 2018. The ~~following is management’s~~ discussion and analysis ~~of certain significant factors~~ that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including, but not limited to, those described in the “Risk Factors” set forth in Item 1A – Risk Factors and the matters set forth in other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements that speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

~~The following discussion and analysis~~follows should be read ~~in conjunction~~together with our ~~consolidated~~ financial statements and the ~~related~~ notes to the financial statements included elsewhere in this Annual Report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

~~Overview~~

Business Development

The Company's current business objective is to seek a business combination with an operating company. We intend to use the Company's limited personnel and financial resources in connection with such activities. The Company ~~does~~will utilize its capital stock, debt or a combination of capital stock and debt, in effecting a business ~~through its wholly owned subsidiary, Zhongchai~~combination. It may be expected that entering into a business combination will involve the issuance of restricted shares of capital stock. The issuance of additional shares of our capital stock:


	·	may significantly reduce the equity interest of our stockholders;
	·	will likely cause a change in control if a substantial number of our shares of capital stock are issued, and most likely will also result in the resignation or removal of our present officer and director; and
	·	may adversely affect the prevailing market price for our common stock.

Similarly, if we issued debt securities, it could result in:


	·	default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;
	·	acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenants were breached without a waiver or renegotiations of such covenants;
	·	our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
	·	our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding.

Cang Bao Tian Xia International Art Trade Center, Inc. has administrative offices located at 5-1-1206 Hefeng Jiangan, Nianqing Rd. Meilan District, Haikou, Hainan Province, China a Wholly Foreign Owned Enterprise established under the laws of the People’s Republic of China and Zhejiang Shengte Transmission Co., Ltd. (“Shengte”) a company established under the laws of the PRC and wholly owned by Zhongchai China. Through its operating subsidiaries, the Company570203.

The Company’s fiscal year end is ~~currently engaged in manufacturing and sale of drivetrain products, mainly gears, transmission gearboxes, and transaxles in China.~~

~~The Company owns the following interests in four entities organized in the PRC and Hong Kong as of~~ June ~~30, 2010 and June 30, 2009.~~

30.

Percentage of Interests
Name of Entity Place of Filing June 30, 2010 June 30, 2009
Zhongchai Holding (Hong Kong) Limited Hong Kong 100 % N/A
(“Zhongchai Holding”)

Zhejiang Zhongchai Machinery Co., Ltd. PRC 100 % 75 %
(“Zhongchai China”, 100% subsidiary of Zhongchai Holding)

Zhejiang Shengte Transmission Co., Ltd. PRC 100 % 100 %
(“Shengte”, 100% subsidiary of Zhongchai China)

Xinchang Lisheng Machinery Co., Ltd. PRC 60 % N/A
(“Lisheng”, 60% subsidiary of Zhongchai China)

Critical ~~Accounting Policies and Estimates~~

~~Below is a description of~~ accounting policies ~~that we consider critical to the preparation~~ and ~~understanding of our financial statements. In addition, certain amounts included in or affecting our~~estimates

Our condensed consolidated financial statements ~~and related disclosure must be estimated, which~~are prepared in accordance with GAAP. The preparation of these financial statements requires us to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. Actual results may differ from these estimates under different assumptions or conditions. The selection of critical accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our consolidated financial statements.

We believe that the critical accounting policies set forth below involve the most significant judgments and estimates used in the preparation of our consolidated financial statements. We regularly evaluate these policies, in light of historical results and experience, consultation with experts, trends and other methods we consider reasonable in the particular circumstances, as well as our forecasts as to how these might change in the future.

~~Principles of Consolidation~~

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Stated of America. The consolidated financial statements include the accounts of Zhongchai Machinery, Inc. and its wholly and majority owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

~~Accounts Receivable and Bad Debt Reserves~~

Trade accounts receivable are stated at the amount management expects to collect from balances outstanding at the end of the period. Based on its assessment of the credit history with customers having outstanding balances and current relationships with them, management makes conclusions whether any realization of losses on balances outstanding at the end of the period will be deemed uncollectible based on the age of the receivables. The Company reserves 0.5% of accounts receivable balances that have been outstanding below three months, 5% of accounts receivable balances that have been outstanding between three months and six months, 20% of receivable balances that have been outstanding within one year, 50% of receivable balances that have been outstanding for between one year and two years, and 100% of receivable balances that have been outstanding more than two years. The balance of allowance for doubtful accounts amounted to $37,670 and $7,732 as of June 30, 2010 and 2009, respectively.

~~Inventory~~

Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the weighted-average basis and includes all costs to acquire and other costs incurred in bringing the inventories to their present location and condition. The Company evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed weighted-average cost if it exceeds the net realizable value. The Company did not record any provision for slow-moving and obsolete inventory as of June 30, 2010 and 2009.

~~Property and Equipment~~

Property and equipment is recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the assets. Repairs and maintenance expenditures, which do not extend the useful lives of the related assets, are expensed as incurred.

Under SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company's long-lived assets are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company also assesses these assets for impairment based on their estimated future cash flows. The Company has not incurred any losses in connection with the adoption of this statement.

~~Goodwill and Other Intangible Assets~~

Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized. All other intangible assets are amortized over their estimated useful lives. Goodwill and indefinite-lived intangible assets are subject to annual impairment testing using the guidance and criteria described in Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets”. This testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value. As of June 30, 2010, the Company concluded that there were no impairments on goodwill or indefinite-lived intangibles. The carrying value of goodwill increased from $3,407,262 for the year ended June 30, 2009, to $3,425,868 for the year ended June 30, 2010, which was attribute to the effect of foreign currency translation $18,606.

~~Revenue Recognition~~

Revenue consists of sales of automotive parts, gears and gearboxes. In accordance with the provisions of Staff Accounting Bulletin No. 103, revenue is recognized when merchandise is shipped, title and risk of loss pass to the customer and collectability is reasonably assured. Revenue is recorded as the sales price of goods and services, net of rebates and discounts and is reported on a gross basis. The gross basis is used mainly due to the fact that the Company acts as principal in each transaction and is responsible for fulfillment and acceptability of the products purchased, the Company takes title to its products before the products are ordered by its customers, the Company has risk of inventory loss as title of the products is transferred to the Company, the Company is responsible for collection of sales and delivery of products, and the Company does not act as an agent or broker and is not compensated on a commission or fee basis.

~~Research and Development Costs~~

~~Research and development ("R&D) costs are classified as general and administrative expenses and are expensed as incurred.~~

~~Comprehensive Income (Loss)~~

The Company has adopted SFAS No. 130, Reporting Comprehensive Income, which establishes rules for the reporting and display of comprehensive income, its components and accumulated balances. SFAS No. 130 defines comprehensive income (loss) to include all changes in equity, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on available-for-sale marketable securities, except those resulting from investments by owners and distributions to owners.

~~Foreign Currency Translation~~

A significant portion of the Company's operations are conducted in China and the financial statements are translated from Chinese RMB, the functional currency, into U.S. Dollars in accordance with SFAS No. 52, "Foreign Currency Translation." Accordingly, all foreign currency assets and liabilities are translated at the period-end exchange rate and all revenues and expenses are translated at the average exchange rate for the period. The effects of translating the financial statements of foreign subsidiaries into U.S. Dollars are reported as a cumulative translation adjustment, a separate component of comprehensive income in stockholder's equity.

~~Fair Value of Financial Instruments~~

~~The Company considers the carrying amounts reported in the consolidated balance sheet for current assets and current liabilities qualifying as financial instruments and approximating fair value.~~

~~Income Taxes~~

Deferred income taxes are computed using the asset and liability method, such that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between financial reporting amounts and the tax basis of existing assets and liabilities based on currently enacted tax laws and tax rates in effect in the United States of America for the periods in which the differences are expected to reverse. Income tax expense is the tax payable for the period plus the change during the period in deferred income taxes. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. No differences were noted between the book and tax bases of the Company’s assets and liabilities, respectively. Therefore, there are no deferred tax assets or liabilities for the year ended June 30, 2010. For the China/Gear segment, the Zhongchai China is located in the PRC, and is therefore subject to central government and provincial and local income taxes within the PRC at the applicable tax rate on the taxable income as reported in the PRC statutory financial statements in accordance with relevant income tax laws.

~~Use of Estimates~~

~~The preparation of financial statements in conformity with GAAP requires management to make~~ estimates and ~~assumptions~~judgments that affect the reported amounts of assets and liabilities, ~~revenues, expenses,~~disclosure of contingent assets and ~~related disclosures~~liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. ~~Actual~~We continually evaluate our estimates and judgments, our commitments to strategic alliance partners and the timing of the achievement of collaboration milestones. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent assets and liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results ~~could differ from those estimates.~~

~~Operating Results~~

can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

Going Concern

The ~~Fiscal Year Ended~~accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to our ability to continue as a going concern.

Results of Operations

Comparison of twelve-month periods ended June 30, ~~2010 Compared~~2019 and 2018

Revenue

For the year ended June 30, 2019, the Company generated $0 in revenues. For the year ended June 30, 2018, the Company generated $0 in revenues.

Expenses

For the year ended June 30, 2019, we incurred operating expenses of $48,856. For the year ended June 30, 2018, we incurred operating expenses in the amount of $4,017,192. The decrease in operating expenses is attributable to a $4,000,000 preferred stock valuation for services related to the ~~Fiscal Year Ended~~issuance of that stock to the David Lazar.

Net Loss

For the year ended June 30, ~~2009~~

~~Revenue~~

~~Revenue increased by $6,059,882 or 123% to $10,983,800~~2019 we incurred a net loss of 48,856. We had net loss of $4,017,192 for the year ended June 30, ~~2010 compared with $4,923,918~~2018. The decrease is attributable to a $4,000,000 preferred stock valuation for services related to the issuance of that stock to the David Lazar.

Liquidity and Capital Resources

As of June 30, 2019, the Company has no business operations and $5,000 cash resources other than that provided by Management. We are dependent upon interim funding provided by Management or an affiliated party to pay professional fees and expenses. Management and an affiliated party have provided funding as may be required to pay for accounting fees and other administrative expenses of the Company until the Company enters into a business combination. The Company would be unable to continue as a going concern without interim financing provided by Management. As of June 30, 2019, we had $0 in cash. As of June 30, 2018, we had $0 in cash.

If we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all. The Company depends upon services provided by Management and an affiliated party to fulfill its filing obligations under the Exchange Act. At present, the Company has no financial resources to pay for such services.

The Company does not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations, maintaining the filing of Exchange Act reports, the investigation, analyzing, and consummation of an acquisition for an unlimited period of time will be paid from additional money contributed by David Lazar, our sole officer and director, or an affiliated party.

During the next 12 months we anticipate incurring costs related to:


	·	filing of Exchange Act reports;
	·	franchise fees, registered agent fees, legal fees and accounting fees; and
	·	investigating, analyzing and consummating an acquisition or business combination.

Cash Flows:


	For the years ended
	June 30,
	2019			2018
Cash Flows from Operating Activities	$	(1,759	)	$	(14,096	)
Cash Flows from Investing Activities		—			—
Cash Flows from Financing Activities		(3,240	)		19,096
Effects of Currency Translations		—			—
Net increase in cash	$	(5,000	)	$	5,000

On June 30, 2019 and 2018, we had $0 in current assets and $5,000 in current assets, respectively. As of June 30, 2019, we had $25,506 in liabilities and stockholders’ deficit, consisting of amounts due to third party vendor. As of June 30, 2018, we had $0 in liabilities.

We had a positive cash flow from operations of $1,759 during the year ended June 30, ~~2009. Revenue for~~2019. We financed our negative cash flow from operations during the 12 months ended June 30, 2019 through advances made by Xingtao Zhou.

We had zero cash flow from operations during the year ended June ~~30, 2010 consists of sales of gears~~30.

The Company currently plans to satisfy its cash requirements for the next 12 months through borrowings from its CEO or companies affiliated with its CEO and ~~transmission gearboxes in China,~~believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated parties. The Company expects that money borrowed will be used during the next 12 months to satisfy the Company's operating costs, professional fees and for ~~$5,061,608~~general corporate purposes. There is no written funding agreement between the Company and ~~$5,922,192, respectively.~~ Mr. Lazar, our sole officer and director.

The ~~increase in gears and gearboxes sales in fiscal 2010 compared~~Company has only limited capital. Additional financing is necessary for the Company to last year was attributed to the Company’s expansion in production capacity and continuous marketing efforts, and taking advantage of the recovery of the domestic market in China for gear and gearbox productscontinue as a ~~result of Chinese government’s economic stimulus plan.~~

~~Cost of Sales and Gross Margin~~

~~Cost of sales was $8,359,486~~going concern. Our independent auditors have unqualified audit opinion for the ~~year~~years ended June 30, 2010, increasing by $4,519,997 or 118%, from $3,839,489 for the year ended June 30, 2009. The increased cost of sales was a reflection of the increased sales. The gross margin was approximately 24% for the year ended June 30, 2010 compared to approximately 22% for the year ended June 30, 2009. The 2% increase in gross margin is mainly attributed to the Company’s achievement of a larger economy of scale, despite the introduction of new gearbox products which bear a relatively low margin.

~~Selling, General~~2018 and ~~Administrative Expenses~~

Selling, general and administrative (“SG&A”) expenses consisted primarily of labor cost and related overhead costs for sales, marketing, finance, legal, human resources and general management. Such costs also include the expenses recognized for stock-based compensation pursuant to FAS 123(R).

SG&A expenses decreased by $760,796 to $1,287,359 in the year ended June 30, 2010 from $2,048,155 in year ended June 30, 2009. SG&A expenses for fiscal years 2010 and 2009 mainly consist of selling expenses, and costs related to being a public company including professional services related to auditing, legal and other services, costs associated2017 with the operating expenses in China, and non-cash expenses amounting to $63,606 recognized for stock based compensation related to stock options and warrants granted in the period pursuant to SFAS 123(R). The decrease of SG&A in fiscal year 2010 is mainly attributed to less professional expenses as the Company moves forwards with more stable operations; and Zhongchai China’s decrease in R&D expenses of approximately $44,377 and in rental expense of approximately $16,214 in the fiscal 2010.

~~Income Tax~~

~~The income tax expense was $264,418 for the year ended June 30, 2010, compared to $57,246 for the year ended June 30, 2009,~~ an ~~increase of $207,172, due mainly to increased sales volume and operating profit.~~

~~Net Income~~

Net Income was $1,072,405 in the year ended June 30, 2010 compared with net loss of $1,132,190 in the year ended June 30, 2009. The net loss for fiscal year of 2009 was mainly attributed to the increase in SG&A related to a lawsuit, increase in R&D expenses, and the lossexplanatory paragraph on ~~disposal of IBC. Net profit for the fiscal year of 2010 was mainly attributed to the increase in production and sales.~~

~~Accounts Receivable~~

going concern.

Accounts receivable was $3,618,030 after reduction of $37,670 for doubtful accounts at June 30, 2010, compared to accounts receivable of $1,540,402 after reduction of $7,732 for doubtful accounts at June 30, 2009. The increase in the amount of accounts receivable is mainly attributable to the increased operations of the Company during the period reported upon. The payment term for sold products usually is 60-90 days, and, to date, accounts receivable are generally within the payment terms.

~~Notes Receivable~~

Notes receivable was $463,465 at June 30, 2010, compared to $448,655 at June 30, 2009. The increase in the amount was minimal. Of the total amount, $22,500 was an unpaid balance of promissory notes due from two individuals, and $440,965 was from product sales to customers using bank accepted forward notes. Even though the notes receivable amount is almost the same compared to the amount at June 30, 2009, the situation has improved significantly since sales have increased by 123%.

Off-Balance Sheet Arrangements

~~Liquidity and Capital Resources~~

As of June 30, ~~2010, Zhongchai China had assets equal to $19,896,194 that primarily was comprised~~2019 and 2018, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of ~~cash~~Regulation S-K promulgated under the Securities Act of 1934.

Contractual Obligations and cash equivalents and restricted cash of $1,586,407, net account receivables, note receivable and other receivables of $4,191,626, inventory of $2,680,666, and an advance payment of $4,993,607. The advance payment represented an advance payment made by the Zhongchai China to Zhejiang Xinchai Holdings Co., Ltd. ("Xinchai Holdings"), for purchase of the land use right and plant building for Zhongchai China’s future production expansion. Zhongchai’s current liabilities asCommitments

As of June 30, ~~2010 were $9,003,684, which primarily were comprised of trade accounts payable~~2019 and ~~accrued expenses,~~2018, we did not have any contractual obligations.

Critical Accounting Policies

Our significant accounting policies are described in the notes ~~payable, short-term loan and other payable. At June 30, 2010, Zhongchai had working capital of $4,448,622. ,Zhongchai believes that it has sufficient operating capital for its current operations.~~

~~Consolidated Statements of Cash Flows~~

Year ended June 30
Statements of Cash Flows 2010 2009
Net cash provided by operating activities 3,350,611 1,754,778
Net cash used in investing activities (5,304,480 ) (604,777 )
Net cash provided by (used in) financing activities (777,351 ) 2,197,500
Effect of foreign currency translation on cash 11,709 1,444
Net increase (decrease) in cash and cash equivalents and restricted cash (2,719,511 ) 3,348,945

~~Net cash provided by operating activities increased by $1,595,833 or 90.94%~~ to ~~$3,350,611~~our financial statements for the ~~year~~twelve months ended June 30, ~~2010 compared with $1,754,778 for the year ended June 30, 2009. The increase mainly because the Company gained more in the achievement of a larger economy of scale, at the same time, accounts payable~~2019 and ~~accrued expenses, accounts receivable,~~2018, and ~~inventory also increased. Advance payments were divided into two parts, one is advance payments for trade which was listed~~are included elsewhere in this part, the other is advance payments for purchase of land use rights and building which was listed in the following part: investing activities. Thirdly, the Company had to pay Keyi $2,600,000 for the purchase of the residual 25% equity of Zhejiang Zhongchai.

Net cash used in investing activities increased by $4,699,703 to $5,304,480 for the year ended June 30, 2010, compared with $604,777 for the year ended June 30, 2009. This was attribute to advance payment about $2.2 million for purchase of land use rights and building, and the payment about $2.5 million to noncontrolling interest for ownership buyback.

The change in net cash provided by (used in) financing activities was mainly because the Company had sufficient money to repay the loan from Agricultural Bank of China which was due on August 26, 2009.

~~Through the fiscal year ended June 30, 2010, Zhongchai has funded its operations from income generated by its PRC subsidiaries and loans for working capital.~~

We expect that future cash flows generated from the operation of gear, transmission gearbox, and transaxle business will be sufficient to cover the Company’s working capital requirements for its business.

As Zhongchai expands its operations and considers additional acquisitions of private companies, divisions or product lines, it may require additional capital for its business development and operations. Zhongchai does not have any specific sources of capital at this time; therefore, it would need to find additional funding for its capitalization needs. Such capital may be in the form of either debt or equity or a combination. To the extent that financing is in the form of debt, it is anticipated that the terms will include various restrictive covenants, affirmative covenants and credit enhancements such as guarantees or security interests. The terms of any proposed financing may not be acceptable to Zhongchai. There is no assurance that funding will be identified or accepted by Zhongchai or, that if offered, it will be concluded.

~~Off-Balance Sheet Arrangements~~

~~The Company does not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).~~

registration statement.

~~Item~~

ITEM 7A. ~~QUANTATIVE~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~

RISK.

Not applicable.

~~Item~~

ITEM 8. FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA.

The ~~information required by this Item is incorporated herein by reference to the~~ financial statements ~~beginning~~annexed to this Form 10-K for the year ended June 30, 2019 begin on page ~~F-1.~~

F-1 and have been audited by our independent accountants, BF Borgers CPA PC.

~~Item~~

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL ~~DISCLOSURE~~

DISCLOSURE.

None.

~~Item~~

ITEM 9A. CONTROLS AND ~~PROCEDURES~~

~~Our management,~~PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management,Xingtao Zhou, who is our Chairman, Founder, Chief ~~Executive Officer~~executive officer and ~~acting~~ Chief ~~Financial Officer (“Certifying Officers”), has evaluated the effectiveness~~financial officer, as of June 30, 2019, we conducted an evaluation of our disclosure controls and procedures, ~~(as~~as such term is defined ~~in Rules~~under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange ~~Act)~~Act of 1934, as ~~of the end of the fiscal period covered by~~amended. Based on this ~~Annual Report on Form 10-K. Based upon such~~ evaluation, ~~the Certifying Officers have~~our Chief Executive Officer has concluded that, ~~as of~~based on the ~~end of such period, June 30, 2010, the Company’s~~material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission's rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is ~~made known~~accumulated and communicated to management, including our ~~Certifying Officers, and that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.~~

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily isChief Executive Officer, as appropriate to allow timely decisions regarding required ~~to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.~~

~~Our management~~disclosure.

Management's Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. ~~Our~~As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control ~~system was~~over financial reporting is a process designed by, or under the supervision of, Xingtao Zhou, the Company's Chief Executive Officer, and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the ~~Company’s~~maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company's management and ~~board of directors regarding the preparation~~directors; and ~~fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can~~(3) provide ~~only~~ reasonable assurance ~~with respect to~~regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial ~~statement preparation and presentation.~~statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ~~Projections~~Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, assessed the effectiveness of ~~the Company’s~~our internal control over financial reporting ~~as of~~at June 30, ~~2010.~~2019. In making this assessment, itmanagement used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ~~(“COSO”)~~(COSO) in Internal Control—Integrated ~~Framework.~~Framework (2013). Based on ~~our~~that assessment ~~we believe~~under those criteria, management has determined that, as of June 30, ~~2010, the Company’s~~2019, our internal control over financial reporting was not effective.

Our internal controls are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only two persons, one of which is the Company's principal executive officer and principal financial officer and, (ii) the Company does not have an audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.

We would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need to expand our board to include independent members.

Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective ~~based on those criteria.~~

controls over financial reporting.

This ~~annual report~~Annual Report does not include an attestation report of ~~the Company’s~~our registered public accounting firm regarding internal control over financial reporting. ~~Management’s~~Management's report was not subject to attestation by the ~~Company’s~~Company's registered public accounting firm pursuant to the ~~rules of~~exemption provided to issuers that are not "large accelerated filers" nor "accelerated filers" under the ~~Securities~~Dodd-Frank Wall Street Reform and ~~Exchange Commission~~Consumer Protection Act.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that ~~permit the Company~~occurred during our fourth fiscal quarter that have materially affected, or are reasonably likely to ~~provide only management’s report in this annual report.~~

materially affect, our internal control over financial reporting.

~~Item~~

ITEM 9B. OTHER ~~INFORMATION~~INFORMATION.

None

~~None.~~

PART III

~~Item~~

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE ~~GOVERNANCE~~

GOVERNANCE.

Neither the Company, its property, nor any of its directors or officers is a party to any pending legal proceeding, nor have they been subject to a bankruptcy petition filed against them. None of its officers or directors have been convicted in, nor is subject to, any criminal proceeding.

The ~~following table sets forth certain information about each~~names and ages of the ~~members~~directors and executive officers of the Company and their positions with the Company are as follows:


Name	Age	Position
Xingtao Zhou	40	President, Chief Executive Officer, Chief Financial Officer (Principal Accounting Officer), Chairman of the Board
Liang Tan	56	Director

Xingtao Zhou -- President, Chief Executive Officer, Chief Financial Officer (Principal Accounting Officer), Chairman of the Board of ~~Directors and each executive officer:~~

Name Age Position with company
Serving as a
Director or an
Officer Since
Peter Wang 56 Chairman, President and acting Chief Financial Officer 2007
Rong Shi 36 Director 2010
Chris Chen 39 Director 2010

Directors.

Mr. ~~Peter Wang~~Zhou has ~~been~~served as the Chairman of the board of directors and President since the inception of Usunco in April 2006, and acting Chief Financial Officer since February 2010. He has more than 20 years of experience in technology and service area with strong background in research and development, operations and corporate management. Mr. Wang successfully co-founded a telecom venture in China, Unitech Telecom (now named UTStarcom, NASDAQ: UTSI) in 1990 and was the Executive Vice President until August 30, 1995. From August 1995 to December 2000, Mr. Wang was the Chairman and CEO of World Communication Group. From December 2000 to 2009, Mr. Wang was Chairman and CEO of China Quantum Communication Limited (later changed to Techedge, Inc. and then to China Biopharma, Inc.) Before forming his own companies, Mr. Wang worked at AT&T Bell Labs during 1987-1990 and Racal-Milgo Information System during 1983-1987. Mr. Wang was also a co-chairman of Business Advisory Council of the National Republican Congressional Committee during the period 1994-1995. In 2004, Mr. Wang received Outstanding 50 Asian Americans in Business Award. Mr. Wang earned his BS in Math & Computer Science and MS in Electrical Engineering from University of Illinois in 1983, as well as MBA in Marketing from Southeast-Nova University in 1986. We believe Mr. Wang’s qualifications to serve on our Board of Directors include his intimate knowledge of our operations as a result of his day to day leadership as our President.

~~Mr. Rong Shi~~ ~~has been Chairman~~chairman and founder of ~~Zhejiang Shengte~~Hainan Cang Bao Tian Xia Artwork Co. Ltd. since 2017 and Cang Bao Ge (Hong Kong) Arts Co., Ltd since 2012. From 2009 to 2012, Mr. Zhou served as the president of Yi Hua Cultural Diffusion Co., Ltd. Mr. Zhou served as the curator of the Yin Yuan Min Su Museum from 2003 to 2009 and as the vice curator from 1999 to 2003. Mr. Zhou received a bachelor’s degree in International Business from Southwestern University of Finance and Economics.

Liang Tan, Director

Liang Tan has served as the general manager of Shanghai Qingsheng Investment Co., Ltd. since ~~August 2004.~~2017. Mr. ~~Shi founded and worked~~Tan served as ~~General Manager~~the deputy general manager of ~~Zhejiang Bokai Auto A/C Compressor~~Shanghai Daren Asset Management Co., Ltd. ~~between March 2003 and October 2005. He was member of Oversight Committee of Rongda Trading Company during 2005 and 2006. Mr. Shi earned his MBA degree~~ from ~~Macao University of Science and Technology in 2003 and his BA degree from Shaoxin Liberal Arts College in 1997. We believe Mr. Shi’s qualifications~~2013 to serve on our Board of Directors include his knowledge of compliance matters as evidenced by his Certificate for Sarbanes Oxley Training Program from Shanghai Financing University and Certificate for Compliance Officer for Public Company from China Stock Exchanges.

~~Mr. Chris Chen~~ has been the General Manager of Manheim China, since February of 2007, where he manages Manheim’s overall business operation in China. From April 2005 to January of 2007, Mr. Chen worked as Principal, Director, and Marketing Manager of SAP AG for its global business operations in Germany, Singapore, and Canada, from January, 2001 to August, 2003, as a Project Manager of IBM Global Service in Canada, and from 1995 to 1999, as a Sales Industry Manager of Oracle Corporation, in China. Mr. Chen earned his MBA from INSEAD in France in 2004 and MS in Software Engineering from McMaster University in Canada in 2001, as well as his Bachelor of Engineering from Jiaotong University in China in 1992. We believe Mr. Chen’s qualifications to serve on our Board of Directors include his knowledge and expertise in the global and Chinese market for mechanical and computer engineering.

All directors are elected to annual terms by the holders of common stock. All directors hold office until the next annual meeting of shareholders and the election and qualification of their successors. Officers are elected annually by the board of directors and serve at the discretion of the Board.

~~There are no family relationships (whether by blood, marriage or adoption) among the Zhongchai directors or executive officers.~~

~~The business address of the directors is: 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou 310007, P.R. China.~~

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

Section 16(a) of the Securities Exchange Act of 1934 requires Zhongchai’s officers and directors, and persons who own more than ten percent of a registered class of Zhongchai’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “Commission”). Officers, directors and greater than ten percent beneficial owners are required by Commission regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely on the Company’s review of the copies of such forms it received and written representations from reporting persons required to file reports under Section 16(a), to Zhongchai’s knowledge, all of the Section 16(a) filing requirements applicable to such persons with respect to fiscal 2010 were complied with.

~~Board Committees~~

The board of directors considers all major decisions. The board has established an operations committee and a compensation committee. The operations committee consists of three members and they are Mr. Xianwei Zhu who is Chairman of the committee and is Company’s senior advisor, Mr. Mengxing who is president of Zhongchai China, and Mr. Rong Shi who is independent director. The Compensation Committee consists of three members and they are Mr. Peter Wang who is Chairman of the committee and is director, Mr. Rong Shi who is independent director, and Mr. Harry Zhu who is director of Zhonchai China. The Company plans to establish an audit committee by March, 2011. The board has affirmatively determined that Messrs. Rong Shi and Chris Chen are independent directors as defined by applicable securities law and corporate governance guidelines.

The board of directors does not have a nominations committee because there are a limited number of directors, and the board believes that shareholder suggestions would be known to the entire board if and when communicated to the Company. As such, the board of directors believes there will be sufficient communication by shareholders with the board about matters and nominees to be brought to its attention.

Currently the board of directors functions as an audit committee and performs some of the same functions as an audit committee including: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; and (3) engaging outside advisors. The Company is not a "listed company" under SEC rules and is therefore not required to have an audit committee comprised of independent directors. The board has determined that its members do not include a person who is an "audit committee financial expert" within the meaning of the rules and regulations of the SEC. The board has determined, however, that each of its members is able to read and understand fundamental financial statements and has substantial business experience that results in that member's financial sophistication. Accordingly, the board believes that each of its members have the sufficient knowledge and experience necessary to fulfill the duties and obligations that an audit committee would have.

~~Code of Ethics~~

~~A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:~~

~~1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;~~

2) Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to the Securities and Exchange Commission and in other public communications made by Zhongchai;

~~3) Compliance with applicable government laws, rules and regulations;~~

~~4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and~~

~~5) Accountability for adherence to the code.~~

Zhongchai adopted a formal code of ethics statement that is designed to deter wrong doing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that Zhongchai files or submits to the SEC and others. A copy of the form of Zhongchai’s code of ethics is filed as an exhibit to a Report on Form 8-K dated March 9, 2007. Requests for copies of Zhongchai’s code of ethics should be sent in writing to 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou 310007, P.R. China, Attention: Secretary.

~~Limitation of Director Liability; Indemnification~~

Under its bylaws, the Company is required to indemnify its officers, directors, employees and agents in certain situations. In some instances, a court must approve such indemnification. As permitted by Nevada statutes, the articles of incorporation eliminate in certain circumstances the monetary liability of its directors for a breach of their fiduciary duties. These provisions do not eliminate a director’s liability for:

~~a willful failure to deal fairly with us or our shareholders in connection with a matter in which the director has a material conflict of interest,~~

~~a violation of criminal law unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful,~~

~~a transaction from which the director derived an improper personal profit, and~~

~~willful misconduct.~~

As to indemnification for liabilities arising under the Securities Act of 1933 for directors, officers or persons controlling the Company, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and therefore unenforceable.

2016.

~~Item~~

ITEM 11. EXECUTIVE ~~COMPENSATION~~

~~The table below sets forth for the fiscal year ended June 30, 2010, the compensation of the President and the three other most highly compensated executive officers of Zhongchai.~~

~~SUMMARY COMPENSATION TABLE~~

Name and
Principal Position

Fiscal
Year

Salary

Bonus

Option
Awards ($)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation
($)

Total
($)

Peter Wang, Chairman 2009 $ 50,000 - - - - $ 50,000
and President 2010 $ 50,000 - - - - $ 50,000
David Ming He, Chief 2009 $ 48,000 - - - - $ 48,000
Financial Officer(1) 2010 $ 32,000 - - - - $ 32,000

~~(1)~~

~~Mr. David He resigned from the position of chief financial officer of the Company on February 28, 2010.~~

COMPENSATION.

Summary Compensation. The following table ~~sets forth information concerning~~summarizes, for each of 2019 and 2018 the ~~other~~ compensation ~~granted~~awarded, paid to or earned by our President, CEO and Chairman of the Board of Directors, Xingtao Zhou and our former CEO, David Lazar who are compensated for their services to the ~~named executive officers for~~Company; no other officer receives compensation from the ~~fiscal year ended June 30, 2010.~~

Name Year Medical Premiums
401K Employer
Match

Peter Wang 2010 $ 12,000 -
David Ming He 2010 $ 8,000 -

~~Employment Agreements~~

~~Currently, all employees~~Company.

Summary Compensation Table


Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)

Xingtao Zhou (1)	2019	0	—	—	—	—	—	—	—
President CEO,CFO, (Principal Accounting Officer) Chairman

David Lazar (1)	2018	—	—	4,003,096	—	—	—	—	4,003,096
former CEO

———————

(1)

Mr. Lazar resigned as CEO on December 28, 2018, when the change of ~~Zhongchai are employed on “at will” employment agreements. The Company intends to establish formal employment contracts for certain other key employees in the future.~~

~~2010 Performance Equity Plan~~

~~Zhongchai adopted its 2010 Performance Equity Plan (“Option Plan”) on April 16, 2010 by the board of~~control was completed. Our two current directors and ~~the Option Plan was approved by the shareholders on May 21, 2010.~~

~~Under the Option Plan, the Compensation Committee in its~~ sole ~~discretion may grant stock options, restricted stock and deferred stock, among other forms of awards,~~officer do not presently receive cash compensation for their services to ~~the Company's employees, directors and consultants (or those of the Company's affiliates).~~ us.

The Company has ~~reserved~~no stock option, retirement, pension, or profit sharing programs for the benefit of directors, officers or other employees, but our officers and directors may recommend adoption of one or more such programs in the future.

The Company does not have a ~~total of 3,750,000 shares of common stock for issuance under the Option Plan.~~

~~The Compensation Committee may grant two types of options under the Option Plan: (a) options qualifying as "incentive stock options" under the requirements of Section 422~~standing compensation committee, audit committee, nomination committee, or committees performing similar functions. We anticipate that we will form such committees of the ~~Internal Revenue Code~~Board of ~~1986, as amended (the "IRC"), or any successor provision, and designated as such ("ISOs"), and (b) non-qualified stock options ("Non-Qualified").~~

Directors once we have a full Board of Directors.

The Compensation Committee determines the vesting schedule, the exercise price per share and other terms and conditions for each option. In the case of options intended to constitute ISOs or performance-based compensation within the meaning of Section 162(m) of the IRC, the exercise price may not be less than the fair market value of the Company's common stock on the date of grant. The Compensation Committee will determine the term of each option, which may not exceed ten years and is subject to further limitations as described herein.

ISOs may be granted only to employees. To the extent required by Section 422(d) of the IRC, the aggregate fair market value of shares of common stock with respect to which ISOs are exercisable for the first time by any individual during any calendar year may not exceed $100,000. ISOs granted to a person considered to own more than 10% of the total combined voting power of all classes of the Company's outstanding stock, or the stock of any subsidiary or affiliate, may not be exercisable after the expiration of five years from the grant date and the option exercise price must be at least 110% of the fair market value of the common stock subject to the option.

Each option shall be evidenced by an option agreement. An option agreement may provide for the payment of the exercise price, in whole or in part, by the delivery of a number of shares of the Company's common stock (plus cash if necessary) having a fair market value equal to such exercise price. Moreover, an option agreement may provide for a "cashless exercise" of the option by establishing procedures whereby the holder, by a properly-executed written notice, directs (a) an immediate market sale or margin loan respecting all or a part of the shares of common stock to which he or she is entitled upon exercise pursuant to an extension of credit by the Company to the holder equal to the exercise price, (b) the delivery of shares of the Company's common stock from the Company directly to a brokerage firm, and (c) the delivery of the exercise price from sale or margin loan proceeds from the brokerage firm directly to the Company.

No stock options were awarded during the fiscal year ended June 30, 2010. Currently, there are 183,275 shares, which Usunco has issued as incentive stock option grants under the 2006 Option Plan at exercise of $1.065 per share. On July 7, 2010, the compensation committee and the board of directors have approved the issuance of options to purchase 1,300,000 shares of the Company’s common stock, of which 500,000 options were granted to one of the Company’s directors, at exercise price of $0.20 per share.

~~Executive Compensation Determination~~

It is the intention of Zhongchai to determine executive compensation by a decision of the majority of the members of compensation committee, at a meeting at which the chief executive officer will not be present.

From time to time key employees may receive a cash bonus as rewards for their job performance that meet or exceed the operation goals and results set up by the board of directors or high-level management. The Company will also consider other employee benefits for which it will assume the cost, such as health and dental insurance benefits. The Company also will reimburse employees for their travel expenses.

~~Director Compensation~~

The board of directors will consider granting stock options or additional equity compensation to outside directors as it determines from time to time, but there is no established plan at this time for such awards. Zhongchai Machinery does not provide cash compensation to directors for attending meetings, but it does reimburse them for their out-of-pocket expenses for attending meetings.

~~The following Director Compensation Table summarizes the compensation of our non-employee directors for services rendered by Zhongchai during the fiscal year ended June 30, 2010.~~

~~NON-EMPLOYEE DIRECTOR COMPENSATION TABLE~~

Name
Fees Earned
or Paid in Cash
Option Awards Total
Rong Shi $ -0- $ -0- $ -0-
Chris Chen $ -0- $ -0- $ -0-

~~Item~~

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER ~~MATTERS~~

MATTERS.

The following table sets forth certain information ~~regarding~~as of April 2, 2018, with respect to the beneficial ownership of our common stock ~~beneficially owned on August 31, 2010,~~ for (i) each ~~stockholder~~director and officer, (ii) all of our directors and officers as a group, and (iii) each person known to ~~be the beneficial owner of 5%~~us to own beneficially five percent (5%) or more of the outstanding shares of our common ~~stock, (ii) each current executive officer and director, and (iii) all executive officers and directors as a group. The table is based on a total~~stock. As of ~~27,613,019~~July 30, 2019 there were 35,319,245 shares of common stock outstanding.

Name and Address of Beneficial Owner
Number of Shares
Beneficially Owned (1)

% of common stock
Beneficially Owned

Sinoquest Management Ltd. (2)
224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.
4,120,990 14.92 %
Peter Wang (2)
224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.
1,957,470 7.09 %
Rong Shi (3)
224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.
200,000 *
Chris Chen
224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.
-0- *
Ruihua International Ltd. (4)
11/F Front Block, Hang Lok Building, 130 Wing Lok Street, Sheung Wan, Hong Kong
17,431,104 63.13 %
All Directors and Executive Officers as a Group (3 persons) (5) 2,157,470 7.81 %

* Less than 1%


Name and Address of Beneficial Owner (1)	Class of Securities	Shares Beneficially Owned	Percentage Owned (3)

Directors and Executive Officers

Xingtao Zhou,	Preferred Stock	10,000,000	100%
Chief Executive Officer, Chief Financial Officer, President and Chairman	Common Stock	17,904,771	50.69%

Yaqin Fu(2)	Common Stock	663,849	1.88%

All Officers and Directors	Common Stock	18,568,620	52.57%

5% Stockholders

Li Ren	Common Stock	1,763,200	5.00%

———————

(1)

Beneficial ownership ishas been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the ~~Securities and Exchange Commission, which include holding voting and investment power with respect to the securities. Shares~~SEC, shares of common stock ~~subject~~which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants ~~currently exercisable, or exercisable within 60 days,~~ are deemed to be outstanding for the purpose of computing the percentage ownership of ~~the total number of shares beneficially owned by the designated person,~~such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ~~for~~ownership of any other ~~person.~~person shown in the table.

~~(2)~~	~~Peter Wang has~~
(2)	Yaqin Fu is the wife of Liang Tan, a ~~47.5% beneficial ownership in Sinoquest Management Limited.~~

~~(3)~~

~~Rong Shi was granted 500,000 shares of options on July 7, 2010. 200,000 of 500,000 were vested on July 7, 2010.~~

~~(4)~~	~~Ruihua International Limited ("Ruihua") has an address at 11/F Front Block, Hang Lok Building, 130 Wing Lok Street, Sheung Wan, Hong Kong. The officer and~~ director of ~~Ruihua who has~~ the ~~right~~Company, and therefore Mr. Tan may be deemed to ~~vote and dispose~~be the beneficial owner of the shares ~~is Mr. Yang Yong HU. The foregoing information is derived from an amended 13D filed~~owned by ~~Ruihua with the SEC~~Ms. Fu.

(3)	Based on ~~August 4, 2009.~~35,319,245 shares of our Common Stock issued and outstanding as of July 30, 2019.

~~(5)~~

~~Consists of Peter Wang, Rong Shi and Chris Chen.~~

~~Item~~

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR ~~INDEPENDENCE~~

~~During~~INDEPENDENCE.

There is no family relationship between the ~~fiscal year ended~~two directors. The new directors and officer have no material plan, contract or arrangement (written or not written) to which either is a party, or in which either participates, that is entered into, or a material amendment, in connection with any grant or award to any either person or modification thereto, under any such plan, contract or arrangement.

The following table shows the relationship of stockholders of the Company's common stock and their relationship to officers, directors and principal stockholders of the Company:


Name	Shares	Relationship to
Yaqin Fu	663,849	Wife of Liang Tan*

Related Party Transactions

As of December 31, 2018, and June 30, ~~2010,~~2018, the Company ~~did not enter into any~~had a loan payable of $0 and $5,000, respectively to David Lazar, Chief Executive Officer. On December 13, 2018, the Company forgave $31,446 of the loan payable to David Lazar. The gain was recorded in additional paid in capital due to its related party ~~transactions~~nature. As of June 30, 2019, $0 remains outstanding.

On June 15, 2018, the company entered into a promissory notes payable with ~~any director, officer, nominee for director, beneficial owner~~David Lazar, Chief Executive Officer. The note is unsecured, noninterest bearing and due in 12 months from the date of ~~5% or more~~issuance. On December 13, 2018, the Company forgave $5,000 of the ~~equity securities~~entire amounts owed on this promissory note to David Lazar. The gain was recorded in additional paid in capital due to its related party nature. As of June 30, 2019, $0 remains outstanding.

On June 19, 2018, the Company issued 3,096,200 shares of common stock issued at par value of $0.001, for services valued at $3,096 to Custodian Ventures, LLC, the company controlled by David Lazar.

On June 19, 2018 the Company created 10,000,000 shares of Series A Preferred Stock, out of the 10,000,000 shares that were already authorized. On that same date, the Company issued 10,000,000 shares of the Series A preferred stock to Custodian Ventures LLC, the company controlled by David Lazar, Chief Executive Officer for services valued at $4,000,000.

~~Director Independence~~

~~We undertook~~(together, the “Shares”) owned by the Seller, for a ~~review~~total purchase price of the independence of our directors and, using the definitions and independence standards for directors provided in the rules of The NASDAQ Stock Market, although not required as the standard for the Company as its stock is traded on the Over-the-Counter Bulletin Board, considered whether any director has a material relationship with us that could interfere with his or her ability to exercise independent judgment in carrying out their responsibilities.$375,000. As a result of ~~this review, we determined that Rong Shi~~the sale, and ~~Chris Chen were "independent directors"~~David Lazar’s resignation as ~~defined under~~sole officer and director of the ~~rules~~Company, there was a change of ~~The NASDAQ Stock Market.~~

control of the Company. There is no family relationship or other relationship between the Seller and the Purchaser.

~~Item~~

ITEM 14. PRINCIPAL ~~ACCOUNTANT~~ACCOUNTING FEES AND ~~SERVICES~~

SERVICES.

The following table shows the fees paid or accrued by us for the audit and other services provided by ~~Patrizio & Zhao~~BF Borges PC, for the fiscal periods shown.


	June 30,		June 30,
	2019		2018
Audit Fees	$	13,100	$	—
Audit Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	13,100	$	—

Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by the above auditors in connection with statutory and regulatory fillings or engagements.

Audit-Related Fees" are fees for assurance and related services by the principal accountant that are traditionally performed by the principal accountant and which are "reasonably related to the performance of the audit or review of the registrant's financial statements.

In the absence of a formal audit committee, the full Board of Directors pre-approves all audit and non-audit services to be performed by the independent registered public accounting firm in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended. The Board of Directors pre-approved 100% of the audit, audit-related and tax services performed by the independent registered public accounting firm for the fiscal years ended June 30, ~~2009~~2019 and ~~June 30, 2010:~~

June 30, 2010 June 30, 2009
Audit Fees $ 93,000 $ 93,000
Audit Related Fees 2,897 -
Tax Fees - -
All Other Fees - -
$ 95,897 $ 93,000

~~Audit services~~2018. The percentage of ~~Patrizio & Zhao~~hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal ~~years 2009 and 2010 consisted of~~year that were attributed to work performed by persons other than the ~~audit of the yearend financial statements and the review of the quarterly financial statements of Zhongchai and registration statements and other SEC filings.~~principal accountant’s full-time, permanent employees was 0%.

~~Because the board of directors of Zhongchai does not have an audit committee, the above services and engagements were approved by the board of directors.~~

PART IV

~~Item~~

ITEM 15. ~~Exhibits,~~ EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as part of this Annual Report:

(a) Financial ~~Statement Schedules.~~

~~Exhibits~~

Statements:

	~~Exhibit No.~~		~~Description~~
~~3.1~~		~~Certificate of Incorporation – (Incorporated by reference from Form 10-KSB for fiscal year ended December 31, 2004, Exhibit 3.1)~~ Page
~~3.2~~ Report of Independent Registered Accounting Firm		~~By-laws (Incorporated by reference from Form 10-KSB for fiscal year ended December 31, 2004, Exhibit 3.2)~~ F-2
~~3.3~~ Balance Sheets as of June 30, 2019 and 2018		~~Amendment to Certificate of Incorporation – Change of Name(Incorporated by reference from Form 8-K, Current Report, Event dated May 21, 2010, Exhibit 3.1)~~ F-3
~~4.1~~ Statements of Operations and Comprehensive Loss for the years ended June 30, 2019 and 2018		Form of Common Stock Purchase Warrant Agreement issued to vFinance Investments, Inc. dated March 7, 2007 (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 4.1) F-4
~~10.1~~ Statement of Changes in Shareholders’ Deficit for the years ended June 30, 2019 and 2018		~~Form of Securities Purchase Agreement with investor in March 2007 private placement. (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.1)~~ F-5
~~10.2~~ Statements of Cash Flows for the years ended June 30, 2019 and 2018		~~Form of Registration Rights Agreement with investors and others dated March 7, 2007 (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.4)~~ F-6
~~10.3~~ Notes to Financial Statements	F-7

(b) Exhibits:

	Joint Venture Agreement dated July 4, 2007 2006 between Xinchai Holding Group Co., Ltd and Usunco Automotive Limited in respect of Zhejiang Zhongchai Machinery Co., Ltd. (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007,
Exhibit ~~10.1)~~
~~10.4~~ Number		Exclusive Distribution Agreement between Xinchai Holding Group C., Ltd and Zhejiang Zhongchai Machinery Co., Ltd., Dated as of January 28, 2007 (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.6) Name
~~10.5~~		~~Share Exchange Agreement dated March 7, 2007, among Usunco Automotive Limited and Equicap, Inc. (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.7)~~
~~10.6~~ 31.1		~~Convertible Note Conversion Agreement dated March 7, 2007 with Fountainhead Capital Partners Limited (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.8)~~ Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
~~10.7~~		~~Consulting Agreement with Fountainhead Capital Partners Limited dated March 7, 2007 (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 10.9)~~
~~10.8~~ 32.1		~~Share Exchange Agreement dated June 15, 2009, among Usunco Automotive Limited~~ Certification of Principal Executive Officer and ~~IBC Automotive Products, Inc. and Equicap, Inc. (Incorporated by reference from Form 8-K, Current Report, Event dated June 15, 2009, Exhibit 10.1)~~
~~10.9~~		~~Form of Acquisition Agreement for 25% Interest in ZhongChai JV.( Incorporated by reference from Form 8-K, Current Report, Event dated June 7, 2010, Exhibit 10.1)~~
~~14.1~~		~~Code of Ethics (Incorporated by reference from Form 8-K, Current Report, Event dated March 9, 2007, Exhibit 14.1)~~
~~21.1~~		Subsidiaries of the Registrant*
~~31.1~~		Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Peter Wang*
~~32.1~~		~~Certificate~~Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Peter Wang*

* Filed herewith

~~ZHONGCHAI MACHINERY, INC.~~

~~Consolidated Financial Statements~~

~~June 30, 2010 and 2009~~

~~Table of Contents~~

	~~Page~~2002.

~~Consolidated Financial Statements~~ 101.INS		XBRL Instance Document

101.SCH		XBRL Schema Document

101.CAL		XBRL Calculation Linkbase Document

101.DEF		XBRL Definition Linkbase Document

101.LAB		XBRL Label Linkbase Document

101.PRE		XBRL Presentation Linkbase Document

ITEM 16. FORM 10-K SUMMARY.

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

Date: September 19, 2019	By:	/s/ Xingtao Zhou
		Xingtao Zhou, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial and accounting officer)

INDEX TO FINANCIAL STATEMENTS


	Page
Report of Independent Registered ~~Public~~ Accounting Firm	~~F-1~~ F-2
Balance Sheets as of June 30, 2019 and 2018	F-3
~~Consolidated Balance Sheets~~	~~F-2~~

~~Consolidated~~ Statements of Operations and Comprehensive ~~Income (Loss)~~Loss for the years ended June 30, 2019 and 2018	~~F-3~~ F-4
Statement of Changes in Shareholders’ Deficit for the years ended June 30, 2019 and 2018	F-5
~~Consolidated Statements of Stockholders’ Equity~~	~~F-4~~

~~Consolidated~~ Statements of Cash Flows for the years ended June 30, 2019 and 2018	~~F-5~~ F-6

Notes to ~~Consolidated~~ Financial Statements	~~F-6~~ F-7

Report of Independent Registered Public Accounting Firm

To the ~~Board~~shareholders and the board of ~~Directors and Stockholders~~

~~Zhongchai Machinery,~~directors of Cang Bao Tian Xia International Art Trade Center, Inc.

Opinion on the Financial Statements

We have audited the accompanying ~~consolidated~~ balance sheets of ~~Zhongchai Machinery,~~Cang Bao Tian Xia International Art Trade Center, Inc. (the ~~“Company”~~"Company") as of June 30, ~~2010~~2019 and ~~2009, and~~2018, the related ~~consolidated~~ statements of operations, ~~and comprehensive income (loss)~~stockholders' equity (deficit), ~~stockholders’ equity~~ and cash flows for the years then ~~ended. These financial statements are~~ended, and the ~~responsibility of~~related notes (collectively referred to as the ~~Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.~~

~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)~~"financial statements"). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements ~~referred to above~~ present fairly, in all material respects, the ~~consolidated~~ financial position of ~~Zhongchai Machinery, Inc.~~the Company as of June 30, ~~2010~~2019 and ~~2009,~~2018, and the ~~consolidated~~ results of ~~their~~its operations and ~~their consolidated~~its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United ~~States~~States.

Basis for Opinion

These financial statements are the responsibility of ~~America.~~

the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s minimal activities raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BF Borgers CPA PC

BF Borgers CPA PC

We have served as the Company's auditor since 2018

Lakewood, CO

September 19, 2019

~~/s/ Patrizio & Zhao, LLC~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

BALANCE SHEETS


	June 30, 2019			June 30, 2018

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	—		$	5,000
Total current assets		—			5,000

TOTAL ASSETS	$	—		$	5,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses	$	10,650		$	—
Related party notes payable		—			5,000
Loan payable – related party		15,856			14,096
Total current liabilities		26,506			19,096

Commitments and Contingencies

STOCKHOLDERS’ DEFICIT
Series A Preferred Stock, 10,000,000 shares authorized at $0.001 per share: 9,992,000 and 10,000,000 shares issued and outstanding as of June 30, 2019 and 2018, respectively		9,992			10,000
Common stock, par value $0.001 per share; 500,000,000 shares authorized; 35,319,245 and 3,319,245 shares issued and outstanding as of June 30, 2019 and 2018, respectively		35,319			3,319
Additional paid in capital		20,509,768			20,505,314
Accumulated deficit		(20,581,585	)		(20,532,729	)
Total stockholders' deficit		(26,506	)		(14,096	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	—		$	5,000

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

~~Parsippany, New Jersey~~

~~September 07, 2010~~

~~F-1~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

STATEMENTS OF OPERATIONS


	For the years ended
	June 30,
	2019			2018

OPERATING EXPENSES:
Related party professional fees – preferred stock	$	—		$	4,000,000
Related party professional fees – common stock		—			3,096
Legal expense		25,750			5,300
Audit and accounting expense		16,550			—
License and registration fees		5,256			8,796
Transfer agent		1,300			—
TOTAL OPERATING EXPENSE		48,856			4,017,192

NET LOSS	$	(48,856	)	$	(4,017,192	)
Net loss per common share – basic and diluted	$	(0.00	)	$	(12.37	)
Weighted average common shares outstanding – basic and diluted		15,154,861			324,838

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

~~ZHONGCHAI MACHINERY,~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

~~Consolidated Balance Sheets~~

STATEMENT OF STOCKHOLDERS’ DEFICIT


																	Total
	Series A Preferred Stock						Common Stock				Capital			Accumulated			Stockholders'
	Number of Shares			Par Value			Number of Shares		Par Value		Deficiency			Deficit			Deficit

Balance – June 30, 2017		—		$	—			223,045	$	223	$	16,515,314		$	(16,515,537	)	$	—
																		—
Shares issued for services -Preferred		10,000,000			10,000							3,990,000						4,000,000
Shares issued for services - Common								3,096,200		3,096								3,096
Net loss		—			—			—		—		—			(4,017,192	)		(4,017,192	)
Balance – June 30, 2018		10,000,000		$	10,000			3,319,245	$	3,319	$	20,505,314		$	(20,532,729	)	$	(14,096	)

Forgiveness of related party loan										—		36,446			—			36,446
Conversion of Preferred stock into common stock		(8,000	)		(8	)		32,000,000		32,000		(31,992	)					—
Net loss		—			—			—		—		—			(48,856	)		(48,856	)
Balance – June 30, 2019		9,992,000		$	9,992			35,319,245	$	35,319	$	20,509,768		$	(20,581,585	)	$	(26,506	)

June 30, 2010 June 30, 2009
Assets
Current assets:
Cash and cash equivalents $ 1,495,597 $ 3,990,767
Restricted cash 90,810 315,151
Accounts receivable, net of allowance for doubtful accounts of $37,670 and $7,732 at June 30, 2010 and 2009, respectively 3,618,030 1,540,402
Inventory 2,680,666 1,568,445
Notes receivable 463,465 448,655
Advance payments 4,993,607 2,988,235
Other current assets 110,131 115,266

Total current assets 13,452,306 10,966,921

Property and equipment, net 3,017,569 2,662,924

Goodwill 3,425,868 3,407,262

Other noncurrent assets: 451 65,575

Total assets $ 19,896,194 $ 17,102,682

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses $ 3,504,923 $ 1,562,217
Trade notes payable 142,365 315,151
Short-term bank loans 1,428,810 2,197,500
Taxes payable 224,108 54,292
Dividend payable 381,201 -
Other current liabilities 3,322,277 635,408
Total current liabilities 9,003,684 4,764,568

Total liabilities 9,003,684 4,764,568

Stockholders’ equity:
Common stock, $.001 par value, 500,000,000 shares authorized, 27,613,019 and 27,613,019 shares issued and outstanding at June 30, 2010 and 2009, respectively 27,613 27,613
Stock subscription receivable (33,120 ) (33,120 )
Additional paid-in capital 16,484,097 16,484,097
Statutory reserves 315,152 124,460
Retained earnings (Accumulated deficit) (7,558,542 ) (8,440,255 )
Accumulated other comprehensive income 1,361,646 1,415,474
Total stockholders’ equity 10,596,846 9,578,269

Noncontrolling interest 295,664 2,759,845

Total equity 10,892,510 12,338,114

Total liabilities and equity $ 19,896,194 $ 17,102,682

~~F-2~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

STATEMENTS OF CASH FLOWS


	For the years ended June 30,
	2019			2018
OPERATING ACTIVITIES:
Net Income	$	(48,856	)	$	(4,017,192	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Shares issued for services		—			4,003,096
Forgiveness of related party loan		31,446			—
Forgiveness of related party notes payable		5,000			—
Changes in net assets and liabilities:
Accounts payable and accrued expenses		10,650
NET CASH USED IN OPERATING ACTIVITIES		(1,760	)		(14,096	)

FINANCING ACTIVITIES:
Payments on related party notes payable		(5,000	)		—
Payment on related party loan		(31,446	)		—
Proceeds from related party notes payable		—			5,000
Proceeds from related party		33,206			14,096
NET CASH PROVIDED BY FINANCING ACTIVITIES		(3,240	)		19,096

NET (DECREASE) INCREASE IN CASH		(5,000	)		5,000

CASH – BEGINNING OF PERIOD		5,000			—
CASH – END OF PERIOD	$	—		$	5,000

NON CASH INVESTING AND FINANCING ACTIVITIES
Debt forgiveness recorded in additional paid in capital	$	36,446		$	—

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

~~ZHONGCHAI MACHINERY,~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

~~Consolidated Statements of Operations~~

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and ~~Comprehensive Income (Loss)~~

2018

For the Years Ended June 30,
2010 2009

Sales $ 10,983,800 $ 4,923,918

Cost of sales 8,359,486 3,839,489

Gross profit 2,624,314 1,084,429

Operating expenses
Selling, general and administrative 1,287,359 2,048,155

Income (loss) from operations 1,336,955 (963,726 )

Other income (expenses):
Interest income (expense), net (82,096 ) 16,145
Other income, net 345,867 138,697
Loss on disposal of a subsidiary-IBC - (220,782 )
Total other income (expenses) 263,771 (65,940 )

Income (loss) before provision for income taxes 1,600,726 (1,029,666 )

Provision for income taxes 264,418 57,246

Net income (loss) 1,336,308 (1,086,912 )

Less: Net income attributable to noncontrolling interest 263,903 45,278

Net income (loss) attributable to Zhongchai Machinery, Inc. 1,072,405 (1,132,190 )

Other comprehensive income (loss)
Foreign currency translation adjustment (53,828 ) 42,646

Comprehensive income (loss) $ 1,018,577 $ (1,089,544 )

Earnings (loss) per common share:
Basic $ 0.04 $ (0.04 )
Diluted $ 0.04 $ (0.04 )

Weighted average number of common shares outstanding:
Basic 27,613,019 28,146,164
Diluted 27,613,019 28,146,164

~~F-3~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Consolidated Statements of Stockholders’ Equity~~

Accumulated
Stock Additional Retained Other Total
Common Stock Subscriptions Paid-in Statutory Earnings Comprehensive Stockholders’

Shares

Amount

Receivable

Capital

Reserves

(Deficit)

Income

Equity

Balance June 1, 2008 28,169,013 $ 28,169 $ (32,400 ) $ 16,516,901 $ 62,253 $ (7,245,858 ) $ 1,372,828 $ 10,701,893

Cancellation of common stock (555,994 ) (556 ) - (32,804 ) - - - (33,360 )

Shareholder Contribution - - (720 ) - - - - (720 )

Net Loss - - - - - (1,132,190 ) - (1,132,190 )

Statutory reserves - - - - 62,207 (62,207 ) - -

Foreign Currency Translation - - - - - - 42,646 42,646

Balance June 30, 2009 27,613,019 $ 27,613 $ (33,120 ) $ 16,484,097 $ 124,460 $ (8,440,255 ) $ 1,415,474 $ 9,578,269

Net Income - - - - - 1,072,405 - 1,072,405

Statutory reserves - - - - 190,692 (190,692 ) - -

Foreign Currency Translation - - - - - - (53,828 ) (53,828 )

Balance June 30, 2010 27,613,019 $ 27,613 $ (33,120 ) $ 16,484,097 $ 315,152 $ (7,558,542 ) $ 1,361,646 $ 10,596,846

~~F-4~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Consolidated Statements of Cash Flows~~

For the Years Ended June 30,
2010 2009
Cash flows from operating activities:
Net income (loss) $ 1,072,405 $ (1,132,190 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncontrolling interest 263,903 45,278
Depreciation and amortization 323,734 215,844
Loss on disposal of assets 4,847 -
Provision for bad debts 29,768 92,017
Stock based compensation 63,606 108,789
Non-cash payments of rent - 3,750
Loss on disposal of a subsidiary-IBC - 390,431
Changes in assets and liabilities:
Accounts receivable (2,090,134 ) (1,154,135 )
Inventory (1,098,936 ) (322,261 )
Notes receivable - trade (47,470 ) (95,257 )
Advance payments 219,504 2,091,724
Other current assets 3,902 184,912
Accounts payable and accrued expenses 1,926,414 838,019
Trade notes payable (173,760 ) 315,151
Taxes payable 168,795 54,145
Other current liabilities 2,684,033 118,561
Total adjustments 2,278,206 2,886,968

Net cash provided by operating activities 3,350,611 1,754,778

Cash flows from investing activities:
Notes receivable - other 35,000 (57,500 )
Advance payments for purchase of land use rights and building (2,200,050 ) -
Additions to property and equipment (393,720 ) (368,312 )
Additions to construction in progress (272,436 ) -
Payments to noncontrolling interest for ownership buyback (2,473,274 ) -
Loss on disposal of a subsidiary –IBC, net of cash - (178,965 )

Net cash used in investing activities (5,304,480 ) (604,777 )

Cash flows from financing activities:
Proceeds from (repayments of) short-term bank loans (777,351 ) 2,197,500

Net cash provided by (used in) financing activities (777,351 ) 2,197,500

Effect of foreign currency translation on cash 11,709 1,444

Net increase (decrease) in cash and cash equivalents (2,719,511 ) 3,348,945

Cash and cash equivalents and restricted cash at beginning of year 4,305,918 956,973

Cash and cash equivalents and restricted cash at end of year $ 1,586,407 $ 4,305,918

~~F-5~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

Note 1 – Organization and ~~Nature~~basis of ~~Business~~

accounting

Basis of Presentation and Organization

Cang Bao Tian Xia International Art Trade Center, Inc., formerly Zhongchai Machinery, Inc. ~~(“Zhongchai Machinery” or “the Company”) (Formerly “Equicap,~~, and before that Equicap, Inc.”), a Nevada corporation is(the “Company”, was a manufacturer and distributor of gears and gearboxes and drive axles ~~which are~~that were marketed and sold to equipment manufacturers in China.

On July 6, 2007, the Board of Directors of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), the China based and 75% owned subsidiary of the Company, approved and finalized a Share Purchase Agreement (“Share Purchase Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the People’s Republic of China. Pursuant to the Share Purchase Agreement, Zhejiang Zhongchai purchased all the outstanding equity of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”) from Keyi, the sole owner of Shengte for approximately $3.7 ~~million.~~

million

On March 7, 2007, the Company and Usunco Automotive, Ltd. (“Usunco”), a British Virgin Islands company, entered into a Share Exchange Agreement (“Exchange Agreement”) which was consummated on March 9, 2007. Under the terms of the Exchange Agreement, the Company acquired all of the outstanding equity securities of Usunco in exchange for 18,323,944 shares of the Company’s common stock.

~~For accounting purposes, because~~

Since the Company had been a public shell company prior to the share exchange, the share exchange was treated as a recapitalization of the Company. As such, the historical financial information prior to the share exchange iswas that of Usunco and its subsidiaries. Historical share amounts ~~have been~~were restated to reflect the effect of the share exchange.

On June 18, 2006, Usunco acquired 100% of IBC Automotive Products Inc (“IBC”), a California Corporation as of May 14, 2004 (date of inception), through a Share Exchange Agreement of 28% of Usunco’s shares. IBC was considered a “predecessor” business to Usunco as its operations constituted the business activities of Usunco formed to consummate the acquisition of IBC. The consolidated financial statements ~~reflect~~at that time reflected all predecessor statements of income and cash flow activities from the inception of IBC in May 2004.

On June 15, 2009, IBC was sold to certain ~~of the~~ management persons of IBC in exchange for the following: (i) the cancellation of an aggregate of 555,994 shares of common stock of the Company which those individuals owned, and (ii) the payment of $60,000 in installments pursuant to the terms of an unsecured promissory note, the final payment of which ~~will be~~was made on November 15, 2010. As part of the transaction, the Company cancelled $428,261 through the closing date,, of inter-company debt which funds had been used in the business of IBC prior to the transaction.

On September 22, 2009, Xinchang Xian Lisheng Machinery Co., Ltd. (“Lisheng”) was incorporated by Zhejiang Zhongchai and two individual investors. Total registered capital of Lisheng iswas RMB 5 million, of which Zhejiang Zhongchai ~~accounts~~accounted for 60%. The Company ~~plans to start~~started production of die casting products in 2010 for use in gearboxes, diesel engines and other machinery products.

On December 16, 2009, Zhongchai Machinery and its wholly owned subsidiaries, Usunco and Zhongchai Holding (Hong Kong) Limited, a Hong Kong company (“Zhongchai Holding”), took action to approve transfer of the shares of Zhejiang Zhongchai Machinery Co., from Usunco to Zhongchai Holding. The transfer was completed on December 23, 2009. The purpose of the transfer was to take advantage of the tax treaty between the ~~People’s~~Peoples Republic of China and the Special Administrative Region of Hong Kong which reduces the withholding tax rate of the PRC on payments to entities outside of China. Usunco, which no longer had any assets after transferring all of them to Zhongchai Holding was subsequently dissolved. The consolidated financial statements ~~will continue~~continued to account for Zhejiang Zhongchai Machinery Co., in the same manner as before the transfer of the ownership. Shareholder approval by the shareholders of Zhongchai Machinery was not required under Nevada law, as there was no sale of all or substantially all the assets of the Company. The shareholder ownership and shareholder rights of Zhongchai Machinery ~~remain~~remained the same as before the transaction.

~~F-6~~

F-7

~~ZHONGCHAI MACHINERY,~~

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

~~Notes to Consolidated Financial Statements~~

~~Note 1 – Organization~~

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and ~~Nature of Business (continued)~~

2018

On April 26, 2010, Zhongchai Holding (Hong Kong) ~~Limited.~~Limited (“Zhongchai Holding”), which owned 75% of the equity in Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), executed a Share Purchase Agreement (“Share Purchase Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the People’s Republic of China. Pursuant to the Share Purchase Agreement, Zhongchai Holding purchased the residual 25% equity of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”) from Keyi at $2.6 million. The ~~agreement has been~~Share Purchase Agreement was approved by the local government agency and a new business license ~~has been~~was issued as Wholly Foreign Owned Enterprise.

On July 26, 2011, the Company held a Special Meeting of Shareholders. At the special meeting the Company’s shareholders approved an amendment to cease its periodic reporting obligation under the Securities Exchange Act of 1934 and thereby forego many of the expenses associates with operating as a public company subject to SEC reporting obligations.

On July 27, 2011, the Company, the Company approved a 1 for 120 reverse stock split of its then outstanding shares of the Company’s Common Stock.

On July 29, 2011, the Company terminated its registration with the Securities and Exchange Commission.Following such termination, the Company went private. Therefore, it became unclear when and if the Company ceased conducting business operations, as no further information became publicly available.

On May 11, 2018, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for the Company, then known as Zhongchai Machinery, Inc., proper notice having been given to the officers and directors of Zhongchai Machinery, Inc. There was no opposition. On May 16, 2018, the Company filed a certificate of revival with the State of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director. On June 19, 2018, the Company issued 3,096,200 shares of common stock issued at par value of $0.001, to Custodian Ventures, LLC, for services valued at $3,096.20. On June 19, 2018, the Company issued 10,000,000 shares of Series A Preferred Stock issued at par value of $0.001, to Custodian Ventures, LLC, for services valued at $4,000,000.

On July 24, 2018, the Company filed a Form 10 with the Securities and Exchange Commission, to again become a reporting issuer.

On December 16, 2018, Custodian Ventures LLC (the “Seller”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Seller agreed to sell to Xingtao Zhou and Yaqin Fu (together, the “Purchaser”), the 3,096,200 common shares and the 10,000,000 preferred shares of the Company (together, the “Shares”) owned by the Seller, for a total purchase price of $375,000. As a result of the sale, and David Lazar’s resignation as sole officer and director of the Company, there was a change of control of the Company. There is no family relationship or other relationship between the Seller and the Purchaser.

On January 08, 2019, the corporate name of the Company was changed to Cang Bao Tian Xia International Art Trade Center, Inc.

The accompanying condensed financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products which may become part of the Company’s product portfolio. The Company has not realized significant sales through since inception. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.

F-8

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and 2018

Note 2- Going Concern

The accompanying condensed financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Note 23 – Summary of ~~Significant Accounting Policies~~

significant accounting policies

~~Basis Of Presentation~~

Cash and Cash Equivalents

~~The accompanying consolidated financial~~

For purposes of reporting within the statements ~~have been prepared in accordance with accounting principles generally accepted in the United Stated~~ of America. The consolidated financial statements include the accounts of Zhongchai Machinery, Inc. and its controlling subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

~~Use of Estimates~~

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management 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. Significant estimates include valuation reserves for accounts receivable, inventory and income taxes and valuation of goodwill. Actual results could differ from those estimates

~~Cash And Cash Equivalents~~

~~In accordance with ASC Topic 230, “Statement of Cash Flows,”~~cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with ~~original maturities~~a maturity of three months or less to be ~~“cash equivalents”.~~

~~Accounts Receivable~~cash and ~~Allowance~~cash equivalents.

Employee Stock-Based Compensation

The Company accounts for ~~Doubtful Accounts~~

stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

~~Trade~~

Income Taxes

The Company accounts ~~receivable~~for income taxes pursuant to FASB ASC Topic 740,Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are ~~stated~~determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value Measurement

The Company values its amounts due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

F-9

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and 2018

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the ~~amount management expects~~measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to ~~collect from~~the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances ~~outstanding at~~based on the ~~end~~observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the ~~period. Based~~fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Valuations for assets and liabilities that can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations are based on observable market data in those markets.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its ~~assessment~~derivative instruments.

Subsequent Event

The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.

Recent Accounting Pronouncements

On May 15, 2019, the FASB issued ASU 2019-05, 9 which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit ~~history with customers having outstanding balances~~losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and ~~current relationships with them, management makes conclusions whether~~(4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any ~~realization~~interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ~~losses~~ASU 2016-13. The Company does not believe that this will have an impact on ~~balances outstanding at~~its financial statements.

On March 21, 2019, the ~~end~~FASB issued ASU 2019-03, 2 which amends the definition of the ~~period will be deemed uncollectible based on~~term “collections” in U.S. GAAP by aligning it with the ~~age~~definition used in the Code of Ethics for Museums of the ~~receivables.~~American Alliance of Museums. The amendments in the ASU “require that a collection-holding entity disclose its policy for the use of proceeds from when collection items are deaccessioned (that is, removed from a collection).” Next Steps: The ASU’s amendments are effective prospectively for annual financial statements issued for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company ~~reserves 0.5%~~does not believe that this will have an impact on its financial statements.

F-10

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and 2018

On June 20, 2018, the FASB issued ASU 2018-07,1 which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of ~~accounts receivable balances~~the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. For public business entities (PBEs), the amendments in ASU 2018-07 are effective for fiscal years beginning after December 15, 2018, including interim periods therein. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued (for PBEs) or have not yet been made available for issuance (for all other entities), but no earlier than an entity’s adoption date of ASC 606.2. If early adoption is elected, all amendments in the ASU that apply must be adopted in the same period. In addition, if early adoption is elected in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is still evaluating the impact that the new accounting guidance will have ~~been outstanding~~ ~~less than three~~on its financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.

Note 4 – Related Party Transactions

On June 15, 2018, the company entered into a promissory notes payable with David Lazar, Chief Executive Officer. The note is unsecured, noninterest bearing and due in 12 months~~, 5%~~ from the date of ~~accounts receivable balances that have been outstanding~~ ~~between three months and six months, 20%~~issuance. On December 13, 2018, the Company forgave $5,000 of ~~accounts~~ ~~receivable balances that have been outstanding~~ ~~within~~ ~~one year, 50% of~~ ~~accounts~~ ~~receivable balances that have been outstanding for between~~ ~~one~~ ~~year and~~ ~~two~~ ~~years, and 100% of~~ ~~accounts~~ ~~receivable balances that have been outstanding~~ ~~more than two~~ ~~years.~~the entire amount owed on this promissory note to David Lazar. The ~~balance of allowance for doubtful accounts amounted~~gain was recorded in additional paid in capital due to ~~$37,670 and $7,732 as~~its related party nature. As of June 30, ~~2010 and 2009, respectively.~~

2019, $0 remains outstanding.

~~Inventory~~

~~Inventory is stated~~

On June 19, 2018, the Company issued 3,096,200 shares of common stock issued at the lower of cost or net realizable value. Cost is calculated on the weighted-average basis and includes all costs to acquire and other costs incurred in bringing the inventory to their present location and condition. ~~The Company~~ ~~evaluate~~s ~~the net realizable~~par value of ~~its~~ ~~inventory~~$0.001, for services valued at $3,096 to Custodian Ventures, LLC, the company controlled by David Lazar.

During the period July 01, 2018 thru December 13, 2018, David Lazar, paid $17,350 of expenses related to accounting, transfer agent, audit and legal fees on ~~a regular basis and record~~s ~~a provision for loss~~behalf of the company. On December 13, 2018, the Company forgave $31,446 of the loan payable to ~~reduce the computed weighted-average cost if it exceeds the net realizable value.~~David Lazar. The ~~Company did not record any provision for slow-moving and obsolete inventory as~~gain was recorded in additional paid in capital due to its related party nature. As of June 30, ~~2010~~2019, $0 remains outstanding.

During the period December 14, 2018 thru June 30, 2019, Mr. Xingtao Zhou, paid a total of $15,856 in expenses on behalf of the company, for legal, transfer agent, audit and ~~2009.~~

~~F-7~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes~~accounting fees. As of June 30, 2019, $15,856, is outstanding and is owed to ~~Consolidated Financial Statements~~

Mr. Zhou. This loan is non-interest bearing and has no specific terms for repayment.

Note 25 – ~~Summary~~Stockholders Equity

Common Stock

On June 19, 2018, the Company issued 3,096,200 shares of ~~Significant Accounting Policies~~ ~~(continued)~~

common stock issued at par value of $0.001, for services valued at $3,096 to Custodian Ventures, LLC, the company controlled by David Lazar.

~~Property~~

On February 14, 2019, the Company issued 32,000,000 common shares to shareholders pursuant to the conversion of 8,000 shares of Series A Preferred Stock at a conversion price of $0.0000025 per common share. As of June 30, 2019, 35,319,245 shares remain outstanding.

F-11

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and ~~Equipment~~

2018

~~Property~~

Preferred Stock

The Company is authorized to issue 10,000,000 shares of $.001 par value preferred shares. On June 19, 2018 the Company created 10,000,000 shares of Series A Preferred Stock, out of the 10,000,000 shares that were already authorized. On that same date, the Company issued 10,000,000 shares of the Series A preferred stock to Custodian Ventures LLC, the company controlled by David Lazar, Chief Executive Officer for services valued at $4,000,000.

The following is a description of the material rights of our Series A Preferred Stock:

Each share of Series A Preferred Stock shall have a par value of $0.001 per share. The Series A Preferred Stock shall vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on a 1 for one basis. If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and ~~equipment are stated~~entitled to vote, the voting rights of the Series A shall not be subject to adjustment unless specifically authorized.

Each share of Series A Preferred Stock shall be convertible at ~~cost. Depreciation is calculated based~~a rate of $0.0000025 per share of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series A Preferred Stock.

Subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of shares of Series A Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, upon any payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the ~~straight-line method over~~Common Stock of the ~~estimated useful lives~~Corporation, as and if declared by the Board of Directors, as if the Series A Preferred Stock had been converted into Common Stock. Subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the payment of any dividends on the any series or classes of stock of the Corporation shall be subject to any priority set forth in Paragraph (I)(c)(3) of Article FIFTH of the Articles of Incorporation, as such may from time to time be amended.

In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets ~~as follows:~~

~~Vehicles~~		~~5 years~~
~~Furniture, machinery and equipment~~		~~3 to 10 years~~
~~Buildings and improvements~~		~~20 to 40 years~~

~~Construction~~of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Corporation upon the initial issuance of the Series A Preferred Stock (each, the “the Original Issue Price”) for each share of Series A Preferred Stock then held by them, plus declared but unpaid dividends. Unless the Corporation can establish a different Original Issue Price in ~~progress primarily represents~~connection with a particular sale of Series A Preferred Stock, the ~~renovation costs of plant, machinery and equipment. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences.~~

~~Cost of repairs and maintenance is expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of operations.~~

~~Long-Lived Assets~~

~~In accordance with ASC Topic 360-10-35, “Accounting~~Original issue price shall be $0.001 per share for the ~~Impairment~~Series A Preferred Stock. If, upon the occurrence of any liquidation, dissolution or ~~Disposal~~winding up of ~~Long-Lived Assets,”~~the Corporation, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the entire assets and funds of the corporation legally available for distribution shall be distributed ratably among the holders of the each series of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.

The Series A Preferred Stock shares are nonredeemable other than upon the mutual agreement of the Company ~~reviews~~and the ~~recoverability~~holder of shares to be redeemed, and even in such case only to the extent permitted by this Certificate of Designation, the Corporation’s Articles of Incorporation and applicable law.

F-12

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and 2018

Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Issue Price of the Series A Preferred Stock by the Series A Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series A Conversion Price per share shall be $0.0000025 for shares of Series A Preferred Stock.

Each share of Series A Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Series A Conversion Price in effect for such share immediately upon the earlier of (i) except as provided below in Section 4(c), the Corporation’s sale of its ~~long-lived assets on~~Common Stock in a ~~periodic basis in order~~public offering pursuant to ~~identify business conditions, which may indicate~~ a ~~possible impairment. The assessment for potential impairment is based primarily on~~registration statement under the ~~Company’s ability to recover the carrying value~~Securities Act of ~~its long-lived assets from expected future discounted cash flows. If the total~~1933, as amended; (ii) a liquidation, dissolution or winding up of the ~~expected future discounted cash flows is less than~~Corporation as defined in section 2(c) above but subject to any liquidation preference required by section 2(a) above; or (iii) the ~~total carrying value~~date specified by written consent or agreement of the ~~assets,~~holders of a ~~loss is recognized for the difference between the fair value (computed based upon the expected future discounted cash flows) and the carrying value~~majority of the ~~assets.~~

then outstanding shares of Series A Preferred Stock.

~~Goodwill~~

The holder of each share of Series A Preferred Stock shall have the right to one vote for each share of Series A Preferred Stock, and ~~Other Intangible Assets~~

~~Goodwill represents costs in excess of fair values assigned~~with respect to such vote, such holder shall have full voting rights and powers equal to the ~~underlying net assets~~voting rights and powers of ~~acquired businesses. Goodwill~~the holders of Common Stock, and ~~intangible assets deemed~~shall be entitled to have indefinite lives are not amortized. All other intangible assets are amortized over their estimated useful lives. Goodwill and intangible assets with indefinite lives are subject to annual impairment test using the guidance and criteria describednotice of any stockholders’ meeting in ~~ASC Topic 350, “Goodwill and Other Intangible Assets”. This test compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value.~~ ~~As of~~ ~~June 30, 2010, the Company~~ ~~concluded that there were no~~ ~~impairment~~s ~~of goodwill or intangible assets with indefinite lives.~~

~~Revenue Recognition~~

~~Revenue consists of sales of automotive parts, gears and gearboxes. In~~ accordance with the ~~provisions~~bylaws of ~~ASC Topic 605-10, revenue is recognized when merchandise is shipped, title~~the Corporation, and ~~risk~~shall be entitled to vote, together with holders of ~~loss~~ ~~are~~ ~~pass~~edCommon Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights shall be rounded to the ~~customer~~s ~~and~~ nearest whole number (with one-half being rounded upward).

On February 14, 2019, the ~~collectability is reasonably assured. Revenue is recorded as~~Company issued 32,000,000 common shares to shareholders pursuant to the ~~sales~~conversion of 8,000 shares of Series A Preferred Stock at a conversion price of ~~goods and services, net~~$0.0000025 per common share.

As of ~~rebates and discounts and is reported on~~June 30, 2019, 9,992,000 preferred shares remain outstanding, which are owned by Xingtao Zhou, CEO.

Additional paid in capital

Related party debt forgiveness resulted in an increase in additional paid in capital of $36,446. Preferred stock conversion resulted in a ~~gross basis. The gross basis is used mainly due to the fact that the Company acts as principal~~$31,992 decrease in each transaction and is responsible for fulfillment and acceptability of the products purchased, the Company takes title to its products before the products are ordered by its customers, the Company has risk of inventory loss as title of the products is transferred to the Company, the Company is responsible for collection of sales and delivery of products, and the Company does not act as an agent or broker and is not compensated on a commission or fee basis.

additional paid in capital.

~~Sales Returns and Warranties~~

~~Generally the~~ C~~ompany does not accept the return of products once sold to customers. The~~ C~~ompany generally provides a one-year limited warranty covering manufacturing defects and/or product functional failures. After evaluation and confirmation of customer complaints, the~~ Company either replaces the defective products or accepts returns by crediting the customer's account, and is responsible for the costs and expenses thus incurred. For auto parts distribution business, replacements and returns, and handling costs are passed through to supplying manufacturers.

~~F-8~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

Note 26 – ~~Summary of Significant Accounting Policies~~ ~~(continued)~~

Operating expenses

~~Advertising Costs~~

The Company incurred $25,750 in legal expenses, ~~the cost of advertising as incurred. Advertising costs for~~$16,550 in audit and accounting fees, $5,181 in OTC Market registration and Nevada state license fees and $1,300 transfer agent fees during the years ended June 30, ~~2009 and 2008 were insignificant.~~

2019.

~~Research and Development Costs~~

Note 7 – Income Taxes

~~Research and development ("R&D~~”~~) costs are classified as general and administrative expenses and are expensed as incurred. R&D costs amounted to $163,504 and $207,881, respectively,~~

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the ~~years ended June 30, 2010 and 2009.~~

~~Income Taxes~~

~~Income taxes are accounted for under the~~use of an asset and liability ~~method.~~approach in accounting for income taxes. Deferred tax assets and liabilities are ~~recognized for~~recorded based on the ~~future tax consequences attributable to~~ differences between the financial ~~statements carrying amounts~~statement and tax bases of ~~existing~~ assets and liabilities and ~~their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted~~the tax rates ~~expected to apply to taxable income~~ in effect currently.

F-13

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD JUNE 30, 2019 and 2018

FASB ASC 740 requires the ~~years in which those temporary differences are expected to be recovered or settled. The effect on~~reduction of deferred tax assets ~~and liabilities of~~by a ~~change in tax rates is recognized in income in the period that includes the enactment date.~~

A valuation allowance, ~~is provided when~~if, based on the weight of available evidence, it is more likely than not that some ~~portion~~ or all of the deferred tax assets will not be realized. ~~No differences were noted between the book and tax bases of~~In the Company’s ~~assets and liabilities, respectively. Therefore, there are no~~opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax ~~assets or liabilities~~asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The cumulative deferred tax asset for the ~~year ended~~years June 30, ~~2010. For the China/Gear segment, the Zhongchai JV~~2019 and 2018 is ~~located~~ ~~in the PRC,~~$851,633 and ~~is therefore subject to~~ ~~central government and~~ ~~provincial~~ ~~and local~~ ~~income taxes within the PRC at the applicable tax rate on the taxable income as reported in the PRC statutory financial statements in accordance with relevant income tax laws.~~ ~~The~~ ~~standard corporate income~~ ~~tax rate is~~ ~~25%~~.

~~Fair Value of Financial Instruments~~

~~The carrying amounts of the Company’s financial instruments,~~$843,610, respectively, which include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other obligations, approximate their fair value due to the short-term maturities of the related instruments.

~~Foreign Currency Translation and Transactions~~

The financial position and results of operations of the Company is determined using local currency (Chinese Yuan) as the functional currency. In accordance with ASC Topic 830-10, Foreign Currency Translation, assets and liabilities are translated at the prevailing exchange rate in effect at each year end. Contributed capital accounts are translated using the historical rate of exchange when capital is contributed. Income statement accounts are translated at the average rate of exchange during the year. Currency translation adjustments arising from the use of different exchange rates are included in accumulated other comprehensive income (loss) in shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations.

~~Comprehensive Income~~ ~~(Loss)~~

The Company has adopted ASC Topic 220-10, Reporting Comprehensive Income, which establishes rules for the reporting and display of comprehensive income, its components and accumulated balances. ASC 220-10 defines comprehensive income (loss) to include all changes in equity, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on available-for-sale marketable securities, except those resulting from investments by owners and distributions to owners.

~~F-9~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 2 – Summary of Significant Accounting Policies~~ ~~(continued)~~

~~Earnings Per Share~~

In accordance with ASC Topic 260-10, “Computation of Earnings Per Share” and EITF No. 03-6, “Participating Securities and the Two-Class Method”, basic earnings per share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two class method, net income is allocated between ordinary shares and other participating securities based on their respective participating rights. Diluted earnings per share is calculated by ~~dividing~~multiplying the estimated tax rate by the cumulative net ~~income attributable to ordinary shareholders as~~operating loss (NOL) adjusted for the ~~effect~~following items:


For the period ended June 30,	2019			2018
Book loss for the year	$	(48,856	)	$	(4,017,192	)

Temporary difference:
Accrued expenses		10,650			—

Tax loss for the year		(38,206	)		(4,017,192	)

Estimated effective tax rate		21	%		21	%
Deferred tax asset	$	(8,023	)	$	(843,610	)

Details of ~~dilutive ordinary equivalent shares, if any, by~~valuation allowance for the ~~weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during~~last two years are as follows:


For the period ended June 30,	2019		2018
Balances at the beginning of the year	$	843,610	$	—
Additions		8,023		843,610
Deductions				—
Balance at the end of the Year	$	851,633	$	843,610

Rate Reconciliation:


For the period ended June 30,	2019			2018
Federal Income Tax Rate	$	(10,260	)	$	(843,610	)
Permanent Difference		2,237			—
Change in Valuation Allowance		8,023			843,610
Balance at the end of the Year	$	—		$	—

Uncertain Tax Positions

Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the ~~year. Ordinary equivalent shares consist~~financial statements. If recognized, substantially all of the ordinary shares issuable upon the conversion of the convertible preferred shares (using the if-converted method) and ordinary shares issuable upon the exercise of outstanding share options (using the treasury stock method).

~~Recent Accounting Pronouncements~~

~~In April 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update~~ ~~(“ASU”)~~ No. 2010-17, Revenue Recognition—Milestone Method (Topic 605) – Revenue Recognition (ASU 2010-17). ASU 2010-17 provides guidance on defining the milestone and determining when the use of the milestone method of revenue recognitionunrecognized tax benefits for research or development transactions is appropriate. It provides criteria for evaluating if the milestone is substantive and clarifies that a vendor can recognize consideration that is contingent upon achievement of a milestone as revenue in the period in which the milestone is achieved, if the milestone meets all the criteria to be considered substantive. ASU 2010-17 is effective for us in fiscal 2012 and should be applied prospectively. The adoption of this ASU ~~will~~ ~~not have a material impact on~~ the Company’s ~~consolidated financial statements.~~

~~In January 2010, the FASB issued the following ASC Updates:~~

●

ASU No. 2010-01— Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash. This Update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009 with retrospective application.

●

~~ASU No. 2010-0~~2— ~~Consolidation~~ ~~(Topic 505): Accounting~~ ~~and~~ Reporting for Decreases in Ownership of a Subsidiary. This Update amends Subtopic 810-10 and related guidance to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to (i) a subsidiary or group of assets that is a business or nonprofit activity; (ii) a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity, but does not apply to: (i~~) sales of in substance real estate; and (ii) conveyances of oil and gas mineral rights. The amendments in this Update are effective beginning in the period that an entity adopts FAS 160~~ ~~(now included in Subtopic 810-10)~~.

●

ASU No. 2010-06— Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This Update amends Subtopic 820-10 that require new disclosures about transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This Update also amends Subtopic 820-10 to clarify certain existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal ~~years beginning after December 15, 2010.~~

~~The Company expects that the adoption of the above Updates issued in January 2010~~ ~~did not and~~ ~~will not have any significant impact on its financial position and results of operations.~~

~~F-10~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 2 – Summary of Significant Accounting Policies~~ ~~(continued)~~

In October 2009, the FASB issued an ASU regarding accounting for own-share lending arrangements in contemplation of convertible debt issuance or other financing. This ASU requires that at the date of issuance of the shares in a share-lending arrangement entered into in contemplation of a convertible debt offering or other financing, the shares issued shall be measured at fair value and be recognized as an issuance cost, with an offset to additional paid-in capital. Further, loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. It is expected the adoption of this ASC Update will have no material impact on the Company’s consolidated financial statements.

~~In October 2009, the FASB concurrently issued the following ASC Updates:~~

●

ASU No. 2009-14 - Software (Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3). This standard removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product, such as embedded software, are within the scope of the software revenue guidance.

●

ASU No. 2009-13 - Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1). This standard modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements.

ASU No. 2009-13 and 2009-14 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. Alternatively, an entity can elect to adopt these standards on a retrospective basis, but both these standards must be adopted in the same period using the same transition method. The Company expects to apply this standard on a prospective basis for revenue arrangements entered into or materially modified beginning J~~uly~~ ~~1, 201~~0~~. It is expected the adoption of these ASC Updates will not have a material impact on the Company’s Consolidated Financial Statements.~~

In August 2009, the FASB issued an ASU regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

~~On July 1, 2009, the FASB officially launched the FASB Accounting Standards Codification (“ASC”), which has become the single official source of authoritative nongovernmental U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The~~ ~~ASC~~ ~~is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the~~ ~~ASC~~ ~~carries an equal level of authority. The~~ ~~ASC~~ ~~is effective for all interim and annual periods ending after September 15, 2009.~~ ~~The Company’s implementation of this guidance effective July 1, 2009 did not have a material effect on the Company’s condensed consolidated financial statements.~~

~~F-11~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 2 – Summary of Significant Accounting Policies~~ ~~(continued)~~

On ~~July~~ ~~1, 2009,~~ ~~the Company~~ adopted the accounting and disclosure requirements of Statement of Financial Accounting Standard (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51, which is now included with ~~ASC~~ ~~Topic 810~~ C~~onsolidation. This~~ ~~standard~~ establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation. On a prospective basis, any changes in ownership will be accounted for as equity transactions with no gain or loss recognized on the transactions unless there is a change in control.

~~Note 3 – Restricted Cash~~

A~~s of~~ ~~June~~ 3~~0, 2010~~ ~~and June 30, 200~~9~~, the Company ha~~d ~~restricted cash of~~ $~~90,810,~~ ~~and $315,151,~~ ~~respectively~~. ~~These restricted cash~~ ~~balances are~~ ~~reserved for settlement of trade~~ ~~notes payable~~ ~~in connection with~~ ~~inventory~~ ~~purchase~~s. ~~The cash held in custody by bank~~ ~~issuing~~ ~~the~~ ~~trade notes payable~~ ~~is restricted as to withdrawal or use, and is currently~~ ~~earning interest~~.

~~Note 4 – Inventory~~

~~Inventory consisting of material, labor and manufacturing overhead at June~~ 30~~, 2010 and June 30, 2009 consists of the following:~~

June 30, June 30,
2010 2009

Gears products $ 1,372,326 $ 885,559
Gearbox products 1,307,940 680,317
Other 400 2,569
Total $ 2,680,666 $ 1,568,445

~~Note 5 – Advance Payments~~

~~Advance payments amounted to approximately $~~5 ~~million as of~~ ~~June~~ 30~~, 20~~10~~, approximately $4.6~~ ~~million~~ of which represented an advance payment made by the Zhongchai JV to Zhejiang Xinchai Holdings Co., Ltd. ("Xinchai Holdings"), a corporation in China, for the purchase of land use rights and building for Zhongchai JV’s future expansion of its production capabilities. Zhongchai JV is currently leasing a portion of the land and building to be purchased. The total land area to be purchased is approximately 250,000 square feet. The total contract price for the land use rights, building and fixtures is approximately $4.6 million. The Company is currently in the process of transferring title.

~~Note 6 – Property and Equipment~~

~~Property and equipment at June~~ 3~~0, 2010 and June 30, 2009 consists of the following:~~

June 30, June 30,
2010 2009

Manufacturing equipment $ 3,272,563 $ 2,923,420
Office equipment and furniture 51,306 56,597
Vehicles 122,965 62,039
Subtotal 3,446,834 3,042,056
Less: Accumulated depreciation 702,871 379,132
2,743,963 2,662,924
Add: Construction in progress 273,606 -

Total $ 3,017,569 $ 2,662,924

~~Depreciation expense for the~~ years ended June 30, ~~2010~~2019 and ~~2009 was $322,658 and $214,770, respectively.~~

~~F-12~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 7 – Intangible Assets~~

~~Intangible assets at June 30, 2010 and June 30, 2009~~ ~~consist of~~ 2018 would affect the ~~following:~~

June 30, 2010 June 30, 2009

Computer Software $ 3,241 $ 3,223
Less: accumulated amortization 2,790 1,701

Total $ 451 $ 1522

~~Amortization expenses for the years ended June~~ 3~~0, 2010 and 2009~~effective income tax rate. There were ~~$1,076 and $1,074, respectively.~~

~~Note 8 – Goodwill~~

~~The following table provides information related to the carrying value of goodwill:~~

Balance as of June 30, 2008 $ 3,393,307
Goodwill acquired during the year -
Effect of foreign currency translation 13,955
Impairment -
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

~~Note 9 – Accounts Payable and Accrued Expenses~~

~~Accounts payable and accrued expenses consist of~~ ~~the~~ ~~following:~~

June 30, June 30,
2010 2009

Accounts payable $ 3,419,595 $ 1,400,162
Accrued expenses 85,328 162,055

Total $ 3,504,923 $ 1,562,217

~~The carrying value of accounts payable and accrued expenses approximates their~~ ~~fair value due to the short-term nature of the~~se ~~obligations.~~

~~F-13~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 10 – Short Term Bank Loans~~

~~Short~~-~~term bank loans consist of the following:~~

June 30, June 30,
2010 2009

On May 25, 2009, the Company obtained a loan from Agricultural Bank of  China, which was re-paid on August 26, 2009. The annual interest was At the fixed interest rate of 4.374% and paid monthly. The loan was secured by a third party. $ - $ 776,450

On June 15, 2009, the Company obtained a loan from Agricultural Bank  of China, which was re-paid on June 10, 2010. The interest  is calculated  Using an annual fixed interest rate of 5.31% and paid monthly. The loan is  secured by a third party. - 1,421,050

On June 10, 2010, the Company obtained a loan from Agricultural Bank  of China, which is due on June 10, 2011. The interest  is calculated using an annual fixed interest rate of 5.31% and paid monthly. The loan is  secured by a third party. 1,428,810 -

Total short-term bank loans $ 1,428,810 $ 2,197,500

~~Note~~ 11 – ~~Other Current Liabilities~~

~~Other current liabilities~~ ~~amounted to $3,322,277 and $635,408~~ ~~as of~~ ~~June 30, 2010 and 2009, respectively,~~ ~~approximately $425,588 and~~ $~~424,854~~ ~~of which represents~~ ~~the last payment due to Keyi from Shengte acquisition in July 2007 for both of the above periods.~~ ~~Also included in the balance of $3,322,277~~no unrecognized income tax benefits as of June 30, ~~2010 was $2,600,000 due to Keyi for the purchase of the residual 25% equity of Zhejiang Zhongchai.~~

~~Note~~ 12 ~~– Risk Factors~~

~~The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition~~2019 and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. The Company’s business may be influenced 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.

2018.

~~Note 1~~3 ~~– Risk of Concentrations in Sales and Purchases~~

~~Two customers accounted for 39% and 25%, respectively, of the Company’s sales for the years ended June 30, 2010.~~

~~One supplier, Zhejiang Yuyang Machinery Co., Ltd, accounted for approximately 18% of the Company’s total purchases for the year ended June 30, 2010.~~

~~Note 14 – Supplemental Disclosure of Cash Flow Information~~

For the Years Ended June 30,
2010 2009

Cash paid for interest $ 132,529 $ 3,786
Cash paid for income taxes $ 166,703 $ 57,246

~~Note 15 – Earnings (Loss) Per Share~~

The Company ~~presents earnings (loss) per share on a basic~~recognizes the interest and diluted basis. Basic earnings (loss) per share have been computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings (loss) per share has been computed by dividing net earnings by the weighted average number of shares outstanding including the dilutive effect of equity securities. All sharepenalties accrued related to unrecognized tax benefits in income tax expense. The Company did not recognize any expenses any interest and per share data have been adjusted to reflect the recapitalization of the Company after the share exchange agreement with Usunco. The weighted average number of shares calculated for Diluted EPS excludes the potential common ~~stock that would be exercised under the options granted to employees and warrants granted to agents because of their anti-dilutive effect.~~

~~F-14~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 15 – Earnings (Loss) Per Share (continued)~~

For the Year Ended June 30,
2010 2009

Net income (loss) $ 1,072,405 $ (1,132,190 )

Weighted average common shares (denominator for basic loss per share) 27,613,019 28,146,164

Effect of dilutive securities: - -

Weighted average common shares (denominator for diluted loss per share) 27,613,019 28,146,164

Basic net income (loss) per share $ 0.04 $ (0.04 )
Diluted net income (loss) per share $ 0.04 $ (0.04 )

~~Note 16 – Share-Based Payments~~

Aspenalties as of June 30, ~~2010, there were 366,550 outstanding options to employees (“Employee Options”)~~2019 and 422,535 outstanding warrants to the private placement agent (“Agent Warrants”). Both the Employee Options and Agent Warrants vest over three years and have a life of five years. For the years ended June 30, 2010 and 2009, the Company recorded approximately $63,606 and $108,789, respectively, of stock-based compensation based on the fair value method of ASC Topic 718 using the following assumptions: volatility of 34.94%, risk free interest rate of 4.63%, dividend yield of 0%, and expected life of 5 years. No estimate of forfeitures was made as the Company has a short history of granting options and warrants.

The fair value of the options and warrants was determined based on the number of shares granted and the quoted price of the Company’s common stock on the grant. The fair value of stock-based compensation was determined using the Black-Scholes model.

~~Note 17 – Stock Authorization and Issuance~~

On March 9, 2007, the Company completed the sale of an aggregate of 8,450,704 shares of its common stock to a limited number of institutional investors in a private placement transaction pursuant to offering exemptions under the Securities Act of 1933. The shares, which represented approximately 30% of the outstanding common stock on an after-issued basis, were sold at a price of $1.42 per share, for net proceeds of approximately $10 million.

The Company has a registration payment arrangement with regard to the common stock issued in the private offering. The Company was required to file a registration statement within 45 days of closing and cause the registration statement to become effective on or prior to 150 days after the closing date. The registration statement was filed within the 45 day limit thus fulfilling part of this obligation. In addition, the Company is required to use reasonable commercial efforts to maintain the registration statement’s effectiveness and file additional registration statements in the future, to continue to provide to the stockholders the opportunity to sell the shares of restricted stock that they hold. This obligation ends if the shares can be sold pursuant to Rule 144.

In the event the Company does not satisfy the registration obligations of the registration rights agreement, (“Registration Default”), the Company shall pay the investors an amount in cash equal to 1% of the aggregate investment amount for each 30-day period of a Registration Default. The maximum penalty that the Company may incur under this registration payment arrangement is 10% of the aggregate investment amount, or $1,200,000. Any payments made are to be prorated for ~~the~~ ~~portion of a 30-day period of a Registration Default.~~

~~F-15~~

~~ZHONGCHAI MACHINERY, INC.~~

~~Notes to Consolidated Financial Statements~~

~~Note 17 – Stock Authorization and Issuance (continued)~~

Although the Company has the obligation to register shares of common stock for other persons under the above described registration rights agreement, the Company is not obligated to pay liquidated damages in the event that their shares are not registered or the registration statement is not available for their sale.

~~Note 1~~8 ~~– Employee Welfare Plan~~

The Company has established an employee welfare plan in accordance with Chinese laws and regulations. Full-time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Company to accrue for these benefits based on a certain percentage of the employees’ salaries.

2018, respectively.

~~NOTE 19~~

Note 8 – Subsequent Events

~~On July 7, 2010, Compensation Committee and Board of Directors have granted 1,300,000 shares of stock options to one director and four employees.~~

Name Position
Option
Granted

Option Price

Expired On
Rong Shi Director 500,000 $ 0.20 2015/07/06
Mengxin He General Manager 500,000 $ 0.20 2015/07/06
Xianding Ge General Manager 100,000 $ 0.20 2015/07/06
Tracy Lin Financial Director 100,000 $ 0.20 2015/07/06
Min Guo Office Manager 100,000 $ 0.20 2015/07/06

~~These stock options will be expired on July 6, 2015. 40% of these options were vested on July 7, 2010 and~~

The Company evaluates events that occur after the ~~remaining 60% of~~year-end date through the ~~options will be vested 20% each year for next three years. Note: The closing price of~~date the ~~stock was $0.15 and the biding price was $0.05 as of July 6, 2010.~~

~~F-16~~

~~SIGNATURES~~

~~In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this Report~~financial statements are available to be ~~signed on its behalf by the undersigned thereunto duly authorized on September 21 2010.~~

	~~ZHONGCHAI MACHINERY, INC.~~

	~~By:~~	~~/s/ Peter Wang~~
		~~Peter Wang~~
		~~President~~

~~In accordance with the Exchange Act, this Report~~issued. Accordingly, management has ~~been signed below by the following persons on behalf of the Registrant~~evaluated subsequent events through August 1, 2019, and has determined that there were no subsequent events, requiring adjustment to, or disclosure in, the ~~capacities indicated.~~

financial statements.

~~Signature~~	~~Capacities~~	~~Date~~

~~/s/ Peter Wang~~	~~Chairman, President and acting Chief Financial Officer~~	~~September 21, 2010~~
~~Peter Wang~~	~~(Principal Executive and Accounting Officer)~~

~~/s/ Rong Shi~~	~~Director~~	~~September 21, 2010~~
~~Rong Shi~~

~~/s/ Chris Chen~~	~~Director~~	~~September 21, 2010~~
~~Chris Chen~~

F-14


þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the year ended June 30, 2019

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

~~NEVADA~~
Nevada	47-0925451
(State or other jurisdiction of ~~Incorporation)~~	~~33-0652593~~ (I.R.S. Employer ~~I.D. Number)~~
incorporation or organization)
~~224 Tianmushan Road,~~ ~~Zhongrong Chengshi Huayuan 5-1-602,~~ ~~Hangzhou, P.R. China~~ ~~(Address of principal executive offices)~~	~~310007~~ ~~(zip code)~~ Identification No.)


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	þ
		Emerging growth company	¨

			~~Page No.~~
	PART I
~~PART I~~
Item 1.	Business.	1
Item 11A.	~~Description of Business~~ Risk Factors.	3 6
Item ~~1A.~~1B.	~~Risk Factors~~ Unresolved Staff Comments.	8 6
Item ~~1B.~~2.	~~Unresolved Staff Comments~~ Properties.	19 6
Item 23.	~~Description of Properties~~ Legal Proceedings.	19 6
Item 34.	~~Legal Proceedings~~ Mine Safety Disclosures.	19 6
~~Item 4~~	~~[Reserved]~~	19
	PART II
~~PART II~~
Item 5.
~~Item 5~~	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity ~~Securities~~Securities.	20 7
Item 66.	Selected Financial Data.	21 8
Item 77.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.	23 8
Item 7A7A.	Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.	29 10
Item 88.	Financial Statements and Supplementary ~~Data~~Data.	29 10
Item 99.	Changes Inin and Disagreements With Accountants on Accounting and Financial ~~Disclosure~~Disclosure.	29 11
Item 9A9A.	Controls and ~~Procedures~~Procedures.	29 11
Item 9B9B.	Other ~~Information~~Information.	30 12

	PART III

Item 1010.	Directors, Executive Officers and Corporate ~~Governance~~Governance.	30 13
Item 1111.	Executive ~~Compensation~~Compensation.	33 13
Item 1212.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder ~~Matters~~Matters.	35 14
Item 1313.	Certain Relationships and Related Transactions, and Director ~~Independence~~Independence.	36 14
Item 1414.	Principal ~~Accountant~~Accounting Fees and ~~Services~~Services.	36 15

	PART IV

Item 15.	Exhibits, ~~and~~ Financial Statement ~~Schedules~~Schedules.	37 16
Item 16.	Form 10-K Summary.	16

~~Name~~
	·	subject us to numerous economic, competitive and regulatory developments, any or all of ~~Major Customers~~		~~Percentage of Total~~ ~~Revenue~~which may have a substantial adverse impact upon the particular industry in ~~2010(fiscal year)~~	which we may operate subsequent to a business combination, and
~~Zhejiang Xinchai Co., Ltd.~~	·		~~39.5~~	%
~~Lonking (Shanghai) Forklift Co., Ltd.~~			~~25.2~~	%
~~Hangcha Forklift Co., Ltd.~~			~~6.3~~	%
~~Xiamen Xiagong Machinery Co., Ltd.~~			~~5.0~~	%
~~Hunan Sunway Machinery Co., Ltd.~~			~~4.1~~	%
~~Zhejiang Hengchun Machinery Co., Ltd.~~			~~3.0~~	%
~~Hangzhou Global Friend Precision Machinery Co., Ltd.~~			~~2.8~~	%
~~Shandong Guangming Machinery Co., Ltd.~~			~~2.6~~	%
~~Anhui Hecha Forklift Co., Ltd.~~			~~1.8~~	%
~~Ningbo Ruyi Joint Stock Co., Ltd.~~			~~1.8~~	%
~~Total~~			~~92.1~~	% result in our dependency upon the development or market acceptance of a single or limited number of products, processes or services.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered


	·	financial condition and results of operation of the target company;
	·	growth potential;
	·	experience and skill of Management and availability of additional personnel;
	·	capital requirements;
	·	competitive position;
	·	stage of development of the products, processes or services;
	·	degree of current or potential market acceptance of the products, processes or services;
	·	proprietary features and degree of intellectual property or other protection of the products, processes or services;
	·	regulatory environment of the industry; and
	·	costs associated with effecting the business combination.

Quarter Ended	High		Low
2008
September 30	$	0.20	$	0.05
December 31	$	0.07	$	0.01
2009
March 31	$	0.05	$	0.01
June 30	$	0.06	$	0.02
September 30	$	0.12	$	0.061
December 31	$	0.25	$	0.05
2010
March 31	$	0.35	$	0.18
June 30	$	0.35	$	0.06

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants, and rights		Number of securities remaining available
Equity compensation plans approved by security holders		-0-		-0-		-0-
Equity compensation plans not approved by security holders		183,275	$	1.065		1,604,148

Total		183,275	$	1.065		1,604,148

	Year ended June 30,

	2010			2009				2008				2007

OPERATIONS DATA

Revenues		$	10.983,800		$	4,923,918			$	3,333,325			$	1,817,264

Net income (Loss)		$	1,072,405		$	(1,132,190	)		$	(1,964,725	)		$	(5,279,437	)

Income/(loss) per common share (basic and diluted)		$	0.04		$	(0.04	)		$	(0.07	)		$	(0.24	)

BALANCE SHEET DATA
Total assets		$	19,896,194		$	17,102,682			$	14,790,817			$	13,893,621
Shareholders' equity		$	10,892,510		$	9,578,269			$	10,701,893			$	10,046,397

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Year
Year Ended June 30, 2010
Revenues	$	1,948,406			1,889,823			3,202,350			3,943,221		$	10,983,800
Gross profit	$	405,232			406,470			747,397			1,065,215		$	2,624,314
Net loss/Net Income	$	(28,355	)		46,332			263,861			790,567		$	1,072,405
LoLoss per common share - basic and diluted	$	(0.00	)		0.00			0.01			0.03		$	0.04

Year Ended June 30, 2009
Revenues	$	1,186,570			820,527			976,967			1,939,854		$	4,923,918
Gross profit	$	334,483			126,630			206,421			416,895		$	1,084,429
Net loss	$	(130,538	)		(366,701	)		(319,817	)		(315,134	)	$	(1,132,190	)
Loss per common share -basic and diluted	$	(0.00	)		(0.01	)		(0.01	)		(0.01	)	$	(0.04	)

		Percentage of Interests
Name of Entity	Place of Filing	June 30, 2010			June 30, 2009
Zhongchai Holding (Hong Kong) Limited	Hong Kong		100	%		N/A
(“Zhongchai Holding”)

Zhejiang Zhongchai Machinery Co., Ltd.	PRC		100	%		75	%
(“Zhongchai China”, 100% subsidiary of Zhongchai Holding)

Zhejiang Shengte Transmission Co., Ltd.	PRC		100	%		100	%
(“Shengte”, 100% subsidiary of Zhongchai China)

Xinchang Lisheng Machinery Co., Ltd.	PRC		60	%		N/A
(“Lisheng”, 60% subsidiary of Zhongchai China)

	Year ended June 30
Statements of Cash Flows	2010			2009
Net cash provided by operating activities		3,350,611			1,754,778
Net cash used in investing activities		(5,304,480	)		(604,777	)
Net cash provided by (used in) financing activities		(777,351	)		2,197,500
Effect of foreign currency translation on cash		11,709			1,444
Net increase (decrease) in cash and cash equivalents and restricted cash		(2,719,511	)		3,348,945

Name	Age	Position with company	Serving as a Director or an Officer Since
Peter Wang	56	Chairman, President and acting Chief Financial Officer	2007
Rong Shi	36	Director	2010
Chris Chen	39	Director	2010

Name and Principal Position	Fiscal Year	Salary		Bonus		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total ($)
Peter Wang, Chairman	2009	$	50,000		-		-		-		-	$	50,000
and President	2010	$	50,000		-		-		-		-	$	50,000
David Ming He, Chief	2009	$	48,000		-		-		-		-	$	48,000
Financial Officer(1)	2010	$	32,000		-		-		-		-	$	32,000

Name	Year	Medical Premiums		401K Employer Match
Peter Wang	2010	$	12,000		-
David Ming He	2010	$	8,000		-

Name	Fees Earned or Paid in Cash		Option Awards		Total
Rong Shi	$	-0-	$	-0-	$	-0-
Chris Chen	$	-0-	$	-0-	$	-0-

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned (1)		% of common stock Beneficially Owned
Sinoquest Management Ltd. (2) 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.		4,120,990		14.92	%
Peter Wang (2) 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.		1,957,470		7.09	%
Rong Shi (3) 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.		200,000		*
Chris Chen 224 Tianmushan Road, Zhongrong Chengshi Huayuan 5-1-602, Hangzhou, 310007 P.R.C.		-0-		*
Ruihua International Ltd. (4) 11/F Front Block, Hang Lok Building, 130 Wing Lok Street, Sheung Wan, Hong Kong		17,431,104		63.13	%
All Directors and Executive Officers as a Group (3 persons) (5)		2,157,470		7.81	%

	For the Years Ended June 30,
	2010			2009

Sales	$	10,983,800		$	4,923,918

Cost of sales		8,359,486			3,839,489

Gross profit		2,624,314			1,084,429

Operating expenses
Selling, general and administrative		1,287,359			2,048,155

Income (loss) from operations		1,336,955			(963,726	)

Other income (expenses):
Interest income (expense), net		(82,096	)		16,145
Other income, net		345,867			138,697
Loss on disposal of a subsidiary-IBC		-			(220,782	)
Total other income (expenses)		263,771			(65,940	)

Income (loss) before provision for income taxes		1,600,726			(1,029,666	)

Provision for income taxes		264,418			57,246

Net income (loss)		1,336,308			(1,086,912	)

Less: Net income attributable to noncontrolling interest		263,903			45,278

Net income (loss) attributable to Zhongchai Machinery, Inc.		1,072,405			(1,132,190	)

Other comprehensive income (loss)
Foreign currency translation adjustment		(53,828	)		42,646

Comprehensive income (loss)	$	1,018,577		$	(1,089,544	)

Earnings (loss) per common share:
Basic	$	0.04		$	(0.04	)
Diluted	$	0.04		$	(0.04	)

Weighted average number of common shares outstanding:
Basic		27,613,019			28,146,164
Diluted		27,613,019			28,146,164

																		Accumulated
							Stock			Additional					Retained			Other			Total
	Common Stock						Subscriptions			Paid-in			Statutory		Earnings			Comprehensive			Stockholders’
	Shares			Amount			Receivable			Capital			Reserves		(Deficit)			Income			Equity

Balance June 1, 2008		28,169,013		$	28,169		$	(32,400	)	$	16,516,901		$	62,253	$	(7,245,858	)	$	1,372,828		$	10,701,893

Cancellation of common stock		(555,994	)		(556	)		-			(32,804	)		-		-			-			(33,360	)

Shareholder Contribution		-			-			(720	)		-			-		-			-			(720	)

Net Loss		-			-			-			-			-		(1,132,190	)		-			(1,132,190	)

Statutory reserves		-			-			-			-			62,207		(62,207	)		-			-

Foreign Currency Translation		-			-			-			-			-		-			42,646			42,646

Balance June 30, 2009		27,613,019		$	27,613		$	(33,120	)	$	16,484,097		$	124,460	$	(8,440,255	)	$	1,415,474		$	9,578,269

Net Income		-			-			-			-			-		1,072,405			-			1,072,405

Statutory reserves		-			-			-			-			190,692		(190,692	)		-			-

Foreign Currency Translation		-			-			-			-			-		-			(53,828	)		(53,828	)

Balance June 30, 2010		27,613,019		$	27,613		$	(33,120	)	$	16,484,097		$	315,152	$	(7,558,542	)	$	1,361,646		$	10,596,846

	June 30, 2010		June 30, 2009

Computer Software	$	3,241	$	3,223
Less: accumulated amortization		2,790		1,701

Total	$	451	$	1522

Balance as of June 30, 2008	$	3,393,307
Goodwill acquired during the year		-
Effect of foreign currency translation		13,955
Impairment		-
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

	For the Year Ended June 30,
	2010		2009

Net income (loss)	$	1,072,405	$	(1,132,190	)

Weighted average common shares (denominator for basic loss per share)		27,613,019		28,146,164

Effect of dilutive securities:		-		-

Weighted average common shares (denominator for diluted loss per share)		27,613,019		28,146,164

Basic net income (loss) per share	$	0.04	$	(0.04	)
Diluted net income (loss) per share	$	0.04	$	(0.04	)

Name	Position	Option Granted		Option Price		Expired On
Rong Shi	Director		500,000	$	0.20	2015/07/06
Mengxin He	General Manager		500,000	$	0.20	2015/07/06
Xianding Ge	General Manager		100,000	$	0.20	2015/07/06
Tracy Lin	Financial Director		100,000	$	0.20	2015/07/06
Min Guo	Office Manager		100,000	$	0.20	2015/07/06