AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 6, 2010

REGISTRATION STATEMENT NO. 333-_____ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

L & L Energy, Inc.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

6199

(Primary Standard Industrial Classification Code Number)

     91-2103949
____________________________________________________________________________________________________________

(I.R.S. Employer Identification Number)

130 Andover Park East Suite 101 Seattle, WA 98188 (206) 264-8065

(Address, including zip code, and telephone lumber, including area code, of registrant’s principal executive offices)

Dickson V. Lee, Chief Executive Officer 130 Andover Park East Suite 101 Seattle, WA 98188 (206) 264-8065 COPY TO: Kevin K. Leung, Esq. Peter Hogan, Esq. Dominador Tolentino, Esq. Richardson & Patel LLP 10900 Wilshire Blvd., Suite 500 Los Angeles, CA 90024 (310) 208-1182

(Name, address, including zip code, and telephone number, including area code, of agent for service)

FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT

(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the

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Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(1)	Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional securities (i) to be offered or issued in connection with any provision of any securities purported to be registered hereby to be offered pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions and (ii) of the same class as the securities covered by this registration statement issued or issuable prior to completion of the distribution of the securities covered by this registration statement as a result of a split of, or a stock dividend on, the registered securities.
(2)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon the average of the high and low prices of the common stock of the Registrant as reported on the Over-the-Counter Bulletin Board on January 4, 2010.
(3)	Warrants issued to accredited investors, calculated in accordance with Rule 457(g) under the Securities Act on the basis of an exercise price of $5.62 per share.
(4)	Warrants issued to two placement agents, calculated in accordance with Rule 457(g) under the Securities Act on the basis of an exercise price of $6.11 per share.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Subject to completion, dated January 5, 2010

Prospectus

L & L ENERGY, INC.

3,706,773 shares of Common Stock

     This prospectus covers the resale by selling security holders named starting on page 13, of up to 3,706,773 shares of our common stock, $0.001 par value per share, which includes:

• 1,371,021 shares of common stock issued in conjunction with our private placement financing completed on October 8, 2009 (the “October Financing”);
• 932,295 shares of common stock underlying the warrants issued in conjunction with the October Financing;
• 835,389 shares of common stock issued in conjunction with our private placement financing completed on November 6, 2009 (the “November Financing”); and
• 568,068 shares of common stock underlying the warrants issued in conjunction with the November Financing.

     These securities will be offered for sale from time to time by the selling security holders identified in this prospectus in accordance with the terms described in the section of this prospectus entitled “Plan of Distribution.” We will not receive any of the proceeds from the sale of the common stock by the selling security holders.

     Our securities are not listed on any national securities exchange. Our common stock is quoted on the OTC Bulletin Board effective on January 6, 2010 under the symbol “LLEN“. The last reported per share price for our common stock was $6.62 as quoted on the OTC Bulletin Board on January 4, 2010.

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 4.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is January 5, 2010

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TABLE OF CONTENTS
		Page
Prospectus Summary				3
Risk Factors				4
Special Note Regarding Forward-Looking Statements				12
Use of Proceeds				13
Selling Security Holders				13
Plan of Distribution				22
Description of Securities to be Registered				23
Interests of Named Experts and Counsel				24
Description of Business				25
Description of Property				40
Summary Financial Data				41
Management’s Discussion and Analysis of Financial Condition and Results of Operations				42
Legal Proceedings				48
Management				48
Executive Compensation				49
Security Ownership of Certain Beneficial Holders and Management				51
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure				51
Certain Relationships and Related Party Transactions				52
Additional Information				53
Index to Consolidated Financial Statements				F-1

You should rely only on the information contained in this prospectus. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus. We and the selling security holders are offering to sell, and seeking offers to buy, common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.

No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.

Market data and other statistical information used throughout this prospectus are based upon independent industry publications, government publications and other published information from third-party sources that we believe are reliable. None of the publications, reports or other published industry sources referred to in this prospectus were commissioned by us or prepared at our request and, except as we deemed necessary, we have not sought or obtained the consent from any of these sources to include their data in this prospectus.

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PROSPECTUS SUMMARY

     This summary contains basic information about us and this offering. The reader should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors.” Some of the statements contained in this prospectus, including statements under “Summary” and “Risk Factors” as well as those noted in the documents incorporated herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. We note that our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus.

     References to “we,” “our,” “us,” the “Company,” or “L&L” refer to L&L Energy, Inc., a Nevada corporation, and its consolidated subsidiaries and variable interest entity.

Our Business

     L & L Energy, Inc. hereinafter the “Company” (formerly L & L International Holdings, Inc. which was changed to L&L Energy, Inc which became effective with the State of Nevada on January 4, 2010) is engaged in the business of coal mining, coal washing, coking, coal consolidation and coal wholesaling in the People’s Republic of China (“China” or “PRC”) and its operations are conducted in Yunnan Province in southwestern China. Our revenues are derived from our coal mining, coal washing, coking and coal wholesales operations and our coal products include raw coal, washed coal and metallurgical coke. The Company conducts its business operations in China through its Chinese subsidiaries: (1) Kunming Biaoyu Industrial Boiler Co., Ltd. (“KMC”), a coal consolidating and wholesale business, in which the Company owns 100% of the voting equity interest; (2) L &L Coal Partners, in which the Company owns an 80% equity ownership interest in two (2) operating coal mines, the DaPuAn Mine and SuTsong Mine and the DaPuAn coal washing facilities, (the “2 Mines”); and (3) our equity ownership interest in the coal washing and coking operations of Hon Shen Coal Co. Ltd. (“Hon Shen” or “HSC”), in which we initially acquired a 65% equity ownership interest of Hon Shen’s coal washing operations in July 2009, and for which we entered into an acquisition agreement in October 23, 2009, as amended on December 9, 2009, by which we increased our equity ownership in Hon Shen to 93% of Hon Shen’s coal washing operations and we acquired a 93% equity ownership interest in Hon Shen’s coking operations. Our corporate structure is organized to take advantage of China’s growing market, utilizing its U.S.-based Seattle corporate staff to plan and control the coal operations in Yunnan, China. The Company assigns its U.S.-trained management team, including CPAs from its Seattle head-office, to monitor and control these coal operations.

Recent Financing Transactions

     On October 8, 2009, we entered into a Securities Purchase Agreement with selling security holders included in this prospectus pursuant we sold Units (the "Units") to these accredited investors, consisting of common stock and common stock warrants. Each Unit purchased consisted of one share of unregistered common stock of the Company, $0.001 par value per share (the "Common Stock") and 6/10ths of a warrant (the "Warrants") to purchase a share of common stock at an exercise price of $5.62 per share and for a five year term expiring in October 2014. Each Unit was priced and sold at $3.90. Thus, the Company sold a total of 1,371,021 Units to investors for gross proceeds of approximately $5,346,980 and representing 1,371,021 shares of Common Stock and warrants for the purchase of up to 822,613 shares of Common Stock. Laidlaw & Co. (UK) Ltd., a member of FINRA, acted as the placement agent for this transaction, which was closed on October 8, 2009.

     On November 6, 2009, we entered into a Securities Purchase Agreement with selling security holders included in this prospectus pursuant to which we sold Units (the "Units") to these accredited investors, consisting of common stock and common stock warrants. Each Unit purchased consisted of one share of unregistered common stock of the Company (the "Common Stock") and 6/10ths of a Warrant to purchase a share of common stock at an exercise price of $5.62 per share for a five year term expiring in November 2014. Each Unit was priced at $3.90. The Company sold a total of 835,389 Units for gross proceeds of approximately $3,258,000 and representing 835,389 shares of Common Stock and warrants for the purchase of up to 501,236 shares of Common Stock. Barretto Securities Inc., a member of FINRA, acted as the placement agent for this transaction, which was closed on November 6, 2009.

Name Change

     Effective on January 4, 2010, the Company changed its name from L&L International Holdings, Inc. to L&L Energy, Inc. The name change was effected through a parent/subsidiary merger of our wholly-owned subsidiary, L&L Energy, Inc., with and into the Company, with the Company as the surviving corporation. To effectuate the merger, the Company filed its Articles of Merger with the Nevada Secretary of State and the merger became effective on January 4, 2010. The Company’s board of directors approved the merger which resulted in the name change on October 9, 2009. In accordance with Section 92A.180 of the Nevada Revised Statutes, shareholder approval of the merger was not required. On the effective date of the merger, the Company’s name was changed

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to “L&L Energy, Inc.” and the Company’s Articles of Incorporation were amended to reflect this name change. As a result of the name change, the Company’s trading symbol shall change to “LLEN” on the OTC Bulletin Board effective on January 6, 2010.

Financial Results

     Our consolidated financial statements for the years ended April 30, 2009 and 2008 are included in this prospectus. During the fiscal year ended April 30, 2009, we spun off the LEK air compressor subsidiary (Lieurkong Machinery Co., Ltd) to focus on the coal (energy) business. In 2009 and 2008, we had approximately $40.94 million and $23.38 million in sales, respectively. In 2009 and 2008, we had approximately $9.96 million and $0.97 million in net income, respectively.

     We have also included our unaudited condensed consolidated financial statements for the six months ended October 31, 2009 and 2008, during which time we had approximately $37.23 million and $20.91 million in sales, respectively, and $9.64 million and $4.93 million in net income, respectively.

See “Index to Consolidated Financial Statements” on page F-1.

The Offering

     We are registering 3,706,773 shares of our common stock for sale by the selling security holders identified in the section of this prospectus entitled “Selling Security Holders.” As required by the Securities Purchase Agreements that we executed as part of the October Financing and the November Financing (more fully described under the section titled “Description of Business” below), we are registering for resale the following: (i) 2,206,410 shares of Common Stock issued to investors in the October and November Financing; (ii) 1,323,849 shares of Common Stock underlying the Warrants issued to the investors in the October Financing and the November Financing; (iii) 109,682 shares of Common stock underlying the warrant issued to the placement agent with an exercise price of $6.11 per share and five year term in connection with the October Financing; and (iv) 66,832 shares of Common Stock underlying the warrant with an exercise price of $6.11 per share and a five year term issued to the placement agent in connection with the November Financing. Information regarding our Common Stock is included in the section of this prospectus entitled “Description of Securities.”

     The shares of common stock offered under this prospectus may be sold by the selling security holders on the public market, in negotiated transactions with a broker-dealer or market maker as principal or agent, or in privately negotiated transactions not involving a broker or dealer. Information regarding the shares of common stock offered under this prospectus, and the times and manner in which they may be offered and sold is provided in the sections of this prospectus entitled “Plan of Distribution.” We will not receive any of the proceeds from those sales. The registration of the shares of common stock offered under this prospectus does not necessarily mean that any of these shares will ultimately be offered or sold by the selling security holders.

General Information

     Our principal executive offices are located at 130 Andover Park East, Suite 101, Seattle, Washington 98188 and our telephone number is (206) 264-8065.

RISK FACTORS

     The reader should carefully consider the risks described below together with all of the other information included in this prospectus. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and an investor in our securities may lose all or part of their investment.

RISKS RELATING TO THE COMPANY AND ITS BUSINESS

Our business and results of operations depend on the volatile People’s Republic of China (“PRC”) domestic coal markets.

     Our business and operating results depend on the PRC domestic supply and demand for coal and coal products. The domestic coal markets are cyclical and have historically experienced pricing volatility, which reflect, among other factors, the conditions of the PRC and global economy and demand fluctuations in key industries that have high coal consumption. Difficult economic conditions

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have resulted in lower coal prices, which in turn affect our operational and financial performance. For example, the average selling price of our coal from our DaPuAn Mine was RMB 612 and RMB 682 per tonne in 2007 and 2008, respectively and the average selling price of our coal from our SuTsong Mine was RMB 550 and RMB 614 per tonne in 2007 and 2008, respectively. Since reaching record high levels in 2008, domestic coal prices have fallen due to weakening demand as a result of the global economic downturn. We expect our 2010 average selling prices for coal to be higher than our 2009 averages. The domestic and international coal markets are affected by supply and demand. The demand for coal is primarily affected by the global economy and the performance of power generation, chemical, metallurgy and construction materials industries. The availability and prices of alternative sources of energy, such as natural gas, oil, hydropower, solar and nuclear power affect the demand for coal. The supply of coal, on the other hand, is primarily affected by the geographical location of coal reserves, the transportation capacity of coal transportation railways, the volume of domestic and international coal supplies and the type, quality and price of competitors’ coal. A significant rise in global coal supply or a reduction in coal demand for our coal by domestic electricity generation or steel industries may have an adverse effect on coal prices, which in turn, may reduce our profitability and adversely affect our business and results of operations.

Our business is highly competitive and increased competition could reduce our sales, earnings and profitability.

     The coal business is highly competitive in China and we face substantial competition in connection with the marketing and sale of our products. Some of our competitors are well established, have greater financial, marketing, personnel and other resources, have been in business for longer periods of time than we have, and have products that have gained wide customer acceptance in the marketplace. The greater financial resources of our competitors will permit them to implement extensive marketing and promotional programs. We could fail to expand our market share, and could fail to maintain our current share. Increased competition could also result in overcapacity in the Chinese coal industry in general. The coal industry in China has experienced overcapacity in the past. During the mid-1970s and early 1980s, a growing coal market and increased demand for coal in China attracted new investors to the coal industry, spurred the development of new mines and resulted in added production capacity throughout the industry, all of which led to increased competition and lower processed coal prices. Similarly, an increase in future processed coal prices could encourage the development of expanded capacity by new or existing coal processors. Any overcapacity could reduce processed coal prices in the future and our profitability would be impaired.

Our results of operations depend on our ability to acquire or develop new coal mines and other coal-related businesses.

     The recoverable coal reserves in our existing mines decline as we produce coal. Our ability to significantly increase our production capacity at existing mines is limited and thus our ability to increase our coal production will depend on increasing the production of our recently developed coal reserves and acquiring new mines, and to a lesser extent, the expanding our existing coal mines. We acquired our sixty percent (60%) equity interest in the 2 Mines (DaPuAn and SuTsong Coal Mines) on May 1, 2008 and we acquired an additional 20% of the equity interest in the 2 Mines’ from its noncontrolling interest holders on August 1,2009, thus increasing our equity interest to eighty percent (80%). In August 2007, the Company completed its acquisition of its 100% equity interest in KMC, which, in turn, owns 80% of a coal mine exploration right for two (2) coal mines which are under development stage and without a government commercial mining license. These two development mines are: Tian-Ri Coal Mine and the Laos Coal Mine. Exhaustion of the mining rights underlying these mines, as well mining rights that we may acquire in the future, can also have an adverse effect on operating results that is disproportionate to the percentage of overall production represented by such mining rights.

     The coal related business in China is heavily regulated by the PRC government. The Company’s acquisition of new mines of PRC coal companies and the procurement of related licenses and permits are subject to the PRC Government approval. Delays in securing or failure to secure relevant PRC Government approvals, licenses or permits, as well as any adverse change in government policies may hinder our expansion plans, which may materially and adversely affect our profitability and growth prospects. We cannot assure you that our future expansion or investments will be successful.

     We cannot assure you that we will be able to continue to identify suitable acquisition targets or acquire these targets on competitive terms and in a timely manner. We may not be able to successfully develop new coal mines or expand our existing ones in accordance with our development plans or at all. We may also fail to acquire or develop additional coal washing and coking facilities in the future. Failure to successfully acquire suitable targets on competitive terms, develop new coal mines or expand our existing coal mines could have an adverse effect on our competitiveness and growth prospects.

If we fail to obtain additional financing we will be unable to execute our business plan.

     As the Company continues to grow quickly, it requires capital infusions from the capital market. Under our current business strategy, our ability to grow will depend on the availability of additional funds, suitable acquisition targets at an acceptable cost, meeting the Company’s liability requirements, and working capital. The Company’s ability to compete effectively, to reach agreements with acquisition targets on commercially reasonable terms, to secure critical financing and to attract professional managers are critical to the Company’s success. Despite our recent financings that are described in this prospectus, we may need additional

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funds to make future acquisitions, continue improving our current coal mines and other coal processing facilities, and to obtain regulatory approvals for our operations. Should such needs arise, we intend to seek additional funds through public or private equity or debt financing, strategic transactions and/or from other sources. However, there are no assurances that future funding will be available on favorable terms or at all. If additional funding is not obtained, we will need to reduce, defer or cancel development programs, planned initiatives or overhead expenditures, to the extent necessary. The failure to fund our capital requirements would have a material adverse effect on our business, financial condition and results of operations. Further, the benefits of an acquisition may take considerable time to develop and we cannot assure investors that any particular acquisition or joint venture will produce the intended benefits. Moreover, the identification and completion of these transactions may require us to expend significant management time and effort and other resources.

Our coal reserve estimates may be materially different from reserves that we may actually recover

     Our reported coal reserves are estimated quantities based on applicable reporting regulations that under present and anticipated conditions have the potential to be economically mined and processed. There are numerous uncertainties inherent in estimating quantities of coal reserves and in projecting potential future rates of coal production including many factors beyond our control. In addition, reserve engineering is a subjective process of estimating underground deposits of reserves that cannot be measured in an exact manner and the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment. Estimates of different engineers may vary and results of our mining/drilling and production subsequent to the date of an estimate may justify revision of estimates. Reserve estimates may require revision based on actual production experience and other factors. In addition, several factors including the market price of coal, reduced recovery rates or increased production costs due to inflation or other factors may render certain of our estimated proved and probable coal reserves uneconomical to exploit and may ultimately result in a restatement of reserves. This may have a material adverse effect on our business, operating results, cash flows and financial condition.

Our business operations may be adversely affected by present or future environmental regulations, and coal industry standards.

     As a Chinese producer of coal products, we are subject to significant, extensive and increasingly stringent environmental protection laws and governmental regulations on coal standards, and safety requirements. These laws and regulations:

• impose fees for the discharge of waste substances, pollutants; • require provisions for reclamation and rehabilitation; • impose fines for serious environmental offenses; and

     • authorize the PRC Government to close down any facility that it determines has failed to comply with environmental regulations, operating standards, and suspend any coal operations that cause excessive environmental damage.

     Despite that our coal mining, washing and coking operations meet all the existing China environmental and safety standards, most of our operations are based on traditional, old coal extraction and processing techniques which are popular in China, and which produce waste water, gas emissions and solid waste materials. The PRC Government has tightened enforcement of applicable laws and regulations and adopted more stringent environmental standards, and operational standards. Our budgeted amount for environmental regulatory compliance may not be sufficient, and we may need to allocate additional funds for this purpose. If we fail to comply with current or future environmental laws and regulations, we may be required to pay penalties or fines or take corrective actions, any of which may have a material adverse effect on our business operations and financial condition. In addition, China is a signatory to the 1992 United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol, which are intended to limit greenhouse gas emissions. On March 14, 2006, the PRC Government released the outline of the Eleventh Five-Year Plan for National Economic and Social Development, which sets goals to decrease the amount of energy consumed per unit of GDP by 20 percent and to reduce the emission of certain major pollutants by ten percent. In addition, recent discussions between the Chinese government and U.S. government on clean energy initiatives, including the reduction of CO2 level and the use low-carbon coal, which initiatives may be incorporated in the Twelfth Five-Year Plan for National Economic and Social Development, may have significant effects on our business operations. If efforts to reduce energy consumption, to use low-carbon coal, and to control greenhouse gas emissions reducing coal consumption, our revenue would decrease and our business would be adversely affected.

We depend on key persons and the loss of any key person could adversely affect our operations.

     The future success of L & L’s investments in China is dependent on the Company’s management team, including Mr. Dickson V. Lee, our Chairman and Chief Executive Officer, our professional team, and advisors, who speak the languages, understand cultural differences, and are adept at doing business internationally. If one or more of the Company’s key personnel are unable or unwilling to continue in their present positions, the Company may not be able to easily replace them, and we may incur additional

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expenses to recruit and train new personnel. The loss of the Company’s key personnel could severely disrupt the Company’s business and its financial condition and results of operations could be materially and adversely affected. Furthermore, since the industries the Company invests in are characterized by high demand and intense competition for talent, the Company may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future. The Company cannot assure its investors that it will be able to attract or retain the key personnel needed to achieve our business objectives. Currently, only Mr. Lee is covered by a one-year term accident insurance policy in China, which is paid for by the Company. Although the Company currently does not maintain “key person” life insurance for any of its key personnel, the Company is in the process to obtaining a “key person” life insurance package for Mr. Lee and expects to obtain such insurance by early to mid 2010.

We may suffer losses resulting from industry-related accidents and lack of insurance.

     We operate coal mines and related facilities that may be affected by water, gas, fire or structural problems and earthquakes. As a result, we, like other companies operating coal mines, have experienced accidents that have caused property damage and personal injuries. Although the Company continuously reviews its existing operational standards, including insurance coverage, and it has implemented safety measures, fire training at our mining operations and provided on-the-job training for our employees and workers, there can be no assurance that industry-related accidents, earthquakes will not occur in the future. The insurance industry in China is still in its development stage and the Chinese insurance companies offer limited business insurance products. We currently only have work-related injury insurance for our employees at the DaPuAn Mine and SuTsong Mine, and limited accident insurance for staff working in China. Any uninsured losses and liabilities incurred by us could have a material adverse effect on our financial condition and results of operations.

Disruptions to the Chinese railway transportation system and the other limited modes of transportation by which we deliver our products may adversely adversely affect our ability to sell our coal products.

     A substantial portion of the coal products we sell is transported to our customers by the Chinese national railway system. As the railway system has limited transportation capacity and cannot fully satisfy coal transportation requirements, discrepancies between capacity and demand for transportation exist in certain areas of the PRC. No assurance can be given that we will continue to be allocated adequate railway transport capacity or acquire adequate rail cars, or that we will not experience any material delay in transporting our coal as a result of insufficient railway transport capacity or rail cars.

     Some of our business operations depend on a single transportation carrier or a single mode of transportation to deliver our coal products. Disruption of any of these transportation services due to weather-related problems, flooding, drought, accidents, mechanical difficulties, strikes, lockouts, bottlenecks, and other events could temporarily impair our ability to supply coal to our customers. Our transportation providers may face difficulties in the future that may impair our ability to supply coal to our customers, resulting in decreased revenues.

Our continued operation of our coal mines are dependent on our ability to obtain and maintain mining licenses and other PRC government approvals for our mining operations.

     Contrary to the outright ownership of land in the United States, the land in China belongs to the Chinese government. Land is only leased to lessees on a long-term basis, ranging from 40 to 70 years. Currently, no law in China prohibits the continual lease of the same land and coal reserves by the lessee after expiration of the lease.

     Similar to the ownership of land in China, coal reserves are owned by the Chinese government which issues a mining license when government leases exclusive mining rights to a mining operator on a long term basis (normally 50 years) that allows the mining operators to operate and extract coal from the mine. Thus, coal mining licenses are the exclusive evidence for approval of a coal mine’s mining rights by the Chinese government. Similar to the ownership of land in China, coal reserves are owned by the Chinese government, which issues a mining license when it leases exclusive mining rights to a mining operator on a long term basis (normally 50 years) that allows the mining operators to operate and extract coal from the mine. The government charges all mining operators a resources (usage) fee ranging from 2%-3% based on the value of the coal excavated from the ground. The coal industry in China is heavily regulated by the government for safety and operational reasons. Several licenses and permits are required in order to operate a coal mine. These licenses and permits, once issued, are to be reviewed and renewed, typically once a year. In addition, many privately owned coal mines, including the 2 Mines, are owned via either a proprietorship or a partnership instead of by a company, due to historical reasons. Private owners under a proprietorship or a partnership of the Company’s mines may subject to greater risks than that of corporations which have limited liabilities.

Our ownership structure is subject to regulatory controls, approvals and timely payments in connection with our acquisitions. Failure to obtain such approvals or to timely remit required payments may cause the unwinding of our acquisitions.

The Company is aware that on October 21, 2005, the PRC State Administration of Foreign Exchange ("SAFE") issued a new

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circular ("Circular 75"), effective November 1, 2005, which repealed Circular 11 and Circular 29, which previously required Chinese residents to seek approval from SAFE before establishing any control of a foreign company or transfer of China-based assets or equity for the shares of the foreign company. SAFE also issued a news release about the issuance of its Circular 75 to make it clear that China’s national policies encourage the efforts by Chinese private companies and high technology companies to obtain offshore financing. Circular 75 confirmed that the uses of offshore special purpose vehicles (“SPV”) as holding companies for PRC investments are permitted as long as proper foreign exchange registrations are made with SAFE. As China starts to develop its legal system, additional legal, administrative, and regulatory rules and regulations may be enacted, and the Company may become subject to the additional rules and regulation applicable to the Company’s Chinese subsidiaries.

     The Company registered KMC with the Chinese government as an American subsidiary in 2006. The registration process was completed in 2008, with all required capital commitments having been injected by L&L into KMC as of November of 2009. The Company also received a final approval from the Chinese government for L & L’s ownership of KMC in November of 2009. We are also in the process of registering our ownership equity ownership interest in the 2 Mines (DaPuAn Mine and SuTsong Mine) with the Chinese government, under the provisional name “L & L Coal Partners” through a nominee who is a Chinese citizen that holds L & L’s equity ownership in the 2 Mines in trust for the benefit of the Company under an agency agreement executed in April 2008. The Company also recently entered into agreements with Hon Shen to increase L&L’s equity interest in Hon Shen’s coal washing operations to 93% and also to acquire a 93% equity interest in Hon Shen’s coking operations (these two distinctive operations represent the entire business operations of Hon Shen) and the Company has commenced the registration procedures that are required by the Chinese government for such acquisition and conversion of Hon Shen into a Sino-foreign cooperation company which is under the Company’s management and voting equity control. The Company believes that Circular 75 and other related Circulars or regulations may likely be further clarified by SAFE, in writing or through oral comments by officials from SAFE, or through implementation by SAFE in connection with actual transactions. However, failure by the Company to obtain the required PRC government approvals for these acquisitions or the Company’s failure to remit all of the required payments for these acquisitions may lead to such acquisitions being deemed void or the unwinding of such acquisitions. Should this occur, we may seek to acquire the equity interest of our subsidiaries through other means, although we cannot guarantee that we will do so, nor can we guarantee that we will be successful if we do.

Risks inherent to mining could increase the cost of operating our business.

     Our coal mining operations are subject to conditions beyond our control that can delay coal deliveries or increase the cost of mining at particular mines for varying lengths of time. These conditions include weather and natural disasters, unexpected maintenance problems, key equipment failures, variations in coal seam thickness, variations in the amount of rock and soil overlying the coal deposit, variations in rock and other natural materials and variations in geologic conditions.

     As with all underground coal mining companies, our operations are affected by mining conditions such as a deterioration in the quality or thickness of faults and/or coal seams, pressure in mine openings, presence of gas and/or water inflow and propensity to spontaneous combustion, as well as operational risks associated with industrial or engineering activity, such as mechanical breakdowns. Although we have conducted geological investigations to evaluate such mining conditions and adapt our mining plans to address them, there can be no assurance that the occurrence of any adverse mining conditions would not result in an increase in our costs of production, a reduction of our coal output or the temporary suspension of our operations.

     Underground mining is also subject to certain risks such as methane outbursts and accidents caused by roof weakness and ground-falls. There can be no assurance that the occurrence of such events or conditions would not have a material adverse impact on our business and results of operations.

RISKS RELATED TO DOING BUSINESS IN CHINA

Our Chinese operations pose certain risks because of the evolving state of the Chinese economy, political, and legislative and regulatory systems. Changes in the interpretations of existing laws and the enactment of new laws may negatively impact our business and results of operation.

     Although our principal executive office is located in Seattle, Washington, all of our current coal business operations are conducted in China. Accordingly, our results of operations, financial condition and prospects are subject to economic, political and legal developments in China. China’s economy differs from the economies of most developed countries in many respects, including its levels of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Doing business in China involves various risks including internal and international political risks, evolving national economic policies, governmental policy on coal industry, as well as financial accounting standards, expropriation and the potential for a reversal in economic conditions. Since the late 1970s, the Chinese government has been reforming its economic system. These policies and measures may from time to time be modified or revised. While the Chinese economy has experienced significant growth

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in the past 20 years, growth has been uneven across different regions and among various economic sectors of China. Furthermore, while the Chinese government has implemented various measures to encourage economic development and guide the allocation of resources, some of these measures may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Also, since early 2004, the Chinese government has implemented certain measures to control the pace of economic growth including certain levels of price controls on raw coking coal. Such controls could cause our margins to be decreased. In addition, such measures may cause a decrease in the level of economic activity in China, which in turn could adversely affect our results of operations and financial condition. Adverse changes in economic policies of the Chinese government or in the laws and regulations, if any, could have a material and adverse effect on the overall economic growth of China, and could adversely affect our business operations.

     There are substantial uncertainties regarding the application of Chinese laws, especially with respect to existing and future foreign investments in China. Despite China having its own securities laws and regulators, the Chinese legal system is in a developmental stage and has historically not enforced its Chinese securities law as rigidly as their U.S. counterparts. The interpretation and application of existing Chinese laws, regulations and policies, and the stated positions of the Chinese authorities may change and possible new laws, regulations or policies will impact our business and operations. Because of the evolving nature of the law, it will be difficult for us to manage and plan for changes that may arise. China’s judiciary is relatively inexperienced in enforcing corporate and commercial law, resulting in significant uncertainty as to the outcome of any litigation in China. Consequently, there is a risk that should a dispute arise between the Company and any party with whom the Company has entered into a material agreement in China, the Company may be unable to enforce such agreements under the Chinese legal system. Chinese law will govern almost all of the Company's acquisition agreements, many of which may also require the approval of Chinese government agencies. Thus, the Company cannot assure investors that the target business will be able to enforce any of the Company’s material agreements or that remedies will be available outside China.

      Our business is and will continue to be subject central, provincial, local and municipal regulation and licensing in China. Compliance with such regulations and licensing can be expected to be a time-consuming, expensive process. Compliance with foreign country laws and regulations affecting foreign investment, business operations, currency exchange, repatriation of profits, and taxation, will increase the risk of investing in our stock.

We may have to incur unanticipated costs because of the unpredictability of the Chinese legal system.

     The Chinese legal system has many uncertainties. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, Chinese legislation and regulations have enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently-enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the Chinese legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

It will be difficult for any shareholder of our company to commence a legal action against our executives. Most of our Company’s assets are located in China.

     Because our Company's directors and officer(s) reside both within and outside of the United States, it may be difficult for an investor to enforce his or her rights against them or to enforce United States court judgments against them if they live outside the United States. Most of the Company's assets, including L & L Coal Partners (2 Mines), KMC and Hon Shen, are located in China, outside of the United States. Additionally, the Company plans to continue acquiring other energy-related entities in China in the future. It may therefore be difficult for investors in the United States to enforce their legal rights, to effect service of process upon the Company's directors or officers, or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of the Company's directors and officers under federal securities laws. Moreover, we have been advised us that China currently does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgments of courts.

Our industry is heavily regulated and we may not be able to remain in compliance with all such regulations and we may be required to incur substantial costs in complying with such regulation.

     We are subject to extensive regulation by China’s Mining Ministry, and by other provincial, county and local authorities in jurisdictions in which our products are processed or sold, regarding the processing, storage, and distribution of our product. Our

 

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processing facilities are subject to periodic inspection by national, province, county and local authorities. We may not be able to comply with current laws and regulations, or any future laws and regulations. To the extent that new regulations are adopted, we will be required to adjust our activities in order to comply with such regulations. We may be required to incur substantial costs in order to comply. Our failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material and adverse effect on our business, operations and finances. Changes in applicable laws and regulations may also have a negative impact on our sales.

     The government regulation of our coal processing operations imposes additional costs on us, and future regulations could increase those costs or limit our ability to crush, clean and process coking coal. China’s central, provincial and local authorities regulate the coal mining industry with respect to matters such as employee health and safety, permitting and licensing requirements, air quality standards, water pollution, plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the discharge of materials into the environment, surface subsidence from underground mining and the effects that mining has on groundwater quality and availability. We are required to prepare and present to China’s central, provincial and local authorities data pertaining to the effect or impact that any proposed processing of coal may have upon the environment. The costs, liabilities and requirements associated with these regulations may be costly and time-consuming and may delay commencement, expansion or continuation of our coal processing operations. The possibility exists that new legislation and/or regulations and orders may be adopted that may materially and adversely affect our operations, our cost structure and/or our customers’ ability to use coal. New legislation or administrative regulations (or judicial interpretations of existing laws and regulations), including proposals related to the protection of the environment that would further regulate and tax the coal industry, may also require us and our customers to change operations significantly or incur increased costs. Certain sales agreements contain provisions that allow a purchaser to terminate its contract if legislation is passed that either restricts the use or type of coal permissible at the purchaser’s plant or results in specified increases in the cost of coal or its use. These factors and legislation, if enacted, could have a material adverse effect on our financial condition and results of operations.

We are subject to currency fluctuations from our Chinese operations and fluctuations in the exchange rate may negatively affect our expenses and results of operations, as well as the value of our assets and liabilities.

     Effective July 21, 2005, The People’s Bank of China announced that the Renminbi (RMB) exchange rate regime is reformed by moving from a fixed rate of exchange based upon the U.S. dollar to a managed floating exchange rate regime based upon market supply and demand of a basket of currencies. On July 26, 2005, the exchange rate against the Renminbi was adjusted to 8.11 Renminbi per U.S. dollar from 8.28 Renminbi per U.S. dollar, which represents an adjustment of approximately two percent. As of January 4, 2010, Renminbi appreciated to approximately RMB 6.83 per U.S. Dollar. It is expected that the revaluation of the Renminbi and the exchange rate of the Renminbi may continue to change in the future. Fluctuations in the exchange rate between the Chinese RMB and the United States dollar could adversely affect our operating results. Results of our business operations are translated at average exchange rates into United States Dollars for purposes of reporting results. As a result, fluctuations in exchange rates may adversely affect our expenses and results of operations as well as the value of our assets and liabilities. Fluctuations may adversely affect the comparability of period-to-period results. We do not use hedging techniques to eliminate the effects of currency fluctuations. Thus, exchange rate fluctuations could have a material adverse impact on our operating results and stock prices.

RISKS RELATED TO CORPORATE AND STOCK MATTERS

The market price for our stock may be volatile. The market price for our stock may be volatile and subject to wide fluctuations in response to factors including the following:

• actual or anticipated fluctuations in our quarterly operating results;
• changes in financial estimates by securities research analysts;
• conditions in coal energy markets;
• changes in the economic performance or market valuations of other coal energy companies;
• announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;
• addition or departure of key personnel;
• fluctuations of exchange rates between RMB and the U.S. dollar;
• intellectual property litigation; and
• general economic or political conditions in China.

     In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our stock.

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Our corporate actions are substantially influenced by our principal stockholders and affiliated entities.

     As of January 4, 2010, our management members and their affiliated entities own or have the beneficial ownership right to approximately 33 % of our outstanding common shares, representing approximately 33 % of our voting power. These stockholders, acting individually or as a group, could exert substantial influence over matters such as electing directors and approving mergers or other business combination transactions. In addition, because of the percentage of ownership and voting concentration in these principal stockholders and their affiliated entities, elections of our board of directors will generally be within the control of these stockholders and their affiliated entities. While all of our stockholders are entitled to vote on matters submitted to our stockholders for approval, the concentration of shares and voting control presently lies with these principal stockholders and their affiliated entities. As such, it would be difficult for stockholders to propose and have approved proposals not supported by management. There can be no assurances that matters voted upon by our officers and directors in their capacity as stockholders will be viewed favorably by all stockholders of the company.

If we issue additional shares in the future, this may result in dilution to our existing stockholders.

     Our articles of incorporation, as amended, authorize the issuance of 120,000,000 shares of common stock and 2,500,000 shares of preferred stock. Our board of directors has the authority to issue additional shares up to the authorized capital stated in the certificate of incorporation. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. Further, any such issuance may result in a change of control of our Company.

     The Company’s business strategy calls for strategic acquisitions of other coal-related businesses. In the past, as a result of the acquisitions of KMC and LEK subsidiaries, the Company issued 485,600 common shares and 1,708,283 common shares, respectively, as consideration for these two (2) purchases. When the Company disposed of the LEK operations, LEK returned the 1,708,283 common shares issued to LEK, and the Company cancelled those shares. The Company also issued 400,000 common shares in connection with its acquisition of the controlling 60% equity interest in the 2 Mines. It is anticipated that future acquisitions will require cash and issuances of L & L capital stock, including our common stock, warrants, preferred shares, or convertible bonds in the future. To the extent we are required to pay cash for any acquisition, we anticipate that we would be required to obtain additional equity and/or debt financing from either the public sector, or private financing. Equity financing would result in dilution for our stockholders. Stock issuances and equity financing, if obtained, may not be on terms favorable to us, and could result in dilution to our stockholders at the time(s) of these stock issuances and equity financings, thus creating a risk factor.

     The authorized preferred stock constitutes what is commonly referred to as "blank check" preferred stock. This type of preferred stock allows the Board of Directors to divide the preferred stock into series, to designate each series, to fix and determine separately for each series any one or more relative rights and preferences and to issue shares of any series without further stockholder approval. Preferred stock authorized in series allows our Board of Directors to hinder or discourage an attempt to gain control of us by a merger, tender offer at a control premium price, proxy contest or otherwise. Consequently, the preferred stock could entrench our management. In addition, the market price of our common stock could be materially and adversely affected by the existence of the preferred stock.

The application of the “penny stock” rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.

     The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. If the trading price of our common stock falls below $5.00 per share, the open-market trading of our common stock is subject to the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction 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 effecting 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 in a penny stock not otherwise exempt from these rules, the broker-dealer must

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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. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

     In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Stockholders should have no expectation of any dividends.

     The holders of our common stock are entitled to receive dividends when, as and if declared by the board of directors out of funds legally available therefore. To date, we have not declared nor paid any cash dividends. The board of directors does not intend to declare any dividends in the foreseeable future, but instead intends to retain all earnings, if any, for use in our business operations.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

     We are subject to reporting obligations under the U.S. securities laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its Annual Report, which contains management’s assessment of the effectiveness of our internal controls over financial reporting. In addition, beginning with our Annual Report for the year ending April 30, 2010, an independent registered public accounting firm must attest to and report on management’s assessment of the effectiveness of our internal controls over financial reporting. Our management may conclude that our internal controls over our financial reporting are not effective. Moreover, even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management’s assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. We also expect these developments will make it more difficult and more expensive for the Company to attract and retain additional members to the Board of Directors (both independent and non-independent), and additional executives.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     All statements contained in this prospectus, other than statements of historical facts, that address future activities, events or developments, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Whether actual results will conform to the expectations and predictions of management, however, is subject to a number of risks and uncertainties that may cause actual results to differ materially. Such risks are in the section entitled “Risk Factors” on page 4, and in our previous SEC filings.

     Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

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USE OF PROCEEDS

     We will not receive any proceeds from the sale of Common Stock by the selling security holders. However, we may receive up to $8,518,532 upon exercise of the Warrants with exercise prices of $5.62 per share for the Warrants issued to accredited investors, and $6.11 per share for the warrants issued to the placement agents in the October Financing and November Financing, the underlying shares of which are included in the registration statement of which this prospectus is a part. If received, such funds will be used for general corporate purposes, including working capital requirements. All proceeds from the sale of such securities offered by the selling security holders under this prospectus will be for the account of the selling security holders, as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution.” With the exception of any brokerage fees and commissions which are the obligation of the selling security holders, we are responsible for the fees, costs and expenses of this offering which are estimated to be approximately $88,618, inclusive of our legal and accounting fees, printing costs and filing and other miscellaneous fees and expenses.

SELLING SECURITY HOLDERS

     We are registering the following securities: (i) an aggregate 2,206,410 shares of Common Stock issued to investors in connection with the October Financing and the November Financing; (ii) an aggregate 1,323,849 shares of Common Stock underlying the Warrants issued to the investors in the October Financing and the November Financing; (iii) 109,682 shares of Common stock underlying the warrant issued to the placement agent in connection with the October Financing; and (iv) 66,832 shares of Common Stock underlying the warrant issued to the placement agent in connection with the November Financing.

     We are registering these securities in order to permit the selling security holders to dispose of the shares of common stock, or interests therein, from time to time. The selling security holders may sell all, some, or none of their shares in this offering. See “Plan of Distribution.”

     The table below lists the selling security holders and other information regarding the beneficial ownership of the shares of common stock by each of the selling security holders. Column B lists the number of shares of common stock beneficially owned by each selling security holder as of January 4, 2010 (assuming full exercise of the Warrants held by such selling security holder). Column C lists the shares of common stock covered by this prospectus that may be disposed of by each of the selling security holders. Column D lists the number of shares of common stock that will be beneficially owned by the selling security holders assuming all of the shares covered by this prospectus are sold. Column E lists the percentage of class beneficially owned, based on 26,364,579 shares of common stock outstanding as of January 4, 2010.

     The selling security holders may decide to sell all, some, or none of the securities listed below. We cannot provide an estimate of the number of securities that any of the selling security holders will hold in the future. For purposes of this table, beneficial ownership is determined in accordance with the rules promulgated by the SEC, and includes voting power and investment power with respect to such securities.

     The inclusion of any securities in the following table does not constitute an admission of beneficial ownership by the persons named below. Except as indicated in the footnotes to the table, no selling security holder has had any material relationship with us or our affiliates during the last three years. Except as indicated below, no selling security holder is the beneficial owner of any additional shares of common stock or other equity securities issued by us or any securities convertible into, or exercisable or exchangeable for, our equity securities. Except as indicated below, no selling security holder is a registered broker-dealer or an affiliate of a broker-dealer.

Selling Security Holders’ Table

		Securities				Securities
		Beneficially		Securities		Beneficially		% Beneficial
		Owned Prior to		Being		Owned After		Ownership After
Name		Offering(1)		Offered		Offering (2)		Offering (4)
(A)		(B)		(C)		(D)		(E)
Bohdan Chaban (5)		16,000		16,000		0		0 %
The Carnahan Trust (6)		20,000		20,000		0		0 %
Cranshire Capital LP (7)		104,000		104,000		0		0 %
David Hickok (8)		20,800		20,800		0		0 %
Ding Chu Fuh Chen (9)		4,800		4,800		0		0 %

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		Securities				Securities
		Beneficially		Securities		Beneficially		% Beneficial
		Owned Prior to		Being		Owned After		Ownership After
Name		Offering(1)		Offered		Offering (2)		Offering (4)
(A)		(B)		(C)		(D)		(E)
Dominique Lubar (10)		10,400		10,400		0		0 %
Francis Sarre (11)		10,400		10,400		0		0 %
Guy C. Billups III (12)		88,000		88,000		0		0 %
Hubert Wieser (13)		10,400		10,400		0		0 %
Hudson Bay Fund LP (14)		44,928		44,928		0		0 %
Hudson Bay Overseas Fund, Ltd. (15)		79,872		79,872		0		0 %
Ira Kalfus (16)		24,000		24,000		0		0 %
James Shapland and Joanne Shapland (17)		13,600		13,600		0		0 %
Jan J. Laskowski and Sofia M. Laskowski
(18)		16,000		16,000		0		0 %
Jeff Tisherman (19)		32,000		32,000		0		0 %
Joseph A. Cox (20)		24,000		24,000		0		0 %
Joav Avtalion (21)		10,400		10,400		0		0 %
Joseph Huggins (22)		10,400		10,400		0		0 %
Leonard Hodes (23)		16,000		16,000		0		0 %
Mark A. Suwyn (24)		53,600		53,600		0		0 %
Mark Brosso and Maureen Brosso (25)		20,800		20,800		0		0 %
Mark Sourian (26)		10,400		10,400		0		0 %
Michael Carroll and Sheila Carroll (27)		40,000		40,000		0		0 %
Meltronics Resources, L.P. (28)		31,200		31,200		0		0 %
MidSouth Investor Fund, LP (29)		124,800		124,800		0		0 %
Muneswara Sreenivasan (30)		10,400		10,400		0		0 %
Nina M. Dougar (31)		12,800		12,800		0		0 %
Pandora Select Partners, LP (32)		417,392		417,392		0		0 %
Prakash Desai (33)		2,400		2,400		0		0 %
Questier Bernard (34)		81,634		81,634		0		0 %
Richard Cohen (35)		41,600		41,600		0		0 %
Roderic Prat (36)		168,000		168,000		0		0 %
Roger K. Cady (37)		24,000		24,000		0		0 %
S. Alexei Gitter (38)		4,800		4,800		0		0 %
Silvano Marchetto (39)		20,800		20,800		0		0 %
Starwest Financial Corporation (40)		10,400		10,400		0		0 %
Thibaud Morin (41)		10,400		10,400		0		0 %
Thomas Hansbauer and Suzanne Hansbauer (42)		9,600		9,600		0		0 %
Whitebox Intermarket Partners, LP (43)		86,818		86,818		0		0 %
Whitebox Combined Partners, LP (44)		455,790		455,790		0		0 %
Laidlaw & Company (UK) Ltd. (3)(45)(46)		109,682		109,682		0		0 %
Laidlaw Holdings Plc (47)(48)		5,546		5,546		0		0 %
Buff Trust (49)(50)		17,549		17,549		0		0 %

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		Securities				Securities
		Beneficially		Securities		Beneficially		% Beneficial
		Owned Prior to		Being		Owned After		Ownership After
Name		Offering(1)		Offered		Offering (2)		Offering (4)
(A)		(B)		(C)		(D)		(E)
Garnet Trust (51)(52)		17,549		17,549		0		0 %
Theodore V. Fowler (53)(54)		5,000		5,000		0		0 %
Lance Friedman (55)(56)		17,060		17,060		0		0 %
Daniel T. Guilfoile (57)(58)		17,060		17,060		0		0 %
Jonathan P. Lawrence (59)(60)		500		500		0		0 %
Hugh Regan (61)(62)		8,794		8,794		0		0 %
Francis R. Smith (63)(64)		3,228		3,228		0		0 %
Robert K. Connors (65)(66)		700		700		0		0 %
Ron Zuckerman (67)(68)		300		300		0		0 %
Hasan Bacovic (69)(70)		57		57		0		0 %
Craig A. Bonn (71)(72)		244		244		0		0 %
Todd A. Cirella (73)(74)		826		826		0		0 %
Jason Russo (75)(76)		825		825		0		0 %
Robert J. Bonaventura (77)(78)		850		850		0		0 %
Oleg Shtaynberger (79)(80)		113		113		0		0 %
Hugh J. Marasa, Jr. (81)(82)		500		500		0		0 %
Joseph M. Fedorko (83)(84)		850		850		0		0 %
Peter Silverman (85)(86)		1,163		1,163		0		0 %
Alpha Capital Anstalt (87)		102,565		102,565		0		0 %
Coronado Capital Partners, LP (88)		82,053		82,053		0		0 %
Excalibur Special Opportunities, LP (89)		410,258		410,258		0		0 %
Linda Hechter (90)		30,770		30,770		0		0 %
Marc Freeman (91)		20,514		20,514		0		0 %
Next View Capital, LP (92)		160,000		160,000		0		0 %
Proximity Fund, LP (93)		160,000		160,000		0		0 %
Sarita Madan (94)		10,258		10,258		0		0 %
SEI Private Trust Co. FAO JM Smucker
Co. Master Trust (95)		205,130		205,130		0		0 %
The USX China Fund (96)		32,000		32,000		0		0 %
Whalehaven Capital Fund, Ltd. (97)		123,077		123,077		0		0 %
Barretto Securities, Inc. (3) (98)		66,832		66,832		0		0 %

----------------------------

(1)	Unless otherwise indicated, the selling security holders purchased the securities being offered in the October and November Financings described above. The securities purchased in both private offerings consisted of Units at a price per Unit of $3.90 and with each Unit consisting of one share of our common stock and 6/10ths of one common stock share purchase warrant, with each whole warrant entitling the holder to purchase an additional common stock share at an exercise price of $5.62 per common share for a period of 60 months.
(2)	Assumes that all of the shares offered hereby are sold and that shares owned before the offering but not offered hereby are not sold.
(3)	Denotes broker-dealer.
(4)	Based on a total of 26,364,579 shares of common stock outstanding as of January 4, 2010.

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(5)	Number of shares being registered include up to 6,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(6)	Kevin Carnahan is the natural person who has voting and investment control over the shares held by Carnahan Trust. Kevin Carnahan disclaims beneficial ownership of the shares. Number of shares owned before the offering include 7,500 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(7)	Downsview Capital, Inc. ("Downsview") is the general partner of Cranshire Capital, L.P. ("Cranshire") and consequently has voting control and investment discretion over securities held by Cranshire. Mitchell P. Kopin ("Mr.Kopin"), President of Downsview, has voting control over Downsview. As a result of the foregoing, each of Mr. Kopin and Downsview may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Cranshire. Number of shares owned before the offering include 39,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(8)	Number of shares being registered include up to 7,800 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(9)	Number of shares being registered include up to 1,800 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(10)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(11)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(12)	Number of shares being registered include up to 33,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(13)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(14)	Sander Gerber is the natural person who has voting and investment control over the shares held by Hudson Bay Fund, LP. Sander Gerber disclaims beneficial ownership of the shares. Number of shares owned before the offering include 16,848 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(15)	Sander Gerber is the natural person who has voting and investment control over the shares held by Hudson Bay Overseas Fund, Ltd. Sander Gerber disclaims beneficial ownership of the shares. Number of shares owned before the offering include 29,952 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(16)	Number of shares being registered include up to 9,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(17)	Number of shares being registered include up to 5,100 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(18)	Number of shares being registered include up to 6,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(19)	Number of shares being registered include up to 12,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(20)	Number of shares being registered include up to 9,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(21)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(22)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(23)	Number of shares being registered include up to 6,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(24)	Number of shares being registered include up to 20,100 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(25)	Number of shares being registered include up to 7,800 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(26)	Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(27)	Number of shares being registered include up to 15,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.

16

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(28)		Paul Melchiorre is the natural person who has voting and investment control over the shares held by Meltronics Resources,
		LP. Paul Melchiorre disclaims beneficial ownership of the shares. Number of shares owned before the offering include
		11,700 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per
		share.
(29)		Lyman O. Heidtke is the natural person who has voting and investment control over the shares held by MidSouth Investor
		Fund, LP. Lyman O. Heidtke disclaims beneficial ownership of the shares. Number of shares owned before the offering
		include 46,800 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62
		per share.
(30)		Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(31)		Number of shares being registered include up to 4,800 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(32)		Andrew J. Redleaf is the natural person who has voting and investment control over the shares held by Pandora Select
		Partners, LP. Andrew J. Redleaf disclaims beneficial ownership of the shares. Number of shares owned before the offering
		include 156,522 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of
		$5.62 per share.
(33)		Number of shares being registered include up to 900 shares of common stock issuable upon exercise of this security holder’s
		warrant at an exercise price of $5.62 per share.
(34)		Number of shares being registered include up to 30,613 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(35)		Number of shares being registered include up to 15,600 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(36)		Number of shares being registered include up to 63,000 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(37)		Number of shares being registered include up to 9,000 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(38)		Number of shares being registered include up to 1,800 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(39)		Number of shares being registered include up to 7,800 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(40)		Larry B. Krause is the natural person who has voting and investment control over the shares held by Starwest Financial
		Corporation. Larry B. Krause disclaims beneficial ownership of the shares. Number of shares owned before the offering
		include 3,900 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62
		per share.
(41)		Number of shares being registered include up to 3,900 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(42)		Number of shares being registered include up to 3,600 shares of common stock issuable upon exercise of this security
		holder’s warrant at an exercise price of $5.62 per share.
(43)		Andrew J. Redleaf is the natural person who has voting and investment control over the shares held by Whitebox
		Intermarket Partners, L.P. Andrew J. Redleaf disclaims beneficial ownership of the shares. Number of shares owned
		before the offering include 32,557 shares of common stock issuable upon exercise of this security holder’s warrant at an
		exercise price of $5.62 per share.
(44)		Andrew J. Redleaf is the natural person who has voting and investment control over the shares held by Whitebox Combined
		Partners, L.P. Andrew J. Redleaf disclaims beneficial ownership of the shares. Number of shares owned before the
		offering include 170,921 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise
		price of $5.62 per share.
(45)		Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing
		described above. The Company has no material relationship with such Selling Security Holder, other than in connection
		with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may
		purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling
		Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered
		hereunder.
(46)		Represents 10,968 shares underlying warrants with an exercise price of $6.11 per share that were issued to Laidlaw &

17

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	Company (UK) Ltd. as compensation for services as placement agent in Registrant’s October Financing described. This selling security holder is a member firm of FINRA. Hugh Regan is the natural person who has investing and voting control over such securities. This selling security holder has no arrangement under which this selling security holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, this selling security holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(47)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(48)	Represents 5,546 shares underlying warrants with an exercise price of $6.11 per share that were issued as part of the compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above. Hugh Regan is the natural person who has voting and investment control over the shares held by Laidlaw Holdings, Plc. Hugh Regan disclaims beneficial ownership of the shares.
(49)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(50)	Represents 17,549 shares underlying warrants with an exercise price of $6.11 per share that were issued as part of the compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above. John P. Tesei is an employee of Laidlaw & Company (UK), Ltd. and is the trustee of Buff Trust, which is the registered holder of the warrants. John P. Tesei, as trustee of Buff Trust, has voting and disposition power over the shares owned by Buff Trust.
(51)	The Trustee of the Selling Security Holder, John P. Tesei is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(52)	Represents 17,549 shares underlying warrants with an exercise price of $6.11 per share that were issued as part of the compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above. John P. Tesei is an employee of Laidlaw & Company (UK), Ltd. and is the trustee of Garnet Trust, which is the registered holder of the warrants. John P. Tesei, as trustee of Garnet Trust, has voting and disposition power over the shares owned by Garnet Trust.
(53)	The Trustee of the Selling Security Holder, John P. Tesei, is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(54)	Represents 5,000 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(55)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(56)	Represents 17,060 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(57)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection

18

---

	with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(58)	Represents 17,060 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(59)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(60)	Represents 500 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(61)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(62)	Represents 8,794 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(63)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(64)	Represents 3,228 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(65)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(66)	Represents 700 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(67)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(68)	Represents 300 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(69)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(70)	Represents 57 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(71)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing

19

---

	described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(72)	Represents 244 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(73)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(74)	Represents 826 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(75)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(76)	Represents 825 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(77)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(78)	Represents 850 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(79)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(80)	Represents 113 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(81)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(82)	Represents 500 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(83)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(84)	Represents 850 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.

20

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(85)	Selling Security Holder is an affiliate of Laidlaw & Company (UK), Ltd., the placement agent in the October Financing described above. The Company has no material relationship with such Selling Security Holder, other than in connection with the October Financing. The Selling Security Holder has no arrangement under which the Selling Security Holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, the Selling Security Holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.
(86)	Represents 1,163 shares underlying warrants with an exercise price of $6.11 per share that were issued as compensation for placement agent services by Laidlaw & Company (UK), Ltd. in the Registrant’s October Financing described above.
(87)	Konrad Ackerman is the natural person who has voting and investment control over the shares held by Alpha Capital Anstalt. Konrad Ackerman disclaims beneficial ownership of the shares. Number of shares owned before the offering include 38,462 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(88)	Zach Easton is the natural person who has voting and investment control over the shares held by Coronado Capital Partners, LP. Zach Easton disclaims beneficial ownership of the shares. Number of shares owned before the offering include 30,770 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(89)	William Hechter is the natural person who has voting and investment control over the shares held by Excalibur Special Opportunities, LP. William Hechter disclaims beneficial ownership of the shares. Number of shares owned before the offering include 153,847 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(90)	Number of shares being registered include up to 11,539 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(91)	Number of shares being registered include up to 7,693 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(92)	Stewart R. Flink is the natural person who has voting and investment control over the shares held by Next View Capital, LP. Stewart R. Flink disclaims beneficial ownership of the shares. Number of shares owned before the offering include 60,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(93)	Steven Crosby is the natural person who has voting and investment control over the shares held by Proximity Fund, LP. Steven Crosby disclaims beneficial ownership of the shares. Number of shares owned before the offering include 60,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(94)	Number of shares being registered include up to 3,847 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(95)	Zach Easton is the natural person who has voting and investment control over the shares held by SEI Private Trust Co. FAO JM Smucker Co. Master Trust. Zach Easton disclaims beneficial ownership of the shares. Number of shares owned before the offering include 76,924 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(96)	Stephen Parr, in his capacity as President of Par Financial Group, the investment advisor to the USX China Fund has voting control and investment discretion over the shares owned by the USX China Fund. Stephen Parr disclaim/s beneficial ownership of such shares. Number of shares owned before the offering include 12,000 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(97)	Michael Allen Finkelstein is the natural person who has voting and investment control over the shares held by Whalehaven Capital Fund, Ltd. Michael Allen Finkelstein disclaims beneficial ownership of the shares. Number of shares owned before the offering include 46,154 shares of common stock issuable upon exercise of this security holder’s warrant at an exercise price of $5.62 per share.
(98)	Represents 66,832 shares underlying warrants with an exercise price of $6.11 per share that were issued to Barretto Securities Inc. as compensation for services as placement agent in Registrant’s November Financing described above. This selling security holder is a member firm of the FINRA. Landon Barretto is the natural person who has investing and voting control over such securities. This selling security holder has no arrangement under which this selling security holder may purchase additional securities in connection with this offering. At the time of acquisition of the securities, this selling security holder had no understanding, directly or indirectly with any person to distribute the securities being offered hereunder.

PLAN OF DISTRIBUTION

We are registering the shares of Common Stock and Common Stock issuable upon exercise of the Warrants to permit the

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resale of these shares of Common Stock by the holders of the Common Stock and warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling security holders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.

     The selling security holders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling security holders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

• on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
• in the over-the-counter market;
• in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
• through the writing of options, whether such options are listed on an options exchange or otherwise;
• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
• an exchange distribution in accordance with the rules of the applicable exchange;
• privately negotiated transactions;
• short sales;
• sales pursuant to Rule 144;
• broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;
• a combination of any such methods of sale; and
• any other method permitted pursuant to applicable law.

     If the selling security holders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling security holders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the selling security holders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The selling security holders may also sell shares of Common Stock short and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling security holders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares. The selling security holders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

     The selling stockholders may pledge or grant a security interest in some or all of the Warrants or shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell

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the shares of Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling security holders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling security holders also may transfer and donate the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

     The selling security holders and any broker-dealer participating in the distribution of the shares of Common Stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of Common Stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling security holders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

     Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

     There can be no assurance that any selling security holders will sell any or all of the shares of Common Stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

     The selling security holders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling security holders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock.

     We will pay all expenses of the registration of the shares of Common Stock pursuant to the registration rights agreement, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling security holder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling security holders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the selling security holders will be entitled to contribution. We may be indemnified by the selling security holders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution.

     Once sold under the shelf registration statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands of persons other than our affiliates.

DESCRIPTION OF SECURITIES TO BE REGISTERED

     As of the date of this prospectus, our authorized capital stock consists of 120,000,000 shares of Common Stock, and 2,500,000 shares of preferred stock, no par value per share. As of January 4, 2010, an aggregate of 26,364,579 shares of common stock were outstanding. There are no shares of preferred stock outstanding.

Common Stock

     Each shareholder of our Common Stock, either in person or by proxy, may cast one vote per share of Common Stock held on all matters to be voted on. The presence, in person or by proxy, of the holders of a majority of the total number of shares entitled to vote constitutes a quorum for the transaction of business. Assuming that a quorum is present, the affirmative vote of a majority of the shares of the Company present in person or represented by proxy is required. The Company's articles of incorporation do not provide for cumulative voting or preemptive rights. Upon the occurrence of a liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and satisfaction of preferential rights of any outstanding preferred stock. The outstanding shares of common stock are, and the shares of common stock to be issued upon exercise of our warrants will be fully paid and non-assessable. To the extent that additional shares of common stock may be issued in the future, the relative interests of the then existing stockholders may be diluted.

Market For Registrant's Common Equity And Related Stockholder Matters

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Market Information

Our common stock, par value $0.001 per share (“Common Stock”), is traded on the Over-The-Counter Bulletin Board (“OTCBB”) under the symbol “LLEN” effective on January 6, 2010. As of January 4, 2010, the closing trading price is $6.62. The following table sets forth, for the periods indicated, the reported high and low closing bid quotations for our common stock as reported on the OTCBB. The bid prices reflect inter-dealer quotations, do not include retail markups, markdowns or commissions and do not necessarily reflect actual transactions.

Quarter Ended		High		Low
October 31, 2009		5.79		5.00
July 31, 2009		3.15		2.99
April 30, 2009		1.84		1.70
January 31, 2009		1.80		1.80
October 31, 2008		0		0
July 31, 2008		-N/A -		-N/A -
April 30, 2008		-N/A -		-N/A -
January 31, 2007		-N/A -		-N/A -
October 31, 2007		-N/A -		-N/A -
July 31, 2007		-N/A -		-N/A -

     As of January 4, 2010, there were approximately 26,364,579 shares of common stock issued and outstanding. There were no shares of preferred stock issued or outstanding.

Holders

As of January 4, 2010, there were approximately 2,448 record-holders of the Company’s common stock.

Dividends

     The Company has not declared or paid any cash dividends on its common stock. It intends to retain earnings, if any, to finance the development and expansion of the business. As a result, the Company does not anticipate paying dividends on our common stock in the foreseeable future. Payment of dividends, if any, will depend on our future earnings, capital requirements and financial position, plans for expansion, general economic conditions and other pertinent factors.

INTERESTS OF NAMED EXPERTS AND COUNSEL

     Kabani & Co., Inc., our independent registered public accounting firm, audited our financial statements at April 30, 2009 and April 30, 2008, as set forth in their report. We have included our financial statements and financial information in this prospectus and elsewhere in this registration statement in reliance on the report of Kabani & Co., Inc. given on their authority as experts in accounting and auditing.

     Richardson & Patel LLP has given us an opinion relating to the due issuance of the common stock being registered. The law firm of Richardson & Patel, LLP (“R & P”) owns 40,000 shares of our common stock. The aggregate number of our restricted common stock held by R & P and its affiliates includes 40,000 shares of common stock. This describes all Company securities held by Richardson & Patel LLP and its affiliates.

     The information included in this prospectus as of January 4, 2010, relating to estimates of our recoverable proven and probable coal reserves and non-reserve coal deposits was derived from reports prepared by Qujing Municipal Land and Mining Right Appraisal Firm for the DaPuAn Coal Mine and Qujing XiaGuang Geological Engineering Co. Ltd. for the SuTsong Coal Mine. This information is included and incorporated by reference in this prospectus in reliance upon this firm as an expert in matters contained in the report. These firms have given the Company consent letters to use the coal reserve reports.

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DESCRIPTION OF BUSINESS

HISTORY AND CORPORATE STRUCTURE

History

     The Company has fourteen (14) years of operating history. In 1995, the Company began as a private corporate financial consulting firm, under the name of Lee & Lam Financial Consultants, Ltd. In 1997, the Company expanded its operations into China and purchased an office in Shenzhen City as its operational center in China. In 1998, the Company assisted its Chinese entities in listing their common shares in the U.S. capital markets. In 1999, the Company's founder was appointed as a judicial member of the Insider Dealing Tribunal of Hong Kong conducting judicial inquiries on companies possibly violating the Insider Dealing Ordinance of Hong Kong. In 2000, L & L shifted its focus from consulting to the acquisition and operation of established businesses in China. In 2001, L & L became an SEC public reporting company in the United States. In 2002, the Company, together with the China Development Institute (CDI), a China think-tank, began its acquisition projects. To gain hands-on experience, in the same year, L & L acquired a minority equity ownership of a computer software company in Chen-Do City, China. During 2002, the Company was appointed as an Economic Advisor of the municipal government of Tong Shan City. Over the span of 2004 and 2005, L & L acquired a 60.4% equity ownership interest in Lieurkong Machinery Co., Ltd. (“LEK”), a Chinese air compressor company located in Liuzhou, China. Effective February 2008, another 20% of LEK’s equity ownership was assigned by a minority shareholder to L & L.

     In 2006, the Company acquired a 60% equity ownership of KMC, a coal wholesale business. In 2007, the remaining 40% of the equity ownership of KMC was assigned to the Company by the minority shareholder of KMC. In January 2008, the Company expanded KMC’s operations by injecting capital and developing its two new coal mines; Tian-Ri Coal Mine in Yunnan of China, a coal mine in Laos (both mines are in a development stage without an operating license nor revenue). The Company appointed Mr. Dickson V. Lee, MBA, CPA, as Chairman of its KMC energy subsidiary in January 2008. On June 18, 2008, the Company received a Certificate of Appreciation from the United States Department of Commerce for its outstanding contribution to the U.S. business community. In May 2008, the Company acquired a 60% equity ownership interest in two (2) coal mining operations (DaPuAn Mine and SuTsong Mine, provisional name L & L Coal Partners, “2 Mines”). In January 2009, the Company disposed of the entire LEK air-compressor segment, to focus on its coal (energy) business. In August of 2009, the Company, through its Chinese nominee, received an additional 20% of equity ownership interest of the 2 Mines. In October of 2009, the Company acquired 93% of Hon Shen Coal Co. Ltd. (with two distinctive operations - coal washing and coal coking) by increasing its 65% equity ownership of Hon Shen’s coal washing operation that it acquired in July 2009 to a 93% equity ownership and also by acquiring 93% of Hon Shen’s coal coking operation.

Our Current Corporate Structure

Our current organizational structure is as follows (the percentages depict the current equity interests):

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(1)	In accordance with applicable PRC regulations on ownership of mining-related companies, this equity ownership is held in trust for the benefit of the Company by a Chinese citizen nominee.

ACQUISITIONS AND DISPOSITIONS OF BUSINESS ENTITIES IN CHINA

     The Company performs quantitative financial reviews to determine its acquisition and disposition strategies. With its management’s bilingual abilities, analytical skills, and China-in-Country experience that it has developed over the past fourteen (14) years, the Company communicates well with Chinese business communities and believes that it can continue to acquire, develop, and operate additional profitable energy operations in China.

Disposal of Air Compressor Operation

     On January 23, 2009, the Company entered into an agreement to dispose of its LEK air compressor subsidiary, at which point the air compressor operations became a discontinued operation of the Company. In accordance with U.S. GAAP, the air compressor’s income (net) was reported separately on the consolidated statements of income and was labeled as a discontinued operation. In addition, for comparative purposes, the discontinued LEK information was disclosed for the three months and nine months ended on January 31, 2009, and January 31, 2008, respectively. According to the terms of the agreement, L & L returned all the shares it owned in LEK to the minority shareholders of LEK; in return, the minority shareholders of LEK returned all the shares they owned in L & L to the Company. Accordingly, the Company received 1,708,283 L & L common shares valued at $4,168,211, while the Company returned 1,517,057 shares and held 191,226 shares, or 9% of shares, as remaining interest in LEK. The remaining 9% of LEK minority equity interest and related assets were in process to be disposed of by L & L via an asset exchange with GuangZhou City Dan Yue Material Trading Company, a coal wholesale and coal equipment developer in GuangZhou City (“DYTCo”) on April 18, 2009; however, due to technical reasons, the exchange was held off. See Note 1 to the consolidated financial statements for the years ended April 30, 2009 below for additional detail. As part of the disposal, LEK agreed to distribute all post-acquisition earnings of LEK to L & L for the period from December 2004 to January 2009 (up to the date of disposal). As a result of the disposal, the Company recognized a net income from discontinued operations of $145,220 for the year ended April 30, 2009 and a disposal loss of $382,961 for the year ended April 30, 2009.

Acquisitions

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     Starting in 2002, the Company invested in certain Chinese private businesses on a small scale, to gain hands-on knowledge of operating businesses in China. Over the fiscal years ended in 2004, 2005, and 2008, the Company acquired an aggregate 80.4% equity ownership interest in LEK, an air compressor manufacturer that operates in Liuzhou, China. In 2006, the Company acquired KMC, which conducts coal consolidation and has been in the coal wholesale business for the past thirteen (13) years. As of April 30, 2009, L & L controlled 100% of KMC’s equity ownership interests. In May 2008, the Company acquired controlling equity ownership interests in two operating coal mines located in Yunnan Province – the DaPuAn Mine and the SuTsong Mine (the “2 Mines")

     On July 16, 2009, the Company acquired a 65% equity ownership interest in two coal washing facilities (with 300,000 tons of coal washing capacity) from Hon Shen Coal Co. Ltd. (“Hon Shen”). On October 23, 2009, the Company executed that certain Acquisition and Capital Increase Agreement (hereinafter the “Original Hon Shen Agreement”), with Hon Shen pursuant to which the Company will: (a) increase its equity ownership interest in Hon Shen’s coal washing facilities from a 65% equity ownership interest to a 93% equity ownership interest; and (b) L&L will acquire 93% equity interest in Hon Shen’s coking facilities, thus reaching an overall 93% ownership of in both the coal washing and coking operations of Hon Shen. Hon Shen’s coal washing facilities have a combined annual capacity of approximately 300,000 tons between two facilities: a 210,000-ton coal washing plant completed in July 2009 using Dense Medium Separation (DMS) technology, and an existing 90,000-ton plant using jig separation technology. Hon Shen’s coking facilities has a production capacity of approximately 150,000 tons with approximately RMB 150 Million in estimated revenues. Total consideration for the additional equity ownership interest of RMB 55,800,000 (approximately $8,180,000 USD) was to be paid by the Company through a combination of cash and common stock issuance payments that will be contributed into the registered capital of Hon Shen. However, on December 9, 2009, the Company executed a revised Acquisition and Capital Increase Agreement (hereinafter the “Revised Hon Shen Agreement”), with Fuchang Wang, the sole equity owner of Hon Shen Coal Co. Ltd. (“Hon Shen”) resulting in more favorable terms than the Original Hon Shen Agreement.

     Pursuant to the Revised Hon Shen Agreement (and similar to the Original Hon Shen Agreement), L&L shall increase its equity ownership interest in Hon Shen from a 65% equity ownership interest to a 93% equity ownership in Hon Shen’s coal washing facilities. Under the Revised Hon Shen Agreement, L&L shall also own 93% equity interest in Hon Shen’s coking facilities, and thus L&L shall own 93% of the entire Hon Shen’s two distinctive business operations -- a) coal washing and b) coal coking. Hon Shen’s coking facilities has a production capacity of approximately150,000 tons with approximately RMB 150 Million in estimated revenues. Further, under the terms of the Original Hon Shen Agreement, L&L’s total consideration due as payment for its acquisition of the additional equity ownership interest in Hon Shen would have totaled RMB 55,800,000 (approximately $8,180,000 USD), which L&L would have had to pay through a combination of cash and common stock over three payments. However, under the renegotiated terms of the Revised Hon Shen Agreement, L&L’s total consideration for the additional equity ownership is now RMB 26,400,000 (approximately $3,860,000 USD), which shall be paid as follows: (1) RMB 6,000,000 (approximately $870,000 USD) in cash within three (3) months of the government’s approval of the acquisition and conversion of Hon Shen into a Sino-foreign cooperation company (see related discussion below); and (2) RMB 20,400,000 (approximately $2,990,000 USD) in cash to be paid within two (2) years of the government’s approval of the acquisition and conversion (these two payments are collectively referred to herein as the “Two L&L Payments”). Upon approval of Hon Shen as a Sino-foreign cooperation company, Hon Shen shall change its name to “Yunnan L&L Hon Shen Coal Company Limited.” Mr. Wang agreed to assume all of Hon Shen’s pre-conversion debts and liabilities and shall be liable for any losses incurred by the Registrant and the SFCC (defined below) that result from such pre-conversion debts and liabilities. The Revised Hon Shen Agreement shall be effective as of October 23, 2009.

     On December 9, 2009, the Registrant also entered into that certain Cooperative Operation Contract to Establish Yunnan Li Wei Hon Shen Coal Co. Ltd. Agreement (the “Cooperative Agreement”) with Hon Shen’s sole equity owner Mr. Wang, which sets forth the agreements between the parties in connection with the conversion of Hon Shen into a Sino-foreign cooperation company (“SFCC”) and the management of the SFCC. The total registered capital of the SFCC shall be RMB 30,000,000, which shall be injected by both parties over a period of twenty four (24) months after government approval of the SFCC is obtained. L&L shall own a 93% equity ownership interest of the SFCC by its purchase of RMB 26,400,000 of the SFCC’s registered capital through the Two L&L Payments described above. Mr. Wang shall own the remaining 7% equity ownership interest in the SFCC based on his ownership of the remaining RMB 3,600,000 in SFCC’s registered capital, in the form of the Hon Shen’s entire existing coal washing and coking facilities. The SFCC’s name shall be “Yunnan L&L Hon Shen Coal Company Limited” and its board of directors (the “Board”) shall have five (5) total members, consisting of four (4) directors chosen by L&L and one (1) director chosen by Hon Shen. The Chairman of the Board and the SFCC’s President shall be appointed by L&L and Hon Shen shall appoint the Vice Chairman of the Board and the SFCC’s Vice President. The SFCC may be terminated, subject to approval by the board of directors and the government, if any of the following occur: (1) bankruptcy of either L&L or Hon Shen; (2) if the SFCC, after an initiation period of 3 years from the Date of Establishment (the “Initiation Period”), fails to reach its business goals and is not able to make a profit in the two years following the Initiation Period; (3) the SFCC suffers: (A) “Significant Damage”, which is defined as an annual loss exceeding 25% of the SFCC’s total registered capital by a single cause in the two years following the Initiation Period, or (B) accumulated damages occurring during the Initiation Period from a single cause exceeding 50% of the SFCC’s total registered capital (except for the cause of force majeur); (4) the SFCC suffers Significant Damage in any fiscal year because its operations are halted for a period of 180 consecutive days (except for stoppages cause by force majeur); (5) bankruptcy of the SFCC or when SFCC’s liabilities exceed its assets, or when SFCC’s business license or permit to operate is revoked, void or not renewed upon expiration; (6) failure of

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either party to perform its duties under the Cooperative Agreement or misrepresentations by either party, and the breaching party fails to correct or remedy such failure to perform or misrepresentation within 60 days of its receipt of notice of such failure or misrepresentation; (7) both parties mutually agree to terminate the Cooperative Agreement; (8) violation of confidentiality by either party; or (9) breach of the Cooperative Agreement by either party. If the SFCC is dissolved and its assets are liquidated, the proceeds from the liquidation shall first be used to pay any remaining debts and liabilities of the SFCC, and then any remaining amount shall be distributed pro rata according to each party’s equity ownership interest.

OUR OPERATIONS Coal Mine Operations

     The Company conducts its coal (energy) operations in Yunnan province, southwest China. As of October 31, 2009, L&L has 3 subsidiaries; the KMC coal wholesale operations, 2 coal mining operations (DaPuAn Mine and SuTsong Mine) including DaPuAn’s coal washing operations (the “2 Mines”), and the Hon Shen Coal Co. Ltd.(coal washing operation and coking operation) (“Hon Shen”). The majority controlling interest (65%) of Hon Shen’s new coal washing facility was acquired by 10 million RMB (equivalent to $1,464,129) on July 16, 2009. L&L increased its equity ownership interest in Hon Shen's coal washing facilities from a 65% equity ownership interest to a 93% equity ownership interest on October 23, 2009. In addition, L&L owns 93% equity interest in Hon Shen's coking facilities, thus reaching an overall 93% ownership of both Hon Shen's coal washing and coking operations. To focus on coal (energy) operation, the Company disposed of its majority interest of LEK air-compressor operations in January of 2009.

     On August 1, 2009, the Company increased its equity ownership of the 2 Mines, from 60% to 80% with no consideration given by the Company to the noncontrolling interest holders.

DaPuAn Coal Mine

     The address of the DaPuAn Coal Mine is located at Bai Zi Chong, DaPuAn Village, Xiongbi Town, Shizong County, Yunnan Province, China. The map below shows the location of DaPuAn Coal Mine:

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     Through our subsidiary L&L Coal Partners (which includes DaPuAn coal mine and SuTsong coal mine), we operate the DaPuAn coal mine (“DaPuAn Mine”), an underground coal mine - which is located in Bai Zi Chong, DaPuAn Village, Xiongbi Town, Shizong County, Yunnan Province, China, and is accessible by public roads.

     Prior to the Company’s acquisition of majority controlling interest of the DaPuAn mine, the mine was separately operated by SeZone County DaPuAn Coal Mine pursuant to resource mining permits effective from 2009 through 2015. In May 2008, the Company acquired majority controlling ownership interest in the resource mining permits and the mining rights to the DaPuAn mine and assumed mining operations.

     The DaPuAn mine, including the mine site and the underlying coal and other minerals, is owned by the PRC. Accordingly, the amount of coal that the Company can extract from the mine is based on a mining right issued by the Yunnan Province Municipal Bureau of Land and Resource. The mining right is issued pursuant to a reserves appraisal report submitted by government authorized mining engineers, and the mining right is issued upon approval of such appraisal report by the Qujing Municipal Bureau of Land and Resource in Yunnan, China. The amount of coal that can be extracted under the mining right represents what the Company can economically and legally extract under applicable PRC law and regulations and as determined by the Yunnan Province Municipal Bureau of Land and Resource.

     Under current mining rights for the DaPuAn Mine, 900,000 tons of coal are permitted to be extracted from DaPuAn mine, provided that the coal underlying the mining rights is fully paid for within 6 years from the issuance date unless specific good cause exists for an extension. The price is determined on a per ton basis, and is subject to change based on the prevailing market price as determined by the State Bureau of Coal Industry of Yunnan. The original owner paid the one-time extraction license fee when it acquired the original mining rights to the mine prior to the L&L Coal Partners’ acquisition of the DaPuAn Mine. L&L Coal Partners pays the required government taxes for the coal it has extracted from the DaPuAn Mine.

     In addition to the mining right, L&L Coal Partners operates the DaPuAn mine pursuant to a resource mining permit issued by the Yunnan Province Municipal Bureau of Land and Resource, which specifies the coordinates of the mining area and the mine’s designated annual production capacity. The resource mining permit for the DaPuAn mine estimates that the mine’s capacity is 150,000 tons per year based on mine operating conditions, and the Company is also in the process of expanding the mine’s capacity to 300,000 tons per year.

     Coal extracted from DaPuAn coal mine is for industrial use. Coal is extracted from DaPuAn mine using a fully-mechanized inclined shaft mining method in which the wellhead and the shaft station in the bottom of the mine are not in the same level and the mine path has an inclined angle with the shaft station of 5 degrees to 30 degrees.

     We currently extract approximately 150,000 tons of coal per year from the DaPuAn Mine. All raw coal is loaded and transported by a chain conveyor into crates which are carried out to the surface by an electrical winch. Each crate carries approximately 0.75 metric tons, and approximately 800 crates are carried to the surface during each 8-hour mining shift. Air compressors are provided for underground air tool use. Electrical power is supplied internally from the Company’s own power stations through state-owned power lines, and supplied to the underground work site through a double-circuit cable designed to mitigate and circumvent potential power supply disruptions.

     Normal water inflow into the mine is controlled by a system of ditches, sumps, pumps and drainpipes installed throughout the mine tunnels. The mine’s ventilation system includes exhaustive fans on the surface of the main incline. Auxiliary fans are used as needed. The present fans are capable satisfying ventilation requirements of the mining operation.

     The DaPuAn Mine’s annual production volumes from 2005 to 2008, and the weighted average selling price per tonne for each year, are as follows:

				Weighted Average
		Annual Production		Price Per Tonne
Year		(Tonnes)		(RMB)
Ended
2005		90,000		405
2006		90,000		510
2007		90,000		612
2008		150,000		793

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     The extracted coal is transported by truck to a warehouse located approximately 300 meters from the mine site and processed at our coal-washing facility for coal washing and sorting. The coal washing process can eliminate impurity of the coal, thus improve quality of the coal and increase value of coal products. Test samples are taken prior to and after the coal-washing process, to analyze and determine efficiency of the washing process, and determine if coal is suitable as coking coal, based primarily on moisture, ash content, and sulfur percentage. Out of the coal produced at the DaPuAn Mine, typically a portion is sold to customers as raw coal, a portion is sold after the washing process as washed fine coal, and approximately 50% of the coal is sold as coking coal when it meets certain chemical requirements, such as low ash, and high K index (for coal stickiness). Coking coal is sent to a coking plant to further process it into high valued coke. Coke is a critical material for making of steel. Currently, the DaPuAn Mine is in the process of expanding its mining capacity to 300,000 tons of annual coal production.

The following definitions apply to our mining operations as per Industry Guide 7 of the Securities Act Industry Guides.

• Reserve. That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Note: Reserves are customarily stated in terms of “ore” when dealing with metalliferous minerals; when other materials such as coal, oil, shale, tar, sands, limestone, etc. are involved, an appropriate term such as “recoverable coal” may be substituted.
• Proven (Measured) Reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling, and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
• Probable (Indicated) Reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

     As reported in the Qujing Municipal Land and Mining Right Appraisal Firm report dated June 30, 2008, the total Proven (Measured) reserve for the DaPuAn Mine was 7.81 million tons.

SuTsong Coal Mine

     The address of the SuTsong Coal Mine is located at A’ang Town, Luoping County, Yunnan Province, China. The map below shows the location of SuTsong Coal Mine:

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     Through our subsidiary L&L Coal Partners, we currently operate the SuTsong coal mine (“SuTsong Coal Mine”), an underground coal mine - which is located in A’ang Town, Luoping County, Yunnan Province, China, and is accessible by public roads.

     Prior to the Company’s acquisition of majority controlling interest of the SuTsong mine, the mine was separately operated by LoPing County SuTsong Coal Mine pursuant to resource mining permits effective from 2009 through 2015. In May 2008, the Company acquired majority controlling ownership interest in the resource mining permits and the mining rights to the SuTsong mine and assumed mining operations.

     The SuTsong mine, including the mine site and the underlying coal and other minerals, is owned by the PRC. Accordingly, the amount of coal that the Company can extract from the mine is based on a mining right issued by Yunnan Province Municipal Bureau of Land and Resource. The mining right is issued pursuant to a reserves valuation report submitted by government authorized mining engineers, and the mining right is issued upon approval of such valuation report by the Qujing XiaGuang Geological Engineering Co. Ltd. in Yunnan, China. The amount of coal that can be extracted under the mining right represents what the Company can economically and legally extract under applicable PRC law and regulations, and as determined by the by Yunnan Province Municipal Bureau of Land and Resource.

     Under current mining rights for the SuTsong Mine, 540,000 tons of coal are permitted to be extracted from SuTsong mine, provided that the coal underlying the mining rights is fully paid for within 6 years from the issuance date unless specific good cause exists for an extension. The coal price is determined on a per ton basis, and is subject to change based on the prevailing market price which is influenced by the State Bureau of Coal Industry of Yunnan. The original owner paid the one-time extraction license fee when it acquired the original mining rights to the mine prior to the L&L Coal Partners’ acquisition of the SuTsong Mine. L&L Coal Partners pays the required government taxes for the coal it has extracted from the SuTsong Mine.

     In addition to the mining right, L&L Coal Partners operates the SuTsong mine pursuant to a resource mining permit issued by the Yunnan Province Municipal Bureau of Land and Resource, which specifies the coordinates of the mining area and the mine’s designated annual production capacity. The resource mining permit for the SuTsong mine estimates that the mine’s capacity is 90,000 tons per year based on mine operating conditions, and the mine’s capacity can be expanded to150,000 tons per year.

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     Coal extracted from SuTsong coal mine is for industrial use. Coal is extracted from SuTsong mine also using the fully-mechanized inclined shaft mining method described above for the DaPuAn Mine.

     We currently extract approximately 90,000 tons of coal per year from the SuTsong Mine. All raw coal is loaded and transported by a chain conveyor into crates which are carried out to the surface by an electrical winch. Each crate carries approximately 0.75 metric tons, and approximately 480 crates are carried to the surface during each 8-hour mining shift. Rock is used for floor material with the excess sent to the surface for disposal. Air compressors are provided for underground air tool use. Electrical power is supplied internally from the Company’s own power stations through state-owned power/utility lines, and supplied to the underground work site through a double-circuit cable designed to mitigate and circumvent potential power supply disruptions.

     Normal water inflow into the mine is controlled by a system of ditches, sumps, pumps and drainpipes installed throughout the mine tunnels. The mine’s ventilation system includes an exhaustive fan on the surface of the main incline. Auxiliary fans are used as needed. The present mine fan is capable of satisfying ventilation demands of the mining operation.

     The SuTsong Mine’s annual production volumes from 2005 to 2008, and the weighted average selling price per tonne for each year, are as follows:

				Weighted Average
		Annual Production		Price Per Tonne
Year		(Tonnes)		(RMB)
2005		30,000		365
2006		30,000		433
2007		90,000		550
2008		90,000		761

     The extracted coal is shipped via trucks to warehouses located approximately 200 meters from the mine site and processed at our coal-washing facility for washing and sorting. Samples are taken prior to and after the coal-washing process, to analyze and determine coking readiness which is based primarily on coal moisture, ash content, sulfur percentage, and volatile contents. Out of the coal produced at the SuTsong Mine, typically a portion is sold to customers as raw coal, and certain portions as washed coal.

     As reported in the Qujing XiaGuang Geological Engineering Co. Ltd. report dated July, 2007, the total Proven (Measured) reserve for the SuTsong Mine was 2.06 million tons, which is being updated.

TianRi Coal Mine (in a development stage)

     TianRi Coal Mine is still under development which has not received a commercial license to generate revenue as of January 4, 2010. Since the Wall Street down turn in 2008, the Company has slowed down its development on non-revenue producing mines, while focuses on acquisitions of existing mines with coal operating licenses, revenue, and positive cash flows. TianRi Mine is located in Mohong Township, Fuyuan County, Yunnan Province, China, the same operating region of L&L coal business.

The map below shows the location of TianRi Coal Mine:

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     Through our subsidiary Kunming Biaoyu Industrial Boiler Co., Ltd. (“KMC”), we currently own 80% of the TianRi coal mine (“TianRi Mine”), an underground coal mine which is in an early development stage, located in Mohong Township, Fuyuan County, Yunnan, China, accessible by public roads. Currently, the TianRi Mine is under a development stage, thus it has not received a government commercial license to produce coal, despite that a total Proven (Measured) reserve was 52.6 million tons was reported by an independent appraiser (ZhongLan Mining Ltd. Co.) dated May 20, 2007. As of January 4, 2010, the TianRi Mine has not in a position to produce revenue nor it is expected to receive a mining operating license to start producing coal related income in a near future. All China coal mine reserves, the mine site, the underlying coal and other minerals are legally owned by the Chinese government. Accordingly, any coal that the Company may extract from the mine is based on a mining right/license issued by Yunnan Province Municipal Bureau of Land and Resource. The amount of coal authorized on a government mining license is based on a reserves appraisal report submitted by government approved mining engineers. The TianRi Mine engaged ZhongLan Mining Ltd. Co. of Yunnan, China, to recommend an economically and legally extract amount under applicable PRC law and regulations which is finalized by the Yunnan Province Municipal Bureau of Land and Resource. Until TianRi Mine receives a government mining license to obtain an exclusive mining right to operate the underground mine, the TianRi Mine shall have minimal commercial value.

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     Prior to the Company’s acquisition of majority controlling interest of the TianRi mine through the Company’s acquisition of KMC, the mining right for the TianRi Mine was separately owned by KMC. As reported in the ZhongLan Mining Ltd. Co. report dated May 20, 2007, the total Proven (Measured) reserve was 52.6 million tons. As of January 4, 2009, the Company has suspended further development of TianRi Mine as it require continuous cash injection into the TianRi Mine, and the Company will instead focus on acquiring established coal related entities and mines which generate revenue, positive cash-flows, and profits to improve L&L earning per share and the shareholder value. The Company will hold off on development of this mine until the economy is fully recovered in 2010.

Laos Coal Mine

     Laos Coal Mine (“Laos Mine”) is physically located in Laos, a country south of China. The Laos Mine is a surface mine, which is located approximately 30 miles south to the Laos-China boarder, and is in an exploration stage. The Laos Mine has not received a government commercial license to produce any coal as of January 4, 2010. As of January 4, 2009, the Company has also suspended its activities in connection with the Laos Mine as it requires continuous cash injection into the project. Instead, the Company will focus on acquiring established coal related entities and mines, which generate revenue, positive cash-flows and profits to improve L&L’s earning per share. The Company will hold off on development of this mine until the economy is fully recovered in 2010.

Coal Consolidation and Wholesale Operations

     In addition to mining coal, we engage in coal trading for profit through our subsidiary KMC. Depending on market conditions, KMC may broker coal from small independent mine operators in its surrounding areas who may lack the means to transport coal from their mine sites or are otherwise unable to sell their coal due the size of their operations. KMC has two large coal storage facilities for its consolidation and wholesale operations with railroad loading access. For the 12 month period ended on October 31, 2009, KMC acquired approximately 110,000 tons of coal from these small mines to trade.

Coal Washing Operations

     Through our controlling equity ownership in Hon Shen’s coal-washing operations, we operate two coal-washing facility at the Hon Shen’s plant site that is capable of processing up to 300,000 tons of coal per year between two facilities: a 210,000-ton coal washing plant completed in July 2009 using Dense Medium Separation (DMS) technology, and an existing 90,000-ton plant using jig separation technology. In addition, construction of a coal washing facility at our DaPuAn Mine site, which we estimate will have approximately 290,000 tons of annual washing capacity using a more jig method of coal washing, was recently completed and is currently awaiting government approval.

     Approximately 1.3 - 1.4 tons of raw coal yield 1 ton of washed coal. Currently, 100% of the washed coal produced by the Hon Shen coal-washing facility is sold to third parties. We expect that a portion of the washed coal produced by our new DaPuAn coal-washing facility will be for our own coking plants and the remaining portion of the washed coal will be sold to third party buyers.

In addition to washed coal, the coal-washing process produces two byproducts:

     (1) “Medium” coal, a PRC coal industry classification, is coal that does not have sufficient thermal value for coking, and is mixed with raw coal and even coal slurries, and sold for home and industrial heating purposes; and

     (2) Coal slurries, sometimes called coal slime, are the castoffs and debris from the washing process. Coal slurries can be used as a fuel with low thermal value, and are sold “as is” or mixed with “medium” coal.

     Hon Shen’s annual production volume of washed coal for the years ended December 31, 2006 to December 31, 2009, is as follows:

		Annual Production (Tons)
Fiscal		Washed		Medium		Coal
Year		Coal *		Coal		Slurries
2006		50,000		5,000		10,000
2007		70,000		7,000		14,000
2008		90,000		9,000		18,000
2009		250,000		25,000		50,000

 

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Coke Manufacturing Operations

     Coke is a hardened, solid carbonaceous residue derived from low-ash, low-sulfur bituminous coal from which the volatile constituents are driven off by baking in an oven without oxygen at high temperatures so that the fixed carbon and residual ash are fused together. Volatile constituents of the coal include water, coal-gas, and coal-tar. Through our controlling equity ownership of Hon Shen’s coking facilities, we produce metallurgical coke.

     Metallurgical coke is primarily used for steel manufacturing. China has exacting national standards for coke, based upon a variety of metrics, including most importantly, ash content, volatilization, caking qualities, sulfur content, mechanical strength and abrasive resistance. Typically, metallurgical coke must have more than 80% fixed carbon, less than 15% ash content, less than 0.8% sulfur content and less than 1.9% volatile matter. According to national standards, metallurgical coke is classified into three grades –Grade I, Grade II and Grade III, with Grade I being the highest quality – and chemical coke is its separate grade. Generally, customers do not provide specifications for coke, except that we may occasionally make requested adjustments, for instance to moisture content, as requested by customers from time to time. The amount of each type of coke that our coking facility produces is based on market demands, although historically its customers have only required Grade II and III metallurgical coke. For the quarter ended October 31, 2009, approximately 20% of the coke produced at the Hon Shen coking facilities was Grade II and 80% was Grade III.

     Metallurgical coke is produced using an identical manufacturing process. Coke is produced at our coking facility from a series of fine-Type coke ovens lined up in a row with an annual capacity of 300,000 tons. The metallurgical coke produced has typical characteristics of 80% fixed carbon, less than 13% ash, less than 0.8% volatile matter and less than 1.9% sulfur.

     Coal that is purchased from third party providers and processed at the Hon Shen coal-washing facility is sent to a coal blending room where it is crushed and blended to achieve an optimal coking blend. Samples are taken from the coal blend and tested for moisture, chemical composition and other properties. The crushed and blended coal is transported by conveyor to a coal bin to be fed into the waiting oven below. After processing through the three temperature-controlled ovens at temperature of 1200°C (2,192 °F), hot coke is pushed out of the oven chamber onto a waiting coke cart, transported to an adjacent quench tower where it is cooled with water spray, and hauled to a platform area to be air-dried. Coke samples are taken at several stages during the process and analyzed in the company’s testing facility, and data is recorded daily and kept by technicians. After drying, the coke is sorted according to size to meet customer requirements.

The annual production volumes of metallurgical coke and for 2006 to 2009, are as follows:

Fiscal Year		Annual Production (Tons)
		Metallurgical Coke
2006		60,000
2007		70,000
2008		90,000
2009		100,000

     Hon Shen has historically sourced all of the coal it uses for coke production from Xiao He Qin Mine, Ji Jin Mine, Lu Cai Chong Mine. However, we plan to use a substantial portion of the metallurgic coke-quality coal extracted from our DaPuAn Mine and SuTsong Mine for coke production. However, if the amount of coal supplied by DaPuAn and SuTsong Mines is not sufficient for Hon Shen’s full production capacity, then we will also source such coal from third parties to meet the coal needs of the coking plant.

Coal Emission Recycling

     In the traditional coking process, small amounts of coking gas are emitted into air. Hon Shen has installed equipments to capture the emitted gas, and to recycle the gas emission into benzene and other byproducts in compliance with the Chinese environmental standards and requirements.

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Electricity Generation

Hon Shen purchases electricity from time to time, as needs arise, from LuXi County Electricity Co.

RECENT FINANCINGS October 2009 Financing

     On October 8, 2009, (the "Company") entered into a Securities Purchase Agreement with accredited investors (the "October Buyers"), pursuant to which the Company sold issued Units ( the "October Units") to the October Buyers, consisting of common stock and common stock warrants. Each Unit purchased consisted of one share of unregistered common stock of the Company (the "Common Stock") and 6/10ths of a warrant (the "October Warrants") to purchase a share of common stock at an exercise price of $5.62 per share and expiring in October 2014 (as exercised, collectively the "October Warrant Shares"). Each Unit was priced at $3.90. The Company sold a total of 1,371,021 October Units for gross proceeds of $5,346,980 and representing 1,371,021 shares of Common Stock. Pursuant to the terms of October Warrants, the October Buyers also became entitled to purchase up to approximately 822,613 shares of Common Stock of the Company at an exercise price of $5.62 per share. The October Warrants have a term of 60 months after the issue date of October 8, 2009. The exercise price and number of shares issuable upon exercise of the October Warrants are subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The October Warrants also have a cashless exercise provision that such holders may utilize after six months from the issuance date of such warrant if a registration statement covering the shares of Common Stock underlying the October Warrants is not available to the Warrant holders and a provision which limits the October Warrant holders right to exercise the October Warrant if such exercise would result in the holder owning more than 9.99% of the Common Stock. Laidlaw & Co. (UK) Ltd., a member of FINRA, acted as the placement agent for the transaction which was closed on October 8, 2009.

     Pursuant to the Registration Rights Agreements (the “Registration Rights Agreement”) executed by and between the Company and the October Buyers in connection with the October Financing, the Company is required to file a registration statement on Form S-1 or Form S-3 (the "Registration Statement") within 90 days after the closing of the transaction for purposes of registering the resale of all of the Common Stock and any shares of capital stock of the Company issued or issuable with respect to the October Warrant Shares and the October Warrants as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on exercises of the October Warrants (together with the October Warrant Shares, the "October Registrable Securities"). If the Company fails to timely file the Registration Statement by the filing deadline, it will be required to pay cash penalties in the amount of one percent (1%) of the October Unit price up to a maximum of six percent (6%), subject to the terms of the Registration Rights Agreement.

     Also, in connection with October Financing, Mr. Dickson V. Lee, the Company’s Chief Executive Officer, the Company and the October Buyers entered into a Make Good Escrow Agreement (the “October Make Good Agreement”) pursuant to which Mr. Lee agreed to place a certain number of the Company's common shares that he owns into escrow (the “October Escrow Shares”). Pursuant to the terms of the October Make Good Agreement, one-half of the October Escrow Shares will be released back to Mr. Lee if the Company has equal to or more than $32,040,000 in after tax net income before non-controlling interest (calculated in accordance with U.S. GAAP, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending April 30, 2010 (“2010 Form 10-K”) and as adjusted under the terms of the October Make Good Agreement) for the fiscal year ending April 30, 2010; otherwise, these October Escrow Shares will be distributed to the October Buyers in proportion to each October Buyer’s purchase price for its October Units. Likewise, the remaining half of the October Escrow Shares will be released back to Mr. Lee if the Company has equal to or more than $108,118,950 in net revenues (calculated in accordance with U.S. GAAP, as reported in the 2010 Form 10-K and as adjusted under the terms of the October Make Good Agreement); otherwise, these October Escrow Shares will be proportionately distributed to the October Buyers.

     The October Financing was completed through a private placement to accredited investors and is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended ("Securities Act"). Laidlaw & Company (UK) Ltd. (“Laidlaw”) acted as the placement agent and financial advisor for this transaction. Laidlaw received cash fees consisting of eight percent (8%) of the gross proceeds and warrants to purchase 109,682 shares of the Company's common stock at $6.11 per share under the same terms as the Unit warrants.

November 2009 Financing

     On November 6, 2009, (the "Company") entered into a Securities Purchase Agreement with accredited investors (the "November Buyers"), pursuant to which the Company sold issued Units (the "November Units") to the November Buyers, consisting of common stock and common stock warrants. Each Unit purchased consisted of one share of unregistered common stock of the

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Company (the "Common Stock") and 6/10ths of a warrant (the "November Warrants") to purchase a share of common stock at an exercise price of $5.62 per share and expiring in November 2014 (as exercised, collectively the "November Warrant Shares"). Each Unit was priced at $3.90. The Company sold a total of 835,389 November Units for gross proceeds of $3,258,000 and representing 835,389 shares of Common Stock. Pursuant to the terms of November Warrants, the November Buyers also became entitled to purchase up to approximately 501,236 shares of Common Stock of the Company at an exercise price of $5.62 per share. The November Warrants have a term of 60 months after the issue date of November 6, 2009. The exercise price and number of shares issuable upon exercise of the November Warrants are subject to customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. The November Warrants also have a cashless exercise provision that such holders may utilize after six months from the issuance date of such warrant if a registration statement covering the shares of Common Stock underlying the November Warrants is not available to the Warrant holders and a provision which limits the November Warrant holders right to exercise the November Warrant if such exercise would result in the holder owning more than 9.99% of the Common Stock. The November Financing closed on November 6, 2009.

     Pursuant to the Registration Rights Agreements (the “Registration Rights Agreement”) executed by and between the Company and the November Buyers in connection with the November Financing, the Company is required to file a registration statement on Form S-1 or Form S-3 (the "Registration Statement") within 90 days after the closing of the transaction for purposes of registering the resale of all of the Common Stock and any shares of capital stock of the Company issued or issuable with respect to the November Warrant Shares and the November Warrants as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on exercises of the November Warrants (together with the November Warrant Shares, the "November Registrable Securities"). If the Company fails to timely file the Registration Statement by the filing deadline, it will be required to pay cash penalties in the amount of one percent (1%) of the November Unit price up to a maximum of six percent (6%), subject to the terms of the Registration Rights Agreement.

     Also, in connection with November Financing, Mr. Lee, the Company’s Chief Executive Officer, the Company and the November Buyers entered into a Make Good Escrow Agreement (the “November Make Good Agreement”) pursuant to which Mr. Lee agreed to place a certain number of the Company's common shares that he owns into escrow (the “November Escrow Shares”). Under the terms of the November Make Good Agreement, since $3,258,000 was raised in this financing, the actual number of November Escrow Shares that are subject to this Make Good Agreement is approximately 395,615 shares (the “Actual November Escrow Shares”). Further, pursuant to the terms of the November Make Good Agreement, one-half of the Actual November Escrow Shares will be released back to Mr. Lee if the Company has equal to or more than $32,040,000 in after tax net income before non-controlling interest (hereinafter referred to as the “2010 Actual ATNI” and which shall be calculated in accordance with U.S. GAAP, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending April 30, 2010 (the “2010 Form 10-K”) and as adjusted under the terms of the November Make Good Escrow Agreement) for the fiscal year ending April 30, 2010; otherwise, the aggregate number of Actual November Escrow Shares to be distributed to the November Buyers (with such distribution being in proportion to each November Buyer’s purchase price for its Units) are calculated as follows: (i) if the difference between the 2010 Guaranteed ATNI of $32,040,000 (the “2010 Guaranteed ATNI”) minus the 2010 Actual ATNI is equal to or greater than 50% of the 2010 Guaranteed ATNI, then the aggregate number of Actual November Escrow Shares to be distributed to the November Buyers in this financing on a pro rata basis shall equal 50% of the Actual Escrow Shares; or (ii) if the difference between the 2010 Guaranteed ATNI minus the 2010 Actual ATNI is less than 50% of the 2010 Guaranteed ATNI, then the aggregate number of Actual November Escrow Shares to be distributed to the November Buyers in this financing on a pro rata basis shall be calculated by multiplying: (A) 50% of the Actual November Escrow Shares times (B) a fraction with a numerator of the difference between the 2010 Guaranteed ATNI minus 2010 Actual ATNI multiplied by 2 and a denominator of the 2010 Guaranteed ATNI. Likewise, under the November Make Good Agreement, the other remaining half of the Actual November Escrow Shares will be released back to Mr. Lee if the Company has equal to or more than $108,118,950 in net revenues (hereinafter referred to as the “2010 Actual Revenue” and which shall be calculated in accordance with U.S. GAAP, as reported in the 2010 Form 10-K and as adjusted under the terms of the November Make Good Escrow Agreement); otherwise, the aggregate number of Actual November Escrow Shares to be proportionately distributed to the November Buyers shall be calculated as follows: (i) if the difference between the 2010 Guaranteed Revenue of $108,118,950 (the “2010 Guaranteed Revenue”) minus the 2010 Actual Revenue is equal to or greater than 50% of the 2010 Guaranteed Revenue, then the aggregate number of Actual November Escrow Shares to be distributed to the November Buyers in this financing on a pro rata basis shall equal 50% of the Actual November Escrow Shares; or (ii) if the difference between the 2010 Guaranteed Revenue minus the 2010 Actual Revenue is less than 50% of the 2010 Guaranteed Revenue, then the aggregate number of Actual November Escrow Shares to be distributed to the November Buyers in the November Financing on a pro rata basis shall be calculated by multiplying: (A) 50% of the Actual November Escrow Shares times (B) a fraction with a numerator of the difference between the 2010 Guaranteed Revenue minus 2010 Actual Revenue multiplied by 2 and a denominator of the 2010 Guaranteed Revenue.

     The November Financing was completed through a private placement to accredited investors and is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended ("Securities Act"). Barretto Securities Inc. (“Barretto”) acted as the placement agent and financial advisor for this transaction. Barretto received cash fees consisting of eight percent (8%) of the gross proceeds and warrants to purchase 66,832 shares of the Company's common stock at $6.11 per share under the same terms as the

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November Unit warrants. CUSTOMERS

     In the coal industry of China, our customers are primarily from the steel industry (for metallurgical coke, which is one of the two critical materials for steel making) and the electrical/ utility plants (where coal is fuel to produce steams for electricity generation). In addition, there are cement factories that also purchase our coal for cement making. For the quarter ended October 31, 2009, we had more than 100 customers who purchased our various coal related products on a long term basis, including raw coal, washed fine coal, and processed coke. We had two major customers who purchased over 10% of the Company’s total sales. They collectively accounted for approximately 42% (approximately $10.3 million USD) of our total sales and approximately 45% (approximately $8 million USD) of accountant receivables. In addition, there are four major suppliers each provided over 10% of our total purchases. These suppliers collectively supplied approximately 75% (approximately $3 million USD) of the Company’s purchases and 56% (approximately $0.8 million USD) of total accounts payable.

DISTRIBUTION

     The coal is distributed approximately 50% through direct sales, and approximately 50% through a third party wholesaler at the present time. We sell our coal through a direct sales force of approximately 200 full-time employees who market directly to our customers, who are mostly end users of coal with long term sales agreements. We also have many agreements with most third-party buyers. While individual sales might be made to a customer who is not subject to a supply agreement, if requested and we have adequate capacity at the time, most of our sales are pursuant to agreements which are signed for two- to four-year terms, with monthly adjustments on pricing. Our customers are all located in the Yunnan Province, and are all accessible by rail lines, which is the most cost effective method for coal transport and which represent the main means of transporting coal products to our customers.

COMPETITORS

     In the Yunnan Province where we operate the DaPuAn and SuTsong coal mines, KMC wholesale business, and Hon Shen coal washing and coking facilities, there are other coal mines, coking and washing players which directly compete with us. Some of our competitors may have greater financial, marketing, distribution or/and technological resources than we have, and they may have more well-known brand names in the market. Despite the fact that L & L is the only U.S. publicly-listed company operating in the region, competitors may compete with us in the coal market.

SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE PRINCIPAL SUPPLIERS

     The primary materials used in our coal mining and processing operations are: (i) steel and wood logs to support underground tunnels for the mining operations; (ii) cement for the construction of underground tunnels; and (iii) water used in our coal washing and coking production process. We procure steel and cement principally from local suppliers on a long term basis. Water is procured primarily from our own water drilling. The ultimate price of materials is set at market rates or determined through negotiation. We believe that we have well-established, cooperative relationships with our suppliers, enabling us to secure reliable supplies of the materials required in our production process. We believe that a number of alternative suppliers exist for the key materials required for coal operations, and therefore do not foresee any difficulty in obtaining adequate supplies. For the year ended April 30, 2009, two (2) major suppliers each provided over 10% of our total purchases. They collectively supplied approximately 60% (approximate $8.5 million) of the Company’s inventory and 56% (approximate $0.9 million) of total accounts payable.

     We use electricity in our operations from both local power companies and our own power facilities. Electricity prices in China are regulated by the government. Total electricity costs are not materially significant to our operations.

RESEARCH AND DEVELOPMENT

     Despite we have recruited Mr. Dennis Bracy, CEO of the US-China Clean Energy Forum, a non-profit organization, as our Independent Board Member and retained Mr. Art Chen, a MIT scientist as an L&L Advisor (part-time), to help us develop clean-energy related business in the future, we had no material research and development expenses in 2008 or 2009. We currently have no plans to directly involve in any research and development activities on clean energy, and do not anticipate any material research and development costs in the near future.

INTELLECTUAL PROPERTIES AND LICENSES

     We have no material patents, trademarks, or other intellectual property, except that L & L holds various coal operating licenses issued by the China government to operate coal mines, coal wholesales, coal washing and coal coking activities.

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GOVERNMENT REGULATION

     At the present time our business revenue is 100% generated from the coal industry in PRC, thus it is subject to various PRC government regulations. In addition, as L&L is a Nevada incorporated company and is public traded in OTC Bulletin Board under the trading symbol “LLEN” as of January 6, 2010. The Company is also subject to various American government regulations, in particular, the securities laws and regulations of both federal and state levels of the US.

The following is a summary of the principal governmental laws and regulations that are or may be applicable to our operations in the PRC. The scope and enforcement of many of the laws and regulations in PRC described below are uncertain. We cannot predict the effect of further developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement of laws.

     The mining industry, including coal exploration, mining, coal washing and coal coking activities, is highly regulated in the PRC. Any company wishes to enter into the coal business in PRC requires a coal license. Regulations issued or implemented by the State Council of PRC, the Ministry of Land and Resources, local environmental agencies and other government authorities cover many aspects of coal exploration, and coal mining. Chinese government regulations also monitor the scope of permissible business, shipment of coal, tariff policy and foreign investment allowed in PRC.

The principal regulations governing the mining business in the PRC include:

. China Mineral Resources Law, which requires a mining business to have exploration and mining licenses from provincial or local land and resources agencies.

. China Mine Safety Law, which requires a mining business to have a safe production license and provides for random safety inspections of mining facilities.

. China Environmental Law, which requires a mining project to obtain an environmental feasibility study of the project.

. Foreign Exchange Controls. The principal regulations governing foreign exchange in the PRC are the Foreign Exchange Control Regulations (1996) and the Administration of Settlement, Sale and Payment of Foreign Exchange Regulations (1996), (“the Foreign Exchange Regulations”). Under the Foreign Exchange Regulations, Renminbi (“RMB”) is freely convertible into foreign currency for current account items, including the distribution of dividends. Conversion of RMB for capital account items, such as direct investment, loans and security investment, however, is still subject to the approval of the State Administration of Foreign Exchange (“SAFE”). Under the Foreign Exchange Regulations, foreign-invested enterprises are required to open and maintain separate foreign exchange accounts for capital account items. In addition, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE.

     Our operating subsidiaries in China have been authorized by land and resources departments of local governments. Chinese regulations require that mining enterprises procure an exploration or mining license from the land and resource department of local governments before they can carry out exploration or mining activities. This license ensures that an enterprise follow proper procedures in its own exploring or mining activities and in selling its products to customers. We have secured or are in the process of securing the necessary exploration or mining licenses from local governments. Our KMC mining subsidiary possesses exploration licenses to explore Tian-Ri Coal Mine in Yunnan Province, and has temporarily suspended obtaining an exploration license for the Laos Coal Mine until the economy is fully recovered in 2010.

     Chinese regulations also require that a mining company must have a safety certification from the PRC Administration of Work Safety before it can engage in mining and extracting activities. All of our operating subsidiaries have obtained safety certification from the Administration of Work Safety of local governments. In addition, all of our operating subsidiaries have passed government safety inspections. Our mining operations have been granted an environmental certification from the PRC Bureau of Environmental Protection.

EMPLOYEES

     As of January 4, 2010, the Company had approximately 1,400 full-time employees primarily located in China. Of which approximately 300 of them are involved in management capacity, and 1,100 are in coal related mining and operational capacity. Currently, there are about 12 people located in the Seattle office for the U.S. operations. None of these employees are represented by collective bargaining agreements. We have not experienced a work stoppage or a union action against the Company. Management

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believes that relations with the Company’s employees are good. AVAILABLE INFORMATION

     We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. The SEC maintains an Internet site that contains reports, proxy information and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov. The materials are also available at the SEC’s public Reference Room, located at 100 F Street, Washington, D.C. 20549. The public may also obtain information through the public reference room by calling the SEC at 1-800-SEC-0330.

DESCRIPTION OF PROPERTY

Company Offices, Production Facilities and Other Property:

     As we operate in various parts of China, over the years, the Company has leased various offices, and property. As of January 4, 2010, the Company either owned or leased the following properties :

(1) We currently lease approximately 5,000 square feet of office space at the Kunming High Tech Zone, Kunming, China, as the Company’s coal operational center in China. The operating lease for this facility expires in February 2010 and is renewable/

(2) The Company purchased a 4,500 square feet office space located at 898 Beijing Road, Kunming City, China which will be used as L&L’s Kunming headquarters. Upon completion of renovation, we will terminate the lease for our offices at Kunming High Tech Zone described above, and plan to move into this new office.

(3) We lease approximately 4,280 square feet of office space for L&L US executive office, located at both the first floor and the second floor at 130 Andover Park East, Seattle, Washington 98188. The operating lease expires on and about September 30, 2010.

(4) We also own an office property, located at Suite 2503, United Plaza, Shenzhen, China, with approximately 1,600 sq ft in space as L&L Shenzhen office.

(5) We lease approximate 2,500 square feet of office space located at Citic Plaza, Suite 3401, Guangzhou, China as L&L south China center for new business development.

(6) We also own land located at RuiLi, Yunnan, China with a remaining lease life of approximate 30 years. The property is being held for expansion purposes.

(7) We own approximate 0.8 acre of land located at Jinding Village, Kunming, Yunnan, China, on which an approximately 3,600 square feet, 3-story building is built as our CEO’s temporary residence when he visits Kunming. As we are in the process of obtaining a full land title for this property, it is classified as an investment, and it was mentioned as the China Mansion investment in a footnote to the financial statements attached to our Quarterly Report on Form 10-Q for the quarter ended on October 31, 2009.

     Rental expense for the years ended October 31, 2009 and 2008 were in the amounts of approximately $48,735 per year. We believe that our existing facilities are well maintained and in good operating condition.

Our Coal Mines:

     As more fully described above under the section titled “Description of Business”, the 2 Mines currently operated by the Company are all located in the Yunnan Province, a coal-rich region of China. We completed the acquisition of DaPuAn Mine and SuTsong Mine on May 1, 2008. The Company holds a majority (80%) equity controlling interest of the 2 Mines. The 2 Mines are physically located near the KMC coal wholesale operations.

     The 2 Mines’ exclusive coal mining rights on the coal reserve of approximately 18 million tons over an approximate 50-year period since the beginning of operations (currently with over 40 years remaining as of April 30, 2009) is the basis of intangible assets of approximately $2.5 million. It is expected that when the 50 years of mining rights expires, they can be further renewed by the government. The exclusive mining rights are authorized by the government, evidenced by the government permitting mining licenses to the 2 Mines.

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     The DaPuAn Mine has an annual production capacity of approximately 150,000 tons, with approximately 7.82 million tons of recoverable coal reserve. The mine expansion is adjusted to approximately 210,000 tons per year to maximize costs at the present time, up front.

     The SuTsong Mine has annual production capacity of approximately 90,000 tons of non-smoking coal. With reserves of approximately 5.7 million tons, the SuTsong Mine is in process to expand to 150,000 tons per year subject to final governmental approval.

     The 2 Mines have been in operations over the past three years. They are involved in coal mining and sales of different types of coals including coking coal (which provides both carbon and fuel for the making of coke, a critical material for the steel productions) and heating/smoking coal (which provides fuel mainly for power generating plants).

     In addition and as also described more fully above under the section “Description of Business”, the Company also owns an 80% equity ownership interest in both the TianRi Coal Mine and the Laos Coal Mine, which are also both located in Yunnan Province, China, through the Company’s 100% equity ownership of KMC.

SUMMARY FINANCIAL DATA

     The summary financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this prospectus. We derived the financial data as of October 31, 2009 and April 30, 2009 and 2008, and for the six months ended October 30, 2009 and 2008 and the years ended April 30, 2009 and 2008 from our financial statements included in this prospectus. The historical results are not necessarily indicative of the results to be expected for any future period. All monetary amounts are expressed in U.S. dollars.

		Six Months Ended October 31,				Years Ended April 30,
		2009		2008		2009		2008
Income Statement Data:		Unaudited		Unaudited		Audited		Audited
Sales		$37,227,726		$20,910,930		$40,938,128		$23,381,508
Cost of Sales		18,494,051		9,465,941		17,946,206		21,994,429
Gross Profit		18,733,675		11,444,989		22,991,922		1,387,079
Total Operating Expenses		4,677,489		2,201,013		3,996,795		887,464
Operating Income		14,056,186		9,243,976		18,995,127		499,615
Total Other Income (Expense)		595,753		(180,224)		(265,356)		(25,174)
Income Before Income Taxes		14,651,939		9,063,752		18,729,771		474,441
Income Tax Provision		1,167,398		572,157		1,219,457		186,461
Income/(Loss) from Discontinued Operations, Net of Tax				69,138		(237,741)		806,368
Net Income Attributable to Non-Controlling Interests		3,843,631		3,626,497		7,315,330		119,879
Net Income		$9,640,910		$4,934,236		$9,957,243		$974,469
Earnings per share:
Basic		$0.44		$0.23		$0.46		$0.05
Diluted		$0.41		$0.22		$0.46		$0.05
Weighted average shares outstanding:
Basic		21,964,044		21,671,211		21,492,215		20,854,212
Diluted		23,634,192		22,070,209		21,882,215		21,255,210
		As of October 31,				As of April 30,
		2009				2009		2008
Balance Sheet Data:		Unaudited				Audited		Audited
Cash and Cash Equivalents		$11,345,517		$5,098,711				$948,210
Working Capital		31,330,725		26,374,693				15,393,309
Total Assets		76,559,021		54,275,375				29,740,415
Total Liabilities		20,946,698		19,110,409				9,633,924
Total Shareholders’ Equity		$47,018,600		$22,432,979				$12,238,137

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     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis of the results of operations and financial condition of the Company for the fiscal years ended April 30, 2009 and 2008 and the six month periods ended October 31, 2009 and 2008 should be read in conjunction with the Summary Financial Data, the Company’s financial statements, and the notes to those financial statements that are included elsewhere in this prospectus. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this prospectus. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

     The Company is engaged in and currently generates revenue from its coal mining, clean coal washing, coal consolidation, coking and wholesaling businesses in China. Despite China having substantial coal resources, due to a lack of organizational skills (among other factors) within the coal industry, China’s mining companies cannot produce enough coal to meet China’s coal demand. As the Chinese economy continues with GDP growth at an estimated 7%-8% in 2009 with emphasis on domestic consumption, the Company plans to continue leveraging on its fourteen (14) years of in-country experience, U.S. management skills, and U.S. accounting knowledge to become a leading coal energy company in the coal-rich Yunnan Province. The Company plans to expand its coal business by acquiring and expanding upon existing operations, following China’s oligopoly policy that is aimed to eliminate small, inefficient coal mines and favor efficient operations. Despite the worldwide financial crisis occurring in the fall of 2008, the Company was able to increase sales and the size of its operations during the quarter ended October 31, 2009. The Company plans to invite qualified U.S. mining executives and strategic partners to become a part of the L & L management team, to facilitate its vertical integration objective in the coal industry. When the Company reaches a certain size, it plans to leverage the vast U.S. coal (energy) resources to diversify risks and increase revenue.

Results of Operations

Three Months Ended October 31, 2009 (“2009”) Compared to the Three Months Ended October 31, 2008 (“2008”)

Total Revenue

1) During the three months period ended October 31, 2009, the Company sales increased by approximately 139% from $10,244,949 in 2008 to $24,482,676 in 2009. This sales increase was a result of L&L Coal, HSC and KMC operation which contributed over $12.4 million, $8.3 million and $3.7 million of sales, respectively, in the current period.

2) As of October 31, 2009, the Company controls 100% of KMC operations, 80% of L&L Coal operations, and 93% of Hon Shen Coal washing and coking operations.

Cost of Sales and Gross Profit

During the three months period ended October 31, 2009, the Company cost of sales increased by approximately 160% from $4,541,646 in 2008 to $11,809,412 in 2009. The gross profit increased by approximately 122% from $5,703,303 in 2008 to $12,673,264 in 2009. These increments were mainly due to the increase of sales of L&L Coal, HSC and KMC operations.

Total Operating expenses

Total operating expense of $3,523,603 incurred in the three months ended October 31, 2009, representing an increase of $2,376,979 (or 207%) as compared to $1,146,624 in 2008. The increase was due to the Company’s rapid growing and new acquisition led to increase in personnel, legal and professional expenses.

Interest expenses

Interest expense of $29,704 for the three months ended October 31, 2009, representing a decrease of $5,132 (or 14%) from $34,836 in 2008. The decrease reflected decreasing bank loans for the period.

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Other Expenses (Income)

Other income of $528,697 for the three months ended October 31, 2009, representing an increase of $604,969 (or 793%) compare to $76,272 was spent in 2008.

Income Taxes

Income taxes of $814,764 for the three months ended October 31, 2009, representing an increase of $545,280 (or 202%) from $269,484 in 2008. The increase reflected increment of net income for the period.

Discontinued Operations

There was no income from discontinued operation for the three months ended October 31, 2009, while there was $27,097 income from discontinued operation in 2008. It was due to disposal of LEK operation.

Non-controlling Interest

Non-controlling interest for the three months ended October 31, 2009 was $1,887,109, representing an increase of $37,797 (or 2%) from $1,849,312 for the same period in 2008. The increase of non-controlling interest is mainly due to changes of its equity ownership of the Company’s subsidiaries.

Net Income

Net income increased by $4,592,909 (or 195%) to $6,946,781 during the three months ended October 31, 2009, comparing to net income of $2,353,872 in 2008. The increase is mainly due to the acquisition of HSC, and the increase efficiencies of the operations of 2 Mines.

Six Months Ended October 31, 2009 (“2009) Compared to the Six Months Ended October 31, 2008 (“2008”)

Total Revenue

1) During the six months period ended October 31, 2009, the Company sales increased by approximately 78% from $20,910,930 in 2008 to $37,227,726 in 2009. This sales increase was a result of L&L Coal, HSC and KMC operation which contributed over $19.2 million, $9.8 million and $8 million of sales, respectively, in the six months period.

Cost of Sales and Gross Profit

During the six months period ended October 31, 2009, the Company cost of sales increased by approximately 95% from $9,465,941 in 2008 to $18,494,051 in 2009. The gross profit increased by approximately 63% from $11,444,989 in 2008 to $18,733,675 in 2009. These increments were a result of the increase of sales of L&L Coal, HSC and KMC operations.

Total Operating expenses

Total operating expense of $4,677,489 incurred in the six months ended October 31, 2009, representing an increase of $2,476,476 (or 112%) as compared to $2,201,013 in 2008.

Interest expenses

Interest expense of $33,302 for the six months ended October 31, 2009, representing a decrease of $61,919 (or 65%) from $95,221 in 2008. The decrease reflected decreasing bank loans for the period.

Other Expenses (Income)

Other income of $629,055 for the six months ended October 31, 2009, representing an increase of $714,058 (or 840%) compare to $85,003 was spent in 2008.

Income Taxes

Income taxes of $1,167,398 for the six months ended October 31, 2009, representing an increase of $595,241 (or 104%) from $572,157 in 2008. The increase reflected increment of net income for the period.

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Discontinued Operations

There was no income from discontinued operation for the six months ended October 31, 2009, while there was $69,138 income from discontinued operation in 2008. It was due to disposal of LEK operation.

Non-controlling Interest

Non-controlling interest for the six months ended October 31, 2009 was $3,843,631 representing an increase of $217,134 (or 6%) from $3,626,497 for the same period in 2008.

Net Income

Net income increased by $4,706,674 (or 95%) to $9,640,910 during the six months ended October 31,2009, comparing to net income of $4,934,236 in 2008. The increase is mainly due to the acquisition of HSC, and the increase efficiencies of the operations of 2 Mines.

Change in Liquidity and Capital Resources:

The following factors affected the Company’s liquidity status and capital resources for the six month periods ended October 31, 2009 and 2008:

Operating activities: Net cash provided by operating activities was $11,935,376 during the six month period ended October 31, 2009. While in the same of period in 2008, the net cash provided by operating activities was $1,158,061. By comparing these two periods, it shows an increment of cash provided by operating activities of $10,777,315 (or 930%). The increment was mainly due to the combined effect of an increase of prepaid and other assets by $8,548,180, increase of accounts receivables by $5,437,660, increase of net income by $4,923,808, and increase of other receivable by $1,694,524, along with the decrease of accounts payable by $4,239,797 and decrease of customer deposit by $2,094,794. The Company's operating cash flow is highly dependent upon its ability to bill the L&L Coal, KMC and HSC sales and collect these billings in a timely manner.

Investing activities: Net cash used in investing activities was $10,228,854 during the six month period ended October31, 2009, compared to $6,034,727 used in investing activities during the same period in 2008. It shows an increase of net cash used of $4,194,127 (or 69%), which was mainly due to the acquisition of HSC and the construction-in-progress of LLC.

Financing activities: Net cash provided by financing activities was $4,574,718 during the six month period ended October 31, 2009, compared to $7,938,068 was generated during the same period in 2008. It shows a decrease of $3,363,350 (or 42%), which was mainly due to the decrease of proceeds from long-term debt by $3,000,000 and the decrease of non-controlling interest due to acquisition by $5,773,399, and increase of proceeds from issuance of stock by $5,228,827.

The current assets of the Company were $49,027,057 and $42,485,102 for the periods ended on October 31, 2009 and April 30, 2009 respectively. The increase in current assets of $6,541,955 (or 15%) was primarily due to the, increase of cash and equivalent by $6,246,806, increase in accounts receivable by $2,612,563, increase of prepaid and other current assets by $1,817,751, and increase of inventories by $1,676,078, and decrease of loan from business associates by $4,116,719, and decrease of other receivables by $1,694,524.

The current liabilities were $17,696,332 and $16,110,409 for the periods ended on October 31, 2009 and April 30, 2009 respectively. The increase of the current liabilities by $1,585,923 was primarily due to the increase of customer deposit by $2,003,335, increase of bank loan by $1,742,313, and increase of accrued and other liabilities by $928,084, and decrease of account payable by $3,328,973.

The HSC has three short term bank loans with the total amount of $1,742,313. The interest rate was from 9.9% to11.1% .

During the year quarter ended October 31, 2009, the HSC entered into three loan agreements with Yunnan Rural Credit Cooperatives with terms of one year to finance its working capital and coal washing facility expansion construction. The terms are as follow:

1)	RMB 3 million, effective January 21, 2009, with a maturity date of January 21, 2010, and interest rate of 9.9%;
2)	RMB 3.5 million, effective April 13, 2009, with a maturity date of April 13, 2010, and interest rate of 11.1%;
3)	RMB 5.4 million, effective November 28, 2008, with a maturity date of November 28, 2009, and interest rate of 11.1%;

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				4/30/2009				10/31/2009
Lender		Interest rate per annum		RMB		US$		RMB		US$
SHORT-TERM LOANS
Yunnan Rural Credit Cooperatives
January 21, 2009 to January 21, 2010		9.90%						3,000,000		439,239
April 13, 2009 to April 13, 2010		11.10%						3,500,000		512,445
November 28 2008 to November 28, 2009		11.10%						5,400,000		790,630
								11,900,000		1,742,313

Comparison of Fiscal Years Ended April 30, 2009 and 2008

     During the year ended on April 30, 2009, the Company coal related sales increased of approximately 75% to $40,938,128 as compared to $23,381,508 for the same year in 2008. The sales reported on the Consolidated Statements of Income excludes sales generated by LEK sales because of our spin off of the LEK air compressor operation in January of 2009, and, as a result, the LEK sales are being treated as a discontinued operation and were not included, following the U.S. generally accepted accounting principles (U.S. GAAP). See Note 21 (Discontinued Operation) to our Financial Statements. The increase in our sales for the year ended April 30, 2009 was mainly due to our acquisition of a controlling equity interest in the 2 Mines, which occurred May 2008. Our revenue of $40,938,128 only represents revenue generated from our coal businesses and does not include the LEK revenue of approx. $9 million, as U.S. GAAP requires LEK’s sales to be excluded in the Consolidated Statement of Income. LEK’s net income is also reported on a separate line in the Consolidated Statement of Income. See Note 21 (Discontinued Operation) to our Financial Statements, in regards to LEK revenue earned by L&L for the current and prior fiscal years ended April 30, 2009 and April 30, 2008.

     As of April 30, 2009, the Company controlled 100% of KMC operations, and also controls 60% of the equity ownership of L&L Coal Partners, which, in turn, owns the 2 Mines. The Company's consolidated financial statements were prepared in accordance with the U.S. GAAP, with the Company’s net profit reflecting the removal of profit attributable to the 40% minority interests belonging to the minority shareholders of L&L Coal Partners. Consequently, the Company’s consolidated results of operations reflect a lower profit margin than the Company would have had if the Company controlled 100% of L&L Coal Partners equity ownership interests. To reflect its true results of operation and improve its profit, the Company intends to acquire the entire equity of L&L Coal Partners from the existing minority shareholders in the future, when it is feasible to do so.

Total Revenue :

As discussed above, the Company’s revenue of $40,938,128 for the year ended April 30, 2009 excluded the revenue from LEK air compressor sales. See Note 1 and Note 21 to the Company’s Financial Statements. When comparing the current year’s revenue of $40,938,128 to $23,381,508 for the prior year ended April 30, 2008, the increase of $17,556,620 (or 75%) for the current year ended on April 30, 2009 was due to coal sales from the 2 Mines, in which the Company acquired a controlling equity interest in the current year and which contributed over $27 million of sales for the current year, offset by the KMC sales decrease in the year ended April 30, 2009. See Note 16, Geographic Information, below, for details.

Total Operating expenses:

Total operating expenses for the year ended April 30, 2009 were $3,996,795 as compared to $887,464 for the year ended April 30, 2008, an increase of $3,109,331 (or 350%). The increase in total operating expenses was mainly due to the newly acquired 2 Mines, which resulted in an increase of our operating expenses, as well as personal cost and selling, general and administrative expenses in the amount of $2,111,361.

Interest expenses :

Interest expenses for the year ended April 30, 2009 were $265,186 as compared to $24,935 for the year ended April 30, 2008, an increase of $240,251 (or 963%). The increase reflected an increase in interest expenses due to the newly acquired 2 Mines during the year ended April 30, 2009.

Minority Interest :

Minority interest for the year ended of April 30, 2009 was $7,315,330 compared to the minority interest for the same period ended April 30, 2008 of $119,879. The increase in minority interest of $7,195,451 (6,002%) was due to the 40% of minority interest related to the newly acquired 2 Mines.

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Net Income :

Net income increased by $8,982,774 (or 921%) to $9,957,243 for the year ended April 30, 2009 as compared to net income of $974,469 for the same period of 2008. The increase in net income was a result of increased revenue generated from sales of coal from the newly acquired 2 Mines sales which occurred during the current year ended April 30, 2009.

Change in Liquidity and Capital Resources:

The following factors affected the Company’s liquidity status and capital resources for the years ended April 30, 2009 and 2008:

From the operating activities of continued operations: Net cash flow provided by the Company’s operating activities was $5,475,155 for the year ended April 30, 2009. For the same period ended April 30, 2008, net cash flow provided by operating activities was $1,350,310. The cash improvement incurred during the current year is due to combined effects of an increase of the current year operating profit of both 2 Mines and KMC operations by $10,026,883, increase of minority interest of $7,195,451, and increase of accounts payable of $7,504,690, increase in tax payable of $2,795,089, and increase of accrued liabilities and other liabilities of $1,335,207; and a decrease in accounts receivable of $16, 415,792, and decrease of prepaid and other assets of $12, 264,091 The Company's operating cash flow is highly dependent upon its ability to bill for the 2 Mine and KMC sales and collect these 2 Mines and KMC operations’ billings in a timely manner.

Investing activities of continued operations: Net Cash used in investing activities was $16,270,068 during the year ended on April 30, 2009, while $809,649 was provided by investing activities in the same period in 2008. The increase of net cash used in investing activities of $17,079,717 (or 2,109%) was due to the acquisition of the 2 Mines during the current year, and the change in investments.

Financing activities of continued operations: Net cash provided by financing activities was $883,786 for the year ended April 30, 2009, while $720,009 was provided by financing activities for the same period in 2008. The increase of $163,777 (or 22%) net cash provided by financing activities was due to the proceeds from stock issuance.

The current assets of the Company’s continued operations were $42,485,102 and $8,741,006 for the current year ended on April 30, 2009, and for the prior year ended on April 30, 2008, respectively. The increase in current assets of $33,744,096 (or 386%) was primarily due to the increases in accounts receivable of $16,403,857, prepayment and other receivable of $7,744,873, and cash and equivalent of $4,150,501, due to the new acquired 2 Mines.

Current liabilities for continued operations were $16,110,409 and $3,173,348 for the current year ended on April 30, 2009, and the prior year ended on April 30, 2008 respectively. The current liabilities increased $12,937,061 (approximately 407%) as compared to the same period in 2008, primarily due to the increase of accounts payable of $4,667,604, tax payable of $3,811,742, and accrued and other liabilities of $1,238,230 in the current year.

Off-Balance Sheet Arrangements:

The Company does not have any off-balance sheet financing arrangements.

The Company's current ratio (current assets divided by current liabilities, a ratio used to determine the Company's ability to pay its short-term liabilities) is 2.77 as of October 31, 2009 compared to 2.63 as of April 30, 2009. As a general rule, the higher the current ratio, the more likely the Company will be able to pay its short-term bills.

Critical Accounting Policies and Estimates

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In doing so, the Company must make estimates and assumptions based on these principles. Many of the estimates and assumptions involved in the application of U.S. GAAP may have a material impact on the reported financial condition, operational performance, and the comparability of such reported information over different reporting periods. The nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters of the susceptibility of such matters to changes; the impact of estimates and assumptions on financial condition or operational performance may be material. There may be uncertainties attached to the estimates or assumptions, or may be difficult to measure or value.

As assumptions for specific sensitivities may change as a result of other possible outcomes, these estimates/assumptions may change in the future and may affect our reported amounts of assets, liabilities, revenue and expense, as well as disclosures of contingent assets and liabilities.

The Company’s internal control over financial reporting includes those policies and procedures that:

 

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(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) 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 with the appropriate authorization of our management and directors; and

(iii) provide reasonable assurance for the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

The following accounts my require estimates in computing the balances:

Revenue Recognition - The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin No 104 when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Accounts receivable - Majority of the Company's accounts receivable is due from its customers in China. The Company determines any required allowance, by considering a number of factors including length of time trade accounts receivable are past due and the Company's previous loss history. The Company writes off accounts receivable when they become uncollectible. When payments subsequently received on such receivables, they are credited to the allowance for doubtful accounts.

Inventories - Inventories comprise of raw materials and coal, and are stated at the lower of cost and net realizable value. Cost, calculated on the first-in first-out basis, comprises materials, direct labor and an appropriate proportion of all production overhead expenditure. Net realizable value is determined on the basis of anticipated sales proceeds less estimated selling expenses. Under the Chinese law, coal reserves are not recorded as a part of L&L inventories.

Property and Equipment - Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 10 years.

Not recording value of coal reserves - On a conservative basis, the Company does not record the value of the 2 Mines' coal reserves which the Company has an exclusive right to excavate for commercial purposes and on a long term basis, as evidenced by the exclusive government mining licenses for the 2 Mines.

Income taxes - The Company provides for income taxes which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax laws in effect at the date of financial statements. Its income from overseas controlled subsidiaries is not subject to the United States federal income taxes, as income not repatriated to the U.S. is not subject to the IRS code.

Impairment of Long-lived Assets: The Company assesses long-lived assets for impairment in accordance with the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144 requires that the Company assess the value of a long-lived asset whenever there is an indication that its carrying amount may not be recoverable. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No long-lived assets were impaired during the periods ended October 31, 2009 and 2008.

Foreign currency translation - The Company’s foreign subsidiaries maintain their financial statements in the local currency which has been determined to be the functional currency. Substantially all overseas operations are conducted in China, using the functional currency Renminbi (RMB). Assets and liabilities denominated in foreign currencies are translated into U.S. Dollars at the rates in effect at the balance sheet date. Revenues and expenses are translated at average rates for the year. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains and losses resulting from foreign currency transactions are included in the results of operations.

Impact of Recent Accounting Pronouncements

In April 2009, the FASB issued ASC 320-10-65, “Recognition and Presentation of Other-Than-Temporary Impairments”. This amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. It does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity

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securities. It is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In April 2009, the FASB issued ASC 820-10-65, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. It provides additional guidance for estimating fair value in accordance with ASC 820 when the volume and level of activity for the asset or liability have significantly decreased and includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP does not change the definition of fair value under ASC 820. The FSP is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In May 2009, the FASB issued ASC 855, Subsequent Events. It establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2009, the FASB issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the Codification). The Codification became the single official source of authoritative, nongovernmental U.S. GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In September 2009 the New FASB Accounting Standards Update 2009-08 issued in Earnings Per Share (amendments to Section 260-10-S99). This update includes technical corrections to Topic 260-10-S99 Earnings Per Share, based on EITF Topic D-53, “Computation of Earnings Per Share for a Period that includes redemption or an induced conversion of a portion of a class of preferred stock” and EITF Topic D-42, “The effect of the calculation of Earnings Per Share for the redemption or induced conversion of preferred stock.” The Company does not expect the implementation of this statement to have an impact on its results or financial position.

Contractual Obligations

For the period ended October 31, 2009, contractual obligations were as follows:

Rent expenses for the period ended October 31, 2009 and 2008 was in the amounts of approximately $17,694 and 16,095 per quarter.

LEGAL PROCEEDINGS

     We are not currently a party to any legal proceedings and we are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us, other than the legal proceeding described below:

     Bratek v. L&L Financial Holdings, et al. On or about November 13, 2009, Ronald F. Bratek (an individual) filed a Complaint in the Superior Court of New Jersey, Mercer County, against the Company (under its former name “L&L Financial Holdings, Inc.”) and Dickson V. Lee. The Complaint alleges claims for frauds and declaratory judgment in relation to Bratek’s past purchase of securities and warrants. The Company believes the implication of this proceeding is not material, and disputes all of Bratek’s claims pertaining to his alleged claims regarding the exercise of his warrant within a specified time period, and will assert appropriate counterclaims.

MANAGEMENT

     The following tables set forth information regarding the Company’s current executive officers and directors of the Company. The Board of Directors is comprised of only one class, and includes four independent directors and our Chairman, Mr. Dickson V. Lee. Except as otherwise described below, all of the directors will serve until the next annual meeting of stockholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the federal securities laws.

Name		Age		Positions
Dickson V. Lee, MBA,CPA		60		CEO & Chairman of the Board

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Jung Mei (Rosemary) Wang, CPA		50		Acting Chief Financial Officer
Shirley Kiang, MBA		58		Director (Independent)
Joseph J. Borich, MBA		65		Director (Independent)
Ian Robinson, CPA		69		Director (Independent)
Robert Lee		57		Director
Dennis Bracy		60		Director (Independent)

     Mr. Dickson V. Lee, Chairman of the Board and Chief Executive Officer - Mr. Lee founded the company in 1995 and has been associated with L&L for the past 14 years. He has extensive management experience with NYNEX (now Verizon), KPMG in New York. Mr. Lee was a New York CPA in 1983 and now is a Washington State CPA. Mr. Lee, who is fluent in Mandarin, Cantonese, and English, served as a judicial member of the Hong Kong SEC Insider Dealing Tribunal (a trial court) for six years. He earned an MBA from Dalhousie University and travels frequently between US and China.

     Ms. Shirley Kiang, MBA, Chair of Compensation Committee - Ms. Kiang, was a senior executive for 20 years with experience in corporate governance, and corporate management for high-tech firms in Silicon Valley, California and in Asia. Ms. Kiang is a U.S. citizen, has close contacts in China and Taiwan. She has been a board member since 1998. Ms. Kiang was a psychology major and earned her MBA degree in Finance from University of Massachusetts at Amherst, MA. Ms. Kiang does not work for any company for the past five years, except has been associated with L&L.

     Mr. Joseph J. Borich, MBA, Chair of Nomination Committee - Mr. Borich, Independent Director, is currently the Executive Director of the Washington State China Relations Council, and has held this position for the past five years. The Council represents over 100 American corporations interested in China, including Boeing and Microsoft. Mr. Borich was the American Consul General to Shanghai of the U.S. embassy to China in 1990s. He also held many positions with the U.S. State Department for over twenty years service as a U.S. foreign officer. Mr. Borich served in the US Army including a tour in Vietnam in 1970s. He speaks Chinese.

     Mr. Ian Robinson, CPA, Chair of Audit Committee – Mr. Robinson, Independent Director, is a former partner at Ernst & Young. His prior experience included being a Board Member of many US and Hong Kong public listed companies, has forty years' experience in auditing and public reporting. He is a Fellow of the CPA Society of Australia, and Fellow of the CPA Society of Hong Kong. Mr. Robinson works at Robinson Consulting Inc. for the past five years, He travels frequently between the US and Hong Kong.

     Mr. Robert Lee, Board of Directors - Mr. Robert Lee, Director, is an experienced engineer who has 20 years of experience in mechanical engineering and organizational skills. Fluent in Mandarin and English, he focuses on strategic development of L&L’s operations. Robert is a brother of Dickson V. Lee, our CEO and Chairman. Robert has been working for Michigan State government for the past five years. Mr. Lee studied at Michigan State University in engineering and mathematics but did not receive a formal degree. He resides in East Lansing, Michigan.

     Ms. Jung Mei (Rosemary) Wang, CPA, Acting Chief Financial Officer – Ms. Wang is a U.S. Certified Public Accountant with 20 years of auditing experience in GAAP, taxation and internal controls of both public and private companies. Currently, Ms. Wang is a partner of Wang & Chou Accountancy Corp. a California-based accounting firm. She speaks both Mandarin and English, and has extensive knowledge of China. Rosemary is a U.S. Citizen, received a MBA degree in Finance, and Master Degree in U.S. Taxation from San Jose State University.

     Mr. Dennis Bracy, Independent Director - Mr. Bracy is the CEO of the US-China Clean Energy Forum and Chair of the Washington State China Relations Council. A former advisor to executives, Senators, Governors and other public officials, he is considered a leading energy strategist. His clients have included the U.S. Department of Energy, Pacific Northwest National Laboratory, Boeing, Microsoft, and Demand Energy Networks. He earned his bachelor’s degree from the University of St. Louis.

EXECUTIVE COMPENSATION

     For the past five year starting from 2005, there were no executives or directors with compensation exceeding $100,000, except for the most recent two years ended April 30, 2008 and 2009. The following summary compensation table indicates the cash and non-cash compensation earned for two years ended April 30, 2009 and 2008 by each Chief Executive Officer that served in the most recent fiscal year, who are the two highest paid executives with total compensation exceeded $100,000 for the years ended April 30, 2009 and 2008.

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SUMMARY COMPENSATION TABLE
								Stock		Warrant		Non-Equity		Nonqualified Deferred		All Other
Name and  Principal				Salary		Bonus		Awards		Award		Incentive Plan		Compensation		Compensation ($)		Total
Position		Year		($)		($)		(units)		(units)		Compensation		Earnings ($)				($)
Dickson V.  Lee		2009		132,000		-		6,000		20,000		-		-		-		132,000
Current CEO  (1)
		2008		125,000		-						-				-		125,000
								-						-
Paul W. Lee
Previous CEO  (2)		2009		-		-		42,000		10,000		-		-		-

(1)	Mr. Dickson V. Lee was appointed as our Chief Executive Officer effective on August 25, 2008.
(2)	Mr. Paul W. Lee resigned as our Company’s Chief Executive Officer effective on August 25, 2008.

Employment Agreements, Termination of Employment and Change-in-Control Arrangements with our Executive Officers

     We have employment agreements with our executive officers, and employees. L&L CEO, Dickson Lee, MBA, CPA will receive an annual compensation of $200,000 in cash with potential bonus for the year ended April 30, 2010, while Acting CFO, Rosemary Jung Mei Wang, CPA will receive an annual compensation of $144,000 in cash and $36,000 in stock with potential bonus for the year ended April 30, 2010. The compensation was approved by the Compensation Committee during a Board meeting to encourage good performance to enhance shareholders’ value.

Outstanding Equity Awards at Fiscal Year-End

The Company may further grant executives cash and equity awards, to reward excellent performance to the Company.

Compensation of Directors

     The following director compensation disclosure reflects all compensation awarded to, earned by or paid to the directors below for the year ended April 30, 2009.

						DIRECTOR COMPENSATION TABLE
				Fees
				Earned		Stock		Warrant				Nonqualified
				or Paid		Awards		Award		Non-Equity		Deferred		All Other
Name and Principal				in Cash		(units)		(units)		Incentive Plan		Compensation		Compensation
Position		Year		($)		(7)		(6)		Compensation		Earnings ($)		($)		Total ($)
Dickson V. Lee (1)		2009				- -		-		-		-		-		-
																-
Joseph J. Borich (2)		2009				- 12,000		5,000		-		-		-
Shirley Kiang (3)		2009				- 12,000		5,000		-		-		-		-
Ian Robinson (4)		2009				- 12,000		5,000		-		-		-		-
Robert Lee (5)		2009				- 12,000		5,000		-		-		-		-

(1)	Mr. Lee was appointed as Chairman of board of director effective January 25, 2009, and waived annual compensation for his services as director for the fiscal year ended on April 30, 2009.

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(2)	Mr. Borich was appointed to our board of directors effective February 18, 2005, and is entitled to receive annual compensation of $0 for his services rendered as a director, as well as chairman of the nomination committee.
(3)	Ms, Kiang was appointed to our board of directors effective March 1, 2004, and is entitled to receive annual compensation of $0 for his services rendered as a director, as well as chairman of the auditing committee.
(4)	Mr. Robinson was appointed to our board of directors effective December 22, 2008, and is entitled to receive annual compensation of $0 for his services rendered as a director, as well as chairman of the compensation committee and member of the audit committees.
(5)	Mr. Robert Lee was appointed to our board of directors effective March 18, 2008, and is entitled to receive annual compensation of $0 for his services rendered as a director, as well as member of the audit committees.
(6)	Warrants of the Company are issued to the Company directors (or former directors) to compensate director’s services. Warrants exercisable in the four years after issuance date are given free as an incentive for helping the Company to grow.
	There is no cash effect on both recipients of warrants. There is no taxable gain until a warrant is disposed for a gain. The exercise price of the warrants issued to directors was $3.00 per share.
(7)	L&L’s stock price closed at $1.80 on April 30, 2009.

Indemnification of Officers and Directors

     We are a Nevada corporation, and accordingly, we are subject to the corporate laws under the Nevada Revised Statutes. Article XI of our Bylaws contain the following indemnification provision for our directors and officers:

“The corporation plans to indemnify its directors and officers to the fullest extent not prohibited by the Nevada General Corporation Law; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and officers; and, provided, further, that the corporation shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the Nevada General Corporation Law or (iv) such indemnification is required to be made under subsection (d).”

     Such indemnification provision may be sufficiently broad to permit indemnification of our executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. The Company has current directors’ and officers’ liability insurance (D&O insurance) covering our directors and officers activities conducted for and on behalf of L&L up to the amount of $5 million. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     During the fiscal year ended April 30, 2009, the Company changed its independent accountants, and engaged Kabani & Co., Inc as its current accountant to replace Jaspers + Hall, PC. There are not and have not been any disagreements between us, our prior independent accountant or our current independent accountant on any matter of accounting principles, practices, or financial statement disclosure during our two most recent fiscal years and subsequent interim period.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following tables set forth certain information regarding beneficial ownership of our securities as of December 31, 2009 by (i) each person who is known by us to own beneficially 5% or more of the Company’s outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Under these rules,

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beneficial ownership generally includes voting or investment power over securities. A person (or group of persons) is deemed to be the “beneficial owner” of our securities if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of, or to dispose or direct the disposition of such securities. Accordingly, more than one person may be deemed to be the beneficial owner of the same security. Unless otherwise indicated, the persons named in the table below have sole voting and/or investment power with respect to the number of shares of common stock indicated as beneficially owned by them. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase shares of our common stock. Beneficial ownership and percentage ownership are based on 26,364,579 shares of common stock outstanding as of January 4, 2010. Unless otherwise stated, the address of our directors and executive officers is c/o L&L Energy, Inc., 130 Andover Park East, Suite 101, Seattle, Washington.

As of January 4, 2010				Amount and Nature of
Class of Stock		Name of Beneficial Owner (1)		Beneficial Ownership				Percent
Executive Officer and
Directors
Common		Dickson V. Lee		7,428,750		(3)		28.04%
Common		Shirley Kiang		211,668		(4)		0.80%
Common		Joseph J. Borich		121,000		(5)		0.46%
Common		Ian Robinson		46,000		(6)		0.17%
Common		Robert Lee		906,420		(7)		3.43%
Common		Rosemary Wang		55,200		(8)		0.21%
Common		Dennis Bracy		125		(9)		*%
Common		All officers and directors as a		8,769,163				32.76%
		group
5% or above Shareholders
Common		T-Squared Investment, LLC (2)		1,770,000				7.47%

(1) Unless otherwise specified, the address for the officers and directors of the Company is c/o L&L Energy, Inc. , 130 Andover Park East, Suite 101, Seattle, Washington.

(2) The address for this stockholder is 1325 Sixth Avenue, Floor 27, New York, NY 10019.

(3) Includes 130,000 shares of common stock underlying warrants issued to Mr. Dickson V. Lee that are exercisable within 60 days of December 31, 2009.

(4) Includes 85,666 shares of common stock underlying warrants issued to Ms. Shirley Kiang that are exercisable within 60 days of December 31, 2009.

(5) Includes 74,000 shares of common stock underlying warrants issued to Mr. Joseph J. Borich that are exercisable within 60 days of December 31, 2009.

(6) Includes 34,000 shares of common stock underlying warrants issued to Mr. Ian Robinson that are exercisable within 60 days of December 31, 2009.

(7) Includes 53,000 shares of common stock underlying warrants issued to Mr. Robert Lee that are exercisable within 60 days of December 31, 2009.

(8) Includes 28,000 shares of common stock underlying warrants issued to Ms. Jung Mei (Rosemary) Wang that are exercisable within 60 days of December 31, 2009 .

(9) Mr. Dennis Bracy recently joined the Company as a board member in November 2009 and his security holdings includes an estimated amount 125 shares underlying warrants issued to Mr. Dennis Bracy that are exercisable within 60 days of December 31, 2009.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Set forth below are our related party transactions since April 30, 2008

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Item		October 31, 2009		April 30, 2009		April 30, 2008
Due to shareholder		$0		($910,791)		($680,062)
Due from related parties-receivable (1)		1,866,917		5,983,636		726,775
Net		$1,866,917		$5,072,845		$46,713

(1)

The balances of due from related party consist of two separate events: 1) cash advances made to Hong Yu Li, manager of KMC subsidiary, for development of Tian-Ri Coal Mine, which advances are invested in the mine and will be reclassified to project costs as assets when supporting documents received, and 2) a loan made to the non-controlling interest shareholders of the 2 Mines that was fully collected as of April 30, 2009. Thus the ending balances were $0, $4,300,000, and $0 as of October 31, 2009, April 30, 2009, and April 30, 2008 respectively.

Director Independence

     The Board has determined that Mrs. Shirley Kiang, Mr. Joseph J. Borich, Mr. Ian Robinson, and Mr. Dennis Bracy are independent directors under listing standards of the NYSE Amex Exchange (formerly the American Stock Exchange).

ADDITIONAL INFORMATION

     We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Reports filed with the SEC pursuant to the Exchange Act, including proxy statements, annual and quarterly reports, and other reports that we have filed can be inspected and copied at the Public Reference Section of the SEC at 100 F. Street N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

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L & L Energy, Inc.
(formerly L & L International Holdings, Inc.)
Index to Consolidated Financial Statements
		Pages
Consolidated Balance Sheets as of October 31, 2009 and April 30, 2009 (unaudited)		F-2
Consolidated Statements of Income for the Six Months Ended October 31, 2009 and 2008 (unaudited)		F-4
Consolidated Statements of Cash Flows for the Six Months Ended October 31, 2009 and 2008 (unaudited)		F-6
Notes to the Consolidated Financial Statements (unaudited)		F-8
Report of Independent Registered Public Accounting Firm		F-21
Consolidated Balance Sheets as of April 30, 2009 and 2008		F-22
Consolidated Statements of Income for the Years Ended April 30, 2009 and 2008		F-24
Consolidated Statements of Cash Flows for the Years Ended April 30, 2009 and 2008		F-26
Consolidated Statements of Shareholders’ Equity for the Years Ended April 30, 2009 and 2008		F-28
Notes to the Consolidated Financial Statements		F-29

F-1

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L & L INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2009 and APRIL 30, 2009
(UNAUDITED)
		October 31, 2009		April 30, 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$11,345,517		$5,098,711
Accounts receivable		19,518,573		16,906,010
Prepaid and other current assets		5,429,122		3,611,371
Other Receivables		7,666,357		9,360,881
Inventories		3,200,571		1,524,493
Loan to business associates		1,866,917		5,983,636
Total current assets		49,027,057		42,485,102
Property and equipment, net		12,694,855		5,243,142
Construction-in-progress		10,061,162		2,085,134
Intangible assets, net		2,557,303		2,507,331
Investments		1,539,792		1,275,660
Investment held in a subsidiary disposed off		573,677		573,677
Deferred tax assets		105,175		105,329
Total non-current assets		27,531,964		11,790,273
TOTAL ASSETS		$76,559,021		$54,275,375
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$1,601,893		$4,930,866
Accrued and other liabilities		1,881,479		953,395
Current portion of long-term payable		3,795,360		3,000,000
Taxes payable		6,371,517		6,014,922
Customer deposits		2,303,770		300,435
Bank loan		1,742,313		-
Due to shareholder		-		910,791
Total current liabilities		17,696,332		16,110,409
LONG-TERM LIABILITIES
Long-term payable		3,250,366		3,000,000
Total long-term liabilities		3,250,366		3,000,000
Total Liabilities		20,946,698		19,110,409
EQUITY:
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, 2,500,000 shares authorized, none issued and
outstanding		-		-
Common stock, $0.001 par value, 120,000,000 shares authorized, 24,712,720
and 21,202,200 shares issued for October 31, 2009 and April 30, 2009,
respectively		24,713		21,201

F-2

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Paid-in Capital		29,602,451		9,604,694
Service cost being amortized		(5,037,453)		-
Deferred stock compensation		(44,667)		(63,667)
Accumulated other comprehensive income		631,808		669,913
Retained Earnings		21,841,748		12,200,838
Total stockholders' equity		47,018,600		22,432,979
Non-controlling interest		8,593,723		12,731,987
Total Equity		55,612,323		35,164,966
TOTAL LIABILITIES AND EQUITY		$76,559,021		$54,275,375
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

F-3

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L & L INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2009 AND 2008
(UNAUDITED)
		For the Three Months				For the Six Months
		Ended October 31				Ended October 31
		2009		2008		2009		2008
NET REVENUES		$24,482,676		$10,244,949		$37,227,726		$20,910,930
COST OF REVENUES		11,809,412		4,541,646		18,494,051		9,465,941
GROSS PROFIT		12,673,264		5,703,303		18,733,675		11,444,989
OPERATING COSTS AND EXPENSES:
Salaries & wages		1,592,617		533,686		1,920,565		874,386
Selling, general and administrative expenses		1,930,986		612,938		2,756,924		1,326,627
Total operating expenses		3,523,603		1,146,624		4,677,489		2,201,013
INCOME FROM OPERATIONS		9,149,661		4,556,679		14,056,186		9,243,976
OTHER EXPENSES (INCOME):
Interest expense		29,704		34,836		33,302		95,221
Other expenses (income), net		(528,697)		76,272		(629,055)		85,003
Total other expenses (income)		(498,993)		111,108		(595,753)		180,224
INCOME FROM CONTINUED OPERATION BEFORE
PROVISION FOR INCOME TAXES, DISCONTINUED
OPERATIONS AND NON-CONTROLLING INTEREST		9,648,654		4,445,571		14,651,939		9,063,752
LESS PROVISION FOR INCOME TAXES		814,764		269,484		1,167,398		572,157
INCOME FROM CONTINUED OPERATION BEFORE
DISCONTINUED OPERATIONS AND NON-
CONTROLLING INTEREST		8,833,890		4,176,087		13,484,541		8,491,595
DISCONTINUED OPERATIONS, Net of tax		-		27,097		-		69,138
NET INCOME		8,833,890		4,203,184		13,484,541		8,560,733
LESS NET INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTERESTS		1,887,109		1,849,312		3,843,631		3,626,497
NET INCOME ATTRIBUTABLE TO THE COMPANY		6,946,781		2,353,872		9,640,910		4,934,236
OTHER COMPREHENSIVE INCOME:
Foreign currency translation income (loss)		-		434		(38,105)		570,244
COMPREHENSIVE INCOME		$6,946,781		$2,354,306		$9,602,805		$5,504,480
INCOME PER COMMON SHARE – basic from continued
operation		$0.31		$0.11		$0.44		$0.22
INCOME PER COMMON SHARE – basic from discontinued

F-4

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operation		$0.00		$0.00		$0.00		$0.01
INCOME PER COMMON SHARE – basic		$0.31		$0.11		$0.44		$0.23
INCOME PER COMMON SHARE – diluted from continued
operation		$0.29		$0.10		$0.41		$0.22
INCOME PER COMMON SHARE – diluted from
discontinued operation		$0.00		$0.00		$0.00		$0.00
INCOME PER COMMON SHARE – diluted		$0.29		$0.10		$0.41		$0.22
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING – basic		22,726,935		21,987,912		21,964,044		21,671,211
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING – diluted		24,397,083		22,386,910		23,634,192		22,070,209
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

F-5

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L&L INTERNATIONAL HOLDINGS, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
(UNAUDITED)
		For the Six Months Ended October 31,
		2009		2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$ 13,484,541		$ 8,560,733
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization		526,202		979,276
Amortization for deferred compensation		19,000		21,000
Issuance of common stock for services		-		264,290
Amortization of service costs		688,131		-
Gain on reduction of debt		(528,697)		-
Deferred tax assets		154		(3,434)
Changes in assets and liabilities, net of businesses acquisition
Accounts receivable		(2,348,100)		(7,785,760)
Inventories		(1,516,442)		(839,121)
Prepaid and other current assets		(1,817,751)		(10,365,931)
Other receivable		1,694,524		-
Accounts payable and other payable		(388,720)		3,851,077
Customer deposit		1,176,480		3,271,274
Accrued liabilities and other liabilities		597,721		1,184,469
Taxes payable		348,333		147,577
Net cash provided by operating activities of continued operation		11,935,376		(714,550)
Net cash provided by operating activities of discontinued operation		-		1,872,611
Net cash provided by operating activities		11,935,376		1,158,061
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(1,682,233)		(5,360,054)
Acquisition of businesses, net of cash acquired		(306,460)		1,600,000
Change in intangible assets		-		(2,507,331)
Acquisition of construction-in-progress		(7,976,029)		-
Increase in investments		(264,132)		232,658
Net cash used in investing activities		(10,228,854)		(6,034,727)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing on bank line of credit		-		397,361
Loan to associates		(183,281)		726,775
Proceeds from long-term debt		-		3,000,000
Change in noncontrolling interest due to acquisition		-		5,773,399
Payments of debt		(625,000)		-
Payment to shareholder		(910,791)		-
Warrants converted to common stock		750,000		-
Proceeds from issuance of common stock		5,543,790		314,963

F-6

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Net cash provided by financing activities of continued operation		4,574,718		10,212,498
Net cash used in financing activities of discontinued operation		-		(2,274,430)
Net cash provided by financing activities		4,574,718		7,938,068
Effect of exchange rate changes on cash and cash equivalents		(34,434)		570,244
INCREASE IN CASH AND CASH EQUIVALENTS		6,246,806		3,631,646
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		5,098,711		948,210
CASH AND CASH EQUIVALENTS, END OF PERIOD		$ 11,345,517		$ 4,579,856
SUPPLEMENTAL NON CASH FLOW INFORMATION:
INTEREST PAID		$ 33,302		$ 95,221
INCOME TAX PAID		$ 1,167,398		$ 572,157
NON-CASH INVESTING AND FINANCING ACTIVITY:
Company issued 400,000 shares to acquire 60% interest in L&L Coal
Partners		$ -		$ 1,600,000
In connection with the purchase of businesses, liabilities were assumed as
follows (see Note 4):
Fair value of net assets acquired		$ 6,789,073
Net cash used in acquisition of businesses		(322,109)
Note payable to sellers		(3,543,191)
Liabilities assumed		$ 2,923,773		$ -

During the quarter ended October 31, 2009, the Company obtained additional ownership from non-controlling interest holders. The Company reduced non-controlling interest and increased paid-in-capital by $8,045,113 as no cash consideration was given.

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

F-7

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L & L INTERNATIONAL HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

L & L International Holdings, Inc. (“L&L” and the “Company”) was incorporated in Nevada, and is headquartered in Seattle, Washington. The Company is a coal (energy) company, started its operations 14 years ago in 1995. Coal sales for the current quarter ended October 31, 2009 was made entirely in China, from coal mining, clean coal washing, coking and coal wholesales operations. Sales of these three coal related operations represent the Company’s consolidated sales for the period ended October 31, 2009. At the present time, the Company conducts its coal (energy) operations in Yunnan province, southwest China. As of October 31, 2009, L&L has 3 subsidiaries; the KMC coal wholesale operations, 2 coal mining operations (DaPuAn Mine and SuTsong Mine) including DaPuAn’s coal washing operations (the “2 Mines”), and the Hon Shen Coal Co. Ltd.(coal washing operation and coking operation) (“HSC”). The majority controlling interest (65%) of HSC’s new coal washing facility was acquired by 10 million RMB (equivalent to $1,464,129) on July 16, 2009. L&L increased its equity ownership interest in Hon Shen's coal washing facilities from a 65% equity ownership interest to a 93% equity ownership interest on October 23, 2009. In addition, L&L owns 93% equity interest in Hon Shen's coking facilities, thus reaching an overall 93% ownership of both Hon Shen's coal washing and coking operations. To focus on coal (energy) operation, the Company disposed of its majority interest of LEK air-compressor operations in January of 2009.

During the quarter ended October 31, 2009, the Company increased its ownership of the 2 coal mining operations (the “2 Mines”), from 60% to 80% with no consideration given by the Company to the noncontrolling interest holders.

NOTE 2. RESTATEMENT

Subsequent to the issuance of the Company's financial statements for the period ended October 31, 2008, the management of the Company determined that certain transactions and presentation in the financial statements for the year ended October 31, 2008 had not been accounted for properly.

Management became aware that there was more income tax provision in addition to what was recorded and reflected in the financial statements as of October 31, 2008. Income tax provision was understated by $572,157 as of October 31, 2008.

The Company has restated its financial statements by recording the accrual for income tax provision as of October 31, 2008.

The effect of the correction of presentation is as follows:

CONSOLIDATED STATEMENT OF INCOME		AS PREVIOUSLY		AS
As of October 31, 2008		REPORTED		RESTATED
Provision for Income Tax		$0		$572,157
Net income from continued operation before attributable to non-
controlling interest		9,181,032		$8,491,596
Net income		9,181,032		$8,560,734
Net Income attributable to the non-controlling interest		3,847,685		$3,626,497
Net Income attributable to company		$5,333,347		$4,934,237
Income per common share – basic		$0.27		$0.23
Income per common share – diluted		$0.27		$0.22

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim financial information - The condensed consolidated interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and six months periods ended October 31, 2009 and 2008 may not necessarily indicative of the results of operations which might be expected for the entire year.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these financial statements should be read in

F-8

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conjunction with the Company's financial statements and notes thereto included in the Company's audited financial statements on Form 10-K for the fiscal year ended April 30, 2009.

Principles of Consolidation – The consolidated financial statements include the accounts of the Company, and its 100% ownership of KMC subsidiary, 80% of operations of L&L Coal Partners, “2 Mines” including both coal mining and coal washing, and 93% of Hon Shen Coal Co. Ltd. All significant inter-company accounts and transactions are eliminated.

Revenue Recognition – The Company’s revenue recognition policies are in compliance with ASC 605, which stipulates recognition of revenue when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Inventories – Inventory is stated at the lower of cost and net realizable value, as determined on moving average basis.

Use of Estimates – The preparation of financial statements, in conformity 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. Based on our past experience, these estimates are reasonably accurate, have not been changed, and these estimates are reasonably not likely to be changed in the future. Actual results could differ from those estimates.

Prior amounts have been updated from those presented in previously filed Forms 10-Q to reflect implementation of ASC 810-10 (formerly, SFAS No. 160), “Noncontrolling Interests in Consolidated Financial Statements”.

New accounting pronouncements

In April 2009, the FASB issued ASC 320-10-65, “Recognition and Presentation of Other-Than-Temporary Impairments”. This amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. It does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. It is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In April 2009, the FASB issued ASC 820-10-65, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. It provides additional guidance for estimating fair value in accordance with ASC 820 when the volume and level of activity for the asset or liability have significantly decreased and includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP does not change the definition of fair value under ASC 820. The FSP is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In May 2009, the FASB issued ASC 855, Subsequent Events. It establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2009, the FASB issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the Codification). The Codification became the single official source of authoritative, nongovernmental U.S. GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption did not have a material impact on the Company’s consolidated financial position or results of operations.

In September 2009 the New FASB Accounting Standards Update 2009-08 issued in Earnings Per Share (amendments to Section 260-10-S99). This update includes technical corrections to Topic 260-10-S99 Earnings Per Share, based on EITF Topic D-53, “Computation of Earnings Per Share for a Period that includes redemption or an induced conversion of a portion of a class of preferred stock” and EITF Topic D-42, “The effect of the calculation of Earnings Per Share for the redemption or induced conversion of preferred stock.” The Company does not expect the implementation of this statement to have an impact on its results or financial position.

NOTE 4. BUSINESS CONBINATION

F-9

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The Company owns 100% of KMC, and majority equity controlling interest of the DaPuAn Coal Mine and SuTsong Mine under the provisional name of L&L Coal Partners (the “2 Mines”), and Hon Shen Coal Co. Ltd. (coal washing operation and coking operation) (“HSC”). On July 16, 2009, the Company acquired 65% equity interest of coal washing facility (a distinctive operation) of HSC in Yunnan Province. On October 23, 2009, L&L increased its equity interest in Hon Shen's coal washing facilities from a 65% to a 93% equity interest. In addition, on October 23, 2009, L&L acquired 93% equity interest in Hon Shen's coking facilities, thus reaching an overall 93% equity interest of HSC’s coal washing and coking operations.

L&L acquisition of HSC’s coal washing was made during the first quarter ended July 31, 2009 as follows:

1. On July 16, 2009 (the “Acquisition Date”), 65% of HSC equity was acquired by the Company with a net value of $2,529,517. Coal washing is a process of cleaning raw coal by physically crushing coal rocks into fine coal powders, and removing impurities and debris from raw coal. In the washing process, the washed coal is separated into different grades, such as coking coal (provides both carbons and fuel for the making of coke; a critical material for steel production), and the heating/thermal coal (provides calories to fuel the utility/power plants). The purchase of the HSC will add approximately 300,000 tons of fine washed coals capacity each year to the Company. Together with the newly completed coal washing facility built by L&L’s DaPuAn Mine, the Company will produce over 500,000 tons of fine washed coal each year, beginning July 16, 2009.

2. The purchase price of the acquisition contract is 10,000,000 RMB (equivalent to US$1,464,129) with the first cash payment of 1,000,000 RMB (equivalent to US$146,413) made on the contract date of July 16, 2009. The remaining 9,000,000 RMB is to be paid in installments: the first installments of 1,000,000 RMB (equivalent to $146,413) 30 days after signing the contract; the Company paid this amount on August 12, 2009; the second installment of 3,000,000 RMB (equivalent to $439,239) three months after the first installment is made; and the final installment of 5,000,000RMB (equivalent to $732,064) within one year after signing the contract.

3. The final valuation of net assets is expected to be completed as soon as possible, but no later than one year from the acquisition date. Certain net assets and liabilities are still being finalized. The following table summarizes the preliminary allocation of the purchase price to the fair values of the assets at the date of acquisition:

Allocation of purchase price:

Fair value of assets		$2,545,497
Less: Fair value of liabilities		(15,980)
Net assets acquired		2,529,517

4. The Pro-Forma Income Statements with acquisition of HSC washing facility.

The following un-audited pro forma condensed consolidated financial information for the three months period ended July 31, 2009 and July 31 2008, as presented below, reflects the results of operations of the Company assuming the HSC acquisition occurred on May 1, 2008. These pro forma results have been prepared for information purposes only and do not purport to be indicative of what operating results would have been had the acquisition actually taken place on May 1, 2008, and may not be indicative of future operating results.

		Pro forma Statement of income for the
		period ended July 31, 2009
Sales		$ 14,944,172
Cost of sales		6,684,640
Gross profit		6,620,469
Total operating expenses		1,228,750
Income from operations		5,391,719
Other expenses (income)		(100,358)
Income from continued operations before tax
provision and minority interest		5,103,376
Income tax		376,894
Income from continued operations before

F-10

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minority interest		5,111,585
Minority Interest		2,117,849
Net income		$ 2,993,607
		Pro forma Statement of income for the
		period ended July 31, 2008
Sales		$12,756,624
Cost of sales		6,764,061
Gross profit		5,992,563
Total operating expenses		1,124,819
Income from operations		4,867,744
Other expenses (income)		69,115
Income from continued operations before tax
provision and minority interest		4,798,629
Income tax		311,695
Income from continued operations before
minority interest		4,486,934
Minority Interest		1,837,184
Net Income from continued operations		2,650,750
Total (income) loss from discontinued
operations		42,041
Net income		$ 2,692,791

See below, for the additional HSC acquisition made by L&L during the current quarter ended on October 31, 2009.

1. L&L executed an Acquisition and Capital Increase Agreement (hereinafter the “Agreement”), effective on October 23, 2009, with Hon Shen Coal Co. Ltd. (“HSC”), located in Yunnan Province, China. Pursuant to the Agreement L&L will increase its equity interest in HSC’s coal washing facility from a 65% equity ownership interest to a 93% equity ownership interest, and acquire additional 93% equity ownership interest in the coking facilities (another distinctive operation of HSC). Thus, L&L reaches an overall 93% ownership in HSC’s entire operations of coal, washing and coking operations, and forms a new controlling subsidiary - Hon Shen Coal Co. Ltd (“HSC”).

2. As reported in our prior Form 8-K filed with the SEC on July 30, 2009, L&L previously acquired a 65% equity ownership interest in Hon Shen’s coal washing facilities have a combined annual capacity of 300,000 tons between two facilities: a 210,000-ton coal washing plant completed in July 2009 using Dense Medium Separation (DMS) technology, and an existing 90,000-ton plant using jig separation technology with approximately $ 33 million (or RMB 225 million). Hon Shen’s coking facilities has a production capacity of 150,000 tons with approximately $30 million (or RMB 204 million) in estimated annual revenues.

3. Total registered capital of the HSC is 30 million RMB (or approximately $ 4.4 million USD). L&L is required to contribute 26,400,000 RMB (approximately $3,865,300 USD) for the overall 93% ownership in HSC’s entire operations of both coal washing and coking operations, excluding transaction costs which were expensed as incurred. The amount of $3.86 million shall be paid by L&L in two payments with a commitment that L&L may inject a total of 60 million RMB cash as total investment capital (which can be injected using bank loans or other financing means) into HSC. The first payment of 6 million RMB (approximately $0.88 million USD) shall be made within 30 days after execution of the Agreement. Of which, L&L has paid 2.2 million RMB (approximately $0.32 million USD) at the end of the current quarter ended on October 31, 2009. The second payment of 20.40 million RMB (approximately $3 million USD) is due to HSC within two years after government’s approval of the acquisition.

F-11

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4. The final valuation of net assets is expected to be completed as soon as possible, but no later than one year from the acquisition date. Certain net assets and liabilities are still being finalized. The following table summarizes the preliminary allocation of the purchase price to the fair values of the assets at the date of acquisition:

Allocation of purchase price:		Amount
Cash		$15,649
Accounts receivables		264,463
Inventories		150,636
Properties plant and equipment		3,675,075
Intangible assets (Land use rights)		128,573
Fair value of assets		4,234,576
Less: Fair value of liabilities		2,907,793
Net assets acquired		$1,326,783

In accordance with authoritative guidance, the transfer of noncontrolling interest of HSC washing facility from 65% to 93% was accounted as the Company recognized additional capital of approximately $757,000.

5. The Pro-Forma Income Statements with acquisition of HSC

The following un-audited pro forma consolidated financial information for the six months period ended October 31, 2009 and October 31, 2008, as presented below, reflects the results of operations of the Company assuming the HSC acquisition occurred on May 1, 2009. These pro forma results have been prepared for information purposes only and do not purport to be indicative of what operating results would have been had the acquisition actually taken place on May 1, 2009, and may not be indicative of future operating results.

						Pro forma
				Historical		Statement of
		Historical		Information of the		Income for the
		Information of the		Acquired Entity		period ended
		Company for the		(HSC) for the
		period ended		period ended		October 31,
		October 31, 2009		October 31, 2009		2009
Sales		$27,330,277.00		$14,333,380.00		$41,663,657
Cost of sales		(10,134,764)		(12,505,634)		(22,640,398)
Gross profit		17,195,513		1,827,746		19,023,259
Total operating expenses		(4,255,559)		(639,441)		(4,895,000)
Income from operations		12,939,954		1,188,305		14,128,259
Other income (expense)		493,990				493,990
Income from continued operations before tax provision and non-
controlling interest		13,433,944		1,188,305		14,622,249
Income tax		(918,392)				(918,392)
Income from continued operations before non-controlling interest		12,515,552		1,188,305		13,703,857
Non-controlling Interest		(3,964,947)				(3,964,947)
Net income		$8,550,605		$1,188,305		$9,738,910
				Historical
		Historical		Information of		Pro forma

F-12

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		Information of		the Acquired		Statement of
		the Company		Entity (HSC)		Income for the
		for the period		for the period		period ended
		ended October		ended October		October 31,
		31, 2008		31, 2008		2008
Sales		$20,910,930.00		$4,010,085.00		$24,921,015
Cost of sales		(9,465,942.00)		(3,743,669.00)		(13,209,611.00)
Gross profit		11,444,988.00		266,416.00		11,711,404
Total operating expenses		(2,201,013.00)		(174,746.00)		(2,375,759.00)
Income from operations		9,243,975.00		91,670.00		9,335,645
Other income (expense)		(180,223.00)		123,154.00		(57,069.00)
Income from continued operations before tax provision and non-
controlling interest		9,063,752.00		214,824.00		9,278,576
Income tax		(572,157.00)		-		(572,157.00)
Income from continued operations before non-controlling interest		8,491,595.00		214,824.00		8,706,419
Non-controlling interest		(3,626,497.00)		-		(3,626,497.00)
Net income from continued operation		4,865,098.00		214,824.00		5,079,922
Net income from discontinued operation		69,138.00		-		$69,138
Net income		$4,934,236.00		$214,824.00		$5,149,060

NOTE 5. CASH AND CASH EQUIVALENTS

The cash and cash equivalents balances as of October 31, 2009 and April 30, 2009 consist of:

Item		October 31, 2009		April 30, 2009
Cash on hand		$6,552,954		$4,458,879
Cash in banks		4,792,563		639,832
Total		$11,345,517		$5,098,711

NOTE 6. ACCOUNTS RECEIVABLE

The account receivable balances amounted to $19,518,573 and $16,906,010 as of October 31, 2009 and April 30, 2009, respectively. No allowance for doubtful accounts or sales returns deemed necessary.

NOTE 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets represent cash advances paid to suppliers by the KMC and HSC, based on the general industry practice. The balances amounted to $5,429,122 and $3,611,371 as of October 31, 2009 and April 30, 2009, respectively.

NOTE 8. OTHER RECEIVABLES Other receivables consist of the following:

Item		October 31, 2009		April 30, 2009
Receivable- KMC right sale		$556,807		$954,373
Other Receivables		7,109,550		8,406,508
Total		$7,666,357		$9,360,881

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NOTE 9. INVENTORIES

Inventories are primarily related to coal located at KMC, 2 Mines and HSC. Inventories are valued under the first-in first-out basis, consist of the following as of October 31, 2009 and April 30, 2009:

Item		October 31, 2009		April 30, 2009
Raw Materials		$798,616		$574,607
Coal		2,401,955		949,886
Total		$3,200,571		$1,524,493

NOTE 10. PROPERTY AND EQUIPMENT

Property and equipment are mainly related to coal mining machinery, and related hardware needed for coal mining and washing operations. The balances of the account consist of the following as of October 31, 2009 and April 30, 2009:

Item		October 31, 2009		April 30, 2009
Machinery (1)		$10,371,014		$6,095,840
Building		3,954,518		-
RuiLi Project (property, at cost)		-		400,687
Furniture, Fixtures & Office equipment		85,567		83,406
Vehicles		149,334		77,695
Leasehold improvements		27,524		27,524
Sub-total		14,587,957		6,685,152
Less: accumulated depreciation		(1,893,102)		(1,442,010)
Property and equipment, net		$12,694,855		$5,243,142

(1) Machinery related to mining and excavating equipment, includes railroad, steel cable, bucket cars, pulleys, motors survey equipment, air compressor units used in shafts, tunnels for the mines mining operations and safety improvement. The related depreciation expense was $451,092, and $979,276 for the period ended October 31, 2009, and for same period of 2008 respectively. Depreciation expenses were included in the accumulated depreciation category shown in the above table.

NOTE 11. INTANGIBLE ASSETS

The amount of $2,428,551 represents the exclusive mining rights to operate the 2 Mines and to extract coal from the 2 Mines coal reserves for approximately 50 years, authorized by the Chinese government. The intangible were acquired in the first quarter of 2008 from the 2 Mines, as a result of acquisition of the “2 Mines” on May 1, 2008. The exclusive mining rights can be renewed with little or no additional cost at the end of 50 years. As coal demand cannot meet its supply in China, and it is Chinese government policy to get more coal out of mines to meet increasing coal demand, there is no impairment of the intangible as of October 31, 2009. The Company has elected to use the straight line method of amortizing its intangible asset costs. The amortization period is 50 years, resulting in amortization expenses of approximately $50,000 per year.

The amount of $128,753 represents the right of using the land of HSC for coal washing and coking operations.

Under Chinese law, all coal reserves legally belong to the government, thus no coal reserves are reported as assets of the Company as of October 31, 2009.

The intangible amortization schedule for the upcoming 5 years is as below:

Year ending April 30,		Amortization
2010		$50,147

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2011		50,147
2012		50,147
2013		50,147
2014		50,147

NOTE 12. CONSTRUCTION-IN-PROGRESS

The Company is expanding its existing mining capacities from 150,000 tons and 90,000 tons to 300,000 tons and 150,000 tons for DaPuAn Mine and SuTsong Mine, respectively. The Construction-In-Progress balance is approximately $10 million as of October 31, 2009, which represents the on-going expansion of mining capacities. It also includes a recently completed coal washing facility of the DaPuAn Mine with approximately 290,000 tons of annual coal washing capacity, subject to the final governmental approval. When approval is received the DaPuAn coal washing facility is to be reclassified from the Construction–in-Progress account to Property and Equipment account.

NOTE 13. INVESTMENTS

Investment of $1,539,792 for the current period ended October 31, 2009 was due to KMC’s development of the Tian-Ri coal mine and Laos coal mine of $1,273,792, and L&L’s investment in China mansion of $266,000. L&L has an investment interest of Tian-Ri coal mine of approximately $0.8 million, which has received the government initial approval, is currently in a stage of excavation and exploration to verify its underground coal reserves conducted by an outside civil engineering firm, and construction of related mountain roads access to the mine sites. For the Laos coal mine, the equity investment of approximately $0.47 million includes a consulting study on the coal mine site, preliminary engineering survey of the coal reserves, which commenced and were in progress as of October 31, 2009. These two coal mines did not generate revenue.

NOTE 14. ACCRUALS AND OTHER LIABILITIES

Accruals and other liabilities consist of the following as of October 31, 2009 and April 30, 2009:

Item		October 31, 2009		April 30, 2009
Other Payable		-		$901,542
Salaries & Welfare Payable		$321,616		22,701
Other Short Term Liabilities (1)		1,559,863		29,152
Total		$1,881,479		$953,395

(1) Other short-term liabilities included employees’ social insurance and prepaid rental deposit.

NOTE 15. GEOGRAPHIC INFORMATION The Company mainly focus on energy operations.

Geographic Segment:

The Company’s operations are in two geographic locations: 1) China, and 2) the United States of America. All income of the Company was generated in China. During the current period ended October 31, 2009, the 2 Mines contributed sales of approximately $12.4 million, KMC contributed sales of approximately $3.73 million, while HSC contributed sales of approximately $8.33 million to the Company. The 2 Mines, KMC and HSC are located in China.

NOTE 16. INCOME AND SALES TAXES

The Company’s main operations are located in China. The Company is subject to income taxes primarily in two taxing jurisdictions, China, and the United States of America (“U.S.”). The income of the Company is mainly generated via its 2 Mines subsidiaries, KMC and Hon Shen Coal foreign entities located in China. The Company incurs tax liability for the coal operations including coal profit tax charged at 25% of coal profit and various surcharges. As the 2 Mines (DaPuAn Mine and SuTsong Mine) in a heavily regulated resource business in China, are in a form of proprietorship (are not incorporated as a corporation), thus they are subject a special tax rate equal to approximately 5% of total revenue proceeds as of the period ended October 31, 2009, subject to provisional adjustments when the coal sale changes. As no cash or funds were repatriated from China to the U.S., the Company’s income was not subject to the U.S. federal taxation for both the current period and the prior year ended on October 31, 2009, and 2008, under subpart F, income from controlled foreign company, of the U.S. Internal Revenue Code.

F-15

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The Company recognizes deferred income taxes for the differences between financial accounting and tax bases of assets and liabilities. In the period ended on October 31, 2009 and 2008, there were no material temporary book/tax differences or differences between financial accounting and tax bases of assets and liabilities.

The Company’s tax liability for the period ended October 31, 2009 was $6,371,517, compared to the prior year ended on April 30, 2009 was $6,014,922. These payables to Chinese local governments can be postponed temporarily as L&L, a U.S. company, is expanding the Sino-American joint-venture to bring in U.S. management skills to increase coal production and safety standards, beneficial to Chinese local communities. According to the China law, a new joint venture may enjoy special Chinese tax rebates from the governments, thus there is a high probability that the 2 Mines, KMC and Hon Shen local tax liability payments may be delayed or mitigated.

The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Income and Comprehensive Income:

		October 31, 2009		October 31, 2008
Tax expense (credit) at statutory rate – federal		34%		34%
State tax expense net of federal tax		-		-
Changes in valuation allowance		(34%)		(34%)
Foreign income tax benefit – PRC (applicable to subsidiary		25%		25%
KMC)
Tax expense at actual rate (applicable to subsidiary KMC)		25%		25%
Foreign income tax benefit – PRC (applicable to subsidiary		5%		5%
LLC)
Tax expense at actual rate (applicable to subsidiary LLC)		5%		5%

United States of America

As of October 31, 2009, the Company in the United States had approximately $2,539,569 in net operating loss carry forwards available to offset future taxable income. Federal net operating losses can generally be carried forward 20 years. The deferred tax assets at October 31, 2009 consist mainly of net operating loss carry forwards. Due to the uncertainty of the realization of the related deferred tax assets of $863,453, a reserve equal to the amount of deferred income taxes has been established at October 31, 2009. The Company has provided 100% valuation allowance to the deferred tax assets as of October31, 2009.

People’s Republic of China (PRC)

Pursuant to the PRC Income Tax Laws, the Company's subsidiary is generally subject to Enterprise Income Taxes ("EIT") at a statutory rate of 25% for the entity of HSC and KMC, while the income taxes rate for LLC is 5% since it was owned in form of partnership. LLC was acquired effectively on May 1, 2008, and HSC was acquired effectively on July 16, 2009, and additional HSC interest was acquired effectively on October 23, 2009.

The following table sets forth the significant components of the provision for income taxes for operation in PRC as of October 31, 2009 and 2008.

		October 31, 2009		October 31, 2008
Net taxable income for KMC		930,756		379,947
Income tax @25%		232,689		94,987
Net taxable income for LLC		13,714,037		9,543,414
Income tax @5%		685,702		477,170
Net taxable income for HSC		1,217,999		-
Income tax @25%		249,007		-

F-16

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NOTE 17. RELATED PARTY TRANSACTIONS
Item		October 31, 2009		April 30, 2009
Due to officer-payable				$ (910,791)
Due from related parties-receivable (1)		$ 1,866,917		$ 5,983,636
		$ 1,866,917		$ 5,072,845

(1) The due from related party are cash advances made to Tony HY Li, manager of KMC subsidiary, for development of Tian-Ri Coal Mine. The advances will be reclassified as project costs as assets when supporting documents are received. The loan to the non-controlling interest shareholders of the 2 Mines which was $0 and $4,300,000 as of October 31, 2009 and April 30, 2009 respectively.

NOTE 18 STOCKHOLDERS’ EQUITY

The Company authorized 2,500,000, no par value, preferred stock. Currently, there is no preferred stock is issued or outstanding.

On January 23, 2009, the Company purchased 400,000 common stock shares of LLFH from a major shareholder for a total of $1.00. The 400,000 shares have been recorded as Treasury Stock in the accompanying financial statements since January 31, 2009.

On January 23, 2009, the Company disposed its air compressor subsidiary LEK. As a result of the disposal, LEK returned L&L shares to the Company. The Company cancelled 1,708,283 shares of common stock received from LEK during the quarter ended January 31, 2009.

On April 10, 2009, an officer (insider) entered into an agreement and donated one million shares of common stock that he personally owns to a Chung Yung Christian University Development Foundation, a non-profit organization, incorporated in the State of California. As of October 31, 2009, 400,000 shares were transferred to the foundation.

The table below listed the Company’s warrants as of October 31, 2009.
				Weighted Average
		Units		Exercise Price
Outstanding at April 30, 2007		3,418,710		$1.62
Exercised		(638,362)		0.80
Expired		-		-
Outstanding at April 30, 2008		2,780,348		1.86
Issued		909,000		2.50
Exercised		(92,374)		0.71
Expired		(1,611,725)		0.81
Outstanding at April 30, 2009		1,985,249		2.50
Issued		1,498,800		1.17
Exercised		(475,000)		1.00
Outstanding at October 31, 2009		5,629,094		2.64
Issued		4,575,095		2.57
Cancelled		(181,250)		3.00
Exercised		(750,000)		1.00

See Note 21, for warrants (class D and Class E) issued to executive and director compensations.

During the period ended October 31, 2009, certain equity shares and warrants were issued as a part of the Company business operations. Warrants class H, I, J, K and L are issued to institutional investors.

F-17

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Following is a summary of the status of warrants outstanding at October 31, 2009:
Type of		Range of		Total		Weighted Average		Weighted
Warrant		Exercise		Warrants		Remaining Life		Average Exercise
		Prices		Outstanding		(Years)		Price
D & E		$ 2.25-$3.00		1,197,999		4.44		$2.89
H, I, J & K		$1.00-$2.60		3,498,800		0.66		1.74
L		$5.62-$6.11		932,295		4.85		5.68
				5,629,094		1.62		$2.64

NOTE 19. EARNINGS PER SHARE

The Company only has common shares and warrants issued and outstanding as of October 31, 2009. Under the treasury stock method of Earnings Per Share, the Company computed the diluted earnings per share, as if all issued warrants were converted to common stock, and cash proceeds were used to buy back common stock. The following presents both basic and diluted earnings per share, for the six months period ended October 31, 2009 and 2008.

		Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
Item		October 31, 2009		October31, 2008		October 31, 2009		October31, 2008
Net income		$6,946,781		$2,353,872		$9,640,910		$4,934,236
Number of Shares		22,726,935		21,987,912		21,964,044		21,671,211
Per Share - Basic		$0.306		$0.107		$0.439		$0.228
Effect of dilutive shares		1,670,148		398,998		1,670,148		398,998
Number of dilutive shares		24,397,083		22,386,910		23,634,192		22,070,209
Per Share - Diluted		$0.285		$0.105		$0.408		$0.224

NOTE 20. CONCENTRATION OF CREDIT RISK

The Company maintains majority of its cash in China, either in Chinese banks or in Company’s Chinese locations. Cash balances in foreign locations are not insured as they are in the U.S. In addition, there are times, when the Company’s cash deposited in the United States banks exceeds the US federal government insured limits, subject to potential risks. As of October 31, 2009 and April 30, 2009, the Company had uninsured cash balances of $6,997,213 and $5,036,400, respectively.

Financial instruments that also potentially subject the Company to concentrations of credit risks are primarily trade accounts receivable and common stock of its investors. The trade accounts receivable are due primarily from clients in China. The Company has not historically experienced material losses due to uncollectible trade accounts receivable.

NOTE 21. WARRANTS

The Company has no qualified employee stock option plan. The Company issued 2 types of warrants, one for executives (warrant class D), and the other for directors (warrant class E). Only directors and senior executives are entitled to receive warrants, as compensations for their services.

During the 6 months period, 750,000 warrants were exercised for the issuance of common shares. As of October 31, 2009, total warrants authorized under Class D and Class E were 1,100,000 units and 4,000,000 units, respectively.

During the period ended October 31, 2009, total units of warrants (class D) issued and warrants (class E) issued were 168,000 units and 1,029,999 units, respectively.

Information relating to warrants outstanding and exercisable at October 31, 2009 summarized by exercise price is as follows:

F-18

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Exercise

Outstanding at

Remaining

Average

Exercisable at

Weighted Average

Price

October 31, 2009 (units)

Contractual Life

Exercise Price

October 31, 2009 (units)

Exercise Price

$2.25 -

Class D

Class E

Class D

Class E

$3.00

168,000

1,029,999

4.44 Years

$2.89

168,000

1,029,999

$2.89

During the current period ended October 31, 2009, the Company did not use its equity instruments to acquire goods or services, other than for directors’ services and to reward senior executives.

The following table summarizes two types of warrants (Class D and Class E) and exercise prices available to the existing and prior executives and board members as of October 31, 2009. Starting from April 1, 2009, monthly warrant issuances to executives and board members will be 4,000 units, changing from 2,000 units per month. The warrants issued will expire after five years, but could be extended.

		Number of Warrants		Number of Warrants
		(D) issued and		(E) issued and		Warrants convertible
Name of Director, Executive		outstanding		outstanding		price
Executives		168,000		-		$2.25
Directors		-		1,029,999		$3.00
Total units issued		168,000		1,029,999

NOTE 23. COMMITMENTS AND CONTINGENCIES

a) Operating Leases

The Company leases its Seattle office and its Kunming office under long-term, non-cancelable leases, expiring in September of 2010 and October of 2009, respectively. The Company renewed its Kunming office on monthly basis after the lease expired. The non-cancelable operating lease agreements require that the Company pays certain operating expenses, including management fees to the leased premises. Rental expenses for the period ended October 31, 2009 and 2008 were $11,445 and $16,095, respectively. The future minimum lease payments required under the operating leases is approximately $27,613.

b) Commitments

Despite the Company has issued 400,000 of its equity shares (valued at $4.00 per share) to the 2 Mines (DaPuAn Mine and SuTsong Mine, called L&L Coal Partners) on August 20, 2008, the Company is to inject approx. $6 million in cash, to in approximately 12 months to satisfy its contribution, under the purchase terms with the 2 Mines. As of October 31, 2009, the Company has injected approximately $0.3 million to Hon Shen Coal (HSC), and anticipates that it will inject approximately $0.57 million cash to HSC within 30 days after execution of the Agreement. The Company should inject a second payment of approximately $3 million USD to HSC in next two years after the Chinese government’s approval of the acquisition.

NOTE 24. MAJOR CUSTOMERS AND MAJOR VENDORS

For the period ended October 31, 2009 and 2008, we had two major customers who purchased over 10% of the Company’s total sales. They collectively accounted for approximately 42% (approximately $10.3 million USD) of our total sales and approximately 45% (approximately $8 million USD) of accountant receivables. In addition, there are four major suppliers each provided over 10% of our total purchases. These suppliers collectively supplied approximately 75% (approximately $3 million USD) of the Company’s purchases and 56% (approximately $0.8 million USD) of total accounts payable.

NOTE 25. SUBSEQUENT EVENTS

1)	On November 13, 2009, the Company raised approximately $3.2 million via a private placement.
2)	Effectively December 1, 2009, the Company leased an office space for its new subsidiary in Guangzhou City on monthly basis. The office space contains 2,400 square feet; monthly lease payment including management fee is approximate $4,900.

 

 

F-19

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3) The Company has performed an evaluation of subsequent events through December 15, 2009, which is the date the financial statements were issued.

F-20

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors L & L International Holdings, Inc.

We have audited the accompanying consolidated balance sheets of L & L International Holdings, Inc. and subsidiaries as of April 30, 2009 and 2008 and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of 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). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of L & L International Holdings, Inc. and subsidiaries as of April 30, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2, the financial statements for the year ended April 30, 2008 have been restated.

Kabani & Co. Inc.

CERTIFIED PUBLIC ACCOUNTANTS Los Angeles, California

August 11, 2009

F-21

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L & L INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
As of April 30, 2009 and 2008
		April 30, 2009		April 30, 2008
ASSETS				(Restated)
CURRENT ASSETS:
Cash & cash equivalent		$ 5,098,711		$ 948,210
Accounts receivable, net		16,906,010		502,153
Prepayments		3,611,371		-
Other Receivables		9,360,881		5,227,379
Inventories		1,524,493		1,336,489
Loan from business associates		1,683,636		726,775
Due from minority shareholders		4,300,000
Current assets held for disposition		-		16,286,227
Total current assets		42,485,102		25,027,233
Property and equipment, net		5,243,142		472,773
Construction-in-progress		2,085,134		-
Intangible assets, net		2,507,331		-
Investments in coal mines		1,275,660		443,876
Minority interest held in a subsidiary disposed off		573,677
Deferred tax assets		105,329		130,132
Non-current assets held for disposition		-		3,666,401
Total non-current assets		11,790,273		4,713,182
TOTAL ASSETS		$ 54,275,375		$ 29,740,415
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$ 4,930,866		$ 263,262
Accrued and other liabilities		953,395		(284,835)
Other payable		3,000,000
Taxes payable		6,014,922		2,203,180
Customer deposits		300,435		311,679
Due to shareholder		910,791		680,062
Liabilities related to entity held for disposal		-		6,460,576
Total current liabilities		16,110,409		9,633,924
LONG-TERM LIABILITY
Long term payable		3,000,000		-
Total long-term liability		3,000,000		-
MINORITY INTEREST		12,731,987		7,868,354
STOCKHOLDER'S EQUITY:
Preferred stock, no par value, 2,500,000 shares
authorized, none issued and outstanding		-		-
Common stock, $0.001 par value, 120,000,000 shares authorized,

F-22

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21,202,200shares issued and 21,059,714 shares outstanding for
4/30/2009 and 4/30/2008		21,201		21,060
Paid-in Capital		9,604,694		9,978,810
Deferred stock compensation		(63,667)		(105,667)
Accumulated other comprehensive income		669,913		100,339
Retained Earnings		12,200,838		2,243,595
Total stockholders' equity		22,432,979		12,238,137
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 54,275,375		$ 29,740,415
The accompanying notes are an integral part of these consolidated financial statements.

F-23

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L & L INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the years ended April 30, 2009 and 2008
		For the Years, Ended April 30
		2009		2008
				(Restated)
NET REVENUES		$ 40,938,128		$ 23,381,508
COST OF REVENUES		17,946,206		21,994,429
GROSS PROFIT		22,991,922		1,387,079
OPERATING COSTS AND EXPENSES:
Salaries & wages		481,128		191,808
Selling / General and administrative expenses		3,515,667		695,656
Total operating expenses		3,996,795		887,464
INCOME FROM OPERATIONS		18,995,127		499,615
OTHER EXPENSES (INCOME):
Interest expense		265,186		24,935
Other expenses (income)		170		239
Total other expenses (income)		265,356		25,174
INCOME FROM CONTINUED OPERATIONS BEFORE MINORITY INTEREST
& PROVISION FOR INCOME TAXES		18,729,771		474,441
LESS: PROVISION FOR INCOME TAXES		1,219,457		186,461
INCOME FROM CONTINUED OPERATIONS BEFORE MINORITY INTEREST		17,510,314		287,980
LESS: MINORITY INTEREST		7,315,330		119,879
NET INCOME FROM CONTINUED OPERATIONS		10,194,984		168,101
DISCOUNTINUED OPERATION (Note 21)
Loss on disposal		(382,961)		-
Net Income from discontinued operations		145,220		806,368
TOTAL INCOME (LOSS) FROM DISCONTINUED OPERATIONS		(237,741)		806,368
NET INCOME		9,957,243		974,469
OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain		569,574		100,339
COMPREHENSIVE INCOME		$ 10,526,817		$ 1,074,808

F-24

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INCOME PER COMMON SHARE – basic from continued operation		$ 0.47		$ 0.01
INCOME PER COMMON SHARE – basic from discontinued operation		$ (0.01)		$ 0.04
INCOME PER COMMON SHARE – basic		$ 0.46		$ 0.05
INCOME PER COMMON SHARE – diluted from continued operation		$ 0.47		$ 0.01
INCOME PER COMMON SHARE – diluted from discontinued operation		$ (0.01)		$ 0.04
INCOME PER COMMON SHARE – diluted		$ 0.46		$ 0.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – basic		21,492,215		20,854,212
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
– diluted, under treasury stock method		21,822,215		21,255,210
The accompanying notes are an integral part of these consolidated financial statements.

F-25

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L&L INTERNATIONAL HOLDINGS, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended April 30, 2009 and 2008
		For the Twelve Months Period
		Ended April 30, 2009
		2009		2008
				Audited
		Audited		(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continued operation		$ 10,194,984		$ 168,101
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Minority interest income		7,315,330		119,879
Depreciation and amortization		481,863		16,010
Income/(loss) from discontinued operation		(237,741)		806,368
Amortization for deferred compensation		42,000		42,000
Issuance of common stock for service		1,274,068		105,741
Issuance of common stock as gift		36,385		-
Changes in assets and liabilities:
Accounts receivable		(16,403,858)		11,934
Inventory		(188,004)		(743,302)
Prepaid and other assets		(12,044,873)		219,218
Accounts payable and Other Payable		7,667,605		162,915
Customer Deposit		(11,244)		147,951
Accrued liabilities and other liabilities		1,468,957		133,750
Long-term payable		3,000,000		-
Loan to associate		(956,861)		(726,775)
Deferred tax asset		24,803		(130,132)
Taxes payable		3,811,741		1,016,652
Net cash provided by operating activities of continued operations		5,475,155		1,350,310
Net cash provided by (used in) operating activities of discontinued operations		12,100,082		(2,341,132)
Net cash provided by (used in) operating activities		17,575,237		(990,822)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(7,820,446)		-
Acquisition of intangible assets		(2,507,331)		-
Construction-in-Progress		(2,085,133)		-
Change in minority interest due to acquisition and disposal		(2,451,697)		853,025
Increase in investments		(1,405,461)		(43,376)
Net cash provided by (used in) investing activities of continued operations		(16,270,068)		809,649
Net cash provided by investing activities of discontinued operations		3,666,402		22,508
Net cash provided by (used in) investing activities		(12,603,666)		832,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock		833,786		246,165
Warrants converted to shares		50,000		480,844

F-26

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Net cash provided by (used in) financing activities of continued operations		883,786		720,009
Net cash provided by (used in) financing activities of discontinued operations		(2,274,430)		351,353
Net cash provided by (used in) financing activities		(1,390,644)		1,078,362
Effect of exchange rate changes on cash and cash equivalents		569,574		(31,350)
INCREASE IN CASH AND CASH EQUIVALENTS		4,150,501		888,347
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		948,210		59,863
CASH AND CASH EQUIVALENTS, END OF PERIOD		$ 5,098,711		$ 948,210
SUPPLEMENTAL NON CASH FLOW INFORMATION:
INTEREST PAID		$ 265,186		$ 24,935
INCOME TAX PAID		$ 1,219,457		$ 186,461
NON-CASH INVESTING AND FINANCING ACTIVITY:
Issuance of 400,000 shares to acquire 60% interest in L&L Coal Partners		$1,600,000		$-
1,708,283 Shares returned by subsidiary as part of spun off		$4,168,211		$-
The accompanying notes are an integral part of these consolidated financial statements

F-27

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L&L INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the years ended April 30, 2009 and 2008
											Accumulated
		Common Stock				Additional		Deferred			Foreign
						Paid-in		Compensation		Retained	Currency
		Shares		Amount		Capital				Earnings	Translation	Total
Balance as of May 1, 2007		19,706,584		$19,706		$9,147,847		($147,667)		$1,269,126	$107,883	$10,396,895
Issuance of Shares		555,018		555		245,176						245,731
Warrants converted to shares		596,362		596		480,248						480,844
Issuance of common stock for service		201,750		202		105,539						105,741
Amortization of deferred compensation								42,000				42,000
Foreign currency translation adjustment											(7,544)	(7,544)
Net Profit										974,469		974,469
Balance as of April 30, 2008		21,059,714		21,059		9,978,810		(105,667)		2,243,595	100,339	12,238,136
Issuance of Shares		663,363		663		818,146						833,7855
Warrants converted to shares		92,374		93		64,885						50,000
Issuance of common stock for acquisition		400,000		400		1,599,600						1,600,000
Issuance of common stock for service		663,713		664		1,273,404						1,274,068
Issuance of common stock as Chinese
New Year Gift		34,652		35		36,350						36,385
Cancellation of Shares		(1,711,616)		(1,712)		(4,166,502)						(4,168,214)
Amortization of deferred compensation								42,000				42,000
Foreign currency translation adjustment											569,574	569,574
Net Profit										9,957,243		9,957,243
Balance as of April 30, 2009		21,202,200		$21,202		$9,604,693		($63,667)		$12,200,838	$669,913	$22,432,979
The accompanying notes are an integral part of these consolidated financial statements

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L & L INTERNATIONAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED APRIL 30, 2009 AND 2008

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

L & L International Holdings, Inc. (“L&L” and the “Company”) was incorporated in Nevada, and has an office in Seattle, Washington. The Company began operating in 1995, is in the coal (energy) related business. Coal sales both from coal production and coal wholesales, represented majority of its consolidated sales for the year ended April 30, 2009 and 2008. The Company conducts its coal (energy) operations in Yunnan province, southwest China, through its subsidiaries KMC coal wholesale business, and the Company’s interest in 2 coal mines (DaPuAn Mine and SuTsong Mine, provisional name L&L Coal Partners, “2 Mines”) operations acquired with effective date on May 1, 2008. In January of 2009, the Company disposed of its majority interest of LEK air-compressor segment, and thus LEK is disclosed as a “discontinued operations” .

Disposal of air compressor Operation:

On January 23, 2009, the Company entered into an agreement to dispose off the LEK air compressor, and classified the air compressor operations as a discontinued operation of the Company and the air compressor’s net income was reported separately on the Consolidated Statements of Income as discontinued operations. According to the terms of the agreement, L&L is to return all the shares it owned in LEK to the minority shareholders of LEK; and the minority shareholders of LEK is to return all the shares it owned in L&L to L&L. Accordingly the Company received 1,708,283 of its common stock valued at $4,168,211while the Company returned 1,517,057 shares of LEK it owned while it still hold 191,226 shares or 9% of shares as remaining interest in LEK. As a part of disposal LEK agreed to distribute all post acquisition earnings of LEK to L&L for the period from December 2004 to January 2009 (up to the date of disposal). The Company has reported a net income of LEK’s nine months operations (up to the disposition date in January of 2009) as a discontinued operation amounting $145,220 in the year ended April 30, 2009, and a disposal loss of $382,961 in the year ended April 30, 2009. For the comparative purposes, the prior years’ financial statements for the years ended on April 30 2008 are also adjusted to reflect the disposition of LEK subsidiary operations.

NOTE 2. RESTATEMENT

Subsequent to the issuance of the Company's financial statements for the year ended April 30, 2008, the management of the Company determined that certain transactions and presentation in the financial statements for the year ended April 30, 2008 had not been accounted for properly.

Management became aware that there was more VAT tax payable in addition to what was recorded and reflected in the financial statements as of April 30, 2008. VAT tax payable was understated by $590,817 as of April 30, 2008. In addition, Management also determined that certain items in balance sheets of the Company as on April 30, 2008 were not properly classified in accordance with the US GAAP, specifically the allowance for bad debts.

The Company has restated its financial statements by recording the accrual for VAT taxes and bad debt allowance expenses, and reclassification as of April 30, 2008.

The effect of the correction of presentation is as follows:
BALANCE SHEET		AS PREVIOUSLY		AS
As of April 30, 2008		REPORTED		RESTATED
OTHER RECEIVABLES		$284,835		$5,227,379
LOAN FROM BUSINESS ASSOCIATES		$0		$726,775
PREPAYMENT		$6,055,271		$0
CURRENT ASSETS HELD FOR DISPOSITION		$16,266,833		$16,286,227
TOTAL CURRENT ASSETS		$25,393,791		$25,027,233
INVESTMENTS		$408,732		$443,876
DEFERRED TAX ASSETS		$0		$130,132
TOTAL NON-CURRENT ASSETS		$4,547,907		$4,713,182
ACCRUED AND OTHER LIABILITIES		$0		($284,835)

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TAX PAYABLE		$1,612,363		$2,203,180
CUSTOMER DEPOSIT		$412,797		$311,679
NON-CURRENT ASSETS HELD FOR DISPOSITION		$6,441,182		$6,460,576
TOTAL CURRENT LIABILITIES		$9,409,666		$9,633,924
STATEMENT OF SHAREHOLDERS' EQUITY
Accumulated Retained Earnings		$2,669,136		$2,243,595
Total Shareholders Equity		$12,663,678		$12,238,137
STATEMENT OF OPERATIONS:
For the year ended April 30, 2009
Cost of Revenue		$21,469,664		$21,994,429
Gross Profit		$1,911,844		$1,387,079
Total Operating Expenses		$856,556		$887,464
Income from Operations		$1,055,288		$499,615
Provision for Income Tax		$316,593		$186,461
Net Income		$1,400,010		$974,469
Income per share - basic and diluted		$0.07		$0.05
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation – The consolidated financial statements include the accounts of the Company, and its 100% ownership of KMC subsidiary, and 60% of operations of L&L Coal Partners, “2 Mines”. All significant inter-company accounts and transactions are eliminated.

Business Segment – For the current quarter ended April 30, 2009, the Company has one reportable business segment: coal (energy). Sales of the Company are mainly generated from its coal (energy) operations, which represented 100% of the Company’s total consolidated income.

Revenue Recognition – The Company’s revenue recognition policies are in compliance with Staff accounting bulletin 104, which stipulates recognition of revenue when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Sales-Coal Operations excluding LEK sales, as a result of a LEK Discontinued Operation - As the Company disposed of its LEK air compressor operation in January of 2009 and therefore, treated it as a Discontinued Operation. See Note 21 – Discontinued Operations for details.

Costs of Good Sold – For coal (energy) sales, cost of good sold includes mainly coal excavation and mining related costs. For the air compressor business, it consists of direct material cost, direct labor costs and related overhead costs associated with such product manufacturing.

Use of Estimates - The preparation of financial statements, in conformity with generally accepted accounting principles, 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. Based on our past experience, these estimates are reasonably accurate, have not been changed, and these estimates are reasonably not likely to be changed in the future. Actual results could differ from those estimates.

New accounting pronouncements

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements”. This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company’s fiscal year beginning May 1, 2009. Management is currently evaluating the effect of this pronouncement on its consolidated financial statements.

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In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquire; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and, c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning October 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after April 30, 2009.

In March, 2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. FASB Statement No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk–related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important. Based on current conditions, the Company does not expect the adoption of SFAS 161 to have a significant impact on its results of operations or financial position.

In May 2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting Principles”. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements.

In May 2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60”. The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The Company does not believe this pronouncement will impact its financial statements.

NOTE 4. BUSINESS CONBINATION

The Company owns majority equity controlling interest of the DaPuAn Coal Mine and SuTsong Mine under the provisional name of L&L Coal Partners (the “2 Mines”). The 2 Mines were acquired by the Company on May 1, 2008.

The acquisition of the 2 Mines effective on May 1, 2008,was executed based on a purchase agreement under which the Company received majority controlling (60%) equity interest in the 2 Mines (DaPuAn Mine and SuTsong Mine, or “L&L Coal Partners”, or “2 Mines”) located in Yunnan Province, a coal rich region of China. The 2 Mines are physically located near the KMC coal wholesale operational area. The consideration of the 60% equity acquisition of the 2 Mines was approximately $7.8 million,. The purchase price under the purchase agreement of $7,883,056 is to be paid in 2 years. In accordance with the purchase agreement, the Company issued 400,000 shares to the prior shareholders of “2 Mines” on August 12, 2008 and has contributed management skills to the new joint venture to expand the mines operations.

A summary of the assets acquired and liabilities assumed in the acquisition is as follows:

		May 1, 2008
Cash		$ 706,670
Accounts Receivable		1,062,323
Other Receivable and Prepayment		5,531,252
Inventories		417,755
Fixed Assets		4,554,696
Intangible Asset		2,442,857

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Total Assets		14,715,553
Accounts Payable		207,725
Other Payable		1,369,401
Net assets		13,138,427
Net assets acquired (60%)		$ 7,883,056
Purchase consideration (in shares & cash)		$ 7,883,056

The 2 Mines exclusive coal mining rights on the coal reserve of approximately 18 million tons over a 50-year period is the basis of intangible Asset of $2,500,000. It is expected that when the 50 years of the mining right expires, the mining rights can be further renewed by the government. The exclusive mining rights are authorized by the government and evidenced by the government mining licenses for the 2 Mines. See Note 12- Intangible Asset.

NOTE 5. CASH AND EQUIVALENTS

The cash balances as of April 30, 2009 and April 30, 2008 consist of:

Item		April 30, 2009		April 30, 2008
Cash on hand		$4,458,879		$414,033
Cash in banks		639,832		534,177
Total		$5,098,711		$948,210

NOTE 6. ACCOUNT RECEIVABLES

The account receivable balances amounted to $16,906,010 and $502,153 as of April 30, 2009 and April 30, 2008, respectively.

NOTE 7. PREPAYMENT

Prepayment includes amounts paid by the KMC and 2 Mines to its coal suppliers based on the general industry practice and amounted to $3,611,371 and $0 as of April 30, 2009 and April 30, 2008, respectively.

NOTE 8. OTHER RECEIVABLES
Other receivables consist of the following:
Item		April 30, 2009		April 30, 2008
Receivable- KMC right sale (1)		$954,373		-
Other Receivables (2)		8,406,508		$5,227,379
Total		$9,360,881		$5,227,379

1) In April of 2007, KMC sold its ownership of a mining-access-right of Da-Ya-Ko mine for $2.5 million to be collected over a three year period starting 2007; approximately $0.9 million is outstanding to be collected within a year.

2) Other receivables are primarily the short term deposit with vendors, and short term unsecured zero interest bearing loans to other

F-32

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companies.

NOTE 9. DUE FROM MINORITY SHAREHOLDERS OF SUBSIDIARY

L&L’s 2 Mines have approximately $4.3 million in short term loans which are secured with zero bearing interest. to the original 2 Mines owners, shown as due from minority mine owners for the year ended April 30, 2009. The loan is collateralized by the minority owners interest to the 2 Mines joint venture, and the loan must be paid back to the Company within one year, before April of 2010.

NOTE 10. INVENTORIES

Inventories are valued under the first-in, first-out basis. Inventories located at KMC and 2 Mines consist of the following details as of April 30, 2009 and April 30, 2008:

Item		April 30, 2009		April 30, 2008
Raw Materials		$574,607		-
Coal		949,886		$1,297,255
Steel		-		15,676
Software		-		23,558
Total Inventory		$1,524,493		$1,336,489

NOTE 11. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of April 30, 2009 and April 30, 2008:

		April 30, 2009		April 30, 2008
RuiLi Project (property, at cost) (1)		$400,687		$400,687
Mining Machinery (2)		6,095,840		80,528
Furniture, fixtures & Office equipment		83,406		111,235
Vehicles		77,695		57,815
Leasehold improvements		27,524		27,524
Sub-total		6,685,152		677,789
Less: accumulated depreciation		(1,442,010)		(205,016)
Property and equipment, net		$5,243,142		$472,773

(1)	On April 20, 2005, the Company acquired the land usage rights of two parcels and a resort property valued at approximately $400,000 from Ms. Yong Peng, to offset her two outstanding loans of $367,948 due to the Company. The properties located at RuiLi city, YenNan, China. The property rights include: a) a 30 year usage right on 80.5 Mu of land, (1 Mu equals 666.67 square meters) with remaining right of 21 years, expiring on 4/26/2030, b) a 20 year land usage right on 28 Mu of an adjacent land with a reservoir, with a remaining right of 15 years, expiring on 12/14/2024, and c) an ecological resort properties with pepper trees, plants, and bungalows. The property was developed as a resort. The value of the Rui-Li land has been appreciating as China continues its growth. But the book value remains the same, and has not adjusted upward, to reflect the conservative principle of accounting presentation.
(2)	Machinery related to mining and excavating equipment, includes railroad, cable, bucket cars, pulleys, motors and survey equipment, air compressors used in shafts and tunnels for the mines mining operations.
(3)	For the year ended April 30, 2009, the depreciation expense was approximately $431,716, while $16,010 for same period of 2008.

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NOTE 12. INTANGIBLE ASSETS

The amount of $2,507,331 represents the exclusive mining rights to operate the 2 Mines for approximately 50 years. The intangible were acquired in the first quarter of 2008 from the 2 Mines, as a result of acquisition of the “2 Mines” on May 1, 2008. The mining rights can be renewed with no additional cost. There is no impairment of the intangible as of April 30, 2009. In accordance with US GAAP, the Company has elected to use the straight line method of amortizing its intangible asset costs. The amortization period is 50 years, resulting in amortization expenses of approximately $50,000 per year. The amortization expenses are $50,147 and $0 for the year ended April 30, 2009 and 2008 respectively.

The amortization schedule for the upcoming 5 years is as below:
Year ending April 30,		Amortization
2010		$50,147
2011		50,147
2012		50,147
2013		50,147
2014		50,147

NOTE 13. CONSTRUCTION-IN-PROGRESS

The Company is expanding the 2 Mines’ mining capacities from 150,000 tons and 90,000 tons to 300,000 tons and 150,000 tons for DaPuAn Mine and SuTsong Mine, respectively and thus “Construction-In-Progress” represents the on-going expansion projects for 2 Mines. It also includes a recently completed coal washing facility of the DaPuAn Mine with approximately 290,000 tons in annual coal washing capacity, subject to the final governmental approval. The total “Construction–in-Progress” amount was approximately $2.09 million as of April 30, 2009.

NOTE 14. INVESTMENTS

The increase in the investment of approximately $0.8 million from the prior year ended on April 30, 2008 of $443,876 to the current year ended April 30, 2009 of $1,275,660 was due to: KMC’s investments for the further development of the Tian-Ri coal mine, and Laos coal mine in the amount of approximately $1.2 million as of April 30, 2009. L&L has an 80% of interest in the extraction rights of Tian-Ri coal mine, which has received the government initial approval, is currently in a stage of excavation and exploration to verify its underground coal reserves which is being conducted by an outside civil engineering firm, and construction of mountain roads has also commenced for access to the mine site. For the Laos coal mine, the equity investment includes a consulting study on the coal mine site, preliminary engineering survey of the coal reserves, which commenced and were in progress as of April 30, 2009.

NOTE 15. ACCRUALS AND OTHER LIABILITIES

Accruals and other liabilities consisted of the following as of April 30, 2009 and April 30, 2008:

Item		April 30, 2009		April 30, 2008
Other Payable		$901,542		$(282,660)
Salaries & Welfare Payable		22,701		-
Other short term Liabilities		29,152		(2,175)
Total accruals		$953,395		$(284,835)

Other liabilities included employees’ social insurance, prepaid rental deposit, and other loans with some other companies.

NOTE 16. GEOGRAPHIC INFORMATION The Company mainly focus on energy operations.

Geographic Segment:

During the year ended on April 30, 2009, the Company’s operations are in two geographic locations: 1) in China, and 2) in the U.S.

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All income of the Company was generated in China. During the year ended April 30, 2009, the 2 Mines contribute sales of approximately $27.4 million, while KMC contributed sales of $13.5 million to the Company. Both the 2 Mines and KMC are located in China.

NOTE 17. INCOME AND SALES TAXES

The Company’s main operations are located in China. The Company is subject to income taxes primarily in two taxing jurisdictions, China, and the United States. The income of the Company is mainly generated via its controlled 2 Mines subsidiaries and KMC, controlled foreign entities located in China. The Company incurs tax liability for the coal operations including coal profit tax charged at 25% based on profit tax and various surcharges. As the 2 Mines (DaPuAn Mine and SuTsong Mine) in a heavily regulated resource business in China, are in a form of proprietorship (are not incorporated as a corporation), thus they are subject a special tax rate equal to approximately 5% of total revenue proceeds as of the fiscal year ended at April 30, 2009, subject to provisional adjustments when the coal sale changes. In the year ended April 30, 2009, some income generated from its disposed LEK air compressor operation was treated as disposed income with its disposed tax benefits of disposed loss are recorded for future tax offset. As no cash or funds were repatriated from China to the U.S., the Company’s income was not subject to the U.S. federal taxation for both the current year and the prior year ended on April 30, 2009, and 2008, under subpart F, income from controlled foreign company, of the U.S. Internal Revenue Code.

The Company recognizes deferred income taxes for the differences between financial accounting and tax bases of assets and liabilities. In the years ended on April 30, 2009 and on April 30, 2008, there were no material temporary book/tax differences or differences between financial accounting and tax bases of assets and liabilities.

As a result of acquisition of the 2 Mines in the current year with substantial increase of sales and profit, the Company’s tax liability for the year ended at April 30, 2009 increased to $5,052,378, as compared to the prior year ended on April 30, 2008 was $2,203,180.

These payables to Chinese local governments can be postponed temporarily as L&L, a U.S. company, is expanding the Sino-American joint-venture to bring in U.S. management skills to increase coal production, beneficial to the local communities. According to the China law, a new joint venture may enjoy special Chinese tax rebates from the governments, thus there is a high probability that the 2 Mines and KMC local tax liability payments may be delayed or mitigated.

The provision for income taxes from continuing operations on income consists of the following for the years ended April 30, 2009 and 2008

		April 30, 2009		April 30, 2008
US current income tax expense (benefit)
Federal		$ -		$ -
State		-		-
PRC current income tax expense (benefit)		1,219,457		186,461
Total provision for income tax		$1,219,457		$186,461

The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations:

		April 30, 2009		April 30, 2008
Tax expense (credit) at statutory rate - federal		34%		34%
State tax expense net of federal tax		6%		6%
Changes in valuation allowance		(40%)		(40%)
Foreign income tax benefit – PRC (applicable to subsidiary		25%		25%
KMC)

F-35

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Tax expense at actual rate (applicable to subsidiary KMC)		25%		25%
Foreign income tax benefit – PRC (applicable to subsidiary		5%		5%
LLC)
Tax expense at actual rate (applicable to subsidiary LLC)		5%		5%

United States of America

As of April 30, 2009, the Company in the United States had approximately $1,548,751 in net operating loss carry forwards available to offset future taxable income. Federal net operating losses can generally be carried forward 20 years. The deferred tax assets for the United States entities at April 30, 2009 consists mainly of net operating loss carry forwards. Due to the uncertainty of the realizability of the related deferred tax assets of $619,500, a reserve equal to the amount of deferred income taxes has been established at April 30, 2009. The Company has provided 100% valuation allowance to the deferred tax assets as of April 30, 2009.

People's Republic of China (PRC)

Pursuant to the PRC Income Tax Laws, the Company's subsidiary is generally subject to Enterprise Income Taxes ("EIT") at a statutory rate of 25% for the entity of KMC, while the income taxes rate for LLC is 5% since it was owned in form of partnership. LLC was acquired effectively on May 1, 2008.

The following table sets forth the significant components of the provision for income taxes for operation in PRC as of April 30, 2009 and 2008.

		April 30, 2009		April 30, 2008
Net taxable income for KMC		1,027,655		745,844
Income tax @25%		256,914		186,461
Net taxable income for LLC		19,250,868		-
Income tax @5%		963,543		-

NOTE 18. RELATED PARTY TRANSACTIONS
Item		April 30, 2009		April 30, 2008
Due to officer		$910,791		$680,062
Due from related parties		1,683,636		726,775

Due from related parties includes 1) the loan to business associates includes Tian-Ri coal mine, which is one of the Company’s investment projects; and Kemandi, which is L&L’s related company. These loans are cash in advance for project development to Hongyu Li, who is manager of KMC.

NOTE 19. STOCKHOLDERS’ EQUITY

The Company stockholders’ equity as of April 30, 2009 is disclosed on the balance sheet which is an integral part of the audited financial statements, above.

The Company authorized 2,500,000, no par value, preferred stock. Currently, there is no preferred stock is issued or outstanding. The Company has not established the details of the preferred stock as of April 30, 2009.

On January 23, 2009, the Company purchased 400,000 common stock shares of LLFH from a major shareholder for a total of $1.00. The 400,000 shares have been recorded as Treasury Stock in the accompanying financial statements since January 31, 2009.

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On January 23, 2009, the Company disposed its air compressor subsidiary LEK. As a result of the disposal, LEK returned L&L shares to the Company. The Company cancelled 1,708,283 shares of common stock received from LEK during the quarter ended January 31, 2009.

On April 10, 2009, an insider entered into an agreement and donated one million shares of common stock that he personally owns to a Chung Yung Christian University Development Foundation, a non-profit organization that is incorporated in the State of California.

The table below listed the Company’s warrants as of April 30, 2009.

				Weighted Average
		Units		Exercise Price
Outstanding at April 30, 2007		3,418,710		$1.62
Exercised		(638,362)		0.80
Expired		-		-
Outstanding at April 30, 2008		2,780,348		1.86
Issued		909,000		2.50
Exercised		(92,374)		0.71
Expired		(1,611,725)		0.81
Outstanding at April 30, 2009		1,985,249		$2.50
Exercisable at April 30, 2009		1,985,249		$2.50

See Note 23, Employee Stock Option Plan, for warrants (class D and Class E) issued to executive and director compensations. During the year ended as of April 30, 2009, certain equity shares and warrants were issued as a part of the Company business operations.

Following is a summary of the status of warrants outstanding at April 30, 2009:
		Range of		Total		Weighted Average		Weighted
Type of Warrant		Exercise		Warrants		Remaining Life		Average Exercise
		Prices		Outstanding		(Years)		Price
D & E		$ 2.25-$3.00		1,235,249		4.93		$2.93
G		$1.80		750,000		0.66		1.80
				1,985,249		3.32		$2.50

NOTE 20. EARNINGS PER SHARE

The Company only has common shares and warrants issued and outstanding as of April 30, 2009. Under the treasury stock method of SFAS #128 (Earning Per Share), the Company computed the diluted earning per share, as if all issued warrants were converted to common stock, and cash proceeds were used to buy back common stock. The following presents both basic and diluted earnings per share, for the twelve month periods ended on April 30, 2009 and 2008.

		Twelve Months Ended		Twelve Months Ended
Item		April 30, 2009		April 30, 2008
Net income		$9,957,243		$974,469

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Number of Shares		21,492,215		20,854,212
Per Share - Basic		$0.46		$0.05
Effect of dilutive shares		330,000		400,998
Number of dilutive shares		21,822,215		21,255,210
Per Share - Diluted		$0.46		$0.05

NOTE 21. DISCONTINUED OPERATION - DISPOSAL OF AIR COMPRESSOR OPERATIONS

On January 23, 2009, the Company entered into an agreement to dispose off the LEK air compressor operation. The Company is reporting that the operation of LEK as a discontinued operation and has eliminated it from the ongoing operations of the Company. The LEK discounted income for the current and prior periods including a loss recognized in discontinued operations, is reported separately from the continued coal operations on the Consolidated Statements of Income. Thus, LEK revenue for the three months and nine months ended on January 31, 2009 and January 31, 2008 of $1,175,834, $3,951,852, $2,492,972, and $6,836,032 respectively, are not reported on the Consolidated Statements of Income of the Company. Instead, only LEK’s net income from its discontinued operations of $76,082, $134,891, $145,220, and $373,026 are reported separately in the accompanying financial statements. In addition, a loss of LEK disposal of $382,961 is reported as Discontinued Operations.

According to the terms of the agreement, L&L is to return all of the shares it owned in LEK to the minority shareholders of LEK; and the minority shareholders of LEK are to return all the shares it owned in L&L to L&L. Accordingly the Company received 1,708,283 of its common stock valued at $4,168,211 while the Company returned 1,517,057 shares of LEK it owned while it holds 191,226 shares or 9% of shares as remaining interest in LEK. As part of disposal LEK, the parties agreed to distribute all post acquisition earnings of LEK to L&L for the period from December 2004 to January 2009 (up to the date of disposal). As a result of disposal, the Company recognized an income from discontinued operation of $76,082 and $145,220 for the three and nine periods ended January 31, 2009 and disposal loss of $382,961 for the three and nine month periods ended January 31, 2009.

Following is the Summary of Disposed Operations.

LEK-Discontinued Operations
BALANCE SHEETS
		April 30, 2008
CURRENT ASSETS HELD FOR DISPOSITION		$16,286,227
Cash & cash equivalent		$368,113
Accounts receivable, net		6,121,935
Prepayments		0
Other Receivables		7,201,944
Inventories		2,523,533
Other assets		70,702
NON-CURRENT ASSET HELD FOR DISPOSITION		3,666,401
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES HELD FOR DISPOSITION:		$6,460,576
Accounts payable		$1,048,766
Accrued and other liabilities		540,445
Taxes payable		1,951,447
Customer deposits		645,488
Bank loan		2,274,430

 

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LEK-discontinued Operations STATEMENTS OF INCOME*
		For the Years Ended April 30,
		2009		2008
REVENUES		$ 3,951,852		$ 8,709,783
Cost of Goods Sold		2,502,512		6,133,151
Gross profit		1,449,340		2,576,632
TOTAL OPERATING COSTS AND EXPENSES:		1,328,411		2,109,161
INCOME FROM OPERATIONS		120,929		467,471
TOTAL OTHER (INCOME)		(61,276)		(924,045)
INCOME BEFORE INCOME TAX		182,205		1,391,516
LESS: INCOME TAX		0		245,276
INCOME BEFORE MINORITY INTEREST		182,205		1,146,240
Less: Minority Interest		1,583		10,336
NET INCOME AFTER MINORITY INTEREST		180,622		1,156,576
Less: Minority Interest		35,402		350,208
NET INCOME		$ 145,220		$ 806,368

*: In accordance with the FASB 144, the discontinued revenue, cost of sold, and gross margin of LEK operations are disclosed only in the above summary, instead of being reported on the Consolidated Statements of Income. Despite the exclusion of LEK revenue, discontinued LEK net profit of $145,220 is reported on the Consolidated Statements of Income.

NOTE 22. CONCENTRATION OF CREDIT RISK

The Company maintains the majority of its cash balances at banks located in Hong Kong and China. Cash balances in these foreign locations are not insured as they do in the U.S. In addition, there are times, when the Company’s cash deposits maintained at U.S. banks located in the United States exceed federal government insured limits. As of April 30, 2009 and April 30, 2008, the Company had uninsured bank cash balances of $5,036,400 and $879,921, respectively.

Financial instruments that also potentially subject the Company to concentrations of credit risks are primarily trade accounts receivable and common stock of its investors. The trade accounts receivable are due primarily from clients in China. The Company has not historically experienced material losses due to uncollectible trade accounts receivable.

For the year ended April 30, 2009, we had two major customers who purchased over 10% of the Company’s total sales. They collectively accounted for approximately 48% (approximate $19.6 million) of our total sales and approximately 55% (approximate $7.6 million) of accountant receivables. On the other hand, there are two major suppliers each provided over 10% of our total purchases. They collectively supplied approximately 60% (approximate $8.5 million) of the Company’s inventory and 56% (approximate $0.9 million) of total accounts payable.

For the year ended April 30, 2008, we had two major customers who purchased over 10% of the Company’s total sales. They collectively accounted for approximately 87% (approximate $20.3 million) of our total sales and approximately 89% (approximate $0.45 million) of accountant receivables. On the other hand, there are two major suppliers each provided over 10% of our total purchases. They collectively supplied approximately 57% (approximate $12.9 million) of the Company’s inventory and 86% (approximate $0.23 million) of total accounts payable.

NOTE 23. EMPLOYEE STOCK OPTION PLAN

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The Company has no qualified employee stock option plan. The Company issued 2 types of warrants, one for executives (warrant class D), and the other for directors (warrant class E). Only directors and senior executives are entitled to receive warrants, as compensations for their services.

During the current year, 92,374 warrants were exercised for the issuance of common shares. As of April 30, 2009, total warrants authorized under Class D and Class E were 1,100,000 units and 4,000,000 units, respectively. During the period ended April 30, 2009, total units of warrants (class D) issued and warrants (class E) issued were 120,000 units and 1,115,249 units, respectively. Information relating to warrants outstanding and exercisable at April 30, 2009 summarized by exercise price is as follows:

Weighted

Weighted

Weighted

Range of

Number of

Average

Average

Number

Average

Exercise

Outstanding at

Remaining

Exercise

Exercisable at

Exercise

Price

April 30, 2009 (units)

Contractual

Price

April 30 2008 (units)

Price

Life

Class D

Class E

Class D

Class E

$2.25

-$3.00

120,000

1,115,249

4.93 Years

$2.93

120,000

1,115,249

$2.93

During the current year ended April 30, 2009, the Company did not use its equity instruments to acquire goods or services, other than for directors’ services and to reward senior executives.

The following table summarizes two types of warrants (Class D and Class E) and exercise prices available to the existing and prior executives and board members as of April 30, 2009. Starting from April 1, 2009, monthly warrant issuances to executives and board members will be 4,000 units, changing from 2,000 units per month. The warrants issued will expire after five years, but could be extended.

		Number of Warrants		Number of Warrants
		(D) issued and		(E) issued and		Warrants convertible
Name of Director, executive		outstanding		outstanding		price
Executives		120,000				$2.25
Directors				1,115,249		$3.00
Total units issued		120,000		1,115,249

NOTE 24. COMMITMENTS AND CONTINGENCIES

a) Operating Leases

The Company leases its Seattle office and its Kunming office under long-term, non-cancelable leases, expiring in September of 2010 and October of 2009, respectively. The non-cancelable operating lease agreements require that the Company pays certain operating expenses, including management fees to the leased premises. Rental expenses for the year ended April 30, 2009 and 2008 were $29,908 and $19,476, respectively. The future minimum lease payments required under the operating leases is approximately $25,340.

b) Commitments

Despite the Company has issued 400,000 of its equity shares (valued at $4.00 per share) to the name of the 2 Mines (DaPuAn Mine and SuTsong Mine, called L&L Coal Partners) on August 20, 2008, the Company is to inject approx. $6 million in cash, to in approximately 12 months to satisfy its contribution, under the purchase terms with the 2 Mines.

NOTE 25. SUBSEQUENT EVENTS

1. On July 16, 2009 the Company acquired a 65% equity interest of Hon Shen Coal Mine’s 300,000 ton annual coal washing

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capacities from the 2 coal washing facilities, located in Yunnan, China, which would bring additional revenue of approximately $39 million in one year, if used $130 per ton sales price of fine washed coal as a basis.

2. Subsequent to April 30, 2009, the Company issued 694,711 shares for the total consideration of $608,500.

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Part II

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth the costs and expenses, payable by the registrant in connection with the sale of common stock being registered. All amounts are estimates except the SEC registration fee.

Securities and Exchange Commission registration fee		$ 1,617.89
Printing and engraving expenses		1,000
Blue Sky fees and expenses		1,000
Legal fees and expenses		75,000
Accounting fees and expenses		5,000
Miscellaneous		5,000
Total		$ 88,617.89
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Nevada Law

     Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:

(a) is not liable pursuant to Nevada Revised Statute 78.138, or

     (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

     In addition, Section 78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

(a) is not liable pursuant to Nevada Revised Statute 78.138; or

     (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.

To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

Section 78.752 of the Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.

 

 

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Other financial arrangements made by the corporation pursuant to Section 78.752 may include the following:

(a) the creation of a trust fund;

(b) the establishment of a program of self-insurance;

(c) the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and

(d) the establishment of a letter of credit, guaranty or surety

     No financial arrangement made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.

     Any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a) by the stockholders;

(b) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;

(c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or

(d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

Charter Provisions and Other Arrangements of the Registrant

We are a Nevada corporation, and accordingly, we are subject to the corporate laws under the Nevada Revised Statutes. Article XI of our Bylaws contain the following indemnification provision for our directors and officers:

“The corporation plans to indemnify its directors and officers to the fullest extent not prohibited by the Nevada General Corporation Law; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and officers; and, provided, further, that the corporation shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the Nevada General Corporation Law or (iv) such indemnification is required to be made under subsection (d).”

     Such indemnification provision may be sufficiently broad to permit indemnification of our executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. The Company has current directors’ and officers’ liability insurance (D&O insurance) covering our directors and officers activities conducted for and on behalf of L&L up to the amount of $5 million.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.

Item 15. Recent Sales of Unregistered Securities

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     The following is a summary of the transactions by the Company during the last three years involving sales of our securities that were not registered under the Securities Act:

     On November 6, 2009, the Company entered into a Securities Purchase Agreement with the Buyers for the issuance of an aggregate 835,389 Units, with each Unit consisting of one share Common Stock and 6/10ths of a warrant to purchase a share of common stock at an exercise price of $5.62 per warrant share and expiring in November 2014 to certain investors and as placement fees for the Transaction. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     On October 8, 2009, the Company entered into a Securities Purchase Agreement with the Buyers for the issuance of an aggregate 1,371,021 Units, with each Unit consisting of one share Common Stock and 6/10ths of a warrant to purchase a share of common stock at an exercise price of $5.62 per warrant share and expiring in October 2014 to certain investors and as placement fees for the Transaction. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act of 1933, as amended. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In August 2009, the Company entered into Securities Purchase Agreement with thirty five (35) accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $1,098,150 for the investors’ purchase of an aggregate 497,320 shares of the Company’s common stock. The Company also received $325,000 from one (1) accredited investor, who exercised a warrant issued to such investor for the purchase of up to 325,000 shares at an exercise price of $1.00 per share. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act of 1933, as amended. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In July 2009, the Company entered into Private Purchase Agreement with two (2) accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $100,000 for the investors’ purchase of an aggregate 45,770 shares of the common stock of the Company. Both investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act of 1933, as amended. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In May 2009, the Company entered into Private Purchase Agreement with two (2) institutional and/or accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $33,500 for the investors’ purchase of an aggregate 33,441 shares of the Company’s common stock. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In April 2009, the Company entered into Private Purchase Agreement with three (3) institutional and/or accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $74,800 for the investors’ purchase of an aggregate 118,640 shares of the Company’s common stock. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

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     In March 2009, the Company entered into Private Purchase Agreement with one (1) accredited investor in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $50,000 for the investor’s purchase of 100,000 shares of the Company’s common stock. This investor represented that he was an "accredited" investor as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipient took his securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In February 2009, the Company entered into Private Purchase Agreement with four (4) institutional and/or accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $100,000 for the investors’ purchase of an aggregate 145,373 shares of the Company’s common stock. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     On February 2, 2009, pursuant to the terms of a warrant agreement, the Company issued to Dennis Brubaker (an existing shareholder and accredited investor) 75,373 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act of 1933, as amended (the “Securities Act”), upon his exercise of the Class C Warrants at an exercise price of $0.66 per share.

     On April 10, 2009, an officer (insider) entered into an agreement and donated one million shares of common stock that he personally owns to the Chung Yung Christian University Development Foundation, a non-profit organization, incorporated in the State of California. The event was reported on Form 8-K (as amended, previously filed with the SEC on April 13, 2009). Approximately half of the total stock donation has been transferred physically to the Foundation as of January 4, 2010.

     On January 23, 2009, the Company purchased 400,000 common stock shares of the Company from a major shareholder for a total of $1.00. The 400,000 shares have been recorded as Treasury Stock in the accompanying financial statements since January 31, 2009. See warrant disclosure and warrant table in Note 19 to the consolidated financial statements for the year ended April 30, 2009 for additional details.

     On January 23, 2009, the Company disposed its air compressor subsidiary LEK. As a result of the disposal, LEK returned all L&L shares back to the Company. The Company cancelled 1,708,283 shares of common stock received from LEK during the quarter ended January 31, 2009.

     In January 2009, the Company entered into Private Purchase Agreement with one (1) accredited investor in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $20,000 for the investor’s purchase up to 22,223 shares of the common stock of the Company. This investor represented that he was an "accredited" investor as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In August 2008, the Company entered into Private Purchase Agreement with three (3) institutional and/or accredited investors in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $214,961 for the investors’ purchase of an aggregate 217,001 shares of the Company’s common stock. All of these investors represented that they were "accredited" investors as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipients took their securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In December 2008, the Company entered into Private Purchase Agreement with one (1) accredited investor in a private placement offering exempt from registration under the Securities Act, pursuant to which the Company received $100,000 for the investor’s purchase of 100,000 shares of the Company’s common stock. This investor represented that he was an "accredited" investor as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the

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Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     In June 2008, the Company entered into Private Purchase Agreement with one (1) accredited investor in a private placement offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company received $100,000 for the investor’s purchase of 326,000 shares of the Company’s common stock. This investor represented that he was an "accredited" investor as defined under Rule 144 of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act and/or Rule 506 of Regulation D for the issuance of these securities. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.

     On July 27, 2007, pursuant to the terms of a warrant agreement, the Company issued to Ray C. Bissell Jr. (an existing shareholder and accredited investor): (i) 50,001 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class A Warrants at an exercise price of $0.83 per share; (ii) 30,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class B Warrants at an exercise price of $1.00 per share; and (iii) 24,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On July 15, 2007, pursuant to the terms of a warrant agreement, the Company issued to James F. Sharp (an existing shareholder and accredited investor): (i) 9,999 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon her exercise of the Class B Warrants at an exercise price of $1.00 per share; and (ii) 48,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On July 1, 2007, pursuant to the terms of a warrant agreement, the Company issued to Hilton Family Trust 9/15/1998 (an existing shareholder and accredited investor): (i) 9,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class B Warrants at an exercise price of $1.00 per share; and (ii) 27,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On June 25, 2007, pursuant to the terms of a warrant agreement, the Company issued to Lorraine F. Meisner (an existing shareholder and accredited investor) 15,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon her exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On June 25, 2007, pursuant to the terms of a warrant agreement, the Company issued to Sidney K. Swank (an existing shareholder and accredited investor) 48,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On June 15, 2007, pursuant to the terms of a warrant agreement, the Company issued to Dennis Brubaker (an existing shareholder and accredited investor) 74,627 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On June 15, 2007, pursuant to the terms of a warrant agreement, the Company issued to Ann T. McElligott (an existing shareholder and accredited investor): (i) 36,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon her exercise of the Class A Warrants at an exercise price of $0.83 per share; and (ii) 7,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon her exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On June 4, 2007, pursuant to the terms of a warrant agreement, the Company issued to BETSY B. NEU, TRUSTEE FOR BETSY B. NEU TRUST, UTD 12 16, 2004 (an existing shareholder and accredited investor) 10,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its

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exercise of the Class A Warrants at an exercise price of $0.83 per share.

     On June 4, 2007, pursuant to the terms of a warrant agreement, the Company issued to Chet Sena (an existing shareholder and accredited investor): (i) 10,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class A Warrants at an exercise price of $0.83 per share; and (ii) 15,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On June 4, 2007, pursuant to the terms of a warrant agreement, the Company issued to David G. Knox (an existing shareholder and accredited investor) 15,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On May 30, 2007, pursuant to the terms of a warrant agreement, the Company issued to Jim and Iris Cline Living Trust (an existing shareholder and accredited investor): (i) 24,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class A Warrants at an exercise price of $0.83 per share; and (ii) 24,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On May 23, 2007, pursuant to the terms of a warrant agreement, the Company issued to Lorraine F. Meisner (an existing shareholder and accredited investor) 30,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon her exercise of the Class A Warrants at an exercise price of $0.83 per share.

     On May 1, 2007, pursuant to the terms of a warrant agreement, the Company issued to Dennis Brubaker (an existing shareholder and accredited investor) 30,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On May 1, 2007, pursuant to the terms of a warrant agreement, the Company issued to Lloyd and Lucille Gardner (an existing shareholder and accredited investor) 15,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon their exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On April 16, 2007, pursuant to the terms of a warrant agreement, the Company issued to Chet Sena (an existing shareholder and accredited investor): (i) 15,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class A Warrants at an exercise price of $0.83 per share; and (ii) 12,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On April 4, 2007, pursuant to the terms of a warrant agreement, the Company issued to BETSY B. NEU, TRUSTEE FOR BETSY B. NEU TRUST, UTD DECEMBER 16, 2004 (an existing shareholder and accredited investor) 12,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On March 29, 2007, pursuant to the terms of a warrant agreement, the Company issued to Dennis Brubaker (an existing shareholder and accredited investor) 30,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class A Warrants at an exercise price of $0.83 per share.

     On March 16, 2007, pursuant to the terms of a warrant agreement, the Company issued to Robert E and Rosalie T. Dettle Living Trust DTD 2/29/80 (an existing shareholder and accredited investor) 45,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class A Warrants at an exercise price of $0.83 per share.

     On February 12, 2007, pursuant to the terms of a warrant agreement, the Company issued to Robert E and Rosalie T. Dettle Living Trust DTD 2/29/80 (an existing shareholder and accredited investor) 30,000 shares of the Company’s common stock, exempt

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from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

     On February 9, 2007, pursuant to the terms of a warrant agreement, the Company issued to BETSY B. NEU, TRUSTEE FOR BETSY B. NEU TRUST, UTD 12 16, 2004 (an existing shareholder and accredited investor) 10,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class A Warrants at an exercise price of $0.83 per share.

     On February 5, 2007, pursuant to the terms of a warrant agreement, the Company issued to Ivan Stoltzfus (an existing shareholder and accredited investor) 4,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On January 25, 2007, pursuant to the terms of a warrant agreement, the Company issued to Clyde Y. Ota (an existing shareholder and accredited investor) 10,002 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon his exercise of the Class B Warrants at an exercise price of $1.00 per share.

     On January 22, 2007, pursuant to the terms of a warrant agreement, the Company issued to 1990 Gainen Family Trust (an existing shareholder and accredited investor) (i) 33,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class A Warrants at an exercise price of $0.83 per share; (ii) 12,498 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class B Warrants at an exercise price of $1.00 per share; and (iii) 12,000 shares of the Company’s common stock, exempt from registration pursuant to Rule 506 of Regulation D, promulgated pursuant to the Securities Act, upon its exercise of the Class C Warrants at an exercise price of $0.67 per share.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

      See “Exhibit Index” below, which follows the signature page to this registration statement.

(b) Financial Statement Schedules

     See the Index to Financial Statements included on page F-1 for a list of the financial statements included in this registration statement.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

     (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "Securities Act");

     (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus file with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

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     (iii) Include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

     (2) For purposes of determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

     (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

     (4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

     (5) For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

     (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

     (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

     (iii) portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

     (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Seattle, State of Washington, on January 5, 2010.

L&L ENERGY, INC. By:/s/ Dickson V. Lee Dickson V. Lee Chief Executive Officer (Principal Executive Officer) By:/s/ Jung Mei Wang Jung Mei (Rosemary) Wang Acting Chief Financial Officer (Principal Financial and Accounting Officer)

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dickson V. Lee and Jung Mei (Rosemary) Wang, his/her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him/her and in his/her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement (and any registration statement filed pursuant to Rule 462 under the Securities Act of 1933, as amended, for the offering which this registration statement relates) and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature		Title		Date
/s/ Dickson V. Lee				January 5, 2010
Dickson V. Lee		Chairman of the Board, President, and
		Chief Executive Officer
/s/ Jung Mei Wang				January 5, 2010
Jung Mei (Rosemary) Wang		Acting Chief Financial Officer
/s/ Shirley Kiang				January 5, 2010
Shirley Kiang		Director
/s/ Ian Robinson				January 5, 2010
Ian Robinson		Director
/s/ Robert Lee				January 5, 2010
Robert Lee		Director
/s/ Dennis Bracy				January 5, 2010
Dennis Bracy		Director
/s/ Joseph J. Borich				January 5, 2010
Joseph J. Borich		Director

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EXHIBIT INDEX

Exhibit
Number	Description

2.1	Agreement and Plan of Reorganization by and among Royal Coronado Co., Ltd., a Nevada corporation, and L & L Investments Holdings Inc., a British Virgin Islands corporation effective as of August 18, 2001(2)
3.1	Articles of Incorporation (1)
3.2	Bylaws (1)
3.3	Certificate of Designation, filed on April 5, 2005 with the Secretary of State of the State of Nevada (4)
3.4	Certificate of Amendment to Articles of Incorporation, filed on March 13, 2008 with the Secretary of State of the State of Nevada (7)
3.5	Amendment to Bylaws
5.1	Opinion of Richardson & Patel LLP *
10.1	L & L Financial Holdings, Inc. Mr. Yang Wu and Liuzhou Liuerkong Machinery Co., Ltd. (LEK) Acquisition and Investment Agreement dated December 4, 2004 (3)

10.2 Joint Venture contract with two coal mines dated May 28, 2008 (5)

10.3	L & L Financial Holdings, Inc. and Kunming Biaoyu Industrial Boiler Co., Ltd. Acquisition and Investment Agreement dated October 30, 2006 (9)
10.4	Contract Regarding Capital Increase and Cooperation between L&L International Holdings, Inc. and Luxi County Hon Shen Coal Co. dated July 16, 2009 (10)
10.5	Form of Securities Purchase Agreement (11)
10.6	Form of Warrant (11)
10.7	Form of Registration Rights Agreement (11)
10.8	Form of Make Good Escrow Agreement (11)
10.9	Form of Escrow Agreement (11)
10.10	Acquisitions Capital Increase Agreement Between L&L International Holdings, Inc. and Luxi County Hon Shen Coal Co. Ltd. dated October 23, 2009 (12)
10.11	Form of Securities Purchase Agreement (13)
10.12	Form of Warrant (13)
10.13	Form of Registration Rights Agreement (13)
10.14	Form of Make Good Escrow Agreement (13)
10.15	Form of Escrow Agreement (13)

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10.16	Acquisition and Capital Increase Agreement by and between L&L International Holdings, Inc. and Mr. Wang (Sole Owner of Hon Shen Coal Co. Ltd.) dated December 9, 2009 (14)
10.17	Connecticut Amended Order (15)
10.18	Cooperative Operation Agreement between L&L International Holding, Inc. and Fuchang Wang Regarding Establishment of Luxi County Hon Shen Coal Co. Ltd. (a Cooperation Company) (English Translation)*
10.19	Agreement (including Agency Agreement for L&L’s Ownership of the 2 Mines executed April 28, 2008 – English Translation) *
10.20	Share Depositary Agreement (DaPuAn Coal Mine) dated July 30, 2009 (English Translation) *
10.21	Share Depositary Agreement (ShuChong Coal Mine) dated July 30, 2009 (English Translation) *
10.22	Entrust Agreement between the Company and Jun Han *
10.23	Supplement Agreement between Jun Han, Yong Yang and Luoping County A’ang Town SuTsong Coal Mine *
10.24	Supplement Agreement between Jun Han, Biansheng Xu and Shizong County DaPuAn Coal Mine *
21.1	List of Subsidiaries *
23.1	Consent of Kabani & Co., Inc. *
23.2	Consent of Richardson & Patel LLP (included in Exhibit 5.1) *
23.3	Consent of Qujing Municipal Land and Mining Right Appraisal Firm for the DaPuAn Coal Mine and Qujing XiaGuang Geological Engineering Co. Ltd. for the SuTsong Coal Mine *

* Filed herewith.

(1)	Filed as Exhibits to the Registrant’s Registration of Securities on Form 10SB12G filed with the SEC on April 2, 2001 and incorporated herein by reference.
(2)	Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 4, 2001 and incorporated herein by reference.
(3)	Filed as Exhibit A to the Registrant’s Current Report on Form 8-K filed with the SEC on December 8th, 2004and incorporated herein by reference.
(4)	Filed as Exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on April 11, 2005 and incorporated herein by reference.
(5)	Filed as Exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 18, 2008 and incorporated herein by reference.
(6)	Reserved.
(7)	Filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on September 15, 2008 and incorporated herein by reference.
(8)	Filed as Exhibit 16.1 to the Registrant’s Current Report on Form 8-K and Amendment to Current Report on Form 8-K/A filed with the SEC on November 12, 2008 and November 19, 2008, respectively, and incorporated herein by reference.
(9)	Filed as Exhibit B to the Registrant’s Amendment to Current Report on Form 8-K/A filed with the SEC on February 23, 2009 and incorporated herein by reference.

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(10)	Filed as Exhibits to the Registrant’s Current Report on Form 8-K filed with the SEC on July 30, 2009 and incorporated herein by reference.
(11)	Filed as Exhibits to the Registrant’s Current Report on Form 8-K filed with the SEC on October 15, 2009 and incorporated herein by reference.

(12)		Filed as Exhibit to the Registrant’s Current Report on Form 8-K and Amendment to Current Report on Form 8-K/A filed
		with the SEC on October 29, 2009 and November 5, 2009, respectively, and incorporated herein by reference.

(13)	Filed as Exhibits to the Registrant’s Current Report on Form 8-K filed with the SEC on November 13, 2009 and incorporated herein by reference.
(14)	Filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 14, 2009 and incorporated herein by reference.
(15)	Filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on December 16, 2009 and incorporated herein by reference.

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