UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

——————————

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ON ~~JULY~~OCTOBER 31, 2013.

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

For the transition period from ________ to ________

Commission file number: 000-32505

L & L ENERGY, INC.

(Exact name of Registrant as specified in its charter)

NEVADA

91-2103949

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

130 Andover Park East, Suite 200, Seattle, WA		98188
(Address of Principal Executive Offices)		(Zip Code)

Registrant's telephone number, including area code: (206) 264-8065

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

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.

Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Smaller reporting company [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of ~~September~~December 910, 2013 there were 4244,~~064~~140,~~769~~938 shares of common stock outstanding, with par value of $0.001.

L & L ENERGY, INC.

Form 10-Q Quarterly Report

	Table of Contents
		Page
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements – Unaudited
	Balance Sheets as of July 31, 2013 and April 30, 2013	3
	Balance Sheets as of October 31, 2013 and April 30, 2013	3
	Statements of Income and Other Comprehensive Income for the three months
	Statements of Income and Other Comprehensive Income for the three and six months
	ended July 31, 2013 and 2012	4
	ended October 31, 2013 and 2012	4
	Statements of Cash Flows for the three months ended July 31, 2013 and 2012	5
	Statements of Cash Flows for the six months ended October 31, 2013 and 2012	5
	Notes to Condensed Consolidated Financial Statements - Unaudited	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2326
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3136
Item 4.	Controls and Procedures	3136
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	3237
Item 1A.	Risk Factors	3338
Item 1B.	Unresolved Staff Comments	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults upon Senior Securities	49
Item 3.	Defaults upon Senior Securities	44
Item 4.	Reserved	49
Item 4.	Reserved	44
Item 5.	Other Information	49
Item 5.	Other Information	44
Item 6.	Exhibits	49
Item 6.	Exhibits	44
Signatures		49
Signatures		45
Index to Exhibits		50
Index to Exhibits		45

When we use the terms "we," "us," "our," "L & L" and "the Company," we mean L & L ENERGY, INC., a Nevada corporation, and its subsidiaries.

This report contains forward-looking statements that involve risks and uncertainties. Please see the sections entitled "Forward-Looking Statements" and "Risk Factors" below for important information to consider when evaluating such statements.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

L & L ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 2013 AND APRIL 30, 2013
AS OF OCTOBER 31, 2013 AND APRIL 30, 2013
~~(Unaudited)~~	(Unaudited)
				July 31, 2013		April 30, 2013
			October 31, 2013		April 30, 2013
ASSETS	~~ASSETS~~
	CURRENT ASSETS:	~~CURRENT ASSETS:~~
	Cash and cash equivalents	~~Cash and cash equivalents~~$	$8,209,516	~~9,041,400~~$	$9,565,084	~~9,565,084~~
		Accounts receivables		34,793,782		35,431,260
	Accounts receivable		34,425,178		35,431,260
		Prepaid and other current assets		22,255,894		23,139,756
	Prepaid and other current assets, net		25,796,596		23,139,756
		Other receivables, net		6,449,967		12,895,304
	Other receivables		4,136,879		12,895,304
		Due from related parties		5,320,624		3,434,502
	Due from related party		5,382,884		3,434,502
	Related party notes receivable - current	~~Related party notes receivable - current~~	4,305,137	~~4,185,598~~	4,237,715	~~4,237,715~~
	Inventories	~~Inventories~~	8,092,437	~~8,153,457~~	7,154,544	~~7,154,544~~
	Total current assets	~~Total current assets~~	90,348,627	~~90,200,722~~	95,858,165	~~95,858,165~~
		Property, plant, equipment, and mine development, net		188,240,373		173,409,488
	Property, plant, equipment, and mine development cost, net		210,583,848		173,409,488
	Construction-in-progress	~~Construction-in-progress~~	41,885,124	~~44,825,438~~	34,679,059	~~34,679,059~~
	Intangible assets, net	~~Intangible assets, net~~	840,194	~~836,096~~	214,883	~~214,883~~
	Goodwill	~~Goodwill~~	2,788,822	~~2,772,307~~	2,753,439	~~2,753,439~~
		Other assets		3,000,000		3,094,830
	Prepaid and other assets, non-current		5,926,886		3,094,830
	Deferred finance fee	~~Deferred finance fee~~	101,215	~~123,731~~	146,072	~~146,072~~
		Long term receivable, net		12,441,007		12,441,007
	Long-term receivable		12,441,007		12,441,007
	Total non-current assets	~~Total non-current assets~~	274,567,096	~~252,238,952~~	226,738,778	~~226,738,778~~
TOTAL ASSETS	~~TOTAL ASSETS~~	$	$364,915,723	~~342,439,674~~$	$322,596,943	~~322,596,943~~
LIABILITIES AND EQUITY	~~LIABILITIES AND EQUITY~~
CURRENT LIABILITIES:	~~CURRENT LIABILITIES:~~
	Accounts payable	~~Accounts payable~~$	$4,059,127	~~3,479,068~~$	$3,794,840	~~3,794,840~~
	Accrued expenses and other current liabilities	~~Accrued expenses and other current liabilities~~	1,157,651	~~1,182,254~~	1,011,100	~~1,011,100~~
	Other payables	~~Other payables~~	23,799,316	~~21,455,016~~	21,373,835	~~21,373,835~~
		Related party payables - current		8,141,475		6,808,798
	Related party payable- current		10,786,214		6,808,798
	Due to officers	~~Due to officers~~	1,214,432	~~2,214,432~~	1,304,431	~~1,304,431~~
		Tax payable		19,703,878		17,792,612
	Taxes payable		20,829,158		17,792,612
	Customer deposits	~~Customer deposits~~	464,743	~~766,208~~	745,200	~~745,200~~
	Bank loans	~~Bank loans~~	4,999,985	~~4,999,985~~	4,999,985	~~4,999,985~~
	Total current liabilities	~~Total current liabilities~~	67,310,626	~~61,942,316~~	57,830,801	~~57,830,801~~
LONG-TERM LIABILITIES	~~LONG-TERM LIABILITIES~~
		Convertible note payable, net		710,415		543,367
	Convertible note payable, net of discount		928,819		543,367
	Derivative liabilities	~~Derivative liabilities~~	961,726	~~4,145,788~~	4,594,912	~~4,594,912~~
	Asset retirement obligations	~~Asset retirement obligations~~	3,805,834	~~3,712,351~~	3,616,643	~~3,616,643~~
	Total long-term liabilities	~~Total long-term liabilities~~	5,696,379	~~8,568,554~~	8,754,922	~~8,754,922~~
		Total Liabilities		70,510,870		66,585,723
	Total liabilities		73,007,005		66,585,723
	Commitments and contingencies	~~Commitments and contingencies~~
EQUITY:	~~EQUITY:~~
L&L ENERGY STOCKHOLDERS' EQUITY:	~~L&L ENERGY STOCKHOLDERS' EQUITY:~~
	Preferred stock, no par value, 2,500,000 shares authorized, none issued and outstanding	~~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: 38,549,283 and 38,385,050 shares issued and outstanding at July 31, 2013 and April 30, 2013 respectively)		38,549		38,385
	Common stock ($0.001 par value, 120,000,000 shares authorized: 44,140,938 and 38,385,050 shares issued and outstanding at October 31, 2013 and April 30, 2013”respectively”)		44,141		38,385
	Additional paid-in capital	~~Additional paid-in capital~~	84,036,975	~~70,211,536~~	69,588,550	~~69,588,550~~
	Accumulated other comprehensive income	~~Accumulated other comprehensive income~~	12,715,639	~~11,390,294~~	9,814,087	~~9,814,087~~
	Retained Earnings	~~Retained Earnings~~	146,653,330	~~145,222,793~~	134,487,028	~~134,487,028~~
		Treasury stock (286,595 shares and 286,595 shares at July 31, 2013 and April 30, 2013 respectively, including shared held by subsidiary)		(68,035)		(68,035)
	Treasury stock (286,595 shares and 286,595 shares at October 31, 2013 and April 30, 2013 respectively)		(68,035)		(68,035)
	Total L & L Energy stockholders' equity	~~Total L & L Energy stockholders' equity~~	243,382,050	~~226,795,137~~	213,860,015	~~213,860,015~~
	Non-controlling interest	~~Non-controlling interest~~	48,526,668	~~45,133,667~~	42,151,205	~~42,151,205~~
	Total equity	~~Total equity~~	291,908,718	~~271,928,804~~	256,011,220	~~256,011,220~~
TOTAL LIABILITIES AND EQUITY	~~TOTAL LIABILITIES AND EQUITY~~	$	$364,915,723	~~342,439,674~~$	$322,596,943	~~322,596,943~~
	The accompanying notes are an integral part of these consolidated financial statements.

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

L & L ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JULY 31,
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2013 AND 2012
(Unaudited)
		2013		2012
		For The Three Months Ended October 31,				For The Six Months Ended October 31,
NET REVENUES	$	51,181,370	$	39,448,098
		2013		2012		2013		2012
COST OF REVENUES		32,126,563		29,548,014
NET REVENUES	$	42,966,509	$	45,504,279	$	94,147,879	$	84,952,377
GROSS PROFIT		19,054,807		9,900,084
COST OF REVENUES		25,723,806		33,625,414		57,850,369		63,173,428
OPERATING COSTS AND EXPENSES:
GROSS PROFIT		17,242,703		11,878,865		36,297,510		21,778,949
Salaries & wages-selling, general and administrative		1,163,294		1,037,713
OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses, excluding salaries and wages		3,224,985		2,597,956
Salaries & wages-selling, general and administrative		3,037,852		856,801		4,201,146		1,894,514
Total operating expenses		4,388,279		3,635,669
Selling, general and administrative expenses, excluding salaries and wages		4,927,012		3,304,418		8,151,997		5,902,374
INCOME FROM OPERATIONS		14,666,528		6,264,415
Total operating expenses		7,964,864		4,161,219		12,353,143		7,796,888
OTHER INCOME (EXPENSE):
INCOME FROM OPERATIONS		9,277,839		7,717,646		23,944,367		13,982,061
Interest income		5,132		107,266
OTHER INCOME (EXPENSE):
Other income(expense), net		(1,336)		328,228
Interest income		4,884		117,069		10,016		224,335
Derivative gain		449,124		-
Other income (expense), net		(493,454)		562,188		(494,790)		890,414
Total other income		452,920		435,494
Loss on debt settlement		(6,101,488)				(6,101,488)
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		15,119,448		6,699,909
Derivative gain		3,184,062		-		3,633,186		-
PROVISION FOR INCOME TAXES		1,692,451		692,440
Total other income (expense)		(3,405,996)		679,257		(2,953,076)		1,114,749
INCOME FROM CONTINUING OPERATIONS		13,426,997		6,007,469
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		5,871,843		8,396,903		20,991,291		15,096,810
Income attributable to non-controlling interests		2,691,232		1,377,363
PROVISION FOR INCOME TAXES		1,694,850		805,527		3,387,301		1,497,967
Income attributable to L & L		10,735,765		4,630,106
INCOME FROM CONTINUING OPERATIONS		4,176,993		7,591,376		17,603,990		13,598,843
DISCONTINUED OPERATIONS, NET OF TAX
Income attributable to non-controlling interests		2,764,508		1,949,832		5,437,688		3,327,195
Net income from discontinued operations attributable to non-controlling interests		-		968,162
Income attributable to L & L		1,430,537		5,641,544		12,166,302		10,271,648
Net income from discontinued operations attributable to L & L		-		1,556,365
DISCONTINUED OPERATIONS, NET OF TAX
TOTAL (LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-		2,524,527
Net income from discontinued operations attributable to non-controlling interests		-		1,091,865		-		2,060,027
NET INCOME	$	13,426,997	$	8,531,996
Net income from discontinued operations attributable to L & L		-		2,101,397		-		3,657,762
Net income attributable to non-controlling interests	$	2,691,232	$	2,345,525
TOTAL (LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-		3,193,262		-		5,717,789
Net income attributable to L & L		10,735,765		6,186,471
NET INCOME	$	4,176,993	$	10,784,638	$	17,603,990	$	19,316,632
OTHER COMPREHENSIVE INCOME:
Net income attributable to non-controlling interests	$	2,764,508	$	3,041,697	$	5,437,688	$	5,387,222
Foreign currency translation gain (loss)		1,867,437		(1,346,509)
Net income attributable to L & L		1,412,485		7,742,941		12,166,302		13,929,410
COMPREHENSIVE INCOME	$	15,294,434	$	7,185,487
OTHER COMPREHENSIVE INCOME:
Comprehensive income attributable to non-controlling interests	$	2,982,462	$	2,094,286
Foreign currency translation gain		1,325,345		1,015,096		2,901,552		(331,413)
Comprehensive income attributable to L & L		12,311,972		5,091,201
COMPREHENSIVE INCOME	$	5,502,338	$	11,799,734	$	20,505,542	$	18,985,219
INCOME PER COMMON SHARE – basic from continuing operations	$	0.28	$	0.13
Comprehensive income attributable to non-controlling interests	$	3,022,055	$	3,233,916	$	6,004,598	$	5,328,203
(LOSS) INCOME PER COMMON SHARE – basic from discontinued operations	$	-	$	0.04
Comprehensive income attributable to L & L		2,480,283		8,565,818		14,500,944		13,657,016
INCOME PER COMMON SHARE – basic	$	0.28	$	0.17
INCOME PER COMMON SHARE – basic from continuing operations	$	0.03	$	0.15	$	0.30	$	0.27
INCOME PER COMMON SHARE – diluted from continuing operations	$	0.27	$	0.13
(LOSS) INCOME PER COMMON SHARE – basic from discontinued operations	$	-	$	0.06	$	-	$	0.10
(LOSS) INCOME PER COMMON SHARE – diluted from discontinued operations	$	-	$	0.04
INCOME PER COMMON SHARE – basic	$	0.03	$	0.21	$	0.30	$	0.37
INCOME PER COMMON SHARE – diluted	$	0.27	$	0.17
INCOME PER COMMON SHARE – diluted from continuing operations	$	0.03	$	0.15	$	0.28	$	0.27
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – basic		37,846,470		36,839,324
(LOSS) INCOME PER COMMON SHARE – diluted from discontinued operations	$	-	$	0.06	$	-	$	0.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - diluted		40,138,137		36,839,324
INCOME PER COMMON SHARE – diluted	$	0.03	$	0.21	$	0.28	$	0.37
The accompanying notes are an integral part of these consolidated financial statements.
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – basic		42,462,474		36,988,915		40,337,131		37,569,600
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - diluted		44,411,324		36,988,915		42,745,653		37,569,600
The accompanying notes are an integral part of these consolidated financial statements.

L & L ENERGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31,
FOR THE PERIOD ENDED OCTOBER 31, 2013 AND 2012
(UNAUDITED)
			2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1317,~~426~~603,~~997~~990	$	819,~~531~~316,~~996~~632
	Loss from discontinued operations, net of income taxes		-		(5,717,789)
	Income from continuing operations, net of income taxes		17,603,990		13,598,843
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		14,~~912~~251,~~951~~447		1,~~582~~936,~~219~~195
	Stock compensation		623,150		566,111
	Loss on the Ironridge Settlement		6,101,487		-
	Accretion of asset retirement obligation		95,708		27,714
	Stock-based compensation		3,353,541		1,053,157
	Amortization of debt discount		385,452		-
	Derivative gain		(3,633,186)		-
	Accretion of asset retirement obligation		142,275		63,903
Changes in assets and liabilities, net of businesses acquisitions:
	Accounts receivable		~~637~~1,~~478~~453,407		(29,~~240~~731,~~633~~779)
	Prepaid and other current assets		~~250~~1,~~845~~741,206		(52,~~116~~368,~~801~~787)
	Inventories		(~~998~~842,~~913~~659)		(122,~~525,259~~237)
	Other receivable		46,~~611~~664,~~332~~817		13,~~277~~967,~~909~~304
	Accounts payable and other payable		17,~~296~~197,~~412~~556		21,~~989~~415,~~804~~108
	Customer deposit		21(288,~~008~~750)		~~(936~~9,~~538)~~397
	Accrued and other liabilities		~~(110~~133,~~922)~~032		(~~225~~85,849)
	Taxes payable		1,911,266		668,942
	Note receivable		-		40,653
Net cash provided by operating activities			23,677,312		5,825,239
	Taxes payable		2,796,682		670,120
Net cash provided by continuing operating activities			47,060,297		10,546,028
Net cash provided by discontinued operating activities			-		566,557
Net cash provided by operating activities			47,060,297		11,112,585
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisition of property and equipment		(~~668~~779,~~967~~301)		(98660,~~629~~412)
	Construction-in-progress		(24,994,276)		(5,661,986)
	Acquisition of intangible assets		(680,704)		-
	Proceeds from repayment of long term receivable		-		1,563,621
	Construction-in-progress		(44,925,877)		(9,807,917)
Net cash used in investing activities			(25,663,243)		(4,196,994)
	Increase in restricted cash		(65,581)		-
	Increase in prepaid rent		(2,714,846)		-
	Loan payment of long term receivable		(13,113)		1,530,069
	Cash received from HSC disposal		324,102		-
Net cash used in continuing investing activities			(48,855,320)		(8,938,260)
Net cash used in discontinued investing activities			-		-
Net cash used in investing activities			(48,855,320)		(8,938,260)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Due to officers		~~910~~(106,~~001~~240)		6511,666
Net cash provided by (used in) financing activities			910,001		6,666
	Proceeds from Treasury stock sold		-		55,933
Effect of exchange rate changes on cash and cash equivalents			552,246		1,015,359
	Payment to previous owner of acquired mine		-		(4,342,510)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(523,684)		2,650,270
Net cash provided by (used in) continuing financing activities			(106,240)		(3,774,911)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			9,565,084		4,040,020
Net cash provided by (used in) discontinued financing activities			-		-
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	9,041,400	$	6,690,290
Net cash provided by financing activities			(106,240)		(3,774,911)
Effect of exchange rate changes on cash and cash equivalents			545,695		1,818,295
INCREASE IN CASH AND CASH EQUIVALENTS			(1,355,568)		217,709
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			9,565,084		3,547,953
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	8,209,516	$	3,765,662
SUPPLEMENTAL INFORMATION
INTEREST PAID		$	~~405~~201,~~677~~952	$	8043,~~862~~216
INCOME TAX PAID		$	65539,~~924~~101	$	580,334
NON-CASH INVESTING AND FINANCING ACTIVITIES:
~~Payable to DaPing shareholders~~	Payable to DaPing shareholders	$	-	$	1511,~~388~~045,~~508~~999
The accompanying notes are an integral part of these consolidated financial statements.

L & L ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

L & L Energy, Inc. (“L&L” ~~and/~~or the “Company”) ~~was~~is ~~incorporated~~a in Nevada, ~~and~~corporation is headquartered in Seattle, Washington. ~~Effective~~ The onCompany’s ~~January~~China 4,operations ~~2010,~~are ~~the~~based ~~State~~in ofBeijing, ~~Nevada~~and ~~approved~~its ~~the~~Taiwan ~~Company’s~~operations ~~name~~are ~~change~~based ~~from~~in ~~L&L~~Taipei. ~~International~~The ~~Holdings~~Company, ~~Inc.~~which towas Lfounded &18 Lyears ~~Energy~~ago in 1995, ~~Inc~~is an energy company. The Company’s isChina aoperations ~~coal~~focuses ~~(energy)~~on ~~company,~~coal and ~~started~~ its Taiwan operations infocus ~~1995~~on clean energy. ~~Coal~~ For the second quarter ended October 31, 2013, coal sales are generated entirely in China, from coal mining, clean coal ~~washing~~, coal wholesale and coal ~~wholesale~~washing operations. At the present time, the Company conducts its coal (energy) operations in Yunnan and Guizhou provinces, located in Southwest China.

As of ~~July31~~October 31, 2013, the Company has the following subsidiaries or operations in China:

· Kunming Biaoyu Industrial Boiler Co., Ltd (“KMC”), which owns/controls coal wholesale operations, L&L Coal Partners (the “2 Mines” or “LLC”), which owns/controls two coal mining operations (DaPuAn Mine and SuTsong Mine) and DaPuAn Mine’s coal washing operations; KMC also owns BaoXing Economic Trade Co. which is in wholesale operations,

· Yunnan L&L Tai Fung (“Tai Fung”), which owns/controls SeZone County Hong Xing Coal Washing Factory (“Hong Xing”) ~~and~~as well as coal wholesale and distribution operations. It also has access to a third party washing facility which it does not own. Hong Xinghas been idled from the end of June 30, 2013.

· Wei She Coal Mine (“WeiShe”),

· DaXing L&L Co. Ltd.,

· ~~Guizhou~~ GuizhouLiWei ~~LiWei~~ Coal Co. Ltd.,

· LaShu Coal Mine (“LaShu”), ~~and~~

· LuoZhou Coal Mine (“LuoZhou”).,

· L&L (Taiwan) Energy Ltd.,

· Beijing LiWeiJia Energy Technology. Ltd., and

· GuiZhouDaFuYuan Coal Co. Ltd. (“DaFuYuan”).

Basis of Presentation

The consolidated financial statements include the accounts of L & L Energy, Inc. and its affiliates. All intercompany transactions, profits and balances have been eliminated in consolidation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Principles

~~These~~The ~~statements~~accompanying ~~reflect~~unaudited ~~all~~consolidated ~~adjustments,~~financial ~~consisting~~statements of ~~normal~~L&L ~~recurring~~have ~~adjustments,~~been ~~which,~~prepared in ~~management’s~~accordance ~~opinion,~~with ~~are~~accounting ~~necessary~~principles ~~for~~generally ~~fair~~accepted ~~presentation~~in the United States of America and the ~~information~~rules ~~contained~~of ~~herein.~~the ~~These~~Securities ~~financial~~and ~~statements~~Exchange Commission (“SEC”), and should be read in conjunction with the ~~Company's~~audited financial statements and notes thereto ~~included~~contained in the Company'’s ~~audited~~latest ~~financial~~Annual ~~statements~~Report onfiled with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the ~~fiscal~~results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes ~~ended~~to ~~April~~the ~~30,~~financial ~~2013~~statements aswhich ~~filed~~would ~~with~~substantially duplicate the ~~Securities~~disclosure ~~and~~contained ~~Exchange~~in ~~Commission~~the ~~(“SEC”)~~audited onfinancial ~~July~~statements for the most recent fiscal year ended April 30, 2013, as reported in Form 10-K, have been omitted.

Principles of Consolidation

The fully consolidated financial statements include the accounts of (i) the Company, (ii) its 100% ownership of KMC, DaXing and Guizhou LiWei subsidiaries including coal wholesale, (iii) 80% of operations of LLC (“2 Mines”), (iv) 51% of WeiShe Mine, (v) 98% of TaiFung, and (ⅵ) 95% of LaShu and 95% of LuoZhou Mines. The Company fully consolidates 100% of the assets and liabilities of its subsidiaries and shows the non-controlling interests owned by their respective minority owners as Non-Controlling Interests. The results of operations of our subsidiaries less amounts attributable to non-controlling interest owners are net income attributable to the Company. All inter-company accounts and transactions are eliminated.

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. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from management’s estimates.

Reclassification

Certain reclassifications have been made to current period consolidated financial statements and footnote to conform to the current period consolidated financial statement and footnote presentation. These reclassifications had no effect on net loss or cash flows as previously reported.

New Accounting Pronouncements

In July 2013, the FASB issued ASU 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) and the London Interbank Offered Rate (LIBOR) swap rate are considered as Benchmark Interest Rate for Hedge Accounting Purposes. Section 815-20-25-6, hedges involving the benchmark interest rate are addressed in paragraph 815-20-25-12(f) for fair value hedges) and paragraph 815-20-25-15(j) for cash flow hedges. This amendment is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company adopted this guidance effective July 17, 2013 and wethe doCompany does not expect the implementation will have a material impact on ~~our~~its consolidated financial statements.

NOTE 3. BUSINESS COMBINATIONS

Acquisitions

For the ~~period~~year ended ~~July 31, 2013 and~~ April 30, 2013, the Company acquired two businesses in the mining industry. The Company has been actively acquiring smaller coal companies who lack the capital and/or management expertise to maximize growth and safety. The Company will continue to seek opportunities to purchase other mining operations as well as coal washing and coal coking operations. The Company expects to realize operating synergies from each of the transactions, or the acquired operation has created, or will create, opportunities for the acquired entity to sell its services to our customers. Both of these factors resulted in a purchase price that contributed to the recognition of goodwill. The acquisitions are summarized as follows:

Business Acquired	Date of Closing		Net Assets Acquired (in ~~million~~millions)	Form of Consideration
LaShu Coal Mine	November 18, 2012	$	15	Cash/Property
LuoZhou Coal Mine	November 18, 2012	$	22	Cash/Property

Each of the acquired businesses has been included in our results of operations since the date of closing. Accordingly, the operating results for the periods presented are not entirely comparable due to these acquisitions and related costs. In each acquisition, the excess of the purchase price over the fair value of the net identifiable assets acquired has been allocated to goodwill.

Purchase Price Allocations

The following tables summarize the estimated fair values of the assets acquired and liabilities assumed at the respective dates of acquisition for the above referenced transactions (in millions).

Category		LaShu	LuoZhou
Current assets	$	3.0	2.0
Property and equipment		6.2	8.4
Mining right		6.9	11.5
Goodwill		0.4	1.4
Total assets acquired		16.5	23.3
Less liabilities assumed		(1.8)	(1.0)
Net assets acquired	$	14.7	22.3
Non-controlling interest	$	0.6	1.0

A brief description of each acquisition is as follows:

LuoZhou Coal Mine (“LuoZhou”) and LaShu Coal Mine (“LaShu”)

On November 18, 2012, the Company completed the acquisitions of the LuoZhou and ~~LaShu~~LaShuCoal ~~Coal~~ Mine when it entered into the Equity Ownership Transfer Agreement (the “Agreement”) with Guizhou Union Energy, Inc., a Chinese corporation (“Union”) and Guizhou Union Capital Investment Holding Co., Ltd., a Chinese corporation (“Union Capital”), to purchase 95% of the equity ownership interest of both LuoZhou and ~~LaShu~~LaShuCoal ~~Coal~~ Mine.

Under the Agreement, the purchase price for 95% of the ownership interest in both LuoZhou and ~~LaShu~~LaShuCoal ~~Coal~~ Mine was approximately RMB $233.3 million (equivalent to US$37.1 million). The purchase price for 95% of the ownership interest in LuoZhou was about RMB $140.55million ~~million~~ (equivalent to US$22.3 million)and the purchase price for 95% of the ownership interest in LaShu Coal Mine was about RMB $92.9 million (equivalent to US$14.8 million), and both of these two mines (LuoZhou and LaShu) will be paid together by a cash outlay of approximately US $1.7 million and the transfer of the Company's interests in Zonelin Coking Plant (98%) and the DaPing Coal Mine (60%)which were valued at about $12.4 million and $23.0 million respectively. LuoZhou Coal Mine has $27 million tons of reserves. LaShu Coal Mine has $7.2 million tons of reserve.

Divestiture

Sale of HSC

In late 2009 to early 2010, the Company determined that it was in the best interest of the Company to expand on other prospective acquisitions that would provide a better return to its stockholders. Therefore, on April 18, 2010, the Company entered into an Equity Sale and Purchase Agreement (the “Equity Sale Agreement”) with Guangxi Liuzhou Lifu Machinery Co., Ltd., whereby the Company sold its 93% equity ownership interest in HSC (Hon Shen Coal Co., Ltd.) for RMB $41,000,000 (equivalent to approximately US$6,000,000). Guangxi Liuzhou Lifu Machinery Co., Ltd. assumed the obligation of the Company to pay to HSC RMB $23,800,000 (equivalent to approximately US$3,485,300) that remained payable to HSC pursuant to the December Agreement. Guangxi Liuzhou Lifu Machinery Co., Ltd. also agreed to pay the remaining balance of RMB $17,200,000(equivalent to approximately US$2,514,700) to the Company in three installments, (1) RMB $3,440,000 (approximately US$502,940) within six months of the sale, (2) RMB $5,160,000 (approximately US$754,410) between six months and twelve months after the sale, and (3) RMB $8,600,000 (approximately US$1,257,350) between twelve and twenty-four months after the sale. Pursuant to the Equity Sale Agreement, if Guangxi Liuzhou Lifu Machinery Co, Ltd does not make such scheduled payments, a penalty of 1% of the applicable payment will be assessed for any deadline that is missed. Additionally, interest of 3.5% per annum of the applicable payment will be assessed as of the day after the applicable payment date. The portions of the purchase price that are due within twelve months after the sale (i.e., the first two installments) are included as “Other receivables” on the Company’s consolidated balance sheets and the portion of the purchase price due within 24 months of the sale (i.e., the third installment) is included as a “Long -term receivable” on the Company’s consolidated balance sheets. The Company recorded US$834,181 as income from discontinued operations and recognized a gain of US$1,017,928 on the sale on April 18, 2010. As of ~~July~~October 31, 2013, the outstanding receivable from the sale of HSC was US$~~548~~224,~~555~~453, which is expected to be received before April 30, 2014.

Sale of Ping Yi Mine

~~With~~After the consideration of several factors including its continuing development strategies, the Company made the determination to dispose of the Ping Yi Mine. On April 30, 2012, the Company entered into an Equity Sale and Purchase Agreement with Mr. Zhang, the previous owner of Ping Yi Mine, whereby the ~~company~~Company sold its 100% equity ownership interest in Ping Yi Mine for RMB $196,000,000, approximately US $31,000,000. The payment was agreed to take the form of receipt with payment in two parts,: (1) through receipt of coal extracted from the Ping Yi Mine subsequent to the disposal, including priority receipt of future coal from the Ping Yi ~~mine~~Mine at a 5% discounted price compared to the market price until 70% of the payment is received; (2) through receipt of the use of Ping Yi Mine’s washing facilities subsequent to disposal, including usage fees charged at a 3%~5% discounted price compared to the market price until 30% of the payment is received. The terms of the agreement state that full payment must be received within five years, and that 70% of total receipts must occur by the end of year three. As of ~~July~~October 31, 2013, the Company received total payment of $21,~~077~~997,~~063~~ 626 as coal washing facilities service during this quarter.

The Company recorded $408,020 as income from discontinued operations for the year-ended April 30, 2012. Additionally, the Company recorded $3,183,786 of costs to dispose related to the provision of discounting the estimated receipt of the payment over the payment term (refer to Note 5 and 11).

Sale of DaPing Coal Mine

~~With~~After the consideration of several factors including continuing development strategies, the Company made the determination to dispose of the DaPing Mine. On November 18, 2012, the Company decided to purchase two coal mines, which are LuoZhou and LaShu mines by making a swap of the 60% equity interest in DaPing ~~mine~~Mine and 98% equity interest in ZoneLin Coking Plant. The fair value of the 60% equity interest in DaPing iswas ~~reasonably stated by the amount of~~ approximately $ 23 million, including $0.5 million on assets write-up per fair value measurement. The Company has no continuing involvement in the disposed business.

Sale of ZoneLin Coking Plant

~~With~~After the consideration of several factors including continuing development strategies, the Company made the determination to dispose of the ZoneLin Coking Plant. On November 18, 2012, the Company decided to purchase two coal mines, which are LouZhou and LaShu ~~mines~~Mines by making a swap of the 60% equity interest in ~~DaPing~~DaPingMine ~~mine~~ and 98% equity interest in ZoneLin Coking Plant. The fair value of the 100% equity interest in ZoneLin iswas ~~reasonably stated by the amount of~~ RMB 77,786,000 (approximately $ 12.4 million, including $2.7 million on assets write-up per fair value measurement). The Company has no continuing involvement in the disposed business.

Total Discontinued Operations

The operating results of the discontinued operations in total are summarized below:

		July 31, 2013		July 31, 2012
Net sales	$	-	$	-
Income before income taxes		-		-
Income tax provision		-		-
TOTAL INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX	$	-	$	2,524,527
Net income from discontinued operations attributable to non-controlling interests	$	-	$	968,162
Net income from discontinued operations attributable to L & L	$	-	$	1,556,365

NOTE 4. PREPAID ~~EXPENSES~~ AND OTHER CURRENT ASSETS

Cash advances are made to coal suppliers to guarantee a certain delivery of coal to usthe Company at a specified time and price. Since the demand for coal is high, wethe ~~set~~Company upenters into agreements with these suppliers, with cash deposits, to ensure a constant supply of coal to our washing facilities. By signing purchase agreements with ~~our~~ suppliers which provide for the payment of deposits over a certain period of time, we ensure that our suppliers will deliver their coal ~~to us~~ in a timely manner. Certain agreements impose penalties on the suppliers for non-compliance.

~~All~~On ofJune ~~the~~10, ~~Company’s~~2013, ~~Bill~~we ~~receivable~~entered isinto ~~Bank~~an ~~Acceptance~~agreement ~~from~~for ~~our~~the ~~customers. Bank’s~~prepayment ~~Acceptance~~of is25,000,000 aRMB ~~promised~~worth ~~future~~of ~~payment,~~coal orwith ~~time~~Guizhou ~~draft~~Qian Hong Mining Resource Consulting Services, ~~which~~Ltd. is(“Qian ~~accepted~~Hong”). ~~and~~On ~~guaranteed~~August by14, a2013, ~~bank~~Ironridge ~~and~~Global ~~drawn~~IV, onLtd a(“Ironridge”) ~~deposit~~agreed atto complete the ~~bank~~payment byfor ~~the~~us ~~buyer. The~~in ~~bank~~exchange ~~acceptance~~for ~~specifies~~free ~~the~~trading ~~amount~~shares. ofThe ~~money,~~details ~~the~~of ~~date,~~our ~~and~~transaction ~~the~~with ~~company~~Ironridge tocan ~~which~~be ~~the~~found ~~payment~~below isin ~~due. After~~NOTE ~~acceptance~~25, ~~the~~“Ironridge ~~draft~~Transaction.” ~~becomes~~On anAugust ~~unconditional~~20, ~~liability~~2013, ofpursuant to the ~~bank. But~~Ironridge ~~the~~Transaction, ~~holder~~Ironridge ofcompleted ~~the~~its ~~draft~~payment ~~can~~to ~~sell~~Qian ~~(exchange)~~Hong. itAs ~~for~~of ~~cash~~October at31, a2013, ~~discount~~the tocompany areceived ~~bank~~approximately or13% ~~endorse~~of itthe tototal ~~another~~amount ~~company~~under ~~instead~~the ofprepayment ~~cash~~agreement ~~payment~~from Qian Hong Mining.

Additionally, the Company provides advances to employees for them to handle ~~incidentals~~incidents in our mining operations as well as washing expansion projects as these facilities are far away from our ~~headquarters~~operating center in Kunming and Guiyang. There were no advances to officers or directors.

During this quarter, the company paid a total of $2.7 million which has a current portion of $0.3 million for renting land to mine coal. This total payment will be amortized in 10 years period.

Prepaid expenses and other current assets consisted of the following:

Description		~~July~~October 31, 2013		April 30, 2013
Advances to suppliers	$	2125,~~179~~463,~~340~~002	$	22,128,001
Advances to employees		~~489~~943,~~000~~377		515,867
Other		587,554		495,888
Prepaid rent		278,445		-
Total	$	22,255,894	$	23,139,756
Other		16,522		495,888
Prepaid and other current assets, total		26,701,346		23,139,756
Less: Allowance for unrecoverable advances		(904,750)		-
Prepaid and other current assets, net	$	25,796,596	$	23,139,756

NOTE 5. OTHER RECEIVABLES

Other receivables consisted of the following:

Description		~~July~~October 31, 2013		April 30, 2013
Short term loans to business associates	$	-	$	3,646,838
Short-term loans to business associates	$	-	$	3,646,838
PYC receivable-current (note 3)		5,176,530		7,094,403
PYC receivable-current (Note 3)		3,338,093		7,094,403
HSC receivable - current (note 3)		548,555		750,703
HSC receivable - current (Note 3)		224,453		750,703
Other		~~724~~574,~~882~~333		1,403,360
Total	$	64,~~449~~136,~~967~~879	$	12,895,304

The Company made short -term loans to business partners in order to develop a long -term business relationship. Such loans are considered consistent with accepted business practices in China. These business partners are suppliers to our Company and we believe that these loans result in securing adequate supplies for the expansion of production capacity in our mines. As more fully discussed in Note 3, the Company sold its 100% equity ownership interest in Ping Yi Mine for RMB $196,000,000, approximately US $31,200,~~000on~~000 on April 30, 2012. The estimated receipt of payment is expected to generally occur ofwithin a five-year ~~term~~period, in accordance with the contract. As such, a valuation allowance was recorded to reflect the net present value of the payments during that ~~term~~period at a rate of 5%, which is with reference to the discount explicit in the agreement. The initial recording of this discount resulted in the recognition of a cost of disposal in the period when the disposal incurred, which will be accreted as interest income by effective interest method over the life of the agreement. As of ~~July~~October 31, 2013, the receivable related to the disposal of the Ping Yi Mine, net of discount, amount to a total of $1712,~~617~~441,~~537~~007 with a current portion of $53,~~176~~338,~~530~~093.

NOTE 6.INVENTORIES

Inventories are primarily related to coal located at KMC, WeiShe,Tai Fung, LuoZhou and LaShu. Inventories consisted of the following:

Description		July 31, 2013		April 30, 2013
Raw Coal	$	1,743,468	$	2,115,833
Fine Coal		4,997,944		4,010,302
Other (Raw materials, low value consumable)		1,412,045		1,028,409
Total	$	8,153,457	$	7,154,544

NOTE 7. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT

Property, plant, equipment and mine development consisted of the following:

Description		July 31, 2013		April 30, 2013
Mine development	$	130,193,613	$	115,014,678
Mineral rights		43,969,494		43,677,912
Building and improvements		6,461,271		6,119,213
Machinery and equipment		25,407,918		24,232,999
Assets retirement cost, net		3,084,182		3,077,883
Property, Plant and Equipment, total		209,116,478		192,122,685
Accumulated depreciation and amortization		(20,876,105)		(18,713,197)
Property, Plant and Equipment, net	$	188,240,373	$	173,409,488

Mineral rights represent the exclusive right, granted by the Chinese government, to operate the five mines, DaPuAn, SuTsong, WeiShe, LuoZhou, and LaShu. The rights were acquired in the first quarter of 2008 as a result of the acquisition of the “2 Mines” on May 1, 2008 and on November 1, 2009, the acquisition of the WeiShe on February 3, 2012 and the acquisition of LuoZhou and LaShu on November 18, 2012, respectively.

The depreciation method used is based on two types of assets:

a. For fixed assets related to production, we use unit of production method

b. For all other assets, we use straight line method

Depreciation and amortization expense was $1,912,951 and $1,582,219 for the three months ended July 31, 2013 and July 31, 2012, respectively.

NOTE 6. INVENTORIES

Inventories primarily consist of coal located at facilities owned by LLC, DaXing, KMC, WeiShe, Tai Fung, LuoZhou and LaShu. Inventories consisted of the following:

Description		October 31, 2013		April 30, 2013
Raw coal	$	589,958	$	2,115,833
Fine coal		5,950,878		4,010,302
Other (Raw materials, low-value consumable)		1,551,601		1,028,409
Total	$	8,092,437	$	7,154,544

NOTE 7. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT COSTS

Property, plant, equipment and mine development costs consisted of the following:

Description		October 31, 2013		April 30, 2013
Mine development costs	$	153,821,199	$	115,014,678
Mineral rights		44,229,338		43,677,912
Building and improvements		6,744,337		6,119,213
Machinery and equipment		25,810,605		24,232,999
Asset retirement costs, net		3,088,869		3,077,883
Property, plant equipment and mine development costs, total		233,694,348		192,122,685
Accumulated depreciation and amortization		(23,110,500)		(18,713,197)
Property, plant equipment and mine development cost, net	$	210,583,848	$	173,409,488

Mineral rights represent the exclusive right, granted by the Chinese government, to operate the five mines, namely DaPuAn, SuTsong, WeiShe, LuoZhou, and LaShu. The rights were acquired during the first quarter of 2008 as a result of the acquisition of the “2 Mines” on May 1, 2008 and on November 1, 2009, the acquisition of the WeiShe on February 3, 2012 and the acquisition of LuoZhou and LaShu on November 18, 2012, respectively.

The depreciation method used is based on two types of assets:

a. For fixed assets related to production, the Company use unit of production method

b. For all other assets, the Company use straight-line method

Depreciation expense was $2,077,997 and $4,120,397 for the three and six months ended October 31, 2013 respectively.

Depreciation expense was $1,910,248 and $3,460,024 for the three and six months ended October 31, 2012 respectively.

Amortization expense of asset retirement cost was $25,685 and $17,337 for the six months ended October 31, 2013 and 2012.

NOTE 8. CONSTRUCTION IN PROGRESS

Construction -in -progress includes mine development costs, ventilation and electrical system improvements, building of staff quarters, and ~~beginning~~ construction of a sewage treatment system and road expansion for the washing facilities. Construction -in -progress was $4441,~~825~~885,~~438~~124 and $34,679,059 as of ~~July~~October 31, 2013 and April 30, 2013, respectively.

~~NOTE9. INTANGIBLE ASSETS~~12

~~Intangible~~NOTE ~~assets consist of customer relationship and technology assets are being amortized over a period of 7 years~~9. ~~Amortization~~INTANGIBLE ~~expense for these assets was $13,727 and $8,008 for the three months ended July 31, 2013 and 2012, respectively.~~ ASSETS

Intangible assets consist of customer relationship and technology assets, and are being amortized over a period of 7 years. Amortization expense for these assets was $38,464 and $47,059 for the six months ended October31, 2013 and 2012, respectively.

Intangible assets consisted of the following:

Description		~~July~~October 31, 2013		April 30, 2013
Technology	$	75,~~241~~684	$	74,732
Land Right		794,271		160,165
Land right		823,385		160,165
Customer Relationship		48,128		47,803
Customer relationship		48,413		47,803
Intangible assets, total		~~917~~947,~~640~~482		282,700
Accumulated amortization		(81107,~~544~~288)		(67,817)
Intangible assets, net	$	~~836~~840,~~096~~194	$	214,883

WeLand ~~have~~rights ~~reclassified~~are ~~Mineral~~related ~~Rights~~ to ~~Property,~~the ~~Plant,~~acquisition ~~Equipment~~of ~~and~~the ~~Mine~~LuoZhou ~~Development.~~and ~~Mineral~~LaShu ~~Rights were disclosed as Intangible Assets in prior financial statements~~mines.

Land right was related to the acquisition of LuoZhou and LaShu mines.

The amortization schedule for the upcoming five years is as below (amount in thousands):

Remainder of Fiscal 2013	$	8
Remainder of Fiscal 2014	$	50
Fiscal 2014		32
Fiscal 2015		101
Fiscal 2015		32
Fiscal 2016		101
Fiscal 2016		32
Fiscal 2017		101
Fiscal 2017		48
Thereafter		487
Fiscal 2018		69
Total	$	840
Total	$	221

NOTE 10. PREPAID AND OTHER ASSETS, NON-CURRENT

Other assets represent the long-term restricted cash ~~totaling~~and ~~amount~~the oflong-term prepayment. The long-term restricted cash is amounting to $3,~~000~~490,~~000~~486 in bank deposits as of October 31,2013 in which $3,000,000 is required to be held as collateral for a convertible note payable (see ~~note~~Note 17). $2,436,400 is the long-term portion of the prepayment for land rental.

12NOTE 11. LONG-TERM RECEIVABLE

~~NOTE~~As 11more fully disclosed in Note 3 and Note 5, the Company has recorded a long-term receivable related to the disposal of the Ping Yi Mine, as of October 31, 2013, is of $12,441,007, net of a present value discount of $3,183,786. ~~LONG~~The ~~TERM~~current ~~RECEIVABLE~~portion of this balance is $3,338,093, which is included in other receivables on the accompanying consolidated balance sheets.

As more fully disclosed in Note 3 and Note 5, the Company has recorded a long-term receivable related to the disposal of the Ping Yi Mine, as of July31, 2013, the total due is of $17,617,537, net of a present value discount of $3,183,786. The current portion of this balance is $5,176,530 which is included in other receivables on the accompanying Consolidated Balance Sheets.13

NOTE 12. RELATED PARTY TRANSACTIONS

Related Party Notes Receivable

The Company loaned money to various entities that have non-controlling interest with the Company.

In here, we define “Control” interest is defined as effective management control of the business entity or minimum 50% ownership. “Non-controlling interest”, sometimes ~~refers~~referred to as minority equity interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent.

The associates normally refer to business partners such as suppliers, customers, or people or party associated with our business entity. For the purpose of this disclosure, there is no distinction between having “non-controlling interests with the Company” and “the Company having an interest in that third party”.

Related party transactions consist of due from related party, related party note receivables, related party payables, and due to officers.

Due from related party consisted of the following balances at ~~July~~October 31, 2013 and April 30, 2013:

Borrowers		July 31, 2013	April 30, 2013
Related parties		October 31, 2013		April 30, 2013
ShiZong HengTai	$	4,~~982~~829,~~659~~408	~~3,156,580~~$	3,156,580
Kunming Kenandi Technology Development Co., Ltd		337,965	277,922
Kunming Kenandi Technology Development Co., Ltd.		553,476		277,922
Total	$	5,~~320~~382,~~624~~884	~~3,434,502~~$	3,434,502

Related party notes ~~receivables~~receivable consists of the following balances at ~~July~~October 31, 2013 and April 30, 2013:

Borrowers		~~July~~October 31, 2013	April 30, 2013	Maturity	Collateralized by
Associates to SuTsong	$	2,~~915~~932,~~675~~906	2,895,990	Various dates	Mine Assets
Associates to DuPuAn		~~988~~953,~~972~~465	982,295	Various dates	Mine Assets
Associates to TaiFong		~~280~~418,~~951~~766	359,430	Various dates	Mine Assets
Total related party notes receivable (current)	$	4,~~185~~305,~~598~~137	4,237,715

Related Party Payable

Related party payable consisted of the following balances at October 31, 2013 and April 30, 2013:

Description		~~July~~October 31, 2013		April 30, 2013
Payable to previous owners of DaPing Coal Mine	$	-	$	507,973
Payable to Robert Lee		1,647,933		1,647,933
ShiZong Heng Tai		-		1,000,886
Kunming Kemandi Technology Development Co.		-		111,899
Payable to Union Energy (non-controlling interest holder of LuoZhou, LaShu and Weishe Mines)		69,~~493~~138,~~542~~281		3,540,107
Total Payable - Related Parties (current)	$	810,~~141~~786,~~475~~214	$	6,808,798

The payable to Union Energy (non-controlling interest holder of WeiShe, LuoZhou and LaShu mines), is not collateralized by any assets of the Company.

Due to Officers and Directors

Due to officers consisted of the following balances at October 31, 2013 and April 30, 2013:

Due to officer		~~July~~October 31, 2013		April 30, 2013
Dickson Lee	$	21,149,641	$	1,179,640
Clayton Fong		64,791		64,791
Shirley Kiang*		-		60,000
Total due to officers/directors	$	21,214,432	$	1,304,431
*No longer a director as of September 1, 2012

13Through the Ironridge debt settlement (NOTE 25), $800,000 due to Dickson Lee was repaid by Ironridge.

NOTE 13. ASSET RETIREMENT OBLIGATION

With respect to the DaPuAn and SuTsong mines, the Company estimates the asset retirement obligation at a rate of 3 RMB per ton based on total reserves at the end of the useful lives of the mines. The Company expects to extract approximately 10 million tons of coal over the expected useful lives (29 and 17 years for DaPuAn and SuTsong Mine respectively). The interest rate used in the net present value calculation is 7%.

As for the WeiShe mine, which acquired in February 2012, the management estimates the asset retirement obligation at a rate of 3 RMB per ton based on total reserves at the end of the useful lives of the mine. The Company expects to extract approximately 19 million tons of coal over the expected useful life of thirty years. The interest rate used in the net present value calculation is 8%.

The LuoZhou and LaShu mines were acquired by the Company in November 2012. According to the mine reservation report, management expects to extract approximately 26.6 million tons of coal and 7 million tons of coal from LuoZhou and LaShu over the remaining 30 years, respectively. LuoZhou Mine and LaShu Mine relocated in Guizhou Province and the management estimates the asset retirement obligation at a rate of 3RMB per ton based on total reserves at the end of the useful lives of the mines. The interest rate used in the net present value calculation of LaShu and LuoZhou mines were 29.06% and 27.01%, respectively.

During the quarter ended July 31, 2010, the Company revised the forecasted cash flows used for the net present value calculations for the DaPuAn and SuTsong mines. The revisions to estimated cash flows pertain to revisions in the estimated amount and timing of required reclamation activities throughout the lives of the respective mines and reflect changes in estimates of closure volumes, disturbed acreages and third-party unit costs as of July 31, 2010. We based these estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from management’s estimates. We evaluated the forecasted cash flows as of July 31, 2013, and no revision was deemed necessary.

The following is a summary of the change in the carrying amount of the asset retirement obligation during the quarter ended July 31, 2013 and the year ended April 30, 2013.

Description		July 31, 2013		April 30, 2013
Beginning balance	$	3,616,643	$	2,459,352
Liabilities incurred during the period		-		1,619,386
Liabilities settle during the period		-		(686,519)
Accretion of interest		95,708		224,424
Ending balance	$	3,712,351	$	3,616,643

NOTE 13. ASSET RETIREMENT OBLIGATION

With respect to the DaPuAn and SuTsong mines, the Company estimates the asset retirement obligation at a rate of 3 RMB per ton based on total reserves at the end of the useful lives of the mines. The Company expects to extract approximately 10 million tons of coal over the expected useful lives (29 and 17 years for DaPuAn and SuTsong Mine, respectively). The interest rate used in the net present value calculation is 7%.

As for the WeiShe mine, which was acquired in February 2012, management estimates the asset retirement obligation at a rate of 3 RMB per ton based on total reserves at the end of the useful lives of the mine. The Company expects to extract approximately 19 million tons of coal over the expected useful life of thirty years. The interest rate used in the net present value calculation is 8%.

The LuoZhou and LaShu mines were acquired by the Company in November 2012. According to the mine reservation report, management expects to extract approximately 26.6million tons of coal and 7 million tons of coal from LuoZhou and LaShu over the remaining 30 years, respectively. LuoZhou Mine and LaShu Mine relocated in Guizhou Province and the management estimates the asset retirement obligation at a rate of 3RMB per ton based on total reserves at the end of the useful lives of the mines. The interest rate used in the net present value calculation of LaShu and LuoZhou mines were 29.06% and 27.01%, respectively.

During the quarter ended July 31, 2010, the Company revised the forecasted cash flows used for the net present value calculations for the DaPuAn and SuTsong mines. The revisions to estimated cash flows pertain to revisions in the estimated amount and timing of required reclamation activities throughout the lives of the respective mines and reflect changes in estimates of closure volumes, disturbed acreages and third-party unit costs as of July 31, 2010. The Company based these estimates on historical and anticipated results and trends and on various other assumptions that the company is reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from management’s estimates. The Company evaluated the forecasted cash flows as of October 31, 2013, and no revision was deemed necessary.

The following is a summary of the change in the carrying amount of the asset retirement obligation during the period ended October 31, 2013 and the year ended April 30, 2013.

Description		October 31, 2013		April 30, 2013
Beginning balance	$	3,616,643	$	2,459,352
Liabilities incurred during the period		-		1,619,386
Liabilities settle during the period		-		(686,519)
Accretion of interest		189,191		224,424
Ending balance	$	3,805,834	$	3,616,643

NOTE 14. OTHER PAYABLES

Other payables consisted of the following:

Description		~~July~~October 31, 2013		April 30, 2013*
Payable to business partners	$	3,~~085~~241,~~947~~802	$	3,578,082
Resource surcharge payable of WeiShe Coal Mine		13,578,688		13,487,011
Resource surcharge payable of the WeiShe Coal Mine		13,658,934		13,487,011
Payable to business associates		46,~~790~~898,~~381~~580		4,308,742
Total other payable	$	21,455,016	$	21,373,835
Total other payables	$	23,799,316	$	21,373,835

None of these payables are collateralized by any assets of the Company.

*Reclassification15

NOTE 15. ~~TAX~~TAXES ~~PAYABLES~~PAYABLE

Taxes payable consisted of the following:

Description		~~July~~October 31, 2013		April 30, 2013
VAT Payable	$	5,~~410~~370,~~560~~514	$	5,258,999
Income Tax Payable (1)		1012,~~460~~153,~~331~~291		9,176,652
Other Taxes Payable (2)		3,~~832~~305,~~987~~353		3,356,961
Total Tax Payable	$	1920,~~703~~829,~~878~~158	$	17,792,612
(1) For China
(2) Other Taxes Payables mainly include resources tax payable and business tax payable in China

NOTE 16. BANK LOANS

On March 19, 2013, the Company entered a Business Loan Agreement with East West Bank of California, USA for a principal amount of $2,500,000, net of a bank fee of $15, at fixed rate of 1.545%. This is revolving line of credit loan to the Company for $2.5 million due on March 18, 2014. The collateral for the amount is a CD of $2,500,000 deposited with the lender. Mr. Dickson V. Lee, Chairman and CEO of the company, ~~act~~acts as guarantor to the loan.

On March 22, 2013, the Company entered into a Business Loan Agreement with China Development Industrial Bank in Taiwan for a principal amount of $2,500,000 as revolving line of credit loan. The interest rate is adjusted every three month with the fixed rate determined by USD Libor rate plus 1.75% as shown in Reuters data source based in London at the beginning of every period. The loan expires in two years. The collateral for the amount is a CD of $2,500,000 deposited with the lender. There is no guarantor to this loan.

1516

NOTE 17. CONVERTIBLE DEBT

On December 10, 2012 (“Closing Date”), the Company issued a Senior Secured Convertible Note (the “Convertible Note”) and warrants (“Investor Warrants”) to Phoenician Limited (“Phoenician”), a Hong Kong company for $3,000,000. The number of warrants shares issued was 289,816 which equal to 15% of the number of common shares issuable under the Convertible Note. The Convertible Note carries an interest rate of 12% and matures in 24 months from the Closing Date.

The Convertible Note can be converted into common shares of the Company at a conversion price $1.55 which is 80% of the 10 days volume weighted average price on Closing date.

The Investor Warrants has exercise price of $1.94 which represents the 10 days volume weighted average price of the Company stock at the Closing date and expire three years from the date of issuance.

Both the Convertible Note and Investor Warrants contain a price protection feature. If the Company, at any time or from time to time while the Convertible Note and Investor Warrants are outstanding, raises capital at a price per share that is less than the current conversion price or strike price, then the current conversion price or strike price will be adjusted downward. The Company determined the embedded conversion feature for the Convertible Note and the Investor Warrants to be a derivative liability in accordance with ASC Topic 815, Derivatives and Hedging and estimated the fair value of the derivative using Lattice Model as of December 10, 2012. Such estimates are revalued at each balance sheet date, with changes in value recorded as unrealized gains or losses in non-operating income (expense) in the Company's consolidated statements of comprehensive income.

On December 10, 2012, the Company recorded a derivative liability of $2,643,191 for the embedded conversion feature of the Convertible Note which was valued at $2,355,390 and the Investor Warrants which was valued at $287,801 and offset to an unamortized debt discount totaled $2,643,191. The debt discount will be amortized using effective interest method over 24 months. As of ~~July~~April 3130, 2013, the Company amortized debt discount $~~167~~218,~~048~~404 and $385,452 as interest expense in the consolidated statements of comprehensive income for the three months and six months ended October 31, 2014, respectively.

Pursuant to the Convertible Note, the Company agreed to establish an account with an agent designated by Phoenician and fund the account with payments from the note receivable from Bowie Resources LLC as collateral. (See Note 10) In addition, the Company agreed to file a registration statement to cover 100% of the common stock underlying the Investor Warrants to ensure Phoenician will have freely trading shares six months after shares issuance under the 144 Rule. The Company agreed to pay the one percent in common stock of the face amount of the Investor Warrants for every thirty day period, or portion thereof not declared effective within one ~~hindered~~hundred eighty days of closing, subject to a maximum of six percent if the Company shares cannot be freely traded after six months of shares issuance under the 144 Rule.

As of ~~July~~October 31, 2013, the outstanding balance of Convertible Note was $3,000,000 and none of the Investor Warrant shares have been exercised and therefore no common shares have been issued under the ~~144~~ Rule. The Company paid monthly interest on the Convertible Note.

In connection with the Convertible Note, the Company initially recorded $180,000 loan origination fee as deferred loan cost and amortized over 24 months using the effective interest method. In addition, the Company prepaid six months interest totaled $180,000 and recorded as prepaid interest. The ~~As of July 31, 2013, the~~ Company amortized loan cost of $22,~~341~~516 and $44,857 as interest expense for the three months and six months ended October 31, 2013, respectively.

During the ~~quarter~~six months ended ~~July~~October 31, 2013, the fair value of the derivative instruments liability decreased by $~~449~~3,~~124~~633,186. This was recorded as unrealized gain on fair value of derivative instruments as non-cash expense in the accompanying consolidated statements of comprehensive income.

Activity for derivative instruments liability during the quarter ended ~~July~~October 31, 2013 was as follows:

		April 30, 2013		Activity During quarter		Increase (Decrease) in Fair Value of Derivative Liability		~~July~~October 31, 2013
Derivative instruments	$	4,594,912	$	0-	$	(~~449~~3,~~124~~633,186)	$	4961,~~145,788~~726

The following is a summary of the assumptions used in the Lattice model as of the initial valuations of the derivative instruments issued during the quarter ended ~~July~~October 31, 2013 and the year ended April 30, 2013:

		July 31, 2013		April 30, 2013
		October 31, 2013		April 30, 2013
Common stock issuable upon exercise of warrants and conversion of notes	$	2,221,926	$	2,221,926
Market value of common stock on measurement date		31.1342		23.0787
Risk free interest rate		0.2410-0.3331%		0.24-0.33%
Warrant and convertibles lives in years		21-32		2-3
Expected volatility (3)		6585-7297%		68-72%
Expected dividend yields (4)		0%		0%

1617

NOTE 18. INCOME TAXES

Our effective tax rates were approximately 1129% and 10% for the three months ended ~~July31~~October 31, 2013 and 2012, respectively. Our effective tax rate was lower than the U.S. federal statutory rate due to the fact that our operations are carried out in foreign jurisdictions, which are subject to lower income tax rates, and the Company has net operating loss carry-forwards available to offset current and future taxable income.

NOTE 19. STOCKHOLDERS’ EQUITY

Stock Issued for Compensation:

For the ~~three~~six months ended ~~July~~October 31, 2013, the Company issued 20155,~~000~~334 shares of common stock to ~~officer~~a board member with the share value of $72582,~~800~~500.

For the three months ended ~~July~~October 31, 2013, the Company issued ~~125~~519,~~638~~995 shares of common stock to ~~employees~~an officer with the share value of $~~478~~1,~~450~~612,460.

For the three months ended ~~July~~October 31, 2013, the Company issued 654,~~000~~462 shares of common stock to ~~advisor~~employees with the share value of $21200,~~900~~404.

~~Stock~~For ~~Issued~~the ~~for~~three ~~Donation:~~months ended October 31, 2013, the Company issued 8,000 shares of common stock with the share value of $12,860 to an advisor.

For the ~~three~~six months ended ~~July~~October 31, 2013, the Company issued 12539,~~595~~995 shares of common stock to an officer with the share value of $501,~~000 to non-profit organization~~685,260.

For the six months ended October 31, 2013, the Company issued 180,000 shares of common stock to employees with the share value of $678,854.

For the six months ended October 31, 2013, the Company issued 140,000 shares of common stock with the share value of $34,760 to an advisor.

Share Issued for Ironridge Settlement

During the three months ended October 31, 2013, the Company issued a total of 5,933,779 shares of common stock to Ironridge Global IV, Ltd (“Ironridge”) as debt settlement, of which 1,079,915 shares was returned and cancelled. The Company valued the net shares of 4,853,863 at the current trading price (between $2.86-$1.26) on the various issuance dates for a total value of $11,116,200. The Company recorded the excess of the fair value of the shares over the debts settled of $6,101,488 as loss on debt settlement. (NOTE 25).

Treasury Stock:

~~For~~As ~~the~~of ~~three~~October ~~months ended July~~ 31, 2013, nothe ~~treasury~~Company recovered zero shares of its common stock ~~has~~and ~~been~~owned ~~purchased~~a ortotal ~~sold~~of by286,595of ~~the~~its ~~Company~~own shares.

NOTE 20. WARRANTS

Warrants Issued for Compensation

During the ~~three~~six months ended ~~July~~of October 31, 2013, the Company ~~has~~had no warrant issued or exercised for compensation.

~~The~~Following ~~fair~~is ~~value~~a ~~was~~summary ~~estimated on the date~~ of the ~~grant~~status ~~using the Black-Scholes option-pricing model. The following table displays the weighted average assumptions that have been applied to estimate the fair value~~ of warrants ~~on the date of grant for warrants~~ outstanding asat ofOctober ~~July~~ 31, 2013:

		July 31, 2013
Type of Warrants		Range of Exercise Prices	Total Warrants Outstanding	Weighted Average Remaining Life (Years)		Weighted Average Exercise Price
Expected life (years)		5.0
Directors - Class E	$	3.00	185,916	1.24	$	3.00
Risk-free interest rate		3.34%
Non-employee	$	2.25-9.51	12,000	0.62	$	3.43
Expected volatility		65.01%
Total			197,916	1.20	$	3.03
Expected dividend yield		0%

(1) Expected Life: The expected life was determined based on the option’s contractual term and employees’ expected early exercise and post-vesting employment termination behavior.

(2) Risk Free Rate: The risk-free interest rate was based on U.S. Treasury yields with a remaining term that corresponds to the expected term of the option calculated on the granted date.

(3) Expected Volatility: Expected volatility is computed based on the standard deviation of the continuously compounded rate of return of days when the stock price changed over the historical period of the expected life of the options.

(4) Dividend Yield: The expected dividend yield is zero. The Company has not paid a dividend and does not anticipate paying dividends in the foreseeable future.

Following is a summary of the status of warrants outstanding at July 31, 2013:

Type of Warrants		Range of Exercise Price	Total Warrants Outstanding	Weighted Average Remaining Life (Years)		Weighted Average Exercise Price
Directors - Class E	$	3.00	185,916	1.49	$	3.00
Non-employee	$	2.25 - 9.51	12,000	0.87	$	3.43
Total			197,916	1.45	$	3.03

Warrants Issued to Investors

~~During~~On ~~the~~November ~~first~~12, ~~quarter~~2012, ~~ended~~the ~~July~~Company ~~31,~~issued ~~2013~~683,003 ~~the~~and ~~company~~64,786 ~~has~~of nofour ~~warrant~~years ~~exercised~~warrants to ~~investors~~lenders. The warrants excise prices are $2.10 and $1.92. The warrants are exercisable immediately.

~~The~~On ~~table~~May ~~below~~23, is2013, athe ~~summary~~Company issued warrants to purchase 232,558 shares of ~~all~~common stock to a lender. The warrants’ ~~activity~~excise asprice ofis ~~July~~$4.30 ~~31,~~and ~~2013:~~it is exercisable immediately.

Warrants Roll-forward Summary
	Units	Weighted Average Exercise Price	Weighted Average Remaining Life (in Years)
Outstanding at April 30, 2013	1,208,286	$3.77	2.02
Issued	-	-	-
Exercised	-	-	-
Expired	-	-	-
Outstanding at July 31, 2013	1,208,286	$3.77	1.78
Exercisable at July 31, 2013	1,208,286	$3.77	1.78

During the six months ended October 31, 2013, the Company has no warrant issued or exercised to investors.

The table below is a summary of all warrants activity as of October 31, 2013:

Warrants Roll-forward Summary

	Units	Weighted Average Exercise Price	Weighted Average Remaining Life (in Years)
Outstanding at April 30, 2013	1,956,075	$3.03	2.61
Issued	232,558	4.30	3.81
Exercised	-	-	-
Expired	-	-	-
Outstanding at July 31, 2013	2,188,633	3.17	2.51
Issued	-	-	-
Exercised	-	-	-
Expired	-	-	-
Outstanding at October 31, 2013	2,188,633	$3.17	2.26
Exercisable at October 31, 2013	2,188,633	$3.17	2.26

NOTE 21. NON-CONTROLLING INTEREST

As described in Note 1, to the consolidated financial statements, the Company has the majority controlling interest of L&L Coal Partners (2coal mining operations), Tai Fung, WeiShe, LuoZhou and LaShu. During the fiscal year 2010, the Company increased its ownership interest in L&L Coal Partners to 80% from 60% at April 30, 2009. The equity related to non-controlling interest as of July31, 2013 represents 20% third party interest in L&L Coal Partners, 2% third party interest in Tai Fung, 49% third party interest in WeiShe, 5% third party interest in LuoZhou and 5% third party interest in LaShu. The non-controlling interest in WeiShe is measured at fair value at the acquisition date, with a discount rate 16% which reflected the factor offor lack of marketability.

Below is a schedule of changes in ownerships interest as of ~~July31~~October 31, 2013 and April 30, 2013:

		July 31, 2013		April 30, 2013
		October 31, 2013		April 30, 2013
Beginning balance	$	42,151,205	$	43,431,399
Non-controlling interest related to acquisitions		-370,864		1,598,799
Translation		~~291~~566,~~230~~911		418,542
Net income related to non-controlling interest		25,~~691~~437,~~232~~688		10,800,403
Non-controlling interest related to disposal		-		(14,097,938)
Ending balance	$	4548,~~133~~526,~~667~~668	$	42,151,205

1819

NOTE 22. EARNINGS PER SHARE

The Company ~~only~~ had common shares, warrants and stock options issued and outstanding as of ~~July~~October 31, 2013. Under the treasury stock method ~~of earnings per share~~, the Company computed the diluted earnings per share as if all issued warrants, options and convertible debt were converted to common stock and cash proceeds were used to buy back common stock. The exercised prices of warrants and options are greater than fair market price. ~~The securities are anti dilutive and can be ignored in the diluted Earnings Per Share calculation of the first quarter of fiscal year of 2014.~~

		For the Three Months Ended July 31
		For the Three Months Ended October 31			For the Six Months Ended October 31
		2013	2012		2013	2012
EPS numerator:
Net income from continuing operations, net of income taxes	$	13,426,997	6,007,469
Net income from continuing operating, net of income taxes	$	4,176,993	7,591,376	$	17,603,990,	13,598,843
Less: Net (loss) income attributable to non-controlling interest		2,691,232	1,377,363
Less: Net income attributable to non controlling-interests		2,764,456	1,949,832		5,437,688	3,327,195
Income from continuing operations attributable to common stockholders		101,~~735~~430,~~765~~537	45,~~630~~641,~~106~~544		12,166,302	10,271,648
(Loss) income from discontinued operations attributable to common stockholders, net of income taxes		-	1,556,365
Income from discontinued operations, net of income taxes		-	2,101,397		-	3,657,762
Net income attributable to common stockholders	$	101,~~735~~430,~~765~~537	67,~~186~~742,~~471~~941	$	12,166,3029	13,929,410
EPS denominator:
Weighted average shares outstanding — basic		3742,~~846~~462,~~470~~474	36,~~839~~988,~~324~~915		40,337,131	37,569,600
Effect of dilutive shares		21,~~291~~948,~~667~~850	-		2,408,522	-
Weighted average shares outstanding — diluted		4044,~~138~~411,~~137~~324	36,~~839~~988,~~324~~915		42,745,653	37,569,600
Basic EPS attributable to common stockholders:
Income from continuing operations		0.2803	0.1315		0.30	0.27
(Loss) income from discontinued operations		-	0.04
Income from discontinued operations		-	0.06		-	0.10
Net income attributable to common stockholders	$	0.2803	0.1721	$	0.30	0.37
Diluted EPS attributable to common stockholders:
Income from continuing operations		0.2703	0.1315		0.28	0.27
(Loss) income from discontinued operations		-	0.04
Income from discontinued operations		-	0.06		-	0.10
Net income attributable to common stockholders	$	0.2703	0.1721	$	0.28	0.37

NOTE 23. COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company held operating lease in the Seattle office, Beijing office, Guizhou office and Taiwan office. The leases of the Seattle office and Beijing office expire in ~~September~~March ~~2013~~2014 and December 2014. The leases of the Guizhou office and Taiwan office both expire in February 2014. The non-cancelable operating lease agreement requires that the Company ~~pays~~pay certain operating expenses, including management fees to the leased premises. The future minimum rental payments in less than a year and in greater than a year are $~~265~~267,~~983~~195 and $~~383~~308,~~119respectively~~461, respectively.

Legal Matters

OnWe ~~August~~are ~~26,~~not ~~2011,~~currently a ~~federal~~party ~~securities~~to ~~law~~any ~~class~~legal ~~action~~proceedings ~~complaint~~in ~~was~~material ~~filed~~nature ~~against the Company, certain officers~~ and ~~directors~~we ~~(i.e.,~~are ~~Dickson~~not V.aware ~~Lee and Ian G. Robinson) and a former officer (i.e., Jung Mei (Rosemary) Wang) in the United States District Court, Western District~~ of ~~Washington~~any atmaterial ~~Seattle~~pending onlegal ~~behalf~~proceeding ofto awhich ~~proposed~~any ~~class~~ of ~~all~~our ~~persons who purchased the common stock of the Company during the period August 13~~officers, ~~2009 through August 2~~directors, ~~2011,~~or ~~inclusive,~~any ~~and~~beneficial ~~who~~holders ~~were damaged thereby (the “Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a)~~ of ~~the~~5% ~~Securities~~or ~~and~~more ~~Exchange Act~~ of ~~1934~~our byvoting ~~filing~~securities ~~materially false~~are ~~and~~adverse ~~misleading reports and financial statements with the SEC from August 2009~~ to ~~July 2011.~~us Onor ~~December~~have ~~15, 2011, the court appointed Gregg Irvin as lead plaintiff, and plaintiff filed an amended complaint and~~ a ~~second~~material ~~amended~~interest ~~complaint~~adverse onto ~~February 8 and March 2~~us, ~~2012, respectively, naming four~~ other ~~current~~than ~~and~~the ~~former~~legal ~~directors~~proceeding asdescribed ~~defendants (i.e., Shirley Kiang, Robert Lee, Dennis Bracy and Robert Okun).~~below:

On ~~November~~August 426, 2011, a ~~complaint~~federal ~~was~~securities ~~filed~~law byclass ~~Larew~~action P.complaint ~~Stouffer,~~was infiled aagainst ~~shareholder derivative suit on behalf of~~ the Company, ~~which is a nominal defendant, against~~ certain ~~its~~ officers and~~/or~~ directors (i.e., Dickson V. Lee, ~~Norman~~and ~~Mineta,~~ Ian G. Robinson,) ~~Robert~~and W.a ~~Lee,~~former ~~Shirley~~officer ~~Kiang~~(i.e., ~~Dennis~~Jung ~~Bracy,~~Mei ~~Syd~~(Rosemary) ~~S. Peng~~Wang) ~~and~~in ~~certain~~the ~~former~~United ~~officers~~States ~~and/or~~District ~~directors (i.e.~~Court, ~~Edward~~Western L.District ~~Dowd,~~of ~~Andrew~~Washington M.at ~~Leitch,~~Seattle ~~Robert~~on ~~Okun,~~behalf ~~Joseph~~of J.a ~~Borich,~~proposed ~~Jung~~class ~~Mei~~of ~~Wang~~all ~~and~~persons ~~David~~who ~~Lin)~~purchased in the ~~First~~common ~~Judicial~~stock ~~District~~of ~~Court~~the ofCompany during the ~~State~~period ofAugust ~~Nevada~~13, ~~for~~2009 ~~Carson~~through ~~City~~August 2, 2011, inclusive, and who were damaged thereby (the “~~Stouffer~~Washington ~~Derivative~~Securities Class ~~Suit~~Action”), alleging that the defendants ~~breached~~violated ~~fiduciary~~Sections ~~duties~~10(b) toand 20(a) of the ~~Company~~Securities and ~~its~~Exchange ~~shareholders,~~Act ~~wasted~~of ~~corporate~~1934 by ~~assets~~filing materially false and misleading public statements August 2009 to July 2011. On December 15, ~~were~~2011, ~~unjustly~~the ~~enriched~~court appointed Gregg Irvin as lead plaintiff, and ~~committed~~plaintiff filed an amended complaint and a second amended complaint on February 8 and March 2, 2012, respectively, naming four other ~~wrongful~~current ~~acts~~and former directors as defendants (i.e., Shirley Kiang, Robert Lee, Dennis Bracy and Robert Okun).

On November 154, 2011, a complaint was filed by ~~Russell~~Larew LP. ~~Bush~~Stouffer, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its then existing officers and/or directors (i.e., Dickson V. Lee, Norman Mineta, Ian G. Robinson, Robert W. Lee, Shirley Kiang, Dennis Bracy, Syd S. Peng) inand ~~the~~certain ~~United~~former ~~States~~officers ~~District~~and/or ~~Court~~directors (i.e., ~~Western~~Edward ~~District~~L. ofDowd, ~~Washington~~Andrew atM. ~~Seattle~~Leitch, ~~(the~~Robert ~~“Bush~~Okun, ~~Derivative~~Joseph ~~Suit”~~J. Borich, ~~with~~Jung Mei Wang and David Lin) in the ~~Stouffer~~First ~~Derivative~~Judicial ~~Suit,~~District Court of the State of Nevada for Carson City (the “Nevada Derivative ~~Suits~~Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders, wasted corporate assets, were unjustly enriched , and committed other wrongful acts.

~~The~~On ~~Company~~November ~~has~~15, ~~notified~~2011, ~~our~~a ~~insurance~~complaint ~~carrier~~was filed by Russell L. Bush, in a shareholder derivative suit on behalf of the ~~Potential~~Company, ~~Class~~which ~~Action~~is ~~and~~a nominal defendant, against its then existing directors (i.e., Dickson V. Lee, Norman Mineta, Ian G. Robinson, Robert W. Lee, Shirley Kiang, Dennis Bracy, Syd S. Peng) in the United States District Court, Western District of Washington at Seattle (“Washington Derivative ~~Suits.~~Suit”), ~~The~~alleging ~~Company~~that ~~has~~the ~~retained~~defendants ~~outside~~breached ~~legal~~fiduciary ~~counsel~~duties and were unjustly enriched.

OnThe ~~April 23, 2012, the~~ Company ~~and~~has ~~Dickson~~notified V.our ~~Lee~~insurance ~~and~~carrier ~~Ian~~of ~~G. Robinson filed a motion to dismiss~~ the Washington Securities Class Action~~. Proceedings~~ inand the ~~Derivative~~Washington ~~Suits~~and ~~were~~Nevada ~~stayed~~Derivative ~~pending~~Suits. ~~the~~The ~~court’s~~Company ~~ruling~~has onalso ~~the~~retained ~~motion~~outside tolegal ~~dismiss~~counsel.

On ~~December~~April 323, 2012, the ~~United~~Company ~~States~~and ~~District~~Dickson ~~Court,~~V. ~~Western~~Lee ~~District~~and ofIan ~~Washington~~G. atRobinson ~~Seattle~~filed ~~granted~~a ~~the Company’s~~ motion to dismiss the Washington Securities Class Action. Proceedings ~~lawsuit,~~in ~~and~~the ~~gave~~Washington ~~plaintiff~~Derivative ~~thirty~~Suits ~~days~~were instayed ~~which~~pending ~~to seek~~ the court’s ~~permission~~ruling toon ~~file~~the ~~another amended~~motion ~~complaint~~to dismiss.

On ~~January~~December 23, ~~2013~~2012, ~~plaintiff filed a motion for leave to file an amended complaint. Pursuant to a stipulation of~~ the ~~parties,~~United ~~the~~States ~~court~~District ~~granted such leave~~Court, ~~and~~Western onDistrict ~~February 4, 2013, plaintiff filed a third amended complaint on behalf~~ of aWashington ~~proposed~~at ~~class~~Seattle ofgranted ~~all persons who purchased~~ the ~~common stock of the~~ Company’s ~~during~~motion ~~the~~to ~~period~~dismiss ~~August 13, 2009 through August 2, 2011, inclusive, and who were damaged thereby, against~~ the ~~Company,~~Securities ~~certain~~Class ~~officers~~Action ~~and/or~~lawsuit ~~directors~~without ~~(i.e.~~prejudice, ~~Dickson V. Lee~~ and ~~Ian~~gave G.plaintiff ~~Robinson)~~thirty ~~and~~days ain ~~former~~which ~~officer~~to ~~(i.e.,~~seek ~~Jung Mei (Rosemary) Wang), alleging that~~ the ~~defendants~~court’s ~~violated~~permission ~~Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading reports and financial statements with the SEC from August 2009~~ to ~~July~~file ~~2011~~another amended complaint.

On January 2, 2013, plaintiff filed a motion for leave to file an amended complaint. Pursuant to a stipulation of the parties, ~~and~~the ancourt ~~order~~granted ~~entered~~such ~~by the court~~leave, ~~the~~and ~~Company’s~~on ~~motion~~February to4, ~~dismiss~~2013, plaintiff’s filed a third amended complaint ~~was~~in ~~submitted~~the Washington Securities Class Action on ~~April~~behalf ~~12,~~of ~~2013. The~~a ~~plaintiff~~proposed ~~filed~~class ~~response~~of onall ~~June~~persons ~~19,~~who ~~2013~~purchased ~~and~~the common stock of the Company ~~did~~during ~~file~~the ~~its~~period ~~response~~August to13, 2009 through August 2, 2011, inclusive, and who were damaged thereby, against the ~~plaintiff’s~~Company, ~~response~~certain onofficers ~~July~~and/or 19directors (i.e., ~~2013~~Dickson V. ~~Proceedings~~ inLee and Ian G. Robinson) and a former officer (i.e., Jung Mei (Rosemary) Wang), alleging that the ~~Derivative~~defendants ~~Suits~~violated ~~continued~~Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading reports and financial statements with the SEC from August 2009 to beJuly ~~stayed~~2011.

~~The~~Proceedings ~~Company~~in ~~believes~~the ~~that~~Washington ~~these~~and ~~suits~~Nevada ~~are~~Derivative ~~without~~Suits ~~merit~~continued ~~and~~to ~~intends~~be tostayed ~~defend~~pending ~~them~~the ~~vigorously~~court’s ruling on the second motion to dismiss.

~~The~~On ~~Company~~December is3, ~~unable~~2013, tothe ~~estimate~~United ~~the~~States ~~amount~~District orCourt, ~~range~~Western District of ~~any~~Washington ~~potential~~at ~~loss~~Seattle indenied the ~~event~~defendants’ ofsecond anmotion ~~unfavorable~~to ~~outcome~~dismiss. AsThe ~~such,~~court ashas ofnot ~~July~~yet ~~31,~~issued ~~2013,~~a ~~the~~case ~~Company~~scheduling ~~has~~order ~~not~~in ~~accrued~~the ~~any~~Washington ~~liability~~Securities inClass ~~connection~~Action ~~with~~and ~~potential~~there ~~losses~~is ~~from~~no ~~legal~~trial ~~proceedings~~date.

20The Company believes that the Washington and Nevada Securities Class Action and the Washington Derivative Suits are without merit and intends to defend them vigorously.

On September 23, 2013, a federal securities law class action complaint was filed against the Company, and certain officers and directors (i.e., Dickson V. Lee, Ian G. Robinson and Clayton Fong) in the United States District Court, Southern District of New York on behalf of a proposed class of all persons who purchased common stock of the Company during the period September 11, 2012 through September 18, 2013, inclusive, and who were damaged thereby (the “New York Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading public statements from September 2012 to September 2013. On November 22, 2013, the plaintiff and several other proposed plaintiffs filed motions for appointment as lead plaintiff and counsel. The court set a status conference for December 20, 2013 to consider the motions.

On October 18, 2013, a complaint was filed by Joseph D, Bessent, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its then existing officers and/or directors (i.e., Dickson V. Lee, Syd S. Peng, Mohan Datwani, Jingcai Yang, James Schaeffer, and Joseph Borich) in the Superior Court for the State of Washington in King County, Washington (the “Bessent Derivative Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

On December 9, 2013, a complaint was filed by Jay Finkelstein, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its current and former officers and/or directors (i.e. Dickson V. Lee, Norman Mineta, Shirley Kiang, Ian Robinson, Dennis Bracy, Edward L. Dowd, Jr., Robert W. Lee, Robert A. Okun, Andrew M. Leitch, Edmund Moy, Dr. Syd S. Peng, Clayton Fong, Jungcai Yang, Mohan Datwani, Joseph Borich, and James Schaeffer) in the United States District Court, Western District of Washington at Seattle (the “Finkelstein Derivative Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

The Company has notified our insurance carriers of the New York Securities Class Action, the Bessent Derivative Suit, and the Finkelstein Derivative Suit. The Company has retained outside legal counsel.

The Company believes that the New York Securities Class Action, the Bessent Derivative Suit, and the Finkelstein Derivative Suit are without merit and intends to defend them vigorously.

The Company is unable to estimate the amount or range of any potential loss in the event of an unfavorable outcome in any of the aforementioned legal proceedings. As such, as of October 31, 2013, the Company has not accrued any liability in connection with potential losses from legal proceedings.

Foreign Currency

The majority of the Company sales, purchases and expense transactions are denominated in RMB (Chinese currency) and most of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.

Environmental Remediation

The PRC adopted extensive environmental laws and regulations that affect the operations of the coal mining industry. The outcome of environmental liabilities under proposed or future environmental legislation cannot be reasonably estimated at present, and could be material. Under existing legislation, however, Company management believes that there are no probable liabilities that will have a material adverse effect on the financial position of the Company.

Chinese Government

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

Concentrations

For the ~~three~~six months ended ~~July~~October 31, 2013, we had ~~two~~three major customers who purchased 1338% of the Company’s total sales, and represented $1410,~~891~~360,~~085of~~075 of accounts receivable balance in total as of ~~July~~October 31, 2013. In addition, we had ~~one~~three major ~~supplier~~suppliers who provided 2039% of our total purchases, and the relevant account payable had been paid off as of ~~July~~October 31, 2013.

NOTE 24. STOCK INCENTIVE PLAN

On September 9, 2010, our Board of Directors adopted the 2010 Stock Incentive Plan (the “2010 Plan”), which was approved by our shareholders at our annual meeting of the shareholders held on the same date. On February 17, 2011, the ~~company~~Company filed S-8 Registration Statement. The Stock Incentive Plan authorizes the Board of Directors or one or more of its members to grant options to eligible individuals to purchase shares of common stock our Company to eligible individuals. Eligible individuals may be employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary, and consultants who provide valuable service to us or our Parent or Subsidiary. Options to purchase Common Stock may be incentive stock options, stock units, stock appreciation rights or non-statutory stock options as determined by the Board of Directors or its delegate. 4,200,000 shares of Common Stock were reserved for issuance.

On September 16, 2013, our Board of Directors adopted the 2013 Stock Incentive Plan (the “2013 Plan”), which was approved by our shareholders at our annual meeting of the shareholders held on the same date. As the end of October, 2013, the Company has not filed S-8 Registration Statement. The Stock Incentive Plan authorizes the Board of Directors or one or more of its members to grant options to eligible individuals to purchase shares of common stock in our Company to eligible individuals. Eligible individuals may be employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary, and consultants who provide valuable service to us or our Parent or Subsidiary. Options to purchase Common Stock may be incentive stock options, stock units, stock appreciation rights or non-statutory stock options as determined by the Board of Directors or its delegate. 5,500,000 shares of common stock were reserved for issuance.

Each option agreement specifies the term as to when the option is to become exercisable. Standard options vest at a rate of at least 20% of the underlying shares per year over five years and have a maximum term of 10 years. However, in no event shall an incentive stock option granted to a 10% or greater stockholder be granted at an exercise price less than 110% of the fair market value of the stock on the date of grant.

During the ~~three~~six months ended ~~July~~of October 31, 2013, the Company has noissued 248,000 stock ~~option~~options ~~issued~~as orboard ~~exercised~~compensation ~~for~~and ~~compensation~~no stock option was exercised.

The following table displays the weighted average assumptions that have been applied to estimate the fair value of stock option awards on the date of grant for the ~~three~~first ~~months~~quarter ended ~~July~~October 31, 2013:

	July 31, 2013
	October 31, 2013
Dividend yield	-
Risk-free interest rate	3.3433%
Expected volatility	65100.0125%
Expected lives	5 years

(1) Expected Life: The expected life was determined based on the option’s contractual term and employees’ expected early exercise and post-vesting employment termination behavior.

(2) Risk Free Rate: The risk-free interest rate was based on U.S. Treasury yields with a remaining term that corresponds to the expected term of the option calculated on the granted date.

(3) Expected Volatility: Expected volatility is computed base on the standard deviation of the continuously compounded rate of return of days when the stock price changed over the historical period of the expected life of the options.

(4) Dividend Yield: The expected dividend yield is zero. The Company has not paid a dividend and does not anticipate paying dividends in there foreseeable future.

Stock compensation expense was recognized based on awards expected to vest. FASB ASC Topic 718 requires forfeiture to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

The following summarizes pricing and term information for options outstanding as of ~~July~~October 31, 2013:

Type of Options	Range of Exercise Prices	Total Options Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Director	$7.65	40,000	2.5934	$7.6065
Director	$2.00	240,000	43.0984	$2.00
		280,000	3.88	$2.81
Director	$2.50	248,000	4.88	$2.50
		528,000	4.21	$2.66

As of ~~July~~October 31, 2013, ~~259~~311,~~999~~000 of ~~280~~528,000 stock options outstanding for compensation were exercisable.

The following table is a summary of stock option activity under the Stock Incentive Plan as of ~~July~~and for the six months ended October 31, 2013:

	Incentive Stock Options	Weighted Average Exercise Price Per Shares	Weighted Average Remaining Life (Years)
Outstanding at April 30, 2013	280,000	$2.81	4.13
Granted	-	-	-
Exercised	-	-	-
Outstanding at July 31, 2013	280,000	$2.81	3.88
Granted	248,000	-	-
Exercised	-	-	-
Outstanding at October 31, 2013	528,000	$2.66	4.21

2123

NOTE 25. ~~SEGMENT~~IRONRIDGE ~~INFORMATION~~SETTLEMENT

On August 14, 2013, L & L Energy, Inc. (“we,” “our,” the “Company”) entered into a stipulation for settlement of claims (the “Stipulation”) with Ironridge Global IV, Ltd. (“Ironridge”). Pursuant to an order of approval by the Superior Court of the State of California for the County of Los Angeles – Central District (the “Order”), the stipulation settled $4,999,153 of payments, which consisted of the following: $4,091,653 (25,000,000 RMB) to Guizhou Qian Hong Mining Resource Consulting Services, Ltd. (“Qian Hong”) as a prepayment for coal to be received at a future date, $107,500 to satisfy the payment of a short term loan to a non-related party, and $800,000 to satisfy the payment of debt to Mr. Dickson Lee, the CEO of L & L Energy, Inc., which Ironridge had purchased in exchange for payment in cash. In exchange, we agreed to issue to Ironridge, shares of our common stock with an aggregate value equal to 105% of the amount owned, plus reasonable attorneys fees, divided by 88% of the following: the closing price of the Company’s common stock on the trading date immediately preceding the date of entry of the Order, not to exceed the arithmetic average of the individual volume weighted average price (“VWAP”) of any five consecutive trading days during the Calculation Period (as defined hereinafter), less $0.05 per share (the “Final Amount”).

On August 16, 2013 (the “Issuance Date”) we issued 2,588,888 shares of the Company’s common stock to Ironridge (the “Initial Issuance”). Additionally, from the date of the Stipulation until that number of consecutive trading days following the Issuance Date required for the aggregate trading volume of our common stock to exceed $80 million, including after hour trades (the “Calculation Period”), if any individual VWAP of our common stock declines below the closing price on the trading date preceding the Order, for each $0.10 or portion thereof, we will, within two trading days, issue to Ironridge additional shares of common stock equal to 5% of the aggregate number of shares required to be issued to Ironridge prior to such issuance (each, an “Additional Issuance”). If, within two days, Ironridge does not receive the Additional Issuance in its account in electronic form and fully cleared for trading, the trading volume during such time shall not count toward aggregate trading volume and the Calculation Period shall be extended by one trading day. At the end of the Calculation Period, the number of shares issued will be adjusted based on the Final Amount.

Under the Stipulation, Ironridge is prohibited from holding any short position in our common stock, and may not to engage in or affect, directly or indirectly, any short sale until at least 180 days after the end of the calculation period described above. The Stipulation also provides that in no event shall the number of shares of the Company’s common stock issued to Ironridge, when aggregated with all other shares of our common stock then beneficially owned or controlled by Ironridge and its affiliates exceed 9.99% of the total number of shares of common stock outstanding after such issuance. The total amount of stock issued under the Stipulation is not to exceed 19.99% of our total outstanding shares before the Initial Issuance without shareholder approval.

The result of the Order and Stipulation is that a total of $4,999,153 of payments to various parties were satisfied by Ironridge in exchange for the issuance of shares of our common stock as provided above. In addition, pursuant to the satisfaction of the prepayment agreement with the Company, Qian Hong made its first shipment of coal to the Company in October 2013. As of October 31, 2013, the Company has received approximately 13% of the total amount under the prepayment agreement.

The Calculation Period ended on November 1, 2013. The Final Amount of common stock issued under this transaction was 4,853,863 shares, the total of which was valued at $11,116,200 by using the then current trading price on the various issuance dates (NOTE 19).

In accordance with the Order and Stipulation, we issued equity and experienced a book loss; however, this event does not affect our cash flow. This event has a material effect on the presentation of our financial statements. Therefore, we disclosed and recorded a $6,101,488 loss on debt settlement in the period ended October 31, 2013.

NOTE 26. SEGMENT INFORMATION

The Company reports its operations primarily through the following reportable operating segments: coal mining, coal wholesaling, coking and coal washing revenue. The Company’s chief operating decision maker uses operating income as the primary measure of segment profit and loss.

	For the three months ended July 31,
		For the three months ended October 31,					For the six months ended October 31,
Total Revenues (including intersegment sales)		2013		~~2012~~	2012		2013		2012
Coal mining revenue	$	2524,~~042~~309,~~136~~575	$	~~11,486,365~~$	13,827,568	$	49,351,710	$	25,237,532
Coal wholesale revenue		12,~~953~~833,~~131~~987		~~12,294,981~~	10,057,073		25,787,118		22,352,054
Coal washing revenue		137,~~242~~033,~~175~~272		~~17,833,828~~	21,619,638		20,275,447		39,529,867
	$	5144,~~237~~176,~~442~~834	$	~~41,615,174~~$	45,504,279	$	95,414,275	$	87,119,453
Total Discontinued Operation Revenues
Coal mining revenue	$	-	$	~~4,136,890~~$	5,114,603	$	-	$	9,251,493
Coal coking revenue		-		~~1,720,948~~	4,326,804		-		6,047,752
	$	-	$	~~5,857,838~~$	9,441,407	$	-	$	15,299,245
Total Revenue	$	5144,~~237~~176,~~442~~834	$	~~47,473,012~~$	54,945,686	$	95,414,275	$	102,418,698
Intersegment revenues		2013		~~2012~~	2012		2013		2012
Coal mining revenue	$	-	$	76,401
Coal washing revenue		56,071			2,090,675		56,071		2,090,675
Coal washing revenue		56,071		2,090,675
	$	56,071		$	2,090,675	$	56,071	$	2,090,675
	$	56,071	$	2,167,076
Total Intersegment Revenue	$	56,071		$	2,090,675	$	56,071	$	2,090,675
Total Intersegment Revenue	$	56,071	$	2,167,076
Net Revenues		2013			2012		2013		2012
Net Revenues		2013		2012
Coal mining revenue	$	24,309,575		$	13,827,568	$	49,351,710	$	25,237,532
Coal mining revenue	$	25,042,136	$	11,486,365
Coal wholesale revenue		12,833,987			10,057,073		25,787,118		22,352,054
Coal wholesale revenue		12,953,131		12,294,981
Coal washing revenue		7,033,272			21,619,638		20,275,447		39,529,867
Coal washing revenue		13,242,175		17,833,828
Less intersegment revenues		(1,210,325)			-		(1,266,396)		(2,167,076)
Less intersegment revenues		(56,072)		(2,167,076)
	$	42,966,509		$	45,504,279	$	94,147,879	$	84,952,377
	$	51,181,370	$	39,448,098
Discontinued operations:
Discontinued operations:
Coal mining revenue	$	-		$	5,114,603	$	-	$	9,251,493
Coal mining revenue	$	-	$	4,136,890
Coal coking revenue		-			4,326,804		-		6,047,752
Coal coking revenue		-		1,720,948
	$	-		$	9,441,407	$	-	$	15,299,245
	$	-	$	5,857,838
Total net revenue	$	42,966,509		$	54,945,686	$	94,147,879	$	100,251,622
Total net revenue	$	51,181,370	$	45,305,936
Net income attributable to L&L		2013			2012		2013		2012
Net income attributable to L&L		2013		2012
Coal mining	$	9,744,095		$	4,586,381	$	20,850,032	$	8,809,395
Coal mining	$	11,105,937	$	4,223,014
Coal wholesale		588,327			521,868		1,124,618		925,517
Coal wholesale		536,291		403,649
Coal washing		(628,488)			2,383,154		118,376		4,084,731
Coal washing		746,864		1,701,577
Parent Company		(8,273,397)	*		(1,849,859)		(9,926,724)		(3,547,996)
Parent Company		(1,653,327)		(1,698,135)
	$	1,430,537		$	5,641,544	$	12,166,302	$	10,271,647
	$	10,735,765	$	4,630,105
Discontinued operations:
Discontinued operations:
Coal mining revenue	$	-		$	1,623,158	$	-	$	3,072,113
Coal mining revenue	$	-	$	1,448,955
Coal coking revenue		-			478,239		-		585,650
Coal coking revenue		-		107,411
	$	-		$	2,101,397	$	-	$	3,657,763
Parent Company		-		-
Total net income attributable to L&L	$	1,430,537		$	7,742,941	$	12,166,302	$	13,929,410
	$	-	$	1,556,366
Depreciation expense		2013			2012		2013		2012
Net income attributable to L&L	$	10,735,765	$	6,186,471
Coal mining	$	1,947,456		$	1,333,506	$	3,614,217	$	2,393,406
Depreciation expense		2013		2012
Coal wholesale		7,130			11,774		14,457		23,522
Coal mining	$	1,666,761	$	1,016,281
Coal washing		152,557			142,705		304,577		285,828
Coal wholesale		7,327		11,814
Parent Company		(29,146)			72,404		17,061		144,270
Coal washing		152,020		142,733
	$	2,077,997		$	1,560,389	$	3,950,312	$	2,847,026
Parent Company		46,207		72,947
* This included the one time non-cash loss of $6,101,488.
	$	1,872,315	$	1,243,775
		October 31, 2013			April 30, 2013
Discontinued operations:		2013		2012
Coal mining	$	275,359,290		$	228,397,266
Coal mining	$	-	$	36,633
Coal wholesale		29,793,121			21,032,874
Parent Company		-		88,798
Coal washing		35,733,404			39,056,343
	$	-	$	125,431
Parent Company (intercompany)		24,029,908			34,110,460
Total depreciation expense	$	1,872,315	$	1,369,206
Total assets	$	364,915,723		$	322,596,943
		July 31, 2013		April 30, 2013
Coal mining	$	249,280,719	$	228,397,266
Coal wholesale		23,536,931		21,032,874
Coal washing		39,131,628		39,056,343
Parent Company (intercompany)		30,490,396		34,110,460
Total assets	$	342,439,674	$	322,596,943

2225

NOTE 27. SUBSEQUENT EVENT

On November 18, 2013, NASDAQ placed a T12 temporary trading halt on L&L’s common stock. NASDAQ informed the Company that trading will remain halted until L&L has satisfied NASDAQ's request for additional information. On November 19, 2013, L&L received a formal request from NASDAQ for additional information. On November 27, the Company submitted its response to the NASDAQ’s request for additional information.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of ~~the Company~~theCompany. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words “estimate,” “anticipate,” “believe,” “expect,” or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other filings with the U.S. Securities and Exchange Commission (“SEC”). These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements. The Company undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.

Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors” in Item 1A, as well as those discussed elsewhere in this Quarterly Report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We file reports with the SEC. You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

When we use the terms "we," "us," "our," "L & L," and "the Company," we mean L & L ENERGY, INC. a Nevada corporation, and its subsidiaries.

Overview

We produce, process, and sell coal in the People’s Republic of China (“China” or “PRC”). As of ~~July31~~October 31, 2013 our vertically integrated coal operations include five coal mines two coal washing plants, and coal wholesale and distribution networks in the southwest region of China. Hong Xing Coal Washing Factory, one of our two coal washing plants, is currently idled pending the renovation of its coal washing equipment. Currently, substantially all of our coal mining operations are located in the Guizhou and Yunnan provinces. Our operations are located in inland and rural areas of China, which are being developed at a faster rate than the coastal areas that have historically received most of the PRC’s government focus. We sell the coal we produce, or acquire through wholesalers; both though direct sales to end users in China and through other wholesalers.

We were initially founded in 1995 by an American citizen and current Chairman and CEO Dickson Lee and originally focused on consulting services. In 2001 we became a public reporting company and in 2004 acquired a majority interest in a coal related air compressor equipment company (“LEK”) located in China, we disposed of LEK in 2009 in order to focus on growing our coal businesses. In 2006 we commenced our coal operations which now constitute our principal operating business. We have funded our business to date primarily through investments from our founder and Chairman, from private placements, from cash flows from operations and from certain debt financings and arrangements.

We conduct our operations through both wholly-owned subsidiaries and majority interests in other entities. We derive our revenues from selling coal to customers, State Owned Enterprises (SOE) and private companies in Yunnan, Guizhou and Guangxi Provinces. Most of our thermal or steam coal is sold to SOEs utilities companies that generate power, mainly electricity. Most of our metallurgical coal and coking coal is sold to SOEs that make steel, though some steelmaker customers also purchase thermal coal to generate power for the steel factories.

We are a United States company incorporated in Nevada and headquartered in Seattle, WA. We have our China headquarter in Beijing and have China operations centers in Kunming City in Yunnan Province and in Guiyang in Guizhou Province. The majority of our management team and board of directors are American citizens and many are bilingual. As a public reporting company since 2001, we commenced trading on the NASDAQ Global Market in February 2010.

Macroeconomic Factors

There were several relevant macro-economic factors directly impacting our operating environment in China during fiscal year 2013, including GDP growth and inflation. In 2012, China’s GDP growth was 7.8%, down from 9.2% and 10.4% in 2011 and 2010 respectively. This was largely attributable to a turbulent world economic climate and China’s efforts to tame inflation.

In the middle of November 2012, China completed its 18th National Congress for ~~it’s~~its once a decade leadership transition. The new leaders have conveyed plans to boost the economic growth in an orderly manner for the coming years.

At the start of the Company’s prior fiscal year in May 2012, inflation in China was 3.0%, down from a recent high of 6.5% in July 2011. After the PRC tightened its fiscal policies, which included letting interest rates rise and capping prices of certain domestically-produced commodities like coal, inflation fell to 2.7% at the end of the Company’s first quarter ended July 31, 2013.Since then the rate has increased up to 3.2 in October 2013.

Coal prices in China declined in the summer of 2012 primarily due to lower priced coal throughout the US and Europe. Prices have stabilized and risen modestly in China this winter. Coal prices in the United States declined because there is lower demand for coal due to increased competition from ample and low price natural gas, one of the warmest winters in recorded history and certain government policies. Combined with a sluggish market for coal in Europe, coal exporters took advantage of the arbitrage opportunities between Chinese domestic coal prices and international coal prices. This created a temporary oversupply of coal ~~last~~ summer 2012. Prices over the fall and winter rose modestly. During the summer of 2013, prices have adjusted downward as typically happens for the season.

Coal will continue to be a key component of the PRC’s energy policy. According to the U.S. Energy Information Administration, coal makes up 70% of China’s total primary energy consumption. China is both the largest consumer and producer of coal in the world. In 2009, China accounted for over 46% of the world’s coal consumption. It is estimated that demand for coal in China will continue to increase for several decades, thus producing a favorable business environment for coal producers and wholesalers. Although China has substantial natural coal resources, the coal mining industry in China is fragmented and inefficient, and includes many small companies who lack the economies of scale and resources needed to maximize production capacity. The past few years, mining companies in China have been unable to produce enough coal to meet China’s growing coal demands. As a result the PRC has allowed China to become a net importer of coal. A national policy of consolidation to increase production capacity, improve efficiency and safety in coal mines in China was announced years ago and continues today. Beginning with the 11^th 5 year plan in 2006, the policy of government-mandated consolidation has continued with the current 12^th 5 year plan from 2011-2015, which expands and accelerates the consolidation to new provinces including Guizhou.

In summary, China began ~~our last~~ fiscal year ending April 30, 2013 with excessive supply of cheaper coal imported resulting in pricing pressure for the entire coal industry. This pricing pressure was evidence in Q1 and Q2 of our fiscal year 2013 as our average selling price per ton decreased 7.7% and 5.0% respectively from previous quarter but the price started to stabilize in Q3 2013 with average selling price per ton increased 6.4% from previous quarter.

The Twelfth Five-Year Plan Impact on the Chinese Coal Industry

The National People’s Congress ratified the 12^th Five-Year Plan in March 2011 for the period 2011-2015. Three sectors received major boost: health care, technology, and energy. With its emphasis on “inclusive growth,” the Chinese government is encouraging foreign business participation in these Strategic Emerging Industries. In the energy sector, the PRC announced guidelines for a government-mandated consolidation of the fragmented and inefficient coal industry in Guizhou Province, similar to earlier consolidation efforts in northern China.

On April 15, 2011, the General Office of the Government of Guizhou Province issued Document (2011) Number 47 notifying the Guizhou Province Energy Department of guidelines related to accelerating the pace of consolidation through 2013. There are three main components to the guidelines: production, safety, and efficiency.

· First, in addition to increasing individual mine production, the provincial government is mandating that individual mines be consolidated into coal holding companies responsible for a minimum production between 800,000 and 2,000,000 tons per year, thus reducing the number of coal holding companies from over 1,600 to 200 or less.

· Second, safety standards will continue to rise as well as increased safety enforcement activity. For example, a mine accident in a county will often result in a temporary shutdown of all mines operating in that county so that safety inspectors can review the safety of each mine.

· Third, to improve efficiency, the level of mechanization will increase significantly, both in shaft drilling and coal production.

Overall Strategy and Plan of Operations

~~The~~In the past, the Company ishas been a vertically integrated coal operator participating in the consolidation of athe fragmented coal industry in the Yunnan and Guizhou Provinces of southwest China. WeIn ~~plan~~January to2013, ~~expand~~the ~~our~~Company’s ~~coal~~Board ~~business~~of ~~two~~Directors decided ~~ways:~~to ~~first,~~instruct ~~through~~the ~~expansion~~management ofto ~~existing~~a) ~~operations~~focus inon ~~accordance~~targeting ~~with~~operations ~~the~~in ~~consolidation~~North ~~policy,~~of ~~and~~China ~~second,~~for ~~through continued~~ acquisition ofwhere ~~operations~~larger ~~that~~scale ~~lack~~of ~~the~~mines ~~capital~~are available and ~~management~~to ~~skills~~upgrade our tomining ~~expand~~portfolio. tob) ~~meet~~As the ~~minimum~~Company ~~capacity~~gains ~~required~~in bypresence ~~the~~in ~~government.~~China, ~~With~~management awas ~~strong~~also ~~operational~~advised ~~base~~to ~~established~~focus inon ~~Guizhou~~thermal coal and ~~Yunnan,~~move ~~L&L's~~away ~~Board~~from ~~has~~coking ~~decided~~coal, due to ~~also~~it ~~target~~being ~~larger~~a ~~coal~~more ~~operations~~price sensitive/volatile as it is strategic material used in the ~~Shanxi~~steel ~~and~~making ~~Inner~~process. ~~Mongolia~~Moving ~~Provinces~~forward, ~~located~~we inplan ~~North~~to ~~China.~~expand ~~Having~~our ~~already~~coal ~~undergone~~business ain ~~consolidation~~three ways: first, ~~the~~through ~~remaining~~expansion ~~mines~~of inexisting ~~Shanxi~~wholesale and ~~Inner~~distribution ~~Mongolia~~operations ~~have~~in ~~larger~~Guizhou, ~~production~~gradually ~~capacities~~building ~~and~~up ~~safer~~our ~~operating~~logistic ~~histories~~network. ~~L&L~~Second, ~~will~~to beacquire ~~targeting~~a ~~mines~~large ~~with~~ over ~~one~~1 million tons of ~~annual~~coal ~~capacity.~~mine(s) Asin ~~part~~North of ~~our~~China. ~~growth~~Third, ~~strategy~~by continuing to ~~upgrade~~expand production at our ~~portfolio,~~current ~~from~~coal ~~time~~mines towe ~~time~~own and operate. We are diligently pursuing on the ~~Company~~TDR ~~may~~(Taiwan ~~decide~~Deposit Receipt) in Taiwan to ~~spin~~raise ~~off~~substantial orcapital ~~dispose~~and ~~smaller~~to ~~assets~~explore ~~that~~other ~~management~~options ~~and~~for ~~the~~raising ~~Board~~capital, ofto ~~Directors~~ensure ~~determine~~the ~~not~~company bemay ingrow and achieve the ~~best~~above ~~interest~~objectives. ofOn ~~LLEN~~October ~~shareholders~~28, in2013, the ~~long~~company ~~run~~signed a strategic marketing agreement with Guizhou Zheshang Coal Group (“Zheshang”). ~~Additional~~Zheshang ~~plans~~is ~~for~~a ~~expanding~~privately ~~our~~held ~~coal~~company ~~businesses~~located ~~includes~~in Guizhou with 10 mines that produce approximately 2 million tons per year. Zheshang is currently expanding ~~our~~their ~~coal~~targeted ~~wholesale~~annual ~~operations~~production into ~~South~~5 ~~China,~~million ~~pursuing~~tons. Under ~~strategic~~the ~~partnerships~~agreement, ~~exploring~~L&L ~~viable~~will ~~options~~utilize ~~for~~its extensive ~~raising~~customer ~~capital~~network ~~with~~to anmarket ~~emphasis~~coal onproduced ~~debt~~by Zheshang. L&L will be responsible for customer relationships, transportation and ~~other~~logistics, ~~non-dilutive~~while ~~instruments~~Zheshang will be responsible for mining production, and ~~strengthening~~mine ~~our~~safety. The ~~professional~~partners ~~team~~are targeting sales of approximately 1.2 million tons of coal per year.

Organic Growth

All five of our mines are producing at full capacity. We had a strong quarter of ~~228~~211,000 tons of coal production. We expect to double that number once all five mines have been fully expanded.

WeiShe mine was acquired in February of 2012 and took 8 months to ramp up to its approved capacity of 150,000 tons per year. We have already begun expansion to 400,000 tons of annual capacity. Luozhou and Lashu were acquired in November 2012 and have ramped up much faster. They are already running atnear approved capacities of 200,000 and 150,000 tons respectively. We expect to expand all three of these Guizhou mines to over 1.2 million tons in the next few years, well ahead of the 2015 deadline for consolidation in the province. In Yunnan, we have 2 mines DaPuAn and SuTsong which we expect to expand to 300,000 tons.

We acquired producing mines that lack capital and/or management expertise to expand to meet the minimum government-mandated production requirement, and then we provide the resources to expand production capacity and improve safety. Most coal mines in Southwest China, including our mines, use the conventional/traditional mining method. Since the acquisition of our mines, the Company has invested substantially in mine infrastructure, which allows us to increase the productivity of our mines. The Company had invested in tunnel construction, shafts, transportation system and roads, pumps, ventilation system, walls, storage facilities, dorms and other types of infrastructure. The investment in tunnel construction and shaft allow the Company to dig coal from new areas in a safer environment to increase the production capacity. The investment in conveyor belts allows the Company to get coal from ground with shorter turnaround time and bigger capacity. We also drill additional shafts in some of our mines to increase safety, operational efficiency, and improve the working environment. Two of our mines continue to use timber to reinforce mine shafts. We have improved safety by using steel and hydraulic braces to reinforce the support the roof of the mine. Our newest mines use roof bolts which are safer and will allow greater mechanization in the future. We have also invested in monitoring equipment for hazardous gases like methane, better electrical equipment and communication systems, GPS locators for each underground miner, and blowers and better ventilation systems to ensure safe air quality. The Company also seeks to acquire larger mines as mines designed to scale up to large production have become available on the market recently because the consolidation policy requires that all mines come under a holding company that controls one to two million tons of production per year.

In addition to simple infrastructure improvement, we improve our production and safety through introducing basic management practices by expanding from single shift to multiple-shift operating teams, and including production incentives and bonuses in our team’s compensation package. Our mine operations have instituted regular safety training for both mine management and workers, regular sharing of safety information, and individual shift safety briefings and debriefings at the start and end of each shift. Because slogans are effective in impacting Chinese behavior, safety banners are posted for easy viewing. We comply with and try to exceed all the safety standards and cooperate fully with local, provincial, and national government safety regulators and safety supervision teams. There have been no fatal accidents in any of our mines.

This has resulted in the successful integration and safe expansion of the five mines we have acquired and expansion of production capacity to meet the current government-mandated minimum annual production requirement of 300,000 tons a year.

The Company continues to expand the capacity and improve the safety of our mines. According to Chinese government regulation, a coal mine can produce up to the production capacity set forth in the mining production permit. However, depending on the market demand for coal, especially during the high demand season in the winter, the local government does allow coal mines to produce more than the production capacity that year or use the unused quote from previous years without giving specific written approval. It has become a common practice that the actual production can vary from the authorized production limit. The situation may change from month to month or year to year. A new permit must be obtained if the total mine production exceed the total approved tonnage for the life of the mine.

Acquisitive Growth

InThere ~~addition~~is tono anacquisitive ~~organic~~ growth ~~of over 100%~~ in the ~~next~~second ~~several~~quarter years, we expect continued opportunities to acquire mines and other operations. We believe that the current government-mandated consolidation policy in China will continue and thus create more acquisition opportunities for us. Strategically, the Company will accelerate the rate of ~~acquisition~~FY ~~and~~2014 ~~increase~~which ~~the~~ended ~~size~~on ofOctober ~~acquiring mines~~31,2013.

~~Our~~We ~~acquisition~~have ~~and~~built ~~inspection~~an acquisition team to facilitate our growth in the future, which consists of business, operational, financial, and renowned coal experts. Two of the members are Dr. ~~SydPeng~~Syd Peng and Mr. Jingcai Yang who are both independent directors of the Company. Dr. Peng is a distinguished professor of mining engineering at the West Virginia University (WVU), specializing in underground mining technologies. After earning his PhD in Mining Engineering from Stanford University in 1970, Dr. Peng spent his entire career in mining including work for the U.S. Bureau of Mines, the faculty of WVU where he served as Chairman of the Department of Mining Engineering. He is a member of the National Academy of Engineering and is the recipient of numerous professional awards. Mr. Yang is a well known leader in the coal industry of China. He has over 30 years of experience, 16 of those spent with Shenhua, the largest coal company in the world. Mr. Yang was formerly the Chief Engineer of Shenhua before being promoted to Chairman & CEO of Shandong Coal Corporation, the largest and most profitable Shenhua subsidiary, where he held full P&L responsibility.

Originally our standard criteria ~~include~~included existing mines in production with good infrastructure and sufficient reserves but lacking the capital and management to expand to or beyond the current minimum of 300,000 tons per year. Mr. JingCai Yang suggested that, due to business strategy considerations and improving safety production, the company should look for larger coal mine(s) in North China. Because the consolidation policy requires that all mines must also join a holding company that controls coal production between 800,000 to 2,000,000 tons. We are now targeting larger mines with production near 300,000 tons or more, and have considerable proven coal reserves, better geology, and strong management teams already in place. When these well-designed mines are executed effectively, they require less capital expenditure to expand capacity. Strong management teams are integral to better safety and allow for scaling up operations more quickly. Mines with these characteristics are now on the market more frequently than in the past because of the government consolidation policy.

~~With~~We aacquired ~~strong~~3 ~~operational~~mines ~~base~~from ~~established~~Union inEnergy ~~Guizhou~~that ~~and~~met ~~Yunnan~~those criteria, ~~L&L's~~Weishe, ~~Board~~Luozhou ~~has decided to also target larger coal operations in the Shanxi~~ and ~~Inner~~Lashu ~~Mongolia~~mines. ~~Provinces~~They ~~located~~are incurrently ~~North~~operating ~~China.~~at ~~Having~~150,000, ~~already undergone a consolidation~~150,000 ~~the remaining mines in Shanxi~~ and ~~Inner~~200,000 ~~Mongolia~~tons ~~have~~per ~~larger~~year ~~production~~respectively ~~capacities~~ and ~~safer operating histories. L&L~~ will be ~~targeting~~expanding ~~mines~~to ~~with~~ over ~~one~~1.2 million ~~tons~~collectively. ofWe ~~annual~~expect ~~capacity.~~other Asopportunities ~~part~~will ofarise ~~our~~in ~~growth~~Guizhou ~~strategy,~~as ~~from~~the ~~time~~deadline tonears. ~~time~~We ~~the~~will ~~Company~~also ~~may~~look ~~decide~~at opportunities to ~~spin~~buy ~~off~~mines orin ~~dispose~~Shanxi ~~smaller~~and ~~assets~~Inner ~~that~~Mongolia ~~management~~which ~~and~~have ~~the~~already ~~Board~~undergone ofconsolidation ~~Directors~~and ~~determine~~are ~~not~~running beat in the ~~best~~capacity ~~interest~~ of ~~LLEN~~one ~~shareholders~~million intons ~~the~~per ~~long run~~year.

We acquired 3 mines from Union Energy that met those criteria, Weishe, Luozhou and Lashu mines. They are currently operating at 150,000, 150,000 and 200,000 tons per year and will be expanding to over 1.2 million collectively. We expect other opportunities will arise in Guizhou as the deadline nears. We will also look at opportunities to buy mines in Shanxi and Inner Mongolia which have already undergone consolidation and are running at the capacity of one million tons per year.29

Other

InThe ~~addition~~Company will continue to ~~acquiring~~recruit ~~mines~~talented professionals to strengthen our team at the board, officer, and management level. Our Board is composed mostly of independent directors who are predominately U.S. citizens. We successfully recruited a world-renowned expert Dr. Syd Peng in coal mining who had chaired the ~~Company~~Department ~~established~~of Mine Engineering at West Virginia University and a ~~new~~former senior executive with the largest coal ~~wholesale~~company ~~operation~~in ~~DaXing~~the ~~L&L~~world ShenHua Coal ~~Company~~Mine Group Mr. ~~With~~Jingcai ~~approval~~Yang. James ~~from~~Schaeffer, the ~~government~~Executive Director who has over three decades of mining experience in participated projects throughout Asia in the energy and resource sectors. He is member of the International Society of Mining, ~~DaXing~~Metallurgy and Exploration. Joseph Borich has ~~begun~~extensive knowledge in developing ~~additional~~business ~~coal~~relation ~~storage~~in ~~space~~China and ~~growing~~Taiwan ~~its~~throughout ~~distribution~~his ~~network~~career. ~~And~~Officers ~~through~~include ~~its~~the ~~sourcing~~founder of ~~coal~~the Company, ita ~~introduces~~Chief ~~potential~~Financial ~~mine~~Officer ~~acquisitions~~who towas ~~the~~a ~~Company~~partner inwith Ernst & Young and an Executive Vice President who was a ~~similar~~former ~~manner~~senior asWhite ~~KMC~~House staffer. ~~DaXing~~ isWe ~~actively~~have ~~pursuing~~recruited ~~additional~~key ~~joint~~managers ~~sales~~to ~~agreements~~augment ~~with~~our ~~strategic~~legal, ~~partners~~accounting, toand ~~further~~operations ~~expand~~departments ~~our~~in ~~distribution~~both the United States and China, of whom many were trained in the United States and have advanced degrees in business.

~~The~~General ~~Company~~Discussion ~~will continue to recruit talented professionals to strengthen our team at the board, officer,~~ and ~~management~~Analysis ~~level. Our board is composed mostly~~ of ~~independent~~Second ~~directors~~Quarter ~~who~~Fiscal ~~are~~Year ~~predominately U.S. citizens. We successfully recruited a world-renowned expert in coal mining who had chaired the Department~~ of ~~Mine~~2014 Engineering at West Virginia University and a former senior executive with the largest coal company in the world. Officers include the founder of the Company, a Chief Financial Officer who was a partner with Ernst & Young, a former senior White House staffer.. We have recruited key managers to augment our legal, accounting, and operations departments in both the United States and China, of whom many were trained in the United States and have advanced degrees in business. Results

The ~~Company’s~~coal ~~immediate~~sold ~~mission~~by isour tomines ~~become~~was a211,000 ~~leading~~tons, ~~coal~~an ~~energy~~increase ~~company~~of in18.5% from ~~coal-rich~~178,000 ~~Yunnan~~tons ~~and~~same ~~Guizhou~~period ~~Provinces~~last year. To ~~meet~~This ~~the~~was ~~government-mandated~~primarily ~~production~~due ~~targets~~to ~~for~~the ~~each~~organic ~~holding~~expansion ~~company~~of inour ~~Guizhou,~~existing weoperations ~~believe~~and ~~that~~ the ~~Company’s~~acquisitions ~~production~~of ~~capacity~~new ~~will~~mines. beOur ~~increased~~net earnings attributable to ~~between~~L&L shareholders were $1~~,000,000~~.4 ~~and~~million 2(see below),~~000,000~~ ~~tons~~down 81.5% from second quarter $7.7 million of fiscal year 2013. Earning per diluted share was $0.03 for the second quarter of fiscal year by2014, down 85.7% compare to $0.21 per diluted share of the ~~end~~second quarter of fiscal year 2013.~~Production~~ Our ~~could~~net beearnings ~~much~~and ~~higher~~EPS dropped dramatically as a result of the Company settling a debt liability with ~~additional~~Ironridge ~~acquisitions~~for a onetime non-operation loss of $6,101,488.

~~General~~Our ~~Discussion~~overall revenue, gross profit and ~~Analysis~~Net ofincome ~~First~~Attributable ~~Quarter~~to ~~Fiscal~~L ~~Year~~& ofL ~~2014~~for ~~Results~~the quarter ending October 31, 2013 compared to the same period in October 31, 2012 was as follows:

The coal sold by our mines was 219,000 tons, an increase of 62% from 135,000 tons same period last year. This was primarily due to the organic expansion of our existing operations and the acquisitions of new mines. Our net earnings attributable to L&L shareholders were $10.7 million, up 73% from first quarter $6.2 million of fiscal year 2013. Earnings per diluted share was $0.27 for the first quarter of fiscal year 2014, up 59% compare to $0.17 per diluted share of the first quarter of fiscal year 2013.

		October 31, 2013	October 31, 2012
*	Revenue	$42.9 m	$45.5 m
*	Gross Profit	$17.2 m	$11.9 m
*	Net Income attributable to L&L	$1.4 m	$7.7 m

~~Our~~The ~~overall~~net ~~revenue, gross profit and Net~~ income ~~Attributable~~of ~~to L&L had increased to~~ $~~51.~~2~~, $19~~.1,3 ~~and~~m ~~$10.7~~at ~~million~~October ~~respectively~~31, ~~for~~2013 ~~the~~included ~~first~~a ~~quarter~~one oftime ~~fiscal~~non-operation ~~year~~loss ~~2014~~of ~~compared to~~ $~~39.4~~6, $9101,488.~~9 and $6.2 million respectively for the same period in 2012.~~

Results of Operations

The following table presents our operating results as a percentage of our revenues for the periods indicated:

	Three Months Ended July 31,
	2013		2012
	Amount	% of Revenue	Amount	% of Revenue
Revenues	$51,181,370	100.00%	$39,448,098	100.00%
Cost of revenue	32,126,563	62.77%	29,548,014	74.90%
Gross profit	19,054,807	37.23%	9,900,084	25.10%
Selling general & administrative	4,388,279	8.57%	3,635,669	9.22%
Interest income	5,132	0.01%	107,266	0.27%
Other income (expense)	(1,336)	0.00%	328,228	0.83%
Derivative gain	449,124	0.88%	-	0.00%
Provision for income taxes	1,692,451	3.31%	692,440	1.76%
Income from Discontinued Operations, Net of Tax	-	0.00%	1,556,365	3.95%
Net Income Attributable to Non-controlling interest	2,691,232	5.26%	2,345,525	5.95%
Net income Attributable to L&L	$10,735,765	20.98%	$6,186,471	15.68%

27Results of Operations

	Three Months Ended October 31,				Six Months Ended October 31,
	2013		2012		2013		2012
	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue
Revenues	$42,966,509	100.00%	$45,504,279	100.00%	$94,147,879	100.00%	$84,952,377	100.00%
Cost of revenue	25,723,806	59.87%	33,625,414	73.90%	57,850,369	61.45%	63,173,428	74.36%
Gross profit	17,242,703	40.13%	11,878,865	26.10%	36,297,510	38.55%	21,778,949	25.64%
Selling general & administrative	7,964,864	18.54%	4,161,219	9.14%	12,353,143	13.12%	7,796,888	9.18%
Interest income	4,884	0.01%	(117,069)	(0.26%)	10,016	0.01%	(224,335)	(0.26%)
Other income (expense)	(493,454)	(1.15%)	(562,188)	(1.24%)	(494,790)	(0.53%)	(890,414)	(1.05%)
Loss on debt settlement	(6,101,488)	(14.20%)			(6,101,488)	(6.48%)		0.00%
Derivative gain	3,184,062	7.41%	-		3,633,186	3.86%	-
Provision for income taxes	1,694,850	3.94%	805,527	1.77%	3,387,301	3.60%	1,497,967	1.76%
Net Income Attributable to Non-controlling interest	2,746,456	6.39%	1,949,832	4.28%	5,437,688	5.78%	3,327,195	3.92%
Income from Discontinued Operations, Net of Tax	-	0.00%	2,101,397	4.62%	-		3,657,762	4.31%
Net income Attributable to L&L	$1,430,537	3.33%	$7,742,941	17.02%	$12,166,302	12.92%	$13,929,410	16.40%

Revenue

The Revenue under this section is the total revenue of the Company and its subsidiaries including intercompany sales which are eliminated during the consolidation process. The following table presents revenues by operating segment:

For Continued Operations (~~ExcludingDaPing~~Excluding DaPing Coal Mine and Zonelin Coking Plant)

On November 18, 2012, the Company finalized the acquisition of ~~theLuoZhou~~the LuoZhou Coal Mine and LaShu Coal Mine. This transaction involved the transfer of the Company's interests in its ZoneLin Coking Plant (98%) and the DaPing Mine (60%) to satisfy majority of the payment for acquisition of Luozhou and Lashu. According to the FASB ASC 360 Rule, since the intention to swap DaPing and Zonelin for LuoZhou and ~~LaShuwere~~LaShu were known during the second quarter ending October 31, 2012, the presentation of DaPing and ZoneLin for balance sheet was classified as “asset/liabilities of discontinued operation”, and “discontinued operation” in Profit and Loss and Cash Flow Statements were reported on the second quarter for the period ending October 31, 2012.

For continued operations, in this quarter, our net revenue ~~increased~~decreased to $5142.29 million during the three months ended ~~July~~October 31, 2013 from $3945.45 million during the three months ended ~~July~~October 31, 2012, representing approximately a 295.6% ~~increase~~decrease year over year. The ~~increase~~decrease was primarily due to ~~79,490tons~~our ~~increase~~coal ~~incoal~~washing ~~production~~revenue ~~volume~~segment. One ~~This increase in production was driven by the addition~~ of ~~the~~our ~~LuoZhou~~coal ~~and~~washing ~~LaShu~~facilities ~~mines~~is astemporarily ~~well~~idling asfor ~~the~~management ~~increasing~~evaluation ~~production levels at the Company’s WeiShe Mine. The Company’s DaPuAn~~ and ~~SuTsong~~equipment ~~mines also continued its recovery after seeing lower production levels in the previous year due to temporary government mandated idling~~improvements.

~~The~~Our ~~tables~~net ~~below~~revenue ~~provide~~increased 11% from $94.1 million during the ~~breakdown~~six months ended October 31, 2013 compared to $84.9 million during the ~~contributions~~six ~~from~~months ~~continuing~~ended ~~operations~~October ~~and~~31, ~~discontinued~~2012. This ~~operations~~was ~~for~~due ~~three~~to ~~month~~the ~~periods~~net onincreases ain ~~year~~mining ~~over~~and ~~year~~wholesale ~~basis~~segments after taking into account decreases in the washing segment.

		Three Months Ended July 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
Coal Mining	$	25,042,136	$	11,486,365	$	13,555,771	118%
Coal Wholesale		12,953,131		12,294,981		658,150	5%
Coal Washing		13,242,175		17,833,828		(4,591,653)	(26%)
Total Revenues	$	51,237,442	$	41,615,174	$	9,622,268	23%

The tables below provide the breakdown the contributions from continuing operations and discontinued operations for three and six month periods on a year over year basis.

		Three Months Ended October 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
Coal Mining	$	24,309,575	$	13,827,568	$	10,482,007	76%
Coal Wholesale		12,833,987		10,057,073		2,776,914	28%
Coal Washing		5,822,947		21,619,638		(15,796,691)	(73%)
Total Revenues	$	42,966,509	$	45,504,279	$	(2,537,770)	(6%)



		Six Months Ended October 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
Coal Mining	$	49,351,710	$	25,237,531	$	24,114,179	96%
Coal Wholesale		25,787,118		22,352,054		3,435,064	15%
Coal Coking		19,009,051		37,362,792		(18,353,741)	(49%)
Total Revenues	$	94,147,879	$	84,952,377	$	9,195,502	11%

For Discontinued Operations (DaPing Coal Mine and Zonelin Coking Plant)

		Three Months Ended July 31,				Increase (Decrease) to Revenue
		Three Months Ended October 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
Coal Mining	$	-	$	45,~~136~~114,~~890~~603	$	(45,~~136~~114,~~890~~603)	(100%)
Coal Coking		-		14,~~720~~326,~~948~~804		(14,~~720~~326,~~948~~804)	(100%)
Total Revenues	$	-	$	59,~~857~~441,~~838~~407	$	(59,~~857~~441,~~838~~407)	(100%)
		Six Months Ended October 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
Coal Mining	$	-	$	9,251,493	$	(9,251,493)	(100%)
Coal Coking		-		6,047,752		(6,047,752)	(100%)
Total Revenues	$	-	$	15,299,245	$	(15,299,245)	(100%)

Coal Mining

During the quarter all of our mines were operational and production was on target. For the three months ended ~~July~~October 31, 2013, our coal mining net revenues increased ~~118~~76% to $2524.03 million from $1113.58 million compared to the same period in 2012. For the six months ended October 31, coal mining net revenues increased 96% to $49.3 million from $25.2 million compared to the same period in 2012. The sales increase year over year was due to the Company’s recovery from the previous year’s government mandated temporary idling and slowdowns, the acquisitions of the LaShu and LuoZhou Mine in November 2012, and organic growth of the WeiShe Mine. Coal production for the quarter increased 5314% year over year ~~from~~to ~~228~~211,000 tons during the three months ended ~~July~~October 31, ~~2012~~2013 to ~~148~~185,000 tons during the three months ended ~~July~~October 31, ~~2013~~2012.

2832

Coal Wholesale

Wholesale revenues increased by 528% during the three months ended ~~July~~October 31, 2013 to $1312.08 million compared to $1210.31 million in same period in 2012. Wholesale revenues increased 15% during the six months ended October 31, 2013 to $25.7 million compared to $22.3 million in same period in 2012.The increase was represented in the overall increase in availability of coal as well as the Company’s ability to expand local market share and increasing long-term contracts with local clients and state-owned enterprises. Wholesale revenues increased due to the ramp up of wholesale activity in line with our increased sales contracts to a large end ~~user~~users. We expect significant increase in wholesale with the continued execution of the one million ton per year Datang contract.

Coal Washing

Coal washing revenue decreased by 2673% to $135.28million during the three months ended October 31, 2013 compared with $21.7 million during the ~~three~~same period last year. Coal washing revenue decreased by 49% to $19 million during the six months ended ~~July~~October 31, 2013 compared with $1737.83 million during the same period last year. Decrease in coal washing revenue mainly due to the idling ~~pending~~of onthe Hong Xing facility, pending management evaluation and equipment improvements.

Gross Profit

Our gross profit percentage in this quarter increased to $1917.12 million from $911.9 million ofin the same quarter last year representing a 9246% increase. Our ~~which~~gross profit percentage increased to $36.2 million from $21.7 million during the six months ended October 31, 2013 compared to the same period of last year representing a 67 % increase. This was mainly attributable to the increase in production and sales volume in our mining segment, revenue increase in our coal wholesaling and decrease in washing segment revenue. Coal mining has historically been the Company’s most profitable business segment. The corresponding change in product/segment mix and the reduction of fixed costs have accordingly increased the gross profit of the current period.

Selling general & administrative

Total sales, general, and administrative expense account for 818.5754% of revenue, during the three months ended ~~July~~October 31, 2013 compared to the 9.2214% the same period in 2012. Total sales, general, and administrative expense account for 13.12% of revenue, during the six months ended October 31, 2013 compared to the 9.18% the same period in 2012. This result is mostly due to ~~our~~increase ~~effective~~in ~~and~~sales ~~sustainable~~costs, ~~management~~professional ~~and~~fees, ~~stable~~wages ~~operating~~and ~~mode~~benefits.

Provision for income taxes

		Three Months Ended July 31,
		Three Months Ended October 31,				Six Months Ended October 31,
		2013		2012		2013		2012
Net income before income taxes	$	155,~~119~~871,~~448~~843	$	68,~~699~~396,~~909~~903	$	20,991,291	$	15,096,810
Provision for income taxes		1,~~692~~694,~~451~~850		~~692~~805,~~440~~527		3,387,301		1,497,967
Effective tax rate		1128.86%		109.59%		16.14%		9.92%

Our net income before tax ~~increased~~decreased ~~125~~31% from $68.74 million three months ended ~~July~~October 31, 2012 to $155.18 million three months ended ~~July~~October 31, 2013, ~~due~~primarily tobecause ~~substantial~~of ~~increase~~the ofdebt ~~operating~~settlement ~~profit~~with Ironridge resulting in a onetime non-operation loss of $6,101,488.

Our ~~effective~~net ~~tax~~income ~~rate~~before ~~slightly~~tax increased ~~from11~~39% ~~during~~from ~~the~~$15 ~~three~~million six months ended ~~July~~October 31, ~~2013~~2012 ~~to10%~~to ~~during~~$20.9 ~~the~~million ~~three~~six months ended ~~July~~October 31, ~~2012~~2013 due to increase in the coal production and sales volume.

Our effective tax rate slightly increased from 10% during the three months ended October 31, 2012 to 29% during the three months ended October 31, 2013.

Our effective tax rate increased from 9.92% during the six months ended October 31, 2012 to 16.14% during the six months ended October 31, 2013.

Net Income Attributable to Common Stockholders

The following table presents net income attributable to common stockholders:

		Three Months Ended July 31,				Increase (Decrease) to Revenue
		Three Months Ended October 31,			Increase (Decrease) to Income
		2013	2012	~~2012~~	$	$%	%
Net income	$	13,426,997	$	8,531,996	$	4,895,001	57.37%
Net income from continued operations (before non-controlling int.)	$	4,176,993	7,591,376		(3,414,383)	-45%
Less: Net income attributable to non-controlling interests		2,~~691~~746,~~232~~456	1,949,832	~~2,345,525~~	796,624	~~345,707~~41%	~~14.74%~~
Net income attributable to common shareholders	$	10,735,765	$	6,186,471	$	4,549,294	73.54%
Net income attributable to Common shareholders	$	1,430,537	5,641,544		(4,211,007)	-75%
		Six Months Ended October 31,			Increase (Decrease) to Income
		2013	2012		$	%
Net income from continued operations (before non-controlling int.)	$	17,603,990	13,598,843		4,005,147	29%
Less: Net income attributable to non-controlling interests		5,437,688	3,327,195		2,110,493	63%
Net income attributable to Common shareholders	$	12,166,302	10,271,648		1,894,654	18%

The 45% decrease of our net income from operations before non-controlling interests was due to the impact of the one time non-operation loss of $6,101,488 debt settlement with Ironridge during the three months ending October 31, 2013. The 29% increase of our net income from operations before non-controlling interests was due to acquisition of two new mines and production expansion of our WeiShe mine, reducing of unit production cost and streamlining our selling, general & administrative expenses during the six months ended October 31, 2013 compared to same prior period in 2012. During the three months ended ~~July 31~~October31, 2013, our coal mining segment coal wholesale segment and coal washing segment significantly improved our revenue performance this quarter compared to the same period last year, increasing ~~118~~76%, 528% and decreasing of 2673% respectively. ~~Specifically~~The revenue increase in coal mining segment primarily contributed to our WeiShe Mine has ramped up production to its approved production capacity, and both LuoZhou and LaShu have ramped up their production ahead of schedule.

Liquidity and Capital Resources

The following factors affected the Company’s liquidity and capital resources:

Net Income was $1317.46 million for the ~~three~~six months ended ~~July~~October 31, 2013 as compared with $819.53 million for the same period ended ~~July~~October 31, 2012. The net cash flow provided by operating activities was $~~23.8~~47 million for ~~three~~six ~~month~~months ended ~~July~~October 31, 2013 as compared with $511.81 million for the same period in 2012. The increase of the net cash provided by operating activities was mainly caused by the decrease of account receivable and other receivables by $13.9 million, as well as account payable increased approximately $5.8 million. The cash provided by prepaid and other current assets was approximately $4.61 million. In addition, net loss from discontinued operation was $5.7 million. There was no discontinued operation this quarter.

Net cash used in investing activities was $2548.78 million during the ~~three~~six months ended ~~July~~October 31, 2013, compared to $48.29 million used in investing activities during the same period in 2012. The increase was mainly due to net effect of ~~(i)~~ purchase of ~~property~~Construction-in-progress ~~and equipment~~ of $~~0.7~~35 million, and ~~(ii)~~the ~~increase~~prepaid of ~~investment~~$2.7 million for ~~construction-~~land ~~in-progress of $25~~rental.0 ~~million.~~

Net cash ~~used~~provided inby financing activities was $~~910,001~~0.1 million during the ~~three~~six months ended ~~July~~October 31, 2013, compared to $~~6,666~~3.8 ~~provided~~million byused in financing activity during the same period in 2012. ~~The~~In ~~increase~~this ofquarter, ~~cash~~there ~~inflow~~ was ~~caused~~no bymoney ~~the~~need ~~payment~~to ~~received~~be ~~from~~paid ~~due~~ to ~~officers~~previous owner of ~~$910,001.~~the company’s mine during this quarter.

We will need to raise additional capital to expand our operations, both to fund additional investments in capital equipment and technology to increase production and improve safety at our existing facilities and to acquire additional profit generating operations.

Off-Balance Sheet Arrangements:

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

Contractual Obligations

As of ~~July~~October 31, 2013, we were contractually obligated to inject capital per our purchase agreements and or lease agreement as follows:

		Amount		Less than 1 year		1-2 years		3-5 years		After 5 years
DaPuAn & SuTsong Mines	$	5,027,746	$	-	$	-	$	5,027,746	$	-
DaPuAn&SuTsong Mines	$	5,027,746	$	-	$	-	$	5,027,746	$	-
Seattle Office		3462,~~715~~487		3427,~~715~~772		-27,772		-6,943		-
Beijing Office		~~248~~223,~~860~~974		~~149~~49,~~316~~772		9949,~~544~~772		-124,430		-
Taiwan Office		2217,~~070~~656		228,~~070~~828		8,828		-		-
GuiZhou Office		~~185~~148,~~839~~672		~~185~~74,~~839~~336		74,336		-		-
Tai Fung		5,119,187		-		5,119,187		-		-
TaiFung		5,119,187		-		5,119,187		-		-
Total	$	10,~~638~~599,~~417~~722	$	~~391~~160,~~940~~708	$	5,~~218~~279,~~731~~895	$	5,~~027~~159,~~746~~119	$	-

Contractual obligations	Payment due by period
	Total	Less than 1 year	1-2 years	2-5 years	More than 5 years
Long-term Debt Obligations	-
Capital Lease Obligations
Operation Lease Obligations	~~491~~452,~~484~~789	~~391~~160,~~940~~708	99160,~~544~~708	131,373
Purchase Obligations
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP	10,146,933		5,119,187	5,207,746
Total	10,~~638~~599,~~417~~722	~~391,940~~-	5,~~218~~279,~~731~~895	5,~~027~~159,~~746~~119

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

Our critical accounting policies are discussed in “Management's Discussion and Analysis or Plan of Operation” in our Annual Report on Form 10-K for the year ended April 30, 2013 and Quarterly ~~Report~~Reports on Form 10-Q for the quarter ended July 31, 2013 and October 31, 2013. Those critical accounting policies remained unchanged at ~~July~~October 31, 2013.

3035

Item 3. Quantitative and Qualitative Disclosures about Market Risk

While our reporting currency is the U.S. Dollar, most of our consolidated revenues and consolidated costs and expenses are denominated in Renminbi (“RMB”). Substantially all of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. Dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

Despite there being at times a coal shortage due to the continued growth of the Chinese economy, which has in turn led to upward movement of coal prices, market risks do exist if the market demand situation in China changes.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) were effective as of January 31, 2013 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

The Company, with the assistance of our independent internal controls consultant, has for some time now proceeded to make specific changes to address the deficiencies of our internal controls. The company has continued to improve its internal controls that have materially affected our controls including those internal controls over financial reporting as follows:

1. Improved the design and documentation related to multiple levels of review over financial statements included in our SEC forms 10-Q and 10-K;

2. Expanded the design and assessment test work over the monitoring function of entity level controls;

3. Enhanced documentation retention policies over test work related to our continuous management assessments of internal control effectiveness;

4. Expanded documentation practices and policies related to various key controls to provide support and audit trails for both internal management assessment as well as external auditor testing; and

5. Improved the design and documentation related to multiple levels of review over financial statements included in our quarterly SEC form 10-Q.

Since April 30, 2011, the Company has also completed the necessary improvements to our internal controls with the assistance of independent internal controls consulting firm and from comments received from our auditors while in the performance of their annual audit and reviews of our quarterly filings. Further, our internal control consultants conducted extensive internal controls testing in the following areas: equity grants and stock administration, financial reporting (including impairment testing, period end reconciliation, and financial reporting), IT general and application controls (security and access, capturing and processing information, end user computing, data backup and restoration), and each internal control tested effective. Also the company employs a team of in-house internal control audit personnel. The Company believes that the deficiencies were remediated by the reporting period of January 31, 2013.

3136

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any legal proceedings in material nature and we are not aware of any material 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:

On August 26, 2011, a federal securities law class action complaint was filed against the Company, certain officers and directors (i.e., Dickson V. Lee and Ian G. Robinson) and a former officer (i.e., Jung Mei (Rosemary) Wang) in the United States District Court, Western District of Washington at Seattle on behalf of a proposed class of all persons who purchased the common stock of the Company during the period August 13, 2009 through August 2, 2011, inclusive, and who were damaged thereby (the “Washington Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading ~~reports~~public ~~and financial~~ statements ~~with the SEC from~~ August 2009 to July 2011. On December 15, 2011, the court appointed Gregg Irvin as lead plaintiff, and plaintiff filed an amended complaint and a second amended complaint on February 8 and March 2, 2012, respectively, naming four other current and former directors as defendants (i.e., Shirley Kiang, Robert Lee, Dennis Bracy and Robert Okun).

On November 4, 2011, a complaint was filed by Larew P. Stouffer, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its then existing officers and/or directors (i.e., Dickson V. Lee, Norman Mineta, Ian G. Robinson, Robert W. Lee, Shirley Kiang, Dennis Bracy, Syd S. Peng) and certain former officers and/or directors (i.e., Edward L. Dowd, Andrew M. Leitch, Robert Okun, Joseph J. Borich, Jung Mei Wang and David Lin) in the First Judicial District Court of the State of Nevada for Carson City (the “~~Stouffer~~Nevada Derivative Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders, wasted corporate assets, were unjustly enriched , and committed other wrongful acts.

On November 15, 2011, a complaint was filed by Russell L. Bush, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against its then existing directors (i.e., Dickson V. Lee, Norman Mineta, Ian G. Robinson, Robert W. Lee, Shirley Kiang, Dennis Bracy, Syd S. Peng) in the United States District Court, Western District of Washington at Seattle (collectively the “~~Bush~~Washington Derivative ~~Suit~~Suits”), and along with the Stouffer Derivative Suit, the “Derivative Suits”), alleging that the defendants breached fiduciary duties and were unjustly enriched.

The Company has notified our insurance carrier of the ~~Potential~~Washington Securities Class Action and the Washington Derivative Suits. The Company has also retained outside legal counsel.

~~The~~On ~~Company~~April is23, ~~unable~~2012, ~~to estimate~~ the ~~amount~~Company orand ~~range~~Dickson ofV. ~~any~~Lee ~~potential~~and ~~loss~~Ian inG. ~~the~~Robinson ~~event~~filed ofa anmotion ~~unfavorable~~to ~~outcome. As~~dismiss ~~such,~~the asWashington ofSecurities ~~January 31,~~Class ~~2013,~~Action. Proceedings in the ~~Company~~Washington ~~has~~Derivative ~~not~~Suits ~~accrued~~were ~~any~~stayed ~~liability~~pending inthe ~~connection~~court’s ~~with~~ruling ~~potential~~on ~~losses~~the ~~from~~motion ~~legal~~to ~~proceedings~~dismiss.

On ~~April~~December 233, 2012, the ~~Company~~United ~~and~~States ~~Dickson~~District V.Court, ~~Lee~~Western ~~and~~District ~~Ian~~of G.Washington ~~Robinson~~at ~~filed~~Seattle agranted the Company’s motion to dismiss the Securities Class Action~~. Proceedings~~ inlawsuit ~~the~~without ~~Derivative~~prejudice, ~~Suits~~and ~~were~~gave ~~stayed~~plaintiff ~~pending~~thirty days in which to seek the court’s ~~ruling~~permission onto ~~the~~file ~~motion~~another amended ~~to dismiss~~complaint.

On ~~December~~January 32, ~~2012~~2013, ~~the~~plaintiff ~~United~~filed ~~States~~a ~~District~~motion ~~Court,~~for ~~Western~~leave ~~District~~to file an amended complaint. Pursuant to a stipulation of ~~Washington~~the atparties, ~~Seattle~~the court granted ~~the~~such ~~Company’s~~leave, ~~motion~~and toon ~~dismiss~~February 4, 2013, plaintiff filed a third amended complaint in the Washington Securities Class Action ~~lawsuit~~on behalf of a proposed class of all persons who purchased the common stock of the Company during the period August 13, 2009 through August 2, 2011, inclusive, and ~~gave~~ ~~plaintiff~~who ~~thirty~~were ~~days~~damaged inthereby, ~~which~~against tothe ~~seek~~Company, certain officers and/or directors (i.e., Dickson V. Lee and Ian G. Robinson) and a former officer (i.e., Jung Mei (Rosemary) Wang), alleging that the ~~court’s~~defendants ~~permission~~violated toSections ~~file~~10(b) ~~another amended~~and ~~complaint~~20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading reports and financial statements with the SEC from August 2009 to July 2011.

On January 2, 2013, plaintiff filed a motion for leave to file an amended complaint. Pursuant to a stipulation of the parties, the court granted such leave, and on February 4, 2013, plaintiff filed a third amended complaint on behalf of a proposed class of all persons who purchased the common stock of the Company during the period August 13, 2009 through August 2, 2011, inclusive, and who were damaged thereby, against the Company, certain officers and/or directors (i.e., Dickson V. Lee and Ian G. Robinson) and a former officer (i.e., Jung Mei (Rosemary) Wang), alleging that the defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading reports and financial statements with the SEC from August 2009 to July 2011.37

~~Pursuant~~Proceedings toin ~~a stipulation of~~ the ~~parties~~Washington and anNevada ~~order~~Derivative ~~entered~~Suits bycontinued ~~the court, the Company’s motion~~ to ~~dismiss~~be ~~plaintiff’s~~stayed ~~third~~pending ~~amended complaint was submitted on April 12, 2013. The plaintiff filed response on June 19, 2013 and~~ the ~~Company did file its response to the plaintiff~~court’s ~~response~~ruling on ~~July 19, 2013. Proceedings in~~ the ~~Derivative~~second ~~Suits~~motion ~~continued~~ to ~~be stayed~~dismiss.

~~The~~On ~~Company~~December is3, ~~unable~~2013, tothe ~~estimate~~United ~~the~~States ~~amount~~District orCourt, ~~range~~Western District of ~~any~~Washington ~~potential~~at ~~loss~~Seattle indenied the ~~event~~defendants’ ofsecond anmotion ~~unfavorable~~to ~~outcome~~dismiss. As The ~~such,~~court ashas ofnot ~~July 31,~~yet ~~2013,~~issued ~~the~~a ~~Company~~case ~~has~~scheduling ~~not~~order ~~accrued~~in ~~any~~the ~~liability~~Washington inSecurities ~~connection~~Class ~~with~~Action ~~potential~~and ~~losses~~there ~~from~~is ~~legal~~no ~~proceedings~~trial date.

The Company believes that ~~these~~the ~~suits~~Washington and Nevada Securities Class Action and the Washington Derivative Suits are without merit and intends to defend them vigorously.

32On September 23, 2013, a federal securities law class action complaint was filed against the Company, and certain officers and directors (i.e., Dickson V. Lee, Ian G. Robinson and Clayton Fong) in the United States District Court, Southern District of New York on behalf of a proposed class of all persons who purchased common stock of the Company during the period September 11, 2012 through September 18, 2013, inclusive, and who were damaged thereby (the “New York Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by filing materially false and misleading public statements from September 2012 to September 2013. On November 22, 2013, the plaintiff and several other proposed plaintiffs filed motions for appointment as lead plaintiff and counsel. The court set a status conference for December 20, 2013 to consider the motions.

~~Item~~On 1AOctober 18, 2013, a complaint was filed by Joseph D, Bessent, in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its then existing officers and/or directors (i.e., ~~Risk~~Dickson ~~Factor~~V. Lee, Syd S. Peng, Mohan Datwani, Jingcai Yang, James Schaeffer, and Joseph Borich) in the Superior Court for the State of Washington in King County, Washington (the “Bessent Derivative Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

~~You~~On ~~should~~December ~~carefully~~9, ~~consider~~2013, ~~the~~a ~~risks~~complaint ~~described~~was ~~below~~filed ~~together~~by ~~with~~Jay ~~the~~Finkelstein, ~~other~~in ~~information~~a ~~set~~shareholder ~~forth~~derivative insuit ~~this~~on ~~Form~~behalf ~~10-Q~~of the Company, which ~~could~~is ~~materially~~a ~~affect~~nominal ~~our business~~defendant, ~~financial~~against ~~condition~~certain of its current and former officers and/or ~~future~~directors ~~results~~(i. ~~The~~e. ~~risks~~Dickson ~~described~~V. ~~below~~Lee, ~~are~~Norman ~~not~~Mineta, ~~the~~Shirley ~~only~~Kiang, ~~risks~~Ian ~~facing~~Robinson, ~~our~~Dennis ~~company~~Bracy, Edward L. ~~The~~ ~~risks~~Dowd, ~~described~~Jr., ~~below~~Robert ~~are~~W. ~~not~~Lee, ~~the~~Robert ~~only~~A. ~~ones~~Okun, ~~that~~Andrew weM. ~~face~~Leitch, Edmund Moy, Dr. ~~Additional~~ ~~risks~~Syd ~~not~~S. ~~presently~~Peng, ~~known~~Clayton toFong, usJungcai orYang, ~~that~~Mohan weDatwani, ~~currently~~Joseph ~~deem~~Borich, ~~immaterial~~and ~~may~~James ~~also~~Schaeffer) ~~affect~~in ~~our~~the ~~business~~United States District Court, ~~operating~~Western ~~results~~District of Washington at Seattle (the “Finkelstein Derivative Suit”), alleging that the defendants breached fiduciary duties to the Company and ~~financial~~its ~~condition~~shareholders and committed other wrongful acts.

~~Risks~~The ~~Relating~~Company tohas notified our insurance carriers of the ~~Company~~New York Securities Class Action, the Bessent Derivative Suit, and ~~Our~~Finkelstein ~~Business~~Derivative Suit. The Company has retained outside legal counsel.

~~Our~~The ~~business~~Company ~~and~~believes ~~results~~that ofthe ~~operations~~New ~~depend~~York onSecurities Class Action, the ~~volatile~~Bessent ~~People’s~~Derivative ~~Republic~~Suit, ofand ~~China~~the ~~domestic~~Finkelstein ~~coal~~Derivative Suit are without merit and ~~international~~intends ~~markets~~to defend them vigorously.

~~Substantially~~The ~~all~~Company ~~of our coal business~~ is ~~conducted~~unable into estimate the ~~People’s~~amount ~~Republic of China (“PRC”~~ or ~~“China”),~~range and as a result, our business and operating results depend on the domestic supply and demand for coal and coal products in China. The domestic coal markets are cyclical and have historically experienced pricing volatility, which reflects, among other factors, the conditions of ~~the~~any ~~PRC~~potential ~~and~~loss ~~global economies and demand fluctuations~~ in ~~key industries that have high coal consumption, such as~~ the ~~power~~event generation and steel industries. Difficult economic conditions in recent periods have resulted in lower coal prices, which in turn negatively affect our operational and financial performance. For example, after reaching record high levels in 2008, the price of ~~domestic~~an ~~coal~~unfavorable inoutcome ~~China fell~~ in ~~2009~~any ~~due to weakening demand as a result~~ of the ~~global~~aforementioned ~~economic~~legal ~~downturn~~proceedings. As ~~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~~such, ~~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 also affect the demand for coal. The supply~~ of ~~coal,~~October ~~on the other hand~~31, ~~is primarily affected by the geographical location of coal reserves~~2013, the ~~transportation~~Company ~~capacity~~has ofnot ~~coal~~accrued ~~transportation~~any ~~railways,~~liability ~~the volume of domestic and international coal supplies and the type, quality and price of competitors’ coal. A significant rise~~ in ~~global~~connection ~~coal~~with ~~supply~~potential orlosses afrom ~~reduction~~legal ~~in coal demand may have an adverse effect on coal prices, which in turn, may reduce our profitability and adversely affect our business and results of operations~~proceedings.

33Item 1A. Risk Factors

~~Our~~You ~~mining~~should ~~operations~~carefully consider the risks described below together with the other information set forth in this Form 10-Q, which could materially affect our business, financial condition or future results. The risks described below are ~~inherently~~not ~~subject~~the only risks facing our company. The risks described below are not the only ones that we face. Additional risks not presently known to ~~changing~~us ~~conditions~~or that ~~could~~we ~~adversely~~currently deem immaterial may also affect our ~~profitability~~business, operating results and financial condition.

~~Our~~Risks ~~coal~~Relating ~~operations are inherently subject~~ to changing conditions that can adversely affect our levels of production and production costs for varying lengths of time and can result in decreases in profitability. We are exposed to commodity price risk related to the ~~purchase~~Company ~~of diesel fuel, wood, explosives~~ and ~~steel.~~Our In addition, weather and natural disasters (such as earthquakes, landslides, flooding, and other similar occurrences), unexpected maintenance problems, key equipment failures, fires, variations in thickness of the layer, or seam, of coal, amounts of overburden, rock and other natural materials, variations in rock and other natural materials and variations in geological conditions can be expected in the future to have, a significant impact on our operating results. Prolonged disruption of production at the mine would result in a decrease in our revenues and profitability, which could be material. Other factors affecting the production and sale of our coal and coke that could result in decreases in our profitability include:Business

~~· sustained~~Our ~~high~~business ~~pricing~~and ~~environment~~results ~~for~~of ~~raw~~operations ~~materials,~~depend ~~including,~~on ~~among~~the ~~other~~volatile ~~things,~~People’s ~~diesel~~Republic ~~fuel,~~of ~~explosives~~China domestic coal and ~~steel;~~international markets.

~~· changes~~Substantially all of our coal business is conducted in the ~~laws~~People’s ~~and/~~Republic of China (“PRC” or ~~regulations~~“China”), ~~that~~and weas a result, our business and operating results depend on the domestic supply and demand for coal and coal products in China. The domestic coal markets are ~~subject~~cyclical and have historically experienced pricing volatility, which reflects, among other factors, the conditions of the PRC and global economies and demand fluctuations in key industries that have high coal consumption, such as the power generation and steel industries. Difficult economic conditions in recent periods have resulted in lower coal prices, which in turn negatively affect our operational and financial performance. For example, after reaching record high levels in 2008, the price of domestic coal in China fell in 2009 due to weakening demand as a result of the global economic downturn. 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, ~~including~~chemical, ~~permitting~~metallurgy and construction materials industries. The availability and prices of alternative sources of energy, ~~safety~~such as natural gas, ~~labor~~oil, hydropower, solar and ~~environmental~~nuclear ~~requirements;~~power also 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 may have an adverse effect on coal prices, which in turn, may reduce our profitability and adversely affect our business and results of operations.

~~· labor shortages; and~~38

~~· changes~~Our inmining ~~the~~operations ~~coal~~are ~~markets~~inherently ~~and~~subject ~~general~~to ~~economic~~changing conditions that could adversely affect our profitability.

Our ~~results~~coal of operations ~~depend~~are oninherently subject to changing conditions that can adversely affect our ~~ability~~levels of production and production costs for varying lengths of time and can result in decreases in profitability. We are exposed to ~~acquire~~commodity ~~new~~price ~~coal~~risk ~~mines~~related to the purchase of diesel fuel, wood, explosives and steel. In addition, weather and natural disasters (such as earthquakes, landslides, flooding, and other similar occurrences), unexpected maintenance problems, key equipment failures, fires, variations in thickness of the layer, or seam, of coal~~-related~~, ~~businesses~~amounts of overburden, rock and other natural materials, variations in rock and other natural materials and variations in geological conditions can be expected in the future to have, a significant impact on our operating results. Prolonged disruption of production at the mine would result in a decrease in our revenues and profitability, which could be material. Other factors affecting the production and sale of our coal and coke that could result in decreases in our profitability include:

~~The~~· Sustained ~~recoverable~~high ~~coal~~pricing ~~reserves~~environment infor ~~mines~~raw ~~decline as coal is extracted from them. In addition~~materials, ~~the coal related business in China is heavily regulated by the PRC government~~including, ~~which,~~ among other things, ~~imposes~~diesel ~~limits on the amount of coal that may be extracted. As a result~~fuel, ~~our~~explosives ~~ability to significantly increase our production capacity at existing mines is limited,~~ and ~~our ability to increase our coal production will depend on acquiring new mines. Our existing mines are the DaPuAn, SuTsong, WeiShe, LuoZhou and LaShu coal mines as of now.~~ steel;

~~Our~~· Changes ~~ability~~in tothe ~~acquire~~laws ~~new coal mines~~ and/or toregulations ~~expand~~that ~~production~~we ~~capacity~~are ~~in China and to procure related licenses and permits is~~ subject to, ~~approval of the PRC government (~~including ~~local governments.) Delays in securing or failure to secure relevant PRC government approvals~~permitting, ~~licenses or permits~~safety, aslabor ~~well as any adverse change in government policies, may hinder our expansion plans, which may materially~~ and ~~adversely~~environmental affect our profitability and growth prospects. We cannot assure you that our future acquisitions, expansions, or investments will be successful. As part of our growth strategy, the Company may decide spin off or dispose smaller assets or operations that management and the Board of Directors determine not be in the best interest of LLEN shareholders in the long run.requirements;

~~Furthermore,~~· Labor weshortages; ~~cannot assure you that we will be able 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 facilities in the future. Failure to successfully acquire suitable targets on competitive terms, develop new coal mines or expand our existing coal mines and other coal related operations could have an adverse effect on our competitiveness and growth prospects. Further, the benefits of an acquisition may take considerable time and other resources 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.

34· Changes in the coal markets and general economic conditions.

IfOur weresults ~~fail~~of tooperations ~~obtain~~depend ~~additional~~on ~~financing~~our weability ~~will~~to beacquire ~~unable~~new tocoal ~~execute~~mines ~~our~~and ~~business~~other ~~plan~~coal-related businesses.

AsThe werecoverable ~~continue~~coal toreserves ~~expand~~in ~~our~~mines ~~business,~~decline weas ~~require~~coal ~~capital~~is ~~infusions~~extracted from ~~the~~them. ~~capital~~In ~~market.~~addition, ~~Under~~the ~~our~~coal ~~current~~related business ~~strategy,~~in ~~our~~China ~~ability~~is toheavily ~~grow~~regulated ~~will~~by ~~depend on~~ the ~~availability~~PRC ~~of additional funds~~government, ~~suitable acquisition targets at an acceptable cost~~which, ~~and~~among ~~working~~other ~~capital. Our ability to compete effectively~~things, toimposes ~~reach~~limits ~~agreements with acquisition targets~~ on ~~commercially~~the ~~reasonable~~amount ~~terms,~~of tocoal ~~secure~~that ~~critical~~may ~~financing~~be ~~and to attract professional managers is critical to our success~~extracted. WeAs ~~will~~a ~~require additional funds to complete recent acquisitions~~result, asour ~~well~~ability as to ~~make~~significantly ~~future~~increase ~~acquisitions,~~our ~~continue~~production ~~improving~~capacity ~~our~~at ~~current~~existing ~~coal~~ mines ~~and~~is ~~other coal processing facilities~~limited, and ~~to obtain regulatory approvals for~~ our ~~operations.~~ability ~~We intend~~ to ~~seek~~increase ~~additional~~our ~~funds~~coal ~~through~~production ~~public or private equity or debt financing, strategic transactions and/or from other sources. However, there are no assurances that future funding~~ will bedepend ~~available~~ on ~~favorable~~acquiring ~~terms~~new ~~or at all~~mines. IfOur ~~additional~~existing ~~funding~~mines isare ~~not~~the ~~obtained~~DaPuAn, ~~we will need to reduce~~SuTsong, ~~defer or cancel development programs~~WeiShe, ~~planned~~LuoZhou ~~initiatives~~and orLaShucoal ~~overhead~~mines ~~expenditures,~~as ~~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~~now.

~~Coal~~Our ~~reserve~~ability ~~estimates~~to acquire new coal mines and to expand production capacity in China and to procure related licenses and permits is subject to approval of the PRC government (including local governments.) Delays in securing or failure to secure relevant PRC government approvals, licenses or permits, as well as any adverse change in government policies, may ~~not~~hinder our expansion plans, which may materially and adversely affect our profitability and growth prospects. We cannot assure you that our future acquisitions, expansions, or investments will be ~~indicative~~successful. As part of ~~reserves~~our growth strategy, the Company may decide spin off or dispose smaller assets or operations that wemanagement ~~actually~~and ~~recover~~the Board of Directors determine not be in the best interest of LLEN shareholders in the long run.

~~The~~Furthermore, ~~coal~~we ~~reserves~~cannot ~~disclosed~~assure ~~for~~you ~~the~~that ~~mines from which~~ we ~~have~~will ~~the~~be ~~right~~able to ~~extract~~identify ~~coal~~suitable ~~are~~acquisition ~~the~~targets ~~estimated~~or ~~quantities~~acquire ~~(based~~these targets on ~~applicable~~competitive ~~reporting~~terms ~~regulations)~~and ~~that~~in ~~under~~a ~~present~~timely ~~and~~manner. ~~anticipated~~We ~~conditions~~may ~~have~~not ~~the~~be ~~potential~~able to besuccessfully ~~economically~~develop ~~mined~~new ~~and processed. However, the amount of~~ coal ~~that~~mines weor ~~may~~expand ~~extract~~our ~~from~~existing aones ~~given~~in ~~mine~~accordance iswith ~~limited~~our bydevelopment ~~the~~plans ~~mining~~or ~~rights~~at ~~granted to us by local governmental authorities~~all. InWe ~~addition,~~may ~~there~~also ~~are~~fail ~~numerous~~to ~~uncertainties~~acquire ~~inherent~~or indevelop ~~estimating~~additional ~~quantities of~~ coal ~~reserves~~washing ~~and~~facilities in ~~projecting~~the ~~potential~~ future ~~rates of coal production including many factors beyond our control~~. ~~Reserve~~Failure ~~engineering~~to issuccessfully aacquire ~~subjective~~suitable ~~process~~targets ofon ~~estimating~~competitive ~~underground~~terms, ~~deposits~~develop ofnew ~~reserves~~coal ~~that~~mines ~~cannot~~or beexpand ~~measured~~our inexisting ancoal ~~exact~~mines ~~manner~~ and ~~the~~other ~~accuracy~~coal ofrelated ~~any~~operations ~~reserve~~could ~~estimate~~have isan aadverse ~~function~~effect ofon ~~the~~our ~~quality~~competitiveness ~~of available data~~ and ~~engineering~~growth ~~and geological interpretation and judgment~~prospects. ~~Estimates of different engineers may vary (e.g.~~Further, ~~in coal grade and reserve quantity) and results of our mining/drilling and production subsequent to~~ the ~~date~~benefits of an ~~estimate~~acquisition may ~~justify~~take ~~revision~~considerable oftime ~~estimates. Reserve estimates may require revision based on actual production experience~~ and other ~~factors.~~resources Into ~~addition,~~develop ~~several~~and ~~factors~~we ~~including~~cannot ~~the~~assure ~~market~~investors ~~price~~that ofany ~~coal~~particular ~~reduced~~acquisition ~~recovery rates~~ or ~~increased~~joint ~~production~~venture ~~costs~~will ~~due~~produce tothe ~~inflation~~intended orbenefits. ~~other~~Moreover, ~~factors~~the ~~may~~identification ~~render certain estimated coal reserves uneconomical to exploit~~ and ~~may~~completion ~~ultimately result in a restatement~~ of ~~reserves.~~these ~~This~~transactions may ~~have~~require aus ~~material~~to ~~adverse~~expend ~~effect~~significant onmanagement ~~our~~time ~~business,~~and ~~operating~~effort ~~results, cash flows~~ and ~~financial~~other ~~condition~~resources.

~~U.S.-listed companies with substantial business operations in China have recently become subject to increased scrutiny, criticism and negative publicity.~~39

~~Since~~If ~~2010,~~we afail ~~number~~to ofobtain ~~U.S.~~additional ~~publicly-listed~~financing ~~companies~~we ~~with~~will ~~substantial~~be ~~operations~~unable into ~~China~~execute ~~have~~our ~~been~~business the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the United States Securities and Exchange Commission (“SEC”) resulting in loss of share valueplan. Much of the scrutiny and negative publicity has centered around accounting weaknesses, inadequate corporate governance and, in some cases, allegations of fraud. As a result of such scrutiny and negative publicity, the stock prices of most U.S. publicly-listed reverse merger companies and other public companies with operations in China have sharply decreased in recent years.

As we continue to expand our business, we require 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, and working capital. Our ~~industry~~ability to compete effectively, to reach agreements with acquisition targets on commercially reasonable terms, to secure critical financing and to attract professional managers is ~~heavily~~critical ~~regulated~~to our success. We will require additional funds to complete recent acquisitions, as well as to make future acquisitions, continue improving our current coal mines and weother ~~may~~coal ~~not~~processing befacilities, ~~able~~and to ~~remain~~obtain inregulatory ~~compliance~~approvals ~~with~~for ~~all~~our ~~such~~operations. ~~regulations~~We intend to seek additional funds through public or private equity or debt financing, strategic transactions and/or wefrom ~~may~~other sources. However, there are no assurances that future funding will be ~~required~~available on favorable terms or at all. If additional funding is not obtained, we will need to ~~incur~~reduce, ~~substantial~~defer ~~costs~~or incancel ~~complying~~development ~~with~~programs, ~~such~~planned ~~regulation~~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.

WeCoal ~~are~~reserve ~~subject~~estimates 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 processing facilities are subject to periodic inspection by national, province, county and local authorities. We may not be ~~able~~indicative toof ~~comply~~reserves ~~with current laws and regulations, or any future laws and regulations. To the extent~~ that ~~new regulations are adopted,~~ we ~~will~~actually ~~be required to adjust our activities in order to comply with such regulations~~recover. 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.

~~Government~~The ~~regulation~~coal ofreserves ~~our~~disclosed ~~operations~~for ~~imposes~~the ~~additional~~mines ~~costs~~from onwhich ~~us,~~we ~~and~~have ~~future~~the ~~regulations~~right ~~could increase those costs or limit our ability~~ to ~~mine,~~extract ~~crush, clean, process and sell~~ coal. ~~China’s~~are ~~central, provincial and local authorities regulate~~ the ~~coal~~estimated ~~mining~~quantities ~~industry~~(based ~~with~~on ~~respect~~applicable toreporting ~~matters~~regulations) ~~such~~that asunder ~~employee~~present ~~health~~ and ~~safety,~~anticipated ~~permitting~~conditions ~~and~~have ~~licensing~~the ~~requirements,~~potential ~~air~~to ~~quality~~be ~~standards,~~economically ~~water~~mined ~~pollution, plant~~ and ~~wildlife~~processed. ~~protection~~However, ~~reclamation~~the ~~and~~amount ~~restoration~~ of ~~mining~~coal ~~properties~~that ~~after~~we ~~mining~~may isextract ~~completed,~~from ~~the~~a ~~discharge~~given ofmine ~~materials~~is ~~into~~limited by the ~~environment, surface subsidence from underground~~ mining ~~and~~rights ~~the~~granted ~~effects~~to ~~that~~us ~~mining~~by ~~has~~local ongovernmental ~~groundwater~~authorities. ~~quality~~In ~~and~~addition, ~~availability.~~there We are ~~required~~numerous touncertainties ~~prepare~~inherent ~~and~~in ~~present~~estimating toquantities ~~China’s~~of ~~central,~~coal ~~provincial~~reserves and ~~local~~in ~~authorities~~projecting ~~data~~potential ~~pertaining~~future torates ~~the~~of ~~effect~~coal orproduction ~~impact~~including ~~that~~many ~~any~~factors ~~proposed~~beyond ~~processing~~our ofcontrol. ~~coal~~Reserve ~~may~~engineering ~~have~~is ~~upon~~a ~~the~~subjective ~~environment.~~process ~~The~~of ~~costs,~~estimating ~~liabilities~~underground ~~and~~deposits ~~requirements~~of ~~associated~~reserves ~~with~~that ~~these~~cannot ~~regulations~~be ~~may~~measured bein ~~costly~~an ~~and~~exact ~~time-consuming~~manner and ~~may~~the ~~delay~~accuracy ~~commencement,~~of ~~expansion~~any orreserve ~~continuation~~estimate ofis ~~our~~a ~~coal~~function ~~processing~~of ~~operations.~~the ~~The~~quality ~~possibility~~of ~~exists~~available ~~that~~data ~~new~~and ~~legislation~~engineering and~~/or~~ ~~regulations~~geological interpretation and ~~orders~~judgment. ~~may~~Estimates beof ~~adopted~~different ~~that~~engineers may ~~materially~~vary ~~and adversely affect our operations~~(e.g., ~~our~~in ~~cost~~coal ~~structure~~grade and~~/or~~ ~~our~~reserve ~~customers’~~quantity) ~~ability~~and toresults ~~use coal. New legislation or administrative regulations (or judicial interpretations~~ of ~~existing~~our ~~laws~~mining/drilling and ~~regulations),~~production ~~including~~subsequent ~~proposals related~~ to the ~~protection~~date of ~~the~~an ~~environment~~estimate ~~that~~may ~~would~~justify ~~further~~revision ~~regulate~~of ~~and~~estimates. ~~tax~~Reserve ~~the~~estimates ~~coal industry,~~ may ~~also~~ require usrevision ~~and~~based ~~our~~on ~~customers~~actual toproduction ~~change~~experience ~~operations~~and ~~significantly~~other orfactors. ~~incur~~In ~~increased~~addition, ~~costs.~~several ~~Certain~~factors ~~sales~~including ~~agreements~~the ~~contain~~market ~~provisions~~price ~~that~~of ~~allow~~coal areduced ~~purchaser~~recovery torates ~~terminate~~or ~~its~~increased ~~contract~~production ifcosts ~~legislation~~due isto ~~passed~~inflation ~~that~~or ~~either~~other ~~restricts~~factors ~~the~~may ~~use~~render orcertain ~~type~~estimated of coal ~~permissible~~reserves atuneconomical ~~the~~to ~~purchaser’s~~exploit ~~plant~~and ormay ~~results~~ultimately inresult ~~specified increases~~ in ~~the~~a ~~cost~~restatement of ~~coal or its use~~reserves. ~~These~~This ~~factors~~may ~~and legislation, if enacted, could~~ have a material adverse effect on our ~~financial~~business, ~~condition~~operating ~~and~~ results, ofcash ~~operations~~flows and financial condition.

35U.S.-listed companies with substantial business operations in China have recently become subject to increased scrutiny, criticism and negative publicity.

~~Our~~Since ~~business~~2010, a number of U.S. publicly-listed companies with substantial operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial ~~results~~commentators ~~may~~and beregulatory ~~adversely~~agencies, ~~affected~~such byas ~~present~~the orUnited ~~future~~States ~~environmental~~Securities ~~regulations~~and Exchange Commission (“SEC”) resulting in loss of share value. Much of the scrutiny and negative publicity has centered around accounting weaknesses, ~~coal~~inadequate ~~industry~~corporate ~~standards~~governance and, ~~safety~~in ~~requirements~~some cases, ~~including~~allegations ~~mine~~of ~~shut~~fraud. ~~downs~~As a result of such scrutiny and negative publicity, the stock prices of most U.S. publicly-listed reverse merger companies and other public companies with operations in ~~2011~~China have sharply decreased in recent years.

AsOur aindustry ~~producer~~is ofheavily ~~coal~~regulated ~~products~~and inwe ~~China,~~may wenot ~~are~~be ~~subject~~able to ~~significant,~~remain ~~extensive~~in ~~and~~compliance ~~increasingly~~with ~~stringent~~all ~~environmental~~such ~~protection laws, governmental~~ regulations onand ~~coal~~we ~~standards~~may ~~and~~be ~~safety~~required ~~requirements.~~to ~~These~~incur ~~laws~~substantial ~~and~~costs ~~regulations,~~in ~~among~~complying ~~other~~with ~~things:~~such regulation.

~~· impose~~We ~~fees~~are ~~for~~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 ~~discharge~~processing, storage, and distribution of ~~waste~~our ~~substances~~product. Our processing facilities are subject to periodic inspection by national, province, county and ~~pollutants;~~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.

· Government regulation of our operations imposes additional costs on us, and future regulations could increase those costs or limit our ability to mine, crush, clean, process and sell 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 ~~establishment~~use or type of ~~reserves~~coal ~~for~~permissible ~~reclamation~~at the purchaser’s plant or results in specified increases in the cost of coal or its use. These factors and ~~rehabilitation;~~legislation, if enacted, could have a material adverse effect on our financial condition and results of operations.

~~· impose fines for serious environmental offenses; and~~40

~~· authorize~~Our ~~the~~business ~~PRC~~operations ~~government,~~and atfinancial ~~its~~results ~~discretion,~~may tobe ~~close~~adversely ~~any~~affected ~~facility~~by ~~that~~present itor ~~determines~~future ~~has failed to comply with~~ environmental regulations, ~~operating~~coal industry standards, and ~~suspend~~safety ~~any~~requirements, ~~coal~~including ~~operations~~mine ~~that~~shut ~~cause~~downs ~~excessive~~in ~~environmental damage.~~ 2011

~~Some~~As ofa ~~our~~producer ~~operations~~of ~~are based on traditional, old~~ coal ~~extraction~~products ~~and processing techniques, which are popular~~ in China, ~~and~~we ~~which~~are ~~produce~~subject ~~waste~~to ~~water~~significant, ~~gas~~extensive ~~emissions~~ and ~~solid~~increasingly ~~waste~~stringent ~~materials.~~environmental ~~The~~protection ~~PRC government has tightened enforcement of applicable~~ laws, ~~and~~governmental regulations ~~and~~on ~~adopted~~coal ~~more stringent environmental and operational~~ standards. ~~We believe that our coal mining~~ and ~~washing operations comply in all material respects with existing Chinese environmental and~~ safety ~~standards~~requirements. ~~However,~~These ~~some~~laws ~~of our mines were subject to what we believed county-wide shut downs~~ and ~~safety inspection of coal mines by the local governments in 2011. The temporary government mandated-shut down was slowing resumed during 2012. As a result~~regulations, ~~our~~among ~~results~~other ~~of operations were named in 2011 and 2012.~~ things:

In· Impose ~~addition,~~fees ~~our budgeted amount~~ for environmental and safety 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 and safety 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. China is a signatory to the ~~1992~~discharge United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol, which are intended to limit greenhouse gas emissions. On March 14, 2011, the PRC government approved the Twelfth Five-Year Plan for National Economic and Social Development, which sets goals to decrease the amount of ~~energy~~waste ~~consumed~~substances ~~per unit of GDP by 16% from 2010 levels, cap energy use at 4 billion tons of coal equivalents by 2015~~ and reduce the carbon emissions by 17% from 2010 levels by 2015. Efforts to reduce energy consumption use low-carbon coal, and control greenhouse gas emissions could materially reduce coal consumption, which would adversely affect our revenue and our business.pollutants;

~~For~~· Require ~~example,~~the inestablishment ~~early 2013, China’s Capital City Beijing had experienced very serious air pollution problem which, was partly contributed by burning~~ of ~~coal~~reserves for ~~heating~~reclamation ~~during the winter months. This had caused internationally attention~~ and seriously damaged the reputation of China. As a result, it is possible that Chinese government may consider regulation and administrative actions that may negatively impact the entire coal business in China which may increase our cost of operation and profitability. rehabilitation;

We· Impose ~~depend~~fines onfor ~~Dickson~~serious V.environmental ~~Lee,~~offenses; ~~Our Chairman~~ and ~~Chief Executive Officer, the loss of who could adversely affect our operations~~

~~The~~· Authorize ~~future~~the ~~success~~PRC ~~of our investments in China is dependent on Mr. Dickson V. Lee~~government, ~~our~~at ~~Chairman~~its ~~and Chief Executive Officer. If Mr. Lee is unable or unwilling to continue in his present positions~~discretion, ~~we may not be able~~ to ~~easily~~close ~~replace~~any ~~him,~~facility ~~and~~that weit ~~may~~determines ~~incur~~has ~~additional~~failed ~~expenses~~ to ~~recruit~~comply ~~and~~with ~~train~~environmental ~~new personnel. The loss of Mr. Lee could severely disrupt our business and its financial condition and results of operations could be materially and adversely affected. Furthermore~~regulations, ~~since~~operating ~~the industries we invest in are characterized by high demand and intense competition for talent~~standards, ~~we may need to offer higher compensation~~ and ~~other~~suspend ~~benefits~~any incoal ~~order~~operations ~~to attract and retain key personnel in the future. We cannot assure investors~~ that wecause ~~will~~excessive beenvironmental ~~able to attract or retain the key personnel needed to achieve our business objectives~~damage. While Mr. Dickson V. Lee is covered by a one-year term accident insurance policy in China, which is paid for by the Company, we currently do not maintain “key person” life insurance coverage for any of our officers.

36Some 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 and operational standards. We believe that our coal mining and washing operations comply in all material respects with existing Chinese environmental and safety standards. However, some of our mines were subject to what we believed county-wide shut downs and safety inspection of coal mines by the local governments in 2011. The temporary government mandated-shut down was slowing resumed during 2012. As a result, our results of operations were named in 2011 and 2012.

~~Our~~In ~~dependence~~addition, our budgeted amount for environmental and safety 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 and safety 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 ~~managerial~~our business operations and financial condition. China is a signatory to the 1992 United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol, ~~technical~~which ~~personal~~are intended to limit greenhouse gas emissions. On March 14, 2011, the PRC government approved the Twelfth Five-Year Plan for National Economic and ~~mining~~Social ~~workers~~ Development, which sets goals to decrease the amount of energy consumed per unit of GDP by 16% from 2010 levels, cap energy use at 4 billion tons of coal equivalents by 2015 and reduce the carbon emissions by 17% from 2010 levels by 2015. Efforts to reduce energy consumption use low-carbon coal, and control greenhouse gas emissions could materially reduce coal consumption, which would adversely affect our ~~operations~~revenue and our business.

WeFor ~~are~~example, ~~currently operating five mines~~ in ~~GuiZhou~~early ~~and Yunnan Provinces. Although WeiShe~~2013, ~~LuoZhou~~China’s ~~and~~Capital ~~LaShu~~City ~~are~~Beijing ~~all~~had ~~located~~experienced invery ~~GuiZhou~~serious ~~Province~~air ~~within~~pollution ~~5-10~~problem ~~hours drive from each other and thus provide the Company some shared resources on key management personnel. However~~which, wewas ~~still~~partly ~~need~~contributed toby ~~have~~burning ~~dedicated~~of ~~management~~coal ~~team~~for inheating ~~each~~during ~~mine to oversee~~ the ~~daily~~winter ~~operation~~months. ~~Due~~This tohad ~~the~~caused ~~remoteness~~internationally ofattention ~~these mines (7-10 hours drive from major cities), it is difficult to attract qualified managers~~ and ~~technical~~seriously ~~staff~~damaged ~~to work at these mines for~~ the ~~long~~reputation ~~term.~~of ~~In addition,~~ China. isAs ~~now~~a ~~expiring labor shortage due to the aging population and one child policy~~result, ~~the~~it ~~younger~~is ~~generation~~possible ~~workers~~that ~~would~~Chinese ~~like~~government tomay ~~work~~consider inregulation ~~cities~~ and ~~away~~administrative ~~from~~actions ~~factories,~~that ~~farms and mines. As a result, it~~ may benegatively ~~difficult~~impact ~~for~~ the ~~Company~~entire tocoal ~~recruit~~business ~~new workers for our mines located~~ in ~~GuiZhou~~China ~~and~~which ~~Yunnan~~may ~~Provinces.~~increase ~~The~~our ~~lack~~cost of ~~qualified~~operation ~~managers, technical personal~~ and ~~mining workers could adversely affect our operations~~profitability.

~~Our~~We ~~business~~depend ison ~~highly~~Dickson ~~competitive~~V. ~~and~~Lee, ~~increased~~Our ~~competition~~Chairman ~~could~~and ~~reduce~~Chief ~~our~~Executive ~~sales~~Officer, ~~earnings~~the ~~and~~loss ~~profitability.~~of who could adversely affect our operations

The ~~coal~~future ~~business~~success isof ~~highly~~our ~~competitive~~investments in China ~~and~~is wedependent ~~face~~on ~~substantial~~Mr. ~~competition~~Dickson inV. ~~connection~~Lee, ~~with~~our ~~the~~Chairman ~~marketing~~ and ~~sale~~Chief ofExecutive ~~our products~~Officer. ~~Some~~If ofMr. ~~our~~Lee ~~competitors~~is ~~are~~unable ~~well~~or ~~established,~~unwilling ~~have~~to ~~greater~~continue ~~financial,~~in ~~marketing,~~his ~~personnel~~present ~~and other resources~~positions, ~~have~~we ~~been~~may innot ~~business~~be ~~for~~able ~~longer~~to ~~periods~~easily ofreplace ~~time than we have~~him, and ~~have~~we ~~products~~may ~~that~~incur ~~have~~additional ~~gained~~expenses ~~wide~~to ~~customer~~recruit ~~acceptance~~and intrain ~~the~~new ~~marketplace~~personnel. The ~~greater~~loss ~~financial resources~~ of ~~our competitors will permit them to implement extensive marketing and promotional programs~~Mr. WeLee could ~~fail~~severely todisrupt ~~expand~~ our ~~market~~business ~~share,~~ and ~~could~~its ~~fail~~financial tocondition ~~maintain~~and ~~our~~results ~~current~~of ~~share.~~operations ~~Increased~~could ~~competition~~be ~~could~~materially ~~also~~and ~~result~~adversely inaffected. ~~overcapacity~~Furthermore, insince the ~~Chinese~~industries ~~coal~~we ~~industry~~invest in ~~general.~~are ~~The~~characterized ~~coal~~by ~~industry~~high indemand ~~China~~and ~~has~~intense ~~experienced~~competition ~~overcapacity~~for intalent, ~~the~~we ~~past.~~may ~~During~~need ~~the~~to ~~mid-1970s~~offer higher compensation and ~~early~~other ~~1980s,~~benefits ain ~~growing~~order ~~coal~~to ~~market~~attract and ~~increased~~retain ~~demand~~key ~~for~~personnel ~~coal~~ in ~~China attracted new investors to~~ the ~~coal~~future. ~~industry,~~We ~~spurred~~cannot ~~the~~assure ~~development~~investors ofthat ~~new~~we ~~mines~~will ~~and~~be ~~resulted~~able into ~~added~~attract ~~production~~or ~~capacity~~retain ~~throughout~~ the ~~industry,~~key ~~all~~personnel ofneeded ~~which led~~ to ~~increased~~achieve ~~competition~~our ~~and~~business ~~lower~~objectives. ~~coal~~While ~~prices~~Mr. ~~Similarly,~~Dickson anV. ~~increase~~Lee inis ~~future~~covered ~~coal~~by ~~prices~~a ~~could~~one-year ~~encourage~~term ~~the~~accident ~~development~~insurance ofpolicy ~~expanded~~in ~~capacity~~China, bywhich ~~new~~is orpaid ~~existing~~for ~~coal~~by ~~processors.~~the ~~Any~~Company, ~~overcapacity~~we ~~could~~currently ~~reduce~~do ~~coal~~not ~~prices~~maintain in“key ~~the~~person” ~~future~~life ~~and~~insurance ~~our~~coverage ~~profitability~~for ~~would~~any beof ~~impaired~~our officers.

~~We may suffer losses resulting from industry-related accidents and lack of insurance.~~41

WeOur ~~operate~~dependence ~~coal~~on ~~mines and related facilities that may be affected by water~~managerial, ~~gas,~~technical ~~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 we continuously reviews our existing operational standards, including insurance coverage~~ and ~~have 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 or other disasters will not occur in the future. The insurance industry in China is still in its development stage, and Chinese insurance companies offer only limited business insurance products. We currently only have work-related injury insurance for our employees at the DaPuAn, SuTsong, Weishe, LuoZhou and LaShu mines and limited accident insurance for staff and miners working in China. Any uninsured losses and liabilities incurred by us could ~~have~~adversely aaffect ~~material adverse effect on~~ our ~~financial condition and results of~~ operations.

~~Disruptions~~We are currently operating five mines in GuiZhou and Yunnan Provinces. Although WeiShe, LuoZhou and LaShu are all located in GuiZhou Province within 5-10 hours drive from each other and thus provide the Company some shared resources on key management personnel. However, we still need to have dedicated management team in each mine to oversee the ~~Chinese~~daily ~~railway~~operation. ~~transportation~~Due ~~system~~to the remoteness of these mines (7-10 hours drive from major cities), it is difficult to attract qualified managers and technical staff to work at these mines for the ~~other~~long ~~limited~~term. ~~modes~~In ofaddition, ~~transportation~~China byis ~~which~~now weexpiring ~~deliver~~labor ~~our~~shortage ~~products~~due to the aging population and one child policy, the younger generation workers would like to work in cities and away from factories, farms and mines. As a result, it may ~~adversely~~be ~~affect~~difficult ~~our~~for ~~ability~~the Company to ~~sell~~recruit new workers for our ~~coal~~mines ~~products~~located in GuiZhou and Yunnan Provinces. The lack of qualified managers, technical personal and mining workers could adversely affect our operations.

AOur ~~substantial~~business ~~portion of the coal products we sell~~ is ~~transported~~highly tocompetitive ~~our customers by the Chinese national railway system. As the railway system has limited transportation capacity~~ and ~~cannot~~increased ~~fully~~competition ~~satisfy~~could ~~coal~~reduce ~~transportation~~our ~~requirements~~sales, ~~discrepancies~~earnings ~~between capacity~~ and ~~demand for transportation exist in certain areas of the PRC~~profitability. 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.

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 ~~business~~competitors ~~operations~~are ~~depend~~well onestablished, ahave ~~single~~greater ~~transportation~~financial, ~~carrier~~marketing, orpersonnel aand ~~single~~other ~~mode~~resources, have been in business for longer periods of ~~transportation~~time tothan ~~deliver~~we ~~our~~have, ~~coal~~and have products that have gained wide customer acceptance in the marketplace. ~~Disruption~~The ofgreater ~~any~~financial resources of ~~these~~our ~~transportation~~competitors ~~services~~will ~~due~~permit them to ~~weather-related~~implement ~~problems,~~extensive ~~flooding,~~marketing ~~drought,~~and ~~accidents,~~promotional ~~mechanical~~programs. ~~difficulties,~~We ~~strikes,~~could ~~lockouts,~~fail ~~bottlenecks~~to expand our market share, and ~~other~~could ~~events~~fail to maintain our current share. Increased competition could ~~temporarily~~also ~~impair~~result ~~our~~in ~~ability~~overcapacity toin ~~supply~~the Chinese coal toindustry ~~our~~in ~~customers~~general. ~~Our~~The ~~transportation~~coal ~~providers~~industry ~~may~~in ~~face~~China ~~difficulties~~has experienced overcapacity in the ~~future~~past. ~~that~~During ~~may~~the ~~impair~~mid-1970s ~~our~~and ~~ability~~early 1980s, a growing coal market and increased demand for coal in China attracted new investors to ~~supply~~the coal industry, spurred the development of new mines and resulted in added production capacity throughout the industry, all of which led to ~~our~~increased ~~customers~~competition and lower coal prices. Similarly, ~~resulting~~an increase in ~~decreased~~future ~~revenues~~coal prices could encourage the development of expanded capacity by new or existing coal processors. Any overcapacity could reduce coal prices in the future and our profitability would be impaired.

37We may suffer losses resulting from industry-related accidents and lack of insurance.

~~Our~~We ~~continued~~operate ~~operations~~coal ofmines 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, ~~are~~have ~~dependent~~experienced onaccidents that have caused property damage and personal injuries. Although we continuously reviews our ~~ability~~existing tooperational ~~obtain~~standards, including insurance coverage and ~~maintain~~have implemented safety measures, fire training at our mining ~~licenses~~operations and provided on-the-job training for our employees and workers, there can be no assurance that industry-related accidents, earthquakes or other ~~PRC~~disasters ~~government~~will ~~approvals~~not occur in the future. The insurance industry in China is still in its development stage, and Chinese insurance companies offer only limited business insurance products. We currently only have work-related injury insurance for our ~~mining~~employees at the DaPuAn, SuTsong, Weishe, LuoZhou and LaShu mines and limited accident insurance for staff and miners 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.

~~Unlike~~Disruptions ~~land in the United States, much of which is owned by private individuals, the land and underlying minerals in China belongs~~ to the ~~PRC~~Chinese ~~government~~railway ~~and~~transportation issystem ~~only leased to lessees such as us on a long-term basis, ranging from 40 to 70 years. Further, coal reserves are owned by the PRC government, which issues mining licenses~~ and ~~exclusive mining rights for a particular mine to a mining operator on a long term basis (normally 50 years). This license allows~~ the ~~mining~~other ~~operators~~limited tomodes ~~operate and extract coal from the mine. Thus, coal mining licenses are the exclusive evidence~~ of ~~approval~~transportation ~~of a coal mine’s mining rights~~ by ~~the~~which ~~PRC government. The government charges all mining operators an upfront fee plus a surcharge ranging from 2%-3% of the value of the coal excavated from the ground. There can be no assurances that~~ we ~~will~~deliver ~~be able to obtain additional mining licenses (including licenses to expand~~ our ~~production~~products ~~capacity~~may atadversely ~~our~~affect ~~existing mines) and rights for additional mines or to maintain such licenses for~~ our ~~existing operations. The loss or failure to obtain or maintain these licenses in full force and effect will have a material adverse impact on our~~ ability to ~~conduct~~sell our ~~business~~coal ~~and on our financial condition~~products.

~~Furthermore,~~A substantial portion of the coal ~~industry~~products inwe ~~China~~sell is ~~heavily~~transported ~~regulated~~to our customers by the ~~government~~Chinese ~~for~~national ~~safety~~railway ~~and operational reasons~~system. ~~Several~~As ~~licenses~~the ~~and~~railway ~~permits~~system ~~are~~has ~~required~~limited intransportation ~~order~~capacity toand ~~operate~~cannot afully satisfy coal ~~mine.~~transportation ~~These~~requirements, ~~licenses~~discrepancies between capacity and ~~permits,~~demand ~~once~~for ~~issued,~~transportation ~~are~~exist ~~reviewed~~in ~~typically~~certain ~~once~~areas aof ~~year~~the PRC. ~~Failure~~No toassurance ~~comply~~can ~~with~~be ~~such~~given ~~regulations~~that ~~could~~we ~~result~~will incontinue ~~fines~~to be allocated adequate railway transport capacity or ~~temporary~~acquire adequate rail cars, or ~~permanent~~that ~~shutdowns~~we ofwill ~~our~~not ~~mining~~experience ~~operations,~~any ~~which~~material ~~would~~delay ~~adversely~~in ~~impact~~transporting our ~~business~~coal ~~and~~as ~~results~~a result of ~~operations~~insufficient railway transport capacity or rail cars.

~~Risks~~Some ~~inherent~~of our business operations depend on a single transportation carrier or a single mode of transportation to ~~mining~~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 ~~increase~~temporarily impair our ability to supply coal to our customers. Our transportation providers may face difficulties in the ~~cost~~future ofthat ~~operating~~may impair our ~~business~~ability to supply coal to our customers, resulting in decreased revenues.

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.42

AsOur ~~with~~continued ~~all~~operations ~~underground~~of coal ~~mining~~mines ~~companies, our operations~~ are ~~affected~~dependent byon ~~mining~~our ~~conditions~~ability ~~such~~to asobtain ~~a deterioration in the quality or thickness of faults~~ and~~/or~~ ~~coal~~maintain ~~seams,~~mining ~~pressure~~licenses ~~in mine openings, presence of gas~~ and~~/or~~ ~~water~~other ~~inflow~~PRC ~~and~~government ~~propensity~~approvals for 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~~Unlike ~~mining~~land in the United States, much of which is ~~also~~owned ~~subject~~by private individuals, the land and underlying minerals in China belongs to ~~certain~~the ~~risks~~PRC government and is only leased to lessees such as ~~methane~~us ~~outbursts~~on ~~and~~a ~~accidents~~long-term ~~caused~~basis, ranging from 40 to 70 years. Further, coal reserves are owned by ~~roof~~the ~~weakness~~PRC government, which issues mining licenses and ~~ground~~exclusive mining rights for a particular mine to a mining operator on a long term basis (normally 50 years). This license allows the mining operators to operate and extract coal from the mine. Thus, coal mining licenses are the exclusive evidence of approval of a coal miner’s mining rights by the PRC government. The government charges all mining operators an upfront fee plus a surcharge ranging from 2%-~~falls~~3% of the value of the coal excavated from the ground. There can be no ~~assurance~~assurances that ~~the~~we ~~occurrence~~will ofbe able to obtain additional mining licenses (including licenses to expand our production capacity at our existing mines) and rights for additional mines or to maintain such ~~events~~licenses for our existing operations. The loss or ~~conditions~~failure ~~would~~to ~~not~~obtain or maintain these licenses in full force and effect will have a material adverse impact on our ability to conduct our business and ~~results~~ ofon ~~operations~~our financial condition.

WeFurthermore, ~~have~~the ~~not~~coal ~~maintained~~industry ~~sufficient~~in ~~documentation~~China ofis ~~our~~heavily ~~internal~~regulated ~~control~~by ~~over~~the ~~financial~~government ~~reporting~~ for ~~the~~safety ~~year~~and ~~ended~~operational ~~April~~reasons. ~~30,~~Several ~~2010~~licenses and ~~2011,~~permits are required in order to operate a coal mine. These licenses and ~~have~~permits, ~~identified~~once ~~material~~issued, ~~weaknesses~~are reviewed typically once a year. Failure to comply with such regulations could result in ~~our~~fines ~~system~~or temporary or permanent shutdowns of ~~internal~~our ~~controls~~mining ~~relating~~operations, towhich ~~the~~would ~~same~~adversely impact our business and results of operations.

WeRisks ~~are~~inherent ~~subject~~ to ~~reporting~~mining 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 its internal controls over financial reporting. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of April 30, 2010 and 2011 and concluded that we did not maintain effective controls over the process of ensuring timely preparation of our financial reporting as of and for the fiscal years ended April 30, 2010 and 2011. In addition, our auditor, Kabani & Co. Inc., identified material weaknesses in our system of internal controls relating to the same. During the last two fiscal years, we have taken several steps to improve our internal control procedures, including adding additional internal and external resources. Until we are able to ensure the effectiveness of our internal controls, any material weaknesses may materially adversely affect our ability to report accurately our financial condition and results of operations in a timely and reliable manner. 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~~increase in the ~~loss~~cost of ~~investor~~operating ~~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 us to attract and retain additional members to the board of directors (both independent and non-independent), and additional executives.

38Our 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.

~~Risks~~As ~~Related~~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 for spontaneous combustion, as well as operational risks associated with industrial or engineering activity, such as mechanical breakdowns. Although we have conducted geological investigations to ~~Doing~~evaluate ~~Business~~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 ~~China~~an increase in our costs of production, a reduction of our coal output or the temporary suspension of our operations.

~~Our~~Underground ~~Chinese~~mining ~~operations~~is ~~pose~~also subject to certain risks ~~because~~such ofas ~~the~~methane ~~evolving~~outbursts ~~state~~and ofaccidents ~~the~~caused ~~Chinese~~by ~~economy~~roof weakness and ~~Chinese~~ground-falls. ~~political,~~There ~~legislative~~can ~~and~~be ~~regulatory~~no ~~systems.~~assurance ~~Changes~~that in the ~~interpretations~~occurrence of ~~existing~~such ~~laws~~events ~~and~~or ~~the~~conditions ~~enactment~~would ofnot ~~new~~have ~~laws~~a ~~may~~material ~~negatively~~adverse impact on our business and results of ~~operation~~operations.

~~Although~~We ~~our~~have ~~principal~~not ~~executive~~maintained ~~office~~sufficient isdocumentation ~~located in Seattle, Washington, all~~ of our ~~current~~internal 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, and control ofover 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~~reporting ~~standards, expropriation and the potential~~ for ~~a reversal in economic conditions. Since~~ the ~~late~~year ~~1970s,~~ended ~~the~~April 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 in the past 20 years30, ~~growth~~2010 ~~has been uneven across different regions~~ and ~~among various economic sectors of China. Furthermore~~2011, ~~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 aidentified ~~negative~~material ~~effect~~weaknesses onin ~~us. For example,~~ our ~~financial~~system ~~condition and results~~ of ~~operations~~internal 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 onrelating ~~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~~same. 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~~We are ~~substantial~~subject ~~uncertainties~~to ~~regarding~~reporting ~~the~~obligations ~~application~~under ofthe ~~Chinese~~U.S. securities laws. The SEC, ~~especially~~as ~~with~~required ~~respect~~by toSection ~~existing~~404 ~~and~~of ~~future~~the ~~foreign~~Sarbanes-Oxley ~~investments~~Act inof ~~China.~~2002, ~~Despite~~adopted ~~China~~rules ~~having~~requiring ~~its~~every ~~own~~public ~~securities~~company ~~laws~~to ~~and~~include ~~regulators,~~a ~~the~~management ~~Chinese~~report ~~legal~~on ~~system~~such iscompany’s internal controls over financial reporting in aits ~~developmental~~Annual ~~stage~~Report, ~~and~~which ~~has~~contains ~~historically~~management’s ~~not~~assessment ~~enforced~~of ~~its~~the ~~Chinese~~effectiveness ~~securities~~of ~~law~~its asinternal ~~rigidly~~controls asover ~~their~~financial Ureporting.S. ~~counterparts.~~Our ~~The~~management ~~interpretation~~conducted ~~and~~an ~~application~~assessment of ~~existing~~the ~~Chinese~~effectiveness ~~laws~~of our internal control over financial reporting as of April 30, ~~regulations~~2010 and ~~policies,~~2011 and concluded that we did not maintain effective controls over the ~~stated~~process ~~positions~~of ensuring timely preparation of ~~the~~our ~~Chinese~~financial ~~authorities~~reporting ~~may~~as ~~change~~of and ~~possible~~for ~~new~~the ~~laws~~fiscal years ended April 30, ~~regulations~~2010 orand ~~policies~~2011. ~~will~~In ~~impact~~addition, our ~~business~~auditor, ~~and~~Kabani ~~operations~~& Co. ~~Because~~Inc., ofidentified ~~the~~material ~~evolving~~weaknesses ~~nature~~in our system of internal controls relating to the ~~law,~~same. itDuring ~~will~~the belast ~~difficult~~two ~~for~~fiscal usyears, we have taken several steps to ~~manage~~improve ~~and~~our ~~plan~~internal ~~for~~control ~~changes~~procedures, ~~that~~including ~~may~~adding ~~arise~~additional internal and external resources. ~~China’s~~Until ~~judiciary~~we isare ~~relatively~~able ~~inexperienced~~to inensure ~~enforcing~~the ~~corporate~~effectiveness ~~and~~of ~~commercial~~our ~~law~~internal controls, ~~resulting~~any inmaterial ~~significant~~weaknesses ~~uncertainty~~may asmaterially adversely affect our ability to ~~the~~report ~~outcome~~accurately ofour ~~any~~financial ~~litigation~~condition and results of operations in ~~China~~a timely and reliable manner. ~~Consequently,~~Our ~~there~~reporting isobligations as a ~~risk~~public ~~that~~company ~~should~~will place a ~~dispute~~significant ~~arise~~strain ~~between~~on usour management, operational and ~~any~~financial ~~party~~resources ~~with~~and ~~whom~~systems wefor ~~have~~the ~~entered~~foreseeable ~~into~~future. aEffective ~~material~~internal ~~agreement~~controls, inparticularly ~~China~~those related to revenue recognition, weare ~~may~~necessary befor ~~unable~~us to ~~enforce~~produce ~~such~~reliable ~~agreements~~financial ~~under~~reports ~~the~~and ~~Chinese~~are ~~legal~~important ~~system~~to help prevent fraud. ~~Chinese~~As ~~law~~a ~~will~~result, ~~govern~~our ~~almost~~failure ~~all~~to achieve and maintain effective internal controls over financial reporting could result in the loss of ~~our~~investor ~~acquisition~~confidence ~~agreements,~~in ~~many~~the reliability of our financial statements, which ~~may~~in ~~also~~turn ~~require~~could harm our business and negatively impact the ~~approval~~trading price of ~~Chinese~~our ~~government agencies~~stock. ~~Thus~~Furthermore, we ~~cannot~~anticipate ~~assure investors~~ that we will beincur ~~able~~considerable costs and use significant management time and other resources in an effort to ~~enforce~~comply ~~any~~with Section 404 and other requirements of ~~our~~the ~~material~~Sarbanes-Oxley ~~agreements~~Act. orWe ~~that~~also ~~remedies~~expect these developments will bemake ~~available~~it ~~outside~~more ~~China~~difficult and more expensive for us to attract and retain additional members to the board of directors (both independent and non-independent), and additional executives.

Our business is and will continue to be subject to 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 securities.43

OnRisks ~~January~~Related 31, 2013, the Guizhou province of China, in which the Company operates three of its five coal mines, issued a provincial-level notice/order (the “Guizhou Consolidation Policy”) that set forth the following key requirements, among others—by the end of 2013: (i) the total number of coal-mine related business enterprises in the Guizhou province (“Guizhou Coal Enterprise”) shall be limited to noDoing ~~more~~Business ~~than 200; (ii) each Guizhou Coal Enterprise~~ in Gui Yang City of Guizhou province shall reach at least the capacity to produce One Million (1,000,000) tons of coal per year; (iii) each Guizhou Coal Enterprise in Liu Pan Shui City of Guizhou province shall reach at least the capacity to produce Two Million (2,000,000) tons of coal per year; (iv) for certain coal mines, the mechanization level for coal-mine development and coal mining shall reach, respectively, 70% and 45% (by the end of 2015, 80% and 55% respectively.) While the Guizhou Consolidation Policy has opened the door for the Company to acquire/consolidate additional smaller coal mines in the Guizhou province at faster speed and at attractive prices, the Company is also aware that the Company’s current coal-production capacity and mechanization level have not met the requirements set forth in the Guizhou Consolidation Policy, but we intend to work diligently to meet the requirements in the policy by the end of 2013. China

39Our Chinese operations pose certain risks because of the evolving state of the Chinese economy and Chinese political, 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.

~~Restrictions~~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, and 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 ~~currency~~government has been reforming its economic system. These policies and measures may ~~limit~~from ~~our~~time ~~ability~~to time be modified or revised. While the Chinese economy has experienced significant growth 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 ~~obtain~~encourage ~~operating~~economic ~~capital~~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 ~~restrict~~cause our ~~ability~~margins to ~~move~~be ~~funds~~decreased. ~~out~~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.

~~The~~There ~~Chinese~~are ~~currency,~~substantial ~~the~~uncertainties ~~Renminbi~~regarding ~~(RMB),~~the isapplication ~~not~~of aChinese ~~freely convertible currency~~laws, ~~which~~especially ~~could~~with ~~limit~~respect ~~our ability~~ to ~~obtain~~existing ~~sufficient~~and future foreign ~~currency~~investments toin ~~support~~China. ~~our~~Despite ~~business~~China ~~operations~~having ~~and~~its ~~could~~own ~~impair~~securities ~~the~~laws ~~ability~~and ofregulators, ~~our~~the Chinese ~~subsidiaries~~legal tosystem ~~pay~~is ~~dividends~~in ora ~~other~~developmental ~~distributions~~stage toand ~~us.~~has Wehistorically ~~rely~~not onenforced ~~the~~its Chinese ~~government’s~~securities ~~foreign~~law ~~currency~~as ~~conversion~~rigidly ~~policies,~~as ~~which~~their ~~may~~U.S. ~~change at any time, in regard to our currency exchange needs~~counterparts. WeThe ~~currently~~interpretation ~~receive~~and ~~all~~application of ~~our~~existing ~~revenues~~Chinese ~~in Renminbi~~laws, ~~which~~regulations isand ~~not~~policies, ~~freely~~and ~~convertible~~the ~~into~~stated ~~other~~positions ~~foreign~~of ~~currencies. In China,~~ the ~~government~~Chinese ~~has~~authorities ~~control~~may ~~over~~change ~~Renminbi~~and ~~reserves~~possible ~~through,~~new ~~among other things~~laws, ~~direct~~regulations ~~regulation~~or ofpolicies ~~the~~will ~~conversion~~impact ofour ~~Renminbi~~business ~~into other foreign currencies~~ and ~~restrictions on foreign imports~~operations. ~~Although~~Because ~~foreign~~of ~~currencies~~the ~~which~~evolving ~~are~~nature ~~required~~of ~~for~~the ~~“current~~law, ~~account”~~it ~~transactions~~will ~~can~~ be ~~bought~~difficult ~~freely~~for atus ~~authorized~~to ~~Chinese~~manage ~~banks,~~and ~~the~~plan ~~proper~~for ~~procedural~~changes ~~requirements~~that ~~prescribed~~may ~~by Chinese law must be met~~arise. ~~Current~~China’s ~~account~~judiciary ~~items,~~is ~~including~~relatively ~~profit~~inexperienced ~~distributions,~~in ~~interest~~enforcing ~~payments~~corporate and ~~expenditures~~commercial ~~from trade-related transactions~~law, ~~can~~resulting ~~be made~~ in ~~foreign~~significant ~~currencies~~uncertainty ~~without~~as ~~prior~~to ~~approval from~~ the ~~Chinese~~outcome ~~State Administration~~ of ~~Foreign~~any ~~Exchange~~litigation byin ~~complying with certain procedural requirements~~China. ~~However~~Consequently, ~~approval~~there ~~from appropriate government authorities~~ is ~~required~~a ~~where~~risk ~~RMB~~that isshould toa bedispute ~~converted~~arise ~~into~~between ~~foreign~~us ~~currency~~ and ~~remitted~~any ~~out~~party ofwith ~~China~~whom towe ~~pay~~have ~~capital~~entered ~~expenses~~into ~~such~~a asmaterial ~~the~~agreement ~~repayment of bank loans denominated~~ in ~~foreign currencies. At the same time~~China, ~~Chinese~~we ~~companies~~may ~~are~~be ~~also~~unable ~~required~~ to ~~sell~~enforce ~~their~~such ~~foreign~~agreements ~~exchange~~under ~~earnings~~the ~~to authorized~~ Chinese ~~banks~~legal ~~and~~system. ~~the~~Chinese ~~purchase~~law ofwill ~~foreign~~govern ~~currencies~~almost ~~for~~all ~~capital~~of ~~account~~our ~~transactions~~acquisition ~~still~~agreements, ~~requires~~many ~~prior approval~~ of ~~the~~which ~~Chinese~~may ~~government.~~also ~~This~~require ~~type~~the approval of ~~heavy regulation by the~~ Chinese government ofagencies. ~~foreign~~Thus, ~~currency~~we ~~exchange~~cannot ~~restricts~~assure ~~certain~~investors ofthat ~~our~~we ~~business~~will ~~operations~~be ~~and~~able ato ~~change~~enforce in any of ~~these~~our ~~government~~material ~~policies,~~agreements or ~~any~~that ~~other,~~remedies ~~could~~will ~~further~~be ~~negatively~~available ~~impact~~outside ~~our operations~~China.

Our ~~ownership~~business ~~structure~~ is ~~subject~~and will continue to ~~regulatory~~be ~~controls~~subject byto ~~the~~central, ~~PRC government~~provincial, ~~including~~local ~~approvals~~ and ~~timely~~municipal ~~payments~~regulation and licensing in ~~connection~~China. Compliance with ~~our~~such ~~acquisitions.~~regulations ~~Failure~~and licensing can be expected to ~~obtain~~be ~~such~~a ~~approvals~~time-consuming, orexpensive toprocess. ~~timely~~Compliance ~~remit~~with ~~required~~foreign ~~payments~~country ~~may~~laws ~~cause~~and regulations affecting foreign investment, business operations, currency exchange, repatriation of profits and taxation will increase the ~~unwinding~~risk of investing in our ~~acquisitions~~securities.

On ~~October~~January 2131, ~~2005~~2013, the ~~PRC~~Guizhou ~~State~~province ~~Administration~~of China, in which the Company operates three of ~~Foreign~~its ~~Exchange~~five coal ~~(“SAFE”)~~mines, issued a ~~circular~~provincial-level notice/order (the “~~Circular~~Guizhou 75Consolidation Policy”), ~~effective~~that ~~November~~set 1,forth ~~2005~~the following key requirements, ~~which~~among ~~repealed~~others—by ~~Circular~~the 11end ~~and~~of ~~Circular~~2013: ~~29,~~(i) ~~which~~the ~~previously~~total ~~required~~number ~~Chinese~~of ~~residents~~coal-mine torelated ~~seek~~business ~~approval~~enterprises ~~from~~in ~~SAFE~~the ~~before~~Guizhou ~~establishing~~province ~~any~~(“Guizhou ~~control~~Coal ofEnterprise”) ashall ~~foreign~~be ~~company~~limited orto ~~transfer~~no more than 200; (ii) each Guizhou Coal Enterprise in Gui Yang City of ~~China-based~~Guizhou ~~assets~~province orshall ~~equity~~reach ~~for~~at least the ~~shares~~capacity to produce One Million (1,000,000) tons of ~~the~~coal ~~foreign~~per ~~company.~~year; ~~SAFE~~(iii) ~~also~~each ~~issued~~Guizhou aCoal ~~news~~Enterprise ~~release~~in ~~about~~Liu ~~the~~Pan ~~issuance~~Shui City of ~~Circular~~Guizhou 75province shall reach at least the capacity to ~~make~~produce itTwo ~~clear~~Million ~~that~~(2,000,000) ~~China’s~~tons ~~national~~of ~~policies~~coal ~~encourage~~per ~~the~~year; ~~efforts~~(iv) byfor ~~Chinese~~certain ~~private~~coal ~~companies~~mines, ~~and~~the ~~high~~mechanization ~~technology~~level ~~companies~~for tocoal-mine ~~obtain~~development ~~offshore~~and ~~financing.~~coal ~~Circular~~mining 75shall ~~confirmed~~reach, ~~that~~respectively, 70% and 45% (by the ~~uses~~end of ~~offshore~~2015, ~~special~~80% ~~purpose~~and ~~vehicles~~55% ~~(“SPV”~~respectively.) While asthe ~~holding~~Guizhou ~~companies~~Consolidation ~~for~~Policy ~~PRC~~has ~~investments~~opened ~~are~~the ~~permitted~~door asfor ~~long~~the asCompany ~~proper~~to ~~foreign~~acquire/consolidate ~~exchange~~additional ~~registrations~~smaller ~~are~~coal ~~made~~mines ~~with~~in ~~SAFE.~~the AsGuizhou ~~China~~province ~~continues~~at tofaster ~~develop~~speed ~~its~~and ~~legal~~at ~~system~~attractive prices, ~~additional~~the ~~legal,~~Company ~~administrative,~~is ~~and~~also ~~regulatory~~aware ~~rules~~that the Company’s current coal-production capacity and ~~regulations~~mechanization ~~may~~level behave ~~enacted~~not met the requirements set forth in the Guizhou Consolidation Policy, ~~and~~but we ~~may~~intend ~~become~~to ~~subject~~work diligently to meet the ~~additional~~requirements ~~rules~~in ~~and~~the ~~regulation~~policy ~~applicable~~by to the ~~our~~end ~~Chinese~~of ~~subsidiaries~~2013.

Our Chinese subsidiaries, Kunming Biaoyu Industrial Boiler Co., Ltd. (“KMC”) have been registered as American subsidiaries, and all required capital contributions have been made into them. We own our equity ownership interest in the DaPuAn and SuTsong Mines through a nominee who is a Chinese citizen that holds our equity ownership in trust for our benefit under an agency agreement executed in April 2008, and we refer to the operations as “L & L Coal Partners” Because this equity will be held by a nominee, no SAFE approval is necessary for it. We believe 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, if we fail to obtain the required PRC government approvals for our acquisitions or fail to remit all of the required payments for acquisitions, such acquisitions may be deemed void or unwound. Should this occur, we may seek to acquire the equity interest of our subsidiaries through other means, although no assurance can be given that we will be able to do so, nor can we assure that we will be successful if we do.44

40Restrictions on Chinese currency may limit our ability to obtain operating capital and could restrict our ability to move funds out of China.

The Chinese currency, the Renminbi (RMB), is not a freely convertible currency, which could limit our ability to obtain sufficient foreign currency to support our business operations and could impair the ability of our Chinese subsidiaries to pay dividends or other distributions to us. We rely on the Chinese government’s foreign currency conversion policies, which may ~~have~~change at any time, in regard to ~~incur~~our ~~unanticipated~~currency ~~costs~~exchange ~~because~~needs. We currently receive all of our revenues in Renminbi, which is not freely convertible into other foreign currencies. In China, the ~~unpredictability~~government has control over Renminbi reserves through, among other things, direct regulation of the conversion of Renminbi into other foreign currencies and restrictions on foreign imports. Although foreign currencies which are required for “current account” transactions can be bought freely at authorized Chinese ~~legal~~banks, ~~system~~the proper procedural requirements prescribed by Chinese law must be met. Current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the Chinese State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. At the same time, Chinese companies are also required to sell their foreign exchange earnings to authorized Chinese banks and the purchase of foreign currencies for capital account transactions still requires prior approval of the Chinese government. This type of heavy regulation by the Chinese government of foreign currency exchange restricts certain of our business operations and a change in any of these government policies, or any other, could further negatively impact our operations.

~~The~~Our ~~Chinese~~ownership ~~legal~~structure ~~system has many uncertainties. The Chinese legal system~~ is ~~based~~subject onto ~~written~~regulatory ~~statutes.~~controls ~~Prior~~by ~~court decisions may be cited for reference but have limited precedential value. Since 1979, Chinese legislation and regulations have enhanced~~ the ~~protections~~PRC ~~afforded to various forms of foreign investments in China. However~~government, ~~China~~including ~~has~~approvals ~~not developed a fully integrated legal system~~ and ~~recently-enacted~~timely ~~laws~~payments ~~and regulations may not sufficiently cover all aspects of economic activities~~ in ~~China.~~connection Inwith ~~particular,~~our 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 uncertaintiesacquisitions. InFailure ~~addition,~~to ~~the~~obtain ~~Chinese~~such ~~legal~~approvals ~~system~~or isto ~~based in part on government policies and internal rules, some of which are not published on a~~ timely ~~basis~~remit orrequired atpayments ~~all, that~~ may ~~have~~cause athe ~~retroactive~~unwinding ~~effect. As a result, we may not be aware~~ of our ~~violation of these policies and rules until sometime after the violation~~acquisitions. ~~In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.~~

ItOn ~~will~~October be21, ~~difficult~~2005, ~~for~~the ~~any~~PRC ~~shareholder~~State Administration of Foreign Exchange (“SAFE”) issued a circular (“Circular 75”), effective November 1, 2005, which repealed Circular 11 and Circular 29, which previously required Chinese residents to ~~commence~~seek approval from SAFE before establishing any control of a ~~legal~~foreign ~~action~~company ~~against~~or ~~our~~transfer ~~executives~~of China-based assets or equity for the shares of the foreign company. ~~Most~~SAFE also issued a news release about the issuance of ~~our~~Circular ~~assets~~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 ~~located~~permitted inas long as proper foreign exchange registrations are made with SAFE. As China continues to develop its legal system, additional legal, administrative, and regulatory rules and regulations may be enacted, and we may become subject to the additional rules and regulation applicable to the our Chinese subsidiaries.

~~Because~~Our ~~our~~Chinese ~~directors~~subsidiaries, ~~and~~Kunming ~~officer(s)~~Biaoyu ~~reside~~Industrial ~~both~~Boiler ~~within~~Co., ~~and~~Ltd. ~~outside~~(“KMC”) ofhavebeen ~~the~~registered ~~United~~as ~~States~~American subsidiaries, itand ~~may~~all berequired ~~difficult~~capital ~~for~~contributions anhave ~~investor~~been tomade ~~enforce~~into ~~his~~them. orWe ~~her~~own ~~rights~~our ~~against~~equity ~~them~~ownership orinterest toin ~~enforce~~the ~~United~~DaPuAn ~~States~~and ~~court~~SuTsong ~~judgments~~Mines ~~against~~through ~~them~~a ifnominee ~~they~~who ~~live~~is ~~outside~~a ~~the~~Chinese ~~United~~citizen ~~States.~~that ~~Most~~holds of our ~~assets~~equity ~~are~~ownership ~~located~~in ~~outside~~trust offor ~~the~~our ~~United~~benefit ~~States~~under an agency agreement executed in ~~China.~~April ~~Additionally~~2008, and we ~~plan~~refer to ~~continue~~the ~~acquiring~~operations ~~other~~as ~~energy-related~~“L ~~entities~~& inL ~~China~~Coal inPartners” ~~the~~Because ~~future~~this equity will be held by a nominee, no SAFE approval is necessary for it. ItWe believe that Circular 75 and other related Circulars or regulations may ~~therefore~~likely be ~~difficult~~further ~~for~~clarified ~~investors~~by SAFE, in ~~the~~writing ~~United~~or ~~States~~through tooral ~~enforce~~comments ~~their~~by ~~legal~~officials ~~rights~~from SAFE, or through implementation by SAFE in connection with actual transactions. However, if we fail to ~~effect~~obtain ~~service~~the ofrequired ~~process~~PRC ~~upon~~government usapprovals orfor our ~~directors~~acquisitions or ~~officers,~~fail or to ~~enforce~~remit ~~judgments~~all of ~~United~~the ~~States~~required ~~courts~~payments ~~predicated~~for ~~upon~~acquisitions, ~~civil~~such ~~liabilities~~acquisitions ~~and~~may ~~criminal~~be ~~penalties~~deemed onvoid us or ~~our~~unwound. ~~directors~~Should ~~and~~this ~~officers~~occur, ~~under~~we ~~federal~~may ~~securities~~seek ~~laws.~~to ~~Moreover~~acquire the equity interest of our subsidiaries through other means, ~~China~~although ~~currently~~no ~~does~~assurance ~~not~~can ~~have~~be ~~treaties~~given ~~with~~that ~~the~~we ~~United~~will ~~States~~be orable ~~many~~to ~~other~~do ~~countries~~so, ~~providing~~nor ~~for~~can ~~the~~we ~~reciprocal~~assure ~~recognition~~that ~~and~~we ~~enforcement~~will ofbe ~~judgments~~successful ofif ~~courts~~we do.

We ~~are~~may ~~subject~~have to ~~currency~~incur ~~fluctuations~~unanticipated ~~from~~costs ~~our~~because ~~Chinese~~of ~~operations and fluctuations in~~ the ~~exchange~~unpredictability ~~rate may negatively affect our expenses and results~~ of ~~operations, as well as~~ the ~~value~~Chinese oflegal ~~our assets and liabilities~~system.

~~Effective~~The ~~July~~Chinese ~~21,~~legal ~~2005,~~system ~~The~~has ~~People’s~~many ~~Bank~~uncertainties. ofThe ~~China~~Chinese ~~announced~~legal ~~that~~system ~~the~~is ~~Renminbi~~based ~~(RMB)~~on ~~exchange~~written ~~rate~~statutes. ~~regime~~Prior ~~changed~~court ~~from~~decisions amay ~~fixed~~be ~~rate~~cited offor ~~exchange~~reference ~~based~~but ~~upon~~have ~~the~~limited Uprecedential value.S. ~~dollar~~Since to1979, aChinese ~~managed~~legislation ~~floating~~and ~~exchange~~regulations ~~rate~~have ~~regime~~enhanced ~~based~~the ~~upon~~protections ~~market~~afforded ~~supply~~to ~~and~~various ~~demand~~forms of aforeign ~~basket~~investments ofin ~~currencies~~China. ~~On July 26~~However, ~~2005,~~China ~~the~~has ~~exchange~~not ~~rate~~developed ~~against~~a ~~the~~fully ~~Renminbi~~integrated ~~was~~legal ~~adjusted~~system toand ~~8.11~~recently-enacted ~~Renminbi~~laws ~~per~~and ~~U.S.~~regulations ~~dollar~~may ~~from~~not ~~8.28~~sufficiently ~~Renminbi~~cover ~~per~~all ~~U.S.~~aspects ~~dollar, which represents an adjustment~~ of ~~approximately~~economic ~~two~~activities ~~percent~~in China. AsIn ~~of January31~~particular, ~~2012,~~because ~~the~~these ~~Renminbi~~laws ~~appreciated~~and toregulations ~~approximately~~are ~~RMB~~relatively ~~6.31~~new, ~~per~~and ~~U.S.~~because ~~Dollar.~~of ~~It is expected that~~ the ~~revaluation~~limited volume of ~~the~~published ~~Renminbi~~decisions and ~~the~~their ~~exchange~~nonbinding ~~rate~~nature, of the ~~Renminbi~~interpretation ~~may~~and ~~continue~~enforcement toof ~~change~~these inlaws ~~the~~and ~~future.~~regulations ~~Fluctuations~~involve inuncertainties. ~~the~~In ~~exchange~~addition, ~~rate between~~ the ~~RMB~~Chinese ~~and~~legal ~~the~~system ~~United~~is ~~States~~based ~~dollar~~in ~~could~~part ~~adversely~~on ~~affect~~government ~~our~~policies ~~operating~~and ~~results.~~internal ~~Results~~rules, some of ~~our~~which ~~business operations~~ are ~~translated~~not atpublished ~~average~~on ~~exchange~~a ~~rates~~timely ~~into~~basis ~~United~~or ~~States~~at ~~Dollars~~all, ~~for~~that ~~purposes~~may ofhave ~~reporting~~a ~~results~~retroactive effect. As a result, ~~fluctuations~~we ~~in exchange rates~~ may ~~adversely~~not ~~affect~~be ~~our~~aware ~~expenses and results~~ of ~~operations~~our asviolation ~~well as the value~~ of ~~our~~these ~~assets~~policies and ~~liabilities.~~rules ~~Fluctuations~~until ~~may~~sometime ~~adversely~~after ~~affect~~ the ~~comparability of period-to-period results~~violation. WeIn doaddition, ~~not~~any ~~use~~litigation ~~hedging~~in ~~techniques~~China tomay ~~eliminate~~be ~~the~~protracted ~~effects~~and ofresult ~~currency~~in ~~fluctuations.~~substantial ~~Thus,~~costs ~~exchange~~and ~~rate~~diversion ~~fluctuations~~of ~~could~~resources ~~have a material adverse impact on our operating results~~ and ~~stock~~management ~~prices~~attention.

~~New governmental regulation relating to greenhouse gas emissions may subject us to significant new costs and restrictions on our operations.~~45

~~Climate~~It ~~change~~will isbe ~~receiving~~difficult ~~increasing~~for ~~attention~~any ~~worldwide.~~shareholder ~~Many scientists, legislators and others attribute climate change~~ to ~~increased~~commence ~~levels~~a oflegal ~~greenhouse~~action ~~gases,~~against ~~including~~our ~~carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions~~executives. ~~There~~Most ~~are~~of ~~bills~~our ~~pending~~assets ~~in Congress that would regulate greenhouse gas emissions. While US regulations~~ are ~~not~~located ~~applicable~~ in China~~, China has agreed to reduce greenhouse gas emissions per unit of GDP which may reduce the rate of growth in coal consumption in China~~. ~~Additionally as China begins to implement more stringent environmental and safety regulations our mining and operational costs may increase.~~

InBecause ~~the~~our ~~middle~~directors ofand ~~November~~officer(s) ~~2012,~~reside ~~China~~both ~~completed~~within ~~its~~and ~~18th~~outside ~~National~~of ~~Congress~~the ~~for~~United States, it ismay ~~once~~be adifficult ~~decade~~for ~~leadership~~an ~~transition.~~investor ~~The~~to ~~new~~enforce ~~leaders~~his ~~have~~or ~~shown~~her torights ~~willingness~~against them or to ~~take~~enforce ~~necessary~~United ~~step~~States tocourt ~~boost~~judgments against them if they live outside the ~~economic~~United ~~growth~~States. inMost of our assets are located outside of the ~~orderly~~United ~~manner~~States in China. Additionally, we plan to continue acquiring other energy-related entities in China in the future. It may therefore be difficult for investors in the ~~coming~~United ~~years.~~States ~~However~~to enforce their legal rights, itto isaffect ~~very~~service ~~difficult~~of process upon us or our directors or officers, or to ~~predict~~enforce ~~the~~judgments ~~government~~of ~~policies~~United States courts predicated upon civil liabilities and ~~direction~~criminal ~~under~~penalties ~~the~~on ~~new~~us ~~leadership~~or ~~for~~our ~~the~~directors ~~next~~and ~~decade~~officers under federal securities laws. ~~Certain~~Moreover, ~~new~~China ~~government~~currently ~~policies~~does ~~may~~not ~~negatively~~have ~~impact~~treaties ~~our~~with ~~business~~the inUnited ~~China~~States inor many other countries providing for the ~~future~~reciprocal recognition and ~~thus~~enforcement ~~our~~of ~~shareholders~~judgments ~~values~~of courts.

41We 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.

~~Failure~~Effective July 21, 2005, The People’s Bank of China announced that the Renminbi (RMB) exchange rate regime changed from a fixed rate of exchange based upon the U.S. dollar to ~~comply~~a ~~with~~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 January31, 2012, the Renminbi appreciated to approximately RMB 6.31 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 RMB and the United States ~~Foreign~~dollar ~~Corrupt~~could ~~Practices~~adversely ~~Act~~affect ~~could~~our ~~subject~~operating usresults. toResults ~~penalties~~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 ~~other~~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 ~~consequences~~impact on our operating results and stock prices.

WeNew ~~are~~governmental ~~subject~~regulation torelating ~~the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments~~ to ~~foreign~~greenhouse ~~officials~~gas ~~for~~emissions ~~the purpose of obtaining or retaining business. Foreign companies, including some that~~ may ~~compete~~subject ~~with~~ us, ~~are not subject~~ to ~~these~~significant ~~prohibitions.~~new ~~Corruption,~~costs ~~extortion, bribery, pay-offs, theft~~ and ~~other~~restrictions fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our ~~business, financial condition and results of~~ operations.

~~Risks~~Climate ~~Related~~change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate change to ~~Our~~increased ~~Common~~levels ~~Stock~~of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. There are bills pending in Congress that would regulate greenhouse gas emissions. While US regulations are not applicable in China, China has agreed to reduce greenhouse gas emissions per unit of GDP which may reduce the rate of growth in coal consumption in China. Additionally as China begins to implement more stringent environmental and safety regulations our mining and operational costs may increase.

~~The~~In ~~market~~the ~~price~~middle of ~~our~~November ~~stock~~2012, China completed its 18th National Congress for it is once a decade leadership transition. The new leaders have shown to willingness to take necessary step to boost the economic growth in the orderly manner in China for the coming years. However, it is very difficult to predict the government policies and direction under the new leadership for the next decade. Certain new government policies may benegatively ~~volatile~~impact our business in China in the future and thus our shareholders values.

~~The market price of our stock may be volatile and subject to wide fluctuations in response to factors including the following:~~46

~~· actual~~Failure orto ~~anticipated~~comply ~~fluctuations~~with inthe ~~our~~United ~~quarterly~~States ~~operating~~Foreign ~~results;~~Corrupt Practices Act could subject us to penalties and other adverse consequences.

~~· changes~~We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial ~~estimates~~condition byand ~~securities~~results ~~research~~of ~~analysts;~~operations.

~~· conditions~~Risks inRelated ~~coal~~to ~~energy~~Our ~~markets;~~Common Stock

~~· changes~~The ~~in the economic performance or~~ market ~~valuations~~price of ~~other~~our ~~coal~~stock ~~energy~~may ~~companies;~~be volatile.

~~· announcements~~The bymarket usprice orof our ~~competitors~~stock ofmay ~~new~~be ~~products,~~volatile ~~acquisitions,~~and ~~strategic~~subject ~~partnerships,~~to ~~joint~~wide ~~ventures~~fluctuations orin ~~capital~~response ~~commitments;~~to factors including the following:

· ~~addition~~Actual or ~~departure~~anticipated offluctuations ~~key~~in ~~personnel~~our quarterly operating results;

· ~~fluctuations~~Changes ofin ~~exchange~~financial ~~rates~~estimates ~~between~~by ~~RMB~~securities ~~and~~research ~~the U.S. dollar~~analysts; ~~and~~

· ~~general~~Conditions ~~economic or political conditions~~ in ~~China~~coal ~~and~~energy ~~USA.~~markets;

In· Changes ~~addition,~~in the ~~securities~~economic ~~market has from time to time experienced significant price and volume fluctuations that are not related to the operating~~ performance ofor ~~particular companies. These~~ market ~~fluctuations~~valuations ~~may~~of ~~also~~other ~~materially~~coal ~~and~~energy ~~adversely affect the market price of our stock.~~ companies;

~~Our~~· Announcements ~~corporate~~by ~~actions~~us ~~are~~or ~~substantially~~our ~~influenced~~competitors byof ~~our~~new ~~principal~~products, ~~stockholders~~acquisitions, ~~and~~strategic ~~affiliated~~partnerships, ~~entities.~~joint ventures or capital commitments;

~~Members~~· Addition ~~of our management and their affiliated entities own~~ or ~~have~~departure ~~the beneficial ownership right to approximately 18%~~ of ~~our~~key outstanding common shares, representing approximately 17% of our voting power. These stockholders, acting individually or as a group, could exert substantial influence over matters such as 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.personnel;

42· Fluctuations of exchange rates between RMB and the U.S. dollar; and

We· General ~~have~~economic ~~the~~or ~~right~~political toconditions ~~issue additional common stock and preferred stock without the consent of our stockholders. If we issue additional shares~~ in ~~the~~China ~~future, this may result in dilution to our existing stockholders~~ and ~~could decrease the value of your shares~~USA.

~~Our~~In ~~articles of incorporation~~addition, ~~as amended, authorize~~ the ~~issuance~~securities ofmarket ~~120,000,000 shares of common stock and 2,500,000 shares of preferred stock. Our board of directors~~ has ~~the~~from ~~authority~~time to ~~issue~~time ~~additional~~experienced ~~shares~~significant upprice toand ~~the~~volume ~~authorized~~fluctuations ~~capital~~that ~~stated~~are innot ~~the~~related ~~articles of incorporation. Our board of directors may choose~~ to ~~issue~~the ~~some~~operating orperformance ~~all~~ of ~~such~~particular ~~shares to acquire one or more businesses or to provide additional financing in the future~~companies. ~~The~~These ~~issuance~~market offluctuations ~~any such shares~~ may ~~result~~also inmaterially aand ~~reduction~~adversely ofaffect 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.

Our ~~business~~corporate ~~strategy~~actions calls for strategic acquisitions of additional coal mines and other coal-related businesses. It is anticipated that future acquisitions will require cash and issuances of our capital stock, including our common stock, warrants, preferred shares or convertible bonds in the future. To the extent we are ~~required~~substantially toinfluenced ~~pay~~by 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.~~principal ~~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~~affiliated ~~financings~~entities.

~~Our~~Members ~~authorized~~of ~~preferred~~our ~~stock~~management ~~constitutes~~and ~~what~~their isaffiliated ~~commonly~~entities ~~referred~~own toor ashave ~~“blank~~the ~~check”~~beneficial ~~preferred~~ownership ~~stock.~~right ~~This~~to ~~type~~approximately 18% of ~~preferred~~our ~~stock~~outstanding ~~allows~~common ~~our~~shares, ~~board~~representing ofapproximately ~~directors~~17% toof ~~divide~~our ~~the~~voting ~~preferred~~power. ~~stock~~These ~~into series~~stockholders, toacting ~~designate~~individually ~~each~~or ~~series~~as a group, tocould ~~fix~~exert ~~and~~substantial ~~determine~~influence ~~separately~~over ~~for~~matters ~~each~~such ~~series~~as ~~any~~approving ~~one~~mergers or ~~more~~other ~~relative~~business ~~rights~~combination ~~and~~transactions. ~~preferences~~In ~~and~~addition, tobecause ~~issue~~of ~~shares~~the percentage of ~~any~~ownership ~~series~~and ~~without~~voting ~~further~~concentration ~~stockholder~~in ~~approval.~~these ~~This~~principal ~~authorized~~stockholders ~~preferred~~and ~~stock~~their ~~allows~~affiliated entities, elections of our board of directors ~~to hinder~~will orgenerally ~~discourage~~be anwithin ~~attempt~~the tocontrol ~~gain~~of ~~control~~these stockholders and their affiliated entities. While all of usour bystockholders aare ~~merger~~entitled to vote on matters submitted to our stockholders for approval, ~~tender~~the ~~offer~~concentration atof ashares and voting control ~~premium~~presently ~~price,~~lies ~~proxy~~with ~~contest~~these orprincipal ~~otherwise~~stockholders and their affiliated entities. ~~Consequently~~As such, ~~the~~it ~~preferred~~would ~~stock~~be ~~could~~difficult ~~entrench~~for ~~our~~stockholders to propose and have approved proposals not supported by management. InThere ~~addition,~~can ~~the~~be ~~market~~no ~~price~~assurances ofthat ~~our~~matters ~~common~~voted ~~stock~~upon ~~could~~by beour ~~materially~~officers and ~~adversely~~directors ~~affected~~in their capacity as stockholders will be viewed favorably by ~~the~~all ~~existence~~stockholders of the ~~preferred stock~~company.

~~Certain SEC rules and FINRA sales practices may limit a stockholder’s ability to buy and sell and our stock, which could adversely affect the price of our common stock.~~47

~~The~~We ~~SEC~~have 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~~right ~~price of our common stock falls below $5.00 per share, the open-market trading of our common stock is subject~~ to ~~the~~issue ~~penny stock rules, which impose~~ additional ~~sales~~common 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~~preferred ~~nature and level of risks in the penny~~ stock ~~market.~~without ~~The broker-dealer also must provide~~ the ~~customer~~consent ~~with current bid and offer quotations for the penny stock, the compensation~~ of ~~the~~our ~~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~~stockholders. ~~The~~If ~~bid~~we ~~and~~issue ~~offer~~additional ~~quotations,~~shares ~~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~~future, ~~the~~this penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may ~~have~~result ~~the effect of reducing the level of trading activity~~ in ~~the~~dilution ~~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.~~existing Westockholders ~~believe that the penny stock rules discourage investor interest in~~ and ~~limit~~could decrease the ~~marketability~~value of ~~our~~your ~~common stock~~shares.

InOur ~~addition~~articles toof ~~the~~incorporation, ~~“penny~~as ~~stock” rules described above~~amended, authorize the ~~Financial~~issuance ~~Industry~~of ~~Regulatory~~120,000,000 ~~Authority~~shares ~~(“FINRA”)~~of ~~has~~common ~~adopted~~stock ~~rules~~and ~~that~~2,500,000 ~~require~~shares ~~that~~of inpreferred ~~recommending~~stock. anOur ~~investment~~board toof adirectors ~~customer,~~has athe ~~broker-dealer~~authority ~~must~~to ~~have~~issue ~~reasonable~~additional ~~grounds~~shares ~~for~~up ~~believing~~to ~~that~~ the ~~investment~~authorized iscapital ~~suitable~~stated ~~for~~in ~~that~~the ~~customer.~~articles ~~Prior~~of toincorporation. ~~recommending~~Our ~~speculative~~board ~~low~~of ~~priced~~directors ~~securities~~may choose to ~~their~~issue ~~non-institutional~~some ~~customers,~~or ~~broker-dealers~~all ~~must~~of ~~make~~such ~~reasonable~~shares ~~efforts~~ to ~~obtain~~acquire ~~information~~one ~~about~~or ~~the~~more ~~customer’s~~businesses ~~financial~~or ~~status,~~to ~~tax~~provide ~~status,~~additional ~~investment~~financing ~~objectives~~in ~~and~~the ~~other information~~future. ~~Under~~The ~~interpretations~~issuance of ~~these~~any ~~rules,~~such ~~FINRA~~shares ~~believes~~may ~~that~~result ~~there~~in is a ~~high~~reduction ~~probability~~of ~~that~~the ~~speculative~~book ~~low~~value ~~priced~~or ~~securities~~market ~~will~~price ~~not~~of bethe ~~suitable~~outstanding ~~for~~shares atof ~~least~~our ~~some~~common ~~customers~~stock. ~~FINRA~~If ~~requirements~~we ~~make~~do itissue ~~more~~any ~~difficult~~such ~~for~~additional ~~broker-dealers~~shares, tosuch ~~recommend~~issuance ~~that~~also ~~their~~will ~~customers~~cause ~~buy~~a ~~our~~reduction ~~common~~in ~~stock,~~the ~~which~~proportionate ~~may~~ownership ~~limit~~and ~~your~~voting ~~ability~~power toof ~~buy~~all ~~and~~other ~~sell~~stockholders. ~~our~~Further, ~~stock~~any ~~and~~such ~~have~~issuance anmay ~~adverse~~result ~~effect~~in ona ~~the~~change ~~market~~of ~~for~~control of our ~~shares~~company.

~~Stockholders~~Our ~~should~~business ~~have~~strategy nocalls ~~expectation~~for strategic acquisitions of additional coal mines and other coal-related businesses. It is anticipated that future acquisitions will require cash and issuances of our 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 ~~dividends~~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.

~~The~~Our ~~holders~~authorized ofpreferred ~~our~~stock ~~common~~constitutes ~~stock~~what ~~are~~is ~~entitled~~commonly referred to ~~receive~~as ~~dividends~~“blank ~~only~~check” ~~when,~~preferred asstock. ~~and~~This iftype ~~declared~~of bypreferred ~~the~~stock allows our board of directors ~~out~~to ofdivide ~~funds~~the ~~legally~~preferred ~~available~~stock ~~therefore.~~into Toseries, ~~date~~to designate each series, weto ~~have~~fix ~~not~~and ~~declared~~determine ~~nor~~separately ~~paid~~for each series any ~~cash~~one ~~dividends~~or more relative rights and preferences and to issue shares of any series without further stockholder approval. ~~Our~~This authorized preferred stock allows our board of directors ~~does~~to hinder ~~not~~or ~~intend~~discourage an attempt to ~~declare~~gain ~~any~~control ~~dividends~~of inus ~~the~~by ~~foreseeable~~a ~~future~~merger, ~~but~~tender ~~instead~~offer ~~intends~~at toa ~~retain~~control ~~all~~premium ~~earnings~~price, ifproxy ~~any~~contest or otherwise. Consequently, ~~for~~the ~~use~~preferred instock could entrench our ~~business~~management. ~~operations~~In addition, the market price of our common stock could be materially and adversely affected by the existence of the preferred stock.

43Certain SEC rules and FINRA sales practices may limit a stockholder’s ability to buy and sell and our stock, which could adversely affect the price of our common stock.

~~Item~~The 1BSEC 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 ~~Unresolved~~per ~~Staff~~share ~~Comments~~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 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.

~~The~~In ~~Company~~addition ~~has~~to ~~outstanding~~the ~~unresolved~~“penny ~~comments~~stock” ~~from~~rules described above, the ~~SEC~~Financial ~~from~~Industry aRegulatory ~~letter~~Authority it(“FINRA”) ~~received~~has onadopted ~~January~~rules ~~12,~~that ~~2012~~require ~~relating~~that toin ~~its~~recommending ~~Registration~~an ~~Statement~~investment onto ~~Form~~a Scustomer, a broker-1dealer ~~filed~~must ~~with~~have reasonable grounds for believing that the ~~SEC~~investment onis ~~December~~suitable 8,for ~~2011,~~that ~~its~~customer. ~~Form~~Prior 10to recommending speculative low priced securities to their non-Qinstitutional ~~for~~customers, broker-dealers must make reasonable efforts to obtain information about the ~~fiscal~~customer’s ~~quarter~~financial ~~ended~~status, ~~October~~tax 31status, ~~2011~~investment objectives and other information. As Under interpretations of ~~November~~these 29rules, ~~2012,~~FINRA webelieves ~~have~~that ~~engaged~~there is a ~~very~~high ~~experienced~~probability ~~SEC~~that ~~lawyer~~speculative tolow ~~assist~~priced ussecurities inwill ~~resolving~~not ~~the~~be ~~SEC~~suitable ~~letter~~for ~~and~~at ~~related~~least ~~issues~~some customers. OnFINRA ~~July~~requirements 3,make ~~2013,~~it wemore ~~submitted~~difficult ~~our~~for ~~response~~broker-dealers to ~~SEC~~recommend onthat ~~the~~their S1customers ~~letter.~~buy Asour ofcommon ~~September 9~~stock, ~~2013,~~which wemay ~~are~~limit ~~still~~your ~~waiting~~ability ~~for~~to buy and sell our stock and have an adverse effect on the ~~response~~market ~~from~~for ~~SEC~~our shares.

Stockholders should have no expectation of any dividends.

The holders of our common stock are entitled to receive dividends only 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. Our 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None~~As described in greater detail above under Part I, Item 1, Note 25“Ironridge Transaction“, in August 2013, we issued 2,588,888 shares of common stock to Ironridge in connection with Stipulation, which was subject to adjustments as discussed above. In total, we issued 5,933,779 shares of common stock to Ironridge Global IV, Ltd. (“Ironridge”). On November 8, 2013, pursuant to the Order and Stipulation, Ironridge returned 1,079,915 shares to the Company for cancellation.

The Company claims an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended, for the issuance of the shares of the Company’s common stock issued in connection with the Ironridge Transaction, as the issuance of securities was in exchange for bona fide outstanding claims, where the terms and conditions of such issuance were approved by a court after a hearing upon the fairness of such terms and conditions.

Item 3. Defaults upon Senior Securities

None.

Item 4. Reserved

This item was removed and reserved pursuant to SEC Release No. 33-9089A issued on February 23, 2010.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit number	Description
31.1	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
31.2	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
32.1	Certification of the Chief Executive Officer pursuant 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

	L & L ENERGY, INC.
Date: September 9, 2013	By:	/S/ Dickson V. Lee
Date: December 13, 2013	By:	/S/ Dickson V. Lee
	Name:	Dickson V. Lee, CPA
	Title:	CEO

EXHIBIT 31.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

I, Dickson V Lee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of L&L Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	L&L ENERGY, INC.
Date: September 9, 2013	By:	/S/ Dickson V. Lee
Date: December 13, 2013	By:	/S/ Dickson V. Lee
	Name:	Dickson V. Lee, CPA
	Title:	CEO

4550

EXHIBIT 31.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

I, Ian G. Robinson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of L&L Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	L&L ENERGY, INC.
Date: September 9, 2013	By:	/S/ Ian G. Robinson
Date: December 13, 2013	By:	/S/ Ian G. Robinson
	Name:	Ian G. Robinson
	Title:	CFO

4651

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of L&L Energy, Inc. (the “Registrant”) for the period ended ~~July~~October 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dickson V. Lee, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge based upon the review of the Report:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	L&L ENERGY, INC.
Date: September 9, 2013	By:	/S/ Dickson V. Lee
Date: December 13, 2013	By:	/S/ Dickson V. Lee
	Name:	Dickson V. Lee, CPA
	Title:	CEO

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of L&L Energy, Inc. (the “Registrant”) for the period ended ~~July~~October 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ian G. Robinson, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge based upon a review of the Report:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	L&L ENERGY, INC.
Date: September 9, 2013	By:	/S/ Ian G. Robinson
Date: December 13, 2013	By:	/S/ Ian G. Robinson
	Name:	Ian G. Robinson
	Title:	CFO

4852

Filing Compare · L & L ENERGY, INC.