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 ~~OCTOBER~~JANUARY 31, ~~2013~~2014.

[ ] 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 [ X ] 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 ~~December~~March 1017, ~~2013~~2014, there were 4443,~~140~~470,~~938~~705 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 October 31, 2013 and April 30, 2013	3
	Balance Sheets as of January 31, 2014 and April 30, 2013	3
	Statements of Income and Other Comprehensive Income for the three and six months
	Statements of Income and Other Comprehensive Income for the three and nine months
	ended October 31, 2013 and 2012	4
	ended January 31, 2014 and 2013	4
	Statements of Cash Flows for the six months ended October 31, 2013 and 2012	5
	Statements of Cash Flows for the nine months ended January 31, 2014 and 2013	5
	Notes to Condensed Consolidated Financial Statements - Unaudited	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	3736
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4947
Item 3.	Defaults upon Senior Securities	4948
Item 4.	~~Reserved~~Mine Safety Disclosures.	4948
Item 5.	Other Information	4948
Item 6.	Exhibits	4948
Signatures		4948
Index to Exhibits		5048

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.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2013 AND APRIL 30, 2013
AS OF JANUARY 31, 2014 AND APRIL 30, 2013
	(Unaudited)
			October 31, 2013		April 30, 2013
			January 31, 2014		April 30, 2013
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	8,~~209~~151,~~516~~268	$	9,565,084
	Accounts receivable		3432,425,~~178~~147		35,431,260
	Prepaid and other current assets, net		25,796,596		23,139,756
	Prepaid expenses and other current assets		29,635,162		23,139,756
	Other receivables		47,~~136~~889,~~879~~520		12,895,304
	Due from related party		5,~~382~~707,~~884~~051		3,434,502
	Related party notes receivable - current		4,~~305~~331,~~137~~581		4,237,715
	Inventories		8,~~092~~452,~~437~~982		7,154,544
	Total current assets		9096,~~348~~592,~~627~~711		95,858,165
	Property, plant, equipment, and mine development cost, net		~~210~~215,~~583~~431,~~848~~354		173,409,488
	Construction-in-progress		4149,~~885~~054,~~124~~291		34,679,059
	Intangible assets, net		~~840~~820,~~194~~185		214,883
	Goodwill		2,~~788~~806,~~822~~089		2,753,439
	Prepaid and other assets, non-current		5,926,886		3,094,830
	Prepaid and Other assets, non-current		5,876,536		3,094,830
	Deferred finance fee		~~101~~78,~~215~~523		146,072
	Long-term receivable		127,~~441~~323,~~007~~886		12,441,007
	Total non-current assets		~~274~~281,~~567~~390,~~096~~864		226,738,778
TOTAL ASSETS		$	~~364~~377,~~915~~983,~~723~~575	$	322,596,943
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Accounts payable	$	43,~~059~~810,~~127~~085	$	3,794,840
	Accrued expenses and other current liabilities		12,~~157~~697,~~651~~671		1,011,100
	Other payables		2325,~~799~~682,~~316~~072		21,373,835
	Related party payable- current		1013,~~786~~027,~~214~~737		6,808,798
	Due to officers		1,214,432		1,304,431
	Taxes payable		2021,~~829~~701,~~158~~013		17,792,612
	Customer deposits		~~464~~2,~~743~~258,918		745,200
	Bank loans		4,999,985		4,999,985
	Total current liabilities		6775,~~310~~391,~~626~~913		57,830,801
LONG-TERM LIABILITIES
	Convertible note payable, net of discount		~~928~~1,~~819~~214,367		543,367
	Derivative liabilities		~~961~~188,~~726~~959		4,594,912
	Asset retirement obligations		3,805,834		3,616,643
	Related party payable- non-current		-		-
	Total long-term liabilities		5,696,379		8,754,922
	Asset retirement obligations		3,903,835		3,616,643
	Total liabilities		73,007,005		66,585,723
	Total long-term liabilities		5,307,161		8,754,922
	Total liabilities		80,699,074		66,585,723
	Commitments and contingencies
EQUITY:
L&L ENERGY STOCKHOLDERS' EQUITY:
	Preferred stock, no par value, 2,500,000 shares authorized, none issued and outstanding		-		-
	Common stock ($0.001 par value, 120,000,000 shares authorized: 44,140,938 and 38,385,050 shares issued and outstanding at October 31, 2013 and April 30, 2013”respectively”)		44,141		38,385
	Common stock ($0.001 par value, 120,000,000 shares authorized: 43,470,705 and 38,385,050 shares issued and outstanding at January 31, 2014 and April 30, 2013, respectively)		43,471		38,385
	Additional paid-in capital		8481,~~036~~943,~~975~~184		69,588,550
	Accumulated other comprehensive income		1214,~~715~~280,~~639~~333		9,814,087
	Retained Earnings		146,653,330		134,487,028
	Retained earnings		150,861,780		134,487,028
	Treasury stock (286,595 shares and 286,595 shares at October 31, 2013 and April 30, 2013 respectively)		(68,035)		(68,035)
	Treasury stock (286,595 shares and 286,595 shares at January 31, 2014 and April 30, 2013, respectively)		(68,035)		(68,035)
	Total L & L Energy stockholders' equity		~~243~~247,~~382~~060,~~050~~733		213,860,015
	Non-controlling interest		4850,~~526~~223,~~668~~768		42,151,205
	Total equity		~~291~~297,~~908~~284,~~718~~501		256,011,220
TOTAL LIABILITIES AND EQUITY		$	~~364~~377,~~915~~983,~~723~~575	$	322,596,943

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

L & L ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2013 AND 2012
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31 2014 AND 2013
(Unaudited)
		For The Three Months Ended October 31,				For The Six Months Ended October 31,
		For The Three Months Ended January 31,				For The Nine Months Ended January 31,
		2013		2012		2013		2012
		2014		2013		2014		2013
NET REVENUES	$	4231,~~966~~671,~~509~~723	$	4559,~~504~~852,~~279~~361	$	94125,~~147~~819,~~879~~602	$	84144,~~952~~804,~~377~~738
COST OF REVENUES		2521,~~723~~774,~~806~~009		3339,~~625~~396,~~414~~382		5779,~~850~~624,~~369~~378		63102,~~173~~569,~~428~~810
GROSS PROFIT		179,~~242~~897,~~703~~714		1120,~~878~~455,~~865~~979		3646,~~297~~195,~~510~~224		2142,~~778~~234,~~949~~928
OPERATING COSTS AND EXPENSES:
Salaries & wages-selling, general and administrative		3596,~~037,852~~155		~~856~~703,~~801~~121		4,~~201~~797,~~146~~301		12,~~894~~597,~~514~~634
Selling, general and administrative expenses, excluding salaries and wages		42,~~927~~860,~~012~~068		3,~~304~~358,~~418~~112		811,~~151~~012,~~997~~065		59,~~902~~260,~~374~~485
Total operating expenses		73,~~964~~456,~~864~~223		4,~~161~~061,~~219~~233		1215,~~353~~809,~~143~~366		711,~~796~~858,~~888~~119
INCOME FROM OPERATIONS		96,~~277~~441,~~839~~491		716,~~717~~394,~~646~~746		2330,~~944~~385,~~367~~858		1330,~~982~~376,~~061~~809
OTHER INCOME (EXPENSE):
Interest income		4,884		117,069		10,016		224,335
Interest income (expense)		4,701		116,926		14,716		341,261
Other income (expense), net		(493,454)		562,188		(494,790)		890,414
Other income(expense), net		(596,222)		71,828		(1,091,012)		962,243
Loss on debt settlement		~~(6,101,488)~~		-		(6,101,488)		-
Derivative gain		3772,~~184,062~~767		-		34,~~633~~405,~~186~~953		-
Total other income (expense)		(3181,~~405,996)~~246		~~679~~188,~~257~~754		(2,~~953~~771,~~076~~831)		1,~~114~~303,~~749~~504
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		56,~~871~~622,~~843~~737		816,~~396~~583,~~903~~500		2027,~~991~~614,~~291~~027		1531,~~096~~680,~~810~~313
PROVISION FOR INCOME TAXES		1,~~694~~018,~~850~~654		~~805~~1,~~527~~574,799		34,~~387~~405,~~301~~955		13,~~497~~072,~~967~~766
INCOME FROM CONTINUING OPERATIONS		45,~~176~~604,~~993~~083		715,~~591~~008,~~376~~701		1723,~~603~~208,~~990~~072		1328,~~598~~607,~~843~~547
Income attributable to non-controlling interests		21,~~764~~395,~~508~~633		13,~~949~~007,~~832~~604		56,~~437~~833,~~688~~321		36,~~327~~334,~~195~~799
Income attributable to L & L		14,~~430~~208,~~537~~450		512,~~641~~001,~~544~~097		1216,~~166~~374,~~302~~751		1022,~~271~~272,~~648~~748
DISCONTINUED OPERATIONS, NET OF TAX
DISCONTINUED OPERATIONS
Net income from discontinued operations attributable to non-controlling interests		-		1,091,865		-		2,060,027
Gain on disposal				3,260,086				3,260,086
Net income from discontinued operations attributable to L & L		-		2,101,397		-		3,657,762
Net income from discontinued operations attributable to non-controlling interests		-		176,375		-		2,236,402
TOTAL (LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-		3,193,262		-		5,717,789
Net income from discontinued operations attributable to L & L		-		335,615		-		3,993,377
NET INCOME	$	4,176,993	$	10,784,638	$	17,603,990	$	19,316,632
TOTAL INCOME FROM DISCONTINUED OPERATIONS		-		3,772,076		-		9,489,865
Net income attributable to non-controlling interests	$	2,764,508	$	3,041,697	$	5,437,688	$	5,387,222
NET INCOME	$	5,604,083	$	18,780,777	$	23,208,072		38,097,412
Net income attributable to L & L		1,412,485		7,742,941		12,166,302		13,929,410
Net income attributable to non-controlling interests	$	1,395,633	$	3,183,979	$	6,833,321		8,571,201
Net income attributable to L & L		4,208,450		15,596,798		16,374,751		29,526,211
		-
OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain		1,325,345		1,015,096		2,901,552		(331,413)
Foreign currency translation gain (loss)		1,564,694		(977,322)		4,466,246		(1,308,735)
COMPREHENSIVE INCOME	$	57,~~502~~168,~~338~~777	$	1117,~~799~~803,~~734~~455	$	2027,~~505~~674,~~542~~318	$	1836,~~985~~788,~~219~~677
Comprehensive income attributable to non-controlling interests	$	31,~~022~~697,~~055~~100	$	3,~~233~~049,~~916~~642	$	67,~~004~~701,~~598~~699	$	58,~~328~~377,~~203~~845
Comprehensive income attributable to L & L		25,~~480~~471,~~283~~677		814,~~565~~753,~~818~~813		1419,~~500~~972,~~944~~619		1328,~~657~~410,~~016~~832
INCOME PER COMMON SHARE – basic from continuing operations	$	0.0310	$	0.1532	$	0.3040	$	0.2760
(LOSS) INCOME PER COMMON SHARE – basic from discontinued operations	$	-	$	0.06	$	-	$	0.10
INCOME PER COMMON SHARE – basic from discontinued operations	$	-	$	0.10	$	-		0.19
INCOME PER COMMON SHARE – basic	$	0.0310	$	0.2142	$	0.3040	$	0.3779
INCOME PER COMMON SHARE – diluted from continuing operations	$	0.0309	$	0.1532	$	0.2838	$	0.2760
(LOSS) INCOME PER COMMON SHARE – diluted from discontinued operations	$	-	$	0.06	$	-	$	0.10
INCOME PER COMMON SHARE – diluted from discontinued operations	$	-	$	0.10	$	-		0.19
INCOME PER COMMON SHARE – diluted	$	0.0309	$	0.2142	$	0.2838	$	0.3779
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – basic		4243,~~462~~613,~~474~~610		3637,~~988~~318,~~915~~789		4041,~~337~~429,~~131~~291		37,~~569~~562,~~600~~695
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - diluted		4445,~~411~~545,~~324~~719		3637,~~988~~318,~~915~~789		4243,~~745~~632,~~653~~344		37,~~569~~562,~~600~~695
The accompanying notes are an integral part of these consolidated financial statements.

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

L & L ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED OCTOBER 31, 2013 AND 2012
FOR THE PERIOD ENDED JANUARY 31, 2014 AND 2013
(UNAUDITED)
			2013		2012
			2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1723,~~603~~208,~~990~~072	$	1938,~~316~~097,~~632~~412
	Loss from discontinued operations, net of income taxes		-		(56,~~717~~229,~~789~~779)
	Income from continuing operations, net of income taxes		17,603,990		13,598,843
	Loss on sale of subsidiary		-		(3,260,086)
	Income from continuing operations, net of income taxes		23,208,072		28,607,547
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		46,~~251~~101,~~447~~572		15,~~936~~124,~~195~~945
	Loss on the Ironridge Settlement		6,101,487		-
	Stock-based compensation		1,259,081		2,099,117
	Stock-based compensation		3,353,541		1,053,157
	Amortization of debt discount		671,000		-
	Amortization of debt discount		385,452		-
	Loss on Ironridge Settlement		6,101,487		-
	Derivative gain		(3,633,186)		-
	Decrease in fair value of derivative liability		(4,405,953)		-
	Accretion of asset retirement obligation		~~142~~216,~~275~~367		63137,~~903~~134
Changes in assets and liabilities, net of businesses acquisitions:
Changes in assets and liabilities, net of businessess acquisitions:
	Accounts receivable		13,~~453~~654,~~407~~897		(911,~~731~~457,~~779~~864)
	Prepaid and other current assets		1,741,206		(2,368,787)
	Prepaid expenses and other current assets		(1,914,539)		(3,584,643)
	Inventories		(~~842~~1,~~659~~152,676)		(222,~~237~~303,922)
	Other receivable		6,664,817		3,967,304
	Other receivables		1,994,239		(17,249,745)
	Accounts payable and other payable		7,197,556		1,415,108
	Accounts payable and other payables		10,820,899		8,358,088
	Customer deposit		(288,750)		9,397
	Customer deposits		1,487,861		(1,273,992)
	Accrued and other liabilities		133,032		(85,849)
	Accrued expense and other liabilities		1,654,332		(417,174)
	Note receivable		-		40,653
	Taxes payable		3,540,644		2,513,694
	Taxes payable		2,796,682		670,120
	Note receivable		-		56,184
Net cash provided by continuing operating activities			4753,~~060~~237,~~297~~283		10,~~546~~609,~~028~~369
Net cash provided by discontinued operating activities			-		~~566~~9,~~557~~489,865
Net cash provided by operating activities			4753,~~060~~237,~~297~~283		1120,~~112~~099,~~585~~234
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisition of property and equipment		(~~779~~1,~~301~~540,270)		(~~660~~1,~~412~~596,161)
	Acquisition of intangible assets		(~~680~~682,~~704~~324)		-
	Construction-in-progress		(44,925,877)		(9,807,917)
	Acquisition of businesses, net of cash acquired		-		(1,748,669)
	Increase in restricted cash		(65,581)		-
	Construction-in-progress		(58,505,000)		(27,442,341)
	Increase in prepaid rent		(2,714,846)		-
	Increase in restricted cash		(318,426)		-
	Loan payment of long term receivable		(13,113)		1,530,069
	Increase in land rental prepaid		(2,383,037)		-
	Cash received from HSC disposal		324,102		-
	Proceeds from repayment of long term receivable		5,300,720		1,559,826
Net cash used in continuing investing activities			(48,855,320)		(8,938,260)
	Proceeds from disposal of fixed asset		2,562,753		-
Net cash used in discontinued investing activities			-		-
	Cash received from HSC disposal		526,250		5,125,291
Net cash used in investing activities			(48,855,320)		(8,938,260)
Net cash used in continuing investing activities			(55,039,334)		(24,102,054)
Net cash used in discontinued investing activities			-		12,555,005
Net cash used in investing activities			(55,039,334)		(11,547,049)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Due to officers		(~~106~~114,~~240~~045)		~~511~~1,~~666~~035,708
	Proceeds from Treasury stock sold		-		55,933
	Payment to previous owner of acquired mine		-		(48,~~342~~708,~~510~~978)
Net cash provided by (used in) continuing financing activities			(~~106~~114,~~240~~045)		(37,~~774~~617,~~911~~337)
Net cash provided by (used in) discontinued financing activities			-		-
Net cash provided by financing activities			(~~106~~114,~~240~~045)		(37,~~774~~617,~~911~~337)
Effect of exchange rate changes on cash and cash equivalents			~~545~~738,~~695~~262		1634,~~818,295~~714
INCREASE IN CASH AND CASH EQUIVALENTS			(1,355,568)		217,709
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(1,413,816)		1,569,562
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			9,565,084		3,547,953
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	8,~~209~~151,~~516~~268	$	35,~~765~~117,~~662~~515
SUPPLEMENTAL INFORMATION
INTEREST PAID		$	201,952	$	43,216
INCOME TAX PAID		$	857,765	$	2,114,059
INCOME TAX PAID		$	539,101	$	580,334
NON-CASH INVESTING AND FINANCING ACTIVITIES:
	Payable to DaPing shareholders	$	-	$	11,045,999
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” or the “Company”) is a Nevada corporation headquartered in Seattle, Washington. The Company’s China operations are based in Beijing, and its Taiwan operations are based in Taipei. The Company, which was founded 1819 years ago in 1995, is an energy company. The Company’s China operations focuses on coal and its Taiwan operations focus on clean energy. For the ~~second~~third quarter ended ~~October~~January 31, ~~2013~~2014, coal sales are generated entirely in China from coal mining, clean coal, coal wholesale and coal washing operations. At the present time, the Company conducts its coal (energy) operations in Yunnan and Guizhou provinces located in Southwest China.

As of ~~October~~January 31, ~~2013~~2014, 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”) 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~~Xing has been idled from the end of June 30, 2013.

· Wei She Coal Mine (“WeiShe”),

· DaXing L&L Co. Ltd.,

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

· LaShu Coal Mine (“LaShu”),

· LuoZhou Coal Mine (“LuoZhou”),

· L&L (Taiwan) Energy Ltd.,

· Beijing LiWeiJia Energy Technology. Ltd., and

· ~~GuiZhouDaFuYuan~~GuiZhou DaFuYuan 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

The accompanying unaudited consolidated financial statements of L&L have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed 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 results of operations for the interim periods ending at January 31, 2014 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 to the financial statements which would substantially duplicate the disclosure contained in the audited financial 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 the Company does not expect the implementation will have a material impact on its consolidated financial statements.

NOTE 3. ~~BUSINESS~~RISK ~~COMBINATIONS~~FACTORS AND MANAGEMENT ACTIONS REGARDING TRADING HALT

On September 19, 2013, the Company formed a Special Independent Committee to conduct a review of allegations made against the Company by the GeoInvesting blog released on September 19, 2013. The Special Independent Committee has since engaged legal counsel and independent investigators. On November 18, 2013, the NASDAQ Stock Market halted trading in our common stock and imposed an ongoing suspension in trading of the shares pending its request for additional information. The issue regarding the NASDAQ's requests for additional information is ongoing and the Company's Special Independent Committee investigation is still being completed. Management does not believe that this matter will materially affect the Company's ability to continue as an ongoing profitable concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

NOTE 4. BUSINESS COMBINATIONS

Acquisitions

For the year ended 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 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
Mining rights		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 ~~LaShuCoal~~LaShu 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 ~~LaShuCoal~~LaShu Coal Mine.

Under the Agreement, the purchase price for 95% of the ownership interest in both LuoZhou and ~~LaShuCoal~~LaShu 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 $140.5million (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~~Equity Sale and Purchase Agreement signed in December 2009. 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 ~~October~~January 31, ~~2013~~2014, the outstanding receivable from the sale of HSC was US$224,453, which is expected to be received before April 30, 2014.

Sale of Ping Yi Mine

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 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 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~~the ~~three. As~~third ofyear ~~October~~from ~~31,~~the ~~2013,~~date of the agreement. The Company received total payment of $1,~~997~~519,~~626~~999 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

After the consideration of several factors including its 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 and 98% equity interest in ZoneLin Coking Plant. The fair value of the 60% equity interest in DaPing was 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

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 by making a swap of the 60% equity interest in DaPingMine and 98% equity interest in ZoneLin Coking Plant. The fair value of the 100% equity interest in ZoneLin was 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.

~~NOTE~~Sale 4.of ~~PREPAID AND~~ZoneLin ~~OTHER~~Coking ~~CURRENT~~Plant ~~ASSETS~~

~~Cash~~After ~~advances~~the ~~are~~consideration ~~made~~of toseveral ~~coal~~factors ~~suppliers~~including tothe ~~guarantee~~continuing adevelopment ~~certain~~strategies, ~~delivery of coal to~~ the Company atmade athe ~~specified~~determination ~~time~~to ~~and~~dispose ~~price.~~of ~~Since~~ the ~~demand~~ZoneLin ~~for~~Coking ~~coal~~Plant. isOn ~~high~~November 18, 2012, the Company ~~enters~~decided ~~into~~to ~~agreements~~purchase ~~with~~two ~~these~~coal ~~suppliers~~mines, ~~with~~which ~~cash~~are ~~deposits,~~LouZhou toand ~~ensure~~LaShu aMines ~~constant~~by ~~supply~~making a swap of ~~coal~~the to60% ~~our~~equity ~~washing~~interest ~~facilities.~~in ByDaPing ~~signing~~Mine ~~purchase~~and ~~agreements~~98% ~~with~~equity ~~suppliers~~interest ~~which~~in ~~provide~~ZoneLin ~~for~~Coking ~~the~~Plant. ~~payment~~The fair value of ~~deposits~~the ~~over~~100% aequity ~~certain~~interest ~~period~~in ofZoneLin ~~time~~was RMB 77,786,000 we(approximately ~~ensure~~$ ~~that~~12.4 ~~our~~million, ~~suppliers~~including ~~will~~$2.7 ~~deliver~~million ~~their~~on ~~coal~~assets inwrite-up aper ~~timely~~fair ~~manner~~value measurement). ~~Certain~~The ~~agreements~~Company ~~impose~~has ~~penalties~~no oncontinuing ~~the~~involvement ~~suppliers~~in ~~for~~the ~~non-compliance~~disposed business.

On June 10, 2013, we entered into an agreement for the prepayment of 25,000,000 RMB worth of coal with Guizhou Qian Hong Mining Resource Consulting Services, Ltd. (“Qian Hong”). On August 14, 2013, Ironridge Global IV, Ltd (“Ironridge”) agreed to complete the payment for us in exchange for free trading shares. The details of our transaction with Ironridge can be found below in NOTE ~~25, “Ironridge Transaction~~5.” OnPREPAID ~~August~~AND ~~20,~~OTHER ~~2013,~~CURRENT pursuant to the Ironridge Transaction, Ironridge completed its payment to Qian Hong. As of October 31, 2013, the company received approximately 13% of the total amount under the prepayment agreement from Qian Hong Mining.ASSETS

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

On June 10, 2013, we entered into an agreement for the prepayment of 25,000,000 RMB worth of coal with Guizhou Qian Hong Mining Resource Consulting Services, Ltd. (“Qian Hong”). On August 14, 2013, Ironridge Global IV, Ltd (“Ironridge”) agreed to complete the payment for us in exchange for free trading shares. The details of our transaction with Ironridge can be found below in NOTE 25, “Ironridge Transaction.” On August 20, 2013, pursuant to the Ironridge Transaction, Ironridge completed its payment to Qian Hong. As of October 31, 2013, the company received approximately 13% of the total amount under the prepayment agreement from Qian Hong Mining. As of January 31, 2014, the company received approximately 24% of the total amount under the prepayment agreement from Qian Hong Mining.

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

During ~~this~~last quarter, the ~~company~~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		~~October~~January 31, ~~2013~~2014		April 30, 2013
Advances to suppliers	$	2528,~~463~~240,~~002~~340	$	22,128,001
Advances to employees		~~943~~1,~~377~~115,943		515,867
Prepaid rent		278,445		-
Prepaid		278,445		0
Other		~~16,522~~433		495,888
Prepaid and other current assets, total		2629,~~701~~635,~~346~~161		23,139,756
Less: Allowance for unrecoverable advances		(904,750)		-
Prepaid and other current assets, net	$	25,796,596	$	23,139,756

10NOTE 6. OTHER RECEIVABLES

NOTE 5. OTHER RECEIVABLES

Other receivables consisted of the following:

Description		~~October~~January 31, ~~2013~~2014		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)		3,338,093		7,094,403
Ping Yi Mine receivable-current (note 3)		1,977,283		7,094,403
HSC receivable - current (Note 3)		224,453		750,703
HSC receivable - current (note 3)		224,453		750,703
Other		~~574~~570,~~333~~663		1,403,360
Total	$	42,~~136~~772,~~879~~399	$	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 $31,200,000 on April 30, 2012. The estimated receipt of payment is expected to generally occur within a five-year period, in accordance with the contract. As such, a valuation allowance was recorded to reflect the net present value of the payments during that 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 October 31, 2013, the receivable related to the disposal of the Ping Yi Mine, net of discount, amount to a total of $12,441,007 with a current portion of $3,338,093. 10

11The 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 the Company and the Company believes that these loans result in securing adequate supplies for the expansion of production capacity in its 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 $31,200,000 on April 30, 2012. The estimated receipt of payment is expected to generally occur within a five-year period, in accordance with the contract. As such, a valuation allowance was recorded to reflect the net present value of the payments during that 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 using the effective interest method over the life of the agreement. As of January 31, 2014, the receivable related to the disposal of the Ping Yi Mine, net of discount, amount to a total of $7,323,886 with a current portion of $7,094,403.

NOTE 67. INVENTORIES

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

Description		~~October~~January 31, ~~2013~~2014		April 30, 2013
Raw coal	$	~~589~~986,~~958~~835	$	2,115,833
Fine coal		5,~~950~~456,~~878~~649		4,010,302
Other (Raw materials, low-value consumable)		1,551,601		1,028,409
Other		2,009,498		1,028,409
Total	$	8,~~092~~452,~~437~~982	$	7,154,544

NOTE 78. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT COSTS

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

Description		~~October~~January 31, ~~2013~~2014		April 30, 2013
Mine development costs	$	153,821,199	$	115,014,678
Mine development cost	$	160,922,831	$	115,014,678
Mineral rights		44,~~229~~501,~~338~~017		43,677,912
Building and improvements		65,~~744~~036,~~337~~281		6,119,213
Machinery and equipment		2526,~~810~~922,~~605~~520		24,232,999
Asset retirement costs, net		3,088,869		3,077,883
Assets retirement cost, net		3,098,196		3,077,883
Property, plant equipment and mine development costs, total		233,694,348		192,122,685
Property, plant and equipment and mine development cost, total		240,480,845		192,122,685
Accumulated depreciation and amortization		(2325,~~110~~049,~~500~~491)		(18,713,197)
Property, plant equipment and mine development cost, net	$	210,583,848	$	173,409,488
Property, plant and equipment and mine development cost, net	$	215,431,354	$	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~~uses unit of production method

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

Depreciation expense was $2,~~077~~005,~~997~~264 and $46,~~120~~101,~~397~~572for ~~for~~ the three and ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 respectively.

Depreciation expense was $12,~~910~~231,~~248~~774 and $35,~~460~~124,~~024~~945for ~~for~~ the three and ~~six~~nine months ended ~~October~~January 31, ~~2012~~2013 respectively.

Amortization expense of asset retirement ~~cost~~costs was $2533,~~685~~953 and $1729,~~337~~246 for the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 and ~~2012~~2013.

~~NOTE 8. CONSTRUCTION IN PROGRESS~~11

~~Construction-in-progress~~NOTE ~~includes mine development costs, ventilation and electrical system improvements, building of staff quarters, and construction of a sewage treatment system and road expansion for the washing facilities~~9. CONSTRUCTION ~~Construction-in-progress~~IN ~~was $41,885,124 and $34,679,059 as of October 31, 2013 and April 30, 2013, respectively.~~PROGRESS

12Construction-in-progress includes mine development costs, ventilation and electrical system improvements, building of staff quarters, and construction of a sewage treatment system and road expansion for the washing facilities. Construction-in-progress was $49,054,291 and $34,679,059 as of January 31, 2014 and April 30, 2013, respectively.

NOTE 910. INTANGIBLE 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 $3863,~~464~~577and ~~and~~ $4755,~~059~~ 350 for the ~~six~~nine months ended ~~October31~~January 31, ~~2013~~2014 and ~~2012~~2013, respectively.

Intangible assets consisted of the following:

Description		~~October~~January 31, ~~2013~~2014		April 30, 2013
Technology	$	7576,~~684~~149	$	74,732
Land right		823,385		160,165
Land rights		828,443		160,165
Customer relationship		48,~~413~~710		47,803
Intangible assets, total		~~947~~953,~~482~~302		282,700
Accumulated amortization		(~~107~~133,~~288~~117)		(67,817)
Intangible assets, net	$	~~840~~820,~~194~~185	$	214,883

Land rights are related to the acquisition of the LuoZhou and LaShu mines.

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

Remainder of Fiscal 2014	$	5025
Fiscal 2015		101
Fiscal 2016		101
Fiscal 2017		101
Thereafter		~~487~~492
Total	$	~~840~~820

NOTE 1011. PREPAID AND OTHER ASSETS, NON-CURRENT

~~Other~~They ~~assets~~ represent the long-term restricted cash and the long-term prepayment. The long-term restricted cash isamounts ~~amounting~~ to $3,~~490~~493,~~486~~499 in bank deposits as of ~~October~~January 31,~~2013~~ 2014, in which $3,000,000 is required to be held as collateral for a convertible note payable (see Note 17). $2,~~436~~383,~~400~~037 is the long-term portion of the prepayment for a land rental.

NOTE 1112. LONG-TERM RECEIVABLE

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 ~~October 31~~January31, ~~2013~~2014, is of $127,~~441~~323,~~007~~886, net of a present value discount of $3,183,786.The current portion of this balance is $37,~~338~~094,~~093~~403, which is included in other receivables on the accompanying consolidated balance sheets.

1312

NOTE 1213. RELATED PARTY TRANSACTIONS

Related Party Notes Receivable

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

InControlling ~~here, we define “Control”~~ interest is defined as effective management control of the business entity or minimum 50% ownership. “Non-controlling interest”, sometimes 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~~receivable, related party payables, and due to officers.

Due from related party consisted of the following balances at ~~October~~January 31, ~~2013~~2014 and April 30, 2013:

Related parties		~~October 31~~January31, ~~2013~~2014		April 30, 2013
ShiZong HengTai	$	4,829,408	$	3,156,580
ShiZongHengTai	$	5,195,327	$	3,156,580
Kunming Kenandi Technology Development Co., Ltd.		~~553~~511,~~476~~724		277,922
Total	$	5,~~382~~707,~~884~~051	$	3,434,502

Related party notes receivable consists of the following balances at ~~October~~January 31, ~~2013~~2014 and April 30, 2013:

Borrowers		~~October~~January 31, ~~2013~~2014	April 30, 2013	~~Maturity~~	~~Collateralized by~~
Associates to SuTsong	$	2,~~932~~950,~~906~~921	2,895,990	~~Various dates~~	~~Mine Assets~~
Associates to DuPuAn		~~953~~959,~~465~~322	982,295	~~Various dates~~	~~Mine Assets~~
Associates to TaiFong		418,766	359,430	Various dates	Mine Assets
Associates to TaiFung		421,338	359,430
Total related party notes receivable (current)	$	4,~~305~~331,~~137~~581	4,237,715

Related Party Payable

Related party payable consisted of the following balances at ~~October 31~~January31, ~~2013~~2014 and April 30, 2013:

Description		~~October~~January 31, ~~2013~~2014		April 30, 2013
Payable to previous owners of DaPing Coal Mine	$	-	$	507,973
Payable to Robert Lee		1,~~647~~990,~~933~~298		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)		911,~~138~~037,~~281~~439		3,540,107
Total Payable - Related Parties (current)	$	10,786,214	$	6,808,798
Total related party payable (current)	$	13,027,737	$	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. The increase of payable to Robert lee is the interest accrued $342,365 in this quarter. The payable to Uninon Energy is free of interest.

Due to Officers and Directors

Due to officers consisted of the following balances at ~~October 31~~January31, ~~2013~~2014 and April 30, 2013:

Due to officer		~~October~~January 31, ~~2013~~2014		April 30, 2013
Dickson Lee	$	1,149,641	$	1,179,640
Clayton Fong		64,791		64,791
Shirley Kiang*		-		60,000
Total due to officers/directors	$	1,214,432	$	1,304,431
*No longer a director as of September 1, 2012

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

14 The Company has accrued interest payable of $163,373 as of January 31, 2014.

NOTE 1314. 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~~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~~Minere ~~relocated~~are located 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~~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~~January 31, ~~2013~~2014, 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~~January 31, ~~2013~~2014 and the year ended April 30, 2013.

Description		~~October~~January 31, ~~2013~~2014		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~~287,~~191~~192		224,424
Ending balance	$	3,~~805~~903,~~834~~835	$	3,616,643

~~NOTE~~ 14~~. OTHER PAYABLES~~

NOTE 15. OTHER PAYABLES

Other payables consisted of the following:

Description		October 31, 2013		April 30, 2013*
Item		January 31, 2014		April 30, 2013
Payable to business partners	$	3,241,802	$	3,578,082
Due to business partner		2,902,558		3,578,082
Resource surcharge payable of the WeiShe Coal Mine		13,658,934		13,487,011
Resource surcharge payable of WeiShe Coal Mine		13,742,834		13,487,011
Payable to business associates		6,898,580		4,308,742
Others (1)		9,036,680		4,308,742
Total other payables	$	23,799,316	$	21,373,835
Total current other payables	$	25,682,072	$	21,373,835
Total other payables	$	25,682,072	$	21,373,835

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

15NOTE 16. TAXES PAYABLE

NOTE 15. TAXES PAYABLE

Taxes payable consisted of the following:

Description		~~October~~January 31, ~~2013~~2014		April 30, 2013
VAT Payable	$	5,370,514	$	5,258,999
VAT payable	$	5,354,681	$	5,258,999
Income Tax Payable (1)		12,153,291		9,176,652
Income tax payable (1)		12,929,538		9,176,652
Other Taxes Payable (2)		3,305,353		3,356,961
Other taxes payable (2)		3,416,794		3,356,961
Total Tax Payable	$	20,829,158	$	17,792,612
Total tax payable	$	21,701,013	$	17,792,612
(1) For China
(2) Other Taxes Payables mainly include resources tax payable and business tax payable in China

NOTE 1617. BANK LOANS

On March 19, 2013, the Company entered into 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 a fixed rate of 1.545%. This is a 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~~Company, 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 a revolving line of credit loan. The interest rate is adjusted every three ~~month~~months with the fixed rate determined by the 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.

1615

NOTE 1718. 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 ~~April~~January 3031, ~~2013~~2014, the Company amortized debt discount $~~218~~285,~~404~~548 and $~~385~~671,~~452~~000 as interest expense in the consolidated statements of comprehensive income for the three months and ~~six~~nine months ended ~~October~~January 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 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 ~~October~~January 31, ~~2013~~2014, 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 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 Company amortized loan cost of $22,~~516~~692 and $4467,~~857~~549 as interest expense for the three months and ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, respectively.

During the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, the fair value of the derivative instruments liability decreased by $34,~~633~~405,~~186~~953. 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 ~~October~~January 31, ~~2013~~2014 was as follows:

		April 30, 2013		Activity During quarter		Increase(Decrease) in Fair Value of Derivative Liability		~~October~~January r 31, ~~2013~~2014
Derivative instruments	$	4,594,912	$	-	$	(34,~~633~~405,~~186~~953 )	$	~~961~~188,~~726~~959

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 ~~October~~ January 31, ~~2013~~2014 and the year ended April 30, 2013:

		October 31, 2013		April 30, 2013
		January 31, 2014		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		1.42		3.87
Risk free interest rate		0.10-0.3134%		0.24-0.33%
Warrant and convertibles lives in years		1-2		2-3
Expected volatility (3)		~~85-97~~106 %		68-72%
Expected dividend yields (4)		0%		0%

1716

NOTE 1819. INCOME TAXES

Our effective tax rates were approximately 2915% and 109% for the three months ended ~~October~~January 31, ~~2013~~2014 and ~~2012~~2013, 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 1920. STOCKHOLDERS’ EQUITY

Stock Issued for Compensation:

For the ~~six~~three months ended ~~October~~January 31, ~~2013~~2014, the Company issued ~~155~~50,~~334~~000 shares of common stock to aemployees ~~board~~with ~~member~~share ~~with~~value ~~the~~of $84,000. The Company cancelled 105,000 shares of common stock previously issued to employees with share value of $~~582~~330,~~500~~000.

For the three months ended ~~October~~January 31, ~~2013~~2014, the Company ~~issued~~cancelled ~~519~~536,~~995~~662 shares of common stock topreviously anissued ~~officer~~to officers with ~~the~~ share value of $1,~~612~~610,~~460~~962.

For the three months ended ~~October~~January 31, ~~2013~~2014, the Company ~~issued~~cancelled 5478,~~462~~571 shares of common stock previously issued to ~~employees~~board member with the share value of $~~200~~237,~~404~~500.

For the ~~three~~nine months ended ~~October~~January 31, ~~2013~~2014, the Company issued 876,~~000~~763 shares of common stock to a board member with the share value of $12345,~~860 to an advisor~~000.

For the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, the Company issued ~~539~~3,~~995~~333 shares of common stock to an officer with the share value of $174,~~685,260~~298.

For the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, the Company issued ~~180~~125,~~000~~100 shares of common stock to employees with the share value of $~~678~~432,854.

For the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, the Company issued ~~140~~14,000 shares of common stock to an advisor 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:

As of ~~October~~January 31, ~~2013~~2014, the Company recovered zero shares of its common stock and owned a total of 286,~~595of~~595 of its own shares.

1817

NOTE 2021. WARRANTS

Warrants Issued for Compensation

During the ~~six~~nine months ended of ~~October~~January 31, ~~2013~~2014 , the Company had no warrant issued or exercised for compensation.

Following is a summary of the status of warrants outstanding at ~~October~~ January 31, ~~2013~~2014 :

Type of Warrants		Range of Exercise Prices	Total Warrants Outstanding	Weighted Average Remaining Life (Years)		Weighted Average Exercise Price
Directors - Class E	$	3.00	185,916	10.2499	$	3.00
Non-employee	$	2.25-9.51	12,000	0.62	$	3.43
Non-employees	$	2.25-9.51	12,000	0.37	$	3.43
Total			197,916	10.2095	$	3.03

Warrants Issued to Investors

On November 12, 2012, the Company issued 683,003 and 64,786 of four-year ~~years~~ warrants to lenders. The warrants ~~excise~~exercise prices are $2.10 and $1.92. The warrants are exercisable immediately.

On May 23, 2013, the Company issued warrants to purchase 232,558 shares of common stock to a lender. The warrants’ ~~excise~~exercise price is $4.30 and it is exercisable immediately.

During the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, the Company has no warrant issued or exercised to investors.

The table below is a summary of all warrants activity as of ~~October~~January 31, ~~2013~~2014:

Warrants Roll-forward Summary
	Units	Weighted Average Exercise Price	Weighted Average ~~Exercise~~Remaining ~~Price~~Life (in Years)	~~Weighted Average Remaining Life (in Years)~~
Outstanding at April 30, 2013	1,956,075	$3.03	$32.0361	~~2.61~~
Issued	232,558	4.30	43.3081	~~3.81~~
Exercised	-	-	-	-
Expired	-	-	-	-
Outstanding at July 31, 2013	2,188,633	$3.17	32.1751	~~2.51~~
Issued	-	-	-	-
Exercised	-	-	-	-
Expired	-	-	-	-
Outstanding at October 31, 2013	2,188,633	$3.17	$32.1726	~~2.26~~
Exercisable at October 31, 2013	2,188,633	$3.17	$32.1726	~~2.26~~
Issued	-	-	-
Exercised	-	-	-
Expired	-	-	-
Outstanding at January 31, 2014	2,188,633	$3.17	2.01
Exercisable at January 31, 2014	2,188,633	$3.17	2.01

~~NOTE 21. NON-CONTROLLING INTEREST~~18

AsNOTE ~~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~~22. ~~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~~ NON-~~controlling~~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 for lack of marketability.INTEREST

~~Below~~As isdescribed ain ~~schedule~~Note 1 to the consolidated financial statements, the Company has the majority controlling interest of ~~changes~~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 ~~ownerships~~L&L Coal Partners to 80% from 60% at April 30, 2009. The equity related to non-controlling interest as of ~~October~~July 31, 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 ~~April~~5% 30third party interest in LaShu. The non-controlling interest in WeiShe is measured at fair value at the acquisition date, ~~2013:~~with a discount rate of 16% which reflected the factor for lack of marketability.

		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		566,911		418,542
Net income related to non-controlling interest		5,437,688		10,800,403
Non-controlling interest related to disposal		-		(14,097,938)
Ending balance	$	48,526,668	$	42,151,205

Below is a schedule of changes in ownerships interest as of January31, 2014 and April 30, 2013:

Description		January 31, 2014		April 30, 2013
Beginning balance	$	42,151,205	$	43,431,399
Non-controlling interest related to acquisitions		370,864		1,598,799
Translation		868,378		418,542
Net income related to non-controlling interest		6,833,321		10,800,403
Non-controlling interest related to disposal		-		(14,097,938)
Ending balance	$	50,223,768	$	42,151,205

NOTE 23. EARNINGS PER SHARE

The Company had common shares, warrants and stock options issued and outstanding as of January 31, 2014. Under the treasury stock method, 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.

		For the Three Months Ended January 31			For the Nine Months Ended January 31
		2014	2013		2014	2013
EPS numerator:
Net income from continuing operatings, net of income taxes	$	5,604,083	15,008,701	$	23,208,072	28,607,547
Less: Net (loss) income attributable to noncontrolling interests		1,395,633	3,007,604		6,833,321	6,334,799
Income from continuing operations attributable to common stockholders		4,208,450	12,001,097		16,374,751	22,272,748
(Loss) income from discontinued operations attributable to common stockholders, net of income taxes			3,595,701			7,253,463
Net income attributable to common stockholders	$	4,208,450	15,596,798	$	16,374,751	29,526,211
EPS denominator:
Weighted average shares outstanding — basic		43,613,610	37,318,789		41,429,291	37,569,600
Effect of dilutive shares		1,932,110			2,203,054
Weighted average shares outstanding — diluted		45,545,720	37,318,789		43,632,345	37,569,600
Basic EPS attributable to common stockholders:
Income from continuing operations		0.10	0.32		0.40	0.59
(Loss) income from discontinued operations		-	0.10		-	0.19
Net income attributable to common stockholders	$	0.10	0.42	$	0.40	0.79
Diluted EPS attributable to common stockholders:
Income from continuing operations		0.09	0.32		0.38	0.59
(Loss) income from discontinued operations		-	0.10		-	0.19
Net income attributable to common stockholders	$	0.09	0.42	$	0.38	0.79

NOTE 2224. ~~EARNINGS~~COMMITMENTS ~~PER~~AND ~~SHARE~~CONTINGENCIES

The Company had common shares, warrants and stock options issued and outstanding as of October 31, 2013. Under the treasury stock method, 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.

		For the Three Months Ended October 31			For the Six Months Ended October 31
		2013	2012		2013	2012
EPS numerator:
Net income from continuing operating, net of income taxes	$	4,176,993	7,591,376	$	17,603,990,	13,598,843
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		1,430,537	5,641,544		12,166,302	10,271,648
Income from discontinued operations, net of income taxes		-	2,101,397		-	3,657,762
Net income attributable to common stockholders	$	1,430,537	7,742,941	$	12,166,3029	13,929,410
EPS denominator:
Weighted average shares outstanding — basic		42,462,474	36,988,915		40,337,131	37,569,600
Effect of dilutive shares		1,948,850	-		2,408,522	-
Weighted average shares outstanding — diluted		44,411,324	36,988,915		42,745,653	37,569,600
Basic EPS attributable to common stockholders:
Income from continuing operations		0.03	0.15		0.30	0.27
Income from discontinued operations		-	0.06		-	0.10
Net income attributable to common stockholders	$	0.03	0.21	$	0.30	0.37
Diluted EPS attributable to common stockholders:
Income from continuing operations		0.03	0.15		0.28	0.27
Income from discontinued operations		-	0.06		-	0.10
Net income attributable to common stockholders	$	0.03	0.21	$	0.28	0.37

NOTE 23. COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The Company held operating ~~lease~~leases in the Seattle office, Beijing office, Guizhou office and Taiwan office. The leases of the Seattle office and Beijing office expire in ~~March~~October 2014 and December 2014, respectively. The leases of the Guizhou office and the Taiwan office both expire in February 2014.The non-cancelable operating lease agreement requires that the Company 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 $~~267,~~195,923 and $~~308~~0,~~461,~~ respectively.

Legal Matters

WeOn ~~are~~August ~~not~~26, ~~currently~~2011, a ~~party~~federal tosecurities ~~any~~law ~~legal~~class ~~proceedings~~action incomplaint ~~material~~was ~~nature~~filed against the Company, certain officers and wedirectors ~~are~~(i.e., ~~not~~Dickson ~~aware~~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 ~~any~~Washington ~~material~~at ~~pending~~Seattle ~~legal~~on ~~proceeding~~behalf toof ~~which~~a ~~any~~proposed class of ~~our~~all ~~officers~~persons who purchased the common stock of the Company during the period August 13, ~~directors~~2009 through August 2, or2011, ~~any~~inclusive, ~~beneficial~~and ~~holders~~who were damaged thereby (the “Washington Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of 5%the orSecurities ~~more~~and Exchange Act of ~~our~~1934 by ~~voting~~filing ~~securities~~materially false ~~are~~and ~~adverse~~misleading public statements from August 2009 to usJuly or2011. ~~have~~On December 15, 2011, the court appointed Gregg Irvin as lead plaintiff, and plaintiff filed an amended complaint and a ~~material~~second ~~interest~~amended ~~adverse~~complaint toon usFebruary 8 and March 2, 2012, respectively, naming four other ~~than~~current ~~the~~and ~~legal~~former ~~proceeding~~directors ~~described~~as ~~below:~~defendants (i.e., Shirley Kiang, Robert Lee, Dennis Bracy and Robert Okun).

On ~~August~~November 264, 2011, a ~~federal~~complaint ~~securities~~was ~~law~~filed ~~class~~by ~~action~~Larew ~~complaint~~P. ~~was~~Stouffer, ~~filed~~in ~~against~~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, ~~and~~Norman Mineta, Ian G. Robinson), ~~and~~Robert aW. ~~former~~Lee, ~~officer~~Shirley ~~(i.e.~~Kiang, ~~Jung~~Dennis ~~Mei~~Bracy, ~~(Rosemary)~~Syd ~~Wang~~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, onRobert ~~behalf~~Okun, ofJoseph aJ. ~~proposed~~Borich, ~~class~~Jung ofMei ~~all~~Wang ~~persons~~and ~~who~~David ~~purchased~~Lin) in the ~~common~~First ~~stock~~Judicial ofDistrict ~~the~~Court ~~Company~~of ~~during~~ the ~~period~~State ~~August~~of ~~13,~~Nevada ~~2009~~for ~~through~~Carson ~~August~~City ~~2, 2011, inclusive, and who were damaged thereby~~ (the “~~Washington~~Stouffer ~~Securities Class~~Derivative ~~Action~~Suit”), alleging that the defendants ~~violated~~breached ~~Sections~~fiduciary ~~10(b)~~duties ~~and~~to ~~20(a) of~~ the ~~Securities~~Company and ~~Exchange~~its ~~Act~~shareholders, ofwasted ~~1934 by~~corporate ~~filing materially false and misleading public statements August 2009 to July 2011. On December 15~~assets, ~~2011,~~were ~~the~~unjustly ~~court~~enriched ~~appointed Gregg Irvin as lead plaintiff~~, and ~~plaintiff~~committed ~~filed an amended complaint and a second amended complaint on February 8 and March 2, 2012, respectively, naming four~~ other ~~current~~wrongful ~~and former directors as defendants (i~~acts.~~e., Shirley Kiang, Robert Lee, Dennis Bracy and Robert Okun).~~

On November 415, 2011, a complaint was filed by ~~Larew~~Russell PL. ~~Stouffer~~Bush, 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~~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~~(collectively ~~Okun,~~the ~~Joseph~~“Washington J.Derivative ~~Borich~~Suits”), ~~Jung Mei Wang~~ and ~~David~~along ~~Lin)~~with in the ~~First~~Stouffer ~~Judicial~~Derivative ~~District~~Suit, ~~Court of~~ the ~~State of Nevada for Carson City (the~~ “~~Nevada~~ Derivative ~~Suit~~Suits”), alleging that the defendants breached fiduciary duties ~~to the Company~~ and ~~its shareholders, wasted corporate assets,~~ were unjustly enriched ~~, and committed other wrongful acts~~.

OnThe ~~November~~Company ~~15,~~has ~~2011,~~notified aour ~~complaint~~insurance ~~was~~carrier ~~filed by Russell L. Bush, in a shareholder derivative suit on behalf~~ of the ~~Company,~~Washington ~~which~~Securities isClass ~~a nominal defendant~~Action, ~~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~~Bush ~~States District Court, Western District of Washington at Seattle (“Washington Derivative~~ Suit~~”),~~ ~~alleging~~and ~~that~~ the ~~defendants~~Stouffer ~~breached~~Suit. The ~~fiduciary~~Company ~~duties~~has ~~and~~also ~~were~~retained ~~unjustly~~outside ~~enriched~~legal counsel.

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

On April 23, 2012, the Company and Dickson V. Lee and Ian G. Robinson filed a motion to dismiss the Washington Securities Class Action. Proceedings in the Washington Derivative Suits were stayed pending the court’s ruling on the motion to dismiss.

On December 3, 2012, the United States District Court, Western District of Washington at Seattle granted the Company’s motion to dismiss the Securities Class Action lawsuit without prejudice, and gave plaintiff thirty days in which to seek the court’s permission to file 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, the court granted such leave, and on February 4, 2013, plaintiff filed a third amended complaint in the Washington Securities Class Action 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.

~~Proceedings in the Washington and Nevada Derivative Suits continued to be stayed pending the court’s ruling on the second motion to dismiss.~~20

Proceedings in the Bush Suit and Stouffer Suit continued to be stayed pending the court’s ruling on the second motion to dismiss.

On December 3, 2013, the United States District Court, Western District of Washington at Seattle denied the defendants’ second motion to dismiss. The court has not yet issued a case scheduling order in the Washington Securities Class Action and there is no trial date.

~~The~~On September 23, 2013, a federal securities law class action complaint was filed against the Company, ~~believes~~and ~~that~~certain officers and directors (i.e., Dickson V. Lee, Ian G. Robinson and Clayton Fong) in the ~~Washington~~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 ~~Nevada~~who were damaged thereby (the “New York Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of the ~~Washington~~Securities ~~Derivative~~and ~~Suits~~Exchange ~~are~~Act ~~without~~of ~~merit~~1934 by filing materially false and ~~intends~~misleading public statements from September 2012 to ~~defend~~September ~~them~~2013. On ~~vigorously~~December 23, 2013, the court appointed Robert Leonard as lead plaintiff. No other deadlines have been established.

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 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 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 Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

On December 23, 2013, a complaint was filed by Loren Giesbrecht 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, Jingcai Yang, James Schaeffer, and Joseph Borich) in the United States District Court, District of Nevada (the “Giesbrecht Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

On January 10, 2013, United States District Court Judge Robert S. Lasnik, who is the judge presiding over the Washington Securities Class Action and the Bush Suit, entered an order consolidating the Bush Suit with the Finkelstein Suit. The court also approved the substitution of Finkelstein as the operative plaintiff in the consolidated Finkelstein Suit.

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

Although the Company continues to believe that all of the foregoing actions are without merit, it has agreed to conduct a global mediation with the plaintiffs on May 6, 2014. Pending the global mediation, litigation activity in the cases is generally stayed. The Company intends to vigorously defend any actions that are not settled.

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 January 31, 2014, the Company has not accrued any liability in connection with potential losses from legal proceedings.

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 ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, wethe Company had three major customers who purchased 3834% of the Company’s total sales, and represented $105,~~360~~970,~~075~~045of of accounts receivable balance in total as of ~~October~~January 31, ~~2013~~2014. In addition, wethe Company had ~~three~~two major suppliers who provided 3930% of ~~our~~its total purchases, and the relevant account ~~payable~~payables had been paid off as of ~~October~~January 31, ~~2013~~2014.

22NOTE 25. STOCK INCENTIVE PLAN

~~NOTE~~On 24September 9, 2010, the Company’s Board of Directors adopted the 2010 Stock Incentive Plan (the “2010 Plan”), which was approved by shareholders at an annual meeting of the shareholders held on the same date. ~~STOCK~~ ~~INCENTIVE~~On ~~PLAN~~February 17, 2011, the Company filed anS-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 of the 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 the company or its 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 916, ~~2010~~2013, ~~our~~the Company’s Board of Directors adopted the ~~2010~~2013 Stock Incentive Plan (the “~~2010~~2013 Plan”), which was approved by ~~our~~ shareholders at ~~our~~an annual meeting of the shareholders held on the same date. OnAs ~~February~~the 17end of January 31, ~~2011~~2014, the Company has not filed an 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~~of the 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 usthe Company or ~~our~~its Parent or Subsidiary. Options to purchase ~~Common~~common ~~Stock~~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. 45,~~200~~500,000 shares of ~~Common~~common ~~Stock~~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 ~~six~~nine months ended of ~~October~~January 31, ~~2013~~2014, the Company has issued 248,000 stock options as board compensation and 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 first quarter ended October 31, 2013:22

	October 31, 2013
Dividend yield	-
Risk-free interest rate	3.33%
Expected volatility	100.25%
Expected lives	5 years

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 third quarter ended January 31, 2014:

	January 31, 2014
Dividend yield	-
Risk-free interest rate	3.33%
Expected volatility	106%
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~~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 there foreseeable future.

Stock compensation expense was recognized based on awards expected to vest. FASB ASC Topic 718 requires ~~forfeiture~~forfeitures 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 ~~October~~January 31, ~~2013~~2014:

Type of Options	Range of Exercise Prices	Total Options Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Director	$7.65	40,000	2.3409	$7.65
Director	$2.00	240,000	3.8459	$2.00
Director	$2.50	248,000	4.8863	$2.50
		528,000	43.2196	$2.66

As of ~~October~~January 31, ~~2013~~2014, 311,000 of 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 and for the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014:

	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
Granted	-	-	-
Exercised	-	-	-
Outstanding at January 31, 2014	528,000	$2.66	3.96

NOTE 2526. IRONRIDGE 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. The Ironridge settlement transaction has been fully completed as of October 31, 2013. No transaction activity during the third quarter ended as of January 31, 2014.

NOTE 2627. 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 October 31,					For the six months ended October 31,
		For the three months ended January 31,					For the nine months ended January 31,
Total Revenues (including intersegment sales)		~~2013~~2014			~~2012~~2013		~~2013~~2014		~~2012~~2013
Coal mining revenue	$	2415,~~309~~104,~~575~~037		$	1326,~~827~~176,~~568~~495	$	4964,~~351~~455,~~710~~746	$	2551,~~237~~414,~~532~~028
Coal wholesale revenue		1210,~~833~~765,~~987~~057			1011,~~057~~560,~~073~~671		2536,~~787~~552,~~118~~175		2233,~~352~~912,~~054~~725
Coal washing revenue		76,~~033~~214,~~272~~126			2122,~~619~~115,~~638~~195		2026,~~275~~489,~~447~~573		3961,~~529~~645,~~867~~062
	$	4432,~~176~~083,~~834~~220		$	4559,~~504~~852,~~279~~361	$	95127,~~414~~497,~~275~~494	$	87146,~~119~~971,~~453~~815
Total Discontinued Operation Revenues
Coal mining revenue	$	-		$	5932,~~114,603~~813	$	-	$	910,~~251~~184,~~493~~306
Coal coking revenue		-			4695,~~326,804~~005		-		6,~~047~~742,~~752~~757
	$	-		$	91,~~441~~627,~~407~~818	$	-	$	1516,~~299~~927,~~245~~063
Total Revenue	$	4432,~~176~~083,~~834~~220		$	5461,~~945~~480,~~686~~179	$	95127,~~414~~497,~~275~~494	$	~~102~~163,~~418~~898,~~698~~878
Intersegment revenues		~~2013~~2014			~~2012~~2013		~~2013~~2014		~~2012~~2013
Coal washing revenue		56(411,~~071~~497)			~~2,090,675~~-		56(1,~~071~~677,893)		2,~~090~~167,~~675~~076
	$	56(411,~~071~~497)		$	~~2,090,675~~-	$	56(1,~~071~~677,893)	$	2,~~090~~167,~~675~~076
Total Intersegment Revenue	$	56(411,~~071~~497)		$	~~2,090,675~~-	$	56(1,~~071~~677,893)	$	2,~~090~~167,~~675~~076
Net Revenues		~~2013~~2014			~~2012~~2013		~~2013~~2014		~~2012~~2013
Coal mining revenue	$	2415,~~309~~104,~~575~~037		$	1326,~~827~~176,~~568~~495	$	4964,~~351~~455,~~710~~747	$	2551,~~237~~414,~~532~~028
Coal wholesale revenue		1210,~~833~~765,~~987~~057			1011,~~057~~560,~~073~~671		2536,~~787~~552,~~118~~175		2233,~~352~~912,~~054~~725
Coal washing revenue		76,~~033~~214,~~272~~126			2122,~~619~~115,~~638~~195		2026,~~275~~489,~~447~~573		3961,~~529~~645,~~867~~062
Less intersegment revenues		(1411,~~210,325~~497)			-		(1,~~266~~677,~~396~~893)		(2,167,~~076~~077)
	$	4231,~~966~~671,~~509~~723		$	4559,~~504~~852,~~279~~361	$	94125,~~147~~819,~~879~~602	$	84144,~~952~~804,~~377~~738
Discontinued operations:
Coal mining revenue	$	-		$	5932,~~114,603~~813	$	-	$	910,~~251~~184,~~493~~306
Coal coking revenue		-			4695,~~326,804~~005		-		6,~~047~~742,~~752~~757
	$	-		$	91,~~441~~627,~~407~~818	$	-	$	1516,~~299~~927,~~245~~063
Total net revenue	$	4231,~~966~~671,~~509~~723		$	5461,~~945~~480,~~686~~179	$	94125,~~147~~819,~~879~~602	$	~~100~~161,~~251~~731,~~622~~801
Net income attributable to L&L		~~2013~~2014			~~2012~~2013		~~2013~~2014		~~2012~~2013
Coal mining	$	94,~~744~~413,~~095~~315		$	411,~~586~~066,~~381~~113	$	2025,~~850~~263,~~032~~347	$	819,~~809~~875,~~395~~508
Coal wholesale		~~588~~559,~~327~~267			~~521~~610,~~868~~386		1,~~124~~683,~~618~~885		~~925~~1,~~517~~535,903
Coal washing		~~(628~~888,~~488)~~298			21,~~383~~933,~~154~~315		~~118~~1,~~376~~006,674		46,~~084~~018,~~731~~046
Parent Company		(81,~~273~~652,~~397~~430)	*		(1,~~849~~651,~~859)~~371		(911,~~926~~579,~~724~~155)		(31,~~547~~896,~~996~~627)
	$	14,~~430~~208,~~537~~450		$	515,~~641~~261,~~544~~185	$	1216,~~166~~374,~~302~~751	$	1025,~~271~~532,~~647~~830
Discontinued operations:
Coal mining revenue	$	-		$	1262,~~623,158~~318	$	-	$	3,~~072~~334,~~113~~431
Coal coking revenue		-			~~478~~73,~~239~~295		-		~~585~~658,~~650~~950
	$	-		$	2335,~~101,397~~613	$	-	$	3,~~657~~993,~~763~~381
Total net income attributable to L&L	$	14,~~430~~208,~~537~~450		$	715,~~742~~596,~~941~~798	$	1216,~~166~~374,~~302~~751	$	1329,~~929~~526,~~410~~211
Depreciation expense		~~2013~~2014			~~2012~~2013		~~2013~~2014		~~2012~~2013
Coal mining	$	1,~~947~~785,~~456~~991		$	12,~~333~~002,~~506~~804	$	35,~~614~~400,~~217~~209	$	24,~~393~~396,~~406~~210
Coal wholesale		78,~~130~~859			1112,~~774~~227		1423,~~457~~316		2335,~~522~~748
Coal washing		~~152~~153,~~557~~505			~~142~~143,~~705~~829		~~304~~458,~~577~~082		~~285~~429,~~828~~657
Parent Company		~~(29~~56,~~146)~~909			72,~~404~~914		1773,~~061~~969		~~144~~217,~~270~~184
	$	2,~~077~~005,~~997~~264		$	12,~~560~~231,~~389~~774	$	35,~~950~~955,~~312~~576	$	25,~~847~~078,~~026~~799
* This included the one time non-cash loss of $6,101,488.
Discontinued operations:
		October 31, 2013			April 30, 2013
Coal mining revenue	$	-		$	261,078	$	-	$	696,257
Coal mining	$	275,359,290		$	228,397,266
Coal coking revenue		-			88,781		-		-
Coal wholesale		29,793,121			21,032,874
	$	-		$	349,859	$	-	$	696,257
Coal washing		35,733,404			39,056,343
Total depreciation expense	$	2,005,264		$	2,581,633	$	5,955,576	$	5,775,056
Parent Company (intercompany)		24,029,908			34,110,460
		January 31, 2014			April 30, 2013
Total assets	$	364,915,723		$	322,596,943
Coal mining	$	293,697,784		$	228,397,266
Coal wholesale		30,851,987			21,032,874
Coal washing		31,979,975			39,056,343
Parent Company (intercompany)		21,453,829			34,110,460
Total assets	$	377,983,575		$	322,596,943

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 ~~theCompany~~the Company. 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 Quarterly Report on Form 10-Q (the “Quarterly 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 ~~October~~January 31, ~~2013~~2014, 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. The Hong Xing Coal Washing ~~Factory~~Facility (“Hong Xing”) , one of our two coal washing plants, is currently idled pending the renovation of its coal washing equipment. TaiFung, the subsidiary which owns Hong Xing, also has access to a third party washing facility. Since the Hong Xing washing facility was idled, most of our coal washing revenue has been derived from this third party facility. 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 proceeds from certain equity and 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. AsWe have been a public reporting company since 2001, we and 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~~2013, China’s GDP growth was 7.87%, down from 97.28% and 109.42% in ~~2011~~2012 and ~~2010~~2011 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 18^th National Congress for 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~~2013 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 summer 2012. Prices over the fall and winter rose modestly. During the ~~summer~~winter of 2013, prices have adjusted ~~downward~~upward as typically happens for the season. However, in December of 2013 coal prices began adjusting downward early than the usual seasonal reduction in the spring.

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~~In 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 11th 5 year plan in 2006, the policy of government-mandated consolidation has continued with the current 12th 5 year plan from 2011-2015, which expands and accelerates the consolidation to new provinces including Guizhou.

In summary, China began 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

In the past, the Company has been a vertically integrated coal operator participating in the consolidation of the fragmented coal industry in the Yunnan and Guizhou Provinces of southwest China. In January 2013, the Company’s Board of Directors decided to instruct the management to a) focus on targeting operations in North of China for acquisition where larger scale of mines are available and to upgrade our mining portfolio. b) As the Company gains in presence in China, management was also advised to focus on thermal coal and move away from coking coal, due to it being a more price sensitive/volatile as it is strategic material used in the steel making process. Moving forward, we plan to expand our coal business in three ways: first, through expansion of existing wholesale and distribution operations in Guizhou, gradually building up our logistic network. Second, to acquire a large over 1 million tons of coal mine(s) in North of China. Third, by continuing to expand production at our current coal mines we own and operate. We are diligently pursuing ~~on the TDR (Taiwan Deposit Receipt) in Taiwan to raise substantial capital and to explore other~~ options for raising capital, to ensure the company may grow and achieve the above objectives. On October 28, 2013, the company signed a strategic marketing agreement with Guizhou Zheshang Coal Group (“Zheshang”). Zheshang is a privately held company located in Guizhou with 10 mines that produce approximately 2 million tons per year. Zheshang is currently expanding their targeted annual production to 5 million tons. Under the agreement, L&L will utilize its extensive customer network to market coal produced by Zheshang. L&L will be responsible for customer relationships, transportation and logistics, while Zheshang will be responsible for mining production, and mine safety. The partners are targeting sales of approximately 1.2 million tons of coal per year.

On October 28, 2013, the company signed a strategic marketing agreement with Guizhou Zheshang Coal Group (“Zheshang”). Zheshang is a privately held company located in Guizhou with 10 mines that produce approximately 2 million tons per year. Zheshang is currently expanding their targeted annual production to 5 million tons. Under the agreement, L&L will utilize its extensive customer network to market coal produced by Zheshang. L&L will be responsible for customer relationships, transportation and logistics, while Zheshang will be responsible for mining production, and mine safety. The partners are targeting sales of approximately 1.2 million tons of coal per year.

Organic Growth

~~All~~This ~~five of~~quarter ~~our~~we ~~mines are producing at full capacity. We~~ had ~~a strong quarter of 211~~121,000 tons of coal production. We expect to ~~double~~increase that number six fold 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~~have already ~~running~~expanded near the approved capacities of 200,000 and 150,000 tons respectively. We expect to expand all three of these Guizhou mines to aggregate capacity of over 1.2 million tons in the next ~~few years~~year, ~~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. We ~~and~~anticipate ~~expansion~~each of ~~production~~our ~~capacity~~mines to ~~meet~~expand ~~the~~their ~~current government-mandated minimum annual~~ production ~~requirement~~capacity to of 300,000 tons a year. by the government mandated deadline of 2015.

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

There is no acquisitive growth in the second quarter of FY 2014 which ended on ~~October~~January 31,~~2013~~ 2014.

We have built 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. 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 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.

We acquired 3 mines from Union Energy that met those criteria, Weishe, Luozhou and Lashu mines. They are currently ~~operating~~approved to operate at 150,000, 150,000 and 200,000 tons per year respectively 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.

Other

The Company will continue to recruit 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 Department of Mine Engineering at West Virginia University and a former senior executive with the largest coal company in the world ShenHua Coal Mine Group Mr. Jingcai Yang. James Schaeffer, the 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, Metallurgy and Exploration. Joseph Borich has extensive knowledge in developing business relation in China and Taiwan throughout his career. Officers include the founder of the Company, a Chief Financial Officer who was a partner with Ernst & Young and an Executive Vice President who was 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.

General Discussion and Analysis of ~~Second~~Third Quarter Fiscal Year of 2014 Results

The coal sold by our mines was ~~211~~121,000 tons, a andecrease ~~increase~~ of ~~18.5~~48% from ~~178~~232,000 tons for the same period last year. This was primarily due to a two reasons. First, typically there is a seasonal slow-down in production around the ~~organic~~Chinese ~~expansion~~New ofYear ~~our~~holiday, ~~existing~~which ~~operations~~occurred ~~and~~during the ~~acquisitions~~end of ~~new~~this ~~mines~~quarter. Second, ~~Our~~in ~~net~~November, ~~earnings~~three ~~attributable~~of toour ~~L&L~~mines ~~shareholders~~ were ~~$1.4~~temporarily ~~million~~idled ~~(see~~for ~~below),~~government ~~down~~safety 81inspections.5% ~~from~~On ~~second~~November ~~quarter~~5, ~~$7.7~~2014, ~~million~~the ofGuizhou ~~fiscal~~provincial ~~year~~government ~~2013.~~issued ~~Earning~~a ~~per~~notice ~~diluted~~stating ~~share~~that ~~was~~there ~~$0.03~~would ~~for~~be mine safety inspections throughout the ~~second~~province ~~quarter~~from ofNovember ~~fiscal~~5, ~~year~~2013 ~~2014~~to December 31, ~~down~~2013 85(the “Guizhou Notice”).7% Our ~~compare~~WeiShe, toLaShu ~~$0.21~~and ~~per~~LuoZhou ~~diluted~~mines, ~~share~~all of ~~the~~which ~~second~~are ~~quarter~~located ofin ~~fiscal~~Guizhou ~~year~~province, were required to cease production beginning November 6, 2013 until they were inspected. ~~Our~~ All ~~net~~three ~~earnings~~of our Guizhou mines passed inspection and ~~EPS~~were ~~dropped~~given ~~dramatically~~permission asto aresume ~~result~~production ofduring the ~~Company~~month ~~settling~~of aDecember ~~debt~~2013. LaShu ~~liability~~Mine ~~with~~resumed ~~Ironridge~~production on December 9, 2013 and WeiShe mine resume production on December 16, 2013. LuoZhou Mine was idled for an extended period of time while engineers amended the mining plan due to a ~~onetime~~geological ~~non-operation~~fault ~~loss~~found ofbeneath $6the mine shaft. After passing inspection,~~101,488~~ LuoZhou Mine resumed production in March 2014.

Our ~~overall~~net ~~revenue~~earnings attributable to L&L shareholders were $6.1 million (see below), ~~gross~~down ~~profit~~70.24% from ~~and~~$20.5 ~~Net~~million ~~income~~for ~~Attributable~~the tothird Lquarter &of Lfiscal year 2013. Earning per diluted share was $0.09 for the third quarter ~~ending~~of ~~October~~fiscal 31year 2014, ~~2013~~down ~~compared~~76% compare to $0.38 per diluted share for the ~~same~~third ~~period~~quarter inof ~~October~~fiscal ~~31,~~year ~~2012~~2013. Our ~~was~~net earnings and EPS dropped dramatically as ~~follows:~~a result of temporary idling of three of our coal mines for government inspection in November 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 overall revenue, gross profit and Net income Attributable to L&L for the quarter ended January 31, 2014 compared to the same period in January 31, 2013 was as follows:

The net income of $2.3 m at October 31, 2013 included a one time non-operation loss of $6,101,488.

		January 31, 2014	January 31, 2013
*	Revenue	$31.7 million	$59.9 million
*	Gross Profit	$10 million	$20.5 million
*	Net Income attributable to L&L	$6.1 million	$15.6 million

Results of Operations

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

	Three Months Ended January 31,				Nine Months Ended January 31,
	2014		2013		2014		2013
	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue	Amount	% of Revenue
Revenues	$31,671,723	100.00%	$59,852,361	100.00%	$125,819,602	100.00%	$144,804,738	100.00%
Cost of revenue	21,774,009	68.75%	39,396,382	65.82%	79,624,378	63.28%	102,569,810	70.83%
Gross profit	9,897,714	31.25%	20,455,979	34.18%	46,195,224	36.72%	42,234,928	29.17%
Selling general & administrative	3,456,223	10.91%	4,061,233	6.79%	15,809,366	12.57%	11,858,119	8.19%
Interest income	4,701	0.01%	116,926	0.20%	14,716	0.01%	341,261	0.24%
Other income (expense)	(596,222)	(1.88%)	71,828	0.12%	(1,091,012)	(0.87%)	962,243	0.66%
Loss on debt settlement	-	-	-	-	(6,101,488)	(4.85%)	-	-
Derivative gain	772,767	2.44%	-	-	4,405,953	3.50%	-	-
Provision for income taxes	1,018,654	3.22%	1,574,799	2.63%	4,405,955	3.50%	3,072,766	2.12%
Net Income Attributable to Non-controlling interest	1,395,633	4.41%	3,183,979	5.32%	6,833,321	5.43%	8,571,201	5.92%
Income from Discontinued Operations, Net of Tax	-	-	3,772,076	6.30%	-	-	9,489,865	6.55%
Net income Attributable to L&L	$4,208,450	13.29%	$15,596,798	26.06%	$16,374,751	13.01%	$29,526,211	20.39%

Results 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 (Excluding DaPing Coal Mine and Zonelin Coking Plant)

On November 18, 2012, the Company finalized the acquisition of 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 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 decreased to $4231.97 million during the three months ended ~~October 31~~January31, ~~2013~~2014 from $4559.59 million during the three months ended ~~October~~January 31, ~~2012~~2013, representing approximately a 547.61 % decrease year over year. The decrease was primarily due to the idling of our ~~coal~~Hong Xing washing ~~revenue~~facility, ~~segment. One~~the ofslow ~~our~~–down ~~coal~~in ~~washing~~production ~~facilities~~leading isup ~~temporarily~~to ~~idling~~the ~~for~~Chinese ~~management~~New ~~evaluation~~Year Holiday, and ~~equipment~~the ~~improvements~~temporary idling of three of our coal mines for government inspection in November.

Our net revenue ~~increased~~decreased 1113% from $94125.19 million during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 compared to $84144.98 million during the ~~six~~nine months ended ~~October~~January 31, ~~2012~~2013. This was primarily due to the ~~net~~decrease ~~increases~~ in ~~mining~~our ~~and~~washing ~~wholesale~~segment, ~~segments~~which ~~after~~was ~~taking~~partially ~~into~~offset ~~account~~by ~~decreases~~an inincrease ~~the~~to ~~washing~~our ~~segment~~mining and wholesale segments.

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

		Three Months Ended January 31,				Increase (Decrease) to Revenue
		2014		2013		$	%
Coal Mining	$	15,104,037	$	26,176,495	$	(11,072,458)	(42%)
Coal Wholesale		10,765,057		11,560,671		(795,614)	(7%)
Coal Washing		5,802,629		22,115,195		(16,312,566)	(74%)
Total Revenues	$	31,671,723	$	59,852,361	$	(28,180,638)	(47%)



		Nine Months Ended January 31,				Increase (Decrease) to Revenue
		2014		2013		$	%
Coal Mining	$	64,455,747	$	51,414,026	$	13,041,721	25%
Coal Wholesale		36,552,175		33,912,725		2,639,450	8%
Coal Washing		24,811,680		61,645,062		(36,833,382)	(60%)
Total Revenues	$	125,819,602	$	146,971,813	$	(21,152,211)	(14%)

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 October 31,				Increase (Decrease) to Revenue
		Three Months Ended January 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
		2014		2013		$	%
Coal Mining	$	-	$	5932,~~114,603~~813	$	(5932,~~114,603~~813)	(100%)
Coal Coking		-		4695,~~326,804~~005		(4695,~~326,804~~005)	(100%)
Total Revenues	$	-	$	91,~~441~~627,~~407~~818	$	(91,~~441~~627,~~407~~818)	(100%)
		Six Months Ended October 31,				Increase (Decrease) to Revenue
		Nine Months Ended January 31,				Increase (Decrease) to Revenue
		2013		2012		$	%
		2014		2013		$	%
Coal Mining	$	-	$	910,~~251~~184,~~493~~306	$	(910,~~251~~184,~~493~~306)	(100%)
Coal Coking		-		6,~~047~~742,~~752~~757		(6,~~047~~742,~~752~~757)	(100%)
Total Revenues	$	-	$	1516,~~299~~927,~~245~~063	$	(1516,~~299~~927,~~245~~063)	(100%)

Coal Mining

During the quarter all of our mines were operational ~~and production was on target~~. For the three months ended ~~October~~January 31, ~~2013~~2014, our coal mining net revenues ~~increased~~decreased 7642% to $2415.31 million from $1326.82 million compared to the same period in ~~2012~~2013. The three months sales decrease year over year was primarily due to a slow-down in production leading up to the Chinese New Year Holiday and the temporary idling of three of our mines for government inspection in November 2013. For the ~~six~~nine months ended ~~October~~January 31, 2014, coal mining net revenues increased 9625% to $4964.35 million from $2551.24 million compared to the same period in ~~2012~~2013. The nine month 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 14% year over year to 211,000 tons during the three months ended October 31, 2013 to 185,000 tons during the three months ended October 31, 2012.~~

Coal Wholesale

Wholesale revenues ~~increased~~decreased by 287% during the three months ended ~~October~~January 31, ~~2013~~2014 to $1210.8 million compared to $1011.16 million in same period in ~~2012~~2013. Wholesale revenues increased 158% during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 to $2536.75 million compared to $2233.39 million in same period in ~~2012~~2013.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 large end 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 7374% to $5.~~8million~~8 million during the three months ended ~~October~~January 31, ~~2013~~2014 compared ~~with~~to $2122.71 million during the same period last year. Coal washing revenue decreased by 4960% to $1924.8 million during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 compared ~~with~~to $3761.36 million during the same period last year. ~~Decrease~~The decrease in coal washing revenue is mainly due to the idling of the Hong Xing facility, which is pending management evaluation and equipment improvements.

Gross Profit

Our gross profit ~~percentage~~ in this quarter ~~increased~~decreased to $179.28 million from $1120.94 million in the same quarter last year representing a 4651.9% ~~increase~~decrease. This decrease is primarily due to a slow-down in production leading up to the Chinese New Year Holiday and the temporary idling of three of our coal mines for government inspection in November 2013. Our gross profit ~~percentage~~ increased to $3646.21 million from $2142.72 million during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 compared to the same period of last year representing a 679.3 % 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 nine month period.

Selling general & administrative

Total sales, general, and administrative expense account for 1810.5491% of revenue, during the three months ended ~~October~~January 31, ~~2013~~2014 compared to the 96.1479% the same period in ~~2012~~2013. Total sales, general, and administrative expense account for ~~13.~~12.57% of revenue, during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 compared to the 98.1819% the same period in ~~2012~~2013. This result is mostly due to increase in sales costs, professional fees, wages and benefits.

Provision for income taxes

		Three Months Ended October 31,				Six Months Ended October 31,
		Three Months Ended January 31,				Nine Months Ended January 31,
		2013		2012		2013		2012
		2014		2013		2014		2013
Net income before income taxes	$	56,~~871~~622,~~843~~737	$	816,~~396~~583,~~903~~500	$	2027,~~991~~614,~~291~~027	$	1531,~~096~~680,~~810~~313
Provision for income taxes		1,~~694~~018,~~850~~654		~~805~~1,~~527~~574,799		34,~~387~~405,~~301~~955		13,~~497~~072,~~967~~766
Effective tax rate		2815.8638%		9.5950%		1615.1496%		9.9270%

Our net income before tax decreased 3160.24 % from $816.46 million three months ended ~~October~~January 31, ~~2012~~2013 to $56.86 million three months ended ~~October~~January 31, ~~2013, primarily because of the debt settlement with Ironridge resulting in a onetime non-operation loss of $6,101,488~~2014.

Our net income before tax ~~increased~~decreased 3912.93% from ~~$15~~31.7 million ~~six~~nine months ended ~~October~~January 31, ~~2012~~2014 to $2027.96 million six months ended ~~October~~January 31, 2013, ~~due~~primarily tobecause ~~increase~~of the debt settlement with Ironridge resulting in a onetime non-operation loss of $6,101,488 in the ~~coal~~second ~~production~~quarter ~~and~~of ~~sales~~fiscal ~~volume~~year 2014.

Our effective tax rate ~~slightly~~ increased from 109.5% during the three months ended ~~October~~January 31, ~~2012~~2013 ~~to 29~~to15.38% during the three months ended ~~October~~January 31, ~~2013~~2014.

Our effective tax rate increased from 9.9270% during the ~~six~~ nine months ended ~~October~~January 31, ~~2012~~2013 to 1615.1496 % during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014.

Net Income Attributable to Common Stockholders

The following table presents net income attributable to common stockholders:

		Three Months Ended October 31,		Increase (Decrease) to Income
		Three Months Ended January 31,		Increase (Decrease) to Income
		2013	2012	$	%
		2014	2013	$	%
Net income from continued operations (before non-controlling int.)	$	45,~~176~~604,~~993~~083	718,~~591~~780,~~376~~777	(313,~~414~~176,~~383)~~694	~~-45~~70%
Less: Net income attributable to non-controlling interests		21,~~746~~395,~~456~~633	13,~~949~~183,~~832~~979	~~796~~1,~~624~~788,346	4156%
Net income attributable to Common shareholders	$	14,~~430~~208,~~537~~450	515,~~641~~596,~~544~~798	(411,~~211~~388,~~007)~~348	~~-75~~73%
		Six Months Ended October 31,		Increase (Decrease) to Income
		Nine Months Ended January 31,		Increase (Decrease) to Income
		2013	2012	$	%
		2014	2013	$	%
Net income from continued operations (before non-controlling int.)	$	1723,~~603~~208,~~990~~072	1338,~~598~~097,~~843~~412	414,~~005~~889,~~147~~340	2939%
Less: Net income attributable to non-controlling interests		56,~~437~~833,~~688~~321	38,~~327~~571,~~195~~201	21,~~110~~737,~~493~~880	6320%
Net income attributable to Common shareholders	$	1216,~~166~~374,~~302~~751	1029,~~271~~526,~~648~~211	113,~~894~~151,~~654~~460	1845%

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 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 76%, 28% and decreasing of 73% respectively. 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.33

Our net income from operations before non-controlling interests decreased 70% during the three months period ending January 31, 2014 and 39% during the nine months period ended January 31, 2014. The decrease was primarily due to the impact of a one time non-operation loss of $6,101,488 debt settlement with Ironridge during the three months ending October 31, 2013, a slow-down in production leading up to the Chinese New Year Holiday, and the temporary idling of three of our coal mines for government inspection in November 2013. During the three months ended January 31, 2014, our coal mining and coal washing segment significantly affected our revenue performance this quarter compared to the same period last year, decreasing 42%, and 74% respectively.

Liquidity and Capital Resources

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

Net Income was $1723.62 million for the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 as compared with $1938.31 million for the same period ended ~~October~~January 31, ~~2012~~2013. The net cash flow provided by operating activities was $4753.2 million for ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014 as compared with $1120.1 million for the same period in ~~2012~~2013. The increase of the net cash provided by operating activities was mainly caused by the decrease of account receivable and other receivables by $1334.94 million, as well as account payable increased approximately $52.85 million. ~~The~~In ~~cash~~addition, ~~provided~~there bywas ~~prepaid~~no ~~and~~discontinued ~~other~~operation ~~current~~this ~~assets~~quarter ~~was~~compared ~~approximately~~ with $49.15 million. ~~In addition,~~ net loss from discontinued operation ~~was~~for ~~$5.7~~the ~~million.~~same ~~There~~period ~~was~~in ~~no discontinued operation this quarter~~2013.

Net cash used in investing activities was $~~48.8~~55 million during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, compared to $811.95 million used in investing activities during the same period in ~~2012~~2013. The increase was mainly due to net effect of purchase of Construction-in-progress of $3531 million and the ~~prepaid~~payment of $2.73 million for land ~~rental~~use.

~~Net~~In ~~cash~~addition, ~~provided~~there bywas ~~financing~~no ~~activities~~discontinued ~~was~~investing ~~$0.1~~operation ~~million~~ during the ~~six~~nine months ended ~~October~~January 31, ~~2013~~2014, compared to $312.86 million ~~used~~net incash ~~financing~~provided ~~activity~~from ~~during~~discontinued investing operation for the same period in ~~2012~~2013. ~~In this quarter, there was no money need to be paid to previous owner of the company’s mine during this quarter.~~

Net cash used in financing activities was $114,045 during the nine months ended January 31, 2014, compared to $7.6 million used in financing activity during the same period in 2013. This decrease is primarily because we completed our payment obligations to previous mine owners.

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 ~~October~~January 31, ~~2013~~2014, 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		6238,~~487~~259		2738,~~772~~259		~~27,772~~-		~~6,943~~-		-
Beijing Office		~~223~~136,~~974~~873		49136,~~772~~873		~~49,772~~-		~~124,430~~-		-
Taiwan Office		172,~~656~~207		82,~~828~~207		~~8,828~~-		-		-
GuiZhou Office		~~148~~18,~~672~~584		7418,~~336~~584		~~74,336~~-		-		-
TaiFung		5,119,187		-		~~5,119,187~~-		-		-
Total	$	10,~~599~~342,~~722~~856	$	~~160~~195,~~708~~923	$	~~5,279,895~~-	$	5,~~159~~027,~~119~~746	$	-

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	~~452~~195,~~789~~923	~~160~~195,~~708~~923	~~160,708~~	~~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,~~599~~342,~~722~~856	-195,923	5,~~279~~119,~~895~~187	5,~~159~~207,~~119~~746

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 Reports on Form 10-Q for the quarter ended July 31, 2013 and October 31, 2013. Those critical accounting policies remained unchanged at October 31, 2013.

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~~2014 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~~There ~~Company,~~have ~~with~~been ~~the~~no ~~assistance~~changes ofin our ~~independent~~ internal ~~controls~~control ~~consultant,~~over ~~has~~financial ~~for~~reporting ~~some~~during ~~time~~the ~~now~~last ~~proceeded~~fiscal toquarter ~~make~~that ~~specific~~have ~~changes~~materially toaffected, ~~address~~or ~~the~~are ~~deficiencies~~reasonably oflikely ~~our internal controls. The company has continued~~ to ~~improve its internal controls that have~~ materially ~~affected~~ affect, our ~~controls including those~~ internal ~~controls~~control 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.

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 public statements 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 “~~Nevada~~Stouffer 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 “Washington Derivative Suits”), and along with the Stouffer Derivative Suit, the “Derivative Suits”), alleging that the defendants breached fiduciary duties and were unjustly enriched.36

~~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 ~~Washington~~Company, ~~Securities~~which ~~Class~~is ~~Action~~a nominal ~~and~~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 ~~Derivative~~at Seattle (the “Bush Suits.”), alleging ~~The~~that ~~Company~~the ~~has~~defendants ~~also~~breached ~~retained~~fiduciary ~~outside~~duties ~~legal~~and ~~counsel~~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~~, in the ~~Washington~~Bush ~~Derivative~~Suit, ~~Suits~~and ~~were~~the ~~stayed~~Stouffer ~~pending~~Suit. The ~~the~~Company ~~court’s~~has ~~ruling~~also onretained ~~the~~outside ~~motion~~legal ~~to dismiss~~counsel.

On April 23, 2012, the Company and Dickson V. Lee and Ian G. Robinson filed a motion to dismiss the Washington Securities Class Action. Proceedings in the Bush Suit and the Stouffer Suit were stayed pending the court’s ruling on the motion to dismiss.

37Proceedings in the Bush Suit and the Stouffer Suit continued to be stayed pending the court’s ruling on the second motion to dismiss.

Proceedings in the Washington and Nevada Derivative Suits continued to be stayed pending the court’s ruling on the second motion to dismiss.

~~The~~On September 23, 2013, a federal securities law class action complaint was filed against the Company, ~~believes~~and ~~that~~certain officers and directors (i.e., Dickson V. Lee, Ian G. Robinson and Clayton Fong) in the ~~Washington~~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 ~~Nevada~~who were damaged thereby (the “New York Securities Class Action”), alleging that the defendants violated Sections 10(b) and 20(a) of the ~~Washington~~Securities ~~Derivative~~and ~~Suits~~Exchange ~~are~~Act ~~without~~of ~~merit~~1934 by filing materially false and ~~intends~~misleading public statementsfrom September 2012 to ~~defend~~September ~~them~~2013. On ~~vigorously~~December 23, 2013, the court appointed Robert Leonard as lead plaintiff. No other deadlines have been established.

On ~~September~~October 2318, 2013, a ~~federal~~complaint ~~securities~~was ~~law~~filed ~~class~~by ~~action~~Joseph ~~complaint~~D, ~~was~~Bessent, ~~filed~~in ~~against~~a shareholder derivative suit on behalf of the Company, ~~and~~which is a nominal defendant, against certain its then existing officers and/or directors (i.e., Dickson V. Lee, ~~Ian~~Syd GS. ~~Robinson~~Peng, MohanDatwani, Jingcai Yang, JamesSchaeffer, and ~~Clayton~~Joseph ~~Fong~~Borich) in the ~~United~~Superior ~~States District~~ Court, ~~Southern~~for ~~District~~the ofState ~~New York on behalf~~ of aWashington ~~proposed~~in ~~class~~King ~~of all persons who purchased common stock of the Company during the period September 11~~County, ~~2012~~Washington ~~through September 18, 2013, inclusive, and who were damaged thereby~~ (the “~~New~~BessentDerivative ~~York Securities Class Action~~Suit”), alleging that the defendants ~~violated~~breached ~~Sections~~fiduciary ~~10(b)~~duties ~~and~~to ~~20(a) of~~ the ~~Securities~~Company and ~~Exchange~~its ~~Act~~shareholders ~~of 1934 by filing materially false~~ and ~~misleading~~committed ~~public statements from September 2012 to September 2013. On November 22, 2013, the plaintiff and several~~ other ~~proposed~~wrongful ~~plaintiffs filed motions for appointment as lead plaintiff and counsel~~acts. ~~The court set a status conference for December 20, 2013 to consider the motions.~~

On ~~October~~December 189, 2013, a complaint was filed by ~~Joseph~~Jay DFinkelstein, ~~Bessent,~~ in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its ~~then~~current ~~existing~~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, ~~Mohan~~Clayton ~~Datwani~~Fong, ~~Jingcai~~Jungcai Yang, ~~James~~Mohan ~~Schaeffer~~Datwani, ~~and~~ Joseph Borich, and James Schaeffer) in the ~~Superior~~United ~~Court~~States ~~for~~District ~~the~~Court, ~~State~~Western District of Washington inat ~~King~~Seattle ~~County, Washington~~ (the “~~Bessent Derivative~~ Finkelstein Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

On December 923, 2013, a complaint was filed by ~~Jay~~Loren ~~Finkelstein,~~Giesbrecht in a shareholder derivative suit on behalf of the Company, which is a nominal defendant, against certain of its ~~current~~then ~~and~~existing ~~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~~Jingcai ~~Fong, Jungcai~~ Yang, ~~Mohan~~James ~~Datwani~~Schaeffer, ~~Joseph Borich,~~ and ~~James~~Joseph ~~Schaeffer~~Borich) in the United States District Court, ~~Western~~ District of ~~Washington~~Nevada ~~at Seattle~~ (the “~~Finkelstein Derivative~~ Giesbrecht Suit”), alleging that the defendants breached fiduciary duties to the Company and its shareholders and committed other wrongful acts.

~~The~~On ~~Company~~January ~~has~~10, ~~notified~~2013, ~~our~~United ~~insurance~~States ~~carriers~~District ofCourt Judge Robert S. Lasnik, who is the ~~New~~judge ~~York~~presiding over the Washington Securities Class Action, and the ~~Bessent Derivative~~ Bush Suit, ~~and~~entered ~~Finkelstein~~an ~~Derivative~~order consolidating the Bush Suit. with the Finkelstein Suit. The ~~Company~~court ~~has~~also ~~retained~~approved ~~outside~~the ~~legal~~substitution ~~counsel~~of Finkelstein as the operative plaintiff in the consolidated Finkelstein Suit.

The Company ~~believes~~has ~~that~~notified our insurance carriers of the New York Securities Class Action, the Bessent Suit, ~~Derivative~~the Finkelstein Suit, and the ~~Finkelstein Derivative~~ Giesbrecht Suit. ~~are~~The ~~without~~Company ~~merit~~has ~~and~~retained ~~intends~~outside tolegal ~~defend them vigorously~~counsel.

~~The~~Although the Company iscontinues ~~unable~~ to ~~estimate~~believe ~~the~~that ~~amount~~all orof ~~range~~the offoregoing ~~any~~actions ~~potential~~are ~~loss~~without inmerit, ~~the~~it ~~event~~has ofagreed anto ~~unfavorable~~conduct ~~outcome~~a inglobal ~~any~~mediation ofwith the ~~aforementioned~~plaintiffs ~~legal~~on ~~proceedings. As~~May ~~such~~6, as2014. Pending ofthe ~~October~~global 31mediation, ~~2013,~~litigation activity in the ~~Company~~cases ~~has~~is ~~not~~generally ~~accrued~~stayed. The ~~any~~Company ~~liability~~intends into ~~connection~~vigorously ~~with~~defend ~~potential~~any ~~losses~~actions ~~from~~that ~~legal~~are ~~proceedings~~not settled.

Item 1A. Risk Factors

You should 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 not the only ~~risks facing our company. The risks described below are not the only~~ ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business, operating results and financial condition.

Risks Relating to the Company and Our Business

Our business and results of operations depend on the volatile People’s Republic of China domestic ~~coal~~ and international coal markets.

Substantially all of our coal business is conducted in the People’s Republic of China (“PRC” or “China”), 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 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, 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, 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.

Our mining operations are inherently subject to changing conditions that could adversely affect our profitability.

Our coal 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 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, 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:

· Sustained high pricing environment for raw materials, including, among other things, diesel fuel, explosives and steel;

· Changes in the laws and/or regulations that we are subject to, including permitting, safety, labor and environmental requirements;

· Labor shortages; and

· Changes in the coal markets and general economic conditions.

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

The recoverable coal reserves in mines decline as coal is extracted from them. In addition, the coal related business in China is heavily regulated by the PRC government, which, among other things, imposes limits on the amount of coal that may be extracted. As a result, our 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 LaShucoal mines ~~as of now~~.

Our ability 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 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 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.

Furthermore, we 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.

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

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 ability to compete effectively, to reach agreements with acquisition targets on commercially reasonable terms, to secure critical financing and to attract professional managers is critical 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 other coal processing facilities, and to obtain regulatory approvals for our operations. We intend to seek additional funds through public or private equity or debt financing, strategic transactions and/or from other sources. However, there are no assurances that future funding will be available on favorable terms or at all. If additional funding is not obtained, we will need to reduce, defer or cancel development programs, planned initiatives or overhead expenditures, to the extent necessary. The failure to fund our capital requirements would have a material adverse effect on our business, financial condition and results of operations.

Coal reserve estimates may not be indicative of reserves that we actually recover.

The coal reserves disclosed for the mines from which we have the right to extract coal are the estimated quantities (based on applicable reporting regulations) that under present and anticipated conditions have the potential to be economically mined and processed. The total in place reserve numbers are calculated based on Chinese mining reserve standards. However, the amount of coal that we may extract from a given mine is limited by the mining rights granted to us by local governmental authorities. In addition, there are numerous uncertainties inherent in estimating quantities of coal reserves and in projecting potential future rates of coal production including many factors beyond our control. Reserve engineering is a subjective process of estimating underground deposits of reserves that cannot be measured in an exact manner and the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment. Estimates of different engineers may vary (e.g., in coal grade and reserve quantity) and results of our mining/drilling and production subsequent to the date of an estimate may justify revision of estimates. Reserve estimates may require revision based on actual production experience and other factors. In addition, several factors including the market price of ~~coal~~coalreduced ~~reduced~~ recovery rates or increased production costs due to inflation or other factors may render certain estimated coal reserves uneconomical to exploit and may ultimately result in a restatement of reserves. This may have a material adverse effect on our business, operating results, cash flows and financial condition.

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

Since 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 commentators and regulatory agencies, such as the United States Securities and Exchange Commission (“SEC”) resulting in loss of share value. 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.

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

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

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 use or type of coal permissible at the purchaser’s plant or results in specified increases in the cost of coal or its use. These factors and legislation, if enacted, could have a material adverse effect on our financial condition and results of operations.

40Our business operations and financial results may be adversely affected by present or future environmental regulations, coal industry standards and safety requirements, including mine shut slowdowns, and shut downs.

Our business operations and financial results may be adversely affected by present or future environmental regulations, coal industry standards and safety requirements, including mine shut downs in 2011

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

· Impose fees for the discharge of waste substances and pollutants;

· Require the establishment of reserves for reclamation and rehabilitation;

· Impose fines for serious environmental offenses; and

· Authorize the PRC government, at its discretion, to close any facility that it determines has failed to comply with environmental regulations, operating standards, and suspend any coal operations that cause excessive environmental damage.

Some 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~~slowdowns, ~~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~~diminished ~~slowing resumed~~ during 2012~~. As a result~~, allowing our ~~results~~production ofto ~~operations~~get ~~were~~back ~~named~~to innormal ~~2011~~levels ~~and 2012~~.

In 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 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, 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 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 revenue and our business.

For example, in early 2013, China’s ~~Capital~~capital ~~City~~city Beijing had experienced very serious air pollution problem which, was partly contributed by burning of coal for heating during the winter months. This had caused ~~internationally~~international 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.

~~We depend on Dickson V. Lee, Our Chairman and Chief Executive Officer, the loss of who could adversely affect our operations~~40

We depend on Dickson V. Lee, our Chairman and Chief Executive Officer, the loss of whom could adversely affect our operations

The future success of our investments in China is dependent on Mr. Dickson V. Lee, our Chairman and Chief Executive Officer. If Mr. Lee is unable or unwilling to continue in his present positions, we may not be able to easily replace him, and we may incur additional expenses to recruit and train 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, since the industries we invest in are characterized by high demand and intense competition for talent, we may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future. We cannot assure investors that we will be able to attract or retain the key personnel needed to achieve our business objectives. 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.

Our dependence on managerial, technical personal and mining workers could adversely affect our operations.

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 daily operation. Due 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 long term. In addition, China is now ~~expiring~~experiencing labor shortage 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 be difficult for the Company to recruit new workers for our mines located in GuiZhou and Yunnan Provinces. The lack of qualified managers, technical personal and mining workers could adversely affect our operations.

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

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

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

We operate coal mines and related facilities that may be affected by water, gas, fire or structural problems and earthquakes. As a result, we, like other companies operating coal mines, have experienced accidents that have caused property damage and personal injuries. Although 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 a material adverse effect on our financial condition and results of operations.

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

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

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

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

Unlike land in the United States, much of which is owned by private individuals, the land and underlying minerals in China belongs to the PRC government and is 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 operators to operate and extract coal from the mine. Thus, coal mining licenses are the exclusive evidence of approval of a coal ~~miner~~mine’s mining rights by the 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 be 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 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 our business and on our financial condition.

Furthermore, the coal industry in China is heavily regulated by the government for safety and operational reasons. Several licenses and permits are required in order to operate a coal mine. These licenses and permits, once issued, are reviewed typically once a year. Failure to comply with such regulations could result in fines or temporary or permanent shutdowns of our mining operations, which would adversely impact our business and results of operations.

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

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

As with all underground coal mining companies, our operations are affected by mining conditions such as a deterioration in the quality or thickness of faults and/or coal seams, pressure in mine openings, presence of gas and/or water inflow and propensity 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 mining is also subject to certain risks such as methane outbursts and accidents caused by roof weakness and ground-falls. There can be no assurance that the occurrence of such events or conditions would not have a material adverse impact on our business and results of operations.

We have not maintained sufficient documentation of our internal control over financial reporting for the year ended April 30, 2010 and 2011, and have identified material weaknesses in our system of internal controls relating to the same. 42

We are subject to reporting obligations under the U.S. securities laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its Annual Report, which contains management’s assessment of the effectiveness of 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 in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. We also expect these developments will make it more difficult and more expensive for us to attract and retain additional members to the board of directors (both independent and non-independent), and additional executives.

Risks Related to Doing Business in China

Our 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.

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

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

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.

On January 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 no more 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.

4443

Restrictions 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 change at any time, in regard to our currency exchange needs. We currently receive all of our revenues in Renminbi, which is not freely convertible into other foreign currencies. In China, the 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 banks, 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.

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

On October 21, 2005, the PRC 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 seek approval from SAFE before establishing any control of a foreign company or transfer of China-based assets or equity for the shares of the foreign company. SAFE also issued a news release about the issuance of Circular 75 to make it clear that China’s national policies encourage the efforts by Chinese private companies and high technology companies to obtain offshore financing. Circular 75 confirmed that the uses of offshore special purpose vehicles (“SPV”) as holding companies for PRC investments are permitted as long as proper foreign exchange registrations are made with SAFE. As China 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.

Our Chinese ~~subsidiaries~~subsidiary, Kunming Biaoyu Industrial Boiler Co., Ltd. (“KMC”) ~~havebeen~~have been registered as ~~American~~a ~~subsidiaries,~~wholly foreign owned entity 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~~ is 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.

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

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

4544

It will be difficult for any shareholder to commence a legal action against us and our ~~executives~~officers and directors. Because our directors and officers reside both within and outside of the United States, it may be difficult for an investor to enforce his or her rights against them or to enforce United States court judgments against them if they live outside the United States. Most of our assets are located outside of the United 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 United States to enforce their legal rights, to affect service of process upon us or our directors or officers, or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on us or our directors and officers under federal securities laws. Moreover, China currently does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgments of courts.

Because our directors and officer(s) reside both within and outside of the United States, it may be difficult for an investor to enforce his or her rights against them or to enforce United States court judgments against them if they live outside the United States. Most of our assets are located outside of the United 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 United States to enforce their legal rights, to affect service of process upon us or our directors or officers, or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on us or our directors and officers under federal securities laws. Moreover, China currently does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgments of courts.

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

Effective July 21, 2005, ~~The~~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 a managed floating exchange rate regime based upon market supply and demand of a basket of currencies. On July 26, 2005, the exchange rate against the Renminbi was adjusted to 8.11 Renminbi per U.S. dollar from 8.28 Renminbi per U.S. dollar, which represents an adjustment of approximately two percent. As of ~~January31~~March 17, ~~2012~~2014, the Renminbi appreciated to approximately RMB 6.3115 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 dollar could adversely affect our operating results. Results of our business operations are translated at average exchange rates into United States Dollars for purposes of reporting results. As a result, fluctuations in exchange rates may adversely affect our expenses and results of operations as well as the value of our assets and liabilities. Fluctuations may adversely affect the comparability of period-to-period results. We do not use hedging techniques to eliminate the effects of currency fluctuations. Thus, exchange rate fluctuations could have a material adverse impact on our operating results and stock prices.

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

Climate change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate change to increased levels 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.

In the middle of November 2012, China completed its 18th National Congress for itits 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 negatively impact our business in China in the future and thus our shareholders values.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

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 condition and results of operations.

Risks Related to Our Common Stock

The market price of our stock may be volatile.

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

· Actual or anticipated fluctuations in our quarterly operating results;

· Changes in financial estimates by securities research analysts;

· Conditions in coal energy markets;

· Changes in the economic performance or market valuations of other coal energy companies;

· Announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;

· Addition or departure of key personnel;

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

· General economic or political conditions in China and USA.

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

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

Members of our management and their affiliated entities own or have the beneficial ownership right to approximately 18.5% of our outstanding common shares, representing approximately 1718% 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.

We have the right to issue additional common stock and preferred stock without the consent of our stockholders. If we issue additional shares in the future, this may result in dilution to our existing stockholders and could decrease the value of your shares.

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

Our business strategy 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 to pay cash for any acquisition, we anticipate that we would be required to obtain additional equity and/or debt financing from either the public sector, or private financing. Equity financing would result in dilution for our stockholders. Stock issuances and equity financing, if obtained, may not be on terms favorable to us, and could result in dilution to our stockholders at the time(s) of these stock issuances and equity financings.

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

~~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.~~46

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

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

Stockholders should have no expectation of any dividends.

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

48Trading of our common stock on the NASDAQ Stock Market may continue to be halted and we may be unable to continue meeting the listing requirements of the NASDAQ Stock Market and may be delisted

On November 18, 2013, the NASDAQ Stock Market halted trading in our common stock and imposed an ongoing suspension in trading of the shares. Delay in the resumption of trading on the NASDAQ Stock Market or failure to maintain the listing of our common stock on the NASDAQ Stock Market or another stock exchange will drastically reduce the liquidity of our common stock.

We are currently party to securities class action and derivative lawsuits that are expensive and time consuming, and, if resolved adversely, could have significant impact on our business, financial condition, or results of operations.

We presently are involved in a number of securities class action and derivative lawsuits. We cannot reasonably estimate the timing or outcome of the securities class action and derivative lawsuits, nor can we predict whether or not any of these lawsuits may have a material adverse effect on our business. These lawsuits may cause us to incur significant legal expense, both directly and as the result of any substantial monetary damages. Adverse findings or the incurrence of costs that are not reimbursed under our insurance policies, could have a material adverse impact on our business, financial condition, or results of operations.

We believe these lawsuits are without merit and are vigorously defending these lawsuits. There can be no assurances that a favorable final outcome will be obtained in all of our cases, and defending any lawsuit is costly and can impose a significant burden on management and employees. Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal or in payments of substantial monetary damages or fines, or we may decide to settle lawsuits on similarly unfavorable terms, which could adversely affect our business, financial conditions, or results of operations.

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

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~~Mine Safety Disclosures.

~~This~~Not ~~item was removed and reserved pursuant to SEC Release No~~applicable. ~~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: December 13, 2013	By:	/S/ Dickson V. Lee
Date: March 17, 2014	By:	/S/ Dickson V. Lee
	Name:	Dickson V. Lee, CPA
	Title:	CEO

4948

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: December 13, 2013	By:	/S/ Dickson V. Lee
Date: March 17, 2014	By:	/S/ Dickson V. Lee
	Name:	Dickson V. Lee, CPA
	Title:	CEO

5049

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: December 13, 2013	By:	/S/ Ian G. Robinson
Date: March 17, 2014	By:	/S/ Ian G. Robinson
	Name:	Ian G. Robinson
	Title:	CFO

5150

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 ~~October~~January 31, ~~2013~~2014 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: December 13, 2013	By:	/S/ Dickson V. Lee
Date: March 17, 2014	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 ~~October~~January 31, ~~2013~~2014, 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: December 13, 2013	By:	/S/ Ian G. Robinson
Date: March 17, 2014	By:	/S/ Ian G. Robinson
	Name:	Ian G. Robinson
	Title:	CFO

5251

Filing Compare · L & L ENERGY, INC.