UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM 10-QSB

L & L FINANCIAL HOLDINGS, INC. ------------------------------------------------------

(Exact name of small Business Issuer as specified in its charter)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of January 31, 2008 there were 19,921,498 shares of common stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

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When we use the terms "we," "us," "our," "L & L" and "the Company," we mean L & L FINANCIAL HOLDINGS, 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.

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PART I

Item 1. Description of Business

L & L Financial Holdings, Inc. ("L & L", or the "Company") is a thirteen years old company, started its operations in 1995. The Company, incorporated in Nevada State, is based in Seattle. L&L focuses on energy business in China. Its energy operations generate majority income, are conducted via its wholly controlled KMC subsidiary (KunMing Coal), located in Yunnan, a coal rich province of China. The Company also has two minor power operations, LEK subsidiary (LiuErKong., 60.4% owned) and LSP subsidiary (LSP Technologies, Inc. 70% owned).

The Company's common stock is listed on the OTC-BB exchange in the Untied States under the trading symbol - "LLFH"  in January of 2008. L&L intends to raise fund so to acquire and expand energy operations in the future.

The Company recruits professional accountants, engineers, advisors and assigns them to China to improve operations. Using bilingual skills, American management philosophy, and US accounting knowledge, the Company is to aggressively grow in China0„30…4s energy industry. The Company also identified an American strategic partner to provide US synergy to accelerate its growth.

AVAILABLE INFORMATION

The Company files annual, quarterly and special reports, and other information with the Securities and Exchange Commission (the SEC). L&L SEC filings are available to the public via the SEC web site at http://www.sec.gov.

History of the Company

In 1995, the Company began operations to provide corporate financial consulting, under the name of Lee & Lam Financial Consultants, Ltd. In 1997, the Company expanded operations into China and purchased an office in Shenzhen City, as its operational center in China. In 1998, the Company assisted Chinese entities to list shares on the US capital markets. In 1999, the Company's founder was appointed as a judicial member of the Insider Dealing Tribunal of Hong Kong conducting judicial inquiries on companies may violate the Insider Dealing Ordinance of Hong Kong. In 2000, L&L shifted its focus from consulting to acquire and operate established operations in China. In 2001, L & L became a SEC public reporting company in the US. In 2002, the Company together with the China Development Institute (CDI), a China think-tank, began its acquisition projects. To gain hands-on experience, in the same year, L&L acquired a minority equity of a computer software company in Chen-Do City, China. During 2002, the Company was appointed as an Economic Advisor of the municipal government of Tong Shan City. In 2004 and 2005, L&L acquired total 60.4% equity interest of an air compressor company, LEK in LiuZhou. In 2005, the Company invited Mr. J. Borich, a former American diplomat and ex-US Consul General at Shanghai, as a Board Member. In 2006, L&L invited Dr. Art Chan, PhD of MIT, a former G.E. executive as a Technology Advisor. To ensure growth, L&L Board of Directors in 2006 elected Mr. Paul W. Lee as Chairman and Ms. Shirley Kiang MBA as Vice Chairperson. In 2006, L&L acquired 60% equity of KMC coal (energy) operations. In 2007, the 40% remaining equity of KMC was assigned by minority shareholder to L&L. In 2007, the Company started to expand coal operations and entered negotiations to acquire a new, large (900,000 tons in capacity) coking facility, making coke for steel mills. To provide analytical support, L&L recruited three (3) financial analysts in Seattle in 2007. In January 2008, the Company expands KMC operations injecting additional capital and prepared its own coal mining operation (Tian-Ri Coal Mine), in addition to the existing coal wholesale business. L&L appointed Mr. Dickson Lee MBA, CPA, as Chairman of its KMC energy subsidiary in January of 2008. The Company recruited Mr. Gene M. Bennett MBA, CPA (inactive), as CFO, effective on March 1, 2008. For more information, see the SEC filings, or visit the Company's website at www.lnlinvestment.com.

The Company Corporate Structure

As of January 31, 2008, L & L energy (coal) operations represent approx. 70% of total income. To secure additional coal resources, the KMC subsidiary is expanding its coal wholesale operations to include a coal exploration (Tian-Ri Coal Mine) and to acquire a large Coking factory, if funding is secured. The Company operates its LEK subsidiary (focusing on piston compressors, located at LiuZhou, China) since 2004. To make its products available in North America, L&L established a new LSP subsidiary for screw-type compressors. The Company has a Shenzhen administrative office to supervise the China operations, collect market intelligence, and conduct due diligence for new acquisitions. L&L assigns professional managers from Seattle, to lead the China operations, improve controls and inventories efficiency. With its bilingual managers, and China-in-Country experience developed over the past 13 years, the Company communicates well with Chinese communities to carry out growth strategies.

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Acquisitions and Dispositions of Business Entities in China

The Company started its LSP Technologies Inc. (LSP) on 1/18/2008. L&L owns 70% equity of LSP, with 30% remaining owned by a group of Chinese nationals. L&L invested $427,608 to renovate LSP facility (including building improvement, office upgrade, purchases of furniture, and other tangible costs) making LSP facility operational before 1/18/2008. The Company capitalized such tangible costs as assets in the third quarter ended 1/31/2008. To further protect the Company interest in China, LSP is in a process to be registered with the Chinese government as a Sino-American joint venture. It is believed that Chinese registration will soon be approved. The Company has registered its KMC energy subsidiary and Shenzhen office with the China government, as American investments in China.

Starting in 2002, the Company invested certain Chinese private business, on small scale, to gain hands-on knowledge of operating in China. In 2004 and 2005, L & L made total purchases of 60.4% equity interest of LEK air compressor subsidiary in Liuzhou, China. Detailed LEK transactions refer to the SEC filings.

L&L acquired KMC coal (energy) subsidiary in 2006. KMC conducts coal consolidation and has been in coal wholesale business for the past 12 years. KMC has 5 long term coal supplying agreements with local coal mines, owns 10% equity of a coal mine with approx. sixty (60) employees. As of January 31, 2008, L&L controls 100% of equity interest of its KMC energy (coal) subsidiary. Detailed acquisition is available at the SEC website. China lacks of petroleum, coal represents 71% of China energy source in 2008. As China economy continues to grow, and coal demands exceed coal supplies. coal prices are to move upward, providing a leading edge for KMC sales and profits

Item 2. Description of Properties As of January 31, 2008,

1)	The KMC subsidiary leases 3,800 sq ft office, located at Yunnan University Science & Technology Building, 59 Science-Medicine Road, Kunming. The office is used as the operational center of the energy operations.
2)	The KMC owns 80% of a coal mine exploration right (Tian-Ri Coal Mine), located in Yunnan. The mine covers approx. 2 sq miles in size.
3)	The LEK subsidiary with its assemble facilities and a warehouse (approx. 100,700 sq ft), is located at 94 Chen Zan Road Liuzhou, China LEK subsidiary also owns three sales offices located at: a) Suite 403 & 404, Guichen Haisan Road, Nahai City, Guangdong, China (approx. 1,400 sq ft); b) Suite #1, Guichen Haisan Road, Nahai City, Guangdong, China. (approx. 2,005 sq ft); and c) Room 102, Pujian Road, Shanghai, China office (approx. 1,650 sq ft).
4)	The LSP subsidiary owns the 6- year usage right of the property located at 39 Dragon Lake Road, Liuzhou, China. The area is about 50 hectors with approx. 60,000 sq ft of assemble and storage area, and approx. 8,000 sq ft of office and demo room.
5)	Seattle office leases its office space (approx. 1,800 sq ft) located at 720 Third Avenue, Suite 1611, Seattle, WA 98104. It is an operating lease expires on 3/31/2008. The Company plans to move to a larger space at the end of the lease.
6)	The Company owns an office property (approximately 1,600 sq ft) located at Suite 2503, United Plaza, Shenzhen, China, about one hour by car from Hong Kong airport.
7)	The Company also occupies an apartment (approx 2,700 sq ft) at Silver Valley of Shenzhen, under a short term operating lease. This space serves as a marketing and operational center of the Company.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

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Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Market Information

As of January 31, 2008, the Company common shares are publicly listed on the OTC-BB with trading symbol - "LLFH". The receipt of LLFH trading symbol is a result of Company's application of 15c-211 under the Securities Exchange Act 1934. As of January 31, 2008, the Company's common stock is not public traded via the OTC-BB exchange. Based on the advice from GLB Trading, Inc, the sponsoring market maker, the stock can be traded shortly.

The Company planning to upgrade its stock trading from OTC-BB to NADSAQ, is establishing its Independent Board of Directors to meet the NASDAQ listing requirements. Other market related strategies are being discussed, including possible change of the Company's name, to better reflect its international operations.

Dividends

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

Sales of Securities

During the third quarter ended January 31, 2008, no shares were sold or converted from its warrants.

Three (new) to One (old) Split of the Company's securities in the past

Historically, in 2004, L & L made a three (new) for one (old) split of its securities. Total units of warrants issued were also increased in 2004. The Company does not have any other securities split since 2004.

Status of Equity Securities

As of January 31, 2008, the Company has authorized preferred shares of 2.5 million. None of the preferred shares are issued and outstanding. The Company authorized common shares are 120 million, with 19,921,498 shares issued and outstanding. (See below for details). There are 9.1 million warrants authorized. Warrants, labeled from Warrant A to Warrant E. are issued and outstanding. See below for details.

Item 6. Management's Discussion and Analysis or Plan of Operation

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO AND THE OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS DOCUMENT. IN ADDITION TO HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION AND OTHER PARTS OF THIS DOCUMENT CONTAIN CERTAIN FORWARD-LOOKING INFORMATION. WHEN USED IN THIS DISCUSSION, THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED DUE TO A NUMBER OF FACTORS BEYOND OUR CONTROL. WE DO NOT UNDERTAKE TO PUBLICLY UPDATE OR REVISE ANY OF OUR FORWARD-LOOKING STATEMENTS EVEN IF EXPERIENCE OR FUTURE

CHANGES SHOW THAT THE INDICATED RESULTS OR EVENTS WILL NOT BE REALIZED. YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT ONLY OUR CURRENT VIEWS OF POSSIBLE FUTURE EVENTS.

Plan of Operation

The Company continues its growth through the KMC energy (coal) operation with continuous discussions to acquire other energy entities in China. The Company seeks institutions capital funding to increase its business competitive

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advantages. The recent LSP operations started on January 18, 2008, is to meet the new customer demands for quality power machines, and to expand the Company products to North America.

The Company to mitigate risks, by registration of KMC and LSP investments with the Chinese government, and by recruiting experienced managers to join in as executives, when its financial resources become feasible.

Results of Operations

1) The sales of KMC energy operation continuing to grow to $5,545,237, thus the Company operational results improved for the three months ended on January 31, 2008, as comparing to that of the same quarter last year. 2) The Company's consolidated financial statements are prepared in accordance with the US generally accepted accounting principles (US GAAP). The US GAAP, while allowing a record of 100% of LEK and KMC revenue, requires subtraction of a portion of the profit belonging to the minority shareholders from the bottom line of the Company. As of January 31, 2008, the Company owning 60.4% equity of the LEK operation removed a 39.6% of net profit being minority interest. The Company received assignment on August 1, 2007 from KMC minority shareholder thus owns 100% equity of the KMC operations. Consequently, the Company results of operations are improved as compared to the prior quarter ended October 31, 2007. As the LSP operation just starts on 1/28/2008 there is no sale. Following the US GAAP, the Company capitalized its LSP facilities renovation costs of $427,602 including facility improvement and office renovation costs as assets in the third quarter ended January 31, 2008.

Total Revenue:

The Company recorded operating revenue of $8,038,209 for the period ended January 31, 2008, comparing to $5,450,168 for the same period in 2007. The increase of $2,588,041 (or 47%) is due to the KMC operations, which contributed over $5.5 million in the current period.

Total operating expenses:

Operating costs amounts approx. $632,058 incurred in the 3rd quarter ended January 31, 2008, representing a decrease of $229,782(or 27 %) as compared to $861,840 for the same period in 2007. The decrease of total operating expenses is mainly due to the capitalization of LSP start up costs of $427,608.

Selling, General and Administrative Expenses (SG&A):

Current SG&A is $551,435 for the quarter ended January 31, 2008. When compared it to $594,132 for the same period in 2007, there is a decrease of $42,697 (or 7%). The difference is mainly due to capitalization of LSP facilities renovation costs.

Interest expenses:

The current period's Interest expenses of $77,440, representing an increase of $10,531 (or 16%) in the current period as comparing to $66,909 for the same period of 2007. The increase reflects the small bank loans increase of both LEK and KMC.

Minority Interest:

Minority interest for the current period ended of January 31, 2008 is $78,361, which is lower than the minority interest of the same period of 2007 ($139,495). This decrease of minority interest is due to KMC 40% assignment to the company, incurred in the 2^nd quarter ending October 31, 2007.

Net Income:

Income increased by $535,307 (or 455%) to $652,920 during the current year, comparing to net income of $117,613 for the same period of 2007, due to the acquisition of KMC operations which is in full operation during the current quarter.

Change in Liquidity and Capital Resources:

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

From the operating activities: Net Cash used in operating activities was $3,342,367 during the current quarter ended January 31, 2008. When compared to net cash used in operating activities of $3,290,153 in the same period of 2007, a change of cash of $52,214 (or 1.6%) was mainly due to effects of an increase cash from accounts receivable by $1,334,761 and increase of accounts payable by $307,839, decrease of prepayments and other assets by $1,749,473, decrease of tax payable by $766,530. The Company's operating cash flow is highly dependent upon its ability to bill for the LEK and KMC sales and collect these LEK and KMC billings in a timely manner.

Investing activities: Net Cash used in investing activities was $72,042 during the current period ended on January 31, 2008, while $138,000 generated in the same period in 2007. The decrease of net cash provided of $210,042 (or -152%) was due to the disposal property and equipment at previous period, and change in investments.

Financing activities: Net cash provided by financing activities was $3,959,718 for the current period ended January 31, 2008, while $74,983 used for the same period in 2007. The significant increase of net cash $4,031,701 (or 5,376%) was primarily due to the increase of additional paid in capital of $3,062,453.

The current assets of the Company were $24,843,242 and $17,570,089 for the periods ended on January 31, 2008, and 2007 respectively. The increase in current assets of $7,273,153 (or 41%) was primarily due to the increase of prepayment and other receivable of $5,408,617, increase of account receivable of $1,573,279, increased of cash of $792,243.

The current liabilities were $13,801,963 and $9,062,531 for the periods ended on January 31, 2008, and 2007 respectively. The significant increase of the current liabilities by $4,739,432 (or 52%) was primarily due to the increase of advanced deposits received of $3,051,376, increases of bank liabilities of $666,776, increase of tax payables liabilities of $118,532, increase of account payables by $828,550, and increase of accruals of liabilities by $297,846.

Off-Balance Sheet Arrangements:

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

The Company's current ratio (current assets divided by current liabilities, a ratio used to determine the Company's ability to pay its short-term liabilities) is 1.80 for the current period ended on January 31, 2008, compared to 1.94 in the prior ended on January 31, 2007. As a general rule, the higher the current ratio, the more likely the Company will be able to pay its short-term bills.

RISK FACTORS

In addition to the risk information contained in the following, the risk factors also include the reports we incorporated in Form 10k-SB by reference. Each reader and investor should carefully read and consider these risk factors indicated in the SEC filings, which may affect the Company's future results and financial conditions.

1.	Risks Relating To The Company and Its Business
	The Registrant's main business is operating in China. China is a developing country with sophisticated and long history of complicated cultural traditions, which are vastly different from that of the US. The decision making process of China and lack of free money flow in and out of China, which are different than that of the US, become the major risks to the Company. As China is still developing its legal system, laws in China are under constant revisions, by the executive branch, which not the same as that of the US. The business activities conducted in China are not covered by the US Constitution, nor by the American judicial system. Any legal system reversal, social unrest in China could adversely affect the Company business, its financial conditions and results of operations. There are critical risks each investor needs to consider them seriously before making an investment in the Company.
	Ownership of Land
	Contrary to the outright land ownership in the US, land in China is only leased to owners on a long term basis, ranging from 40 to 70 years. This is a system similar to the land lease in New Territory of Hong Kong,

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	during the British colonization in Hong Kong, which ended in 1997. Currently, no law in China prohibits the continuing lease of the same land after the expiration of lease period.
2.	Cultural, Political and Language Differences
	There are material cultural, political and language differences between China and the United States, which make business negotiations and doing business more difficult in China than that of the United States. Further, continuing trade surpluses, led by the Chinese export to the US over the US export to China, has become a sensitive political issue in the United States, and various members of United States legislature have threatened trade sanctions against China, if China continues its trade surplus with the US. In addition, continuous strong economic growth in China with its possible military buildup may result in American economic sanctions against China that could adversely affect the financial position and results of operations of the Registrant.
3.	Uncertainty of exchange rate of Chinese Currency (RMB) to the US Dollars
	The Chinese currency (RMB) tries to set at a fixed rate with the US dollars and other foreign currencies. The RMB is not freely exchanged in the global markets. However, the Chinese currency is considered by the US government to be under valued against the US dollars. The Chinese RMB thus may continue to appreciate against the US dollars. The RMB value increased by 2.2% since the summer of 2005 and is expected continue to increase in the future. When and if the Chinese Government allows a floating exchange rate, it is expected the RMB will appreciate more in its value. The United States has requested that China allow its currency exchange rate to float freely. Implications of currency fluctuation may or may not be favorable to the Company and its investments in China.
4.	Reliance upon Key Management
	The future success of L & L's investments in China is dependent on the Company's Chinese team, including Paul W. Lee, Company's Chairman, and Marco Au, the China Manager. Those executives speak the languages, understands culture differences, legal, and USA business practices.
	If one or more of the Company's key personnel are unable or unwilling to continue in their present positions, the Company may not be able to easily replace them, and may incur additional expenses to recruit and train new personnel. The Company's business could be severely disrupted and its financial condition and results of operations could be materially and adversely affected. Furthermore, since the industries the Company invests in are characterized by high demand and intense competition for talent, the Company may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future. The Company cannot assure its investors that it will be able to attract or retain the key personnel needed to achieve our business objectives. Furthermore, the Company does not maintain key-man life insurance for any of its key personnel. Currently, most executives and managers are covered by a one-year term accident insurance policy in China, paid by the Company.
5.	Insurance Coverage in China
	Despite the assets are generally insured, the Company has a very limited business insurance coverage in China. The insurance industry in China is still at an early stage of development. In particular, insurance companies in China offer limited business insurance products. As a result, the executives and managers of the Company only have limited one-year accident insurance coverage. No other business liability or disruption insurance coverage is available for the Company's operations in China, nor for LEK subsidiary in China. Any business disruption, litigation or natural disaster might result in substantial costs and the diversion of resources.
6.	Chinese Legal System/Enforcement of Agreements, Including Acquisition Agreements in China.
	Despite China has its own enforcement agency, securities regulators, the Chinese Legal System is in the developmental stage. In addition, the existing Chinese laws generally are not enforceable to the same extent as that in the US. The Chinese judiciary is relatively inexperienced in enforcing corporate and commercial law, resulting in significant uncertainty as to the outcome of any litigation in China. Consequently, there is a risk that should a dispute arise between the Company and any party with whom the Company has entered into a material agreement in China, the Company may be unable to enforce such agreements under the

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	Chinese legal system. Chinese law will govern almost all of the Company's acquisition agreements, many of which may also require the approval of Chinese government agencies. Thus, the Company cannot assure investors that the target business will be able to enforce any of the Company's material agreements or that remedies will be available outside China.
	Moreover, the Registrant is aware that the PRC State Administration of Foreign Exchange ("SAFE") on October 21, 2005 issued a new circular ("Circular 75"), effective November 1, 2005, which supersedes Circular 11 and Circular 29 ceased to be implemented. SAFE also issued a news release about the issuance of its Circular 75 to make it clear that China's national policies encourage the efforts by Chinese private companies and high technology companies to obtain offshore financing. Circular 75 confirm 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.
	Neither the Registrant nor the Chinese shareholders of LEK from whom the Registrant acquired shares of LEK have made registration with SAFE in connection with the LEK transaction. While it is unclear to what extent the regulations is applied to the Registrant, the Registrant believes that Circular 75 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.
7.	Risks Associated with the Company's Business Strategy Contemplating Growth may need more capital.
	As the Company grows and intends to grow its operations by acquiring other businesses, it requires capital infusions. Under this strategies, the ability to grow through such acquisitions and joint ventures will depend on its availability of additional fund, suitable acquisition candidates at an acceptable cost, our ability to compete effectively to attract and reach agreement with acquisition candidates or joint venture partners on commercially reasonable terms, the availability of financing to complete larger acquisitions or joint ventures. In addition, the benefits of an acquisition or joint venture transaction may take considerable time to develop and we cannot assure investors that any particular acquisition or joint venture will produce the intended benefits. Moreover, the identification and completion of these transactions may require us expend significant management and other resources.
8.	The Company Acquisition Strategy May Result In Dilution To Its Stockholders
	The Company business strategy calls for strategic acquisition of other businesses. In connection with the acquisition of LEK and KMC, the Company issued 1,708, 283 common shares and 485,592 common shares respectively, as consideration for these two purchases. It is anticipated that future acquisitions will require cash and issuances of our capital shares, including our common stocks. 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. Equity financing would result in dilution for the stockholders. Stock issuances and financing, if obtained, may not be on terms favorable to us and could result in substantial dilution to our stockholders at the time(s) of these stock issuances and financings. Availability of significant amounts of our common shares for sale could adversely affect its market price.
	As of January 31, 2008, there were approximately 19,921,498 shares of our common shares outstanding. Please refer to the Statement of Shareholders Equity for details.
9.	Recently enacted changes in securities laws and regulations are likely to increase our costs
	The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), which became law in July 2002, requires changes in our corporate governance, public disclosure and compliance practices. Sarbanes-Oxley also requires the Securities and Exchange Commission (the "SEC"), to promulgate new rules on a variety of corporate governance and disclosure subjects. We expect these developments will increase our legal and financial compliance costs.
	We also expect these developments will make it more difficult and more expensive for the Company to attract and retain additional members of the board of directors, particularly to serve on the Company audit committee, and additional executive officers. In the worst event, there is a probability that the Company may not be able to continue to pay auditor fees, to keep its status as a public company in the US.

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FORWARD LOOKING STATEMENTS:

The company makes written and oral statements from time to time regarding to the business and prospects, such as projections of future performance, statements of management's plans and objectives, forecasts of market trends, and other matters that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Statements containing the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimates," "projects," "believes," "expects," "anticipates," "intends," "target," "goal," "plans," "objective," "should" or similar expressions, identify forward-looking statements, which may appear in documents, reports, filings with the Securities and Exchange Commission, news releases, written or oral presentations made by officers, or other representations made by the company to analysts, stockholders, investors, news organizations and others, and discussions with management and other representatives of the Company. For such statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the private Securities Litigation Reform Act of 1995.

Any forward-looking statement made by or on behalf of the Company speaks only as of the date on which such statement is made. The forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. Except as required by law, the Company does not undertake any obligation to update or keep current either (i) any forward-looking statement to reflect events or circumstances arising after the date of such statement, or (ii) the important factors that could cause the future results to differ materially from historical results or trends, results anticipated or planned by the company, or which are reflected from time to time in any forward-looking statement which may be made by or on behalf of the Company.

Item 7. Controls and Procedures Evaluation of disclosure controls and procedures

The Company recruited Mr. Gene M Bennett CPA, as new CFO, effective on 3/1/2008. With Mr. Bennett participation to evaluate the effectiveness of the operations, further improvements of control procedures can be made. The Company with the participation of its executives have evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 15d-15e under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, the Company, its CEO, and CFO, have concluded that the disclosure controls and procedures are effective as of 1/31/2008, covered by this report.

As required by Rule 15e-15(e) under the Securities Exchange Act of 1934, the company has evaluated the internal controls over financial reporting to determine whether any changes occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, no such change in the internal controls over financial reporting occurred during the most recent fiscal quarter.

Changes in internal control over financial reporting

During the three months ended 1/31/2008, covered by this Report, no changes were made to our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We are aware that any system of controls, however well designed and operated, can only provide reasonable, and not absolute, assurance that the objectives of the system are met, and that maintenance of disclosure controls and procedures is an ongoing process that may change over time.

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Item 7A. Consolidated Financial Statements
L & L FINANCIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
January 31, 2008 and April 30, 2007
	January 31, 2008	April 30, 2007
	Unaudited	Audited
ASSETS
CURRENT ASSETS:
Cash	$1,464,330	$885,229
Accounts receivable	9,022,830	8,006,748
Bad Debt Provision	(1,477,916)	(1,360,440)
Notes Receivable	0	350,551
Prepayments and other receivable	11,855,629	8,105,000
Inventories	4,102,822	3,197,420
Provision of inventories-Obso	(124,453)	(114,561)
Total current assets	24,843,242	19,069,947
PROPERTY AND EQUIPMENT, net	2,552,968	2,585,989
GOODWILL	1,591,704	1,591,704
LOAN MADE TO BUSINESS ASSOCIATES	4,313,071	4,313,071
INVESTMENTS	536,644	464,602
Total long term assets	8,994,387	8,955,366
TOTAL ASSETS	$33,837,629	$28,025,313
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$2,201,588	$2,835,289
Accrued and other liabilities	1,775,063	1,401,541
Taxes payable	3,174,598	3,836,301
Customer deposits	3,830,380	713,386
Bank loan and bank line of credit	2,820,334	1,923,077
Total current liabilities	13,801,963	10,709,594
TOTAL LIABILITIES	13,801,963	10,709,594
MINORITY INTEREST	5,436,341	6,919,257
STOCKHOLDER's EQUITY:
Preferred stock, no par value, 2,500,000 shares
authorized, none issued and outstanding
Common stock, $0.001 par value, 120,000,000 shares authorized
19,921,498 and 19,273,248 issued and outstanding	19,921	19,273
Paid-in Capital	12,210,300	9,147,847
Deferred stock compensation	(124,205)	(147,667)
Foreign currency translation	141,675	107,883
Retained Earnings	2,351,634	1,269,126
Total stockholders' equity	14,599,325	10,396,462
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$33,837,629	$28,025,313

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

11

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

12

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

13

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L&L Financial Holdings, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the period ended January 31, 2008
	Common Stock		Additional Paid in	Deferred	Retained	Foreign Currency
	Shares	Amount	Capital	Compensation	Earnings	Translation	Total
Balance
April 30, 2007	19,273,248	19,273	$9,147,847	($147,667)	$1,268,486	$107,883	$10,395,822
Share Issuance	51,888	51	$245,176				$245,227
40% additional KMC Equity			2,337,029				2,337,029
Warrants converted to shares	596,362	597	480,248				480,845
Amortization of deferred
compensation				23,462			23,462
Foreign currency translation
adjustment						33,792	33,792
Net Profit					1,083,148		1,083,148
January 31, 2008	19,921,498	19,921	$12,210,300	($124,205)	$2,351,634	$141,675	$14,599,325

L & L FINANCIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THIRD QUARTER ENDED JANUARY 31, 2008 Un-audited

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

L & L Financial Holdings, Inc. (the "Company") is located in Seattle, Washington. The Company's China operations are supervised by its ShenZhen office, located at ShenZhen City of China. The Company's majority revenues are generated from its subsidiaries, LEK, KMC. The Company started its LSP Technologies, Inc (LSP) on 1/18/2008, during this third quarter. The Company owns 60.4%, 100% and 70% of controlling equity of LEK, KMC, and LSP respectively, as of January 31, 2008. KMC is an energy related, coal consolidator in Yunnan of China. It is in the process to acquire a Tian-Ri Coal Mine at the Yunnan, the coal rich region of China, so that KMC can start its own coal exploration in China. (see Subsequent Events.) LEK assembles and market air compressors focusing on piston-types, popular in China. While LSP starts to assemble and markets the high-end, screw-types air compressors meeting customers' changing, buying behavior. Both LEK and LSP are located in Liuzhou, China, easy for management. As of 1/31/2008, LSP has no sales.

Prior to the establishment of LSP, the Company has invested $427,608 in the past to renovate the facilities located at 39 Dragon Lake Road, Liuzhou, and conducted feasibility study for the LSP new joint venture.

It is Management's opinion that all adjustments necessary for a fair statement of the results for this interim period have been made. All adjustments are of a normal recurring nature.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash - Cash includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

14

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Principles of Consolidation - The consolidated financial statements include the accounts of the Company, and its 60.4% ownership of the LEK subsidiary and 100% ownership of KMC subsidiary. All significant inter-company accounts and transactions are eliminated.

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

Costs of Good Sold - It consists of direct material cost, direct labor costs and related overhead costs associated with such product manufacturing.

Accounts receivable - Majority of the Company's accounts receivable is due from its customers in China. The Company writes off accounts receivable when they become uncollectible. When payments subsequently received on such receivables, they are credited to the allowance for doubtful accounts.

Inventories - Inventories comprise finished goods and work-in-progress and are stated at the lower of cost and net realizable value. Cost, calculated on the first-in, first-out basis, comprises materials, direct labor and an appropriate proportion of all production overhead expenditure. Net realizable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

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

Income taxes - The Company makes provisions for income taxes based on the Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax laws in effect at the date of financial statements. Its income from overseas controlled subsidiaries is not subject to the United States federal income taxes, as income not repatriated to the US is subject to the IRS code.

Financial Instruments - Financial instruments consist primarily of cash, accounts receivables, related party receivables, investments in equity securities and obligations under a bank credit facility. The carrying amounts of cash, accounts receivable and the credit facility are the fair value of those instruments. The carrying value of the related party receivables is estimated on the basis of arms' length transactions.

Use of Estimates - The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stock-Based Compensation: The Company issued warrants to compensate directors and executives in accordance with Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, and provides the pro forma net earnings and pro forma earnings per share disclosures for employee stock warrants granted, as if the fair-value-based method defined in Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, had been applied. In accordance with APB No. 25, compensation expense is recorded on the date a warrant is granted only if the current market price of the underlying stock exceeds the exercise price. The Company has issued two types of warrants (Class D, and Class E). As of January 31, 2008, no options have been granted.

The Company from time-to-time may grant restricted stock to employees and executives to award their services. Compensation cost if any, is to be charged as expenses on the grant date.

The Company follows SFAS 123 and Emerging Issues Task Force ("EITF") Issue No. 96-18 Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services. Under SFAS 123, stock compensation is based on the fair value of such instruments. The Company made additional disclosure on Note 21; Employee Stock Option Plan.

a) Pro Forma Net Income and Earning Per Share:

Under SFAS 123, the Company's net earnings, and earning per share are adjusted to the pro forma amounts for the three months ended January 31, 2008, and 2007, as follows:

15

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(Per $ thousand)	Three months periods ended
	1/31/2008	1/31/2007
Net income - as reported	$652,920	$218
Stock-Based employee compensation		(1.6)
Expense included in reported net income, net of tax		0
Total stock-based employee compensation expense
determined, under fair- value-based method for
all rewards, net of tax		(1.6)
Pro forma net profit	$652,920	$216.40

The fair value of the options granted in the period ended January 31, 2008 was determined based on the minimum value method. That calculation assumed no dividends, 5 year lives and risk free interest rate of 3.25% .

Impairment of Long-lived Assets - The Company assesses long-lived assets for impairment in accordance with the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144 requires that the Company assess the value of a long-lived asset whenever there is an indication that its carrying amount may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows generated by those assets to the assets' net carrying value. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No long-lived assets were impaired during the period ended January 31, 2008 and 2007.

Earning Per Common Share - The Company has adopted SFAS No. 128, Earnings per Share, which supersedes APB No. 15. Net profit per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic earning per share is based upon the weighted average number of common shares outstanding. Diluted net profit per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic EPS differs from primary EPS calculation in that basic EPS does not include any potentially dilutive securities. Diluted EPS must be disclosed regardless of the dilutive impact to basic EPS (See Note 19).

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

NOTE 3. BUSINESS COMBINATION

The Company owns 100% of voting interest in KMC (Kunming Mine Company), and majority voting interest in LEK (Liuzhou City No. 2 Air Compressor Co Ltd, or Liuzhou Liuerkong Machinery Company Ltd.) as of January 31, 2008. The acquisitions of KMC and LEK are recorded under a purchase method of accounting. In accordance with SFAS No. 141, the Company consolidates LEK and KMC financial positions at January 31, 2008 and operational results from November 1, 2007 through January 31, 2008 for the third quarter ended on January 31, 2008.

A) The following information relates to the historical LEK acquisition:

LEK, was acquired in 2004, detailed acquisition was filed with SEC EDGAR in 2005. Please refer to EDGAR for details.

B) In 2006, the started KMC energy operations:

16

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KMC, was acquired in October, 2006, detailed acquisition was filed with SEC EDGAR in 2006. The KMC energy operation becomes focus of the Company growth. Please refer to EDGAR for historical acquisition details.

NOTE 4. CASH

The cash balances as of January 31, 2008 and April 30, 2007 consist of:

Item	1/31/2008	4/30/2007
Cash on hand	$913,656	$62,649
Cash in banks	550,674	822,580
Total	$1,464,330	$885,229

NOTE 5. ACCOUNT RECEIVABLES

The account receivable balances, relating to the trade accounts as of January 31, 2008 and April 30, 2007 consist of:

		1/31/2008			4/30/2007
		Bad debt	Account receivable,		Bad debt	Account receivable,
Item	Amount	provision	net	Amount	provision	net
Within credit term(1)	$5,637,212	$0	$5,637,212	$4,780,150	$0	$4,780,150
Exceeding due day 1 to 30 days	1,181,321	(73,896)	1,107,425	1,076,237	(53,812)	1,022,425
Exceeding due day 31 to 180 days	2,204,297	(1,404,020)	800,277	2,150,361	(1,306,628)	843,733
Exceeding due day 181 days(1)	0	0	0	0	0	0
Total	$9,022,830	($1,477,916)	$7,544,914	$8,006 ,748	($1,360,440)	$6,646,308

(1)	Based on Chinese business custom, the Company grants approx 30-60 days credit term for their customers.
(2)	The receivable would normally be collected within the 180 days.

NOTE 6. NOTES RECEIVABLE

The notes receivables incurred for the LEK trade activities with its customers, in relation to the LEK air compressor selling business. These note receivables are to be collected from its Clients.

The notes receivable balances as of January 31, 2008 and April 30, 2007 consist of:

Item	1/31/2008		4/30/2007
Amount	$0		$350,551
Bad debt provision	0		0
Notes receivable, net	$0		$350,551

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NOTE 7. INVENTORIES

Inventories located at LEK subsidiary consist of the following details as of January 31, 2008 and April 30, 2007:

Item		1/31/2008			4/30/2007
Raw Materials (net)		$471,528			$1,537,586
Work in process		833,667			749,295
Coal and other materials		2,194,899			593,187
Finished Goods (1)		602,728			317,352
Subtotal		4,102,822			3,197,420
Less: Obsolescence Provision		(124,453	)		(114,561	)
Total Inventories		$3,978,369			$3,082,859

(1) The balance of inventories at the period ended January 31, 2008 and year ended April 30, 2007 are $3,978,369 and $3,082,859 respectively. The net increase was $895,510. The finished goods increased 90% than that of year ended April 30 2007 and the provision or obsolescence increase 9% than last year end April 30, 2007.

NOTE 8. PREPAYMENT AND OTHER ASSETS

Prepayment and other assets consist of the following details as of January 31, 2008 and April 30, 2007:

Item		1/31/2008		4/30/2007
Prepayments (1)		$6,870,587		$3,140,486
Receivable-KMC right sale (1)		2,037,093		2,500,000
Deposits (2)		28,893		0
Other Receivables (3)		2,919,056		2,347,174
Advances to employees		0		117,340
Total		$11,855,629		$8,105,000

(1) It is the business practice in China that Company maintains deposits or prepayments with its vendors and consultants, to ensure timely delivery of goods or services.

(2) Other receivables include accounts receivable from selling old fixed assets, and other non-air compressors. During the current year, LEK disposed old equipment, metal scraps, and un-usable assets to the general public to streamline its manufacturing facilities. The sales proceeds are reflected on the cash flow statement.

(3) LEK has 21 sales and service centers, located through out China and away from Liu Zhou factory. Each sale staff of these locations receives some cash advances, in order to conduct LEK business. The advances are recorded under employees' personal names, as advances to employees. The advances are on a replenish basis. In addition, it is the business practice that when employees having business trips, or due to unexpected difficulties, they may obtain an approval to borrow cash advance from the employer, on a temporarily basis. The advances can be collected, either upon demand, upon employees' claim their expenses, or deducted from their salaries. As the Company with LEK factory has approx. 400 workers and staff as of 1/31/2008, the balance is considered reasonable. There were nearly 200 people in LEK who have the advances as of January 31, 2008. The amount of advances to employees varies ranging from few hundreds to three thousands dollars to each of these employees.

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NOTE 9. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of January 31, 2008 and April 30, 2007:

Item		1/31/2008			4/30/2007
Building		$996,924			$917,681
RuiLi Project (property, at cost) (1)		400,687			400,687
Machinery		1,740,216			1,649,657
Furniture, fixtures & Office equipment		133,535			127,983
Vehicles		108,048			109,357
Leasehold improvements		27,524			27,524
Sub-total		3,406,934			3,232,889
Less: accumulated depreciation		(853,966	)		(646,900	)
Property and equipment, net		$2,552,968			$2,585,989

(1) On April 20, 2005 an agreement was reached that a debtor, Ms. Yong Peng, is to turn over the land usage rights of two parcels and a resort property valued at approx. $400,000 to the Company, to offset two outstanding loans of $367,948 due to the Company. As the formal contract was not signed until July 17 of 2005, the Company reclassified Account Receivables to the Property and Equipment account, under Ruili Property at April 30, 2005. The properties located at RuiLi city, China, may facilitate the Company expansion in China. The property rights include: a) a 30 year usage right on 80.5 Mu of land, (1 Mu equals 666.67 square meters) with remaining right of 25 yeas, expiring on 4/26/2030, b) a 20 year land usage right on 28 Mu of an adjacent land with a reservoir, with a remaining right of 19 years, expiring on 12/14/2024, and c) an ecological resort properties with pepper trees, plants, and bungalows. The property was developed as a resort.

NOTE 10. INVESTMENTS

As of January 31, 2008, the Company owns 19.5% investment interests in Tech-H, recorded under an investment and accounted for at historical cost, consistent with that of the prior year. The audited financial statements of Tech-H indicate the software company is growing and profitable. Therefore, management determined there is no impairment for the software company's investment. Following the US GAAP, no income is recorded on the investment account.

In addition, the LEK subsidiary has an investment in another (third party) air compressor entity (of 5% equity), this small investment is recorded as an investment account on the balance sheet at January 31, 2008. The investment is recorded at cost and no impairment is suggested.

The summary of two years Investments Accounts as of January 31, 2008 and April 30, 2007 is as follows:

		Year		Historical		As of		Increase				As of		Equity
Item		Purchased		Costs		4/30/2007		(exchange)		Divesture		1/31/2008		Ownership
LEK subsidiary invested
in :
An Air Compressor Co.		2004		$62,422		$62,422						$62,422		5.00	%
L&L invested in:
Tech-H (1)		2001		$400,500		$400,500						$400,500		19.50	%
Others												73,722
Total:												$536,644

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NOTE 11. ACCRUALS AND OTHER LIABILITIES

Accruals and other liabilities consisted of the following as of January 31, 2008 and April 30, 2007:

Item		1/31/2008		4/30/2007
LEK-Accrual expenses :
a) Selling commissions		$0		$0
b) Office expenses		78,414		54,425
c) Staff salaries and benefits		446,405		168,094
d) other operation expenses including audit fees		8,063		7,422
LEK - Accrual expenses :		532,882		229,941
LEK Purchase Payable		60,028		0
LEK Other short term Liabilities		131,985		127,596
LEK Other Payable		443,212		532,841
KMC Payables		1,755		19,231
LEK - Welfare Payable		180		0
L&L Payables, due to controlling shareholder		603,991		491,932
Others		1,030		0
Total		$1,775,063		$1,401,541

(1) Other liabilities included employees' social insurance, prepaid rental deposit, and other loans with some other companies. All the liabilities have no repayment terms. They are miscellaneous short term accruals due to month early end cut-off dates. They are not notes payable. These accruals are to be paid off in the next month.

NOTE 12. LOANS MADE TO A LEK CORPORATE SHAREHOLDER AND ITS AFFILIATES

These loans consisted of the following as of January 31, 2008, the LEK shareholder borrowed money from the company during 2006:

Item		1/31/2008		4/30/2007
Liuzhou No. 2 air compressor Co, Ltd. (1) (3)		$2,884,054		$2,884,054
FLUID-MEC International Holdings Co. (2) (3)		1,429,017		1,429,017
Total		$4,313,071		$4,313,071

(1) When the Registrant acquired LEK, its assets included a loan of approximately $3,085,440 due from a corporation which owns a minority share of LEK. The loan amount is fully secured by assets of a land usage right ($5,413,402), which was determined by an evaluation report issued by an independent China evaluation firm, and a commercial properties ($2,780,387) of this corporate entity. The loan allows the Company to take approx. 9.3% income via rental from the commercial properties (approx. $284,000 per annum). The term loan is due in 2009.

(2) When the Registrant acquired LEK during the current year, an asset of LEK includes a loan of approx. $1,266,142 due from a corporation which owns a minority share of LEK's affiliate. The loan is charged with 2% interest guaranteed by its shareholders and is due in December, 2007. According to the loan contract, the principal and interest will be due, and collected in December 2007.

(3) The notes are subject to paying interests only, until the full principal balances become due at maturity. As of 10/31/2007, no interest is needed to be paid according to the note agreement.

NOTE 13. BANK LOAN AND BANK LINE OF CREDIT

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Bank loan and bank line of credits are summarized as follows:

Items		1/31/2008		4/30/2007
Bank loans
LEK subsidiary (1)		$2,820,334		$1,923,077
Total		$2,820,334		$1,923,077

(1) Bank loan collateralized by the properties of the subsidiary approximately US$2,443,106 as of January 31, 2008. Interest is charged at 5.31% to 8.37% per annum. The loan interest is payable monthly. The Company's loan balance excludes interest under this facility. The total interest the company has paid as of January 31, 2008 was approx. $120,200. The principal of the bank loan is due in end of year 2008.

The registrant received a credit line of $150,000 from United Commercial Bank at Seattle for its working capital on June 20, 2006. The term of this credit line is on a 5-year renewable basis with an adjustable interest rate of approx. 9% per annum currently. The credit line is secured by founder's personal house located at Kent, Washington.

NOTE 14. SEGMENT INFORMATION

The Company operations consist of two distinct segments: a) the LEK air compressors operations, and b) L&L consulting operation.

1) Sales Segment:

For the current quarter ended January 31, 2008, the Company sales is mainly generated from its energy operation from its KMC coal subsidiary. KMC energy income represented 69%, and LEK air compressors income represented 31% of the total consolidated sales of the Company. It is expected that energy sector is continue to grow in the future. Comparing with the prior year's figures.

The sales segments are summarized as follows:
Sale Segments		Quarter ended on 1/31/2008							Year ended on 4/30/2007
		Sales					Profit		Sales					Profit
Energy-KMC		$5,545,237		69	%		$302,690		$7,405,691		39	%		$1,155,939
Air compressors		2,492,972		31	%		123,980		11,600,304		61	%		632,744
Total		$8,038,209					$426,670		$19,005,995					$1,788,683

The Company plans to continue focusing on the air compressor sales and manufacturing activities in China. It plans to formulate the JV with Sullivan Palatek to market US air compressors in China to increase the product portfolio.

2) Geographic Segment:

Despite the fact that during the current period ended on January 31, 2008, the Company's operations are in two geographic locations: 1) in China, and 2) in the US. All income of the Company is generated in China. During the nine months ended January 31, 2008, KMC contributes sales of $17,273,698 and LEK contributes sales of $6,836,032 to the Company. Both LEK and KMC are located in China.

During the current period, there is no concentration of LEK sales with any of its customers, suppliers, and accounts receivable.

3) Segment by Assets:

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The Company's assets consist of the following:
(In $ Per Thousand)
Assets								1/31/2008															4/30/2007
		L&L			LEK			KMC			Total			%			L&L			LEK			KMC			Total			%
											(2)															(2)
Cash		19			447			998			1,464			4			19			825			41			885			3
Receivables (1)		520			9,078			8,798			18,396			54			-			6,483			514			6,997			26
prepayment		-			1,005			-			1,005			3			462			2,658			5,234			8,105			30
Inventories		-			3,035			943			3,978			12			-			2,490			593			3,083			11
PP&E		414			2,076			63			2,553			8			19			2,097			69			2,185			8
Goodwill		-			-			1,592			1,592			5			-			-						1,592			6
Loan from shareholder		4,313			-			-			4,313			13						4,313						4,313			16
Investment		467			70			-			537			2			10,495			64			-			64			0
Total Assets		5,733			15,711			12,394			33,838						10,995			18,931			6,451			27,224			100
Asset %		17	%		46	%		37	%		100				%		6	%		70	%		24	%		100	%

NOTE 15. INCOME TAXES

The Company's main operations are located in China. The Company is subject to income taxes primarily in two taxing jurisdictions, China and the United States. The income of the Company is mainly generated via its controlled KMC, and LEK subsidiaries, controlled foreign entities located in China. As no cash or fund is repatriated from KMC and LEK to the US, the Company is not subject to the US federal taxation for both the current period and the prior year ended on January 31, 2008, and 2007, under subpart F, Income from controlled foreign company, of the US Internal Revenue Code.

The Company recognizes deferred income taxes for the differences between financial accounting and tax bases of assets and liabilities. The Company due to the LEK acquisition, acquired a net operating loss carry forward (benefit) of approx. $7,708,480 incurred in the past via LEK operations in China. In the period ended on January 31, 2008 and on April 30, 2007, there were no material temporary book/tax differences or differences between financial accounting and tax bases of assets and liabilities.

NOTE 16. RELATED PARTY TRANSACTIONS

None.

NOTE 17. STOCKHOLDERS' EQUITY

The following events incurred in three months ended January 31, 2008:

Historically, the Company offered its common shares with warrants in private placements under the Reg. D to the US accredited investors, to gain capital for acquisition activities in China in 2003 and 2004. The initial PPM offered at $2.50 per share with a warrant convertible at the same price. The share price increased to $3.25 on October 30, 2006.

On July 14, 2004, the Company began to issue warrants at $1.25 per unit to raise capital through a private placement. Each unit of the warrant gives the holder the right to purchase the Company's common stock at $2.00 per share. The Company has authorized the issuance of 800,000 warrants for this offering. For the period ended January 31, 2008, the Company has issued 285,000 units of warrants for $356,250 in the past.

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The Company declared a 3 (new)-for-1(old) common split in September 2004, to increase its issued and outstanding stock, and to improve its float and liquidity when stock is being traded. All stock presented to the Company on September 2004 have been retroactively restated for the effect of this split. The Company made disclosures and offered a rescission to its investors on a voluntary basis in 2005 for possible oversights of the private placements in the past, including commission expenses of thirty five percent (35%) which were paid to an outside contractor in 2003, and 2004 as the placement disclosures incidentally reflected only twenty percent of such commission expenses.

The table below listed the Company's warrants as of January 31, 2008.

WARRANTS
SUMMARY
						Beginning											Warrants		Ending
						balance		Activity during the period									Expired		balance
Type of Warrants		Date		Authorized		5/1/2004		Issuance		Split		Conversion			Exercised		1/31/ 2008		1/31/2008
				(Units)		(Units)		(Units)		(Units)		(Units)			(Units)				(Units)
Warrants (class A)
Re: Warrants on
PPM exercise price		Feb-03		2,000,000		630,334		-		1,260,668		(490,800	)		-		-		1,400,202
@US$2.50
Warrants (class B)
Re: Warrants on
PPM exercise price		Feb-04		1,000,000		4,167		144,753		241,842		(42,003	)		-		-		348,759
@US$3.00
Warrants (class C)
Re: Premium of
US$1.25 with
exercise price
@US$2.00		July-04		1,000,000		-		285,000		570,000		(30,000	)		-		-		825,000
Warrants (class D)
Re: Executive
exercise price		May-04		1,100,000		-		40,000		80,000		-			-		-		120,000
@US$2.25
Warrants (class E)		May-04		4,000,000		-		850,000		153,749		(47,500	)		-		-		956,249
Re: Director
exercise price
@US$3.00
Total				9,100,000		634,501		1,319,753		2,306,259		(610,303	)		0		0		3,650,210

     See Note 20, Employee Stock Option Plan, for warrants (class D and Class E) issued to executive and director compensations.

NOTE 18. EARNINGS PER SHARE

The Company only has common shares and warrants issued and outstanding during the year. Under the treasury stock method of SFAS #128, the Company computed the diluted earning per share, as if all issued warrants were converted to common shares, and cash proceeds were used to buy back common shares. The following presents both basic and diluted earnings per share, for the two period ended on January 31, 2008 and April 30, 2007.

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		Three Months Ended		Twelve Months Ended
Item		January 31, 2008		April 30, 2007
Net Income		$794,595		$1,302,063
Number of Shares		19,921,498		19,273,248
Per Share- Basic		$0.040		$0.068
Effect of dilutive shares		66,487		411,740
Number of dilutive shares		19,987,985		19,684,988
Per Share - Diluted		$0.040		$0.066

NOTE 19. CONCENTRATION OF CREDIT RISK

The Company maintains the majority of its cash balances at banks located in China. Cash balances in these foreign locations are not insured as they do in the U.S. As of January 31, 2008, and April 30, 2007, the Company had uninsured bank cash balances of $1,326,962 and $885,229, respectively.

Financial instruments that also potentially subject the Company to concentrations of credit risks are primarily trade accounts receivable and common stock of its investors. The trade accounts receivable are due primarily from clients in China. The Company has not historically experienced material losses due to uncollectible trade accounts receivable. As discussed in Note 2, the Company does not believe that the carrying value of its investments is impaired at January 31, 2008.

NOTE 20. EMPLOYEE STOCK OPTION PLAN

The Company issued two types of warrants, one for executives (warrant class D), and the other for directors (warrant class E). Only directors and senior executives are entitled to receive warrants, as compensations for their services. See Note 18, Stockholders' Equity for reference.

During the current year, no warrants are converted to common shares. As of January 31, 2008, total warrants authorized under Class D and Class E are 1,100,000 units and 4,000,000 units, respectively. During the period ended January 31, 2008, total units of warrants (class D) issued and warrants (class E) issued are 40,000 units and 850,000 units respectively.

Information relating to warrants outstanding and exercisable at January 31, 2008 summarized by exercise price is as follows:

Range of

Number of Outstanding

Weighted Average

Weighted Average

Number Exercisable

Weighted Average

Exercise

at October 31,2006

Remaining

Exercise

at October 31,2006

Exercise

Price

(units)

Contractual Life

Price

(units)

Price

Class D

Class E

Class D

Class E

$3.00

4 Years

$3.00

$3.00

600,000

956,249

600,000

512,000

During the current period ended 1/31/2008, the Company does not use its equity instruments to acquire goods or services, other than directors' services and reward senior executives.

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The following table summarizes two types of warrants and exercise prices, as of January 31, 2008:

		Number of		Number of
Name of Director, executive		Warrants (D)		Warrants (E)		Warrants
		issued and		issued and		convertible price
		outstanding		outstanding
Olmsted , former Director				7,500		$3.00
Leung, former Director(1)				181,250		$3.00
Lee, Director				604,166		$3.00
Locke, former Director		120,000				$2.25
Kiang, Director				61,666		$3.00
Sheppard, former Director(1)				51,667		$3.00
Borich, Director				50,000		$3.00
Total units issued		120,000		956,249

1) Member of Board voluntarily resigned to observe that only American citizens may serve the Board.

NOTE 21. COMMITMENTS AND CONTINGENCIES

a) Operating Leases

The Company leases its Seattle office and Silver Lake facility in China under two separate long-term, non-cancelable leases, expiring soon in March of 2008, and June of 2008 respectively. The non-cancelable operating lease agreements require that the Company pays certain operating expenses, including management fees to the leased premises. Rental expenses for the periods ended January 31, 2008 and 2007 were $6,239 and $8,735 respectively. The future minimum lease payments required under the operating leases is $ 15,700.

NOTE 22. SUBSEQUENT EVENTS

1)	The Company received an official clearance letter from FINRA (Financial Industry Regulatory Authority) for L&L Financial Holdings, Inc. common stock on 2/11/2008. Under the Securities Exchange Act of 1934, the FINRA letter allows GLB Trading, Inc. to start an un-priced quotation of the Company common stock on the OTC Bulletin Board. As of March 11, 2008, per GLB Trading Inc., the Company common stock is ready for bids and offers at the OTC-BB.
2)	With a government permit, the Company KMC subsidiary started its Tian-Ri Coal Mine explorations on 2/25/2008. The coal reserve of Tian-Ri Coal Mine, based on an engineering study, is estimated at 53 million tons of high grad, recoverable coking coal, valued at approx. $7.3 billion when using $138 per ton coal price. To ensure quality operation, the Company recruited Mr. Kong Ling-Min, Senior Geological Engineer, in February 2008.
3)	Mr. Gene M. Bennett MBA, MBA, CPA (inactive), joined the Company as CFO on 3/1/2008.
4)	The Board established Independent Directors, in efforts to upgrade its stock trading to from OTC-BB to NASDAQ. Mr. J. Borich and S. Kiang become first two Independent Members.
5)	Mr. Sun Lo-Yu, National Advisor to the Untied States Small Business Administration (SBA), becomes the Company advisor.
6)	The Company executive, Mr. Dickson Lee CPA, becomes Chairman of the LSP power subsidiary in March of 2008.

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Part III

Item 8. Directors and Executive Officers a) Board of Directors

There is no change of board of directors as of January 31, 2008. See Note 22-Sequent Events.

b) Executive Officer

There is no change of Officer during the period. Item 9. Executive & Director Compensation

No executive, Board of the company takes salaries over $80,000 per year.

The Company issues 54,002 common shares to new member of Board of Directors as the 5-year service compensations. The issued shares cover a 5 year service period, if a director resigned prior the 5th year, the pro-rated shares may be repatriated back to the Company. All Board members holds an insignificant amount of common shares of the Registrant as of January 31, 2008.

Warrants of the Company are issued to the Company directors (or former directors) to compensate director's services. Warrants exercisable in the four years after issuance date are given free as an incentive for helping the Company to grow. There is no cash effect on both recipients of warrants. There is no taxable gain until a warrant is disposed for a gain. The conversion price of warrants to directors is the same as offered to the private investors. None of directors has more than 400,000 units of warrants. None of the directors has exercised the warrants.

Item 10. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of January 31, 2008 with respect to persons known to the Company to be the beneficial owners of more than 5% of its voting securities and with respect to the beneficial ownership of such securities by each director of the Company and by all directors and executive officers of the Company as a group.

				Amount and Nature
		Name of Beneficial		of Beneficial
Class of Stock		Owner		Ownership		Percent
Common		Dickson Lee		7,650,000		38.40	%
Common		Kathy C Au (1)		1,200,000		6.02	%
Common		Li Xiang (2)		1,200,000		6.02	%
Common		Wu Yang (3)		1,708,283		8.58	%
Common		KMC (4)		485,592		2.44	%
Common		Other investors		7,677,623		38.54	%
Total issued & outstanding				19,921,498		100	%

(1)	Spouse of Mr. D. Lee, founder.
(2)	Issued for Tech-H acquisition in 2001
(3)	Issued for LEK acquisition in 2004.
(4)	Issued to Tony HY Li, and Francis XH Zhang for KMC acquisition in 2006.

Item 11. Certain Relationships and Related Transactions.

None.

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		Part IV
Item 12. Principal Accountant Fees and Services
Item		Fiscal Year			Fiscal Year
		of 2008(1)			of 2007
Audit Related Fees:
Audit Fess		$35,000			$50,000
Quarterly and other fees		30,000			22,000
Total auditor fees		$65,000			$72,000
(1) Representing estimates.

Item 13. Exhibits and Report on Form 8- K

See Exhibit A - contract of LSP Technologies Inc. executed on 1/18/2008.

The following list describes the exhibits filed as part of this report on Form 10-KSB:

EXHIBIT NUMBER

DESCRIPTION

31.1	Certificate of Chairman as Required by Rule 13a-14(a)/15d-14.
31.2	Certificate of Comptroller as required by Rule 13a-14(a)/15d-14.
32.1	Certificate of Chairman as Required by Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2	Certificate of Comptroller as Required by Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d- 14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

SIGNATURES

In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

L & L FINANCIAL HOLDINGS, INC.

Date: March 11, 2008

By: /S/ Paul W. Lee ---------------------- Paul W. Lee

Chairman

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CERTIFICATIONS OF CEO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul W. Lee certify that:

1. I have reviewed this quarterly report on Form 10-QSB of L&L Financial Holdings, Inc for the three months ended January 31, 2008.

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)) 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) 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

     c) 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.

Date: March 11, 2008

By: /S/ Paul W. Lee

----------------- Paul W. Lee Chairman

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CERTIFICATIONS OF CFO PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gene M. Bennett, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of L&L Financial Holdings, Inc. for the three months ended January 31, 2008.

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)) 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) 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

     c) 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.

Date: March 11, 2008

By: /S/ Gene M. Bennett ------------------------------------------- Gene M. Bennett, MBA CFO

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CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Paul W. Lee, L & L Financial Holdings, Inc. (the "Company"), hereby certify, to my knowledge, that:

(1) The Company's 3rd quarter Report on Form 10-QSB for the year the 3rd quarterly ended January 31, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 11, 2008

By: /S/ Paul W. Lee ------------------------ Paul W. Lee Chairman

 

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.

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CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Gene M. Bennett, L & L Financial Holdings, Inc. (the "Company"), hereby certify, to my knowledge, that:

(1)The Company's quarterly Report on Form 10-QSB for the quarterly ended January 31, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) Information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company.

Date: March 11, 2008

By: /S/ Gene M. Bennett --------------------------- Gene M. Bennett, MBA CFO

 

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.

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Exhibit A

Contract of LSP Technologies, Inc.

LSP Technologies, Inc.

Sino-American Joint Venture Contract

(English Translation)

 

Dated: 01/18/2008

 

 

By :

     L&L Financial Holdings, Inc. and

LEK (Liu Er Kong Machinery Company Co Ltd.)

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Content

Chapter 1. General

Chapter 2. Two Parties

Chapter 3. Forming Joint Venture

Chapter 4. Purpose, scope and scale of Production

Chapter 5. Total Investment and Registered Capital

Chapter 6. Responsibilities of both Parties

Chapter 7. Sales of Products

Chapter 8. Board of Directors

Chapter 9. Management Structure

Chapter 10. Leasing of Facilities and Purchase of Equipment

Chapter 11. Preparation and Construction

Chapter 12. Labor management

Chapter 13. Finance, Audit, and Tax

Chapter 14. Period of Joint Venture

Chapter 15. Liquidation of Joint Venture

Chapter 16. Modification and Dissolution of Contract

Chapter 17. Penalty

Chapter 18. Force Major

Chapter 19. Applicable Laws

Chapter 20. Solution of Dispute

Chapter 21. Effective of Contract and Other Appendix

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Chapter 1 - General

China LEK (Liu er kong) air compressor company (hereafter referred to as Party A) and American L&L Financial Holdings, Inc.(hereafter referred to as Party B) following the Sino-foreign joint venture (JV) enterprise law of the People Republic of China and other rules and regulations, based on mutual benefits and friendly negotiation have a agreed to establish a joint venture company at Guangxi Province of People Republic China, thus entered this contract.

Chapter 2 - Two Parties

Article 1. Parties entered this contract are:

Party A: LEK

A Guangxi China incorporated company

Legal Address: 94 ChengZhan Road, Liuzhou city

Legal Representative Person: Wu Yang (Chairman, Chinese citizen)

 

Party B: L&L Financial Holdings, Inc.

American Nevada state incorporated company

Legal Address: 720 Third Avenue suite 1611, Seattle, WA 98104

Legal Representative Person: Dickson Lee (U.S. citizen)

     If the above parties have any changes, the changed party should notify the other party of such changes. Otherwise, the changed party will take the responsibilities.

Chapter 3 - Forming A Joint Venture

     Article 2. Following Sino-foreign joint venture enterprise law of the People Republic of China and other rules and regulations, to establish the joint venture at Liuzhou, Guangxi, China.

Article 3. The name of the joint venture: LSP Technologies, Inc. ("JV company")

JV address: 14^th Floor, 1 High Tech Road, Science and Technology Industrial Zone, Liuzhou city.

     Article 4. JV company is incorporated in China. It must follow all rules and regulations of People's Republic of China. Rights of JV company are protected by Chinese laws.

     Article 5. JV company is a limited liabilities company. Party A and Party B must contribute its capital and share responsibility of the JV company. Each party according to its capital of JV company, shares profits, and risks of the JV company.

     Article 6. JV company may establish branch in China after approval from board of directors and related government approval.

Chapter 4 - Purpose, scope and scale of Production

     Article 7. Objectives of JV company: strength economic corporation and technology exchange, using advance and suitable technology and scientific management method, jointly produce screw air compressor and customer related equipment. Product should have quality and

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price competitive advantage, so that product can be sold both in and out side China, increase profits so both parties can enjoy satisfactory rate of return.

     Article 8. Scope of Operation of JV company: Sales and manufacturing of air compressors, engineering machines, air purification equipments, complete set equipments, chemical engineering equipments, other electrical engineering products, and supplementary parts. Other technical consulting service of the above products.

     Article 9. JV company should reach production goals of: first year 500 units of air compressors with sales reaching 40 million RMB. In the fifth year, it is reaching 300 million RMB sales.

Chapter 5 - Total Investment and Registered Capital

         Article 10. Total capital of the JV company is 20 million RMB

         Article 11. Registered capital of JV company is 20 million RMB.

Of which, Party A contributes 6 million RMB representing 30% equity;

Party B contributes 14 million RMB representing 70% equity.

         Article 12. Party A and Party B will contribute their capital as follows:

     Party A: using the 6-year usage right of building, space, equipments, and facilities, located at 39 Dragon Lake Road

          Party B: using cash and air compressor parts as follows:

          Cash-7 million RMB (of equivalent US dollars)

          Parts ( imported air-ends, equipments and others) - 7 million RMB( based on China custom inspection, and appraisal, insufficient amount will be contributed using US dollars.)

          Both parties contribute capital in two phases:

          Phase I: Party A contributes the first 3-year usage right of building facilities, equipments located at 39 Dragon Lake Road (equivalent to 3 million RMB); Party B contributes cash and air compressor parts (imported air-ends, equipments and others), equivalent to 7 million RMB. Both Parties agree to carry out the above within 3 months after receive JV company license.

     Phase II: Party A contribute the second 3-year usage right of building facilities, equipments locate at 39 Dragon Lake Road, equivalent to 3 million RMB; Party B contribute cash and parts (imported air-ends, equipments and others) Equivalent to 7 million RMB. Both parties agree above (Phase II contribution) within 2 years after receive JV company license.

     Article 13. When making contribution both Parties need to follow the time guideline, any Party may not using excuses to delay its contributions.

     Party B using US dollars to contribute amounts, must be converted at the National Foreign Exchange Bureau Rate for its foreign currency. Party A using the usage right of 39 Dragon Lake Road, must provide legal documents which to be confirmed by Party B.

     Article 14. Both Parties after contributed capitals, capital needs to be confirm by a Chinese CPA firm. JV company when receives Chinese CPA firm confirmation should forward such confirmation to government for reference.

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     Article 15. Registered capital, total investment capital if adjusted need to send to governmental approval. During JV period, JV company cannot reduce its registered capital. Any party wishes to expand JV capital needs to approve by Board of Directors.

Either Party A or Party B wishes to transfer some JV equity to a third party, it should be approved by the other party of the JV company. If the other party does not response either indicating agrees with the transfer or disagrees with the transfer. After 30 days of notice, it is deemed agree by the other party. Each party has the first right of refusal of any transfer of equity.

JV equity transfer needs to be approved by the government before becomes effective.

     Article 16. After JV company starts, no party could mortgage JV company stocks, unless it is approved by the board.

Chapter 6 - Responsibilities of both Parties

     Article 17. When JV company starts operate, Party A will not produce screw compressors. Both Parties agreed that they will not use intangibles of each Party to contribute into JV company (i.e. goodwill, sales channel, distributorship rights of Sullivan Palatek in China, Hong Kong, and Taiwan). Party A and Party B, each is responsible for the following:

           Party A responsibilities:

           Following Article 12 and 13 to make capital contribution; Coordinate Chinese government for joint venture approval;

           Coordinate Party B to provide advises, services to JV company for importation of equipment and parts;

           Coordinating purchase of place transportation vehicle, telecommunication equipments, raw material for the JV company; Coordinating any other things for JV company

            Party B responsibilities:

            Following Article 12 and 13 to make capital contribution:

           Coordinate JV company to provide advises, services for purchase of equipment and parts overseas.

           Coordinating any other things for JV company

     If necessary expanses are spent for registration JV company, expenses after both company confirmation to be charged to the JV company.

     Party has the advanced to JV company of 300 thousand RMB in cash in November 2007 to renovate the facilities at 39 Dragon Lake Road. Starting November 2007, Party A is paying utility expenses for the facilities at 39 Dragon Lake Road. Both Parties agreed the utility bills will be reimbursed back to each party, or using the expenses as capital contributions.

Chapter 7 - Sales of Products

     Article 18. Products of JV company, should be sold in China if quality standard was matched. It is to use the exiting channel of Party A, or appoint Party A to sell JV products, so to increase JV products profit. Also JV company should sell directly to the market both inside China and outside china, so that the ultimately goal is 55% export, sell domestically 45% JV company products.

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     Article 19. JV company encourages direct sales to market both inside China and outside China. If necessary, JV company can appoint the third party to sell of products.

Chapter 8 - Board of Directors

          Article 20. JV company starts its Board of Director when received the license.

     Article 21. The Board of Directors consists of 9 members, Party A assigns 3 members, Party B assigns 6 members. Chairman is recommended by Party B, vice Chairman is recommended by Party A; Both Chairman, vice Chairman, and Directors serve 3 years, if needed, they can re-appoint 3 more years.

     If any party needs to change its recommended directors, it should notify to government of such changes.

     Article 22. Board of Directors is the highest authority of JV company, which decides all major events of JV company.

The following major events must be approved by all Directors:

1.	Changes of by-law of JV company,
2.	Changes of registered JV capital,
3.	Any merger acquisitions of JV company,
4.	Dissolutions of JV company.
	(See Sino-American Joint Venture Clause number 33)

The following major event must approved by 2/3 Directors:

1.	the annual budget of JV company
2.	distribution of profits of JV company
3.	increase capital or transfer capital of JV company
4.	mortgage asset of JV company
5.	mortgage stocks of JV company
6.	any related party transaction of JV company.

If any other events of JV company requires Board of Director approval, only over 50% of board member is required

     Article 23. Chairman of the Board is the legal person of JV company. If Chairman cannot carry out his duty, he can assign his duty to Vice Chairman or board of Directors. If Chairman did not assign his duty or cannot carry out his duty, the rest of the Board member can vote to assign a Director to carry out Chairman's duty.

     Article 24. Board of Directors have to meet at least once a year, Chairman is the person initiates such meeting. If 1/3 of directors proposed a meeting, Chairman should call of such meeting, a notice should be send including place, agenda, and the date of board of directors meeting. Such a meeting notice should be send 3 day in advance using letters, email, or telephone to all board members, all board of directors meeting must be kept in writing for future reference

     Article 25. Board of Directors meeting (including emergence meeting) must attend by at least 5 board members (including telephone conference) each board member has one voting right. Following Article 22, there must be majority vote in order to reach board resolution.

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     Article 26. Both parties have responsibilities to send its Board members to attend Board meeting. If Board member cannot attend Board meeting, he can assign other to attend Board meeting.

     Article 27. Board member of JV company will not take any salary, fee. But during the Board meeting, JV company will pay for transportation expenses, and hotel expenses.

Chapter 9 - Management Structure

     Article 28. President of JV company is fully responsible for company's operation. President is responsible for company for daily operation, and responsible to Board of Directors. JV company has one President recommended by Party B, one Vice President by recommended Party A. both President and Vice President are hired by the Board for period of 3 years. President and Vice President can be reappointed by the Board.

     Article 29. The responsibility of President is to carry out the Board resolutions, organizes dally activities of JV company, executes the annual budget and the sales plan for the JV company. Vice President helps President's work.

     JV company can establish several departments, each department helps to carry out President's assignments.

         Article 30. Both President and Vice President must be serious of their duty

 

Chapter 10 - Leasing of Facilities and Purchase of Equipment

     Article 31. Party A is responsible to provide a production base, to be locate at 39 Dragon Lake Road, which has existing building facilities and the equipments.

1.	The land rental of the location needs to be paid by JV company. The price of the land rental should be the same as the existing land rental paid by Party A. If f any increase of land rental 39 Dragon Lake Road, such increase should be paid by Party A.
2.	For any reasons, not control by Party A and Party B which caused reduction of operations facilities, located at 39 Dragon Lake Road, Party A must compensate such loses to JV company in order to keep Party A ownership percentage. If Party A cannot compensate such loses, the Party A may force to reduce its equity ownership of JV company. (Some buildings locate at 39 Dragon Lake Road may be removed /demolished, see Appendix)

     Article 32. Any purchase of material, equipments, and transportation vehicle, and office material for JV company, should consider to purchase inside China.

     Article 33. IF party B is appointed by JV company to purchase material, equipment out side China, it should notify Party A to avoid any related party transaction.

Chapter 11 - Preparation and Construction

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     Article 34. JV company will have an Organization Committee consist of 3 people, of which Party A sends 1 person, Party B sends 2 people.

     Article 35. the Organization Committee will be responsible for renovating of the facility, purchase equipment, material and preparing a budget to pay such renovation. All documents, charts , records must be all kept for future reference.

          Article 36. Organization Committee to seek tax rebates for JV company.

     Article 37. Organization Committee coordinates technical people to verify and inspect the quality of such renovation.

Chapter 12 - Labor management

     Article 38. When JV company hires, fires, transfers employees or decides their salaries, benefits, insurances, promotion, demotion, JV company must follows the Labor Law of People's Republic of China and related regulations. Board of Directors should develop a plan for JV company's labor union, such a plan should be recorded to the local government.

     Article 39. Board of Directors of JV company should decide the salary, benefits, insurances, and the travel expenses of senior management, recommended by Party A or Party B.

     Article 40. All employee of JV company, should follow the union laws of People's Republic China, to establish union and conduct union activities JV company must provide basic requirement for union activates. JV company must assign 2% of total employee salary to be used for union's meeting, office, benefit, culture, and sports activities. JV company's union will follow union rules to manage such expenses.

Chapter 13 - Finance, Audit, and Tax

     Article 41. JV company uses the accounting system of People's Republic of China, both parties A and Party B recommend its own financial people to be a candidates of accountant and the cashier, JV company decide who he will hire.

          Article 42. JV company uses RMB as its accounting unit.

     Article 43. JV company use January 1^st as its beginning of the year, and use December 31^st as the end of the year or it can be decided by the board of directors. All accounting record receipts, vouchers, and journal entry must be prepared in Chinese; if necessary it can be supplemented in English.

     Article 44. JV company needs to follow relate regulation to make reserves for its future development, employee benefits, and the reward. Such reserve can be distributed by the board of directors based on actual operating result of JV company.

     Article 45. JV company needs to hire Chinese CPA firm to audit, review its financial statements. The result must be summit to president and board of directors.

     If one party wishes to hire a CPA firm of another country to audit JV company financial statements, it must be approved by the board of directors. Such expenses must be paid by the ordering party.

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     Article 46. During the first 3 months of each year, president of JV company must prepare budget including balance sheet, income statement, and the profit distribution plan, summit to board of directors for approval.

     Article 47. JV company should open bank accounts and the Bank of China, or any banks approved by Bank of China

          Article 48. JV company should balance its own cash.

          Article 49. JV company should supervise its employee to pay China taxes.

          Article 50. JV company should pay local tax and timely prepare tax return

          Article 51. JV company should insure its activities using Chinese insurance company

Chapter 15 - Liquidation of Joint Venture

     Article 53. JV Company dissolution will followed the Chinese laws and regulation, all assets after dissolution will distribute will back to both parties according to investment percentage

Chapter 16 - Modification and Dissolution of Contract

     Article 54. If any medication and dissolution of contract, must be proved must be by Party A and Party B in writing to government to approval. Then those changes can be effective.

          Article 55. For the following reasons, this contact can be terminated and dissolved

1.	Due to mother nature leading server loses
2.	Due to server loses JV Company cannot operate
3.	One Party violate this contact resulting this contract cannot carry forward
4.	Both Parties agree JV Company cannot reach business goal and there is no future for the company

     Dissolution of JV Company should be propose all the broad directors and Chinese government. If one board member does not show up over tow years the other party must notify directors in writing at least three times. If director still do not respond one party can apply the dissolution to the company

Chapter 17 - Penalty

     Article 56. Any party not contribute the capital on time will be violating to the contract. The other party can notified the party who did not contribute the capital must contribute the capital in three months. If over three months the capital still not contributed by the party who is not contribute the capital hive up all its right to the JV Company. The party who contribute will notified the they party who is not contribute the capital in writing and attachment Chinese CAP firm statement so that the party contributes the capital can find another company. If the party does not contribute the capital do not respond contribute the capital then the party did not contribute the

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capital has the liability to pay the all capital and the JV Company is to start the reorganization. Any party did not make the capital contribute 1% of penalty each month until the capital is fully paid.

     Article 57. Base on the friendly relationship between party A and party B should not violation the contract if the party did not pay the contribute will automatic to pay the capital for the contract.

Chapter 18 - Force Major

     Article 58. Due to major force which cost all major clauses of this contract cannot carry out. Both parties will discuss how to resolve of the JV Company operation.

Chapter 19 - Applicable Laws

          Article 59. This contact follows the laws of People of Republican of China.

Chapter 20 - Solution of Dispute

     Article 60. Any dispute of this contract should be settled on the friendly basis. If cannot be resolved the dispute, the Parties should summit paper for arbitration through the China International Arbitration Committee. The result of the arbitration the final, must be binding to both Parties.

          Article 61. All clauses of this contract need to carry out, except disputes under arbitration.

Chapter 21 - Effective of Contract and Others

     Article 62. This Sino-American is based on Chinese language if it is necessary it will be supplemented to English language.

          Article 63. All attachments and exhibits following of this contract is party of this contract.

     Article 64. This contract and its attachments after both Parties signature by Liuzhou Bureau for effective. This contract has four copies, each Party keep one copy, Approving Department has one copy, and Business Bureau keep one copy.

     Article 65. If any party uses telegram and email for sending notices, another party should follow up to the letter in the writing. The following address and recipient are the legal address for sending the notice to each party for the JV Company. If changes are made must notified another party.

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Party A: Address: 94 Chen Zhen Liuzhou City Recipient: Wu Yang E-mail: LEk@liuerkong.com

Party B:

Address: 720 Third Ave Suite 1611, Seattle WA 98104 USA

Recipient: Dickson Lee

E-mail: dixlnl@msn.com

 

Party A: LEK Legal Person: Wu Yang Party B: L&L Financial Holdings, Inc Legal person: Dickson V Lee Signature Date: 1/18/2008

APPENDIX :

     1. As Party A provides usage right of building, equipments, and facilities located at 39 Dragon Lake Road, for the JV Company operation basis (excluding the of the relative land to the year 2015). Before this contract is signed the Liuzhou city government notified Party A, that government is to expend the Dragon Lake Road, so the office area (four stories) and demonstration room (two stories) approx. 1,970 sq meters, has been planned for city demolition. As a result, the facilities provided by Party A at 39 Dragon Lake Road, if demolished based on city plan, will be left only to 12,338 sq meters. (Detail will be provided by actual measurement) with mainly factories left to use by JV company. Thus, when the JV Company is established, Party B must use the American investment role to negotiate with city government, to slow down demolition of the said building. If the demolition starts, it will cost negative image of JV company. Therefore,

          1) If two building were demolished, Party A needs to put in compensations in order to keep its equities in the JV Company. If the party A cannot compensate such loses, Party A may force to reduce its equalities in the JV Company.

     2) To insure to smooth the JV Company, both Parties agree to seek new land( 40 to 100 hectors) nearby . New land purchasing price can be advanced by Party B first, and then settle it with JV Company. Both Parties agree to move to this newly purchased location.

     2. To ensure the quality JV Company products, Party B has contracted Sullivan Palatek to seek technical cooperation. SP has sent Mr. Harry Skoczek on 12/3/2007 to LSP to understand JV status for 10 days. SP has agreed in principle to provide its air-ends at costs, and provide quality services to JV company and becomes a partner of the JV Company.

     After JV Company is established both Parties agree to invite SP to become the shareholder of the JV Company. Each party is to reduce its equity percentage to accommodate SP. This is to

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ensure the quality and competitiveness of the JV Company, to become the leader of Air Compressor industry in China.

Party A: LEK /S/ Legal Person: Wu Yang

Party B: L&L Financial Holdings, Inc /s/ Legal Person: Dickson V Lee

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