UNITED
      STATES




**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**





QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      quarterly period ended March
      31, 200 8





TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from _________ to _________





Commission
      file number 000-28727





LONG-E
      INTERNATIONAL, INC.


(Exact
      name of small business issuer as specified in its charter)





Utah
            
            87-0624752(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)





C-6F,
      Huahan Chuangxin Block, Keyuan Road, Hi-Tech Industry Zone, Shenzhen, 518000,
      Guangdong, China


(Address
      of principal executive offices)





(86)
      755
      3396 5188


(Issuer’s
      telephone number)





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  No





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting
      company:





Large
                accelerated filer
            o
            Accelerated
                filer
            oNon-accelerated
                filer
            o
            Smaller
                reporting company
            þ





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes  No





As
      of May
      15, 200 8 ,
      there
      were 31,259,714 shares issued and outstanding of the registrant’s common
      stock.





**INDEX**


**Page**PART
                  I.          FINANCIAL
                  INFORMATIONItem
                  1.            
                  Financial Statements
              3Consolidated
                  Balance Sheets as of March 31, 2008 (unaudited) and December 31,
                  2007
              3Consolidated
                  Statements of Operations for the three months ended March 31, 2008
                  and
                  2007 (unaudited)
              4Consolidated
                  Statements of Cash Flows for the three months ended March 31, 2008
                  and
                  2007 (unaudited)
              5Notes
                  to Unaudited Financial Statements
              6Item
                  2.            
                  Management’s Discussion and Analysis of Financial Condition and Results of
                  Operations
              20Item
                  4.            
                  Controls and Procedures
              24PART
                  II. OTHER INFORMATIONItem
                  6.            
                  Exhibits
              25Signatures
              26




2




**PART
      I — FINANCIAL INFORMATION**




**Item
      1.**   **Financial
      Statements.**




**Long-E
      International, Inc. and Subsidiaries**


**Consolidated
      Balance Sheets**




March 31,
              2008
            
            December 31,
              2007(Unaudited)**ASSETS:**Current
                Assets:Cash
                and cash equivalents
            
            $
            3,474,227
            
            $
            3,715,010Trade
                receivables, net (Note 4)
            
            
            8,393,617
            
            
            6,768,947Short-term
                loans receivable (Note 5)
            
            
            2,424,016
            
            
            2,333,656Inventories,
                net (Note 6)
            
            
            2,630,486
            
            
            2,763,930Value-added
                taxes (VAT) refundable
            
            
            45,947
            
            
            22,370Due
                from related parties (Note 13)
            
            
            14,029
            
            
            23,587Prepaid
                expenses and other receivables
            
            
            160,049
            
            
            810,668Total
                current assets
            
            
            17,142,371
            
            
            16,438,168Plant
                and equipment, net (Note 7)
            
            
            2,063,378
            
            
            2,146,924Land
                use right deposit (Note 15)
            
            
            1,225,669
            
            
            1,179,980Intangibles,
                net (Note 8)
            
            
            41,276
            
            
            53,835**Total
                Assets**
            
            $
            20,472,694
            
            $
            19,818,907**LIABILITIES
                AND SHAREHOLDERS' EQUITY:**Current
                Liabilities:Accounts
                payable - Trade
            
            $
            2,473,050
            
            $
            2,670,458Accrued
                liabilities and other payables
            
            
            194,967
            
            
            717,661Short
                term loans (Note 9 and 13)
            
            
            1,372,522
            
            
            1,545,829Current
                portion of bank loans payable (Note 10)
            
            
            211,392
            
            
            261,435Registration
                rights penalty payable (Note 16)
            
            
            323,600
            
            
            323,600Other
                taxes payable
            
            
            1,267,733
            
            
            1,212,896Wages
                payable
            
            
            692,890
            
            
            810,274Corporate
                income taxes payable
            
            
            451,593
            
            
            239,361Due
                to related parties (Note 13)
            
            
            298,114
            
            
            175,718Total
                current liabilities
            
            
            7,285,861
            
            
            7,957,232Long-term
                Liabilities:Bank
                loans payable (Note 10)
            
            
            -
            
            
            20,278Convertible
                debt, net of debt discount of $4,728,483 and $4,862,208, respectively
                (Note 11)
            
            
            624,517
            
            
            490,692Convertible
                debt, issued for settlement ofliquidateddamage, net of debt discount of $1,098,825 and $1,127,000, respectively
                (Note 11)
            
            
            28,175
            
            
            -**Total
                Liabilities**
            
            
            7,938,553
            
            
            8,468,202**Commitments
                and Contingencies (Note 15)****Shareholders'
                Equity:**Common
                stock, $0.001 Par value; 50,000,000 shares authorized; issued and
                outstanding 31,259,714 and 31,259,714 respectively (Note
                12)
            
            
            31,260
            
            
            31,260Additional
                paid-in capital
            
            
            8,623,111
            
            
            8,623,111Deferred
                warrant expense
            
            
            -
            
            
            (19,060
            )Accumulated
                other comprehensive income
            
            
            1,520,840
            
            
            983,362Statutory
                reserves
            
            
            1,252,323
            
            
            1,252,323Retained
                earnings
            
            
            1,106,607
            
            
            479,709**Total
                Shareholders' Equity**
            
            
            12,534,141
            
            
            11,350,705**Total
                Liabilities and Shareholders' Equity**
            
            $
            20,472,694
            
            $
            19,818,907





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


3





**Long-E
      International, Inc. and Subsidiaries**


**Consolidated
      Statements of Operations**





For the Three Months EndedMarch
                31,2008
            
            2007(Unaudited)
            
            (Unaudited)Sales
                Revenues
            
            $
            8,985,992
            
            $
            6,157,718Assembling
                / Reprocessing Revenues
            
            
            183,746
            
            
            384,330Total
                Revenues
            
            
            9,169,738
            
            
            6,542,048Cost
                of Sales
            
            
            6,699,833
            
            
            4,431,596Gross
                Profit
            
            
            2,469,905
            
            
            2,110,452Operating
                ExpensesSelling
                expenses
            
            
            542,337
            
            
            1,338,266General
                and Administrative expenses
            
            
            751,177
            
            
            1,251,416Research
                and development
            
            
            191,694
            
            
            66,185Total
                Operating Expenses
            
            
            1,485,208
            
            
            2,655,867Income
                (Loss) from Operations
            
            
            984,697
            
            
            (545,415
            )Other
                Income (Loss):Other
                income
            
            
            17,354
            
            
            11,500Interest
                incomes
            
            
            6,232
            
            
            1,937Interest
                expenses
            
            
            (182,763
            )
            
            (95,353
            )Gain
                on extinguishment of debts
            
            
            -
            
            
            15,715Total
                Other Income (Loss)
            
            
            (159,177
            )
            
            (66,201
            )Income
                (Loss) before income taxes
            
            
            825,520
            
            
            (611,616
            )Income
                taxes (Note 10)
            
            
            (198,622
            )
            
            (84,615
            )Net
                Income (Loss)
            
            
            626,898
            
            
            (696,231
            )Foreign
                currency translation adjustment
            
            
            537,478
            
            
            (213,944
            )Comprehensive
                income (loss)
            
            $
            1,164,376
            
            $
            (910,175
            )Net
                earnings per share, basic
            
            $
            0.02
            
            $
            (0.02
            )Weighted
                average number of shares outstanding, basic
            
            
            31,259,714
            
            
            31,259,714Net
                earnings per share, diluted
            
            $
            0.02
            
            $
            (0.02
            )Weighted
                average number of shares outstanding, diluted
            
            
            33,554,507
            
            
            31,259,714




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


4


**Long-E
      International, Inc. and Subsidiaries**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





For the Three Months Ended
              March 31,2008
            
            2007(Unaudited)
            
            (Unaudited)**Cash
                flows from operating activities**Net
                Income (loss)
            
            $
            626,898
            
            $
            (696,231
            )Adjustments
                to reconcile net income to cash provided by (used in) operating
                activities:Depreciation
                and amortization
            
            
            214,812
            
            
            141,941Loss
                on disposal of fixed asset
            
            
            -
            
            
            -Amortization
                of debt discount
            
            
            162,000
            
            
            89,217Amortization
                of CCG warrants
            
            
            19,060
            
            
            -Chang
                in operating assets and liabilities:(Increase)
                decrease in assets:Receivables,
                net
            
            
            (1,333,432
            )
            
            530,852VAT
                tax recoverable
            
            
            (22,225
            )
            
            9,555Due
                from related parties
            
            
            172,558
            
            
            (7,339
            )Inventories,
                net
            
            
            235,320
            
            
            (1,227,413
            )Prepaid
                expenses and other receivables
            
            
            667,138
            
            
            (459,320
            )(Decrease)
                increase in liabilities:Accounts
                payable and accrued liabilities
            
            
            (827,577
            )
            
            1,056,313Other
                tax payable
            
            
            7,706
            
            
            4,149Corporate
                income tax payable
            
            
            198,622
            
            
            (3,252
            )Net
                cash provided by (used in) operating activities
            
            
            120,880
            
            
            (561,528
            )Cash
                flows from investing activities:Purchase
                of plant and equipment
            
            
            (37,373
            )
            
            (500,473
            )Net
                cash used in investing activities
            
            
            (37,373
            )
            
            (500,473
            )Cash
                flows from financing activities:Proceeds
                from bank loans
            
            
            -
            
            
            307,098Proceeds
                from loans from individuals
            
            
            -
            
            
            24,984Repayment
                of bank loans
            
            
            (279,360
            )
            
            (77,305
            )Repayment
                of government loans
            
            
            -
            
            
            (251,907
            )Repayment
                of loans from individuals
            
            
            -
            
            
            (149,768
            )Proceeds
                (repayment) from related party advances
            
            
            (35,073
            )
            
            55,864Issuance
                of convertible promissory notes
            
            
            -
            
            
            5,353,000Net
                cash provided by (used in) financing activities
            
            
            (314,433
            )
            
            5,261,966Effect
                of exchange rate changes on cash
            
            
            (9,857
            )
            
            (244,733
            )Net
                increase (decrease) in cash
            
            
            (240,783
            )
            
            3,955,232Cash,
                beginning of period
            
            
            3,715,010
            
            
            2,313,080Cash,
                end of period
            
            $
            3,474,227
            
            $
            6,268,312**Supplemental
                disclosure information:**Interest
                expense paid
            
            $
            20,763
            
            $
            6,136Income
                taxes paid
            
            $
            198,622
            
            $
            84,615**Non-cash
                interest expenses:**Amortization
                of debt discount
            
            $
            162,000
            
            $
            89,217Amortization
                of CCG warrants
            
            $
            19,060
            
            $
            -




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


5


**Long-E
      International, Inc. and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


**For
      the three months ended March 31, 2008 and 2007 (unaudited)**




**1.**  **DESCRIPTION
      OF BUSINESS AND ORGANIZATION**





Long-e
      International, Inc. (the “Company”) is a Utah corporation organized on October
      5, 1998 under the name Softwall Equipment Corporation. In February 2005, in
      a
      transaction accounted for as a reverse acquisition, the Company acquired all
      of
      the  outstanding
      capital stock of Inncardio, Inc. and the name of the Company was changed to
      Inncardio, Inc. In connection with the acquisition of Long-e International
      Group
      Co., Inc. (“LIG”), which is described below, on December 21, 2006, the Company’s
      corporate name was changed to Long-e International, Inc.





The
      Company is a holding company and owns the stock of LIG. LIG is a British Virgin
      Islands corporation organized on May 23, 2006. LIG’s sole business is the
      ownership of Long-e Technology (Shenzhen) Co., Ltd. (“LTS”), a wholly foreign
      owned enterprises organized as a limited liability company under the law of
      the
      Peoples’ Republic of China under the name Shenzhen Agilon Science And Technology
      Co., Inc. LTS’ name was changed to Long-e International Group Co., Inc. on March
      16, 2007. LIG was organized on December 21, 2001 by the holders of a majority
      of
      the equity of LTS on December 21, 2001 who became the majority stockholders
      of
      LIG.





On
      June 22, 2006, LIG entered into an agreement to acquire all of the equity of
      LTS
      for RMB 4,800,000, which was equivalent to $578,000. The consideration was
      provided by LIG’s stockholders who made interest-free loans to LIG. As of March
      31, 2008, such loans were still outstanding.
****





On
      June 29, 2007, LIG received government approval to acquire LTS and its
      classification was changed from a domestic corporation to a wholly-foreign
      owned
      enterprise, known as a WFOE. LTS has a business license which expires December
      21, 2010. ****





On
      November 30, 2006, the Company, then known as Inncardio, Inc., entered into
      a
      Share Exchange Agreement (the “Exchange Agreement”) with LIG and its
      shareholders. Pursuant to the Exchange Agreement, the Company issued 20,661,879
      shares of its common stock to LIG’s shareholders and their designees in exchange
      for 100% of the outstanding equity interests of LIG. The share exchange, which
      was completed effective December 29, 2006, The share exchange resulted in a
      change of control of the Company. As part of the share exchange, the directors
      and officers of LIG became the directors and officers of the
      Company.





At
      the
      time of the share exchange on December 29, 2006, the Company was recapitalized
      to give effect to the share exchange, and at the time of LIG’s acquisition of
      LTS, LIG was recapitalized to give effect to the acquisition. Under generally
      accepted accounting principles, both the acquisition by the Company of LIG
      and
      the acquisition of LTS by LIG are considered to be capital transactions in
      substance, rather than business combinations. That is, the acquisition is
      equivalent, to the acquisition first of LTS of LIG and then by LIG of the
      Company, then known as Inncardio, Inc., with, in the case of the Company, the
      issuance of stock by LIG for the net monetary assets of the Company. This
      transaction is reflected as recapitalizations, and is accounted for as a change
      in capital structure. Accordingly, the accounting for the acquisition is
      identical to that resulting from a reverse acquisition. Under reverse takeover
      accounting, the comparative historical financial statements of the Company,
      as
      the legal acquirer, are those of the accounting acquirer. As a result of both
      the acquisition of LTS and the subsequent acquisition of LIG being treated
      as
      reverse acquisitions, the Company’s historical financial statements for period
      prior to December 29, 2006 are those of LTS, The accompanying financial
      statements reflect the recapitalization of the stockholders’ equity as if the
      transactions occurred as of the beginning of the first period presented. Thus,
      the 20,661,879 shares of common stock issued to the former LIG stockholders
      are
      deemed to be outstanding for all periods reported prior to the date of the
      reverse acquisition.





As
      a
      result of the reverse acquisition of LIS, the Company’s sole business became the
      business of LTS. LTS is engaged in research, development, production, marketing
      and sales of automotive electronic products, including automotive safety and
      security systems. All current operations and assets of LTS are located in the
      PRC.


6





**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





**a.**
            **Basis
                of preparation**





Management
      acknowledges its responsibility for the preparation of the accompanying interim
      consolidated financial statements which reflect all adjustments, consisting
      of
      normal recurring adjustments, considered necessary in its opinion for a fair
      statement of its consolidated financial position and the results of its
      operations for the interim period presented. These consolidated financial
      statements should be read in conjunction with the summary of significant
      accounting policies and notes to consolidated financial statements included
      in
      the Company’s Form 10-KSB annual report for the year ended December 31, 2007.





The
      accompanying unaudited condensed consolidated financial statements for the
      Company and its subsidiaries have been prepared in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and with the instructions to Form 10-Q and Article
      8-03 of Regulation S-X .
      In the
      opinion of management, the consolidated financial statements reflect all
      adjustments (consisting of normal recurring adjustments) considered necessary
      for a fair presentation of the results the Company and its subsidiaries for
      the
      periods presented. Operating results for interim periods are not necessarily
      indicative of results that may be expected for the fiscal year as a whole.





The Company’s consolidated financial statements include the financial statements of
      its wholly-owned subsidiaries, LIG and LRS. All significant intercompany
      accounts and transactions have been eliminated in consolidation.





**b.**
            **Basis
                of consolidation**





The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries. Significant intercompany transactions have been eliminated on
      consolidation.





**c.**
            **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, disclosure of contingent
      assets and liabilities at the date of the financial statements, and the reported
      amounts of revenues and expenses during the reporting year. Because of the
      use
      of estimates inherent in the financial reporting process, actual results could
      differ from those estimates.





**d.**
            **Fair
                values of financial
                instruments**





The
      Company values its financial instruments as required by Statement of Financial
      Accounting Standard (SFAS) No. 107, “Disclosures about Fair Value of Financial
      Instruments”. The estimated fair value amounts have been determined by the
      Company, using available market information and appropriate valuation
      methodologies. The estimates presented herein are not necessarily indicative
      of
      amounts that the Company could realize in a current market
      exchange.





The
      Company’s financial instruments primarily consist of cash and cash equivalents,
      trade receivable, short-term loans receivable, inventories, value-added taxes
      (VAT) refundable, due from related parties, prepaid expenses and other
      receivables, accounts payable-trade, accrued liabilities and other payables,
      short term loans, current portion of bank loans payable, registration rights
      penalty payable, other taxes payable, wages payable, corporate income taxes
      payable, due to related parties. As of the balance sheet date, the estimated
      fair values of the financial instruments were not materially different from
      their carrying values as presented due to the short maturities of these
      instruments and that the interest rates on the borrowings approximate those
      that
      would have been available for loans of similar remaining maturity and risk
      profile at respective year ends.


7


**e.**
            **Cash
                and cash equivalents**





Cash
      and
      cash equivalents include cash on hand, demand deposits with banks and liquid
      investments with an original maturity of three months or less.





**f.**
            **Accounts
                Receivable**





Accounts
      receivables are recognized and carried at original invoiced amount less an
      allowance for uncollectible accounts, as needed.





The
      Company uses the aging method to estimate the valuation allowance for
      anticipated uncollectible receivable balances. Under the aging method, bad
      debts
      percentages determined by management based on historical experience as well
      as
      current economic climate are applied to customers’ balances categorized by the
      number of months the underlying invoices have remained outstanding. The
      valuation allowance balance is adjusted to the amount computed as a result
      of
      the aging method. When facts subsequently become available to indicate that
      the
      amount provided as the allowance was incorrect, an adjustment which classified
      as a change in estimate is made.





**g.**
            **Inventories**





Inventories
      are stated at the lower of cost, as determined on a weighted average basis,
      or
      market. Costs of inventories include purchase and related costs incurred in
      bringing the products to their present location and condition. Market value
      is
      determined by reference to selling prices after the balance sheet date or to
      management’s estimates based on prevailing market conditions. The management
      writes down the inventories to market value if it is below cost. The management
      also regularly evaluates the composition of its inventories to identify
      slow-moving and obsolete inventories to determine if valuation allowance is
      required.





**h.**
            **Plant
                and Equipment**





Plant
      and
      equipment are initially recognized recorded at cost. Gains or losses on
      disposals are reflected as gain or loss in the period of disposal. The cost
      of
      improvements that extend the life of plant and equipment are capitalized. These
      capitalized costs may include structural improvements, equipment and fixtures.
      All ordinary repairs and maintenance costs are expensed as
      incurred.





Depreciation
      for financial reporting purposes is provided using the straight-line method
      over
      the estimated useful lives of the assets:





Production
                Machinery and Equipment
            8
                yearsLeasehold
                Improvements
            10
                yearsOffice
                and Other Equipment
            5
                yearsAutomobiles
            5
                years





**i.**
            **Impairment
                of Long-Lived Assets**





The
      Company accounts for impairment of plant and equipment, land use rights and
      amortizable intangible assets in accordance with SFAS No. 144, “Accounting for
      Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which
      requires the Company to evaluate a long-lived asset for recoverability when
      there is event or circumstance that indicate the carrying value of the asset
      may
      not be recoverable. An impairment loss is recognized when the carrying amount
      of
      a long-lived asset or asset group is not recoverable (when carrying amount
      exceeds the gross, undiscounted cash flows from use and disposition) and is
      measured as the excess of the carrying amount over the asset’s (or asset
      group’s) fair value.





**j.**  **Comprehensive
      income**





SFAS
      No.130, “Reporting Comprehensive Income”, requires disclosure of all components
      of comprehensive income and loss on an annual and interim basis. Comprehensive
      income and loss is defined as the change in equity of a business enterprise
      during a period from transactions and other events and circumstances from
      non-owner sources.


8





**k.**
            **Segment
                information**





SFAS
      No.131, “Disclosures about Segments of an Enterprise and Related Information”,
      requires certain financial and supplementary information to be disclosed on
      an
      annual and interim basis for each reportable segment of an enterprise. The
      Company believes that it operates in one business segment (research,
      development, production, marketing and sales of auto electronic products) and
      predominately in one geographical area (China), as all of the Company’s current
      operations are carried out in China, and 82% of its revenues are derived from
      customers in China, with 18% exported to customers
      abroad**.** ****





**l.**
            **Revenue
                recognition**





The
      Company generates revenues from the sales of auto electronic products and
      subcontracting activities. Sales are recognized when the following four revenue
      criteria are met: persuasive evidence of an arrangement exists, delivery has
      occurred, the selling price is fixed or determinable, and collectability is
      reasonably assured. Sales are presented net of value added tax (VAT). No return
      allowance is made as products returns are insignificant based on historical
      experience. Subcontracting revenue is recognized upon delivery of
      goods.





**m.**
            **Government
                grants**





Grants
      from the PRC government are recognized at their fair value where there is a
      reasonable assurance that the grant will be received and the Company will comply
      with all attached conditions. ****





Government
      grants are recognized as revenues or gains **** in
      the
      period received and as assets, decreases of liabilities, or expenses depending
      on the form of the grants received.





**n.**
            **Research
                and development costs**





Research
                and development costs are expensed to operations as incurred.





**o.**
            **Income
                taxes**





The
      Company accounts for income taxes in accordance with SFAS No. 109, "Accounting
      for Income Taxes". SFAS No. 109 requires an asset and liability approach for
      financial accounting and reporting for income taxes and allows recognition
      and
      measurement of deferred tax assets based upon the likelihood of realization
      of
      tax benefits in future years. Under the asset and liability approach, deferred
      taxes are provided for the net tax effects of temporary differences between
      the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. A valuation allowance is provided
      for
      deferred tax assets if it is more likely than not these items will either expire
      before the Company is able to realize their benefits, or that future
      deductibility is uncertain.





**p.**
            **Foreign
                currency translation**





The
      Company uses the United States dollars (“U.S. dollars” or “US$”) for financial
      reporting purposes. LTS, as the Company’s operating subsidiary, maintains its
      books and records in its functional currency, Chinese Renminbi (“RMB”), being
      the primary currency of the economic environment in which their operations
      are
      conducted. In general, in accordance with Statement of Financial Accounts
      Standards (“SFAS”) No. 52, “Foreign Currency Translation”, the Company
      translates its assets and liabilities into U.S. dollars using the applicable
      exchange rates prevailing at the balance sheet date, and the statement of income
      is translated at average exchange rates during the reporting period, and equity
      accounts at the historical rates. Adjustments resulting from the translation
      of
      the Company’s financial statements are recorded as accumulated other
      comprehensive income.


9


Until
      July 21, 2005, RMB had been pegged to US$ at the rate of RMB8.30: US$1.00.
      On
      July 21, 2005, the PRC government reformed the exchange rate system into a
      managed floating exchange rate system based on market supply and demand with
      reference to a basket of currencies. In addition, the exchange rate of RMB
      to
      US$ was adjusted to RMB8.11: US$1.00 as of July 21, 2005. The People’s Bank of
      China announces the closing price of a foreign currency such as US$ traded
      against RMB in the inter-bank foreign exchange market after the closing of
      the
      market on each working day, which will become the unified exchange rate for
      the
      trading against RMB on the following working day. The daily trading price of
      US$
      against RMB in the inter-bank foreign exchange market is allowed to float within
      a band of ± 0.3%
      around the unified exchange rate published by the People’s Bank of China.





This
      quotation of exchange rates does not imply free convertibility of RMB to other
      foreign currencies. All foreign exchange transactions continue to take place
      either through the Bank of China or other banks authorized to buy and sell
      foreign currencies at the exchange rates quoted by the People’s Bank of China.
      Approval of foreign currency payments by the Bank of China or other institutions
      requires submitting a payment application form together with invoices, shipping
      documents and signed contracts.





The
      exchange rates used to translate amounts in RMB into U.S. Dollars for the
      purposes of preparing the consolidated financial statements were as follows:





March 31, 2008
            
            December 31, 2007Balance
                sheet items, except for the registered and paid-up capital, as of
                period
                end
            
            
            RMB7.0220:US$1
            
            
            RMB7.29394:US$1Amounts
                included in the statements of operations, statements of changes in
                stockholders’ equity and statements of cash flows for the period
            
            
            RMB7.17566:US$1
            
            
            RMB7.59474:US$1Equity
                accounts




No
      representation is made that RMB amounts have been, or would be, converted into
      US$ at the above rates.





**q.**
            **Earnings
                (loss) per common share**




The
      Company reports earnings (loss) per share in accordance with Statement of
      Financial Accounting Standard (SFAS) No.128. This statement requires dual
      presentation of basic and diluted earnings (loss) with a reconciliation of
      the
      numerator and denominator of the loss per share computations. Basic earnings
      per
      share amounts are based on the weighted average shares of common outstanding.
      If
      applicable, diluted earnings per share assume the conversion, exercise or
      issuance of all common stock instruments such as options, warrants and
      convertible securities, unless the effect is to reduce a loss or increase
      earnings per share. Accordingly, this presentation has been adopted for the
      periods presented. There were no adjustments required to net income for the
      period presented in the computation of diluted earnings per share. There were
      no
      common stock equivalents (CSE) necessary for the computation of diluted loss
      per
      share.





The
      following is a reconciliation of the numerators and denominators of the basic
      and diluted earnings per share computations:


**For the Three Months Ended March 31****2008**
              
              **2007**Numerator:-
                  Net income (loss)
              
              $
              626,898
              
              $
              (696,231
              )Denominator:-
                  Weighted-average shares outstanding used for basic earnings per
                  share
              
              
              31,259,714
              
              
              31,259,714-
                  Weighted-average shares outstanding used for diluted earnings per
                  share
              
              
              33,554,507
              
              
              31,259,714-Earnings
                  (loss) per share - basic
              
              $
              0.02
              
              $
              (0.02
              )-Earnings
                  (loss) per share - diluted
              
              $
              0.02
              
              $
              (0.02
              )


10


Weighted-average
      shares outstanding used for both basic and diluted earnings per share are the
      same for 2008 as all the potentially convertible instruments were then
      anti-dilutive.




**r.**
            **Related
                parties**





A
      party
      is considered to be related to the Company if the party directly or indirectly
      or through one or more intermediaries, controls, is controlled by, or is under
      common control with the Company. Related parties also include principal owners
      of the Company, its management, members of the immediate families of principal
      owners of the Company and its management and other parties with which the
      Company may deal if one party controls or can significantly influence the
      management or operating policies of the other to an extent that one of the
      transacting parties might be prevented from fully pursuing its own separate
      interests. A party which can significantly influence the management or operating
      policies of the transacting parties or if it has an ownership interest in one
      of
      the transacting parties and can significantly influence the other to an extent
      that one or more of the transacting parties might be prevented from fully
      pursuing its own separate interests is also a related party.





**s.**
            **Recently
                issued accounting
                pronouncements**





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements”, which establishes a framework for
      reporting fair value and expands disclosures about fair value measurements.
      SFAS
      No. 157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007 and interim periods within those fiscal years. The
      adoption of this standard had no impact on the Company’s financial position or
      results of operations.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No. 159, “The Fair Value Option for Financial Assets and Financial
      Liabilities-Including an amendment of FASB Statement No. 115,
      (“SFAS No. 159”). SFAS No. 159 permits entities to choose to
      measure many financial instruments and certain other items at fair value. Most
      of the provisions of this Statement apply only to entities that elect the fair
      value option. However, the amendment to FASB Statement No. 115, “Accounting
      for Certain Investments in Debt and Equity Securities,”
(“SFAS No. 115”), applies to all entities with available-for-sale and
      trading securities. SFAS No. 159 is effective for the Company’s
      consolidated financial statements for the annual reporting period beginning
      after November 15, 2007. The adoption of this standard had no impact on the
      company’s financial position or results of operations.





In
      December 2007, the FASB issued SFAS No.141R, Business Combinations (SFAS No.
      141R). SFAS No. 141R requires the acquiring entity in a business combination
      to
      recognize all the assets acquired and liabilities assumed, establishes the
      acquisition date fair value as the measurement objective for all assets acquired
      and liabilities assumed, and requires the acquirer to expand disclosures about
      the nature and financial effect of the business combination. SFAS No. 141R
      is
      effective for business combinations for which the acquisition date is on or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. We have not yet determined the impact of the adoption of
      SFAS
      No. 141R on our consolidated financial statements and footnote
      disclosures.





In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
      Consolidated Financial Statements (SFAS No. 160). SFAS No. 160 requires all
      entities to report noncontrolling (minority) interests in subsidiaries as equity
      in the consolidated financial statements. The statement establishes a single
      method of accounting for changes in a parent’s ownership interest in a
      subsidiary that do not result in deconsolidation and expands disclosures in
      the
      consolidated financial statements. SFAS No. 160 is effective for fiscal years
      beginning after December 15, 2008 and interim periods within those fiscal years.
      We have not yet determined the impact of the adoption of SFAS No. 160 on our
      consolidated financial statements and footnote disclosures.





In
      March 2008, the FASB issued SFAS 161, “ *Disclosures
      about Derivative Instruments and Hedging Activities* ” *.* The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with
      early application encouraged. The Company is currently evaluating the impact
      of
      adopting SFAS 161 on its consolidated financial statements.


11





**3.**  **CONCENTRATIONS
      OF CREDIT RISK**





Financial
      instruments which potentially expose the Company to concentrations of credit
      risk consist of cash, accounts and other receivables as of March 31, 2008 and
      December 31, 2007. The Company performs ongoing evaluations of its cash position
      and credit evaluations to ensure collections and minimize losses.





As
      of
      March 31, 2008, substantially all of the Company’s bank deposits were placed
      with banks in the PRC where there is currently no rule or regulation in place
      for obligatory insurance to cover bank deposits in the event of bank failure.
      The Company has not suffered any losses on its cash balances.





For
      the three months ended March 31, 2008, approximately 82%  of
      the**Company’s sales was  made to customers located in the PRC
      and 18% was made to customers outside of the PRC. In addition, approximately
      99%**of accounts receivables as of March 31, 2008 also arose from
      customers located in the PRC.





Other
      than one customer who accounted for approximately 11% and 13% of the Company’s
      total revenue for the three months ended March 31, 2008 and 2007, respectively,
      no single external customer exceeded 10% and 10% of the Company’s total revenue
      for the three months period ended March 31, 2008 and 2007.





**4.**  **T** **RADE
      RECEIVABLES**





At
      March
      31, 2008 and December 31, 2007, trade receivables consist of the
      following:





March 31,
            
            December 31,2008
            
            2007Trade
                receivables
            
            $
            8,887,058
            
            $
            7,243,994Less:
                Provision for doubtful accounts
            
            
            (493,441
            )
            
            (475,047
            )Trade
                receivables, net
            
            $
            8,393,617
            
            $
            6,768,947








**5.**  **SHORT-TERM
      LOANS RECEIVABLE**





At
      March
      31, 2008 and December 31, 2008, short-term loans receivable consist of the
      following:





March 31,
            
            December 31,2008
            
            2007No
                fixed terms of repayment
            
            $
            715,149
            
            $
            688,49212%
                loans receivable, due on April 30, 2008
            
            
            284,811
            
            
            274,19412%
                loans receivable, due on up to May 25, 2008
            
            
            712,028
            
            
            685.48512%
                loans receivable, due on June 16, 2008
            
            
            712,028
            
            
            685,485Total
            
            $
            2,424,016
            
            $
            2,333,656





The
      above unsecured loans were made to an electronics company in support of a
      non-binding letter of intent pursuant to which the Company is in negotiations
      to
      acquire that company. If a material definitive agreement is reached , the
      Company may apply towards the acquisition purchase price the principal and
      interest due to the Company from the outstanding
      loans.


12


**6.**  **INVENTORIES**





At
      March
      31, 2008 and December 31, 2007, inventories consist of the
      following:





March 31,
              2008
            
            December 31,
              2007Raw
                materials and packing materials
            
            $
            1,593,400
            
            $
            1,196,275Raw
                materials on consignment at subcontractors
            
            
            15,925
            
            
            13,848Finished
                goods
            
            
            532,345
            
            
            678,169Work-in-progress
            
            
            922,275
            
            
            1,303,7153,063,945
            
            
            3,192,007Less:
                Allowance for obsolescence
            
            
            (433,459
            )
            
            (428,077
            )Total
            
            $
            2,630,486
            
            $
            2,763,930





**7.**  **PLANT
      AND EQUIPMENT**





At
      March
      31, 2008 and December 31, 2007, plant and equipment consist of the
      following:





March
                31,
              2008
            
            December
                31,
              2007Production
                machinery and equipment
            
            $
            2,913,907
            
            $
            2,854,944Leasehold
                improvements
            
            
            478,163
            
            
            373,233Office
                and other equipment
            
            
            223,499
            
            
            215,850Automobiles
            
            
            188,200
            
            
            181,1853,803,769
            
            
            3,625,212Less:
                Accumulated depreciation
            
            
            (1,740,391
            )
            
            (1,478,288
            )$
            2,063,378
            
            $
            2,146,924





The
      depreciation expense was $200,482 and $129,395 for the three months ended March
      31, 2008 and 2007, and is broken down as follows:





March 31,
              2008
            
            March 31,
              2007Cost
                of sales
            
            $
            150,443
            
            $
            95,380Operating
                expense
            
            
            50,039
            
            
            34,015Total
            
            $
            200,482
            
            $
            129,395





**8.**  **INTANGIBLE
      ASSETS**





Intangible
      assets consist of the following, which is to be amortized over 2 years starting
      2006:





March 31,
            
            December 31,2008
            
            2007Computerized
                ERP System
            
            $
            111,076
            
            $
            109,246Other
                software
            
            
            6,067
            
            
            5,840Less:
                Accumulated amortization
            
            
            (75,867
            )
            
            (61,251
            )$
            41,276
            
            $
            53,835





The
      amortization expenses were $14,330 and $12,546 for the three months ended March
      31, 2008 and 2007, respectively.




13





**9.**
            **SHORT-TERM
                LOANS**





Short-term
      loans consist of the following:





March
                31,
            
            December
                31,2008
            
            20076.57%
                Bank loan, due by installments up to August 2, 2008*
            
            $
            640,825
            
            $
            822,583Interest-free,
                unsecured loans from individuals, no fixed terms of
                repayment
            
            
            731,697
            
            
            723,246Total
                short-term bank loans
            
            $
            1,372,522
            
            $
            1,545,829





For
      the
      three months ended March 31, 2008, interest expense from these loans amounted
      to
      $14,192.


*See
      also
      note 13.





**10.**
            **BANK
                LOANS PAYABLE**





Bank
      loans payable consist of the following:





March
                31,
            
            December
                31,2008
            
            20073.49%
                Bank loan, due by installments up to October 7, 2008
            
            $
            103,982
            
            $
            146,6993.49%
                Bank loan, due by installments up to February 12, 2009
            
            
            107,410
            
            
            135,014Total
                Long term bank loans payable
            
            
            211,392
            
            
            281,713Less:
                current portion due within one year
            
            
            211,392
            
            
            261,435Long-term
                loans payable due after one year
            
            $
            -
            
            $
            20,278





Interest
      expense from these loans for the three months ended March 31, 2008 amounted
      to
      $6,571.





**11.**
            **CONVERTIBLE
                DEBT**





On
      January 25, 2007, the Company effected a second private placement transaction
      (the “Second Private Placement”). Pursuant to a Securities Purchase Agreement
      entered into with the investors, the Company sold and the investors
      purchased:





·
            Convertible
                Promissory Notes (the “Notes”) in the aggregate principal amount of
                $5,353,000 convertible into a total of 13,382,500 shares of the Company’s
                common stock at a price of $0.40 per share. Upon filing of a Certificate
                of Designations of Preferences, Rights and Limitations of the Company’s
                class of preferred stock with the Secretary of State of Utah, the
                Notes
                shall be convertible only into 13,382,500 shares of preferred stock,
                at a
                price of $0.40 per share. The Notes are payable on January 25, 2017,
                subject to automatic extension on a month by month basis. The Notes
                do not
                bear any interest.





·
            Common
                Stock Purchase Warrants (the "Series A Warrant") entitling the investors
                to purchase up to an aggregate of 6,691,250 shares of the Company's
                common
                stock at a price of $0.48 per share. The Series A Warrant is exercisable
                until January 25, 2012. The Series A Warrant has a "cashless exercise"
                feature, and the exercise price per share may be adjusted in response
                to
                the occurrence of certain triggering events. The Company may call
                the
                Series A Warrant if the closing market price of its common stock
                equals or
                exceeds $1.00 per share for 30 consecutive trading days and there
                is an
                effective registration statement covering the shares of common stock
                underlying the Series A Warrant during such period.





·
            Common
                Stock Purchase Warrants (the "Series B Warrant") to purchase up to
                an
                aggregate of 6,691,250 shares of the Company's common stock at a
                price of
                $0.60 per share. The period of exercisability of the Series B Warrant,
                and
                the other material terms thereof, are the same as for the Series
                A
                Warrant, with the exception that the call feature is triggered if
                the
                closing market price of the Company's common stock equals or exceeds
                $1.20
                per share for 30 consecutive trading days and there is an effective
                registration statement covering the shares of common stock underlying
                the
                Series B Warrant during such period.


14





As
      of the
      date of this report, none of the Notes had been converted and none of the Series
      A or B Warrants from the Second Private Placement had been exercised, in whole
      or in part. After commissions and expenses, we received net cash proceeds
      approximately $4.79 million in the Second Private Placement after paying
      professional fees.





Pursuant
      to the terms of the Amended and Restated Registration Right Agreement in the
      Second Private Placement, the Company agreed to file, not later than 120 days
      after the closing date of the original December 2006 Securities Purchase
      Agreement, a registration statement registering a portion of the shares issuable
      upon conversion of the Notes and the Series A and Series B Warrants, and a
      portion of the shares issued in the Private Placement closed December 29, 2006.
      The Company failed to satisfy certain agreed deadlines during the registration
      process. The Company is obligated to pay the investors liquidated damages in
      cash equal to 2% of the investor’s initial investment in the Company, up to 20%
      of such investment in the aggregate. For the year ended December 31, 2007,
      the
      Company accrued liquidated damages for failure to comply with its obligations
      under the registration rights agreement in the amount of $1,450,600 (See Note
      16).





Effective
      December 31, 2007, the Company issued ten-year, no interest notes convertible
      into shares of the Company’s common stock, par value $0.001 per share, at $0.17
      per share (the “Conversion Notes”) in exchange for the cancellation of
      approximately $1.127 million of liquidated damages due to certain investors
      through December 31, 2007. The Conversion Notes were issued pursuant to a
      Securities Purchase, Settlement and Release Agreement (the “Settlement
      Agreement”). Pursuant to the Settlement Agreement, the participating investors,
      who constituted a majority of the holders of the Company’s outstanding
      convertible notes and warrants issued in the prior Placements, also waived
      any
      anti-dilution adjustments to such securities arising from the issuance or
      conversion of the Conversion Notes.





The
      Company evaluated whether or not the secured convertible debentures contain
      embedded conversion options, which meet the definition of derivatives under
      SFAS
      133 “Accounting for Derivative Instruments and Hedging Activities” and related
      interpretations. The Company concluded that since the secured convertible
      debentures had a fixed conversion rate of $1.00, the secured convertible debt
      was not a derivative instrument. In accordance with Emerging Issues Task Force
      (‘‘EITF’’) 98-5 and EITF 00-27, the convertible debt was considered to have an
      embedded beneficial conversion feature (BCF) because the effective conversion
      price was less than the fair value of the Company’s common stock. The
      convertible notes were fully convertible at the issuance date, therefore the
      portion of proceeds allocated to the  original  Notes
      of
      $896,002 was
      determined to be the value of the beneficial conversion feature and was recorded
      as a debt discount and is being amortized over the 120-month convertible debt
      term. Upon conversion of the Conversion Note, whether upon automatic conversion
      when the Company amends its articles of incorporation to create a series of
      preferred stock or upon voluntary conversions, the unamortized debt discount
      allocable to the converted notes will be expensed as additional interest.





The
      investors in the Second Private Placement also received Series A and Series
      B
      Warrants. The Series A and Series B Warrants have a term of 5 years after the
      issue date of January 25, 2007. These warrants were treated as a discount on
      the
      secured debt and were valued at $4,456,998 to be amortized over the 120-month
      convertible debt term. The fair market value of each stock warrant was estimated
      on the date of grant using the Black-Scholes option-pricing model in accordance
      with SFAS No. 123R using the following weighted-average assumptions: expected
      dividend yield 0%; risk-free interest rate of 4.63%; volatility of 79% and
      an
      expected term of five years.





For
      the
      three months ended March 31, 2008, amortization of debt discount was $133,825,
      which is included in interest expense on the accompanying consolidated statement
      of operations. The amortization of debt discounts amounted to $624,517, the
      balance of the debt discount is $4,728,483 at March 31, 2008 which will be
      amortized over the term of the debenture, and , upon conversion of the
      debentures, the unamortized portion will be expensed as additional
      interest.





The
      convertible debenture liability (Issued Jan 25, 2007, due Jan 25, 2017) is
      as
      follows at March 31, 2008:




Convertible
                debentures 0% payable (Issued Jan 25,2007, due Jan
                25,2017)
            
            $
            5,353,000Less:
                unamortized discount on debentures
            
            
            (4,728,483
            )Convertible
                debentures, net
            
            $
            624,517


15





For
      the
      three months ended March 31, 2008, amortization of debt discount was $28,175,
      which is included in interest expense on the accompanying consolidated statement
      of operations. The amortization of debt discounts amounted to $28,175, the
      balance of the debt discount is $1,098,825 at March 31, 2008 which will be
      amortized over the term of the debenture.





The
      convertible debenture liability ( Issued
      Dec 31, 2007, due Dec 31, 2017 )
      is as
      follows at March 31, 2008:




Convertible
                debentures 0% payable (Issued
                Dec 31,2007, due Dec 31, 2017)
            
            $
            1,127,000Less:
                unamortized discount on debentures
            
            
            (1,098,825
            )Convertible
                debentures, net
            
            $
            28,175





**12.**
            **SHAREHOLDERS’
                EQUITY**





Warrants





In
      connection with the Second Private Placement transaction, the Company issued
      Series A Warrants entitling the investors to purchase up to an aggregate of
      6,691,250 shares of the Company's common stock at a price of $0.48 per share
      and
      Series B Warrants to purchase up to an aggregate of 6,691,250 shares of the
      Company's common stock at a price of $0.60 per share (See Note 11).





On
      March
      31, 2007 the Company entered into an engagement letter for investor relations
      services and  agreed
      to
      issue to  CCG
      Investor Relations Partners, LLC (“CCG”)  a
      warrant to purchase up to 125,000 shares of the Company’s common stock at an
      exercise price of $1.20 per share, vesting in four parts through early 2008. The
      fair
      market value of these stock warrants was $76,242 and was estimated on the date
      of grant using the Black-Scholes option-pricing model in accordance with SFAS
      No. 123R using the following weighted-average assumptions: expected dividend
      yield 0%; risk-free interest rate of 4.63%; volatility of 79% and an expected
      term of five years. The Company will amortize the fair value of these warrants
      over the vesting period beginning on April 1, 2007. For the three months ended
      March 31, 2008, amortization of warrants was $19,060 which is included in
      general and administrative expense on the accompanying consolidated statement
      of
      operations. The amortization of warrants amounted to $76,242, the balance is
      zero at March 31, 2008.





A
      summary
      of the status of the Company's outstanding stock warrants as of March 31, 2008
      and changes during the periods then ended is as follows:





Number
                of
              Warrants
            
            Weighted Average
                Exercise PriceBalance
                at December 31, 2007
            
            
            6,807,141
            
            $
            0.49Granted
            
            
            13,507,500
            
            $
            0.55Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Balance
                at March 31, 2008
            
            
            20,314,641
            
            $
            0.53Options
                exercisable at end of period
            
            
            20,314,641
            
            $
            0.53





The
      following information applies to all warrants outstanding at March
      31,
      2008:




Warrants
                Outstanding
            
            Warrants
                ExercisableRange
                of Exercise Prices
            
            Shares
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Shares
            
            Weighted
                Average Exercise Price$0.28
            
            
            1,000,000
            
            
            3.50
            
            $
            0.28
            
            
            1,000,000
            
            $
            0.28$0.40-048
            
            
            9,859,106
            
            
            3.75
            
            $
            0.48
            
            
            9,859,106
            
            $
            0.48$0.60
            
            
            9,330,535
            
            
            3.75
            
            $
            0.60
            
            
            9,330,535
            
            $
            0.60$1.20
            
            
            125,000
            
            
            4.00
            
            $
            1.20
            
            
            125,000
            
            $
            1.2020,314,641
            
            
            
            
            $
            0.53
            
            
            20,314,641
            
            $
            0.52


16


As
      of
      March 31, 2008 and 2007, the Company did not have an approved equity incentive
      plan and had no options outstanding.





**13.**
            **RELATED
                PARTY TRANSACTIONS AND
                ARRANGEMENTS**





(a)
            *Balances
                with related parties*





In
      addition to the transactions detailed elsewhere in these financial statements,
      The Company had the following balances with related parties.





March
                31,
            
            December
                31,2008
            
            2007Due
                from related parties:Ms.
                Li Xiangdong, VP, Finance of LTS
            
            $
            7,684
            
            $
            2,599Mr.
                Chen Linshen, Executive VP
            
            
            98
            
            
            2,530Mr.
                Xu Rujiang, COO & GM of LTS
            
            
            2,952
            
            
            9,102Mr.
                Wang Songtao, VP, Int’l Business of LTS
            
            
            427
            
            
            4,305Mr.
                Liangzhu, CFO
            
            
            -
            
            
            5,051Ms.
                Liyang, VP, Administration of LTS
            
            
            1,871
            
            
            -Mr.
                Pu Zhiheng, VP, Internal Business of LTS
            
            
            997
            
            
            -Due
                from related parties
            
            $
            14,029
            
            $
            23,587





These
      amounts due from various employees represent cash advances made to cover
      anticipated business-related expenses, including business travel. When the
      employee submits proof of the expenditures made in the conduct of the Company’s
      business from such advances, the business expenses are recognized by the Company
      and the amount due back to the Company is reduced accordingly. Where additional
      business expenses are anticipated in the short-term, the Company allows these
      employees to retain the advances pending use towards subsequent business
      expenses. These balances are held interest-free, unsecured and have no fixed
      repayment date. It is expected that the amounts provided will be applied towards
      business expenses within one year of advance.





March
                31,
            
            December
                31,2008
            
            2007Due
                to related parties:Mr.
                Bu Shengfu, CEO
            
            $
            188,644
            
            $
            33,145Mr.
                Li Huamin, a stockholder
            
            
            31,120
            
            
            31,120Mr.
                Xu Jiafa, VP, Production of LTS
            
            
            28,839
            
            
            27,963Mr.
                Chen Dong, a stockholder
            
            
            45,073
            
            
            79,756Mr.
                Yin Zhongjun, Chief Engineer
            
            
            4,438
            
            
            3,011Mr.
                Wang Qing, Chefu’s Stockholder
            
            
            -
            
            
            723Due
                to related parties
            
            $
            298,114
            
            $
            175,718





The
      balances due to related parties represent loans to the Company from the
      respective related parties. These balances are interest-free, unsecured and
      have
      no fixed repayment date. It is expected that the Company will repay such amounts
      within one year.





Other:





LTS
      executed a loan agreement for $ 1,139,244 in July
      2007 from Shenzhen City Commercial Bank-HuangGang Branch, secured by a personal
      guarantee and mortgage agreement executed by our Chief Executive Officer and
      Chairman of the Board Bu Shengfu and his wife, Lv Rui, and mortgage agreement
      executed by Chen YunFeng, a stockholder of the Company. The Company drew funds
      under the loan on August 3, 2007 and the funds drawn on this loan are due in
      full plus interest accrued and unpaid as of August 2, 2008. The outstanding
      balance loan bears interest at an annual rate of 6.57%, subject to adjustment
      by
      the Chinese government under certain circumstances. Subsequent to the end of
      the
      March 31, 2008, the rate was adjusted to 6.84%. Beginning in September 2007,
      LTS
      was obligated to pay approximately $71,203 of principal and the interest accrued
      thereon to date as of the 20 th of each
      month during the term of the loan. The lender shall have repayment priority
      over
      LTS’s other subordinate creditors and its sole shareholder for disbursement of
      funds during the term of the loan.  As
      of
      March 31, 2008 we had a remaining principal balance of $640,825 outstanding
      on
      this loan.


17







**14.**
            **CURRENT
                VULNERABILITY DUE TO CERTAIN
                CONCENTRATIONS**





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





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





**15.**
            **COMMITMENTS
                AND CONTINGENCIES**





(a)
            *Operating
                lease commitments*





The
      Company has entered into tenancy agreements for the lease of factory premises
      and staff dorms. The Company’s commitments for minimum lease payments under
      these non-cancelable operating leases for the next four years and thereafter
      are
      as follows *:*





Year
                ending December 31,2008
            
            $
            483,6892009
            
            
            583,8272010
            
            
            400,5512011
                and thereafter
            
            
            467,310Total
            
            $
            1,935,377




Total
      rental expenses for the three months period ended March 31, 2008 and 2007
      amounted to  $116,650
      and $45,749, respectively.





(b)
            *Social
                insurances of LTS’s
                employees*





According
      to the prevailing laws and regulations of the PRC, LTS is required to cover
      its
      employees with medical, retirement and unemployment insurance programs.
      Management believes that due to the transient nature of its employees, LTS
      does
      not need to provide all employees with such social insurances, and has paid
      the
      social insurances for its employees who have completed three months’ continuous
      employment with LTS.





In
      the
      event that any current or former employee files a complaint with the PRC
      government, LTS may be subject to making up the social insurances as well as
      administrative fines. As the Company believes that these fines would not be
      material, no provision has been made in this regard.





(c)
            *Statutory
                Reserves*





Based
      on
      the legal formation of the entities, LTS is required to set aside 10% of its
      net
      income as reported in its statutory accounts on an annual basis to the Statutory
      Surplus Reserve Fund Once the total Statutory Surplus Reserve reaches 50% of
      the
      registered capital of LTS, further appropriations are discretionary. The
      Statutory Surplus Reserve can be used to increase the registered capital and
      eliminate future losses of the respective companies under PRC GAAP. The
      Statutory Surplus Reserve is not distributable to shareholders except in the
      event of liquidation.


18





Before
      January 1, 2006, LTS is also required on an annual basis to set aside at least
      5% of after-tax profit, calculated in accordance with PRC accounting standards
      and regulations, to the Statutory Surplus Welfare Fund, which can be used for
      staff welfare.





Effective
      from January 1, 2006, the appropriation to the Statutory Surplus Welfare Fund
      is
      no longer required. If LTS provide the Statutory Surplus Welfare Fund, such
      amount shall be determined at the discretion of its board of
      directors.





The
      Reserve Fund can be used to increase the registered capital upon approval by
      relevant government authorities and eliminate future losses of the respective
      companies upon a resolution by the board of directors.





Appropriations
      to the above statutory reserves are accounted for as a transfer from retained
      earnings to statutory reserves and are performed once a year at the financial
      year end.





There
      are
      no legal requirements in the PRC to fund these statutory reserves by transfer
      of
      cash to any restricted accounts, and the Company does not do so. These reserves
      are not distributable as cash dividends.





(d)
            *Capital
                Commitments*





The
      Company had entered into an agreement to purchase a land use right in Guangdong
      Province, China at a consideration of US$2,451,339. As at March 31, 2008, the
      Company had paid an initial deposit of US$1,225,670 and was shown in land use
      right deposit on the accompanying consolidated balance sheets. The capital
      commitment thereon as at March 31, 2008 was US$1,225,669.





**16.**
            **REGISTRATION
                RIGHTS LIQUIDATED DAMAGES**





In
      connection with the Company’s Private Placement, which is more fully described
      in Note 11, and pursuant to the Securities Purchase Agreement dated December
      29,
      2006, the Company and certain investors entered into an Amended and Restated
      Registration Rights Agreement on January 25, 2007 (the “2007 Registration Rights
      Agreement”), whereby the Company was required to file a Registration Statement
      registering a portion of the securities issued or underlying notes and warrants
      issued in the Company’s December 2006 and January 2007 private placements within
      an agreed period. If the Company fails to satisfy these deadlines, the Company
      is obligated to pay the investors liquidated damages in cash equal to two
      percent (2%) of the investors’ initial investment in the Company, up to 20% of
      such investment in aggregate. As of December 31, 2007, the registration
      statement had not been filed. In view of the provision for liquidated damages,
      and the likelihood that the Company would have to pay the penalty in full,
      the
      Company has recognized approximately $1.45 million as of December 31, 2007,
      as a
      liability for such penalty payments.





Effective
      December 31, 2007, the Company issued ten-year, no interest notes convertible
      into shares of the Company’s common stock at $0.17 per share is satisfaction of
      approximately $1.127 million of liquidated damages owing to certain investors
      through December 31, 2007. These Conversion Notes were issued pursuant to the
      Settlement Agreement. Pursuant to the Settlement Agreement, the participating
      investors, who constituted a majority of the holders of the Company’s
      outstanding convertible notes and warrants issued in the prior Placements,
      also
      waived any anti-dilution adjustments to such securities arising from the
      issuance of the Conversion Note. The Company and the participating investors
      also entered into a Registration Rights Agreement pursuant to which the Company
      agreed to file a registration statement registering the shares of common stock
      issuable upon conversion of the Conversion Notes, by the ninetieth
      (90 th )
      day
      following the earlier of (i) the date upon which the Company satisfies all
      obligations to file registration statements pursuant to the 2007 Registration
      Rights Agreement, or (ii) the date upon which all of the securities registrable
      pursuant to the 2007 Registration Rights Agreement are eligible for resale
      pursuant to Rule 144. There are no liquidated damages or penalties associated
      with these registration rights.




Those
      investors who are not parties to the Settlement Agreement retained their right
      to cash payment for the liquidated damages owed to them by the Company through
      December 31, 2007, and all investors in the Placements retained their right
      to
      cash payment on any additional liquidated damages accruing and owed from January
      1, 2008 forward pursuant to the 2007 Registration Rights Agreement. As of March
      31, 2008, out of the US$1,450,600 liquidated damages due, the investors received
      $1,127,000 in convertible notes, and as such retain the right to an aggregate
      cash payment of $323,600.


19





**Item
      2.**  **Management’s
      Discussion and Analysis or Plan of Operations.**




*This
      Form 10−Q contains forward-looking statements. Our actual results could differ
      materially from those set forth as a result of general economic conditions
      and
      changes in the assumptions used in making such forward-looking
      statements*  *The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our interim financial statements
      and notes thereto appearing elsewhere herein. The analysis set forth below
      is
      provided pursuant to applicable Securities and Exchange Commission regulations
      and is not intended to serve as a basis for projections of future events. Refer
      also to “Certain Factors That Could Affect Our Future Results”
below.*




*Unless
      the context otherwise requires, the terms “Company,” “we,” “us,” and “our” as
      used throughout this report refer to Long-e International, Inc., or “Long-e,” a
      Utah corporation, and its wholly-owned subsidiaries, Long-e International Group
      Co., Ltd., or “LIG,” and Long-e Technology (Shenzhen) Co., Ltd. or
“LTS.”*




**Overview**




We
      are a
      holding company and operate through LTS. We engage in the research, development,
      manufacture, marketing and servicing of auto electronic products, with an
      emphasis on automotive safety and security systems. Our current products are
      related to automotive security and operational safety, including a variety
      of
      electronic vehicle alarm systems, tire pressure monitoring systems, and reverse
      sensor systems, which we sell to automotive manufacturers and to after-market
      parts wholesalers and retailers.




In
      response to the market opportunities in China and the global automotive
      components industry trends, our primary goal is to continue developing leading
      edge technology, focus that technology to produce distinctive market-leading
      products with sustainable margins that appeal to both Chinese and foreign
      automotive manufacturers and to purchasers in the aftermarket, while maintaining
      efficient production and a low cost structure. Our research and development
      strategy relies primarily on internal innovation and development, supplemented
      with collaboration with academic and research institutions and acquisition
      of
      targeted technical solutions. We actively track research developmental trends
      in
      automotive electronic products and government regulations regarding vehicle
      safety and environmental standards, and continually seek to both improve and
      perfect existing products and develop new ones in accelerated product
      development cycles. In addition, we seek to recruit and retain highly qualified
      Chinese and foreign technical personnel, by maintaining positive working
      conditions, providing competitive benefits and a relaxed corporate culture.
      We
      promote our internal philosophy of mutual growth to our technical staff and
      award various incentives for positive research and development
      results.




Most
      of
      our products are sold into the Chinese market. The Chinese government has broad
      powers to impose price controls on the sales of goods and services within China.
      Although neither our prices nor the prices of our suppliers are subject to
      price
      controls, it is possible that, in view of rising costs in China, that the
      government may impose price controls on our products. To the extent that price
      controls affect both the cost of raw materials and the prices at which we can
      sell our products, our margin will be largely subject to price we pay and the
      amount that we charge. If price controls are imposed on the prices we can
      charge, but not on the amounts our suppliers may charge, our margins may suffer
      to the extent that we are not legally able to increase our prices to reflect
      our
      increased costs. Additionally, our business license for LTE expires on December
      21, 2010, and if the license is not extended, we will not be able to remain
      in
      business.




**Critical
      Accounting Policies and Estimates**




The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with generally accepted accounting principles in the United States.
      We believe the following are the critical accounting policies that impact our
      financial statements, some of which are based on management’s best estimates
      available at the time of preparation. Actual experience may differ from these
      estimates.




Our
      consolidated financial statements and accompanying notes are prepared in
      accordance with generally accepted accounting principles in the United States.
      Preparing financial statements requires management to make estimates and
      assumptions that affect the reported amounts of assets, liabilities, revenue,
      and expenses. These estimates and assumptions are affected by management’s
      application of accounting policies. We believe an understanding of the basis
      and
      nature of the estimates and assumptions involved with the following aspects
      of
      our consolidated financial statements is critical to an understanding of our
      financial condition.


20




***Revenue
      Recognition*** *.* We
      recognize revenue from the sales of auto electronic products. Sales are
      recognized when the following four revenue criteria are met: persuasive evidence
      of an arrangement exists, delivery has occurred, the selling price is fixed
      or
      determinable, and collectivity is reasonably assured. Sales revenue is presented
      net of value added tax (VAT), sales rebates and returns. No
      return
      allowance is made as product returns are insignificant based on historical
      experience. Subcontracting revenue is recognized upon delivery of
      goods.




***Inventory*** .
      Inventory is carried at the lower of cost or market, determined on a weighted
      average cost method and based on net realizable value. The determination of
      net
      realizable value is based on several assumptions and estimates. We provide
      an
      allowance that we consider to be reasonable for non-moving or slow moving
      inventory items and for items with expected future realizable values lower
      than
      cost. These assumptions and estimates may be revised from time to time, based
      on
      changes in market demand. The markets in which we compete are rapidly changing
      due to technological developments and an increasing worldwide focus on
      automotive safety. Other companies offer products similar to those offered
      by
      us, and target the same customers. Some of these companies have substantially
      greater financial, marketing and technical resources. It is also possible that
      new competitors or alliances among existing competitors may emerge and such
      competitors may rapidly acquire significant market share, making it increasingly
      difficult for us to sell our current inventory. These market factors could
      reduce the net realizable value of our inventory.




***Income
      Taxes*** .  LTS
      enjoy
      preferential tax concessions as a high-tech enterprise. Pursuant to the
      Regulation of Tax Policy of Enterprises of Shenzhen Municipal Special
      Administrative Economy District as issued by the Shenzhen municipal government,
      the Shenzhen Regional Tax Bureau recognized and approved LTS’s status as a new
      high technology enterprise and granted LTS a 100% reduction in our income tax
      liability for our first two profitable years after 2003 and a 50% reduction
      in
      our income tax liability for three years from our third profitable year. As
      the
      corporate income tax rate in Shenzhen, China is 15%, LTS’s effective income tax
      rate for the 2005 through 2007 fiscal years is 7.5%. The
      effective corporate income tax rate for 2008 is 15%.




***Warranty
      Obligations*** *.* On an
      ongoing basis, we estimate and record a warranty obligation and an allowance
      for
      product returns. These estimates are made based on documented contractual
      warranty obligations and historical experience. Unforeseen events, including
      increased technological difficulties with products, could occur that have not
      been anticipated in estimating the warranty provision. These recorded estimates
      are adjusted from time to time to reflect any additional recurring
      costs.




***Impairment
      of Long-Lived and Amortized Intangible Assets*** .
      We
      account for impairment of plant and equipment and amortizable intangible assets
      in accordance with SFAS No. 144, “Accounting for Impairment of Long-Lived Assets
      and Long-Lived Assets to be Disposed Of,” which requires us to evaluate a
      long-lived asset for recoverability when there is event or circumstance that
      indicates the carrying value of the asset may not be recoverable. An impairment
      loss is recognized when the carrying amount of a long-lived asset or asset
      group
      is not recoverable (when the carrying amount exceeds the gross, undiscounted
      cash flows from use and disposition) and is measured as the excess of the
      carrying amount over the asset’s fair value.




***Employee
      Benefits*** .
      Pursuant to the regulations of the Shenzhen Social Insurance Bureau, we, via
      LTS, pay for various forms of required social insurance for our workforce,
      including endowment insurance, medical insurance, employment injury insurance,
      unemployment insurance and birth insurance for female employees as well. As
      stipulated by the PRC’s Company Law and as provided in LTS’s Articles of
      Association, we allocate 5% of our income after tax, as determined under PRC
      accounting rules and regulations, to LTS’s “Statutory common welfare reserve,”
which is restricted for capital expenditure for the collective benefits of
      LTS’s
      employees.




**Results
      of Operations**




**Three
      months ended March 31, 2008 and 2007**




The
      following table sets forth information from our statements of operations for
      the
      three months ended March 31, 2008 and 2007, in dollars and as a percentage
      of
      revenue (dollars in thousands):


21




Three
                Months Ended March 31,2008
            
            2007Sales
            
            $
            8,986
            
            
            98.0
            %
            $
            6,158
            
            
            94.1
            %Assembling
                and reprocessing revenue
            
            
            184
            
            
            2.0
            %
            
            384
            
            
            5.9
            %Total
                revenues
            
            
            9,170
            
            
            100.0
            %
            
            6,542
            
            
            100.0
            %Cost
                of sales
            
            
            6,700
            
            
            73.1
            %
            
            4,432
            
            
            67.7
            %Gross
                profit
            
            
            2,470
            
            
            26.9
            %
            
            2,110
            
            
            32.3
            %Selling
            
            
            542
            
            
            5.9
            %
            
            1,338
            
            
            20.1
            %General
                and administrative
            
            
            751
            
            
            8.2
            %
            
            1,251
            
            
            19.1
            %Research
                and development
            
            
            192
            
            
            2.1
            %
            
            66
            
            
            1.0
            %Income
                (loss) from operations
            
            
            985
            
            
            10.7
            %
            
            (545
            )
            
            (8.3
            )%Other
                income
            
            
            17
            
            
            0.2
            %
            
            11
            
            
            0.2
            %Interest
                income
            
            
            6
            
            
            0.1
            %
            
            2
            
            
            0.0
            %Interest
                expense
            
            
            (21
            )
            
            (0.2
            )%
            
            (6
            )
            
            (0.1
            )%Amortization
                of discount on convertible note
            
            
            (162
            )
            
            (1.8
            )%
            
            (89
            )
            
            (1.4
            )%Gain
                on extinguishment of debts
            
            
            0
            
            
            0.0
            %
            
            16
            
            
            0.2
            %Income
                (loss) before income taxes
            
            
            826
            
            
            9.0
            %
            
            (611
            )
            
            (9.3
            )%Provision
                for income taxes
            
            
            199
            
            
            2.2
            %
            
            85
            
            
            1.3
            %Net
                income (loss)
            
            
            627
            
            
            6.8
            %
            
            (696
            )
            
            (10.6
            )%




***Revenue*** .
      Our
      sales for the three months ended March 31, 2008 totaled $9.0 million, an
      increase of 45% compared with our sales revenue of $6.2 million for the three
      months ended March 31, 2007.




The
      following table sets forth information of sales revenue analyses for the three
      months ended March 31, 2008 and 2007, in
      dollars and as a percentage of revenue (dollars in thousands)




Three
                Months Ended March 31,2008
            
            2007Two-
                way interactive visual car alarm System
            
            $
            6,493
            
            
            72.3
            %
            $
            3,551
            
            
            57.7
            %Other
                car alarm system
            
            
            1,141
            
            
            12.7
            %
            
            1,301
            
            
            21.1
            %Tire
                Pressure Monitoring System
            
            
            994
            
            
            11.0
            %
            
            1,063
            
            
            17.3
            %Parking
                sensor systems
            
            
            358
            
            
            4.0
            %
            
            243
            
            
            3.9
            %Total
                sales revenue
            
            $
            8,986
            
            
            100.0
            %
            $
            6,158
            
            
            100.0
            %




Sales
      of
      two-way interactive visual car alarm system increased as the product became
      more
      popular within the Chinese aftermarket. Sales to distributors for export totaled
      $1.6 million for the three months ended March 31, 2008, or 18% of our revenue
      from product sales during the period, representing an increase of $0.1 million
      or 7% from $1.5 million generated by such sales in the three months ended March
      31, 2007. Sales within the Chinese aftermarket and to OEMs totaled $7.4 million,
      or 82%, of our total product sales for the three months ended March 31, 2008,
      an
      increase of $2.7 million, or 57%, from $4.7 million in the three months ended
      March 31, 2007.




During
      the three months ended March 31, 2008, we generated $184,000 in revenue from
      subcontracting activities, a decrease of $200,000 or 52% from $384,000 generated
      from subcontracting activities generated during the three months ended March
      31,
      2007. The subcontracting revenue generated during the three months ended March
      31, 2008 related to semi-manufactured goods.




During
      the three months ended March 31, 2008, our cost of goods sold totaled $6.7
      million, an increase of 52% compared with our cost of goods sold of $4.4 million
      for the three months ended March 31, 2007. The increase was in line with the
      increase in sales revenue.




***Gross
      Margin*** **.** Our
      gross
      margin on product sales and
      subcontracting activities decreased
      from 34.3% for the three months ended March 31, 2007 to 27% for the three months
      ended March 31, 2008. These decreases have primarily resulted from certain
      changes in our materials purchase marketing and products offerings, in
      particular from the rising in price on raw materials as well, which we were
      not
      able to recover through higher prices.




22




***Operating
      Expenses*** **.** During
      the three months ended March 31, 2008, operating expenses totaled $1.5 million,
      as compared to $2.7 million during the three months ended March 31, 2007, a
      decrease of 44%. Our general and administrative expenses for the three months
      ended March 31, 2008 were $751,000, a decrease of 40% from $1.3 million for
      the
      three months ended March 31, 2007. The decrease was mainly a result of $400,000
      of commissions and consulting fees that we incurred in 2007. Selling expenses
      decreased from $1.3 million for the three months ended March 31, 2007 to
      $542,000 for the three months ended March 31, 2008. In 2007, provision for
      doubtful accounts amounted to approximately $765,000 was charged to selling
      expenses. We had not comparable charge in the 2008 quarter..




***Research
      and Development*** **.** During
      the three months ended March 31, 2008, our research and development expenses
      for
      three months ended March 31, 2008 totaled $192,000, an increase of $126,000
      or
      two times the research and development expenses of $66,000 in the three months
      ended March 31, 2007. We spent approximately $139,000 in 2008 on GPRS mobile
      application technologies.




***Interest
      Expense*** **.** For
      the
      three months ended March 31, 2008, our interest expense totaled $183,000, as
      compared to interest expense of $95,000 in the three months ended March 31,
      2007. For
      the
      three months ended March 31, 2008 and 2007, we recorded amortization of debt
      discount of approximately $162,000 and $89,000 related to our convertible notes.




***Net
      Income*** **.** For
      the
      three months ended March 31, 2008, net income was $627,000, or $0.02 per share
      (basic and diluted) as compared to net loss of $696,000, or ($0.02) per share
      (basic and diluted) for the three months ended March 31, 2007, an increase
      of
      $1.3 million or 190%.




**Liquidity
      and Capital Resources**




We
      finance our activities primarily through the our product sales, supplemented
      by
      short term loans. For the three months ended March 31, 2008, we generated gross
      profit totaling $2.5 million, which was $0.5 million or 19% greater than our
      gross profit of $2.1 million for the three months ended March 31, 2007.




As
      of
      March 31, 2008, we held $3.5 million in cash and cash equivalents as compared
      to
      $3.7 million at December 31, 2007. As of March 31, 2008, our current liabilities
      totaled $7.3 million, an decrease from $8.0 million at December 31, 2007. Our
      working capital increased from $8.5 million as of December 31, 2007 to $9.9
      million as of March 31, 2008.




Our
      net
      income of $627,000 for the three months ended March 31, 2008 includes non-cash
      charges of $214,812 for depreciation and amortization and also non-cash discount
      on financial instruments of $181,000. Net cash provided by our operating
      activities totaled $121,000 for the three months ended March 31, 2008, as
      compared to net cash used in $561,528 during three months ended March 31, 2007,
      reflecting increased cash flow from operating activities due to the expansion
      of
      our production and sales capacities, notwithstanding an increase in accounts
      receivables and inventories. During the three months ended March 31, 2008,
      our
      accounts receivable turned over approximately 1.1 times, and our inventories
      turned over approximately 2.1 times. Management feels that these turn rates
      reflect a reasonable amount of time during which our liquid assets are tied
      up
      from the purchase of raw materials, through production to product sales and
      payment on accounts receivable.




For
      the
      three months ended March 31, 2008, our net cash used in investing activities
      totaled $37,373 as compared to $500,473 for the three months ended March 31,
      2007. The $37,373 was used toward purchasing equipment and related
      machinery.




For
      the
      three months ended March 31, 2008, net cash used in financial activities
      amounted to $314,433 as compared to net cash provided by financing activities
      of
      $5,261,966 for the three months ended March 31, 2007. The decrease was primarily
      attributable to the receipt of cash from convertible debt of $5,353,000 on
      Jan
      25, 2007 and no such activity in 2008.




Over
      the
      remainder of fiscal 2008, we are seeking to achieve further growth by increasing
      our ongoing investment in research and development, increasing the sales of
      our
      TPMSs and digital parking reverse sensor systems, continuing to develop our
      marketing network, implementing stricter and more efficient quality controls,
      and increasing investment in our production management system, and also to
      tighten controls on operating expenditures and cut out non- necessary expenses.
      We expect our future capital requirements to be approximately $3 million during
      the 2008 fiscal year. We plan to meet our funding needs through a combination
      of
      debt and equity financing, including, but not limited to, our previously
      completed and announced private placements, the proceeds of which are being
      used
      as working capital.


23




**Recent
      Accounting Pronouncements**




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements”, which establishes a framework for
      reporting fair value and expands disclosures about fair value measurements.
      SFAS
      No. 157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007 and interim periods within those fiscal years. The
      adoption of this standard had no impact on the Company’s financial position or
      results of operations.




In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No. 159, “The Fair Value O  ption for
      Financial Assets and Financial Liabilities-Including an amendment of FASB
      Statement No. 115,
      (“SFAS No. 159”). SFAS No. 159 permits entities to choose to
      measure many financial instruments and certain other items at fair value. Most
      of the provisions of this Statement apply only to entities that elect the fair
      value option. However, the amendment to FASB Statement No. 115, “Accounting
      for Certain Investments in Debt and Equity Securities,”
(“SFAS No. 115”), applies to all entities with available-for-sale and
      trading securities. SFAS No. 159 is effective for the Company’s
      consolidated financial statements for the annual reporting period beginning
      after November 15, 2007. The adoption of this standard had no impact on the
      company’s financial position or results of operations.





In
      December 2007, the FASB issued SFAS No.141R, Business Combinations (SFAS No.
      141R). SFAS No. 141R requires the acquiring entity in a business combination
      to
      recognize all the assets acquired and liabilities assumed, establishes the
      acquisition date fair value as the measurement objective for all assets acquired
      and liabilities assumed, and requires the acquirer to expand disclosures about
      the nature and financial effect of the business combination. SFAS No. 141R
      is
      effective for business combinations for which the acquisition date is on or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. We have not yet determined the impact of the adoption of
      SFAS
      No. 141R on our consolidated financial statements and footnote
      disclosures.





In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
      Consolidated Financial Statements (SFAS No. 160). SFAS No. 160 requires all
      entities to report noncontrolling (minority) interests in subsidiaries as equity
      in the consolidated financial statements. The statement establishes a single
      method of accounting for changes in a parent’s ownership interest in a
      subsidiary that do not result in deconsolidation and expands disclosures in
      the
      consolidated financial statements. SFAS No. 160 is effective for fiscal years
      beginning after December 15, 2008 and interim periods within those fiscal years.
      We have not yet determined the impact of the adoption of SFAS No. 160 on our
      consolidated financial statements and footnote disclosures.




In
      March 2008, the FASB issued SFAS 161, “ *Disclosures
      about Derivative Instruments and Hedging Activities* ” *.* The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with
      early application encouraged. The Company is currently evaluating the impact
      of
      adopting SFAS 161 on its consolidated financial statements.








**Item
      4.**  **Controls
      and Procedures.**




As
      of the
      end of the period covered by this report on Form 10-Q, our Chief Executive
      Officer and our Chief Financial Officer performed an evaluation of the
      effectiveness of and the operation of our disclosure controls and procedures
      as
      defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on
      that evaluation, our Chief Executive Officer and Chief Financial Officer could
      not conclude that as of March 31, 2008, our disclosure controls and procedures
      were effective in timely alerting them to material information relating to
      Long-e International, Inc. required to be included in our Exchange Act filings
      and ensuring such information is recorded, processed, summarized and reported
      within the time periods specified in Securities and Exchange Commission rules
      and forms. Further, since the closing of the previously reported share exchange
      marked a change in the operations of the business, our Chief Executive Officer
      and Chief Financial Officer concluded that there was a further need to evaluate
      and implement appropriate disclosure controls and procedures to ensure the
      timely, accurate and comprehensive flow of material information, especially
      in
      relation to LIG and LTS, required to be disclosed in our Exchange Act filings
      and to ensure that all such information is recorded, processed, summarized
      and
      reported within the time periods required. Since March 31, 2008, our Chief
      Executive Officer and other members of the management team have been working
      to
      design and implement such effective disclosure controls and procedures.


24





There
      have been no changes in our internal control over financial reporting identified
      in connection with the evaluation required by Rule 13a-15(d) or Rule 15d-15(d)
      under the Exchange Act that occurred during the quarter ended March 31,
      2008 that has materially affected, or is reasonably likely to materially affect,
      our internal control over financial reporting.





**PART
      II — OTHER INFORMATION**





**Item
      6.**  **Exhibits.**




(a)
      Exhibits.




**Exhibit**
            
            **Item**31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002*





*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities
      Exchange Act of 1934 or otherwise subject to the liabilities of that section,
      nor shall it be deemed incorporated by reference in any filing under the
      Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
      before or after the date hereof and irrespective of any general incorporation
      language in any filings.


25


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





LONG-E
                INTERNATIONAL, INC.Date:
                May 20, 2008
            
            /s/
                Bu ShengfuBu
                Shengfu, President
              (Principal
                Executive Officer)Date:
                  May 20, 2008
            
            /s/
                Liang ZhuLiang
                Zhu, Chief Financial Officer (Principal Financial and Accounting
                Officer)




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