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, 2008

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	o
Non-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, 2008, there were 31,259,714 shares issued and outstanding of the registrant’s common stock.

INDEX

	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	3

Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007	3
Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007 (unaudited)	4
Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007 (unaudited)	5
Notes to Unaudited Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION

Item 6. Exhibits	25

Signatures	26

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	$	3,715,010
Trade receivables, net (Note 4)		8,393,617		6,768,947
Short-term loans receivable (Note 5)		2,424,016		2,333,656
Inventories, net (Note 6)		2,630,486		2,763,930
Value-added taxes (VAT) refundable		45,947		22,370
Due from related parties (Note 13)		14,029		23,587
Prepaid expenses and other receivables		160,049		810,668
Total current assets		17,142,371		16,438,168
Plant and equipment, net (Note 7)		2,063,378		2,146,924
Land use right deposit (Note 15)		1,225,669		1,179,980
Intangibles, 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	$	2,670,458
Accrued liabilities and other payables		194,967		717,661
Short term loans (Note 9 and 13)		1,372,522		1,545,829
Current portion of bank loans payable (Note 10)		211,392		261,435
Registration rights penalty payable (Note 16)		323,600		323,600
Other taxes payable		1,267,733		1,212,896
Wages payable		692,890		810,274
Corporate income taxes payable		451,593		239,361
Due to related parties (Note 13)		298,114		175,718
Total current liabilities		7,285,861		7,957,232

Long-term Liabilities:
Bank loans payable (Note 10)		-		20,278
Convertible debt, net of debt discount of $4,728,483 and $4,862,208, respectively (Note 11)		624,517		490,692
Convertible debt, issued for settlement of liquidated damage, 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		31,260
Additional paid-in capital		8,623,111		8,623,111
Deferred warrant expense		-		(19,060	)
Accumulated other comprehensive income		1,520,840		983,362
Statutory reserves		1,252,323		1,252,323
Retained 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

Long-E International, Inc. and Subsidiaries

Consolidated Statements of Operations

	For the Three Months Ended
	March 31,
	2008			2007
	(Unaudited)			(Unaudited)

Sales Revenues	$	8,985,992		$	6,157,718
Assembling / Reprocessing Revenues		183,746			384,330
Total Revenues		9,169,738			6,542,048

Cost of Sales		6,699,833			4,431,596

Gross Profit		2,469,905			2,110,452

Operating Expenses
Selling expenses		542,337			1,338,266
General and Administrative expenses		751,177			1,251,416
Research and development		191,694			66,185

Total Operating Expenses		1,485,208			2,655,867

Income (Loss) from Operations		984,697			(545,415	)

Other Income (Loss):
Other income		17,354			11,500
Interest incomes		6,232			1,937
Interest expenses		(182,763	)		(95,353	)
Gain on extinguishment of debts		-			15,715

Total 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			31,259,714

Net 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

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			141,941
Loss on disposal of fixed asset		-			-
Amortization of debt discount		162,000			89,217
Amortization of CCG warrants		19,060			-

Chang in operating assets and liabilities:
(Increase) decrease in assets:
Receivables, net		(1,333,432	)		530,852
VAT tax recoverable		(22,225	)		9,555
Due 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	)		1,056,313
Other tax payable		7,706			4,149
Corporate 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		-			307,098
Proceeds from loans from individuals		-			24,984
Repayment 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	)		55,864
Issuance of convertible promissory notes		-			5,353,000

Net cash provided by (used in) financing activities		(314,433	)		5,261,966

Effect of exchange rate changes on cash		(9,857	)		(244,733	)

Net increase (decrease) in cash		(240,783	)		3,955,232

Cash, beginning of period		3,715,010			2,313,080

Cash, end of period	$	3,474,227		$	6,268,312

Supplemental disclosure information:
Interest expense paid	$	20,763		$	6,136
Income taxes paid	$	198,622		$	84,615

Non-cash interest expenses:

Amortization of debt discount	$	162,000		$	89,217

Amortization of CCG warrants	$	19,060		$	-

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

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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Basis of consolidation

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

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.

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.

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.

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.

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.

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 years
Leasehold Improvements	10 years
Office and Other Equipment	5 years
Automobiles	5 years

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.

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.

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.

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.

Research and development costs

Research and development costs are expensed to operations as incurred.

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.

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.

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, 2007
Balance sheet items, except for the registered and paid-up capital, as of period end		RMB7.0220:US$1		RMB7.29394:US$1
Amounts 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$1
Equity accounts

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

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	)

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.

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.

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.

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. TRADE RECEIVABLES

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

	March 31,			December 31,
	2008			2007
Trade receivables	$	8,887,058		$	7,243,994

Less: 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		2007
No fixed terms of repayment	$	715,149	$	688,492
12% loans receivable, due on April 30, 2008		284,811		274,194
12% loans receivable, due on up to May 25, 2008		712,028		685.485
12% loans receivable, due on June 16, 2008		712,028		685,485

Total	$	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.

6. INVENTORIES

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

	March 31, 2008			December 31, 2007

Raw materials and packing materials	$	1,593,400		$	1,196,275
Raw materials on consignment at subcontractors		15,925			13,848
Finished goods		532,345			678,169
Work-in-progress		922,275			1,303,715
		3,063,945			3,192,007

Less: 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, 2007
Production machinery and equipment	$	2,913,907		$	2,854,944
Leasehold improvements		478,163			373,233
Office and other equipment		223,499			215,850
Automobiles		188,200			181,185
		3,803,769			3,625,212

Less: 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, 2007
Cost of sales	$	150,443	$	95,380
Operating expense		50,039		34,015

Total	$	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			2007

Computerized ERP System	$	111,076		$	109,246
Other software		6,067			5,840

Less: 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.

9.	SHORT-TERM LOANS

Short-term loans consist of the following:

	March 31,		December 31,
	2008		2007
6.57% Bank loan, due by installments up to August 2, 2008*	$	640,825	$	822,583
Interest-free, unsecured loans from individuals, no fixed terms of repayment		731,697		723,246

Total 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		2007
3.49% Bank loan, due by installments up to October 7, 2008	$	103,982	$	146,699
3.49% Bank loan, due by installments up to February 12, 2009		107,410		135,014

Total Long term bank loans payable		211,392		281,713
Less: current portion due within one year		211,392		261,435

Long-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.

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)	$	5,353,000
Less: unamortized discount on debentures		(4,728,483	)
Convertible debentures, net	$	624,517

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)	$	1,127,000
Less: 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 Price
Balance at December 31, 2007		6,807,141	$	0.49
Granted		13,507,500	$	0.55
Exercised		-		-
Forfeited		-		-
Balance at March 31, 2008		20,314,641	$	0.53

Options 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 Exercisable
Range 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	$	1.20
		20,314,641			$	0.53		20,314,641	$	0.52

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		2007
Due from related parties:
Ms. Li Xiangdong, VP, Finance of LTS	$	7,684	$	2,599
Mr. Chen Linshen, Executive VP		98		2,530
Mr. Xu Rujiang, COO & GM of LTS		2,952		9,102
Mr. Wang Songtao, VP, Int’l Business of LTS		427		4,305
Mr. Liangzhu, CFO		-		5,051
Ms. 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		2007
Due to related parties:
Mr. Bu Shengfu, CEO	$	188,644	$	33,145
Mr. Li Huamin, a stockholder		31,120		31,120
Mr. Xu Jiafa, VP, Production of LTS		28,839		27,963
Mr. Chen Dong, a stockholder		45,073		79,756
Mr. Yin Zhongjun, Chief Engineer		4,438		3,011
Mr. Wang Qing, Chefu’s Stockholder		-		723
Due 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.

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	$	483,689
2009		583,827
2010		400,551
2011 and thereafter		467,310

Total	$	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.

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.

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.

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):

	Three Months Ended March 31,
	2008					2007
Sales	$	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				2007
Two- 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.

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.

Recent Accounting Pronouncements

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.

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.

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 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1		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.

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 Shengfu
		Bu Shengfu, President (Principal Executive Officer)


Date: May 20, 2008		/s/ Liang Zhu
		Liang Zhu, Chief Financial Officer (Principal Financial and Accounting Officer)

LONG-E INTERNATIONAL, INC. 10-Q