UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM 10-Q





[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              For
      the quarterly period ended December 31,
2008





OR




[ 
      ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
              
              For
      the transition period from ___________ to
  ___________.




Commission file number:000-1321559









Jpak
Group, Inc.


(Exact
name of Registrant as specified in its charter)












Nevada
                
                20-1977020(State
      or Other Jurisdiction of
                  Incorporation
      or Organization)
                
                (I.R.S.
      Employer
                  Identification
      Number)




15
      Xinghua Road
              Qingdao,
      Shandong Province
              People’s
      Republic of China
            
            266401(Address
      of Principal Executive Offices)
            
            (ZIP
      Code)




(86-532)
84616387


(Registrant’s
telephone number,


including
area code)




________________________________________________________


Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.




Yes
[X]  No [  ]




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one)













Large
      Accelerated Filer
            
            
            Accelerated
      FilerNon-accelerated
      filer
            (do
      not check if a smaller reporting company)
            
            Smaller
      reporting company
            X




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




Yes [  ]  No [X]




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.




On
February 13, 2008 there were 24,805,000 shares of the issuer's common
stock, par value $.001 per share, outstanding. The issuer also has 5,608,564
shares of Series A Preferred Stock, par value $.0001 per share, outstanding,
which shares are convertible into on aggregate of 11,217,128 shares of common
stock, and 5,000,000 shares
of Series B Convertible Preferred Stock, par value $.0001 per share outstanding,
which shares are convertible into an aggregate of 8,333,333 shares of common
stock

















2










JPAK
GROUP, INC.





INDEX





Page
                    NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
                  
                  Financial
      StatementsConsolidated
      Balance SheetsDecember
      31, 2008 (unaudited)
                  
                  5Consolidated
      Statements of Operations (unaudited)Three
      and six months ended December 31, 2008 and 2007
                  
                  6Consolidated
      Statements of Cash Flows (unaudited)Six
      months ended December 31, 2008 and 2007
                  
                  7Notes
      to Condensed Consolidated Financial Statements
                  
                  8Item
      2.
                  
                  Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
                  
                  15Item
      3.
                  
                  Quantitative
      and Qualitative Disclosure About Market Risks
                  
                  21Item
      4.
                  
                  Controls
      and Procedures
                  
                  22Item
      4T
                  
                  Controls
      and Procedures
                  
                  24PART
      II - OTHER INFORMATIONItem
      1.
                  
                  Legal
      Proceedings
                  
                  25Item
      1.A
                  
                  Risk
      Factors
                  
                  25Item
      2.
                  
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  
                  25Item
      3.
                  
                  Defaults
      Upon Senior Securities
                  
                  25Item
      4.
                  
                  Submission
      of Matters to a Vote of Security Holders
                  
                  25Item
      5.
                  
                  Other
      Information
                  
                  25Item
      6.
                  
                  Exhibits
                  
                  26















3







Report
of Independent Registered Public Accounting Firm





To the
Board of Directors and Stockholders


JPAK
Group, Inc.:








We have reviewed the accompanying
consolidated balance sheet of JPAK Group, Inc. and subsidiaries (the “Company”)
as of December 31, 2008, and the related consolidated statements of operations
and other comprehensive income, and cash flows for the six months ended December
31, 2008 and 2007. These consolidated financial statements are the
responsibility of the company’s management.





We conducted our reviews in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for
financial and accounting matters.  It is substantially less in scope
than an audit conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the consolidated financial statements taken
as a whole.  Accordingly, we do not express such an
opinion.





Based on our review, we are not aware
of any material modifications that should be made to the accompanying
consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of
America.




















/s/  Patrizio
& Zhao, LLC


Patrizio
& Zhao, LLC





Parsippany,
New Jersey


February
2, 2009









4


Jpak Group, Inc. Consolidated
Balance Sheets


(Unaudited)


December 31,
                  
                  
                  June 30,2008
                  
                  
                  2008(unaudited)ASSETSCURRENT
      ASSETSCash and cash
      equivalents
                  
                  $
                  5,998,193
                  
                  
                  $
                  7,218,904Accounts receivable, net of
      allowance for doubtful accounts of $196,709and $45,359 at December 31,
      2008 and June 30, 2008, respectively
                  
                  
                  7,730,299
                  
                  
                  
                  9,026,455Inventory
                  
                  
                  3,840,311
                  
                  
                  
                  5,420,631Other receivables
                  
                  
                  1,295,378
                  
                  
                  
                  1,131,511Prepaid expenses and other
      current assets
                  
                  
                  161,681
                  
                  
                  
                  96,751Advance payments
                  
                  
                  3,044,664
                  
                  
                  
                  1,367,622Total Current
    Assets
                  
                  
                  22,070,526
                  
                  
                  
                  24,261,874PROPERTY
      AND EQUIPMENT, NET
                  
                  
                  11,841,437
                  
                  
                  
                  11,660,063Total Assets
                  
                  $
                  33,911,963
                  
                  
                  $
                  35,921,937LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
                  
                  $
                  2,022,397
                  
                  
                  $
                  3,598,732Trade notes
    payable
                  
                  
                  3,467,442
                  
                  
                  
                  3,784,956Short term bank
    loans
                  
                  
                  3,080,700
                  
                  
                  
                  3,063,900Current portion of long-term
      debt
                  
                  
                  953,110
                  
                  
                  
                  1,263,786Other payables
                  
                  
                  344,486
                  
                  
                  
                  259,861Total Current
      Liabilities
                  
                  
                  9,868,135
                  
                  
                  
                  11,971,235LONG-TERM
      DEBT
                  
                  
                  764,307
                  
                  
                  
                  655,091MINORITY
      INTEREST
                  
                  
                  105,710
                  
                  
                  
                  105,690Total Liabilities
                  
                  
                  10,738,152
                  
                  
                  
                  12,732,016STOCKHOLDERS’
      EQUITYSeries A convertible preferred
      stock, $0.0001 par value, 5,608,564shares authorized,
      issued and outstanding
                  
                  
                  561
                  
                  
                  
                  561Common stock, $0.001 par value,
      300,000,000 shares authorized24,805,000and
      24,505,000 shares issued and outstanding atDecember 31 2008 and
      June 30, 2008
                  
                  
                  24,805
                  
                  
                  
                  24,505Series B convertible preferred
      stock, $0.0001 par value, 5,000,000shares authorized,
      issued and outstanding
                  
                  
                  500
                  
                  
                  
                  500Series A Preferred
      Shares
                  
                  
                  2,484,226
                  
                  
                  
                  2,484,226Series B Preferred
      Shares
                  
                  
                  1,390,853
                  
                  
                  
                  1,390,853Warrants
                  
                  
                  4,634,678
                  
                  
                  
                  4,634,678Placement Agent
      Warrants
                  
                  
                  1,172,487
                  
                  
                  
                  1,172,487Additional paid-in
      capital
                  
                  
                  11,453,304
                  
                  
                  
                  11,048,604Retained earnings
                  
                  
                  (943,857
                  )
                  
                  
                  (562,030
                  )Statutory
reserves
                  
                  
                  348,009
                  
                  
                  
                  348,009Accumulated other comprehensive
      income
                  
                  
                  2,608,245
                  
                  
                  
                  2,647,528Total Stockholders’
      Equity
                  
                  
                  23,173,811
                  
                  
                  
                  23,189,921Total Liabilities and
      Stockholders’ Equity
                  
                  $
                  33,911,963
                  
                  
                  $
                  35,921,937


The
accompanying notes are an integral part of these consolidated financial
statements.
 5


Jpak Group, Inc.


Consolidated
Statements of Operations and Comprehensive Income (Loss)


(Unaudited)


For
      the Three Months Ended
                
                
                For
      the Six Months EndedDecember
      31,
                
                
                December
      31,2008
                
                
                2007
                
                
                2008
                
                
                2007SALES
                
                $
                6,108,787
                
                
                $
                6,114,644
                
                
                $
                15,539,117
                
                
                $
                15,418,892COST
      OF SALES
                
                
                5,206,666
                
                
                
                4,319,117
                
                
                
                12,202,568
                
                
                
                11,306,299GROSS
      PROFIT
                
                
                902,121
                
                
                
                1,795,527
                
                
                
                3,336,549
                
                
                
                4,112,593OPERATING
      EXPENSESSelling, general and
      administrative
                
                
                1,517,427
                
                
                
                1,572,252
                
                
                
                3,625,088
                
                
                
                2,942,598INCOME
      (LOSS) FROM OPERATIONS
                
                
                (615,306
                )
                
                
                223,275
                
                
                
                (288,539
                )
                
                
                1,169,995OTHER
      INCOME (EXPENSES)Interest Income (expense),
      net
                
                
                (99,092
                )
                
                
                (96,453
                )
                
                
                (107,617
                )
                
                
                (185,460
                )Non-operating income (expense),
      net
                
                
                1,134
                
                
                
                238,498
                
                
                
                13,770
                
                
                
                248,662Total Other Income
      (Expenses)
                
                
                (97,958
                )
                
                
                142,045
                
                
                
                (93,847
                )
                
                
                63,202INCOME
      (LOSS) BEFORE PROVISION FOR INCOME TAXES
                
                
                (713,264
                )
                
                
                365,320
                
                
                
                (382,386
                )
                
                
                1,233,197PROVISION
      FOR INCOME TAXES
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -NET
      INCOME (LOSS) BEFORE MINORITY INTEREST
                
                
                (713,264
                )
                
                
                365,320
                
                
                
                (382,386
                )
                
                
                1,233,197MINORITY
      INTEREST
                
                
                (67
                )
                
                
                (1,980
                )
                
                
                (559
                )
                
                
                (1,980
                )NET
      INCOME (LOSS)
                
                
                (713,197
                )
                
                
                363,340
                
                
                
                (381,827
                )
                
                
                1,235,177BENEFICIAL
      CONVERSION FEATURE RELATED TO ISSUANCEOF
      SERIES A CONVERTIBLE PREFERRED STOCK
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,484,226
                )BENEFICIAL
      CONVERSION FEATURE RELATED TO ISSUANCEOF
      SERIES B CONVERTIBLE PREFERRED STOCK
                
                
                -
                
                
                
                (1,390,853
                )
                
                
                -
                
                
                
                (1,390,853
                )NET
      INCOME (LOSS) APPLICABLE TO COMMONSTOCKHOLDERS
                
                
                (713,197
                )
                
                
                (1,027,513
                )
                
                
                (381,827
                )
                
                
                (2,639,902
                )OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign currency translation
      adjustment
                
                
                (375
                )
                
                
                468,008
                
                
                
                (39,283
                )
                
                
                824,150COMPREHENSIVE
      INCOME (LOSS)
                
                
                (713,572
                )
                
                
                (559,505
                )
                
                
                (421,110
                )
                
                
                (1,815,752
                )BASIC
      EARNINGS PER SHARE
                
                
                (0.03
                )
                
                
                (0.04
                )
                
                
                (0.02
                )
                
                
                (0.11
                )DILUTED
      EARNINGS PER SHARE
                
                
                (0.03
                )
                
                
                (0.04
                )
                
                
                (0.02
                )
                
                
                (0.11
                )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARESOUTSTANDINGBASIC
                
                
                24,805,000
                
                
                
                24,505,000
                
                
                
                24,805,000
                
                
                
                24,178,913DILUTED
                
                
                24,805,000
                
                
                
                24,505,000
                
                
                
                24,805,000
                
                
                
                24,178,913


The
accompanying notes are an integral part of these consolidated financial
statements.
 6


Jpak Group, Inc.


Consolidated
Statements of Cash Flows


(Unaudited)




For
      the Six Months EndedDecember 31,2008
                
                
                2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income (loss)
                
                $
                ( 381,827
                )
                
                $
                1,235,177Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Minority interest
                
                
                (559
                )
                
                
                (1,980
                )Depreciation
    expense
                
                
                598,024
                
                
                
                518,645Loss (Gain) on disposal of fixed
      assets
                
                
                (332
                )
                
                
                -Share-based
    payment
                
                
                303,750
                
                
                
                -Bad debt expense
                
                
                150,823
                
                
                
                -Changes in assets and
      liabilities:Accounts
    receivable
                
                
                1,192,350
                
                
                
                1,937,765Inventory
                
                
                1,607,080
                
                
                
                676,659Other receivables
                
                
                (157,372
                )
                
                
                (118,427
                )Prepaid expenses and other
      current assets
                
                
                36,782
                
                
                
                703,834Advance payments
                
                
                (1,666,470
                )
                
                
                (2,013,322
                )Accounts payable and accrued
      expenses
                
                
                (1,592,945
                )
                
                
                (2,318,245
                )Other payables
                
                
                83,046
                
                
                
                (66,978
                )Total Adjustments
                
                
                554,177
                
                
                
                (682,049
                )Net Cash Provided By Operating
      Activities
                
                
                172,350
                
                
                
                553,128CASH
      FLOWS FROM INVESTING ACTIVITIES:Additions to property and
      equipment
                
                
                (763,260
                )
                
                
                (732,080
                )Acquisition of Qingdao’s
      equity
                
                
                -
                
                
                
                (864,000
                )Proceeds from disposal of fixed
      assets
                
                
                48,345
                
                
                
                -Cash acquired from the
      subsidiary
                
                
                -
                
                
                
                99,019Net Cash Used In Investing
      Activities
                
                
                (714,916
                )
                
                
                (1,497,061
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Commission of Series B Preferred
      Shares
                
                
                -
                
                
                
                (374,551
                )Exercise of J
      warrants
                
                
                -
                
                
                
                5,000,000Issuance of trade notes
      payable
                
                
                (337,645
                )
                
                
                (538,880
                )Repayment of employee
      loans
                
                
                (211,591
                )
                
                
                -Repayment of bank
      loans
                
                
                -
                
                
                
                (1,246,935
                )Net Cash Provided By (Used In)
      Financing Activities
                
                
                (549,236
                )
                
                
                2,839,634EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
                
                
                (128,910
                )
                
                
                195,703NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                (1,220,711
                )
                
                
                2,091,404CASH
      AND CASH EQUIVALENTS – BEGINNING
                
                
                7,218,904
                
                
                
                4,938,200CASH
      AND CASH EQUIVALENTS – ENDING
                
                $
                5,998,193
                
                
                $
                7,029,604


The
accompanying notes are an integral part of these consolidated financial
statements.
 7







JPAK
GROUP, INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007
 (Unuadited)


NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS





JPAK
Group, Inc. (Formerly Rx Staffing Inc.), a public shell company as defined in
Rule 12b-2 of the Exchange Act of 1934, established under the laws of Nevada on
December 6, 2004. The accompanying consolidated financial statements include the
financial statements of JPAK Group, Inc. and its subsidiaries. Our primary
business is to print and produce packaging products for sale to the beverage and
other industries.





On August
9, 2007, Rx Staffing Inc. completed a reverse acquisition of JPAK Group Co.,
Ltd., (“JPAK”), which was incorporated in the Cayman Islands on June 22, 2006.
To accomplish the exchange of shares Rx Staffing issued 23,005,000 shares of
common stock on a one to one ratio for a 100% equity interest in JPAK, per the
terms of the Share Exchange and Bill of Sale of assets of Rx Staffing and Shaun
Jones. Rx Staffing was delivered with zero assets and zero liabilities at time
of closing. Following the reverse acquisition, Rx Staffing changed the name to
JPAK Group, Inc. The transaction was regarded as a reverse merger whereby JPAK
was considered to be the accounting acquirer as its shareholders retained
control of RX Staffing after the exchange. Although we are the legal parent
company, the share exchange was treated as a recapitalization of JPAK. Thus,
JPAK is the continuing entity for financial reporting purposes. The Financial
Statements have been prepared as if JPAK had always been the reporting company
and then on the share exchange date, had changed its name and reorganized its
capital stock.





In
September 2006, JPAK acquired 100% interest in Grand International Industrial
Ltd. which was incorporated on August 4, 2006, in the city of Hong Kong, the
People’s Republic of China. In August 2006, Grand International acquired 88.23%
interest in Qingdao Renmin, which was incorporated in May 2001 in the city of
Qingdao, the People’s Republic of China. On July 3, 2007, Grand International
acquired the remaining 11.77% interest in Qingdao Renmin. The consolidated
financial statements reflect all predecessor statements of income and cash flow
from the inception of Qingdao Renmin in August 2006. In October 2007, Qingdao
Renmin invested in Qingdao Delikang Packing Machinery Co., Ltd., , a joint
venture with Xi’an Heiniu Machinery, Co. Qingdao Renmin acquired 51% interest of
Qingdao Delikang.





Substantially
all of our business is conducted through Qingdao Renmin, an operating subsidiary
established in the Peoples Republic of China, in which we indirectly hold a 100%
interest.





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





BASIS
OF PRESENTATION





Our
Consolidated Financial Statements include the accounts of our direct
wholly-owned subsidiaries and of our indirect proportionate share of
subsidiaries owned by the wholly-owned subsidiaries. All intercompany balances
and transactions are eliminated in consolidation. The accompanying unaudited
financial statements have been prepared in accordance with generally accepted
accounting principles (GAAP) applicable to interim financial information and
with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. Interim
results are not necessarily indicative of results for a full year. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the financial position and the results of operations and cash
flows for the interim periods have been included.





INTERIM
FINANCIAL STATEMENTS





These
interim financial statements should be read in conjunction with the audited
financial statements for the years ended June 30, 2008 and 2007, as not all
disclosures required by generally accepted accounting principles for annual
financial statements are presented. The interim financial statements follow the
same accounting policies and methods of computations as the audited financial
statements for the years ended June 30, 2008 and 2007.










8





NOTE
3 – ACCOUNTS RECEIVABLE





Trade
accounts receivable are stated at original invoice amount less allowance for
doubtful receivables made based on management’s periodic review of aging of
outstanding balances and customer credit history. Allowance for doubtful
accounts amounted to $196,709 and $45,359 at December 31, 2008 and June 30,
2008.





NOTE
4 – INVENTORY





Inventory
at December 31, 2008 and June 30, 2008 consists of the following:




December 31, 2008
                
                
                June 30, 2008Finished
      goods
                
                $
                863,095
                
                
                $
                787,872Raw
      materials
                
                
                2,416,492
                
                
                
                4,011,065Parts
      and supplies
                
                
                68,899
                
                
                
                66,599Work
      in process
                
                
                491,825
                
                
                
                555,095Total
                
                $
                3,840,311
                
                
                $
                5,420,631





NOTE
5 – ADVANCE PAYMENTS





We make
advances to certain vendors for inventory, equipment, and
construction-in-progress. The advances on purchase of inventory amounted to
$2,339,220 and $825,795 as of December 31, 2008 and June 30, 2008. Additionally,
we made advances on equipment purchases amounting to $705,444 and $541,827 as of
December 31, 2008 and June 30, 2008, respectively.





NOTE
6 – PROPERTY AND EQUIPMENT





Property
and equipment at December 31, 2008 and June 30, 2008 consists of the
following:




December 31, 2008
                
                
                June 30, 2008Buildings
                
                $
                4,370,313
                
                
                $
                3,972,267Machinery
      and equipment
                
                
                14,540,332
                
                
                
                13,973,256Subtotal
                
                
                18,910,645
                
                
                
                17,945,523Less:
      Accumulated depreciation
                
                
                7,656,574
                
                
                
                7,023,58211,254,071
                
                
                
                10,921,941Add:
      Construction in progress
                
                
                587,366
                
                
                
                738,122Total
                
                $
                11,841,437
                
                
                $
                11,660,063


Depreciation
expense for the six months ending December 31, 2008 and 2007 were $598,024 and
$434,628, respectively. Depreciation expense for the three months ending
December 31, 2008 and 2007 were $301,115 and $213,086,
respectively.





NOTE
7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses at December 31, 2008 and June 30, 2008 consist of
the following:





December 31, 2008
                
                
                June 30, 2008Accounts
      payable
                
                $
                1,934,703
                
                
                $
                3,256,552Accrued
      expenses
                
                
                87,694
                
                
                
                342,180Total
                
                $
                2,022,397
                
                
                $
                3,598,732





The
carrying value of accounts payable and accrued expenses approximates fair value
due to the short-term nature of these obligations.








9






NOTE
8 – TRADE NOTES PAYABLE





Trade
notes payable consists of noncollateralized non-interest bearing promissory
notes issued in connection with the acquisition of certain inventory and
equipment. Balances outstanding under the notes as of December 31, 2008 and June
30, 2008 were $3,467,442 and $3,784,956, respectively.





NOTE
9 – SHORT TERM BANK LOANS





Short
term bank loans at December 31, 2008 and June 30, 2008 consists of the
following:





December 31, 2008
                          
                          
                          June 30, 2008On
      January 29th
      2008, we obtained a loan from Qingdao CityCommercial
      Bank, of which principal is to be paid in full by January 29th
      ,2009Interest
      is to be calculated using an annual fixed rate of 7.47%
andpaid
      monthly. The loan is secured by our property and
equipment.
                          
                          $
                          2,347,200
                          
                          
                          $
                          2,334,400On
      May 30th,
      2008, we obtained a loan from China Industrial andCommercial
      Bank, of which principal is to be paid in full by May 29th,
      2009Interest
      is to be calculated using an annual fixed rate of 7.47%
andpaid
      monthly. The loan is secured by our equipment.
                          
                          $
                          733,500
                          
                          
                          $
                          729,500Total
      short term bank loans
                          
                          $
                          3,080,700
                          
                          
                          $
                          3,063,900





NOTE
10 – INCOME TAXES





JPAK
Group Co., Ltd. was incorporated in the Cayman Islands. Under the laws of Cayman
Islands, we are not subject to tax on income or capital gain.





The
operating subsidiary Qingdao Renmin is a wholly foreign-owned enterprise
incorporated in the PRC and subject to PRC Foreign Enterprise Income Tax
(“FEIT”) Law. Pursuant to FEIT Law, foreigninvested enterprises (“FIEs”) are
subject to FEIT at a state tax rate of 30% plus a local tax rate of 3% on PRC
taxable income. FIEs are also entitled to be exempted from FEIT for a 2-year
period starting from their first profit-making year followed by a 50% reduction
of FEIT payable for the subsequent three years, if they fall into the category
of production-oriented enterprises with an operational period of more than 10
years in China. Qingdao Renmin started its tax holiday period on January 1,
2007, which will end on December 31, 2011.








10





On March
16, 2007, the National People’s Congress of China enacted a new Corporate Income
Tax (“CIT”) law, under which FIEs and domestic companies would be subject to CIT
at a uniform rate of 25%. The new CIT law became effective on January 1, 2008.
The grandfathering treatments for unutilized tax holiday are provided for
certain qualified FIEs. For those FIEs which have already commenced their
qualified tax holidays before 2008, they can continue to enjoy the remaining
unutilized tax holidays until expiry. For those qualified old FIEs which have
not commenced their tax holidays before 2008 due to cumulative losses, their tax
holidays will be deemed to commence in 2008 and can be utilized until expiry.
Currently, we do not believe the new CIT law will affect the preferential tax
treatments (i.e. the unutilized tax holiday) enjoyed by them.





On
February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration
of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular 1”).
According to Article 4 of Circular 1, distributions of accumulated profits
earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 or after
will be exempt from withholding tax (“WHT”) while distribution of the profit
earned by an FIE after January 1,2008 to its foreign investor(s) shall be
subject to WHT. Since we intend to reinvest its earnings to further expand its
businesses in mainland China, our foreign invested enterprises do not intend to
declare dividends to their immediate foreign holding companies in the
foreseeable future. Accordingly, as of December 31, 2008, we have not recorded
any withholding tax on the retained earnings of its foreign invested enterprises
in China.





NOTE
11 – LONG-TERM DEBT





As of
December 31, 2008, we had an outstanding long-term debt of $1,717,417, including
the current portion of $953,110. As of June 30, 2008, we had an outstanding
long-term debt of $1,918,877, including the current portion of $1,263,786. These
loans represent borrowings from employees at an annual interest rate of 10%.
Interest payments are made semi-annually with no principal payments due until
May 31, 2010, as per the terms of the loan agreement.





NOTE
12 – EMPLOYEE WELFARE PLAN





We have
established an employee welfare plan in accordance with Chinese laws and
regulations. Our Full-time employees  in the PRC participate in a
government-mandated multi-employer defined contribution plan pursuant to which
certain pension benefits, medical care, unemployment insurance, employee housing
fund and other welfare benefits are provided to employees. PRC labor regulations
require us to accrue for these benefits based on certain percentage of the
employees’ salaries. The total contribution for such employee benefits was
$223,505and $154,282 for the quarters ended December 31, 2008 and 2007,
respectively.





NOTE
13 – RISK FACTORS





In the
three months ended December 31, 2008 and 2007, five vendors accounted for
approximately 60% and 94% of our purchases, respectively.





In the
three months ended December 31, 2008 and 2007, five customers accounted for
approximately 56% and 72% of our sales, respectively.





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








11





NOTE
14 - CONCENTRATIONS OF CREDIT RISK





Financial
instruments which potentially subject us to credit risk consist principally of
cash on deposit with financial institutions. Management believes that the
financial institutions that hold our cash and cash equivalents are financially
sound and minimal credit risk exists with respect to these
investments.








NOTE
15 – SUPPLEMENTAL CASH FLOW INFORMATION





Six Months Ended December
    31,2008
                
                
                2007Cash
      paid for interest
                
                $
                112,845
                
                
                $
                217,755Cash
      paid for income taxes
                
                $
                -
                
                
                $
                -





NOTE
16 – EARNINGS PER SHARE





We
present earnings per share on a basic and diluted basis. Basic earnings per
share have been computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding. Diluted earnings per
share have been computed by dividing income available to common shareholders by
the weighted average number of shares outstanding including the dilutive effect
of equity securities. All share and per share data have been adjusted
retroactively to reflect our recapitalization pursuant to the Securities
Exchange Agreement with Rx Staffing.





Three Months Ended December
    31,2008
                
                
                2007Net
      income (loss)
                
                $
                ( 713,197
                )
                
                $
                363,340Beneficial
      conversion feature related to issuanceof
      Series B convertible preferred stock
                
                
                -
                
                
                
                (1,390,853
                )Net
      income (loss) applicable to common stockholders
                
                
                (713,197
                )
                
                
                (1,027,513
                )Weighted
      average common shares(denominator
      for basic income per share)
                
                
                24,805,000
                
                
                
                24,505,000Effect
      of diluted securities:
                
                
                -
                
                
                
                -Weighted
      average common shares(denominator
      for diluted income per share)
                
                
                24,805,000
                
                
                
                24,505,000Basic
      net income (loss) per share
                
                $
                (0.03
                )
                
                $
                (0.04
                )Diluted
      net income (loss) per share
                
                $
                (0.03
                )
                
                $
                (0.04
                )










12







Six Months Ended December
    31,2008
                
                
                2007Net
      income (loss)
                
                $
                ( 381,827
                )
                
                $
                1,235,177Beneficial
      conversion feature related to issuanceof
      Series A convertible preferred stock
                
                
                -
                
                
                
                (2,484,226
                )Beneficial
      conversion feature related to issuanceof
      Series B convertible preferred stock
                
                
                -
                
                
                
                (1,390,853
                )Net
      income (loss) applicable to common stockholders
                
                
                (381,827
                )
                
                
                (2,639,902
                )Weighted
      average common shares(denominator
      for basic income per share)
                
                
                24,805,000
                
                
                
                24,178,913Effect
      of diluted securities:
                
                
                -
                
                
                
                -Weighted
      average common shares(denominator
      for diluted income per share)
                
                
                24,805,000
                
                
                
                24,178,913Basic
      net income (loss) per share
                
                $
                (0.02
                )
                
                $
                (0.11
                )Diluted
      net income (loss) per share
                
                $
                (0.02
                )
                
                $
                (0.11
                )








NOTE
17 – LIQUIDATED DAMAGE FOR INEFFECTIVE REGISTRATION STATEMENT





On August
9, 2007, we entered into a Registration Rights Agreement with the Investors (the
“Investor RRA”). Under the Investor RRA, we were required to prepare and file a
registration statement for the sale of the Common Stock issuable to the
Investors under the Series A and Series B Preferred Stock and the Warrants and
to use our best efforts to cause, and to maintain, the effectiveness of the
registration statement. We filed the initial registration statemen to fulfill
this obligation on October 9, 2007 and our Pre-Effective Amendment Number 7,
which was filed on December 16, 2008, was declared effective on December January
7, 2009.  We are subject to certain monetary obligations if the
registration statement is not declared effective by the SEC by March 31, 2008.
The obligations are payments in an amount equal to 2% of the aggregate amount
invested by such Investor (based upon the number of Registrable Securities then
owned by such Investor) for each 30 day period or any portion thereof following
the date by which such Registration Statement should have been effective, up to
a maximum amount of 10%. Under the Investor RRA, the shareholders of JPAK were
granted piggyback registration rights for 15,805,000 shares of our common
stock.











13





The
Investor RAA also contains provisions for the inability to register all of the
shares underlying all of the Series A and Series B Preferred Stock and Warrants
due to the SEC’s application of Rule 415.  Pursuant to those
provisions, if the SEC issues us a 415 comment, then we must first try to
register the common stock underlying the preferred stock (on a pro rata basis
among the holders of the Preferred Stock) and then register all of the common
underlying the Warrants (on a pro rata basis among the holders of the Warrants).
Pursuant to such a comment, our effective registration statement registered for
resale 687,106 shares of common stock underlying the Series A Preferred Stock,
as required by the terms of the Investor RRA.  Subsequent registration
statements required to be filed to register the rest of the common stock
underlying the preferred stock and warrants issued in the financing will be
filed on the later of (i) 60 days following the sale of substantially all of the
shares of common stock included in this Registration Statement or any subsequent
Registration Statement and (ii) 6 months following the effective date of this
Registration Statement or any subsequent Registration Statement, as applicable,
or such earlier or later date as permitted or required by the
Commission.  Each such subsequent registration statement must be
declared effective by the earlier of (A) the 90th day following the filing date
of such Registration Statement (or in the event such Registration Statement is
reviewed by the Commission, the one hundred twentieth (120th) day following such
filing date) or (B) 5 business days after SEC has no more comments. However, we
do not have any monetary obligations for any securities that were not permitted
to be included in a registration statement because of the SEC’s application of
Rule 415 until such time as such securities are required to be filed pursuant to
the Investor RRA.  In such case, the liquidated damages shall be
calculated to only apply to the percentage of securities which are permitted by
the Commission to be included in the Registration Statement.






Since we
were only able to register 687,106 common shares and the total common shares
underlying the Series A convertible preferred stock is 11,217,128, we are only
required to pay 6.13% (687,106/11,217,128) of the 2 percent ($110,000) due per
month under the terms of the RAA. Therefore, our monthly liquated damages will
be roughly $6,738.07. Pursuant to discussions with SEC staff covering
interpretations of Rule 415, we based the number of shares eligible for
registration on the number of shares currently outstanding (24,505,000) and the
number of common shares currently held by non-affilates (1,500,000 issued by RX
Staffing prior to the reverse merger and the 561,322 shares issued the American
Capital Markets, Ltd. as part of the merger).  Our monetary
obligations terminated as of the date our registration statement was declared
effective - January 7, 2009.





NOTE
18 – SUBSEQUENT EVENTS





None.















14






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




We
did not conduct any operations during periods up through the date of the share
exchange (the “Share Exchange”) which was completed in August 2007 pursuant to
which we acquired all of the outstanding shares of capital stock of Jpak Group
Co., Ltd., an exempted company organized under the laws of the Cayman Islands
(“Jpak”). The Share Exchange has been accounted for as a reverse  merge
accounting for business combinations in accordance with generally accepted
accounting principles in the United States of America, or “U.S. GAAP.” Reported
results of operations of the combined group reflect Jpak's operations.  As
a result, we have included elsewhere in theis Quarterly Report on Form 10-Q the
consolidated financial statements of Jpak, our subsidiary which indirectly owns
Qingdao Renmin Printing Co., Ltd. our operating subsidiary (“Qingdao Renmin”).
Jpak owns 100% equity interest in Qingdao Renmin through its wholly owned
subsidiary Grand International Industrial Limited, a company organized under the
laws of Hong Kong (“Grand International”).


The
following discussion and analysis of our financial condition and result of
operations contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those described in the "Risk
Factors" section of the other reports we file with the Securities and Exchange
Commission. Actual results may differ materially from those contained in any
forward-looking statements.




The
following discussion and analysis of our financial condition and result of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q.




Overview




We are
engaged primarily in the development, manufacture, and distribution of aseptic
liquid food and beverage cartons for milk, fruit juices, soy milk, yogurt
drinks, iced tea, wine, sauces and other liquid foods and beverages in China.
Since 2004, we have focused on research and development and we believe we are
the largest and leading domestic supplier of aseptic liquid food and beverage
cartons in China. Our business is primarily in China, but we have recently
entered into contracts to manufacture products to export to several other
countries.





Company
History





Qingdao
Renmin commenced operations in China in 1958 as a state-owned, traditional
printing and packaging company. Management completed the buyout of 88.23% of the
state-owned equity interest in 2004, and in the same year started the
development of aseptic liquid food and beverage cartons which was launched in
the China market in 2005.





On June,
22, 2006, Jpak was incorporated in the Cayman Islands as Winner Dragon Limited.
Winner Dragon Limited and was renamed Jpak Group Co., Ltd. on September 18,
2006. Additionally, during September 2006, Jpak completed the acquisition of
88.23% of the equity interest in Qingdao Renmin through Grand International, the
100% owned subsidiary of Jpak. Currently, substantially, all of our operations
are conducted in China through Qingdao Renmin.




In July
2007, Grand International completed the acquisition of the remaining 11.77% of
the state-owned equity interest and now owns 100% of the equity interest of
Qingdao Renmin.








15






Competitive
environment





The
market for packaging products is competitive. Our operations may be affected by
technological advances of competitors, industry consolidation, competitive
combination products and new information of marketed products or post-marketing
surveillance.  In addition, the recent milk scandal has brought
significant downward pressure on the industry.





Due to
China’s new anti-monopoly laws, some of our larger competitors decreased the
amount of bundled products they offer.  Although this may cause such
competitors to lower their price points, we believe it will allow us to be more
competitive with them.  Since the sale of bundled products still
maintains a large market share, we will continue to try and compete in the
offering of bundled materials and equipment.





Milk
scandal and its effect on Jpak




In
September 2008, the Chinese health ministry announced that several babies died
and thousands were sickened by contaminated milk formula powder.  The
authorities have confirmed that the tainted powder was laced with melamine, an
industrial chemical sometimes used to make plastics and fertiliser. Adding the
chemical to the milk makes the formula test at higher concentrations of
protein.






The
tainted milk powder was traced to the Sanlu Group, one of China's biggest dairy
producers, which operates as a joint venture with a New Zealand-based dairy
conglomerate, Fonterra.  Further investigation revealed that milk
formula powders produced by dozens of other dairy producers were also
contaminated. As a result of these issues, the Chinese government has begun
strengthening its supervision on the milk and beverage industries. As a result,
some smaller plants have stopped their production and other larger companies
within the industry are still working to recovery from the damage caused by the
scandal.




In recent
years and prior to the milk scandal, we  began focusing more efforts
in the dairy packaged segment as it typically has larger margins than the fruit
juice market. Due to the scandal, our recently developed relationship with Sanlu
has been terminated and all orders from them have been cancelled. Additionally,
orders from Taizinai and Yinying, two of our other customers in the dairy
segment, have also fallen.





Management
continues to monitor both the short and long-term impact that the milk scandal
will have on our business and operations.  Although we are currently
taking every action necessary to attempt to minimize the impact, since medium
and small size companies constitute most of our customers, our short term
revenue has been adversely impacted.  Despite these short-term
problems, management’s current effort to realign our marketing effort in the
post-scandal market place is beginning to show positive results and we expect
our revenues to increase in the near future.





As a
result of recent downturn in the worldwide financial and credit markets, some of
our key customers are experiencing  a challenging business environment
in conjunction with mounting financial pressure.  As a result,
management has recently tightened our credit control by installing ceilings on
our customers’ credit limits and more closely monitoring the financial situation
of our customers.





Although
many companies are facing challenges from the worldwide economic downturn, our
sales department has developed seven new clients in the domestic and overseas
market that amounted for 6% of the total sales in the three months ended
December 31, 2008.  In addition, we are negotiating with a leading
Chinese milk producer and if those negotiations are successful, our orders may
increase significantly.




Strategy





Our
growth strategy consists of consolidating our market leader position among
domestic liquid food and beverage aseptic carton suppliers and to pursue
expansion in the China market as well as selective Asian and Middle Eastern
markets. We intend to achieve our goal by pursuing the following
strategies:





●
              Increasing
      output to further penetrate the China market;●
              Offering
      bundled packaging materials and liquid filling machines;●
              Increasing
      sales to selective Asian and other markets;●
              Continuing
      and increasing the recent orders from Russia and other Eastern European
      markets;●
              Establishing
      brand names and brand awareness; and●
              Enhance
      the Company’s competitive advantages through
  R&D.








16







Research
and Development





In
October 2006, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co.,
Ltd., (“Qingdao Delikang”), a joint venture with Xi’an Heiniu Machinery, Co.
Qingdao Renmin is the 51% owner of Qingdao Delikang.  The main
business of this joint venture is to research and develop filling
machines.  We are progressing with related technology and techniques
and the filling machines are still in the development period. Management is
formalizing its strategies for the filling machines, but hopes for a market
launch sometime
in the first quarter of fiscal 2010. Now the filling machines can run at
12,000 packages output per hour during our tests and stability of all parts of
the machines is being observed for further amendment if any.





In
addition, we successfully developed packaging which can be used in the filling
machines created by SIG.  Management believes this new packaging will
be able to increase our revenue significantly with a relative higher gross
margin. Currently, the new products are being tested by ourselves and among our
customers.  Provided that the product tests are successful, the sales
of SIG packaging are expected to generate a significant amount of
revenue.





Manufacturing,
Sales and marketing





We
support commercialized products with manufacturing, sales and marketing efforts.
We are also moving forward with additional investments to enhance our
infrastructure and business, including capital expenditures for the new
production machinery. We have increased the annual capacity from 2 billion packs
last year to approximate 3.5 billion packs currently.





Management
continually reviews the business, including manufacturing operations, to
identify actions that will enhance long-term competitiveness. By continuously
streamlining the management of the production processes and improving production
efficiency, we decreased the scrap percentage and lowered our
costs.





We
expanded our market by increasing the number of transactions with existing key
clients and new clients; during fiscal 2008, we gained a number of additional
clients.  We recently began receiving orders from customers in Russia
and Eastern Europe, who currently only account for a small amount of our total
sales, but we intend to expand the amount of customers in these regions.
Management also believes we are well positioned to attain new strategic clients
in the coming year with our new filling machines and SIG packaging.







17




Results
of Operations




The
following table shows the results of operations of our business.






Comparison of the
three months ended December
31, 2008 and 2007




Three
      Months Ended December 31
                                      
                                      2008
                                      
                                      
                                      2007Sales
                                      
                                      $
                                      6,108,787
                                      
                                      
                                      $
                                      6,114,644Cost
      of sales
                                      
                                      $
                                      5,206,666
                                      
                                      
                                      $
                                      4,319,117Total
      expenses
                                      
                                      $
                                      1,517,427
                                      
                                      
                                      $
                                      1,572,252Other
      income (expense)
                                      
                                      $
                                      (97,958
                                      )
                                      
                                      $
                                      142,045Income
      taxes
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Net
      income (loss)
                                      
                                      $
                                      (713,197
                                      )
                                      
                                      $
                                      363,340Foreign
      currency translation adjustment
                                      
                                      $
                                      (375
                                      )
                                      
                                      $
                                      468,008Comprehensive
      income/Loss
                                      
                                      $
                                      (713,572
                                      )
                                      
                                      $
                                      (559,505
                                      )





Sales. Total sales were
approximately US$6.1 million for the three months ended December 31, 2008 as
compared to approximately US$6.1 million for the same period of 2007, with no
material fluctuations. Revenue did not grow significantly because of the down
turn of the milk product industry caused by the continuous impact of the recent
milk scandal and global financial crisis in the second half of
2008.





Cost of Sales. Cost of sales
for the three months ended December 31, 2008, was approximately US$5.2 million,
or 85.2% of sales compared to US$4.3 million, or 70.6% of sales, for the same
period of 2007. Our cost of sales are primarily composed of the costs of direct
raw materials (mainly paper materials, polyethylene materials, aluminum
materials, printing materials), labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. Under the difficult
market circumstances, we began to cut down our sales price to enhance our
competitive edge and attract new customers, which led to a decrease of gross
margin by as much as 14.6%.




Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$1.5 million for the three months ended December 31, 200,8 as compared to
approximately US$1.6 million for the same period of 2007, a slight decrease of
approximately US$0.1 million, or 3.5%. The decrease was mainly due to the
expense for warrant issuances that occurred in the same period of
2007.





Net income
(loss).  Net loss was approximately US$0.7 million for three
months ended December 31, 2008, as compared to net income of approximately
US$0.3 million for the same period of 2007, a decrease of approximately US$1
million. The decrease in net income was primarily due to our sales price
reduction which directly caused the decrease of gross margin.





Foreign currency translation
adjustment.Our reporting currency is the US dollar. Our local
currency, Renminbi (RMB), is our functional currency. Results of operations and
cash flow are translated at average exchange rates during the period, and assets
and liabilities are translated at the unified exchange rate as quoted by the
People’s Bank of China at the end of the period. Translation adjustments
resulting from this process are included in accumulated other comprehensive
income in the statement of shareholders’ equity. Transaction gains and losses
that arise from exchange rate fluctuations on transactions denominated in a
currency other than the functional currency are included in the results of
operations as incurred.




Currency
translation adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to loss of US$375 as of December 31, 2008 as compared to gain of
US$0.5 million as of December 31, 2007. The balance sheet amounts with the
exception of equity at December 31, 2008, were translated at RMB6.81663 to
US$1.00 as compared to RMB7.29395 at December 31, 2007. The equity accounts were
stated at their historical rate. The average translation rates applied to income
statement accounts for the three months ended December 31, 2008 and 2007 were
RMB6.82786 and RMB7.44345, respectively.








18





Comprehensive loss.The
comprehensive income, which adds the currency adjustment to net income, was a
loss of approximately US$0.7 million for the three months ended December 31,
2008 as compared to a loss of US$0.6 million for the three months ended December
31, 2007, an increase of $0.1 million. The increase of loss was mainly due to
the reduction of our operating profit in this period.







Comparison of the
six months ended December
31, 2008 and 2007




Six
      Months Ended December 31
                                        
                                        2008
                                        
                                        
                                        2007Sales
                                        
                                        $
                                        15,539,117
                                        
                                        
                                        $
                                        15,418,892Cost
      of sales
                                        
                                        $
                                        12,202,568
                                        
                                        
                                        $
                                        11,306,299Total
      expenses
                                        
                                        $
                                        3,625,088
                                        
                                        
                                        $
                                        2,942,598Other
      income (expense)
                                        
                                        $
                                        (93,847
                                        )
                                        
                                        $
                                        63,202Income
      taxes
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -Net
      income (loss)
                                        
                                        $
                                        (381,825
                                        )
                                        
                                        $
                                        1,235,177Foreign
      currency translation adjustment
                                        
                                        $
                                        (39,283
                                        )
                                        
                                        $
                                        824,150Comprehensive
      income/Loss
                                        
                                        $
                                        (421,110
                                        )
                                        
                                        $
                                        (1,815,752
                                        )





Sales. Total sales were
approximately US$15.5 million for the six months ended December 31, 2008 as
compared to approximately US$15.4 million for the same period of 2007, increased
by approximately US$0.1 million. Revenue did not grow significantly because of
the down turn of the milk product industry caused by the continuous impact of
the recent milk scandal and global financial crisis in the second half of 2008,
which had a greatly impact on sales volume. To deal with the difficulty, we
reduced prices to promote sales, which also had negative effect to
revenue.





Cost of Sales. Cost of sales
for the six months ended December 31, 2008, was approximately US$12.2 million,
or 78.5% of sales, as compared to US$11.3 million, or 73.3% of sales, for the
same period of 2007. Our cost of sales are primarily composed of the costs of
direct raw materials (mainly paper materials, polyethylene materials, aluminum
materials, printing materials), labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. Under the difficult
market circumstances, we began to cut down our sales price to enhance our
competitive edge and attract new customers, which led to a decrease of gross
margin by as much as 5.2%.




Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$3.6 million for the six months ended December 31, 2008, as compared to
approximately US$2.9 million for the same period of 2007, an increase of
approximately US$0.7 million, or 23.2%. The increase was mainly due to an
increase in research and development expenses and the bad debt provision for the
six months ended December 31, 2008. We strengthened our research and development
activity in 2008, which caused the total R&D expense to reach almost US$1
million, while in the same period of 2007, R&D expense was US$0.5 million.
For the six months ended December 31, 2008, we increased the bad debt provision
for the accounts receivable to US$0.2 million, as compared to US$0.05 million
for bad debt provision in the same period of 2007.





Net income
(loss).  Net loss was approximately US$0.4 million for six
months ended December 31, 2008, as compared to net income of approximately
US$1.2 million for the same period of 2007, a decrease of approximately US$1.6
million. The decrease in net income was primarily due to the sales price
reduction which directly caused the decrease of gross profit
margin.  In addition, the increase of selling, general and
administrative expense also reduced net income.








19





Foreign currency translation
adjustment.Our reporting currency is the US dollar. Our local
currency, Renminbi (RMB), is our functional currency. Results of operations and
cash flow are translated at average exchange rates during the period, and assets
and liabilities are translated at the unified exchange rate as quoted by the
People’s Bank of China at the end of the period. Translation adjustments
resulting from this process are included in accumulated other comprehensive
income in the statement of shareholders’ equity. Transaction gains and losses
that arise from exchange rate fluctuations on transactions denominated in a
currency other than the functional currency are included in the results of
operations as incurred.




Currency
translation adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to loss of US$0.04 as of December 31, 2008 as compared to gain of
US$0.8 million as of December 31, 2007. The balance sheet amounts with the
exception of equity at December 31, 2008 were translated at RMB6.81663 to
US$1.00 as compared to RMB7.29395 at December 31, 2007. The equity accounts were
stated at their historical rate. The average translation rates applied to income
statement accounts for the six months ended December 31, 2008 and 2007 were
RMB6.8292 and RMB7.50626, respectively.





Comprehensive loss.The
comprehensive loss, which adds the currency adjustment to net income/loss, was
approximately US$0.4 million for the six months ended December 31, 2008 as
compared to a loss of US$1.8 million for the six months ended December 31, 2007,
a decrease of $1.4 million. The decrease of loss was because we did not incur a
loss due to the beneficial conversion feature related to the issuance of
convertible preferred stock as in the same period of 2007.





Liquidity
and Capital Resources





As of
December 31, 2008, we had working capital totaling approximately US$12.2
million, including cash and cash equivalents of US$6.0 million.





Net cash
generated in operating activities was US$172,350 for the six months ended
December 31, 2008. This net cash generated was primarily due to the decrease of
accounts receivable and inventory balance during this period.  Net
cash generated in operating activities was US$553,128 for the six months ended
December 31, 2007. This net cash generated was primarily due to the reduction in
accounts receivable, inventory and prepaid expenses during the same period of
2007.





Net cash
used in investing activities for the six months ended December 31, 2008 totaled
US$0.7 million and related primarily to the purchase of property and equipment.
Net cash used in investing activities for the six months ended December 31, 2007
totaled US$1.5 million and related primarily to the purchase of property and
equipment and the acquisition of the outstanding equity of Qindao Renmin which
was not owned by us.




Net cash
used in financing activities for the six months ended December 31, 2008 was
US$0.5 million and related primarily to the decrease of trade notes payable and
repayment of bank loans. Net cash generated in financing activities for the six
months ended December 31, 2007 was US$2.8 million and related primarily to
exercise of Warrant J during the same period of 2007.




We
entered into several loan agreements with our primary lenders, Industrial and
Commercial Bank of China and Qingdao City Commercial Bank, under which we have
term loans. As of December 31, 2008, we had an aggregate principal amount of
US$3.0 million outstanding under the loan agreements, which amounts mature from
January 2009 to May 2009 and bear interest at a rate of 7.47% per annum. The
loan agreements contain customary affirmative and negative covenants. As of
December 31, 2008, we were in material compliance with the terms of our loan
agreements.








20







Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.






Income
Taxes




We are
not subject to any income taxes in the United States or the Cayman Islands.
Under the Interim Regulations of the People's Republic of China on Enterprises
Income Tax effective from January 1, 1994 to December 31, 2007 and the Income
Tax Law of the People's Republic of China for Foreign Investment Enterprises and
Foreign Enterprises effective from July 1, 1991 to December 31, 2007, a company
is generally subject to an income tax at an effective rate of 33% (30% state
income taxes plus 3% local income taxes) on income reported in the statutory
financial statements after appropriate tax adjustments with the following “tax
holidays”: If the enterprise is a manufacturing related joint venture with a
foreign enterprise or a wholly owned subsidiary of a foreign enterprise, with an
operation of 10 years or more, it enjoys a two-year income tax exemption from
the year that it is profitable and a 50% income tax reduction for the following
three years ( the “2-3 tax holiday”).




Our
subsidiary, Qingdao Renmin has been a domestic limited liability company since
May 24, 2001 and has been subject to an income tax at an effective rate of 33%.
However, since September 7, 2006, as a result of our acquisition, Qingdao Renmin
is now a foreign investment enterprise and started to enjoy the 2-3 tax
holidays.




On March
16, 2007, the PRC promulgated a new income tax law for enterprises that became
effective on January 1, 2008. Under the new income tax law, a company
incorporated in the PRC will be generally subject to an income tax at an
effective rate of 25%. In accordance with the new tax law, Qingdao Renmin may
continue to enjoy the 2-3 tax holidays that it currently enjoys as a foreign
investment enterprise subject to the regulations to be promulgated by the State
Council of the PRC.




Critical
Accounting Policies and Estimates





Please
refer to “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” in our 10-K/A for the year ending June 30, 2008 for
disclosures regarding Jpak’s critical accounting policies and
estimates.  The interim financial statements follow the same
accounting policies and methods of computations as those for the year ended June
30, 2008.





Item
3. Quantitative and Qualitative Disclosure About Market Risk




Not
applicable.






21




Item
4. Controls and Procedures





I.   Disclosure
Controls and Procedures.


As of the
end of the period covered by this report, our management conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and acting chief financial officer of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934). Based on this evaluation, the
officers concluded that our disclosure controls and procedures are ineffective
in ensuring that information required to be disclosed by our company in reports
that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Commission rules and forms.





II.  Changes
in Internal Control over Financial Reporting


On
May 4, 2008, management concluded that our internal control over financial
reporting was not effective due to the existence of the material weaknesses
discussed below. A material weakness is a control deficiency, or a combination
of control deficiencies, that results in more than a remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.





On May 4,
2008, our Board of Directors concluded that we are required to restate its
previously issued audited financial statements for the year ended June 30, 2007
and the periods ended September 30, 2007, and December 31,
2007.  Subsequent to the issuance of these financial statements,
management identified various errors in connection with its 2007 financial
statements and determined that a restatement was necessary in respect of the
following:




1.
            Revision of reverse acquisition
      accounting.On August 9, 2007, we completed a reverse
      acquisition of Jpak Group Co., Ltd. (“Jpak Ltd”), a Cayman Islands
      Company.   As a result, Jpak Ltd became our wholly owned
      subsidiary.  Previously, in September 2006, Jpak Ltd acquired an
      88.23% equity interest in Qingdao Renmin, our primary operating
      subsidiary located in the city of Qingdao in Shandong Province in the
      Peoples Republic of China, through Grand International, a Hong Kong
      company, which is the wholly owned subsidiary of Jpak Ltd.  In July
      2007, Grand International acquired the remaining 11.77% state-owned equity
      interest in Qingdao Renmin and now owns 100% equity interest in Qingdao
      Renmin.  The acquisition of Qingdao Renmin was initially accounted
      for using the purchase method. Subsequent to the issuance of the June 30,
      2007, financial statements, management revisited the acquisition and
      deemed the transaction to be a reverse acquisition for accounting
      purposes. Qingdao Renmin was considered to be the accounting acquirer as
      both Grand International and Jpak Ltd were holding companies with no
      significant operations and Qingdao Renmin continues as the primary
      operating entity even after the exchange, although Jpak Ltd is the legal
      parent company.  As such, Qingdao Renmin (and its historical
      financial statements) is the continuing entity for financial reporting
      purposes and the share exchange will be treated as a recapitalization of
      Jpak Ltd.  Thus, Jpak Ltd is the continuing entity for financial
      reporting purposes.  Accordingly, we will prepare the financial
      statements as if Jpak Ltd had always been the reporting company and
      then on the share exchange date, changed its name and reorganized its
      capital stock.  Accordingly, we shall revise our financial statements
      to reflect reverse merger accounting by eliminating the goodwill and
      adjusting the additional paid-in
capital.





2.
            Revision of capitalized costs
      related to financing transaction. In connection with the
      US$5,500,000 financing that we completed in August 2007, we granted
      warrants, with an exercise price of US$0.50 per share, to purchase up to
      990,000 shares of common stock to the placement agent of the Financing.
      The expiration date of this warrant is May 17, 2011. Furthermore, as a
      result of the investors’ exercise of their Series J warrants in December
      2007, we granted the placement agent an additional warrant to purchase up
      to 750,000 shares of common stock with an exercise price of US$0.60 per
      share; the expiration date of this warrant is December 28, 2011. These
      placement agent warrants have the same terms as the Series A and Series B
      Warrants we issued to the investors.  The cost related to the two
      placement agent warrants were originally capitalized and amortized over
      the term of the warrants.    However, after further
       discussion  and research, we  believe  the 
      warrants  issued to  the placement  agents  are
      directly attributable to raising capital; if we had not issued the
      warrants to the placement agent, we would have paid the same amount of
      cash as the fair value of the warrants.  Therefore, we will allocate
      the proceeds received in a financing transaction to the preferred shares
      and warrants on a relative fair value basis to the additional paid-in
      capital of preferred shares and common shares,
    respectively.









22






On
September 23, 2008, our Board of Directors concluded that we are required to
restate its previously issued audited financial statements for the period ended
December 31, 2007 and March 31, 2008.  Subsequent to the issuance of
these financial statements, management identified various errors in connection
with them and determined that a restatement was necessary in respect of the
following:





1.
            In
      connection with the exercise of the Series J Warrants (the “Series J
      Exercise”), we extended the term of our Series A Warrants and Series B
      Warrants from four years to six years, so that such warrants shall now
      expire on August 9, 2013. The extension of the term of the Series A and
      Series B Warrants (from four to six years) was a condition of the exercise
      of the Series J Warrants and the subsequent issuance of the Series B
      Preferred stock (“the financing”).  Originally we considered the
      incremental costs as part of the issuance costs for the Series B Preferred
      Shares.  However, after reviewing the SEC’s comments, we now
      believe that these costs are indirect costs associated with the offering
      of our securities and should be changed to an expense.  The
      incremental value of Series A warrants, Series B Warrants and investors
      warrants are US$540,430.





2.
            We
      incurred a commission of $462,519.22 pursuant to the Series J
      Exercise.  However, this commission was not paid until January 16,
      2008.  Originally, in the financial statements as of March 31, 2008,
      we did not account for this commission as a deduction to additional
      paid-in capital; we included this commission as part of the expenses in
      the third quarter.  To correct the error, we accounted for the
      commission as a deduction to additional paid-in capital in the second
      quarter and revise the amount of expenses in the third
      quarter.








These
control deficiencies resulted in a misstatement to substantially all of our
financial statements and disclosures covering the year ended June 30, 2007 and
onward, which resulted in a material misstatement to such annual and interim
financial statements (September 30, 2007, December 30, 2007 and March 31, 2008)
that was not prevented or detected. Because of the aforementioned control
deficiencies, which together constitute a material weakness, our management
concluded that our internal control over financial reporting was
ineffective.




Remediation
Plan for Material Weaknesses





The
material weaknesses described above in “Evaluation of Disclosure Controls and
Procedures” comprise control deficiencies that we discovered in the third
quarter of fiscal year 2008 as we were preparing responses to SEC comments
regarding the registration statement on Form S-1 that we filed on February 29,
2008 and in the first quarter of our fiscal 2009 year as we were preparing
additional responses to SEC comments regarding the registration statement on
Form S-1 that we filed on August 5, 2008. Pursuant to this discovery, we
formulated a remediation plan and initiated remedial action to address those
material weaknesses. The elements of the remediation plan are as
follows:




●
            Appoint a new Acting Chief
      Financial Officer.We appointed a new Acting CFO with extensive US
      GAAP and regulatory experience.  Our new Acting CFO, Frank Su,
      maintains a deep understanding of GAAP and financial statements and is
      highly skilled in analyzing and evaluating various financial issues and in
      preparing financial statements.●
            Restate Financial Statement:We restated our financial statements for the year ending June 30,
      2007 and our interim financial statements for the quarter ending September
      30, 2007, December 31, 2007 and March 31, 2008; furthermore, we filed the
      necessary amendments so that the correct accounting treatment is reflected
      in those statements and flows through them accordingly.●
            Seeking and Recruiting
      Additional Accounting Professionals. We are seeking to
      recruit experienced professionals to augment and upgrade our financial
      staff to address issues of timeliness and completeness in financial
      reporting when we are preparing filings for the Securities and Exchange
      Commission.




Although
we believe that these corrective steps will remediate the material weaknesses
discussed above when all of the additional financial staff positions are filled
and our filings do not receive any additional comments from the SEC, we cannot
assure you that this will be sufficient. We may be required to expend additional
resources to identify, assess and correct any additional weaknesses in our
internal control. We cannot make assurances that it will not identify additional
material weaknesses in its internal control over financial reporting in the
future.




Except as
described above, there have been no changes in our internal controls over
financial reporting that occurred during our last fiscal quarter to which this
Quarterly Report on Form 10-Q relates that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.






23





ITEM
4T. CONTROLS AND PROCEDURES.





Management's
Quarterly Report on Internal Control over Financial Reporting.





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting.  Our management conducted an evaluation of the
effectiveness  of our internal  control
over  financial  reporting  based on the framework
in Internal  Control
-  Integrated  Framework  ("ICFT")  issued
by the Committee of Sponsoring  Organizations of the Treadway
Commission.  Based on our evaluation, management has concluded, as of
December 31, 2008, we did not maintain effective controls over the financial
reporting process.





Management’s
assessment of the effectiveness of the registrant’s internal control over
financial reporting is as of the period ended December 31, 2008. Based on the
evaluation, management concluded that there was a material weakness in our
internal control over financial reporting.  Subsequent to the issuance
of our June 30, 2007 financial statements, management identified various errors
in connection with our 2007 financial statements and determined that a
restatement was necessary in respect of the following: revision of reverse
acquisition accounting and revision of capitalized costs relatedto financing
transactions.  As a result, we filed restated financial statements for
the year ending June 30, 2007 and for the quarters ending September 30, 2007 and
December 31, 2007.  We then received additional SEC comments and
management determined that another restatement of our December 31, 2007
financial statements, and a restatement of our March 31, 2008 financial
statements was necessary in respect of the following: accounting for the
extended term of the Series A and Series B Warrants issued in the private
placement we closed in August 2007 and the commission paid pursuant to the
exercise of the Series J Warrants.





A  material  weakness  is  a  control  deficiency,  or  combination  of  control
deficiencies,  in
ICFR  such  that  there  is
a  reasonable  possibility  that a
material  misstatement of our annual or interim financial statements
will not be prevented or detected on a timely  basis
by  employees  in the normal  course of their
assigned functions.





To
remediate the error, we filed restated financials and amendments to ensure that
the disclosure in all of our filings is consistent and accurate.





This
quarterly report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management's  report was not subject to
attestation by our registered  public accounting firm pursuant to
temporary rules of the Securities and
Exchange  Commission  that permit us to
provide  only  management's report in this quarterly
report.

















24






PART
II - OTHER INFORMATION




Item
1. Legal Proceedings





Not
applicable.




Item
1A. Risk Factors





Not
applicable.





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





Not
applicable.




Item
3. Defaults Upon Senior Securities





Not
applicable.




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





We  filed
and mailed proxy statements to re-elect our Board of Directors for our Annual
Shareholder Meeting, which was held on December 10, 2008, on or about November
7, 2008.  All of our directors were reelected at the Annual
Shareholder Meeting as follows:
 
 Director
      Nominee
                  FOR
      (# and %)
                  WITHHELD
      (# and %)Yijun
      Wang
                  23,946,323
      (89.50%)
                  0Huatian
      Sha
                  23,946,323
      (89.50%)
                  0Qingjun
      Yang
                  23,946,323
      (89.50%)
                  0Ming
      Qi
                  23,946,323
      (89.50%)
                  0Stewart
      Shiang Lor
                  23,946,323
      (89.50%)
                  0


Item
5. Other Information





Not
applicable.










25





Item
6. Exhibits





Exhibit No.
                                              
                                              Description3.1
                                              
                                              Articles
      of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to
      our Annual Report on Form 10-K filed on September 29,
      2008)3.2
                                              
                                              Bylaws
      (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form
      10-K filed on September 29, 2008)15.1
                                              
                                              Letter
      regarding unaudited interim financial
    information31.1
                                              
                                              Certification
      of the Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
                                              
                                              Certification
      of the Acting Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
                                              
                                              Certification
      of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                                              
                                              Certification
      of the Acting Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
      as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.













26










SIGNATURES






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




JPAK
      GROUP, INC.By:
            /s/ 
      Yijun WangYijun
      Wang
              Chief
      Executive Officer, Chief Accounting Officer,President &
      DirectorBy:
            /s/ 
      Dongliang SuDongliang
      Su
              Acting
      Chief Financial Officer




Date: 
February 17, 2008

















27