UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM 10-Q/A





þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              For
      the quarterly period ended December
  31, 2007





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
o




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 o Accelerated Filer
o  Non-accelerated
filer 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 August
4, 2008 there were 24,805,000 shares of the issuer's common stock, par value
$.0001 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 and 5,000,000 shares of our Series B Preferred Stock, par value $.001 per
share outstanding, which are convertible into an aggregate of 8,333,333 shares
of our common stock.







2







JPAK
GROUP, INC.





INDEX





Page
              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
            
            Financial
      StatementsConsolidated
      Balance SheetsDecember
      31, 2007 (unaudited) and June 30, 2007
            
            5Consolidated
      Statements of Operations (unaudited)Three
      months ended December 31, 2007 and 2006
            
            6Consolidated
      Statements of Cash Flows (unaudited)Three
      months ended December 30, 2007 and 2006
            
            7Notes
      to Condensed Consolidated Financial Statements
            
            8Item
      2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
            
            23Item
      3.
            
            Quantitative
      and Qualitative Disclosure About Market Risks
            
            29Item
      4.
            
            Controls
      and Procedures
            
            29PART
      II - OTHER INFORMATIONItem
      1.
            
            Legal
      Proceedings
            
            31Item
      1.A
            
            Risk
      Factors
            
            31Item
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            41Item
      3.
            
            Defaults
      Upon Senior Securities
            
            41Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            41Item
      5.
            
            Other
      Information
            
            41Item
      6.
            
            Exhibits





















EXPLANATORY NOTE: On May 3, 2008,
the Board of Directors of Jpak Group, Inc. (“we”, “us”, “our” or the "Company")
concluded that the Company is required to restate its previously issued audited
financial statements for the year ended June 30, 2007, and as a result, its
financial statements for the quarters ending September 31, 2007 and December 31,
2007. Subsequent to the issuance of the June 30, 2007 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: revision of reverse acquisition accounting and revision of
capitalized costs related to financing transactions.  As a result of
the Board’s decision and the aforementioned revisions to our financial
statements, our previously issued financial statements for the year ended June
30, 2007 (which were included in our Registration Statement on Form S-1), and
the periods ended September 30, 2007, and December 31, 2007, should no longer be
relied upon.  Accordingly, we filed restated financials for the
quarter ending December 31, 2007 in a 10-Q/A on May 27,
2008.  However, we are filing this amendment to respond to additional
comments we received from the SEC regarding our revised financial
statements.


3







PART
I. FINANCIAL INFORMATION




Item
1. Financial Statements




Report of
Independent Registered Public Accounting Firm








To the
Board of Directors


JPAK
Group, Inc.








We have reviewed the accompanying
consolidated balance sheet of JPAK Group, Inc. as of December 31, 2007, and the
related consolidated statements of operations and other comprehensive income for
the three-month and six-month periods ended December 31, 2007 and 2006 and cash
flows for the six-month periods then ended. 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 reviews, 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
11, 2008


(Except
for Note 15, as to which


the date
is May 13, 2008)































4


JPAK
GROUP, INC.




CONSOLIDATED
BALANCE SHEETS




(UNAUDITED)




ASSETS








December
    31,
            
            
            June
  30,2007
            
            
            2007(Restated)
            
            
            (Restated)CURRENT
      ASSETSCash and cash
      equivalents
            
            $
            7,029,604
            
            
            $
            4,938,200Account receivables, net of
      allowance $40,603 and $38,945, respectively
            
            
            6,976,926
            
            
            
            8,583,396Inventory
            
            
            2,849,813
            
            
            
            3,393,896Other receivables
            
            
            120,519
            
            
            
            -Prepaid expenses and other
      current assets
            
            
            72,645
            
            
            
            772,792Advance payments
            
            
            2,048,889
            
            
            
            -Deferred financing costs,
      net
            
            
            -
            
            
            
            405,072Total Current Assets
            
            
            19,098,396
            
            
            
            18,093,356PROPERTY
      AND EQUIPMENT, NET
            
            
            8,576,582
            
            
            
            7,935,920Total Assets
            
            $
            27,674,978
            
            
            $
            26,029,276LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
            
            $
            1,937,200
            
            
            $
            4,634,457Trade notes
    payable
            
            
            -
            
            
            
            526,000Convertible notes
            
            
            -
            
            
            
            5,500,000Short-term bank
    loans
            
            
            4,113,000
            
            
            
            4,812,900Other payables
            
            
            -
            
            
            
            65,378Total Current Liabilities
            
            
            6,050,200
            
            
            
            15,538,735LONG-TERM
      DEBT
            
            
            1,730,339
            
            
            
            2,008,893MINORITY
      INTEREST
            
            
            98,753
            
            
            
            -STOCKHOLDERS’
      EQUITYSeries A convertible preferred
      stock, $0.0001 par value, 5,608,564shares authorized,
      issued and outstanding
            
            
            561
            
            
            
            -Common stock, $0.001 par value,
      300,000,000 shares authorized24,505,000 shares
      issued and outstanding
            
            
            24,505
            
            
            
            23,005Series B convertible preferred
      stock, $0.001 par value, 5,000,000shares authorized,
      issued and outstanding
            
            
            500
            
            
            
            -Allocation
      of Series A Preferred Shares
            
            
            3,529,388
            
            
            
            -Allocation
      of Series B Preferred Shares
            
            
            2,559,246
            
            
            
            -Warrants
            
            
            3,281,077
            
            
            
            -Placement
      Agent Warrants
            
            
            1,103,064
            
            
            
            -Incremental
      value of Original Placement Agent Warrants
            
            
            27,225
            
            
            
            -Additional paid-in
      capital
            
            
            10,477,418
            
            
            
            5,676,259Retained earnings
            
            
            (2,917,576
            )
            
            
            1,896,256Statutory
reserves
            
            
            348,009
            
            
            
            348,009Accumulated other comprehensive
      income
            
            
            1,362,269
            
            
            
            538,119Total Stockholders’
Equity
            
            
            19,795,686
            
            
            
            8,481,648Total Liabilities and Stockholders’
      Equity
            
            $
            27,674,978
            
            
            $
            26,029,276








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





5


JPAK
GROUP, INC.




CONSOLIDATED
STATEMENTS OF OPERATIONS




AND
COMPREHENSIVE INCOME




(UNAUDITED)








Three
      Months Ended
            
            
            Six
      Months EndedDecember
    31,
            
            
            December
    31,2007
            
            
            2006
            
            
            2007
            
            
            2006(Restated)
            
            
            (Restated)REVENUE
            
            $
            6,114,644
            
            
            $
            5,371,875
            
            
            $
            15,418,892
            
            
            $
            13,048,360COST
      OF SALES
            
            
            4,319,117
            
            
            
            4,246,343
            
            
            
            11,306,299
            
            
            
            10,130,300GROSS
      PROFIT
            
            
            1,795,527
            
            
            
            1,125,532
            
            
            
            4,112,593
            
            
            
            2,918,060EXPENSESSelling, general and
      administrative
            
            
            1,009,581
            
            
            
            1,315,884
            
            
            
            2,361,114
            
            
            
            2,429,019Depreciation
    expense
            
            
            22,241
            
            
            
            12,902
            
            
            
            41,054
            
            
            
            25,006Total Expenses
            
            
            1,031,822
            
            
            
            1,328,786
            
            
            
            2,402,168
            
            
            
            2,454,025INCOME
      (LOSS) FROM OPERATIONS
            
            
            763,705
            
            
            
            (203,254
            )
            
            
            1,710,425
            
            
            
            464,035OTHER
      INCOME (EXPENSES)Interest income
            
            
            8,113
            
            
            
            -
            
            
            
            32,295
            
            
            
            -Interest expense
            
            
            (104,566
            )
            
            
            (105,532
            )
            
            
            (217,755
            )
            
            
            (192,919
            )Other income (expense),
      net
            
            
            238,498
            
            
            
            133,016
            
            
            
            248,662
            
            
            
            126,254Total Other Income
    (Expenses)
            
            
            142,045
            
            
            
            27,484
            
            
            
            63,202
            
            
            
            (66,665
            )INCOME
      BEFORE PROVISIONFOR INCOME TAX
            
            
            905,750
            
            
            
            (175,770
            )
            
            
            1,773,627
            
            
            
            397,370PROVISION
      FOR INCOME TAX
            
            
            -
            
            
            
            169,950
            
            
            
            -
            
            
            
            259,925NET
      INCOME BEFORE MINORITY INTEREST
            
            
            905,750
            
            
            
            (345,720
            )
            
            
            1,773,627
            
            
            
            137,445MINORITY
      INTEREST
            
            
            (1,980
            )
            
            
            (40,691
            )
            
            
            (1,980
            )
            
            
            22,108NET
      INCOME
            
            
            907,730
            
            
            
            (305,029
            )
            
            
            1,775,607
            
            
            
            115,337Beneficial
      conversion feature related to issuance of
            
            
            -
            
            
            
            -
            
            
            
            (3,529,388
            )
            
            
            -Series
      A convertible preferred stockBeneficial
      conversion feature related to issuance of
            
            
            (2,559,246
            )
            
            
            -
            
            
            
            (2,559,246
            )
            
            
            -Series
      B convertible preferred stockNET
      INCOME / (LOSS) APPLICABLE TO
            
            
            (1,651,516
            )
            
            
            (305,029
            )
            
            
            (4,313,027
            )
            
            
            115,337COMMON
      STOCK HOLDERSOTHER
      COMPREHENSIVE INCOME/ (LOSS)Foreign currency translation
      adjustment
            
            
            468,008
            
            
            
            (27,828
            )
            
            
            824,150
            
            
            
            (38,053
            )COMPREHENSIVE
      INCOME / (LOSS)
            
            $
            (1,183,508
            )
            
            $
            ( 332,857
            )
            
            $
            (3,488,877
            )
            
            $
            77,284BASIC
      EARNINGS/(LOSS) PER SHARE
            
            $
            (0.07
            )
            
            $
            ( .01
            )
            
            $
            (0.18
            )
            
            $
            .00DILUTED
      EARNINGS/(LOSS) PER SHARE
            
            $
            (0.04
            )
            
            $
            ( .01
            )
            
            $
            (0.13
            )
            
            $
            .00WEIGHTED
      AVERAGESHARES OUTSTANDINGBASIC
            
            
            24,505,000
            
            
            
            23,005,000
            
            
            
            24,178,913
            
            
            
            23,005,000DILUTED
            
            
            46,374,102
            
            
            
            23,005,000
            
            
            
            33,856,385
            
            
            
            23,005,000





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





6


JPAK
GROUP, INC.




CONSOLIDATED
STATEMENTS OF CASH FLOWS




FOR
THE SIX MONTHS ENDED DECEMBER 31,




(UNAUDITED)





2007
            
            
            2006(Restated)
            
            
            (Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
            
            $
            1,775,607
            
            
            $
            115,337Adjustments
      to reconcile net income to net cashProvided
      (used) by operating activities:Minority interest
            
            
            (1,980
            )
            
            
            22,108Depreciation and
      amortization
            
            
            518,645
            
            
            
            346,145Gain on disposal of fixed
      assets
            
            
            -
            
            
            
            (1,108,582
            )Changes in assets and
      liabilities:Account
      receivables
            
            
            1,937,765
            
            
            
            3,909,791Inventory
            
            
            676,659
            
            
            
            (1,022,024
            )Restricted
      cash for trade notes repayments
            
            
            -
            
            
            
            132,540Other
      receivables
            
            
            (118,427
            )
            
            
            (264,705
            )Prepaid
      expenses and other current assets
            
            
            703,834
            
            
            
            (5,954
            )Advance
      payments
            
            
            (2,013,322
            )
            
            
            -Due
      from shareholders
            
            
            -
            
            
            
            (50,000
            )Accounts
      payable and accrued expenses
            
            
            (2,780,764
            )
            
            
            (1,248,145
            )Other
      payables
            
            
            (66,978
            )
            
            
            (2,398,220
            )Other
      current liabilities
            
            
            -
            
            
            
            237,984Total Adjustments
            
            
            (1,144,568
            )
            
            
            (1,449,062
            )Net Cash Provided (Used) By Operating
      Activities
            
            
            631,039
            
            
            
            (1,333,725
            )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
            
            
            (576,378
            )
            
            
            (121,407
            )Addition of construction in
      progress
            
            
            (155,702
            )
            
            
            -Acquisition of
      Qingdao
            
            
            -
            
            
            
            (5,268,500
            )Investing
      in Sub
            
            
            (864,000
            )
            
            
            -Cash acquired from the
      subsidiary
            
            
            99,019
            
            
            
            -Net Cash Used By Investing
      Activities
            
            
            (1,497,061
            )
            
            
            (5,389,907
            )CASH
      FLOWS FROM FINANCING ACTIVITIESTrade notes
    payable
            
            
            (538,880
            )
            
            
            102,967Additional capital
      contribution
            
            
            (452,462
            )
            
            
            5,406,695Exercise of J
      warrants
            
            
            5,000,000
            
            
            
            -Proceeds from short term bank
      loans
            
            
            -
            
            
            
            1,082,790Repayment of bank
      loans
            
            
            (1,246,935
            )
            
            
            -Net Cash Provided By Financing
      Activities
            
            
            2,761,723
            
            
            
            6,592,452EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
            
            
            195,703
            
            
            
            47,745NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            2,091,404
            
            
            
            (83,435
            )CASH
      AND CASH EQUIVALENTS – BEGINNING
            
            
            4,938,200
            
            
            
            1,289,995CASH
      AND CASH EQUIVALENTS – ENDING
            
            $
            7,029,604
            
            
            $
            1,206,560





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





7








JPAK
GROUP, INC.




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS






(UNAUDITED)








NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS





JPAK
Group, Inc. (Hereinafter JPAK) is a Cayman Islands based holding company
incorporated on June 22, 2006. In December 2006, the Company acquired a 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 an 88.23% interest in Qingdao Renmin Printing
Co., Ltd., (“Qingdao Renmin”) which was incorporated in May 2001 in the city of
Qingdao, the People’s Republic of China. In July 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
activities from the inception of Qingdao Renmin in August 2006. Qingdao Renmin’s
primary business is to print and produce packaging products for sale to the
beverage and other industries. In October, 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.





On August
9, 2007, the Company completed a reverse acquisition of JPAK. Prior to the
acquisition, Rx Staffing Inc. (“Rx Staffing” or “the Company”) was a public
shell company, as that term is defined in Rule 12b-2 of the Exchange Act,
established under the laws of Nevada on December 6, 2004. To accomplish the
share exchange The Company issued 23,005,000 shares of common stock on a one to
one ratio for a 100% equity interest in JPAK. In accordance with 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, the Company changed the name of Rx Staffing,
Inc. to Jpak Group, Inc.  The transaction was treated 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 the
Company is 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.





NOTE
2 – INTERIM FINANCIAL STATEMENTS





These
interim financial statements should be read in conjunction with the audited
financial statements for the years ended June 30, 2007 and 2006, 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, 2007 and 2006.





NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying un-audited 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.


8




















NOTE
4 – INVENTORY





Inventory
at December 31, 2007 and June 30, 2007 consisted of the following:





December 31,
            
            
            June 30,2007
            
            
            2007Finished
      products
            
            $
            111,924
            
            
            $
            571,357Raw
      materials
            
            
            2,562,009
            
            
            
            2,206,420Parts
      and supplies
            
            
            52,850
            
            
            
            41,280Work
      in process
            
            
            123,030
            
            
            
            574,839Total
            
            $
            2,849,813
            
            
            $
            3,393,896


NOTE 5 –
RELATED PARTY TRANSACTIONS





Viewed
from the perspective of the financial statements of the reporting entity, a
related party may be any of the following:


·
              Affiliates


·
              Principal
      owners and close kin


·
              Management
      and close kin


·
              Parents
      and subsidiaries


·
              Equity
      method investors and investees


·
              Trusts
      for the benefit of employees


·
              Any
      other party that has the ability to influence the management or operating
      policies of the reporting enterprise significantly, to the extent that it
      may be prevented from fully pursuing its own separate
      interests.


·
              De
      facto agents of the entity


The
Company did not have any related party transactions accordingly.





9


NOTE
6 – DEFERRED FINANCING COSTS





Costs
related to obtaining the convertible note are capitalized and amortized over the
term of the related debt using the straight-line method, which is 12 months. The
remaining balance was allocated to issuance costs and netted with additional
paid-in capital as the note was converted in August 2007 per Note
8.  Deferred financing costs at December 31, 2007 and June 30, 2007
were as follows:





December 31,
            
            
            June 30,2007
            
            
            2007Deferred
      financing costs
            
            $
            460,017
            
            
            $
            460,017Less:
      Accumulated amortization
            
            
            460,017
            
            
            
            54,945Net
      deferred financing costs
            
            $
            -
            
            
            $
            405,072





Amortization
of deferred financing costs charged to operations for the six months ending
December 31, 2007 and December 31, 2006 was $49,835 and $-0-,
respectively.








NOTE 7–
PROPERTY AND EQUIPMENT





Property
and equipment at December 31, 2007 and June 30, 2007 consisted of the
following:





December 31,
            
            
            June 30,2007
            
            
            2007Buildings
            
            $
            3,842,612
            
            
            $
            3,533,677Machinery
      and equipment
            
            
            10,854,604
            
            
            
            9,848,634Subtotal
            
            $
            14,697,216
            
            
            
            13,382,311Less:
      Accumulated depreciation
            
            
            6,120,634
            
            
            
            5,446,391Total
            
            $
            8,576,582
            
            
            $
            7,935,920


Depreciation
expense for six months ending December 31, 2007 and 2006 was $434,628, and
$346,145, respectively. Depreciation expense for three months ending December
31, 2007 and 2006 was 213,086 and $177,857, respectively.





NOTE
8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





The
carrying value of accounts payable and accrued expenses approximate fair value
due to the short-term nature of the obligations. As of December 31, 2007,
accounts payable and accrued expenses were $1,521,913 and $415,287,
respectively. As of June 30 2007, accounts payable and accrued expenses were
$4,066,655 and $567,802, respectively.





NOTE
9 – CONVERSION OF CONVERTIBLE NOTES




On August
9, 2007, the convertible notes converted to the following items: (i) 5,608,564
shares of the Company’s Series A Convertible Preferred Stock, par value $.0001
per share (the “Preferred Stock”), which shares are convertible into an
aggregate of 11,217,128 shares of Common Stock, (ii) Class A Warrants to
purchase an aggregate of 5,500,000 shares of Common Stock (subject to
adjustment) at an exercise price of $.60 per share until August 2011 (the “Class
A Warrants”), (iii) Class B Warrants to purchase an aggregate of 5,500,000
shares of Common Stock (subject to adjustment) at an exercise price of $.70 per
share until August 2011 (the “Class B Warrants”) and (iv) Class J Warrants to
purchase (a) an aggregate of 5,000,000 shares of Series B Preferred Stock, which
preferred stock shall contain the same terms as the Series A Preferred Stock
(other than conversion price), which shares will be convertible into 8,333,333
shares of the Company’s Common Stock, (b) Class C Warrants to purchase an
aggregate of 4,166,667 shares of Common Stock (subject to adjustment) at an
exercise price of $.72 per share (the “Class C Warrants”) and (c) Class D
Warrants to purchase an aggregate of 4,166,667 shares of Common Stock (subject
to adjustment) at an exercise price of $.84 per share (the “Class D Warrants”
and together with the Class A Warrants, Class B Warrants and Class C
Warrants,


10


the
“Warrants”). The Class J Warrants shall only be exercisable until 90 days
following the effective date of a registration statement registering for sale
the shares of common stock underlying the securities issued in the
financing.





NOTE
10 – SHORT-TERM BANK LOANS





Short-term
bank loans as of December 31, 2007 consist of the following:


On
      February 2nd,
      2007, the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by
      February11th
      2008, The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the Company's
      equipment.
            $   685,500





On
      April 10th,
      2007 the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by April
      9th2008.
      The interest is to be calculated using an annual fixed interest rate
      of7.029%
      and paid monthly. The loan is secured by the Company's
      equipment.
            822,600On
      February 12th
      2007, the Company obtained a loan from Qingdao CityCommercial
      Bank, of which the principal is to be paid in full by February 11th2008.
      The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the Company's
      equipment.
            2,193,600On
      May 25th
      2007, the Company obtained a loan from China
      Merchant  Bank,of
      which the principal is to be paid in full by May 25th
      2008.  The interest isto
      be calculated using an annual fixed interest rate of 6.57% and paid
      monthly.The
      loan is secured by the Company's equipment.
            411,300Total
      short-term bank loans
            $4,113,000





NOTE
11 – LONG-TERM DEBT





As of
December 31, 2007 and June 30, 2007, the Company had long-term debt of
$1,730,339 and $2,008,893 outstanding, respectively. 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 the end of the
two-year period.





NOTE
12 – RISK FACTORS





In the
three months and six months ended December 31, 2007, three customers accounted
for approximately 71% of the Company’s sales, four vendors accounted for
approximately 94% of the Company’s purchases.





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





NOTE
13 - CONCENTRATIONS OF CREDIT RISK





Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with financial institutions of $ 7,029,604 at
December 31, 2007.


11





NOTE
14 – SUPPLEMENTAL CASH FLOW DISCLOSURES





Six
      Months EndedDecember2007
            
            
            2006Cash
      paid for interest
            
            $
            217,755
            
            
            $
            192,919Cash
      paid for income taxes
            
            $
            -
            
            
            $
            259,925








NOTE
15 – RESTATEMENT TO REFLECT REVERSE MERGER ACCOUNTING





In August
2007, Jpak Group Co., Ltd. (“JPAK”) – a private holding company established
under the laws of the Cayman Islands on June 22, 2006, acquired an 88.23% equity
interest in Qingdao Renmin through Grand International, the 100% owned
subsidiary of JPAK.  As a result of the acquisition, Qingdao Renmin
became the majority owned subsidiary of Grand International and an indirect
majority owned subsidiary of JPAK. Originally the Company accounted the
acquisition using the purchase method.  Grand International and
Qingdao Renmin were considered as the acquirer and acquiree respectively both
from the business and accounting perspectives.





The
Company has changed the Company’s accounting method and the transaction has been
regarded as a reverse merger whereby Qingdao Renmin was considered to be the
accounting acquirer as both Grand International and JPAK were holding companies
with no significant operations and Qingdao Renmin continues as the primary
operating entity even after the exchange, although JPAK 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 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.
Accordingly, the Company has revised the financial statements to reflect reverse
merger accounting.





Pursuant
to SEC Manual Item 2.6.5.4 Reverse acquisitions, the Company believes the
statement of stockholders’ equity in the Company’s S-1 for the fiscal years
ended June 30, 2007 and 2006 should be revised to disclose the effect of the
reverse merger on a retroactive basis. The SEC guidance requires  that
“in a reverse acquisition the historical shareholder’s equity of the accounting
acquirer prior to the merger is retroactively restated (a recapitalization) for
the equivalent number of shares received in the merger after giving effect to
any difference in par value of the registrant’s and the accounting acquirer’s
stock by an offset in paid in capital.” Based on this statement, the Company
believes the statement of stockholders’ equity should be revised to properly
disclose the effects of the reverse merger by retroactively restating the
23,005,000 shares given to JPAK (accounting acquirer in the reverse merger with
Rx Staffing). In addition, the Company has revised the financial statements for
the fiscal year ended June 30, 2007 to disclose the effect of the
recapitalization on a retroactive basis.
































12














NOTE
15 – RESTATEMENT TO REFLECT REVERSE MERGER ACCOUNTING (continued)





The
effect of restatement is as follows:





CONSOLIDATED
BALANCE SHEETS






ASSETSAs reported under Acquisition Accounting as
      at
              
              
              As reported under Reverse Merger Accounting
      as atDecember 31,2007
              
              
              December 31,2007
              
              
              Effect of ChangeCURRENT
      ASSETSCash
      and cash equivalents
              
              $
              7,029,604
              
              
              $
              7,029,604
              
              
              $
              -Account
      receivables, net of allowance $40,603 and $38,945,
      respectively
              
              
              6,976,926
              
              
              
              6,976,926
              
              
              
              -Inventory
              
              
              2,849,813
              
              
              
              2,849,813
              
              
              
              -Other
      receivables
              
              
              120,519
              
              
              
              120,519
              
              
              
              -Prepaid
      expenses and other current assets
              
              
              72,645
              
              
              
              72,645
              
              
              
              -Advance
      payments
              
              
              2,048,889
              
              
              
              2,048,889
              
              
              
              -Deferred
      placement agent warrant costs, net
              
              
              1,093,131
              
              
              
              -
              
              
              
              (1,093,131
              )Total
      Current Assets
              
              
              20,191,527
              
              
              
              19,098,396
              
              
              
              (1,093,131
              )PROPERTY
      AND EQUIPMENT, NET
              
              
              8,576,582
              
              
              
              8,576,582
              
              
              
              -GOODWILL
              
              
              1,017,245
              
              
              
              -
              
              
              
              (1,017,245
              )Total
      Assets
              
              $
              29,785,354
              
              
              $
              27,674,978
              
              
              $
              (2,110,376
              )LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
              
              $
              1,937,200
              
              
              $
              1,937,200
              
              
              $
              -Short-term
      bank loans
              
              
              4,113,000
              
              
              
              4,113,000
              
              
              
              -Total
      Current Liabilities
              
              
              6,050,200
              
              
              
              6,050,200
              
              
              
              -LONG-TERM
      DEBT
              
              
              1,730,339
              
              
              
              1,730,339
              
              
              
              -MINORITY
      INTEREST
              
              
              98,753
              
              
              
              98,753
              
              
              
              -STOCKHOLDERS’
      EQUITYSeries
      A convertible preferred stock, $0.0001 par value,5,608,564
      shares authorized, issued and outstanding
              
              
              561
              
              
              
              561
              
              
              
              -Common
      stock, $0.001 par value, 300,000,000 sharesauthorized
      24,505,000 shares issued and outstanding
              
              
              24,505
              
              
              
              24,505
              
              
              
              -Series
      B convertible preferred stock, $0.001 par value,5,000,000
      shares authorized, issued and outstanding
              
              
              500
              
              
              
              500
              
              
              
              -Allocation
      of Series A Preferred Shares
              
              
              -
              
              
              
              3,529,388
              
              
              
              3,529,388Allocation
      of Series B Preferred Shares
              
              
              -
              
              
              
              2,559,246
              
              
              
              2,559,246Warrants
              
              
              3,986,666
              
              
              
              3,281,077
              
              
              
              (705,589
              )Placement
      agent warrants
              
              
              1,127,313
              
              
              
              1,103,064
              
              
              
              (24,249
              )Incremental
      value of Original Placement Agent Warrants
              
              
              -
              
              
              
              27,225
              
              
              
              27,225Additional
      paid-in capital
              
              
              11,590,258
              
              
              
              10,477,418
              
              
              
              (1,112,840
              )Retained
      earnings
              
              
              3,556,733
              
              
              
              (2,917,576
              )
              
              
              (6,474,309
              )Statutory
      reserves
              
              
              371,364
              
              
              
              348,009
              
              
              
              (23,355
              )Accumulated
      other comprehensive income
              
              
              1,248,162
              
              
              
              ,362,269
              
              
              
              114,107Total
      Stockholders’ Equity
              
              
              21,906,062
              
              
              
              19,795,686
              
              
              $
              (2,110,376
              )Total
      Liabilities and Stockholders’ Equity
              
              $
              29,785,354
              
              
              $
              27,674,978
              
              
              $
              (2,110,376
              )





13


NOTE
15 – RESTATEMENT TO REFLECT REVERSE MERGER ACCOUNTING (continued)


CONSOLIDATED STATEMENTS OF
      OPERATIONS
              AND COMPREHENSIVE INCOME
            
            As reported under Acquisition Accounting for
      the six months ended
            
            
            As reported under Reverse Merger Accounting
      for the six months endedDecember 31,2007
            
            
            December 31,2007
            
            
            Effect of ChangeREVENUE
            
            $
            15,418,892
            
            
            $
            15,418,892
            
            
            $
            -COST
      OF SALES
            
            
            11,306,299
            
            
            
            11,306,299
            
            
            
            -GROSS
      PROFIT
            
            
            4,112,593
            
            
            
            4,112,593
            
            
            
            -EXPENSESSelling, general and
      administrative
            
            
            2,395,296
            
            
            
            2,361,114
            
            
            
            (34,182
            )Depreciation
    expense
            
            
            41,054
            
            
            
            41,054
            
            
            
            -Total Expenses
            
            
            2,436,350
            
            
            
            2,402,168
            
            
            
            (34,182
            )INCOME
      FROM OPERATIONS
            
            
            1,676,243
            
            
            
            1,710,425
            
            
            
            (34,182
            )OTHER
      INCOME (EXPENSES)Interest income
            
            
            32,295
            
            
            
            32,295
            
            
            
            -Interest expense
            
            
            (217,755
            )
            
            
            (217,755
            )
            
            
            -Other income (expense),
      net
            
            
            248,662
            
            
            
            248,662
            
            
            
            -Total Other Income
      (Expenses)
            
            
            63,202
            
            
            
            63,202
            
            
            
            -INCOME
      BEFORE PROVISIONFOR
      INCOME TAX
            
            
            1,739,445
            
            
            
            1,773,627
            
            
            
            (34,182
            )PROVISION
      FOR INCOME TAX
            
            
            -
            
            
            
            -
            
            
            
            -NET
      INCOME BEFORE MINORITY INTEREST
            
            
            1,739,445
            
            
            
            1,773,627
            
            
            
            (34,182
            )MINORITY
      INTEREST
            
            
            (1,980
            )
            
            
            (1,980
            )
            
            
            -NET
      INCOME
            
            
            1,741,425
            
            
            
            1,775,607
            
            
            
            (34,182
            )Beneficial
      conversion feature related to issuance of
            
            
            -
            
            
            
            (3,529,388
            )
            
            
            3,529,388Series
      A convertible preferred stockBeneficial
      conversion feature related to issuance of
            
            
            -
            
            
            
            (2,559,246
            )
            
            
            2,559,246Series
      B convertible preferred stockNET
      INCOME / (LOSS) APPLICABLE TO
            
            
            1,741,425
            
            
            
            (4,313,027
            )
            
            
            6,054,452COMMON
      STOCK HOLDERSOTHER
      COMPREHENSIVE INCOMEForeign currency translation
      adjustment
            
            
            710,043
            
            
            
            824,150
            
            
            
            (114,107
            )COMPREHENSIVE
      INCOME
            
            $
            2,451,468
            
            
            $
            (3,488,877
            )
            
            $
            5,940,345





14








NOTE
15 – RESTATEMENT TO REFLECT REVERSE MERGER ACCOUNTING (continued)





CONSOLIDATED STATEMENTS OF
CASH FLOWS


As reported
              under  Acquisition
              Accounting for
              the six months ended
            As reported
              under Reverse
              MergerAccounting for thesix months endedDecember 31,2007
            December 31,2007
            Effect of
Change


CASH
FLOWS FROM OPERATING ACTIVITIES


Net
      Income
            
            $
            1,741,425
            
            
            $
            1,775,607
            
            
            $
            34,182Adjustments
      to reconcile net income to net cashProvided
      (used) by operating activities:Minority interest
            
            
            (1,980
            )
            
            
            (1,980
            )
            
            
            -Depreciation and
      amortization
            
            
            518,645
            
            
            
            518,645
            
            
            
            -Gain on disposal of fixed
      assets
            
            
            -
            
            
            
            -
            
            
            
            -Changes in assets and
      liabilities:Account
      receivables
            
            
            1,937,765
            
            
            
            1,937,765
            
            
            
            -Inventory
            
            
            676,659
            
            
            
            676,659
            
            
            
            -Other
      receivables
            
            
            (118,427
            )
            
            
            (118,427
            )
            
            
            -Prepaid
      expenses and other current assets
            
            
            703,834
            
            
            
            703,834
            
            
            
            -Advance
      payments
            
            
            (2,013,322
            )
            
            
            (2,013,322
            )
            
            
            -Accounts
      payable and accrued expenses
            
            
            (2,780,763
            )
            
            
            (2,780,764
            )
            
            
            (1
            )Other
      payables
            
            
            (66,978
            )
            
            
            (66,978
            )
            
            
            -Other
      current liabilities
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Adjustments
            
            
            (1,144,567
            )
            
            
            (1,144,568
            )
            
            
            (1
            )Net
      Cash Used By Operating Activities
            
            
            596,858
            
            
            
            631,039
            
            
            
            34,181CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
            
            
            (576,378
            )
            
            
            (576,378
            )
            
            
            -Addition of construction in
      progress
            
            
            (155,702
            )
            
            
            (155,702
            )
            
            
            -Acquisition of
      Qingdao
            
            
            (864,000
            )
            
            
            (864,000
            )
            
            
            -Cash acquired from the
      subsidiary
            
            
            99,019
            
            
            
            99,019
            
            
            
            -Net
      Cash Used By Investing Activities
            
            
            (1,497,061
            )
            
            
            (1,497,061
            )
            
            
            -CASH
      FLOWS FROM FINANCING ACTIVITIESTrade notes
    payable
            
            
            (538,880
            )
            
            
            (538,880
            )
            
            
            -Additional capital
      contribution
            
            
            (452,462
            )
            
            
            (452,462
            )
            
            
            -Exercise of J
      warrants
            
            
            5,000,000
            
            
            
            5,000,000
            
            
            
            -Repayment of short term bank
      loans
            
            
            (889,152
            )
            
            
            (1,246,935
            )
            
            
            (357,783
            )Repayment of long term
      debt
            
            
            (357,783
            )
            
            
            -
            
            
            
            357,783Net
      Cash Provided By Financing Activities
            
            
            2,761,723
            
            
            
            2,761,723
            
            
            
            -EFFECT
      OF FOREIGN CURRENCYTRANSLATION
      ON CASH
            
            
            229,884
            
            
            
            195,703
            
            
            
            (34,181
            )NET
      INCREASE IN CASH AND CASH QUIVALENTS
            
            
            2,091,404
            
            
            
            2,091,404
            
            
            
            -CASH
      AND CASH EQUIVALENTS – BEGINNING
            
            
            4,938,200
            
            
            
            4,938,200
            
            
            
            -CASH
      AND CASH EQUIVALENTS – ENDING
            
            $
            7,029,604
            
            
            $
            7,029,604
            
            
            $
            -








15








NOTE
16 – EARNINGS (LOSS) PER SHARE





The
Company presents earnings per share on a basic and diluted
basis.  Basic earnings (loss) per share has been computed by dividing
net earnings by the weighted average number of shares
outstanding.  Diluted earnings (loss) per share has been computed by
dividing net earnings by the weighted average number of shares outstanding
including the dilutive effect of equity securities on an if converted method.
All share and per share data have been adjusted retroactively to reflect the
recapitalization of the Company pursuant to the Securities Exchange Agreement
with Rx Staffing.


3 Months Ended December 31,
      2007Net
    Income
            
            
            Shares
            
            
            Per
ShareIncome
      from operations
            
            $
            763,705
            
            
            
            24,505,000
            
            
            $
            0.03Basic
      EPS
            
            $
            (1,651,516
            )
            
            
            24,505,000
            
            
            $
            (0.07
            )Effect
      of dilutive securities
            
            $
            -
            
            
            
            21,869,102
            
            
            
            (0.02
            )Diluted
      EPS
            
            $
            (1,651,516
            )
            
            
            46,374,102
            
            
            $
            (0.04
            )3 Months Ended December 31,
      2006Net
    Income
            
            
            Shares
            
            
            Per
ShareLoss
      from operations
            
            $
            (203,254
            )
            
            
            23,005,000
            
            
            $
            (0.01
            )Basic
      EPS
            
            $
            (305,029
            )
            
            
            23,005,000
            
            
            $
            (0.01
            )Effect
      of dilutive securities
            
            $
            -
            
            
            
            -
            
            
            
            -Diluted
      EPS
            
            $
            (305,029
            )
            
            
            23,005,000
            
            
            $
            (0.01
            )6 Months Ended December 31,
      2007Net
    Income
            
            
            Shares
            
            
            Per
ShareIncome
      from operations
            
            $
            1,710,425
            
            
            
            24,178,913
            
            
            $
            0.07Basic
      EPS
            
            $
            (4,313,027
            )
            
            
            24,178,913
            
            
            $
            (0.18
            )Effect
      of dilutive securities
            
            
            -
            
            
            
            9,677,472
            
            
            
            (0.02
            )Diluted
      EPS
            
            $
            (4,313,027
            )
            
            
            33,856,385
            
            
            $
            (0.13
            )6 Months Ended December 31,
      2006Net
    Income
            
            
            Shares
            
            
            Per
ShareIncome
      from operations
            
            $
            464,035
            
            
            
            23,005,000
            
            
            $
            0.02Basic
      EPS
            
            $
            115,337
            
            
            
            23,005,000
            
            
            $
            0.00Effect
      of dilutive securities
            
            
            -
            
            
            
            -
            
            
            
            -Diluted
      EPS
            
            $
            115,337
            
            
            
            23,005,000
            
            
            $
            0.00


















































16








NOTE
17 – ALLOCATION OF PROCEEDS FROM THE EXERCISE OF SERIES J WARRANTS





On August
9, 2007, the Company became a party to the NPA (Note Purchase Agreement dated
May 17,2007 ) by and among the Company, JPAK, Grand International and the
Investors.  Pursuant to the NPA JPAK issued Convertible Promissory
Notes in the aggregate principal amount of US$5.5 million to the Investors. As a
result of the Share Exchange, the Notes automatically converted into 5,608,564
shares of Series A Convertible Preferred Stock outstanding. The shares of Series
A Convertible Preferred Stock are convertible into an aggregate of 11,217,128
shares of common stock. Under the terms of the Notes, the company also issued
(i) Series A Warrants to purchase an aggregate of 5,500,000 shares of common
stock (subject to adjustment) at an exercise price of US$.60 per share until
August 2013 (the “Series A Warrants”), (ii) Series B Warrants to purchase an
aggregate of 5,500,000 shares of common stock (subject to adjustment) at an
exercise price of US$.70 per share until August 2013 (the “Series B Warrants”)
and (iii) Series J Warrants to purchase (a) an aggregate of 5,000,000 shares of
Series B Convertible Preferred Stock, which preferred stock shall contain the
same terms as the Series A Convertible Preferred Stock (other than conversion
price), which shares will be convertible into 8,333,333 shares of the Company’s
common stock, (b) Series C Warrants to purchase an aggregate of 4,166,667 shares
of common stock (subject to adjustment) at an exercise price of US$.72 per share
(the “Series C Warrants”) and (c) Series D Warrants to purchase an aggregate of
4,166,667 shares of common stock (subject to adjustment) at an exercise price of
US$.84 per share (the “Series D Warrants”). The Series J Warrants shall be
exercisable at an exercise price of US$1.00 per warrant and shall only be
exercisable until 90 days following the effective date of the registration
statement for which this prospectus forms a part. Finally, the Company also
granted warrants to purchase 990,000 shares of common stock with an exercise
price of US$.50 per share to the placement agent in the financing transaction.
These warrants have the same terms as the Series A and Series B Warrants, except
that they contain a “cashless” exercise provision.





On
December 28, 2007, the holders of the Company’s outstanding Series J Warrants
exercised in full such warrants for aggregate gross proceeds of US$5.0 million
to The Company. Upon exercise of the Series J Warrants and pursuant to their
stated terms, the Company issued to the holders of the Series J Warrants (a) an
aggregate of 5,000,000 shares of the Company’s Series B Convertible Preferred
Stock, which are convertible into an aggregate of 8,333,333 shares of the
Company’s common stock, (b) Series C Warrants to purchase an aggregate of
4,166,667 shares of the Company’s common stock at an exercise price of US$0.72
per share and (c) Series D Warrants to purchase an aggregate of 4,166,667 shares
of the Company’s common stock (subject to adjustment) at an exercise price of
US$0.84 per share. The Series C Warrants and Series D Warrants have a term of
six years from the date of issuance.





In
connection with the exercise of the Series J Warrants, 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.




As per
SAB Topic 5.A, “specific incremental costs directly attributable to a proposed
or actual offering of securities may properly be deferred and charged against
the gross proceeds of the offering.”





As per
SEC accounting and reporting manual on reverse merger, “costs of issuing equity
securities are charged directly to equity as deduction of the fair value
assigned to share issued”.





Accordingly,
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 had to pay the same amount of cash as the fair
value.  Therefore, we have deducted the fair value of the placement
agent warrants $802,500 and incremental value of the original placement agent
warrants $27,225 from the proceeds of Preferred Shares $5,000,000.




















17





The key
assumptions we utilized for the calculation of warrants are:





·
            Volatility
      is based on historical volatility from the beginning to period
      end.  Volatility on and prior to August 9 are assumed to be the
      same as the volatility as of September
30.


·  Risk-free
Rate of Return based on the rate of treasury note with the same expiry
term.


·  Black-Scholes
Call Value is calculated using the like of
http://www.blobek.com/black-scholes.html





Agent Warrants
            
            2007-08-09
            2007-12-28
            2007-12-28Original
            RevisedExpiration
      Date:
            2011-08-092013-08-09Strike
      Price:
            $0.50Share
      Price:
            
            $0.72
            $1.60
            $1.60Time
      to Expiration:
            
            1,461
            1,320
            2,051Volatility:
            
            7.11%
            7.57%
            7.57%Risk-free
      Rate of Return:
            
            4.57%
            3.18%
            3.18%Black-Scholes
      Call Value:
            
            $0.30
            $1.15
            $1.18Warrant
      Valuation:
            
            $300,564.00
            $1,142,757.00
            $1,169,982.00Agent Warrants
            
            2007-08-09
            2007-12-28Expiration
      Date:
            2013-12-28Strike
      Price:
            $0.60Share
      Price:
            
            $0.72
            $1.60Time
      to Expiration:
            
            2,333
            2,192Volatility:
            
            7.11%
            7.57%Risk-free
      Rate of Return:
            
            4.57%
            3.18%Black-Scholes
      Call Value:
            
            $0.26
            $1.07Warrant
      Valuation:
            
            $194,325.00
            $802,500.00


18








Furthermore,
we allocated the remaining proceeds of $4,170,275 between investors warrants and
Preferred Shares on a relative fair value basis.  The total value of
investors warrants including incremental value of the original investors
warrants and the value of Series B Preferred shares were $8,393,251 and
$13,333,333 respectively.  Therefore, the Company allocated $1,611,029
and $2,559,246 to the investors warrants and preferred stocks respectively from
the $4,170,275 remaining proceeds of J warrants exercise.








Valuation
            2007-12-28Proceeds
      of Series B Preferred Shares
            5,000,000Value
      of Placement Agent Warrants
            802,500Incremental
      value of original Placement Agent Warrants
            27,225Net
      proceeds after deduction of value and incremental value of placement agent
      warrants
            4,170,275Series
      C Warrants
            4,208,334Series
      D Warrants
            3,791,667Incremental
      value of Series A Warrants
            181,500Incremental
      value of Series B Warrants
            211,750Total
      value of investor warrants and incremental value of investors
      warrants
            8,393,251Value
      of Series B Preferred Shares
            13,333,333Allocation
      of Warrants
            1,611,029Allocation
      of Series B Preferred Shares
            2,559,246


19








The
increment value of Series A Warrants and Series B warrants were $181,550 and
$211,750 respectively.








Series A
      Warrants
            
            2007-08-09
            2007-12-28
            2007-12-28Original
            RevisedExpiration
      Date:
            2011-08-092013-08-09Strike
      Price:
            $0.60Share
      Price:
            
            $0.72
            $1.60
            $1.60Time
      to Expiration:
            
            1,461
            1,320
            2,051Volatility:
            
            7.11%
            7.57%
            7.57%Risk-free
      Rate of Return:
            
            4.57%
            3.18%
            3.18%Black-Scholes
      Call Value:
            
            $0.22
            $1.07
            $1.10Warrant
      Valuation:
            
            $1,212,200.00
            $5,858,050.00
            $6,039,550.00Series B
      Warrants
            
            2007-08-09
            2007-12-28
            2007-12-28Original
            RevisedExpiration
      Date:
            2011-08-092013-08-09Strike
      Price:
            $0.70Share
      Price:
            
            $0.72
            $1.60
            $1.60Time
      to Expiration:
            
            1,461
            1,320
            2,051Volatility:
            
            7.11%
            7.57%
            7.57%Risk-free
      Rate of Return:
            
            4.57%
            3.18%
            3.18%Black-Scholes
      Call Value:
            
            $0.14
            $0.98
            $1.01Warrant
      Valuation:
            
            $772,750.00
            $5,368,000.00
            $5,579,750.00









































20











NOTE
18 – BENIFICIAL CONVERSION FEATURE OF SERIES B PREFERRED SHARES








On
December 28, 2007, the conversion feature of the Series B Convertible Preferred
Stock is “in the money” and is therefore deemed to contain a beneficial
conversion feature.





According
to EITF 00-27, the effective conversion price based on the proceeds received for
or allocated to the convertible instrument should be used to compute the
intrinsic value, if any, of the embedded conversion option. An issuer should
first allocate the proceeds received in a financing transaction that includes a
convertible instrument to the convertible instrument and any other detachable
instruments included in the exchange (such as detachable warrants) on a relative
fair value basis. Then, the Issue 98-5 model should be applied to the amount
allocated to the convertible instrument, and an effective conversion price
should be calculated and used to measure the intrinsic value, if any, of the
embedded conversion option.





On a
relative fair value basis, we have allocated $2,559,246 and $1,611,029 to the
Series B Convertible Preferred Shares and the warrants
respectively.  The effective conversion price is $0.307, the allocated
proceeds of $2,559,246 divided by 8,333,333 (the number of shares to be received
on conversion).








Although
the intrinsic value of the conversion option is calculated to
be $10,375,000 [(8,333,333 shares) × ($1.60 – $0.307)], it is limited to
$2,559,2446, the proceeds allocated to the A Convertible preferred
Shares.





At the
date of issuance, we make the following entry for recording:





Preferred
Stock
Discount:                                                                2,559,246


APIC – beneficial conversion
option                                                                           2,559,246





We also
make the following entry to amortize the preferred stock discount on the date of
issuance because the preferred stock is not mandatorily redeemable and is
immediately convertible into common stock:





Retained
Earnings:                                                                          
2,559,246


Preferred Stock
Discount                                                                                              
2,559,246





The net
result of the two entries is a reclassification of $2,559,246  from
retained earnings to additional paid-in capital.  This amount is also
a reduction to the net income available to the common shareholders in the
numerator of the earning-per-share calculation in the second quarter of
FY2008.”








NOTE 19 –
LIQUIDATED DAMAGE FOR INEFFECTIVE REGISTRATION STATEMENT





On August
9, 2007, the Company entered into a Registration Rights Agreement with the
Investors (the “Investor RRA”). Under the Investor RRA, the Company was 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 the Company’s best efforts to cause, and to maintain,
the effectiveness of the registration statement. The Company filed this
registration statement to fulfill the Company’s obligations under the RRA. The
Company is 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 the Company’s
common stock.





The
Investor “RAA” also contains provisions for the inability to register all of the
shares underlying all of the


21


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 the Company 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). The Company is filing the
Registration Statement to register 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, the Company does 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 the
Company is only able to register 687,106 common shares and the total common
shares underlying the Series A convertible preferred stock is 11,217,128, the
Company is only required to pay 6.13% (680,106/11.217,128) of the 2 percent
($110,000) due per month under the terms of the Company’s
RAA.  Therefore, the Company’s monthly liquated damages will be
roughly $6,738.07. Pursuant to discussions with SEC staff covering
interpretations of Rule 415, the Company 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).





NOTE
20 – SUBSEQUENT EVENTS





No
material transactions or events occurring after the balance sheet date required
disclosure in the quarterly financial statements for December 31,
2007.





























22








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”). Previously, in September 2006, Jpak 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.  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 Share Exchange has been accounted for as a
reverse acquisition under the reverse merger method of accounting for business
combinations in accordance with generally accepted accounting principles in the
United States of America, or “U.S. GAAP.” As a result, Qingdao Renmin is
considered to be the accounting acquirer as both Grand International and Jpak
were holding companies with no significant operations and Qingdao Renmin
continues as the primary operating entity even after the Share Exchange,
although Jpak 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.  Thus, Jpak is the continuing entity for financial reporting
purposes.  We have included elsewhere in this Quarterly Report on Form
10-Q/A 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 this Quarterly Report on Form 10-Q/A and in 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/A.





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, coffee, sauces and other liquid foods and beverages in China.
Since 2004, we have started and focused on the 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 begun contract manufacturing products for export primarily to Southeast
Asia.





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 filling
  machines;










●
            Increasing
      sales to selective Asian and other markets;
and










●
            Establishing
      brand names and awareness.





Company
History


23


Jpak
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 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, a company located in Qingdao, Shandong
Province of the People’s Republic of China, 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.





In August
2007, we acquired all of the outstanding capital stock of Jpak.





Results
of Operations





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





Comparison
of the Three Months Ended December 31, 2007 and 2006





Three
      Months Ended December 31
            
            2007
            
            
            2006Sales
            
            $
            6,114,644
            
            
            $
            5,371,875Cost
      of sales
            
            $
            4,319,117
            
            
            $
            4,246,343Total
      expenses
            
            $
            1,031,822
            
            
            $
            1,328,786Other
      income (expense)
            
            $
            142,045
            
            
            $
            27,484Income
      taxes
            
            $
            -
            
            
            $
            169,950Minority
      Interest
            
            $
            (1,980
            )
            
            $
            (40,691
            )Net
      income
            
            $
            907,730
            
            
            $
            (305,029
            )Foreign
      currency translation adjustment
            
            $
            468,008
            
            
            $
            (27,828
            )Comprehensive
      income/Loss
            
            $
            ($1,183,508
            )
            
            $
            (332,857
            )




Sales.
Total sales were approximately US$6.1 million for the three months ended
December 31, 2007 as compared to approximately US$5.4 million for the three
months ended December 31, 2006, an increase of approximately US$0.7 million, or
13.8%. The increase resulted from increased sale of our products and services to
numerous new customers in 2007. The increase of new customers was mainly due to
shifting of the product lines from traditional printing and packaging to aseptic
liquid food and beverage cartons. Monetary sales amount for the products have
been treated as the key performance indicators that management utilizes to
assess operations.





Cost of Sales. Cost of sales for the three
months ended December 31, 2007 was approximately US$4.3 million, or 70.6% of
sales, as compared to US$4.2 million, or 79.1% of sales, for the three months
ended December 31, 2006. 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. The significant
decrease in cost of sales to sales % was primarily due to gradual shifting of
the product lines from traditional printing and packaging to aseptic liquid food
and beverage cartons which have higher profit margins.




Selling, general and administrative expenses.Selling, general and administrative expenses were approximately US$1.1
million for the three months ended December 31, 2007 as compared to
approximately US$1.3 million for the three months ended December 31, 2006, a
decrease of approximately US$0.2 million, or 20.8%. The decrease was mainly due
to the decrease of research and development expenses incurred in gradual
shifting of the product lines from traditional printing and packaging to aseptic
liquid food and beverage cartons. Substantial research and development expenses
were incurred during 2006 in order to shift the product lines.





Minority Interest. In October 2007,
Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co., Ltd.,
(“Qingdao Delikang”), through a joint venture with Xi’an Heiniu Machinery, Co.
Qingdao Renmin is the 51% owner of Qingdao Delikang. The minority interest
relates to that subsidiary.





Net income.Net income was approximately US$0.9
million for three months ended December 31, 2007 as compared to net loss of
approximately US$0.3 million for the three months ended December 31, 2006, an
increase of US$1.2 million. The increase in net income was primarily due to
increase of sales, increase of profit margin of products and decrease of
selling, general and administrative expenses.


24






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 gain of US$ 430,000 as of December 31, 2007 as compared to loss
of US$28,000 as of December 31, 2006. The balance sheet amounts with the
exception of equity at December 31, 2007 were translated at 7.29395 RMB to 1.00
US dollar as compared to RMB7.80031 at December 31, 2006. 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, 2007, and
December 31, 2006 were RMB7.44345 and RMB7.87384, respectively.





The
comprehensive income, which adds the currency adjustment to net income, was a
loss of approximately US$1.2 million for the three months ended December 31,
2007 as compared to US$0.3 million loss for the three months ended December 31,
2006, an increase of $1.5 million. The increase was primarily due to increase of
foreign currency translation adjustment US$0.4 million and increase of net
income by US$1.2 million. There was an appreciation of RMB to US$ during the
three months ended December 31, 2007 as compared to that of 2006.





Comparison
of the Six Months Ended December 31, 2007 and 2006





Six
      Months Ended December 31
            
            2007
            
            
            2006Sales
            
            $
            15,418,892
            
            
            $
            13,048,360Cost
      of sales
            
            $
            11,306,299
            
            
            $
            10,130,300Total
      expenses
            
            $
            2,402,168
            
            
            $
            2,454,025Other
      income (expense)
            
            $
            63,202
            
            
            $
            (66,665
            )Income
      taxes
            
            $
            -
            
            
            $
            259,925Minority
      Interest
            
            $
            (1,980
            )
            
            $
            (22,108
            )Net
      income
            
            $
            1,775,607
            
            
            $
            115,337Foreign
      currency translation adjustment
            
            $
            824,150
            
            
            $
            (38,053
            )Comprehensive
      income/Loss
            
            $
            ($3,488,877
            )
            
            $
            77,284




Sales.Total sales were approximately US$15.4
million for the six months ended December 31, 2007 as compared to approximately
US$13.0 million for the six months ended December 31, 2006, an increase of
approximately US$2.4 million, or 18.5%. The increase resulted from increased
sale of our products and services to numerous new customers in 2007. The
increase of new customers was mainly due to shifting of the product lines from
traditional printing and packaging to aseptic liquid food and beverage cartons.
Monetary sales amount for the products have been treated as the key performance
indicators that management utilizes to assess operations.





Cost of Sales. Cost of sales for the six months
ended December 31, 2007 was approximately US$11.3 million, or 73.4% of sales, as
compared to US$10.1 million, or 77.7% of sales, for the six months ended
December 31, 2006. 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. The decrease in cost
of sales to sales % was primarily due to gradual shifting of the product lines
from traditional printing and packaging to aseptic liquid food and beverage
cartons which have higher profit margins.




Selling, general and administrative expenses.
Selling, general and administrative expenses were approximately US$2.4 million
for the six months ended December 31, 2007 as compared to approximately US$2.5
million for the six months ended December 31, 2006, the decrease of
approximately US$0.1 million, or 4.0%. There was no significant difference
between the six months ended December 31, 2007 vs. 2006.





Minority Interest.In October 2007,
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 minority interest relates to
that subsidiary.





Net income.Net income was approximately US$1.7
million for six months ended December 31, 2007 as compared to net income of
approximately
US$0.1 million for the six months ended December 31, 2006, an increase of US$1.8
million. The increase in net income was primarily due to increase of sales and
increase of profit margin of products.


25




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 gain of US$710,000 as of December 31, 2007 as compared to loss
of US$38,000 as of December 31, 2006. The balance sheet amounts with the
exception of equity at December 31, 2007 were translated at 7.29395 RMB to 1.00
US dollar as compared to RMB7.80031 at December 31, 2006. 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, 2007, and
December 31, 2006 were RMB7.50626 and RMB7.92547, respectively.





The
comprehensive income, which adds the currency adjustment to net income, was a
loss of approximately US$3.5 million for the six months ended December 31, 2007
as compared to US$77,000 for the six months ended December 31, 2006, an increase
of $2.5 million. The increase was primarily due to increase of foreign currency
translation adjustment US$0.7 million and increase of net income by US$1.7
million. There was an appreciation of RMB to US$ during the six months ended
December 31, 2007 as compared to that of 2006.




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.





Liquidity
and Capital Resources





As of
December 31, 2007, we had working capital totaling approximately US$14.1
million, including cash and cash equivalents of US$6.8 million.





Net cash
provided in operating activities was US$597,000 for the six months ended
December 31, 2007. This net cash provided was primarily due to the net income
generated during the six months ended December 2007. Net cash used US$1.3
million for the six months ended December 31, 2006 was primarily related to
reduction of account receivables offsetting with decrease of accounts payables
and other payables and increase of inventory.





Net cash
used in investing activities for the six months ended December 31, 2007 amounted
to US$1.5 million and related primarily to the purchase of property and
equipment and the acquisition of the outstanding equity of Qingdao Renmin not
owned by Jpak. Net cash used in investing activities for the six months ended
December 31, 2006 amounted to US$5.4 million was related to acquisition of the
outstanding equity of Qingdao Renmin not owned by Jpak.




Net cash
provided in financing activities for the six months ended December 31, 2007 was
US$2.8 million and related primarily to exercise of J warrants. Net cash
provided in financing activities for the six months ended December 31, 2006
totaled US$6.6 million and related mainly to capital contribution.










26




We have
entered into several loan agreements with our primary lenders, Industrial and
Commercial Bank of China, Qingdao City Commercial Bank and China Merchant Bank,
under which we have term loans. As of December 31, 2007, we had an aggregate
principal amount of US$4.1 million outstanding under the loan agreements, which
amounts mature from February 2008 to May 2008 and accrue interest at a rate from
7.029% per annum to 6.57% per annum. The loan agreements contain customary
affirmative and negative covenants. As of December 31, 2007, we were in material
compliance with the terms of our loan agreements.





Since the
principal amount of US$4.1 million will fall due between February 2008 to May
2008, we will either repay the term loan or renew the loan according to the
financial position and cashflow position as at the maturity date of the term
loan. Since the financial and cashflow position is strengthening as compared for
the six months ended December 31, 2007 vs. 2006, we will repay some of the term
loan provided that that there is no additional working capital
requirement.





On August
9, 2007, we became a party to that certain Note Purchase Agreement (the “NPA”)
by and among Jpak, Grand International Industrial Limited, a company organized
under the laws of Hong Kong (“Grand International”) and the investors named
therein (collectively, the “Investors”). The NPA was originally entered into in
May 2007 pursuant to which Jpak issued Convertible Promissory Notes in the
aggregate principal amount of US$5.5 million (the “Financing”) to the Investors
(the “Notes”). As a result of the Share Exchange, under the terms of the NPA and
the Notes, the Notes have been converted into (i) 5,608,564 shares of our Series
A Convertible Preferred Stocks, par value $.0001 per share (the “Preferred
Stock”), which shares are convertible into an aggregate of 11,217,128 shares of
common stock, (ii) Series A Warrants to purchase an aggregate of 5,500,000
shares of common stock (subject to adjustment) at an exercise price of US$.60
per share until August 2011 (the “Series A Warrants”), (iii) Series B Warrants
to purchase an aggregate of 5,500,000 shares of common stock (subject to
adjustment) at an exercise price of US$.70 per share until August 2011 (the
“Series B Warrants”) and (iv) Series J Warrants to purchase (a) an aggregate of
5,000,000 shares of Series B Preferred Stock, which preferred stock shall
contain the same terms as the Series A Preferred Stock (other than conversion
price), which shares will be convertible into 8,333,333 shares of our common
stock, (b) Series C Warrants to purchase an aggregate of 4,166,667 shares of
common stock (subject to adjustment) at an exercise price of US$.72 per share
(the “Series C Warrants”) and (c) Series D Warrants to purchase an aggregate of
4,166,667 shares of common stock (subject to adjustment) at an exercise price of
US$.84 per share (the “Series D Warrants”).





On
December 28, 2007, the holders of the Company's outstanding Series J Warrants
exercised in full such warrants for aggregate gross proceeds of US$5.0 million
to the Company. Pursuant to the terms of the Series J Warrants, the Company
issued to the holders of the Series J Warrants (a) an aggregate of 5,000,000
shares of the Company's Series B Convertible Preferred Stock, which will be
convertible into an aggregate of 8,333,333 shares of the Company's Common Stock,
(b) Series C Warrants to purchase an aggregate of 4,166,667 shares of the
Company's Common Stock at an exercise price of US$0.72 per share and (c) Series
D Warrants to purchase an aggregate of 4,166,667 shares of the Company's Common
Stock (subject to adjustment) at an exercise price of US$0.84 per share. The
Series C Warrants and Series D Warrants have a term of six years from the date
of issuance.





In
connection with the Financing, we also granted warrants to purchase 990,000
shares of common stock with an exercise price of US$.50 per share to the
placement agent in the Financing. These warrants have the same terms as the
Series A and Series B Warrants, except that they contain a “cashless” exercise
provision.





Although
we expect that the net proceeds of the private placement described above,
together with our available funds and funds generated from our operations, will
be sufficient to meet our anticipated needs for 12 months, we may need to obtain
additional capital to continue to operate and grow our business. Our cash
requirements may vary materially from those currently anticipated due to changes
in our operations, including our marketing and distribution activities, product
development, expansion of our personnel and the timing of our receipt of
revenues. Our ability to obtain additional financing in the future will depend
in part upon the prevailing capital market conditions, as well as our business
performance. There can be no assurance that we will be successful in our efforts
to arrange additional financing on terms satisfactory to us, if at
all.




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.




Critical
Accounting Policies and Estimates





Our
consolidated financial information has been prepared in accordance with
generally accepted accounting principles in the United States, which requires us
to make judgments, estimates and assumptions that affect (1) the reported
amounts of our assets and liabilities, (2) the disclosure of our contingent
assets and liabilities at the end of each fiscal period and (3) the reported
amounts of revenues and expenses during each fiscal period. We continually
evaluate these estimates based on our own historical experience, knowledge and
assessment of current business and other conditions, our expectations regarding
the future based on available information and reasonable assumptions, which
together form our basis for making judgments about matters that are not readily
apparent from other sources. Since the use of estimates is an integral component
of the financial reporting process, our actual results could differ from those
estimates. Some of our accounting policies require a higher degree of judgment
than others in their application.


27












When
reviewing our financial statements, you should consider (1) our selection of
critical accounting policies, (2) the judgment and other uncertainties affecting
the application of those policies, and (3) the sensitivity of reported results
to changes in conditions and assumptions. We believe the following accounting
policies involve the most significant judgment and estimates used in the
preparation of our financial statements.





Revenue
recognition.





We derive
our revenues primarily from sales of printing packaging products. We generally
recognize product revenue when persuasive evidence of an arrangement exists,
delivery has occurred, the fee is fixed or determinable, and the collectibility
is probable. In instances where final acceptance of the product is specified by
the customer, revenue is deferred until all acceptance criteria have been met.
We are generally not contractually obligated to accept returns.





Accounts
Receivable and allowance for Doubtful Accounts.




Trade
accounts receivable are stated at the amount management expects to collect from
balances outstanding at the end of the period. An allowance is estimated based
upon (i) management’s assessment of the credit history with customers having
outstanding balances and (ii) the current status of the relationship with the
customer. It is possible the allowance for doubtful accounts could materially
differ than management’s estimate.




Inventory.




Our
provision for inventory write-downs are based on our best estimates of (i)
product sale prices, (ii) customer demand patterns, and (iii) our plan to
transition products. However, due to the fact that we operate in a highly
competitive industry that is characterized by aggressive pricing practices,
downward pressures on gross margins, and rapid technological advances it is
foreseeable that the estimates used by us to determine its provisions for
inventory write-downs will be materially different from the actual amounts or
results. Such differences could result in higher than expected inventory
provisions and related costs, which could have a materially adverse effect on
our results of operations and financial condition in the near term.




Property
and Equipment.




Property
and equipment are stated at cost and depreciated using the straight-line method,
over 5 and 40 years. The carrying value of long lived assets is evaluated
whenever changes in circumstances indicate the carrying amount of such assets
may not be recoverable. If necessary, we recognize an impairment loss for the
difference between the carrying amount of the assets and their estimated fair
value. Fair value is based upon current and anticipated future undiscounted cash
flows. Expenditures for maintenance and repairs are charged to operations as
incurred; additions, renewals and betterments are capitalized. Based upon our
most recent analysis, we believe that no impairment of property and equipment
existed for the 3 months ended December 31, 2007.




Foreign
Currency Translation and Transactions.




The
financial position and results of operations of our foreign subsidiaries are
determined using local currency


(Chinese
Yuan) as the functional currency. Assets and liabilities of the subsidiaries are
translated at the exchange rate in effect at each year end. Contributed capital
accounts are translated using the historical rate of exchange when capital is
injected. Income statement accounts are translated at the average rate of
exchange during the year. Translation adjustments arising from the use of
different exchange rates from period to period are included in the cumulative
translation adjustment account in shareholders’ equity. Gains and losses
resulting from foreign currency transactions are included in operations. Due to
the volatile nature of the Chinese Yuan, the results of operations and financial
condition could be materially impacted.





Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.





On
October 2, 2007, we appointed Patrizio & Zhao, LLC, as our independent
registered public accounting firm to replace Bagell, Josephs, Levine &
Company, LLC following their dismissal on October 2, 2007. This action was
ratified by our board of directors on October 2, 2007. During our fiscal years
ended December 31, 2006 and 2005 and the subsequent interim period through
October 2, 2007, we had no disagreements with Bagell, Josephs, Levine &
Company, LLC on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of Bagell, Josephs, Levine & Company, LLC
would have caused it to make reference to the subject matter of the
disagreements in its report. Bagell, Josephs, Levine & Company, LLC’s report
on our financial statements for the fiscal years ended December 31, 2006 and
2005 did not contain an adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting principles. A
letter addressed to the SEC from Bagell, Josephs, Levine & Company, LLC
stating that it agrees with the above statement was attached as an exhibit to
our Current Report on 8-K filed with the SEC on October 8,
2007.


28









Item
3. Quantitative and Qualitative Disclosure About Market Risk




Not
applicable.




Item
4. Controls and Procedures





Evaluation
of Disclosure Controls and Procedures








We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Acting
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosures. Any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives. Our management, with the participation of our Chief
Executive Officer and Acting Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures as of December 31, 2008.
Based upon that evaluation and subject to the foregoing, our Chief Executive
Officer and Acting Chief Financial Officer concluded that our disclosure
controls and procedures were deficient.




A
material weakness is a significant deficiency in one or more of the internal
control components that alone or in the aggregate precludes our internal
controls from reducing to an appropriately low level the risk that material
misstatements in our financial statements will not be prevented or detected on a
timely basis. Due to staffing and resource constraints, a material weakness
became evident to management regarding our inability to simultaneously close the
books on a timely basis each month and quarter and to generate all the necessary
disclosure for inclusion in our filings with the Securities and Exchange
Commission.





In
addition, this lack of staffing and resources has led to a misstatement in our
financial statements.  On May 4, 2008, the Board of Directors of Jpak
Group, Inc. (“we”, “us”, “our” or the "Company") concluded that the Company is
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


29


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.





This
control deficiency 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 and December 30, 2007) that was not
prevented or detected. Accordingly, management has concluded that this control
deficiency constitutes a material weakness.





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.  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. On May 8, 2008, we appointed Dongliang (Frank) Su as our
      Acting Chief Financial Officer; Ming Qi resigned as our Chief Financial
      Officer, although he will maintain his position as a director on our Board
      on that same day.  Mr. Su has extensive US GAAP and regulatory
      experience and maintains a deep understanding of GAAP and financial
      statements.  Mr. Su is highly skilled in analyzing and
      evaluating various financial issues and in preparing financial
      statements.





●
            Restate Financial Statement:We are
      restating our financial statements for the year ending June 30, 2007 and
      our interim financial statements for the quarters ending September 30,
      2007 and December 31, 2007 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 enable management to conclude that
our disclosure controls are effective and these measures will remediate the
material weaknesses discussed above when all of the additional financial staff
positions are filled, 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 disclosure or internal control.





Changes
in Internal Controls Over Financial Reporting





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-QSB relates that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.








30







PART
II - OTHER INFORMATION




Item
1. Legal Proceedings





Not
applicable.




Item
1A. Risk Factors





Except as
set forth below, there have been no changes to the risk factors set forth in our
filings with the Securities and Exchange Commission.





Risks
Related To Our Business.





The price increase of raw
materials, such as paper materials, polyethylene materials, and aluminum
materials, could increase the cost of our products and reduce our profit
margin.  Paper materials, polyethylene materials, and aluminum
materials are the major materials for our aseptic packaging products. In the
last two years, the prices of paper materials, polyethylene materials and
aluminum materials have fluctuated substantially, as have other raw materials,
due to the increasing demand in China resulting from its rapid economic
development. Although we have managed to minimize the impact of such fluctuation
in the past, there is no assurance that we will be able to do so in the future.
If the price for paper materials, polyethylene materials, aluminum materials,
and other necessary raw materials increases significantly, our profit margin
could decrease considerably and we may not be able to maintain our
profitability.





We may not be able to secure
financing needed for future operating needs on acceptable terms, or on any terms
at all.From time to time, we may seek additional financing to provide
the capital required to maintain or expand our production facilities, implement
research and development and equipment and/or working capital initiatives, as
well as to repay outstanding loans if cash flow from operations is insufficient.
We cannot predict with certainty the timing or account of any such capital
requirements. If such financing is not available on satisfactory terms, we may
be unable to expand our business or develop new business at the desired rate.
Consequently, our operating results may suffer. If we are able to incur debt, we
may be subject to certain restrictions imposed by the terms of the debt and the
repayment of such debt may limit our cash flow and our ability to grow. If we
are unable to incur debt, we may be forced to issue additional equity, which
could have a dilutive effect on our current stockholders.





Expansion of our business may put
added pressure on our management and operational infrastructure impeding our
ability to meet any increased demand for our products and services and possibly
hurting our operating results.Our business plan is to significantly grow
our operations to meet anticipated growth in demand for our products and
services. Our planned growth includes the increase of our line of products and
expansion of sales in our existing markets as well as new markets over the next
few years. Growth in our business may place a significant strain on our
personnel, management, financial systems and other resources. The evolution of
our business also presents numerous risks and challenges, including, but not
limited to:




●
            the
      continued acceptance of our products and services by the packaging
      industries;●
            our
      ability to successfully and rapidly expand sales to potential customers in
      response to potentially increasing
demand;




●
            the
      costs associated with such growth, which are difficult to quantify, but
      could be significant;●
            rapid
      technological change; and●
            the
      highly competitive nature of the packaging
  industries.





If we are
successful in obtaining rapid market growth of our products and services, we
will be required to deliver large volumes of quality products and services to
customers on a timely basis at a reasonable cost to those customers. Meeting any
such increased demands will require us to expand our manufacturing facilities,
to increase our ability to purchase raw materials, to increase the size of our
work force, to expand our quality control capabilities and to increase the scale
upon which we provide our products and services. Such demands would require more
capital and working capital than we currently have available and we may be
unable to meet the needs of our customers, this could adversely affect our
relationship with customers, leading to a reduction in our
revenues.







31







We have a history of operating
losses, and there can be no assurance that we can sustain or increase
profitability and, as a result, may not operate as a going
concern. While we recently achieved an operating profit, we
have had operating losses in some of the years since our inception and there can
be no assurance that we can sustain or increase profitability. Unanticipated
problems, expenses, and delays are frequently encountered in developing and
marketing products. These include, but are not limited to, competition, the need
to develop customers and market expertise, market conditions, sales, marketing,
increases in the cost of raw materials and governmental regulation. Our failure
to meet any of these conditions would have a materially adverse effect upon us
and may force us to reduce or curtail our operations. Revenues and profits, if
any, will depend upon various factors. We may not achieve our business
objectives and the failure to achieve such goals would have an adverse impact on
our business and results of operations. In addition, we expect to incur
additional general and administrative expenses as a public company in the United
States which could also have a negative impact on our
profitability.





Our existing indebtedness may
adversely affect our ability to obtain additional funds and may increase our
vulnerability to economic or business downturns. Our
indebtedness aggregated approximately US$5.8 million as of September 30, 2007.
As a result, we are subject to the risks associated with significant
indebtedness, including:




●
            we
      must dedicate a portion of our cash flows from operations to pay debt
      service costs and, as a result, we have less funds available for
      operations and other purposes;●
            it
      may be more difficult and expensive to obtain additional funds through
      financings, if available at all;●
            we
      are more vulnerable to economic downturns and fluctuations in interest
      rates, less able to withstand competitive pressures and less flexible in
      reacting to changes in our industry and general economic conditions;
      and●
            if
      we default under any of our existing credit facilities or if our creditors
      demand payment of a portion or all of our indebtedness, we may not have
      sufficient funds to make such
payments.




We have pledged substantially all
of our assets to secure our borrowings and are subject to covenants that may
restrict our ability to operate our business. Our borrowings
under our existing loan agreements are secured by substantially all of our
assets. If we default under the indebtedness secured by our assets, those assets
would be available to the secured creditor to satisfy our obligations to the
secured creditor. In addition, our loan agreements impose certain restrictive
covenants, including financial covenants. Failure to satisfy any of these
covenants could result in all or any of the following:




●
            acceleration
      of the payment of our outstanding indebtedness;●
            cross
      defaults to and acceleration of the payment under other financing
      arrangements;●
            our
      inability to borrow additional amounts under our existing financing
      arrangements; and●
            our
      inability to secure financing on favorable terms or at all from
      alternative sources.





Any of
these consequences could adversely affect our ability to acquire consumer
receivable portfolios and operate our business.





The failure to maintain our
relationships with our existing customers or the failure to obtain new customers
could negatively affect our revenues and decrease our earnings or have an
adverse impact on our business. We maintain purchase orders
for the sales of our products to our customers. Although we have entered into
agreements to supply our customers, we cannot assure that such agreements will
be renewed when the terms of such agreements expire or that our relationships
with our customers will be maintained on satisfactory terms, if at all. The
failure to maintain our relationships with our customers or the failure to
obtain new customers could (i) negatively affect our revenues and decrease our
earnings or (ii) adversely impact our business.







We rely on a limited number of
suppliers and the loss of any of our suppliers, or delays or problems in the
supply of materials used in our products, could materially and adversely affect
our business, financial condition, results of operations and growth
prospects. We generally rely on one or two suppliers for each
of the primary materials used in our products, including paper, polyethylene and
aluminum, and otherwise rely on a limited number of suppliers for the other
materials used in our products. Our suppliers may not be able to supply the
necessary materials without interruption. We may not have adequate remedies for
their failure to supply us which could result in a shortage of our products. If
one of our suppliers fails or refuses to supply us for any reason, it could take
time and expense to obtain a new supplier. In addition, our failure to maintain
existing relationships with our suppliers or to establish new relationships in
the future could negatively affect our ability to obtain the materials used in
our products in a timely manner. The search for new suppliers could potentially
delay the manufacture of our products, resulting in shortages in the marketplace
and may cause us to incur additional expense. Failure to comply with applicable
legal requirements subjects our suppliers to possible legal or regulatory
action, including shutdown, which may adversely affect their


32


ability
to supply us with the materials we need for our products. Any delay in
supplying, or failure to supply, materials for our products by any of our
suppliers could result in our inability to meet the commercial demand for our
products, and could adversely affect our business, financial condition, results
of operations and growth prospects.





We may not be able to adequately
protect our intellectual property, which could harm our competitive
advantage. We rely on a combination of patent, copyright,
trademark and trade secret laws and restrictions on disclosure to protect our
intellectual property rights. Piracy of intellectual property is widespread in
China and despite our efforts to protect our intellectual proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
technology. Monitoring unauthorized use of our technology is difficult and
costly, and we cannot be certain that the steps we have taken will prevent
misappropriations of our technology, particularly in countries where the laws
may not protect our intellectual property rights as fully as in other countries
such as the United States of America. In addition, third parties may seek to
challenge, invalidate, circumvent or render unenforceable any intellectual
property rights owned by us. From time to time, we may have to resort to
litigation to enforce our intellectual property rights, which could result in
substantial costs, diversion of our management’s attention and diversion of our
other resources.





The failure to increase our
current manufacturing capacity could materially and adversely affect our
business, financial condition, results of operations and growth
prospects. We currently manufacture our products at a single
facility with two production lines. Manufacturing products at a single site
presents risks because a disaster, such as a fire or hurricane, may interrupt
our manufacturing capability. In such an event, we will have to resort to
alternative sources of manufacturing that could increase our costs as well as
result in significant delays. Any increase in costs, slowdowns or shutdowns
could have a material adverse affect on our business, financial condition,
results of operations and growth prospects.





Our use
of a single manufacturing facility with two production lines may restrict our
ability to attract large customers who require certainty in the production
process. We intend to expand our manufacturing operations by adding additional
production lines, but there is no assurance that we will have the financial
resources required for this planned expansion or that any such expansion will be
successful or completed in a timely fashion or within budget. We may encounter
difficulties and significant unexpected costs and delays in scaling up our
manufacturing operations. The failure to scale-up manufacturing operations in a
timely and cost-effective way may adversely affect our income. In the event the
demand for our products rapidly increases or spikes in a certain period, we may
not have the manufacturing ability to fulfill demand, either in our own
facilities or through agreements with third parties. This lack of manufacturing
capacity could have a material adverse affect on our business, financial
condition, results of operations and growth prospects.





Our failure to successfully
develop new business segments could have a material adverse affect on our
business, financial condition, results of operations and growth
prospects. We are currently pursuing and in the future may
pursue new technologies and businesses segments internally or through
acquisitions or combinations which involve significant risks. Any such
acquisition or combination may involve, among other things, the payment of cash,
the incurrence of contingent liabilities and the amortization of expenses
related to goodwill and other intangible assets, and transaction costs, which
may adversely affect our business, financial condition, results of operations
and growth prospects. Our ability to integrate and organize any new businesses
and/or products, whether internally developed or obtained by acquisition or
combination, will likely require significant expansion of our operations. There
is no assurance that we will have or be able to obtain the necessary resources
to satisfactorily effect such expansion, and the failure to do so could have a
material adverse effect on our business, financial condition, results of
operations and growth prospects. In addition, future acquisitions or
combinations by us involve risks of, among other things, entering markets or
segments in which we have no or limited prior experience, the potential loss of
key employees or difficulty, delay or failure in the integration of the
operations of any such new business with our current business and operating and
financial difficulties of any new or newly combined operations, any of which
could have a materially adverse effect on our business, financial condition,
results of operations and growth prospects. Moreover, there can be no assurance
that the anticipated benefits of any internally developed new business segment
or business combination will be realized.







The loss of one or more members of
our management team or other key employees could affect our ability to
successfully grow our business.Our success and future growth
depends to a significant degree on the skills and continued services of our
management team and other key employees, including but not limited to, Yijun
Wang, our Chairman, Chief Executive Officer and President (and Chairman and
Chief Executive Officer of Qingdao Renmin) and Qingjun Yang, the President of
Qingdao Renmin. Qingdao Renmin currently has employment agreements with its
named executive officers but does not currently maintain key person life
insurance. If one or more members of our management or other key employees were
to resign or no longer be able to serve as our employees, it could impair our
revenue growth, business and future prospects. Further, our ability to execute
our business plan is dependent on our ability to attract and retain additional
highly skilled personnel.




We do not have a majority of
independent directors serving on our board of directors, which could present the
potential for conflicts of interest. We do not have a majority
of independent directors serving on our board of directors and we cannot
guarantee that our board of directors will have a majority of independent
directors in the future. In the absence of a majority of independent directors,
our executive officers could establish policies and enter into transactions
without independent review and approval thereof. This could present the
potential for a conflict of interest between us and our stockholders, generally,
and the controlling officers, stockholders or directors.


33





We may be exposed to risks
relating to our disclosure controls and our internal controls and may need to
incur significant costs to comply with applicable requirements. 
Based on the evaluation done by our management at December 31, 2007, our
disclosure controls were deemed deficient, in that we could not assure that
information required to be disclosed in our SEC reports is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms, and communicated to our
management, so as to allow timely decisions regarding required
disclosures.  Due to staffing and resource constraints, a material weakness
became evident to management regarding our inability to simultaneously close the
books on a timely basis each month and quarter and to generate all the necessary
disclosure for inclusion in our SEC filings. This material weakness caused us to
be late in the filing of our Quarterly Report on Form 10-Q for
the quarter ended December 31, 2007. In our quarterly report for the
quarter ending September 30, 2007, we did not have sufficient resources to
discover and correctly account for the impact of the issuance of certain
warrants on our financial statements.  In addition, this lack of
staffing and resources led to a misstatement in our financial
statements.





Based on
the evaluation done by our management as of March 31, 2008, our internal
controls were deemed deficient, in that we did not accurately account for the
Share Exchange and related transactions so as to avoid a material misstatement
in our financial statements that would not be prevented or detected in a timely
manner.  Due to SEC comments we received concerning our registration
statement on Form S-1, we conducted further research about how to account for
the share exchange and related activities and only then did management recognize
the material weakness. This material weakness caused an error in our financial
statements regarding how we accounted for the share exchange and the placement
agent warrants issued in the financing that closed simultaneously with the share
exchange.  These mistakes flowed through to our financial statements
for the quarters ending September 30, 2007 and December 31, 2007.  On
May 4, 2008, the Board of Directors concluded that we are required to restate
our 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.  Restated
financial statements for the year ending June 30, 2007 will be included in an
amendment to our Registration Statement on Form S-1; restated financials for the
quarter ending September 30, 2007 will be included in an amendment to the
quarterly report for such period, which we filed on this same date and restated
financials for the quarter ending December 31, 2007 are included in this
amendment.




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 SEC filings.  No assurances can be
given that we will be able to adequately remediate existing deficiencies in
disclosure controls and not have deficiencies when we report on internal
controls.  Although we believe that these corrective steps – restating
our financial statements and hiring a new Acting CFO (see Management section
below) – will enable management to conclude that our disclosure controls are
effective and these measures will remediate the material weaknesses discussed
above when all of the additional financial staff positions are filled, 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
disclosure or internal control and to otherwise comply with the internal
controls rules under Section 404 of the Sarbanes-Oxley Act which will be newly
applicable to us for the fist time at the end of this fiscal
year.








If we are unable to establish
appropriate internal financial reporting controls and procedures, it could cause
us to fail to meet our reporting obligations, result in the restatement of our
financial statements, harm our operating results, subject us to regulatory
scrutiny and sanction, cause investors to lose confidence in our reported
financial information and have a negative effect on the market price for shares
of our common stock.Effective internal controls are necessary
for us to provide reliable financial reports and effectively prevent fraud. We
maintain a system of internal control over financial reporting, which is defined
as a process designed by, or under the supervision of, our principal executive
officer and principal financial officer, or persons performing similar
functions, and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.





As a
public company, we will have significant additional requirements for enhanced
financial reporting and internal controls. We will be required to document and
test our internal control procedures in order to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management
assessments of the effectiveness of our internal controls over financial
reporting and a report by our independent registered public accounting firm
addressing these assessments. The process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company.




We cannot
assure you that we will not, in the future, identify additional areas requiring
improvement in our internal control over financial reporting. We cannot assure
you that the measures we will take to remediate any areas in need of improvement
will be successful or that we will implement and maintain adequate controls over
our financial processes and reporting in the future as we continue our growth.
If we are unable to establish appropriate internal financial reporting controls
and procedures, it could cause us to fail to meet our reporting obligations,
result in the restatement of our financial statements, harm our operating
results, subject us to regulatory scrutiny and sanction, cause investors to lose
confidence in our reported financial information and have a negative effect on
the
market price for shares of our common stock.


34







We face significant competition in
each product we offer and each geographic market in which we operate, and if we
fail to compete effectively, we may lose our market share and our profitability
may be adversely affected. The aseptic liquid food and
beverage carton market in China is rapidly evolving and highly competitive. We
expect competition in this market to persist and intensify. We face competition
in each major product line we offer and each geographic market in which we
operate. We face nationwide competition primarily from Tetra Pack and SIG
Cambibloc (“SIG”), both multi-national companies which currently have an
estimated combined 90% of the aseptic carton market. We also face competition
from domestic aseptic carton suppliers in China. Existing or future competing
products may provide (i) better quality and technology, (ii) greater utility,
lower cost or other benefits from their intended uses than our products, or
(iii) may offer comparable performance at lower cost. Many of these companies
are well-established, have substantially greater financial and other resources,
and have more experience in manufacturing and marketing than we do. There can be
no assurance that we will be able to compete successfully with such competitors.
If our products fail to capture and maintain market share, we may not achieve
sufficient product revenues, and our business could suffer.




High margins for the aseptic
liquid food and beverage cartons business will attract more businesses to enter
this field. Our business could suffer as a result of more
competition.  Our business has enjoyed relatively high profit
margins so far due to the fact that we have concentrated in the aseptic liquid
food and beverage carton business. Such high margins will attract more
businesses to enter into this field. As a result, competition may intensify and
our profits may drop significantly.





Risks
Related To Doing Business in China




Changes in China’s political or
economic situation could harm us and our operational results.Economic
reforms adopted by the Chinese government have had a positive effect on the
economic development of the country, but the government could change these
economic reforms or any of the legal systems at any time. This could either
benefit or damage our operations and profitability. Some of the things that
could have this effect are:





●
            level
      of government involvement in the economy;●
            control
      of foreign exchange;●
            methods
      of allocating resources;●
            balance
      of payments position;●
            international
      trade restrictions; and●
            international
      conflict.





The
Chinese economy differs from the economies of most countries belonging to the
Organization for Economic Cooperation and Development, or OECD, in many ways.
The economic reforms in China have been conducted under a tight grip of the
Chinese government. As a result of these differences, we may not develop in the
same way or at the same rate as might be expected if the Chinese economy were
similar to those of the OECD member countries.




Our business is largely subject to
the uncertain legal environment in China and your legal protection could be
limited.The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which precedents set in
earlier legal cases are not generally used. The overall effect of legislation
enacted over the past 20 years has been to enhance the protections afforded to
foreign invested enterprises in China. However, these laws, regulations and
legal requirements are relatively recent and are evolving rapidly, and their
interpretation and enforcement involve uncertainties. These uncertainties could
limit the legal protections available to foreign shareholders, such as the right
of foreign invested enterprises to hold licenses and permits such as requisite
business licenses. Because most of our officers and directors reside outside of
the United States, it may be difficult, if not impossible, to acquire
jurisdiction over those persons if a lawsuit is initiated against us and/or its
officers and directors by a shareholder or group of shareholders in the United
States. Also, because our officers will likely be residing in the PRC at the
time such a suit is initiated, achieving service of process against such persons
would be extremely difficult. Furthermore, because the majority of our assets
are located in the People’s Republic of China (“PRC”) it would also be extremely
difficult to access those assets to satisfy an award entered against us in
United States court. Moreover, we have been advised that the PRC does not have
treaties with the United States providing for the reciprocal recognition and
enforcement of judgments of courts.







35







Recent PRC regulations relating to
mergers and acquisitions of domestic enterprises by foreign investors may
increase the administrative burden we face and create regulatory
uncertainties. On August 8, 2006, six PRC regulatory agencies, namely,
the PRC Ministry of Commerce (“MOFCOM”), the State Assets Supervision and
Administration Commission (“SASAC”), the State Administration for Taxation, the
State Administration for Industry and Commerce, the China Securities Regulatory
Commission (“CSRC”), and the State Administration of Foreign Exchange, (“SAFE”),
jointly adopted the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (“New M&A Rule”), which became effective on
September 8, 2006. The New M&A Rule purports, among other things, to require
offshore special purpose vehicles (“SPVs”), formed for overseas listing purposes
through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals, to obtain the approval of the CSRC prior to publicly listing
their securities on an overseas stock exchange.





On
September 21, 2006, pursuant to the New M&A Rule and other PRC laws and
regulations, the CSRC, in its official website, promulgated relevant guidance
with respect to the issues of listing and trading of domestic enterprises’
securities on overseas stock exchanges (the “Administrative Permits”), including
a list of application materials with respect to the listing on overseas stock
exchanges by SPVs.





Based on
our understanding of current PRC Laws, we believe that the New M&A Rule does
not require us or our Chinese shareholders or our entities in China to obtain
the CSRC approval in connection with the transaction contemplated by the share
exchange agreement, by and among the Company, Jpak and the shareholders of Jpak
named therein, dated as of August 9, 2007 (the “Securities Exchange Agreement”
or “SEA”), in connection with the Share Exchange because Grand International
completed the approval procedures of the acquisition of the 88.23% equity
interest in Qingdao Renmin at MOFCOM before September 8, 2006 when the New
M&A Rule became effective.





There
are, however, substantial uncertainties regarding the interpretation and
application of current or future PRC laws and regulations, including the New
M&A Rule. Accordingly, we cannot assure you that PRC government authorities
will not ultimately take a view contrary to our understanding that we do not
need the CSRC approval, and PRC government authorities may impose some
additional approvals and requirements.





Further,
if the PRC government finds that we or our Chinese shareholders did not obtain
the CSRC approval, which CSRC may think we should have obtained before our
executing the Securities Exchange Agreement, we could be subject to severe
penalties. The New M&A Rule does not stipulate the specific penalty terms,
so we are not able to predict what penalties we may face, and how such penalties
will affect our business operations or future strategy.





The Chinese government exerts
substantial influence over the manner in which we must conduct our business
activities.China only recently has permitted provincial and local
economic autonomy and private economic activities and, as a result, we are
dependent on our relationship with the local government in the province in which
we operate our business. Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. Our ability to operate in China may be
harmed by changes in its laws and regulations, including those relating to
taxation, import and export tariffs, environmental regulations, land use rights,
property and other matters. We believe that our operations in China are in
material compliance with all applicable legal and regulatory requirements.
However, the central or local governments of these jurisdictions may impose new,
stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations. Accordingly, government actions in the
future, including any decision not to continue to support recent economic
reforms and to return to a more centrally planned economy or regional or local
variations in the implementation of economic policies, could have a significant
effect on economic conditions in China or particular regions thereof, and could
require us to divest ourselves of any interest we then hold in Chinese
properties.




Future inflation in China may
inhibit our activity to conduct business in China. In recent years, the
Chinese economy has experienced periods of rapid expansion and high rates of
inflation. During the past ten years, the rate of inflation in China has been as
high as 20.7% and as low as -2.2%. These factors have led to the adoption by
Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation.
While inflation has been more moderate since 1995, high inflation may in the
future cause Chinese government to impose controls on credit and/or prices, or
to take other action, which could inhibit economic activity in China, and
thereby harm the market for our products.




36







Restrictions on currency exchange
may limit our ability to receive and use our revenues effectively.The
majority of our revenues will be settled in RMB (“RMB”) and, any future
restrictions on currency exchanges may limit our ability to use revenue
generated in RMB to fund any future business activities outside China or to make
dividend or other payments in U.S. dollars. Although the Chinese government
introduced regulations in 1996 to allow greater convertibility of the RMB for
current account transactions, significant restrictions still remain, including
primarily the restriction that foreign-invested enterprises may only buy, sell
or remit foreign currencies after providing valid commercial documents, at those
banks in China authorized to conduct foreign exchange business. In addition,
conversion of RMB for capital account items, including direct investment and
loans, is subject to governmental approval in China, and companies are required
to open and maintain separate foreign exchange accounts for capital account
items. We cannot be certain that the Chinese regulatory authorities will not
impose more stringent restrictions on the convertibility of the
RMB.




The value of our securities will
be affected by the foreign exchange rate between U.S. dollars and RMB.The value of our common stock will be affected by the foreign exchange
rate between U.S. dollars and RMB, and between those currencies and other
currencies in which our sales may be denominated. For example, to the extent
that we need to convert U.S. dollars into RMB for our operational needs and
should the RMB appreciate against the U.S. dollar at that time, our financial
position, the business of the company, and the price of our common stock may be
harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the
purpose of declaring dividends on our common stock or for other business
purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar
equivalent of our earnings from our subsidiaries in China would be
reduced.





Government regulations and
environmental matter in China may adversely impact on our business. Our
manufacturing operations are subject to numerous laws,
regulations,     rules and specifications relating to
human health and safety and     the environment. These
laws and regulations address and regulate, among
other     matters, wastewater discharge, air quality
and the generation, handling,     storage, treatment,
disposal and transportation of solid and hazardous
wastes     and releases of hazardous substances into
the environment. In addition, third     parties and
governmental agencies in some cases have the power under such
laws     and regulations to require remediation of
environmental conditions and, in the     case of
governmental agencies, to impose fines and penalties. We make capital
expenditures from time to time to stay in compliance
with     applicable laws and regulations.




We have
obtained all permits and approvals and filed all registrations required for the
conduct of its business, except where the failure to obtain any permit or
approval or file any registration would not have a material adverse effect on
our business, financial condition and results of operations. We are in
compliance in all material respects with the numerous laws,
regulations,     rules, specifications and permits,
approvals and registrations relating to human health and safety and the
environment except where noncompliance would not have a material adverse effect
on our business, financial condition and results of operations.




The PRC
governmental authorities have not revealed any material environmental liability
that would have a material adverse effect on us. We have not been notified by
any governmental authority of any continuing noncompliance, liability or other
claim in connection with any of our properties or business operations, nor are
we aware of any other material environmental condition with respect to any of
our properties or arising out of our business operations at any other location.
However, in connection with the ownership and operation of our properties
(including locations to which we may have sent waste in the past) and the
conduct of our business, we potentially may be liable for damages or cleanup,
investigation or remediation costs.




No
assurance can be given that all potential environmental liabilities have been
identified or properly quantified or that any prior owner, operator, or tenant
has not created an environmental condition unknown to us. Moreover, no assurance
can be given that (i) future laws, ordinances or regulations will not impose any
material environmental liability or (ii) the current environmental condition of
the properties will not be affected by the condition of land or operations in
the vicinity of the properties (such as the presence of underground storage
tanks), or by third parties unrelated to us. State and local environmental
regulatory requirements change often.




It is
possible that compliance with a new regulatory requirement could impose
significant compliance costs on us. Such costs could have a material adverse
effect on our business, financial condition and results of
operations.




We may have difficulty
establishing adequate management, legal and financial controls in the PRC.The PRC historically has been deficient in Western style management and
financial reporting concepts and practices, as well as in modern banking,
computer and other control systems. We may have difficulty in hiring and
retaining a sufficient number of qualified employees to work in the PRC. As a
result of these factors, we may experience difficulty in establishing
management, legal and financial controls, collecting financial data and
preparing financial statements, books of account and corporate records and
instituting business practices that meet Western standards.




Changes in foreign exchange
regulations in the PRC may affect our ability to pay dividends in foreign
currency or conduct other foreign exchange business. RMB is
not a freely convertible currency currently, and the restrictions on currency
exchanges may limit our ability to use revenues generated in RMB to fund our
business activities outside the PRC or to make dividends or other payments in
United States dollars. The PRC government strictly regulates conversion of RMB
into foreign currencies. Over the years, foreign exchange regulations in the PRC
have significantly reduced the government’s control over routine foreign
exchange transactions


37


under
current accounts. In the PRC, the State Administration for Foreign Exchange, or
the SAFE, regulates the conversion of the RMB into foreign currencies. Pursuant
to applicable PRC laws and regulations, foreign invested enterprises
incorporated in the PRC are required to apply for “Foreign Exchange Registration
Certificates.” Currently, conversion within the scope of the “current account”
(e.g. remittance of foreign currencies for payment of dividends, etc.) can be
effected without requiring the approval of SAFE. However, conversion of currency
in the “capital account” (e.g. for capital items such as direct investments,
loans, securities, etc.) still requires the approval of SAFE.




In
addition, on October 21, 2005, SAFE issued the Notice on Issues Relating to the
Administration of Foreign Exchange in Fundraising and Reverse Investment
Activities of Domestic Residents Conducted via Offshore Special Purpose
Companies (“Notice 75”), which became effective as of November 1, 2005. Notice
75 replaced the two rules issued by SAFE in January and April 2005.




According
to Notice 75:




●
            prior
      to establishing or assuming control of an offshore company for the purpose
      of obtaining overseas equity financing with assets or equity interests in
      an onshore enterprise in the PRC, each PRC resident, whether a natural or
      legal person, must complete the overseas investment foreign exchange
      registration procedures with the relevant local SAFE
    branch;●
            an
      amendment to the registration with the local SAFE branch is required to be
      filed by any PRC resident that directly or indirectly holds interests in
      that offshore company upon either (1) the injection of equity interests or
      assets of an onshore enterprise to the offshore company, or (2) the
      completion of any overseas fund raising by such offshore company;
      and●
            an
      amendment to the registration with the local SAFE branch is also required
      to be filed by such PRC resident when there is any material change in the
      capital of the offshore company that does not involve any return
      investment, such as (1) an increase or decrease in its capital, (2) a
      transfer or swap of shares, (3) a merger or division, (4) a long term
      equity or debt investment, or (5) the creation of any security
      interests.




Moreover,
Notice 75 applies retroactively. As a result, PRC residents who have established
or acquired control of offshore companies that have made onshore investments in
the PRC in the past are required to complete the relevant overseas investment
foreign exchange registration procedures by March 31, 2006. Under the relevant
rules, failure to comply with the registration procedures set forth in Notice 75
may result in restrictions being imposed on the foreign exchange activities of
the relevant onshore company, including the payment of dividends and other
distributions to its offshore parent or affiliate and the capital inflow from
the offshore entity, and may also subject relevant PRC residents to penalties
under PRC foreign exchange administration regulations.






In
addition, SAFE issued updated internal implementing rules (“Implementing Rules”)
in relation to Notice 75. The Implementing Rules were promulgated and became
effective on May 29, 2007. Such Implementing Rules provide more detailed
provisions and requirements regarding the overseas investment foreign exchange
registration procedures. The Implementing Rules permits retroactive registration
for PRC residents who have established or acquired control of offshore companies
that have made onshore investments in the PRC in the past but did not complete
the relevant overseas investment foreign exchange registration procedures before
March 31, 2006. But there may be penalties on the relevant PRC residents and the
relevant onshore company if any foreign exchange transactions were paid out from
the relevant onshore company to the relevant offshore company between April 21,
2005 and the date of the application for the registration. However, even after
the promulgation of Implementing Rules there still exist uncertainties regarding
the SAFE registration for PRC residents’ interests in overseas companies. It
remains uncertain whether PRC residents shall go through the overseas investment
foreign exchange registration procedures under Notice 75 or Implementing Rules,
who may indirectly hold our shares through the participation and exercise of
incentive stock option granted by Joyrich Group Limited and Fabregas Group
Limited, shareholders of our company.




As a
result, we cannot predict how they will affect our business operations following
our business combination. For example, our ability to conduct foreign exchange
activities following a business combination, such as remittance of dividends and
foreign-currency-denominated borrowings, may be subject to compliance with the
SAFE registration requirements by such PRC residents, over whom we have no
control. In addition, we cannot assure you that such PRC residents will be able
to complete the necessary approval and registration procedures required by the
SAFE regulations. We will require all our shareholders, following a business
combination, who are PRC residents to comply with any SAFE registration
requirements, if required by Notice 75, Implementing Rules or other applicable
PRC laws and regulations, although we have no control over either our
shareholders or the outcome of such registration procedures. Such uncertainties
may restrict our ability to implement our business combination strategy and
adversely affect our business and prospects following a business
combination.




38


Our
future employee stock option plan or stock ownership plan involving any PRC
domestic individual will be subject to the administration of foreign exchange in
the PRC . In accordance with the Measures of Administration on Foreign Exchange
of Individuals promulgated on December 25, 2006 (the “Measures”) and the
Implementing Rules of the Measures of Administration on Foreign Exchange of
Individuals (the “Implementing Rules of Measures”), which became effective in
February 2007, a PRC domestic individual (i.e., a Chinese citizen as defined)
who participates in the employees stock option plan or stock plan of an overseas
listed company shall conduct foreign exchange related affairs upon the prior
approval of SAFE and/or its local branch through its employer or a PRC agency.
The dividends of the shares or proceeds received from sale of shares under the
stock option plan or stock ownership plan in foreign exchange by such PRC
domestic individual shall be remitted and deposited into the special onshore
foreign currency bank account in the PRC opened by the employer or the PRC
agency. Furthermore, following the Implementing Rules of Measures, SAFE issued
the Operating Procedures for Administration of Domestic Individuals
Participating in the Employee Stock Ownership Plan or Stock Option Plan of An
Overseas Listed Company (Hui Zong Fa [2007] No. 78, the “Circular 78”) on April
6, 2007. Circular 78, which introduces a number of new and highly restrictive
requirements, applies to any employee stock option plan or stock ownership plan
offered by a PRC or non-PRC company whose shares are listed on an overseas stock
exchange. Given these PRC regulations, if we approve and implement any employee
stock option plan or stock ownership plan which will involve any PRC domestic
individual, the SAFE registration for such PRC domestic individual participating
in the employee stock ownership plan or stock option plan shall apply and be
required. Nevertheless, Circular 78 only applies to the overseas listed company
other than an overseas private company and as a result, the incentive stock
option granted by Joyrich Group Limited and Fabregas Group Limited, shareholders
of our company and private companies, to PRC residents do not fall into such
SAFE registration under Circular 78. Currently it is silent in terms of PRC
statutory requirements with respect to the PRC domestic individuals
participating in employee stock ownership plan or stock option plan of an
overseas private company, since there are no applicable PRC laws or regulations.
It is unclear how future regulations will impact the incentive stock options
granted by Joyrich Group Limited and Fabregas Group Limited.












Risks
Relating to Our Securities





Insiders have substantial control
over us, and they could delay or prevent a change in our corporate control even
if our other stockholders wanted it to occur.Our executive
officers, directors, and principal stockholders who hold 5% or more of our
outstanding common stock own, in the aggregate, approximately 96% of our
outstanding common stock. These stockholders are able to control all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. This could delay or prevent an outside
party from acquiring or merging with us even if our other stockholders wanted it
to occur.




There is no active public trading
market for our common stock and there can be no assurance that one will develop
in the future.  There is no active public trading market for
our common stock. Our common stock is quoted on the OTC Bulletin Board. There
can be no assurance that a regular trading market will develop or that if
developed, will be sustained. The development of an active trading market will
depend on the existence of willing buyers and sellers, the presence of which is
not within our control, or the control of any market maker or specialist. The
number of active buyers and sellers of our common stock at any particular time
may be limited. Under such circumstances, our shareholders could have difficulty
selling our shares on short notice, and, therefore, our common stock should not
be viewed as a short-term or liquid investment. In the absence of a trading
market, a shareholder will be unable to liquidate his investment except by
private sale.





If we fail to remain current on
our reporting requirements, we could be removed from the OTC Bulletin Board
which would limit the ability of broker dealers to sell our securities and the
ability of stockholders to sell their securities in the secondary
market. Companies trading on the OTC Bulletin Board must be
reporting issuers under Section 12 of the Securities Exchange Act of 1934, as
amended, and must be current in their reports under Section 13, in order to
maintain price quotation privileges on the OTC Bulletin Board. If we fail to
remain current on our reporting requirements, we could be removed from the OTC
Bulletin Board. As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market. In addition, we may be unable to get re-listed on the OTC
Bulletin Board, which may have an adverse material effect on our
company.




Any market that develops in shares
of our common stock will be subject to the penny stock regulations and
restrictions, which could impair liquidity and make trading
difficult.SEC Rule 15g-9, as amended, establishes the
definition of a "penny stock" as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to a limited number of exceptions. It is likely that our shares
will be considered to be penny stocks for the immediately foreseeable future.
This classification severely and adversely affects the market liquidity for our
common stock.





For any
transaction involving a penny stock, unless exempt, the penny stock rules
require that a broker or dealer approve a person’s account for transactions in
penny stocks and the broker or dealer receive from the investor a written
agreement to the transaction setting forth the identity and quantity of the
penny stock to be purchased.   To approve a person’s account for
transactions in penny stocks, the broker or dealer must obtain financial
information and investment experience and objectives of the person and make a
reasonable determination that the transactions in penny stocks are suitable for
that person and that that person has sufficient knowledge and experience in
financial matters to be capable of evaluating the risks of transactions in penny
stocks.


39


The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the SEC relating to the penny stock market
which, in highlight form, sets forth:





●
            the
      basis on which the broker or dealer made the suitability determination,
      and●
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.





Disclosure
also has to be made about the risks of investing in penny stock in both public
offerings and in secondary trading and commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.






Because
of these regulations, broker-dealers may not wish to engage in the
above-referenced necessary paperwork and disclosures and/or may encounter
difficulties in their attempt to sell shares of our common stock, which may
affect the ability of selling stockholders or other holders to sell their shares
in any secondary market and have the effect of reducing the level of trading
activity in any secondary market. These additional sales practice and disclosure
requirements could impede the sale of our securities, if and when our securities
become publicly traded. In addition, the liquidity for our securities may
decrease, with a corresponding decrease in the price of our securities. Our
shares, in all probability, will be subject to such penny stock rules for the
foreseeable future and our shareholders will, in all likelihood, find it
difficult to sell their securities.




The market for penny stocks has
experienced numerous frauds and abuses which could adversely impact investors in
our stock.  OTC Bulletin Board securities are frequent targets
of fraud or market manipulation, both because of their generally low prices and
because OTC Bulletin Board reporting requirements are less stringent than those
of the stock exchanges or NASDAQ.





Patterns
of fraud and abuse include:





●
            Control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or issuer;●
            Manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;●
            “Boiler
      room" practices involving high pressure sales tactics and unrealistic
      price projections by inexperienced sales persons;●
            Excessive
      and undisclosed bid-ask differentials and markups by selling
      broker-dealers; and●
            Wholesale
      dumping of the same securities by promoters and broker-dealers after
      prices have been manipulated to a desired level, along with the inevitable
      collapse of those prices with consequent investor
  losses.





Our
management is aware of the abuses that have occurred historically in the penny
stock market.





In the event that we raise
additional capital through the issuance of equity securities, or securities
exercisable for or convertible into our equity securities, our stockholders
could experience substantial dilution. If we raise additional
capital by issuing equity securities or convertible debt securities, our
existing stockholders may incur substantial dilution. Further, any shares so
issued may have rights, preferences and privileges superior to the rights,
preferences and privileges of our outstanding securities.





The market price of our common
stock may be volatile.The market price of our common stock will likely
be highly volatile, as is the stock market in general, and the market for OTC
Bulletin Board quoted stocks in particular. Some of the factors that may
materially affect the market price of our common stock are beyond our control,
such as changes in financial estimates by industry and securities analysts,
conditions or trends in industries in which we operate, announcements made by
our competitors or sales of our common stock. These factors may materially
adversely affect the market price of our common stock, regardless of our
performance.





In
addition, the public stock markets have experienced extreme price and trading
volume volatility. This volatility has significantly affected the market prices
of securities of many companies for reasons frequently unrelated to the
operating performance of the specific companies. These broad market fluctuations
may adversely affect the market price of our common stock.





We have not paid dividends in the
past and do not expect to pay dividends in the future, and any return on
investment may be limited to the value of our stock.We have
never paid any cash dividends on our common stock and do not anticipate paying
any cash dividends
on our common stock in the foreseeable future and any return on investment may
be limited to the value of our stock. We plan to retain any future earnings to
finance growth.


40







Anti-takeover provisions of Nevada
law, our articles of incorporation and our bylaws may prevent or delay an
acquisition of us that shareholders may consider favorable or attempts to
replace or remove our management that could be beneficial to our
shareholders. Our articles of incorporation and bylaws contain
provisions which could make it more difficult for a third party to acquire us
without the consent of our board of directors. Our bylaws impose restrictions on
the persons who may call special shareholder meetings. Furthermore, the Nevada
Revised Statutes contain an affiliated transaction provision that prohibits a
publicly-held Nevada corporation from engaging in a broad range of business
combinations or other extraordinary corporate transactions with an “interested
stockholder” unless, among others, (i) the transaction is approved by a majority
of disinterested directors before the person becomes an interested shareholder
or (ii) the transaction is approved by the holders of a majority of the
corporation’s voting shares other than those owned by the interested
shareholder. An interested shareholder is defined as a person who together with
affiliates and associates beneficially owns more than 10% of the corporation’s
outstanding voting shares. This provision may have the effect of delaying or
preventing a change of control of our company even if this change of control
would benefit our shareholders.












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





Not
applicable.




Item
5. Other Information











Item
6. Exhibits





See
Exhibit Index on page 20 for a description of the documents that are filed
as Exhibits to this report on Form 10-Q or incorporated by reference
herein.







41







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 OfficerBy:
            /s/
      Dongliang (Frank) SuDongliang
      (Frank) Su
              Acting
      ChiefFinancial Officer




Date:
August 4, 2008







42







EXHIBIT
INDEX




Exhibit No.
            
            Description2.1
            
            Securities
      Exchange Agreement by and among Jpak Group, Inc., Jpak Group Co., Ltd.,
      the shareholders of Jpak Group Co., Ltd. named therein and the selling
      party named therein, dated as of August 9, 2007 (incorporated by reference
      to Exhibit 2.1 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.1
            
            Articles
      of Incorporation of Jpak Group, Inc. (f/k/a Rx Staffing, Inc.), filed with
      the Secretary of State of Nevada on December 6, 2004 (incorporated by
      reference to Exhibit 3 of Rx Staffing, Inc.’s Form SB-2 filed on June 10,
      2005).3.1(a)
            
            Certificate
      of Amendment to Articles of Incorporation, filed with the Secretary of
      State of Nevada on November 29, 2006 (incorporated by reference to Exhibit
      3.1(a) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.1(b)
            
            Certificate
      of Amendment to Articles of Incorporation, filed with the Secretary of
      State of Nevada on July 27, 2007 (incorporated by reference to Exhibit
      3.1(b) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.2
            
            By-laws
      of Jpak Group, Inc. (f/k/a Rx Staffing, Inc.), adopted on December 10,
      2004 (incorporated by reference to Exhibit 3 of Rx Staffing, Inc.’s Form
      SB-2 filed on June 10, 2005).3.2(a)
            
            First
      Amendment to By-laws adopted on July 27, 2007 (incorporated by reference
      to Exhibit 3.2(a) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).4.1
            
            Certificate
      of Designation of the Relative Rights and Preferences of the Series A
      Convertible Preferred Stock of Jpak Group, Inc., filed with the Secretary
      of State of Nevada on August 9, 2007 (incorporated by reference to Exhibit
      4.1 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
    2007).4.1(a)
            
            Amendment
      to the Certificate of Designation of the Relative Rights and Preferences
      of the Series A Convertible Preferred Stock of Jpak Group, Inc., filed
      with the Secretary of State of Nevada on October 1, 2007 (incorporated by
      reference to Exhibit 4.1(a) of the Company’s Form 8-K filed on October 9,
      2007).4.2
            
            Certificate
      of Designation of the Relative Rights and Preferences of the Series B
      Convertible Preferred Stock of Jpak Group, Inc. (incorporated by reference
      to Exhibit 4.2 of Rx Staffing, Inc.’s Form 8-K filed on January 4,
      2008).4.3
            
            Series
      A Warrant to Purchase shares of common stock of Jpak Group, Inc., issued
      on August 9, 2007 (incorporated by reference to Exhibit 4.3 of Rx
      Staffing, Inc.’s Form 8-K filed on August 15, 2007).4.4
            
            Series
      B Warrant to Purchase shares of common stock of Jpak Group, Inc., issued
      on August 9, 2007 (incorporated by reference to Exhibit 4.4 of Rx
      Staffing, Inc.’s Form 8-K filed on August 15, 2007).4.5
            
            Series
      J Warrant to Purchase shares of the Series B Convertible Preferred Stock,
      Series C Warrants to Purchase common stock and Series D Warrants to
      Purchase common stock, issued August 9, 2007 (incorporated by reference to
      Exhibit 4.5 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).4.6
            
            Series
      C Warrant to Purchase shares of common stock of Jpak Group, Inc.
      (incorporated by reference to Exhibit 4.6 of Rx Staffing, Inc.’s Form 8-K
      filed on January 8, 2008).4.7
            
            Series
      D Warrant to Purchase shares of common stock of Jpak Group, Inc.
      (incorporated by reference to Exhibit 4.7 of Rx Staffing, Inc.’s Form 8-K
      filed on January 8, 2008).10.1
            
            Note
      Purchase Agreement by and among Jpak Group Co., Ltd, Grand International
      Industrial Limited and the investors identified therein, dated as of May
      17, 2007 (incorporated by reference to Exhibit 10.1 of Rx Staffing, Inc.’s
      Form 8-K filed on August 15, 2007).10.2
            
            Joinder
      Agreement executed by Jpak Group, Inc., dated as of August 9, 2007
      (incorporated by reference to Exhibit 10.2 of Rx Staffing, Inc.’s Form 8-K
      filed on August 15, 2007).10.3
            
            Registration
      Rights Agreement by and among Jpak Group, Inc. and the purchasers named
      therein, dated as of August 9, 2007 (incorporated by reference to Exhibit
      10.3 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).10.4
            
            Securities
      Escrow Agreement by and among Jpak Group, Inc., the purchasers named
      therein, the principal stockholders of Jpak Group, Inc. named therein and
      the escrow agent named therein, dated as of August 9, 2007 (incorporated
      by reference to Exhibit 10.4 of Rx Staffing, Inc.’s Form 8-K filed on
      August 15, 2007).10.5
            
            Lock-Up
      Agreement by and among Jpak Group, Inc. and the shareholders of Jpak
      Group, Inc. named therein, dated as of August 9, 2007 (incorporated by
      reference to Exhibit 10.5 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).









43







10.6
            
            Working
      Capital Loan Contract, effective as of August 27, 2006, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.6 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.7
            
            Working
      Capital Loan Contract, effective as of February 12, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Qingdao City
      Commercial Bank, Yongping Branch, as lender (incorporated by reference to
      Exhibit 10.7 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).





10.8
            
            Working
      Capital Loan Contract, effective as of February 12, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.8 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.9
            
            Working
      Capital Loan Contract, effective as of April 10, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.9 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.10
            
            Employment
      Agreement, effective June 1, 2001, by and between Qindgao Renmin Printing
      Co., Ltd., as employer and Yijun Wang, as employee (incorporated by
      reference to Exhibit 10.10 of Rx Staffing, Inc.’s Registration Statement
      on Form S-1 filed on November 9, 2007).10.11
            
            Employment
      Agreement, effective June 1, 2001, by and between Qindgao Renmin Printing
      Co., Ltd., as employer and Ming Qi, as employee (incorporated by reference
      to Exhibit 10.11 of Rx Staffing, Inc.’s Registration Statement on Form S-1
      filed on November 9, 2007).31.1
            
            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.









44