UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM 10-Q





[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              For
      the quarterly period ended September 30,
2008





OR




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






Commission file number:000-1321559















Jpak
Group, Inc.


(Exact
name of Registrant as specified in its charter)











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




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




(86-532)
84616387


(Registrant’s
telephone number,


including
area code)




________________________________________________________


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





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




YesX
No




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




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




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




Yes
 NoX




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




On
November 13, 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.















JPAK
GROUP, INC.





INDEX





Page
              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
            
            Financial
      StatementsConsolidated
      Balance SheetsSeptember
      30, 2008 (unaudited)
            
            3Consolidated
      Statements of Operations (unaudited)Three
      months ended September 30, 2008 and 2007
            
            4Consolidated
      Statements of Cash Flows (unaudited)Three
      months ended September 30, 2008 and 2007
            
            5Notes
      to Condensed Consolidated Financial Statements
            
            6Item
      2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
            
            13Item
      3.
            
            Quantitative
      and Qualitative Disclosure About Market Risks
            
            18Item
      4.
            
            Controls
      and Procedures
            
            19Item
      4T
            
            Controls
      and Procedures
            
            21PART
      II - OTHER INFORMATIONItem
      1.
            
            Legal
      Proceedings
            
            21Item
      1.A
            
            Risk
      Factors
            
            21Item
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            21Item
      3.
            
            Defaults
      Upon Senior Securities
            
            21Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            21Item
      5.
            
            Other
      Information
            
            21Item
      6.
            
            Exhibits
            
            22










PART
I. FINANCIAL INFORMATION




Item
1. Financial Statements





Report
of Independent Registered Public Accounting Firm





To the
Board of Directors and Stockholders


JPAK
Group, Inc.:








We have reviewed the accompanying
consolidated balance sheet of JPAK Group, Inc. and subsidiaries (the “Company”)
as of September 30, 2008, and the related consolidated statements of operations
and other comprehensive income, and cash flows for the three months ended
September 30, 2008 and 2007. These consolidated financial statements are the
responsibility of the company’s management.





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





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




















/s/  Patrizio
& Zhao, LLC


Patrizio
& Zhao, LLC





Parsippany,
New Jersey


November
4, 2008


2







JPAK GROUP, INC.


Consolidated
Balance Sheets


(Unaudited)


September 30,
            
            
            June 30,2008
            
            
            2008(unaudited)ASSETSCURRENT
      ASSETSCash and cash
      equivalents
            
            $
            7,440,835
            
            
            $
            7,218,904Accounts receivable, net of
      allowance for doubtful accounts of $196,172and $45,359 at September
      30, 2008 and June 30, 2007, respectively
            
            
            8,428,677
            
            
            
            9,026,455Inventory
            
            
            5,310,385
            
            
            
            5,420,631Other receivables
            
            
            1,224,595
            
            
            
            1,131,511Prepaid expenses and other
      current assets
            
            
            302,911
            
            
            
            96,751Advance payments
            
            
            1,925,051
            
            
            
            1,367,622Total Current
    Assets
            
            
            24,632,454
            
            
            
            24,261,874PROPERTY
      AND EQUIPMENT, NET
            
            
            11,642,817
            
            
            
            11,660,063Total Assets
            
            $
            36,275,271
            
            
            $
            35,921,937LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
            
            $
            2,563,886
            
            
            $
            3,598,732Trade notes
    payable
            
            
            4,380,520
            
            
            
            3,784,956Short term bank
    loans
            
            
            3,072,300
            
            
            
            3,063,900Current portion of long-term
      debt
            
            
            1,140,701
            
            
            
            1,263,786Other payables
            
            
            216,719
            
            
            
            259,861Total Current
      Liabilities
            
            
            11,374,126
            
            
            
            11,971,235LONG-TERM
      DEBT
            
            
            908,523
            
            
            
            655,091MINORITY
      INTEREST
            
            
            105,487
            
            
            
            105,690Total Liabilities
            
            
            12,388,136
            
            
            
            12,732,016STOCKHOLDERS’
      EQUITYSeries A convertible preferred
      stock, $0.0001 par value, 5,608,564shares authorized,
      issued and outstanding
            
            
            561
            
            
            
            561Common stock, $0.001 par value,
      300,000,000 shares authorized24,805,000and
      24,505,000 shares issued and outstanding atSeptember 30 2008 and
      June 30, 2008
            
            
            24,805
            
            
            
            24,505Series B convertible preferred
      stock, $0.0001 par value, 5,000,000shares authorized,
      issued and outstanding
            
            
            500
            
            
            
            500Series A Preferred
      Shares
            
            
            2,484,226
            
            
            
            2,484,226Series B Preferred
      Shares
            
            
            1,390,853
            
            
            
            1,390,853Warrants
            
            
            4,634,678
            
            
            
            4,634,678Placement Agent
      Warrants
            
            
            1,172,487
            
            
            
            1,172,487Additional paid-in
      capital
            
            
            11,453,056
            
            
            
            11,048,604Retained earnings
            
            
            (230,660
            )
            
            
            (562,030
            )Statutory
reserves
            
            
            348,009
            
            
            
            348,009Accumulated other comprehensive
      income
            
            
            2,608,620
            
            
            
            2,647,528Total Stockholders’
      Equity
            
            
            23,887,135
            
            
            
            23,189,921Total Liabilities and
      Stockholders’ Equity
            
            $
            36,275,271
            
            
            $
            35,921,937The
      accompanying notes are an integral part part of these consolidated
      financial statements.








3




JPAK GROUP, INC.




Consolidated
Statements of Operations and Comprehensive Income


(Unaudited)


For
      the Three Months EndedSeptember
      30,2008
            
            
            2007SALES
            
            $
            9,430,330
            
            
            $
            9,304,248COST
      OF SALES
            
            
            6,995,902
            
            
            
            6,987,181GROSS
      PROFIT
            
            
            2,434,428
            
            
            
            2,317,067OPERATING
      EXPENSESSelling, general and
      administrative
            
            
            2,107,661
            
            
            
            1,370,346INCOME
      FROM OPERATIONS
            
            
            326,767
            
            
            
            946,721OTHER
      INCOME (EXPENSES)Non-operating
    income
            
            
            21,675
            
            
            
            10,163Interest Income
            
            
            21,166
            
            
            
            24,182Interest expense
            
            
            (29,691
            )
            
            
            (113,189
            )Non-operating
    expense
            
            
            (9,039
            )
            
            
            -Total Other Income
      (Expenses)
            
            
            4,111
            
            
            
            (78,844
            )INCOME
      BEFORE PROVISION FOR INCOME TAXES
            
            
            330,878
            
            
            
            867,877PROVISION
      FOR INCOME TAXES
            
            
            -
            
            
            
            -NET
      INCOME BEFORE MINORITY INTEREST
            
            
            330,878
            
            
            
            867,877MINORITY
      INTEREST
            
            
            (492
            )
            
            
            -NET
      INCOME
            
            
            331,370
            
            
            
            867,877BENEFICIAL
      CONVERSION FEATURE RELATED TO ISSUANCE OFSERIES
      A CONVERTIBLE PREFERRED STOCK
            
            
            -
            
            
            
            (2,484,226
            )NET
      INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS
            
            
            331,370
            
            
            
            (1,616,349
            )OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign currency translation
      adjustment
            
            
            (38,908
            )
            
            
            356,142COMPREHENSIVE
      INCOME
            
            $
            292,462
            
            
            $
            (1,260,207
            )BASIC
      EARNINGS PER SHARE
            
            $
            0.01
            
            
            $
            ( 0.07
            )DILUTED
      EARNINGS PER SHARE
            
            $
            0.01
            
            
            $
            ( 0.07
            )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGBASIC
            
            
            24,798,478
            
            
            
            23,852,826DILUTED
            
            
            42,739,864
            
            
            
            23,852,826The accompanying notes are an integral part
      part of these consolidated financial
      statements.







4





JPAK GROUP, INC.


Consolidated
Statements of Cash Flows


(Unaudited)


For
      the Three Months EndedSeptember 30,2008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
            
            $
            331,370
            
            
            $
            867,877Adjustments
      to reconcile net income to net cashProvided
      by (used in) operating activities:Minority interest
            
            
            (492
            )
            
            
            -Depreciation and
      amortization
            
            
            296,909
            
            
            
            271,377Share-based
    payment
            
            
            202,500
            
            
            
            -Bad debt expense
            
            
            150,782
            
            
            
            -Changes in assets and
      liabilities:Accounts
    receivable
            
            
            472,126
            
            
            
            1,086,362Inventory
            
            
            125,185
            
            
            
            892,338Restricted cash for trade notes
      repayment
            
            
            -
            
            
            
            (1,289,788
            )Other receivables
            
            
            (90,037
            )
            
            
            -Prepaid expenses and other
      current assets
            
            
            (3,397
            )
            
            
            698,464Advance payments
            
            
            (554,020
            )
            
            
            -Accounts payable and accrued
      expenses
            
            
            (1,045,312
            )
            
            
            (2,640,752
            )Other payables
            
            
            (43,880
            )
            
            
            (49,304
            )Total Adjustments
            
            
            (489,636
            )
            
            
            (1,031,303
            )Net Cash Used In Operating
      Activities
            
            
            (158,266
            )
            
            
            (163,426
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Additions to property and
      equipment
            
            
            (84,743
            )
            
            
            (334,385
            )Additions to construction in
      progress
            
            
            (162,922
            )
            
            
            -Acquisition of Qingdao’s
      equity
            
            
            -
            
            
            
            (864,000
            )Net Cash Used In Investing
      Activities
            
            
            (247,665
            )
            
            
            (1,198,385
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Additional paid-in
      capital
            
            
            -
            
            
            
            (452,463
            )Issuance of trade notes
      payable
            
            
            585,547
            
            
            
            -Repayment of bank
      loans
            
            
            -
            
            
            
            (1,076,370
            )Proceeds from bank
      loans
            
            
            125,164
            
            
            
            -Net Cash Provided By (Used In)
      Financing Activities
            
            
            710,711
            
            
            
            (1,528,833
            )EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
            
            
            (82,849
            )
            
            
            142,243NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            221,931
            
            
            
            (2,748,401
            )CASH
      AND CASH EQUIVALENTS – BEGINNING
            
            
            7,218,904
            
            
            
            4,938,200CASH
      AND CASH EQUIVALENTS – ENDING
            
            $
            7,440,835
            
            
            $
            2,189,799


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




JPAK GROUP, INC.


NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS





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





On August
9, 2007, Rx Staffing Inc. (“Rx Staffing) completed a reverse acquisition of JPAK
Group Co., Ltd., (“JPAK”), which was incorporated in the Cayman Islands on June
22, 2006. To accomplish the exchange of shares Rx Staffing issued 23,005,000
shares of common stock on a one to one ratio for a 100% equity interest in JPAK,
per the terms of the Share Exchange and Bill of Sale of assets of Rx Staffing
and Shaun Jones. Rx Staffing was delivered with zero assets and zero liabilities
at time of closing. Following the reverse acquisition, Rx Staffing changed the
name to JPAK Group, Inc. The transaction was regarded as a reverse merger
whereby JPAK was considered to be the accounting acquirer as its shareholders
retained control of RX Staffing after the exchange. Although 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.





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





Substantially
all of the Company’s business is conducted through Qingdao Renmin, an operating
subsidiary established in the Peoples Republic of China, in which the Company
indirectly holds a 100% interest.





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





NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying un-audited financial statements has 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.


6





NOTE
4– ACCOUNTS RECEIVABLE





Trade
accounts receivable are stated at original invoice amount less allowance for
doubtful receivables made based on management’s periodic review of aging of
outstanding balances and customer credit history. Allowance for doubtful
accounts amounted to $196,172 and $45,359 at September 30, 2008 and June 30,
2008.





NOTE
5 – INVENTORY





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


September 30, 2008
            
            
            June 30, 2008Finished
      goods
            
            $
            609,888
            
            
            $
            787,872Raw
      materials
            
            
            4,068,311
            
            
            
            4,011,065Parts
      and supplies
            
            
            70,621
            
            
            
            66,599Work
      in process
            
            
            561,565
            
            
            
            555,095Total
            
            $
            5,310,385
            
            
            $
            5,420,631





NOTE
6 – ADVANCE PAYMENTS





The
Company makes advances to certain vendors for inventory, equipment, and
construction-in-progress. The advances on purchase of inventory amounted to
$1,043,937 and $825,795 as of September 30, 2008 and June 30, 2008.
Additionally, the Company made advances on equipment purchases amounting to
$881,114 and $541,827 as of September 30, 2008 and June 30, 2008,
respectively.





NOTE
7 – PROPERTY AND EQUIPMENT





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


September 30, 2008
            
            
            June 30, 2008Buildings
            
            $
            3,983,158
            
            
            $
            3,972,267Machinery
      and equipment
            
            
            14,096,255
            
            
            
            13,973,256Subtotal
            
            
            18,079,413
            
            
            
            17,945,523Less:
      Accumulated depreciation
            
            
            7,339,564
            
            
            
            7,023,58210,739,849
            
            
            
            10,921,941Add:
      Construction in progress
            
            
            902,968
            
            
            
            738,122Total
            
            $
            11,642,817
            
            
            $
            11,660,063





7


Depreciation
expense for the quarters ended September 30, 2008 and 2007 were $296,909 and
$271,377, respectively.





NOTE
8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





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





September 30, 2008
            
            
            June 30, 2008Accounts
      payable
            
            $
            2,515,958
            
            
            $
            3,256,552Accrued
      expenses
            
            
            47,928
            
            
            
            342,180Total
            
            $
            2,563,886
            
            
            $
            3,598,732





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





NOTE
9 – TRADE NOTES PAYABLE





Trade
notes payable consists of noncollateralized non-interest bearing promissory
notes issued in connection with the acquisition of certain inventory and
equipment. Balances outstanding under the notes as of September 30, 2008 and
June 30, 2008 were $4,380,520 and $3,784,956, respectively.





NOTE
10 – SHORT TERM BANK LOANS





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





September 30, 2008
            
            
            June 30, 2008On
      January 29th
      2008, the Company obtained a loan from Qingdao CityCommercial
      Bank, of which principal is to be paid in full by January 29th
      ,2009Interest
      is to be calculated using an annual fixed rate of 7.47%
andpaid
      monthly. The loan is secured by the company's property and
      equipment.
            
            $
            2,340,800
            
            
            $
            2,334,400On
      May 30th,
      2008, the Company obtained a loan from China Industrial
andCommercial
      Bank, of which principal is to be paid in full by May 29th,
      2009Interest
      is to be calculated using an annual fixed rate of 7.47%
andpaid
      monthly. The loan is secured by the company's equipment.
            
            $
            731,500
            
            
            $
            729,500Total
      short term bank loans
            
            $
            3,072,300
            
            
            $
            3,063,900





8




NOTE
11 – INCOME TAXES





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





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





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





On
February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration
of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular 1”).
According to Article 4 of Circular 1, distributions of accumulated profits
earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 or after
will be exempt from withholding tax (“WHT”) while distribution of the profit
earned by an FIE after January 1,2008 to its foreign investor(s) shall be
subject to WHT. Since the Company intend to reinvest its earnings to further
expand its businesses in mainland China, its foreign invested enterprises do not
intend to declare dividends to their immediate foreign holding companies in the
foreseeable future. Accordingly, as of September 30, 2008, the Company has not
recorded any withholding tax on the retained earnings of its foreign invested
enterprises in China.





NOTE
12 – LONG-TERM DEBT





As of
September 30, 2008, the Company had an outstanding long-term debt of $2,049,224,
including the current portion of $1,140,701. As of June 30, 2008, the Company
had an outstanding long-term debt of $1,918,877, including the current portion
of $1,263,786. These loans represent borrowings from employees at an annual
interest rate of 10%. Interest payments are made semi-annually with no principal
payments due until May 31, 2010, as per the terms of the loan
agreement.





NOTE
13 – EMPLOYEE WELFARE PLAN





The
Company has established an employee welfare plan in accordance with Chinese laws
and regulations. Full-time employees of the Company in the PRC participate in a
government-mandated
multi-employer defined contribution plan pursuant to which certain pension
benefits, medical care, unemployment insurance, employee housing fund and other
welfare benefits are provided to employees. PRC labor regulations require the
Company to accrue for these benefits based on certain percentage of the
employees’ salaries. The total contribution for such employee benefits was
$119,482 and $103,663 for the quarters ended September 30, 2008 and 2007,
respectively.


9





NOTE
14 – RISK FACTORS





In the
three months ended September 30, 2008 and 2007, five vendors accounted for
approximately 64% and 84% of the Company’s purchases, respectively.





In the
three months ended September 30, 2008 and 2007, five customers accounted for
approximately 47% and 67% of the Company’s sales, respectively.





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
15 - CONCENTRATIONS OF CREDIT RISK





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





NOTE
16 – SUPPLEMENTAL CASH FLOW INFORMATION





Three Months Ended September
      30,2008
            
            
            2007Cash
      paid for interest
            
            $
            29,691
            
            
            $
            113,189Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -











10


NOTE
17 – EARNINGS PER SHARE





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





Three Months Ended September
      30,2008
            
            
            2007Net
      income
            
            $
            331,370
            
            
            $
            867,887Beneficial
      conversion feature related to issuanceof
      Series A convertible preferred stock
            
            
            -
            
            
            
            (2,484,226
            )Net
      income (loss) applicable to common stockholders
            
            
            331,370
            
            
            
            (1,616,349
            )Weighted
      average common shares(denominator
      for basic income per share)
            
            
            24,798,478
            
            
            
            23,852,826Effect
      of diluted securities:
            
            
            17,941,386
            
            
            
            -Weighted
      average common shares(denominator
      for diluted income per share)
            
            
            42,739,864
            
            
            
            23,852,826Basic
      net income (loss) per share
            
            $
            0.01
            
            
            $
            ( 0.07
            )Diluted
      net income (loss) per share
            
            $
            0.01
            
            
            $
            ( 0.07
            )





NOTE
18 –SHARE-BASED PAYMENT





On April
1, 2008, JPAK entered into a consulting agreement with Tripoint Capital
advisors, LLC to provide consulting services for one year. As a result, JPAK
agreed to issue to Tripoint and/or its affiliates 300,000 shares of its capital
stock on July 1, 2008. The shares were issued on July 1, 2008. 150,000 shares
were vested immediately and the remaining 150,000 will be vested in equal
installments in the next two quarters.





The fair
value of the share based payment was US$404,700, determined based on the number
of shares granted and the quoted price of the Company’s common stock on April 1
2008, the date of grant.  The fair value of share based payment is
amortized over the one year service period.





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.


11





The
Investor “RAA” also contains provisions for the inability to register all of the
shares underlying all of the Series A and Series B Preferred Stock and Warrants
due to the SEC’s application of Rule 415.  Pursuant to those
provisions, if the SEC issues us a 415 comment, then 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





None.





12






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




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





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







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







Overview







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





Company
History





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





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




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


13


Competitive
environment





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





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





Milk
scandal and its effect on Jpak




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






The
tainted milk powder was traced to the Sanlu Group, one of China's biggest dairy
producers, which operates
as a joint venture with a New Zealand-based dairy conglomerate,
Fonterra.  Further investigation revealed that milk formula powder
produced by dozens of other dairy producers were also
contaminated.




We have
been focusing strongly in the dairy packaged segment in recent years as it
brings higher margins than the fruit juice market. Due to the above milk
scandal, our recently developed relationship with Sanlu and orders from them has
been cancelled. Orders from Taizinai and Yinying, two of our other customers,
have also fallen.





Between
January and August 2008, the total volume for beverage cartons was 900,000,000
packs, 360,000,000 of which were diary related.  70% of our clients
are dairy or related and account for approximately 45% of our
sales.





Management
is currently evaluating the impact that the milk scandal will have on our
business and operations and is taking every action necessary to minimize the
impact. However,
due to the affect the scandal is having on some of our customers, we currently
anticipate that the milk scandal may affect our revenues by as much as
30%.





Some of
our key customers are experiencing a tough business environment as well as
financial pressure.  As a result, management has tightened our credit
control by having caps on our customers’ credit limits and is closely monitoring
the financial situation of our customers.





Although
everyone is facing many challenges from the world market today, our sales
department has developed the domestic and overseas market with fourteen new
domestic clients and exploring the Bulgaria market, which amounted to 5% of the
sales in the three months ended September 30, 2008.








14








Strategy





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





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








Research
and Development





In
October 2006, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co.,
Ltd., (“Qingdao Delikang”), a joint venture with Xi’an Heiniu Machinery, Co.
Qingdao Renmin is the 51% owner of Qingdao Delikang.  The main
business of this joint venture is to research and develop filling
machines.  We are progressing with related technology and techniques
and the filling machines are still in the development period. Management is
formalizing its strategies for the filling machines, but hopes for a market
launch date by the second quarter of fiscal 2009.





In addition, we successfully developed
packaging which can be used in the filling machines created by
SIG.  Management believes this new packaging will be able to increase
our revenue significantly.  The packaging will also
enjoy a relatively higher gross margin.


15





Manufacturing,
Sales and marketing





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





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





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




Results
of Operations




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




Comparison of the Three Months Ended September
30, 2008 and 2007




Three
      Months Ended September 30
            
            2008
            
            
            2007Sales
            
            $
            9,430,330
            
            
            $
            9,304,248Cost
      of sales
            
            $
            6,995,902
            
            
            $
            6,987,181Total
      expenses
            
            $
            2,107,661
            
            
            $
            1,370,346Other
      income (expense)
            
            $
            4,111
            
            
            $
            (78,844Income
      taxes
            
            $
            -
            
            
            $
            -Net
      income
            
            $
            331,370
            
            
            $
            867,877Foreign
      currency translation adjustment
            
            $
            (38,908
            )
            
            $
            356,142Comprehensive
      income/Loss
            
            $
            292,462
            
            
            $
            (1,260,207
            )




Sales. Total sales were
approximately US$9.4 million for the three months ended September 30, 2008 as
compared to approximately US$9.3 million for the three months ended September,
2007, an increase of approximately US$0.1 million, or 1.4%. Compared with one
year ago, we was not able to grow the revenue significantly mainly due to two
reasons. One is the down turn of the tea market in the south of China impacted
by the global financial crisis; the other is the down turn of the milk product
industry due to the recent milk scandal.








16





Cost of Sales. Cost of sales
for the three months ended September 30, 2008 was approximately US$7.0 million,
or 74.2% of sales, as compared to US$7.0 million, or 75.1% of sales, for the 3
months ended September 30, 2007. Our cost of sales are primarily composed of the
costs of direct raw materials (mainly paper materials, polyethylene materials,
aluminum materials, printing materials), labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. The slight decrease
of cost of sales to sales by 0.9% was primarily due to the reduced defective
product percentage through improved of the production management.




Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$2.1 million for the three months ended September 30, 2008 as compared to
approximately US$1.4 million for the three months ended September 30, 2007, an
increase of approximately US$0.7 million, or 55.9%. The increase was mainly due
to an increase in research and development expenses and the bad debt provision
for the three months ended September 30, 2008. The company strengthened the
research and development activity in 2008, leading to the total R&D expense
reached USD0.6 million, while in the same period of 2007, R&D expense was
0.25M. For the three months ended September 30, 2008, the company has increased
the bad debt provision for the accounts receivable to 0.2 million, as compared
to US$0.05 million for bad debt provision in the same period of
2007.





Net income. Net income was
approximately US$0.3 million for three months ended September 30, 2008 as
compared to net income of approximately US$0.9 million for the three months
ended September 30, 2007, an increase of US$535,995. The increase in net income
was primarily due to increase of general and administrative expense during the
period.




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




Currency
translation adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to loss of US$0.04 million as of September 30, 2008 as compared to
gain of US$0.4 million as of September 30, 2007. The balance sheet amounts with
the exception of equity at September 30, 2008 were translated at 6.83527 RMB to
1.00 US dollar as compared to RMB7.51760 at September 30, 2007. The equity
accounts were stated at their historical rate. The average translation rates
applied to income statement accounts for the 3 months ended September 30, 2007,
and September 30, 2006 were RMB6.83107 and RMB7.56906,
respectively.





Comprehensive income.The
comprehensive income, which adds the currency adjustment to net income, was a
income of approximately US$0.3 million for the three months ended September 30,
2008 as compared to a loss of US$1.3 million for the three months ended
September 30, 2007, an increase of $1.6 million. The increase was because the
Company did not incur a loss due to the beneficial conversion feature related to
the issuance of convertible preferred stock in the period.





Liquidity
and Capital Resources





As of
September 30, 2008, we had working capital totaling approximately US$13.3
million, including cash and cash equivalents of US$7.4 million.





Net cash
used in operating activities was US$158,266 for the three months ended September
30, 2008. This net cash used was primarily due to the decrease of account
payable during the three months ended September 2008. Net cash used in operating
activities was US$163,000 for the three months ended September 30, 2007. This
net cash used was primarily due to reduction of accounts payable offsetting with
decrease of account receivables during the three months ended September
2007.








17





Net cash
used in investing activities for the three months ended September 30, 2008
totaled US$0.2 million and related primarily to the purchase of property. Net
cash used in investing activities for the three months ended September 30, 2007
totaled US$1.2 million and related primarily to the purchase of property and
equipment and the acquisition of the outstanding equity of Qindao Renmin which
was not owned by us.




Net cash
generated in financing activities for the three months ended September 30, 2008
was US$0.1 million and related primarily to the increase of trade note
receivable. Net cash used in financing activities for the three months ended
September 30, 2007 was US$1.5 million and related primarily to repayment of some
of the bank loans.




We have
entered into several loan agreements with our primary lenders, Industrial and
Commercial Bank of China and Qingdao City Commercial Bank, under which we have
term loans. As of September 30, 2008, we had and aggregate principal amount of
US$3.0 million outstanding under the loan agreements, which amounts mature from
January 2009 to May 2009 and accrue interest at a rate of 7.47% per annum. The
loan agreements contain customary affirmative and negative covenants. As of
September 30, 2008, we were in material compliance with the terms of our loan
agreements.





Off-Balance
Sheet Arrangements




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




Income
Taxes




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




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




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




Critical
Accounting Policies and Estimates





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







Item 3. Quantitative and Qualitative Disclosure About Market
Risk




Not
applicable.






18








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 September 30, 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 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.











19






On
September 23, 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 period ended December 31,
2007 and March 31, 2008.  Subsequent to the issuance of these
financial statements, management identified various errors in connection with
them and determined that a restatement was necessary in respect of the
following:





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





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








These
control deficiencies resulted in a misstatement to substantially all of our
financial statements and disclosures covering the year ended June 30, 2007 and
onward, which resulted in a material misstatement to such annual and interim
financial statements (September 30, 2007, December 30, 2007 and March 31, 2008)
that was not prevented or detected. 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 fourth
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.We appointed a new Acting CFO with extensive US
      GAAP and regulatory experience.  Our new Acting CFO, Frank Su,
      maintains a deep understanding of GAAP and financial statements and is
      highly skilled in analyzing and evaluating various financial issues and in
      preparing financial statements.●
            Restate Financial Statement:We restated our financial statements for the year ending June 30,
      2007 and our interim financial statements for the quarter ending September
      30, 2007, December 31, 2007 and March 31, 2008; furthermore, we filed the
      necessary amendments so that the correct accounting treatment is reflected
      in those statements and flows through them
accordingly.●
            Seeking and Recruiting Additional Accounting
      Professionals. We are seeking to recruit experienced
      professionals to augment and upgrade our financial staff to address issues
      of timeliness and completeness in financial reporting when we are
      preparing filings for the Securities and Exchange
  Commission.






Although
we believe that these corrective steps will 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.








20





ITEM
4T. CONTROLS AND PROCEDURES.





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





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting.  Our management conducted an evaluation of the
effectiveness  of our internal  control
over  financial  reporting  based on the framework
in Internal  Control
-  Integrated  Framework  ("ICFT")  issued
by the Committee of Sponsoring  Organizations of the Treadway
Commission.  Based on our evaluation, management has concluded, as of
September 30, 2008, we did not maintain effective controls over the financial
reporting process.





Management’s
assessment of the effectiveness of the registrant’s internal control over
financial reporting is as of the period ended September 30, 2008. Based on the
evaluation, management concluded that there was a material weakness in our
internal control over financial reporting.  Subsequent to the issuance
of our June 30, 2007 financial statements, management identified various errors
in connection with our 2007 financial statements and determined that a
restatement was necessary in respect of the following: revision of reverse
acquisition accounting and revision of capitalized costs relatedto financing
transactions.  As a result, we filed restated financial statements for
the year ending June 30, 2007 and for the quarters ending September 30, 2007 and
December 31, 20078.  We then received additional SEC comments and
management determined that another restatement of our December 31, 2007
financial statements, and a restatement of our March 31, 2008 financial
statements was necessary in respect of the following: accounting for the
extended term of the Series A and Series B Warrants issued in the private
placement we closed in August 2007 and the commission paid pursuant to the
exercise of the Series J Warrants.





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





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





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







PART II - OTHER INFORMATION




Item
1. Legal Proceedings





Not
applicable.




Item
1A. Risk Factors





Not
applicable.





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





Not
applicable.




Item
3. Defaults Upon Senior Securities





Not
applicable.




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





No
matters were submitted to our security holders during the period covered by this
Report.  However, we did file and mail proxy statements to re-elect
our Board of Directors for our upcoming Annual Shareholder Meeting, to be held
on December 10, 2008, on or about November 7, 2008.





Item 5. Other Information





Not
applicable.




21





Item
6. Exhibits





Exhibit No.
            
            Description3.1
            
            Articles
      of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to
      our Annual Report on Form 10-K filed on September 29,
  2008)3.2
            
            Bylaws
      (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form
      10-K filed on September 29, 2008)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.










22







SIGNATURES






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




JPAK
      GROUP, INC.By:
            /s/ 
      Yijun WangYijun
      Wang
              Chief
      Executive Officer and Acting Principal Accounting OfficerBy:
            /s/ 
      Dongliang SuDongliang
      Su
              Acting
      Chief Financial Officer




Date: 
November 14, 2008


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