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 March 31,
2009





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 May
13, 2009 there were 25,005,000 shares of the issuer's common stock, par
value $.001 per share, outstanding. The issuer also has 5,608,564 shares of
Series A Preferred Stock, par value $.0001 per share, outstanding, which shares
are convertible into on aggregate of 11,217,128 shares of common stock, and 5,000,000 shares of Series
B Convertible Preferred Stock, par value $.0001 per share outstanding, which
shares are convertible into an aggregate of 8,333,333 shares of common
stock


























JPAK
GROUP, INC.





INDEX





Page
                NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
              
              Financial
      StatementsConsolidated
      Balance SheetsMarch
      31, 2009 (unaudited)
              
              4Consolidated
      Statements of Operations (unaudited)Three
      and nine months ended March 31, 2009 and 2008
              
              5Consolidated
      Statements of Cash Flows (unaudited)Nine
      months ended March 31, 2009 and 2008
              
              6Notes
      to Condensed Consolidated Financial Statements
              
              7Item
      2.
              
              Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
              
              14Item
      3.
              
              Quantitative
      and Qualitative Disclosure About Market Risks
              
              21Item
      4.
              
              Controls
      and Procedures
              
              21Item
      4T
              
              Controls
      and Procedures
              
              23PART
      II - OTHER INFORMATIONItem
      1.
              
              Legal
      Proceedings
              
              23Item
      1.A
              
              Risk
      Factors
              
              23Item
      2.
              
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              
              23Item
      3.
              
              Defaults
      Upon Senior Securities
              
              23Item
      4.
              
              Submission
      of Matters to a Vote of Security Holders
              
              23Item
      5.
              
              Other
      Information
              
              23Item
      6.
              
              Exhibits
              
              24










2





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 March 31, 2009, and the related consolidated statements of operations and
other comprehensive income, and cash flows for the nine months ended March 31,
2009 and 2008. 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


April 28,
2009





3
 JPAK
GROUP, INC.








Consolidated
Balance Sheets





March
      31,
                
                
                June
      30,2009
                
                
                2008(unaudited)ASSETSCURRENT
      ASSETSCash and cash
      equivalents
                
                $
                1,952,631
                
                
                $
                3,433,948Restricted cash
                
                
                2,989,178
                
                
                
                3,784,956Accounts receivable, net of
      allowance for doubtful accounts of $1,441,909and $45,359 at March 31,
      2009 and June 30, 2008, respectively
                
                
                10,110,173
                
                
                
                9,026,455Inventory
                
                
                3,239,498
                
                
                
                5,420,631Other receivables
                
                
                1,238,718
                
                
                
                1,131,511Loan
      receivable-current
                
                
                131,850
                
                
                
                -Prepaid expenses and other
      current assets
                
                
                114,159
                
                
                
                96,751Advance payments
                
                
                2,358,112
                
                
                
                1,367,622Total Current
    Assets
                
                
                22,134,319
                
                
                
                24,261,874PROPERTY
      AND EQUIPMENT, NET
                
                
                12,167,373
                
                
                
                11,660,063LOAN
      RECEIVABLE-NON CURRENT
                
                
                43,950
                
                
                
                -Total Assets
                
                $
                34,345,642
                
                
                $
                35,921,937LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
                
                $
                2,057,293
                
                
                $
                3,442,859Trade notes
    payable
                
                
                2,734,622
                
                
                
                3,784,956Short term bank
    loans
                
                
                3,076,500
                
                
                
                3,063,900Current portion of long-term
      debt
                
                
                951,811
                
                
                
                1,263,786Other payables
                
                
                272,099
                
                
                
                259,861Income tax
payable
                
                
                167,429
                
                
                
                -Other taxes
    payable
                
                
                383,681
                
                
                
                155,873Total Current
      Liabilities
                
                
                9,643,435
                
                
                
                11,971,235LONG-TERM
      DEBT
                
                
                1,508,950
                
                
                
                655,091MINORITY
      INTEREST
                
                
                105,187
                
                
                
                105,690Total Liabilities
                
                
                11,257,572
                
                
                
                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 authorized24,805,000 and
      24,505,000 shares issued and outstanding atMarch 31 2009 and
      June 30, 2008, respectively
                
                
                24,805
                
                
                
                24,505Series B convertible preferred
      stock, $0.0001 par value, 5,000,000shares authorized,
      issued and outstanding
                
                
                500
                
                
                
                500Series A Preferred
      Shares
                
                
                2,484,226
                
                
                
                2,484,226Series B Preferred
      Shares
                
                
                1,390,853
                
                
                
                1,390,853Warrants
                
                
                4,634,678
                
                
                
                4,634,678Placement Agent
      Warrants
                
                
                1,172,487
                
                
                
                1,172,487Additional paid-in
      capital
                
                
                11,453,304
                
                
                
                11,048,604Retained earnings
                
                
                (988,710
                )
                
                
                (562,030
                )Statutory
reserves
                
                
                348,009
                
                
                
                348,009Accumulated other comprehensive
      income
                
                
                2,567,357
                
                
                
                2,647,528Total Stockholders’
      Equity
                
                
                23,088,070
                
                
                
                23,189,921Total Liabilities and
      Stockholders’ Equity
                
                $
                34,345,642
                
                
                $
                35,921,937




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





4
 JPAK
GROUP, INC.








Consolidated
Statements of Operations and Comprehensive Income (Loss)


(Unaudited)


For
      the Three Months Ended
                
                
                For
      the Nine Months EndedMarch 31,
                
                
                March 31,2009
                
                
                2008
                
                
                2009
                
                
                2008SALES
                
                $
                11,968,137
                
                
                $
                10,813,896
                
                
                $
                27,507,254
                
                
                $
                26,232,788COST
      OF SALES
                
                
                8,637,784
                
                
                
                7,876,883
                
                
                
                20,840,352
                
                
                
                19,183,182GROSS
      PROFIT
                
                
                3,330,353
                
                
                
                2,937,013
                
                
                
                6,666,902
                
                
                
                7,049,606OPERATING
      EXPENSESSelling, general and
      administrative
                
                
                3,152,896
                
                
                
                1,277,004
                
                
                
                6,777,984
                
                
                
                4,219,602INCOME
      (LOSS) FROM OPERATIONS
                
                
                177,457
                
                
                
                1,660,009
                
                
                
                (111,082
                )
                
                
                2,830,004OTHER
      INCOME (EXPENSES)Interest expense,
    net
                
                
                (55,803
                )
                
                
                (60,693
                )
                
                
                (163,420
                )
                
                
                (246,774
                )Non-operating income (expense),
      net
                
                
                487
                
                
                
                (18,393
                )
                
                
                14,257
                
                
                
                230,890Total Other
    Expenses
                
                
                (55,316
                )
                
                
                (79,086
                )
                
                
                (149,163
                )
                
                
                (15,884
                )INCOME
      (LOSS) BEFORE PROVISION FOR INCOME TAXES
                
                
                122,141
                
                
                
                1,580,923
                
                
                
                (260,245
                )
                
                
                2,814,120PROVISION
      FOR INCOME TAXES
                
                
                167,372
                
                
                
                -
                
                
                
                167,372
                
                
                
                -NET
      INCOME (LOSS) BEFORE MINORITY INTEREST
                
                
                (45,231
                )
                
                
                1,580,923
                
                
                
                (427,617
                )
                
                
                2,814,120MINORITY
      INTEREST
                
                
                (378
                )
                
                
                1,980
                
                
                
                (937
                )
                
                
                -NET
      INCOME (LOSS)
                
                
                (44,853
                )
                
                
                1,578,943
                
                
                
                (426,680
                )
                
                
                2,814,120BENEFICIAL
      CONVERSION FEATURE RELATED TO ISSUANCEOF
      SERIES A CONVERTIBLE PREFERRED STOCK
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,484,226
                )BENEFICIAL
      CONVERSION FEATURE RELATED TO ISSUANCEOF
      SERIES B CONVERTIBLE PREFERRED STOCK
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,390,853
                )NET
      INCOME (LOSS) APPLICABLE TO COMMONSTOCKHOLDERS
                
                
                (44,853
                )
                
                
                1,578,943
                
                
                
                (426,680
                )
                
                
                (1,060,959
                )OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign currency translation
      adjustment
                
                
                (40,888
                )
                
                
                801,923
                
                
                
                (80,171
                )
                
                
                1,626,073COMPREHENSIVE
      INCOME (LOSS)
                
                $
                ( 85,741
                )
                
                $
                2,380,866
                
                
                $
                ( 506,851
                )
                
                $
                565,114BASIC
      EARNINGS PER SHARE
                
                $
                ( 0.00
                )
                
                $
                ( 0.06
                )
                
                $
                ( 0.02
                )
                
                $
                ( 0.04
                )DILUTED
      EARNINGS PER SHARE
                
                $
                ( 0.00
                )
                
                $
                ( 0.03
                )
                
                $
                ( 0.02
                )
                
                $
                ( 0.04
                )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARESOUTSTANDINGBASIC
                
                
                24,805,000
                
                
                
                24,505,000
                
                
                
                24,805,000
                
                
                
                24,286,022DILUTED
                
                
                24,805,000
                
                
                
                46,903,748
                
                
                
                24,805,000
                
                
                
                24,286,022




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









5
 JPAK
GROUP, INC.








Consolidated
Statements of Cash Flows


(Unaudited)


For
      the Nine Months EndedMarch 31,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income (loss)
                
                $
                ( 426,680
                )
                
                $
                2,814,120Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Minority interest
                
                
                (937
                )
                
                
                -Depreciation
    expense
                
                
                909,320
                
                
                
                722,211Loss (Gain) on disposal of fixed
      assets
                
                
                (332
                )
                
                
                -Share-based
    payment
                
                
                405,000Bad debt expense
                
                
                1,395,887
                
                
                
                7,521Changes in assets and
      liabilities:Accounts
    receivable
                
                
                (2,442,127
                )
                
                
                (271,952
                )Inventory
                
                
                2,202,674
                
                
                
                (801,688
                )Other receivables
                
                
                (135,496
                )
                
                
                (950,642
                )Prepaid expenses and other
      current assets
                
                
                (17,004
                )
                
                
                536,561Advance payments
                
                
                (1,032,099
                )
                
                
                (404,428
                )Accounts payable and accrued
      expenses
                
                
                (1,399,169
                )
                
                
                (1,115,131
                )Income tax
payable
                
                
                167,372
                
                
                
                -Other taxes
    payable
                
                
                227,088
                
                
                
                (220,713
                )Advanced payment from
      customers
                
                
                29,730
                
                
                
                32,355Other payables
                
                
                (18,565
                )
                
                
                3,421Total Adjustments
                
                
                291,342
                
                
                
                (2,462,485
                )Net Cash Provided By (Used In)
      Operating Activities
                
                
                (135,338
                )
                
                
                351,635CASH
      FLOWS FROM INVESTING ACTIVITIES:Additions to property and
      equipment
                
                
                (1,335,995
                )
                
                
                (3,441,308
                )Proceeds from disposal of fixed
      assets
                
                
                48,352
                
                
                
                -Cash acquired from the
      subsidiary
                
                
                -
                
                
                
                99,695Loan receivable
                
                
                (175,740
                )
                
                
                -Net Cash Used In Investing
      Activities
                
                
                (1,463,383
                )
                
                
                (3,341,613
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Issuance (repayment) of trade
      notes payable
                
                
                (1,065,535
                )
                
                
                1,085,120Proceeds from capital
      contribution
                
                
                -
                
                
                
                3,976,724Repayment of employee
      loans
                
                
                533,810
                
                
                
                -Repayment of bank
      loans
                
                
                -
                
                
                
                (2,352,778
                )Net Cash Provided By (Used In)
      Financing Activities
                
                
                (531,725
                )
                
                
                2,709,066EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
                
                
                (146,649
                )
                
                
                133,285NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                
                
                (2,277,095
                )
                
                
                (147,627
                )CASH
      AND CASH EQUIVALENTS AND RESTRICTED CASH– BEGINNING
                
                
                7,218,904
                
                
                
                4,938,200CASH
      AND CASH EQUIVALENTS AND RESTRICTED CASH– ENDING
                
                $
                4,941,809
                
                
                $
                4,790,573SUPPLEMENTAL
      SCHEDULE OF NON CASH ACTIVITIESAdvance payments reclassed to
      construction in progress
                
                $
                80,548
                
                
                $
                -




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





6
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





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 – Summary of Significant Accounting Policies





Basis
Of Presentation





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





7
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





Note
2 – Summary of Significant Accounting Policies (continued)





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.





Reclassification





Certain
amounts of June 30, 2008 were reclassified for presentation
purposes.





Note
3– Restricted Cash





As of
March 31, 2009 and June 30, 2008, the Company had $2,989,178 and $3,784,956
restricted cash, respectively. These restricted cash balances are reserved for
settlement of trade notes payable in connection with inventory
purchases.  The cash is held in custody by the bank issuing the trade
notes payable, is restricted as to withdrawal or use, and is currently earning
interest.





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. If the financial condition of
the Company’s customers were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required.





The
balance of allowance for doubtful accounts amounted to $1,441,909 and $45,359 as
of March 31, 2009 and June 30, 2008, respectively. Additional allowance amounted
to $1,396,363 due from a previous major customer, who was near bankruptcy as of
March 31, 2009, is fully recorded.





Note
5 – Inventory





Inventory
at March 31, 2009 and June 30, 2008 consists of the following:





March
      31, 2009
                    
                    
                    June
      30, 2008Finished
      goods
                    
                    $
                    915,041
                    
                    
                    $
                    787,872Raw
      materials
                    
                    
                    2,197,540
                    
                    
                    
                    4,011,065Parts
      and supplies
                    
                    
                    90,432
                    
                    
                    
                    66,599Work
      in process
                    
                    
                    36,485
                    
                    
                    
                    555,095Total
                    
                    $
                    3,239,498
                    
                    
                    $
                    5,420,631





Note
6 – Advance Payments





The
Company makes advances to certain vendors for inventory and equipment. The
advances on purchase of inventory amounted to $1,523,588 and $825,795 as of
March 31, 2009 and June 30, 2008. Additionally, the Company made advances on
equipment purchases amounted to $834,524 and $541,827 as of March 31, 2009 and
June 30, 2008 respectively.





8
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





Note
7 – Property and Equipment





Property
and equipment at March 31, 2009 and June 30, 2008 consists of the
following:


March
      31, 2009
                        
                        
                        
                        June
      30, 2008Buildings
                        
                        $
                        4,364,355
                        
                        
                        $
                        3,972,267Machinery
      and equipment
                        
                        
                        14,866,258
                        
                        
                        
                        13,973,256Subtotal
                        
                        
                        19,230,613
                        
                        
                        
                        17,945,523Less:
      Accumulated depreciation
                        
                        
                        7,957,456
                        
                        
                        
                        7,023,58211,273,157
                        
                        
                        
                        10,921,941Add:
      Construction in progress
                        
                        
                        894,216
                        
                        
                        
                        738,122Total
                        
                        $
                        12,167,373
                        
                        
                        $
                        11,660,063





Depreciation
expense for the nine months ended March 31, 2009 and 2008 were $909,320 and
$722,211 respectively. Depreciation expense for the three months ended March 31,
2009 and 2008 were $311,296 and $287,583, respectively.





Note
8 – Loan Receivable





The
Company provides a non interest-bearing loan amounted to $175,800 to a certain
customer for purchasing a filling machine, with a commitment from the
customer on buying an agreed quantity of packaging supplies from the
Company. The customer agreed to pay back the loan receivable in four
installments by June 30, 2010.





Note
9 – Accounts Payable and Accrued Expenses





Accounts
payable and accrued expenses at March 31, 2009 and June 30, 2008 consist of the
following:





March
      31, 2009
                  
                  
                  
                  June 30, 2008Accounts
      payable
                  
                  $
                  2,009,256
                  
                  
                  $
                  3,256,552Accrued
      expenses
                  
                  
                  48,037
                  
                  
                  
                  186,307Total
                  
                  $
                  2,057,293
                  
                  
                  $
                  3,442,859





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





Note
10 – Trade Notes Payable





Trade
notes payable consists of non-collateralized non-interest bearing promissory
notes issued in connection with the acquisition of certain inventory and
equipment. Balances outstanding under the notes as of March 31, 2009 and June
30, 2008 were $2,734,622 and $3,784,956, respectively.





Note
11 – Short Term Bank Loans





Short
term bank loans at March 31, 2009 and June 30, 2008 consist of the
following:




March
      31,
            
            
            June
      30,2009
            
            
            2008On
      January 29 2009, the Company obtained a loan from Qingdao
    CityCommercial
      Bank, of which principal is to be paid in full by January 29,
      2009.Interest
      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.
            
            $
            -
            
            
            $
            2,334,400








9
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





Note
11 – Short Term Bank Loans (continued)





March
      31,
              
              
              June
      30,2009
              
              
              2008On
      January 22 2009, the Company obtained a loan from Qingdao
    CityCommercial
      Bank, of which principal is to be paid in full by January 22,
      2010.Interest
      is to be calculated using an annual fixed rate of 5.31%
andpaid
      monthly. The loan is secured by the company's property and
      equipment.
              
              $
              2,344,000
              
              
              $
              -On
      May 30, 2008, the Company obtained a loan from China Industrial
      andCommercial
      Bank, of which principal is to be paid in full by May 29,
      2009.Interest
      is to be calculated using an annual fixed rate of 7.47%
andpaid
      monthly. The loan is secured by the company's equipment.
              
              $
              732,500
              
              
              $
              729,500Total
      short term bank loans
              
              $
              3,076,500
              
              
              $
              3,063,900





Note
12 – 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, foreign invested 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 does not believe that the new CIT law will affect the
preferential tax treatments (i.e. the unutilized tax holiday) that it is
entitled to. Accordingly, since January 1, 2009, the Company has commenced the
3-year period of tax holidays by a 50% reduction of FEIT with an effective tax
rate of 12.5%, and for the period ended March 31, 2009, the income tax expense
was $167,372.





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.





10
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





Note
13 – Long-Term Debt





As of
March 31, 2009, the Company had an outstanding long-term debt of $2,460,761,
including the current portion of $951,811. 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
14 – 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 $
346,014 and $ 262,211 for the quarters ended March 31, 2009 and
2008.





Note
15 – Risk Factors





In the
three months ended March 31, 2009 and 2008, five vendors accounted for
approximately 84% and 80% of the Company’s purchases, respectively.





In the
three months ended March 31, 2009 and 2008, five customers accounted for
approximately 63% and 62% 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
16 - 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
17 – Supplemental Cash Flow Information





Nine Months Ended March 312009
              
              
              2008Cash
      paid for interest
              
              $
              300,148
              
              
              $
              248,318Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -





11
 JPAK
GROUP, INC.
 
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)





Note
18 – 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 March 312009
                        
                        
                        
                        2008Net
      income (loss)
                        
                        $
                        ( 44,853
                        )
                        
                        $
                        1,578,943Weighted
      average common shares(denominator
      for basic income per share)
                        
                        
                        24,805,000
                        
                        
                        
                        24,505,000Effect
      of diluted securities:Convertible
      preferred stock
                        
                        
                        -
                        
                        
                        
                        10,608,564Warrants
                        
                        
                        -
                        
                        
                        
                        11,790,184Weighted
      average common shares(denominator
      for diluted income per share)
                        
                        
                        24,805,000
                        
                        
                        
                        46,903,748Basic
      net income (loss) per share
                        
                        $
                        ( 0.00
                        )
                        
                        $
                        0.06Diluted
      net income (loss) per share
                        
                        $
                        ( 0.00
                        )
                        
                        $
                        0.03





Nine Months Ended March 312009
                
                
                2008Net
      income (loss)
                
                $
                ( 426,680
                )
                
                $
                2,814,120Beneficial
      conversion feature related to issuanceof
      Series A convertible preferred stock
                
                
                -
                
                
                
                (2,484,226
                )Beneficial
      conversion feature related to issuanceof
      Series B convertible preferred stock
                
                
                -
                
                
                
                (1,390,853
                )Net
      income (loss) applicable to common stockholders
                
                
                (426,680
                )
                
                
                (1,060,959
                )Weighted
      average common shares(denominator
      for basic income per share)
                
                
                24,805,000
                
                
                
                24,286,022Effect
      of diluted securities:
                
                
                -
                
                
                
                -Weighted
      average common shares(denominator
      for diluted income per share)
                
                
                24,805,000
                
                
                
                24,286,022Basic
      net income (loss) per share
                
                $
                ( 0.02
                )
                
                $
                ( 0.04
                )Diluted
      net income (loss) per share
                
                $
                ( 0.02
                )
                
                $
                ( 0.04
                )





12





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 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% (687,106/11,217,128) of the 2 percent
($110,000) due per month under the terms of the Company’s RAA. Therefore, the
Company’s monthly liquidated 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 to the American Capital Markets, Ltd. as
part of the merger).





Until
January 7, 2009, the registration statement of the Company is declared effective
by SEC and therefore the monetary obligations are terminated since
then.





Note
20 – Subsequent Events








On April 1, 2009, we issued 200,000
restricted shares to Dongliang (Frank) Su for the Acting CFO duties he will
provide to us from April 1, 2009 through March 31, 2010.  The fair
value of these shares at the issuance date was US$20,000.  The shares
were issued in accordance with the exemption from the registration provisions of
the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for
issuances not involving any public offering.










13






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.




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.








14







Due to
China’s new anti-monopoly laws, some of our larger competitors have recently
decreased the amount of bundled products that they offer.  This may
cause some of these competitors to actually lower their price points, but we
believe it will allow us to be more competitive since the sale of bundled
products still maintains a relative large portion of the overall
market.  As such,, we will continue to try and compete and build on
our offerings of bundled materials and equipment.





Milk
scandal and its continuing impact on operations




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






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







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





Management
continues to monitor both the short and long-term impact that the milk scandal
will have on our business and operations. Although we are currently taking every
action necessary to attempt to minimize the impact, since medium and small size
companies constitute most of our customers, our short term revenue has been
adversely impacted.   Despite these short-term problems, management’s
current effort to realign our marketing effort in the post-scandal market place
is beginning to show positive results and we expect our revenues to increase in
the near future.  In the past quarter, we began discussions with
several new customers including some milk producers. In fact, Wondersun, a
client that we recently obtained, became one of our top 10 clients in terms of
sales during the previous quarter.





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





Although
many companies are facing challenges from the worldwide economic downturn, our
sales department has developed eleven new domestic clients which amounted to 8%
of the total sales in the three months ended March 31, 2009.  In
addition, we are making progress in our negotiations with a leading Chinese milk
producer and if these negotiations are successful, our orders may increase
significantly.











15







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●
              
              Enhancing
      the Company’s competitive advantages through continued
      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 focus
of this joint venture is the research and development of liquid filling
machines.  We are currently in the process of finalizing the
development of certain new filling machine  technology and techniques.
Management is currently formalizing its strategies for these new filling
machines and hopes to launch these products by July 2009. Our initial testing
has shown that these updated filling machines can produce  12,000
packages per hour.  We are currently monitoring the stability of all
parts of the machines to determine if any additional adjustments are
needed.





In
addition, we successfully developed packaging which can be used in the filling
machines created by SIG.  Management believes this new packaging could
result in significantly increased revenues with a higher gross margin. These new
products are still being tested by ourselves and among our customers and we
expect customer approval in the near term.. Provided that the product tests are
successful, the sales of SIG packaging are expected to generate significant
additional revenue.





Manufacturing,
Sales and marketing





We
support commercialized products with manufacturing, sales and marketing efforts.
We are also moving forward with additional investments to enhance our
infrastructure and business, including capital expenditures for the new
production machinery. We have increased the annual capacity from 2 billion packs
last year to approximate 3.5 billion packs under our current normal packaging.
Additionally, once our SIG packaging system passes its initial testing,,
management plans to introduce up to eight more production lines with annual
capacity of 80 million packs per line (as funding becomes
available).





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 year 2008, we gained a number of
additional clients.  We have received orders from customers in Russia
and Eastern Europe, who currently account for only 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 year 2009 with our new filling machines and once the SIG packaging
becomes fully operational.










16










Results
of Operations







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









Comparison of the
three months ended March
31, 2009 and 2008




Three
      Months Ended March 31
                                  
                                  2009
                                  
                                  
                                  2008Sales
                                  
                                  $
                                  11,968,137
                                  
                                  
                                  $
                                  10,813,896Cost
      of sales
                                  
                                  $
                                  8,637,784
                                  
                                  
                                  $
                                  7,876,883Total
      expenses
                                  
                                  $
                                  3,152,896
                                  
                                  
                                  $
                                  1,277,004Other
      income (expense)
                                  
                                  $
                                  (55,316
                                  )
                                  
                                  $
                                  (79,086
                                  )Income
      taxes
                                  
                                  $
                                  167,372
                                  
                                  
                                  $
                                  -Net
      income (loss)
                                  
                                  $
                                  (44,853
                                  )
                                  
                                  $
                                  1,578,943Foreign
      currency translation adjustment
                                  
                                  $
                                  (40,888
                                  )
                                  
                                  $
                                  801,923Comprehensive
      income (loss)
                                  
                                  $
                                  (85,741
                                  )
                                  
                                  $
                                  2,380,866





Sales. Total sales were
approximately US$12.0 million for the three months ended March 31, 2009 as
compared to approximately US$10.8 million for the same period of 2008, an
increase of approximately US$1.2 million, or 10.7%. The growth of revenue was
mainly due to partial recovery from the impact of the milk scandal discussed
above and the global financial crisis.   In addition, our recent
adjustment in sales strategy and our continuing efforts to locate and develop
new customers also contributed to the sales growth.  With our
competitive pricing advantage, we have added 11 new domestic customers in this
quarter which accounted for 8% of total revenue.





Cost of Sales. Cost of sales
for the three months ended March 31, 2009 was approximately US$8.6 million, or
72.2% of sales, as compared to US$7.9 million, or 72.8% of sales, for the same
period of 2008. Our cost of sales are primarily composed of raw materials costs
(mainly paper materials, polyethylene materials, aluminum materials, printing
materials), labor, depreciation and amortization of manufacturing equipment and
facilities, and other overhead. Under the difficult current market conditions,
we reduced our selling price to enhance our competitive edge and continue to
attract new customers. Additionally, we have adopted tighter cost management
procedures in order to maintain our cost advantage over certain
competitors.




Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$3.2 million for the three months ended March 31, 2009 as compared to
approximately US$1.3 million for the same period of 2008, a dramatic increase of
approximately US$1.9 million, or 147%. This increase was mainly result of a
onetime bad debt allowance of approximately US$1.4 million due to a former major
customer who was near bankruptcy. In addition, our R&D expenses increased by
US$0.2 million over the previous period.  As a result of the bad debt
allowance, management has tightened our credit procedures and control by having
ceilings on our customers’ credit limits and is more closely monitoring the
financial situation of our customers.





Net income
(loss).  Net loss was approximately US$0.04 million for three
months ended March 31, 2009 as compared to net income of approximately US$1.6
million for the same period of 2008, a decrease of approximately US$1.6 million.
The decrease in net income was primarily the result of the one-time bad debt
allowance of almost US$1.4 million.  Without this bad debt allowance,
net income would have only decreased by approximately US$0.2
million.





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.








17






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$40,888 as of March 31, 2009 as compared to gain of
US$0.8 million as of March 31, 2008. The balance sheet amounts with the
exception of equity at March 31, 2009 were translated at RMB6.8259 to US$1.00 as
compared to RMB7.0028 at March 31, 2008. The equity accounts were stated at
their historical rate. The average translation rates applied to income statement
accounts for the three months ended March 31, 2009 and 2008 were RMB6.8253 and
RMB7.4286, respectively.





Comprehensive loss.The
comprehensive income, which adds the currency adjustment to net income, was a
loss of approximately US$0.09 million for the three months ended March 31, 2009
as compared to an income of US$2.4 million for the three months ended March 31,
2008, a decrease of income by $2.5 million. The decrease of income was mainly
due to the reduction of our operating profit in this period.







Comparison of the
nine months ended March
31, 2009 and 2008




Nine
      Months Ended March 31
                                  
                                  2009
                                  
                                  
                                  2008Sales
                                  
                                  $
                                  27,507,254
                                  
                                  
                                  $
                                  26,232,788Cost
      of sales
                                  
                                  $
                                  20,840,352
                                  
                                  
                                  $
                                  19,183,182Total
      expenses
                                  
                                  $
                                  6,777,984
                                  
                                  
                                  $
                                  4,219,602Other
      income (expense)
                                  
                                  $
                                  (149,163
                                  )
                                  
                                  $
                                  (15,884
                                  )Income
      taxes
                                  
                                  $
                                  167,372
                                  
                                  
                                  $
                                  -Net
      income (loss)
                                  
                                  $
                                  (426,680
                                  )
                                  
                                  $
                                  2,814,120Foreign
      currency translation adjustment
                                  
                                  $
                                  (80,171
                                  )
                                  
                                  $
                                  1,626,073Comprehensive
      income (loss)
                                  
                                  $
                                  (506,851
                                  )
                                  
                                  $
                                  565,114





Sales. Total sales were
approximately US$27.5 million for the nine months ended March 31, 2009 as
compared to approximately US$26.2 million for the same period of 2008, increased
by approximately US$1.3 million, or 4.9%. The limited growth of revenue was
mainly due to the downturn of our dairy package sales as a result of the milk
scandal discussed above.  In addition, the recent global financial
crisis caused some of our customers to decrease orders and reduced our projected
overall sales volume. To help deal with these issues, we reduced certain prices
which increased sales volume but had a negative effect on revenue.





Cost of Sales. Cost of sales
for the nine months ended March 31, 2009 was approximately US$20.8 million, or
75.8% of sales, as compared to US$19.2 million, or 73.1% of sales, for the same
period of 2008. Our cost of sales are primarily composed of raw materials costs
(mainly paper materials, polyethylene materials, aluminum materials, printing
materials), labor, depreciation and amortization of manufacturing equipment and
facilities, and other overhead. Under the difficult current market conditions,
we have reduced our selling price to enhance our competitive edge and to
continue to attract new customers.   Although this strategy
allowed us to increase sales volume it also contributed to our decreased gross
margin by 2.7%.





Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$6.8 million for the nine months ended March 31, 2009 as compared to
approximately US$4.2 million for the same period of 2008, an increase of
approximately US$2.6 million, or 61%. The increase was mainly due to an increase
of research and development expenses and the bad debt allowance for the nine
months ended March 31, 2009. The Company continuously strengthened our research
and development activities, which caused the total R&D expense to reach
almost US$1.5 million, as compared to the R&D expense of US$0.8 million in
the same period of 2008. For the nine months ended March 31, 2009, we had bad
debt allowance of approximately US$1.4 million due to a former major customer
who was near bankruptcy. As a result of the bad debt allowance, management
tightened our credit procedures and control by having ceilings on our customers’
credit limits and more closely monitoring the financial situation of our
customers.








18







Net income
(loss).  Net loss was approximately US$0.4 million for nine
months ended March 31, 2009 as compared to net income of approximately US$2.8
million for the same period of 2008, a decrease of approximately US$3.3 million.
The decrease in net income was primarily due to the increase of $US2.6 million
in selling, general and administrative expenses. In addition, the sales price
reduction that we initiated to increase sales volume decreased the gross profit
margin and therefore also had a negative impact on net income.








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$0.08 million as of March 31, 2009 as compared to gain
of US$1.6 million as of March 31, 2008. The balance sheet amounts with the
exception of equity at March 31, 2009 were translated at RMB6.8259 to US$1.00 as
compared to RMB7.0028 at March 31, 2008. The equity accounts were stated at
their historical rate. The average translation rates applied to income statement
accounts for the nine months ended March 31, 2009 and 2008 were RMB6.8241 and
RMB7.3725, respectively.





Comprehensive loss.The
comprehensive loss, which adds the currency adjustment to net income/loss, was
approximately US$0.5 million loss for the nine months ended March 31, 2009 as
compared to an income of US$0.6 million for the same period of 2008, a decrease
of $1.1 million. The decrease of income was mainly due to the reduction of our
operating profit in this period.





Liquidity
and Capital Resources





As of
March 31, 2009, we had working capital totaling approximately US$12.5 million,
including cash and cash equivalents of US$4.9 million.





Net cash
used in operating activities was US$135,338 for the nine months ended March 31,
2009. This net cash used was primarily due to the increase of accounts
receivable and advanced payment during this period.  Net cash
generated in operating activities was US$351,635 for the nine months ended March
31, 2008. This net cash generated was primarily the result of revenue growth
which led to an increase in net income during the same period of
2008.





Net cash
used in investing activities for the nine months ended March 31, 2009 totaled
US$1.5 million and related primarily to the purchase of property and equipment
and non interest-bearing loans provided to a customer. Net cash used in
investing activities for the nine months ended March 31, 2008 totaled US$3.3
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.








19






Net cash
used in financing activities for the nine months ended March 31, 2009 was US$0.5
million and related primarily to the decrease of trade notes payable deducted by
new borrowings from staff. Net cash generated in financing activities for the
nine months ended March 31, 2008 was US$2.7 million and related primarily to
capital contribution during the same period of 2008.




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 March 31, 2009, we had an aggregate principal amount of US$3.0
million outstanding under the loan agreements, with amounts mature from May 2009
to January 2010 and bear interest at a rate of 7.47% and 5.31% per annum. The
loan agreements contain customary affirmative and negative covenants and were
secured by the property and equipment of Qindao Renmin. As of March 31, 2009, 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. Since January 1, 2009, Qingdao Renmin has entered to the
three-year period of tax holiday by a 50% reduction of income tax with effective
rate of 12.5%.







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.









20




Item
3. Quantitative and Qualitative Disclosure About Market Risk




Not
applicable.




Item
4. Controls and Procedures





I.   Disclosure
Controls and Procedures.


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





II.  Changes
in Internal Control over Financial Reporting


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





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




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





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












21









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





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





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








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




Remediation
Plan for Material Weaknesses





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




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




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




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









22








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  ("ICFR")  issued
by the Committee of Sponsoring  Organizations of the Treadway
Commission.  Based on our evaluation, management has concluded, as of
March 31, 2009, 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 March 31, 2009. Based on the
evaluation, management concluded that there was a material weakness in our
internal control over financial reporting.  Subsequent to the issuance
of our June 30, 2007 financial statements, management identified various errors
in connection with our 2007 financial statements and determined that a
restatement was necessary in respect of the following: revision of reverse
acquisition accounting and revision of capitalized costs relatedto financing
transactions.  As a result, we filed restated financial statements for
the year ending June 30, 2007 and for the quarters ending September 30, 2007 and
December 31, 2007.  We then received additional SEC comments and
management determined that another restatement of our December 31, 2007
financial statements, and a restatement of our March 31, 2008 financial
statements was necessary in respect of the following: accounting for the
extended term of the Series A and Series B Warrants issued in the private
placement we closed in August 2007 and the commission paid pursuant to the
exercise of the Series J Warrants.





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





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





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







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.





Item
5. Other Information





Not
applicable.










23





Item
6. Exhibits





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
















24













SIGNATURES






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




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




Date: 
May 14, 2009














25