UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549





FORM 10-Q





[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              For
      the quarterly period ended December 31,
  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
February 4, 2010 there were 36,368,334  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 8,333,333shares of common
stock, 12,000,000 shares of Series C Convertible Preferred Stock, par value
$0.0001 per share outstanding, which shares are convertible into an aggregate of
12,000,000  shares of common stock.















JPAK
GROUP, INC.





INDEX





Page
              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
            
            Financial
      StatementsConsolidated
      Balance Sheets as ofDecember
      31, 2009 (unaudited) and June 30, 2009
            
            4Unaudited
      Consolidated Statements of Operationsfor
      the three and six months ended December 31, 2009 and
      2008
            
            5Unaudited
      Consolidated Statements of Cash Flowsfor
      the six months ended December 31, 2009 and 2008
            
            6Unaudited
      Notes to Consolidated Financial Statements
            
            7Item
      2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of Operations
            
            17Item
      3.
            
            Quantitative
      and Qualitative Disclosure About Market Risks
            
            22Item
      4.
            
            Controls
      and Procedures
            
            23PART
      II - OTHER INFORMATIONItem
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            25Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            25Item
      6.
            
            Exhibits
            
            25











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 December 31, 2009, and the related
consolidated statements of operations and comprehensive income (loss) for the
three months and six months ended December 31, 2009 and 2008, and cash flows for
the six months ended December 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 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 financial
statements referred to above for them to be in conformity with accounting
principles generally accepted in the United States of America.





We have previously audited, in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States), the balance sheet of JPAK
Group, Inc. and Subsidiaries as of June 30, 2009, and the related consolidated
statements of operations and comprehensive income, stockholders’ equity and cash
flows for the year then ended (not presented herein); and in our report dated
September 10, 2009, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of June 30, 2009, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been
derived.







/s/  Patrizio
& Zhao, LLC
 Patrizio
& Zhao, LLC





Parsippany,
New Jersey


January
27, 2010










3








Consolidated
Balance Sheets


December
      31,
            
            
            June
      30,2009
            
            
            2009Assets
            
            (Unaudited)Current
      assetsCash and cash
      equivalents
            
            $
            7,203,020
            
            
            $
            2,969,699Restricted cash
            
            
            4,180,409
            
            
            
            3,403,868Accounts receivable, net of
      allowance for doubtful accounts of $1,498,405and $1,496,723 at
      December 31, 2009 and June 30, 2009, respectively
            
            
            9,271,365
            
            
            
            9,063,973Inventory
            
            
            7,160,336
            
            
            
            5,353,193Trade notes
      receivable
            
            
            448,701
            
            
            
            -Other receivables
            
            
            1,253,636
            
            
            
            1,205,983Loan receivable
            
            
            132,030
            
            
            
            175,800Advance payments
            
            
            5,103,265
            
            
            
            503,143Prepaid expenses and other
      current assets
            
            
            139,109
            
            
            
            70,544Prepaid other
    taxes
            
            
            -
            
            
            
            266,664Total current
    assets
            
            
            34,891,871
            
            
            
            23,012,867Property
      and equipment, net
            
            
            12,971,713
            
            
            
            13,107,216Other
      assets
            
            
            112,697
            
            
            
            -Total assets
            
            $
            47,976,281
            
            
            $
            36,120,083LiabilitiesCurrent
      liabilitiesAccounts payable and accrued
      expenses
            
            $
            2,771,724
            
            
            $
            3,277,973Trade notes
    payable
            
            
            4,362,115
            
            
            
            3,212,704Advance payments from
      customers
            
            
            298,928
            
            
            
            327,898Short-term bank
    loans
            
            
            2,347,200
            
            
            
            2,344,000Current portion of long-term
      debt
            
            
            764,307
            
            
            
            951,811Income tax
payable
            
            
            324,607
            
            
            
            167,429Other current
      liabilities
            
            
            192,894
            
            
            
            97,827Total current
      liabilities
            
            
            11,061,775
            
            
            
            10,379,642Long-term
      debt
            
            
            4,724,812
            
            
            
            1,985,075Total liabilities
            
            
            15,786,587
            
            
            
            12,364,717EquityStockholders’
      equitySeries A convertible preferred
      stock, $0.0001 par value, 5,608,564shares authorized,
      issued and outstanding
            
            
            561
            
            
            
            561Series B convertible preferred
      stock, $0.0001 par value, 5,000,000shares authorized,
      issued and outstanding
            
            
            500
            
            
            
            500Series C convertible preferred
      stock, $0.0001 par value, 12,000,000shares authorized,
      issued and outstanding
            
            
            1,200
            
            
            
            -Common stock, $0.001 par value,
      300,000,000 shares authorized,36,368,334 and
      25,005,000 shares issued and outstanding at December31, 2009 and June 30,
      2009, respectively
            
            
            36,368
            
            
            
            25,005Series A preferred
      shares
            
            
            2,484,226
            
            
            
            2,484,226Series B preferred
      shares
            
            
            1,390,853
            
            
            
            1,390,853Warrants
            
            
            -
            
            
            
            4,634,678Placement agent
      warrants
            
            
            1,172,487
            
            
            
            1,172,487Additional paid-in
      capital
            
            
            22,011,719
            
            
            
            11,473,104Retained earnings
      (deficit)
            
            
            1,386,164
            
            
            
            (1,106,478
            )Statutory
reserves
            
            
            1,010,026
            
            
            
            1,010,026Accumulated other comprehensive
      income
            
            
            2,590,464
            
            
            
            2,565,276Total stockholders’
      equity
            
            
            32,084,568
            
            
            
            23,650,238Noncontrolling
      interest
            
            
            105,126
            
            
            
            105,128Total equity
            
            
            32,189,694
            
            
            
            23,755,366Total liabilities and
      equity
            
            $
            47,976,281
            
            
            $
            36,120,083










4








Consolidated
Statements of Operations and Comprehensive Income (Loss)


(Unaudited)





For
      the Three Months Ended
            
            
            For
      the Six Months EndedDecember 31,
            
            
            December 31,2009
            
            
            2008
            
            
            2009
            
            
            2008Sales
            
            $
            13,166,264
            
            
            $
            6,108,787
            
            
            $
            29,728,184
            
            
            $
            15,539,117Cost
      of sales
            
            
            10,031,204
            
            
            
            5,206,666
            
            
            
            21,868,816
            
            
            
            12,202,568Gross
      profit
            
            
            3,135,060
            
            
            
            902,121
            
            
            
            7,859,368
            
            
            
            3,336,549Operating
      expensesSelling,
      general and administrative
            
            
            1,805,476
            
            
            
            1,517,427
            
            
            
            4,693,819
            
            
            
            3,625,088Income
      (loss) from operations
            
            
            1,329,584
            
            
            
            (615,306
            )
            
            
            3,165,549
            
            
            
            (288,539
            )Other
      income (expenses):Interest expense,
    net
            
            
            (95,005
            )
            
            
            (99,092
            )
            
            
            (192,056
            )
            
            
            (107,617
            )Non-operating income,
      net
            
            
            89,878
            
            
            
            1,134
            
            
            
            86,366
            
            
            
            13,770Total other income
      (expenses)
            
            
            (5,127
            )
            
            
            (97,958
            )
            
            
            (105,690
            )
            
            
            (93,847
            )Income
      (loss) before provision for income taxes
            
            
            1,324,457
            
            
            
            (713,264
            )
            
            
            3,059,859
            
            
            
            (382,386
            )Provision
      for income taxes
            
            
            324,524
            
            
            
            -
            
            
            
            567,362
            
            
            
            -Net
      income (loss)
            
            
            999,933
            
            
            
            (713,264
            )
            
            
            2,492,497
            
            
            
            (382,386
            )Less:
      net (loss) attributable to noncontrolling interest
            
            
            (89
            )
            
            
            (67
            )
            
            
            (145
            )
            
            
            (559
            )Net
      income (loss) attributable to Jpak
            
            
            1,000,022
            
            
            
            (713,197
            )
            
            
            2,492,642
            
            
            
            (381,827
            )Undistributed
      income attributable to preferredstockholders
            
            
            491,161
            
            
            
            -
            
            
            
            1,165,971
            
            
            
            -Net
      income (loss) applicable to commonstockholders
            
            
            508,861
            
            
            
            (713,197
            )
            
            
            1,326,671
            
            
            
            (381,827
            )Other
      comprehensive income (loss)Foreign currency translation
      adjustment
            
            
            (6,842
            )
            
            
            (375
            )
            
            
            25,188
            
            
            
            (39,283
            )Comprehensive
      income (loss)
            
            $
            993,180
            
            
            $
            (713,572
            )
            
            $
            2,517,830
            
            
            $
            (421,110
            )Basic
      earnings (loss) per common share
            
            $
            0.02
            
            
            $
            (0.03
            )
            
            $
            0.05
            
            
            $
            (0.02
            )Diluted
      earnings (loss) per common share
            
            $
            0.02
            
            
            $
            (0.03
            )
            
            $
            0.05
            
            
            $
            (0.02
            )Weighted
      average number of common sharesoutstandingBasic
            
            
            28,092,863
            
            
            
            24,805,000
            
            
            
            26,548,931
            
            
            
            24,805,000Diluted
            
            
            56,295,779
            
            
            
            24,805,000
            
            
            
            49,882,001
            
            
            
            24,805,000








5










Consolidated
Statements of Cash Flows


(Unaudited)





For
      the Six Months EndedDecember 31,2009
            
            
            2008Cash
      flows from operating activities:Net
      income (loss)
            
            $
            2,492,642
            
            
            $
            (381,827
            )Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Noncontrolling
      interest
            
            
            (145
            )
            
            
            (559
            )Depreciation
            
            
            770,427
            
            
            
            598,024Share-based
    payment
            
            
            -
            
            
            
            303,750Loss (gain) on disposal of fixed
      assets
            
            
            2,355
            
            
            
            (332
            )Provision for bad
      debts
            
            
            (361
            )
            
            
            150,823Changes in assets and
      liabilities:Accounts
    receivable
            
            
            (194,577
            )
            
            
            1,192,350Inventory
            
            
            (1,799,098
            )
            
            
            1,607,080Trade notes
      receivable
            
            
            (448,518
            )
            
            
            -Other receivables
            
            
            (45,987
            )
            
            
            (157,372
            )Advance payments
            
            
            (3,172,068
            )
            
            
            (1,666,470
            )Prepaid expenses and other
      current assets
            
            
            (68,477
            )
            
            
            36,782Other assets
            
            
            (112,651
            )
            
            
            -Accounts payable and accrued
      expenses
            
            
            (510,297
            )
            
            
            (1,592,945
            )Advance payments from
      customers
            
            
            (29,406
            )
            
            
            -Prepaid other
    taxes
            
            
            266,919
            
            
            
            -Income tax
payable
            
            
            156,885
            
            
            
            -Other current
      liabilities
            
            
            94,896
            
            
            
            83,046Total adjustments
            
            
            (5,090,103
            )
            
            
            554,177Net cash provided by (used in)
      operating activities
            
            
            (2,597,461
            )
            
            
            172,350Cash
      flows from investing activities:Advance payments for fixed
      assets
            
            
            (1,425,485
            )
            
            
            -Additions to property and
      equipment
            
            
            (619,447
            )
            
            
            (763,260
            )Proceeds from disposal of fixed
      assets
            
            
            -
            
            
            
            48,345Change in loan
      receivable
            
            
            43,992
            
            
            
            -Net cash used in investing
      activities
            
            
            (2,000,940
            )
            
            
            (714,915
            )Cash
      flows from financing activities:Issuance of trade notes
      payable
            
            
            1,144,557
            
            
            
            (337,645
            )Proceeds from (repayment of)
      long-term debt
            
            
            2,547,183
            
            
            
            (211,591
            )Additional
      paid-in capital
            
            
            5,916,500
            
            
            
            -Net cash provided by (used in)
      financing activities
            
            
            9,608,240
            
            
            
            (549,236
            )Effect
      of foreign currency translation on cash
            
            
            23
            
            
            
            (128,910
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            5,009,862
            
            
            
            (1,220,711
            )Cash
      and cash equivalents and restricted cash –  beginning
            
            
            6,373,567
            
            
            
            7,218,904Cash
      and cash equivalents and restricted cash –ending
            
            $
            11,383,429
            
            
            $
            5,998,193








6







Note
1 – Organization and Nature of Business





JPAK
Group, Inc. (Formerly Rx Staffing Inc was 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 Co.”) 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 Co., 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. (“JPAK”). The
transaction was regarded as a reverse merger whereby JPAK Co. 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 Co.. Thus, JPAK Co. is the
continuing entity for financial reporting purposes. The financial statements
have been prepared as if JPAK Co. 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 Co. 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 flows 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
the requirements of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities
and Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. Interim results are not
necessarily indicative of results for a full year. In the opinion of management,
all adjustments considered necessary for a fair presentation of the financial
position and the results of operations and cash flows for the interim periods
have been included.





Interim
Financial Statements





These
interim financial statements should be read in conjunction with the audited
financial statements for the years ended June 30, 2009 and 2008, 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, 2009 and 2008.








7







Note
2 – Summary of Significant Accounting Policies (continued)





Recent
Accounting Pronouncements





On July
1, 2009, the Financial Accounting Standards Board (“FASB”) officially launched
the FASB Accounting Standards Codification (“ASC”), which has become the single
official source of authoritative nongovernmental U.S. GAAP, in addition to
guidance issued by the Securities and Exchange Commission. The ASC is designed
to simplify U.S. GAAP into a single, topically ordered structure. All guidance
contained in the ASC carries an equal level of authority. The ASC is effective
for all interim and annual periods ending after September 15, 2009. The
Company’s implementation of this guidance effective July 1, 2009 did not have a
material effect on the Company’s condensed consolidated financial
statements.





On July
1, 2009, the Company adopted the accounting and disclosure requirements of
Statement of Financial Accounting Standard (“SFAS”) No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51,
which is now included with ASC Topic 810 Consolidation.  This standard
establishes a single method of accounting for changes in a parent’s ownership
interest in a subsidiary that do not result in deconsolidation.  On a
prospective basis, any changes in ownership will be accounted for as equity
transactions with no gain or loss recognized on the transactions unless there is
a change in control.





Reclassification





Certain
amounts of December 31, 2008 were reclassified for presentation
purposes.





Note
3– Restricted Cash





As of
December 31, 2009 and June 30, 2009, the Company had restricted cash of
$4,180,409 and $3,403,868, respectively. These restricted cash balances are
reserved for settlement of trade notes payable and open letter of credit in
connection with inventory purchases.  The cash held in custody by bank
issuing the trade notes payable and letter of credit 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 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 $1,498,405 and $1,496,723
as of December 31, 2009 and June 30, 2009, respectively. The allowance was
mainly because a major customer was near bankruptcy as of December 31,
2009.





Note
5 – Inventory





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





December 31, 2009
            
            
            June 30, 2009Finished
      goods
            
            $
            2,326,472
            
            
            $
            939,428Raw
      materials
            
            
            4,263,303
            
            
            
            3,912,953Parts
      and supplies
            
            
            206,097
            
            
            
            84,806Work
      in process
            
            
            364,464
            
            
            
            416,006Total
            
            $
            7,160,336
            
            
            $
            5,353,193








8







Note
6 – Advance Payments





The
Company makes advances to certain vendors for inventory and equipment. The
advances for the purchase of inventory amounted to $3,384,103 and $210,449 as of
December 31, 2009 and June 30, 2009, respectively. Additionally, the advances
for the purchase of equipment amounted to $1,719,162 and $292,694 as of December
31, 2009 and June 30, 2009, respectively.





Note
7 – Loan Receivable





The
Company gave a non interest-bearing loan in the amount of $132,030 to a certain
customer for purchasing a filling machine, with a commitment from the customer
to buy an agreed quantity of packaging supplies from the Company. The customer
agreed to pay back the loan in four installments by June 30, 2010.





Note
8 – Property and Equipment





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


December 31, 2009
            
            
            June 30, 2009Buildings
            
            $
            4,647,279
            
            
            $
            4,463,528Machinery
      and equipment
            
            
            17,278,340
            
            
            
            16,817,851Subtotal
            
            
            21,925,619
            
            
            
            21,281,379Less:
      Accumulated depreciation
            
            
            8,953,906
            
            
            
            8,174,16312,971,713
            
            
            
            13,107,216Total
            
            $
            12,971,713
            
            
            $
            13,107,216





Depreciation
expenses for the three months ended December 31, 2009 and 2008 were $387,928 and
$301,115, respectively. Depreciation expenses for the six months ended December
31, 2009 and 2008 were $770,427 and $598,024, respectively.





Note
9 – Accounts Payable and Accrued Expenses





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





December 31, 2009
            
            
            June 30, 2009Accounts
      payable
            
            $
            2,609,947
            
            
            $
            3,032,577Accrued
      expenses
            
            
            161,777
            
            
            
            245,396Total
            
            $
            2,771,724
            
            
            $
            3,277,973





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





Note
10 – Trade Notes Payable





Trade
notes payable consist 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 December 31, 2009 and June
30, 2009 were $4,362,115 and $3,212,704, respectively.








9







Note
11 – Short Term Bank Loans





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





December
      31,
            
            
            June
      30,2009
            
            
            2009On
      January 22, 2009, the Company obtained a loan from Qingdao
      CityCommercial
      Bank, out of which, the principal is to be paid in full by
      January22,
      2010.  Interest is to be calculated using an annual fixed rate
      of 5.31%and
      paid monthly. The loan is secured by the company's property
      andequipment.
            
            $
            2,347,200
            
            
            $
            2,344,000Total short term bank
      loans
            
            $
            2,347,200
            
            
            $
            2,344,000





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 six months ended December 31, 2009, the income tax
expense was $567,362.





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 intends 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







Note
13 – Long-Term Debt





As of
December 31, 2009, the Company had an outstanding long-term debt of $4,139,874
due to employees, including the current portion of $764,307. As of June 30,
2009, the Company had an outstanding long-term debt of $2,936,886 due to
employees, including the current portion of $951,811. These loans were borrowed
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.





The
long-term debt also includes mortgage loan. The Company has entered into a
contract with a third party to obtain a mortgage loan on collateral of their
current equipment. The Company agreed to pay back the loan in 48 installments
over four years. During the quarter ended December 31, 2009, the Company
received the contractual amount of approximately $1.4 million and paid back the
first installment. The balance of principal payable was $1,349,245 at December
31, 2009.





Note
14 – Stockholders’ Equity and Related Financing Agreements





On August
9, 2007, the shareholders of JPAK were issued 23,005,000 shares of Rx Staffing’s
common stock, which represented 64.4% of all the issued and outstanding shares
of JPAK’s common stock, under a Securities Exchange Agreement (the “SEA”),
pursuant to which all the shares of Rx Staffing were transferred and JPAK became
a wholly-owned subsidiary of Rx Staffing. In connection with the Share Exchange,
the company changed its name to JPAK Group, Inc.





On August
9, 2007, JPAK became a party to the Note Purchase Agreement dated May 17, 2007
(“NPA”). Pursuant to the NPA, JPAK issued Convertible Promissory Notes in the
aggregate principal amount of $5.5 million to the Investors. As a result of the
Share Exchange, and under the terms of the Notes and the NPA, the notes
converted to the following: (i) 5,608,564 shares of the Company’s Series A
Convertible Preferred Stock, par value $.0001 per share, convertible into an
aggregate of 11,217,128 shares of Common Stock, (ii) Series A Warrants to
purchase an aggregate of 5,500,000 shares of Common Stock (subject to
adjustment) at an exercise price of $.60 per share until August 2011 (the
“Series A Warrants”), (iii) Series B Warrants to purchase an aggregate of
5,500,000 shares of Common Stock (subject to adjustment) at an exercise price of
$.70 per share until August 2011 (the “Series B Warrants”) and (iv) Series J
Warrants to purchase (a) an aggregate of 5,000,000 shares of Series B Preferred
Stock, which shall contain the same terms as the Series A Preferred Stock (other
than conversion price), and will be convertible into 8,333,333 shares of the
Company’s Common Stock, (b) Series C Warrants to purchase an aggregate of
4,166,667 shares of Common Stock (subject to adjustment) at an exercise price of
$.72 per share (the “Series C Warrants”) and (c) Series D Warrants to purchase
an aggregate of 4,166,667 shares of Common Stock (subject to adjustment) at an
exercise price of $.84 per share (the “Series D Warrants” and together with the
Series A Warrants, Series B Warrants and Series C Warrants, the “Warrants”). The
Series J Warrants were exercisable until 90 days following the effective date of
a registration statement registering for sale of shares of common stock
underlying the securities issued in the financing. Finally, the Company also
granted warrants to purchase 990,000 shares of common stock at an exercise price
of $.50 per share and 750,000 shares of common stock at an exercise price of
$.60 per share to the placement agent in the financing transaction. These
warrants have the same terms as the Series A and Series B Warrants, except that
they contain a “cashless” exercise provision.





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








11







Note 14 –
Stockholders’ Equity and Related Financing Agreements
(continued)





In
connection with the exercise of the Series J Warrants, the term of Series A and
Series B Warrants was extended 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 was a condition of the exercise of the Series J
Warrants and the subsequent issuance of the Series B Preferred stock (the
“Series B financing”).  In this way, the conversion of Series A and
Series B convertible Preferred Stock is deemed as “in the money” and therefore
contain a beneficial conversion feature which amounted to $2,484,226 and
$1,390,853, respectively, after allocation.





On April
1, 2008, JPAK entered into a consulting agreement with Tripoint Capital
advisors, LLC to provide consulting services for one year. As a result, JPAK
agreed to issue to Tripoint and/or its affiliates 300,000 shares of its capital
stock on July 1, 2008. The shares were issued on July 1, 2008. 150,000 shares
were vested immediately and the remaining 150,000 were to be vested in equal
installments in the next two quarters. The fair value on April 1, 2008 was
$404,700 based on the quoted price of the Company’s common stock.





On April
1, 2009, the board of directors approved to issue 200,000 shares of the
Company’s common stock to Mr. Dongliang (Frank) Su, the acting CFO of the
Company and the shares were vested on July 1, 2009. The fair value on April 1,
2009 was $20,000 based on the quoted price of the Company’s common stock on that
day.





On
November 3, 2009, JPAK completed a financing with one accredited investor.
The financing raised gross proceeds of $6.0 million with net proceeds to
JPAK of $5,916,500. As a result of the financing, JPAK issued 12,000,000 units
of securities at a price of $0.50 per unit. Each unit consists of (i) one (1)
share of the Company’s Series C Convertible Preferred Stock, par value $0.0001
per share (the “Preferred Shares”), convertible into one share of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), and (ii) a
one-half Series E Warrant (the “Series E Warrant”) and one-half Series F Warrant
(the “Series F Warrant”, collectively the “Warrants”).  Each whole
Series E Warrant may be exercised to purchase one share of Common Stock at an
exercise price of $0.60 per share and each whole Series F Warrant may be
exercised to purchase one share of Common Stock at an exercise price of $0.70
per share.  The Warrants are exercisable for a period of five years from
the date of issuance. In connection with the financing, the Company paid the fee
of $30,000 to Tripoint Global Equities, LLC, who acted as placement
agent.





On
December 16, 2009, JPAK entered into an Exchange Agreement with each of the
holders of the warrants that were issued pursuant to the private financings that
closed in August 2007, December 2007 and November 2009.  Pursuant to
the Exchange Agreement the Company issued an aggregate of 11,363,334 shares of
our common stock in exchange for 5,500,000 Series A Warrants; 5,500,000 Series B
Warrants; 4,166,667 Series C Warrants; 4,166,667 Series D Warrants; 6,000,000
Series E Warrants; and 6,000,000 Series F Warrants.  The warrant
exchange took the form of a cashless transaction.  As a result, JPAK
does not have any warrants outstanding other than those issued to the placement
agent of the above mentioned private financings.





Note
15 – Employee Welfare Plan





The
Company 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 a certain percentage
of the employees’ salaries. The total contribution for such employee benefits
was $246,986 and $223,505 for the six months ended December 31, 2009 and 2008,
respectively.








12







Note
16 – Risk Factors





For the
three months ended December 31, 2009 and 2008, five vendors accounted for
approximately 78% and 60% of the Company’s purchases, respectively. Total
purchases from these vendors were $9,949,685 and $5,777,360 for the three months
ended December 31, 2009 and 2008, respectively.





For the
three months ended December 31, 2009 and 2008, five customers accounted for
approximately 63% and 56% of the Company’s revenue, respectively. Total sales to
these customers were $8,326,864 and $3,354,643 for the three months ended
December, 2009 and 2008, 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
17 - 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
18 – Capital Commitment





On
November 27, 2009, the Company entered into two agreements with a third party to
obtain mortgage loans of approximately $1.4 million on collateral of their
contracted purchase of printing equipment for approximately $2.3 million.
Pursuant to the agreements, the Company is obliged to pay back principal and
interest of $38,323 per month within four years after the acquisitions of
equipment are completed.





Note
19 – Earnings Per Share





The
Company presents earnings per share (“EPS”) 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.





The
Company uses two-class method to calculate the basic earnings per share. Under
the two class method, net income is allocated between ordinary shares and other
participating securities based on their respective participating rights. The
Company’s Series A, Series B and Series C preferred shares are participating
securities. In the event that any dividends are paid on our common stock, the
holders of Series A, Series B and Series C preferred stock shall share with the
holders of common stock on an as converted basis in such dividends. The
5,608,564 shares of Series A Preferred Stock are convertible into an aggregate
of 11,217,128 shares of common stock. The 5,000,000 shares of Series B Preferred
Stock are convertible into an aggregate of 8,333,333 shares of common
stock.  The 12,000,000 shares of Series C Preferred Stock are
convertible into an aggregate of 12,000,000 shares of common stock.








13







Note
19 – Earnings Per Share (continued)





Basic EPS
for the three months ended December 31, 2009 was computed as
follows:





Net
      income
            
            $
            1,000,022Less
      dividends paid to:Common
      shareholders
            
            
            -Series
      A convertible preferred shareholders
            
            
            -Series
      B convertible preferred shareholders
            
            
            -Series
      C convertible preferred shareholders
            
            
            -Undistributed
      2009 earnings
            
            $
            1,000,022





Basic
      earnings per share amounts:Series
      A
            
            
            Series
      B
            
            
            Series
      CCommon
            
            
            convertible
            
            
            convertible
            
            
            convertibleStock
            
            
            preferred stock
            
            
            preferred stock
            
            
            preferred stockDistributed
      earnings
            
            $
            0.00
            
            
            $
            0.00
            
            
            $
            0.00
            
            
            $
            0.00Undistributed
      earnings
            
            
            0.02
            
            
            
            0.04
            
            
            
            0.03
            
            
            
            0.01Totals
            
            $
            0.02
            
            
            $
            0.04
            
            
            $
            0.03
            
            
            $
            0.01





Diluted
EPS for the three months ended December 31, 2009 was computed as follows using
the If-Converted Method:





Distributed
      &Undistributedearnings
      toCommon
            
            
            Common
            
            
            EarningsStock
            
            
            Shares
            
            
            Per ShareAs
      reported - Basic
            
            $
            508,861
            
            
            
            28,092,863
            
            
            $
            0.02Warrants
            
            
            -
            
            
            
            1,087,238
            
            
            
            --508,861
            
            
            
            29,180,101
            
            
            $
            0.02Series
      A preferred stock conversion
            
            
            203,182
            
            
            
            11,217,128
            
            
            
            --Series
      B preferred stock conversion
            
            
            150,946
            
            
            
            8,333,333
            
            
            
            --Series
      C preferred stock conversion
            
            
            137,033
            
            
            
            7,565,217
            
            
            
            --Diluted
      earnings for common stock
            
            $
            1,000,022
            
            
            
            56,295,779
            
            
            $
            0.02





Basic EPS
for the three months ended December 31, 2008 was computed as
follows:





Net
      income
            
            
            
            
            
            $
            (713,197
            )Less
      dividends paid to:Common
      shareholders
            
            
            
            
            
            
            -Series
      A convertible preferred shareholders
            
            
            
            
            
            
            -Series
      B convertible preferred shareholders
            
            
            
            
            
            
            -Undistributed
      earnings
            
            
            
            
            
            $
            (713,197
            )Basic
      earnings per share amounts:Series
      A
            
            
            Series
      BCommon
            
            
            convertible
            
            
            convertibleStock
            
            
            preferred stock
            
            
            preferred stockDistributed
      earnings
            
            $
            0.00
            
            
            $
            0.00
            
            
            $
            0.00Undistributed
      earnings
            
            
            (0.03
            )
            
            
            0.00
            
            
            
            0.00Totals
            
            $
            (0.03
            )
            
            $
            0.00
            
            
            $
            0.00








14







Note
19 – Earnings Per Share (continued)





Diluted
EPS for the three months ended December 31, 2008 was computed as follows using
the If-Converted Method:





Distributed
      &Undistributedearnings
      toCommon
            
            
            Common
            
            
            EarningsStock
            
            
            Shares
            
            
            Per ShareAs
      reported - Basic
            
            $
            (713,197
            )
            
            
            24,805,000
            
            
            $
            (0.03
            )Warrants
            
            
            -
            
            
            
            -
            
            
            
            --(713,197
            )
            
            
            24,805,000
            
            
            $
            (0.03
            )Series
      A preferred stock conversion
            
            
            -
            
            
            
            -
            
            
            
            --Series
      B preferred stock conversion
            
            
            -
            
            
            
            -
            
            
            
            --Diluted
      earnings for common stock
            
            $
            (713,197
            )
            
            
            24,805,000
            
            
            $
            (0.03
            )





Basic EPS
for the six months ended December 31, 2009 was computed as follows:





Net
      income
            
            $
            2,492,642Less
      dividends paid to:Common
      shareholders
            
            
            -Series
      A convertible preferred shareholders
            
            
            -Series
      B convertible preferred shareholders
            
            
            -Series
      C convertible preferred shareholders
            
            
            -Undistributed
      2009 earnings
            
            $
            2,492,642




Basic
      earnings per share amounts:Series
      A
              
              
              Series
      B
              
              
              Series
      CCommon
              
              
              convertible
              
              
              convertible
              
              
              convertibleStock
              
              
              preferred stock
              
              
              preferred stock
              
              
              preferred stockDistributed
      earnings
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00Undistributed
      earnings
              
              
              0.05
              
              
              
              0.10
              
              
              
              0.08
              
              
              
              0.02Totals
              
              $
              0.05
              
              
              $
              0.10
              
              
              $
              0.08
              
              
              $
              0.02


Diluted
EPS for the six months ended December 31, 2009 was computed as follows using the
If-Converted Method:





Distributed
      &Undistributedearnings
      toCommon
            
            
            Common
            
            
            EarningsStock
            
            
            Shares
            
            
            Per ShareAs
      reported - Basic
            
            $
            1,326,671
            
            
            
            26,548,931
            
            
            $
            0.05Warrants
            
            
            -
            
            
            
            -
            
            
            
            --1,326,671
            
            
            
            26,548,931
            
            
            $
            0.05Series
      A preferred stock conversion
            
            
            560,529
            
            
            
            11,217,128
            
            
            
            --Series
      B preferred stock conversion
            
            
            416,422
            
            
            
            8,333,333
            
            
            
            --Series
      C preferred stock conversion
            
            
            189,020
            
            
            
            3,782,609
            
            
            
            --Diluted
      earnings for common stock
            
            $
            2,492,642
            
            
            
            49,882,001
            
            
            $
            0.05








15







Note
19 – Earnings Per Share (continued)





Basic EPS
for the six months ended December 31, 2008 was computed as follows:





Net
      income
            
            $
            (381,827
            )Less
      dividends paid to:Common
      shareholders
            
            
            -Series
      A convertible preferred shareholders
            
            
            -Series
      B convertible preferred shareholders
            
            
            -Undistributed
      earnings
            
            $
            (381,827
            )




Basic
      earnings per share amounts:Series
      A
              
              
              Series
      BCommon
              
              
              convertible
              
              
              convertibleStock
              
              
              preferred stock
              
              
              preferred stockDistributed
      earnings
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00Undistributed
      earnings
              
              
              (0.02
              )
              
              
              0.00
              
              
              
              0.00Totals
              
              $
              (0.02
              )
              
              $
              0.00
              
              
              $
              0.00


Diluted
EPS for the six months ended December 31, 2008 was computed as follows using the
If-Converted Method:





Distributed
      &Undistributedearnings
      toCommon
            
            
            Common
            
            
            EarningsStock
            
            
            Shares
            
            
            Per ShareAs
      reported - Basic
            
            $
            (381,827
            )
            
            
            24,805,000
            
            
            $
            (0.02
            )Warrants
            
            
            -
            
            
            
            -
            
            
            
            --(381,827
            )
            
            
            24,805,000
            
            
            $
            (0.02
            )Series
      A preferred stock conversion
            
            
            -
            
            
            
            -
            
            
            
            --Series
      B preferred stock conversion
            
            
            -
            
            
            
            -
            
            
            
            --Diluted
      earnings for common stock
            
            $
            (381,827
            )
            
            
            24,805,000
            
            
            $
            (0.02
            )





Note
20 – Supplemental Cash Flow Information





Six
      Months Ended December 31,2009
            
            
            2008Cash
      paid for interest
            
            $
            253,402
            
            
            $
            112,845Cash
      paid for income taxes
            
            $
            383,092
            
            
            $
            -





Note
21 – Subsequent Events





On
January 11, 2010, Qingdao Likang Packaging Co. Ltd (Qingdao Likang), a
wholly-owned subsidiary of Grand International, one of our subsidiaries, was
licensed to start business in Qingdao with a capital commitment of $13.5
million, 37% of which will be invested within three months after registration
and the rest will be invested within two years. Grand International is allowed
to use the capital raised or the profit generated by Qingdao Renmin for this
capital investment.  We have
also started the process of acquiring land rights to 100 mu (Chinese Acres) land
in Qingdao to build production facility for Qingdao Likang.








16










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








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 financial condition and results of
operations relates to the operations and financial condition reported in the
financial statements of Jpak for the three months and six months ended December
31, 2009 and 2008 and should be read in conjunction with such financial
statements and related notes included in this report.




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
one of the largest and leading domestic suppliers 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 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.





On
January 11, 2010, Qingdao Likang Packaging Co. Ltd (Qingdao Likang), a
wholly-owned subsidiary of Grand International, was registered in Qingdao with a
capital commitment of $13.5 million, 37% of which will be injected within three
months after registration and the rest will be done within two years. Grand
International is allowed to use the capital raised or the profit generated by
Qingdao Renmin for this capital injection.





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.





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





Milk
scandal, economic crisis and their effects on Jpak





In
September 2008, the Chinese health ministry announced that over the previous
months several babies had 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.  This milk scandal caused a severe
disruption in the market for milk and milk related products which adversely
affected our business in prior periods.








17







Recently,
we have seen signs of recovery; the sales volumes of the top two milk producers
have almost recovered to the levels before the scandal and even
higher.





Prior to
the milk scandal, we focused more efforts in the dairy packaged segment as it
typically has higher margins than the fruit juice market. Due to this scandal,
our previous sales to dairy customers fell sharply and some major customers and
business relationships were lost. As a result of the scandal and the competitive
environment it caused, prices were cut by nearly 10% and our short-term revenue
was adversely impacted.  This caused our performance in the 2009
fiscal year to fall significantly short of our expectations prior to the
scandal.





Management
began to take every action to minimize these losses and monitor both short and
long-term impact on our business and operations. We tightened our credit
control by installing ceilings on our customers’ credit limits and monitored the
financial situation of our customers more closely. So far, Management’s efforts
to realign our marketing effort with the post-scandal market place have shown
positive results, as reflected by our performance during the first six months in
fiscal year 2010. At present, packages for dairy and tea drinks account for a
large percentage of our products, which cover more than 60% and 30% of our
revenue, respectively.





Strategy





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








Research
and Development





In
October 2006, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co.,
Ltd., (“Qingdao Delikang”), a joint venture with Xi’an Heiniu Machinery, Co.
Qingdao Renmin is the 51% owner of Qingdao Delikang.  The main
business of this joint venture is to research and develop filling
machines.  We are progressing with related technology and techniques
and the filling machines are still in the development phase. Currently, the
filling machines can run at 12,000 packages output per hour during our tests and
the first machine is being installed with one of our customers.





In
addition, we successfully developed packaging which can be used in the filling
machines created by SIG (the second largest multi-national supplier in the
aseptic liquid food and beverage carton market).  Our new products are
being tested among our customers and we continue to improve the manufacturing
techniques. We estimate that we will incur up to approximately US$300,000 in
additional costs for the R&D of this associated with this new product
improvement. The new production line is being installed and production tests are
expected to be run in March. Provided that the product tests are successful,
management believes this new packaging will be able to increase our revenue
significantly at a relatively higher gross margin.




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. Our annual capacity has increased from 2 billion packs
last year to approximately 3.5 billion packs this year. Additionally, assuming
funds are available, once our SIG compatible packaging passes all necessary
tests  including the test of equipment, material and final products
and launches in large batch, management plans to introduce up to eight
additional production lines with annual capacity of 80 million packs per
line.


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.





With the
planning and construction of our new plant of Qingdao Likang, we anticipate that
one new line for normal packs and four new lines for SIG packs will be put into
production in approximately one year. We intend to expand further in the next
two or three years, which may increase our annual capacity to 8.0 billion packs
per annum.








18







We have
expanded our market by increasing the number of transactions with our existing
key clients and new clients. Our sales department has recently developed twelve
new clients, which amounted to 2.3% of the total sales in the six months ended
December 31, 2009. We also begun to receive orders from customers in Russia and
Eastern Europe. Although these orders currently only account for a small portion
of our total sales, we intend to further increase the orders
from  these regions.





Furthermore,
we are  in the process of negotiating a new contract with one of
China’s top three milk producers and we are in the process of discussing further
cooperation. We are receiving trial orders from this new customer and we believe
this business relationship may enhance our business performance to a greater
extent.



























19







Results
of Operations




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




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





Three
      Months Ended December 31
            
            2009
            
            
            2008Sales
            
            $
            13,166,264
            
            
            $
            6,108,787Cost
      of sales
            
            $
            10,031,204
            
            
            $
            5,206,666Gross
      profit
            
            $
            3,135,060
            
            
            $
            902,121Selling,
      general and administrative expenses
            
            $
            1,805,476
            
            
            $
            1,517,427Other
      income (expense)
            
            $
            (5,127
            )
            
            $
            (97,958
            )Income
      taxes
            
            $
            324,524
            
            
            $
            -Minority
      interest
            
            $
            (89
            )
            
            $
            (67
            )Net
      income (loss)
            
            $
            1,000,022
            
            
            $
            (713,197
            )Undistributed
      income attributable to convertible preferred stockholders
            
            $
            491,161
            
            
            $
            -Foreign
      currency translation adjustment
            
            $
            (6,842
            )
            
            $
            (375
            )Comprehensive
      income (loss)
            
            $
            993,180
            
            
            $
            (713,572
            )





Sales. Total sales were
approximately US$13.2 million for the three months ended December 31, 2009 as
compared to approximately US$6.1 million for the same period ended December 31,
2008, an increase of approximately US$7.1 million, or 116%. The significant
increase of sales reflected the extent of our recovery from the milk scandal and
our sales effects in the period. In addition to the new client development, we
have enhanced our cooperation with our existing clients with significant order
increase.





Cost of Sales. Cost of sales
for the three months ended December 31, 2009 was approximately US$10.0 million,
or 76.2% of sales, as compared to US$5.2 million, or 85.2% of sales, for the
same period ended December 31, 2008. Our cost of sales are primarily composed of
the costs of direct raw materials (mainly paper materials, polyethylene
materials, aluminum materials, printing materials), labor, depreciation and
amortization of manufacturing equipment and facilities, and other overhead. The
percentage of cost of sales has decreased significantly due to the fall of major
raw material price and the rise of outputs, which helped increase the economic
scale and reduce material wastage.





Gross profit.Gross
profit margin for the three months ended December 31, 2009 was approximately
23.8% as compared to 14.8% for the three months ended December 31, 2008, an
increase of 9%.





Selling, general
and administrative expenses. Selling, general and administrative expenses
were approximately US$1.8 million for the three months ended December 31, 2009
as compared to approximately US$1.5 million for the same period ended December
31, 2008, an increase of approximately US$0.3 million, or 19%. The increase was
mainly due to the compensation expenses to external service providers for the
November Financing and December Warrants Restructuring.





Net income
(loss).  Net income was approximately US$1.0 million for the
three months ended December 31, 2009 as compared to net loss of approximately
US$0.7 million for the same period ended December 31, 2008, an increase of
approximately US$1.7 million. The increase in net income was primarily due to
the significant growth in revenue and higher gross margin in the quarter ended
December 31, 2009.





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$6,842 as of December 31, 2009 as compared to loss of
US$375 as of December 31, 2008. The balance sheet amounts with the exception of
equity at December 31, 2009 and 2008 were both translated at RMB6.83 to US$1.00.
The equity accounts were stated at their historical rate. The average
translation rates applied to income statement accounts for the three months were
average exchange rate during the quarter.





Comprehensive income (loss).The comprehensive income, which adds the currency adjustment to net
income, was approximately US$1.0 million for the three months ended December 31,
2009 as compared to a loss of US$0.7 million for the three months ended December
31, 2008, an increase of $1.7 million. The increase of comprehensive income was
mainly due to the increase of our operating profit in the quarter.






20







Comparison of the
six months ended December
31, 2009 and 2008





Six Months Ended December 31
            
            2009
            
            
            2008Sales
            
            $
            29,728,184
            
            
            $
            15,539,117Cost
      of sales
            
            $
            21,868,816
            
            
            $
            12,202,568Gross
      profit
            
            $
            7,859,368
            
            
            $
            3,336,549Selling,
      general and administrative expenses
            
            $
            4,693,819
            
            
            $
            3,625,088Other
      income (expense)
            
            $
            (105,690
            )
            
            $
            (93,847
            )Income
      taxes
            
            $
            567,362
            
            
            $
            -Minority
      interest
            
            $
            (145
            )
            
            $
            (559
            )Net
      income (loss)
            
            $
            2,492,642
            
            
            $
            (381,827
            )Undistributed
      income attributable to convertible preferred stockholers
            
            $
            1,165,971
            
            
            $
            -Foreign
      currency translation adjustment
            
            $
            25,188
            
            
            $
            (39,283
            )Comprehensive
      income (loss)
            
            $
            2,517,830
            
            
            $
            (421,110
            )





Sales. Total sales were
approximately US$29.7 million for the six months ended December 31, 2009 as
compared to approximately US$15.5 million for the same period of 2008, increased
by approximately US$14.2 million or 91%. The significant increase of sales
reflected the extent of our recovery from the milk scandal and our sales effects
in the period.





Cost of Sales. Cost of sales
for the six months ended December 31, 2009 was approximately US$21.9 million, or
73.6% of sales, as compared to US$12.2 million, or 78.5% of sales, for the same
period of 2008. Our cost of sales are primarily composed of the costs of direct
raw materials (mainly paper materials, polyethylene materials, aluminum
materials, printing materials), labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. The percentage of
cost of sales has decreased due to the fall of major raw material price and the
rise of outputs, which helped increase the economic scale and reduce material
wastage.





Gross profit.Gross
profit margin for the six months ended December 31, 2009 was approximately 26.4%
as compared to 21.5% for the six months ended December 31, 2008, an increase by
4.9%.





Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$4.7 million for the six months ended December 31, 2009 as compared to
approximately US$3.6 million for the same period of 2008, an increase of
approximately US$1.1 million, or 29.5%. The increase was mainly due to an
increase of compensation expenses to external service providers for the November
Financing and December Warrants Restructuring and increased post-sale service
expenses.





Net income
(loss).  Net income was approximately US$2.5 million for six
months ended December 31, 2009 as compared to net loss of approximately US$0.4
million for the same period of 2008, an increase of approximately US$2.9
million. The increase in net income was primarily due to the significant growth
in revenue and higher gross margin in the period ended December 31,
2009.





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 gain of US$25,188 as of December 31, 2009 as compared to loss of
US$39,283 as of December 31, 2008. The balance sheet amounts with the exception
of equity at December 31, 2009 and 2008 were both translated at RMB6.83 to
US$1.00. The equity accounts were stated at their historical rate. The average
translation rates applied to income statement accounts for the six months ended
December 31, 2009 and 2008 were RMB6.8194 and RMB6.8292 to US$1.00,
respectively.










21





Comprehensive income (loss).The comprehensive income, which adds the currency adjustment to net
income, was approximately US$2.5 million for the six months ended December 31,
2009 as compared to a loss of US$0.4 million for the six months ended December
31, 2008, an increase of $2.9 million. The increase in comprehensive income was
primarily due to the increase of our operating profit in this
period.





Liquidity
and Capital Resources





As
of December 31, 2009, we had working capital totaling approximately US$23.8
million, including cash and cash equivalents of US$11.4 million.





Net
cash used in operating activities was US$2,597,461 for the six months ended
December 31, 2009. This net cash used was primarily due to the increase of
advanced payment and inventory balances as a result of the increase in sales.
Net cash generated in operating activities was US$172,350 for the same period
ended December 31, 2008. This net cash generated was primarily due to the
decrease of accounts receivable and inventory balance during the
period.





Net cash used in investing activities for the six months ended December 31, 2009
totaled US$2.0 million and related primarily to the purchase and advanced
payments for property and equipment. Net cash used in investing activities for
the same period ended December 31, 2008 totaled US$0.7 million and also related
primarily to the purchase of property and equipment.





Net cash generated in financing activities for the six months ended December 31,
2009 was US$9.6 million and related primarily to the issuance of trade notes
payable, proceeds from additional borrowings from employees and the new
financing in this period. In November 2009, we completed a financing of US$6
million with net proceeds US$5,916,500. Net cash used in financing activities
for the same period ended December 31, 2008 was US$0.55 million and related
primarily to the reduction of trade notes payable and repayment of borrowings
from employees during the period.





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 December 31, 2009, we had an aggregate principal amount of
US$2.3 million outstanding under the loan agreements, with amounts mature in
January 2010 and bear an interest rate of 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 December 31, 2009, we were in
material compliance with the terms of our loan agreements.





Critical
Accounting Policies and Estimates





Please refer to “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” in Jpak’s 2009 10-K 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, 2009.





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.








Item
3. Quantitative and Qualitative Disclosure About Market Risk





Not
applicable.











22







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.

















23








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.





Since
April 2009 we have been working diligently on the documentation of internal
controls. The documentation is expected to complete in February 2010. Testing of
internal controls will be conducted thereafter. We have identified a number of
weaknesses with several financial processes.  We are still in the
process of evaluating the impacts of these weaknesses, some of which may be
material.  We expect this Sarbanes-Oxley Act Section 404 compliance
project will enhance the Company’s internal controls significantly.





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.





Changes
in Internal Control Over Financial Reporting





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








24










PART
II - OTHER INFORMATION








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





(a)
            As
      disclosed on the Current Report on Form 8-K that we filed with the
      Securities and Exchange Commission on November 5, 2009, on November 4,
      2009, we issued 12,000,000 units of our securities pursuant to a
      Securities Purchase Agreement we entered into with one accredited
      investor.





For a
more complete description of the terms of the securities, please see the
November 5, 2009 8-K.





The
Financing was consummated pursuant to the exemption from the registration
provisions of the Securities Act of 1933, as amended, provided by Section 4(2)
of the Securities Act, Rule 506 of Regulation D and/or Regulation S promulgated
thereunder.




(b)
            Not
      applicable.





(c)
            Not
      applicable.








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





We did not submit any matters to
our shareholders during the quarter covered by this Report. However, we
did solicit votes from our shareholders during the period covered by this Report
for our 2009 annual shareholder meeting.  On December 30, 2009, we
mailed out a proxy statement soliciting votes to re-elect our Board of Directors
at our Annual Shareholder Meeting, which was held on January 20,
200.  All of our directors were re-elected; the following shows the
voting tabulation for such election:







Director
      Nominee
            FOR
      (# and %)
            WITHHELD
      (# and %)Mr.
      Yiyun  Wang
            21,387,342
      &100%
            0Mr.
      Qingjun Yang
            21,387,342
      & 100%
            0Mr.
      Huatian Sha
            21,387,342
      &100%
            0Mr.
      Ming Qi
            21,387,342
      & 100%
            0Stewart
      Shiang Lor
            21,387,342
      & 100%
            0Yuanbo
      Wang
            21,387,342
      &100%
            0Lingui
      Jiao
            21,387,342
      &100%
            0








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.




















25










SIGNATURES








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





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





Date: 
February 4, 2010























26