UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON, D.C.
20549




FORM 10-Q/A




þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              For
      the quarterly period endedSeptember
      30, 2007




OR




o
            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.




Yesx Noo




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 filero
Accelerated Filero
Non-accelerated filerx















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




Yeso Nox




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




On
October 30, 2008, there were 24,805,000 shares of the issuer's common
stock, par value $.0001 per share, outstanding. The issuer also has 5,608,564
shares of Series A Preferred Stock, per 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 our Series B Preferred Stock, par value $.001 per
share outstanding, which are convertible into an aggregate of 8,333,333 shares
of our common stock.













JPAK
GROUP, INC.





INDEX





Page
              NumberPART
      I - FINANCIAL INFORMATIONItem
      1.
            
            Financial
      StatementsCondensed
      Consolidated Balance SheetsSeptember
      30, 2007 (unaudited) and June 30, 2007
            
            3Condensed
      Consolidated Statements of Operations (unaudited)Three
      months ended September 30, 2007 and 2006
            
            4Condensed
      Consolidated Statements of Cash Flows (unaudited)Three
      months ended September 30, 2007 and 2006
            
            5Notes
      to Condensed Consolidated Financial Statements
            
            6Item
      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
            
            22PART
      II - OTHER INFORMATIONItem
      1.
            
            Legal
      Proceedings
            
            24Item
      1.A
            
            Risk
      Factors
            
            24Item
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            34Item
      3.
            
            Defaults
      Upon Senior Securities
            
            34Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            34Item
      5.
            
            Other
      Information
            
            34Item
      6.
            
            Exhibits
            
            34











EXPLANATORY NOTE
:On May 3, 2008, the Board of Directors of Jpak Group, Inc.
(“we”, “us”, “our” or the "Company") concluded that the Company is required to
restate its previously issued audited financial statements for the year ended
June 30, 2007, and as a result, its financial statements for the quarters ending
September 31, 2007 and December 31, 2007. Subsequent to the issuance of the June
30, 2007 financial statements, management identified various errors in
connection with its 2007 financial statements and determined that a restatement
was necessary in respect of the following: revision of reverse acquisition
accounting andrevision of capitalized
costs relatedto
financing transaction.  As a result of the Board’s decision and the
aforementioned revisions to our financial statements, our previously issued
financial statements for the year ended June 30, 2007 (which were included in
our Registration Statement on Form S-1), and the periods ended September 30,
2007, and December 31, 2007, should no longer be relied
upon.  Accordingly, we filed restated financials for the quarter
ending September 30, 2007 in a 10-Q/A on August 5, 2008.  Then, we
received additional SEC comments  and determined that the financial
statements for the quarter ending December 31, 2007 must be restated again, and
that the financial statements for the quarter ending March 31,
2008  must be restated; these revisions impact the financial
statements for the quarter ended September 30, 2007 and as a result, we filed
another amendment – on September 29, 2008, to our quarterly report on Form 10-Q
for the quarter ending September 30, 2007 to conform, and make consistent the
disclosure contained herein with our other filings. We are filing this amendment
to respond to additional SEC comments, which we received on October 10,
2008.



















PART
I. FINANCIAL INFORMATION





Item
1. Financial Statements





Report of Independent
Registered Public Accounting Firm








To the
Board of Directors and Stockholders


JPAK
Group, Inc.








We have reviewed the accompanying
consolidated balance sheets of JPAK Group, Inc. and Subsidiaries (the “Company”)
as of September 30, 2007 and June 30, 2007, and the related consolidated
statements of operations and other comprehensive income and cash flows for the
three months ended September 30, 2007 and 2006.  These financial
statements are the responsibility of the company’s management.





We conducted our review 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 interim
financial statements for them to be in conformity with accounting principles
generally accepted in the United States of America.

















/s/ Patrizio & Zhao,
LLC


Patrizio
& Zhao, LLC








Parsippany,
New Jersey


October
30, 2007


(Except
for Note 1, 14, 15, 16 and 17 as to which


the date
is October 29, 2008)






































2


JPAK
GROUP, INC.





CONSOLIDATED
BALANCE SHEETS





(UNAUDITED)








ASSETS





September 30,
            
            
            June 30,2007
            
            
            2007(Restated)
            
            
            (Restated)CURRENT
      ASSETSCash and cash
      equivalents
            
            $
            2,189,799
            
            
            $
            4,938,200Restricted cash for trade notes
      repayment
            
            
            1,298,941
            
            
            
            -Account receivables, net of
      allowance for uncollectible accounts
            
            
            7,613,343
            
            
            
            8,583,396Inventory
            
            
            2,544,263
            
            
            
            3,393,896Prepaid expenses and other
      current assets
            
            
            75,584
            
            
            
            772,792Deferred financing costs,
      net
            
            
            -
            
            
            
            405,072Total Current
    Assets
            
            
            13,721,930
            
            
            
            18,093,356PROPERTY
      AND EQUIPMENT, NET
            
            
            8,164,227
            
            
            
            7,935,920Total Assets
            
            $
            21,886,157
            
            
            $
            26,029,276LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
            
            $
            2,041,290
            
            
            $
            4,634,457Trade notes
    payable
            
            
            533,600
            
            
            
            526,000Convertible notes
            
            
            -
            
            
            
            5,500,000Short-term bank
    loans
            
            
            4,002,000
            
            
            
            4,812,900Other payables
            
            
            16,668
            
            
            
            65,378Total Current
      Liabilities
            
            
            6,593,558
            
            
            
            15,538,735LONG-TERM
      DEBT
            
            
            1,834,350
            
            
            
            2,008,893STOCKHOLDERS’
      EQUITYSeries
      A convertible preferred stock, $0.0001 par value,
5,608,564shares
      authorized,5,608,564 shares issued and outstanding
            
            
            561
            
            
            
            -Common stock, $0.001 par value,
      300,000,000 shares authorized24,505,000 shares
      issued and outstanding
            
            
            24,505
            
            
            
            23,005Allocation
      of Series A Preferred Shares
            
            
            2,484,226
            
            
            
            -Warrants
            
            
            2,327,600
            
            
            
            -Placement
      Agent Warrants
            
            
            332,937
            
            
            
            -Additional paid-in
      capital
            
            
            7,622,836
            
            
            
            5,676,259Retained earnings
            
            
            (576,686
            )
            
            
            1,896,256Statutory
reserves
            
            
            348,009
            
            
            
            348,009Accumulated other comprehensive
      income
            
            
            894,261
            
            
            
            538,119Total
      Stockholders’ Equity
            
            
            13,458,249
            
            
            
            8,481,648Total
      Liabilities and Stockholders’ Equity
            
            $
            21,886,157
            
            
            $
            26,029,276








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





3


JPAK
GROUP, INC.





CONSOLIDATED
STATEMENTS OF OPERATIONS





AND
COMPREHENSIVE INCOME





FOR
THE THREE MONTHS ENDED SEPTEMBER 30,





(UNAUDITED)


2007
            
            
            2006(Restated)
            
            
            (Restated)REVENUE
            
            $
            9,304,248
            
            
            $
            7,676,485COST
      OF SALES
            
            
            6,987,181
            
            
            
            5,883,956GROSS
      PROFIT
            
            
            2,317,067
            
            
            
            1,792,529EXPENSESSelling, general and
      administrative
            
            
            1,351,533
            
            
            
            1,060,180Depreciation
    expense
            
            
            18,813
            
            
            
            12,105Total Expenses
            
            
            1,370,346
            
            
            
            1,072,285INCOME
      FROM OPERATIONS
            
            
            946,721
            
            
            
            720,244OTHER
      INCOME (EXPENSES)Interest income
            
            
            24,182
            
            
            
            22,074Interest expense
            
            
            (113,189
            )
            
            
            (110,156
            )Other income (expense),
      net
            
            
            10,163
            
            
            
            (8,632
            )Total Other Income
      (Expenses)
            
            
            (78,844
            )
            
            
            (96,714
            )INCOME  BEFORE
      PROVISION FOR INCOME TAX
            
            
            867,877
            
            
            
            623,530PROVISION
      FOR INCOME TAX
            
            
            -
            
            
            
            89,975NET
      INCOME
            
            
            867,877
            
            
            
            533,555Beneficial
      conversion feature related to issuance of
            
            
            (2,484,226
            )Series
      A convertible preferred stockNET
      INCOME / (LOSS) APPLICABLE TO
            
            
            (1,616,349
            )COMMON
      STOCK HOLDERSOTHER
      COMPREHENSIVE INCOME (LOSS)Foreign currency translation
      adjustment
            
            
            356,142
            
            
            
            (10,225
            )COMPREHENSIVE
      INCOME / (LOSS)
            
            $
            (1,260,207
            )
            
            $
            523,330BASIC
      EARNINGS/(LOSS) PER SHARE
            
            $
            (0.07
            )
            
            $
            .02DILUTED
      EARNINGS/(LOSS) PER SHARE
            
            $
            (0.07
            )
            
            $
            .02WEIGHTED
      AVERAGE NUMBER OF COMMON SHARESOUTSTANDINGBASIC
            
            
            23,852,826
            
            
            
            23,005,000DILUTED
            
            
            23,852,826-
            
            
            
            23,005,000








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





4


JPAK
GROUP, INC.





CONSOLIDATED
STATEMENTS OF CASH FLOWS





FOR
THE THREE MONTHS ENDED SEPTEMBER 30,





(UNAUDITED)








2007
            
            
            2006(Restated)
            
            
            (Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
            
            $
            867,877
            
            
            $
            533,555Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation and
      amortization
            
            
            271,377
            
            
            
            168,288Loss on disposal of fixed
      assets
            
            
            -
            
            
            
            66,682Changes in assets and
      liabilities:Restricted
      cash
            
            
            (1,289,788
            )
            
            
            (410,240
            )Account
      receivables
            
            
            1,086,362
            
            
            
            2,582,172Inventory
            
            
            892,338
            
            
            
            (969,124
            )Prepaid
      expenses
            
            
            698,464
            
            
            
            43,637Accounts
      payable and accrued expenses
            
            
            (2,640,752
            )
            
            
            (1,258,904
            )Other
      payables
            
            
            (49,304
            )
            
            
            -Income
      tax payable
            
            
            -
            
            
            
            (98,877
            )Total Adjustments
            
            
            (1,031,303
            )
            
            
            123,634Net Cash Provided (Used) By
      Operating Activities
            
            
            (163,426
            )
            
            
            657,189CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
            
            
            (334,385
            )
            
            
            (2,082,178
            )Disposal of fixed
      assets
            
            
            -
            
            
            
            1,029,368Acquisition of Qingdao’s
      equity
            
            
            (864,000
            )
            
            
            -Net Cash Used By Investing
      Activities
            
            
            (1,198,385
            )
            
            
            (1,052,810
            )CASH
      FLOWS FROM FINANCING ACTIVITIESTrade note
payable
            
            
            -
            
            
            
            470,952Additional capital
      contribution
            
            
            (452,463
            )
            
            
            -Repayment of other
      loans
            
            
            -
            
            
            
            (46,836
            )Repayment of bank
      loan
            
            
            (1,076,370
            )
            
            
            (177,256
            )Net Cash Provided (Used) By
      Financing Activities
            
            
            (1,528,833
            )
            
            
            246,860EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
            
            
            142,243
            
            
            
            14,102NET
      DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (2,748,401
            )
            
            
            (134,659
            )CASH
      AND CASH EQUIVALENTS – BEGINNING
            
            
            4,938,200
            
            
            
            1,289,995CASH
      AND CASH EQUIVALENTS – ENDING
            
            $
            2,189,799
            
            
            $
            1,155,336











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





5


JPAK
GROUP, INC.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





(UNAUDITED)





NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS





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





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





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





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








NOTE
2 – INTERIM FINANCIAL STATEMENTS





These
interim financial statements should be read in conjunction with the audited
financial statements for the years ended June 30, 2007 and 2006, as not all
disclosures required by generally accepted accounting principles for annual
financial statements are presented. The interim financial statements follow the
same accounting policies and methods of computations as the audited financial
statements for the years ended June 30, 2007 and 2006.





NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying un-audited financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP) applicable to interim
financial information and with the requirements of Form 10-Q and Rule 10-01 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. Interim results are not necessarily indicative of results
for a full year. In the opinion of management, all adjustments considered
necessary for a fair presentation of the financial position and the results of
operations and cash flows for the interim periods have been
included.








NOTE
4 – INVENTORY





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





September
      30,
            
            
            June 30,2007
            
            
            2007Finished
      products
            
            $
            407,318
            
            
            $
            571,357Raw
      materials
            
            
            2,077,938
            
            
            
            2,206,420Parts
      and supplies
            
            
            56,921
            
            
            
            41,280Work
      in process
            
            
            2,086
            
            
            
            574,839Total
            
            $
            2,544,263
            
            
            $
            3,393,896








6






NOTE
5 – DEFERRED FINANCING COSTS





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





September
      30,
            
            
            June 30,2007
            
            
            2007Deferred
      financing costs
            
            $
            460,017
            
            
            $
            460,017Less:
      Accumulated amortization
            
            
            104,780
            
            
            
            54,945Issuance
      costs
            
            
            355,237
            
            
            
            -Net
      deferred financing costs
            
            $
            -
            
            
            $
            405,072





Amortization
of deferred financing costs charged to operations for the quarters ending
September 30, 2007 and September 30, 2006 was $49,835 and $-0-,
respectively.





NOTE
6 – PROPERTY AND EQUIPMENT





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





September
      30,
            
            
            June 30,2007
            
            
            2007Buildings
            
            $
            3,533,677
            
            
            $
            3,533,677Machinery
      and equipment
            
            
            10,378,749
            
            
            
            9,848,634Subtotal
            
            $
            13,912,426
            
            
            
            13,382,311Less:
      Accumulated depreciation
            
            
            5,748,199
            
            
            
            5,446,391Total
            
            $
            8,164,227
            
            
            $
            7,935,920


Depreciation
expense for the quarters ending September 30, 2007 and September 30, 2006 was
$221,543 and $168,288, respectively.





NOTE
7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





The
carrying value of accounts payable and accrued expenses approximate fair value
due to the short-term nature of the obligations. As of September 30, 2007,
accounts payable and accrued expenses were $1,572,448 and 468,842, respectively.
As of June 30 2007, accounts payable and accrued expenses were $4,066,655 and
567,802, respectively.








NOTE
8 – CONVERSION OF CONVERTIBLE NOTES




On August
9, 2007, the convertible notes converted to following items: (i) 5,608,564
shares of the Company’s Series A Convertible Preferred Stock, par value $.0001
per share (the “Preferred Stock”), whose shares are convertible into an
aggregate of 11,217,128 shares of Common Stock, (ii) Class A Warrants to
purchase an aggregate of 5,500,000 shares of Common Stock (subject to
adjustment) at an exercise price of $.60 per share until August 2011 (the “Class
A Warrants”), (iii) Class B Warrants to purchase an aggregate of 5,500,000
shares of Common Stock (subject to adjustment) at an exercise price of $.70 per
share until August 2011 (the “Class B Warrants”) and (iv) Class J Warrants to
purchase (a) an aggregate of 5,000,000 shares of Series B Preferred Stock,
containing the same terms as the Series A Preferred Stock (other than conversion
price), whose shares are convertible into 8,333,333 shares of the Company’s
Common Stock, (b) Class C Warrants to purchase an aggregate of 4,166,667 shares
of Common Stock (subject to adjustment) at an exercise price of $.72 per share
(the “Class C Warrants”) and (c) Class D Warrants to purchase an aggregate of
4,166,667 shares of Common Stock (subject to adjustment) at an exercise price of
$.84 per share (the “Class D Warrants” and together with the Class A Warrants,
Class B Warrants and Class C Warrants, the “Warrants”). The Class J Warrants
shall only be exercisable until 90 days following the effective date of a
registration statement registering for sale the shares of common stock
underlying the securities issued in the financing.





The
conversion of convertible notes  is considered as a non-cash financing
transaction.








7





NOTE 9 – SHORT-TERM BANK LOANS





Short-term
bank loans consist of the following:


On
      February 2nd,
      2007, the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by
      February11th
      2008, The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the Company's
      equipment.
            
            $
            667,000On
      April 10th,
      2007 the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by April
      9th2008.
      The interest is to be calculated using an annual fixed interest rate
      of7.029%
      and paid monthly. The loan is secured by the Company's
      equipment.
            
            $
            800,400On
      February 12th
      2007, the Company obtained a loan from Qingdao CityCommercial
      Bank, of which the principal is to be paid in full by February 11th2008.
      The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the Company's
      equipment.
            
            $
            2,134,400On
      May 25th
      2007, the Company obtained a loan from China
      Merchant  Bank,of
      which the principal is to be paid in full by May 25th
      2008.  The interest isto
      be calculated using an annual fixed interest rate of 6.57% and paid
      monthly.The
      loan is secured by the Company's equipment.
            
            $
            400,200Total
      short-term bank loans
            
            $
            4,002,000





Short-term
bank loans on June 30, 2007 consist of the following:





On
      September 7th
      2006, the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by
      August27th,
      2008. The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the company's
      equipment.
            
            $
            867,900





On
      February 2nd,
      2007, the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by
      February11th
      2008, The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the company's
      equipment.
            
            $
            657,500On
      April 10th,
      2007 the Company obtained a loan from China Industrialand
      Commercial Bank, of which the principal is to be paid in full by April
      9th2008.
      The interest is to be calculated using an annual fixed interest rate
      of7.029%
      and paid monthly. The loan is secured by the company's
      equipment.
            
            $
            789,000On
      February 12th
      2007, the Company obtained a loan from Qingdao CityCommercial
      Bank, of which the principal is to be paid in full by February 11th2008.
      The interest is to be calculated using an annual fixed interest rate
      of6.732%
      and paid monthly. The loan is secured by the company's
      equipment.
            
            $
            2,104,000On
      May 25th
      2007, the Company obtained a loan from China
      Merchant  Bank,of
      which the principal is to be paid in full by May 25th
      2008.  The interest isto
      be calculated using an annual fixed interest rate of 6.57% and paid
      monthly.The
      loan is secured by the company's equipment.
            
            $
            394,500Total
      short-term bank loans
            
            $
            4,812,900








8





NOTE
10 – LONG-TERM DEBT





As of
September 30, 2007 and June 30, 2007, the Company had long-term debt of
$1,834,350 and $2,008,893 outstanding, respectively. These loans represent
borrowings from employees at an annual interest rate of 10%. Interest payments
are made semi-annually with no principal payments due until the end of the two
year period.





NOTE
11 – RISK FACTORS





In the
three months ended September 30, 2007, five customers accounted for
approximately 66.8% of the Company’s sales and five vendors accounted for
approximately 84% of the Company’s purchases.





The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.





NOTE
12 - CONCENTRATIONS OF CREDIT RISK





Financial instruments which potentially
subject the Company to credit risk consist principally of cash on deposit with
financial institutions of $2,189,799 as of September 30, 2007 and
$4,928,904 as of June 30, 2007.





NOTE
13 – SUPPLEMENTAL CASH FLOW DISCLOSURES





Three Months Ended
              September2007
            
            
            2006Cash
      paid for interest
            
            $
            113,189
            
            
            $
            119,357Cash
      paid for income taxes
            
            
            -
            
            
            $
            102,631


NOTE 14 – RESTATEMENT TO REFLECT
REVERSE MERGER ACCOUNTING, REALLOCATION OF PROCEEDS FROM PROCEEDS OF
CONVERTIBLE PROMISORY NOTES AND RECLASIFICATION OF BENIFICIAL CONVERSION FEATURE
OF SERIES A PREFERRED SHARES








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





The
Company has changed its accounting method and the transaction has been regarded
as a reverse merger whereby Qingdao Renmin was considered to be the accounting
acquirer as both Grand International and JPAK were holding companies with no
significant operations and Qingdao Renmin continues as the primary operating
entity even after the exchange, although JPAK is the legal parent
company.  As such, Qingdao Renmin (and its historical financial
statements) is the continuing entity for financial reporting purposes and the
share exchange was treated as a recapitalization of JPAK. Thus, JPAK is the
continuing entity for financial reporting purposes. The Financial Statements
have been prepared as if JPAK had always been the reporting company and then, on
the share exchange date, had changed its name and reorganized its capital stock.
Accordingly, the Company has revised the financial statements to reflect reverse
merger accounting.








9





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





In addition, after reviewing comments
from the SEC, we changed certain assumptions utilized, particularly volatility,
and therefore changed values assigned to the preferred stock and warrants
resulting from the automatic conversion of convertible promissory notes into
Series A preferred stock (Please see Note 16 – Allocation of Proceeds of
Convertible Promissory Notes for more information). The total value of
warrants and the value of Series A Preferred shares on the date of conversion
were $5,153,233 and $5,500,000 respectively.  The Company allocated
$2,327,600 and $2,484,226 to warrants and preferred stocks respectively from the
$4,811,826 remaining proceeds of Convertible Promissory Notes.  The
key assumptions we utilized for the calculation of warrants are:





·
            Volatility
      is based on our estimate of expected volatility by utilizing the
      historical, expected or implied volatility of similar entities whose
      instruments are publicly available.  Our estimate of the
      expected volatility of Jpak is
30.28%


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


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


·       Warrant Valuation = Black-Scholes
Call Value * number of Series warrants outstanding.





Additionally,
as a result of the beneficial conversion feature of the Series A preferred
shares we reclassified $2,484,226 from retained earnings to additional paid-in
capital.  This amount is also a reduction to the net income available
to the common shareholders in the numerator of the earning-per-share calculation
in the first quarter of FY2008.  (Please see Note 17 – Beneficial
Conversion Feature of Series C Preferred Shares for additional
information.)







The
effect of restatement is as follows:













CONSOLIDATED BALANCE
SHEETS





ASSETS





As reported under Acquisition
      Accounting
            
            
            As reported under Reverse
      Merger Accounting
            
            
            Effect of ChangeSeptember 30,
            
            
            September 30,2007
            
            
            2007CURRENT
      ASSETSCash and cash
      equivalents
            
            $
            2,189,799
            
            
            $
            2,189,799
            
            
            $
            -Restricted cash for trade notes
      repayment
            
            
            1,298,941
            
            
            
            1,298,941
            
            
            
            -Account receivables, net of
      allowance $39,507
            
            
            7,613,343
            
            
            
            7,613,343
            
            
            
            -Inventory
            
            
            2,544,263
            
            
            
            2,544,263
            
            
            
            -Prepaid expenses and other
      current assets
            
            
            75,584
            
            
            
            75,584
            
            
            
            -Total Current
    Assets
            
            
            13,721,930
            
            
            
            13,721,930
            
            
            
            -PROPERTY
      AND EQUIPMENT, NET
            
            
            8,164,227
            
            
            
            8,164,227
            
            
            
            -GOODWILL
            
            
            1,017,245
            
            
            
            -
            
            
            
            (1,017,245
            )Total Assets
            
            $
            22,903,402
            
            
            $
            21,886,157
            
            
            $
            (1,017,245
            )LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts payable and accrued
      expenses
            
            $
            2,041,290
            
            
            $
            2,041,290
            
            
            $
            -Trade notes
    payable
            
            
            533,600
            
            
            
            533,600
            
            
            
            -Short-term bank
    loans
            
            
            4,002,000
            
            
            
            4,002,000
            
            
            
            -Other payables
            
            
            16,668
            
            
            
            16,668
            
            
            
            -Total Current
      Liabilities
            
            
            6,593,558
            
            
            
            6,593,558
            
            
            
            -LONG-TERM
      DEBT
            
            
            1,834,350
            
            
            
            1,834,350
            
            
            
            -STOCKHOLDERS’
      EQUITYSeries A convertible preferred
      stock, $0.0001 par value, 5,608,564shares
      authorized,5,608,564 shares issued and outstanding
            
            
            561
            
            
            
            561
            
            
            
            -Common stock, $0.001 par value,
      300,000,000 shares authorized24,505,000 shares
      issued and outstanding
            
            
            24,505
            
            
            
            24,505
            
            
            
            -Allocation
      of Series A Preferred Shares
            
            
            -
            
            
            
            2,484,226
            
            
            
            2,484,226Warrants
            
            
            -
            
            
            
            2,327,600
            
            
            
            2,327,600Placement
      Agent Warrants
            
            
            -
            
            
            
            332,937
            
            
            
            332,937Additional paid-in
      capital
            
            
            10,577,424
            
            
            
            7,622,836
            
            
            
            (2,954,588
            )Retained earnings
            
            
            2,683,185
            
            
            
            (576,686
            )
            
            
            (3,259,871
            )Statutory
reserves
            
            
            371,364
            
            
            
            348,009
            
            
            
            (23,355
            )Accumulated other comprehensive
      income
            
            
            818,455
            
            
            
            894,261
            
            
            
            75,806Total
      Stockholders’ Equity
            
            
            14,475,494
            
            
            
            13,458,249
            
            
            
            (1,017,245
            )Total
      Liabilities and Stockholders’ Equity
            
            $
            22,903,402
            
            
            $
            21,886,157
            
            
            $
            (1,017,245
            )








10










CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME


As reported under Acquisition Accounting for
      the three months
              ended
            
            
            As reported under Reverse Merger Accounting
      for the three months ended
            
            
            Effect of ChangeSeptember 30,2007
            
            
            September 30,2007REVENUE
            
            $
            9,304,248
            
            
            $
            9,304,248
            
            
            $
            -COST
      OF SALES
            
            
            6,987,181
            
            
            
            6,987,181
            
            
            
            -GROSS
      PROFIT
            
            
            2,317,067
            
            
            
            2,317,067
            
            
            
            -EXPENSESSelling, general and
      administrative
            
            
            1,351,535
            
            
            
            1,351,535
            
            
            
            -Depreciation
    expense
            
            
            18,813
            
            
            
            18,813
            
            
            
            -Total Expenses
            
            
            1,370,346
            
            
            
            1,370,348
            
            
            
            -INCOME
      FROM OPERATIONS
            
            
            946,721
            
            
            
            946,719
            
            
            
            -OTHER
      INCOME (EXPENSES)Interest income
            
            
            24,182
            
            
            
            24,182
            
            
            
            -Interest expense
            
            
            (113,189
            )
            
            
            (113,189
            )
            
            
            -Other income (expense),
      net
            
            
            10,163
            
            
            
            10,163
            
            
            
            -Total Other Income
      (Expenses)
            
            
            (78,844
            )
            
            
            (78,844
            )
            
            
            -INCOME  BEFORE
      PROVISION FOR INCOME TAX
            
            
            867,877
            
            
            
            867,877
            
            
            
            -PROVISION
      FOR INCOME TAX
            
            
            -
            
            
            
            -
            
            
            
            -NET
      INCOME
            
            
            867,877
            
            
            
            867,877
            
            
            
            -Beneficial
      conversion feature related to issuance of
            
            
            -
            
            
            
            (2,484,226
            )
            
            
            (2,484,226
            )Series
      A convertible preferred stockNET
      INCOME / (LOSS) APPLICABLE TO
            
            
            867,877
            
            
            
            (1,616,349
            )
            
            
            (2,484,226
            )COMMON
      STOCK HOLDERSOTHER
      COMPREHENSIVE INCOMEForeign currency translation
      adjustment
            
            
            280,336
            
            
            
            356,142
            
            
            
            75,806COMPREHENSIVE
      INCOME
            
            $
            1,148,213
            
            
            $
            (1,260,207
            )
            
            $
            (2,408,420
            )










11














CONSOLIDATED STATEMENTS OF
CASH FLOWS


As reported under Acquisition Accounting
      for the three months ended
            
            
            As reported under Reverse Merger Accounting
      for the three months ended
            
            
            Effect of ChangeSeptember 30,2007
            
            
            September 30,2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
            
            $
            867,877
            
            
            $
            867,877
            
            
            $
            -Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation and
      amortization
            
            
            271,377
            
            
            
            271,377
            
            
            
            -Changes in assets and
      liabilities:Restricted
      cash
            
            
            (1,289,788
            )
            
            
            (1,289,788
            )
            
            
            -Account
      receivables
            
            
            1,086,362
            
            
            
            1,086,362
            
            
            
            -Inventory
            
            
            892,338
            
            
            
            892,338
            
            
            
            -Prepaid
      expenses
            
            
            698,464
            
            
            
            698,464
            
            
            
            -Accounts
      payable and accrued expenses
            
            
            (2,640,752
            )
            
            
            (2,640,751
            )
            
            
            -Other
      payables
            
            
            (49,304
            )
            
            
            (49,304
            )
            
            
            -Total Adjustments
            
            
            (1,031,303
            )
            
            
            (1,031,301
            )
            
            
            -Net Cash Provided By (Used In)
      Operating Activities
            
            
            (163,426
            )
            
            
            (163,426
            )
            
            
            -CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition of property and
      equipment
            
            
            (334,385
            )
            
            
            (334,385
            )
            
            
            -Acquisition of Qingdao’s
      equity
            
            
            (864,000
            )
            
            
            (864,000
            )
            
            
            -Net Cash Used In Investing
      Activities
            
            
            (1,198,385
            )
            
            
            (1,198,385
            )
            
            
            -CASH
      FLOWS FROM FINANCING ACTIVITIESCapital
      contribution
            
            
            (452,463
            )
            
            
            (452,463
            )
            
            
            -Repayment of bank
      loan
            
            
            (1,076,370
            )
            
            
            (1,076,370
            )
            
            
            -Net Cash Provided By (Used In)
      Financing Activities
            
            
            (1,528,833
            )
            
            
            (1,528,833
            )
            
            
            -EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
            
            
            142,243
            
            
            
            142,243
            
            
            
            -NET
      DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (2,748,401
            )
            
            
            (2,748,401
            )
            
            
            -CASH
      AND CASH EQUIVALENTS – BEGINNING
            
            
            4,938,200
            
            
            
            4,938,200
            
            
            
            -CASH
      AND CASH EQUIVALENTS – ENDING
            
            $
            2,189,799
            
            
            $
            2,189,799
            
            
            $
            -













12








NOTE
15 – EARNINGS PER SHARE





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





For the Three Months EndedSeptember 30, 2007
            
            
            September 30, 2006Net
      income
            
            $
            867,887
            
            
            $
            533,555Beneficial
      conversion feature related to issuanceof
      Series A convertible preferred stock
            
            
            (2,484,226
            )
            
            
            -Net
      income (loss) applicable to common stockholders
            
            
            (1,616,349
            )
            
            
            533,555Weighted
      average common shares(denominator
      for basic income per share)
            
            
            23,852,826
            
            
            
            23,005,000Effect
      of diluted securities:Convertible
      preferred stock
            
            
            -
            
            
            
            -Convertible
      notes
            
            
            -
            
            
            
            -Weighted
      average common shares(denominator
      for diluted income per share)
            
            
            23,852,826
            
            
            
            23,005,000Basic
      net income (loss) per share
            
            $
            ( 0.07
            )
            
            $
            0.02Diluted
      net income (loss) per share
            
            $
            ( 0.07
            )
            
            $
            0.02











NOTE
16 – ALLOCATION OF PROCEEDS OF CONVERTIBLE PROMISSORY NOTES





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














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





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








13





Accordingly,
we believe the warrants issued to the placement agents are directly attributable
to raising capital.  If we had not issued the warrants to the
placement agent, we would have had to pay the same amount of cash as the fair
value.  Therefore, we have deducted the fair value of the placement
agent warrants $332,937 and the remaining deferred financing costs of $355,237
from the proceeds of Preferred Shares $5,500,000.  Furthermore, we
allocated the remaining proceeds of $4,811,826 between investors warrants and
Preferred Shares on a relative fair value basis.





Originally,
we used an expected volatility of approximate
7% and assumed that expected volatility would be the same as
historical volatility for calculations of value assigned the preferred
stock and warrants.  After reviewing comments from the SEC, we changed
certain assumptions utilized, particularly volatility, and therefore changed
values assigned to the preferred stock and warrants resulting from the automatic
conversion of convertible promissory notes into Series A preferred stock (Please
see Note 14 – Restatement to Reflect Reverse Merger Accounting, Reallocation of
Proceeds of Convertible Promissory Notes and Reclassification of Beneficial
Conversion Feature of Series A Preferred Shares- to see the effects of these
changes on the Balance Sheet, Income Statement and Statement of Cash
Flow).





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





·
            Volatility
      is based on our estimate of expected volatility by utilizing the
      historical, expected or implied volatility of similar entities whose
      instruments are publicly available.  Our estimate of the
      expected volatility of Jpak is
30.28%


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


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


·
            Warrant
      Valuation = Black-Scholes Call Value * number of Series warrants
      outstanding.





The total
value of warrants and the value of Series A Preferred shares on the date of
conversion were $5,153,233 and $5,500,000 respectively.  Therefore,
the Company allocated $2,327,600 and $2,484,226 to warrants and preferred stocks
respectively from the $4,811,826 remaining proceeds of Convertible Promissory
Notes.








Proceeds
      of Series A Preferred Shares
            5,500,000Financing
      commission of Series A Preferred Shares
            355,237Proceeds
      of Series A Preferred Shares after deducting commission
            5,144,763Value
      of Placement Agent Warrants
            332,937Net
      proceeds after deduction of value of placement agent warrants and
      financing commission of Series A Preferred Shares
            4,811,826Series
      A Warrants
            1,543,300Series
      B Warrants
            1,271,600Series
      J Warrants
            2,338,333Total
      value of investor warrants, incremental value of investors warrants and
      preferred shares
            5,153,233Value
      of Series A Preferred Shares
            5,500,000Allocation
      of Warrants
            2,327,600Allocation
      of Series A Preferred Shares
            2,484,226







Warrant valuationAgent Warrants
            
            August 9, 2007Expiration
      Date:
            August
      9, 2011August
      9, 2013Strike
      Price:
            $0.50Share
      Price:
            
            $0.72Time
      to Expiration:
            
            1,461Volatility:
            
            30.28%Risk-free
      Rate of Return:
            
            4.57%Black-Scholes
      Call Value:
            
            $0.34Warrant
      Valuation:
            
            $332,937.00








14





Series A Warrants
            
            August 9, 2007Expiration
      Date:
            August
      9, 2011August
      9, 2013Strike
      Price:
            $0.60Share
      Price:
            
            $0.72Time
      to Expiration:
            
            1,461Volatility:
            
            30.28%Risk-free
      Rate of Return:
            
            4.57%Black-Scholes
      Call Value:
            
            $0.28Warrant
      Valuation:
            
            $1,543,300.00Series B Warrants
            
            August 9, 2007Expiration
      Date:
            August
      9, 2011August
      9, 2013Strike
      Price:
            $0.70Share
      Price:
            
            $0.72Time
      to Expiration:
            
            1,461Volatility:
            
            30.28%Risk-free
      Rate of Return:
            
            4.57%Black-Scholes
      Call Value:
            
            $0.23Warrant
      Valuation:
            
            $1,271,600.00Series J Warrants
            
            August 9, 2007Expiration
      Date:
            August
      9, 2011Strike
      Price:
            $0.60Share
      Price:
            
            $0.72Time
      to Expiration:
            
            1,461Volatility:
            
            30.28%Risk-free
      Rate of Return:
            
            4.57%Black-Scholes
      Call Value:
            
            $0.28Warrant
      Valuation:
            
            $2,338,333.24








15




NOTE
17 – BENEFICIAL CONVERSION FEATURE OF SERIES A PREFERRED SHARES





On August
7, 2007, the conversion feature of the Series A Convertible Preferred Stock is
“in the money” and is therefore deemed to contain a beneficial conversion
feature.





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





On a
relative fair value basis, we have allocated $2,484,226 and $2,327,600 to the
Series A Convertible Preferred Shares and the warrants
respectively.  The effective conversion price is $0.221, the allocated
proceeds of $2,484,226 divided by 11,217,128 (the number of shares to be
received on conversion).  The intrinsic value of the conversion option
therefore is $5,592,106 [(11,217,128 shares) × ($0.72 –
$0.221)].  Because $5,592,106 is more than $2,484,226, the proceeds
allocated to the A Convertible Preferred Shares, the intrinsic value of the
conversion option is limited to $2,484,226.





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





Preferred
Stock
Discount:                                                                2,484,226


APIC – beneficial conversion
option                             2,484,226





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





Retained
Earnings:                                                                           
2,484,226


Preferred Stock
Discount                                                 2,484,226





The net
result of the two entries is a reclassification of $2,484,226 from retained
earnings to additional paid-in capital.  This amount is also a
reduction to the net income available to the common shareholders in the
numerator of the earning-per-share calculation in the first quarter of FY2008.
(Please see Note 14 – Restatement to Reflect Reverse Merger Accounting,
Reallocation of Proceeds of Convertible Promissory Notes and Reclassification of
Beneficial Conversion Feature of Series A Preferred Shares- to see the effects
of these changes on the Balance Sheet, Income Statement and Statement of Cash
Flow).




NOTE
18 – RELATED PARTY TRANSATIONS





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


·
              Affiliates


·
              Principal
      owners and close kin


·
              Management
      and close kin


·
              Parents
      and subsidiaries


·
              Equity
      method investors and investees


·
              Trusts
      for the benefit of employees


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


·
              De
      facto agents of the entity


The
Company did not have any related party transactions accordingly.




NOTE
19 – SUBSEQUENT EVENTS





No
material transactions or events occurring after the balance sheet date required
disclosure in the quarterly financial statements for September 30,
2007.








16







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





We
did not conduct any operations during periods up through the date of the share
exchange (the “Share Exchange”) which was completed in August 2007 pursuant to
which we acquired all of the outstanding shares of capital stock of Jpak Group
Co., Ltd., an exempted company organized under the laws of the Cayman Islands
(“Jpak”). Previously, in September 2006, Jpak acquired an 88.23% equity interest
in Qingdao Renmin, our primary operating subsidiary located in the city of
Qingdao in Shandong Province in the Peoples Republic of China, through Grand
International, a Hong Kong company, which is the wholly owned subsidiary of
Jpak.  In July 2007, Grand International acquired the remaining 11.77%
state-owned equity interest in Qingdao Renmin and now owns 100% equity
interest in Qingdao Renmin.  The Share Exchange has been accounted for
as a reverse acquisition under the reverse merger method of accounting for
business combinations in accordance with generally accepted accounting
principles in the United States of America, or “U.S. GAAP.” As a result,
Qingdao Renmin is considered to be the accounting acquirer as both Grand
International and Jpak were holding companies with no significant operations and
Qingdao Renmin continues as the primary operating entity even after the Share
Exchange, although Jpak is the legal parent company.  As such, Qingdao
Renmin (and its historical financial statements) is the continuing entity for
financial reporting purposes and the Share Exchange will be treated as a
recapitalization of Jpak.  Thus, Jpak is the continuing entity for
financial reporting purposes., We have included elsewhere in this Quarterly
Report on Form 10-Q the consolidated financial statements of Jpak, our
subsidiary which indirectly owns Qingdao Renmin Printing Co., Ltd. our operating
subsidiary (“Qingdao Renmin”). Jpak owns 100% equity interest in Qingdao Renmin
through its wholly owned subsidiary Grand International Industrial Limited, a
company organized under the laws of Hong Kong (“Grand
International”).





The
following discussion and analysis of our financial condition and result of
operations contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those described in the "Risk
Factors" section of this Quarterly Report on Form 10-Q and in the other reports
we file with the Securities and Exchange Commission. Actual results may differ
materially from those contained in any forward-looking statements.





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





Overview





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





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




·
            Increasing
      output to further penetrate the China market;





·
            Offering
      bundled packaging materials and filling machines;





·
            Increasing
      sales to selective Asian and other markets;
and





·
            Establishing
      brand names and brand awareness.




Company
History





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





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







17




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





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





Results
of Operations





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





Comparison of the Three Months Ended
September 30, 2007and
2006





Three
      Months Ended September 30
            
            2007
            
            2006Sales
            
            $
            9,304,248
            
            $
            7,676,485Cost
      of sales
            
            $
            6,987,181
            
            $
            5,883,956Total
      expenses
            
            $
            1,370,346
            
            $
            1,072,285Other
      income (expense)
            
            $
            (78,844
            )
            $
            (96,714
            )Income
      taxes
            
            $
            -
            
            $
            89,975Net
      income
            
            $
            867,877
            
            $
            533,555Foreign
      currency translation adjustment
            
            $
            356,142
            
            $
            (10,225
            )Comprehensive
      income/Loss
            
            $
            ($1,260,207)
            
            $
            523,330




Sales. Total sales were
approximately US$9.3 million for the three months ended September 30, 2007 as
compared to approximately US$7.7 million for the three months ended September,
2006, an increase of approximately US$1.6 million, or 20.8%. The increase
resulted from increased sale of our products and services to numerous new
customers in 2007.





Cost of Sales. Cost of sales
for the 3 months ended September 30, 2007 was approximately US$7.0 million, or
75.1% of sales, as compared to US$5.9 million, or 76.6% of sales, for the 3
months ended September 30, 2006. Our cost of sales are primarily composed of the
costs of direct raw materials (mainly paper materials, polyethylene materials,
aluminum materials, printing materials), labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. The slight decrease
of cost of sales to sales % was primarily due to a slight decrease in prices of
direct raw materials.




Selling, general and administrative
expenses. Selling, general and administrative expenses were approximately
US$1.4 million for the three months ended September 30, 2007 as compared to
approximately US$1.1 million for the three months ended September 30, 2006, an
increase of approximately US$0.3 million, or 27.8%. The increase was mainly due
to an increase in our sales force, sales related marketing activities and
support staff. Selling expenses primarily consist of advertising, promotional
and other sales and marketing expenses, salaries, commissions, and benefits for
our sales and marketing personnel. We expect that our selling expenses will
increase in absolute terms in the near term as we increase our sales efforts,
expansion of the markets to more markets, hire additional sales personnel, and
initiate additional marketing programs. We also expect to incur additional
general and administrative expenses as a result of being listed as a public
company in the United States.





Net income. Net income was
approximately US$0.9 million for three months ended September 30, 2007 as
compared to net income of approximately US$0.5 million for the three months
ended September 30, 2006, an increase of US$334,000. The increase in net income
was primarily due to increase of sales during the period.




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.










18




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$ 280,000 as of September 30, 2007 as compared to loss
of US$10,000 as of September 30, 2006. The balance sheet amounts with the
exception of equity at September 30, 2007 were translated at 7.51760 RMB to 1.00
US dollar as compared to RMB7.91680 at September 30, 2006. The equity accounts
were stated at their historical rate. The average translation rates applied to
income statement accounts for the 3 months ended September 30, 2007, and
September 30, 2006 were RMB7.56906 and RMB7.97711, respectively.





The
comprehensive income, which adds the currency adjustment to net income, was a
loss of approximately US$1.0 million for the three months ended September 30,
2007 as compared to US$0.5 million for the three months ended September 30,
2006, a decrease of $1.5 million. The decrease was mainly due to the beneficial
conversion feature which amounts to US$2.5 million.





Income
Taxes





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





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





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





Liquidity
and Capital Resources





As of
September 30, 2007, we had working capital totaling approximately US$7.1
million, including cash and cash equivalents of US$2.2 million.





Net cash
used in operating activities was US$163,000 for the three months ended September
30, 2007. This net cash used was primarily due to reduction of accounts payable
offsetting with decrease of account receivables and the net income generated
during the three months ended September 2007. Net cash provided US$657,000 for
the three months ended September 30, 2006 was primarily related to decrease of
account receivables offsetting with reduction of accounts payables and inventory
increase.





Net cash
used in investing activities for the three months ended September 30, 2007
totaled US$1.2 million and related primarily to the purchase of property and
equipment and the acquisition of the outstanding equity of Qindao Renmin not
owned by us. Net cash used in investing activities for the three months ended
September 30, 2006 totaled US$1.1 million was related to the purchase of
property and equipment offsetting with the sales proceeds of some obsolete
machines.




Net cash
used in financing activities for the three months ended September 30, 2007 was
US$1.5 million and related primarily to repayment of some of the bank loans. Net
cash provided in financing activities for the three months ended September 30,
2006 totaled US$247,000 and related mainly to the increase of trade note
payable.










19







We have
entered into several loan agreements with our primary lenders, Industrial and
Commercial Bank of China and Qingdao City Commercial Bank, under which we have
term loans. As of September 30, 2007, we had and aggregate principal amount of
US$4.0 million outstanding under the loan agreements, which amounts mature from
February 2008 to May 2008 and accrue interest at a rate from 7.029% per annum to
6.57% per annum. The loan agreements contain customary affirmative and negative
covenants. As of September 30, 2007, we were in material compliance with the
terms of our loan agreements.





On August
9, 2007, we became a party to that certain Note Purchase Agreement (the “NPA”)
by and among Jpak, Grand International Industrial Limited, a company organized
under the laws of Hong Kong (“Grand International”) and the investors named
therein (collectively, the “Investors”). The NPA was originally entered into in
May 2007 pursuant to which Jpak issued Convertible Promissory Notes in the
aggregate principal amount of US$5.5 million (the “Financing”) to the Investors
(the “Notes”). As a result of the Share Exchange, under the terms of the NPA and
the Notes, the Notes have been converted into (i) 5,608,564 shares of our Series
A Convertible Preferred Stocks, par value $.001 per share (the “Preferred
Stock”), which shares are convertible into an aggregate of 11,217,128 shares of
common stock, (ii) Series A Warrants to purchase an aggregate of 5,500,000
shares of common stock (subject to adjustment) at an exercise price of US$.60
per share until August 2011 (the “Series A Warrants”), (iii) Series B Warrants
to purchase an aggregate of 5,500,000 shares of common stock (subject to
adjustment) at an exercise price of US$.70 per share until August 2011 (the
“Series B Warrants”) and (iv) Series J Warrants to purchase (a) an aggregate of
5,000,000 shares of Series B Preferred Stock, which preferred stock shall
contain the same terms as the Series A Preferred Stock (other than conversion
price), which shares will be convertible into 8,333,333 shares of our common
stock, (b) Series C Warrants to purchase an aggregate of 4,166,667 shares of
common stock (subject to adjustment) at an exercise price of US$.72 per share
(the “Series C Warrants”) and (c) Series D Warrants to purchase an aggregate of
4,166,667 shares of common stock (subject to adjustment) at an exercise price of
US$.84 per share (the “Series D Warrants”). The Series J Warrants shall be
exercisable at an exercise price of US$1.00 per warrant and shall only be
exercisable until 90 days following the effective date of the registration
statement of which this prospectus forms a part. In connection with the
Financing, we also granted warrants to purchase 990,000 shares of common stock
with an exercise price of US$.50 per share to the placement agent in the
Financing. These warrants have the same terms as the Series A and Series B
Warrants, except that they contain a “cashless” exercise provision.





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




Off-Balance
Sheet Arrangements




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




Critical
Accounting Policies and Estimates





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







20







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





Revenue
recognition.





We derive
our revenues primarily from sales of printing packaging products which are
recognized at the point of sale.





Accounts
Receivable.




Our terms
of sales allow for payments to be made for up to one year. Our management
reviews customer credit worthiness, current economic trends and changes in
customer payment patterns to evaluate the need for reserves.




Inventory.




Inventory
is stated at the lower of weighted average cost or market, which takes into
account historical prices on a continuing basis.




Property
and Equipment.




Property
and equipment are stated at cost and depreciated using the straight-line method,
over 5 and 40 years. The carrying value of long lived assets is evaluated
whenever changes in circumstances indicate the carrying amount of such assets
may not be recoverable. If necessary, we recognize an impairment loss for the
difference between the carrying amount of the assets and their estimated fair
value. Fair value is based upon current and anticipated future undiscounted cash
flows. Expenditures for maintenance and repairs are charged to operations as
incurred; additions, renewals and betterments are capitalized. Based upon our
most recent analysis, we believe that no impairment of property and equipment
existed for the 3 months ended September 30, 2007.




Foreign
Currency Translation and Transactions.




The
financial position and results of operations of our foreign subsidiaries are
determined using local currency (Chinese Yuan) as the




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





Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure





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







21





Item
3. Quantitative and Qualitative Disclosure About Market Risk




Not
applicable.





Item
4. Controls and Procedures








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




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





In
addition, this lack of staffing and resources has led to a misstatement in our
financial statements.  On May 4, 2008, the Board of Directors of Jpak
Group, Inc. (“we”, “us”, “our” or the "Company") concluded that the Company is
required to restate its previously issued audited financial statements for the
year ended June 30, 2007 and the periods ended September 30, 2007, and December
31, 2007.  Subsequent to the issuance of these financial statements,
management identified various errors in connection with its 2007 financial
statements and determined that a restatement was necessary in respect of the
following:





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





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






22






This
control deficiency resulted in a misstatement to substantially all of our
financial statements and disclosures covering the year ended June 30, 2007 and
onward, which resulted in a material misstatement to such annual and interim
financial statements (September 30, 2007 and December 30, 2007) that was not
prevented or detected. Accordingly, management has concluded that this control
deficiency constitutes a material weakness.





Remediation
Plan for Material Weaknesses





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





●
            Appoint a new Acting Chief
      Financial Officer.On May 8, 2008, we appointed Dongliang (Frank)
      Su as our Acting Chief Financial Officer; Ming Qi resigned as our Chief
      Financial Officer, although he will maintain his position as a director on
      our Board on that same day.  Mr. Su has extensive US GAAP and
      regulatory experience and maintains a deep understanding of GAAP and
      financial statements.  Mr. Su is highly skilled in analyzing and
      evaluating various financial issues and in preparing financial
      statements.●
            Restate
      Financial Statement: We are restating our financial statements for the
      year ending June 30, 2007 and our interim financial statements for the
      quarters ending September 30, 2007 and December 31, 2007 so that the
      correct accounting treatment is reflected in those statements and flows
      through them accordingly.●
            Seeking
      and Recruiting Additional Accounting Professionals. We are seeking to
      recruit experienced professionals to augment and upgrade our financial
      staff to address issues of timeliness and completeness in financial
      reporting when we are preparing filings for the Securities and Exchange
      Commission.







Although
we believe that these corrective steps will enable management to conclude that
our disclosure controls are effective and these measures will remediate the
material weaknesses discussed above when all of the additional financial staff
positions are filled, we cannot assure you that this will be sufficient. We may
be required to expend additional resources to identify, assess and correct any
additional weaknesses in disclosure or internal control.





Changes
in Internal Controls Over Financial Reporting





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








23




PART
II - OTHER INFORMATION





Item
1. Legal Proceedings





Not
applicable.





Item
1A. Risk Factors





Risks
Related To Our Business.





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





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





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




·
            the
      continued acceptance of our products and services by the packaging
      industries;·
            our
      ability to successfully and rapidly expand sales to potential customers in
      response to potentially increasing demand;·
            the
      costs associated with such growth, which are difficult to quantify, but
      could be significant;·
            rapid
      technological change; and·
            the
      highly competitive nature of the packaging
  industries.





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







24







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





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




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




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




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





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





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




25






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





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





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





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





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




26







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




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





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





Based on
the evaluation done by our management as of March 31, 2008, our internal
controls were deemed deficient, in that we did not accurately account for the
Share Exchange and related transactions so as to avoid a material misstatement
in our financial statements that would not be prevented or detected in a timely
manner.  Due to SEC comments we received concerning our registration
statement on Form S-1, we conducted further research about how to account for
the share exchange and related activities and only then did management recognize
the material weakness. This material weakness caused an error in our financial
statements regarding how we accounted for the share exchange and the placement
agent warrants issued in the financing that closed simultaneously with the share
exchange.  These mistakes flowed through to our financial statements
for the quarters ending September 30, 2007 and December 31, 2007.  On
May 4, 2008, the Board of Directors concluded that we are required to restate
our previously issued audited financial statements for the year ended June 30,
2007 and the periods ended September 30, 2007 and December 31,
2007.  Subsequent to the issuance of these financial statements,
management identified various errors in connection with its 2007 financial
statements and determined that a restatement was necessary.  Restated
financial statements for the year ending June 30, 2007, and restated financials
for the quarter ending September 30, 2007 and December 31, 2007 were included in
amendments to such reports that we filed on August 5, 2008.  After
such filing, we received additional SEC comments and determined that the
financial statements for the quarter ending December 31, 2007 must be restated
again, and that the financial statements for the quarter ending March 31, 2008
must be restated; we filed restated financials for the quarter ending December
31, 2007 and March 31, 2008 in a quarterly report on Form 10-Q for each such
quarter on September 29, 2008.  Those revisions impacted the financial
statements for the quarter ended September 31, 2007 and as a result, we filed an
amendment on September 29, 2008 to conform, and make consistent the disclosure
contained herein with our other filings.  The latest restatement was
needed to properly account for the extension of the term of the Series A and
Series B Warrants, as well as the compensation issued pursuant to the exercise
of the Series J Warrants.




We are
seeking to recruit experienced professionals to augment and upgrade our
financial staff to address issues of timeliness and completeness in financial
reporting when we are preparing SEC filings.  No assurances can be
given that we will be able to adequately remediate existing deficiencies in
disclosure controls and not have deficiencies when we report on internal
controls.  Although we believe that these corrective steps – restating
our financial statements and hiring a new Acting CFO – will enable management to
conclude that our disclosure controls are effective and these measures will
remediate the material weaknesses discussed above when all of the additional
financial staff positions are filled, we cannot assure you that this will be
sufficient. We may be required to expend additional resources to identify,
assess and correct any additional weaknesses in disclosure or internal control
and to otherwise comply with the internal controls rules under Section 404 of
the Sarbanes-Oxley Act which will be newly applicable to us for the fist time at
the end of this fiscal year.






27




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





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




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




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




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





Risks
Related To Doing Business in China




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





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







28






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




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




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





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





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





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





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





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




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




29




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




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





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




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




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




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




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




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






30




Changes in
foreign exchange regulations in the PRC may affect our ability to pay dividends
in foreign currency or conduct other foreign exchange
business.  RMB is not a freely convertible currency currently,
and the restrictions on currency exchanges may limit our ability to use revenues
generated in RMB to fund our business activities outside the PRC or to make
dividends or other payments in United States dollars. The PRC government
strictly regulates conversion of RMB into foreign currencies. Over the years,
foreign exchange regulations in the PRC have significantly reduced the
government’s control over routine foreign exchange transactions under current
accounts. In the PRC, the State Administration for Foreign Exchange, or the
SAFE, regulates the conversion of the RMB into foreign currencies. Pursuant to
applicable PRC laws and regulations, foreign invested enterprises incorporated
in the PRC are required to apply for “Foreign Exchange Registration
Certificates.” Currently, conversion within the scope of the “current account”
(e.g. remittance of foreign currencies for payment of dividends, etc.) can be
effected without requiring the approval of SAFE. However, conversion of currency
in the “capital account” (e.g. for capital items such as direct investments,
loans, securities, etc.) still requires the approval of SAFE.




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




According
to Notice 75:




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




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


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








31




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




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






Risks
Relating to Our Securities





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




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






32





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




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





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





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





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





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




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




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





Patterns
of fraud and abuse include:





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








33




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





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





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





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





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




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





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





Not
applicable.





Item
3. Defaults Upon Senior Securities





Not
applicable.





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





Not
applicable.





Item
5. Other Information








Item
6. Exhibits





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







34







SIGNATURES






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




JPAK
      GROUP, INC.By:
            /s/
      Yijun WangYijun
      Wang
              Chief
      Executive OfficerBy:
            /s/
      Dongliang (Frank) SuDongliang
      (Frank) Su
              Acting
      Chief Financial Officer




Date:
November 3, 2008







35







EXHIBIT
INDEX




Exhibit No.
            
            Description2.1
            
            Securities
      Exchange Agreement by and among Jpak Group, Inc., Jpak Group Co., Ltd.,
      the shareholders of Jpak Group Co., Ltd. named therein and the selling
      party named therein, dated as of August 9, 2007 (incorporated by reference
      to Exhibit 2.1 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.1
            
            Articles
      of Incorporation of Jpak Group, Inc. (f/k/a Rx Staffing, Inc.), filed with
      the Secretary of State of Nevada on December 6, 2004 (incorporated by
      reference to Exhibit 3 of Rx Staffing, Inc.’s Form SB-2 filed on June 10,
      2005).3.1(a)
            
            Certificate
      of Amendment to Articles of Incorporation, filed with the Secretary of
      State of Nevada on November 29, 2006 (incorporated by reference to Exhibit
      3.1(a) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.1(b)
            
            Certificate
      of Amendment to Articles of Incorporation, filed with the Secretary of
      State of Nevada on July 27, 2007 (incorporated by reference to Exhibit
      3.1(b) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).3.2
            
            By-laws
      of Jpak Group, Inc. (f/k/a Rx Staffing, Inc.), adopted on December 10,
      2004 (incorporated by reference to Exhibit 3 of Rx Staffing, Inc.’s Form
      SB-2 filed on June 10, 2005).3.2(a)
            
            First
      Amendment to By-laws adopted on July 27, 2007 (incorporated by reference
      to Exhibit 3.2(a) of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).4.1
            
            Certificate
      of Designation of the Relative Rights and Preferences of the Series A
      Convertible Preferred Stock of Jpak Group, Inc., filed with the Secretary
      of State of Nevada on August 9, 2007 (incorporated by reference to Exhibit
      4.1 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
    2007).4.1(a)
            
            Amendment
      to the Certificate of Designation of the Relative Rights and Preferences
      of the Series A Convertible Preferred Stock of Jpak Group, Inc., filed
      with the Secretary of State of Nevada on October 1, 2007 (incorporated by
      reference to Exhibit 4.1(a) of the Company’s Form 8-K filed on October 9,
      2007).4.2
            
            Form
      of Certificate of Designation of the Relative Rights and Preferences of
      the Series B Convertible Preferred Stock of Jpak Group, Inc. (incorporated
      by reference to Exhibit 4.2 of Rx Staffing, Inc.’s Form 8-K filed on
      August 15, 2007).4.3
            
            Series
      A Warrant to Purchase shares of common stock of Jpak Group, Inc., issued
      on August 9, 2007 (incorporated by reference to Exhibit 4.3 of Rx
      Staffing, Inc.’s Form 8-K filed on August 15, 2007).4.4
            
            Series
      B Warrant to Purchase shares of common stock of Jpak Group, Inc., issued
      on August 9, 2007 (incorporated by reference to Exhibit 4.4 of Rx
      Staffing, Inc.’s Form 8-K filed on August 15, 2007).4.5
            
            Series
      J Warrant to Purchase shares of the Series B Convertible Preferred Stock,
      Series C Warrants to Purchase common stock and Series D Warrants to
      Purchase common stock, issued August 9, 2007 (incorporated by reference to
      Exhibit 4.5 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).4.6
            
            Form
      of Series C Warrant to Purchase shares of common stock of Jpak Group, Inc.
      (incorporated by reference to Exhibit 4.6 of Rx Staffing, Inc.’s Form 8-K
      filed on August 15, 2007).4.7
            
            Form
      of Series D Warrant to Purchase shares of common stock of Jpak Group, Inc.
      (incorporated by reference to Exhibit 4.7 of Rx Staffing, Inc.’s Form 8-K
      filed on August 15, 2007).10.1
            
            Note
      Purchase Agreement by and among Jpak Group Co., Ltd, Grand International
      Industrial Limited and the investors identified therein, dated as of May
      17, 2007 (incorporated by reference to Exhibit 10.1 of Rx Staffing, Inc.’s
      Form 8-K filed on August 15, 2007).10.2
            
            Joinder
      Agreement executed by Jpak Group, Inc., dated as of August 9, 2007
      (incorporated by reference to Exhibit 10.2 of Rx Staffing, Inc.’s Form 8-K
      filed on August 15, 2007).10.3
            
            Registration
      Rights Agreement by and among Jpak Group, Inc. and the purchasers named
      therein, dated as of August 9, 2007 (incorporated by reference to Exhibit
      10.3 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).10.4
            
            Securities
      Escrow Agreement by and among Jpak Group, Inc., the purchasers named
      therein, the principal stockholders of Jpak Group, Inc. named therein and
      the escrow agent named therein, dated as of August 9, 2007 (incorporated
      by reference to Exhibit 10.4 of Rx Staffing, Inc.’s Form 8-K filed on
      August 15, 2007).10.5
            
            Lock-Up
      Agreement by and among Jpak Group, Inc. and the shareholders of Jpak
      Group, Inc. named therein, dated as of August 9, 2007 (incorporated by
      reference to Exhibit 10.5 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.6
            
            Working
      Capital Loan Contract, effective as of August 27, 2006, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.6 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.7
            
            Working
      Capital Loan Contract, effective as of February 12, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Qingdao City
      Commercial Bank, Yongping Branch, as lender (incorporated by reference to
      Exhibit 10.7 of Rx Staffing, Inc.’s Form 8-K filed on August 15,
      2007).







36








10.8
            
            Working
      Capital Loan Contract, effective as of February 12, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.8 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.9
            
            Working
      Capital Loan Contract, effective as of April 10, 2007, by and between
      Qingdao Renmin Printing Co., Ltd., as borrower, and Industrial and
      Commercial Bank of China, Qingdao Branch, as lender (incorporated by
      reference to Exhibit 10.9 of Rx Staffing, Inc.’s Form 8-K filed on August
      15, 2007).10.10
            
            Employment
      Agreement, effective June 1, 2001, by and between Qindgao Renmin Printing
      Co., Ltd., as employer and Yijun Wang, as employee (incorporated by
      reference to Exhibit 10.10 of Rx Staffing, Inc.’s Registration Statement
      on Form S-1 filed on November 9, 2007).10.11
            
            Employment
      Agreement, effective June 1, 2001, by and between Qindgao Renmin Printing
      Co., Ltd., as employer and Ming Qi, as employee (incorporated by reference
      to Exhibit 10.11 of Rx Staffing, Inc.’s Registration Statement on Form S-1
      filed on November 9, 2007).31.1
            
            Certification
      of the Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.15.1
            
            Letter
      regarding unaudited interim financial information31.2
            
            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.















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