UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549





FORM 10-K





xANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE


SECURITIES EXCHANGE ACT OF 1934





FOR THE FISCAL YEAR ENDED JUNE 30, 2009





oTRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (D) OF THE


SECURITIES EXCHANGE ACT OF 1934





FOR THE TRANSITION PERIOD FROM _____________TO ____________





COMMISSION FILE NUMBER:








JPAK GROUP, INC.


(Exact name of registrant as specified in its charter)











Nevada

20-1977020(State or other jurisdiction of  incorporation)

(I.R.S. Employer Identification or Organization No.)





15 Xinghua Road


Qingdao, Shandong Province


Postal Code 266401


People’s Republic of China


(86-532) 84616387


(Address and telephone number of principal executive offices and principal place of business)





Securities registered under Section 12 (b) of the Exchange Act:  NONE




Securities registered under Section 12 (g) of the Exchange Act:
COMMON STOCK WITH $.001 PAR VALUE(Title of Class)




Indicate by check mark if the Registrant is a well known seasoned issuer as defined in Rule 405 of the securities Act.  Yes o No x





Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.  Yes o No x





Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.  x





Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer  o
Accelerated Filer oNon-accelerated filer    o
Smaller reporting company x





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





The aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant as of June 30,2009 (the last business day of the Registrant’s most recently completed fiscal year) was approximately $412,000.  The number of outstanding shares of the Registrant’s Common Stock as of the
close of business on September 22, 2009 was 23,005,000 and  5,608,564 shares of the Registrant’s Series A Preferred and 5,000,000 shares of Series B Preferred.










PART IPageItem 1
Description of Business

3Item 1A
Risk Factors

13Item 1B
Unresolved Staff Comments

27Item 2
Description of Property

28Item 3
Legal Proceedings

28Item 4
Submission of Matters to a Vote of Security Holders

28PART IIItem 5
Market for Common Equity and Related Stockholder Matters

28Item 6
Selected Financial Data

31Item 7
Management’s Discussion and Analysis of Financial Conditions and Results of Operations

31Item 7A
Quantitative and Qualitative Disclosures About Market Risk

39Item 8
Financial Statements

F-1Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

64Item 9A
Controls and Procedures

64Item 9B
Other Information

67PART IIIItem 10
Directors and Executive Officers of the Registrant

67Item 11
Executive Compensation

69Item 12
Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters

72Item 13
Certain Relationships and Related Transactions

75Item 14
Principal Accountant Fees and Services

77PART IVItem 15
Exhibits and Financial Statements Schedules

78Signatures

80


2







PART I








ITEM 1.                      DESCRIPTION OF BUSINESS





GENERAL 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 one
of the largest and leading domestic suppliers of aseptic liquid food and beverage cartons in China. Our business is primarily in China and we have also exported a small quantity of products.





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;


·
Continuing and increasing the recent orders from Russia and other Eastern Europe markets;


·
Establishing brand names and brand awareness; and


·
Enhancing the Company’s competitive advantages through R&D.





Company History





RX Staffing, Inc.





Rx Staffing, Inc. was a development stage company incorporated in the State of Nevada on December 6, 2004. It was formed as a full-service temporary personnel agency to better meet the supplemental staffing needs of healthcare providers. Its corporate purpose was (i) to provide personnel staffing services to institutions, occupational
site healthcare organizations and alternative site healthcare organizations and (ii) to provide health care professionals such as nurses, specialty technicians and physicians with the flexibility to balance their professional and personal schedules.





For the period beginning on the date of inception through the date of the Share Exchange, Rx Staffing generated minimal revenue from the sale of its medical staffing services.





On August 9, 2007, we completed a reverse acquisition of Jpak Group, Inc. (“Jpak”).  Prior to the acquisition, Rx Staffing Inc. (“Rx Staffing”), was a public shell company, as that term is defined in Rule 12b-2 of the Exchange Act, established under the laws of Nevada on December 6, 2004.  To
accomplish the share exchange we 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. 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 JPAK had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock.





Jpak Group, Inc.





We commenced operations in China in 1958 as a state-owned, traditional printing and packaging company. In 2004, management completed the buyout of 88.23% of a state-owned equity interest in Qindao Renmin, a company located in Qingdao, Shandong Province of the People’s Republic of China; in the same year, we started developing aseptic
liquid food and beverage cartons which was launched in the China market in 2005.  Jpak Group Co., Ltd. (“Jpak Ltd”) was incorporated in the Cayman Islands on June 22, 2006 under the name Winner Dragon Limited; they changed their name to Jpak Ltd. on September 18, 2006.  Also in September 2006, Jpak Ltd. acquired the 88.23% equity interest in Qingdao Renmin through Grand International, the 100% owned subsidiary of Jpak Ltd. Substantially, all of our operations are conducted in China
through Qingdao Renmin. In July 2007, Grand International purchased the remaining 11.77% state-owned equity interest in Qingdao Renmin and now owns 100% equity interest in Qingdao Renmin.








3





In September 2006, Jpak Group Co., Ltd. (“JPAK”) – a private holding company established under the laws Cayman Islands on June 22, 2006, acquired 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. The transaction was 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 JPAK had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock.  Accordingly, we have revised our financial statements to reflect reverse merger accounting.





On August 9, 2007, we entered into that certain Share Exchange, pursuant to which Jpak Ltd. became our wholly owned subsidiary and in connection with the Share Exchange, we changed our corporate name to “Jpak Group, Inc.”





The Share Exchange and the Financing





On August 9, 2007, we entered into and consummated the transactions contemplated (the “Share Exchange”) under a Securities Exchange Agreement (the “SEA”) by and among us, Jpak and the shareholders of Jpak (namely Joyrich Group Limited, a British Virgin Islands (“BVI”) company, Fabregas Group Limited,
a BVI company, Statepro Investments Ltd., a BVI company, Raytech Investments Limited, a BVI company, and Capital American Markets Limited, a BVI company), pursuant to which all the shares of Jpak were transferred to us and Jpak became a wholly-owned subsidiary of ours, and at the same time the shareholders of Jpak were issued 23,005,000 shares of our common stock, which represented 64.4% of all the issued and outstanding shares of our common stock (assuming conversion of the preferred stock described below) following
the Share Exchange and the financing described below. The Share Exchange has been accounted for as a reverse acquisition under the purchase method of accounting for business combinations in accordance with generally accepted accounting principles in the United States of America, or “U.S. GAAP.” Reported results of operations of the combined group issued after completion of the transaction will reflect Jpak’s operations.





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





On August 9, 2007, we also entered into a Registration Rights Agreement with the Investors (the “Investor RRA”). Under the Investor RRA, we were required to prepare and file a registration statement for the sale of the Common Stock issuable to the Investors under the Series A and Series B Preferred Stock and the Warrants and
to use our best efforts to cause, and to maintain, the effectiveness of the registration statement. We filed an initial registration statement on November 9, 2007, to fulfill our obligations under the RRA. We are subject to certain monetary obligations if, the registration statement is not declared effective by the SEC by March 31, 2008. The obligations are payments in an amount equal to 2% of the aggregate amount invested by such Investor (based upon the number of Registrable Securities then owned by such Investor)
for each 30 day period or any portion thereof following the date by which such Registration Statement should have been effective, up to a maximum amount of 10%. Under the Investor RRA, the shareholders of Jpak were granted piggyback registration rights for 15,805,000 shares of our common stock.








4







The Investor RRA also made provisions if we cannot register all of the shares underlying all of the Series A and Series B Preferred Stock and Warrants due to the SEC’s application of Rule 415.  Pursuant to those provisions, if the SEC issues us a 415 comment, then we must first try to register the common stock underlying
the preferred stock (on a pro rata basis among the holders of the Preferred Stock) and then register all of the common underlying the Warrants (on a pro rata basis among the holders of the Warrants).   The SEC did issue a 415 comment to us on March 27, 2008 and accordingly, we filed an amendment to our Registration Statement to register for resale 687,106 shares of common stock underlying the Series A Preferred Stock, as required by the terms of the Investor RRA.  Subsequent registration
statements required to be filed to register the rest of the common stock underlying the preferred stock and warrants issued in the financing will be filed on the later of (i) 60 days following the sale of substantially all of the shares of common stock included in the Registration Statement or any subsequent Registration Statement and (ii) 6 months following the effective date of the Registration Statement or any subsequent Registration Statement, as applicable, or such earlier or later date as permitted or required
by the Commission.  Each such subsequent registration statement must be declared effective by the earlier of (A) the 90th day following the filing date of such Registration Statement (or in the event such Registration Statement is reviewed by the Commission, the one hundred twentieth (120th) day following such filing date) or (B) 5 business days after SEC has no more comments. However, we do not
have any monetary obligations for any securities that were not permitted to be included in a registration statement because of the SEC’s application of Rule 415 until such time as such securities are required to be filed pursuant to the Investor RRA.  In such case, the liquidated damages shall be calculated to only apply to the percentage of securities which are permitted by the Commission to be included in the Registration Statement. On June 8, 2009, we filed a Registration Statement to register
for resale 19,333,334 shares of common stock underlying Series A Warrants, Series B Warrants, Series C Warrants and Series D Warrants.





In addition to the Share Exchange, and the Investor RRA, on August 9, 2007, we also entered into a Securities Escrow Agreement (the “Escrow Agreement”) with the Investors, the principal stockholders named therein (the “Principal Stockholders”) and the escrow agent named therein (the “Escrow Agent”).
Under the Escrow Agreement, the Principal Stockholders agreed to place an aggregate of 7,200,000 shares of Common Stock into escrow (the “Escrow Shares”) for the benefit of the Investors in the event the Company fails to achieve net income for the fiscal year ended June 30, 2008 (“Fiscal 2008”) of at least US$3.955 million (the “Fiscal 2008 Performance Threshold”). Since we met the Fiscal 2008 Performance Threshold, the Escrow Shares were returned to the Principal Stockholders.





In connection with the Financing, we issued H.C. Wainwright & Co., Inc., a broker-dealer member of FINRA who acted as our exclusive placement agent in connection with the financing received the following compensation for its services as placement agent: (i) a cash fee of 9% of the gross proceeds, plus expenses (an aggregate of $972,500)
and (ii) warrants to purchase 990,000 shares of common stock at an exercise price equal to $0.50 per share, and warrants to purchase 750,000 shares of common stock at an exercise price equal to $0.60 per share, certain of which warrants were issued to officers and employees of the placement agent.





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





In connection with such exercise, the holders of the Series J Warrants agreed not to exercise their demand registration rights with respect to the shares of our common stock underlying the Series B Convertible Preferred Stock, the Series C Warrants and the Series D Warrants during the period beginning on the date of exercise of the Series
J Warrants and ending on the ninetieth (90th) day following the effective date of this prospectus.





In connection with the exercise of the Series J Warrants, we extended the term of our Series A Warrants and Series B Warrants from four years to six years, so that such warrants shall now expire on August 9, 2013, and the deadline for effectiveness of the registration statement was extended to March 31, 2008.





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.





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 the export market.





Established in 1958, Qingdao Renmin was a state-owned, traditional printing and packaging company. On August 21, 2006, Grand International entered into a sales and purchase agreement with three of the then-existing five shareholders (the “Original Shareholders”) of Qingdao Renmin, pursuant to which Grand International purchased
88.23% of the equity interest in Qingdao Renmin. The total purchase consideration was RMB 40,999,000 which was determined based upon the net asset value of Qingdao Renmin as of August 21, 2006. On September 5, 2006, this transfer was approved by the Qingdao Municipal Bureau of Foreign Trade and Economic Cooperation, and the registration with the Qingdao State Administration for Industry and Commerce was completed on December 7, 2006. As a result of this transfer, Grand International acquired an 88.23% equity
interest in Qingdao Renmin. In July 2007, Grand International purchased the remaining 11.77% state-owned equity interest in Qingdao Renmin and now owns 100% equity interest in Qingdao Renmin.








5







The acquisition of Qingdao has been accounted for in the financial statements using the reverse merger accounting method.





We have experienced significant growth in our business in recent years. Our total net sales reached US$40.4 million for the fiscal year ended June 30, 2009, up fromUS$37.3 million for the fiscal year ended June 30, 2008 and US$30.4 million for the fiscal year ended June 30, 2007, up from US$22.6 million for the fiscal year ended June 30,
2006. Additionally, our total net sales for reached US$40.4 million for the year ended June 30, 2009 as compared to approximately US$37.3 million for the year ended June 30, 2008, an increase of approximately US$3.1 million or 8.4%.





Our Corporate Structure





We were incorporated in the state of Nevada on December 6, 2004 under the name RX Staffing, Inc. On August 9, 2007 we entered into that certain Share Exchange, pursuant to which Jpak became our wholly owned subsidiary. In connection with the Share Exchange, we changed our corporate name to Jpak Group, Inc. We function as a holding company
and, through our subsidiaries, own 100% equity interest in Qingdao Renmin, our operating subsidiary.





Jpak was incorporated in the Cayman Islands on June 22, 2006 under the name Winner Dragon Limited. On September 18, 2006, Winner Dragon Limited was renamed Jpak Group Co., Ltd. In September 2006, Jpak completed the acquisition of 88.23% of the equity interest in Qingdao Renmin through Grand International, the 100% owned subsidiary of Jpak.
Substantially, all of our operations are conducted in China through Qingdao Renmin. In July 2007, Grand International purchased the remaining 11.77% state-owned equity interest in Qingdao Renmin and now owns 100% equity interest in Qingdao Renmin.





Our Industry





We believe that the liquid food and beverage carton market for brick and pillow shapes in China is approximately 30 billion packages annually with sales of US$1.7billion. We believe the key factor that will continue to drive the growth of the liquid food and beverage carton market in China is the rapidly increasing per capita consumptions
of milk and non-carbonated beverages in the major coastal cities as well as the rural regions.








Our Growth Strategy





We strive to consolidate our market leader position among domestic liquid food and beverage aseptic carton suppliers and intend 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.





We are continuing our efforts to increase our production output as well as widen the range of aseptic carton products to further penetrate the packaged milk and other liquid food and beverage markets in China.





Offering bundled packaging materials and filling machines.





We are developing aseptic liquid filling machines to augment the sales of our aseptic carton packaging products, enabling us to offer a complete packaging solution as well as increase per customer sales.





Increasing sales to selective Asian and other markets.





We are aggressively pursuing Asian and other markets to increase market penetration via direct sales and channel partnerships in selective countries.





Continuing and increasing the recent orders from Russia and other Eastern European markets.




To expand Russia and other Eastern European markets, we participated their local product exhibitions to develop new customers, and paid visits to our current customers in these areas may help us develop
these markets.




Establishing brand names and brand awareness.





We are continuing to establish a strong corporate identity as well as enhance our product brand names and brand awareness to enhance an accelerated adoption of our existing and new products.





Enhancing the Company’s competitive advantages through R&D.





We have successfully developed packaging which can be used in the filling machines created by SIG. Currently, the new products are being tested among our customers and the manufacture techniques are still being improved. We expect the SIG comparative would meet the standard within six months.


6





Our Products





We provide a wide variety of aseptic liquid food and beverage carton products intended to address the needs of our customers.





Aseptic Packaging Technology





We use aseptic packaging technology in our products. An aseptic liquid food and beverage processing and packaging ensure that the packaged contents and packaging materials are free of harmful bacteria and microorganisms in a closed, sterile production environment under ultra high temperature treatment.





Our cartons are designed and constructed for processing under aseptic conditions, keeping the liquid foods and beverages safe, fresh and flavorful without refrigeration or preservatives during storage, and allowing the liquid food and beverages to retain their nutrition, taste, texture and color.





Liquid Food and Beverage Cartons





Our aseptic liquid food and beverage cartons are made of multiple layers of polyethylene, paper board, and aluminum materials which are intended for the packaging of milk, fruit juices, soy milk, yogurt drinks, iced tea, coffee, sauces and others. Aseptic cartons are available in brick or pillow shapes in standard and slim formats, with
various filling volume specifications.





Aseptic Carton Features and Advantages





Our aseptic liquid food and beverage cartons are produced with several proprietary, core product and process technologies which enable the packaging materials to have many distinctive features and advantages, including:





●
Aseptic packaging materials keep the liquid foods and beverages safe, fresh, and flavorful.




●
Cartons ensure the packaged contents are free of harmful bacteria and microorganisms.


●
Multi-layered materials are moisture-, air- and light-proof, allowing the packaged contents to retain their original nutrition, taste, texture and color.





●
Aseptic packaged materials allow liquid foods and beverages to be stored for a long period of time without refrigeration and preservatives.





●
Special printing process makes the carton package printing attractive and eye-catching.





●
Durable packaging materials are suitable for long distance shipping and handling.





●
A variety of shapes, forms and volume specifications to suit the various packaging needs.





●
Packaging materials of used and discarded cartons are renewable and recyclable.











7





Manufacturing





Our manufacturing and operations facility is 18,000 square meters with a current annual production output of up to 3.5 billion aseptic liquid food and beverage cartons. Our production facility is equipped with both imported and self-developed equipment and machines, including printing production lines, coating/forming processing lines,
and other cutting and processing equipment.





We have established a stringent quality assurance system that is in conformance with ISO9001:2000, Aseptic Liquid Food Packaging Standards, and Food Safety and Management Requirements. We have obtained the certificates of ISO9001-2000, HACCP Food Safety and Management System as well as Advanced Technology and Product Enterprise.





We believe that our current production wastage ratio is one of the lowest in the industry. We are striving to minimize the wastage by enhancing online testing procedures, employee training as well as improving equipment and fixture efficiency.





Suppliers





Raw materials and supplies are generally procured from domestic suppliers, including paper materials, polyethylene materials, aluminum materials, and other materials. We rely on a single or limited number of suppliers for such raw materials, parts, components and other items. Although there are many suppliers for each of these raw materials,
parts, components and other items, we are dependent on a limited number of suppliers for many of the significant raw materials and components. We do not have any long-term or exclusive purchase commitments with any of our suppliers.





Sales, Customers and Marketing





We sell and distribute our aseptic liquid food and beverage cartons directly to our customers who are manufacturers and suppliers of packaged milk, fruit juices, soy milk, yogurt drinks, iced tea, coffee, sauces and other liquid foods and beverages throughout China.





We are developing and expanding our customer base via distributors in selective Asian and the Middle Eastern countries to target manufacturers and suppliers of packaged milk, fruit juices, iced tea and other non-carbonated drinks.





We conduct our marketing activities to further penetrate the China market and to enter selective Asian and Middle Eastern markets, including: attending industry trade shows, advertising in industry publications, using internet marketing, collaborating with the government as well as increasing brand and brand awareness.





Competition





China Market





The aseptic liquid food and beverage carton market in China is dominated by Tetra Pack, followed by SIG, both multi-national suppliers with a combined 90% of the market share. Tetra Pack provides packaging materials, packaging machines and processing solutions for the food and beverage industries. Worldwide, it is the dominant market leader
in these industries. SIG is a Swiss public company that provides food and beverage carton and plastic bottle packaging materials and filling machines. In 2006 it had an estimated worldwide sales of 1.3 billion Euros. Domestic suppliers currently have an estimated 10% of the China aseptic carton market and have been gaining market shares from Tetra Pack and SIG. These gains have been primarily due to their lower offering price with comparable products. While domestic suppliers have penetrated the non-carbonated
soft drink carton market, the higher growth milk carton market continues to be dominated by Tetra Pack and SIG.








8








We believe we currently lead the domestic suppliers with an annual production output of 3.5 billion packages. We plan to expand our production capacity and increase our market penetration with a bundle of sales of aseptic
cartons and liquid filling machines to our existing and new customers.





Asian and Middle Eastern Markets





Tetra Pack dominates the aseptic carton packaging materials and filling machines as well as the liquid food and beverage processing markets in most of the Asian and Middle Eastern countries. Since 2004, SIG has established manufacturing plants in Thailand, Vietnam and Saudi Arabia and has taken market shares from Tetra Pack in these regional
markets.





With the exception of China, where alternative domestic suppliers exist, Tetra Pack and SIG are not challenged by other suppliers in most Asian and Middle Eastern markets. China based suppliers however, like us, are beginning to enter these markets. Collectively, we are expected to capture a portion of the market share over the course
of the next few years.





Our Competitive Strengths





Leveraging our competitive strengths, we believe that we have established ourselves as a leader among domestic suppliers in China and are in a strong position to challenge the dominant market positions held by other suppliers. We are aggressively penetrating the aseptic carton market and expect to take significant market shares within
next few years. Our competitive strengths include:





Expedited development and time-to-market capability.





We have demonstrated our ability to timely develop and bring to market a line of aseptic carton products within an eighteen 18 month time frame. We will continue capitalizing on this capability for our newly developed products.





Substantially lower manufacturing system cost.





We have developed a complete manufacturing system for the production of aseptic cartons at a cost that we believe to be significantly lower than the industry’s average. We believe that this significant cost saving makes our products the most price-competitive in the market.





Significantly reduced direct cost and lower price.





We have developed proprietary product and process technologies that allow for minimal production wastage and we believe one of the lowest direct costs in the industry, collectively giving us a critical competitive edge and thus allowing
us to offer attractive prices to customers.








9





High product quality and proven market acceptance.





Our aseptic carton products are proven to be comparable to those of Tetra Pak and SIG and are well-received by our customers.





Experienced and cohesive management team for rapid growth.





Most key executives have been with us and working together for over 20 years. This experienced and cohesive management team is committed and ready to rapidly grow our business.





Intellectual Property





We develop our own proprietary product and process technologies for the aseptic carton packaging materials. We have filed a total of 30 patents on material structure, production equipment fixtures, testing equipment and have been granted 22 patents with another eight pending. Our 22 issued patents expire between April 2015 and July
2017.





We have submitted five registered trademark applications, one of which has been accepted by the State Administration for Industry and Commerce of China. We are in the process of submitting another registered trademark application.





Government Regulation





The PRC government regulates the printing and packaging industry. This section summarizes the principal PRC regulations relating to our businesses:





We operate our business in China under a legal regime consisting of the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under our authority, including the General Administration of Press and Publication, or GAPP, the State General Administration of
the Quality Supervision, Inspection and Quarantine (“AQSIQ”), the State Administration for Industry and Commerce (“SAIC”), and their respective authorized local counterparts.





Regulations on Printing and Manufacturing of Food and Beverage Packaging Products





The principal regulations governing printing and manufacturing of food and beverage packaging products in China consist of the Regulations on the Administration of Printing Industry, the Interim Rules on Establishment of the Foreign Invested Printing Companies, the General Specification on the Manufacturing License of Food Packaging Products,
Vessel, Tools and Other Products. Below is a summary of relevant provisions of these regulations.





Regulations on the Administration of Printing Industry





On August 2, 2001, the State Council enacted the Regulations on the Administration of Printing Industry, or Printing Regulations. Such Printing Regulations set forth detailed requirements on the qualification and operations of the operators of printing industry. Under the Printing Regulations, the operators of printing industry shall obtain
the operating license, such as the “License for Printing Operations”. Our subsidiary, Qingdao Renmin, has been granted a License for Printing Operations issued by the Shandong Provincial Bureau of Press and Publication that allows Qingdao Renmin to operate the printing business. Qingdao Renmin has also obtained a License for Special Industry issued by the Qingdao Municipal Bureau of Public Security on August 9, 2001. However, such License for Special Industry has not been required for the printing
industry since the promulgation of the Decision of the State Council on the Enactment of Administrative Licensing for the Expressly Reserved Items Subject to Administrative Examination and Approval Rules on June 29, 2004.








10





General Specification on the Manufacturing License of Food Packaging, Vessel, Tools and Other Products





Pursuant to the General Specification on the Manufacturing License of Food Packaging, Vessel, Tools and Other Products, or General Specification, promulgated by AQSIQ on July 18, 2006 and came into enforcement on the same day, the food and beverage packaging products must meet certain quality standards and the operators of the food packaging
shall obtain a Manufacturing License from the AQSIQ. Such General Specification sets forth the detailed examination and approval procedures for applying the Manufacturing License, which include five steps to obtain the license: (i) preliminary examination at the local counterpart of AQSIQ, (ii) testing manufacturing, (iii) on-the-spot verification, (iv) examination of sample product and (v) the final approval and issuance of the license. We have obtained the Manufacturing License issued by AQSIQ in April 2007.





Regulations on Foreign Invested Printing Companies





Foreign invested printing companies are specifically governed by the Interim Rules on Establishment of the Foreign Invested Printing Companies, jointly promulgated by the GAPP and the Ministry of Commerce of China, or MOFCOM, in 2002 in accordance with the Law on Sino-Foreign Equity Joint Venture (2001), the Law on Sino-Foreign Contractual
Joint Venture (2000), the Law on Wholly Foreign-Funded Enterprises (2000) and the Regulations on the Administration of Printing Industry.





The Interim Rules on Establishment of the Foreign Invested Printing Companies allow and encourage the establishment of the sino-foreign equity joint ventures and wholly foreign-funded enterprises engaged in the printing business of packaging products. Furthermore, such sino-foreign equity joint ventures and wholly foreign-funded enterprises
shall also obtain the License for Printing Operations to operating the printing business in China, in accordance with the Regulations on the Administration of Printing Industry and other applicable laws and regulations.





We have applied and updated the License for Printing Operations for Qingdao Renmin since its 88.23% equity interests have been acquired by Grand International and subsequently transformed into the sino-foreign equity joint ventures.





Research and Development





Development focus.





Our research and development effort focuses on developing proprietary technology in aseptic packaging materials and liquid filling machines to meet the growing market demand. Our research and development expenditures were approximately US$2.1 million and US$1.3 million for the fiscal years ended June 30, 2009 and 2008, respectively.








11






Research team.
 
 We have an experienced and multi-disciplined research and development team of engineers and technicians with a proven track record working with aseptic packaging materials and machinery.





Laboratory equipment.





Our research and development center has five laboratories and one Experimental Workshop which is for testing the new products, are built with state-of-the-art laboratory equipment for experiments on, but not limited to, packaging printing, plastic materials, aluminum materials, compound material strength, microorganism assessments and trial
filling processing.


Projects and partnerships.





We currently have 22 research and development projects ongoing, 4 of which are classified as “Focused Innovative Technology Development Projects” by Qingdao City. We have formed numerous strategic research and development partnerships with educational institutions, research institutions, material suppliers, machinery builders
and liquid food and beverage manufacturers.





Product Pipeline.





We have a continuous pipeline for (i) new products for aseptic liquid food and beverage carton packaging materials, (ii) current product extension and (iii) new product. In our efforts to develop our own line of liquid food and beverage filling machines, we are testing a prototype of our liquid filling machine in the fourth quarter of
2008 and are hoping that after consumer testing, we can have a market launch date by the second quarter of 2010.





Employees





As of June 30, 2009, we had 432 employees, consisting of 287 in manufacturing and operation, 37 in research and development, 20 in sales and marketing and 88 in general and administrative. All of our employees are full-time employees.





None of our personnel are represented under collective bargaining agreements. We consider our relations with our employees to be good.





Description of Property





All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of 50 years. This period may be renewed at the expiration of the initial and any subsequent
terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations. Qingdao Renmin currently owns land use rights to approximately 277,480 square meters of land consisting of manufacturing facilities, employee quarters and office buildings in Qingdao, China. Qingdao Renmin holds four State-owned Land Use Rights and the Building Ownership Certificates for the land use rights and buildings owned by it. On the State-owned Land Use Rights and the Building Ownership Certificate
(No.: Qing Fang Di Quan 3738), State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 14621) and State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 45171), there is a note stating that because the information of the land is incomplete, the land use right registration is pending. On the State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 19508), the type of the land use right is shown as allocated, meaning that
no consideration needed to be paid for the land use right.





We intend to enhance our manufacturing facility over the next few years and may expand our land to meet this demand.








12





HOW YOU CAN FIND ADDITIONAL INFORMATION





We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC.  For further information with respect to the Company, you may read and copy its reports, proxy statements and other information, at the SEC public reference rooms at 100 F.  Street, N.E., Washington,
D.C. 20549.  You can request copies of these documents by writing to the SEC and paying a fee for the copying cost.  Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference rooms.  The Company’s SEC filings are also available at the SEC’s web site at http://www.sec.gov.





You may also send a request for a paper copy to our outside securities counsel: Leser, Hunter, Taubman & Taubman, c/o Jpak Group, Inc. 17 State Street, Suite 2000, New York, NY 10004.





ITEM 1A.                      RISK FACTORS





An investment in our common stock is speculative and involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before purchasing any shares of our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties
may also adversely impair our business operations. If any of the events described in the risk factors below actually occur, our business, financial condition or results of operations could suffer significantly. In such case, the value of your investment could decline and you may lose all or part of the money you paid to buy our common stock.





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.








13





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





●
the continued acceptance of our products and services by the packaging industries;





●
our ability to successfully and rapidly expand sales to potential customers in response to potentially increasing demand;





●
the costs associated with such growth, which are difficult to quantify, but could be significant;





●
rapid technological change; and





●
the highly competitive nature of the packaging industries.





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





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.














14








Our existing indebtedness may adversely affect our ability to obtain additional funds and may increase our vulnerability to economic or business downturns.  Our indebtedness aggregated approximately US$12.4 million as of June 30, 2009. 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 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 June 30, 2008, our disclosure controls were deemed ineffective, 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.  Initially, due to staffing and resource constraints, a material weakness became
evident to management in its December 2007 evaluation 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 June 30, 2008, our internal controls were deemed ineffective, 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 were 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.  Restated financial statements for the year ending June 30, 2007 were included in an amendment to our Registration Statement on Form S-1; 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 an amendment to our quarterly report on
Form 10-Q for each such quarter on September 29, 2008.Those revisions however, impacted the financial statements for the quarter ended September 31, 2007 and as a result, we filed, on September 29, 2008, an amendment to that quarterly report to conform, and make consistent the disclosure contained therein with our other filings.  This 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.








15








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





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








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





●
acceleration of the payment of our outstanding indebtedness;





●
cross defaults to and acceleration of the payment under other financing arrangements;





●
our inability to borrow additional amounts under our existing financing arrangements; and





●
our inability to secure financing on favorable terms or at all from alternative sources.





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





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





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








16





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.

















17








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





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





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





As a public company, we will have significant additional requirements for enhanced financial reporting and internal controls. We will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the
effectiveness of our internal controls over financial reporting and a t 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.








18





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





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





Risks Related To Doing Business in China





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





●
level of government involvement in the economy;





●
control of foreign exchange;





●
methods of allocating resources;





●
balance of payments position;





●
international trade restrictions; and





●
international conflict.














19








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 investorsmay 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.








20








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 5.9% and as low as -1.4%. 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





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.








21








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 andthe environment. These laws and regulations address and regulate, among othermatters, wastewater discharge, air quality and the generation, handling,storage, treatment, disposal and transportation of solid and hazardous wastesand
releases of hazardous substances into the environment. In addition, thirdparties 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, legal and financial controls in the PRC. The PRC historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, computer and other
control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.





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








22








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





According to Notice 75:





●
prior to establishing or assuming control of an offshore company for the purpose of obtaining overseas equity financing with assets or equity interests in an onshore enterprise in the PRC, each PRC resident, whether a natural or legal person, must complete the overseas investment foreign exchange registration procedures with the relevant
local SAFE branch;





●
an amendment to the registration with the local SAFE branch is required to be filed by any PRC resident that directly or indirectly holds interests in that offshore company upon either (1) the injection of equity interests or assets of an onshore enterprise to the offshore company, or (2) the completion of any overseas fund raising by
such offshore company; and





●
an amendment to the registration with the local SAFE branch is also required to be filed by such PRC resident when there is any material change in the capital of the offshore company that does not involve any return investment, such as (1) an increase or decrease in its capital, (2) a transfer or swap of shares, (3) a merger or division,
(4) a long term equity or debt investment, or (5) the creation of any security interests.





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





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





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








23








Our future employee stock option plan or stock ownership plan involving any PRC domestic individual will be subject to the administration of foreign exchange in the PRC . In accordance with the Measures of Administration on Foreign Exchange of Individuals promulgated
on December 25, 2006 (the “Measures”) and the Implementing Rules of the Measures of Administration on Foreign Exchange of Individuals (the “Implementing Rules of Measures”), which became effective in February 2007, a PRC domestic individual (i.e., a Chinese citizen as defined) who participates in the employees stock option plan or stock plan of an overseas listed company shall conduct foreign exchange related affairs upon the prior approval of SAFE and/or its local branch through its employer
or a PRC agency. The dividends of the shares or proceeds received from sale of shares under the stock option plan or stock ownership plan in foreign exchange by such PRC domestic individual shall be remitted and deposited into the special onshore foreign currency bank account in the PRC opened by the employer or the PRC agency. Furthermore, following the Implementing Rules of Measures, SAFE issued the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership
Plan or Stock Option Plan of An Overseas Listed Company (Hui Zong Fa [2007] No. 78, the “Circular 78”) on April 6, 2007. Circular 78, which introduces a number of new and highly restrictive requirements, applies to any employee stock option plan or stock ownership plan offered by a PRC or non-PRC company whose shares are listed on an overseas stock exchange. Given these PRC regulations, if we approve and implement any employee stock option plan or stock ownership plan which will involve any PRC
domestic individual, the SAFE registration for such PRC domestic individual participating in the employee stock ownership plan or stock option plan shall apply and be required. Nevertheless, Circular 78 only applies to the overseas listed company other than an overseas private company and as a result, the incentive stock option granted by Joyrich Group Limited and Fabregas Group Limited, shareholders of our company and private companies, to PRC residents do not fall into such SAFE registration under Circular
78. Currently it is silent in terms of PRC statutory requirements with respect to the PRC domestic individuals participating in employee stock ownership plan or stock option plan of an overseas private company, since there are no applicable PRC laws or regulations. It is unclear how future regulations will impact the incentive stock options granted by 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 90.9% of our outstanding common stock. These stockholders are able to control all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.





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





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








24





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





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





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.

















25








Patterns of fraud and abuse include:





●
Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;





●
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;





●
“Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;





●
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and





●
Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.





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





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





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





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





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











26








Future sales of our common stock may depress our stock price. Sales of a substantial number of shares of our common stock in the public market could cause a decrease in the market price of our common stock. As of September 22, 2009, we had approximately 44,555,461
shares of common stock outstanding (assuming conversion of our outstanding Series A and Series B preferred stock). We also have warrants to purchase approximately 21,073,334 shares of our common stock outstanding. We may also issue additional shares of stock and securities convertible into or exercisable for stock in connection with our business. In addition, we have agreed to file a registration statement covering the sale of the shares of our common stock underlying the securities issued in the recent
financing transaction, which shares will be freely tradable following the effective date of such registration statement. Certain of our shareholders holding an aggregate of 23,005,000 shares of our common stock (including shares held in escrow as described herein) have agreed that, for a period of six months following the effectiveness of the registration statement for which this prospectus forms a part, they will not, subject to certain limited exceptions set forth in the Lock-Up Agreement (defined herein),
including consent by the investors, offer, sell, contract to sell, assign, transfer, hypothecate, pledge or grant a security interest in or other dispose of any shares of common Stock. In addition, for a period of 12 months following such six month period, no such shareholder shall sell more than one-twelfth of their total shares of common stock during any one month period. If a significant portion of our shares of common stock were sold in the public market, the market value of our common stock could be adversely
affected.





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 1B.                      UNRESOLVED STAFF COMMENTS





Although we are not an accelerated or large accelerated filer, we are voluntarily disclosing that we received comments from the SEC regarding our Registration Statement on Form S-1 covering the resale of 19,333,334 shares of common stock underlying Series A Warrants, Series B Warrants, Series C Warrants and Series D Warrants.  We
filed our response to such comments, along with an amendment to our S-1 on June 8, 2009, but received additional comments thereafter.  We are now filing a response and related amended filings pursuant to the SEC’s latest comments.





27





ITEM 2.                      DESCRIPTION OF PROPERTY





Our corporate executive offices are located at 15 Xinghua Road, Qingdao, Shandong Province, 266401, People’s Republic of China.





All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of 50 years. This period may be renewed at the expiration of the initial and any subsequent
terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations. Qingdao Renmin currently owns land use rights to approximately 277,480 square meters of land consisting of manufacturing facilities, employee quarters and office buildings in Qingdao, China. Qingdao Renmin holds four State-owned Land Use Rights and the Building Ownership Certificates for the land use rights and buildings owned by it. On the State-owned Land Use Rights and the Building Ownership
Certificate (No.: Qing Fang Di Quan 3738), State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 14621) and State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 45171), there is a note stating that because the information of the land is incomplete, the land use right registration is pending. On the State-owned Land Use Rights and Building Ownership Certificate (No.: Qing Fang Di Quan 19508), the type of the land use right is shown as allocated,
meaning that no consideration needed to be paid for the land use right.





We intend to expand our manufacturing facility over the next few years but believe that we currently have enough land to satisfy such expansion.








ITEM 3.                      LEGAL PROCEEDINGS





From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not aware of any pending or threatened legal proceeding that, if determined in a manner adverse to us, could have a material adverse effect on our business and operations.








ITEM 4.                      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





There were no matters submitted to a vote of securities holders during the fourth quarter of our fiscal year ended June 30, 2008.








PART II




ITEM 5.                      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





Our common stock commenced trading on the Over-The-Counter Bulletin Board on August 15, 2007 and trades under the symbol “JPAK”





The OTC Bulletin Board is an unorganized, inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ, and quotes for stocks included on the OTC Bulletin Board are not listed in the financial sections of newspapers, as are those for the NASDAQ Stock Market.











28





Transactions in our common stock have been sporadic and do not constitute an active market. Prior to the Share Exchange our shares of common stock did not trade publicly.





The following table sets forth the quarterly high and low bid prices for the common stock since the quarter ended September 30, 2008, the first quarter during which our common stock was listed on an exchange.  The prices set forth below represent inter-dealer quotations, without retail markup, markdown or commission and may not be
reflective of actual transactions.





High


LowQuarter ended September 30, 2008

$
1.20


$
0.30Quarter ended December 31, 2008

$
1.01


$
0.13Quarter ended March 31, 2009

$
0.75


$
0.05Quarter ended June 30, 2009

$
0.75


$
0.05





At September 22, 2009, the closing bid price of the common stock was $0.94 and we had approximately 33 record holders of our common stock, 4 record holders of our Series A Preferred Stock and 4 record holders of our Series B Preferred Stock. This number excludes any estimate by us of the number of beneficial owners of
shares held in street name, the accuracy of which cannot be guaranteed.





There are Series A warrants to purchase 5,500,000 shares common stock at $0.60 per share and Series B warrants to purchase 5,500,000 shares at $0.70 per share; these warrants were issued to investors on August 9, 2007 and expire in 2013. There are also warrants to purchase 990,000 shares of common stock at $0.50 per share, which
were issued to the placement agent in the Financing. The placement agent warrants will expire in 2013.





There are Series C Warrants to purchase an aggregate of 4,166,667 shares of our common stock at an exercise price of US$0.72 per share and Series D Warrants to purchase an aggregate of 4,166,667 shares of our common stock (subject to adjustment) at an exercise price of US$0.84 per share. The Series C Warrants and Series D Warrants were
issued to investors on December 28, 2007 and expire in 2013. There are also warrants to purchase 750,000 shares of common stock at $0.60 per share, which were issued to the placement agent in the exercise of the Series J Warrants. The placement agent warrants will expire in 2013.





Effective August 11, 1993, the SEC adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, 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 certain exceptions. For any transaction involving
a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) that 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. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make
a reasonable determination that the transactions in penny stocks are suitable for that person and 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 Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) states 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 about 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 have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.











29





Dividend Policy





We have never declared or paid dividends on our common stock. We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account
various factors, including current financial condition, operating results and current and anticipated cash needs.





Description of Equity Compensation Plans





We do not have any equity compensation plans. Our Board of Directors may adopt one or more equity compensation plans in the future.





Recent Sales of Unregistered Securities





During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act as amended. Unless stated otherwise; (i) that each of the persons who received these unregistered securities had knowledge and experience in financial and business matters which allowed them to evaluate
the merits and risk of the receipt of these securities, and that they were knowledgeable about our operations and financial condition; (ii) no underwriter participated in, nor did we pay any commissions or fees to any underwriter in connection with the transactions; (iii) the transactions did not involve a public offerings; and (iv) each certificate issued for these unregistered securities contained a legend stating that the securities have not been registered under the Act and setting forth the restrictions
on the transferability and the sale of the securities.





On August 9, 2007, we issued 23,005,000 shares of common stock in exchange for all of the issued and outstanding shares of Jpak Group Co., Ltd, (“Jpak”).





On August 9, 2007, we became a party to that certain Note Purchase Agreement (the “NPA”) by and among Jpak, Grand International Industrial Limited 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 (the “Financing”) in the aggregate principal amount of US$5.5 million to the Investors (the “Notes”). As a result of the Share Exchange, under the terms of the NPA and the Notes, the Notes automatically converted into (i) 5,608,564 shares of our Series A Convertible Preferred Stock, 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 which were amended on December 28, 2007 to extend the term to August 2013 (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$.70 per share until August 2011 which were amended on December 28, 2007 to extend the term to August 2013 (the “Series B Warrants”)
and (iv) Series J Warrants to purchase (a) an aggregate of 5,000,000 shares of Series B Preferred Stock, which preferred stock shall contain the same terms as the Series A Preferred Stock (other than conversion price), which shares will be convertible into 8,333,333 shares of our common stock, (b) Series C Warrants to purchase an aggregate of 4,166,667 shares of common stock (subject to adjustment) at an exercise price of US$.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.








30








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





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





None of the above transactions involved a public offering, and we believe that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the SEC.





In April 2008, we engaged TriPoint Capital Advisors, LLC to provide us with business development and U.S. corporate compliance services. The initial term of the agreement is one year.  Pursuant to the agreement, TriPoint shall receive 300,000 shares of our restricted common stock – all of which was issued on July
14, 2008, with 175,000 vesting immediately and the remainder to vest in equal installments of 75,000 every 90 days thereafter - in consideration for their services. The shares were valued at $0.30 per share, the closing bid price for shares of our common stock on the date of issuance. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering.





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













ITEM 6.                   SELECTED FINANCIAL DATA





Not applicable.





ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS





The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of Jpak for the fiscal years ended June 30, 2009 and 2008 and should be read in conjunction with such financial statements and related notes included
in this report.






Overview




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







31






Company History




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




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




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




Competitive environment




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




As a result of Chinas new anti-monopoly laws, some of our larger competitors have decreased the amount of bundled products that they offer.  Although this may cause such competitors to lower their price points, we believe it may actually allow us to be more competitive with them as we continue to offer bundled material and equipment
which still maintains a large market share.




Milk scandal and its continuous effect on Jpak




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




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




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




Management continues to monitor both the short and long-term impact that the milk scandal will continue to have on our operations. Although Management believes that we are currently taking every possible action to minimize the impact, we may still experience some negative short term impact on our operating results.  For example,  our
short term revenue has been adversely impacted by scandals negative impact on medium and small size companies that constitute most of our customers. Additionally, we have reduced our average sales price by nearly 10% as a result of more competitive environment brought by this scandal. However, management’s efforts to realign our marketing focus on the post-scandal market place are beginning to show positive results. Our orders of the fiscal year 2009 increased by 27% compared to fiscal year 2008 in
terms of volume. Currently packages for dairy and tea drink account for a largely percentage of our products and 50% and 30% of our revenue respectively.






32






Economic crisis effect and latest development of Jpak




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




Although many companies are facing challenges from the recent worldwide economic downturn, our sales department has actually developed more than 35 new domestic clients which accounted to over 10.6% of the total sales for our 2009 fiscal year.  In addition, we have signed a contract with one of the China’s top three milk
producers and recently begun cooperation.  We expect that we will receive trial orders of up to 100 million packs from this new customer in the first half of fiscal year 2010 and before we begin mass production. We believe that the  establishment of this business relationship could significantly enhance our business performance and may lead to as much as $3.0 million to $7.5 million in new sales in fiscal year 2010.




Strategy




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




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







Research and Development




In October 2006, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co., Ltd., (“Qingdao Delikang”), a joint venture with Xi’an
Heiniu Machinery, Co. Qingdao Renmin is the 51% owner of Qingdao Delikang.  The main business of this joint venture is the research and development of filling machines.  This joint venture is currently developing various technologies related to filling machines and filling machine techniques. Currently, the new filling machines under development can run at a rate of 12,000 packages per hour during initial testing.  We expect that the first machine will begin customer production trial
in October 2009 and that acceptance tests may take as long as three months.








33




In addition, we successfully developed packaging that can be used in the filling machines created by SIG.  Currently, the new products are being tested among our customers and the manufacturing techniques are still being improved. We estimate that we will incur approximate US$300,000 additional R&D cost to finalize development
of this new product. Provided that the product tests are successful, management believes this new packaging will be able to increase our revenue significantly and provide a higher relative gross margin.




Manufacturing, Sales and marketing




We support commercialized products with manufacturing, sales and marketing efforts. We are also moving forward with additional investments to enhance our infrastructure and business, including capital expenditures for the new production machinery. We have increased our annual capacity from 2 billion packs last year to approximate 3.5 billion
packs for our current normal packaging. Management continually reviews the business, including manufacturing operations, to identify actions that will enhance long-term competitiveness. By continuously streamlining the management of the production processes and improving production efficiency, we decreased the scrap percentage and lowered our costs.




We expanded our market by increasing the number of transactions with existing key clients and new clients; during fiscal year 2009, we gained a number of additional clients.  We have received orders from customers in Russia and Eastern Europe, who currently only account for a small amount of our total sales, but we intend to
expand the amount of customers in these regions. Management also believes we are well positioned to attain new strategic clients in the year 2010 with our new filling machines and SIG packaging.












34






Results of Operations






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






Comparison of the fiscal year ended June 30, 2009 and 2008







Year Ended June 30,

2009


2008Sales

$
40,409,375


$
37,263,624Cost of sales

$
30,259,650


$
27,379,350Total expenses

$
9,382,754


$
6,054,118Other income (expense)

$
(342,898
)

$
(24,945
)Income taxes

$
307,500


$
-Minority interest

$
(996
)

$
(1,460
)Net income (loss)

$
117,569


$
3,806,671Beneficial conversion feature related to issuance of series A&B
convertible preferred stock


-



(3,875,079
)Foreign currency translation adjustment

$
(82,252
)

$
2,109,409Comprehensive income (loss)

$
(16,448
)

$
2,066,269







Sales. Total sales were approximately US$40.4 million for the fiscal year ended June 30, 2009 as compared to approximately US$37.3 million for the fiscal year ended June 30, 2008, an increase of approximately US$3.1 million, or 8.4%. As a result of the worldwide economic climate and
the recent milk scandal, we reduced our prices in order to increase sales.  This price reduction   had a negative effect on revenue in the first half of our most recent fiscal year. With the improving  macroeconomic environment  coupled with our efforts to overcome recent difficulties, we were able to increase sales in the second half of our 2009 fiscal year and our overall year-to-year sales actually increased – although not as significantly as we originally
expected.




Cost of Sales. Cost of sales for the fiscal year ended June 30, 2009 was approximately US$30.3 million, or 74.9% of sales, as compared to US$27.4 million, or 73.5% of sales, for the fiscal year ended June 30, 2008. Our cost of sales are primarily composed of the costs of direct raw
materials (mainly paper materials, polyethylene materials, aluminum materials, printing materials), labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead. Under the difficult market circumstance of economic crises, we began to lower our sales price beginning in the second quarter in order to enhance our competitive edge and attract new customers.  As a result, our gross margins decreased by 1.4%.




Selling, general and administrative expenses. Selling, general and administrative expenses were approximately US$9.4 million for the fiscal year ended June 30, 2009 as compared to approximately US$6.0 million for the fiscal year ended June 30, 2008, an increase of approximately
US$3.4 million, or 59%. The increase was mainly due to an increase of research and development expenses and the bad debt allowance for our 2009 fiscal year. The Company also continued to increase the research and development activities, which caused the total R&D expense to reach almost US$2.1 million, as compared to the R&D expense of US$1.3 million in the fiscal year ended June 30, 2008. For the fiscal year ended June 30, 2009, bad debt allowance was approximately US$1.5 million and was the result of
a pervious major customer who was near bankruptcy.   As a result, Management has tightened our credit control by having caps on our customers’credit limits and closely monitoring the financial situation of our customers.








35






Net income.  Net income was approximately US$0.1 million for the fiscal year ended June 30, 2009 as compared to net income of approximately US$3.8 million for the fiscal year ended June 30, 2008, a decrease of approximately US$3.7 million. The decrease in net income was
primarily due to the increase of selling, general and administrative expenses by US$3.4 million. In addition, the sales price reduction decreased the gross profit margin and therefore had a negative impact on net income.




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




Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders' equity and amounted to loss of US$0.08 as of June 30, 2009 as compared to gain of US$2.1 million as of June 30, 2008. The balance sheet amounts with the exception of equity at
June 30, 2009 were translated at RMB6.8259 to US$1.00 as compared to RMB6.8540 at June 30, 2008. The equity accounts were stated at their historical rate. The average translation rates applied to income statement accounts for the years were average exchange rate during the years.






Comprehensive income (loss).The comprehensive loss, which adds the currency adjustment to net income or loss applicable to common stockholders, was approximately US$0.08 million for the fiscal year ended June 30, 2009 as compared to an income of US$2.1 million for the fiscal year
ended June 30, 2008, a decrease of $2.2 million. The decrease of income was mainly due to the reduction of our operating profit in this period.






Liquidity and Capital Resources




As of June 30, 2009, we had working capital totaling approximately US$12.6 million, including cash and cash equivalents of US$6.4 million.






Net cash generated in operating activities was US$2.4 for the fiscal year ended June 30, 2009. This net cash generated was primarily due to the increased sales from our operations. The US$1.5 million bad debt provision was a onetime non-cash expense.  Net cash generated in operating activities was US$0.9 for the fiscal year ended
June 30, 2008. This net cash generated was primarily the result of revenue growth which led to an increase in net income.






36







Net cash used in investing activities for the fiscal year ended June 30, 2009 totaled US$2.8 million and related primarily to the purchase of property and equipment and non interest-bearing loans provided to a customer. Net cash used in investing activities for the fiscal year ended June 30, 2008 totaled US$3.6 million and related primarily
to the purchase of property and equipment.







Net cash used in financing activities for the fiscal year ended June 30, 2009 was US$0.3 million and related primarily to the decrease of trade notes payable and repayment of short-term bank loan. Net cash generated in financing activities for the fiscal year ended June 30, 2008 was US$4.6 million and related primarily to capital contribution
and issuance of trade notes payable during the year.







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 June 30, 2009, we had an aggregate principal amount of US$2.3 million outstanding under the loan agreements, with amounts mature in January 2010
and bear an interest rate of 5.31% per annum. The loan agreements contain customary affirmative and negative covenants and were secured by the property and equipment of Qindao Renmin. As of June 30, 2009, we were in material compliance with the terms of our loan agreements.






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.




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.






Basis of Presentation




The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States of America (GAAP).









37




Use of Estimates




The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.






Cash and Cash Equivalents




In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," we consider all highly liquid instruments with original maturities of three months or less to be cash and cash equivalents.






Accounts Receivable and Allowance for Doubtful Accounts.




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






Inventory




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






Property and Equipment




Property and equipment are stated at cost and depreciated using the straight-line method, over 5 and 40 years. The carrying value of long lived assets is evaluated whenever changes in circumstances indicate the carrying amount of such assets may not be recoverable. If necessary, we recognize an impairment loss for the difference between
the carrying amount of the assets and their estimated fair value. Fair value is based upon current and anticipated future discounted 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 fiscal year ended June 30, 2009.










38






Revenue recognition




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






Income Taxes




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




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




On March 16, 2007, the PRC promulgated a new income tax law for enterprises that became effective on January 1, 2008. Under the new income tax law, a company incorporated in the PRC will be generally subject to an income tax at an effective rate of 25%. In accordance with the new tax law, Qingdao Renmin may continue to enjoy the 2-3 tax
holidays that it currently enjoys as a foreign investment enterprise subject to the regulations to be promulgated by the State Council of the PRC. Since January 1, 2009, Qingdao Renmin has entered to the three-year period of tax holiday by a 50% reduction of income tax with effective rate of 12.5%.






Off-Balance Sheet Arrangements




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












ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not Applicable





39
 JPAK GROUP, INC.
  Consolidated Financial Statements
  June 30, 2009 and 2008








ITEM 8.                      FINANCIAL STATEMENTS





JPAK GROUP, INC.





CONSOLIDATED FINANCIAL STATEMENTS





JUNE 30, 2009 AND 2008


CONSOLIDATED FINANCIAL STATEMENTS








Report of Independent Registered Public Accounting Firm
F-2Consolidated Balance Sheets
F-3Consolidated Statements of Operations and Comprehensive Income (loss)
F-4Consolidated Statements of Stockholders’ Equity
F-5Consolidated Statements of Cash Flows
F-6Notes to Consolidated Financial Statements
F-7













F-1







Report of Independent Registered Public Accounting Firm









To the Board of Directors and Stockholders




JPAK Group, Inc.




We have audited the accompanying consolidated balance sheets of JPAK Group, Inc. and Subsidiaries (the “Company”) as of June 30, 2009 and 2008, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for
the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.




We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.




In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of JPAK Group, Inc. and Subsidiaries as of June 30, 2009 and 2008, and the consolidated results of their operations and their consolidated cash flows for
the years then ended in conformity with accounting principles generally accepted in the United States of America.




/s/ Patrizio & Zhao, LLC


PATRIZIO & ZHAO, LLC




Certified Public Accountants and Consultants


Parsippany, New Jersey




September 10, 2009








F-2





Consolidated Balance Sheets







June 30,


June 30,2009


2008AssetsCurrent assetsCash and cash equivalents

$
2,969,699


$
3,433,948Restricted cash


3,403,868



3,784,956Accounts receivable, net of allowance for doubtful accounts of $1,496,723and $45,359 at June 30, 2009 and 2008, respectively


9,063,973



9,026,455Inventory


5,353,193



5,420,631Other receivables


1,205,983



1,131,511Loan receivable


175,800



-Advance payments


503,143



1,367,622Prepaid expenses and other current assets


70,544



96,751Prepaid other taxes


266,664



-Total current assets


23,012,867



24,261,874Property and equipment, net


13,107,216



11,660,063Total assets

$
36,120,083


$
35,921,937LiabilitiesCurrent liabilitiesAccounts payable and accrued expenses

$
3,277,973


$
3,442,859Trade notes payable


3,212,704



3,784,956Advance payments from customers


327,898



208,913Short term bank loans


2,344,000



3,063,900Current portion of long-term debt


951,811



1,263,786Income tax payable


167,429



-Other taxes payable


-



155,873Other current liabilities


97,827



50,948Total current liabilities


10,379,642



11,971,235Long-term debt


1,985,075



655,091Total liabilities


12,364,717



12,626,326EquityStockholders’ equitySeries A convertible preferred stock, $0.0001 par value, 5,608,564shares authorized, issued and outstanding


561



561Common stock, $0.001 par value, 300,000,000 shares authorized,25,005,000 and 24,505,000 shares issued and outstanding atJune 30, 2009 and 2008, respectively


25,005



24,505Series B convertible preferred stock, $0.0001 par value, 5,000,000shares authorized, issued and outstanding


500



500Series A preferred shares


2,484,226



2,484,226Series B preferred shares


1,390,853



1,390,853Warrants


4,634,678



4,634,678Placement agent warrants


1,172,487



1,172,487Additional paid-in capital


11,473,104



11,048,604Retained earnings (deficit)


(1,106,478
)


(1,063,713
)Statutory reserves


1,010,026



849,692Accumulated other comprehensive income


2,565,276



2,647,528Total stockholders’ equity


23,650,238



23,189,921Noncontrolling interest


105,128



105,690Total equity


23,755,366



23,295,611Total liabilities and equity

$
36,120,083


$
35,921,937





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


F-3









Consolidated Statements of Operations and Comprehensive Income (loss)







For the Years Ended June 30,2009


2008Sales

$
40,409,375


$
37,263,624Cost of sales


30,259,650



27,379,350Gross profit


10,149,725



9,884,274Operating expensesSelling, general and administrative


9,382,754



6,054,118Income from operations


766,971



3,830,156Other income (expenses):Non-operating income


30,073



43,154Interest Income


161,169



90,801Interest expense


(410,001
)


(356,589
)Non-operating expense


(124,139
)


(21,644
)Government subsidy income


-



219,333Total other income (expenses)


(342,898
)


(24,945
)Income before provision for income taxes


424,073



3,805,211Provision for income taxes


307,500



-Net income before minority interest


116,573



3,805,211Minority interest


(996
)


(1,460
)Net income


117,569



3,806,671Beneficial conversion feature related to Issuance of series A convertiblepreferred stock


-



(2,484,226
)Beneficial conversion feature related to issuance of series B convertiblepreferred stock


-



(1,390,853
)Undistributed income (loss) attributable to preferred stockholders


51,765



(25,268
)Net income (loss) applicable to common stockholders


65,804



(43,140
)Other comprehensive incomeForeign currency translation adjustment


(82,252
)


2,109,409Comprehensive income (loss)

$
(16,448
)

$
2,066,269Basic earnings per common share

$
0.00


$
(0.00
)Diluted earnings per common share

$
0.00


$
(0.00
)Weighted average number of common shares outstandingBasic


24,852,671



24,341,066Diluted


44,403,132



24,341,066






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







F-4







Consolidated Statements of Stockholders’ Equity







Series A


Series BConvertible preferred


Convertible preferred


Allocation
of


Allocation
of








Commission
Series A


Commission
Series B











Accumulated
Other


TotalCommon Stock


Stock


Stock


Series A


Series B





Placement


of


of


Additional


Retained





Compre-


Stock-Par





Par





Par


Preferred


Preferred





Agent


Preferred


Preferred


Paid-in


Earnings


Statutory


hensive


holders’Shares


Value


Shares


Value


Shares


Value


Shares


Shares


Warrants


Warrants


Shares


Shares


Capital


(Deficit)


Reserves


Income


EquityBalance June 30, 2007


23,005,000


$
23,005



-


$
-



-


$
-


$
-


$
-


$
-


$
-


$
-


$
-


$
5,676,259


$
1,896,256


$
348,009


$
538,119


$
8,481,648Common stock issuedin conjunctionwith RX Staffingrecapitalization


1,500,000



1,500



-



-



-



-



-



-



-



-



-



-



(1,500
)


-



-



-



-Proceeds of   preferred sharesallocated onAug 9, 2007


-



-



-



-



-



-



2,484,226



-



2,327,600



332,937



355,237



-



(5,500,000
)


-



-



-



-Proceeds of preferred sharesallocated onDec 8, 2007


-



-



-



-



-



-



-



1,390,853



2,307,078



839,550



-



462,519



(5,000,000
)


-



-



-



-Series A & B convertiblePreferred stock


-



-



5,608,564



561



5,000,000



500



-



-



-



-



-



-



-



-



-



-



1,061Capital contribution


-



-



-



-



-



-



-



-



-



-



-



-



11,181,010



(2,389,878
)


-



-



8,791,132Net income


-



-



-



-



-



-



-



-



-



-



-



-



-



3,806,671



-



-



3,806,671Beneficial conversion feature related toissuance ofSeries A convertiblepreferred stock


-



-



-



-



-



-



-



-



-



-



-



-



2,484,226



(2,484,226
)


-



-



-Beneficial conversion feature related toissuance ofSeries B convertiblepreferred stock


-



-



-



-



-



-



-



-



-



-



-



-



1,390,853



(1,390,853
)


-



-



-Statutory reserves


-



-



-



-



-



-



-



-



-



-



-



-



-



(501,683
)


501,683



-



-Other comprehensive income


-



-



-



-



-



-



-



-



-



-



-



-



-



-



-



2,109,409



2,109,409Balance June 30, 2008


24,505,000


$
24,505



5,608,564


$
561



5,000,000


$
500


$
2,484,226


$
1,390,853


$
4,634,678


$
1,172,487


$
355,237


$
462,519


$
10,230,848


$
(1,063,713
)

$
849,692


$
2,647,528


$
23,189,921Issuance of  common shares


500,000



500



-



-



-



-



-



-



-



-



-



-



424,500



-



-



-



425,000Net income


-



-



-



-



-



-



-



-



-



-



-



-



-



117,569



-



-



117,569Statutory reserves


-



-



-



-



-



-



-



-



-



-



-



-



-



(160,334
)


160,334



-



-Other comprehensive income


-



-



-



-



-



-



-



-



-



-



-



-



-



-



-



(82,252
)


(82,252
)Balance June 30, 2009


25,005,000


$
25,005



5,608,564


$
561



5,000,000


$
500


$
2,484,226


$
1,390,853


$
4,634,678


$
1,172,487


$
355,237


$
462,519


$
10,655,348


$
(1,106,478
)

$
1,010,026


$
2,565,276


$
23,650,238






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





F-5








Consolidated Statements of Cash Flows







For the Years Ended June 30,2009


2008Cash flows from operating activities:Net income

$
117,569


$
3,806,671Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Minority interest


(996
)


(1,460
)Depreciation and amortization


1,248,849



1,048,719Share based payment


425,000



-Loss (gain) on disposal of fixed assets


85,652



(10,955
)Provision for bad debts


1,451,177



2,029Changes in assets and liabilities:Accounts receivable


(1,451,575
)


466,883Inventory


89,730



(1,561,951
)Other receivables


(69,819
)


(1,067,840
)Advance payments


789,528



(1,290,664
)Prepaid expenses and other current assets


26,605



686,148Accounts payable and accrued expenses


(178,961
)


(1,390,329
)Advance payments from customers


118,126



197,157Income tax payable


167,429



-Other taxes payable


(423,179
)


-Other current liabilities


46,669



(20,374
)Total adjustments


2,324,235



(2,942,637
)Net cash provided by operating activities


2,441,804



864,034Cash flows from investing activities:Additions to property and equipment


(2,718,595
)


(4,399,318
)Proceeds from disposal of fixed assets


65,467



716,936Loan receivable


(175,800
)


-Proceeds from minority interest


-



101,202Net cash used in investing activities


(2,828,928
)


(3,581,180
)Cash flows from financing activities:Additional paid-in capital


-



4,043,414Issuance (repayment) of trade notes payable


(587,817
)


3,021,211Repayment of bank loans


(732,500
)


(2,440,521
)Proceeds from long-term debt


1,010,118



-Net cash provided by (used in) financing activities


(310,199
)


4,624,104Effect of foreign currency translation on cash


(148,014
)


373,746Net increase (decrease) in cash and cash equivalents


(845,337
)


2,280,704Cash and cash equivalents and restricted cash at beginning of year


7,218,904



4,938,200Cash and cash equivalents and restricted cash at end of year

$
6,373,567


$
7,218,904Supplemental schedule of non cash activitiesAdvance payments exchanged for property and equipment

$
80,575


$
-






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


F-6







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, was established under the laws of Nevada on December 6, 2004. The accompanying consolidated financial statements include the financial statements of JPAK Group, Inc. and its subsidiaries (the “Company”).
The Company’s primary business is to print and produce packaging products for sale to the beverage and other industries.





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





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





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





Note 2 – Summary of Significant Accounting Policies





Basis Of Presentation





The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United Stated of America. The consolidated financial statements include the accounts of JPAK Group Inc. and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated
in consolidation.









Cash And Cash Equivalents





In accordance with Statement of Financial Accounting Standards No. 95, “Statement of Cash Flows,” the Company considers all highly liquid instruments with original maturities of three months or less to be “cash equivalents”.







F-7




Accounts Receivable





Trade accounts receivable are stated at original invoice amount less allowance for doubtful receivables which is based on management’s periodic review of aging of outstanding balances and customer credit history. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be required. The balance of allowance for doubtful accounts amounted to $1,496,723 and $45,359 as of June 30, 2009 and 2008, respectively. An allowance amounted to $1,458,108 accrued in the year 2009 was mainly resulted from a previous major customer, who was near bankruptcy as of June 30, 2009.































F-8


Note 2 – Summary of Significant Accounting Policies (continued)





Inventory







Inventory is stated at the lower of cost or market. Cost is determined using the weighted-average cost method. Provisions are made for excess, slow moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value. Management continually evaluates the recoverability based on assumptions about
customer demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required that could negatively impact our gross margin and operating results. The Company did not record any provision for slow-moving and obsolete inventory as of June 30, 2009 and 2008.









Property and Equipment







Property and equipment are stated at cost. Depreciation is calculated based on the straight-line method over the estimated useful lives of the assets as follows:






Vehicles
5 to 10 yearsFurniture, machinery and equipment
5 to 20 yearsBuildings and improvements
40 years





Construction in progress primarily represents the renovation costs of plant, machinery and equipment.  Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences.









Cost of repairs and maintenance is expensed as incurred. Gain or loss on disposal of property and equipment, if any, is recognized in the consolidated statements of operations.






Long-Lived Assets







In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company reviews the recoverability of its long-lived assets on a periodic basis in order to identify business conditions, which may indicate a possible impairment. The assessment for potential impairment is based primarily
on the Company’s ability to recover the carrying value of its long-lived assets from expected future discounted cash flows. If the total of the expected future discounted cash flows is less than the total carrying value of the assets, a loss is recognized for the difference between the fair value (computed based upon the expected future discounted cash flows) and the carrying value of the assets.









F-9






Revenue Recognition







The Company derives its revenues primarily from sale of printed packaging products. In accordance with the provisions of Staff Accounting Bulletin No. 104, revenue should not be recognized until it is realized or realizable and earned.  Revenues are considered to have been earned when the entity has substantially accomplished
what it must do to be entitled to the benefits represented by the revenues. In this regard, the Company’s revenue is recognized when merchandise is received by customers or shipped by the Company pursuant to contractual terms of sales, title and risk of loss passes to the customers and the collectibility is reasonably assured.









Research and Development







Research and development costs are expensed when incurred. Research and development costs for the years ended June 30, 2009 and 2008 was $2,111,469 and $1,299,157, respectively.









F-10







Note 2 – Summary of Significant Accounting Policies (continued)







Income Taxes







Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.









A valuation allowance is provided to reduce the carrying amount of deferred tax assets if it is considered more likely than not that some portion, or all, of the deferred tax assets will not be realized. No differences were noted between the book and tax bases of the Company’s assets and liabilities, respectively. Therefore, there
are no deferred tax assets or liabilities for the years ended June 30, 2009 and 2008.The standard corporate income tax rate decreased from 33% to 25% beginning on January 1, 2008, when the new Chinese tax law became effective.









As a PRC Foreign Enterprise, Qingdao Renmin is also entitled to be exempted from Foreign Enterprise Income Tax (“FEIT”) for a 2-year period starting from their first profit-making year followed by a 50% reduction of FEIT payable for the subsequent three years. Since January 1, 2009, the Company has commenced the 3-year period
of tax holidays by a 50% reduction of FEIT with an effective tax rate of 12.5%.









Fair Value of Financial Instruments







The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, investment securities, accounts receivable, accounts payable, accrued expenses and other obligations, approximate their fair value due to the short-term maturities of the related instruments.









Foreign Currency Translation and Transactions







The financial position and results of operations of the Company is determined using local currency (Chinese Yuan) as the functional currency.  Assets and liabilities are translated at the prevailing exchange rate in effect at each year end. Contributed capital accounts are translated using the historical rate of exchange when
capital is contributed. Income statement accounts are translated at the average rate of exchange during the year. Currency translation adjustments arising from the use of different exchange rates are included in accumulated other comprehensive income (loss) in shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations.







F-11






Comprehensive Income (Loss)







The Company has adopted SFAS No. 130, Reporting Comprehensive Income, which establishes rules for the reporting and display of comprehensive income, its components and accumulated balances. SFAS No. 130 defines comprehensive income (loss) to include all changes in equity, including adjustments to minimum pension liabilities, accumulated
foreign currency translation, and unrealized gains or losses on available-for-sale marketable securities, except those resulting from investments by owners and distributions to owners.




Share-Based Payments
 
  The Company accounts for stock based compensation issued to employees and non-employees in accordance with SFAS No. 123R and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in conjunction with Selling Goods or Services.”
SFAS NO.123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). The EITF No. 96-18 reached a consensus that the issuer should measure the fair value of the equity instruments using the stock price and other measurement assumptions as of the earlier of either of the following: (1) The date at which a commitment for performance by the counterparty to earn the equity instruments
is reached (a "performance commitment"); or (2) The date at which the counterparty's performance is complete.






F-12







Note 2 – Summary of Significant Accounting Policies (continued)





Earnings (Loss) Per Share







In accordance with SFAS No. 128, “Computation of Earnings Per Share” (“SFAS No. 128”) and EITF No. 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128” (“EITF No. 03-6”), basic earnings per share is computed by dividing net income attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two class method, net income is allocated between ordinary shares and other participating securities based on their respective participating rights. Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary
equivalent shares outstanding during the year. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the convertible preferred shares (using the if-converted method) and ordinary shares issuable upon the exercise of outstanding share options (using the treasury stock method).







Use of Estimates







The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation reserves for accounts receivable, inventory and income taxes and valuation of goodwill. Actual results could differ from those estimates









Recent Accounting Pronouncements







In April 2009, FASB Staff Position (FSP) No. FSP 107-1 and APB 28-1 was issued to amend SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods as well as for annual financial statements. This FSP also amends APB Opinion No. 28,
Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP 107-1 and APB 28-1 are effective for interim reporting periods ending after June 15, 2009. Adoption of this guidance did not have a material impact on our consolidated financial statements.






In April 2009, FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, was issued to provide additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements, when the volume
and level of activity for the asset or liability have significantly decreased. This FSP also provides guidance on identifying circumstances which indicate that a transaction is not orderly. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Adoption of this guidance did not have a material impact on our consolidated financial statements.






In October 2008, the FASB issued FSP 157-3, Determining Fair Value of a Financial Asset in a Market That Is Not Active (“FSP 157-3”). FSP 157-3 clarifies the application of Statement of Financial Accounting Standards No. 157, Fair Value Measurements, in an inactive market. It demonstrates how the fair value of a financial asset
is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The Company’s implementation of this standard did not impact its consolidated results of operations or financial condition.









F-13







Note 2 – Summary of Significant Accounting Policies (continued)





Recent Accounting Pronouncements (continued)







In September 2008, the FASB issued FSP FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees, an Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 (“FSP FAS 133-1 and FIN 45-4”). FSP FAS133-1 and FIN 45-4 amends
Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. FSP FAS 133-1 and FIN 45-4 also amend FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others (“FIN 45”), to require additional disclosure about
the current status of the payment/performance risk of a guarantee. The provisions of the FSP that amend SFAS 133 and FIN 45 are effective for reporting periods ending after November 15, 2008. FSP FAS 133-1 and FIN 45-4 also clarifies the effective date in Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). Disclosures required by SFAS 161 are effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. The Company’s adoption of FSP FAS 133-1 and FIN 45-4 on January 1, 2009, had no impact to its consolidated results of operations or financial condition.









Reclassification







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









Note 3– Restricted Cash







As of June 30, 2009 and 2008, the Company had $3,403,868 and $3,784,956 restricted cash, respectively. These restricted cash balances are reserved for settlement of trade notes payable and open letter of credit in connection with inventory purchases.  The cash held in custody by bank issuing the trade notes payable and letter
of credit is restricted as to withdrawal or use, and is currently earning interest.









Note 4 – Inventory







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









June 30, 2009


June 30, 2008Finished goods

$
939,428


$
787,872Raw materials


3,912,953



4,011,065Parts and supplies


84,806



66,599Work in process


416,006



555,095Total

$
5,353,193


$
5,420,631







Note 5 – Advance Payments







The Company makes advances to certain vendors for inventory and equipment. The advances on purchase of inventory amounted to $210,449 and $825,795 as of June 30, 2009 and 2008, respectively.  Additionally, the Company made advances on equipment purchases amounted to $292,694 and $541,827 as of June 30, 2009 and 2008, respectively.









F-14


Note 6 – Property and Equipment





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


June 30, 2009


June 30, 2008Buildings

$
4,463,528


$
3,972,267Machinery and equipment


16,817,851



13,973,256Subtotal


21,281,379



17,945,523Less: Accumulated depreciation


8,174,163



7,023,58213,107,216



10,921,941Add: Construction in progress


-



738,122Total

$
13,107,216


$
11,660,063





Depreciation expenses for the years ended June 30, 2009 and 2008 were $1,248,849 and $1,048,719, respectively.





Note 7 – Loan Receivable





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







Note 8 – Accounts Payable and Accrued Expenses







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





June 30, 2009


June 30, 2008Accounts payable

$
3,032,577


$
3,256,552Accrued expenses


245,396



186,307Total

$
3,277,973


$
3,442,859










F-15





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





Note 9 – Trade Notes Payable





Trade notes payable consist of non-collateralized non-interest bearing promissory notes issued in connection with the acquisition of certain inventory and equipment. Balances outstanding under the notes as of June 30, 2009 and 2008 were $3,212,704 and $3,784,956, respectively.







Note 10 – Short Term Bank Loans





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







June 30,
2009


June 30,
2009On January 29, 2008, the Company obtained a loan from Qingdao CityCommercial Bank, out of which, the principal was paid in full by January 29,2009.  Interest was calculated using an annual fixed rate of 7.47% and paidmonthly. The loan was secured by the company's equipment.

$
-


$
2,334,000









F-16







Note 10 – Short Term Bank Loans (continued)





On May 30, 2008, the Company obtained a loan from China Industrial andCommercial Bank, out of which, the principal was paid in full by May 29,2009.  Interest was calculated using an annual fixed rate of 7.47% andpaid monthly. The loan was secured by the company's equipment.

$
-


$
729,500On January 22 2009, the Company obtained a loan from Qingdao CityCommercial Bank, out of which, the principal is to be paid in full by January22, 2010.  Interest is to be calculated using an annual fixed rate of 5.31% andpaid monthly. The loan is secured by the company's property and equipment.

$
2,344,000


$
-Total short term bank loans

$
2,344,000


$
3,063,900







Note 11 – Income Taxes







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






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






On March 16, 2007, the National People’s Congress of China enacted a new Corporate Income Tax (“CIT”) law, under which FIEs and domestic companies would be subject to CIT at a uniform rate of 25%. The new CIT law became effective on January 1, 2008. The grandfathering treatments for unutilized tax holiday are provided
for certain qualified FIEs. For those FIEs which have already commenced their qualified tax holidays before 2008, they can continue to enjoy the remaining unutilized tax holidays until expiry. For those qualified old FIEs which have not commenced their tax holidays before 2008 due to cumulative losses, their tax holidays will be deemed to commence in 2008 and can be utilized until expiry. Currently, the Company does not believe that the new CIT law will affect the preferential tax treatments (i.e. the unutilized
tax holiday) that it is entitled to. Accordingly, since January 1, 2009, the Company has commenced the 3-year period of tax holidays by a 50% reduction of FEIT with an effective tax rate of 12.5%, and for the period ended June 30, 2009, the income tax expense was $307,500.








F-17






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









Note 12 – Long-Term Debt







As of June 30, 2009, the Company had an outstanding long-term debt of $2,936,886, including the current portion of $951,811. As of June 30, 2008, the Company had an outstanding long-term debt of $1,918,877, including the current portion of $1,263,786. These loans represent borrowings from employees at an annual interest rate of 10%. Interest
payments are made semi-annually with no principal payments due until May 31, 2010, as per the terms of the loan agreement.









F-18


Note 13 – Employee Welfare Plan







The Company has established an employee welfare plan in accordance with Chinese laws and regulations. Full-time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other
welfare benefits are provided to employees. PRC labor regulations require the Company to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits was $ 440,169 and $ 356,359 for the years ended June 30, 2009 and 2008, respectively.









Note 14 – Statutory Common Welfare Fund







As stipulated by the People’s Republic of China (PRC), net income after tax can only be distributed as dividends after appropriation has been made for the following:









(i)
Making up cumulative prior years’ losses, if any;







(ii)
Allocations to the “Statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;







(iii)
Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's “Statutory common welfare fund”, which is established for the purpose of providing facilities and other collective benefits to the Company employees;







Allocations to the discretionary surplus reserve were approved in the shareholders’ general meeting. The Company provided the statutory surplus reserve of $160,334 and $501,683 for the years ended June 30, 2009 and 2008, respectively.









Note 15 – Risk Factors





In the years ended June 30, 2009 and 2008, five vendors accounted for approximately 70% and 62% of the Company’s purchases, respectively. Total purchases from these vendors were $24,923,202 and $21,061,635 for the years ended June 30, 2009 and 2008, respectively.






In the years ended June 30, 2009 and 2008, five customers accounted for approximately 55% and 57% of the Company’s revenue, respectively. Total sales to these customers were $22,096,132 and $21,009,545, for the years ended June 30, 2009 and 2008, respectively.








F-19









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









Note 16 - Concentrations of Credit Risk





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





F-20


Note 17 – Supplemental Cash Flow Information





Years Ended June 30,2009


2008Cash paid for interest

$
399,488


$
356,589Cash paid for income taxes

$
140,071


$
-




Note 18 – Share-Based Payments
 
 On April 1, 2008, JPAK entered into a consulting agreement with Tripoint Capital advisors, LLC to provide consulting services for one year. As a result, JPAK agreed to issue to Tripoint and/or its affiliates 300,000 shares of its capital stock on July 1, 2008. The shares were issued on July 1, 2008. 150,000 shares were vested immediately
and the remaining 150,000 will be vested in equal installments in the next two quarters.  The fair value on April 1, 2008 was $404,700 based on the quoted price of the Company’s common stock.
  On April 1, 2009, the board of directors approved to issue 200,000 shares of the Company’s common stock to Mr. Dongliang (Frank) Su, the Acting CFO of the Company and the shares vested on July 1, 2009. The fair value on April 1, 2009 was $20,000 based on the quoted price of the Company’s common stock on that day.





Note 19 – Earnings Per Share





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









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





F-21






Note 19 – Earnings Per Share (continued)






Basic EPS for the year ended June 30, 2009 was computed as follows:









Net income





$
117,569Less dividends paid to:Common shareholders






-Series A convertible preferred shareholders






-Series B convertible preferred shareholders






-Undistributed 2009 earnings





$
117,569Basic earnings per share amounts:Series A


Series BCommon


convertible


convertibleStock


preferred stock


preferred stockDistributed earnings

$
0.00


$
0.00


$
0.00Undistributed earnings


0.00



0.01



0.00Totals

$
0.00


$
0.01


$
0.00









F-22








Note 19 – Earnings Per Share (continued)





Diluted EPS for the year ended June 30, 2009 was computed as follows using the If-Converted Method:









Distributed &Undistributedearnings toCommon


Common


EarningsStock


Shares


Per ShareAs reported - Basic

$
65,804



24,852,671


$
0.00Warrants


-



-



-65,804



24,852,671


$
0.00Series A preferred stock conversion


29,700



11,217,128



-Series B preferred stock conversion


22,065



8,333,333



-Diluted earnings for common stock

$
117,569



44,403,132


$
0.00







Basic EPS for the year ended June 30, 2008 was computed as follows:









Net income





$
3,806,671Less dividends paid to:Common shareholders






-Series A convertible preferred shareholders






2,484,226Series B convertible preferred shareholders






1,390,853Undistributed 2008 loss





$
(68,408
)Basic earnings per share amounts:Series A


Series BCommon


convertible


convertibleStock


preferred stock


preferred stockDistributed earnings

$
(0.00
)

$
0.50


$
0.55Undistributed earnings


(0.00
)


(0.00
)


(0.00
)Totals

$
(0.00
)

$
0.50


$
0.55







F-23




Note 19 – Earnings Per Share (continued)




We consider the beneficial conversion feature as dividend in kind distributed to the preferred shareholders.






Diluted EPS for the year ended June 30, 2008 was computed as follows using the If-Converted Method:






Distributed &Undistributedearnings toCommon


Common


EarningsStock


Shares


Per ShareAs reported - Basic

$
(43,140
)


24,341,066


$
(0.00
)Warrants


-



-



--(43,140
)


24,341,066


$
(0.00
)Series A preferred stock conversion


-



-



--Series B preferred stock conversion


-



-



--Diluted earnings for common stock

$
(43,140
)


24,341,066


$
(0.00
)














F-24






Note 20 – Liquidated Damages for Ineffective Registration Statement
  
  On August 9, 2007, the Company entered into a Registration Rights Agreement with the Investors (the “Investor RRA”). Under the Investor RRA, the Company was required to prepare and file a registration statement for the sale of the Common Stock issuable to the Investors under the Series A and Series B Preferred Stock and the
Warrants and to use the Company’s best efforts to cause, and to maintain, the effectiveness of the registration statement. The Company filed this registration statement to fulfill the Company’s obligations under the RRA. The Company is subject to certain monetary obligations if, the registration statement is not declared effective by the SEC by March 31, 2008. The obligations are payments in an amount equal to 2% of the aggregate amount invested by such Investor (based upon the number of Registrable
Securities then owned by such Investor) for each 30 day period or any portion thereof following the date by which such Registration Statement should have been effective, up to a maximum amount of 10%. Under the Investor RRA, the shareholders of JPAK were granted piggyback registration rights for 15,805,000 shares of the Company’s common stock.


The Investor “RAA” also contains provisions for the inability to register all of the shares underlying all of the Series A and Series B Preferred Stock and Warrants due to the SEC’s application of Rule 415.  Pursuant to those provisions, if the SEC issues us a 415 comment, then the Company must first try to
register the common stock underlying the preferred stock (on a pro rata basis among the holders of the Preferred Stock) and then register all of the common stock underlying the Warrants (on a pro rata basis among the holders of the Warrants). The Company is filing the Registration Statement to register for resale 687,106 shares of common stock underlying the Series A Preferred Stock, as required by the terms of the Investor RRA.  Subsequent registration statements required to be filed to register the
rest of the common stock underlying the preferred stock and warrants issued in the financing will be filed on the later of (i) 60 days following the sale of substantially all of the shares of common stock included in this Registration Statement or any subsequent Registration Statement and (ii) 6 months following the effective date of this Registration Statement or any subsequent Registration Statement, as applicable, or such earlier or later date as permitted or required by the Commission.  Each such
subsequent registration statement must be declared effective by the earlier of (A) the 90th day following the filing date of such Registration Statement (or in the event such Registration Statement is reviewed by the Commission, the one hundred twentieth (120th) day following such filing date) or (B) 5 business days after SEC has no more comments. However, the Company does not have any monetary obligations for any securities that were not permitted to be included in a registration statement because of the SEC’s
application of Rule 415 until such time the securities are required to be filed pursuant to the Investor RRA.  In such case, the liquidated damages shall be calculated to only apply to the percentage of securities which are permitted by the Commission to be included in the Registration Statement.






Since the Company is only able to register 687,106 common shares and the total common shares underlying the Series A convertible preferred stock is 11,217,128, the Company is only required to pay 6.13% (687,106/11,217,128) of the 2 percent of 5,500,000 shares of common stock ($110,000) due per month under the terms of the Company’s
RAA. Therefore, the Company’s monthly liquated damages will be approximately $6,738. Pursuant to discussions with SEC staff covering interpretations of Rule 415, the Company based the number of shares eligible for registration on the number of shares currently outstanding (24,505,000) and the number of common shares currently held by non-affilates (1,500,000 issued by RX Staffing prior to the reverse merger and the 561,322 shares issued to the American Capital Markets, Ltd. as part of the merger).






On January 7, 2009, the registration statement of the Company was declared effective by SEC and therefore the monetary obligations were terminated therefrom. The total amount of liquidated damages was $60,642 for the year ended June 30, 2009.






Note 21 – Reclassification of Prior Year Retained Earnings (Deficit)







As per the laws of the People’s Republic of China (PRC), the Company is required to allocate 10% of its income (net of tax) to the statutory reserve for the benefit of the Company’s employees.  The Company has reclassified an amount of $501,683 to the statutory reserve from the retained earnings of June 30, 2008.  This
reclassification has no effect on the net income and the earnings per share.  A reconciliation of the retained earnings of June 30, 2008 after reclassification is presented as follows:







F-25




Note 21 – Reclassification of Prior Year Retained Earnings (Deficit) (continued)


Retained Earnings(Deficit)


Statutory ReservesBalance at June 30, 2008

$
(562,030
)

$
348,009Reclassification to statutory reservefor the year ended June 30, 2008


(501,683
)


501,683Adjusted balance at June 30, 2008

$
(1,063,713
)

$
849,692





Note 22 – Subsequent Events







None.



















F-26











ITEM 9.                      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES





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 Form 8-K filed with the SEC on October 8, 2007.








ITEM 9A.                      CONTROLS AND PROCEDURES





Evaluation of Disclosures Controls and Procedures





Our management evaluated, with participation of our Chief Executive Officer and our Acting Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and our Acting Chief Financial
Officer have concluded that our disclosure controls and procedures are ineffective in ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Acting Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.

















64








Management’s Report on Internal Controls Over Financial Reporting





Board of Directors and Shareholders of Jpak Group, Inc.:





The Management of Jpak Group, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for Jpak.  Jpak’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U. S. generally accepted accounting principles.  Jpak’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of Jpak’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.
S. generally accepted accounting principles, and that  receipts and expenditures of Jpak are being made only in accordance with authorizations of management and directors of Jpak; (iii) provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of Jpak’s assets that could have a material effect on the financial statements, and (iv) provide reasonable assurance that receipts and expenditures of Jpak are being made only in accordance with
authorization of management and directors of Jpak.





The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2008, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.  Management’s
assessment included evaluating the design of the Company’s internal control over financial reporting and testing the operational effectiveness of the Company’s internal control over financial reporting.





A material weakness is a control deficiency, or combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  The Company identified the following control deficiencies which, together, constitute
a material weakness in the Company’s assessment of the effectiveness of internal control over financial reporting as of June 30, 2008:





1.
Inability to close our books and generate required disclosure.Management evaluated our controls as of December 31, 2007 and due to staffing and resource constraints, a material weakness became evident 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. This material weakness caused us to be late in our filing for that quarter. In addition, this lack of staffing and resources led to a misstatement in our financial statements. Then, in our quarterly report for the September 30, 2007 quarter, we did not have sufficient resources to discover and correctly account for the impact of the issuance of certain warrants on our financial statements. Accordingly, we filed amendments to our quarterly
report on Form 10-Q for the quarter ended September 30, 2007 and December 31, 2007 to correct the accounting treatment for such warrants.





2.
Revision of reverse acquisition accounting.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 significantoperations 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 needed to 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.  As a result, we restated our financial statements for the year ending June 30, 2007 and revised our financial statements to reflect reverse merger accounting by eliminating the goodwill and adjusting the additional paid-in capital.





3.
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 allocated the proceeds received in the 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.










65







4.
Series J Warrant Exercise.In connection with the exercise of the Series J Warrants (the “Series J Exercise”), we extended the term of our Series A Warrants and Series B Warrants from four years to six years, so that such warrants shall now expire on August 9, 2013. The extension of the term of the Series A and Series B Warrants
(from four to six years) was a condition of the exercise of the Series J Warrants and the subsequent issuance of the Series B Preferred stock (“the financing”).  Originally we considered the incremental costs as part of the issuance costs for the Series B Preferred Shares.  However, after reviewing the SEC’s comments, we now believe that these costs are indirect costs associated with the offering of our securities and should be changed to an expense.  The incremental
value of Series A warrants, Series B Warrants and investors warrants are US$540,430. Additionally, we incurred a commission of $462,519.22 pursuant to the Series J Exercise.  However, this commission was not paid until January 16, 2008.  Originally, in the financial statements as of March 31, 2008, we did not account for this commission as a deduction to additional paid-in capital; we included this commission as part of the expenses in the third quarter.  To correct the error, we shall account
the commission as a deduction to additional paid-in capital in the second quarter and revise the amount of expenses in the third quarter.




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,  December 30, 2007 and March 31, 2008) that was not
prevented or detected.  Because of the aforementioned control deficiencies, which together constitute a material weakness, the Company’s management has concluded that the Company’s internal control over financial reporting was ineffective as of June 30, 2008.





The Company is in the process of remediating its control deficiencies.  However, the material weakness in internal control over financial reporting that has been identified will not be remediated until numerous internal controls are implemented and operate for a period of time, are tested, and the Company is able to conclude that
such internal controls are operating effectively. The most significant elements of our remediation plan are:





●
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 restated our financial statements for the year ending June 30, 2007 and our interim financial statements for the quarters ending September 30, 2007,  December 31, 2007 and March 31, 2008 so that the correct accounting treatment is reflected
in those statements and flows through them accordingly.●
Seeking and Recruiting Additional Accounting Professionals.We are seeking to recruit experienced professionals to augment and upgrade our financial staff to address issues of timeliness and completeness in financial reporting when we are preparing filings for the
Securities and Exchange Commission.





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





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





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





Jpak Group, Inc.





/s/  Yijun Wang


Yijun Wang


PRESIDENT & CEO





/s/  Dongliang (Frank) Su


Dongliang (Frank) Su


ACTING CHIEF FINANCIAL OFFICER





66








ITEM 9B.                      OTHER INFORMATION





None





PART III








ITEM 10.                      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT





EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES





The following individuals were appointed as our officers and directors upon the completion of the Share Exchange between us and Jpak. The officers and directors below were not affiliated with us prior to the Share Exchange. The officers and directors of the company prior to the Share Exchange resigned from their positions in connection
with the Share Exchange.  Additionally, on May 8, 2008, we appointed Dongliang (Frank) Su as our Acting Chief Financial Officer; Ming Qi resigned as our Chief Financial Officer on that same date, although he will maintain his position as a director on our Board.  Mr. Su is not related to any of our directors or executive officers and is not involved in any transaction that is required to be disclosed under Item 404(a) of Regulation S-K.    We appointed Mr. Su as part of
our efforts to ensure the proper interpretation of accounting issues in the future and avoid future restatements of our financial statements.  We believe that Mr. Su’s experience will benefit us greatly and assist us to maintain adequate controls and procedures, as well as accurately prepare our financial statements.





Name

Age

PositionYijun Wang

57

Chairman of the Board of Directors, Chief Executive Officer and PresidentDongliang (Frank) Su

40

Acting Chief Financial OfficerQingjun Yang

53

Director and President (Qingdao Renmin)Huatian Sha

53

Director and SecretaryMing Qi

44

DirectorStewart Shiang Lor

45

DirectorYuanbo Wang

52

Vice President, Technology (Qingdao Renmin)Ligui Jiao

50

Vice President, Manufacturing (Qingdao Renmin)





Mr. Yijun Wang, the Chairman of the Board and Chief Executive Officerand President. Mr. Wang is our current President and Chairman of the Board of Directors. He has over 30 years of working experience in corporate management,
product development, manufacturing and operations, technology management as well as government relations. He has been with Qingdao Renmin and served as CEO since 1984. Prior to joining Qingdao Renmin, Mr. Wang served in several technical management positions at Qingdao Light Industrial Co., Ltd. He has received numerous government and industry awards and distinctions, among them the “Outstanding Corporate Executive - Qingdao”; and “National Top Executive in Packaging Industry”. Mr. Wang
is a certified Senior Economist and a certified Senior Mechanical and Electrical Engineer. He graduated from Nanjing Machinery and Electrical Institute, Qingdao Light Industrial Management School, and National Economic Council University.








67





Mr. Dongliang (Frank) Su, Acting Chief Financial Officer.  Prior to becoming our Acting CFO, he founded Kvalue Financial Services Co., Ltd. (Kvalue), an advisory firm specialized in providing CFO advisory services and IPO related financial services.  Prior to Kvalue,
Mr. Su worked as a Senior Manager for KPMG China, where he was one of the founders of the departments of Internal Audit Services and Business Performance Services at KPMG Shanghai.  Mr. Su is also the CFO of Magiland Property, a company in Qingdao, China.  Mr. Su has over sixteen years of experience in business, financial management, internal auditing and consulting and led many projects dealing with Sarbanes-Oxley Act Section 404, finance function transformation, assurance and internal auditing
for Fortune 500 companies and local conglomerates in China.  Mr. Su is a US Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), and Certified Internal Auditor (CIA).  Mr. Su earned his Master of Business and Administration (MBA) with distinction from York University, Canada.





Mr. Qingjun Yang, Director. Mr. Yang is a Director and he serves as President of Qingdao Renmin and also leads the Marketing and Sales Division. He has been with Qingdao Renmin for over 30 years, starting as a technical manager on the production line and ultimately becoming the President
in 2001. Mr. Yang is experienced in technical management, marketing and sales, distribution management, product development as well as manufacturing and operations. Mr. Yang has received several government and industry awards and distinctions, including the “Top Packaging Executive in Shandong Province - 2005”. He has completed several technical and management courses at Beijing Printing Institute, Ministry of Light Industry Management School, and Qinghua University. Mr. Yang received his bachelor
degree in Mechanical Engineering from Qingdao Zhigong University.





Mr. Huatian Sha, Director and Secretary. Mr. Sha is a Direcotr and our Secretary. As Vice President, Accounting (Qindgao Renmin), he is responsible for Qingdao Renmin’s finance and accounting operations. He has more than 30 years of extensive experience in finance and accounting,
operations management and technical management. Prior to joining Qingdao Renmin, Mr. Sha served various operations and accounting management positions at Xinhe Cultural and Sporting Co., Ltd., Qingdao State Holding Co., Ltd, and Qingdao Sewing Machinery Co., Ltd. Mr. Sha graduated from Shandong Mechanical and Industry College and Qingdao State Management School.





Mr. Ming Qi, Director. Mr. Qi is a Director and Chief Financial Officer of Qindgao Renmin. He has over 20 years of extensive experience in corporate and financial management, international trade and export management, manufacturing and operations, sales and marketing. Prior to joining
Qingdao Renmin, he was General Manager at a Qingdao food process plant of Zhengda Group and served senior management positions at several Qingdao based companies. Mr. Qi received bachelor degree in Mechanical Engineering from Shandong University.





Mr. Stewart Shiang Lor, Director. Mr. Lor serves as Director. He has over 20 years of working experience in diverse disciplines including corporate management, manufacturing and operations, international trade, corporate finance and investment, information technology as well as sales
and marketing. Mr. Lor cofounded Lorons International Corporation, PowerBridge Technology Co., Ltd. and Cmark Capital Co., Ltd. and served senior management positions at several U.S. and China based companies. Mr. Lor graduated from State University of New York at Stony Brook and studied Management at Baruch College.





Significant Employees





The following are employees who are not executive officers, but who are expected to make significant contributions to our business:





Mr. Yuanbo Wang, Vice President, Technology (Qindgao Renmin). Mr. Wang is the Vice President, Technology (Qindgao Renmin) and is responsible for our research and development, quality assurance and equipment management. He has 35 years of extensive experience in product design and
formulation, production process and equipment research, development and optimization as well as quality assurance and control. Prior to joining Qingdao Renmin, Mr. Wang served as Vice President at Qingdao Sensitization Material Co., Ltd. and Operations Manager at Qingdao Carpet Co., Ltd. He received bachelor degree in Mechanical Engineering from Shandong Chemical Engineering University.





Mr. Ligui Jiao, Vice President, Manufacturing (Qindgao Renmin). Mr. Jiao is the Vice President, Manufacturing (Qindgao Renmin) and is responsible for our manufacturing, inventory and material management operations. He has over 30 years of working experience in production planning,
production management, inventory control, and material management as well as manufacturing resource planning applications. Prior to joining Qingdao Renmin, Mr. Jiao served in various equipment and manufacturing management positions at Qingdao Textile Electronics Equipment Co., Ltd. Mr. Jiao graduated from Qingdao Zhigong University in Mechanical and Process Engineering and Shandong Electrical and Industry College in Economics and Management.








68








Compliance with Section 16(a) of the Exchange Act





Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than 10% of any class of our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file.





Based on our review of copies of such reports, we believe that there was compliance with all filing requirements of Section 16(a) applicable to our officers, directors and 10% stockholders during fiscal 2009.





Code of ethics





The Company has always encouraged its employees, including officers and directors to conduct business in an honest and ethical manner.  Additionally, it has always been our policy to comply with all applicable laws and provide accurate and timely disclosure. As a recent public company, we did not have a formal written code of
ethics for the 2009 fiscal year; we will adopt a formal written code of ethics this fiscal year, 2010.





Our code of ethics will apply to all employees, including all directors and officers and will be designed to deter wrongdoing and promote honest and ethical conduct and compliance with applicable laws and regulations.  The code will also incorporate our expectations of our employees that enable us to provide accurate and timely
disclosure in our filings with the Securities and Exchange Commission and other public communications.  Our code of ethics will be posed on our website as soon as is practicable.  Any future changes or amendments to our code of ethics, and any waiver of our code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, or Principal Accounting Officer, will also be posted on our website when applicable.





Board Independence and Committees





Presently, we are not required to comply with the director independence requirements of any securities exchange.  In determining whether our directors are independent, however, we intend to comply with the rules of the American Stock Exchange LLC, or the AMEX.  The board of directors will also consult with counsel to
ensure that the boards of director’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors, including those adopted under the Sarbanes-Oxley Act of 2002 with respect to the independence of audit committee members.  The AMEX listing standards define an “independent director” generally as a person, other than an officer of a company, who does not have a relationship with the company that would
interfere with the director’s exercise of independent judgment.





Due to our lack of operations and size prior to the Share Exchange, we did not have an Audit Committee. Furthermore, we are currently quoted on the OTC Bulletin Board, which is sponsored by the NASD, under the symbol “JPAK” and the OTCBB does not have any listing requirements mandating the establishment of any particular committees.  For
these same reasons, we did not have any other separate committees during fiscal 2008; all functions of a nominating committee, audit committee and compensation committee were performed by our sole director.  Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by the national securities exchanges as necessary. Therefore, we intend that a majority of our directors will eventually be independent directors
and at least one director will qualify as an “audit committee financial expert.”








ITEM 11.                      EXECUTIVE COMPENSATION





The Company





We have not paid any compensation to our chief executive officer or any other executive officer during the last three fiscal years.











69




Jpak




The following table sets forth the compensation paid by Jpak to its chief executive officer and chief financial officer and to all other executive officers for services rendered during the last three completed fiscal years. In reviewing the table, please note that:





●
The compensation amounts paid to Yijun Wang reflects compensation paid to him by the operating subsidiaries of Jpak during the reported periods; and●
No officer earned more than US$150,000 per annum





Summary Compensation Table





Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)(a)
(b)
(c)
(d)
(e)
(f)Yijun Wang
Chief Executive Officer
2009
120,000
0
0
0Yijun Wang
Chief Executive Officer
2008
50,000
0
0
0Yijun Wang
Chief Executive Officer
2007
50,000(1)
0
0
0Ming Qi
Chief Accounting Officer
2009
90,000
0
0
0Ming Qi
Chief Accounting Officer
2008
30,000 (2)
0
0
0Ming Qi
Chief Accounting Officer
2007
30,000 (3)
0
0
0Dongliang (Frank) Su
Acting Chief Financial Officer (3)
2009
72,000
0
20,000
0Dongliang (Frank) Su
Acting Chief Financial Officer
2008
18,000 (4)
0
0
0Dongliang (Frank) Su
Acting Chief Financial Officer
2007
0
0
0
0





70








Name and Principal Position
Year
Non-Equity Incentive Plan Compensation
($)
Nonqualified  Deferred Compensation Earnings
($)
All other Compensation
($)
Total
($)(a)
(b)
(g)
(h)
(i)
(j)Yijun Wang
Chief Executive Officer
2009
0
0
0
120,000Yijun Wang
Chief Executive Officer
2008
0
0
0
50,000Yijun Wang
Chief Executive Officer
2007
0
0
0
0Ming Qi
Chief Accounting Officer
2009
0
0
0
90,000Ming Qi
Chief Accounting Officer
2008
0
0
0
30,000Ming Qi
Chief Accounting Officer
2007
0
0
0
0Dongliang (Frank) Su
Acting Chief Financial Officer
2009
0
0
0
92,000Dongliang (Frank) Su
Acting Chief Financial Officer
2008
0
0
0
0Dongliang (Frank) Su
Acting Chief Financial Officer
2007
0
0
0
0





(1) The compensation for Yijun Wang reflects his salary at Qingdao Renmin prior to the Share Exchange.





(2) Ming Qi served as our Chief Financial Officer from January 2007 until May 2008.





(3) The compensation for Ming Qi in 2007 reflects his salary at Qingdao Renmin prior to the Share Exchange.





(4) Frank Su has served as our Acting Chief Financial Officer since May 2008; accordingly, he did not receive any compensation from us prior to such time, however we are required to include him in the table for the preceding three fiscal years. Frank’s compensation includes costs incurred for his assistant, who worked mainly on Jpak’s
Sarbanes-Oxley Section 404 compliance project. The market value of the 200,000 shares issued to Frank was US$20,000 at the date of issuance.








71








Potential Payments upon Termination





Our employment agreements with Yijun Wang, our Chief Executive Officer, and Ming Qi, our Chief Financial Officer provide for various payments and benefits upon termination of their employment. Ming Qi waived all potential payments and benefits upon his resignation as our CFO.  Pursuant to a one year agreement we signed with Mr.
Frank Su, he agreed to serve as our Acting Chief Financial Officer until we find an adequate replacement.  After we have negotiated the termination of the contract with the applicable employee, the employee shall be provided with a compensation subsidy as per relevant national, provincial and municipal regulations. We do not have any other policies, agreements or arrangements regarding potential payments upon termination of employment.





Outstanding Equity Awards at Fiscal Year-End





There are no outstanding equity awards as of the end of our most recently completed fiscal year.





Compensation of Directors





We have not paid our directors fees in the past for attending scheduled or special meetings of our board of directors. In the future, we may adopt a policy of paying independent directors a fee for their attendance at board and committee meetings. We do however reimburse each director for reasonable travel expenses related to such director’s
attendance at board of directors and committee meetings, but such amount shall not exceed $5,000.





Limitation on Liability and Indemnification Matters





Article X of our Articles of Incorporation provide that no director or officer of the corporation past, present or future, shall be personally liable to the corporation or any of its shareholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the liability of a director for acts or omissions
which involve intentional misconduct, fraud or knowing violation of law and for the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes is not so eliminated. The corporation shall advance or reimburse reasonable expenses incurred by this individual without regard to the limitations in Nevada Revised Statute 78.7502, or any other limitation which may hereafter be enacted to the extent such limitation may be disregarded if authorized by the Articles of Incorporation.





Our bylaws provide for the indemnification of our directors and officers, as to those liabilities and on those terms and conditions as appropriate.








ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.





The following table sets forth certain information regarding the beneficial ownership of our common stock, Series A Preferred Stock and Series B Preferred Stock. The information below indicates:





●
each person who is known by us to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock or our issued and outstanding shares of Series A Preferred Stock or Series B Preferred Stock;●
each of our directors, executive officers and nominees to become directors; and●
all directors and executive officers as a group.








72








As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct
the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable.





As of September 22, 2009, we have 25,005,000 shares of common stock outstanding; 5,608,564 shares of Series A Preferred Stock outstanding, which convert into 11,217,128 shares of common stock; and 5,000,000 shares of Series B Preferred Stock outstanding,
which convert into 8,333,333 shares of common stock.  Each holder of Series A and Series B Preferred Stock are entitled to vote on all matters, together with the holders of Common Stock, on an as converted basis up to 9.99% of (A) the Common Stock issuable upon conversion of the Series A and Series B Preferred Stock held by such holder, plus (B) all other shares of Common Stock beneficially owned by the holder at such time.  However, based upon the terms of the preferred stock and the Warrants,
the holders thereof may not convert or exercise such securities if on any date, such holder would be deemed the beneficial owner of either more than 4.9% or 9.9%, depending upon the holder’s specific cap, of the then outstanding shares of our common stock; although, the holder can elect to waive the cap upon 61 days notice to us, but the cap shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the Warrant. Accordingly, the column entitled “Percent
of Class” represents the total voting power that a shareholder possesses based on his/her current holdings, taking the ownership cap into account.
  Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of common stock and Series A and Series B Preferred Stock indicated. For purposes of the table below,
in accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the beneficial owner, for purposes of any shares of common stock, Series A Preferred Stock or Series B Preferred Stock, over which he or she has or shares, directly or indirectly, voting or investment power, or of which he or she has the right to acquire beneficial ownership at any time within 60 days after October 30, 2008. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment
power” includes the power to dispose or direct the disposition of shares.




Name and Address*

Amount and Nature of beneficial ownership


Percent of ClassJoyrich Group Limited (1)


17,023,700



68.6
%Fabregas Group Limited (2)


3,163,188



12.8
%Statepro Investments Ltd. (3)


1,170,954



4.7
%Vision Opportunity Master Fund (4)


631,340
(5)


4.9
% (5)Vision Capital Advantage Fund (4)


186,563
(5)


4.9
% (5)QVT Fund LP (6)


2,425,995
(7)


9.8
% (7)Quintessence Fund LP (6)


1,944,189
(8)


7.8
%(8)Yijun Wang


—



—Qingjun Yang


—



—Huatian Sha


—



—Ming Qi


—



—Yuanbo Wang


—



—Ligui Jiao


—



—Stewart Shiang Lor (9)


21,357,842



86.1
%All executive officers and directors as a group (seven persons)


21,357,842



86.1
%










* The address for the officers and directors is 15 Xinghua Road, Qingdao, Shandong Province, the People’s Republic of China, (86-532) 8461 6387.





(1)   Joyrich Group Limited is a BVI company of which Stewart Shiang Lor is the sole shareholder and has sole voting and dispositive power over these shares. Mr. Lor is a one of our directors.





(2)   Fabregas Group Limited is a BVI company of which Stewart Shiang Lor is the sole shareholder and has sole voting and dispositive power over these shares. Mr. Lor is a one of our directors.





(3)   Statepro Investments Ltd. is a BVI company of which Stewart Shiang Lor is the sole shareholder and has sole voting and dispositive power over these shares. Mr. Lor is a one of our directors.





(4)   The investment manager for Vision Opportunity Master Fund, Ltd. (“VOMF”) and Vision Capital Advantage Fund, LP (“VCAF,” together with VOMF they are collectively referred to as “Vision”)) is Vision Capital Advisors, LLC (“VCA”). Ultimate voting and dispositive control rests with Adam
Benowitz, as VCA’s Senior Managing Member and the portfolio manager of VOMF and VCAF. Each of VCA and Adam Benowitz disclaim beneficial ownership of these shares.  The amount listed under “Common Stock” represents shares of Common Stock issuable upon exercise of warrants and conversion of the preferred stock that are exercisable and convertible within 60 days of June 4, 2009.








73




(5) This amount represents 4.9% of the shares of common stock underlying all of the Series A Preferred Stock, Series B Preferred Stock and Warrants Vision owns.  Vision currently owns 2,804,282 shares of Series A Preferred Stock (convertible into 5,608,564 shares of common stock), 2,500,000 shares of Series B Preferred Stock (convertible
into 4,166,667 shares of common stock) and warrants to purchase up to 9,666,666 shares of common stock; however, pursuant to the ownership Cap explained above, they are only deemed to beneficially own the number listed in the table.  As a result of a private transfer transaction between VOMF and VCAF, (i) VOMF currently owns 2,164,540 shares of Series A Preferred Stock (convertible into 4,329,080 shares of common stock), 1,929,674 shares of Series B Preferred Stock (convertible into 3,216,124 shares
of common stock) and warrants to purchase up to an aggregate of 7,461,404 shares of common stock; however, pursuant to the ownership Cap explained above, they are only deemed to beneficially own the number listed in the table and (ii) VCAF currently owns 639,742 shares of Series A Preferred Stock (convertible into 1,279,484 shares of common stock), 570,326 shares of Series B Preferred Stock (convertible into 950,543 shares of common stock) and warrants to purchase up to an aggregate of 2,205,262 shares of
common stock; however, pursuant to the ownership Cap explained above, they are only deemed to beneficially own the number listed in the table.





(6)   Management of QVT Fund and Quintessence is vested in its general partner, QVT Associates GP LLC. QVT Financial LP is the investment manager for QVT Fund LP and shares voting and investment control over the securities held in QVT Fund LP.  QVT Financial GP LLC is the general partner of QVT Financial LP and as such has complete
discretion in the management and control of the business affairs of QVT Financial LP.  AVT Associates GP LLC is the general partner of QVT Fund LP and may be deemed to beneficially own the securities.  The managing members of QVT Financial GP LLC are Daniel Gold, Lars Bader, Tracy Fu and Nicholas Brumm.  Each of QVT Financial LP, QVT Financial GP LLC< Daniel Gold, Lars Bader, Tracy Fu and Nicholas Brumm disclaims beneficial ownership of our securities held by QVT Fund and
Quintessence, except to the extend of its pecuniary interest therein.





(7)  This amount represents 9.9% of the shares of common stock underlying QVT’s Series A Preferred Stock, Series B Preferred Stock and Warrants.  QVT currently owns 2,523,854 shares of Series A Preferred Stock (convertible into 5,047,708 shares of common stock), 2,250,000 shares of Series B Preferred Stock (convertible
into 3,750,000 shares of common stock) and warrants to purchase up to 8,700,000 shares of common stock; however, pursuant to the ownership Cap explained above, they are only deemed to beneficially own the number listed in the table.





(8) This amount represents 9.9% of the shares of common stock underlying Quintessence’s Series A Preferred Stock, Series B Preferred Stock and Warrants.  Quintessence currently owns 280,428 shares of Series A Preferred Stock (convertible into 560,856 shares of common stock), 250,000 shares of Series B Preferred Stock (convertible
into 416,667 shares of common stock) and warrants to purchase up to 966,666 shares of common stock; however, pursuant to the ownership Cap explained above, they are only deemed to beneficially own the number listed in the table.





(9)   Mr. Lor has sole voting and dispositive power over the shares of common stock beneficially owned by Joyrich Group Limited, Fabregas Group Limited and Statepro Investments Ltd. See footnotes (1) through (3).











74




Changes in Control





Pursuant to the Share Exchange, all the shares of Jpak were transferred to us and Jpak became a wholly-owned subsidiary of ours, and at the same time the shareholders of Jpak were issued 23,005,000 shares of our common stock, which represented 64.4% of all the issued and outstanding shares of our common stock (assuming conversion of the preferred stock described below) following the Share Exchange and the financing.  Therefore,
the closing of the Share Exchange caused a change in control.













ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.





We have not entered into any transactions during the last two fiscal years with any director, executive officer, director nominee, 5% or more shareholder, nor have we entered into transactions with any member of the immediate families of the foregoing person (include spouse, parents, children, siblings, and in-laws) nor is any such transaction
proposed, except as follows:





Reorganization of Qingdao Renmin





On August 21, 2006, Grand International entered into a sales and purchase agreement with three of the then-existing five shareholders (the “Original Shareholders”) of Qingdao Renmin, pursuant to which Grand International purchased 88.23% of the equity interest in Qingdao Renmin. The total purchase consideration was RMB40,999,000
which was determined based upon the net asset value of Qingdao Renmin as of August 21, 2006. On September 5, 2006, this transfer was approved by the Qingdao Municipal Bureau of Foreign Trade and Economic Cooperation, and the registration with the Qingdao State Administration for Industry and Commerce was completed on December 7, 2006. As a result of this transfer, Grand International acquired an 88.23% equity interest in Qingdao Renmin. In July 2007, Grand International purchased the remaining 11.77% state-owned
equity interest in Qingdao Renmin and now owns 100% equity interest in Qingdao Renmin.





In March 2007, Joyrich Group Limited and Fabregas Group Limited, two of our principal shareholders, issued stock options to the executives and management team of Qingdao Renmin pursuant to which such persons will be entitled to acquire shares of Joyrich Group Limited and Fabregas Group Limited. Under the terms of the options, such person
will have the right to purchase 100% of the outstanding capital stock of Joyrich Group Limited and 43.63% of the outstanding capital stock of Fabregas Group Limited. These options may be exercised in accordance with the following schedule: 75% of the shares subject to these options vested; 25% of the shares subject to these options shall be vested as of December 31, 2007; provided, that the revenue of Qingdao Renmin for the period from October 1, 2007 to December 31, 2007 reaches RMB 30,000,000.





Share Exchange





On August 9, 2007, we entered into and consummated the transactions contemplated under a Securities Exchange Agreement, pursuant to which all the shares of Jpak were transferred to us and Jpak became our wholly-owned subsidiary and at the same time the shareholders of Jpak were issued 23,005,000
shares of our common stock, which represented 64.4% of all the issued and outstanding shares of our common stock (assuming conversion of the preferred stock described below) following the Share Exchange and the Financing.











75








Registration Rights Agreement





On August 9, 2007, we also entered into a Registration Rights Agreement with the Investors (the “Investor RRA”). Under the Investor RRA, we are required to prepare and file a registration statement for the sale of the common stock issuable to the Investors under the Series A Preferred Stock and the Series A and Series B Warrants
and to use our best efforts to cause, and to maintain, the effectiveness of the registration statement. We are subject to certain monetary obligations if the registration statement is not declared effective by the effective date specified in the Investor RRA. The obligations are payments in an amount equal to 2% of the aggregate amount invested by such Investor (based upon the number of Registrable Securities then owned by such Investor) for each 30 day period or any portion thereof following the date by which
such Registration Statement should have been effective, up to a maximum amount of 10%.  The Investor RRA provides for specific registration procedures if the SEC issues a Rule 415 comment.  Since we received a Rule 415 comment, we are required to register a certain number of shares of common stock underlying the Series A Preferred Stock in the registration statement; subsequent registration statements will be filed to register the rest of the common stock underlying the preferred stock and
warrants.  Each such subsequent registration statement must be declared effective by the earlier of (A) the 90th day following the filing date of such Registration Statement (or in the event such Registration Statement is reviewed by the Commission, the one hundred twentieth (120th) day following such filing date) or (B) 5 business days after SEC has no more comments. We do not have any monetary
obligations for any securities that were not permitted to be included in a registration statement because of the SEC’s application of Rule 415 until such time as such securities are required to be filed pursuant to the Investor RRA.  In such case, the liquidated damages shall be calculated to only apply to the percentage of securities which are permitted by the Commission to be included in the Registration Statement.





Under the Investor RRA, the shareholders of Jpak were granted piggyback registration rights with respect to the registration statement to be filed under the Investor RRA for 15,805,000 shares of common stock.





Securities Escrow Agreement





In addition, on August 9, 2007, we entered into the securities escrow agreement with the Investors, the principal stockholders named therein (the “Escrow Stockholders”) and the escrow agent named therein (the “Escrow Agent”), (the “Securities Escrow Agreement”). Under the Securities Escrow Agreement,
the Escrow Stockholders agreed to place an aggregate of 7.2 million shares of common stock into escrow for the benefit of the Investors in the event we fail to achieve net income for Fiscal 2008 of at least US$3.955 million (the “Fiscal 2008 Performance Threshold”). We obtained the Fiscal 2008 Performance Threshold and therefore all of the escrowed shares were returned to the Escrow Stockholders.





Lock-Up Agreement





Pursuant to that certain lock-up agreement, dated as of August 9, 2007 entered into by the former Jpak shareholders (the “Lock-Up Agreement”), shareholders holding an aggregate of 23,005,000 shares of our common stock have agreed that, for a period of six months following the effectiveness of the registration statement, of
which this prospectus is a part, they will not, subject to certain limited exceptions set forth in the Lock-Up Agreement, including consent by the Investors, offer, sell, contract to sell, assign, transfer, hypothecate, pledge or grant a security interest in or other dispose of any shares of common stock. In addition, for a period of 12 months following such six month period, no such shareholder shall sell more than one-twelfth of their total shares of common stock during any one month period.





Review, Approval and Ratification of Related Party Transactions





Given our small size and limited financial resources, we had not adopted, prior to the Share Exchange, formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, directors and significant shareholders. However, we intend that such transactions will,
on a going-forward basis, be subject to the review, approval or ratification of our board of directors, or an appropriate committee thereof.








76





Promoters and Certain Control Persons





On August 9, 2007, we entered into and consummated the transactions contemplated (the “Share Exchange”) under a Securities Exchange Agreement (the “SEA”) by and among us, Jpak and the shareholders of Jpak (namely Joyrich Group Limited, a British Virgin Islands (“BVI”) company, Fabregas Group Limited,
a BVI company, Statepro Investments Ltd., a BVI company, Raytech Investments Limited, a BVI company, and Capital American Markets Limited, a BVI company), pursuant to which all the shares of Jpak were transferred to us and Jpak became a wholly-owned subsidiary of ours, and at the same time the shareholders of Jpak were issued 23,005,000 shares of our common stock, which represented 64.4% of all the issued and outstanding shares of our common stock (assuming conversion of the preferred stock described below)
following the Share Exchange and the financing.





Our only “promoters” (within the meaning of Rule 405 under the Securities Act), or person who took the initiative in the formation of our business or in connection with the formation of our business received 10% of our debt or equity securities or 10% of the proceeds from the sale of such securities in exchange for the contribution
of property or services, during the last five years have been Joyrich, Fabregas and Statepro.  As disclosed elsewhere in this Report, in connection with the Share Exchange, Joyrich, Fabregas and Statepro, the majority shareholders of Raygere, received 17,023,700, 3,163,188 and 1,170,954 shares of our common stock, respectively, representing approximately 68.6%, 12.8% and 4.7%, respectively, of our issued and outstanding shares.  Mr. Stewart Shiang Lor is the sole shareholder of Joyfrich, Fabregas
and Statepro and Mr. Lor is one of our directors.








ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES








(1) AUDIT FEES








The aggregate fees billed for professional services rendered by Patrizio & Zhao for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements
for fiscal years 2009 and 2008 were approximately $97,500 and $90,000, respectively.








(2) AUDIT-RELATED FEES








NONE








(3) TAX FEES








NONE








(4) ALL OTHER FEES








NONE








(5) AUDIT COMMITTEE POLICIES AND PROCEDURES








The policy of our Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by the Company’s independent auditors during the fiscal year.





No services related to Audit-Related Fees, Tax Fees or All Other Fees described above, were approved by the Audit Committee.








77








ITEM 15.
EXHIBITS & FINANCIAL STATEMENT SCHEDULES





1.
Financial Statements and Financial Statement Schedules See “Index to Consolidated Financial Statements” on page F-1





2.
EXHIBITS


3.1

Articles of Incorporation, as amended3.2

Bylaws, as amended4.1

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 the Registrant’s Form 8-K filed on August 15, 2007)4.2

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 Registrant’s Form 8-K filed on October 9, 2007)4.3

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 4.1 of the Registrant’s Form 8-K filed on January 4, 2008).4.4

Series A Warrant to Purchase shares of common stock of Jpak Group, Inc., issued on August 9, 2007 (incorporated by reference to Exhibit 4.2 of Rx Staffing, Inc.’s Form 8-K filed on January 4, 2008).4.5

Series B 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 January 4, 2008).4.6

Series C Warrant to Purchase shares of common stock of Jpak Group, Inc. (incorporated by reference to Exhibit 4.4 of the Registrant’s Form 8-K filed on January 4, 2008).4.7

Series D Warrant to Purchase shares of common stock of Jpak Group, Inc. (incorporated by reference to Exhibit 4.5 of the Registrant’s Form 8-K filed on January 4, 2008).10.1

Note Purchase Agreement by and among Jpak Group Co., Ltd, Grand International Industrial Limited and the investors identified therein, dated as of May 17, 2007 (incorporated by reference to Exhibit 10.1 of the Registrant’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 the Registrant’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 the Registrant’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 the Registrant’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 the Registrant’s Form 8-K filed on August 15, 2007)





78








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 the Registrant’s Form 8-K filed on August 15, 200710.7

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 the Registrant’s Form 8-K filed on August 15, 2007)10.8

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 the Registrant’s Form 8-K filed on August 15, 2007).10.9

Employment Agreement, effective June 1, 2001, by and between Qingdao Renmin Printing Co., Ltd, as employer, and Yijun Wang, as employee.10.10

Employment Agreement, effective February 26, 2007, by and between Qingdao Renmin Printing Co., Ltd, as employer, and Ming Qi, as employee10.11

Letter of Agreement by and among Jpak Group, Inc. and the holders of Series J Warrants, dated as of December 28, 2007 (incorporated by reference to Exhibit 10.1 of the Registrant's form 8-K filed on January 4, 200821.1

List of Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 of the Registrant’s Form 8-K filed on August 15, 2007)31.1

Certifications of Principal Executive Officer  pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, the “Act”31.2

Certifications of Principal Financial Officer pursuant to Rule 13a-14(a) of the “Act”32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.32.2

Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350

















79








SIGNATURES





In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





Jpak Group, Inc.By:
/s/ Yijun WangYijun Wang
PRESIDENT AND CHIEF EXECUTIVE OFFICERBy:
/s/ Dongliang (Frank) SuDongliang (Frank) Su
ACTING CHIEF FINANCIAL OFFICER








Date:  September 23, 2009





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Date:  September 23, 2009

By:
/s/  Yijun WangYijun Wang
PRESIDENT, CHIEF EXECUTIVE OFFICER, DIRECTORDate:  September 23, 2009

By:
/s/  Ming QiMing Qi
DIRECTORDate:  September 23, 2009

By:
/s/  Huation ShaHuatian Sha
DIRECTORDate: September 23, 2009

By:
/s/  Qingjun YangQingjun Yang
DIRECTORDate:  September 23, 2009

By:
/s/  Stewart Shiang LorStewart Shiang Lor
DIRECTORDate:  September 23, 2009

By:
/s/  Dongliang (Frank) SuDongliang (Frank) Su
ACTING CHIEF FINANCIAL OFFICER













80