UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the quarterly period ended June 30,
2014 or



o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the transition period from _____________
to _____________



Commission file number 0-21384



INTERNATIONAL PACKAGING AND LOGISTICS GROUP,
INC.

(Exact Name of Registrant as Specified in
its Charter)



|Nevada                          |  | 13-3367421         
|------------------------------- |  | -------------------
|(State or Other Jurisdiction of |  | (I.R.S. Employer   
|Incorporation or Organization)  |  | Identification No.)



7700 Irvine Center Drive, Suite 870

Irvine, California

(Address of Principal Executive Offices)



92608

(Zip Code)



(949) 861-3560

(Registrant’s Telephone Number, Including
Area Code)





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



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

x Yes       o
No



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 o        
|------------------------- | ---------------------------
|                          |                            
|Non-accelerated filer o   | Smaller reporting company x



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

o
Yes      x No



The number of shares outstanding of the Issuer’s common
stock as of August 14, 2014 was 4,961,357











International
Packaging and Logistics Group, Inc.,

and
Subsidiaries



Condensed
Consolidated Financial Statements

for
the Three and Six Months Ended



June
30, 2014 and 2013







C O N T E N T S





|                                                                         |       
|------------------------------------------------------------------------ | ------
|Condensed Consolidated Balance Sheets                                    | 1     
|                                                                         |       
|Condensed Consolidated Statements of Operations and Comprehensive Income | 3     
|                                                                         |       
|Condensed Consolidated Statements of Cash Flows                          | 5     
|                                                                         |       
|Notes to Condensed Consolidated Financial Statements                     | 7 – 22









i





Part I.
Financial Information

Item 1.
Financial Statements



International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Balance Sheets

As
of June 30, 2014 and December 31, 2013

(Unaudited)



|                                       |  | June 30 |           |  | December 31 |  
|-------------------------------------- |  | ------- | --------- |  | ----------- | -
|                                       |  | 2014    |           |  | 2013        |  
|Current Assets                         |  |         |           |  |             |  
|Cash                                   |  | $       | 1,621,629 |  |             | $
|Accounts receivable, net               |  |         | 6,554,102 |  |             |  
|Other current assets                   |  |         | 3,466     |  |             |  
|                                       |  |         |           |  |             |  
|Total Current Assets                   |  |         | 8,179,197 |  |             |  
|                                       |  |         |           |  |             |  
|Property, Plant and Equipment, net     |  |         | 47,007    |  |             |  
|                                       |  |         |           |  |             |  
|Other Assets                           |  |         |           |  |             |  
|Prepaids                               |  |         | 3,156     |  |             |  
|Deposits                               |  |         | 24,999    |  |             |  
|Contract in place                      |  |         | 1,295,726 |  |             |  
|Deferred tax assets                    |  |         | 264,314   |  |             |  
|                                       |  |         |           |  |             |  
|Total Other Assets                     |  |         | 1,588,195 |  |             |  
|                                       |  |         |           |  |             |  
|Total Assets                           |  | $       | 9,814,399 |  |             | $
|                                       |  |         |           |  |             |  
|Liabilities and Stockholders' Equity   |  |         |           |  |             |  
|Current Liabilities                    |  |         |           |  |             |  
|Accounts payable and accrued expenses  |  | $       | 6,637,666 |  |             | $
|Notes payable - related party          |  |         | 80,000    |  |             |  
|Other current liabilities              |  |         | 5,538     |  |             |  
|                                       |  |         |           |  |             |  
|Total Current Liabilities              |  |         | 6,723,204 |  |             |  
|                                       |  |         |           |  |             |  
|Commitments and contingencies (Note 6) |  |         | –         |  |             |  





See accompanying notes.





1







International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Balance Sheets

As
of June 30, 2014 and December 31, 2013

(Unaudited)



|                                                                                                                       |  |   | June
                                         31 2014 |   |  |   | December
                                         31 2013 | 
|---------------------------------------------------------------------------------------------------------------------- |  | - | ----------------------------------------------------- | - |  | - | --------------------------------------------------------- | 
|Stockholders' Equity                                                                                                   |  |   |                                                       |   |  |   |                                                           | 
|Convertible preferred shares: $0.0001 par value, 50,000,000
shares authorized, 974,730 Series A issued and outstanding |  |   | 98                                                    |   |  |   | 98                                                        | 
|400,000 Series B issued and outstanding                                                                                |  |   | 40                                                    |   |  |   | 40                                                        | 
|Common stock: $0.001 par value, 900,000,000 shares authorized,
4,961,357 issued and outstanding                        |  |   | 4,961                                                 |   |  |   | 4,961                                                     | 
|Additional paid-in capital                                                                                             |  |   | 2,202,877                                             |   |  |   | 2,202,877                                                 | 
|Accumulated other comprehensive income                                                                                 |  |   | 44,491                                                |   |  |   | 34,414                                                    | 
|Retained (deficit) earnings                                                                                            |  |   | (5,341                                                | ) |  |   | 54,304                                                    | 
|Non-controlling interest                                                                                               |  |   | 844,069                                               |   |  |   | 878,152                                                   | 
|                                                                                                                       |  |   |                                                       |   |  |   |                                                           | 
|Total Stockholders' Equity                                                                                             |  |   | 3,091,195                                             |   |  |   | 3,174,846                                                 | 
|                                                                                                                       |  |   |                                                       |   |  |   |                                                           | 
|Total Liabilities and Stockholders' Equity                                                                             |  | $ | 9,814,399                                             |   |  | $ | 8,931,524                                                 | 







See accompanying notes.









2







International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Statements of Operating and Comprehensive Income (Loss)

For
the Six Months Ended June 30, 2014 and 2013

(Unaudited)



|                                      |  | Six Months Ended June 30, |            |   | Three Months Ended
June 30 |  
|------------------------------------- |  | ------------------------- | ---------- | - | -------------------------- | -
|                                      |  | 2014                      |            |   | 2013                       |  
|Revenues                              |  |                           |            |   |                            |  
|Packaging                             |  | $                         | 16,088,153 |   |                            | $
|Logistics                             |  |                           | 3,218,756  |   |                            |  
|                                      |  |                           |            |   |                            |  
|Total Revenues                        |  |                           | 19,306,909 |   |                            |  
|                                      |  |                           |            |   |                            |  
|Cost of Goods Sold                    |  |                           |            |   |                            |  
|Packaging                             |  |                           | 15,397,590 |   |                            |  
|Logistics                             |  |                           | 2,699,792  |   |                            |  
|                                      |  |                           |            |   |                            |  
|Total Cost of Goods Sold              |  |                           | 18,097,382 |   |                            |  
|                                      |  |                           |            |   |                            |  
|Gross Profit                          |  |                           | 1,209,527  |   |                            |  
|                                      |  |                           |            |   |                            |  
|Operating Expenses                    |  |                           |            |   |                            |  
|Administrative expenses               |  |                           | 572,573    |   |                            |  
|Rent                                  |  |                           | 63,589     |   |                            |  
|Salaries and wages                    |  |                           | 672,771    |   |                            |  
|                                      |  |                           |            |   |                            |  
|Total Operating Expenses              |  |                           | 1,308,933  |   |                            |  
|                                      |  |                           |            |   |                            |  
|(Loss) income from Operations         |  |                           | (99,406    | ) |                            |  
|                                      |  |                           |            |   |                            |  
|Other Income                          |  |                           |            |   |                            |  
|Interest income net                   |  |                           | 102        |   |                            |  
|Other income (expense)                |  |                           | 2,349      |   |                            |  
|Rent Income                           |  |                           | 567        |   |                            |  
|Total Other Income                    |  |                           | 3,018      |   |                            |  
|                                      |  |                           |            |   |                            |  
|Net Income (Loss) before Income Taxes |  |                           | (96,388    | ) |                            |  





See accompanying notes.





3





International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Statements of Operating and Comprehensive Income (Loss)

For
the Six Months Ended June 30, 2014 and 2013

(Unaudited)



|                                                                           |  | Six Months Ended |           |   | Three Months Ended |  
|-------------------------------------------------------------------------- |  | ---------------- | --------- | - | ------------------ | -
|                                                                           |  | June 30,         |           |   | June 30            |  
|                                                                           |  | 2014             |           |   | 2013               |  
|                                                                           |  |                  |           |   |                    |  
|Income tax benefit (expense)                                               |  |                  | 2,660     |   |                    |  
|                                                                           |  |                  |           |   |                    |  
|Net Income (Loss)                                                          |  |                  | (93,728   | ) |                    |  
|                                                                           |  |                  |           |   |                    |  
|Net loss (gain)  attributable to
    non-controlling interest              |  |                  | 34,083    |   |                    |  
|                                                                           |  |                  |           |   |                    |  
|Net Income (Loss) attributable to common stockholders                      |  |                  | (59,645   | ) |                    |  
|                                                                           |  |                  |           |   |                    |  
|Comprehensive Income                                                       |  |                  |           |   |                    |  
|Currency translation adjustment                                            |  |                  | 10,077    |   |                    |  
|                                                                           |  |                  |           |   |                    |  
|Comprehensive Income (Loss)                                                |  | $                | (49,568   | ) |                    | $
|                                                                           |  |                  |           |   |                    |  
|(Loss) earnings per weighted average share of
    common stock     - basic |  | $                | (0.01     | ) |                    | $
|(Loss) earnings per weighted average share of
    common stock - diluted   |  | $                | (0.01     | ) |                    | $
|Weighted average shares outstanding - 
basic                               |  |                  | 4,961,357 |   |                    |  
|Weighted average shares outstanding - 
diluted                             |  |                  | 4,961,357 |   |                    |  





See accompanying notes.







4







International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Statements of Cash Flows

For
the Six Months Ended June 30, 2014 and 2013

(Unaudited)





|                                                                                          |  | June 30 2014 |           |   | June 30 2013 |  
|----------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ------------ | -
|Cash flows from operating activities:                                                     |  |              |           |   |              |  
|Net loss                                                                                  |  | $            | (93,728   | ) |              | $
|Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |  |              |           |   |              |  
|Depreciation expense                                                                      |  |              | 3,599     |   |              |  
|Changes in operating assets and liabilities:                                              |  |              |           |   |              |  
|Increase in accounts receivable                                                           |  |              | (443,374  | ) |              |  
|Decrease (increase) in deposits                                                           |  |              | 14,412    |   |              |  
|Decrease in current assets                                                                |  |              | 18,916    |   |              |  
|Increase (decrease) in accounts payable and accrued expenses                              |  |              | 1,061,812 |   |              |  
|(Decrease) increase in other current liabilities                                          |  |              | (96,082   | ) |              |  
|Net cash provided by (used in) operating activities                                       |  |              | 465,555   |   |              |  
|                                                                                          |  |              |           |   |              |  
|Cash flow from investing activities:                                                      |  |              |           |   |              |  
|Purchase of property and equipment                                                        |  |              | (45,894   | ) |              |  
|                                                                                          |  |              |           |   |              |  
|Net cash used in investing activities                                                     |  |              | (45,894   | ) |              |  









See accompanying notes.





5







International
Packaging and Logistics Group, Inc., and Subsidiaries

Condensed
Consolidated Statements of Cash Flows

For
the Six Months Ended June 30, 2014 and 2013

(Unaudited)





|                                                     |  | June 30 |           |  | June 30 |  
|---------------------------------------------------- |  | ------- | --------- |  | ------- | -
|                                                     |  | 2014    |           |  | 2013    |  
|Cash flow from financing activities:                 |  |         |           |  |         |  
|Net cash provided by financing activities            |  | –       |           |  | –       |  
|                                                     |  |         |           |  |         |  
|Effect of foreign currency translation               |  |         | 9,525     |  |         |  
|                                                     |  |         |           |  |         |  
|Net increase/(decrease) in cash and cash equivalents |  |         | 429,186   |  |         |  
|Cash and cash equivalents at beginning of period     |  |         | 1,192,443 |  |         |  
|Cash and cash equivalents at end of period           |  | $       | 1,621,629 |  |         | $
|                                                     |  |         |           |  |         |  
|Supplementary Disclosures of Cash Flow               |  |         |           |  |         |  
|Cash paid during the year for:                       |  |         |           |  |         |  
|Interest                                             |  | $       | –         |  |         | $
|Taxes (refund)                                       |  | $       | –         |  |         | $











See accompanying notes.





6





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant Accounting Policies
| | -- | ------------------------------------------



Organization and Basis of Presentation



These interim condensed consolidated financial
statements represent the financial activity of International Packaging and Logistics Group, Inc., (“IPL Group” or “the
Company”) a publicly traded company listed and traded on the NASDAQ Over the Counter Bulletin Board (“OTCBB”).
The interim condensed consolidated financial statements for the three and six months ended June 30, 2014 and 2013 have been prepared
in accordance with accounting principles generally accepted in the United States. The interim condensed consolidated financial
statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated. The Company’s
fiscal year end is on December 31.



The foregoing unaudited interim condensed
consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission
(“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the disclosures required
by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited
interim condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial
statements and the notes thereto included on Form 10-K for the period ended December 31, 2013. In the opinion of management, the
unaudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal
recurring nature, necessary for a fair statement of the results for the interim period presented.



The preparation of interim condensed consolidated
financial statements in accordance with generally accepted accounting principles in the United States of America requires the use
of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
known to exist as of the date the condensed consolidated financial statements are published, and the reported amounts of revenues
and expenses during the reporting period. Uncertainties with respect to such estimates and assumption are inherent in the preparation
of the Company’s condensed consolidated financial statements; accordingly, it is possible that the actual results could differ
from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial
position and results of operations.



Operating results for the six month periods
ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.



Nature of Operations



On July 2, 2007, International Packaging
and Logistics Group, Inc., through its wholly-owned subsidiary, YesRx.com (“YesRx”) acquired all the outstanding shares
of H&H Glass, Inc. (“H&H Glass” or “H&H”), in exchange for 3,915,000 shares of its common stock
in a reverse triangular merger (the “Merger”). H&H Glass is a glass importer that supplies custom products such
as perfume bottles and food condiment bottles, plus provides complementary services such as container design and mold making. H&H
Glass imports glass containers from Asia and distributes to North America. H&H Glass acquires its products mainly from one
supplier in China and Taiwan and sells its products through several distributors in the United States and Canada who service small
to medium sized customers. H&H imports in excess of 1,000 shipping containers of glass a year. Depending on the size of the
product, a container can contain anywhere from 3,000 to 300,000 pieces.





7





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant
                                         Accounting Policies (continued)
| | -- | -----------------------------------------------------------------------------------------------





On January 1, 2010, International Packaging
and Logistics Group, Inc., acquired a majority interest in EZ Link Holdings, Ltd., company organized
under the laws of the British Virgin Islands which contractually controls EZ Link Corporation (“EZ Link”), a logistics
company headquartered in Taiwan. EZ Link was established in July 2003 under the laws of Taiwan, Republic of China (“PRC”)
EZ LINK is a full service international freight forwarder, who has current networks to locations in China, Hong Kong, South East
Asia, North East Asia, North America, Latin America and Europe.



Organization and Line of Business



International Packaging and Logistics Group,
Inc., a Nevada corporation, was originally incorporated as Interactive Medical Technologies, Ltd., on June 2, 1986, in the state
of Delaware. On April 17, 2008, IPL Group converted from a Delaware corporation to a Nevada Corporation.



EZ Link Holdings Ltd.



EZ Link Holdings Ltd. was incorporated in 2009, under the laws
of the British Virgin Islands. The Company has no substantive operations of its own.



EZ Link Corp., a Taiwan company established in July 2003 with
initial registered capital of NTD 13,500,000, is a freight forwarder with current networks of locations in China, Hong Kong, South
East Asia, North East Asia, North America, Latin America and Europe, and holds the licenses and approvals necessary to operate
its business in China.



Taiwan law currently has limits on foreign ownership of companies.
To comply with these foreign ownership restrictions, on December 31, 2009, EZ Link Holdings entered into following exclusive
agreements with EZ Link Corp. and its owners (collectively the “Contractual Arrangements”):



(1) Consulting Services Agreement,
through which EZ Link Holdings has the right to advise, consult, manage and operate EZ Link Corp. and collect and own all of its
net profits;



(2) Operating Agreement, through
which EZ Link Holdings has the right to recommend director candidates and appoint the senior executives of EZ Link Corp, approve
any transactions that may materially affect the assets, liabilities, rights or operations of EZ Link Corp, and guarantee the contractual
performance

by EZ Link Corp. of any agreements with
third parties, in exchange for a pledge by EZ Link Corp. of its accounts receivable and assets.



In consideration of services provided by the consultant, EZ
Link Corp will pay a consulting fee equal to all of its net income on a quarterly basis. There was a cumulative net loss from January
1, 2014 to June 30, 2014 of ($69,557).



The terms of these Consulting Agreements
begin as of the date of the Contractual Agreements, and shall continue in perpetuity, unless terminated in accordance with relevant
provisions in the agreements or by any other agreement reached by all parties.





8





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant Accounting Policies (continued)
| | -- | ------------------------------------------------------



Principles of Consolidation



The accompanying consolidated financial statements
are prepared in accordance with generally accepted accounting principles in the United States of America. EZ Link Corp’s
functional currency is New Taiwan Dollars (NTD), however, the accompanying consolidated financial statements have been re-measured
and presented in United States Dollars (“USD”).



The consolidated financial statements include
the accounts of IPL Group and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include
H&H Glass and 51% of EZ Link Holdings, Ltd. Intercompany accounts and transactions have been eliminated upon consolidation.



Consolidation of variable interest entities

The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries in which the Company has a controlling financial interest.
The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is
a voting interest entity or a variable interest entity (“VIE”).



Voting interest entities are
entities that have sufficient equity and provide the equity investors voting rights that give them the power to make significant
decisions related to the entity’s operations. The usual condition for a controlling financial interest in a voting
interest entity is ownership of a majority voting interest.  Accordingly, the Company consolidates its majority-owned subsidiary,
EZ Link Corp, in which it holds more than 50% of the voting rights or where control is exercised through other contractual rights.



VIEs are entities that lack one or more
of the characteristics of a voting interest entity. Either the entity does not have sufficient equity at risk to finance
its activities without additional subordinated financial support from other parties or the equity investors do not have the characteristics
of a controlling financial interest. The entity that has a controlling financial interest in a VIE is referred to as the
primary beneficiary and is required to consolidate the VIE. The Company’s majority-owned subsidiaries are not considered
VIEs.



The Company's consolidated financial statements
include 100% of the assets, liabilities and earnings of a subsidiary, EZ Link Corp, which is more than 50% owned and control is
established. The ownership interest of the minority owners of the Company’s subsidiary is called non-controlling interest.



The Company has concluded that EZ Link
Corp is a VIE and that the Company’s 51% owned subsidiary, EZ Link Holdings, absorbs a majority of the risk of loss from
the activities of EZ Link Corp. and enables the Company to receive a majority of its expected residual returns. Accordingly, the
Company accounts for EZ Link Corp. as a VIE as of January 1, 2010.



The initial measurement of the assets and liabilities of EZ
Link Corp. for the purpose of consolidation by the Company is at fair value. EZ Link Holdings, Ltd. has had no other business activities
except for the entering into of the exclusive agreements with EZ Link Corp. and its shareholders.



The consolidated financial statements include the
financial statements for the Company, its subsidiaries and the variable interest entity, EZ Link Corp. and EZ Link
Corp.’s subsidiary EZ Link International. All significant inter-company transactions and balances between the Company,
its subsidiaries and the variable interest entity are eliminated upon consolidation.



9





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant Accounting Policies (continued)
| | -- | ------------------------------------------------------



Country risk



As EZ Link Holding, Ltd. principal operations
are conducted in Taiwan, it is subject to special considerations and significant risks not typically associated with companies
in the US. These risks include, among others, risks associated with the political, economic and legal environments and foreign
currency exchange limitations encountered in Taiwan. The EZ Link Holdings results of operations may be adversely affected by changes
in the political and social conditions in Taiwan, and by changes in governmental policies with respect to laws and regulations,
among other things.



In addition, most of the transactions undertaken
in Taiwan are denominated in New Taiwan Dollars (“NTD”), which must be converted into other currencies before remittance
out of Taiwan may be considered. Both the conversion of NTD into foreign currencies and the remittance of foreign currencies abroad
require the approval of the Taiwan government.  Therefore, it is assumed that there will be limitations of distribution
of profits from EZ Link Corp. to EZ Link Holdings.



Estimates



The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and the disclosures of contingent assets and liabilities
at the date of the consolidated financial statements. Significant estimates include an allowance for doubtful accounts and depreciation
of property, plant and equipment.



Cash and Cash Equivalents



The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. Cash equivalents include amounts invested
in a money market account with a financial institution. Cash equivalents are carried at cost, which approximates fair value.



Contract in Place



Indefinite-lived intangible assets are not amortized, but reviewed
at least annually for potential impairment through assessment of qualitative factors to determine if those assets are impaired.
If, through the qualitative assessment, it is determined that it is more likely than not the asset is not impaired, no further
testing is required. If it is determined that is more likely than not the asset is impaired or if the Company elects
not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value
of the asset at the reporting unit level using an income (discounted cash flow) approach that requires significant management
judgment with respect to revenue and expense growth rates and the selection and use of an appropriate discount rate.



The contract in place represents the fair value of the consulting contract and operating agreement between
EZ Link Holdings, Ltd. and EZ Link Corp. Contract in place is considered an indefinite life intangible asset. We have elected
December 31 as the date to perform our annual impairment test



10





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant Accounting Policies (continued)
| | -- | ------------------------------------------------------



Revenue Recognition



The Company recognizes product revenue
provided that (1) persuasive evidence of an arrangement exists, (2) delivery to the customer has occurred, (3) the selling price
is fixed or determinable and (4) collection is reasonably assured.  Delivery is considered to have occurred when title and
risk of loss have transferred to the customer. The price is considered fixed or determinable when it is not subject to refund or
adjustments. Outbound shipping and handling charges are included in net sales.



Foreign Currency Translation



As of June 30, 2014 the accounts of the
EZ Link were maintained, and its consolidated financial statements were expressed, in NTD. Such consolidated financial statements
were translated into USD with NTD as the functional currency. All assets and liabilities were translated at the exchange rate
on the consolidated balance sheet dates, stockholders’ equity are translated at the historical rates and the statements
of income items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported
under other comprehensive income.



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. Such amounts were not material during each of the three and six month periods ended June 30, 2014 and
2013.



Cash flow from the Company's operations included
in the statement of cash flows is calculated based upon the functional currency using the average translation rate. As a result,
amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with arithmetical
changes in the corresponding balances on the consolidated balance sheet.



Concentration of Credit Risk



The Company maintains balances in a money
market fund that is not federally insured. Balances in this fund were $1,123,414 and $783,519 at June 30, 2014 and December 31,
2013, respectively.



Accounts receivable are typically unsecured.
The Company performs ongoing credit evaluations of its customers’ financial condition. It generally requires no collateral
and maintains reserves for potential credit losses on customer accounts, when necessary. As of June 30, 2014, 77.7% of H&H
Glass’s Accounts Receivable were attributable to three customers. As of December 31, 2013, 86.0% of H&H Glass’s
Accounts Receivable were attributable to three customers.



At June 30, 2014 and December 31, 2013
H&H Glass had allowance for doubtful reserves of $19,358 and $64,837, respectively.



In general, the Company reserves 50% of an accounts receivable
balance when it becomes 90 days past due and 100% of an accounts receivable balance that is over 365 past due.





11





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 1. | Summary of Significant Accounting Policies (continued)
| | -- | ------------------------------------------------------



Concentration of Credit Risk - continued



H&H Glass purchased 100% of its glass
from one vendor in the three month period ending June 30, 2014 and 2013.  During the three-month period ending June 30, 2014
and 2013, H&H Glass purchased $7,102,154 and $7,271,607 of products from this vendor, respectively.  During the Six-month
period ending June 30, 2014 and 2013, H&H Glass purchased $14,131,740 and $14,528,397 of products from this vendor, respectively.
This concentration is due to the relatively small size of H&H Glass’s orders.  H&H Glass’s specialized
short-run custom orders generally are not attractive to larger glass manufacturers.



Non-controlling Interest



The Company accounts for its non-controlling
interest of 49% in EZ Link Holdings, Ltd. in the condensed consolidated financial statements classified as a separate component
of equity. In addition, net earnings, and components of other comprehensive income are attributed to both the Company and non-controlling
interest.



Net Earnings/(Loss) per Share



Earnings/(loss) per common share is computed
on the weighted average number of common shares outstanding during each year. Basic earnings per share is computed as net loss
applicable to common stockholders’ divided by the weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur from common shares issuable through convertible preferred shares,
stock options, warrants and other convertible securities when the effect would be dilutive.



Comprehensive Income (Loss)



The Company reports and displays comprehensive
income and its components in a full set of general purpose consolidated financial statements. The Company’s translation income
of $2,043 and a loss of $28,064 for the three month periods ended June 30, 2014 and 2013 and income of $10,077 and a loss of $16,436
for the six month periods ended June 30, 2014 and 2013, respectively, relate to the translation of financial statements from New
Taiwan Dollar to US Dollars.



| | 2. | Preferred Stock Transactions
| | -- | ----------------------------



Series A Convertible
Preferred Stock



The Series A Preferred shares are convertible
into common shares on a 1:1 ratio at a fixed rate of $3 per share.  Preferred shares have no voting rights, have no redemption
rights and earn no dividends.  Holders of Series A Convertible Preferred Stock are not permitted to convert their stock
into common shares until the Company’s market capital reaches $15,000,000. Upon dissolution, liquidation or winding
up of the Company, whether voluntary or involuntary, the holders of the then outstanding shares of Series A Convertible Preferred
Stock shall be entitled to receive out of the assets of the Company the sum of $0.0001 per share (the “Liquidation Rate”)
before any payment or distribution shall be made on any other class of capital stock of the Company ranking junior to the Series
A Convertible Preferred Stock.





12





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 2. | Preferred Stock Transactions (continued
| | -- | ---------------------------------------



Series B Convertible Preferred Stock



As of January 1, 2010 pursuant to the purchase
agreement for 51% ownership in EZ Link Holdings Ltd., approximately 47% of the purchase price amount of $400,000 was paid in Series
B convertible preferred shares of IPL Group at a per share value of $1.00, or 400,000 shares.



The Series B preferred shares are convertible
into common shares on a 1:1 ratio at a fixed rate of $1 per share.  Preferred shares have no voting rights, have no
redemption rights and earn no dividends.



The Series B preferred shares would have been
convertible into common shares in two equal tranches, the first tranche was to be upon completion and receipt of the financial
statements as of and for the year ending December 31, 2010, if all of the following performance targets were met by EZ Link:



(a) Maintain revenues
and before tax earnings same as the prior 12 month period; and

(b) Maintained a positive
cash flow from operations over the prior 12 month period.



These criteria were not met during the period
January 1, 2010 through December 31, 2013, so there have been no conversions of Series B preferred stock. However,
the first tranche will be eligible for conversion again at December 31, 2014. If EZ Link does not reach its performance goals,
the conversion rights will be extended each year, on an indefinite basis until the performance goals are reached.



The second tranche of the Series B preferred
shares shall be convertible after the 12 month period after the first tranche becomes convertible, i.e. at the earliest the year
ending December 31, 2015, if all of the following performance targets are met by EZ Link:



(a) 5% increase in
revenues and 1% before tax earnings over the prior 12 month period; and

(b) Maintained a positive
cash flow from operations over the prior 12 month period.



EZ Link did not reach its performance goals
at December 31, 2013, so the conversion rights will be extended each year, on an indefinite basis until the performance goals are
reached.



ASC Topic 480, “Distinguishing Liabilities
from Equity,” establishes standards for how an issuer classifies and measures certain financial instruments with characteristics
of both liabilities and equity.



A mandatorily redeemable financial instrument
shall be classified as a liability unless the redemption is required to occur only upon the liquidation or termination of the reporting
entity. A financial instrument issued in the form of shares is mandatorily redeemable if it embodies an unconditional
obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates)
or upon an event certain to occur. A financial instrument that embodies a conditional obligation to redeem the instrument
by transferring assets upon an event not certain to occur becomes mandatorily redeemable—and, therefore becomes a liability—if
that event occurs, the condition is resolved, or the event becomes certain to occur.



The Company determined that the preferred
shares are not mandatorily or conditionally redeemable and are properly classified as permanent equity in the accompanying consolidated
financial statements.



13





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 3. | Common Stock Transactions
| | -- | -------------------------



During the six months ending June 30, 2014
and 2013 no stock was issued.



| | 4. | Related Party Transactions
| | -- | --------------------------



Allen Lin



The Company paid Mr. Allen Lin, President
of H&H Glass and a member of the board of directors of the Company, salary of $66,950 and $65,000 for the three-month periods
ended June 30, 2014 and 2013, respectively and $ 133,900 and $130,000 for the six-month periods ended June 30, 2014 and 2013, respectively.



Josephine Lin



Josephine Lin, Mr. Lin’s wife, is
employed by the Company and was paid salary of $14,935 and $14,500 for the three-month periods ended June 30, 2014 and 2013 and
$29,870 and $29,000 for the six-month periods ended June 30, 2014 and 2013, respectively.



William Gresher



For each three-month period ended June,
2014 and 2013, Mr. Gresher, a member of the Board of Directors, was paid $1,500 in cash for Director fees.



For each six-month period ended June 30,
2014 and 2013, Mr. Gresher, a member of the Board of Directors, was paid $3,000 in cash for Director fees.



Owen Naccarato



For each three-month period ending June
30, 2014 and 2013 respectively, Mr. Naccarato, a member of the Board of Directors, was paid $9,000 in cash for legal fees and for
the three month periods ending June 30, 2014 and 2013 was paid $1,500 in cash for Directors fees.



For each six-month period ending June 30,
2014 and 2013 respectively, Mr. Naccarato, a member of the Board of Directors, was paid $18,000 in cash for legal fees and for
the six-month periods ending June 30, 2014 and 2013 was paid $3,000 in cash for Directors fees.





14





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 4. | Related Party Transactions - continued
| | -- | --------------------------------------



Easy Global Company, Ltd.



The chairman of Easy Global Company, Ltd.
is also a shareholder of EZ Link Corporation. EZ Link rents its offices from Easy Global Company, Ltd. During the three months
ended June 30, 2014 and 2013, EZ Link paid $11,383 and $11,489, respectively and for the six months ended June 30, 2014 and 2013,
EZ Link paid $22,697 and $23,177 to Easy Global Company for rent expense.



| | 5. | Property and Equipment
| | -- | ----------------------



The Company’s property and equipment
at June 30, 2014 and December 31, 2013, consisted of the following:





|                              |  | June 30, 2014 |          |   | December 31, 2013 |  
|----------------------------- |  | ------------- | -------- | - | ----------------- | -
|Furniture and fixtures        |  | $             | 14,552   |   |                   | $
|Computers and equipment       |  |               | 190,432  |   |                   |  
|                              |  |               | 204,984  |   |                   |  
|Less accumulated depreciation |  |               | (157,977 | ) |                   |  
|Total                         |  | $             | 47,007   |   |                   | $





The Company recorded depreciation expense
for the six-month periods ending June 30, 2014 and 2013 of $3,599 and $2,931 respectively.



| | 6. | Commitments and Contingencies
| | -- | -----------------------------



Litigation



The Company is not
currently aware of any formal legal proceedings or claims that the Company believes will have, individually or in the aggregate,
a material adverse effect on the Company’s financial position or results of operations.







15





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 6. | Commitments and Contingencies - continued
| | -- | -----------------------------------------



Leases



Operating leases



H&H Glass rents approximately 2,900
square feet of office space for its headquarters. The lease began on January 1, 2013 and expires on August 31, 2019. As of June
30, 2014, total monthly base rent is $6,235 per month.



EZ Link rents 2,388 square feet of office
space for its headquarters. The lease began on October 1, 2011, through March 31, 2012. The lease is renewed annually. As of March
31, 2014, total base monthly rent is $3,840 per month.



EZ Link also rents 182 square feet of office
space. The lease began on April 15, 2011, and expires on April 14, 2014. The lease has a 3% increase each year. As of June 30,
2014, total base monthly rent is $1,436.



EZ Link also maintains operating leases
for parking spaces and vehicles used in its operations expiring through June 23, 2014.



Future minimum payments on the non-cancellable
leases described above as of June 30, 2014, are:



|Fiscal Year ended December 31,
|------------------------------
|2014                          
|2015                          
|2016                          
|2017                          
|2018                          
|Thereafter                    
|                              



| | 7. | Earnings per Share
| | -- | ------------------



Earnings
                                         per share have been calculated using the weighted average number of shares outstanding
                                         during each period. There was a net loss during the six months ended June 30, 2014 and
                                         2013 and the three months ended June 30, 2013, therefore the Company’s Convertible
                                         Preferred Shares would not constitute potentially dilutive securities. There was a net
                                         income during the six months ended June 30, 2014 therefore the Company’s Convertible
                                         Preferred Shares would constitute potentially dilutive securities.



Earnings (loss) per share of common stock
are calculated as follows:







16





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014





|7. | Earnings per Share (continued)
|-- | ------------------------------



|                                                                               |  | For the Three Months Ended June 30, |          
|------------------------------------------------------------------------------ |  | ----------------------------------- | ---------
|                                                                               |  | 2014                                |          
|BASIC EARNINGS PER SHARE OF COMMON STOCK:                                      |  |                                     |          
|Net earnings available to the Company’s common stockholders                    |  | $                                   | 62,220   
|                                                                               |  |                                     |          
|Weighted average common shares outstanding                                     |  |                                     | 4,961,357
|Basic earnings per share of common stock                                       |  | $                                   | 0.01     
|                                                                               |  |                                     |          
|DILUTED EARNINGS PER SHARE OF COMMON STOCK:                                    |  |                                     |          
|Net earnings available to the Company’s common stockholders                    |  | $                                   | 62,220   
|                                                                               |  |                                     |          
|Weighted average common shares outstanding                                     |  |                                     | 4,961,357
|Effect of dilutive securities:                                                 |  |                                     |          
|Convertible preferred stock                                                    |  |                                     | 1,374,730
|Weighted average common shares outstanding after effect of dilutive securities |  |                                     | 6,336,087
|                                                                               |  |                                     |          
|Diluted earnings per share of common stock                                     |  | $                                   | 0.01     



|                                                                               |  | For the Six Months Ended June 30, |          
|------------------------------------------------------------------------------ |  | --------------------------------- | ---------
|                                                                               |  | 2014                              |          
|BASIC EARNINGS PER SHARE OF COMMON STOCK:                                      |  |                                   |          
|Net earnings available to the Company’s common stockholders                    |  | $                                 | (59,645  
|                                                                               |  |                                   |          
|Weighted average common shares outstanding                                     |  |                                   | 4,961,357
|Basic earnings per share of common stock                                       |  | $                                 | (0.01    
|                                                                               |  |                                   |          
|DILUTED EARNINGS PER SHARE OF COMMON STOCK:                                    |  |                                   |          
|Net earnings available to the Company’s common stockholders                    |  | $                                 | (59,645  
|                                                                               |  |                                   |          
|Weighted average common shares outstanding                                     |  |                                   | 4,961,357
|Effect of dilutive securities:                                                 |  |                                   |          
|Convertible preferred stock                                                    |  |                                   | –        
|Weighted average common shares outstanding after effect of dilutive securities |  |                                   | 4,961,247
|                                                                               |  |                                   |          
|Diluted earnings per share of common stock                                     |  | $                                 | (0.01    







17





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Condensed Consolidated Financial Statements

June
30, 2014



| | 8. | Segment Reporting
| | -- | -----------------



The management approach model is based
on the way a Company’s management organizes segments within the Company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any
other manner in which management disaggregates a company.



Following is a summary of segment information for the three
and six months ended June 30, 2014:



|Six months ended June 30, 2014 |  | Packaging |            |   | Logistics |  |           | Total | 
|------------------------------ |  | --------- | ---------- | - | --------- |  | --------- | ----- | 
|                               |  |           |            |   |           |  |           |       | 
|Revenue                        |  | $         | 16,088,153 |   |           |  | 3,218,756 |       | 
|Operating Income               |  |           | (22,233    | ) |           |  | (77,173   | )     | 
|Total Assets                   |  |           | 8,780,447  |   |           |  | 1,033,952 |       | 
|Interest Income                |  |           | 0          |   |           |  | 401       |       | 
|Interest Expense               |  |           | (299       | ) |           |  | 0         |       | 
|Depreciation                   |  | $         | 0          |   |           |  | 3,559     |       | 



|Three months ended June 30, 2014 |  | Packaging |           |  | Logistics |  |           | Total | 
|-------------------------------- |  | --------- | --------- |  | --------- |  | --------- | ----- | 
|                                 |  |           |           |  |           |  |           |       | 
|Revenue                          |  | $         | 8,130,122 |  |           |  | 1,836,831 |       | 
|Operating Income                 |  |           | 71,377    |  |           |  | (12,445   | )     | 
|Total Assets                     |  |           | 8,780,447 |  |           |  | 1,033,952 |       | 
|Interest Income                  |  |           | 0         |  |           |  | 353       |       | 
|Interest Expense                 |  |           | 0         |  |           |  | 0         |       | 
|Depreciation                     |  | $         | 0         |  |           |  | 1,794     |       | 







18





International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Consolidated Financial Statements

June
30, 2014



| | 9. | Unrestricted Net Assets
| | -- | -----------------------



EZ Link Corp. has retained earnings of
approximately $976 as of June 30, 2014. Distributions and other payments to EZ Link Holdings, Ltd. from its subsidiary, EZ Link
Corp. may not permitted by the Taiwan government. Condensed financial information of the United States operations is as follows:



|                                           |  | June 30, |           |   | June 30 |  
|------------------------------------------ |  | -------- | --------- | - | ------- | -
|Balance Sheets                             |  | 2014     |           |   | 2013    |  
|                                           |  |          |           |   |         |  
|Assets                                     |  |          |           |   |         |  
|Cash and cash equivalents                  |  | $        | 1,352,492 |   |         | $
|Accounts receivable, net                   |  |          | 5,857,641 |   |         |  
|Other current assets                       |  |          | (2,158    | ) |         |  
|Total current assets                       |  |          | 7,207,975 |   |         |  
|                                           |  |          |           |   |         |  
|Investment in EZ Link Holdings, Ltd.       |  |          | 857,143   |   |         |  
|Deposits                                   |  |          | 12,433    |   |         |  
|Deferred tax assets                        |  |          | 264,314   |   |         |  
|Total assets                               |  | $        | 8,341,865 |   |         | $
|                                           |  |          |           |   |         |  
|Liabilities                                |  |          |           |   |         |  
|                                           |  |          |           |   |         |  
|Accounts payable                           |  | $        | 5,979,543 |   |         | $
|Accrued liabilities                        |  |          | 91,528    |   |         |  
|Notes payable to related party             |  |          | 80,000    |   |         |  
|Total current liabilities                  |  |          | 6,151,071 |   |         |  
|                                           |  |          |           |   |         |  
|Total liabilities                          |  |          | 6,151,071 |   |         |  
|                                           |  |          |           |   |         |  
|Stockholders' equity                       |  |          |           |   |         |  
|Common stock                               |  |          | 4,961     |   |         |  
|Preferred stock                            |  |          | 138       |   |         |  
|Additional paid-in capital                 |  |          | 2,202,877 |   |         |  
|Retained earnings                          |  |          | (17,182   | ) |         |  
|Total stockholders' equity                 |  |          | 2,190,794 |   |         |  
|Total liabilities and stockholders' equity |  | $        | 8,341,865 |   |         | $



19







International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Consolidated Financial Statements

June
30, 2014



| | 9. | Unrestricted Net Assets - continued
| | -- | -----------------------------------





|                             |  | Three Months |            |   | Three Months |  
|---------------------------- |  | ------------ | ---------- | - | ------------ | -
|                             |  | June 30,     |            |   | June 30,     |  
|Statement of Operations      |  | 2014         |            |   | 2013         |  
|                             |  |              |            |   |              |  
|Net sales                    |  | $            | 8,130,122  |   |              | $
|Cost of goods sold           |  |              | (7,716,754 | ) |              |  
|                             |  |              |            |   |              |  
|Operating expenses           |  |              | (341,991   | ) |              |  
|Loss from operations         |  |              | 71,377     |   |              |  
|                             |  |              |            |   |              |  
|Other income and (expense)   |  |              |            |   |              |  
|Interest income (expense)    |  |              | 0          |   |              |  
|Other income (expense)       |  |              | (40        | ) |              |  
|Realized gain on investment  |  |              | –          |   |              |  
|Income tax benefit (payable) |  |              | –          |   |              |  
|Total other income           |  |              | (40        | ) |              |  
|Net Income                   |  | $            | 71,337     |   |              | $







20







International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Consolidated Financial Statements

June
30, 2014



| | 9. | Unrestricted Net Assets - continued
| | -- | -----------------------------------



|                             |  | Six Months |             |   | Six Months |  
|---------------------------- |  | ---------- | ----------- | - | ---------- | -
|                             |  | June 30,   |             |   | June 30,   |  
|Statement of Operations      |  | 2014       |             |   | 2013       |  
|                             |  |            |             |   |            |  
|Net sales                    |  | $          | 16,088,153  |   |            | $
|Cost of goods sold           |  |            | (15,397,590 | ) |            |  
|                             |  |            |             |   |            |  
|Operating expenses           |  |            | (712,796    | ) |            |  
|Loss from operations         |  |            | (22,233     | ) |            |  
|                             |  |            |             |   |            |  
|Other income and (expense)   |  |            |             |   |            |  
|Interest income (expense)    |  |            | (299        | ) |            |  
|Other income (expense)       |  |            | (40         | ) |            |  
|Realized gain on investment  |  |            | –           |   |            |  
|Income tax benefit (payable) |  |            | (1,600      | ) |            |  
|Total other income           |  |            | (1,939      | ) |            |  
|Net Income                   |  | $          | (24,172     | ) |            | $







21







International
Packaging and Logistics Group, Inc., and Subsidiaries

Notes
to Consolidated Financial Statements

June
30, 2014



| | 9. | Unrestricted Net Assets - continued
| | -- | -----------------------------------



|                                           |  | Six Months |           |  | Six Months |  
|------------------------------------------ |  | ---------- | --------- |  | ---------- | -
|                                           |  | June 30,   |           |  | June 30,   |  
|Statements of Cash Flows                   |  | 2014       |           |  | 2013       |  
|                                           |  |            |           |  |            |  
|Net cash provided by operating activities: |  | $          | 502,809   |  |            | $
|                                           |  |            |           |  |            |  
|Cash flow from investing activities        |  |            |           |  |            |  
|Proceeds from sale of investment           |  |            | –         |  |            |  
|Net cash provided by investing activities  |  |            | –         |  |            |  
|                                           |  |            |           |  |            |  
|Cash flow from financing activities:       |  |            |           |  |            |  
|Proceeds from note payable - related party |  |            | –         |  |            |  
|Net cash provided by financing activities  |  |            | –         |  |            |  
|                                           |  |            |           |  |            |  
|Net increase in cash                       |  |            | 502,809   |  |            |  
|Cash, beginning of period                  |  |            | 849,683   |  |            |  
|Cash, end of period                        |  | $          | 1,352,492 |  |            | $





22





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



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS’



This Quarterly Report
on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.  In some cases, forward-looking statements are identified by terms such as “may”,
“will”, “should”, “could”, “would”, “expects”, “plans”,
“anticipates”, “believes”, “estimates”, “projects”, “predicts”, “potential”,
and similar expressions intended to identify forward-looking statements.



These forward-looking
statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual
results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking statements. Also, these forward-looking statements represent
our estimates and assumptions only as of the date of this Report. Except as otherwise required by law, we expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Report
to reflect any change in our expectations or any change in events, conditions, or circumstances on which any of our forward-looking
statements are based or to conform to actual results. We qualify all of our forward-looking statements by these cautionary statements.



Overview



We
import glass containers from Asia and distribute to the North American market including Canada. This was a result of International
Packaging and Logistic Group, Inc. (“IPL Group Inc.” or the “Company”) acquiring H&H Glass, Inc. (“H&H
Glass”) in July of 2007. IPL Group, Inc. closed its pharmacy business in February 2007.



H&H Glass is a
glass importer that supplies custom products such as perfume bottles and food condiment bottles, plus provides complementary services
such as product design and the making of product molds. H&H Glass acquires its products from 3 to 5 suppliers in China and
Taiwan and sells its products through several distributors in the United States and Canada who service small- to medium-sized customers.
H&H imports in excess of 1,000 containers of glass a year. Depending on the size of the product, a container can contain anywhere
from 3,000 to 300,000 pieces.



In addition, as of January
1, 2010, International Packaging and Logistics Group, Inc., acquired a 51% interest in EZ Link Holdings, Ltd., a company organized
under the laws of the British Virgin Islands on December 18, 2009, which controls EZ Link Corporation (“EZ Link”),
a logistics company headquartered in Taiwan. EZ Link was established in July 2003 under the laws of Taiwan, Republic of China.
EZ Link Holdings, Ltd. consolidates EZ Link under ASC Topic 810 as it controls EZ Link through a management contract. EZ Link
is a full service international freight forwarder, who has current networks to locations in China, Hong Kong, South East Asia,
North East Asia, North America, Latin America and Europe.



Plan of Operation



Our general operating plan is as follows:



Short Term



|· | Continue growing revenue and profits through the existing business;                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | Meet the challenge of the declining world economy while maintaining revenue and profitability - our goal will be to  focus closely on product mix, improve our gross margin and develop new projects with existing clients;
|· | Expand the supply network for our products;                                                                                                                                                                                
|· | Expand our current business model to include other areas that fall within our distribution expertise such as packaging using plastic and acrylic materials.                                                                
|· | Integrate our new logistics business into our overall plan                                                                                                                                                                 





23







Long Term



| | Expand our service into other areas such as Europe and Australia through the same supplier channel.  Our existing business model copies to other markets naturally.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Expand the client base and areas of service of our logistics business.                                                                                             



Results of Operations



Three and six months ending June 30, 2014 and 2013



Revenue:



For the three months ending June 30, 2014 and 2013, revenues
were $9,966,953 and $10,096,994, respectively, for a decrease of $130,041 (1.3%) over the same period in 2013. The decrease in
revenue is mainly due to two factors; 1) a increase in packaging revenue of $137,319 (1.7%) due to a decrease in sales deductions,
2) offset by a decrease in logistics revenues of $267,360 (12.7%) , mainly due to a decrease in overall shipping.



For the six months ending June 30, 2014 and 2013, revenues were
$19,306,909 and $20,464,803, respectively, for a decrease of $1,157,894 (5.7%) over the same period in 2013. The decrease in revenue
is mainly due to two factors; 1) a decrease in packaging revenue of $559,826 (3.4%) due to a decrease in sales, 2) and a decrease
in logistics revenues of $598,068 (15.7%), mainly due to a decrease in overall shipping.



Cost of Goods Sold:



Cost of goods sold for the three months ending June 30, 2014
and 2013 were $9,256,675 and $9,410,263 respectively, for a decrease of $153,588 (1.6%) over the same period in 2013. This decrease
consists of a decrease in Logistics cost of goods sold of $213,073 (2.3%) which was a direct result of the decrease in overall
shipping, offset by an increase in packaging cost of goods sold of $59,485 (1.0%) from the same period in 2013 mainly due to an
increase in packaging revenue.



Cost of goods sold for the six months ending June 30, 2014 and
2013 were $18,097,382 and $19,197,433 respectively, for a decrease of $1,100,051 (5.7%) over the same period in 2013. This decrease
consists of a decrease in Logistics cost of goods sold of $503,078 (15.8%) which was a direct result of the decrease in overall
shipping, plus a decrease in packaging cost of goods sold of $403,027 (2.5%) from the same period in 2013 mainly due to a increase
in packaging revenue during the first quarter.



Gross Profit:



Gross profit was $710,278 and $686,731 for the three months
ending June 30, 2014 and 2013, an increase of $23,547 (3.4%) over the same period in 2013. The gross profit margin
as a percent of sales for the three months ending June 30, 2014 and 2013 was 7.1% and 6.8 %, respectively, for an increase of 0.3%.
The increase is a result of a 0.9% increase in gross profit percent from the packaging business plus an increase of 0.6% gross
profit percent from the logistics business over prior year.



Gross profit was $1,209,527 and $1,267,370 for the six months
ending June 30, 2014 and 2013, a decrease of $57,843 (4.6%) over the same period in 2013. The gross profit margin
as a percent of sales for the six months ending June 30, 2014 and 2013 was 6.3% and 6.2 %, respectively, for a decrease of 0.1%.
The decrease is a result of a 0.8% decrease in gross profit percent from the packaging business offset by an increase of 0.1% gross
profit percent from the logistics business over prior year.



24







Operating Expenses:



Operating expenses for the three month period ended June 30,
2014 and 2013 were $651,346 and $671,543 respectively for a decrease of $20,543 (3.0%) from the same period prior year. Operating
expenses for the six month period ended June 30, 2014 and 2013 were $1,308,933 and $1,292,660 respectively for an increase of $16,273
(1.3%) from the same period prior year. These differences in operating expenses were mostly attributable to the following:



|Three months ending:       |  | 6/30/2014 |         |  | 6 /30/2013 |   |         | $ VAR |  |   | $ VAR   |   |  | 
|-------------------------- |  | --------- | ------- |  | ---------- | - | ------- | ----- |  | - | ------- | - |  | 
|Salaries & Related Expense |  | $         | 360,863 |  |            | $ | 347,814 |       |  | $ | 13,049  |   |  | 
|                           |  |           |         |  |            |   |         |       |  |   |         |   |  | 
|Rent                       |  |           | 34,560  |  |            |   | 30,344  |       |  |   | 4,216   |   |  | 
|                           |  |           |         |  |            |   |         |       |  |   |         |   |  | 
|Insurance                  |  |           | 55,652  |  |            |   | 45,822  |       |  |   | 9,830   |   |  | 
|                           |  |           |         |  |            |   |         |       |  |   |         |   |  | 
|Meals & Entertainment      |  |           | 14,453  |  |            |   | 8,505   |       |  |   | 5,948   |   |  | 
|Travel Expense             |  |           | 98,601  |  |            |   | 51,024  |       |  |   | 47,577  |   |  | 
|                           |  |           |         |  |            |   |         |       |  |   |         |   |  | 
|Accounting                 |  |           | 26,005  |  |            |   | 110,285 |       |  |   | (84,280 | ) |  | 
|Miscellaneous              |  |           | 61,212  |  |            |   | 77,749  |       |  |   | (16,537 | ) |  | 
|Total Expenses             |  | $         | 651,346 |  |            | $ | 671,543 |       |  | $ | (20,197 | ) |  | 



|Six months ending:         |  |   | 6
                                         /30/2014 |  |  |   | 6
                                         /30/2013 |  |  |   | $
                                         VAR |   |  |  | %
                                         VAR |  |  |                                                          
|-------------------------- |  | - | --------------------------------------------------- |  |  | - | --------------------------------------------------- |  |  | - | ---------------------------------------------- | - |  |  | ---------------------------------------------- |  |  | ---------------------------------------------------------
|Salaries & Related Expense |  | $ | 672,771                                             |  |  | $ | 701,284                                             |  |  | $ | (28,513                                        | ) |  |  | -4.1%                                          |  |  | Packaging salary lower in 2014 by $12,997 plus           
|                           |  |   |                                                     |  |  |   |                                                     |  |  |   |                                                |   |  |  |                                                |  |  | $40,674 increase in EZ Link salary (bonuses).            
|Rent                       |  |   | 63,589                                              |  |  |   | 66,354                                              |  |  |   | (2,765                                         | ) |  |  | -4.2%                                          |  |  | Packaging rent lower by $2,097 and EZ Link rent decreased
|                           |  |   |                                                     |  |  |   |                                                     |  |  |   |                                                |   |  |  |                                                |  |  | by $668. Decrease due to new contract - packaging.       
|Insurance                  |  |   | 109,461                                             |  |  |   | 101,985                                             |  |  |   | 7,476                                          |   |  |  | 7.3%                                           |  |  | Packaging insurance increased $6,593, EZ Link up $883.   
|Meals & Entertainment      |  |   | 22,203                                              |  |  |   | 16,504                                              |  |  |   | 5,699                                          |   |  |  | 34.5%                                          |  |  | Packaging increased by $5,046                            
|Travel Expense             |  |   | 183,294                                             |  |  |   | 107,962                                             |  |  |   | 75,332                                         |   |  |  | 69.8%                                          |  |  | Increase in packaging travel of $71,518, increase in     
|                           |  |   |                                                     |  |  |   |                                                     |  |  |   |                                                |   |  |  |                                                |  |  | EZ Link travel of $3.814.                                
|Accounting                 |  |   | 104,755                                             |  |  |   | 128,285                                             |  |  |   | (23,530                                        | ) |  |  | -18.3%                                         |  |  | $23,600 less in audit fees run through the current year. 
|Miscellaneous              |  |   | 152,860                                             |  |  |   | 170,286                                             |  |  |   | (17,426                                        | ) |  |  | -10.2%                                         |  |  | Miscellaneous items                                      
|Total Expenses             |  | $ | 1,308,933                                           |  |  | $ | 1,292,660                                           |  |  | $ | 16,273                                         |   |  |  | 1.3%                                           |  |  |                                                          





25





Other Income (Expenses):



Interest income (expense) for the three months ended June 30,
2014 and 2013 was $353 and $343, respectively, for an increase of $10 (2.9%) from the same period prior year. Interest income (expense)
for the six months ended June 30, 2014 and 2013 was $102 and $573, respectively, for a decrease of $471 (82.2%) from the same period
prior year.



Other income (expense) was ($33) for the three months ending
June 30, 2014, a decrease of $1,609 (102.1%) over the same period in 2013.  Other income was $2,349 for the six months ending
June 30, 2014, an increase of $384 (19.4%) over the same period in 2013



Rent income was $191 for the three months ending June 30, 2014,
a decrease of $2 (1.0%) from the same period prior year.   Rent income was $567 for the six months ending June 30, 2014,
an increase of $375 (195.3%) from the same period prior year.



Liquidity and Capital Resources



Cash flow used in operations for the six months ending June
30, 2014 amounted to $465,465, which mainly consisted the following: by 1) six month net loss of $93,728, 2) increase in accounts
receivable of $443,374 and a decrease in current liabilities of $96,082 offset by 1) depreciation expense of $3,599, 2) decrease
in current assets of 18,916, 3) increase in accounts payable and accrued expenses of $1,061,812 and 4) the return of $14,412 of
deposits.



On June 30, 2014, the Company had total assets of $9,814,399
compared to $8,931,524 on December 31, 2013, an increase of $882,875 or 9.8%.  The Company had total stockholders’
equity of $3,091,195 on June 30, 2014, compared to stockholders’ equity of $3,174,846 on December 31, 2013, a decrease of
$83,651 (2.6%). As of June 30, 2014, the Company's working capital position decreased by $86,622 (5.6%) from working
capital of $1,542,615 at December 31, 2013 to working capital of $1,455,993 at June 30, 2014.



Capital Resources



Over the next twelve months, management
is of the opinion that sufficient working capital will be obtained from operations or from current working capital of the company.



Federal Income Tax



The Company deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents
the tax payable for the period and the change during the period in deferred tax assets and liabilities



EZ Link Corporation is governed by the
Taiwan’s Income Tax Law and local income tax laws. Pursuant to the Taiwan Income Tax Law, enterprises are subject to tax
at a statutory rate of 17%. The local government has also provided companies with various incentives to encourage economic development
in the region. Such incentives include reduced tax rates and other measures



26





ITEM 4.       Controls and Procedures.



Disclosure Controls and Procedures



As of June 30, 2014, under the supervision
and with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, management has evaluated the
effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation and because
of the material weaknesses in our internal control over financial reporting described below, the Chief Executive Officer and the
Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of June 30,
2014.



Management identified the following control
deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:



Our size has prevented us from being able
to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal
control system. There is mainly one person involved in processing of transactions. Therefore, it is difficult to effectively segregate
accounting duties. We have hired an additional administrative person and retained an outside professional firm to assist in the
separation of duties on an ongoing basis. The use of the outside firm has proven successful in assisting in the separation of duties.
However, additional people are not needed to do the administrative work therefore segregation of duties will continue to be an
ongoing weakness.



Similarly, the EZ Link operation also has
a material weakness due to lack of segregation of duties. Its size has prevented us from being able to employ sufficient resources
to enable us to have an adequate level of supervision and segregation of duties within our internal control system. We have retained
an outside professional firm to assist in the separation of duties on an ongoing basis. The use of the outside firm has proven
successful in assisting in the separation of duties. However, additional people are not needed to do the administrative work therefore
segregation of duties will continue to be an ongoing weakness.



Limitations on the Effectiveness of Internal
Controls



Disclosure controls and procedures, no
matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives.
The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include
the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human
failures such as simple errors or mistakes or intentional circumvention of the established process.



Changes in Internal Control over Financial
Reporting



There were no changes in internal control
over financial reporting that occurred during the fiscal year covered by this report that have materially affected, or are reasonably
likely to affect, the Company's internal control over financial reporting.







27







PART II. OTHER INFORMATION





| | Item 1. | Legal Proceedings
| | ------- | -----------------



None





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



None





|Item 3. | Defaults Upon
Senior Securities
|------- | -------------------------------





None





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





None





|Item 5. | Other Information
|------- | -----------------





None







28









|Item 6. | Exhibits
|------- | --------



a) Exhibits





| | 31.1    | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) ( Section 302 of the Sarbanes-Oxley Act of 2002) 
| | ------- | -------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                          
| | 31.2    | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) ( Section 302 of the Sarbanes-Oxley Act of 2002) 
| |         |                                                                                                                          
| | 32.1    | Certification of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
| |         |                                                                                                                          
| | 32.2    | Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
| |         |                                                                                                                          
| | 99.1    | Temporary Hardship Exemption                                                                                             
| |         |                                                                                                                          
| | 101.INS | XBRL Instance Document*                                                                                                  
| | 101.SCH | XBRL Schema Document*                                                                                                    
| | 101.CAL | XBRL Calculation Linkbase Document*                                                                                      
| | 101.DEF | XBRL Definition Linkbase Document*                                                                                       
| | 101.LAB | XBRL Label Linkbase Document*                                                                                            
| | 101.PRE | XBRL Presentation Linkbase Document*                                                                                     







|* | To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.
|- | -----------------------------------------------------------------------------------









29







SIGNATURES



Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.





International Packaging and
Logistics Group, Inc.

(Registrant)







|Dated:  August 20, 2014 |  | By: /s/ Owen Naccarato                   | 
|----------------------- |  | ---------------------------------------- | 
|                        |  | Owen Naccarato                           | 
|                        |  | Chief Executive Officer                  | 
|                        |  | Principal Financial Officer and Director | 





| |  | By: /s/ Allen Lin   | 
| |  | ------------------- | 
| |  | Allen Lin, Director | 
| |  | President H&H Glass | 



| |  | By: /s/ William Gresher   | 
| |  | ------------------------- | 
| |  | William Gresher, Director | 











30