U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 31, ~~2010~~2011

[ ]	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

Jpak Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-1977020
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

15 Xinghua Road, Qingdao, Shandong Province

People’s Republic of China 266401

(Address of principal executive offices (zip code))

(86-532) 84616387

(Issuer's telephone number)

(Former address)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer			Accelerated Filer
Non-accelerated filer			Smaller reporting company	X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes [ ] No [X]

As of ~~February~~May 1113, ~~2010~~2011 there were 36,368,334 shares of the issuer's common stock, par value $.001 per share, outstanding. The issuer also has 5,608,564 shares of Series A Preferred Stock, par value $.0001 per share, outstanding, which shares are convertible into on aggregate of 11,217,128 shares of common stock, and 5,000,000 shares of Series B Convertible Preferred Stock, par value $.0001 per share outstanding, which shares are convertible into an aggregate of 8,333,333 shares of common stock, 12,000,000 shares of Series C Convertible Preferred Stock, par value $0.0001 per share outstanding, which shares are convertible into an aggregate of 12,000,000 shares of common stock.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 3 Item 1. Financial Statements 3 Consolidated Balance Sheets at ~~December~~March 31, ~~2010~~2011 (unaudited) and ~~2009~~June 30, 2010 3 Unaudited Consolidated Statements of Operations for the three months andnine months ended March 31, 2011 and ~~six~~2010 4 Unaudited Consolidated Statement of Comprehensive income for three months and nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 45 Unaudited Consolidated Statements of Cash Flows for the ~~six~~three and nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 56 Unaudited Notes to Consolidated Financial Statements 67 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 1719 Item 3. Quantitative and Qualitative Disclosures About Market Risk 2225 Item 4. Controls and Procedures 2225 PART II – OTHER INFORMATION 2326 Item 1. Legal Proceedings 2326 Item 1A. Risk Factors 2326 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 2326 Item 3. Defaults Upon Senior Securities 2326 Item 4. (Removed and Reserved) 2326 Item 5. Other Information 2426 Item 6. Exhibits 2427

PART I – FINANCIAL INFORMATION

JPAK GROUP, INC.

Consolidated Balance Sheets

	December 31,		June 30,
	March 31,		June 30,
	2010		2010
	2011		2010
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	1,~~931~~448,~~098~~202	$	6,221,273
Restricted cash		79,~~785~~447,~~421~~730		4,744,084
Accounts receivable, net of allowance for doubtful accounts of $1,322,725		11,238,963		10,915,611
Accounts receivable, net of allowance for doubtful accounts of $1,322,168		16,431,067		10,915,611
and $1,284,360 at December 31, 2010 and June 30, 2010, respectively
and $1,284,360 at March 31, 2011 and June 30, 2010, respectively
Inventory		98,~~816~~919,~~073~~857		8,298,177
Trade notes receivable		30629,~~340~~124		515,150
Other receivables		~~572~~613,~~398~~585		484,003
Advance payments		4522,~~289,058~~340		31,~~670~~287,~~469~~924
Prepaid expenses and other current assets		~~660~~467,~~249~~002		299,713
Total current assets		3638,~~323~~478,~~600~~907		3532,~~148~~765,~~480~~935
Property and equipment, net		14,~~425~~352,~~061~~429		11,201,241
Other noncurrent assets:
Intangible assets, net		3,105,149		-
Advance payments – non current		1,673,408		2,382,545
Deferred loss on sales of assets		2,087,158		1,899,277
Intangible assets, net		3,109,886		-
Prepaid expenses		1,204,467		952,676
Deferred loss on sales of assets		2,051,564		1,899,277
Total assets	$	57,145,435	$	49,201,674
Prepaid expenses		1,158,598		952,676
Total assets	$	60,824,792	$	49,201,674
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	34,~~308~~365,~~026~~950	$	2,401,560
Trade notes payable		79,~~304~~046,~~473~~626		4,659,370
Short-term bank loans		3,~~034~~054,000		2,946,000
Current portion of long-term debt		34,~~899~~547,~~765~~296		2,589,409
Income tax payable		~~189~~376,~~718~~880		127,169
Other current liabilities		~~145~~128,~~578~~084		167,728
Total current liabilities		1721,~~881~~518,~~560~~836		12,891,236
Long-term debt		43,~~006~~235,~~755~~028		3,049,115
Total liabilities		2124,~~888~~753,~~315~~864		15,940,351
Equity
Stockholders’ equity:
Series A convertible preferred stock, $0.0001 par value, 5,608,564
shares authorized, issued and outstanding		561		561
Series B convertible preferred stock, $0.0001 par value, 5,000,000
shares authorized, issued and outstanding		500		500
Series C convertible preferred stock, $0.0001 par value, 12,000,000
shares authorized, issued and outstanding		1,200		1,200
Common stock, $0.001 par value, 300,000,000 shares authorized,
36,368,334 shares issued and outstanding at December 31, 2010
36,368,334shares issued and outstanding at March 31, 2011
and June 30, 2010, respectively		36,368		36,368
Series A preferred stock		2,484,226		2,484,226
Series B preferred stock		1,390,853		1,390,853
Additional paid-in capital		23,903,~~644~~645		23,184,206
Retained earnings		2,~~073~~658,~~099~~373		1,776,028
Statutory reserves		1,551,089		1,551,089
Accumulated other comprehensive income		3,~~707~~935,~~269~~088		2,731,043
Total stockholders’ equity		35,~~148~~961,~~809~~903		33,156,074
Noncontrolling interest		108,311		105,249
Non-controlling interest		109,025		105,249
Total equity		3536,~~257~~070,~~120~~928		33,261,323
Total liabilities and equity	$	5760,~~145~~824,~~435~~792	$	49,201,674

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

~~JPAK~~Consolidated ~~GROUP,~~Statements ~~INC.~~of Operations

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

	For the Three Months Ended						For the ~~Six~~Nine Months Ended
	December 31,						December 31,
	March 31,						March 31,
	2010			2009			2010			2009
	2011			2010			2011			2010
Sales	$	1619,~~658~~705,~~221~~508		$	1312,~~166~~876,~~264~~271		$	3252,~~843~~549,~~868~~376		$	2942,~~728~~604,~~184~~455
Cost of sales		1316,~~774~~694,~~638~~942			10,~~031~~125,~~204~~261			2643,~~399~~094,~~795~~737			2131,~~868~~994,~~816~~077
Gross profit		23,~~883~~010,~~583~~566			32,~~135~~751,~~060~~010			69,~~444~~454,~~073~~639			710,~~859~~610,~~368~~378
Operating expenses
Selling, general and administrative		32,~~307~~052,~~261~~282			1,~~805~~948,~~476~~808			57,~~539~~592,~~756~~038			46,~~693~~642,~~819~~627
Income (loss) from operations		(423,678	)		1,329,584			904,317			3,165,549
Incomefrom operations		958,284			802,202			1,862,601			3,967,751
Other income (expenses):
Interest expense, net		(155,591	)		(95,005	)		(306,327	)		(192,056	)
Interestincome,net		(217,268	)		(104,741	)		(523,595	)		(296,797	)
Non-operating income, net		24,908			89,878			12,341			86,366
Non-operatingincome, net		9,286			228			21,627			86,594
Total other income (expenses)		(~~130~~207,~~683~~982	)		(5104,~~127~~513	)		(~~293~~501,~~986~~968	)		(~~105~~210,~~690~~203	)
Income (loss) before provision for income taxes		(554,361	)		1,324,457			610,331			3,059,859
Income before provision for income taxes		750,302			697,689			1,360,633			3,757,548
Provision for income taxes		~~125~~165,~~906~~027			~~324~~143,~~524~~148			~~313~~478,~~342~~369			~~567~~710,~~362~~510
Net income (loss)		(680,267	)		999,933			296,989			2,492,497
Netincome		585,275			554,541			882,264			3,047,038
Less: net loss attributable to noncontrolling interest		(37	)		(89	)		(81	)		(145	)
Less: net loss attributable to non-controlling interest		-			(149	)		(81	)		(294	)
Net income (loss) attributable to Jpak Group, Inc.		(680,230	)		1,000,022			297,070			2,492,642
Net income attributable to Jpak Group, Inc.		585,275			554,690			882,345			3,047,332
Undistributed income attributable to preferred
stockholders		-313,396			~~491~~257,~~161~~672			~~137~~472,~~999~~467			1,~~165~~379,~~971~~110
Net income applicable to common stockholders		(680,230	)		508,861			159,071			1,326,671
Net income attributable to common
Other comprehensive income
Stockholders		271,879			297,018			409,878			1,668,222
Foreign currency translation adjustment		456,780			(6,842	)		976,226			25,188
Basic earnings per common share	$	0.01		$	0.01		$	0.01		$	0.05
Comprehensive income (loss)	$	(223,450	)	$	993,180		$	1,273,296		$	2,517,830
Diluted earnings per common share	$	0.01		$	0.01		$	0.01		$	0.05
Basic earnings (loss) per common share	$	(0.02	)	$	0.02		$	0.00		$	0.05
Diluted earnings (loss) per common share	$	(0.02	)	$	0.02		$	0.00		$	0.05
Weighted average number of common shares
outstanding
Outstanding
Basic		36,368,334			2836,~~092~~368,~~863~~334			36,368,334			2631,~~548~~489,~~931~~511
Diluted		3667,~~368~~918,~~334~~795			5668,~~295~~442,~~779~~656			6768,~~918~~287,~~795~~451			4957,~~882~~651,~~001~~605

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

~~JPAK~~Consolidated ~~GROUP,~~Statements ~~INC.~~of Comprehensive Income

Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months Ended
	For the Three Months Ended						For the Nine Months Ended
	December 31,
	March 31,						March 31,
	2010			2009
	2011			2010			2011		2010
Cash flows from operating activities:
Net income	$	585,275		$	554,541		$	882,264	$	3,047,038
Net income (loss)	$	296,989		$	2,492,497
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		689,237			770,427
Share-based payment		719,439			-
Loss (gain) on disposal of fixed assets		9,491			2,355
Changes in assets and liabilities:
Accounts receivable		2,663			(194,938	)
Inventory		(1,248,756	)		(1,799,098	)
Trade notes receivable		491,823			(448,518	)
Other receivables		(72,699	)		(45,987	)
Advance payments		(525,026	)		(3,172,068	)
Prepaid expenses and other current assets		(664,690	)		85,791
Accounts payable and accrued expenses		830,250			(510,297	)
Income tax payable		60,258			156,885
Other current liabilities		55,352			65,490
Total adjustments		347,342			(5,089,958	)
Net cash provided by (used in) operating activities		644,331			(2,597,461	)
Cash flows from investing activities:
Advance payments for fixed assets		24,601			(1,425,485	)
Additions to property and equipment		(3,648,505	)		(619,447	)
Proceeds from disposal of fixed assets		5,852			-
Acquisition of intangible assets – land use rights		(3,058,800	)		-
Loan receivable		-			43,992
Net cash used in investing activities		(6,676,852	)		(2,000,940	)
Cash flows from financing activities:
Restricted cash		(2,851,076	)		(776,541	)
Issuance of trade notes payable		2,463,965			1,144,557
Proceeds from long-term debt		2,064,413			2,547,183
Additional paid-in capital		-			5,916,500
Net cash provided by financing activities		1,677,302			8,831,699
Effect of foreign currency translation on cash		65,044			23
Net increase (decrease) in cash and cash equivalents		(4,290,175	)		4,233,321
Cash and cash equivalents and restricted cash – beginning		6,221,273			2,969,699
Cash and cash equivalents and restricted cash – ending	$	1,931,098		$	7,203,020

Other comprehensive income
Foreign currency translation adjustment		228,533			8,012			1,207,902			33,643

Total other comprehensive income		228,533			8,012			1,207,902			33,643

Comprehensive income		813,808			562,553			2,090,166			3,080,681

Comprehensive income attributable to the
noncontrolling interest		(714	)		(1	)		(3,857	)		(444	)

Comprehensive income attributable to Jpak Group, Inc.	$	813,094		$	562,552		$	2,086,309		$	3,080,237

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

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	March 31,
	2011			2010

Cash flows from operating activities:
Net income	$	882,264		$	3,047,038
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		1,039,053			1,168,485
Share-based payment		719,439			-
Loss on disposal of fixed assets		9,557			2,355
Changes in assets and liabilities:
Accounts receivable		(5,031,544	)		(2,201,790	)
Inventory		(312,274	)		(3,121,290	)
Trade notes receivable		(93,531	)		(942,425	)
Other receivables		(110,008	)		(99,430	)
Advance payments		1,558,161			(741,029	)
Prepaid expenses and other current assets		(156,534	)		188,026
Accounts payable and accrued expenses		1,854,723			507,918
Income tax payable		60,678			135,517
Other current liabilities		(45,041	)		99,391
Total adjustments		(507,321	)		(5,004,272	)

Net cash provided by (used in) operating activities		374,943			(1,957,234	)

Cash flows from investing activities:
Advance payments for fixed assets		24,772			(1,656,081	)
Additions to property and equipment		(3,795,651	)		(784,748	)
Proceeds from disposal of fixed assets		5,892			-
Acquisition of intangible assets – land use rights		(3,080,127	)		-

Net cash used in investing activities		(6,845,114	)		(2,440,829	)

Cash flows from financing activities:
Restricted cash		(4,455,568	)		549,069
Issuanceof trade notes payable		4,147,413			126,246
Proceeds from short-term bank loans		-			586,560
Proceeds from long-term debt		1,905,378			2,990,884
Additional paid-in capital		-			5,916,500

Net cash provided by financing activities		1,597,223			10,169,259

Effect of foreign currency translation on cash		99,877			7,890

Net increase (decrease) in cash and cash equivalents		(4,773,071	)		5,779,086

Cash and cash equivalents–beginning		6,221,273			2,969,699

Cash and cash equivalents–ending	$	1,448,202		$	8,748,785

Supplemental schedule of non cash activities
Deferred loss—sale leaseback	$	217,740		$	-

Note 1 – Organization and Nature of Business

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

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

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

On January 11, 2010, Qingdao Likang Packaging Co. Ltd (“Qingdao Likang”), a wholly-owned subsidiary of Grand International, was registered in Qingdao with a capital commitment of $13.5 million. As of December 31, 2010, approximately $7.1 million or 52.6% of total registered capital has been invested and the remaining $6.4 million of the registered capital will be invested within two years since the registration. Grand International is allowed to use the capital raised or the profit generated by Qingdao Renmin for this capital investment.

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

Note 2 – Summary of Significant Accounting Policies

Basis Of Presentation

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

Note 2 – Summary of Significant Accounting Policies (continued)

Basis Of Presentation (continued)

In preparing the accompanying unaudited consolidated financial statements, we evaluated the period from ~~December~~March 31, ~~2010~~2011 through the date the financial statements were issued, for material subsequent events requiring recognition or disclosure. No(see ~~such~~Note ~~events were identified for this period.~~22)

Interim Financial Statements

These interim financial statements should be read in conjunction with the audited financial statements for the years ended June 30, 2010 and 2009, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the years ended June 30, 2010 and 2009.

Intangible Assets

Land use rights with a finite useful life are amortized on a straight-line basis over its estimated useful life of 50 years, which is a common term stipulated by the government.

Reclassification

Certain amounts as of June 30, 2010 and ~~December~~March 31, ~~2009~~2010 were reclassified for presentation purposes.

Note 3– Restricted Cash

As of ~~December~~March 31, ~~2010~~2011 and June 30, 2010, the Company had restricted cash of $79,~~785~~447,~~421~~730 and $4,744,084, respectively. These restricted cash balances are reserved for settlement of trade notes payable and open letter of credit in connection with inventory purchases. The cash held in custody by bank issuing the trade notes payable and letter of credit is restricted as to withdrawal or use, and is currently earning interest.

Note 4– Accounts Receivable

Trade accounts receivable are stated at original invoice amount less allowance for doubtful receivables based on management’s periodic review of aging of outstanding balances and customer credit history. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The balance of allowance for doubtful accounts amounted to $1,322,~~725~~168 and $1,284,360 as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010, respectively. The allowance was ~~mainly~~mainlymade ~~made~~ for a customer currently under bankruptcy restructuring and we estimate that chances to recover the outstanding allowance balance from this customer are remote.

Note 5 – Inventory

Inventory, consisting of material, labor, and manufacturing overhead, as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consists of the following:

	December 31, 2010		June 30, 2010
	March 31, 2011		June 30,2010
Raw materials	$	6,~~562~~507,~~517~~928	$	6,595,076
Work in process		~~945~~423,~~203~~914		314,794
Finished goods		21,~~044~~679,~~964~~222		1,237,290
Parts and supplies		~~263~~308,~~389~~793		151,017
Total	$	98,~~816~~919,~~073~~857	$	8,298,177

Note 6 – Advance Payments

Advance payments as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consist of the following:

	December 31, 2010		June 30, 2010
	March 31, 2011		June 30,2010
Advance payments for inventory	$	2522,~~467,163~~340	$	1,287,924
Advance payments for equipment		1,~~821~~673,~~895~~408		2,382,545
Total	$	42,~~289~~195,~~058~~748	$	3,670,469

Note 7 – Property and Equipment

Property and equipment as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consist of the following:

	December 31, 2010		June 30, 2010
	March 31, 2011		June 30, 2010
Buildings	$	4,~~833~~864,~~042~~901	$	4,673,651
Machinery and equipment		15,~~328~~512,~~454~~571		12,007,708
Machinery—capital lease		12,~~456~~076,~~320~~720		1,414,080
Subtotal		2122,~~617~~454,~~816~~192		18,095,439
Less: Accumulated depreciation		10,~~277~~639,~~228~~547		9,425,588
		11,340,588		8,669,851
		11,814,645		8,669,851
Add: Construction in progress		32,~~084~~537,~~473~~784		2,531,390
Total	$	14,~~425~~352,~~061~~429	$	11,201,241

Depreciation expenses for the three months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 were $~~332~~334,~~866~~198 and $~~387~~398,~~928~~058, respectively. Depreciation expenses for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 were $~~668~~1,~~746~~002,944 and $~~770~~1,~~427~~168,485, respectively. For the ~~six~~nine months ended ~~December~~March 31, 2011 and 2010, amortization of machinery and equipment under capital lease included in depreciation expense was $90136,~~326~~434 and $-0-, respectively.

Note 8 – Intangible Assets

Intangible assets as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consist of the following:

	December 31, 2010			June 30, 2010
	March 31, 2011			June 30, 2010
Land use rights	$	3,~~125~~146,~~989~~596		$	-
Less: accumulated amortization		~~(20~~36,~~840~~710	)		-
Total	$	3,~~105~~109,~~149~~886		$	-

The intangible assets represent consideration payment and other expenditures for land use right of Qingdao Likang for a parcel of land with an area of approximately 65,064 square meters. The total cost is amortized over 50 years. Amortization expense for the three months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 was $15,~~350~~618 and $-0-, respectively. For the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 was $2036,~~491~~109 and $-0-, respectively.

Note 9 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consist of the following:

	December 31, 2010		June 30, 2010
	March 31, 2011		June 30, 2010
Accounts payable	$	23,~~830~~708,~~200~~387	$	2,105,829
Accrued expenses		~~477~~657,~~826~~563		295,731
Total	$	34,~~308~~365,~~026~~950	$	2,401,560

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

Note 10 – Trade Notes Payable

Trade notes payable consist of non-collateralized non-interest bearing promissory notes issued in connection with the acquisition of certain inventory and equipment. Balances outstanding under the notes as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 were $79,~~304~~046,~~473~~626 and $4,659,370, respectively.

Note 11 – Short-Term Bank Loans

Short -term bank loans as of ~~December~~March 31, ~~2010~~2011 and June 30, 2010 consist of the following:

	December 31,		June 30,
	March 31,		June 30,
	2010		2010
	2011		2010
On January 18, 2010, the Company obtained a loan from Qingdao City
On January 18, 2010, the Company obtained a loan from QingdaoCity
Commercial Bank, out of which, the principal is to be paid in full by January
Commercial Bank. The principal was paid in full on January18, 2011.
18, 2011. Interest is to be calculated using an annual fixed rate of 5.31%
Interest was calculated using an annual fixed rate of 5.31%
and paid monthly. The loan is secured by the company's property.	$	~~606,800~~-	$	589,200
On February 11, 2010, the Company obtained a loan from Qingdao City
On February 11, 2010, the Company obtained a loan from QingdaoCity
Commercial Bank, out of which, the principal is to be paid in full by February
Commercial Bank. The principal was paid in full on February11, 2011.
11, 2011. Interest is to be calculated using an annual fixed rate of 5.31%
Interest was calculated using an annual fixed rate of 5.31%
and paid monthly. The loan is secured by the company's property.	$	~~2,427,200~~-	$	2,356,800
Total short-term bank loans	$	3,034,000	$	2,946,000
On January 14, 2011, the Company obtained a loan from Qingdao City
Commercial Bank. The principal is to be paid in full by January
14, 2012. Interest is calculated using an annual fixed rate of 5.08375%
andpaid monthly. The loan is secured by the company's property.	$	610,800	$	-
On January 18, 2011, the Company obtained a loan from QingdaoCity
Commercial Bank. The principal is to be paid in full by January 18, 2012. Interest is calculated using an annual fixed rate of 5.08375%and paid monthly. The loan is secured by the company's property.	$	1,221,600	$	-
On January26, 2011, the Company obtained a loan from QingdaoCity
Commercial Bank. The principal is to be paid in full by January26, 2012.
Interest is calculated using an annual fixed rate of 5.08375%
andpaid monthly. The loan is secured by the company's property.	$	1,221,600	$	-
Total short-term bank loans	$	3,054,000	$	2,946,000

Note 12 – Long-Term Debt

Long term debt as ofofMarch ~~December~~ 31, ~~2010~~2011 and June 30, ~~2010~~2010consist ~~consist~~ of the following:

	December 31,		June 30,
	March 31,		June 30,
	2010		2010
	2011		2010
The Company obtained loans from employees, upon which interest is
The Company obtained loans from employees, upon whichinterest is
payable at an annual fixed rate of 10%. Interest payments are made
semi-annually with no principal payments due until May 31, 2010,
as per the terms of the loan agreement.	$	5,~~424~~437,~~792~~647	$	4,439,622
On November 27, 2009, the Company entered into a sale-leaseback
transaction with International Fareastern Leasing Co., Ltd., which was
accounted for as a financing arrangement in the amount of approximately
$1.4 million. The annual principal and interest payment is $411,548
and the term of the arrangement is four years. Refer to Note 18.	$	1,068,362	$	1,198,902
In December 2010, two other sale-leaseback agreements established on
November 27, 2009 went into effect, which represents financing
arrangement in the total amount of approximately $1.65 million, received in two allotments. The annual principal and interest payment is $467,593 and the term of the arrangement is four years.	$	1,413,366	$	-
Total	$	7,906,520	$	5,638,524
Less: Current portion of loans		3,020,347		2,184,459
Current portion of obligation under capital lease		879,418		404,950
Total Current portion		3,899,765		2,589,409
Total long-term portion	$	4,006,755	$	3,049,115

910

Note 12 – Long-Term Debt (continued)

	March 31,		June 30,
	2011		2010
On November 27, 2009, the Company entered into a sale-leaseback
transaction with International Fareastern Leasing Co., Ltd., which was
accounted for as a financing arrangement in the amount of approximately
$2.08 million. The annual principal and interest payment is $597,487
and the term of the arrangement is four years. Refer to Note 18.	$	1,540,932	$	1,198,902

In December 2010, two other sale-leaseback agreements established on
November 27, 2009 went into effect, which represents financing
arrangement in the total amount of approximately $1.05 million, received in two allotments. The annual principal and interest payment is $298,063 and the term of the arrangement is four years.	$	803,745	$	-

Total	$	7,782,324	$	5,638,524

Less:Current portion of loans		3,661,746		2,184,459
Current portion of obligation under capital lease		885,550		404,950

Total Current portion		4,547,296		2,589,409

Total long-term portion	$	3,235,028	$	3,049,115

Note 13 – Stockholders’ Equity and Related Financing Agreements

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

On August 9, 2007, Jpak became a party to the Note Purchase Agreement dated May 17, 2007 (~~the~~ “NPA”). Pursuant to the NPA, Jpak issued Convertible Promissory Notes in the aggregate principal amount of $5.5 million to the Investors. As a result of the Share Exchange, and under the terms of the Notes and the NPA, the notes converted to the following: (i) 5,608,564 shares of the Company’s Series A Convertible Preferred Stock, par value $.0001 per share, convertible into an aggregate of 11,217,128 shares of common stock, par value $0.001 per share (the “Common Stock”), (ii) Series A Warrants to purchase an aggregate of 5,500,000 shares of Common Stock (subject to adjustment) at an exercise price of $.60 per share ~~until~~untilAugust ~~August~~ 2011 (the “Series A Warrants”), (iii) Series B Warrants to purchase an aggregate of 5,500,000 shares of Common Stock (subject to adjustment) at an exercise price of $.70 per share until August 2011 (the “Series B Warrants”) and (iv) Series J Warrants to purchase (a) an aggregate of 5,000,000 shares of Series B Preferred Stock, which shall contain the same terms as the Series A Preferred Stock (other than conversion price), and will be convertible into 8,333,333 shares of the Company’s Common Stock, (b) Series C Warrants to purchase an aggregate of 4,166,667 shares of Common Stock (subject to adjustment) at an exercise price of $.72 per share (the “Series C Warrants”) and (c) Series D Warrants to purchase an aggregate of 4,166,667 shares of Common Stock (subject to adjustment) at an exercise price of $.84 per share (the “Series D Warrants” and together with the Series A Warrants, Series B Warrants and Series C Warrants, the “Warrants”). The Series J Warrants were exercisable until 90 days following the effective date of a registration statement registering for sale of shares of common stock underlying the securities issued in the financing. Finally, the Company also granted warrants to purchase 990,000 shares of common stock at an exercise price of $.50 per share and 750,000 shares of common stock at an exercise price of $.60 per share to the placement agent in the financing transaction. These warrants have the same terms as the Series A and Series B Warrants, except that they contain a “cashless” exercise provision.

Note 13 – Stockholders’ Equity and Related Financing Agreements (continued)

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

In connection with the exercise of the Series J Warrants, the term of Series A and Series B Warrants was extended from four years to six years, so that such warrants shall now expire on August 9, 2013. The extension of the term of the Series A and Series B Warrants was a condition of the exercise of the Series J Warrants and the subsequent issuance of the Series B Preferred stock (the “Series B financing”). In this way, the conversion of Series A and Series B convertible Preferred Stock is deemed as “in the money” and therefore ~~contains~~contain a beneficial conversion feature which amounted to $2,484,226 and $1,390,853, respectively, after allocation.

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

Note 13 – Stockholders’ Equity and Related Financing Agreements (continued)

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

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

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

Note 14 – Income Taxes

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

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

On March 16, 2007, the National People’s Congress of China enacted a new Corporate Income Tax (“CIT”) law, under which FIEs and domestic companies would be subject to CIT at a uniform rate of 25%. The new CIT law became effective on January 1, 2008. The grandfathering treatments for unutilized tax holiday are provided for certain qualified FIEs. For those FIEs which have already commenced their qualified tax holidays before 2008, they can continue to enjoy the remaining unutilized tax holidays until expiry. For those qualified old FIEs which have not commenced their tax holidays before 2008 due to cumulative losses, their tax holidays will be deemed to commence in 2008 and can be utilized until expiry. Currently, the Company does not believe that the new CIT law will affect the preferential tax treatments (i.e. the unutilized tax holiday) that it is entitled to. Accordingly, since January 1, 2009, the Company has commenced the 3-year period of tax holidays by a 50% reduction of FEIT with an effective tax rate of 12.5%, and for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010, the income tax expense was $~~303~~478,~~937~~369 and $~~567~~710,~~362~~510, respectively.

11On February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) jointly issued CaiShui [2008] Circular 1 (“Circular 1”). According to Article 4 of Circular 1, distributions of accumulated profits earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 or after will be exempt from withholding tax (“WHT”) while distribution of the profit earned by an FIE after January 1, 2008 to its foreign investor(s) shall be subject to WHT. Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future.

Note 14 – Income Taxes (continued)

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

Note 15 – Employee Welfare Plan

The Company has established an employee welfare plan in accordance with Chinese laws and regulations. Full-time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. PRC labor regulations require the Company to accrue for these benefits based on a certain percentage of the employees’ salaries. The total contribution for such employee benefits was $~~311~~350,~~879~~489 and $~~246~~355,~~986~~380 for the ~~six~~nine ~~months~~monthsended ~~ended~~March ~~December~~ 31, ~~2010~~2011 and ~~2009~~2010, respectively.

Note 16 – Risk Factors

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

Note 17 - Risk of Concentrations and Credit Risk

For the ~~three~~nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010, five vendors accounted for approximately 6874% and 7872% of the Company’s purchases, respectively. Total purchases from these vendors were $1238,~~858~~825,~~675~~494 and $933,~~949~~018,~~685~~556 for ~~the~~thenine ~~three~~ months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010, respectively.

For the three months ended December 31, 2010 and 2009, five customers accounted for approximately 61% and 63% of the Company’s revenue, respectively. Total sales to these customers were $10,121,722 and $8,326,864 for the three months ended December 31, 2010 and 2009, respectively.13

Note 17 - Risk of Concentrations and Credit Risk (continued)

For the nine months ended March 31, 2011 and 2010, five customers accounted for approximately 68% and 63% of the Company’s revenue, respectively. Total sales to these customers were $35,896,674 and $27,009,278 for the nine months ended March 31, 2011 and 2010, respectively.

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

Note 18 – Sale-Leaseback Transaction Accounted for as a Financing Arrangement

On November 27, 2009, the Company entered into three sale-leaseback arrangements with International Fareastern Leasing Co., Ltd and completed two of them for the refinancing of its printing equipment. The equipment with book value of approximately $3.4.2 million was sold for approximately $12.408 million. The other ~~two~~one went into effect in ~~December~~June ~~2010~~2011. The equipment with book value of approximately $21.445 million was sold for approximately $1.6505 million. The cash received was used towards the original invoice amount. The transaction has been accounted for as a financing arrangement, wherein the equipment remains on the Company’s books and will continue to be depreciated.

The loss on the sale of the equipment was deferred and amortized over the remaining useful life of the leased assets as an increase of depreciation expense. For the three months ended ~~December~~March 31, ~~2010~~2011, the Company amortized $4549,~~932~~353 of the deferred loss into depreciation expense. A financing obligation in the amount of $2.534 million, representing the proceeds, has been recorded under long-term debt in the Company’s ~~Balance~~balance ~~Sheet~~sheet, and is being reduced based on payments under the lease.

Note 18 – Sale-Leaseback Transaction Accounted for as a Financing Arrangement (continued)

The lease has a term of four years and requires minimum annual lease payments as follows:

Year Ending June 30	~~Year Ending June 30~~	Amount
2011	~~2011~~	~~439,709~~$	146,872
2012	~~2012~~	~~879,418~~	885,550
2013	~~2013~~	~~879,418~~	885,550
2014	~~2014~~	~~604,868~~	609,086
Total	~~Total~~	$~~2,803,413~~	2,527,057

The Company has the option to purchase the equipment at the end of the lease term.

Note 19 – Earnings Per Share

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

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

Basic EPS for the three months ended December 31, 2010 was computed as follows:

Net loss	$	(680,230	)
Less dividends paid to:
Common shareholders		-
Series A convertible preferred shareholders		-
Series B convertible preferred shareholders		-
Series C convertible preferred shareholders		-
Undistributed loss	$	(680,230	)

Basic earnings per share amount:
				Series A		Series B		Series C
	Common			convertible		convertible		convertible
	Stock			preferred stock		preferred stock		preferred stock
Distributed earnings	$	0.00		$	0.00	$	0.00	$	0.00
Undistributed earnings		(0.01	)		0.00		0.00		0.00
Totals	$	(0.01	)	$	0.00	$	0.00	$	0.00

Note 19 – Earnings Per Share (continued)

Diluted EPS for the three months ended December 31, 2010 was computed as follows using the If-Converted Method:

	Distributed &
	Undistributed
	earnings to
	Common			Common		Earnings
	Stock			Shares		Per Share
As reported - Basic	$	(680,230	)		36,368,334	$	(0.02	)
Warrants		-			-		-
		(680,230	)		36,368,334	$	(0.02	)
Series A preferred stock conversion		-			-		-
Series B preferred stock conversion		-			-		-
Series C preferred stock conversion		-			-		-
Diluted earnings for common stock	$	(680,230	)		36,368,334	$	(0.02	)

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

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

Basic earnings per share amounts:
			Series A		Series B		Series C
	Common		convertible		convertible		convertible
	Stock		preferred stock		preferred stock		preferred stock
Distributed earnings	$	0.00	$	0.00	$	0.00	$	0.00
Undistributed earnings		0.02		0.04		0.03		0.01
Totals	$	0.02	$	0.04	$	0.03	$	0.01

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

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

Note 19 – Earnings Per Share (continued)

Basic EPS for the ~~six~~three months ended ~~December~~March 31, ~~2010~~2011 was computed as follows:

Net income attributable to Jpak Group, Inc.	$	~~297~~585,~~070~~275
Less dividends paid to:
Common shareholders		-
Series A convertible preferred shareholders		-
Series B convertible preferred shareholders		-
Undistributed earnings	$	297,070
Series C convertible preferred shareholders		-
Undistributed income	$	585,275

Basic earnings per share amounts:
			Series A		Series B		Series C
	Common		convertible		convertible		convertible
	Stock		preferred stock		preferred stock		preferred stock
Distributed earnings	$	0.00	$	0.00	$	0.00	$	0.00
Undistributed earnings		0.0001		0.0102		0.01		0.0001
Totals	$	0.0001	$	0.0102	$	0.01	$	0.0001

Diluted EPS for the ~~six~~three months ended ~~December~~March 31, ~~2010~~2011was ~~was~~ computed as follows using the If-Converted Method:

	Distributed &
	Undistributed
	earnings to
	Common		Common		Earnings
	Stock		Shares		Per Share
As reported - Basic	$	~~159~~313,~~071~~396	$	36,368,334	$	0.0001
Warrants		-		-		-
		159,071		36,368,334	$	0.00
		313,396		36,368,334	$	0.01
Series A preferred stock conversion		4996,~~063~~661		11,217,128		-
Series B preferred stock conversion		3671,~~449~~811		8,333,333		-
Series C preferred stock conversion		52103,~~487~~407		12,000,000		-
Diluted earnings for common stock	$	~~297~~585,~~070~~275	$	67,918,795	$	0.0001

Basic EPS for the ~~six~~three months ~~ended~~endedMarch ~~December~~ 31, ~~2009~~2010was ~~was~~ computed as follows:

Net income	$	2,492,642
Net income attributable to Jpak Group, Inc.	$	554,690
Less dividends paid to:
Common shareholders		-
Series A convertible preferred shareholders		-
Series B convertible preferred shareholders		-
Series C convertible preferred shareholders		-
Undistributed 2009 earnings	$	2554,~~492,642~~690

Basic earnings per share amounts:
			Series A		Series B		Series C
	Common		convertible		convertible		convertible
	Stock		preferred stock		preferred stock		preferred stock
Distributed earnings	$	0.00	$	0.00	$	0.00	$	0.00
Undistributed earnings		0.0501		0.1002		0.0801		0.0201
Totals	$	0.0501	$	0.1002	$	0.0801	$	0.0201

Note 19 – Earnings Per Share (continued)

Diluted EPS for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010 was computed as follows using the If-Converted Method:

	Distributed &
	Undistributed
	earnings to
	Common		Common		Earnings
	Stock		Shares		Per Share
As reported - Basic	$	1297,~~326,671~~018		2636,~~548~~368,~~931~~334	$	0.0501
Warrants		-		-523,861		--
		1,326,671		26,548,931	$	0.05
		297,018		36,892,195	$	0.01
Series A preferred stock conversion		~~560~~91,~~529~~610		11,217,128		--
Series B preferred stock conversion		~~416~~68,~~422~~058		8,333,333		--
Series C preferred stock conversion		~~189~~98,~~020~~004		312,~~782~~000,~~609~~000		--
Diluted earnings for common stock	$	2554,~~492,642~~690		4968,~~882~~442,~~001~~656	$	0.0501

~~Note~~Basic 20EPS –for ~~Share~~the ~~Based~~nine ~~Payments~~months ended March 31, 2011 was computed as follows:

On December 15, 2010, JPAK granted five-year options to purchase up to 3,600,000 shares of the common stock of the Company at the exercise price of $0.20 per share to four of its key employees in accordance with the 2010 Equity Incentive Plan. All the options vested immediately upon issuance. The fair value of each option grant is estimated on the granted date using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the quarter ended December 31, 2010: expected volatility of 299.23 percent and risk-free interest rate of 2.11 percent.

Net income attributable to Jpak Group, Inc.	$	882,345
Less dividends paid to:
Common shareholders		-
Series A convertible preferred shareholders		-
Series B convertible preferred shareholders		-
Undistributed earnings	$	882,345

Accordingly, an amount of $719,439 share based payments were charged against income as compensation costs in the three months ended December 31, 2010.

Basic earnings per share amounts
			Series A		Series B		Series C
	Common		convertible		convertible		convertible
	Stock		preferred stock		preferred stock		preferred stock

Distributed earnings	$	0.00	$	0.00	$	0.00	$	0.00
Undistributed earnings		0.01		0.03		0.02		0.01
Totals	$	0.01	$	0.03	$	0.02	$	0.01

~~Note~~ Diluted 21EPS –for ~~Supplemental~~the ~~Cash~~nine ~~Flow~~months ~~Information~~ended March 31, 2011 was computed as follows using the If-Converted Method:

	Six Months Ended December 31,
	Distributed &
	2010		2009
	Undistributed
Cash paid for interest	$	365,737	$	253,402
	earnings to
Cash paid for income taxes	$	317,808	$	383,092
	Common		Common		Earnings
	Stock		Shares		Per Share
As reported - Basic	$	472,467	$	36,368,334	$	0.01
Options		-		368,656		-
		472,467		36,736,990	$	0.01
Series A preferred stock conversion		145,724		11,217,128		-
Series B preferred stock conversion		108,260		8,333,333		-
Series C preferred stock conversion		155,894		12,000,000		-
Diluted earnings for common stock	$	882,345		68,287,451	$	0.01

Note 22 – Subsequent Event

None.

Note 19 – Earnings Per Share (continued)

Basic EPS for the nine months ended March 31, 2010was computed as follows:

Net income attributable to Jpak Group, Inc.	$	3,047,332
Less dividends paid to:
Common shareholders		-
Series A convertible preferred shareholders		-
Series B convertible preferred shareholders		-
Series C convertible preferred shareholders		-
Undistributed 2009 earnings	$	3,047,332

Basic earnings per share amounts:
			Series A		Series B		Series C
	Common		convertible		convertible		convertible
	Stock		preferred stock		preferred stock		preferred stock

Distributed earnings	$	0.00	$	0.00	$	0.00	$	0.00
Undistributed earnings		0.05		0.11		0.09		0.03
Totals	$	0.05	$	0.11	$	0.09	$	0.03

Diluted EPS for the nine months ended March 31, 2010was computed as follows using the If-Converted Method:

	Distributed &
	Undistributed
	earnings to
	Common		Common		Earnings
	Stock		Shares		Per Share

As reported - Basic	$	1,668,222		31,489,511	$	0.05
Warrants		-		129,882		-
		1,668,222		31,619,393	$	0.05
Series A preferred stock conversion		594,250		11,217,128		--
Series B preferred stock conversion		441,476		8,333,333		--
Series C preferred stock conversion		343,384		6,481,751		-
Diluted earnings for common stock	$	3,047,332		57,651,605	$	0.05

Note 20 – Share Based Payments

On December 15, 2010, JPAK granted five years options to purchase up to 3,600,000 shares of the common stock of the Company at the exercise price of $0.20 per share to four of its key employees in accordance with the 2010 Equity Incentive Plan. All the options vested immediately upon issuance. The fair value of each option grant is estimated on the granted date using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the quarter ended March 31,2011: expected volatility of 299.23 percent and risk-free interest rate of 2.11 percent.

Accordingly, an amount of $719,439 sharebased payments were charged against income ascompensation costs in the nine months ended March 31, 2011.

Note 21 – Supplemental CashFlow Information

	Nine Months Ended March 31,
	2011		2010

Cash paid for interest	$	413,035	$	446,551
Cash paid for income taxes	$	387,019	$	547,609

Note 22 – Subsequent Events

OnMay 9, 2011, Dongliang (Frank) Su resigned as the Company’s Acting Chief Financial Officer, although he will maintain his position as one of the Company’s financial advisors. Mr. Su tendered his resignation voluntarily and not as a result of any dispute or disagreement between the Company. On that same day, we appointed Yongbo (Esther) Wang as Chief Financial Officer.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of Jpak for the three months and ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 and should be read in conjunction with such financial statements and related notes included in this report.

Overview

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

Company History

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

On June 22, 2006, Jpak Group Co., Ltd (“Jpak Ltd.”) was incorporated in the Cayman Islands. In September 2006, Jpak Ltd. completed the acquisition of 88.23% of the equity interest in Qingdao Renmin through Grand International, the 100% owned subsidiary of ~~Jpak Ltd~~JpakLtd.. In July 2007, Grand International completed the acquisition of the remaining 11.77% of the state-owned equity interest and now owns 100% of the equity interest of Qingdao Renmin.

On August 9, 2007, Rx Staffing completed a reverse acquisition of Jpak Ltd. and issued 23,005,000 shares of common stock on a one to one ratio for a 100% equity interest in Jpak Ltd., whereby Jpak Ltd. becomes a subsidiary of Rx Staffing. On the same day, Rx Staffing changed its corporate name to Jpak Group, Inc. (“Jpak”).

On January 11, 2010, Qingdao Likang Packaging Co. Ltd (“Qingdao Likang”), a wholly-owned subsidiary of Grand International, was registered in Qingdao with a capital commitment of $13.5 million. As of December 31, 2010, approximately $7.1 million or 52.6% of total registered capital has been invested and the rest will be invested within two years since the registration. Grand International is allowed to use the capital raised or the profit generated by Qingdao Renmin for this capital injection.

Competitive environment

The market for packaging products is competitive. Our operations may be affected by technological advances of competitors, industry consolidation, competitive combination products and new information of marketed products or post-marketing surveillance.

Due to China’s new anti-monopoly laws, some of our larger competitors decreased the amounts of bundled products they offer, which may cause them to lower their prices. Recently we have seen more and more competition from the new entry of local suppliers as they are attracted by the relatively higher margin of this sector. As a result of intensifying competition, our sales price and gross margin have been affected.

Strategy

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

17· Increasing output to further penetrate the China market; · Developing bundled packaging materials and liquid filling machines; · Increasing sales to selective Asian and other markets; · Partnering with top milk producers; · Establishing brand names and brand awareness; and · Enhancing the Company’s competitive advantages through R&D.

- Increasing output to further penetrate the China market; - Developing bundled packaging materials and liquid filling machines; - Increasing sales to selective Asian and other markets; - Partnering with top milk producers; - Establishing brand names and brand awareness; and - Enhancing the Company’s competitive advantages through R&D.

Research and Development

To maintain and expand our market share, our top priority is to achieve technology breakthroughs on SIG packages and self-developed filling equipment.

In October 2006, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co., Ltd., (“Qingdao Delikang”), a joint venture with Xi’an Heiniu Machinery, Co.. Qingdao Renmin is the 51% owner of Qingdao Delikang. The main business of this joint venture is to research and develop filling machines. Our first filling machine can run at approximately 12,000 packages output per hour and has finished tests by one of our customers. The second one is being manufactured and can be provided to our clients in a couple of months.

In addition, we are dedicated to developing packaging materials that can be used in the filling machines created by SIG ~~Combibloc (“SIG”), one of our primary competitors in China~~. We have achieved technology breakthroughs with our first SIG packaging line, which can produce packages for small customers. Our second SIG packaging line iswas ~~being~~recently ~~manufactured~~installed and ~~will~~has bebegun ~~available~~production ~~for~~as ~~test use by our customers soon~~well. We continue to improve both quality and stability of these two new lines. We plan to add up to eight additional lines in the near future. Management believes that these new SIG packaging lines will significantly increase our revenue and also provide relatively higher gross margins in the next several years.

Manufacturing, Sales and Marketing

We support commercialized products with manufacturing, sales and marketing efforts. We are also moving forward with additional investments to enhance our infrastructure and business, including capital expenditures for the new production machinery. Our current annual capacity is approximately 3.5 billion packs for normal packaging. Once SIG packaging passes tests proving its ability to produce packages in large batches, assuming funding is available, management plans to introduce up to eight more production lines with anticipated annual capacity of 80 million packs per line.

Management continually reviews the business, including manufacturing operations, to identify actions that will enhance long-term competitiveness. By continuously streamlining the management of the production processes and improving production efficiency, we decreased the scrap percentage and lowered our costs. However, because of rising raw material prices, we were unable to lower our prices further, which may have resulted in a slower pace of growth than we might have experienced had we lowered our prices.

With the planning and construction of our new plant of Qingdao Likang, we anticipate that a new line for normal packs and four new lines for SIG packs will be put into production in the middle of 2011. As our finances permit, further expansion will be continued in the following two or three years which may increase our annual capacity to 8.0 billion packs per annum in total.

Results of Operations

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

Comparison of the three months ended ~~December~~ March 31, ~~2010 and 2009~~2011and2010

Three Months Ended December 31	2010			2009
Three Months Ended March 31	2011			2010
Sales	$	1619,~~658~~705,~~221~~508		$	1312,~~166~~876,~~264~~271
Cost of sales	$	1316,~~774~~694,~~638~~942		$	10,~~031~~125,~~204~~261
Gross profit	$	23,~~883~~010,~~583~~566		$	32,~~135~~751,~~060~~010
Selling, general and administrative expenses	$	32,~~307~~052,~~261~~282		$	1,~~805~~948,~~476~~808
Other income (expense)	$	(~~130~~207,~~683~~982	)	$	(5104,~~127~~513	)
Income taxes	$	~~125~~165,~~906~~027		$	~~324~~143,~~524~~148
Non-controlling interest	$	~~(37~~-	)	$	(89149	)
Net income (loss)	$	(680,267	)	$	999,933
Net income	$	585,275		$	554,690
Foreign currency translation adjustment	$	~~456~~227,~~780~~819		$	(68,~~842~~011	)
Comprehensive income (loss)	$	(223,450	)	$	993,180
Comprehensive income	$	813,094		$	562,701

18Sales. Total sales were approximately $19.7 million for the three months ended March 31, 2011 as compared with approximately $12.9 million for the three months ended March 31, 2010, an increase of approximately $6.8 million, or 52.7%. The increase of sales was mainly due to our continued sales and marketing efforts to locate and the new customers also contributed to the sales growth. With our competitive pricing advantage, we have added 3 new domestic customers in this quarter which accounted for 0.47% of total revenue.

Cost of Sales. ~~Total~~Cost of sales ~~were approximately $16.7 million~~ for the three months ended ~~December~~March 31, ~~2010~~2011 was approximately $16.7 million, or 84.8% of sales, as compared with ~~approximately~~ $1310.21 million, or 78.3% of sales, for the three months ended ~~December~~March 31, ~~2009~~2010, an increase of approximately $36.56 million, or 2665.53%. ~~The~~Our ~~increase~~cost of sales ~~was~~is ~~mainly~~primarily ~~due~~composed toof ~~our~~the ~~continued~~costs ~~sales~~of ~~and~~direct ~~marketing~~raw ~~efforts~~materials as(mainly ~~well~~paper asmaterials, ~~the~~polyethylene ~~introduction~~materials, ofaluminum ~~SIG~~materials, ~~packaging~~printing ~~lines~~materials), ~~which~~labor, ~~accounts~~depreciation ~~for~~and ~~approximately~~amortization $1of manufacturing equipment and facilities, and other overhead.0 ~~million~~The increase of ~~our~~cost ~~additional~~of sales as a percentage of sales by 6. ~~Although~~5% was due to the ~~total~~purchase ~~sales~~price ~~volume~~escalation ~~increased~~of major raw materials such as paper and plastic particles, which led to a narrower profit margin in ~~this~~the period covered by ~~nearly~~this ~~32%,~~Report. ~~our~~Our ~~revenue~~cost ~~did~~of ~~not~~sales ~~grow~~may ~~the~~continue ~~same~~to ~~percentage~~rise ~~because~~as the ~~sale~~global ~~price~~commodity prices move higher. We can hardly impose controls on the cost of our major ~~products~~raw ~~were~~materials such as paper and plastic particles. Although we are trying to use material-saving techniques to cut down inthe ~~order~~portion toof ~~maintain~~cost ~~customers~~of assales, aour ~~result~~efforts may be limited compared with the price increase of ~~fierce~~certain ~~competition~~raw materials.

~~Cost~~Gross ~~of Sales~~profit.As ~~Cost~~a result of ~~sales for~~ the ~~three~~increase ~~months~~in ~~ended~~the ~~December~~percentage ~~31,~~of ~~2010~~cost ~~was approximately $13.8 million, or 82.7%~~ of sales,the asgross ~~compared~~profit ~~with~~margin ~~$10.0 million, or 76.2% of sales,~~ for the three months ended ~~December~~March 31, ~~2009,~~2011 anwas ~~increase of~~ approximately $315.~~8 million or 37.~~3%. ~~Our~~as ~~cost~~compared ofwith ~~sales~~21.4% isfor ~~primarily composed of~~ the ~~costs~~three ofmonths ~~direct~~ended ~~raw~~March ~~materials (mainly paper materials~~31, ~~polyethylene materials~~2010, ~~aluminum materials, printing materials), labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead. The increase of cost of sales as~~ a ~~percentage~~decrease of ~~sales by~~ 6.51% ~~was due to the purchase price escalation of major raw materials such as paper and plastic particles, which led to a narrower profit margin in the period covered by this Report~~. Our cost of sales may continue to rise as the global commodity prices move higher. We can hardly impose controls on the cost of our major raw materials such as paper and plastic particles. Although we are trying to use material-saving techniques to cut down the portion of cost of sales, our efforts may be limited compared with the price increase of certain raw materials.

~~Gross~~Selling, ~~profit.~~general Asand aadministrative ~~result~~expenses. ofSelling, ~~the~~general ~~increase~~and inadministrative ~~the~~expenses ~~percentage~~were ofapproximately ~~cost~~$2.1 ofmillion ~~sales, the gross profit margin~~ for the three months ended ~~December~~March 31, ~~2010~~2011 ~~was approximately 17.3%~~ as compared with 23approximately $2.8%0 million for the three months ended ~~December~~March 31, ~~2009~~2010, aan ~~decrease~~increase of 6approximately $0.1 million, or 5.0%. The slight increase was mainly due to the growing repair expenses and social welfare expenses by approximately $0.13million and the additional expenses occurring to Likang amounted to approximately $0.1 million.

~~Selling,~~Income ~~general and administrative expenses~~tax. Income ~~Selling,~~tax ~~general~~was ~~and administrative expenses were~~ approximately $30.317 million for the three months ended ~~December~~March 31, ~~2010~~2011 as compared with approximately $10.814 million for the three months ended ~~December~~March 31, ~~2009~~2010, an increase of approximately $10.503 million, or 8321.24%. ~~The~~in ~~increase~~accordance ~~was~~with ~~mainly due to~~ the ~~increase~~change of ~~expenses~~profit ~~for~~before ~~management incentive options vested in the three months ended December 31, 2010 and recorded as compensation costs amounted to approximately $0~~tax.~~7 million, the growing R&D expenses by approximately $0.3 million and the additional expenses occurring to Likang amounted to approximately $0.2 million.~~

~~Income~~Net ~~tax~~income. ~~Income~~Net ~~tax~~income was approximately $0.1259 million for the three months ended ~~December~~March 31, ~~2010~~2011 as compared with ~~approximately~~net income$0.3255 million for the three months ended ~~December~~March 31, ~~2009~~2010, aan ~~decrease~~increase of approximately $0.204 million. orThe ~~61.2%~~small increase in ~~accordance~~net ~~with~~income was primarily due to the ~~change~~shrink of gross profit ~~before~~and ~~tax~~the sight rise of general and administrative expenses.

Net income (loss). Net loss was approximately $(0.67) million for the three months ended December 31, 2010 as compared with net income of $1.0 million for the three months ended December 31, 2009, a decrease of approximately $1.67 million. The decrease in net income was primarily due to the reduction of gross profit and the increase in general and administrative expenses.21

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

Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders' equity and was a gain of $~~456~~227,~~780~~819 for the three months ended ~~December~~March 31, ~~2010~~2011 compared with ~~a loss of~~ $(68,~~842)~~011 for the three months ended ~~December~~March 31, ~~2009~~2010. The balance sheet amounts with the exception of equity at ~~December~~March 31, ~~2010~~2011 were translated at RMB6.~~5920~~54879 to US$1.00 as compared with RMB6.~~8166~~81663 to US$1.00 at ~~December~~March 31, ~~2009~~2010. The equity accounts were stated at their historical rate. The average translation rates applied to income statement accounts for the three months ended ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 were RMB6.~~6483~~58940 and RMB6.~~8360~~81896 to US$1.00.

Comprehensive income ~~(loss)~~. The comprehensive ~~loss~~income, which adds the currency adjustment to net income, was $(0.~~22)~~81 million for the three months ended ~~December~~March 31, ~~2010~~2011 as compared with comprehensive income $0.9956 million for the three months ended ~~December~~March 31, ~~2009~~2010. The large amount of foreign currency translation adjustment was due to rapid appreciation of RMB. As a result, the comprehensive ~~loss~~income for the three months ended ~~December~~March 31, ~~2010~~2011 was ~~largely~~slightly ~~reduced even though the net loss was higher~~increased.

19Comparison of the nine months ended March 31,2011and 2010

Comparison of the six months ended December 31, 2010 and 2009

Nine Months Ended March 31	2011			2010
Sales	$	52,549,376		$	42,604,455
Cost of sales	$	43,094,737		$	31,994,077
Gross profit	$	9,454,639		$	10,610,378
Selling, general and administrative expenses	$	7,592,038		$	6,642,627
Other income (expense)	$	(501,968	)	$	(210,203	)
Income taxes	$	478,369		$	710,510
Non-controlling interest	$	(81	)	$	(294	)
Net income (loss)	$	882,345		$	3,047,332
Foreign currency translation adjustment	$	1,204,045		$	32,905
Comprehensive income (loss)	$	2,086,309		$	3,080,237

Six Months Ended December 31	2010			2009
Sales	$	32,843,868		$	29,728,184
Cost of sales	$	26,399,795		$	21,868,816
Gross profit	$	6,444,073		$	7,859,368
Selling, general and administrative expenses	$	5,539,756		$	4,693,819
Other income (expense)	$	(293,986	)	$	(105,690	)
Income taxes	$	313,342		$	567,362
Non-controlling interest	$	(81	)	$	(145	)
Net income (loss)	$	296,989		$	2,492,497
Foreign currency translation adjustment	$	976,226		$	25,188
Comprehensive income (loss)	$	1,273,296		$	2,517,803

Sales. Total sales were approximately $52.5 million for the nine months ended March 31, 2011 as compared with approximately $42.6 million for the nine months ended March 31, 2010, an increase of approximately $9.9 million, or 23.2%. The increase of sales was mainly due to our continued sales and marketing efferts to locate and the new customers also contributed to the sales growth. With our competitive pricing advantage, we have added 9 new domestic customers in this quarter which accounted for 0,47% of total revenue.

Cost of Sales. ~~Total~~Cost of sales ~~were approximately $32.8 million~~ for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 was approximately $43.1 million, or 82.1% of sales, as compared with ~~approximately~~ $2932.70 million, or 75.1% of sales, for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, an increase of approximately $311.1 million, or 1034.57%. ~~The~~Our ~~increase~~cost of sales ~~was~~is ~~mainly~~primarily ~~due~~composed toof ~~our~~the ~~continued~~costs ~~sales~~of ~~and~~direct ~~marketing~~raw ~~efforts~~materials as(mainly ~~well~~paper asmaterials, ~~the~~polyethylene ~~introduction~~materials, ofaluminum ~~SIG~~materials, ~~packaging~~printing ~~lines~~materials), ~~which~~labor, ~~accounts~~depreciation ~~for~~and ~~approximately~~amortization $2of manufacturing equipment and facilities, and other overhead.2 ~~million~~The increase of ~~our~~cost ~~additional~~of sales as a percentage of sales by 7.0% ~~Although~~was due to the ~~total~~purchase ~~sales~~price ~~volume~~escalation ~~increased~~of major raw materials such as paper and plastic particles, which led to a narrower profit margin in ~~this~~the period covered by ~~nearly~~this ~~15%,~~Report. ~~our~~Our ~~revenue~~cost ~~did~~of ~~not~~sales ~~grow~~may ~~the~~continue ~~same~~to ~~percentage~~rise ~~because~~as the ~~sale~~global ~~price~~commodity prices move higher. We can hardly impose controls on the cost of our major ~~products~~raw ~~were~~materials such as paper and plastic particles. Although we try to use material-saving techniques to cut down inthe ~~order~~portion toof ~~maintain~~cost ~~customers~~of assales, aour ~~result~~efforts may be limited compared with the price increase of ~~fierce~~certain ~~competition~~raw materials.

Cost of Sales. Cost of sales for the six months ended December 31, 2010 was approximately $26.4 million, or 80.4% of sales, as compared with $21.9 million, or 73.6% of sales, for the six months ended December 31, 2009, an increase of approximately $4.5 million or 20.7%. Our cost of sales is primarily composed of the costs of direct raw materials (mainly paper materials, polyethylene materials, aluminum materials, printing materials), labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead. The increase of cost of sales as a percentage of sales by 6.8% was due to the purchase price escalation of major raw materials such as paper and plastic particles, which led to a narrower profit margin in the period covered by this Report. Our cost of sales may continue to rise as the global commodity prices move higher. Although we try to use material-saving techniques to cut down the portion of cost of sales, our efforts may have limited effect as compared with the price increases of certain raw materials.22

Gross profit. As a result of the increase in the percentage of cost of sales, the gross profit margin for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 was approximately 1918.60% as compared with 2624.49% for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, a decrease of 6.89%.

Selling, general and administrative expenses. Selling, general and administrative expenses were approximately $57.56 million for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 as compared with approximately $46.76 million for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, an increase of approximately $01.80 million, or 1815.2%. The increase was mainly due to the increase of expenses for management incentive options vested in ~~the three months ended~~ December 31, 2010 and recorded as compensation costs amounted to approximately $0.7 million.

Income tax. Income tax was approximately $0.348 million for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 as compared with approximately $0.671 million for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, a decrease of approximately $0.323 million or 4432.84% in accordance with the change of profit before tax.

Net income. Net income was approximately $0.388 million for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 as compared with net income of $23.505 million for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, a decrease of approximately $2.217 million, or 8871.1%. The decrease in net income was primarily due to the decrease of gross profit and the rise of general and administrative expenses.

20 Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders' equity and was a gain of $1,203,964 for the nine months ended March 31, 2011 compared with a gain of $32,905 for the nine months ended March 31, 2010. The balance sheet amounts with the exception of equity at March 31, 2011 were translated at RMB6.54879 to US$1.00 as compared with RMB6.81668 to US$1.00 at March 31, 2010. The equity accounts were stated at their historical rate. The average translation rates applied to income statement accounts for the nine months ended March 31, 2011 and 2010 were RMB6.65779 and RMB6.81942 to US$1.00.

~~Currency~~Comprehensive ~~translation~~income.The ~~adjustments resulting from this process are included in accumulated other~~ comprehensive income, inwhich adds the ~~consolidated~~currency ~~statement~~adjustment ofto ~~shareholders'~~net ~~equity~~income, ~~and~~ was ~~a gain of~~ $~~976,226~~2.1 million for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 as compared with ~~a gain of~~ $~~25,188~~3.1 million for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010. The ~~balance~~large ~~sheet~~amount ~~amounts with the exception~~ of ~~equity~~foreign atcurrency ~~December~~translation ~~31,~~adjustment ~~2010~~was ~~were~~due ~~translated at RMB6.5920~~ to ~~US$1.00~~rapid asappreciation ~~compared~~of ~~with RMB6~~RMB.~~8166~~ As toa ~~US$1.00 at December 31~~result, ~~2009.~~the ~~The~~comprehensive ~~equity accounts were stated at their historical rate. The average translation rates applied to~~ income ~~statement accounts~~ for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 ~~and~~was ~~2009~~significantly ~~were~~improved ~~RMB6.7042~~even ~~and~~though ~~RMB6.8194~~the tonet ~~US$1~~profit was much lower.~~00.~~

Comprehensive income. The comprehensive income, which adds the currency adjustment to net income, was $1.3 million for the six months ended December 31, 2010 as compared with $2.5 million for the six months ended December 31, 2009. The large amount of foreign currency translation adjustment was due to rapid appreciation of RMB. As a result, the comprehensive income for the six months ended December 30, 2010 was significantly improved even though the net profit was much lower.

Liquidity and Capital Resources

	For the six months ended December 31,
	For the nine months ended March 31,
	2010			2009
	2011			2010
Cash flow from operating activities	$	~~644~~374,~~331~~943		$	(21,~~597~~957,~~461~~234	)
Cash flow from investing activities		(6,~~676~~845,~~852~~114	)		(2,~~000~~440,~~940~~829	)
Cash flow from financing activities		1,~~677~~597,~~302~~223			810,~~831~~169,~~699~~259

~~As of December 31, 2010, we had working capital totaling approximately $18.5 million, including cash and cash equivalents of $1.9 million.~~23

~~Net~~ As ~~cash~~of ~~generated~~March ~~in operating activities was approximately $0.6 million for the six months ended December~~ 31, 2010., ~~This~~we ~~net~~had ~~cash~~working ~~generated~~capital ~~was~~totaling ~~primarily due to the increase of accounts payable balances by~~ approximately $~~0.8~~17 million., ~~Net~~including cash ~~used~~and incash ~~operating~~equivalents ~~activities~~of ~~was~~ $21.64 million ~~for the six months ended December 31, 2009 mainly due to the increase of advanced payment and inventory balances as a result of the increase in sales in the period~~.

Net cash ~~used~~generated in ~~investing~~operating activities was approximately $0.37 million for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011. ~~totaled~~This ~~$6.7~~net ~~million~~cash generated was primarily due to the ~~purchase~~decrease ~~and~~of ~~advanced~~accounts ~~payments~~receivable ~~for~~balances ~~property~~by ~~and~~approximately ~~equipment~~$5 million and ~~the~~increase ~~consideration~~of ~~paid~~advanced ~~for~~payment aand ~~land~~accounts ~~use~~payable ~~right~~balances ofby ~~Qingdao~~approximately$1.6 ~~Likang~~million and $1.8 million respectively. Net cash used in ~~investing~~operating activities was $2.0 million for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010. ~~totaled~~This ~~$2.0~~net ~~million~~cash used was primarily due to the ~~purchase~~increase of ~~property~~accounts receivable and ~~equipment~~inventory balances by approximately $5.3 million as ~~well~~a result of the increase in sales.

Net cash ~~generated~~used in ~~financing~~investing activities for the ~~six~~nine months ended ~~December~~March 31, ~~2010~~2011 ~~was~~totaled $16.78 million primarily due to the ~~issuance~~purchase ofand ~~trade~~advanced ~~notes~~payments ~~payable~~for property and equipment and the ~~two~~consideration ~~new~~paid ~~sale-leaseback~~for ~~transactions~~a land use right of Qingdao Likang. Net cash ~~generated~~used in ~~financing~~investing activities for the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010 ~~was~~totaled $92.64 million primarily due to the ~~issuance~~purchase of ~~trade~~property ~~notes payable, proceeds from additional borrowings from employees~~ and ~~the~~equipment ~~new~~as ~~financing in this period~~well.

Net cash generated in financing activities for the nine months ended March 31, 2011 was $1.6 million primarily due to the issuance of trade notes payable and the two new sale-leaseback transactions. Net cash generated in financing activities for the nine months ended March 31, 2010 was $10.2 million primarily due to the issuance of trade notes payable, proceeds from additional borrowings from employees and the new financing in this period.

Borrowings and Credit Facilities

In January and February ~~2010~~2011 we have entered into two loan agreements with our primary lenders, Qingdao City Commercial Bank, with which we have term loans. The short-term bank borrowings outstanding as of ~~December~~March 31, ~~2010~~2011 and ~~2009~~2010 were approximately $3.005 million and $2.39 million, respectively, both of which ~~bore~~born an average interest rate of 5.3108375% per annum. Secured by properties and equipment of ~~Qindao Renmin~~QindaoRenmin, the loan agreements have one-year terms, contain customary affirmative and negative covenants and will expire in January and February ~~2011~~2012 respectively. As of December 31, 2010, we were in material compliance with the terms of our loan agreements. The current borrowings will probably extend after expiration in consideration of the capital demand from our company.

On November 27, 2009, the Company entered into three sale-leaseback agreements with International Far-eastern Leasing Co., Ltd, ~~one~~two of which ~~went~~were ~~into~~completed ~~effect~~ after signing the agreements and accounted for as a financing arrangement in the amount of approximately $12.408 million. The annual principal and interest payment is $~~411~~597,~~548~~487 and the term of the arrangement is four years. The other ~~two~~one related to $1.6505 million financing proceeds ~~in total~~, received in ~~two~~one ~~allotments~~allotment, for ~~their~~the contracted purchase of equipment of approximately $21.445 million went into effect in ~~December~~June ~~2010~~2011, pursuant to which the Company will pay back principal and interest of $~~467~~298,~~593~~063 per annum in four years.

Capital Commitment

On August 12, 2010, Qingdao Likang, our indirectly owned subsidiary, entered into a land use right transfer agreement with Qingdao Territories and House Administration Bureau, pursuant to which, Qingdao Likang was granted a 50-year use right for a parcel of land in Qingdao with an area of approximately 65,064 square meters. Qingdao Likang has paid the consideration and started building a new plant on the land and the construction is estimated to be completed by June 2011.

The agreement also included provisions that require total investment for the project no less than RMB242.1 million (US$35.66 million) before August 12, 2013 with a conditional one-year extension. The amount of total investment refers to the amount of capital that will be spent in the construction and operations of the plant. It includes not only the registered capital, but also future borrowings such as bank loans.

Critical Accounting Policies and Estimates

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in ~~our~~Jpak’s ~~Form~~2010 10-K for ~~the year ended June 30, 2010 for~~ disclosures regarding ~~our~~Jpak’s critical accounting policies and estimates. The interim financial statements follow the same accounting policies and methods of computations as those for the year ended June 30, 2010.

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

(a)	Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and our Acting Chief Financial Officer have concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and are effective in providing reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b)	Changes in internal control over financial reporting

Since April 2009, we have been working diligently on the evaluation of internal controls based on COSO framework. The evaluation covers all the major financial reporting processes, including procurement, revenue, inventory, fixed assets, tax, treasury and financial reporting. As of June 30, 2010, we completed our documentation both at the entity level and process level. As a result, we have identified a number of significant deficiencies and improvement opportunities with each process. We have subsequently implemented remediation measures to correct most of these weaknesses. We believe that these corrective steps have remediated the material weaknesses disclosed in our annual report on Form 10-K for the year ended June 30, 2009 and our internal controls are now effective.

Nevertheless, we would like to draw your attention to a number of remaining significant deficiencies with our internal controls, as described in our Form 10-K for the year ended June 30, 2010. A significant deficiency is a deficiency, or a combination of deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting. After evaluation we believe these deficiencies are significant, but not material after taking into account our risk assessment and existing controls both at the entity and process levels. The significant deficiencies identified in the Form 10-K for the year ended June 30, 2010 have been partially remediated due to the following:

Currently the Company’s Acting Chief Financial Officer and his assistant, who are experienced with US GAAP reporting, are assisting in the preparation of financial statements in conformity with US GAAP and the SEC reporting requirements. Additionally, the Company has made efforts to enhance the knowledge of US GAAP reporting of its financial staff as part of its Sarbanes-Oxley Act Section 404 compliance project (“SOX project”) and other on the job training in applying US GAAP in addition to the SOX project.

Although the Company does not have a Board with a majority of independent members and does not have an audit committee, it hired Mr. Wenjie Li as its independent director in July 2010. The Company is also seeking additional independent members, including a qualified financial expert to fulfill the role of audit committee chairman. Nevertheless, the Company cannot assure you of when it will identify a qualified candidate or when it will be able to form an independent audit committee.

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

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

Item 1A. Risk Factors

Not applicable to smaller reporting companies.

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

(a) Not Applicable.

(b) Not Applicable.

ITEM 3. Defaults upon Senior Securities

(a) Not Applicable.

(b) Not Applicable.

ITEM 4. (Removed and Reserved)

ITEM 5. OTHER INFORMATION

(a) Not applicable.

(b) Not applicable.

ITEM 6. EXHIBITS

(a) The following exhibits are filed as part of this report.

Exhibit No		Description
3.1		Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed on September 29, 2008)

3.2		Bylaws (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed on September 29, 2008)

31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Acting Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Acting Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

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

JPAK GROUP, INC. By: /s/ Yijun Wang Yijun Wang Chief Executive Officer, ~~Chief Accounting Officer,~~ President & Director By: /s/ ~~Dongliang~~Yongbo SuWang ~~Dongliang~~Yongbo Su(Esther) ~~Acting~~Wang Chief Financial Officer

Date: ~~February~~May 1113, 2011

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Filing Compare · Jpak Group, Inc.