YBCC, Inc. - FORM 10-Q - November 18, 2011

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EXCEL - IDEA: XBRL DOCUMENT - YBCC, Inc.	Financial_Report.xls
EX-31.2 - CERTIFICATION - YBCC, Inc.	iplo_10q-ex3102.htm
EX-31.1 - CERTIFICATION - YBCC, Inc.	iplo_10q-ex3101.htm
EX-32.1 - CERTIFICATION - YBCC, Inc.	iplo_10q-ex3201.htm
EX-32.2 - CERTIFICATION - YBCC, Inc.	iplo_10q-ex3202.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2011 or

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

For the transition period from _____________ to _____________

Commission file number 0-21384

INTERNATIONAL PACKAGING AND LOGISTICS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

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

7700 Irvine Center Drive, Suite 870

Irvine, California

(Address of Principal Executive Offices)

92608

(Zip Code)

(949) 861-3560

(Registrant’s Telephone Number, Including Area Code)

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

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

x Yes o No

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

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o	Smaller reporting company x

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

o Yes x No

The number of shares outstanding of the Issuer’s common stock as of October 31, 2011 was 4,961,357

International Packaging and Logistics Group, Inc.,

and Subsidiaries

TABLE OF CONTENTS

		PAGE NO.
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets September 30, 2011 and December 31, 2010	1

	Condensed Consolidated Statements of Operations Three Months Ended September 30, 2011 and 2010 and Nine Months Ended September 30, 2011 and 2010	2

	Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2011 and 2010	4

	Notes to Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 4T.	Controls and Procedures	24

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Submission of Matters to a Vote of Security Holders	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

Signatures		28

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2011, and December 31, 2010

(Unaudited)

	September 30,			December 31
	2011			2010
Current Assets	(Unaudited)			(Audited)
Cash	$	984,067		$	700,264
Accounts receivable, net		6,400,619			5,959,793
Other current assets		9,607			56,592
Prepaid expenses		13,244			35,641
Prepaid taxes		121,811			-

Total Current Assets		7,529,348			6,752,290

Property, Plant and Equipment, net		26,263			37,815
Total Property, plant and equipment, net		26,263			37,815

Other Assets
Deposits		38,439			33,280
Contract in place		1,295,726			1,295,726
Deferred tax assets		126,216			126,216

Total Other Assets		1,460,381			1,455,222

Total Assets	$	9,015,992		$	8,245,327

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses	$	5,959,634		$	4,891,559
Notes payable - related party		80,000			80,000
Taxes payable		-			74,219
Other current liabilities		21,503			19,127

Total Current Liabilities		6,061,137			5,064,905

Commitments and contingencies		-			-
Stockholders' Equity
Convertible preferred shares: $0.0001 par value, 50,000,000shares authorized, 974,730 Series A issued and outstanding		98			98
400,000 Series B issued and outstanding		40			40
Common stock: $0.001 par value, 900,000,000 shares authorized, 4,961,357 issued and outstanding		4,961			4,961
Additional paid-in capital		2,202,877			2,202,877
Accumulated other comprehensive income		31,435			50,333
Retained earnings		(120,628	)		92,147

Total IPLO Stockholders' Equity		2,118,783			2,350,456

Non controlling interest		836,072			829,966

Total Stockholders' Equity		2,954,855			3,180,422

Total Liabilities and Stockholders' Equity	$	9,015,992		$	8,245,327

See accompanying notes.

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations And Comprehensive Loss

For the Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)

	Nine Months Ending						Three Months Ending
	Sept 30,						Sept 30,
	2011			2010			2011			2010
Revenues
Packaging	$	20,009,851		$	18,901,202		$	6,289,838		$	7,508,676
Logistics		7,023,229			9,073,323			2,031,030			3,349,723

Total Revenues		27,033,080			27,974,525			8,320,868			10,858,399

Cost of Goods Sold
Packaging		19,475,417			18,236,970			6,193,938			7,320,528
Logistics		6,026,002			8,207,408			1,712,438			3,036,557

Total Cost of Goods Sold		25,501,419			26,444,378			7,906,376			10,357,085

Gross Profit		1,531,661			1,530,147			414,492			501,314

Operating Expenses
Administrative expenses		662,705			711,593			248,106			234,944
Rent		145,430			129,149			50,193			44,644
Salaries and wages		999,470			856,414			339,178			295,051

Total Operating Expenses		1,807,605			1,697,156			637,477			574,639

Loss from Operations		(275,944	)		(167,009	)		(222,985	)		(73,325	)

Other Income
Interest income (expense)		(637	)		199			60			(335	)
Other income		23,637			6,294			23,120			2,332
Rent Income		3,075			4,331			126			1,642
Realized gain on investment		-			93,038			-			93,038
Total Other Income		26,075			103,862			23,306			96,677

See accompanying notes.

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations And Comprehensive Loss

For the Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)

Net Income (Loss) before Income Taxes		(249,869	)		(63,147	)		(199,679	)		23,352

Income tax benefit		43,200			2,246			48,697			26,638

Net Income (Loss)		(206,669	)		(60,901	)		(150,982	)		49,990

Net gain (loss) attributable to non controlling interest		(6,106	)		(2,525	)		7,500			(669	)

Net Income (Loss) attributable to IPLO		(212,775	)		(63,426	)		(143,482	)		49,321

Comprehensive Income
Unrealized loss on investments		-			(58,246	)		-			(76,961	)
Gain (loss) on currency exchange		(18,898	)		17,556			(15,735	)		5,704

Comprehensive Loss	$	(231,673	)	$	(104,116	)	$	(159,217	)	$	(21,936	)

Earnings per weighted average share of common stock - basic	$	(0.04	)	$	(0.01	)	$	(0.03	)	$	0.01

Earnings per weighted average share of common stock - diluted	$	(0.04	)	$	(0.01	)	$	(0.03	)	$	0.01

Weighted average shares outstanding - basic		4,961,357			4,961,357			4,961,357			4,961,357

Weighted average shares outstanding - diluted		4,961,357			4,961,357			4,961,357			6,336,087

See accompanying notes.

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2011 and 2010

(Unaudited)

	September 30,			September 30,
	2011			2010
Cash flow from operating activities
Net loss	$	(206,669	)	$	(60,901	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense		10,123			4,728
Realized gain on investment		-			(93,038	)
Bad debt expense		-			2,413
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(495,416	)		(3,754,596	)
(Increase) decrease in other current assets		47,918			(267,388	)
(Increase) decrease in prepaid expenses		22,105			2,585
(Increase) decrease in prepaid taxes		(121,811	)		162,838
(Increase) decrease in deposits		(7,030	)		(2,654	)
(Increase) decrease in deferred tax asset		-			34,414
Increase (decrease) in accounts payable and accrued expenses		1,121,583			4,538,685
Increase (decrease) in taxes payable		(74,219	)		-
Increase (decrease) in other current liabilities		3,678			155,289

Net cash provided by operating activities		300,262			722,375

Cash flow from investing activities:
Proceeds from sale of investment		-			234,800
Cash acquired in acquisition of subsidiary		-			594,147
Net cash provided by investing activities		-			828,947
Cash flow from financing activities:
Proceeds from line of credit		-			255,120
Payments on line of credit		-			(159,450	)
Proceeds from notes payable - related party		-			8,000
Net cash provided by financing activities		-			103,670

Effect of currency translation		(16,459	)		34,388

Net increase in cash		283,803			1,689,380
Cash at beginning of period		700,264			9,918
Cash at end of period	$	984,067		$	1,699,298

Supplementary disclosures of cash flow information
Cash paid during the year for
Interest	$	901		$	344
Taxes/(refund)	$	145,100		$	(229,321	)

See accompanying notes.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2011

1. Summary of Significant Accounting Policies

Organization and Basis of Presentation

These interim condensed consolidated financial statements represent the financial activity of International Packaging and Logistics Group, Inc., (“IPL Group” or “the Company”) a publicly traded company listed and traded on the NASDAQ Over the Counter Bulletin Board (“OTCBB”). The interim condensed consolidated financial statements for the three and nine months ended September 30, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States. The interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated. The Company’s fiscal year end is December 31.

The foregoing unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and the notes thereto included on Form 10-K for the period ended December 31, 2010. In the opinion of management, the unaudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

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

Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Nature of Operations

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

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2011

1. Summary of Significant Accounting Policies (continued)

Nature of Operations (continued)

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

EZ Link International, Samoa (“ELIS”) was incorporated in Samoa. ELIS is a wholly owned subsidiary of EZ Link Corporation and was set up to facilitate shipping operations in the Republic of China.

Organization and Line of Business

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

EZ Link Holdings Ltd.

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

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

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

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

(2) Operating Agreement, through which EZ Link Holdings has the right to recommend director candidates and appoint the senior executives of EZ Link Corp, approve any transactions that may materially affect the assets, liabilities, rights or operations of EZ Link Corp, and guarantee the contractual performance by EZ Link Corp. of any agreements with third parties, in exchange for a pledge by EZ Link Corp. of its accounts receivable and assets.

In consideration of services provided by the consultant, EZ Link Corp will pay a consulting fee equal to all of its net income on a quarterly basis. The cumulative net income from January 1, 2010 to September 30, 2011 is $51,218 which has not been paid at September 30, 2011.

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

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2011

1. Summary of Significant Accounting Policies (continued)

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

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

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

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

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

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

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

Principles of Consolidation

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

The consolidated financial statements include the accounts of IPL Group and its subsidiaries (collectively the “Company”). The Company’s subsidiaries include H&H Glass and EZ Link Holdings, Ltd.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2011

1.	Summary of Significant Accounting Policies (continued)

Estimates

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

Cash and Cash Equivalents

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

Contract in Place

Goodwill and indefinite-lived intangible assets are not amortized. Rather, they are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Contract in place is the only intangible asset with an indefinite life on our consolidated balance sheets. We have elected December 31 as the date to perform our annual impairment test.

The contract in place represents the fair value of the consulting contract and operating agreement between EZ Link Holdings, Ltd. and EZ Link Corp.

Revenue Recognition

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

Foreign Currency Translation

As of September 30, 2011 the accounts of EZ Link were maintained, and its consolidated financial statements were expressed, in NTD. Such consolidated financial statements were translated into USD with NTD as the functional currency. All assets and liabilities were translated at the exchange rate on the balance sheet dates, stockholders’ equity are translated at the historical rates and the statements of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

1.	Summary of Significant Accounting Policies (continued)

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Such amounts were not material during each of the periods ended September 30, 2011 and 2010.

Cash flow from the Company's operations included in the statement of cash flows is calculated based upon the functional currency using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with arithmetical changes in the corresponding balances on the consolidated balance sheet. No presentation is made that the NTD amounts could have been, or could be, converted into USD at the rates used in translation.

Concentration of Credit Risk

The Company, at times, maintains cash balances in excess of the federally insured limit of $250,000 per institution. The Company had no uninsured balances as of September 30, 2011 and December 31, 2010.

The Company maintains balances in a Money Market Fund that is not federally insured. Balances in this fund were $618,313 and $137,986 at September 30, 2011 and December 31, 2010, respectively.

Accounts receivable are typically unsecured. The Company performs ongoing credit evaluations of its customers’ financial condition. It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary. As of September 30, 2011, 86.2% of H&H Glass’s Accounts Receivable were attributable to four customers. As of December 31, 2010, 84.7% of H&H Glass’s Accounts Receivable were attributable to four customers. At September 30, 2011 and December 31, 2010 H&H Glass had a reserve for doubtful accounts of $16,194 and $23,364 respectively.

In general the Company will reserve a receivable based one of the following reasons; if the receivable is over 90 days old the company will reserve 50% and if over 12 months old the Company will reserve 100% of the amount. However, the Company performs ongoing evaluations of each credit over 90 days past due and when the account is considered collectible no reserve is provided.

H&H Glass purchased 100% of its glass from one vendor in the nine months ended September 30, 2011 and 2010. During the three months ended September 30, 2011 and 2010, H&H Glass purchased $5,584,394 and $5,966,082 of products from this vendor, respectively. During the nine months ended September 30, 2011 and 2010, H&H Glass purchased $16,938,923 and $15,046,126 of products from this vendor, respectively. This concentration is due to the relatively small size of H&H Glass’s orders. H&H Glass’s specialized short-run custom orders generally are not attractive to larger glass manufacturers.

Non controlling Interest

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

Net Earnings/(Loss) per Share

Earnings/(loss) per common share is computed on the weighted average number of common shares outstanding during each year. Basic earnings per share is computed as net loss applicable to common stockholders’ divided by the weighted average number of common shares outstanding for the period.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

1.	Summary of Significant Accounting Policies (continued)

Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through convertible preferred shares, stock options, warrants and other convertible securities when the effect would be dilutive.

Comprehensive Income (Loss)

The Company reports and displays comprehensive income and its components in a full set of general-purpose consolidated financial statements. The Company’s realized loss of $15,735 and realized gain of $5,704 for the three months ended September 30, 2011 and 2010, and realized loss of $18,898 and gain of $17,566 for the nine months ended September 30, 2011 and 2010, respectively, relate to the translation of the financial statements from New Taiwan Dollars to US Dollars. The Company also recorded an unrealized loss of $76,961 for the three months ended September 30, 2010 and $58,246 for the nine months ended September 30, 2010 on investments available for sale.

2.	Preferred Stock Transactions

Description of the Series A Convertible Preferred Stock

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

Description of the Series B Convertible Preferred Stock

The Series B Preferred Shares shall be convertible into common shares in two equal tranches, the first being upon completion and receipt of the year ending December 31, 2010, financials if all of the following performance targets are met by EZ Link:

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

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

This criteria was not met so there were no conversions as of December 31, 2010. However, the first tranche will be eligible for conversion again at December 31, 2011.

The second tranche of the Preferred Shares shall be convertible after the second 12 month period, i.e. the year ending December 31, 2011, if all of the following performance targets are met by EZ Link:

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

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

If EZ Link does not reach its performance goals at December 31, 2011, the conversion rights will be extended one additional year.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

2. Preferred Stock Transactions (continued)

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

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

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

3. Common Stock Transactions

During the nine months ending September 30, 2011 no stock was issued.

Common stock transactions during the nine months ending September 30, 2010:

As of January 1, 2010, pursuant to the purchase agreement for 51% ownership in EZ Link Holdings Ltd., a portion of the purchase price in the amount of $457,143 was paid in common shares of IPL Group, Inc. at a per share value of $1.00, or 457,143 shares.

4. Related Party Transactions

Allen Lin

The Company paid Mr. Allen Lin, President of H&H Glass and a member of the board of directors of the Company, salary of $57,500 and $55,125 for the three month ended September 30, 2011 and 2010, respectively, and $172,500 and $165,375 for the nine-months ended September 30, 2011 and 2010. respectively.

Mr. Allen Lin advanced the Company $0 and $8,000 during the three and nine months ended September 30, 2010 respectively.

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $14,000 and $14,000 for the three month ended September 30, 2011 and 2010, respectively, and $42,000 and $42,000 for the nine months ended September 30, 2011 and 2010, respectively.

Steven Westlund

For each three months ended September 30, 2011 and 2010, Mr. Westlund, the Company’s Chief Executive Officer and acting Chief Financial Officer, was paid $1,500 in cash for Director fees.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

4. Related Party Transactions (continued)

For each nine months ended September 30, 2011 and 2010, Mr. Westlund, the Company’s Chief Executive Officer and acting Chief Financial Officer, was paid $4,500 in cash for Director fees.

William Gresher

For each three months ended September 30, 2011 and 2010, Mr. Gresher, a member of the Board of Directors, was paid $1,500 in cash for Director fees.

For each nine months endied September 30, 2011 and 2010, Mr. Gresher, a member of the Board of directors, was paid $4,500 in cash for Director fees.

Easy Global Company, Ltd.

The chairman of Easy Global Company, Ltd. is also a shareholder of EZ Link Corporation. EZ Link rents its offices from Easy Global Company, Ltd. During the three months ended September 30, 2011 and 2010, EZ Link paid $11,691 and $11,829, respectively, and for the nine months ended September 30, 2011 and 2010, EZ Link paid $32,280 and $32,256, respectively, to Easy Global Company for rent expense.

5. Property and Equipment

The Company’s property and equipment at September 30, 2011 and December 31, 2010, consisted of the following:

	September 30,			December 31,
	2011			2010
Furniture and fixtures	$	14,552		$	14,552
Computers and equipment		145,178			151,655
Leasehold improvements		60,742			63,977
		220,472			230,184
Less accumulated depreciation		(194,209	)		(192,369	)
Total	$	26,263		$	37,815

The Company recorded depreciation expense for the nine months ended September 30, 2011 and 2010, of $10,123 and $4,728, respectively.

6. Commitments and Contingencies

Leases

Operating leases

H&H Glass rents 2,887 square feet of office space for its headquarters. The lease began on January 1, 2005, and was renewed on September 1, 2008 and expires on August 31, 2013. As of September 30, 2011, total monthly base rent is $8,854 per month.

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

6. Commitments and Contingencies (continued)

EZ Link rents 2,388 square feet of office space for its headquarters. The lease began on October 1, 2009, and was renewed in September 2010. The lease is renewed annually. As of September 30, 2011, total base monthly rent is $4,128 per month.

EZ Link also rents 182 square feet of office space. The lease began on October 1, 2009, and expired on September 30, 2011. The lease renews every two years. As of September 30, 2011, total base monthly rent is $1,424.

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

Future minimum payments on this lease for fiscal years following September 30, 2011, are:

Year ended December 31,
2011		48,554
2012		153,924
2013		126,205
2014		13,682
Thereafter		-

	$	342,365

7. Earnings (Loss) per Share

Earnings per share have been calculated using the weighted average number of shares outstanding during each period. The Company’s Convertible Preferred Shares constituted potentially dilutive securities as of September 30, 2011. However, the net loss for the three and nine months ended September 30, 2011 would have made these securities anti-dilutive. Earnings per share at September 30, 2011, is calculated using the number of common shares issued to effect the business combination as being outstanding during the entire period.

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

	For the Three Months Ended September 30,
	2011			2010
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net Income (Loss) attributable to IPLO	$	(143,482	)	$	49,321

Weighted average common shares outstanding		4,961,357			4,961,357
Basic earnings per share of common stock	$	(0.03	)	$	0.01

DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net Income (Loss) attributable to IPLO	$	(143,482	)	$	49,321

Weighted average common shares outstanding		4,961,357			4,961,357
Effect of dilutive securities:
Convertible preferred stock		-			1,374,730
Weighted average common shares outstanding after effect of dilutive securities		4,961,357			6,336,087
Diluted earnings per share of common stock	$	(0.03	)	$	0.01

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

7. Earnings (Loss) per Share (continued)

	For the Nine Months Ended September 30,
	2011			2010
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net Income (Loss) attributable to IPLO	$	(212,775	)	$	(63,426	)

Weighted average common shares outstanding		4,961,357			4,961,357
Basic earnings per share of common stock	$	(0.04	)	$	(0.01	)

DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net Income (Loss) attributable to IPLO	$	(212,775	)	$	(63,426	)

Weighted average common shares outstanding		4,961,357			4,961,357
Effect of dilutive securities:
Convertible preferred stock		-			-
Weighted average common shares outstanding after effect of dilutive securities		4,961,357			4,961,357

Diluted earnings per share of common stock	$	(0.04	)	$	(0.01	)

8. Segment Reporting

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

Following is a summary of segment information for the nine months ended September 30, 2011:

Revenue	$	20,009,851		7,023,229		27,033,080
Operating Income		(301,598	)	25,654		(275,944	)
Total Assets		7,899,268		1,116,724		9,015,992
Interest Income		29		235		264
Interest Expense		-		(901	)	(901	)
Depreciation	$	450		9,673		10,123

Following is a summary of segment information for the three months ended September 30, 2011:

	Packaging			Logistics			Total

Revenue	$	6,289,838			2,031,030			8,320,868
Operating Income		(214,959	)		(8,026	)		(222,985	)
Total Assets		7,899,268			1,116,724			9,015,992
Interest Income		9			53			62
Interest Expense		-			(2	)		(2	)
Depreciation	$	300			3,389			3,689

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

9. Unrestricted Net Assets

EZ Link Corp. had stockholders equity of approximately $454,097 as of September 30, 2011. Distributions and other payments to EZ Link Holdings, Ltd. from its subsidiary, EZ Link Corp. may not be permitted by the Taiwan government. Condensed financial information of the United States operations is as follows:

	September 30,			December 31,
Balance Sheets	2011			2010

Assets
Cash and cash equivalents	$	725,138		$	191,414
Accounts receivable, net		5,617,795			4,722,353
Other current assets		-			37,491
Prepaid expenses		-			22,606
Prepaid taxes		121,811			-
Total current assets		6,464,744			4,973,864

Investment in EZ Link Holdings, Ltd.		857,143			857,143
Property and equipment		149			599
Deposits		12,433			12,433
Deferred tax assets		126,216			126,216
Total assets	$	7,460,685		$	5,970,255

Liabilities

Accounts payable	$	5,260,434		$	3,421,238
Accrued expenses		32,903			94,675
Notes payable - related party		80,000			80,000
Taxes payable		-			74,219
Total current liabilities		5,373,337			3,670,132

Total liabilities		5,373,337			3,670,132

Stockholders' equity
Preferred stock		138			138
Common stock		4,961			4,961
Additional paid-in capital		2,202,877			2,202,877
Retained earnings		(120,628	)		92,147
Total stockholders' equity		2,087,348			2,300,123
Total liabilities and stockholders' equity	$	7,460,685		$	5,970,255

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

9. Unrestricted Net Assets – continued

The cumulative net earnings from EZ Link from January 1, 2010 that would be payable to EZ Link Holdings as a management receivable totals $51,218 at September 30, 2011.

Information of the United States operations is as follows:

	Three Months			Three Months
	September 30,			September 30,
Statement of Operations	2011			2010

Net sales	$	6,289,838		$	7,508,676
Cost of goods sold		(6,193,938	)		(7,320,528	)

Operating expenses		(310,859	)		(276,861	)
Loss from operations		(214,959	)		(88,713	)

Other income and (expense)
Interest income		9			9
Other income		12,608			-
Realized gain on investments		-			93,038
Income tax benefit		50,930			50,000
Income/(loss) from subsidiary (51%)		7,930			(5,013	)
Total other income		71,477			138,034
Net loss	$	(143,482	)	$	49,321

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

9. Unrestricted Net Assets - continued

Information of the United States operations is as follows:

	Nine Months			Nine Months
	September 30,			September 30,
Statement of Operations	2011			2010

Net sales	$	20,009,851		$	18,901,202
Cost of goods sold		(19,475,417	)		(18,236,970	)

Operating expenses		(836,032	)		(831,796	)
Loss from operations		(301,598	)		(167,564	)

Other income and (expense)
Interest income		29			425
Other income		12,608			-
Realized gain on investment		-			93,038
Income tax benefit		50,930			25,608
Income/(loss) from subsidiary (51%)		25,256			(14,933	)
Total other income		88,823			104,138
Net loss	$	(212,775	)	$	(63,426	)

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

9. Unrestricted Net Assets – continued

Information of the United States operations is as follows:

	September 30,		September 30,
Statements of Cash Flows	2011		2010

Net cash provided by operating activities:	$	533,724	$	840,137

Cash flow from investing activities
Proceeds from sale of investment		-		234,800
Net cash provided by investing activities		-		234,800

Cash flow from financing activities:
Proceeds from note payable - related party		-		8,000
Net cash provided by financing activities		-		8,000

Net increase in cash		533,724		1,082,937
Cash, beginning of period		191,414		9,918
Cash, end of period	$	725,138	$	1,092,855

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2011

10. Reclassifications

The Company changed its presentation of revenues and related costs associated with EZ Link’s subsidiary, EZ Link International, Samoa, within the Consolidated Statements of Operations to report these revenues and cost of revenues gross within continuing operations to better reflect the nature of the transactions. It had previously been presented on a net basis within operating expense.

The following table provides a summary of the reclassifications:

	For the Nine
	Months Ended
	September 30,
	2010

Revenue previously reported	$	26,342,242
Reclassification of EZ Link International		1,632,283

Total Revenue	$	27,974,525

Cost of goods sold previously reported	$	24,813,138
Reclassification of EZ Link International		1,631,240

Total cost of goods sold	$	26,444,378

Total goss profit	$	1,043

Reclassification to income and cost of revenue from expense	$	1,043

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS’

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

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

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2010 included in our Annual Report on Form 10-K for the year ended December 31, 2010.

Overview

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

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

In addition, as of January 1, 2010, International Packaging and Logistics Group, Inc., (“IPL Group Inc.”), acquired a majority interest in EZ Link Holdings, Ltd., company organized under the laws of the British Virgin Islands on December 18, 2009, which controls EZ Link Corporation, a logistics company headquartered in Taiwan. EZ Link was established in July 2003 under the laws of Taiwan, Republic of China. EZ Link Holdings, Ltd. consolidates EZ Link under ASC Topic 810 (FIN 46R) as it controls EZ Link through a management contract. EZ LINK is a full service international freight forwarder, who has current networks to locations in China, Hong Kong, South East Asia, North East Asia, North America, Latin America and Europe.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

EZ Link International, Samoa (“ELIS”) was incorporated in Samoa. ELIS is a wholly owned subsidiary of EZ Link Corporation and was set up to facilitate shipping operations in the Peoples Republic of China.

Plan of Operation

Our general operating plan is as follows:

Short Term

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

Long Term

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

Results of Operations

Three and nine months ended September 30, 2011 and 2010

Revenue:

For the three months ended September 30, 2011 and 2010, revenues were $8,320,868 and $10,858,399, respectively, for a decrease of $2,537,531 (23.4%) over the same period in 2010. The decrease in revenue is mainly due to two factors; 1) a decrease in packaging revenue of $1,218,838 (16.2%) due to two clients reducing orders as a result of the up and down economic environment and 2) a decrease in logistics revenues of $1,318,693 (39.4%) due to a loss of a large customer.

For the nine months ended September 30, 2011 and 2010, revenues were $27,033,080 and $27,974,525, respectively, for a decrease of $941,445 (3.4%) over the same period in 2010. The decrease in revenue is mainly due to two factors; 1) an increase in packaging revenue of $1,108,649 (5.9%) which was due to an upturn in the worldwide economy compared to a year ago but is seeing a slowdown this quarter, and 2) offset by a decrease in logistics revenues of $2,050,094 (22.6%) due to a loss of a large customer.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

Cost of Goods Sold:

Cost of goods sold for the three months ended September 30, 2011 and 2010 were $7,906,376 and $10,357,085, respectively, for a decrease of $2,450,709 (23.7%) over the same period in 2010. This decrease consists of a decrease in packaging cost of goods sold of $1,126,590 (15.4%) which was due to a combination of a decrease in sales plus a decrease in ocean freight as a result of a client handling its own freight, plus a decrease in logistics cost of goods sold of $1,324,119 (43.6%) over the same period in 2010 which is related to the loss of a large customer.

Cost of goods sold for the nine months ended September 30, 2011 and 2010 were $25,501,419 and $26,444,378, respectively, for a decrease of $942,959 (3.6%) over the same period in 2010. This decrease consists of an increase in packaging cost of goods sold of $1,238,447 (6.8%) which was a direct result of the increase in sales for the first two quarters reduced by a decrease in sales in this third quarter, plus a decrease in logistics cost of goods sold of $2,181,406 (26.6%) over the same period in 2010 which is related to the loss of a large customer.

Gross Profit:

Gross profit was $414,492 and $501,314 for the three months ended September 30, 2011 and 2010, respectively, a decrease of $86,822 (17.3%) over the same period in 2010. The gross profit margin as a percentage of sales for the three months ended September 30, 2011 and 2010 was 5.0% and 4.6%, respectively, for an increase of 0.4%. The increase consists of an increase of 6.3% in gross profit percentage from the logistics business offset by a decrease in gross profit percentage from the packaging business of 1.0%.

Gross profit was $1,531,661 and $1,530,147 for the nine months ended September 30, 2011 and 2010, respectively, an increase of $1,514 (0.1%) over the same period in 2010. The gross profit margin as a percent of sales for the nine months ended September 30, 2011 and 2010 was 5.7% and 5.5%, respectively, an increase of 0.2%.

Operating Expenses:

Operating expenses for the three months ended September 30, 2011 and 2010 were $637,477 and $574,639, respectively, for an increase of $62,838 (10.9) from the same period in 2010. Operating expenses for the nine months ended September 30, 2011 and 2010 were $1,807,605 and $1,697,156, respectively, for an increase of $110,499 (6.5%) over the same period in 2010. These differences in operating expenses were mostly attributable to the following – see below schedules:

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

Three months ending:	9/30/2010		9/30/2011		$ VAR			% VAR
Salaries & Related Expense	$	295,051	$	339,178		44,127			15.0%	Packaging salary increased in 2011 by $9,131 plus a $34,996 increase in EZ Link salary expense (bonus)
Rent		44,644		50,193		5,549			12.4%	Packing rent increased by $1,959 and EZ Link rent increased by $3,590. Increase due to annual rate increases.
Accounting		42,915		26,558		(16,357	)		-38.1%	Additional 2010 audit fees due to EZ Link Acquisition
Insurance		27,048		30,679		3,631			13.4%	Packaging Insurance based on prior revenue which was higher plus an increase in EZ Link Group insurance.
Meals & Entertainment		17,703		19,978		2,275			12.9%
Legal		10,000		9,000		(1,000	)		-10.0%	No material change
Travel Expense		70,765		104,052		33,287			47.0%	Increase in packaging travel of $37,258.
Miscellaneous		66,513		57,839		(8,674	)		-13.0%	Miscellaneous items
Total Expenses	$	574,639	$	637,477		62,838			10.9%

Nine months ending:	9/30/2010		9/30/2011		$ VAR			% VAR
Salaries & Related Expense	$	856,414	$	999,470		143,056			16.7%	Packaging salary higher in 2011 by $13,252 plus a $129,803 increase in EZ Link salary expense (bonus)
Rent		129,140		145,430		16,290			12.6%	Packing rent increased by $4,962 and EZ Link rent increased by $11,328. Increase due to annual rate increases.
Accounting		90,915		69,204		(21,711	)		-23.9%	Additional 2010 audit fees due to EZ Link Acquisition
Insurance		91,792		123,087		31,295			34.1%	Packaging Insurance increased by $23,491 plus an increase in EZ Link Group insurance of $7,804.
Meals & Entertainment		57,593		61,201		3,608			6.3%	EZ Link expense increased $3,631 over prior year
Legal		28,000		27,000		(1,000	)		-3.6%	No material change
Travel Expense		227,208		202,085		(25,123	)		-11.1%	increase in packing travel of $21,152 offset by EZ Link travel decrease of $3,972.
Miscellaneous		216,094		180,128		(35,966	)		-16.6%	Miscellaneous items
Total Expenses	$	1,697,156	$	1,807,605		110,449			6.5%

Other Income (Expenses):

Interest income (expense) for the three months ended September 30, 2011 and 2010 was $60 income and $335 expense, respectively, for an increase of $395 (117.9%) over the same period in 2010. Interest income (expense) for the nine months ended September 30, 2011 and 2010 was $637 expense and $199 income for a decrease of $836 (420.1%).

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

Other income for the three months ended September 30, 2011 and 2010 was $23,120 and $2,332, respectively, an increase of $20,788 (891.4%) over the same period in 2010. Other income for the nine months ended September 30, 2011 and 2010 was $23,637 and $6,294, respectively, an increase of $17,343 (275.5%) over the same period in 2010.

Rental income for the three months ended September 30, 2011 and 2010 was $126 and $1,642, respectively, a decrease of $1,516 (92.3%) over the same period in 2010. Rental income for the nine months ended September 30, 2011 and 2010 was $3,075 and $4,331, respectively, a decrease of $1,256 (29.0%) over the same period in 2010.

Liquidity and Capital Resources

Net cash provided by operating activities for the nine months ended September 30, 2011 amounted to $300,262, which mainly consisted of the following: net loss of $257,599, increase in accounts receivable of $495,416, offset by an increase in accounts payable and accrued expenses of $1,121,583.

On September 30, 2011 the Company had total assets of $9,015,992 compared to $8,245,327 on December 31, 2010, an increase of $770,665 or 9.3%. The Company had total IPLO stockholders’ equity of $2,118,783 on September 30, 2011, compared to total IPLO stockholders’ equity of $2,350,456 on December 31, 2010, a decrease of $231,673 (9.9%). As of September 30, 2011 the Company's working capital position decreased by $219,174 (13.0%) from working capital of $1,687,385 at December 31, 2010 to working capital of $1,468,211 at September 30, 2011.

Capital Resources

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

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, they have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting discussed below.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2011

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed by, and under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

Our internal control over financial reporting includes those policies and procedures that:

	1.	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
	2.	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
	3	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2011. Based on this assessment, management concluded that the Company did not maintain effective internal controls over financial reporting as a resulted of identified material weakness in our financial reporting described below. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management's report in this quarterly report.

		IDENTIFIED MATERIAL WEAKNESS A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Management identified the following material weakness in internal control during its assessment of internal controls over financial reporting as of September 30, 2011: ·We lack an effective period-end financial statement reconciliation process to transition from Taiwan Accounting Standards to U.S. Generally Accepted Accounting Principles (“GAAP”). ·We lack formal guidance or checklist of procedures to facilitate the reconciliation of the financial statements reported under Taiwan accounting standards to GAAP. ·We lack the expertise to properly handle our Company’s complex income tax accounting issues. MANAGEMENT'S REMEDIATION INITIATIVES We are undertaking the remedial measures to establish effective disclosure controls and procedures and internal control over financial reporting, including improving the supervision and training of our accounting staff to understand and implement accounting requirements, policies and procedures for the accounting of variable interest entities. We are reviewing the qualifications of qualified GAAP consultants who can work with the Company’s Chief Financial Officer and Taiwan accounting team to indentify GAAP related issues and help evaluate and address such issues before they present problems in reporting in the United States. We are planning to utilize a qualified consultant on an on-going basis. We also appointed an independent director who is knowledgeable in US GAAP to our board of directors. The remediation initiatives are an ongoing process of establishing and meeting recording and reporting milestones that are designed to provide an effective system of internal control over financial reporting. We expect to have the system fully operational within the current fiscal year. Until then, executive and financial management is closely scrutinizing the recording and reporting of all material financial transactions. In light of the identified material weaknesses, management, performed (1) significant additional substantive review of those areas described above, and (2) performed additional analyses, including but not limited to a detailed balance sheet and statement of operations analytical review that compared changes from the prior period's financial statements and analyzed all significant differences. These procedures were completed so management could gain assurance that the financial statements and schedules included in this Form 10-Q fairly present in all material respects the Company's financial position, results of operations and cash flows for the periods presented. Changes in Internal Controls There has been no additional changes except for what is discussed above in our internal control over financial reporting during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

None

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities

None

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

None

ITEM 5. Other Information

None

ITEM 6. Exhibits

a) Exhibits

	31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)

	31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)

	32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350

	32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

	101.INS	XBRL Instance Document
	101.SCH	XBRL Schema Document
	101.CAL	XBRL Calculation Linkbase Document
	101.DEF	XBRL Definition Linkbase Document
	101.LAB	XBRL Label Linkbase Document
	101.PRE	XBRL Presentation Linkbase Document

SIGNATURES

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

International Packaging and Logistics Group, Inc.

(Registrant)


Dated: November 18, 2011	By:	/s/ Steven R.. Westlund
		Steven Westlund
		Chief Executive Officer
		Principal Financial Officer and Director

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

	By:	/s/ William Gresher
		William Gresher, Director

YBCC, Inc. - FORM 10-Q - November 18, 2011

Attached files

YBCC, Inc. Reports