---

UNITED STATES
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: June 30, 2015

[  ] 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: 001-34997

CHINA SHENGDA PACKAGING GROUP INC.
(Exact Name of Registrant as Specified in Its Charter)

Nevada	26-1559574
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

No. 2 Beitang Road
Xiaoshan Economic and Technological Development Zone
Hangzhou, Zhejiang Province 311215
People’s Republic of China
(Address of principal executive offices, Zip Code)

(86) 571-82838805
(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. 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]     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 [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]     (Do not check if a smaller reporting company) [  ]	Smaller reporting company [X]

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

The number of shares outstanding of each of the issuer’s classes of common stock as of August 14, 2015 is as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	7,758,168

---

CHINA SHENGDA PACKAGING GROUP INC.

Quarterly Report on Form 10-Q

Period Ended June 30, 2015

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures.	10
PART II OTHER INFORMATION
Item 1.	Legal Proceedings.	11
Item 1A.	Risk Factors.	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Mine Safety Disclosures.	11
Item 5.	Other Information.	11
Item 6.	Exhibits	11

i

---

PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

CHINA SHENGDA PACKAGING GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Contents	Page(s)
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations and Comprehensive Income	F-3
Consolidated Statements of Cash Flows	F-4
Notes to Consolidated Financial Statements	F-5 - F-22

1

---

CHINA SHENGDA PACKAGING GROUP INC.

F-1

---

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in US$)

		June 30,			December 31,
ASSETS		2015			2014
Current assets		(Unaudited)
Cash and cash equivalents	$	10,651,972		$	10,909,547
Restricted cash		12,659,820			13,764,420
Accounts and notes receivable, net		43,968,476			40,385,615
Inventories		22,043,281			16,197,839
Prepayments and other receivables		3,750,134			1,714,052
Amount due from related parties		230,098			51,093
Deductible value added tax payable		865,139			867,869
Total current assets		94,168,920			83,890,435
Non-current assets
Property, plant and equipment, net		76,001,975			72,274,052
Land use right		11,624,648			11,650,850
Deferred tax assets		3,945,552			2,965,241
Goodwill		182,036			180,373
Total assets	$	185,923,131		$	170,960,951
LIABILITIES AND EQUITY
Current liabilities
Accounts and notes payable	$	50,689,405		$	41,954,268
Amounts due to related parties		3,554,905			2,961,704
Accrued expenses and other payables		4,743,444			2,964,988
Taxes payable		1,619,446			1,826,922
Short-term loans		3,500,000			3,500,000
Current portion of long-term loans		4,500,000			-
Total current liabilities		68,607,200			53,207,882
Non-current liabilities
Long-term loans		-			4,500,000
Total liabilities	$	68,607,200		$	57,707,882
Commitment and contingencies
Equity
Stockholders’ equity
Common stock (US$0.001 par value, 38,000,000 shares authorized, 7,758,168 shares issued and outstanding at June 30, 2015 and December 31, 2014) (1)		7,758			7,758
Additional paid-in capital		43,067,497			43,067,497
Appropriated retained earnings		8,713,159			8,293,281
Unappropriated retained earnings		49,535,257			49,894,124
Accumulated other comprehensive income		12,834,475			11,778,550
Total equity for stockholders of China Shengda Packaging		114,158,146			113,041,210
Noncontrolling interest		3,157,785			211,859
Total equity		117,315,931			113,253,069
Total liabilities and equity	$	185,923,131		$	170,960,951

(1) All per share amounts and shares outstanding for all periods have been retroactively restated to reflect China Shengda Packaging Group Inc.’s 1-for-5 reverse stock split, which was effect on May 18, 2015.

See notes to the consolidated financial statements

F-2

---

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Amounts in US$)

(1) All per share amounts and shares outstanding for all periods have been retroactively restated to reflect China Shengda Packaging Group Inc.’s 1-for-5 reverse stock split, which was effect on May 18, 2015.

See notes to the consolidated financial statements

F-3

---

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in US$)

		Six Months Ended June 30,
		2015			2014
		(Unaudited)			(Unaudited)
Cash flows from operating activities
Net (loss) income	$	(147,651	)	$	474,356
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expenses		3,740,846			3,913,433
Deferred tax		(949,492	)		(726,504	)
Change in operating assets and liabilities:
Restricted cash		1,227,000			(324,200	)
Accounts and notes receivable		(3,192,096	)		3,343,059
Inventories		(4,892,140	)		(1,246,982	)
Prepayments and other receivables		(1,644,438	)		(1,316,122	)
Accounts and notes payable		7,842,297			1,934,610
Amount due from(to) related party		385,946			(199,440	)
Accrued expenses and other payables		1,671,235			244,698
Tax payables		(212,805	)		1,102,166
Net cash provided by operating activities		3,828,702			7,199,074
Cash flows from investing activities
Purchase of property, plant and equipment		(4,463,668	)		(2,565,687	)
Proceeds from disposal of property, plant and equipment		278,120			175,615
Net cash (used in) investing activities		(4,185,548	)		(2,390,072	)
Cash flows from financing activities
Proceeds from short-term loans		3,500,000			10,998,480
Proceeds from long-term loans		-			4,497,226
Repayment of short-term loans		(3,500,000	)		(10,187,980	)
Repayment of long-term loans		-			(4,497,226	)
Restricted cash		-			(2,690,860	)
Net cash flows (used in) financing activities		-			(1,880,360	)
Effect of foreign currency exchange rate fluctuation on cash and cash equivalents		99,271			(46,752	)
Net changes in cash and cash equivalents		(257,575	)		2,881,890
Cash and cash equivalents, beginning of year		10,909,547			6,569,495
Cash and cash equivalents, end of year	$	10,651,972		$	9,451,385
Cash paid during the year for:
Interest paid	$	385,786		$	509,851
Income taxes paid	$	392,621		$	982,735
Non-cash financing transactions:
Property, plant and equipment and inventory injected by noncontrolling interest	$	3,137,995		$	-

F-4

---

1.	PRINCIPAL ACTIVITIES AND ORGANIZATION

The consolidated financial statements include the financial statements of China Shengda Packaging Group Inc. (the “Company” or “China Shengda Packaging”) and its subsidiaries, Evercharm Holdings Limited (“Evercharm”), Zhejiang Great Shengda Packaging Co., Ltd (“Great Shengda”), Zhejiang Shengda Color Pre-printing Co. Ltd (“Shengda Color”), Hangzhou Shengming Paper Co., Ltd (“Hangzhou Shengming”), Suzhou Asian and American Paper Products Co., Ltd (“Suzhou AA”), Jiangsu Shuangsheng Paper Technology Development Co., Ltd. (“Shuangsheng”), Jiangsu Great Shengda Concept Packaging Development Co., Ltd. (“Shengda Concept”), Chendu Shengda Zhongtian Packaging Co., Ltd (“Shengda Zhongtian”) and Hangzhou Xiaoshan Xiaosheng Paper Co., Ltd (“Xiaosheng”). The Company and its subsidiaries are collectively referred to as the “Group”.

The Company, formerly named as Health Place Corporation, was incorporated in the State of Nevada on March 16, 2007 as a web-based service provider offering an online service where health practitioners could purchase products and services to improve their work and home lives, including books, CDs, clothing, and accessories geared towards the needs of these practitioners. However, it did not engage in any operations and was dormant from its inception until its reverse acquisition of Evercharm on April 8, 2010.

On April 8, 2010, the Company completed a reverse acquisition transaction through a share exchange with Evercharm and its sole shareholder, Shengda (Hangzhou) Holdings Limited (“Shengda Holdings”), whereby China Shengda Packaging acquired 100% of the issued and outstanding capital stock of Evercharm, in exchange for 5,520,000 shares of China Shengda Packaging’s common stock, which constituted 92% of its issued and outstanding shares on a fully-diluted basis of China Shengda Packaging immediately after the consummation of the reverse acquisition. As a result of the reverse acquisition, Evercharm became China Shengda Packaging’s wholly-owned subsidiary and Shengda Holdings, the former shareholder of Evercharm, became China Shengda Packaging’s controlling stockholder. The share exchange transaction with Evercharm was treated as a reverse acquisition, with Evercharm as the accounting acquirer and China Shengda Packaging as the acquired party.

On April 29, 2010, the Company completed a private placement of shares of its common stock with a group of accredited investors. Pursuant to a securities purchase agreement with the investors, the Company issued to the investors an aggregate of 291,262 shares at a price per share of US$17.15 for US$5 million. Net proceeds after deducting offering costs were approximately US$4.0 million.

On December 10, 2010, the Company completed a public offering and issued an aggregate of 1,600,000 shares at a price per share of US$20.0 for US$32 million. Net proceeds after deducting offering costs were approximately US$29.7 million.

Evercharm was incorporated in British Virgin Islands (“BVI”) on September 15, 2004, and is a holding company without any operations.

Great Shengda, Evercharm’s wholly-owned subsidiary, was incorporated in Hangzhou city, Zhejiang province, People’s Republic of China(“PRC”) on November 22, 2004. Its registered capital was US$44 million as of June 30, 2015. Great Shengda is engaged in manufacturing and processing corrugated paper cartons and paperboard and package decoration printing and selling.

Shengda Color, Great Shengda’s100% wholly-owned subsidiary, was incorporated in Hangzhou city, Zhejiang province, PRC on August 8, 2005 with registered capital of RMB10 million. Shengda Color is engaged in the manufacturing and sale of paper cartons and paperboard, as well as the research and development of paper packing technology.

Hangzhou Shengming, 75% held by Shengda Color and 25% held by Evercham, was incorporated in Hangzhou city, Zhejiang province, PRC on December 28, 2006 with registered capital of US$15 million. It is engaged in the manufacturing and sale of paper cartons and paperboard, as well as the research and development of paper packing technology.

F-5

---

Suzhou AA was incorporated in Suzhou city, Jiangsu province, PRC on June 22, 2010, with registered capital amounting to RMB1.89 million. It is engaged in manufacturing and sales of paper products. On August 12, 2010, Great Shengda acquired 100% equity interest of Suzhou AA from its original shareholders, for cash consideration amounting to RMB3 million (US$0.44 million).

Shuangsheng was incorporated in Yancheng city, Jiangsu province, PRC on September 22, 2011. Shuangsheng has registered capital amounting to RMB280 million, 99.06% held by Great Shengda and 0.94% held by Shuangdeng Paper Industrial Company Limited (“Shuangdeng Paper”), a company incorporated in PRC, and is controlled by the same ultimate stockholders of the Company. Shuangsheng is engaged in the business of new paper making technology, related research and the development, application, transfer and consultation of such relevant technology.

Shengda Concept, Great Shengda’s 100% wholly-owned subsidiary, was incorporated in Yangcheng city, Jiangsu province, PRC on June 16, 2014, with registered capital of RMB30.95 million. Shengda Concept is engaged in the manufacturing and sale of paper cartons and paperboard as well as the research development of paper packing technology.

Shengda Zhongtian, a joint venture 55% held by Great Shengda and 45% held by Chengdu Zhongtian Chengxin Packaging Co., Ltd (“Chengxin Packaging”), was incorporated in Chengdu city, Sichuan province, PRC on December 2, 2014, with registered capital of RMB42.86 million with actually invested capital of RMB39.88 million. Zhongtian is engaged in the manufacturing and sale of paper cartons and paper boxes.

Xiaosheng, Shuangsheng’s 100% wholly-owned subsidiary, was incorporated in Hangzhou city, Zhejiang province, PRC on December 15, 2014, with registered capital of RMB38 million with actually invested capital of nil. Xiaosheng is engaged in the sale of corrugating medium paper. It was at the development stage as of June 30, 2015.

On May 18, 2015, China Shengda Packaging effected a one for five reverse stock split (the “Reverse Spilt”). The principal effect of the Reverse Split was to decrease the number of outstanding shares of each of China Shengda Packaging’s common shares. All per share amounts and shares outstanding for all the periods have been retroactively restated to reflect the Reverse Split.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)	Basis of presentation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The consolidated interim financial information as of June 30, 2015 and for the six-month periods ended June 30, 2015 and 2014 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and notes disclosures, which are normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have not been included. The consolidated interim financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of June 30, 2015, its consolidated results of operations and cash flows for the six-month periods ended June 30, 2015 and 2014, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Noncontrolling interest represents the ownership interests in a subsidiary that was held by owners other than the parent and is part of the equity of the consolidated group. The noncontrolling interest is reported in the consolidated statement of financial position within equity, separately from the parent’s equity. Net income or loss and comprehensive income or loss is attributed to the parent and the noncontrolling interest. If losses attributable to the parent and the noncontrolling interest in a subsidiary exceed their interests in the subsidiary’s equity, the excess, and any further losses attributable to the parent and the noncontrolling interest, is attributed to those interests.

F-6

---

(b)	Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Group to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the allowance for doubtful receivables, recoverability of the carrying amount of inventory, and the assessment of deferred tax assets or liabilities. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.

(c)	Cash and cash equivalents

Cash includes not only currency on hand but demand deposits with banks or other financial institutions. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

(d)	Restricted cash

Restricted cash represents the deposits held as compensating balances against banks’ acceptances issued, loans borrowed.

(e)	Accounts and notes receivable, net

Accounts receivable are recognized and carried at original sales amounts less an allowance for uncollectible accounts, as needed.

Accounts receivable are reviewed periodically as to whether they are past due based on contractual terms and their carrying value has become impaired. An allowance for doubtful accounts is recorded in the period in which loss is determined to be probable based on an assessment of specific evidence indicating doubtful collection, historical experience, account balance aging and prevailing economic conditions. Accounts receivable balances are written off after all collection efforts have been exhausted. No significant account receivable balance was written off as of June 30, 2015 and December 31, 2014.

Notes receivable represent banks’ acceptances that have been arranged with third-party financial institutions by certain customers to settle their purchases from us. These banks’ acceptances are non-interest bearing and are collectible within six months. Such sales and purchasing arrangements are consistent with industry practices in the PRC.

There were no outstanding amounts from customers that individually represent greater than 10% of the total balance of accounts receivable as of June 30, 2015 and December 31, 2014.

(f)	Inventories

Inventories are stated at lower of cost or market. Cost is determined using the weighted average method. Inventory includes raw materials, work in process and finished goods. The variable production overhead is allocated to each unit of production on the basis of the actual use of the production facilities. The allocation of fixed production overhead to the costs of conversion is based on the normal capacity of the production facilities.

F-7

---

Where there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down to their fair value for the difference with charges to cost of sales.

No value was written down for the inventories as of June 30, 2015 and December 31, 2014.

(g)	Property, plant and equipment and construction in process

Other than those acquired in a business combination, property, plant and equipment is stated at historical cost less accumulated depreciation and amortization. The historical cost of acquiring an item of property, plant and equipment includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. If an item of property, plant and equipment is constructed or developed over a period of time before it is in a condition to be placed in service, the interest cost incurred during that period as a result of expenditures for the item is a part of the historical cost. This item is categorized as construction in progress and is not depreciated until substantially all the activities necessary to bring it to the condition and location necessary for its intended use are completed.

Depreciation of property, plant and equipment is calculated using the straight-line method (after taking into account their respective estimated residual value) over the estimated useful lives of the assets as follows:

Depreciation of property, plant and equipment attributable to manufacturing activities is capitalized as part of inventories, and expensed to cost of goods sold when inventories are sold. Expenditures for maintenance and repairs are expensed as incurred.

The gain or loss on the disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of operations.

Construction in progress represents capital expenditure measured as the direct costs of construction or acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to the appropriate category of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. Construction in progress is not depreciated.

(h)	Land use right

Land use right represents the cost paid to the PRC government authorities for the right to use land over a specified period. Land use right is amortized on a straight line basis over its estimated useful life, which is the periods over which the asset is expected to contribute directly or indirectly to the future cash flows of the Group. The land use right, with 166,533 square meters in area, has a term of 50 years and will expire in December 2058, the estimated useful life is as follows:

(i)

Goodwill

Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of businesses acquired. Goodwill and certain other intangible assets deemed to have indefinite lives are not amortized. Intangible assets determined to have definite lives are amortized over their useful lives. Goodwill and indefinite lived intangible assets are subject to impairment testing annually as of the fiscal year-end or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable by comparing carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value.

F-8

---

(j)	Foreign currency translation and transactions

The Company’s and Evercharm’s functional currency is the United States dollar (“US$”). The functional currency of the Company’s subsidiaries in the PRC is Renminbi (“RMB”).

At the date a foreign currency transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured initially in the functional currency of the recording entity by use of the exchange rate in effect at that date. The increase or decrease in expected functional currency cash flows upon settlement of a transaction resulting from a change in exchange rates between the functional currency and the currency in which the transaction is denominated is recognized as foreign currency transaction gain or loss that is included in determining net income for the period in which the exchange rate changes. At each balance sheet date, recorded balances that are denominated in a foreign currency are adjusted to reflect the current exchange rate.

The Company’s reporting currency is US$. Assets and liabilities of the PRC subsidiaries are translated at the current exchange rate at the balance sheet dates, equity is translated at the historical exchange rate at the injection date and revenues and expenses are translated at the average exchange rates during the reporting periods. Translation adjustments are reported in other comprehensive income.

(k)	Commitments and contingencies

In the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, product and environmental liability, and tax matters. The Group records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Historically, the Group has not experienced any material service liability claims.

(l)	Appropriated retained earnings

The income of the Company’s PRC subsidiaries is distributable to its stockholders after transfer to reserves as required by relevant PRC laws and regulations and the subsidiaries’ articles of association. Appropriations to the reserves are approved by the respective boards of directors.

Reserves include statutory reserves and other reserves. Statutory reserves can be used to make good previous years’ losses, if any, and may be converted into capital in proportion to the existing equity interests of stockholders, provided that the balance after such conversion is not less than 25% of the registered capital. The appropriation of statutory reserve may cease to apply if the balance of the fund is equal to 50% of the entity’s registered capital. Pursuant to relevant PRC laws and articles of association of Great Shengda, Shengda Color, Hangzhou Shengming, Suzhou AA and Shuangsheng, the appropriation to the statutory reserves and other reserves is 15% of net profit after taxation of respective entity, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with U.S. GAAP might differ from those reflected in the statutory financial statements of the Company’s subsidiaries.

As of June 30, 2015 and December 31, 2014, the statutory reserve recorded by the Company’s subsidiaries incorporated in the PRC amounted to US$8,713,159 and US$8,293,281, respectively.

As of June 30, 2015 and December 31, 2014, the statutory reserve balances of Great Shengda, Hangzhou Shengming, Shengda Color, Suzhou AA, Shuangsheng, Shengda Concept, Shengda Zhongtian and Xiaosheng accounted for approximately 16.2%, 15.6%, 50.0%, 36.1%, nil, nil, nil and nil of their registered capital. The future income of these subsidiaries will be subject to statutory reserve.

F-9

---

(m)	Revenue recognition

All of the following criteria must exist in order for the Group to recognize revenue: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) price to the buyer is fixed or determinable; and (4) collectability is reasonably assured.

Delivery does not occur until products have been shipped to the customers, risk of loss has transferred to the customers and customers’ acceptance has been obtained, or the Group has objective evidence that the criteria specified in customers’ acceptance provisions have been satisfied. The majority of domestic sales contracts transfer title and risk of loss to customers upon receipt. The majority of oversea sales contracts transfer title and risk of loss to customers when goods were delivered to the carriers. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved.

In the PRC, value added tax (the “VAT”) of 17% on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. Revenue is recognized on a net basis, and the VAT collected is not recognized as revenue of the Company.

(n)	Research and development costs

Research and development costs are expensed as incurred. These expenses consist of the costs of the Company’s internal research and development activities and the costs of developing new products and enhancing existing products. Research and development costs amounted to US$1,988,441 and US$2,120,541 were recorded in general and administrative expenses for six months ended June 30, 2015 and 2014, respectively, US$1,024,238 and US$1,209,083 were recorded in general and administrative expenses for three months ended June 30, 2015 and 2014, respectively.

(o)	Retirement and other postretirement benefits

Full-time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, maternity insurance, work-related injury insurance and other welfare benefits are provided to employees. Chinese labor regulations require that the PRC subsidiaries of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Group has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were approximately US$864,690 and US$685,789 for six months ended June 30, 2015 and 2014, respectively, US$473,256 and US$336,818 were recorded in general and administrative expenses for three months ended June 30, 2015 and 2014, respectively

(p)	Income taxes

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

The Company also periodically evaluates whether it has any uncertain tax positions requiring accounting recognition in its financial statements. Under applicable U.S. GAAP, companies may recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Applicable U.S. GAAP also provides guidance on the de-recognition of income tax liabilities, classification of interest and penalties on income taxes, and accounting for uncertain tax positions in interim period financial statements. The Company's policy is to record interest and penalties on uncertain tax provisions as a component of its income tax expense. The Group did not have any interest and penalties associated with tax positions and did not have any significant unrecognized uncertain tax positions as of June 30, 2015 and December 31, 2014.

F-10

---

(q)	Earnings per share

Basic earnings per share are computed by dividing income attributable to holders of common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares.

(r)	Comprehensive income

Comprehensive income consists of net income and other gains and losses affecting shareholders' equity that, under U.S. GAAP, are excluded from net income. During the periods presented, the Group's comprehensive income (loss) represents its net income (loss) and foreign currency translation gains and losses.

(s)	Fair value measurements

Financial instruments include cash and cash equivalents, accounts and notes receivable, prepayments and other receivables, short-term loans, accounts and notes payable, other payables and amounts due to related party. The carrying amounts of these financial instruments approximate their fair value due to the short term maturities of these instruments.

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs are used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(t)	Recently issued accounting standards

In the period from January 1, 2015 to August 14, 2015, the FASB has issued ASU No. 2015-01 through ASU 2015-11, which are not expected to have a material impact on the consolidated financial statements upon adoption.

(u)	Concentration of Risks

Concentration of Credit Risk

Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash and cash equivalents and accounts and notes receivable. As of June 30, 2015 and December 31, 2014 substantially all of the Group’s cash and cash equivalents were deposited in financial institutions that management believes to be of high credit quality located in the PRC, which management believes are of high credit quality. Accounts receivable are typically unsecured and are derived from revenue earned from customers in the PRC. The risk with respect to accounts receivable is mitigated by credit evaluations the Group performs on its customers and its ongoing monitoring process of outstanding balances.

F-11

---

Concentration of Customers

There are no revenues from customers that individually represent greater than 10% of the total revenues during six-month period ended June 30, 2015 and 2014.

Concentration of Suppliers

The Company purchased its products from one major suppliers during the six months ended June 30, 2015, accounting for 12.76% of the total purchases, and there are no purchase from suppliers that individually represent greater than 10% of the total purchase during three months ended June 30, 2015. The Company purchased its products from three major suppliers during the six months ended June 30, 2014, accounting for 13.55%, 12.46% and 11.34% of the total purchases, and two major suppliers during the three months ended June 30, 2014, accounting for 20.68% and 11.80% of the total purchases.

Current vulnerability due to certain other concentrations

The Group’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 30 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

The Group transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

Additionally, the value of RMB is subject to changes in central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

(v)	Segment reporting

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

Accordingly, the Group categorizes its business into two operating segments, namely (i)Paper cartons and other paper products; (ii)Corrugating medium paper.

3.	ACCOUNTS AND NOTES RECEIVABLE, NET

Accounts and notes receivable consist of the following:

F-12

---

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Accounts receivable	$	37,542,359		$	32,401,827
	Notes receivable		6,426,117			7,983,788
		$	43,968,476		$	40,385,615

No allowance for doubtful amounts was provided as of June 30, 2015 and December 31, 2014.

4.	INVENTORIES

Inventories consist of the following:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Raw materials	$	16,094,813		$	12,321,396
	Finished goods		5,939,786			3,862,363
	Work in process		8,682			14,080
		$	22,043,281		$	16,197,839

No value was written down for inventories as of June 30, 2015 and December 31, 2014.

5.	PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables consist of the following:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Prepayments	$	3,141,053		$	1,530,041
	Other receivables		291,074			184,011
	Prepaid expenses		318,007			-
		$	3,750,134		$	1,714,052

The prepayments were mainly paid to their suppliers in advance for raw materials purchased and for machinery purchased for new subsidiaries Shengda Concept and Shengda Zhongtian.

6.	PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Buildings and improvements	$	34,300,299		$	27,890,275
	Machinery		69,053,425			62,781,607
	Office equipment and furnishing		1,092,573			968,721
	Motor vehicles		1,823,398			1,470,979
	Construction in progress		1,276,238			7,212,504
			107,545,933			100,324,086
	Less: accumulated depreciation		(31,543,958	)		(28,050,034	)
		$	76,001,975		$	72,274,052

The Group recorded depreciation expenses of US$3,607,718 and US$3,684,097 for six months ended June 30, 2015 and 2014, US$1,896,503 and US$1,704,753 for three months ended June 30, 2015 and 2014, respectively.

F-13

---

The property, plant and equipment with net book value amounting to US$8,013,819 and US$8,404,050 were pledged as collateral for bank loans as of June 30, 2015 and December 31, 2014, respectively.

7.	LAND USE RIGHT

In October 2010, Great Shengda paid US$12,315,000(RMB75,000,000) to Shengda Group Jiangsu Shuangdeng Paper Industrial Co., Ltd. (“Shuangdeng Paper”), a related party of the Group, for the acquisition of the land use right, which is located in Yancheng city, Jiangsu province. The land use right, with 166,533 square meters in area, has a term of 50 years and will expire in December 2058. It was purchased for construction of paper manufacturing plants to expand the Group's business. The Group recorded amortization expense of US$133,128 and US$131,908 for six months ended June 30, 2015 and 2014, respectively. US$66,930 and US$65,425 for three months ended June 30, 2015 and 2014, respectively. However, the certificate of land use right is still awaiting the local government’s authorization.

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Land use right	$	12,315,000		$	12,202,500
	Less: accumulated amortization		(690,352	)		(551,650	)
		$	11,624,648		$	11,650,850

The future amortization is as follows:

8.

LOANS

Short-term loans

Short-term loans consist of the following:

Note 1 the effective interest rate was 2.67% and 2.93% as of June 30, 2015 and December 31, 2014, respectively.

The short-term loan was denominated in USD for working capital purposes, with weighted average balances of US$3,538,889 and US$10,480,111; with weighted average interest rates of 2.88% and 5.77% for six months ended June 30, 2015 and 2014, respectively; and with weighted average balances of US$3,576,923 and US$10,480,111; with weighted average interest rates of 2.84% and 5.85% for three months ended June 30, 2015 and 2014, respectively.

The Bank of China loans amounting to US$3,500,000 were guaranteed by Shengda Group Co., Limited (“SD Group”), a related party (Note 11), as of June 30, 2015.

F-14

---

Current portion of long-term loans

The current portion of long-term loans consist of the following:

Note 1 the effective interest rate was 3.07% as of June 30, 2015.

The current portion of long-term loans was denominated in USD for working capital purposes, with weighted average balances of US$3,075,000 and US$1,466,851, with weighted average interest rates of 3.27% and 4.05% for six months ended June 30, 2015 and 2014, respectively; and with weighted average balances of US$4,500,000 and nil; with weighted average interest rates of 3.27% and nil for three months ended June 30, 2015 and 2014, respectively.

The loan was pledged with restricted cash amounting to US$5,000,040 as of June 30, 2015.

Long-term loans

Long-term loans consist of the following:

Note 1 the effective interest rate was 3.27% as of December 31, 2014.

The long term loan was denominated in USD for working capital purpose, with weighted average balances of US$1,425,000 and US$3,082,873, with weighted average interest rates of 3.27% and 3.27% for six months ended June 30, 2015 and 2014, respectively; and with weighted average balances of nil and US$4,500,000, with weighted average interest rates of nil and 3.27% for three months ended June 30, 2015 and 2014, respectively

The following table summarizes the unused lines of credit:

The facilities of Bank of China and Industrial and Commercial Bank of China were guaranteed by SD Group, a related party, for working capital and general corporate purposes (Note 11).

The facility of Jiangsu Sheyang Rural Commercial Bank was pledged with Shuangsheng’s property and guaranteed by Great Shengda. All the unused facilities can be withdrawn upon demand.

9.	ACCOUNTS AND NOTES PAYABLE

Accounts and notes payable consist of the following:

F-15

---

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Notes payable	$	15,270,600		$	17,571,600
	Accounts payable		35,418,805			24,382,668
		$	50,689,405		$	41,954,268

The notes payable were issued by the Great Shengda to their suppliers for raw materials purchased. All the notes payable were bank accepted notes payable without interest and due within six months. They are pledged with restricted cash amounting to US$7,635,300 and US$8,785,800 as of June 30, 2015 and December 31, 2014, respectively. The notes payable from Bank of China, Industrial and Commercial Bank of China and Agriculture Bank of China were guaranteed by SD Group (Note 11).

10.	ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables as of the end of the periods presented consist of the following:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Advance from customers	$	1,135,417		$	875,352
	Payroll and welfare payable		1,409,978			1,083,186
	Other payables		676,240			597,884
	Accrued expenses		1,521,809			408,566
		$	4,743,444		$	2,964,988

11.	RELATED PARTY TRANSACTION

Related party balances are as follows:

						June 30,			December 31,
	Related parties		Relationship			2015			2014
	Amounts due from related parties					(Unaudited)
	Shuangdeng Paper		Controlled by the same ultimate stockholders		$	53,096		$	46,825
	Shengda Xiang Wei Chemical Co., Limited(“Shengda Xiang Wei”)		Controlled by the same ultimate stockholders			4,592			4,268
	Zhejiang Shuangsheng Logistic Company Limited(“Shuangsheng Logistic”)		Controlled by the same ultimate stockholders			49,260			-
	SD Group		Controlled by the same ultimate stockholders			123,150			-
					$	230,098		$	51,093
	Amounts due to related parties
	Shuang Ke Da		Controlled by the same ultimate stockholders		$	296,191		$	442,285
	Shuangdeng Paper		Controlled by the same ultimate stockholders			2,351,860			2,040,435
	Shuangsheng Logistic		Controlled by the same ultimate stockholders			1,425			2,420
	Hangzhou New Shengda Investment Limited (“New Shengda”)		Controlled by the same ultimate stockholders			576,097			466,395
	Yancheng Zhaosheng Shiye Co., Ltd (“Yancheng Zhaosheng”)		Controlled by the same ultimate stockholders			30,788			10,169
	Chengxin Packaging		Noncontrolling interest			298,544			-
					$	3,554,905		$	2,961,704

F-16

---

The amount due from Shuangdeng Paper represents the receivable for selling the paper cartons. The amount due from Shengda Xiang Wei represents the receivable for selling the paper cartons. The amount due from Shuang Ke Da represents the advance for purchase of electricity and water by the Group. They were recorded as “amount due from related parties” in the consolidated balance sheets, non-interest bearing and receivable within one year.

The amount due to ShuangKeDa represents the payable for land lease and purchase of fixed assets by the Group. The amount due to Shuangdeng Paper represents the payable for purchase of steam. The amount due to Shuangsheng Logistic represents the payable for transportation fee. The amount due to SD Group represents the payable for land lease. The amount due to New Shengda represents the payable for land lease by the Group. The amount due to Yancheng Zhaosheng represents the payable for land lease. The amount due to Chengxin Packaging represents the payable for purchase of raw material and electricity. They were recorded as “amount due to related parties” in the consolidated balance sheets, non-interest bearing and repayable within one year.

Significant related party transactions are as follows:

F-17

---

Guarantee by SD Group

SD Group entered into maximum debt guarantee contracts with Bank of China Xiaoshan Branch and Industrial and Commercial Bank of China Xiaoshan Branch, under which SD Group agreed to act as guarantor for loans borrowed and bank accepted notes payable issued by Great Shengda from Bank of China Xiaoshan Branch and Industrial and Commercial Bank of China Xiaoshan Branch (Note 8 and 9).

SD Group also entered into debt guarantee contracts with Agriculture Bank of China, under which SD Group agreed to act as guarantor for bank accepted notes payable amounting to US$7,553,200 borrowed by Great Shengda (Note 9).

12.	RESTRICTED NET ASSETS

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of dividends from its PRC subsidiaries. As described in Note 2(l), the net income of the Company’s PRC subsidiaries is distributable only after sufficient appropriation of reserves.

Amounts restricted include paid-in capital and reserve funds of the Company’s PRC subsidiaries as determined pursuant to the PRC accounting standards and regulations, totaling approximately US$51,788,414 and US$51,368,536 as of June 30, 2015 and December 31, 2014, respectively.

13.	NONCONTROLLING INTEREST

The movement of noncontrolling interest is as follows:

	Beginning balance as of December 31, 2014	$	211,859
	noncontrolling interest contribution		3,155,353
	Net loss attributable to noncontrolling interest		(208,662	)
	OCI attributable to noncontrolling interest		(765	)
	Ending balance as of June 30, 2015 (Unaudited)	$	3,157,785

The noncontrolling interest contribution of $3,155,353 represented the estimated fair value of property, plant and equipment and inventory injected by Chengxin Packaging, a third party, which takes up 45% of Shengda Zhongtian, a joint venture with registered capital of RMB42.86 million.

14.

TAXATION

Taxes payable are composed of the following:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	VAT payable	$	666,525		$	1,227,056
	Income tax payable		692,409			400,163
	Other taxes payable		260,512			199,703
		$	1,619,446		$	1,826,922

F-18

---

The Company and its consolidated entities each file tax returns separately.

1)

VAT

Pursuant to the Provisional Regulation of the PRC on VAT and the related implementing rules, all entities and individuals (“taxpayers”) that are engaged in the sale of products in the PRC are generally required to pay VAT at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayers. Further, when exporting goods, the exporter is entitled to apportion of or all the refund of VAT that it has already paid or incurred.

The Group’s PRC subsidiaries are subject to VAT at 17% for their revenues.

The deductible value added tax payable represents the VAT already paid or borne exceeded the VAT required to pay, amounting to US$865,139 and US$867,869 as of June 30, 2015 and December 31, 2014, respectively. The deductible VAT will be used to offset future VAT required to pay.

2)	Income tax

United States

China Shengda Packaging is subject to United States tax at a tax rate of 34%. In six months ended June 30, 2015 and the year ended December 31, 2014, the Company does not provide for U.S. income taxes on foreign subsidiaries’ undistributed earnings as they will be permanently reinvested in foreign operations.

BVI

Incorporated in BVI, Evercharm is governed by the income tax law of BVI. According to current BVI income tax law, the applicable income tax rate for Evercharm is 0%.

PRC

Great Shengda has obtained the approval and is qualified as New and High-Tech Enterprise (“NHTE”) by relevant government authorities in February 2014. According to the PRC Enterprise Income Tax Law, Great Shengda is eligible to enjoy a preferential tax rate of 15% for the calendar year of 2014 and 2015.

Shengda Color, Hangzhou Shengming, Suzhou AA and Shuangsheng are manufacturing domestic enterprises and are not entitled to any tax holiday. They were subject to income tax at a rate of 25% for calendar years 2014 and 2015. Shengda Concept, Shengda Zhongtian and Xiaosheng are subject to income tax at a rate of 25% for calendar year 2015.

Under the Enterprise Income Tax Law, dividends, interests, rent, royalties and gains on transfers of property payable a foreign-invested enterprise in the PRC to their foreign investors who are a non-resident enterprises will be subject to a 20% withholding tax, unless such non-resident enterprise’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a reduced rate of withholding tax.

The following table reconciles the Group’s effective tax for the periods presented:

			Three Months Ended June 30,						Six Months Ended June 30,
			2015			2014			2015			2014
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Expected enterprise income tax
	at statutory tax rate	$	(54,813	)	$	748,663		$	(126,846	)	$	487,359
	Effect of preferential rate		(77,383	)		(244,836	)		(159,399	)		(310,615	)
	Others		-			3,059			-			3,059
	Effective enterprise income tax	$	(132,196	)	$	506,886		$	(286,245	)	$	179,803

F-19

---

The significant components of income tax expense are as follows:

			Three Months Ended June 30,						Six Months Ended June 30,
			2015			2014			2015			2014
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Current tax expenses	$	372,793		$	737,809		$	663,247		$	906,307
	Deferred tax benefits		(504,989	)		(230,923	)		(949,492	)		(726,504	)
	Income tax (benefit) expenses	$	(132,196	)	$	506,886		$	(286,245	)	$	179,803

Deferred tax assets and deferred tax liabilities reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purpose and the tax bases used for income tax purpose. The following represents the tax effect of each major type of temporary difference:

			June 30,			December 31,
			2015			2014
			(Unaudited)
	Net operating loss carried forward	$	3,756,519		$	2,744,172
	Effect of deductible temporary differences between assigned value of property, plant and equipment and their tax bases in a business combination		189,033			221,069
	Total Deferred tax assets	$	3,945,552		$	2,965,241

Shuangsheng, one of the Group's subsidiaries, incurred a pretax loss of approximately US$14.1 million as of June 30, 2015 since its paper mill officially went into production in June 2013. The net operating loss carry forwards will expire if unused in the years ending December 31, 2018 through 2020.

Shengda Concept and Shengda Zhongtian, which officially went into production in first quarter of 2015, incurred a pretax loss of approximately US$0.4 and US$0.6 million as of June 30, 2015, respectively. The net operating loss carry forwards will expire if unused in the year ending December 31, 2020.

15.	COMMITMENTS AND CONTINGENCIES

The Group has entered into operating lease agreements for land, offices and plants. The estimated annual rental expense for lease commitment is as follows:

As of June 30, 2015, material capital commitment under non-cancellable equipment construction and factory construction contracts is US$588,029.

The Group is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations.

The Group did not identify any contingency as of June 30, 2015 and December 31, 2014.

F-20

---

16.	SEGMENT REPORTING

The Group determines segments based on the differences in products and services to segments and measuring their performance.

The Group’s operations are mainly classified into two principal reportable segments that provide different products or services, the one is for manufacturing and processing corrugated paper cartons and paper board and package decoration printing and selling. And the other one is for Corrugating medium paper. Separate management of each segment is required because each business unit is subject to different marketing, operation, and technology strategies.

Accounting policies of the transactions between segments are the same as those described in the summary of significant accounting policies. Performance is measured by various factors such as segment revenue and segment profit. Individual segment assets and all corporate expenses and income tax expenses are allocated to the segments.

F-21

---

17.	EARNINGS PER SHARE

Basic loss per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. There were no potential dilutive instruments. The following is a reconciliation of the basic and diluted earnings per share computations for three and six months ended June 30, 2015 and 2014:

			Three Months Ended June 30,						Six Months Ended June 30,
			2015			2014			2015			2014
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Net income attributable to Company’s common stockholders	$	124,606		$	1,067,707		$	61,011		$	530,015
	Weighted average number of common shares outstanding – basic and diluted (1)		7,758,168			7,758,168			7,758,168			7,758,168
	Earnings per share – basic and diluted (1)	$	0.02		$	0.14			0.01		$	0.07

(1) All per share amounts and shares outstanding for all periods have been retroactively restated to reflect China Shengda Packaging Group Inc.’s 1-for-5 reverse stock split, which was effect on May 18, 2015.

18.	SUBSEQUENT EVENT

The Group has evaluated subsequent events through the issuance of the consolidated financial statements and no subsequent events are identified that require disclosure.

F-22

---

ITEM 2.

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

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:

•	“the Company,” “our company,” “we,” “us,” or “our,” are to the combined business of China Shengda Packaging Group Inc., a Nevada corporation, and its consolidated subsidiaries: Evercharm, Great Shengda, Shengda Color, Hangzhou Shengming, Suzhou AA, Shuangsheng, Shengda Concept, Shengda Zhongtian and Xiaosheng;
•	“Evercharm” are to Evercharm Holdings Limited, a BVI company;
•	“Great Shengda” are to Zhejiang Great Shengda Packaging Co., Ltd., a PRC company;
•	“Shengda Color” are to Zhejiang Shengda Color Pre-printing Co., Ltd., a PRC company;
•	“Hangzhou Shengming” are to Hangzhou Shengming Paper Co., Ltd., a PRC company;
•	“Suzhou AA” are to Suzhou Asian & American Paper Products Co., Ltd., a PRC company;
•	“Shuangsheng” are to Jiangsu Shuangsheng Paper Technology Development Co., Ltd., a PRC company;
•	“Shengda Concept” are to Jiangsu Great Shengda Concept Packaging Development Co., Ltd., a PRC company;
•	“Shengda Zhongtian” are to Chengdu Shengda Zhongtian Packaging Co., Ltd., a PRC company;
•	“Xiaosheng” are to Hangzhou Xiaoshan Xiaosheng Paper Co., Ltd., a PRC company;
•	“SD Group” are to Shengda Group Co., Ltd.;
•	“BVI” are to the British Virgin Islands;
•	“PRC” and “China” are to the People’s Republic of China, excluding Hong Kong, Macau and Taiwan;
•	“YRD” are to Yangtze River Delta Economic Zone, which includes Shanghai, Zheijiang Province and Jiangsu Province;
•	“SEC” are to the Securities and Exchange Commission;
•	“Securities Act” are to the Securities Act of 1933, as amended;
•	“Exchange Act” are to the Securities Exchange Act of 1934, as amended;
•	“Renminbi” and “RMB” are to the legal currency of China; and
•	“U.S. dollars,” “dollars” and “$” are to the legal currency of the United States.

2

---

Overview of Our Business

We are a leading paper packaging company in China. We are principally engaged in the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons in a variety of sizes and strengths. We also manufacture corrugated paperboards and corrugating medium paper, which are used for the production of flexo-printed and color-printed cartons.

We provide paper packaging solutions to a wide variety of industries, including food, beverage, cigarette, household appliance, consumer electronics, pharmaceutical, chemical, machinery and other consumer or industrial sectors. Our major products are single-layer paper cartons for food, drinks and medicine, double-layer paper cartons for garments, chemicals, furniture, refrigerators and air-conditioners, and triple-layer paper cartons for electrical machinery, motorcycles and other heavy-duty products. Our maximum annual production capacity of paper cartons and corrugating medium paper as of June 30, 2015 was approximately 765 million square meters and 150 thousand tons.

Our production facilities are strategically located in the YRD, a manufacturing center in China, thus putting us in close proximity to a large number of paper carton customers. Due to the weight and bulk of paper products and the consequent high shipping costs, paper packaging companies are generally limited to servicing a geographic radius from their production site, usually between 300 and 500 kilometers, within which they can compete economically. The paper carton market, therefore, is highly influenced by regional supply and demand dynamics. Based from our four manufacturing facilities in the provinces of Zhejiang and Jiangsu, we have established a sales network with five customer service centers that can service customers throughout the YRD, which accounted for the majority of our revenues. As the leading paper packaging manufacturer in the YRD, we are well positioned to capitalize on the fast-growing demand for paper cartons driven by the concentration and success of the manufacturing companies in the region.

We serve a broad base of reputable customers, including some of the Fortune 500 companies and Top 500 Chinese enterprises. Our major customers include Nongfu Spring Co., Ltd., Hangzhou Cigarette Company, Samsung’s Chinese subsidiary Suzhou Samsung Electrical Co., Ltd. and Panasonic’s Chinese subsidiary Hangzhou Panasonic Home Electrical Appliance Company. We have developed long-term relationships with and loyalty from our customers, many of which have been with us for over five years. We have also engaged in strategic alliance relationships with ten customers as their preferred supplier. At the same time, we continue to attract new customers to generate higher demand for our products and increase market penetration.

Recent Development

On May 19, 2015, we filed a Certificate of Change (the “Certificate”) pursuant to Nevada Revised Statutes (“NRS”) Section 78.209 with the Secretary of State of the State of Nevada to effect a reverse stock split (the “Reverse Split”) of the Company’s authorized and issued and outstanding common stock, par value $0.001 per share (the “Common Stock”), at an exchange ratio of 1-for-5. The Certificate has the effect of amending the Company’s Articles of Incorporation. The Reverse Split was duly approved by the Board of Directors of the Company without shareholder approval, in accordance with the authority conferred by Section 78.207 of the NRS. The Reverse Split became effective at 4:30 pm Eastern Standard Time on May 18, 2015 (the “Effective Time”). As a result of the Reverse Split, the total number of issued and outstanding shares of Common Stock decreased from 38,790,811 to approximately 7.76 million, and the Company’s authorized shares of Common Stock simultaneously decreased from 190,000,000 to 38,000,000 shares.

Second quarter Financial Performance Highlights

The following are some financial highlights for the second quarter of 2015:

Revenues: Revenues increased by $2.5 million, or 6.6%, to $39.7 million for the three months ended June 30, 2015, from $37.2 million for the same period of last year.

Gross Profit: Gross profit decreased by $1.2 million, or 17.9%, to $5.3 million for the three months ended June 30, 2015, from $6.5 million for the same period of last year.

Net income attributable to common stockholders: Net income attributed to stockholders decreased by $1.0 million, or 88.3%, to $0.1 million for the three months ended June 30, 2015, from $1.1 million for the same period of last year.

Basic and diluted net income per share: Basic and diluted net income per share was $0.02 for the three months ended June 30, 2015, compared with $0.14 for the same period last year.

3

---

Results of Operations

Comparison of Three Months Ended June 30, 2015 and June 30 2014 (unaudited)

The following table sets forth key components of our results of operations during the three months ended June 30, 2015 and 2014, both in dollars and as a percentage of our revenues.

		Three Months Ended						Three Months Ended
		June 30, 2015						June 30, 2014
					% of						% of
		Dollars			Revenues			Dollars			Revenues
Revenues	$	39,703,201			100.0%		$	37,237,538			100.0%
Cost of goods sold		34,374,054			86.6%			30,742,764			82.6%
Gross profit		5,329,147			13.4%			6,494,774			17.4%
Operating expenses
Selling expenses		1,523,667			3.8%			1,614,033			4.3%
General and administrative expenses		3,940,021			9.9%			3,168,636			8.5%
(Income) from disposal of property, plant and equipment		(87,538	)		(0.2%	)		(5,104	)		0.0%
Total operating expenses		5,376,150			13.5%			4,777,565			12.8%
Other income (expenses)
Interest income		87,237			0.2%			43,623			0.1%
Interest expense		(218,716	)		(0.6	)%		(354,923	)		(1.0)%
Subsidy income		552			0.0%			214,193			0.6%
Total other (expenses)		(130,927	)		(0.3	)%		(97,107	)		(0.3)%
Non-operating expense (income)		2,108			0.0%			55,040			0.1%
(Loss) income before income tax expense and noncontrolling interest		(180,038	)		(0.5	)%		1,565,062			4.2%
Income tax expense (benefit)		(132,196	)		(0.3	)%		506,886			1.4%
Net (loss) income		(47,842	)		(0.1	)%		1,058,176			2.8%
Net (loss) attributable to noncontrolling interest		(172,448	)		(0.4	)%		(9,531	)		0.0%
Net income attributable to common stockholders	$	124,606			0.3%		$	1,067,707			2.9%

Revenues. We generate revenues from the sale of our paper cartons, corrugated paper and other paper products. Revenues by segment were as follows:

		Three Months Ended			Three Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	29,805,763		$	29,900,861
Corrugating medium paper		13,301,689			10,739,534
Elimination of inter-segment transactions		(3,404,251	)		(3,402,857	)
Revenues	$	39,703,201		$	37,237,538

Revenues of paper cartons and other paper products

Our revenues of paper cartons and other paper products decreased by $0.1 million, or 0.3%, to $29.8 million for the three months ended June 30, 2015, from $29.9 million for the same period in 2014. The average price per square meter was approximately $0.31 for the three months ended June 30, 2015, which was approximately $0.39 for the same period of 2014. Sales volume increased by 18.1 million square meters, or 23.4%, to 95.4 million square meters for the three months ended June 30, 2015, from 77.3 million square meters for the same period of 2014. The increased sales volume was mainly contributed by Shengda Zhongtian and Shengda Concept that started their operations in the first quarter of 2015.

4

---

For the three months ended June 30, 2015, color cartons accounted for 22.8% and flexo cartons accounted for 52.2% of our revenues of paper cartons and other paper products, compared to 24.3% and 56.0%, respectively, for the same period of 2014. Average per square meter prices for our color cartons and flexo cartons for the three months ended June 30, 2015 were approximately $0.39 and $0.29, respectively, as compared to approximately $0.39 and $0.38, respectively, for the same period of 2014.

Consumer and industrial goods manufacturing sectors are the principal markets we serve. Our major customers remained home appliances and electronics manufacturers and food, beverage and cigarette manufacturers in the YRD, which accounted for 18.1% and 22.3%, respectively, of our revenues of paper cartons and other paper products for the three months ended June 30, 2015, compared to 21.0% and 19.1%, respectively, for the same period of 2014.

Revenues of corrugating medium paper

Our revenues of corrugating medium paper increased by $2.6 million, or 23.8%, to $13.3 million for the period ended June 30, 2015, from $10.7 million for the same period in 2014. Sales volume of corrugating medium paper was approximately 37.8 thousand tons and the average price was approximately $352 per ton, as compared with 30.1 thousand tons and $356 for the same period in 2014 respectively.

Cost of goods sold. Our cost of goods sold is comprised of raw materials, labor cost (production-related workers), depreciation and amortization of production-related equipment, utilities consumption costs and overhead allocation. Cost of goods sold by segment was as follows:

		Three Months Ended			Three Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	24,053,026		$	23,259,065
Corrugating medium paper		13,725,279			10,886,556
Elimination of inter-segment transactions		(3,404,251	)		(3,402,857	)
Cost of goods sold	$	34,374,054		$	30,742,764

Cost of goods sold of paper cartons and other paper products

Our cost of goods sold of paper cartons and other paper products increased by $0.8 million, or 3.4%, to $24.1 million for the three months ended June 30, 2015, from $23.3 million for the same period of 2014. The increase was mainly attributable to the increased sales volume. Average cost of goods sold per square meter for the three months ended June 30, 2015 decreased by $0.05, or 16.3%, to $0.25, from $0.30 per square for the same period of 2014. Management will keep monitoring for cost control.

Cost of goods sold of corrugating medium paper

Our cost of goods sold of corrugating medium paper increased by $2.8 million, or 26.1%, to $13.7 million for the period ended June 30, 2015, from $10.9 million for the same period of 2014. Sales volume of corrugating medium paper was approximately 37.8 thousand tons and the average cost was approximately $363 per ton for the period ended June 30, 2015, as compared to 30.1 thousand tons and $361 respectively for the same period in 2014.

Gross profit. Gross profit by segment was as follows:

		Three Months Ended			Three Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	5,752,737		$	6,641,796
Corrugating medium paper		(423,590	)		(147,022	)
Gross profit	$	5,329,147		$	6,494,774

5

---

Gross profit of paper cartons and other paper products

Gross profit of paper cartons and other paper products decreased by $0.8 million, or 13.4%, to $5.8 million for the three months ended June 30, 2015, from $6.6 million for the same period of 2014. Gross profit of flexo cartons decreased by 0.6 million, or 13.6%, to $3.9 million for the three months ended June 30, 2015, from $4.5 million for the same period of 2014. Gross profit of color cartons decreased by $0.2 million, or 12.9%, to $1.9 million for the three months ended June 30, 2015, from $2.1 million for the same period of 2014. The decrease in our gross profit of paper cartons and other paper products was mainly due to increased cost of goods sold of paper cartons and other paper products as noted above. Gross profit as a percentage of revenues was 19.3% for the three months ended June 30, 2015, as compared to 22.2% for the same period of 2014.

Gross profit of corrugating medium paper

Gross profit of corrugating medium paper was negative $0.4 million for the three months ended June 30, 2015, compared with negative $0.1 million for the same period of 2014. The decrease of the gross profit was mainly due increased sales volume of corrugating medium paper with negative gross profit ratio. Management will keep streamlining the manufacturing process, improving products quality and reducing the raw material consumption and trying to increase the gross profit step by step.

Selling expenses. Our selling expenses include freight, salary and benefits for sales and marketing personnel, travelling and marketing expenses. Our selling expenses decreased by $0.1 million, or 5.6%, to $1.5 million for the three months ended June 30, 2015, from $1.6 million for the same period of 2014. The decrease resulted mainly from the decreased marketing expenses. As a percentage of revenues, selling expenses for the three months ended June 30, 2015 decreased to 3.8%, from 4.3% for the same period of 2014.

General and administrative expenses. Our general and administrative expenses are comprised of research and development, or R&D, expense, salary and benefits for administrative personnel, rental fees, depreciation and amortization for equipment used other than for production and miscellaneous expenses unrelated to production. Our general and administrative expenses increased by $0.7 million, or 24.3%, to $3.9 million for the three months ended June 30, 2015, from $3.2 million for the same period of 2014. The increase resulted mainly from the increased staff costs, which includes salary, benefits, social insurance and other relevant staff expenses. As a percentage of revenues, general and administrative expenses for the three months ended June 30, 2015 increased to 9.9%, as compared to 8.5% for the same period of 2014.

Net income attributable to common stockholders. As a result of the cumulative effect of the above factors, our net income attributable to common stockholders decreased by $1.0 million, or 88.3%, to $0.1 million for the three months ended June 30, 2015, from $1.1 million for the same period of 2014.

Comparison of Six Months Ended June 30, 2015 and June 30, 2014 (unaudited)

The following table sets forth key components of our results of operations during the six months ended June 30, 2015 and 2014, both in dollars and as a percentage of our revenues.

		Six Months Ended						Six Months Ended
		June 30, 2015						June 30, 2014
					% of						% of
		Dollars			Revenues			Dollars			Revenues
Revenues	$	77,630,620			100.0%		$	69,527,517			100.0%
Cost of goods sold		67,294,930			86.7%			58,899,444			84.7%
Gross profit		10,335,690			13.3%			10,628,073			15.3%
Operating expenses
Selling expenses		3,389,105			4.4%			3,463,962			5.0%
General and administrative expenses		7,157,482			9.2%			6,011,684			8.6%
(Income) loss from disposal of property, plant and equipment		(87,538	)		(0.1%	)		636,341			0.9%
Total operating expenses		10,459,049			13.5%			10,111,987			14.5%
Other income (expenses)
Interest income		210,399			0.3%			541,442			0.8%
Interest expense		(410,505	)		(0.5	)%		(678,608	)		(1.0)%
Subsidy income		13,568			0.0%			214,193			0.3%
Total other (expense) income		(186,538	)		(0.2	)%		77,027			0.1%
Non-operating expenses (income)		123,999			0.2%			(61,046	)		(0.1)%
(Loss) income before income tax expense and noncontrolling interest		(433,896	)		(0.6	)%		654,159			0.9%
Income tax expense (benefit)		(286,245	)		(0.4	)%		179,803			0.3%
Net (loss) income		(147,651	)		(0.2	)%		474,356			0.7%
Net (loss) attributable to noncontrolling interest		(208,662	)		(0.3	)%		(55,659	)		(0.1)%
Net income attributable to common stockholders	$	61,011			0.1%		$	530,015			0.8%

6

---

Revenues. Revenues by segment were as follows:

		Six Months Ended			Six Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	60,770,077		$	56,018,419
Corrugating medium paper		21,789,013			20,081,425
Elimination of inter-segment transactions		(4,928,470	)		(6,572,327	)
Revenues	$	77,630,620		$	69,527,517

Revenues of paper cartons and other paper products

Our revenues of paper cartons and other paper products increased by $4.8 million, or 8.5%, to $60.8 million for the six months ended June 30, 2015, from $56.0 million for the same period of 2014. The average price per square meter was approximately $0.33 for the six months ended June 30, 2015, compared with approximately $0.39 for the same period of 2012. Sales volume increased by 37.8 million square meters, or 26.0%, to 183.1 million square meters for the six months ended June 30, 2015, from 145.3 million square meters for the same period of 2014. The increased sales volume was mainly contributed by Shengda Zhongtian and Shengda Concept that started their operations in the first quarter of 2015.

For the six months ended June 30, 2015, color cartons accounted for 22.5% of our revenues and flexo cartons accounted for 55.8% of our revenues, compared to 24.8% and 55.8%, respectively, for the same period of 2014. Average per square meter prices for our color cartons and flexo cartons for the six months ended June 30, 2015 were approximately $0.39 and $0.31, respectively, as compared to approximately $0.39 and $0.38, respectively, for the same period of 2014.

Consumer and industrial goods manufacturing sectors are the principal markets we serve. Our major customers remained home appliances and electronics manufacturers and food, beverage and cigarette manufacturers in the YRD, which accounted for 18.8% and 22.0%, respectively, of our revenues for the six months ended June 30, 2015, compared to 21.5% and 20.0%, respectively, of our revenues in the six months ended June 30, 2014.

Revenues of corrugating medium paper

Our revenues of corrugating medium paper increased by $1.7 million, or 8.5%, to $21.8 million for the period ended June 30, 2015, from $20.1 million for the same period in 2014. Sales volume of corrugating medium paper was approximately 62.1 thousand tons and the average price was approximately $351 per ton, as compared with 55.5 thousand tons and $362 for the same period in 2014 respectively.

Cost of goods sold. Cost of goods sold by segment was as follows:

7

---

		Six Months Ended			Six Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	49,206,046		$	43,957,928
Corrugating medium paper		23,017,354			21,513,843
Elimination of inter-segment transactions		(4,928,470	)		(6,572,327	)
Cost of goods sold	$	67,294,930		$	58,899,444

Cost of goods sold of paper cartons and other paper products

Our cost of goods sold of paper cartons and other paper products increased by $5.2 million, or 11.9%, to $49.2 million for the six months ended June 30, 2015, from $44.0 million for the same period of 2014. Average cost of goods sold per square meter for the six months ended June 30, 2015 was approximately $0.27, as compared to approximately $0.30 for the same period of 2014. Management will keep monitoring raw material prices for cost control.

Cost of goods sold of corrugating medium paper

Our cost of goods sold of corrugating medium paper increased by $1.5 million, or 7.0%, to $23.0 million for the period ended June 30, 2015, from $21.5 million for the same period of 2014. Sales volume of corrugating medium paper was approximately 62.1 thousand tons and the average cost was approximately $370 per ton for the period ended June 30, 2015, as compared to 55.5 thousand tons and $387 respectively for the same period in 2014. The high average per ton cost in the same period in 2014 was mainly attributable to the high consumption of material and energy in the pilot phase of the paper mill production. Management will keep monitoring for cost control.

Gross profit. Gross profit by segment was as follows:

		Six Months Ended			Six Months Ended
		June 30, 2015			June 30, 2014
		Dollars			Dollars
Paper cartons and other paper products	$	11,564,031		$	12,060,491
Corrugating medium paper		(1,228,341	)		(1,432,418	)
Gross profit	$	10,335,690		$	10,628,073

Gross profit of paper cartons and other paper products

Our gross profit of paper cartons and other paper products decreased by $0.5 million, or 4.1%, to $11.6 million for the six months ended June 30, 2015, from $12.1 million for the same period of 2014. Gross profit from flexo cartons decreased by $0.2 million, or 2.1%, to $8.0 million for the six months ended June 30, 2015, from $8.2 million for the same period of 2014. Gross profit from color cartons decreased by $0.3 million, or 8.5%, to $3.6 million for the six months ended June 30, 2015, from $3.9 million for the same period of 2014. The decrease in our gross profit of paper cartons and other paper products was mainly due to increased cost of goods sold of paper cartons and other paper products as noted above. Gross profit as a percentage of revenues was 19.0% for the six months ended June 30, 2015, as compared to 21.5% for the same period of 2014.

Gross profit of corrugating medium paper

Gross profit of corrugating medium paper was negative $1.2 million for the six months ended June 30, 2015, compared with negative $1.4 million for the same period of 2014. The increase of the gross profit was mainly due to economical scale effect along with reduction of the raw material consumption. Management will keep streamlining the manufacturing process, improving products quality and reducing the raw material consumption and trying to increase the gross profit step by step.

Selling expenses. Our selling expenses decreased by $0.1 million, or 2.0%, to $3.4 million for the six months ended June 30, 2015, from $3.5 million for the same period of 2014. The decrease resulted mainly from the decreased marketing expenses. As a percentage of revenues, selling expenses for the six months ended June 30, 2015 decreased to 4.4%, from 5.0% for the same period of 2014.

8

---

General and administrative expenses. Our general and administrative expenses increased by $1.2 million, or 19.1%, to $7.2 million for the six months ended June 30, 2015, from $6.0 million for the same period of 2014. The increase resulted mainly from the increased staff costs, which includes salary, benefits, social insurance and other relevant staff expenses. As a percentage of revenues, general and administrative expenses for the six months ended June 30, 2015 increased to 9.2%, as compared to 8.6% for the same period of 2014.

Net income attributable to common stockholders. As a result of the cumulative effect of the above factors, our net income attributable to common stockholders decreased by $0.4 million, or 88.5%, to $0.1 million for the six months ended June 30, 2015, from $0.5 million for the same period of 2014.

Liquidity and Capital Resources

Cash generated from our operations and borrowing capacity under our lines of credit are used as our primary source of liquidity. As of June 30, 2015, we had cash and cash equivalents of $10.7 million and restricted cash of $12.7 million. We anticipate that cash on hand, and cash generated from our operations will be sufficient to satisfy our obligations for at least the next 12 months.

The following table sets forth a summary of our cash flows for the periods indicated:

Cash Flow

		Six Months Ended June 30,
		2015			2014
Net cash provided by operating activities	$	3,828,702		$	7,199,074
Net cash (used in) investing activities		(4,185,548	)		(2,390,072	)
Net cash (used in) financing activities		-			(1,880,360	)
Effect of foreign currency exchange rate fluctuation on cash and cash equivalents		99,271			(46,752	)
Net (decrease) increase in cash and cash equivalents		(257,575	)		2,881,890
Cash and cash equivalents at beginning of the period		10,909,547			6,569,495
Cash and cash equivalent at end of the period	$	10,651,972		$	9,451,385

Operating Activities

Net cash used in operating activities was $3.8 million for the three months ended June 30, 2015, as compared to $7.2 million net cash provided by operating activities for the same period of 2014. This was attributable to our net loss of $0.1 million, adjusted by depreciation and amortization expenses of $3.7 million, and a net decrease in cash from accounts and notes receivable of $3.2 million, a net decrease in cash from inventories of $4.9 million, a net increase in cash from accounts and notes payable of $7.8 million and a net increase in cash from other working capital items of $0.5 million.

Investing Activities

Net cash used in investing activities was $4.2 million for the three months ended June 30, 2015, as compared to $2.4 million for the same period of 2014. The $4.2 million was mainly used for the purchases of property, plant and equipment, primarily related to the capital expenditure of Shuangsheng, Shengda Concept and Shengda Zhongtian.

Financing Activities

Net cash provided by financing activities was nil for the six months ended June 30, 2015, as compared to $1.9 million net cash provided by financing activities for the same period of 2014. During the six months ended June 30, 2014, we received proceeds from loans amounting to $3.5 million, and we repaid loans amounting to $3.5 million.

Seasonality

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.

9

---

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the Chinese economy and our industry, and continually maintain effective cost controls in operations.

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 are material to our investors.

Critical Accounting Policies

Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Recent Accounting Pronouncements

See Note 2(t) (recently issued accounting standards) to our unaudited consolidated financial statements included elsewhere in this report.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer, Mr. Daliang Teng and our Chief Financial Officer, Mr. Ken He, of the effectiveness of the design and operation of our disclosure controls and procedures, as of June 30, 2015. Based upon, and as of the date of this evaluation, Messrs. Teng and He determined that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There were no changes in our internal controls over financial reporting during the second quarter of fiscal 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

10

---

PART II

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, cash flow or operating results.

ITEM 1A.

RISK FACTORS.

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any equity securities during the second quarter of 2015 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the quarter.

No repurchases of our common stock were made during the second quarter of 2015.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

Not applicable.

ITEM 6.

EXHIBITS.

The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.

11

---

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.

Date: August 14, 2015	CHINA SHENGDA PACKAGING GROUP INC.
	By:	/s/ Daliang Teng
		Daliang Teng, Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Ken He
		Ken He, Chief Financial Officer
		(Principal Financial Officer and Principal
		Accounting Officer)

---

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T (furnished herewith).

---