YBCC (YBAO) 10-Q 2008 Q4 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2008 or

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

For the transition period from _____________ to _____________

Commission file number 0-21384

INTERNATIONAL PACKAGING AND LOGISTICS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

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

7700 Irvine Center Drive, Suite 870

Irvine, California

(Address of Principal Executive Offices)

92608

(Zip Code)

(949) 861-3560

(Registrant’s Telephone Number, Including Area Code)

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

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

x Yes       o No

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

o Yes      x No

The number of shares outstanding of the Issuer’s common stock as of  November 14 , 2008 was 4,504,214

International Packaging and Logistics Group, Inc.,

and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Consolidated Financial Statements

for the Three and Nine Months Ended

September 30, 2008 and 2007

C  O  N  T  E  N  T  S

Consolidated Balance Sheets	1
Consolidated Statements of Operations and Comprehensive Income	2
Consolidated Statements of Cash Flows	3
Notes to Consolidated Financial Statements	4 – 18

International Packaging and Logistics Group, Inc.,

and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Consolidated Financial Statements

for the Three and Nine Months Ended

September 30, 2008 and 2007

					September 30,		December 31,
					2008		2007
Current Assets					(unaudited)		(audited)
	Cash				$	127,356	$	210,082
	Short-term investments					183,218		252,231
	Accounts receivable (net of reserve for doubtful
		accounts of $0 and $0, respectively)				3,740,779		3,766,186
	Income tax refund receivable					10,897		-
	Prepaid taxes					-		15,002
	Consignment inventory					21,382		25,000
		Total Current Assets				4,083,632		4,268,501
Property, Plant and Equipment (net of accumulated
	depreciation of $29,830 and $26,019, respectively)					8,174		11,985
Other Assets
	Deposits					16,928		6,496
	Deferred tax assets					197,029		197,029
		Total Other Assets				213,957		203,525
				Total Assets	$	4,305,763	$	4,484,011
Liabilities and Stockholders’ Equity
	Current Liabilities
		Accounts payable and accrued expenses			$	2,461,793	$	3,136,626
		Income taxes payable				326,903		-
		Loans payable				-		250,000
		Accrued interest				-		16,667
		Accrued liabilities – Kaire Holdings				237,045		237,045
			Total Current Liabilities			3,025,741		3,640,338
	Stockholders’ Equity
		Convertible preferred shares: $0.0001 par value, 50,000,000 shares
			authorized, 974,730 and 882,230 issued and outstanding, respectively			98		88
		Common stock: $0.001 par value, 900,000,000 shares authorized,
			4,504,214 issued and outstanding			4,504		4,504
		Additional paid-in capital				1,346,231		1,068,741
		Accumulated other comprehensive income				3,423		72,436
		Retained deficit				(74,234)		(302,096)
			Total Stockholders’ Equity			1,280,022		843,673
				Total Liabilities and Stockholders’ Equity	$	4,305,763	$	4,484,011

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International Packaging and Logistics Group, Inc.,

and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Consolidated Financial Statements

for the Three and Nine Months Ended

September 30, 2008 and 2007

					Three Months Ended September 30,				Nine Months Ended September 30,
					2008		2007		2008		2007
					(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues					$	4,693,575	$	5,226,199	$	13,497,299	$	13,613,106
Cost of goods sold						(4,244,704)		(4,804,187)		(12,212,930)		(12,315,876)
	Gross Profit					448,871		422,012		1,284,369		1,297,230
Operating Expenses
	Administrative expenses					109,850		113,588		438,113		318,004
	Rent					15,122		24,944		55,861		63,052
	Salaries and wages					98,522		97,644		349,009		349,783
		Total Operating Expenses				223,494		236,176		842,983		730,839
			Income from Operations			225,377		185,836		441,386		566,391
Other Income/(Expenses)
	Interest income					3,413		5,932		9,442		16,207
	Forgiveness of debt					-		-		26,000		-
	Interest expense					-		-		(10,833)		-
		Total Other Income/(Expenses)				3,413		5,932		24,609		16,207
			Net Income before Income Taxes			228,790		191,768		465,995		582,598
Income tax expense						(115,528)		(83,500)		(238,133)		(138,357)
			Net Income			113,262		108,268		227,862		444,241
Comprehensive Income
	Unrealized gain/(loss) on investments					(49,566)		(23,065)		(69,013)		27,410
				Comprehensive Income	$	63,696	$	85,203	$	158,849	$	471,651
Earnings per weighted average share of common stock - basic					$	0.03	$	0.02	$	0.05	$	0.27
Earnings per weighted average share of common stock - diluted					$	0.02	$	0.02	$	0.04	$	0.23
Weighted average shares outstanding - basic						4,504,214		4,457,617		4,504,214		1,640,262
Weighted average shares outstanding - diluted						5,478,944		5,330,258		5,417,502		1,933,265

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International Packaging and Logistics Group, Inc.,

and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Consolidated Financial Statements

for the Three and Nine Months Ended

September 30, 2008 and 2007

					2008		2007
Increase (decrease) in cash and cash equivalents:					(unaudited)		(unaudited)
	Net income/(loss)				$	227,862	$	444,241
	Adjustments to reconcile net loss to net cash used
		in operating activities:
			Depreciation expense			3,811		3,042
			Forgiveness of debt			(26,000)		-
			Preferred shares issued for accrued interest			10,833		-
	Changes in operating assets and liabilities:
		(Increase) decrease in accounts receivable				25,407		264,045
		(Increase) decrease in inventory				3,618		(548,859)
		(Increase) decrease in income tax refund receivable				(10,897)		-
		Decrease in prepaid taxes				15,002		-
		Increase in deposits				(10,432)		-
		Increase (decrease) in income taxes payable				326,903		(163,843)
		Increase (decrease) in accounts payable and accrued expenses				(648,833)		620,672
				Net cash used in operating activities		(82,726)		619,298
Cash flow from investing activities:
				Net cash used in investing activities		-		-
Cash flow from financing activities:
	Cash acquired from acquisition of Kaire Holdings					-		53,918
				Net cash generated by financing activities		-		53,918
				Net increase in cash and cash equivalents		(82,726)		673,216
				Cash and cash equivalents at beginning of year		210,082		589,995
				Cash and cash equivalents at end of period	$	127,356	$	1,263,211
Supplementary disclosures of cash flow information
	Cash paid during the year for
		Interest			$	-	$	-
		Taxes			$	3,712	$	135,200
	Unrealized gain on short-term investments				$	(69,013)	$	27,410

During the nine months ended September 30, 2008, the Company entered into the following non-cash transactions:

• Issued 92,500 shares of series A preferred shares in lieu of payment of promissory notes valued at $250,000 and related accrued interest valued at $27,500.

During the nine months ended September 30, 2007, the Company entered into the following non-cash transactions.

• Issued 4,286,916 shares of common stock in connection with the merger with H&H Glass.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies

Nature of Operations

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

Organization and Line of Business

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

Effective February 3, 1998, Interactive Medical Technologies, Ltd., changed its name to Kaire Holdings Incorporated, and effective May 28, 2008 its name changed from Kaire Holdings Incorporated to International Packaging and Logistics Group, Inc.

On January 23, 2007, IPL Group and its wholly-owned subsidiary, YesRx, executed a Letter of Intent whereby YesRx would acquire all of the outstanding stock of H&H Glass Corporation, an Illinois corporation.  H&H Glass was formed in 1989.  As part of this transaction, on February 4, 2007, IPL Group discontinued its pharmacy business, and Effective Health, Inc., was shut down.

Merger and Corporate Structure

On July 2, 2007, an Agreement and Plan of Merger was executed between IPL Group, its wholly-owned subsidiary YesRx.com, and H&H Glass, whereby YesRx.com acquired all of the outstanding stock of H&H Glass Corporation, an Illinois corporation in exchange for 3,915,000 shares of IPL Group’s common stock representing 87% of IPL Group’s outstanding stock.  As part of the merger agreement, 225,000 shares were issued to Naccarato and Associates related to assistance with the merger.

As a result of the Merger, there was a change in control of IPL Group.  In accordance with SFAS No. 141, H&H Glass was defined as the accounting acquirer.  While the transaction is accounted for using the purchase method of accounting, in substance the transaction results in a reverse merger with a recapitalization of IPL Group’s capital structure.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Merger and Corporate Structure (continued)

The historical financial statements presented herein are those of H&H Glass, as adjusted to give effect to the stock of IPL Group (the legal acquirer) since the Merger.  The retained earnings of the accounting acquirer have been carried forward after the acquisition, and H&H Glass’s bases in its assets and liabilities were carried over in the recapitalization.  Operations prior to the business combination are those of H&H Glass.

The accompanying financial statements present the historical financial condition, results of operations and cash flows of H&H Glass prior to the Merger.

The significant acquired assets and liabilities are noted as follows:

International Packaging and Logistics, Inc., and Subsidiaries
Summary Statement of Financial Position
At July 1, 2007
Assets
	Cash		$	53,918
		Total Assets	$	53,918
Liabilities
	Accounts payable and accrued expenses			120,661
	Loans payable			250,000
	Accrued liabilities			238,219
		Total Liabilities	$	608,880
Net liabilities assumed			$	554,962

Principles of Consolidation

The consolidated financial statements include the accounts of IPL Group and its wholly-owned subsidiaries (collectively the “Company”).  The Company’s subsidiaries include H&H Glass, Effective Health, Inc., and YesRx.com.  Intercompany accounts and transactions have been eliminated upon consolidation.  The balance sheets as of September 30, 2008, and December 31, 2007, contain the balances of H&H Glass, IPL Group and its other subsidiaries as of those dates.  The statements of operations for the three- and nine-month periods ending September 30, 2008, contain the consolidated results of operations of H&H Glass and of IPL Group and its other subsidiaries.  The statements of operations for the three- and nine-month periods ending September 30, 2007, contain the results of operations of only H&H Glass for the six month period from January 1, 2007 through June 30, 2007, and contain the consolidated results of operations of H&H Glass and of IPL Group and its other subsidiaries for the three month period from July 1, 2007 through September 30, 2007.

As a result of the application of reverse takeover accounting, the consolidated financial statements are issued under the name of the legal parent (IPL Group) but are a continuation of the financial statements of the wholly-owned legal subsidiary (H&H Glass) and not of the legal parent.  The control of the assets and business of IPL Group, is deemed acquired in consideration for the issue of additional capital by H&H Glass.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Estimates

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

Cash and Cash Equivalents

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

Revenue Recognition

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

Concentration of credit risk

The Company, at times, maintains cash balances in excess of the federally insured limit of $100,000 per institution.  The uninsured balance as of September 30, 2008, was $85,593.  The uninsured balance as of December 31, 2007, was $28,010.

The Company had unsecured short-term investments totaling $183,218 and $252,231 at September 30, 2008 and December 31, 2007 respectively.

Accounts receivable are typically unsecured.  The Company performs ongoing credit evaluations of its customers’ financial condition.  It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary.  As of September 30, 2008, 93.6% of H&H Glass’s Accounts Receivable were attributable to five customers.  As of December 31, 2007, 92.5% of H&H Glass’s Accounts Receivable were attributable to five customers.

H&H Glass purchased 100% of its glass from one vendor in the three- and nine-month periods ending September 30, 2008 and 2007.  During the three-month period ending September 30, 2008 and 2007, H&H Glass purchased $3,557,809 and $4,130,440 of products from this vendor, respectively.  During the nine-month period ending September 30, 2008 and 2007, H&H Glass purchased $9,960,800 and $10,382,764 of products from this vendor, respectively.  This concentration is due to the relatively small size of H&H Glass’s orders.  H&H Glass’s specialized short-run custom orders generally are not attractive to larger glass manufacturers.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Net Earnings per Share

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

Consignment Inventory

H&H Glass’s inventory at September 30, 2008, and December 31, 2007, consists of goods returned by a customer and is stated at the lower of cost or estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost.  Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets.  The Company uses other depreciation methods (generally accelerated) for tax purposes.  Repairs and maintenance that do not extend the useful life of property and equipment are charged to expense as incurred.  When property and equipment are retired or otherwise disposed of, the asset and its accumulated depreciation are removed from the accounts, and the resulting profit or loss is reflected in income.

The estimated service lives of property and equipment are principally as follows:

Computers and equipment	3-5 years
Furniture & Fixtures	5-7 years

Income Taxes

The Company accounts for its income taxes using the Financial Accounting Standards Board Statements of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” which requires the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carryforwards.  Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards.  A valuation allowance is established to reduce the deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.

-7-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Income Taxes (continued)

In July 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.”  The Interpretation requires that realization of an uncertain income tax position must be estimated as “more likely than not” (i.e., greater than 50% likelihood of receiving a benefit) before it can be recognized in the financial statements.  Further, the Interpretation requires the recognition of tax benefits recorded in the financial statements to be based on the amount most likely to be realized assuming a review by tax authorities having all relevant information.  The Interpretation also clarifies the financial statement classification of tax-related penalties and interest and sets forth new disclosures regarding unrecognized tax benefits.  The Company adopted the Interpretation in the first quarter 2007.  The Company had minimal impact from adoption of this Interpretation.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles.  SFAS No. 107, “Disclosure about Fair Value of Financial Instruments,” requires certain disclosures regarding the fair value of financial instruments.  For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

Stock-Based Compensation

Effective January 1, 2006, the Company has adopted the fair-value-based method of accounting prescribed in Financial Accounting Standards Board Statement No. 123R (Accounting for Stock-Based Compensation) for its employee stock option plans.

Specifically, the Company adopted SFAS No. 123R using the “prospective method.”  This statement replaced FAS-123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FAS-95, Statement of Cash Flows.  FAS-123R requires companies to apply a fair-value-based measurement method in accounting for shared-based payment transactions with employees and to record compensation cost for all stock awards granted after the required effective date and for awards modified, repurchased or cancelled after that date.  The scope of FAS-123R encompasses a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.  All employee stock option grants made since the beginning of fiscal 2005 have been expensed over the related stock option vesting period based on the fair value at the date the options are granted.  Prior to fiscal 2005, the Company applied Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for stock options.  The Company did not have any unvested employee stock options or warrants outstanding at June 30, 2008 or December 31, 2007.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Comprehensive Income (Loss)

Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (SFAS 130) established standards for reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements.  Comprehensive income consists of net income and unrealized gains (losses) on available-for-sale securities.  The Company does not incur currency translation adjustments because all transactions with foreign companies are denominated in US Dollars.  The Statement requires only additional disclosures in the consolidated financial statements and does not affect the Company’s financial position or results of operations.

Reclassifications

Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 presentations.  These reclassifications had no effect on previously reported results of operations or accumulated deficit.

Advertising Costs

The Company expenses advertising costs as they are incurred.  There were no advertising costs for the three- and nine-month periods ending September 30, 2008 and 2007.

Long–Lived Assets

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” the Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets, when events and circumstances warrant such a review.  The carrying value of a long-lived asset is considered impaired when the anticipated discounted cash flow from such asset is separately identifiable and is less than its carrying value.  In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset.  Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.  Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

Recent Accounting Pronouncements

In December 2007, the FASB issued FAS No. 141(R), “Applying the Acquisition Method.”  FAS No. 141(R) provides guidance for the recognition of the fair values of the assets acquired upon initially obtaining control, including the elimination of the step acquisition model.  The standard is effective for acquisitions made in fiscal years beginning after December 15, 2008, and is not expected to have a significant impact on the Company’s results of operations, financial condition or liquidity.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

In December 2007, the FASB issued FAS No. 160, “Accounting for Noncontrolling Interests.”  FAS No. 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests.  Under the standard, noncontrolling interests are considered equity and should be reported as an element of consolidated equity, and net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the income statement of the attribution of that income between the controlling and noncontrolling interests.  FAS No. 160 is effective prospectively for fiscal years beginning after December 15, 2008, and is not expected to have a significant impact on the Company’s results of operations, financial condition or liquidity.

The Company also adopted EITF Issue No. 06-11, “Accounting for Income Tax Benefits on Dividends on Share-Based Payment Awards” as of January 1, 2008.  This EITF indicates that tax benefits of dividends on unvested restricted stock are to be recognized in equity as an increase in the pool of excess tax benefits.  Should the related awards forfeit or no longer become expected to vest, the benefits are to be reclassified from equity to the income statement.  The adoption of this EITF does not have a significant impact on the Company’s results of operations, financial condition or liquidity.

In September 2006, the FASB issued FAS No. 157, “Fair Value Measurements” (“FAS 157”) which provides guidance for using fair value to measure assets and liabilities.  It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  FAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances.  FAS 157, as originally issued, was effective for fiscal years beginning after November 15, 2007.  In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), to partially defer FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”).  FSP 157-2 defers the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008.  The Company adopted FAS 157 effective January 1, 2008, and the adoption of FAS 157 had no material impact to its consolidated financial position or results of operations.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”).  FAS 161 requires entities to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”) and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, and early adoption is permitted.  The Company is in the process of reviewing the potential impact of FAS 161.

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International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

1.           Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (“FSP No. 142-3”).  The intent of this FSP is to improve consistency between the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), and the period of expected cash flows used to measure the fair value of the intangible asset under SFAS No. 141R.  FSP No. 142-3 will require that the determination of the useful life of intangible assets acquired after the effective date of this FSP shall include assumptions regarding renewal or extension, regardless of whether such arrangements have explicit renewal or extension provisions, based on an entity’s historical experience in renewing or extending such arrangements.  In addition, FSP No. 142-3 requires expanded disclosures regarding intangible assets existing as of each reporting period.  FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.  Early adoption is prohibited.  The Company is currently evaluating the impact that FSP No. 142-3 will have on its financial statements.

In May 2008, the FASB issued Financial Accounting Standard (FAS) No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  The statement is intended to improve financial reporting by identifying a consistent hierarchy for selecting accounting principles to be used in preparing financial statements that are prepared in conformance with generally accepted accounting principles.  Unlike Statement on Auditing Standards (SAS) No. 69, “The Meaning of Present in Conformity With GAAP,” FAS No. 162 is directed to the entity rather than the auditor.  The statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with GAAP,” and is not expected to have any impact on the Company’s results of operations, financial condition or liquidity.

In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.”  Under the FSP, unvested share-based payment awards that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS.  The FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those years, and is not expected to have a significant impact on the Company’s results of operations, financial condition or liquidity.

Other recent accounting pronouncements issued by the FASB (including its EITF), the American Institute of Certified Public Accountants (“AICPA”) and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

2.           Preferred Stock Transactions

The agreement with the former holders of IPLGroup’s convertible debt stated that all debt and related convertible interest would be converted into fixed rate convertible preferred shares at an exercise price fixed on a post-reverse split basis of $3 per share, and that 882,230 shares would have to be issued in order to retire the debt.  The agreement stated that the shares would be issued after the Company completed a reverse stock split in early fiscal 2008 and changed its state of domicile from Delaware to Nevada.

-11-

2.           Preferred Stock Transactions (continued)

These shares were issued in June 2008, but the Company has deemed these shares to have been issued concurrent with the merger.  The Company recorded 882,230 shares at $0.0001 par value to retire debt and interest totaling $2,646,692.  Preferred shares are convertible into common shares on a 1:1 ratio at a fixed rate of $3 per share.  Preferred shares have no voting rights, have no redemption rights and earn no dividends.  Holders of Series A Convertible Preferred Stock are not permitted to convert their stock into common shares until the Company’s market capital reaches $15,000,000.  Upon dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the holders of the then outstanding shares of Series A Convertible Preferred Stock shall be entitled to receive out of the assets of the Company the sum of $0.0001 per share (the “Liquidation Rate”) before any payment or distribution shall be made on any other class of capital stock of the Company ranking junior to the Series A Convertible Preferred Stock.

In addition, the Company recorded 92,500 shares of Series A Convertible Preferred Stock to retire two promissory notes and interest totaling $277,500.

Statement of Financial Accounting Standards No. 150: Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (FAS 150) establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

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

Based on the assessment of FAS 150, the Company determined that the preferred shares are not mandatorily redeemable and are properly classified as equity in the accompanying financial statements.

3.           Common Stock Transactions

Common stock transactions during the nine months ending September 30, 2008:

None

Common stock transactions during the nine months ending September 30, 2007:

Issued 4,286,916 shares of common stock in connection with the merger with H&H Glass.

-12-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

4.           Related Party Transactions

Allen Lin

The Company paid Mr. Allen Lin, President of H&H Glass and a member of the board of directors of the Company, salary of $50,000 and $45,000 for the three-month periods ended September 30, 2008 and 2007, respectively and $150,000 and $135,000 for the nine-month periods ended September 30, 2008 and 2007, respectively. 

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $12,600 and $12,000 for the three-month periods ended September 30, 2008 and 2007, respectively and $37,800 and $36,000 for the nine-month periods ended September 30, 2008 and 2007, respectively.

5.           Accounts Receivable

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

Outbound shipping and handling charges are included in net sales.  H&H Glass assumes responsibility for all glass shipments until they are received by and approved by their customers.  Accounts receivable are unsecured.  The Company performs ongoing credit evaluations of its customers’ financial condition.  It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary.  At September 30, 2008 and December 31, 2007, H&H Glass had no reserves for doubtful accounts, as the Company believes that all of its accounts receivable are fully collectible.

Accounts receivable as of September 30, 2008 and December 31, 2007, were $3,740,779 and $3,766,186, respectively.  At September 30, 2008, five customers accounted for 93.6% of all accounts receivable.  At December 31, 2007, five customers accounted for 92.5% of all accounts receivable.

-13-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

6.           Property and Equipment

H&H Glass’s property and equipment at September 30, 2008 and December 31, 2007, consisted of the following:

		2008		2007
Furniture and fixtures		$	14,552	$	14,552
Computers and equipment			23,452		23,452
			38,004		38,004
Less accumulated depreciation			(29,830)		(26,019)
	Total	$	8,174	$	11,985

H&H Glass recorded depreciation expense for the three-month period ending September 30, 2008 and 2007, of $1,133 and $520, respectively and for the nine-month period ending September 30, 2008 and 2007, of $3,811 and $3,042 respectively.

7.           Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at September 30, 2007, and December 31, 2007, consisted of the following:

		2008		2007
Accounts payable		$	2,397,716	$	3,017,709
Accrued professional and related fees			38,385		93,225
Accrued settlements			25,692		25,692
	Total	$	2,461,793	$	3,136,626

8.           Notes Payable

In February 2007, IPLGroup issued two promissory notes for an aggregate of $250,000, with interest on the unpaid principal balance at eight percent (8%) per annum.  The notes were originally due October 1, 2007, but were extended to June 30, 2008.  During the three months ended June 30, 2008, the total principal and accrued interest of $27,500 on these notes were converted at $3 a share (market price on the day of the conversion) into 92,500 shares of Series A Convertible Preferred Stock.  Interest accrued on these notes at December 31, 2007, was $16,667.

-14-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

9.           Commitments and Contingencies

Leases

Operating leases

H&H Glass rents 2,887 square feet of office space at 7700 Irvine Center Drive in Irvine, California.  The lease began on January 1, 2005, and expired on August 31, 2008 with the current monthly rate at $6,496.  During the three months ended June 30, 2008, H&H Glass signed an extension to the lease through August 31, 2013.  Future minimum lease payments are as follows:

Year ended December 31,
2008	$	24,795
2009		100,337
2010		103,849
2011		107,483
Thereafter		187,119
	$	523,583

H&H Glass recorded rent expense of $15,122 and $24,944 for the three months ending September 30, 2008 and 2007, respectively, and $55,861 and $63,052 for the nine months ending September 30, 2008 and 2007, respectively.

Litigation

The Company is periodically involved in legal actions and claims that arise as a result of events that occur in the normal course of operations.  The Company is not currently aware of any formal legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations.

10.           Earnings per Share

Earnings per share have been calculated using the weighted average number of shares outstanding during each period.  The Company’s Convertible Preferred Shares constituted potentially dilutive securities as of September 30, 2008.  Earnings per share at September 30, 2007, is calculated using the number of common shares issued to effect the business combination as being outstanding during the entire period.

-15-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

10.           Earnings per Share - continued

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

		For the Three Months Ended September 30,
		2008		2007
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	113,262	$	108,268
Weighted average common shares outstanding			4,504,214		4,457,617
Basic earnings per share of common stock		$	0.03	$	0.02
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	113,262	$	108,268
Weighted average common shares outstanding			4,504,214		4,457,617
Effect of dilutive securities:
	Options		-		-
	Convertible preferred stock		974,730		872,641
Weighted average common shares outstanding after effect of dilutive securities			5,478,944		5,330,258
Diluted earnings per share of common stock		$	0.02	$	0.02

-16-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

10.           Earnings per Share - continued

		For the Nine Months Ended September 30,
		2008		2007
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	227,862	$	444,241
Weighted average common shares outstanding			4,504,214		1,640,262
Basic earnings per share of common stock		$	0.05	$	0.27
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	227,862	$	444,241
Weighted average common shares outstanding			4,504,214		1,640,262
Effect of dilutive securities:
	Options		-		-
	Convertible preferred stock		913,288		293,003
Weighted average common shares outstanding after effect of dilutive securities			5,417,502		1,933,265
Diluted earnings per share of common stock		$	0.04	$	0.23

11.           Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157), which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.  The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability based upon an exit price model.

In accordance with SFAS 157, the following table represents the Company’s fair value hierarchy for its financial assets (cash, cash equivalents and short-term investments) measured at fair value on a recurring basis as of September 30, 2008:

Securities Owned	Level 1		Level 2		Level 3		Total
Short-term investments	$	183,218	$	-	$	-	$	183,218
Total	$	183,218	$	-	$	-	$	183,218

-17-

International Packaging and Logistics Group, Inc., and Subsidiaries

(F/K/A Kaire Holdings, Inc.)

Notes to Consolidated Financial Statements

September 30, 2008

12.           Merger with H&H Glass, Inc.

On July 2, 2007, IPLGroup completed the merger with H&H Glass, Inc., a privately held company.  The acquisition has been accounted for as a reverse merger (recapitalization), with H&H Glass deemed to be the accounting acquirer.  Accordingly, the historical financial statements presented herein are those of H&H Glass, as adjusted to give effect to the stock of IPLGroup (the legal acquirer) since the Merger.

The following unaudited pro forma consolidated results of operations have been prepared as if the merger had occurred at January 1, 2007:

	3 months ended		9 months ended
	September 30, 2007		September 30, 2007
Sales	$	5,226,199	$	13,613,106
Cost of goods sold		(4,804,187)		(12,315,876)
Operating expenses		(241,518)		(789,062)
Net other income		5,932		16,207
Income tax expense		(83,500)		(138,357)
Net income		102,926		386,018
Unrealized gain/(loss) on investments		(23,065)		27,410
Comprehensive income	$	79,861	$	413,428
Net income per share – basic and diluted	$	0.03	$	0.10

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the merger been consummated as of that time, nor is it intended to be a projection of future results.

13.           Income Taxes

During the nine months ended September 30, 2008, the Company received an unexpected tax refund of $97,070.  The Company recorded this refund as an offset to the current year’s income tax expense.

14.           Subsequent Events

None

-18-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS’

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

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

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2007 included in our Annual Report on Form 10-KSB for the year ended December 31, 2007.

-19-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

Overview

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

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

Plan of Operation

Our general operating plan is as follows:

Short Term

·Continue growing revenue and profits through the existing business;

·To meet the challenge of the declining US currency while maintaining revenue and profitability - our goal will be to  focus closely on product mix and improve our gross margin;

·To expand the supply network for our products;

·Expand our current business model to include other areas that fall within our distribution expertise such as packaging that uses plastic and acrylic material.

Long Term

·To expand our service into other areas such as Europe and Australia through the same supplier channel.  Our existing business model copies to other markets naturally.

Results of Operations

Three and nine months ending September 30, 2008 and 2007

Revenue:

For the three months ending September 30, 2008 and 2007, revenues were approximately $4,693,573 and $5,226,199  respectively, for a decrease of $532,624 (10.2%) over the same period in 2007. The decrease in revenue is a mainly due to a plant capacity shortage in the Glass industry.  Recognizing that issue would not only affect us in the second quarter but would be an ongoing issue, we have secured the services and commitment of a Chinese/Japanese JV manufacturer who will provide for both our existing unmet capacity needs as well as our future capacity needs.  It will take several months to get the necessary molds ready for production, so we anticipate being back in full production sometime during the fourth quarter.  No clients were lost due to this issue.  Our revenues for the nine months ending September 30, 2008 and 2007 were $13,497,299 and $13,613,106 respectively, for a decrease of $115,807 (0.9%) over the same period in 2007.  The decrease was due mainly to the plant capacity issue partially offset by price increases.

-20-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

Cost of Goods Sold:

Cost of goods sold for the three months ending September 30, 2008 and 2007 were $4,244,704 and $4,804,187 respectively, for a decrease of $559,483 (11.7%) over the same period in 2007. This decrease is a direct result of the decrease in sales. Cost of goods sold for the nine months ending September 30, 2008 and 2007 were $12,212,930 and $12,315,876 respectively, for a decrease of $102,946 (0.8%) over the same period in 2007   This year to date decrease is mainly a result of a decrease in sales, the component being a decrease in cost of glass $104,363 or 1.0% decrease from prior year’s cost.

Gross Profit:

Gross profit was $448,871 and $422,012 for the three months ending September 30, 2008 and 2007, an increase of $26,859 (6.4%) over the same period in 2007.   The gross profit margin as a percent of sales for the three months ending September 30, 2008 and 2007 was 9.6% and 8.1 % respectively for an increase of 1.5%.  Gross profit for the nine months ending September 30, 2008 and 2007 were $1,284,369 and $1,297,230 respectively for a decrease of $12,861 (1.0%).  The gross profit margin as a percent of sales for the nine months ending September 30, 2008 and 2007 was 9.5% and 9.5% respectively for no (0.0%) change in percentage over the prior year.   The flat change in gross profit percentage from prior period was mainly attributable to keeping the relationship level between the price of glass plus freight and the sales price of product to customers.

Operating Expenses:

Operating expenses for the three and nine month period ended September 30, 2008 were $223,494 and $842,983 respectively for a decrease of $12,682 (5.4%) and an increase of $112,144 (15.3%) respectively from the same period prior year.  These differences in operating expenses were mostly attributable to the following:

Operating Expense Analysis
Three months ending:	9/30/2007	9/30/2008	$ VAR	% VAR
Salaries and Related Expense	$97,644	$98,522	878	0.90%	Increase in salaries
Rent	24,944	15,122	-9,822	-39.38%	2006 CAM(common area fee) was paid in July 2007
Professional Services	15,979	725	-15,254	-95.46%	Accrued partial audit fee in Q3 in 2007
Directors Fees	-	3,000	3,000	100.00%	No director fees in 2007
Subcontractor Expense	899	9,975	9,076	1009.57%	New legal Fees of $3k per month
Accounting	3,000	20,740	17,740	591.33%	$10K tax prep fee, $10K third Qtr review fee
Travel	77,690	57,860	-19,830	-25.52%	Travel to fewer countries in 2008
Other	16,020	17,550	1,530	9.55%	Miscellaneous items
	$236,176	$223,494	-12,682	-5.37%

-21-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

Operating Expenses - continued:

Nine months ending:	6/30/2007	6/30/2008	$ VAR	% VAR
Salaries and Related Expense	$349,783	$349,009	-774	-0.22%	Increases to base salaries
Rent	63,052	55,861	-7,191	-11.40%	Increase per terms of lease
Insurance Expense	51,235	65,466	14,231	27.78%	Increase in rates
Professional Services	39,018	20,295	-18,723	-47.99%	Accrued partial audit fee in Q3 in 2007
Directors Fees	-	10,500	10,500	100.00%	No director fees in 2007
Subcontractor Expense	4,462	19,875	15,413	345.43%	New legal Fees of $3k per month
Accounting	3,000	84,811	81,811	100.00%	Fees -$10K tax prep, $44K audit, $30K Qtrly review
Travel Expense	197,991	188,581	-9,410	-4.75%	Travel to fewer countries in 2008
Outside Services	-	21,109	21,109	100.00%	Proxy printing cost, tax footnote fee
All others	21,298	27,476	6,178	29.01%	Miscellaneous items
	$729,839	$842,983	113,144	15.50%

Other Income (Expenses):

Interest income for the three and nine months ended September 30, 2008 and 2007 was $3,413 and $9,442 respectively for a decrease of $2,519 (42.5%) and $6,765 (41.7%) respectively from the same period prior year as a result of a smaller sum of money being left in the bank to earn interest.  

Interest expense for the three and nine months ended September 30, 2008 and 2007 was $0 and $10,833 respectively for an increase of $0 (0.0%) and $10,833 (100.0%) respectively from the same period prior year representing the interest on two promissory notes issued in February 2007 that totaled $250,000 in the aggregate.  These notes were converted into preferred shares on June 30, 2008.  There was no equivalent expense in the previous year.

-22-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

Other income for the three and nine month period ended September 30, 2008 was $0 and $26,000 respectively for an increase of $0 (0.0%) and $26,000 (100.0%) respectively from the same period prior year.  The income is a result of forgiveness of debt from a consultant during the second quarter ending June 30, 2008.  There was no equivalent income item in the previous year.

Federal Income Tax

The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.  The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities

Liquidity and Capital Resources

Cash flow used in operations for the nine months ending September 30, 2008 amounted to $82,726, which mainly consisted the income for the nine months ending September 30, 2008 of $227,862 plus the following; 1) depreciation expense of $3,811, 2) preferred shares issued for accrued interest of $10,833, 3) decrease in account receivable of $25,407, 3) decrease in inventories of $3,618, 4) decrease in prepaid taxes of $15,002 and 5) an increase in taxes payable of $103,891, offset by 1) a write-off of accrued liabilities of $26,000, 2) an increase in deposits of $10,432, 3) increase in income tax refund receivable of $10,897,  and 4) a decrease in accounts payable and accrued expenses of $648,833.

The decrease in accounts receivable of $25,407 is a result of more timely receipt of payments in 2008.  The decrease in accounts payable and accrued expenses of $648,833 consisted mainly of a decrease in accounts payable for products of $694,320, which was primarily attributable to lower sales volume and to payments being made near the end of the reporting period.  The increase in taxes payable of $326,903  is a result of the prior year’s income tax expense plus a overpayment of taxes discovered and included in income taxes payable..

On September 30, 2008 the Company had total assets of $4,305,763 compared to $4,484,011 on December 31, 2007, a decrease of $178,248 or 4.0%.  The Company had a total stockholder's equity of $1,280,022 on September 30, 2008, compared to a stockholder’s equity of $843,673 on December 31, 2007, an increase of $436,349 (51.7%).  As of September 30, 2008 the Company's working capital position increased by $429,728 (68.4%) from working capital of $628,163 at December 31, 2007 to working capital of $1,057,891 at September 30, 2008.  This increase is mainly a result of a net income for the nine months ended September 30, 2008 and conversion of loan payable and accrued interest to preferred stock..

Capital Resources

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

Subsequent Events:

None

-23-

International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     As of June 30, 2008, under the supervision and with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2008.

Changes in Internal Control over Financial Reporting

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

Management's Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO Framework").

     Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of September 30, 2008.  Our principal Chief Executive Officer and Chief Financial Officer concluded we have a material weakness due to lack of segregation of duties. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is one person involved in processing of transactions. Therefore, it is difficult to effectively segregate accounting duties.  

     As a result of this material weakness we had implemented remediation procedures whereby in December 2007 we have hired an additional administrative person and will retain an outside professional firm to assist in the separation of duties on an ongoing basis.  We will continue to monitor and assess the costs and benefits of additional staffing.

     This quarterly report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report on internal control in this annual report.

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International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

 CONTROLS AND PROCEDURES

After evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), were unable to conclude that as of the Evaluation Date, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. We believe that we will have effective internal controls to meet this requirement prior to the filing of our annual report for the year ended December 31, 2008.

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

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

PART II.  OTHER INFORMATION

Item 1.                      Legal Proceedings

Litigation

H.D. Smith Wholesale Drug Company – Action for breach of contract and other various causes of action

 On December 30, 2004 a settlement was reached where IPLO was obligated to pay the plaintiff $50,000 on behalf of its subsidiary, Classic Care Pharmacy.  The balance owed as of September 30, 2008 was $25,692, and IPLO is in breach of this settlement.

Except as otherwise specifically indicated above, management believes that the Company does not have any material liability for any lawsuits, settlements, judgments, or fees of defense counsel which have not been paid or accrued as of September 30, 2008.

ITEM 2                   Unregistered Sales of Equity Securities and Use of Proceeds

None

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International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

ITEM 3.                  Defaults Upon Senior Securities

None

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

None

ITEM 5.                  Other Information

None

ITEM 6.                  Exhibits

a) Exhibits

31.1             Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)

 ( Section 302 of the Sarbanes-Oxley Act of 2002)

31.2              Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)

 ( Section 302 of the Sarbanes-Oxley Act of 2002)

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

(Section 906 of the Sarbanes-Oxley Act of 2002)

32.2Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

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International Packaging and Logistics Group, Inc.

and Subsidiaries

(f/k/a Kaire Holdings, Inc.)

September 30, 2008

SIGNATURES

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

International Packaging and Logistics Group, Inc.

(Registrant)

Dated:  November 19, 2008                       By: /s/ Steven  R.Westlund

           Steven Westlund

                                           Chief Executive Officer

        Principal Financial Officer and Director                                              

By: /s/ Allen Lin_________

           Allen Lin, Director

                                           President H&H Glass

By: /s/ William Gresher_________

              William, Director

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