YBCC (YBAO) 10-Q 2009 Q3 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, 2009 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 September 30, 2009 was 4,504,214

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2009, and December 31, 2008

					September 30, 2009		December 31, 2008
Current Assets					(unaudited )		(audited)
	Cash				$	27,584	$	64,967
	Short-term investments					179,112		128,553
	Accounts receivable (net of reserve for doubtful
		accounts of $0 and $0, respectively)				2,712,862		4,493,107
	Income tax refund receivable					-		25,091
	Prepaid taxes					162,838		-
		Total Current Assets				3,082,396		4,711,718
Property, plant and equipment (net of accumulated
	depreciation of $33,146 and $32,096, respectively)					4,858		7,041
Other Assets
	Deposits					10,433		16,928
	Deferred tax assets					179,997		166,709
		Total Other Assets				190,430		183,637
				Total Assets	$	3,277,684	$	4,902,396
Liabilities and Stockholders’ Equity
	Current Liabilities
		Accounts payable and accrued expenses			$	1,567,193	$	3,022,783
		Income taxes payable				-		93,260
		Related party advances				38,400		38,400
		Accrued liabilities - Kaire Holdings				237,045		237,045
			Total Current Liabilities			1,842,638		3,391,488
	Stockholders’ Equity
		Convertible preferred stock: $0.0001 par value, 50,000,000 shares
			authorized, 974,730 issued and outstanding			98		98
		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		1,346,231
		Accumulated other comprehensive income/(loss)				24,651		(8,718)
		Retained earnings				59,562		168,793
			Total Stockholders’ Equity			1,435,046		1,510,908
				Total Liabilities and Stockholders’ Equity	$	3,277,684	$	4,902,396

See accompanying notes.

- 1 - -

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2009 and 2008

(Unaudited)

					Three Months Ended September 30,				Nine Months Ended September 30,
					2009		2008		2009		2008
Revenues					$	4,702,489	$	4,693,575	$	11,306,358	$	13,497,299
Cost of Goods Sold						(4,479,756)		(4,244,704)		(10,670,113)		(12,212,930)
			Gross Profit			222,733		448,871		636,245		1,284,369
Operating Expenses
	Administrative expenses					141,975		110,333		354,895		442,308
	Rent					25,651		15,122		49,974		55,861
	Salaries and wages					104,786		98,522		371,820		349,009
		Total Operating Expenses				272,412		223,977		776,689		847,178
			Income (Loss)from Operations			(49,679)		224,894		(140,444)		437,191
Other Income/(Expenses)
	Interest income					39		3,413		735		9,442
	Interest expense					-		-		-		(10,833)
	Forgiveness of debt					-		-		-		26,000
		Total Other Income/(Expenses)				39		3,413		735		24,609
			Net Income/(Loss) before Income Taxes			(49,640)		228,307		(139,709)		461,800
Income tax benefit/(expense)						(145)		8,661		30,478		(110,232)
			Net Income/(Loss) available to common stockholders			(49,785)		236,968		(109,231)		351,568
Comprehensive Income
	Unrealized gain/(loss) on investments					17,627		(49,566)		33,369		(69,013)
				Comprehensive Income/(Loss)	$	(32,158)	$	187,402	$	(75,862)	$	282,555
Earnings/(loss) per weighted average share of common stock - basic					$	(0.01)	$	0.05	$	(0.02)	$	0.08
Earnings/(loss) per weighted average share of common stock - diluted					$	(0.01)	$	0.04	$	(0.02)	$	0.06
Weighted average shares outstanding - basic						4,504,214		4,504,214		4,504,214		4,504,214
Weighted average shares outstanding - diluted						4,504,214		5,478,944		4,504,214		5,417,502

See accompanying notes.

- 2 - -

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2009 and 2008

(Unaudited)

					Nine Months Ended September 30,
					2009		2008
Cash flows from operating activities:
	Net income/(loss)				$	(109,231)	$	351,568
	Adjustments to reconcile net income/(loss) to net cash used
		in operating activities:
			Depreciation expense			2,183		3,811
			Write off of accrued liabilities			-		(26,000)
			Preferred shares issued for payment of interest			-		10,833
	Changes in operating assets and liabilities:
		Decrease in accounts receivable				1,780,245		25,407
		Decrease in inventory				-		3,618
		Decrease (increase) in income tax refund receivable				25,091		(10,897)
		(Increase) decrease in prepaid taxes				(162,838)		15,002
		Decrease (increase) in deposits				6,495		(10,432)
		Increase in deferred tax asset				(30,478)		-
		(Decrease) increase in income taxes payable				(93,260)		203,197
		Decrease in accounts payable and accrued expenses				(1,455,590)		(648,833)
				Net cash used in operating activities		(37,383)		(82,726)
Cash flow from investing activities:
				Net cash used in investing activities		-		-
Cash flow from financing activities:
				Net cash provided by financing activities		-		-
				Net decrease in cash and cash equivalents		(37,383)		(82,726)
				Cash and cash equivalents at beginning of period		64,967		210,082
				Cash and cash equivalents at end of period	$	27,584	$	127,356
Supplementary disclosures of cash flow information
	Cash paid during the year for
		Interest			$	-	$	-
		Taxes			$	256,098	$	3,712
	Unrealized gain/(loss) on short-term investments, net of tax				$	33,369	$	(69,013)

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

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

See accompanying notes.

- 3 - -

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies

Basis of Presentation

These interim consolidated financial statements represent the financial activity of International Packaging and Logistics Group, Inc., (“IPL Group” or “the Company”) a publicly traded company listed and traded on the NASDAQ Over the Counter Bulletin Board (“OTCBB”).  The interim condensed consolidated financial statements for the three and nine months ended September 30, 2009 and 2008, and the consolidated financial statements for the year ended December 31, 2008, have been prepared in accordance with accounting principles generally accepted in the United States.  The interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany transactions have been eliminated.  The Company’s fiscal year ends on December 31.

The foregoing unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”).  Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto included on Form 10-K for the period ended December 31, 2008.  In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

Operating results for the three- and nine-month periods ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

Nature of Operations

On July 2, 2007, International Packaging and Logistics Group, Inc., through its wholly-owned subsidiary, YesRx.com (“YesRx”) acquired all the outstanding shares of H&H Glass, Inc. (“H&H Glass” or “H&H”), in exchange for 3,915,000 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.

5 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

Organization and Line of Business (continued)

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.

In March 2009, IPL Group acquired a majority interest in EZ LINK Corporation (“EZ LINK”), which is a logistics company headquartered in Taiwan.  The Company received approval from the People’s Republic of China (“PRC”) in late June 2009 and as a result, the actual acquisition date was scheduled to be completed on July 1, 2009.  However the acquisition was cancelled when the PRC also informed the EZ Link selling shareholders that they would be personally assessed a large tax on the gain from the sale of their share of EZ LINK.  The sellers withdrew, and the acquisition did not take place.

Principles of Consolidation

The interim condensed 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 and Effective Health, Inc.  Intercompany accounts and transactions have been eliminated upon consolidation.  The condensed consolidated balance sheets as of September 30, 2009, and December 31, 2008, contain the balances of H&H Glass, IPL Group and its other subsidiaries as of those dates.  The condensed consolidated statements of operations for the three and nine-month periods ending September 30, 2009 and 2008, contain the consolidated results of operations of H&H Glass and of IPL Group and its other subsidiaries.

Estimates

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

Cash and Cash Equivalents

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

6 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

Revenue Recognition

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

Concentration of Credit Risk

The Company, at times, maintains cash balances in excess of the federally insured limit of $250,000 per institution.  In December 2008, the Company’s bank entered into the FDIC Temporary Liquidity Guarantee Program, which eliminated the ceiling on federally insured deposits.  The Company had no uninsured balance as of September 30, 2009, or December 31, 2008.

The Company maintains balances in a money market fund that is not federally insured.  Balances in this fund were $108,190 and $189,822 at September 30, 2009, and December 31, 2008, respectively.

The Company had an unsecured available-for-sale investment with a fair value of $179,112 and $128,553 at September 30, 2009, and December 31, 2008, 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, 2009, 77.9% of H&H Glass’s Accounts Receivable were attributable to three customers.  As of December 31, 2008, 79.7% of H&H Glass’s Accounts Receivable were attributable to three customers.  At September 30, 2009, and December 31, 2008,  H&H Glass had no reserves for doubtful accounts, as the Company believed that all of its accounts receivable are fully collectible at that time.

H&H Glass purchased 100% of its glass from one vendor in the three- and nine-month periods ending September 30, 2009 and 2008.  During the three-month periods ending September 30, 2009 and 2008, H&H Glass purchased $3,972,239 and $3,658,754 of products from this vendor, respectively.  During the nine-month periods ending September 30, 2009 and 2008, H&H Glass purchased $9,239,337 and $10,250,674 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.  As customer orders have been growing in size, H&H Glass has begun to seek and use additional suppliers.

Net Earnings/(Loss) per Share

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

7

1.           Summary of Significant Accounting Policies (continued)

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” (codified within ASC 272, 740, 805, 830, 942, 958 and 995), 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.

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 recognition of tax benefits recorded in the financial statements must be based on the amount most likely to be realized assuming a review by tax authorities having all relevant information.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles.  SFAS No. 157, “Fair Value Measurements” (codified within ASC 820-10), 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.

8 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments (continued)

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157, codified within ASC 820-10)), which is effective for fiscal years beginning after November 15, 2008, 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.

SFAS No. 157 prescribes a fair value hierarchy in order to increase consistency and comparability in fair value measurements and related disclosures.  The hierarchy is broken down into three levels based on the reliability of inputs as follows:

• Level 1—Valuations based on quoted prices in active markets for identical assets.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

•   Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly.  Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•   Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Stock-Based Compensation

The Company has utilizes the fair-value-based method of accounting for its employee stock option plans.

The Company to applies a fair-value-based measurement method in accounting for shared-based payment transactions with employees and to record compensation cost for all stock awards.  Share-based compensation arrangements, include share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.  The Company did not have any unvested employee stock options or warrants outstanding at September 30, 2009, or December 31, 2008.

Comprehensive Income (Loss)

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.

9 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

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 April 2009, the FASB issued three FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities:

• FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (ASC Topic 820-10-65-4);

• FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (ASC Topic 825-10-65-1); and

• FSP No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (ASC Topic 320-10-65-1).

ASC Topic 820-10-65-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, “Fair Value Measurements” (ASC Topic 820), when the volume and level of activity for the asset or liability have significantly decreased in relation to normal market activity. ASC Topic 820-10-65-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. The Company adopted ASC Topic 820-10-65-4 as of March 30, 2009. As the new standard only clarified existing guidance, there was no material effect on the Company’s consolidated financial statements and notes.

ASC Topic 825-10-65-1 amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments” (ASC Topic 825), to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This new standard also amends Accounting Principles Board (APB) Opinion No. 28, “Interim Financial Reporting” (ASC Topic 270), to require those disclosures in summarized financial information at interim reporting periods. The Company adopted ASC Topic 825-10-65-1 as of March 30, 2009.  The implementation of this standard did not have a material effect on the Company’s financial statements.

10 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

ASC Topic 320-10-65-1 amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This new standard does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The Company adopted ASC Topic 320-10-65-1 as of March 30, 2009.  The implementation of this standard did not have a material effect on the Company’s financial statements.

In June 2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC Topic 855). ASC Topic 855 establishes the criteria for subsequent events, including: (a) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (b) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (c) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date.  The Company has evaluated all subsequent events through November 7, 2009, the date of this filing, and determined there are no material recognized or unrecognized subsequent events.

In November of 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”).  IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”).  Under the proposed roadmap, the Company may be required in fiscal 2015 to prepare financial statements in accordance with IFRS.  However, the SEC will make a determination in 2011 regarding the mandatory adoption of IFRS.  The Company is currently assessing the impact that this potential change would have on its consolidated financial statements, and the Company will continue to monitor the development of the potential implementation of IFRS.

In June 2009, the Financial Accounting Standards Board (“FASB”) established the FASB Accounting Standards Codification (the “Codification”) to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification superseded all then-existing non-SEC accounting and reporting standards on July 1, 2009, and all other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative. The adoption of the Codification did not have a material impact on the Company’s consolidated financial statements and results of operations.

Effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year-end entity, the Codification will require more information about transfers of financial assets, including securitization transactions, and transactions where entities have continuing exposure to the risks related to transferred financial assets. The Codification eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures about an entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. The Company does not expect the adoption of these Codification updates to have a material impact on its consolidated financial statements and results of operations.

11 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

1.           Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

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 IPL Group’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.

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,” codified within ASC 480-10) establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

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

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

12 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

3.           Common Stock Transactions

Common stock transactions during the nine months ending September 30, 2009:

None.

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

None.

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 $52,500 and $50,000 for the three-month periods ended September 30, 2009 and 2008, respectively and $197,500 and $150,000 for the nine-month periods ended September 30, 2009 and 2008, respectively. 

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $13,375 and $12,600 for the three-month periods ended September 30, 2009 and 2008, respectively and $40,125 and $37,800 for the nine-month periods ended September 30, 2009 and 2008, respectively.

Steven Westlund

For the three-month periods ending September 30, 2009 and 2008, Mr. Westlund, the Company’s Chief Executive Officer and acting Chief Financial Officer, was paid $1,500 and $1,500 respectively in cash for Director fees.

For the nine-month periods ending September 30, 2009 and 2008, Mr. Westlund, the Company’s Chief Executive Officer and acting Chief Financial Officer, was paid $4,500 and $4,500 respectively in cash for Director fees.

William Gresher

For the three-month periods ending September 30, 2009 and 2008, Mr. Gresher, a member of the Board of Directors, was paid $1,500 and $1,500 respectively in cash for Director fees.

For the nine-month periods ending September 30, 2009 and 2008, Mr. Gresher, a member of the Board of Directors, was paid $4,500 and $4,500 respectively in cash for Director fees.

13

5.           Property and Equipment

H&H Glass’s property and equipment at September 30, 2009 and December 31, 2008, consisted of the following:

		2009		2008
Furniture and fixtures		$	14,552	$	14,552
Computers and equipment			23,452		23,452
			38,004		38,004
Less accumulated depreciation			(33,146)		(30,963)
	Total	$	4,858	$	7,041

H&H Glass recorded depreciation expense for the three-month period ending September 30, 2009 and 2008, of $0 and $1,133, respectively and for the nine-month period ending September 30, 2009 and 2008, of $2,183 and 3,811 respectively.

14

6.           Commitments and Contingencies

Leases

Operating leases

H&H Glass rents 2,887 square feet of office space for its headquarters.  The lease began on January 1, 2005, and expired on August 31, 2008.  It was renewed on September 1, 2008, and expires on August 31, 2013.  As of September 30, 2009, total monthly base rent is $8,265.  The Landlord provided H&H a tenant improvement allowance equal to $45,458 to be allocated equally over the first eleven months of the lease.  Future minimum payments on this lease for fiscal years following September 30, 2009, are:

Year ended December 31,
2009	$	25,663
2010		103,849
2011		107,483
2012		111,245
2013		75,874
	$	424,114

H&H Glass recorded rent expense of $25,651 and $15,122 for the three months ending September 30, 2009 and 2008, respectively, and $49,974 and $55,861 for the nine months ending September 30, 2009 and 2008, respectively.

6.           Commitments and Contingencies (continued)

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.

7.           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.  However, the net loss for the three and nine months ended September 30, 2009, would have made these securities anti-dilutive.  Therefore, basic and fully diluted loss per share for the three and nine months ended September 30, 2009, are the same.

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

		For the Three Months Ended September 30,
		2009		2008
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(49,785)	$	236,968
Weighted average common shares outstanding			4,504,214		4,504,214
Basic earnings/(loss) per share of common stock		$	(0.01)	$	0.05
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(49,785)	$	236,968
Weighted average common shares outstanding			4,504,214		4,504,214
Effect of dilutive securities:
	Convertible preferred stock		-		974,730
Weighted average common shares outstanding after effect of dilutive securities			4,504,214		5,478,944
Diluted earnings/(loss) per share of common stock		$	(0.01)	$	0.04

15 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2009

7.           Earnings per Share (continued)

		For the Nine Months Ended September, 30
		2009		2008
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(109,231)	$	351,568
Weighted average common shares outstanding			4,504,214		4,504,214
Basic earnings/(loss) per share of common stock		$	(0.02)	$	0.08
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(109,231)	$	351,568
Weighted average common shares outstanding			4,504,214		4,504,214
Effect of dilutive securities:
	Convertible preferred stock		-		913,288
Weighted average common shares outstanding after effect of dilutive securities			4,504,214		5,417,502
Diluted earnings/(loss) per share of common stock		$	(0.02)	$	0.06

8.           Fair Value Measurements

The Company designates cash equivalents (consisting of money market funds) and investments in securities of publicly traded companies as Level 1.  The total amount of the Company’s investment classified as Level 3 is $179,112.

In January 2009, the Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115” (codified within ASC 470-20, 825-10 and 954-825).  SFAS No. 159 permits the Company to elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities that are not otherwise required to be measured at fair value on an instrument-by-instrument basis.  If the Company elects the fair value option, it would be required to recognize subsequent changes in fair value in the Company’s earnings.  This standard also establishes presentation and disclosure requirements designed to improve comparisons between entities that choose different measurement attributes for similar types of assets and liabilities.  While SFAS No. 159 became effective for the Company in 2009, the Company did not elect the fair value measurement option for any of its existing assets and liabilities and accordingly SFAS No. 159 did not have any impact on the Company’s consolidated financial statements.  The Company could elect this option for new or substantially modified assets and liabilities in the future.

Fair value of financial instruments:  The carrying amounts of financial instruments, including cash and cash equivalents, short-term investments, accounts payable, accrued expenses approximated fair value as of September 30, 2009, and December 31, 2008, because of the relative short-term nature of these instruments.  The fair value of the Company’s available-for-sale securities was $179,112 at September 30, 2009, and these securities are classified as Level 3.

16

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, 2008 included in our Annual Report on Form 10-K for the year ended December 31, 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 container can contain anywhere from 3,000 to 300,000 pieces.

The acquisition of EZ Link Corporation has been cancelled.  The Company was waiting for the People’s Republic of China (“PRC”) approval in order to confirm the acquisition.  The Company received the approval from the PRC Taiwan however, the acquisition was cancelled when the EZ Link selling shareholders were informed by the PRC Taiwan that they would be personally assessed a large tax on the gain from the sale of their share of EZ Link if it was consummated.

17

Plan of Operation

Our general operating plan is as follows:

Short Term

·Continue growing revenue and profits through the existing business;

·Meet the challenge of the declining world economy while maintaining revenue and profitability - our goal will be to  focus closely on product mix, improve our gross margin and develop new projects with existing clients;

·Expand the supply network for our products;

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

·Due to the turndown of the economy the business environment was very tough in 2008 and continued through the third quarter of 2009.  As a result IPLO has had to be more aggressive in 2009 to achieve upward opportunities in helping customers achieve savings by offering cost reductions in product and transportation costs through its just –in-time inventory delivery program.

Long Term

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

Results of Operations

Three and nine months ending September 30, 2009 and 2008

Revenue:

For the three months ending September 30, 2009 and 2008, revenues were $4,702,489 and $4,693,575 respectively, for an increase of $8,914 (0.2%) over the same period in 2008.  The increase in revenue during the third quarter is a mainly due the recovery of our worldwide run-rate.  Our fourth quarter should be comparable to last prior year’s fourth quarter as well.  Our revenues for the nine months ending September 30, 2009 and 2008 were $11,306,358 and $13,497,299 respectively, for a decrease of $2,190,941 (16.2%) over the same period in 2008.  The year-to-date decrease in revenue is a mainly due to two factors, the first being the slowdown in the worldwide economy and second, most of our customers placed large inventory orders in the final quarter of 2008 which resulted in fewer orders in the quarters ending March 31, 2009 and June 30, 2009.  As mentioned above the run rate was back on track for the third quarter and it is anticipated that the fourth quarter will be on track with prior year as well.

18

Cost of Goods Sold:

Cost of goods sold for the three months ending September 30, 2009 and 2008 were $4,479,756 and $4,244,704 respectively, for an increase of $235,052 (5.5%) over the same period in 2008. This increase is a direct result of the increase in sales. Cost of goods sold for the nine months ending September 30, 2009 and 2008 were $10,670,113 and $12,212,930 respectively, for a decrease of $1,542,817 (12.6%) over the same period in 2008   This year to date decrease is mainly a result of a decrease in sales, the components being: 1) a decrease in cost of glass $1,011,337 (9.9%) from prior year’s cost, 2) decrease in ocean freight of $435,402 (26.4%), and 3) a decrease in other cost of goods sold items of $96,078 (30.6%).

Gross Profit:

Gross profit was $222,733 and $448,871for the three months ending September 30, 2009 and 2008, a decrease of $226,138 (50.4%) over the same period in 2008.  The gross profit margin as a percent of sales for the three months ending September 30, 2009 and 2008 was 4.7% and 8.9 % respectively for a decrease of 4.8%. Gross profit for the nine months ending September 30, 2009 and 2008 were $636,245 and $1,284,369respectively for a decrease of $648,124 (50.5%).  The gross profit margin as a percent of sales for the nine months ending September 30, 2009 and 2008 was 5.6% and 9.5 % respectively, for a decrease of 3.9 %.  The decrease in gross profit percentage was mainly attributable the worldwide economic downturn. Gross margins will continue to be depressed in 2009 due to the pushing of lower margin products in order to generate revenue combined with pricing pressures on products as a result of competition in this depressed economy.  Our strategy is to maintain market share and as the economy recovers so will the product margins.

Operating Expenses:

Operating expenses for the three and nine month period ended September 30, 2009 were $272,412 and $776,689 respectively for an increase of $48,435 (21.6%)  for the three month period and a decrease of $70,489 (8.3%) for the nine month period from the same period prior year.  The $48,435 increase and the $70,489 decrease in operating expenses were mostly attributable to the following:

Three months ending:	9/30/2008	9/30/2009	$ VAR	% VAR
Salaries & Related Expense	$98,522	$104,786	$6,264	6.4%	Increase in Salary plus 2008 bonus paid in 2009
Rent	15,122	25,651	10,529	69.6%	New lease
Bad Debt Allowance	0	44,786	44,786	100.0%	Rejected product - trying to resell
Travel Expense	57,860	86,656	28,796	49.8%	More travel in 3rd quarter 2009
All others	52,473	55,319	2,846	5.4%	Miscellaneous items
Total Expenses	$223,977	$317,198	$93,221	41.6%

  19

Nine months ending:	9/30/2008	9/30/2009	$ VAR	% VAR
Salaries & Related Expense	$349,009	$371,820	$22,811	6.5%	Increase in Salary plus 2008 bonus paid in 2009
Rent	55,861	49,974	-5,887	-10.5%	New lease offset by negotiated rated credits
Bad Debt Allowance	0	44,786	44,786	100.0%	Rejected product - trying to resell
Professional Service Expense	20,295	1,255	-19,040	-93.8%	EITF 19 consulting fees, tax prep and footnote fees
Accounting	84,811	56,508	-28,303	-33.4%	2007 audit fees paid in 2008
Legal	18,000	27,000	9,000	50.0%	Legal fees started 2nd Qtr 2008
Travel Expense	188,581	159,464	-29,117	-15.4%	Less travel in 2009
Outside Services	21,109	8,455	-12,654	-59.9%	2008 - Proxy and public filing costs
All others	109,512	102,213	-7,299	-6.7%	Miscellaneous items
Total Expenses	$847,178	$821,475	-$25,703	-3.0%

Other Income (Expenses):

Interest income for the three and nine months ended September 30, 2009 was $39 and $735 respectively for a decrease of $3,374 (98.9%) and $8,707 (92.2%) 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, 2009 $0 and $0 respectively for a decrease 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.  There was no equivalent expense in the current year.

Other income for the three and nine months ended September 30, 2009 was $0 and $0 respectively for a decrease 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.  There was no equivalent income item in the current year.

Federal Income Tax

The Company records 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

20

Liquidity and Capital Resources

Cash flow used in operations for the nine months ending September 30, 2009 amounted to $37,383which mainly consisted the following: 1) the net loss for the nine month period ending September 30, 2009 of $109,23, 2)1 increase in prepaid taxes of $162,838, 3) decrease in income taxes payable of $93,260, 4) increase in deferred tax assets of $30,478 and 5) a decrease in accounts payable of $1,455,590 due to the decrease in sales resulting in less inventory purchases, offset by 1) decrease in account receivable or $1,780,245 – mainly due to the decrease in sales, 2) decrease in income tax refund receivable of $25,091,  3) depreciation expense of  $2,183, and 4) decrease in deposits of $6,495.

On September 30, 2009 the Company had total assets of $3,277,684 compared to $4,902,396 on December 31, 2008, a decrease of $1,624,712 or 33.1%.  The Company had total stockholder’s equity of $1,435,046 on September 30, 2009, compared to a stockholder’s equity of $1,510,908 on December 31, 2008, a decrease of $75,862 (5.0%).  As of September 30, 2009 the Company's working capital position decreased by $80,472 (6.1%) from working capital of $1,320,230 at December 31, 2008 to working capital of $1,239,758 at September 30, 2009.

Capital Resources

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

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of September 30, 2009, 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 (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 Annual Report on Form 10-K (the "Evaluation Date"). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of September 30, 2009.

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.

21

PART II.  OTHER INFORMATION

Item 1.                      Legal Proceedings

None

ITEM 2                             Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3.                  Defaults Upon Senior Securities

None

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

None

ITEM 5.                  Other Information

None

ITEM 6.                  Exhibits

a) Exhibits

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

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

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

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

32.1Certification 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)

22 

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 12, 2009                       By: /s/ Steven  R.Westlund

      Steven Westlund

                                      Chief Executive Officer

  Principal Financial Officer and Director

By: /s/ Allen Lin_________

      Allen Lin, Director

                                      President H&H Glass

By: /s/ William Gresher_________

      William Gresher, Director

23