YBCC (YBAO) 10-Q 2010 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, 2010 or

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

For the transition period from _____________ to _____________

Commission file number 0-21384

INTERNATIONAL PACKAGING AND LOGISTICS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

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

7700 Irvine Center Drive, Suite 870

Irvine, California

(Address of Principal Executive Offices)

92608

(Zip Code)

(949) 861-3560

(Registrant’s Telephone Number, Including Area Code)

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

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

x Yes       o No

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

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

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

o Yes      x No

The number of shares outstanding of the Issuer’s common stock as of October 31, 2010 was 4,961,357

International Packaging and Logistics Group, Inc.,

and Subsidiaries

Condensed Consolidated Financial Statements

for the Three and Nine Months Ended

September 30, 2010 and 2009

C  O  N  T  E  N  T  S

Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations and Comprehensive Income	3
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	7 – 20

See accompanying notes.

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

As of September 30, 2010 and December 31, 2009

 (Unaudited)

				30-Sep-10		31-Dec-09
Current Assets
	Cash			$	1,466,307	$	9,918
	Investments-temporary				-		230,013
	Accounts receivable (net of reserve for doubtful				7,086,964		2,816,849
		accounts of $5,247 and $0, respectively)
	Other current assets				256,888		-
	Prepaid taxes				-		162,838
		Total Current Assets			8,810,159		3,219,618
		Total Property, Plant and Equipment (net)			21,429		3,090
Other Assets
	Prepaid expenses				24,328		-
	Deposits				31,741		10,433
	Contract in place				1,295,726		-
	Deferred tax assets				177,909		212,323
		Total Other Assets			1,529,704		222,756
			Total Assets	$	10,361,292	$	3,445,464
Liabilities and Stockholders' Equity
	Current Liabilities
		Accounts payable and accrued expenses		$	6,787,921	$	1,777,596
		Short-term loans			95,670		-
		Loans payable			33,230		-
		Notes payable - related party			80,000		72,000
		Other current liabilities			197,347		-
		Accrued liabilities - Kaire Holdings			237,045		237,045
			Total Current Liabilities		7,431,213		2,086,641
	Commitments and contingencies				-		-

See accompanying notes

1

Stockholders' Equity
	Convertible preferred shares: $0.0001 par value, 50,000,000 shares				98		98
		authorized, 974,730 Series A issued and outstanding			40		-
		400,000 Series B issued and outstanding
	Common stock: $0.001 par value, 900,000,000 shares authorized,				4,961		4,504
	4,961,357 and 4,504,214 issued and outstanding, respectively
	Additional paid-in capital				2,202,877		1,346,231
	Accumulated other comprehensive income				12,255		58,246
	Accumulated deficit				(113,682)		(50,256)
Total IPLO Stockholders’ Equity					2,106,549		1,358,823
		Non controlling interest			823,530		-
			Total Stockholders’ Equity		2,930,079		1,358,823
Total Liabilities and Stockholders’ Equity				$	10,361,292	$	3,445,464

See accompanying notes

2

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations And Comprehensive Income

For the THREE and Nine Months Ended September 30, 2010 and 2009

(Unaudited)

				Nine Months Ended				Three Months Ended
				September 30,				September 30,
				2010		2009		2010		2009
Revenues
	Packaging			$	18,901,202	$	11,306,358	$	7,508,676	$	4,702,489
	Logistics				7,441,040		-		2,821,451		-
			Total Revenue		26,342,242		11,306,358		10,330,127		4,702,489
Cost of Goods Sold
	Packaging				18,236,970		10,670,113		7,320,528		4,479,756
	Logistics				6,576,168		-		2,510,828		-
			Total Cost of Goods Sold		24,813,138		10,670,113		9,831,356		4,479,756
			Gross Profit		1,529,104		636,245		498,771		222,733
Operating Expenses
	Administrative expenses				705,938		354,895		230,821		141,975
	Rent				129,149		49,974		44,644		25,651
	Salaries and wages				856,414		371,820		295,051		104,786
		Total Operating Expenses			1,691,501		776,689		570,516		272,412
			Income (Loss) from Operations		(162,397)		(140,444)		(71,745)		(49,679)
Other Income
	Interest income (expense)				167		735		(335)		39
	Other income				1,714		-		752		-
	Rent income				4,331		-		1,642		-
	Realized gain on investment				93,038		-		93,038		-
		Total Other Income			99,250		735		95,097		39
			Net Income (Loss) before Income Taxes		(63,147)		(139,709)		23,352		(49,640)

See accompanying notes

3

Income tax (expense) benefit					2,246		30,478		34,827		(145)
		Net Income (Loss)			(60,901)		(109,231)		58,179		(49,785)
Less: Net loss attributable to non controlling interest					(2,525)		-		(669)		-
Net Income (Loss) attributable to IPLO					(63,426)		(109,231)		57,510		(49,785)
Comprehensive Income
	Unrealized gain on investments				(58,246)		33,369		(76,961)		17,627
	Gain (loss) on currency exchange				12,255		-		(7,786)		-
		Comprehensive Income (Loss)		$	(109,417)	$	(75,862)	$	(27,237)	$	(32,158)
Earnings per weighted average share of common stock -
			basic	$	(0.01)	$	(0.02)	$	0.01	$	(0.01)
Earnings per weighted average share of common stock -
			diluted	$	(0.01)	$	(0.02)	$	0.01	$	(0.01)
Weighted average shares outstanding - basic					4,961,357		4,504,214		4,961,357		4,504,214
Weighted average shares outstanding - diluted					4,961,357		4,504,214		6,336,087		4,504,214

See accompanying notes

4

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2010 and 2009

(Unaudited)

				September 30,	September 30,
			2010		2009
Increase (decrease) in cash and cash equivalents:
	Net income/(loss)		$	(60,901)	$	(109,231)
	Adjustments to reconcile net income/(loss) to net cash used
		in operating activities:
		Depreciation expense		4,728		2,183
		Realized gain on sale of investment		(93,038)		-
		Bad debt		2,413		-
	Changes in operating assets and liabilities:
		(Increase) decrease in accounts receivable		(3,725,304)		1,780,245
		Increase in other current assets		(83,174)		-
		(Increase) decrease in prepaid taxes		162,838		(162,838)
		Decrease in income tax refund receivable		-		25,091
		Decrease in prepaid expenses		2,585		-
		(Increase) decrease in deposits		(2,654)		6,495
		(Increase) decrease in deferred tax asset		34,414		(30,478)
		Decrease in income taxes payable		-		(93,260)
		Increase (decrease) in accounts payable and accrued expenses		4,475,167		(1,455,590)
		Increase in other current liabilities		159,278		-
	Net cash generated by/(used in) operating activities			876,357		(37,383)
Cash flow from investing activities:
		Proceeds from sale of investment		234,800		-
		Cash acquired in acquisition of subsidiary		297,001		-
	Net cash provided by investing activities			531,081		-
Cash flow from financing activities:
		Proceeds from short-term loans		255,120		-
		Payments on short-term loans		(159,450)		-
		Proceeds from related party advance		8,000		-
		Payment on notes payable		(89,814)		-
	Net cash provided by financing activities			13,856		-

See accompanying notes

5

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2010 and 2009

(Unaudited)

	Effect of currency translation			34,375		-
	Net increase/(decrease) in cash and cash equivalents			1,456,389		(37,383)
	Cash and cash equivalents at beginning of period			9,918		64,967
	Cash and cash equivalents at end of period		$	1,466,307	$	27,584
Supplementary disclosures of cash flow information
	Cash paid (received) during the year for
		Interest	$	344	$	-
		Taxes / (Refund)	$	(229,321)	$	256,098

See accompanying notes

6

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

1.           Summary of Significant Accounting Policies

Organization and Basis of Presentation

These interim condensed consolidated financial statements represent the financial activity of International Packaging and Logistics Group, Inc., (“IPL Group” or “the Company”) a publicly traded company listed and traded on the NASDAQ Over the Counter Bulletin Board (“OTCBB”).  The interim condensed consolidated financial statements for the three and nine months ended September 30, 2010 and 2009 have been prepared in accordance with accounting principles generally accepted in the United States.  The interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries.  All intercompany transactions have been eliminated.  The Company’s fiscal year end is on December 31.

The foregoing unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements.  These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited condensed consolidated financial statements and the notes thereto included on Form 10-K for the period ended December 31, 2009.  In the opinion of management, the u naudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

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

Operating results for the three and nine month periods ended September 30, 2010, are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

Nature of Operations

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

 7

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

1.           Summary of Significant Accounting Policies (continued)

Organization and Line of Business

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

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

EZ Link Holdings Ltd.

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

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

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

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

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

In consideration of services provided by the consultant, EZ Link Corp will pay a consulting fee equal to all of its net income on a quarterly basis.

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

8

1.           Summary of Significant Accounting Policies (continued)

Consolidation of variable interest entities

In accordance with ASC Topic 810, “Consolidations,” variable interest entities (VIEs) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company has concluded that EZ Link Corp is a VIE and that the Company’s 51% owned subsidiary, EZ Link Holdings, absorbs a majority of the risk of loss from the activities of EZ Link Corp.  and enables the Company to receive a majority of its expected residual returns. Accordingly, the Company accounts for EZ Link Corp. as a VIE as of September 30, 2010.

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

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

Country risk

As the principal operations of EZ Link Holding, Ltd. are conducted in Taiwan, it is subject to special considerations and significant risks not typically associated with companies in the US. These risks include, among others, risks associated with the political, economic and legal environments and foreign currency exchange limitations encountered in Taiwan. The EZ Link Holdings results of operations may be adversely affected by changes in the political and social conditions in Taiwan, and by changes in governmental policies with respect to laws and regulations, among other things.

In addition, most of the transactions undertaken in Taiwan are denominated in New Taiwan Dollars (NTD), which must be converted into other currencies before remittance out of Taiwan may be considered. Both the conversion of NTD into foreign currencies and the remittance of foreign currencies abroad require the approval of the Taiwan government.

Principles of Consolidation

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

9 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

1.           Summary of Significant Accounting Policies (continued)

The interim condensed consolidated financial statements include the accounts of IPL Group and its subsidiaries (collectively the “Company”).  The Company’s subsidiaries include H&H Glass, Effective Health, Inc. and 51% of EZ Link Holdings, Ltd.

The accompanying condensed consolidated financial statements at September 30, 2010, include EZ Link Holdings, Ltd., from the January 1, 2010 date of acquisition.  Intercompany accounts and transactions have been eliminated upon consolidation.

Estimates

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

Acquisition Accounting

Per Accounting Standard Codification topic 805, Business Combinations, the assets and liabilities acquired were allocated at fair value of the shares issued. This statement requires the Company to recognize Contact in place

as of the acquisition date, measured as a residual, the excess of the consideration transferred plus the fair value of the non-controlling interest at the acquisition date, over the fair values of the net assets acquired.

Cash and Cash Equivalents

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

Contact in place

Contact in place is tested for impairment on an annual basis in accordance with the authoritative guidance for Contact in place. Additionally, Contact in place is tested in the interim if events and circumstances indicate that Contact in place may be impaired. The events and circumstances that are considered include business climate, legal factors, operating performance indicators and competition. Impairment of Contact in place is evaluated using a two-step process. The first step involves a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the second step of the process involves a comparison of the fair value and the carrying amount of the Contact in place of that reporting unit. If the carrying amount of the Contact in place of a reporting unit exceeds the fair value of that Contact in place, an impairment loss would be recognized in an amount equal to the excess of carrying value over fair value. If an event occurs that would cause a revision to the estimates and assumptions used in analyzing the value of the Contact in place, the revision could result in a non-cash impairment charge that could have a material impact on the financial results. As of September 30, 2010, the Company recorded no impairment of Contact in place.

10

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.

Foreign Currency Translation

All assets and liabilities were translated at the exchange rate on the balance sheet date, stockholder's equity are translated at the historical rates and statement of operations items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under other comprehensive income gains and losses resulting from foreign currency transactions are reflected in the income statement.

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.  During the nine months ended September 30, 2009, the Company’s bank ceased participating in the program, which returned the limit to $250,000 per institution.  The Company had uninsured balances of $103,685 and $0 as of September 30, 2010, and December 31, 2009, respectively.

The Company maintains balances in a Money Market Fund that is not federally insured.  Balances in this fund were $890,259 and $71,863 at September 30, 2010, and December 31, 2009, respectively.

The Company had an unsecured available-for-sale investment with a fair value of $230,013 at December 31, 2009.  During the three months ended September 30, 2010, the Company sold the investment and realized a gain on its investment of $93,038.

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, 2010, 78.4% of H&H Glass’s Accounts Receivable were attributable to three customers.  As of December 31, 2009, 77.0% of H&H Glass’s Accounts Receivable were attributable to three customers.  At September 30, 2010 and December 31, 2009 H&H Glass had a reserve for doubtful accounts of $0 and $0 respectively.

At September 30, 2010 and December 31, 2009, EZ Link Holdings, Ltd had a reserve for doubtful accounts of $5,247 and $0, respectively.

In general the Company will reserve a receivable amount based one of the following reasons;

1) If the receivable is over 90 days old the company will reserve 50% and if over 12 months old the Company will reserve 100% of the amount; and

2) If the customer rejects the product and the reject is due to a Company error, a reserve will be established.

11 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

1.           Summary of Significant Accounting Policies (continued)

H&H Glass purchased 100% of its glass from one vendor in the three- and nine- month period ending September 30, 2010 and 2009.  During the three-month period ending September 30, 2010 and 2009, H&H Glass purchased $5,966,082 and $3,972,239 of products from this vendor, respectively.  During the nine-month period ending September 30, 2010 and 2009, H&H Glass purchased $15,046,126 and $9,239,337 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.

Non controlling Interest

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

Net Earnings/(Loss) per Share

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

stockholders’ divided by the weighted average number of common shares outstanding for the period.  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.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles.  ASC Topic 820, “Fair Value Measurements and Disclosures,” 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.

ASC 820 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.

ASC 820 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.

12 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

1.           Summary of Significant Accounting Policies (continued)

•   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.

The Company designates cash equivalents (consisting of money market funds) and investments in securities of publicly traded companies as Level 1.

Comprehensive Income (Loss)

The Company reports and displays comprehensive income and its components in a full set of general-purpose condensed consolidated financial statements. The Company’s unrealized loss of $7,786 and $0 for the three months ended September 30, 2010 and 2009, respectively and a gain of $12,255 and $0 for the nine months ended September 30, 2010 and 2009, respectively, relate to the translation of financial statements from New Taiwan Dollar to US Dollars. The Company also recorded an unrealized gain of $17,627 for the three months ended September 30, 2009, and a gain of $33,369 for the nine months ended September 30, 2009, on investments available for sale.   During the three months ended September 30, 2010, the Company sold its investment and realized a gain of $93,038.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06 to improve disclosures about fair value measurements. ASU 2010-6 clarifies certain existing disclosures and requires new disclosure regarding significant transfers in and out of Level 1 and Level 2 of fair value measurements and the reasons for the transfer. The amendments in ASU 2010-06 will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal periods.

Other recent accounting pronouncements issued by the FASB, 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 condensed consolidated financial statements.

2.           Preferred Stock Transactions

As of January 1, 2010 pursuant to the purchase agreement for 51% ownership in EZ Link Holdings Ltd., approximately one half of the purchase price amount $400,000 was paid in Series B convertible preferred shares of IPL Group, Inc. at a per share value of $1.00, or 400,000 shares.

Description of the Series B Convertible Preferred Stock

The Preferred shares are convertible into common shares on a 1:1 ratio at a fixed rate of $1 per share.  Preferred shares have no voting rights, have no redemption rights and earn no dividends.

13 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

2.           Preferred Stock Transactions (continued)

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

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

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

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

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

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

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

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

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

3.           Common Stock Transactions

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

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

14 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

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 $55,125 and $52,500 for the three months ended September 30, 2010 and 2009, respectively and $165,375 and $197,500 for the nine months ended September 30, 2010 and 2009, respectively. 

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

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $14,000 and $13,375 for the three months ended September 30, 2010 and 2009, respectively and $42,000 and $40,125 for the nine months ended September 30, 2010 and 2009, respectively.

Steven Westlund

For the three months ending September 30, 2010 and 2009, 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 months ending September 30, 2010 and 2009, 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 months ending September 30, 2010 and 2009, 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 months ending September 30, 2010 and 2009, Mr. Gresher, a member of the Board of Directors, was paid $4,500 and $4,500 respectively in cash for Director fees.

Easy Global Company, Ltd.

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

15 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

5.           Property and Equipment

The Company’s property and equipment at September 30, 2010 and December 31, 2009, consisted of the following:

		2010		2009
Furniture and fixtures		$	14,552	$	14,552
Computers and equipment			142,162		23,452
			156,714		38,004
Less accumulated depreciation			(135,285)		(34,914)
	Total	$	21,429	$	3,090

The Company recorded depreciation expense for the nine months ending September 30, 2010 and 2009, of $4,728 and $2,183, respectively.

6.           Commitments and Contingencies

Leases

Operating leases

H&H Glass rents 2,887 square feet of office space for its headquarters.  The lease began on January 1, 2005, and was renewed on September 1, 2008 and expires on August 31, 2013.  As of September 30, 2010, total monthly base rent is $8,554 per month.

EZ Link rents 2,388 square feet of office space for its headquarters.  The lease began on October 1, 2008, and was renewed in September 2009.  The lease is renewed annually.  As of September 30, 2010, total base monthly rent is $3,763 per month.

Future minimum payments on this lease for fiscal years following September 30, 2010, are:

Year ended December 31,
2010	$	37,851
2011		141,352
2012		111,245
2013		75,874
	$	366,322

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 as of September 30, 2010.  Earnings per share at September 30, 2010, is calculated using the number of common shares issued to effect the business combination as being outstanding during the entire period.

16

7.           Earnings per Share (continued)

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

		For the Three Months Ended September 30,
		2010		2009
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	57,510	$	(49,785)
Weighted average common shares outstanding			4,961,357		4,504,214
Basic earnings per share of common stock		$	0.01	$	(0.01)
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	57,510	$	(49,785)
Weighted average common shares outstanding			4,961,357		4,504,214
Effect of dilutive securities:
	Options		-		-
	Convertible preferred stock		1,374,730		-
Weighted average common shares outstanding after effect of dilutive securities			6,336,087		4,504,214
Diluted earnings per share of common stock		$	0.01	$	(0.01)

		For the Nine Months Ended September,
		2010		2009
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(63,426)	$	(109,231)
Weighted average common shares outstanding			4,961,357		4,504,214
Basic earnings/(loss) per share of common stock		$	(0.01)	$	(0.02)
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to common stockholders		$	(63,426)	$	(109,231)
Weighted average common shares outstanding			4,961,357		4,504,214
Effect of dilutive securities:
	Options		-		-
	Convertible preferred stock		-		-
Weighted average common shares outstanding after effect of dilutive securities			4,961,357		4,504,214
Diluted earnings/(loss) per share of common stock		$	(0.01)	$	(0.02)

17 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

8.              Acquisition of EZ Link Holdings, Ltd.

In March 2009, International Packaging and Logistics Group, Inc. (“IPL Group Inc.”)  announced the acquisition of EZ Link Corporation (“EZ Link”) which is a logistics company headquartered in Taiwan. EZ Link was established in July 2003 under the laws of Taiwan, Republic of China.  The transaction structure exposed the EZ Link shareholders to a potential tax liability and as a result the transaction was halted.  Subsequently the structure has been revised whereby EZ Link Holdings, Ltd., a company organized under the laws of the British Virgin Islands, controls EZ Link Corporation through a contractual arrangement.  IPL Group, Inc. acquired 51% of EZ Link Holdings, Ltd. through the issuance of common stock and Series B preferred stock.  Other than the change in the acq uiree all the basic terms of the original transaction remain the same.  EZ Link is a full service international freight forwarder, who has current networks to locations in China, Hong Kong, South East Asia, North East Asia, North America, Latin America and Europe.

Capitalization of Purchase Price

(a) Approximately one half of the Purchase Price amount $457,143 was paid in common shares of the Company as of the closing date based on a per share value of $1.00.

(b) Approximately one half of the Purchase Price amount $400,000 was paid in Series B Convertible Preferred Shares which will be convertible into shares of the Company’s common shares on a one for one basis.  The preferred shares were valued at $1.00 per share and are convertible pursuant to the terms and conditions specified in the acquisition agreement.

The results of EZ Link Corporation’s operations have been included in the unaudited consolidated financial statement since the date of acquisition

The following table presents the allocation of the acquisition:

Cash and cash equivalents		$297,001
Accounts receivable		547,295
Other current assets		173,714
Property and Equipment		22,478
Deposits		18,654
Prepaid expenses		26,913
	Total Assets	1,086,055
Accounts payable and accrued expenses		540,461
Other current liabilities		37,603
Notes payable		123,044
	Total Liabilities	701,108
Contract in place		1,295,726
	Net Assets Acquired	$1,680,673
Fair value of common stock		$457,143
Fair value of Series B preferred stock		400,000
Fair value of non controlling interest		823,530
	Fair value of Net Assets Acquired	$1,680,673

18 

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2010

8.              Acquisition of EZ Link Holdings, Ltd. (continued)

The capital stock of the EZ Link Holdings, Ltd. consists of 50,000 authorized shares of common stock, $1.00 par value, of which 24,500 shares were issued and outstanding at December 31, 2009. EZ Link Holdings, Ltd. sold 51% of its shares, or 25,500 common shares to IPL Group., EZ Link Holdings, Ltd is a majority owned subsidiary of IPL Group.  Since the Company acquired a 51% controlling interest, the remaining 49% is accounted for as non controlling interest.

Per Accounting Standard Codification topic 805, Business Combinations, the assets and liabilities acquired were allocated at fair value of the shares issued. This statement requires the Company to recognize Contact in place as of the acquisition date, measured as a residual, the excess of the consideration transferred plus the fair value of the non controlling interest at the acquisition date, over the fair values of the net assets acquired

The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisition of EZ Link Holdings Ltd, Inc. had occurred at January 1, 2009.

		Three months ended September 30, 2009		Nine months ended September 30, 2009
Revenues	$	6,262,103	$	16,617,244
Cost of goods sold		(5,738,127)		(15,047,437)
Gross Profit		523,976		1,569,807
Operating Expenses		546,610		1,586,020
Net income from operations		(22,634)		(16,213)
Net income		(28,805)		16,819
Net loss per share	$	(0.01)	$	0.01

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  acquisitions  been consummated as of that time, nor is it intended to be a projection of future results.

 19

9.           Segment Reporting

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

Following is a summary of segment information for the three months ended September 30, 2010:

		Packaging		Logistics		Total
Revenue	$	7,508,676	$	2,821,451	$	10,330,127
Operating Income		(94,022)		22,277		(71,745)
Total Assets		8,919,032		1,442,260		10,361,292
Capital Expenditures		0		0		0
Interest Income		9		0		9
Interest Expense		0		344		344
Depreciation	$	632	$	219	$	851

Following is a summary of segment information for the nine months ended September 30, 2010:

		Packaging		Logistics		Total
Revenue	$	18,901,202	$	7,441,040	$	26,342,242
Operating Income		(172,870)		10,473		(162,397)
Total Assets		8,919,032		1,442,260		10,361,292
Capital Expenditures		0		0		0
Interest Income		425		86		511
Interest Expense		0		344		344
Depreciation	$	2,340	$	2,388	$	4,728

20 

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

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 confor m 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, 2009 included in our Annual Report on Form 10-K for the year ended December 31, 2009.

Overview

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

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

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

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

 Plan of Operation

Our general operating plan is as follows:

Short Term

·Continue growing revenue and profits through the existing business;

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

·Expand the supply network for our products;

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

·Integrate our new logistics business into our overall plan

Long Term

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

·Expand the client base and areas of service of our logistics business.

Results of Operations

Three and nine months ending September 30, 2010 and 2009

Revenue:

For the three months ending September 30, 2010 and 2009, revenues were $10,330,127 and $4,702,489 respectively, for an increase of $5,627,638 (119.7%) over the same period in 2009. The increase in revenue is a mainly due to two factors; 1) an increase in packaging revenue of $2,806,187 (59.7%) due to an upturn in the worldwide economy and due to customers’ replenishing their inventory levels, which had been kept at low levels due to the global recession and 2) $2,821,451 of revenue from our logistics line of business acquired in January 2010 (no equivalent revenues in 2009).  Our revenues for the nine months ending September 30, 2010 and 2009 were $26,342,242 and $11,306,358 respectively, for an increase of $15,035,884 (133.0%) over the same period in 2009.   The increase in revenue is a mainly due to two fa ctors; 1) an increase in packaging revenue of $7,594,844 (67.2%) due to an upturn in the worldwide economy and due to customers’ replenishing their inventory levels, which had been kept at low levels due to the global recession and 2) $7,441,040 of revenue from our logistics line of business acquired in January 2010 (no equivalent revenues in 2009).

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

Cost of Goods Sold:

Cost of goods sold for the three months ending September 30, 2010 and 2009 was $9,831,356 and $4,479,756 respectively, for an increase of $5,351,600 (119.5%) over the same period in 2009. This increase consists of an increase in packaging cost of goods sold of $2,840,727(63.4%) which was a direct result of the increase in sales, plus $2,510,828 in cost of goods sold related to the logistics business acquired in January 2010 (no equivalent costs in 2009).  Cost of goods sold for the nine months ending September 30, 2010 and 2009 was $24,813,138 and $10,670,113 respectively, for an increase of $14,143,025 (132.5%) over the same period in 2009. This increase consists of an increase in packaging cost of goods sold of $7,566,857 (70.9%) which was a direct result of the increase in sales, plus $6,576,168 in cost of goods sold related to the logistics business acquired in January 2010 (no equivalent costs in 2009).

Gross Profit:

Gross profit was $498,771 and $222,733 for the three months ending September 30, 2010 and 2009, respectively, an increase of $276,038 (123.9%) over the same period in 2009.   The gross profit margin as a percent of sales for the three months ending September 30, 2010 and 2009 was 4.8% and 4.7 % respectively for an increase of 0.1%.  The increase is a result of an 11.0% gross profit percent from the logistics business offset by a lower gross profit percent from the packaging business of 2.5%.  The main reason for the decrease in packaging gross profit percentage is due to an increase in the ocean freight of 7.0%.

Gross profit was $1,529,104 and $636,245 for the nine months ending September 30, 2010 and 2009, respectively, an increase of $892,859 (140.3%) over the same period in 2009.   The gross profit margin as a percent of sales for the nine months ending September 30, 2010 and 2009 was 5.8% and 5.6 % respectively for an increase of 0.2%.  The increase is a result of an 11.6% gross profit percent from the logistics business offset by a lower gross profit percent from the packaging business of 3.5%.    The main reason for the decrease in packaging gross profit percentage is due to an increase in ocean freight of 3.9%.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

Operating Expenses:

Operating expenses for the three and nine months ended September 30, 2010 and 2009 were $570,516 and $1,691,501 respectively for an increase of $298,104 (109.4%) and $914,812 (117.8%), repectively, from the same period in the prior year.  These differences in operating expenses were mostly attributable to the following:

Three months ending:	9/30/2009	9/30/2010	$ VAR	% VAR
Salaries & Related Expense	$104,786	$300,372	$195,586	186.7%	Acquired EZ Link expense of $152,180
Rent	25,651	44,644	18,993	74.0%	New lease had negotiated rated credits in 2009
					plus $18,151 in acquired EZ Link lease
Insurance	10,832	27,048	16,216	149.7%	Insurance based on prior year revenue which was lower
					plus $14,332 in acquires EZ Link insurance expense
Meals and Entertainment	2,236	17,706	15,470	691.9%	Increased entertainment due to $14,332 of EZ Link expenses
Travel Expenses	86,657	70,765	(15,892)	(18.3%)	Acquired EZ Link expenses of $4,928, offset by
					$20,820 (24.0%) decrease in H&H travel expenses
Postage/Telephone/Telecom	2,581	10,361	7,780	301.4%	Acquired EZ Link expenses of $6,631, offset by
					$528 (20.5%) decrease in H&H expenses
Professional & Consulting	34,200	57,577	23,377	68.4%	$17,715 of increase due to EZ link related accounting
					and audit fees.
EZ Link acquired fees - other	-	37,233	37,233	-	Misc other of $24,617, repairs and maintenance of $3,689,
					transportation $6,272, and employee welfare $2,655
Miscellaneous	5,469	4,810	(659)	(12.0%)
Total Expenses	$272,412	$570,516	$298,104	109.4%

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

Nine months ending:	9/30/2009	9/30/2010	$ VAR	% VAR
Salaries & Related Expense	$371,820	$861,735	$489,915	131.8%	Packaging salary lower in 2010 offset by
					$522,185 in acquired EZ Link salary expense
Rent	49,974	129,149	79,175	158.4%	New lease had negotiated rated credits in 2009
					plus $51,726 in acquired EZ Link lease
Insurance	67,994	91,792	23,798	35.0%	Insurance based on prior year revenue which was lower
					offset by $39,103 in acquire EZ Link insurance exp
Meals & Entertainment	6,775	57,596	50,821	750.1%	Acquired EZ Link expense of $57,091
Travel Expense	159,463	227,208	67,745	42.5%	Increased travel in 2010
Postage/Telephone/Telecom	10,088	31,135	21,047	208.6%	Acquired EZ Link expense of $20,205
Professional & Consulting	93,763	133,388	39,625	42.3%	Increase of $34,407 in EZ Link related accounting and
					audit fees and acquired EZ Link expenses of $7,215 offset
					by a decrease in other professional fees of $1,995
EZ Link acquired fees	-	143,715	143,715	-	Employee welfare costs of $22,540, transportation costs of
					$18,871, repairs and maintenance of $9,259
					and miscellaneous other expenses of $93,045
Miscellaneous	16,812	15,783	(1,029)	(6.1%)
Total Expenses	$776,689	$1,691,501	$914,812	117.8%

Other Income (Expenses):

Interest income (expense) for the three months ended September 30, 2010 and 2009 was $335 of expense and $39 of income, respectively for an increase of expense of $374 (959.0%) from the same period in the prior year.  During the three months ended September 30, 2010, EZ Link took an interest-bearing short-term bank loan that incurred $344 of interest expense. There was no equivalent expense in the prior year.   Net interest income for the nine months ended September 30, 2010 and 2009 was $167 and $735, respectively for a decrease of $568 (77.3%) from the same period in the prior year.   This decrease in net income is also primarily due to the $344 of interest expense from the short-term bank loan.

Realized gain on investments was $93,038 and $0 for the nine months ending September 30, 2010 and 2009, an increase of $93,038 over the same period in 2009 (no equivalent income in prior year).  This amount represents the income from the sale of certain company investments.

Liquidity and Capital Resources

Cash flow generated by operations for the nine months ending September 30, 2010 amounted to $876,357, which mainly consisted the following: 1) increase in accounts payable and accrued expenses of $4,475,167, 2) increase in other current liabilities of $159,278, 3) decrease in deferred tax asset  of $34,414,  4) depreciation of $4,728, and 5) bad debt of $2,413 offset by 1) increase in accounts receivable of $3,725,304, 2) realized gain on sale of investment of $93,038, decrease in other current assets of $83,174 and 4) the net loss of $60,901.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

Cash flow provided by investing activities was $531,801which represents the cash acquired from the purchase of EZ Link Holdings Ltd of $297,001 and proceeds from the sale of investments of $234,800.

Cash flow provided by financing activities was $13,856 which consisted of receipt of $255,120 in short term loans and $8,000 advance from a shareholder, offset by payments of loans payable in the amount of $249,264.

On September 30, 2010 the Company had total assets of $10,361,292 compared to $3,445,464 on December 31, 2009, an increase of $6,915,828 or 200.7%.  The Company had total IPLO stockholders’ equity of $2,106,549 on September 30, 2010, compared to IPLO stockholders’ equity of $1,358,823 on December 31, 2009, an increase of $747,726 (55.0%).  As of September 30, 2010 the Company's working capital position increased by $245,969 (21.7%) from working capital of $1,132,977 at December 31, 2009 to working capital of $1,378,946 at September 30, 2010.   The increase of $342,974 in working capital is from the acquisition of EZ Link Holdings, Ltd.

Capital Resources

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

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure and Procedures

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

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

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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

1.	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2.	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2010. Based on this assessment, management concluded that the Company did not maintain effective internal controls over financial reporting as a resulted of identified material weakness in our financial reporting described below. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated  Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. This annual report does not include an attestation r eport of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management's report in this quarterly report.

IDENTIFIED MATERIAL WEAKNESS

 A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Management identified the following material weakness in internal control during its assessment of internal controls over financial reporting as of September 30, 2010:

3.
·	We lack an effective period-end financial statement reconciliation process to transition from Taiwan Accounting Standards to U.S. Generally Accepted Accounting Principles (“GAAP”).
·	We lack formal guidance or checklist of procedures to facilitate the reconciliation of the financial statements reported under Taiwan accounting standards to GAAP.

· We lack an effective period-end financial statement reconciliation process to transition from Taiwan Accounting Standards to U.S. Generally Accepted Accounting Principles (“GAAP”).

· We lack formal guidance or checklist of procedures to facilitate the reconciliation of the financial statements reported under Taiwan accounting standards to GAAP.

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

MANAGEMENT'S REMEDIATION INITIATIVES

We are undertaking the remedial measures to establish effective disclosure controls and procedures and internal control over financial reporting, including improving the supervision and training of our accounting staff to understand and implement accounting requirements, policies and procedures for the accounting of variable interest entities. We are reviewing the qualifications of qualified GAAP consultants who can work with the Company’s Chief Financial Officer and Taiwan accounting team to indentify GAAP related issues and help evaluate and address such issues before they present problems in reporting in the United States. We are planning to utilize a qualified consultant on an on-going basis. We also appointed an independent director who is knowledgeable in US GAAP to our board of directors and as an audit committee member and h e will be involved in monitoring the internal audit functions within the Company. The remediation initiatives are an ongoing process of establishing and meeting recording and reporting milestones that are designed to provide an effective system of internal control over financial reporting. We expect to have the system fully operational within the current fiscal year. Until then, executive and financial management is closely scrutinizing the recording and reporting of all material financial transactions.

In light of the identified material weaknesses, management, performed (1) significant additional substantive review of those areas described above, and (2) performed additional analyses, including but not limited to a detailed balance sheet and statement of operations analytical review that compared changes from the prior period's financial statements and analyzed all significant differences. These procedures were completed so management could gain assurance that the financial statements and schedules included in this Form 10-Q fairly present in all material respects the Company's financial position, results of operations and cash flows for the periods presented.

Changes in Internal Controls

There has been no additional changes except for what is discussed above in our internal control over financial reporting during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

PART II.  OTHER INFORMATION

Item 1.                      Legal Proceedings

None

ITEM 2                             Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3.                  Defaults Upon Senior Securities

None

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

None

International Packaging and Logistics Group, Inc.

and Subsidiaries

September 30, 2010

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)

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, 2010                     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