10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: June 30, 2011
Or
[  ]	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: 000-31497

CHINA LOGISTICS GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida	65-1001686
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

23F. Gutai Beach Building No. 969 Zhongshan Road (South), Shanghai, China	200011
(Address of principal executive offices)	(Zip Code)

86-21-63355100

(Registrant’s telephone number, including area code)

Not Applicable

(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 [  ]No 

Indicate by check mark whether the registrant has been submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[ x]Yes [  ] No 

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]
(Do not check if smaller reporting company)

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

[  ] Yes  [X] No 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 41,508,203 shares of common stock are issued and outstanding as of August 19, 2011.

Explanatory Note

The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “Form 10-Q”), originally filed with the Securities and Exchange Commission on August 22, 2011, is to furnish Exhibit 101 to the Form 10-Q within the 30 day grace period provided for the initial submission of interactive data files, as required by Rule 405 of Regulation S-T.

No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

ITEM 6.  EXHIBITS.

Exhibit No.		Description
	3.1	Articles of Incorporation (1)
	3.2	Articles of Amendment (1)
	3.3	Articles of Amendment (5)
	3.4	Articles of Amendment (2)
	3.5	Form of Articles of Amendment (10)
	3.6	Bylaws (1)
	4.1	Trilogy Capital Partners, Inc. Warrant Agreement dated June 1, 2006(3)
	4.2	Form of common stock purchase warrant issued to Mr. Chen (12)
	4.3	Form of common stock purchase warrant issued in the 2008 Unit Offering (13)
	10.1	Debt Conversion Agreement with David Aubel dated December 3, 2005 (4)
	10.2	Amendment to Debt Conversion Agreement with David Aubel dated May 15, 2006 (6)
	10.3	Consulting and Management Agreement dated May 22, 2007 with China Direct Investments, Inc. (7)
	10.4	Consulting and Management Agreement dated September 5, 2007 with Capital One Resource Co., Ltd (8)
	10.5	Acquisition Agreement dated as of December 31, 2007 between MediaReady, Inc., Shandong Jiajia International Freight & Forwarding (Logistics Co.) Ltd., and Messrs. Hui Liu and Wei Chen (2)
	10.6	Finder's Agreement dated as of December 31, 2007 between MediaReady, Inc. and Dragon Venture (Shanghai) Capital Management Co., Ltd. (2)
	10.7	Consulting Agreement dated as of December 31, 2007 between MediaReady, Inc. and China Direct, Inc. (2)
	10.8	Form of Amendment to Acquisition Agreement dated as of January 28, 2008 between MediaReady, Inc., Shandong Jiajia International Freight & Forwarding Co., Ltd., and Messrs. Hui Liu and Wei Chen (9)
	10.9	Form of Amendment to Finder's Agreement dated as of January 28, 2008 between MediaReady, Inc. and Dragon Venture (Shanghai) Capital Management Co., Ltd. (9)
	10.10	Form of Amendment to Acquisition Agreement dated as of March 13, 2008 between MediaReady, Inc., Shandong Jiajia International Freight & Forwarding Co., Ltd., and Messrs. Hui Liu and Wei Chen (11)
	10.11	Lease Agreement between China Logistics Group, Inc. and ETI International, Inc. (17)
	10.12	Form of Subscription Agreement for 2008 Unit Offering (13)

10.13	Lease Agreement between Wei Chen and Shandong Jiajia International Freight & Forwarding Co., Ltd.(14)
10.14	Lease Agreement dated December 31, 2008 between Shandong Jiajia International & Freight Forwarding Co., Ltd. and Shandong Import & Export Co., Ltd. (17)
10.15	Assumption Agreement dated December 31, 2007 between David Aubel and MediaReady, Inc. (17)
10.16	Conversion Agreement dated March 20, 2008 between V. Jeffrey Harrell and China Logistics Group, Inc. (16)
10.17	Conversion Agreement dated March 20, 2008 between David Aubel and China Logistics Group, Inc. (16)
10.18	Form of promissory note in the principal amount of $561,517.27 dated January 1, 2003 issued by Video Without Boundaries, Inc. to Mr. David Aubel (15)
10.19	Form of Security Agreement dated May 23, 2001 between Valusales.com, Inc. and Mr. David Aubel (15)
10.20	Promissory note from Shanghai Yudong Logistics Co., Ltd. to Shandong Jiajia International Freight & Forwarding Co., Ltd., dated March 30, 2009 (18)
14.1	Code of Business Conduct and Ethics (12)
21.1	Subsidiaries of the Registrant (12)
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

(1	)	Incorporated by reference to the registration statement on Form 10-SB, SEC File No. 0-31497 as filed with the Securities and Exchange Commission on September 11, 2000, as amended.
(2	)	Incorporated by reference to the Current Report on Form 8-K as filed on January 7, 2008.
(3	)	Incorporated by reference to the Current Report on Form 8-K as filed on June 2, 2006.
(4	)	Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 2004.
(5	)	Incorporated by reference to the Current Report on Form 8-K as filed on September 27, 2006.

(6	)	Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended September 30, 2006.
(7	)	Incorporated by reference to the Current Report on Form 8-K as filed on May 23, 2007.
(8	)	Incorporated by reference to the Current Report on Form 8-K as filed on September 10, 2007.
(9	)	Incorporated by reference to the Current Report on Form 8-K as filed on January 31, 2008.

(10	)	Incorporated by reference to the definitive information statement on Schedule 14C as filed on February 14, 2008.
(11	)	Incorporated by reference to the Current Report on Form 8-K as filed on March 18, 2008.
(12	)	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2007.
(13	)	Incorporated by reference to the Current Report on Form 8-K as filed on April 24, 2008.
(14	)	Incorporated by reference to the Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended June 30, 2008.
(15	)	Incorporated by reference to the Quarterly Report on Form 10-Q for the period ended September 30, 2008.
(16	)	Incorporated by reference to the Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended March 31, 2008.
(17	)	Incorporated by reference to the registration statement on Form S-1, SEC File No. 333-151783, as amended.
(18	)	Incorporated by reference to the Quarterly Report on Form 10-Q for the period ended March 31, 2009.

*  Previously filed or furnished with China Logistics Group, Inc. Form 10-Q filed on August 22, 2011.

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this Quarterly Report on Form 10-Q/A shall be deemed “furnished” and not “filed”.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHINA LOGISTICS GROUP, INC.
Date: September 13, 2011	By:	/s/ Wei Chen
		Wei Chen
		Chairman, Chief Executive Officer and President (principal executive officer)
Date: September 13, 2011	By:	/s/ Yuan Huang
		Yuan Huang
		Chief Financial Officer (principal financial and accounting officer)

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CHINA LOGISTICS GROUP, INC. AND SUBSIDIARIES CONSODIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Sales	$ 6,064,231	$ 5,788,599	$ 10,673,664	$ 11,212,756
Cost of sales	5,718,640	5,755,453	9,909,191	10,768,978
Gross profit	345,591	33,145	764,473	443,778
Operating expenses:
Selling, general and administrative	182,429	676,080	527,701	874,959
Depreciation and amortization	3,321	2,248	11,907	5,146
Total operating expenses	185,750	678,328	539,608	880,105
Income (loss) from operations	159,841	(645,183)	224,865	(436,327)
Other income (expenses):
Other (expense)	(6,650)	(69,427)	(14,996)	(68,152)
Change in fair value of derivative liability		(214,873)		(447,059)
Interest income (expense)	243	(2,253)	(1,553)	(3,282)
Total other expenses, net	(6,407)	(286,553)	(16,549)	(518,493)
Income (loss) before income taxes	153,434	(931,736)	208,316	(954,820)
Foreign taxes	4,070	5,615	5,618	10,808
Net Income (loss)	149,364	(937,351)	202,698	(965,628)
Less: Net income (loss) attributable to the noncontrolling interest	36,250	122,031	124,911	15,213
Net income (loss) attributable to China Logistics Group, Inc.	113,114	(1,059,382)	77,787	(980,841)
Other comprehensive income (loss):
Foreign currency translation adjustments	(8,898)	4,506	3,492	8,607
Comprehensive income (Loss)	$ 104,216	$ (1,054,876)	$ 81,279	$ (972,234)
Earnings Per Share
Earnings Per Share - Basic	$ 0.00	$ (0.03)	$ 0.00	$ (0.03)
Earnings Per Share - Diluted	$ 0.00	$ (0.03)	$ 0.00	$ (0.03)
Weighted average number of shares outstanding:
Weighted average number of shares outstanding - Basic	41,508,203	38,815,895	41,508,203	36,673,949
Weighted average number of shares outstanding - Diluted	46,008,203	38,815,895	46,008,203	36,673,949

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CHINA LOGISTICS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$ 202,698	$ (965,628)
Depreciation expense	11,907	5,146
Allowance for doubtful accounts	42,146	5,488
Change in fair value of derivative liability		(447,059)
Stock based compensation		464,000
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Accounts receivable	(1,281,389)	(339,180)
Prepaid expenses and other current assets		(335,030)
Other receivables	533,724
Accounts payable	(155,193)	22,781
Other accruals and current liabilities	317,777	147,444
Taxes payable	(5,012)	(229)
Advances to vendors	(6,496)	(64,720)
Advances from customers	833,721	295,886
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	493,883	(316,984)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,274)	(17,657)
Repayment of advances to related parties	64,207
Advances to related parties	(90,320)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(30,387)	(17,657)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of advances from related parties	(674,074)	(402,989)
NET CASH USED IN FINANCING ACTIVITIES	(674,074)	(402,989)
EFFECT OF EXCHANGE RATE ON CASH	6,845	95,369
NET INCREASE (DECREASE) IN CASH	(203,733)	(642,261)
CASH	1,309,848	1,720,838
CASH	1,106,115	1,078,577
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for foreign taxes	$ 5,101	$ 6,767

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Document and Entity Information (USD $)	3 Months Ended
	Jun. 30, 2011	Aug. 12, 2011	Jun. 30, 2009
Document and Entity Information
Entity Registrant Name	China Logistics Group Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001123493
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		41,508,203
Entity Public Float			$ 1,999,656
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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Related Party Disclosures

3 Months Ended

Jun. 30, 2011

Related Party Disclosures

Related Party Transactions Disclosure [Text Block]

NOTE 6 –RELATED PARTY TRANSACTIONS

Due to Related Parties

On June 30, 2011 and December 31, 2010, due to related parties consisted of the following:

		June 30,  2011	December 31,  2011
		Unaudited
Due to Xiangfen Chen	$	135,677	$	159,092
Due to Bin Liu		228,614		122,898
Due to Tianjin Sincere Logistics Co., Ltd.		120,329		846,987
Due to Langyunbu		-		72,217
Due to China Direct Industries, Inc.		279,973		237,473
	$	764,593	$	1,438,667

Xiangfen Chen is the general manager of Shandong Jiajia Xiamen branch. Bin Liu is the general manager of Shandong Jiajia Tianjin branch. Mr. Liu is a 90% owner of Tianjin Sincere Logistics Co., Ltd.  Langyunbu is an entity affiliated with Hui Liu, a member of our Board of Directors and Chief Executive Officer of Shandong Jiajia. These loans are unsecured, non-interest bearing and repayable on demand. Shandong Jiajia used the proceeds for general working capital purposes. The amounts due to China Direct Industries, Inc. (“China Direct”) relate to professional fees, primarily legal and accounting paid by China Direct on our behalf of $86,973 and promissory notes payable of $193,000 at June 30, 2011 and professional fees paid by China Direct on our behalf of $86,973 and promissory notes payable of $150,000 on December 31, 2010.  The proceeds from these notes were used for working capital purposes.  The notes accrue interest at 4% annually and are due at various dates in 2012.

There are no assurances that the terms of the transactions with these related parties are comparable to terms we could have obtained from unaffiliated third parties.

Due From Related Parties

At June 30, 2011 and December 31, 2010 our due from related party amounted to $664,533 and $638,420, respectively.  This is due from Shandong Huibo Import & Export Co., Ltd., a Chinese limited liability company which is a minority owner of our company.  Shandong Huibo Import & Export Co., Ltd. is owned by PeiXiang Wang (31.7%) and PengXiang Liu (68.3%), unrelated third parties.  These advances are unsecured, non-interest bearing and payable on demand.

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Commitment and Contingencies

3 Months Ended

Jun. 30, 2011

Commitment and Contingencies

Commitments and Contingencies Disclosure [Text Block]

NOTE 8 – CONTINGENCIES AND COMMITMENTS

Rent expense from our office leases for the three months ended June 30, 2011 and 2010 were approximately $29,000 and $26,000, respectively.  We did not have any minimum, contingent, or sublease arrangements in these leases.

The table below presents our commitments for our various office leases in the U.S. and The PRC for the years ended December 31, 2011 and thereafter:

Period	Total
	Unaudited
Remaining period Ended December 31, 2011	$	87,000
Year Ended December 31, 2012		26,000
Year Ended December 31, 2013		9,000
Thereafter		0
Total	$	122,000

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Accounting Policies

3 Months Ended

Jun. 30, 2011

Accounting Policies

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE 2 –BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements for the three and six month periods ended June 30, 2011 and 2010 have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements for the interim periods presented are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented. Financial results for interim periods are not necessarily indicative of results that should be expected for the full year. The accompanying consolidated financial statements include our accounts and those of our 51% owned subsidiary, Shandong Jiajia. All inter-company transactions and balances have been eliminated in consolidation.

Revenue Recognition

We provide freight forwarding services to our customers.  Our business model involves placing our customers’ freight on prearranged contracted transport. Our revenue recognition policy is in accordance with the guidance of Financial Accounting Standards Boards (“FASB”) Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. We provide transportation services, generally under contract, by third parties with whom we have contracted these services.

Typically, we recognize revenue in connection with our freight forwarding service when the payment terms are as follows:

- When merchandise departs the shipper's  location if the trade pricing terms  are CIF (cost, insurance and freight),

- When  merchandise departs the shipper’s location if the trade pricing terms are CFR (cost and freight cost); or

- When merchandise arrives at the destination port if the trade pricing terms are FOB (free on board) destination.

We recognize direct shipping costs concurrently with the recognition of the related revenue for each shipment. These costs are generally isolated by billings as we do not own the shipping containers or transportation vessels.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reported periods.

Significant estimates for the periods reported include the allowance for doubtful accounts which is based on an evaluation of our outstanding accounts receivable including the age of amounts due, the financial condition of our specific customers, knowledge of our industry segment in Asia, and historical bad debt experience.  This evaluation methodology has provided a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability.  However, we are aware that given the current global economic situation, including that of the PRC, meaningful time horizons may change.  We intend to enhance our focus on the evaluation of our customers' sustainability and adjust our estimates as may be indicated.

We also rely on certain assumptions when deriving the fair value of share-based compensation, derivative liability and calculations underlying our provision for taxes in China.  Assumptions and estimates employed in the areas are material to our reported financial conditions and results of operations.  Actual results could differ from these estimates.

Stock Based Compensation

We account for stock options and other equity based compensation issued to employees by measuring the grant-date fair value of stock options and other equity based compensation issued to employees and recognize the costs in the statement of operations over the period during which the employees are required to provide services.

Basic and Diluted Earnings per Share

Pursuant to ASC 260-10-45, basic income (loss) per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income (loss) per share reflects the potential dilution that could occur if securities were exercised or converted into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in our income subject to anti-dilution limitations.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The carrying value of these instruments approximates their fair value.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and accounts receivable. We deposit our cash with high credit quality financial institutions in the United States and the PRC. At June 30, 2011, we had deposits of $1,105,613 in banks in the PRC. In the PRC, there is no equivalent federal deposit insurance as in the United States; as such these amounts held in banks in the PRC are not insured. We have not experienced any losses in such bank accounts through June 30, 2011.

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible portion of its accounts receivable. This estimate is based on the historical collection experience and a review of the current status of trade receivables. The allowance for doubtful accounts totaled $1,872,722 and $1,830,576 at June 30, 2011 and December 31, 2010, respectively.

Other receivables

Other receivables are comprised of advances to other entities with which we have a strategic or other business relationship, a refundable deposit we made as required by a Chinese court for potential payment to a former customer in the event we are unsuccessful in a lawsuit we filed against them for amounts owed to us, and deferred expenses.  The amounts advanced to our strategic partners are unsecured, repayable on demand, and bear no interest.  We also advance money to employees for business travel expenditures which are then expensed upon conclusion of the trip and the processing of an expense report.  The components of other receivables at June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011		December 31, 2010
	Unaudited
Loans receivable	$	393,180	$	801,472
Deferred expenses		16,963		84,327
Legal deposit		30,945		30,249
Other		42,894		101,658
	$	483,982	$	1,017,706

Advance to Vendors and Other Prepaid Expenses

Advances to vendors and other prepaid expenses consist primarily of prepayments or deposits from us for contracted shipping arrangements that have not been utilized by our customers. These amounts are recognized as cost of revenues as shipments are completed and customers utilize the shipping arrangement. Advances to vendors and other prepaid expenses totaled $353,905 and $347,409 at June 30, 2011 and December 31, 2010, respectively.

 Accrued Expenses and other Current Liabilities

Accrued expenses and other current liabilities are comprised of i) loans payable due to unrelated parties used for working capital purposes and payable on demand, ii) accruals for professional fees that have not yet been billed, and iii) accrued salaries.  The components of accruals and other current liabilities at June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2010		December 31, 2010
	Unaudited
Loans payable	$	713,513	$	388,410
Accrued expenses		253,128		251,772
Accrued salaries		44,701		53,383
	$	1,011,342	$	693,565

Advances from Customers

Advances from customers consist of prepayments to us for contracted cargo that has not yet been shipped to the recipient and for other advance deposits. These amounts are recognized as revenue when all of the revenue recognition criteria have been met. Advances from customers totaled $1,299,777 and $466,056, at June 30, 2011 and December 31, 2010, respectively.

Foreign Currency Translation

The accompanying unaudited consolidated financial statements are presented in United States dollars. The functional currency of Shandong Jiajia is the Renminbi (“RMB”), the official currency of the PRC.   Capital accounts of the unaudited consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rate for the periods presented.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through PRC authorized institutions. No representation is made that the RMB amounts could have been, or could be converted into U.S. dollars at the rates used in translation.  Translation of amounts from RMB into United States dollars (“US$”) has been made at the following exchange rates for the respective periods:

	June 30, 2011		June 30, 2010		December 31, 2010
Balance sheet		6.4630				6.6118
Statement of operations		6.5316		6.7787

Income Taxes

We follow the asset and liability method of accounting for taxes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized.

Noncontrolling Interest

Noncontrolling interests in our subsidiaries are recorded as a component of our equity, separate from the parent’s equity.  Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions.  Results of operations attributable to the noncontrolling interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.

Recent Accounting Pronouncements

Accounting Standards Update (“ASU”) No. 2011-05 amends FASB Codification Topic 220 on comprehensive income (1) to eliminate the current option to present the components of other comprehensive income in the statement of changes in equity, and (2) to require presentation of net income and other comprehensive income (and their respective components) either in a single continuous statement or in two separate but consecutive statements. These amendments do not alter any current recognition or measurement requirements in respect of items of other comprehensive income.

The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Earlier adoption is permitted, because compliance with the amendments is already permitted. We adopted this guidance effective with the beginning of our 2011 fiscal year.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies.  Due to the tentative and preliminary nature of those proposed standards, the Company’s management has not determined whether implementation of such proposed standards would be material to its consolidated financial statements.

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Equity

3 Months Ended

Jun. 30, 2011

Equity

Stockholders' Equity Note Disclosure [Text Block]

NOTE 5 – STOCKHOLDERS’ EQUITY

Preferred Stock

At June 30, 2011 and December 31, 2010, 450,000 shares of Series B convertible preferred stock remain issued and outstanding. One share of Series B Convertible Preferred Stock converts into 10 shares of common stock.

Common Stock

We did not issue any common stock during the six month period ended June 30, 2011.

Common Stock Purchase Warrants

A summary of our common stock warrant activity during the six month periods ended June 30, 2011 is as follows:

	Shares Underlying Warrants	Weighted Average exercise Price
Outstanding at December 31, 2010	33,676,000	$	0.21
Granted	-		-
Exercised	-		-
Outstanding at June 30, 2011	33,676,000	$	0.21

The common stock purchase warrants outstanding at June 30, 2011 include 31,558,500 warrants issued in connection with our offering of common stock in 2008. These warrants are currently exercisable at $0.20 per share and expire on April 30, 2013.

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Earnings Per Share

3 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share [Text Block]

NOTE 3 – EARNINGS (LOSS) PER SHARE

Under the provisions of ASC 260, “Earnings Per Share”, basic income (loss) per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in our income, subject to anti-dilution limitations.

	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Numerator:
Net Income (loss) applicable to common stockholders (A)	$	113,114	$	(1,059,382	)	$	77,787	$	(980,841)
Denominators:
Denominator for basic earnings per share:
Weighted average shares outstanding (B)		41,508,203		38,815,895			41,508,203		36,673,949
Series B convertible preferred stock		4,500,000					4,500,000		-
Denominator for diluted earnings (loss) per share:
Diluted weighted average shares outstanding		46,008,203		38,815,895			46,008,203		36,673,949

Potentially issuable shares at June 30, 2011 and 2010 which could result in dilution in the future but were not included in diluted earnings per share for the periods presented as they are anti-dilutive, included:

	Six Months Ended June 30,
	2011		2010
Stock purchase warrants issued to Mr. Chen		2,000,000		2,000,000
Stock purchase warrants		117,500		117,500
Class A and B stock purchase warrants		31,558,500		31,558,500
Series B convertible preferred stock		-		4,500,000
		33,676,000		38,176,000

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Foreign Operations and Currency Translation

3 Months Ended

Jun. 30, 2011

Foreign Operations and Currency Translation

Foreign Currency Disclosure [Text Block]

NOTE 7 – FOREIGN OPERATIONS

All of our revenues for the six months ended June 30, 2011 and 2010 were derived from the PRC, and substantially all of our assets at June 30, 2011 and December 31, 2010 were located in the PRC.

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Organization, Consolidation and Presentation of Financial Statements

3 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements

Nature of Operations [Text Block]

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

China Logistics Group, Inc. (“we”, “us”, “our” or the “Company”) is a Florida corporation and was incorporated on March 19, 1999 under the name of ValuSALES.com, Inc. We changed our name to Video Without Boundaries, Inc. on November 16, 2001. On August 31, 2006 we changed our name from Video Without Boundaries, Inc. to MediaReady, Inc. and on February 14, 2008, we changed our name from MediaReady, Inc. to China Logistics Group, Inc.

During 2002, we began to reposition our company within the home entertainment media-on-demand marketplace.  It was our intent to become a producer and distributor of interactive consumer electronics and provide streaming digital media and video on demand services. However, we were unable to successfully or profitably penetrate the market.

On December 31, 2007 we entered into an acquisition agreement with Shandong Jiajia International Freight and Forwarding Co., Ltd. (“Shandong Jiajia”) and its sole shareholders Messrs. Hui Liu and Wei Chen, through which we acquired a 51% interest in Shandong Jiajia. The transaction was accounted for as a capital transaction, implemented through a reverse recapitalization.  

Shandong Jiajia, formed in 1999 as a Chinese limited liability company, is an international freight forwarder and logistics management company. Shandong Jiajia acts as an agent for international freight and shipping companies. Shandong Jiajia sells cargo space and arranges land, maritime, and air international transportation for clients seeking to import or export merchandise from or into China.  Headquartered in Qingdao, Shandong Jiajia has branches in Shanghai, Xiamen, Lianyungang and Tianjin. Shandong Jiajia is a designated agent of cargo carriers including Nippon Yusen Kaisha, P&O Nedlloyd, CMA CGM Group, Safmarine Container Lines, Chilean carrier CSAV Group, Ryder CRSA Logistics, Horizon Lines,and Regional Container Lines (RCL).

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Property, Plant, and Equipment

3 Months Ended

Jun. 30, 2011

Property, Plant, and Equipment

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2011 and December 31, 2010 consisted of the following:

	Useful Lives	June 31,  2011		December 31, 2010
		Unaudited
Computer equipment	4 years	$	50,036	$	38,466
Furniture and equipment	4-5 years		104,592		111,889
			154,628		150,355
Less: accumulated depreciation			(127,138)		(115,231)
		$	27,490	$	35,124

For the six months ended June 30, 2011, and 2010, depreciation expense totaled $42,146 and $5,488 respectively.

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CHINA LOGISTICS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (06/30/2011 unaudited) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash	$ 1,106,115	$ 1,309,848
Accounts receivable, net	4,343,771	3,104,526
Other Receivables	483,982	1,017,706
Advance to vendors and other prepaid expenses	353,905	347,409
Due from related parties	664,533	638,420
Total current assets	6,952,306	6,417,909
Property and equipment, net	27,490	35,124
Total assets	6,979,796	6,453,033
Current liabilities:
Accounts payable - trade	2,503,517	2,658,710
Accrued expenses and other current liabilities	1,011,342	693,565
Advances from customers	1,299,777	466,056
Due to related parties	764,593	1,438,667
Foreign tax payable	10,141	15,153
Total current liabilities	5,589,370	5,272,151
Shareholders' equity:
Preferred stock - $0.001 par value, 10,000,000 shares authorized; Series B convertible preferred stock - 450,000 issued and oustanding	450	450
Common stock, $.001 par value, 500,000,000 shares authorized; 41,508,203 shares issued and outstanding at June 30, 2011	41,508	41,508
Additional paid-in capital	20,636,980	20,636,980
Accumulated deficit	(19,428,195)	(19,505,982)
Accumulated other comprehensive loss	(128,036)	(131,527)
Total China Logistics Group, Inc. shareholders' equity (deficit)	1,122,707	1,041,429
Noncontrolling interest	267,719	139,454
Total shareholders' equity	1,390,426	1,180,882
Total liabilities and shareholders' equity	$ 6,979,796	$ 6,453,033