10-Q

  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 June 30, 2012 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 August 14, 2012 was 4,961,357

International Packaging and Logistics Group, Inc.,

and Subsidiaries

Condensed Consolidated Financial Statements

for the Three and Six Months Ended

June 30, 2012 and 2011

C  O  N  T  E  N  T  S

Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations and Comprehensive Income	4
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7 - 21

2

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

As of June 30, 2012 and December 31, 2011

 (Unaudited)

	June 30		December 31
	2012		2011
Current Assets	(Unaudited)		(Audited)
Cash	$	1,252,232	$	1,140,791
Accounts receivable, net		6,460,388		5,975,714
Other current assets		9,612		4,347
Prepaid taxes		-		70,881
Total Current Assets		7,722,232		7,191,733
Property, Plant and Equipment, net		16,621		23,212
Total Property, plant and equipment, net		16,621		23,212
Other Assets
Prepaids		69,994		75,394
Deposits		39,354		39,169
Contract in place		1,295,726		1,295,726
Deferred tax assets		174,246		190,128
Total Other Assets		1,579,320		1,600,417
Total Assets	$	9,318,173	$	8,815,362
Liabilities and Stockholders' Equity
Current inabilities
Accounts payable and accrued expenses	$	6,081,553	$	5,690,754
Notes payable - related party		80,000		80,000
Other notes payable		62,848		-
Taxes payable		-		-
Other current liabilities		24,369		22,314
Total Current Liabilities		6,248,770		5,793,068

Stockholders' Equity
Convertible preferred shares: $0.0001 par value,    50,000,000 shares authorized, 974,730 Series A issued and outstanding	98			98
400,000 Series B issued and outstanding		40			40
Common stock: $0.001 par value, 900,000,000 shares authorized,     4,961,357 issued and outstanding		4,961			4,961
Additional paid-in capital		2,202,877			2,202,877
Accumulated other comprehensive income		40,767			47,172
Retained earnings (deficit)		(42,475	)		(81,779	)
Total IPLO Stockholders' Equity		2,206,268			2,173,369
Non controlling interest		863,135			848,925
Total Stockholders' Equity		3,069,403			3,022,294
Total Liabilities and Stockholders' Equity	$	9,318,173		$	8,815,362

See accompanying notes.

3

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations And Comprehensive Income

For the Three AND SIX Months Ended JUNE 30, 2012 and 2011

(Unaudited)

	Six Months Ended						Three Month Ended
	June 30						June 30
	2012			2011			2012			2011
Revenues
Packaging	$	15,204,257		$	13,720,013		$	8,346,209		$	7,639,563
Logistics		4,832,926			4,992,199			2,706,183			2,487,040
Total Revenues		20,037,183			18,712,212			11,052,392			10,126,603
Cost of Goods old
Packaging		14,613,277			13,281,479			8,226,936			7,424,061
Logistics		4,215,054			4,313,564			2,392,409			2,152,643
Total Cost of Goods Sold		18,828,331			17,595,043			10,619,345			9,576,704
Gross Profit		1,208,852			1,117,169			433,047			549,899
Operating Expenses
Administrative expenses		421,302			414,599			195,509			219,282
Rent		98,447			95,237			49,085			48,695
Salaries and wages		608,683			660,292			306,407			346,255
Total Operating Expenses		1,128,432			1,170,128			551,001			614,232
Income (loss) from Operations		80,420			(52,959	)		(117,954	)		(64,333	)
Other Income
Interest income (expense), net		(239	)		(697	)		111			184
Other income (expense)		3,224			517			1,402			(166	)
Rent income		-			2,949			-			1,488
Total Other Income		2,985			2,769			1,513			1,506
Net Income (Loss) before Income Taxes		83,404			(50,190	)		(116,441	)		(62,827	)

See accompanying notes.

4

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Operations And Comprehensive Income

For the Three AND SIX Months Ended JUNE 30, 2012 and 2011

(Unaudited)

	Six Months Ended June 30						Three Months Ended June 30
	2012				2011			2012			2011
Income tax benefit  (expense)		(29,890	)		(5,497	)		23,070			(6,773	)
Net Income (Loss)		53,514			(55,687	)		(93,371	)		(69,600	)
Net (gain) loss attributable to non controlling interest		(14,210	)		(13,606	)		(14,015	)		(6,474	)
Net Income (Loss) attributable to IPLO		39,304			(69,293	)		(107,386	)		(76,074	)
Comprehensive Income
Currency translation adjustment		(6,405	)		(3,163	)		(6,718	)		11,015
Comprehensive Income (loss)	$	32,899		$	(72,456	)	$	(114,104	)	$	(65,059	)
Earnings per weighted average share of common stock -
basic	$	0.01		$	(0.01	)	$	(0.02	)	$	(0.01	)
Earnings per weighted average share of common stock -
diluted	$	0.01		$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted average shares outstanding - basic		4,961,357			4,961,357			4,961,357			4,961,357
Weighted average shares outstanding - diluted		6,336,087			4,961,357			4,961,357			4,961,357

See accompanying notes.

5

International Packaging and Logistics Group, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2012 and 2011

(Unaudited)

	June 30,			June 30,
	2012			2011
Increase (decrease) in cash and cash equivalents:
Net income/(loss)	$	53,514		$	(55,687	)
Adjustments to reconcile net income/(loss) to net cash
provided by (used in) operating activities:
Depreciation expense		6,616			6,434
Loss on disposal of PP&E		137			-
Changes in operating assets and liabilities:
(Increase ) in accounts receivable		(479,580	)		(1,479,563	)
(Increase )decrease in prepaid taxes		70,881			(70,881	)
Increase deferred tax asset		15,879			-
Decrease in other current assets		63,783			58,359
(Decrease)in income taxes payable		-			(74,219	)
Increase in accounts payable and accrued expenses		353,301			1,471,921
Increase in other current liabilities		34,188			8,111
Net cash provided by/(used in) operating activities		118,719			(135,525	)
Cash flow from investing activities:
Net cash from investing activities		-			-
Cash flow from financing activities:
Net cash provided by financing activities		-			-
Effect of currency translation		(7,278	)		(4,118	)
Net increase/(decrease) in cash and cash equivalents		111,441			(139,643	)
Cash and cash equivalents at beginning of period		1,140,791			700,264
Cash and cash equivalents at end of period	$	1,252,232		$	560,621

See accompanying notes.

6

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

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 six months ended June 30, 2012 and 2011 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, 2011.  In the opinion of management, the unaudited 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 financial position and results of operations.

Operating results for the three and six month periods ended June 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

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 service small to medium sized customers.  H&H imports in excess of 1,000 shipping containers of glass a year.  Depending on the size of the product, a container can contain anywhere from 3,000 to 300,000 pieces.

7

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

1.           Summary of Significant Accounting Policies (continued)

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.

EZ Link International, Samoa (“ELIS”) was incorporated in Samoa.  ELIS is a wholly owned subsidiary of EZ Link Corporation and was set up to facilitate shipping operations in the Republic of China. 

Organization and Line of Business

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

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 cumulative net income from January 1, 2012 to June 30, 2012 is $36,758 which has not been paid at June 30, 2012.  The cumulative net income from inception of this contractual arrangement through June 30, 2012 is approximately $48,870.

The terms of these Consulting Agreements begin as of the date of the Contractual 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

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

1.           Summary of Significant Accounting Policies (continued)

Consolidation of variable interest entities

The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries in which the Company has a controlling financial interest.  All significant intercompany accounts and transactions have been eliminated in consolidation.  The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”). 

Voting interest entities are entities that have sufficient equity and provide the equity investors voting rights that give them the power to make significant decisions related to the entity’s operations.  The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest.  Accordingly, the Company consolidates its majority-owned subsidiary, EZ Link Corp, in which it holds more than 50% of the voting rights or where control is exercised through other contractual rights. 

VIEs are entities that lack one or more of the characteristics of a voting interest entity.  Either the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties or the equity investors do not have the characteristics of a controlling financial interest.  The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE.  The Company’s majority-owned subsidiaries are not considered VIEs. 

The Company's consolidated financial statements include 100% of the assets, liabilities and earnings of a subsidiary, EZ Link Corp, which is more than 50% owned and control is established.  The ownership interest of the minority owners of the Company’s subsidiary is called non controlling interest.

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 January 1, 2010.

The initial measurement of the assets and liabilities of EZ Link Corp. for the purpose of consolidation by the Company is at fair 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 consolidated financial statements include the financial statements for the Company, its subsidiaries and the variable interest entity, EZ Link Corp. and EZ Link Corp.’s subsidiary EZ Link International.  All significant inter-company transactions and balances between the Company, its subsidiaries and the variable interest entity are eliminated upon consolidation.

Country risk

As EZ Link Holding, Ltd. principal operations 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.

9

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

1.           Summary of Significant Accounting Policies (continued)

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.  Therefore, it is assumed that there will be limitations of distribution of profits from EZ Link Corp. to EZ Link Holdings.

Principles of Consolidation

The accompanying 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 New Taiwan Dollars (NTD), however, the accompanying consolidated financial statements have been re-measured and presented in United States Dollars ($).

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

The accompanying consolidated financial statements at June 30, 2012, include EZ Link Holdings, Ltd., and subsidiaries from the January 1, 2010 date of acquisition.  Intercompany accounts and transactions have been eliminated upon consolidation.

Estimates

The preparation of 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 consolidated financial statements.  Significant estimates include an allowance for doubtful accounts and depreciation of property, plant and equipment.

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.

Contract in Place

Goodwill and indefinite-lived intangible assets are not amortized. Rather, they are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Contracts in place is the only intangible asset with an indefinite life on our consolidated balance sheets.  We have elected December 31 as the date to perform our annual impairment test.  

The contract in place represents the fair value of the consulting contract and operating agreement between EZ Link Holdings, Ltd. and EZ Link Corp.

10

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

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

As of June 30, 2012 the accounts of the EZ Link were maintained, and its consolidated financial statements were expressed, in NTD. Such consolidated financial statements were translated into USD with NTD as the

functional currency.  All assets and liabilities were translated at the exchange rate on the consolidated balance sheet dates, stockholders’ equity are translated at the historical rates and the statements of income items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under other comprehensive income.

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Such amounts were not material during each of the six month periods ended June 30, 2012 and 2011.

Cash flow from the Company's operations included in the statement of cash flows is calculated based upon the functional currency using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with arithmetical changes in the corresponding balances on the consolidated balance sheet. No presentation is made that the NTD amounts could have been, or could be, converted into USD at the rates used in translation.

Concentration of Credit Risk

The Company maintains balances in a Money Market Fund that is not federally insured.  Balances in this fund were $694,015 and $652,092 at June 30, 2012 and December 31, 2011, respectively.

Accounts receivable are typically unsecured.  The Company performs ongoing credit evaluations of its customers’ financial condition.  It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary. As of June 30, 2012, 86.6% of H&H Glass’s Accounts Receivable were attributable to four customers.  As of December 31, 2011, 83.4% of H&H Glass’s Accounts Receivable were attributable to three customers.

At June 30, 2012 and December 31, 2011 EZ Link Holdings, Ltd had no reserve for doubtful accounts.

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

11

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

1.           Summary of Significant Accounting Policies (continued)

Concentration of Credit Risk - continued

H&H Glass purchased 100% of its glass from one vendor in the three month periods ending June 30, 2012 and 2011.  During the three-month period ending June 30, 2012 and 2011, H&H Glass purchased $7,271,607 and $6,419,915 of products from this vendor, respectively.  During the six months ended June 30, 2012 and 2011, H&H Glass purchased $12,926,700 and $11,354,529 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. 

Non-controlling Interest

The Company 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.

Comprehensive Income (Loss)

The Company reports and displays comprehensive income and its components in a full set of general purpose consolidated financial statements. The Company’s translation loss of $6,718 and gain of $11,015 for the three month periods ended June 30, 2012 and 2011 and a loss of $6,405 and of $3,163 for the six month periods ended June 30, 2012 and 2011, respectively, relate to the translation of financial statements from New Taiwan Dollar to US Dollars.

2.           Preferred Stock Transactions

The 400,000 shares of Series B Preferred Shares shall be convertible into common shares in two equal tranches, 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.

These criteria were not met, so there were no conversions as of December 31, 2010 or 2011.  However, the first tranche will be eligible for conversion again at December 31, 2012.

12

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

2.           Preferred Stock Transactions - continued

The second tranche of the Preferred Shares shall be convertible after the second 12 month period, i.e. the year ending December 31, 2012, 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.

EZ Link did not reach its performance goals at December 31, 2011, so the conversion rights will be extended one additional year.  December 31, 2012 for the first tranche and December 31, 2013 for the second tranche.

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 also has 974,730 Series A Preferred Shares issued and outstanding which are convertible at any time with a conversion price of $3.00 per share.

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

3.           Common Stock Transactions

During the six months ending June 30, 2012 and 2011 no stock was issued.

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 $62,500 and $57,500 for the three-month periods ended June 30, 2012 and 2011, respectively, and $125,000 and $115,000 for the six-month periods ended June 30, 2012 and 2011, respectively. 

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $14,000 for each of the three-month periods ended June 30, 2012 and 2011, and $28,000 for each of the six-month periods ended June 30, 2012 and 2011

13

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

4.           Related Party Transactions - continued

William Gresher

For each three-month period ended June 30, 2012 and 2011, Mr. Gresher, a member of the Board of Directors, was paid $1,500 in cash for Director fees.

For each six-month period ended June 30, 2012 and 2011, Mr. Gresher, a member of the Board of Directors, was paid $3,000 in cash for Director fees.

Owen Naccarato

For each three-month period ending June 30, 2012 and 2011 respectively, Mr. Naccarato, a member of the Board of Directors, was paid $9,000 in cash for legal fees and for the three month period ending June 30, 2012 was paid $1,500 in cash for Directors fees.

For each six-month period ending June 30, 2012 and 2011 respectively, Mr. Naccarato, a member of the Board of Directors, was paid $18,000 in cash for legal fees and for the six month period ending June 30, 2012 was paid $1,500 in cash for Directors 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 months ended June 30, 2012 and 2011, EZ Link paid $11,310 and $11,898, respectively, and for the six months ended June 30, 2012 and 2011, EZ Link paid $23,205 and $23,589, respectively to Easy Global Company for rent expense.

5.           Property and Equipment

The Company’s property and equipment at June 30, 2012 and December 31, 2011, consisted of the following:

	June 30, 2012			December 31, 2011
Furniture and fixtures	$	14,552		$	14,552
Computers and equipment		152,076			147,039
Leasehold improvements		62,848			63,977
		229,476			225,568
Less accumulated depreciation		(212,855	)		(202,356	)
Total	$	16,621		$	23,212

The Company recorded depreciation expense for the six-month periods ending June 30, 2012 and 2011, of $6,616 and $6,434 respectively.

6.           Commitments and Contingencies

Litigation

 The Company is not currently aware of any formal legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations.

14

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

6.           Commitments and Contingencies - continued

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 June, 2012, total monthly base rent is $9,164 per month.

EZ Link rents 2,388 square feet of office space for its headquarters.  The lease began on October 1, 2011, through March 31, 2012.  The lease is renewed annually.  As of March 31 2012, total base monthly rent is $3,984 per month.

EZ Link also rents 182 square feet of office space.  The lease began on April 15, 2011, and expires on April 14, 2014.  The lease has a 3% increase each year.  As of June 30, 2012, total base monthly rent is $1,436

EZ Link also maintains operating leases for parking spaces and vehicles used in its operations expiring through June 23, 2014.

Future minimum payments on this lease for fiscal years following December 31, 2011, are:

Year ended December 31,
2012	$	149,158
2013		157,539
2014		81,665
Thereafter		81,665
	$	470,027

7.           Earnings per Share

Earnings per share have been calculated using the weighted average number of shares outstanding during each period.  There was positive net income during the six months ended June 30, 2012, therefore the Company’s Convertible Preferred Shares constituted potentially dilutive securities.  However, the net loss for the three months ended June 30, 2012 and 2011 and for the six months ended June 30, 2011 would have made these securities anti-dilutive.  Earnings per share at June 30, 2012, is calculated using the number of common shares issued to effect the business combination as being outstanding during the entire period.

15

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

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

	For the Three Months Ended June 30,
	2012			2011
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to IPLO common stockholders	$	(107,386	)	$	(76,074	)
Weighted average common shares outstanding		4,961,357			4,961,357
Basic earnings (loss) per share of common stock	$	(0.02	)	$	(0.02	)
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to IPLO common stockholders	$	(107,386	)	$	(76,074	)
Weighted average common shares outstanding		4,961,357			4,961,357
Effect of dilutive securities:
Convertible preferred stock		-			-
Weighted average common shares outstanding after effect of dilutive securities		4,961,357			4,961,357
Diluted earnings per share of common stock	$	(0.02	)	$	(0.02	)

	For the Six Months Ended June 30,
	2012		2011
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to IPLO common stockholders	$	39,304	$	(69,293	)
Weighted average common shares outstanding		4,961,357		4,961,357
Basic earnings (loss) per share of common stock	$	0.01	$	(0.01	)
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings (loss) available to IPLO common stockholders	$	39,304	$	(69,293	)
Weighted average common shares outstanding		4,961,357		4,961,357
Effect of dilutive securities:
Convertible preferred stock		1,374,730		-
Weighted average common shares outstanding after effect of dilutive securities		6,336,087		4,961,357
Diluted earnings (loss) per share of common stock	$	0.01	$	(0.01	)

8.            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 and six months ended June 30, 2012:

16

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

8.            Segment Reporting (continued)

June 30	Y-T-D	Packaging		Logistics			Total
Revenue		$	15,204,257		4,832,926			20,037,183
Operating Income			38,600		41,820			80,420
Total Assets			7,849,251		1,468,922			9,318,173
Interest Income			18		569			587
Interest Expense			0		(826	)		(826	)
Depreciation		$	0		6,697			6,697

June 30	QTR	Packaging			Logistics			Total
Revenue		$	8,346,209			2,706,183			11,052,392
Operating Income			(150,471	)		32,517			(117,954	)
Total Assets			7,819,926			1,468,922			9,288,848
Interest Income			7			519			526
Interest Expense			0			(415	)		(415	)
Depreciation		$	0			3,348			3,348

17

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

9.           Unrestricted Net Assets

EZ Link Corp. has retained earnings of approximately $48,870 as of June 30, 2012. Distributions and other payments to EZ Link Holdings, Ltd. from its subsidiary, EZ Link Corp. may not permitted by the Taiwan government.  Condensed financial information of the United States operations is as follows:

	June 30,			December 31,
Balance Sheets	2012			2011
Assets
Cash and cash equivalents	$	841,906		$	803,072
Accounts receivable, net		5,524,940			5,205,066
Prepaid taxes		-			70,811
Total current assets		6,366,846			6,078,949
Investment in EZ Link Holdings, Ltd.		857,143			857,143
Deposits		12,433			12,433
Deferred tax assets		137,091			190,128
Total assets	$	7,410,668		$	7,138,653
Liabilities
Accounts payable	$	5,148,326		$	4,839,651
Accrued liabilities		45,190			98,675
Notes payable to related party		80,000			80,000
Total current liabilities		5,273,516			5,018,326
Total liabilities		5,273,516			5,018,326
Stockholders' equity
Common stock		4,961			4,961
Preferred stock		138			138
Additional paid-in capital		2,202,877			2,202,877
Retained earnings (deficit)		(70,824	)		(87,649	)
Total stockholders' equity		2,132,152			2,120,327
Total liabilities and stockholders' equity	$	7,410,668		$	7,138,653

18

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

9.           Unrestricted Net Assets - continued

Information of the United States operations is as follows:

	Three Months			Three Months
	June 30,			June 30,
Statement of Operations	2012			2011
Net sales	$	8,346,209		$	7,639,563
Cost of goods sold		(8,226,936	)		(7,424,061	)
Operating expenses		(269,744	)		(301,098	)
Loss from operations		(150,471	)		(85,596	)
Other income and (expense)
Interest income		7			10
Other income		1,200			-
Income tax benefit (expense)		53,037			-
Total other income		54,244			10
Net loss	$	(96,227	)	$	(85,586	)

19

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

9.           Unrestricted Net Assets - continued

	Six Months			Six Months
	June 30,			June 30,
Statement of Operations	2012			2011
Net sales	$	15,204,257		$	13,720,013
Cost of goods sold		(14,613,277	)		(13,281,479	)
Operating expenses		(552,380	)		(525,173	)
Income (loss) from operations		38,600			(86,639	)
Other income and (expense)
Interest income (expense)		18			20
Other income		2,400			-
Income tax		(24,262	)		-
Total other income		(21,844	)		20
Net loss	$	16,756		$	(86,619	)

20

International Packaging and Logistics Group, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012

9.           Unrestricted Net Assets - continued

Information of the United States operations is as follows:

	Six Months		Six Months
	June 30,		June 30,
Statements of Cash Flows	2012		2011
Net cash provided by operating activities:	$	38,834	$	(35,470	)
Cash flow from investing activities
Proceeds from sale of investment		-		-
Net cash provided by investing activities		-		-
Cash flow from financing activities:
Proceeds from note payable - related party		-		-
Net cash provided by financing activities		-		-
Net increase in cash		38,834		(35,470	)
Cash, beginning of period		803,072		191,414
Cash, end of period	$	841,906	$	155,944

21

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS’

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

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

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2011 included in our Annual Report on Form 10-K for the year ended December 31, 2011.

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., 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.  EZ Link International, Samoa (“ELIS”) was incorporated in Samoa.  ELIS is a wholly owned subsidiary of EZ Link Corporation and was set up to facilitate shipping operations in the Republic of China. 

Plan of Operation

Our general operating plan is as follows:

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Short Term

● Continue growing revenue and profits through the existing business;

● Meet the challenge of a difficult 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 six months ending June 30, 2012 and 2011

Revenue:

For the three months ending June 30, 2012 and 2011, revenues were $11,052,392 and $10,126,603 respectively, for an increase of $925,789 (9.1%) over the same period in 2011. The increase in revenue is a mainly due an increase in packaging revenue of $706,646 (9.2%) and an increase in logistics revenue of $219,143 (8.8%) due to an upturn in the worldwide economy.

For the six months ending June 30, 2012 and 2011, revenues were $20,037,183 and $18,712,212 respectively, for an increase of $1,324,971 (7.0%) over the same period in 2011. The increase in revenue is a mainly due to an increase in packaging revenue of $1,484,244 (10.8%) due to an upturn in the worldwide economy offset by a small decrease in logistics revenue of ($159,273) (3.2%).

Cost of Goods Sold:

Cost of goods sold for the three months ending June 30, 2012 and 2011 were $10,619,345 and $9,576,704 respectively, for an increase of $1,042,641 (10.9%) over the same period in 2011. This increase consists of an increase in packaging cost of goods sold of $802,875 (10.8%) which was a direct result of the increase in sales, plus an increase in logistics cost of goods sold of $239,766 (11.1%) from the same period in 2011 due to an increase in local shipping business.

Cost of goods sold for the six months ending June 30, 2012 and 2011 were $18,828,331 and $17,595,043 respectively, for an increase of $1,233,288 (7.0%) over the same period in 2011. This increase consists of an increase in packaging cost of goods sold of $1,331,798 (10.0%) which was a direct result of the increase in sales, offset by a small decrease in logistics cost of goods sold of ($98,510) (2.2%) from the same period in 2011 due to decrease in local shipping business on a year to date basis.

Gross Profit:

Gross profit was $433,047 and $549,899 for the three months ending June 30, 2012 and 2011, a decrease of $116,852 (21.2%) over the same period in 2011.   The gross profit margin as a percent of sales for the three months ending June 30, 2012 and 2011 was 3.9% and 5.4 % respectively for a decrease of 1.5%.  The decrease is a result of a 1.4% gross profit percent from the packaging business offset by a higher gross profit percent from the logistics business of 11.6%.

23

Gross profit was $1,208,852 and $1,170,128 for the six months ending June 30, 2012 and 2011, an increase of $91,683 (8.2%) over the same period in 2011.   The gross profit margin as a percent of sales for the six months ending June 30, 2012 and 2011 was 6.3% and 6.0 % respectively for an increase of 0.3%.  The increase is a result of a 3.9% gross profit percent from the packaging business plus a higher gross profit percent from the logistics business of 12.8%.

Operating Expenses:

Operating expenses for the three month period ended June 30, 2012 and 2011 were $551,001 and $614,232 respectively for a decrease of $63,231 (10.3%) from the same period prior year.   Operating expenses for the six month period ended June 30, 2012 and 2011 were $1,128,432 and $1,170,128 respectively for a decrease of $41,696 (3.6%) from the same period prior year.   These differences in operating expenses were mostly attributable to the following:

Three months ending:	6/30/2012		6/30/2011		$ VAR			% VAR
Salaries & Related Expense	$	306,407	$	346,255	$	(39,848	)		-13.0	%	Packaging salary higher in 2012 by $1,492 offset by $41,343 decrease in EZ Link salary (prior year had bonus).
Rent		49,085		48,695		390			0.8	%	Packing rent increased by $1,111 and EZ Link rent decreased by $721.  Increase due to annual rate increases.
Insurance		53,096		47,453		5,643			10.6	%	Packaging insurance increased by $6,110 offset by  a decrease in EZ Link Group insurance of $467.
Meals & Entertainment		10,290		5,982		4,308			41.9	%	Packaging  expense was up $4,450 less EZ kink of ($142).
Travel Expense		33,793		63,168		(29,375	)		-86.9	%	Decrease in packaging travel of $31,908, increase in EZ Link travel of $2,533.
Miscellaneous		98,330		102,679		(4,349	)		-4.4	%	Miscellaneous items
Total Expenses	$	551,001	$	614,232	$	(63,231	)		-11.5	%

Six months ending:	6/30/2012		6/30/2011		$ VAR			% VAR
Salaries & Related Expense	$	608,683	$	660,292	$	(51,609	)		-8.5	%	Packaging salary higher in 2012 by $15,671 offset by  $67,280 decrease in EZ Link salary (prior year had bonus).
Rent		98,447		95,237		3,210			3.3	%	Packing rent increased by $1,062 and EZ Link rent increased by $1,758.  Increase due to annual rate increases.
Insurance		95,144		92,408		2,736			2.9	%	Packaging insurance increased $2,663
Meals & Entertainment		16,667		11,878		4,789			28.7	%	Packaging increased by 4,940
Travel Expense		104,387		98,033		6,354			6.1	%	Increase in packaging travel of $4,463, increase in EZ Link travel of $1,891.
Miscellaneous		205,115		212,280		(7,165	)		-3.5	%	Miscellaneous items
Total Expenses	$	1,128,443	$	1,170,128	$	(41,685	)		-3.7	%

24

Other Income (Expenses):

Interest income (expense) for the three months ended June 30, 2012 and 2011 was $184 and $184 respectively for a decrease of expense $73 (40.0%) from the same period prior year.  Interest income (expense) for the six months ended June 30, 2012 and 2011 was ($239) and ($697) respectively for a decrease of expense $458 (65.7%) from the same period prior year

Other income was $1,402 for the three months ending June 30, 2012, an increase of $1,568 over the same period in 2011 and for the six months ending June 30, 2012, other income was $3,224 an increase of $2,708 over the same period in 2011.  Rent income was $0 for the three and six months ending June 30, 2012, a decrease of $1,488 and $2,949 respectively over the same period in 2011.  

Liquidity and Capital Resources

Cash flow generated in operations for the six months ending June 30, 2012 amounted to $118,719 which mainly consisted the following: six months net income of $53,514 plus 1) increase in accounts payable and accrued expenses of $353,301, 2) a decrease in prepaid taxes of $70,881,3) a decrease in other current assets of $63,783 and a increase in miscellaneous items of $40,941 offset by a decrease in accounts receivable of $479,580.

On June 30, 2012 the Company had total assets of $9,318,173 compared to $8,815,362 on December 31, 2011, an increase of $502,822 or 5.7%.  The Company had total IPLO stockholders’ equity of $2,206,268 on June 30, 2012, compared to stockholders’ equity of $2,173,369 on December 31, 2011, an increase of $32,899 (1.5%).  As of June 30, 2012 the Company's working capital position increased by $74,797 (5.3%) from working capital of $1,398,665 at December 31, 2011 to working capital of $1,473,462 at June 30, 2012.  

Capital Resources

Over the next twelve months, management is of the opinion that sufficient working capital will be obtained from operations or from its positive working capital position at June 30, 2012.

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.

25

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
3.	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 June 30, 2012. 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 report 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 June 30, 2012:

● 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.

26

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.  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

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)

Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Form 10-Q within the permitted 30-day grace period granted for the first quarterly period in which detailed footnote tagging is required.

27

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:  August 17, 2012	By:	/s/ Owen Naccarato
		Owen Naccarato
		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

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EX-31.1

Exhibit 31.1

CEO Certification

I, Owen Naccarato, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of International Packaging and Logistics Group, Inc. (the "Company");

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.       The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

         a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

         b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

         c)       evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

         d)       disclosed in this report any changes in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.  The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

         a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

         b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting

Date: August 17, 2012

/s/ Owen Naccarato

Owen Naccarato, Chief Executive Officer, and Director

EX-31.2

Exhibit 31.2

CFO Certification

I, Owen Naccarato, certify that:

1.     I have reviewed this quarterly report on Form 10Q of International Packaging and Logistic Group, Inc., (the "Company");

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.       The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

         a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

         b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

         c)       evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

         d)       disclosed in this report any changes in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

 5.  The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):

         a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

         b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting

Date: August 17, 2012

/s/ Owen Naccarato

Owen Naccarato

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Packaging and Logistics Group, Inc. (the "Company") on Form 10Q for the period ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steve Westlund, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned’s knowledge and belief:

     (1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/  OwenNaccarato

Owen Naccarato

Chief Executive Officer, and Director

August 17, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of International Packaging and Logistic Group, Inc., (the "Company") on Form 10Q for the period ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steve Westlund, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that to the best of the undersigned’s knowledge and belief:

     (1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Owen Naccarato

Owen Naccarato

Chief Financial Officer

August 17, 2012