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 March 31, 2014 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 May 15, 2014 was 4,961,357
International Packaging and Logistics Group, Inc.,
and Subsidiaries
Condensed Consolidated Financial Statements
for the Three Months Ended
March 31, 2014 and 2013
C O N T E N T S
| Condensed Consolidated Balance Sheets | 1 |
| Condensed Consolidated Statements of Operations and Comprehensive Income | 3 |
| Condensed Consolidated Statements of Cash Flows | 5 |
| Notes to Condensed Consolidated Financial Statements | 7 – 21 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Balance Sheets
As of March 31, 2014 and December 31, 2013
(Unaudited)
| March 31 | December 31 | |||||||
| 2014 | 2013 | |||||||
| Current Assets | ||||||||
| Cash | $ | 790,016 | $ | 1,192,443 | ||||
| Accounts receivable, net | 6,371,192 | 6,106,850 | ||||||
| Other current assets | 15,175 | – | ||||||
| Total Current Assets | 7,176,383 | 7,299,293 | ||||||
| Property, Plant and Equipment, net | 47,462 | 7,050 | ||||||
| Other Assets | ||||||||
| Prepaids | 5,806 | 25,892 | ||||||
| Deposits | 38,840 | 39,248 | ||||||
| Contract in place | 1,295,726 | 1,295,726 | ||||||
| Deferred tax assets | 264,315 | 264,315 | ||||||
| Total Other Assets | 1,604,687 | 1,625,181 | ||||||
| Total Assets | $ | 8,828,532 | $ | 8,931,524 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 5,707,516 | $ | 5,655,668 | ||||
| Notes payable - related party | 80,000 | 80,000 | ||||||
| Other current liabilities | 21,384 | 21,010 | ||||||
| Total Current Liabilities | 5,808,900 | 5,756,678 | ||||||
| Commitments and contingencies (Note 6) | – | – | ||||||
See accompanying notes.
| 1 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Balance Sheets
As of March 31, 2014 and December 31, 2013
(Unaudited)
| Stockholders' Equity | ||||||||
| Convertible preferred shares: $0.0001 par value, 2,000,000 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 | 26,385 | 34,414 | ||||||
| Retained earnings (deficit) | (67,560 | ) | 54,304 | |||||
| Non controlling interest | 852,831 | 878,152 | ||||||
| Total Stockholders' Equity | 3,019,632 | 3,174,846 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 8,828,532 | $ | 8,931,524 |
See accompanying notes.
| 2 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2014 | 2013 | |||||||
| Revenues | ||||||||
| Packaging | $ | 7,958,031 | $ | 8,655,176 | ||||
| Logistics | 1,381,925 | 1,712,633 | ||||||
| Total Revenues | 9,339,956 | 10,367,809 | ||||||
| Cost of Goods Sold | ||||||||
| Packaging | 7,680,836 | 8,337,294 | ||||||
| Logistics | 1,159,872 | 1,449,877 | ||||||
| Total Cost of Goods Sold | 8,840,708 | 9,787,171 | ||||||
| Gross Profit | 499,248 | 580,638 | ||||||
| Operating Expenses | ||||||||
| Administrative expenses | 316,650 | 231,637 | ||||||
| Rent | 29,026 | 36,010 | ||||||
| Salaries and wages | 311,908 | 353,470 | ||||||
| Total Operating Expenses | 657,584 | 621,117 | ||||||
| Loss from Operations | (158,336 | ) | (40,479 | ) | ||||
| Other Income | ||||||||
| Interest income (expense), net | (251 | ) | 230 | |||||
| Other income (expense) | 2,382 | 389 | ||||||
| Rent Income | 376 | – | ||||||
| Total Other Income | 2,507 | 619 | ||||||
| Net Income (Loss) before Income Taxes | (155,829 | ) | (39,860 | ) | ||||
| 3 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| Income tax benefit (expense) | 8,644 | 2,100 | ||||||
| Net Income (Loss) | (147,185 | ) | (37,760 | ) | ||||
| Net (gain) loss attributable to non-controlling interest | 25,321 | 9,646 | ||||||
| Net Income (Loss) attributable to common stockholders | (121,864 | ) | (28,114 | ) | ||||
| Comprehensive Income | ||||||||
| Unrealized loss on investments | – | – | ||||||
| Currency translation adjustment | 8,029 | 11,631 | ||||||
| Comprehensive Income (Loss) | $ | (113,835 | ) | $ | (16,483 | ) | ||
| Earnings per weighted average share of common stock - | ||||||||
| basic | $ | (0.02 | ) | $ | (0.01 | ) | ||
| Earnings per weighted average share of common stock - | ||||||||
| diluted | $ | (0.02 | ) | $ | (0.01 | ) | ||
| Weighted average shares outstanding - basic | 4,961,357 | 4,961,357 | ||||||
| Weighted average shares outstanding - diluted | 4,961,357 | 4,961,357 |
See accompanying notes.
| 4 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the three Months Ended March 31, 2014 and 2013
(Unaudited)
| March 31 | March 31 | |||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (147,185 | ) | $ | (37,760 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 1,762 | 2,187 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in accounts receivable | (274,005 | ) | (1,040,742 | ) | ||||
| Decrease in other assets | 3,943 | 38,170 | ||||||
| Increase in current liabilities | 60,168 | 975,771 | ||||||
| Net cash used in operating activities | (355,317 | ) | (62,374 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Purchase of property and equipment | (42,280 | ) | – | |||||
| Net Increase in refundable deposits | 7 | – | ||||||
| Net cash used in investing activities | (42,273 | ) | – | |||||
See accompanying notes.
| 5 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the three Months Ended March 31, 2014 and 2013
(Unaudited)
| Cash flow from financing activities: | ||||||||
| Net cash provided by financing activities | – | – | ||||||
| Effect of currency translation | (4,837 | ) | 12,167 | |||||
| Net decrease in cash and cash equivalents | (402,427 | ) | (50,207 | ) | ||||
| Cash and cash equivalents at beginning of period | 1,192,443 | 1,387,939 | ||||||
| Cash and cash equivalents at end of period | $ | 790,016 | $ | 1,337,732 | ||||
| Supplementary Disclosures of Cash Flow | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | – | $ | – | ||||
| Taxes (refund) | $ | – | $ | – |
See accompanying notes.
| 6 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
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 months ended March 31, 2014 and 2013 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 consolidated financial statements and the notes thereto included on Form 10-K for the period ended December 31, 2013. 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 month periods ended March 31, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.
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
March 31, 2014
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.
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. There was a cumulative net income from January 1, 2014 to March 31, 2014 of $25,321.
The terms of these Consulting Agreements begin as of the date of the Contractual Agreements, and shall continue in perpetuity, unless terminated in accordance with relevant provisions in the agreements or by any other agreement reached by all parties.
| 8 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
1. Summary of Significant Accounting Policies (continued)
Principles of Consolidation
The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. EZ Link Corp’s functional currency is New Taiwan Dollars (NTD), however, the accompanying consolidated financial statements have been re-measured and presented in United States Dollars ($).
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 March 31, 2014, include EZ Link Holdings, Ltd., and subsidiaries from the January 1, 2010 date of acquisition. Intercompany accounts and transactions have been eliminated upon consolidation.
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.
| 9 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
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.
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.
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. The carrying value of goodwill is reviewed at least annually for possible impairment. The Company first assesses qualitative factors in order to determine if goodwill is impaired. If, through the qualitative assessment, it is determined that it is more likely than not that goodwill is not impaired, no further testing is required. If it is determined that it is more likely than not that goodwill is impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of goodwill at the reporting unit level using an income (discounted cash flow) approach that requires significant management judgment with respect to revenue and expense growth rates and the selection and use of an appropriate discount rate. No impairment losses were recognized during the three-month periods ended March 31, 2014 or 2013.
The contract in place represents the fair value of the consulting contract and operating agreement between EZ Link Holdings, Ltd. and EZ Link Corp. Contract in place is the only intangible asset with an indefinite life on our consolidated balance sheets and is accounted for as goodwill. We have elected December 31 as the date to perform our annual impairment test.
| 10 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
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 March 31, 2014 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 three month periods ended March 31, 2014 and 2013.
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 representation 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 and other checking accounts that is not federally insured. Balances in this fund were $393,907 and $783,519 at March 31, 2014 and December 31, 2013, 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 March 31, 2014, 80.7% of H&H Glass’s Accounts Receivable were attributable to three customers. As of December 31, 2013, 86.0% of H&H Glass’s Accounts Receivable were attributable to three customers.
At March 31, 2014 and December 31, 2013, H&H Glass had allowance for doubtful reserves of $19,358 and $59,223, respectively.
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
March 31, 2014
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 March 31, 2014 and 2013. During the three-month period ending March 31, 2014 and 2013, H&H Glass purchased $7,029,586 and $7,480,025 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 gain of $8,029 and $11,631 for the three month periods ended March 31, 2014 and 2013, respectively, relate to the translation of financial statements from New Taiwan Dollar to US Dollars.
2. Preferred Stock Transactions
Description of the Series A Convertible Preferred Stock
The Series A Preferred shares are convertible into common shares on a 1:1 ratio at a fixed rate of $3 per share. Preferred shares have no voting rights, have no redemption rights and earn no dividends. Holders of Series A Convertible Preferred Stock are not permitted to convert their stock into common shares until the Company’s market capital reaches $15,000,000. Upon dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the holders of the then outstanding shares of Series A Convertible Preferred Stock shall be entitled to receive out of the assets of the Company the sum of $0.0001 per share (the “Liquidation Rate”) before any payment or distribution shall be made on any other class of capital stock of the Company ranking junior to the Series A Convertible Preferred Stock.
| 12 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
Description of the Series B Convertible Preferred Stock
As of January 1, 2010 pursuant to the purchase agreement for 51% ownership in EZ Link Holdings Ltd., approximately 47% of the purchase price amount of $400,000 was paid in Series B convertible preferred shares of IPL Group at a per share value of $1.00, or 400,000 shares.
The Preferred shares are convertible into common shares on a 1:1 ratio at a fixed rate of $1 per share. Preferred shares have no voting rights, have no redemption rights and earn no dividends.
The Series B Preferred Shares would have been convertible into common shares in two equal tranches, the first tranche was to be upon completion and receipt of the financial statements as of and for the year ending December 31, 2010, if all of the following performance targets were 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, 2013. However, the first tranche will be eligible for conversion again at December 31, 2014. If EZ Link does not reach its performance goals, the conversion rights will be extended each year, on an indefinite basis until the performance goals are reached.
The second tranche of the Preferred Shares shall be convertible after the 12 month period after the first tranche becomes convertible, i.e. at the earliest the year ending December 31, 2015, 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, 2013, so the conversion rights will be extended each year, on an indefinite basis until the performance goals are reached.
ASC Topic 480, “Distinguishing Liabilities from Equity,” establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.
A mandatorily redeemable financial instrument shall be classified as a liability unless the redemption is required to occur only upon the liquidation or termination of the reporting entity. A financial instrument issued in the form of shares is mandatorily redeemable if it embodies an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates) or upon an event certain to occur. A financial instrument that embodies a conditional obligation to redeem the instrument by transferring assets upon an event not certain to occur becomes mandatorily redeemable—and, therefore becomes a liability—if that event occurs, the condition is resolved, or the event becomes certain to occur.
The Company determined that the preferred shares are not mandatorily or conditionally redeemable and are properly classified as permanent equity in the accompanying consolidated financial statements.
3. Common Stock Transactions
During the three months ending March 31, 2014 and 2013 no stock was issued.
| 13 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
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 $66,950 and $65,000 for the three-month periods ended March 31, 2014 and 2013, respectively.
Josephine Lin
Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $14,935 and $14,500 for the three-month periods ended March 31, 2014 and 2013.
William Gresher
For each three-month period ended March 31, 2014 and 2013, Mr. Gresher, a member of the Board of Directors, was paid $1,500 in cash for Director fees.
Owen Naccarato
For each three-month period ending March 31, 2014 and 2013 respectively, Mr. Naccarato, a member of the Board of Directors, was paid $9,000 in cash for legal fees and for the three month periods ending March 31, 2014 and 2013 was paid $1,500 in cash for Directors fees.
| 14 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
4. Related Party Transactions - continued
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 March 31, 2014 and 2013, EZ Link paid $11,314 and $11,688, respectively to Easy Global Company for rent expense.
5. Property and Equipment
The Company’s property and equipment at March 31, 2014 and December 31, 2013, consisted of the following:
| March 31, 2014 | December 31, 2013 | |||||||
| Furniture and fixtures | $ | 14,552 | $ | 14,552 | ||||
| Computers and equipment | 186,617 | 146,180 | ||||||
| 201,169 | 160,732 | |||||||
| Less accumulated depreciation | (153,707 | ) | (153,682 | ) | ||||
| Total | $ | 47,462 | $ | 7,050 | ||||
The Company recorded depreciation expense for the three-month periods ending March 31, 2014 and 2013, of $1,762 and $2,187 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.
| 15 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
6. Commitments and Contingencies - continued
Leases
Operating leases
H&H Glass rents approximately 2,900 square feet of office space for its headquarters. The lease began on January 1, 2013 and expires on August 31, 2019. As of March 31, 2014, total monthly base rent is $6,235 per month.
EZ Link rents 2,388 square feet of office space for its headquarters. The lease began on October 1, 2011, through September, 2014. The lease is renewed annually. As of March 31, 2014, total base monthly rent is $3,786 per month.
EZ Link also rents 182 square feet of office space. The lease began on April 15, 2011, and expires on May 14, 2015. The lease has a 3% increase each year. As of March 31, 2014, total base monthly rent is $1,486.
EZ Link also maintains operating leases for parking spaces and vehicles used in its operations expiring through June 23, 2014.
Future minimum payments on the non-cancellable leases described above as of March 31, 2014, are:
| 2014 | 57,681 | |||
| 2015 | 80,899 | |||
| 2016 | 83,335 | |||
| 2017 | 85,123 | |||
| 2018 | 86,652 | |||
| Thereafter | 59,624 | |||
| $ | 453,314 |
7. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at March 31, 2014 and December 31, 2013, consisted of the following:
| March 31, 2014 | December 31, 2013 | |||||||
| Accounts payable | $ | 5,615,988 | $ | 5,564,140 | ||||
| Accrued professional and related fees | 91,528 | 91,528 | ||||||
| Total | $ | 5,707,516 | $ | 5,655,668 | ||||
| 16 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
8. Earnings per Share
Earnings per share have been calculated using the weighted average number of shares outstanding during each period. There was a net loss during the three months ended March 31, 2014 and the three months ended March 31, 2013 therefore the Company’s Convertible Preferred Shares would not constitute potentially dilutive securities.
Earnings (loss) per share of common stock are calculated as follows:
| For the Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| BASIC EARNINGS PER SHARE OF COMMON STOCK: | ||||||||
| Net earnings available to the Company’s common stockholders | $ | (121,864 | ) | $ | (28,114 | ) | ||
| Weighted average common shares outstanding | 4,961,357 | 4,961,357 | ||||||
| Basic earnings per share of common stock | $ | (0.02 | ) | $ | (0.01 | ) | ||
| DILUTED EARNINGS PER SHARE OF COMMON STOCK: | ||||||||
| Net earnings available to the Company’s common stockholders | $ | (121,864 | ) | $ | (28,114 | ) | ||
| 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 | ) | $ | (0.01 | ) | ||
| 17 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
9. Segment Reporting
The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Following is a summary of segment information for the three months ended March 31, 2014:
| March 31, 2014 | Packaging | Logistics | Total | |||||||||
| Revenue | $ | 7,958,031 | 1,381,925 | 9,339,956 | ||||||||
| Operating loss | (93,610 | ) | (64,726 | ) | (158,336 | ) | ||||||
| Total Assets | 7,907,676 | 920,856 | 8,828,532 | |||||||||
| Interest Income | 0 | 48 | 48 | |||||||||
| Interest Expense | (299 | ) | 0 | (299 | ) | |||||||
| Depreciation | 0 | 1,762 | 1,762 | |||||||||
| 18 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
10. Unrestricted Net Assets
EZ Link Corp. has retained earnings of approximately $18,857 as of March 31, 2014. 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:
| March 31, | March 31, | |||||||
| Balance Sheets | 2014 | 2013 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 440,237 | $ | 911,146 | ||||
| Accounts receivable, net | 5,913,302 | 6,295,989 | ||||||
| Other current assets | (2,157 | ) | – | |||||
| Total current assets | 6,351,382 | 7,207,135 | ||||||
| Investment in EZ Link Holdings, Ltd. | 857,143 | 857,143 | ||||||
| Deposits | 12,432 | 12,433 | ||||||
| Deferred tax assets | 264,315 | 183,679 | ||||||
| Total assets | $ | 7,485,272 | $ | 8,260,390 | ||||
| Liabilities | ||||||||
| Accounts payable | $ | 5,178,110 | $ | 5,987,570 | ||||
| Accrued liabilities | 91,528 | 63,190 | ||||||
| Notes payable to related party | 80,000 | 80,000 | ||||||
| Total current liabilities | 5,349,638 | 6,130,760 | ||||||
| Total liabilities | 5,349,638 | 6,130,760 | ||||||
| Stockholders' equity | ||||||||
| Common stock | 4,961 | 4,961 | ||||||
| Preferred stock | 138 | 138 | ||||||
| Additional paid-in capital | 2,202,877 | 2,202,877 | ||||||
| Retained earnings | (72,342 | ) | (78,346 | ) | ||||
| Total stockholders' equity | 2,135,634 | 2,129,630 | ||||||
| Total liabilities and stockholders' equity | $ | 7,485,272 | $ | 8,260,390 | ||||
| 19 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
| Three Months | Three Months | |||||||
| March 31, | March 31, | |||||||
| Statement of Operations | 2014 | 2013 | ||||||
| Net sales | $ | 7,958,031 | $ | 8,655,176 | ||||
| Cost of goods sold | (7,680,836 | ) | (8,337,294 | ) | ||||
| Operating expenses | (370,805 | ) | (323,177 | ) | ||||
| Loss from operations | (93,610 | ) | (5,295 | ) | ||||
| Other income and (expense) | ||||||||
| Interest income (expense) | (299 | ) | 181 | |||||
| Total other income (expense) | (299 | ) | 181 | |||||
| Net Income | $ | (93,909 | ) | $ | (5,114 | ) | ||
| 20 |
International Packaging and Logistics Group, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2014
10. Unrestricted Net Assets - continued
| Three Months | Three Months | |||||||
| March 31, | March 31, | |||||||
| Statements of Cash Flows | 2014 | 2013 | ||||||
| Net cash used in operating activities: | $ | (409,446 | ) | $ | (204,836 | ) | ||
| Cash flow from investing activities | ||||||||
| Net cash provided by investing activities | – | – | ||||||
| Cash flow from financing activities: | ||||||||
| Net cash provided by financing activities | – | – | ||||||
| Net increase in cash | (409,446 | ) | (204,836 | ) | ||||
| Cash, beginning of period | 849,683 | 1,115,982 | ||||||
| Cash, end of period | $ | 440,237 | $ | 911,146 | ||||
| 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.
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. (“IPL Group Inc.”) acquiring H&H Glass in July of 2007. IPLGroup, Inc. closed its pharmacy business in February 2007.
H&H Glass is a glass importer that supplies custom products such as perfume bottles and food condiment bottles, plus provides complementary services such as product design and the making of product molds. H&H Glass acquires its products from 3 to 5 suppliers in China and Taiwan and sells its products through several distributors in the United States and Canada who service small- to medium-sized customers. H&H imports in excess of 1,000 containers of glass a year. Depending on the size of the product, a container can contain anywhere from 3,000 to 300,000 pieces.
In addition, as of January 1, 2010, International Packaging and Logistics Group, Inc., acquired a majority interest in EZ Link Holdings, Ltd., a company organized under the laws of the British Virgin Islands on December 18, 2009, which controls EZ Link Corporation, a logistics company headquartered in Taiwan. EZ Link was established in July 2003 under the laws of Taiwan, Republic of China. EZ Link Holdings, Ltd. consolidates EZ Link under ASC Topic 810 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.
Plan of Operation
Our general operating plan is as follows:
Short Term
| · | Continue growing revenue and profits through the existing business; | |
| · | Meet the challenge of the declining world economy while maintaining revenue and profitability - our goal will be to focus closely on product mix, improve our gross margin and develop new projects with existing clients; | |
| · | Expand the supply network for our products; | |
| · | Expand our current business model to include other areas that fall within our distribution expertise such as packaging using plastic and acrylic materials. | |
| · | Integrate our new logistics business into our overall plan |
| 22 |
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 months ending March 31, 2014 and 2013
Revenue:
For the three months ending March 31, 2014 and 2013, revenues were $9,339,956 and $10,367,809, respectively, for a decrease of $1,027,853 (9.9%) over the same period in 2013. The decrease in revenue is mainly due to two factors; 1) a decrease in packaging revenue of $697,145 (8.1%) due to a decrease in sales, 2) and a decrease in logistics revenues of $330,708 (19.3%) , mainly due to a decrease in overall shipping.
Cost of Goods Sold:
Cost of goods sold for the three months ending March 31, 2014 and 2013 were $8,840,708 and $9,787,171 respectively, for a decrease of $946,463 (9.7%) over the same period in 2013. This decrease consists of a decrease in packaging cost of goods sold of $656,458 (7.9%) which was a direct result of the decrease in sales, plus a decrease in logistics cost of goods sold of $290,005 (20.0%) from the same period in 2013 mainly due to a decrease in overall shipping.
Gross Profit:
Gross profit was $499,248 and $580,638 for the three months ending March 31, 2014 and 2013, a decrease of $81,390 (14.0%) over the same period in 2013. The gross profit margin as a percent of sales for the three months ending March 31, 2014 and 2013 was 5.3% and 5.6 %, respectively, for a decrease of 0.3%. The decrease is a result of a 0.2% decrease in gross profit percent from the packaging business offset by an increase of 0.7% gross profit percent from the logistics business over prior year.
| 23 |
Operating Expenses:
Operating expenses for the three month period ended March 31, 2014 and 2013 were $657,584 and $621,117, respectively, for an increase of $36,467 (5.9%) from the same period prior year. These differences in operating expenses were mostly attributable to the following:
| Three months ending: | 3/31/2014 | 3/31/2013 | $ VAR | % VAR | ||||||||||||||
| Salaries & Related Expense | $ | 311,908 | $ | 353,470 | $ | 41,562 | -11.8 | % | Packaging salary higher in 2013 by $46,355, and a | |||||||||
| $4,793 increase in EZ Link salary. | ||||||||||||||||||
| Rent | 29,026 | 36,010 | -6,984 | -19.4 | % | Packing rent decreased by $12,737 and EZ Link rent increased by $5,753. | ||||||||||||
| Insurance | 53,809 | 56,163 | -2,354 | -4.2 | % | Packaging Insurance based on revenue decreased by $2,939 plus increase in EZ Link Group insurance of $585. | ||||||||||||
| Meals & Entertainment | 23,674 | 20,635 | 3,039 | 14.7 | % | EZ Link increased $3,331, packaging decreased $292. | ||||||||||||
| Travel Expense | 84,693 | 56,939 | 27,754 | 48.7 | % | Increase in packaging travel of $28,407, decrease in | ||||||||||||
| EZ Link travel of ($653). | ||||||||||||||||||
| Miscellaneous | 154,474 | 97,900 | 56,574 | 57.8 | % | Miscellaneous items | ||||||||||||
| Total Expenses | $ | 657,584 | $ | 621,117 | $ | 36,467 | 5.9 | % | ||||||||||
Other Income (Expenses):
Interest income (expense) for the three months ended March 31, 2014 and 2013 was ($251) and $230, respectively, for a decrease of $481 (209.1%) from the same period prior year.
Other income was $2,382 for the three months ending March 31, 2014, an increase of $1,993 (512.3%) over the same period in 2013. Rent income was $376 for the three months ending March 31, 2014, and increase of $376 (100.0%) from the same period prior year.
Liquidity and Capital Resources
Cash flow used in operations for the three months ending March 31, 2014 amounted to $355,317, which mainly consisted the following: by 1) quarterly net loss of $147,185, 2) increase in accounts receivable of $274,005 and a decrease in current liabilities of $12,516 offset by 1) depreciation expense of $1,762, 2) decrease in current assets of 3,943, and 3) increase in accounts payable and accrued expenses of $72,684.
On March 31, 2014, the Company had total assets of $8,828,532 compared to $8,931,524 on December 31, 2013, a decrease of $102,992 or 1.2%. The Company had total stockholders’ equity of $3,019,632 on March 31, 2014, compared to stockholders’ equity of $3,174,846 on December 31, 2013, a decrease of $155,214 (4.9%). As of March 31, 2014, the Company's working capital position decreased by $175,132 (11.4%) from working capital of $1,542,615 at December 31, 2013 to working capital of $1,367,483 at March 31, 2014.
Capital Resources
Over the next twelve months, management is of the opinion that sufficient working capital will be obtained from operations or from current working capital of the company.
Federal Income Tax
The Company deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.
| 24 |
EZ Link Corporation is governed by the Taiwan’s Income Tax Law and local income tax laws. Pursuant to the Taiwan Income Tax Law, enterprises are subject to tax at a statutory rate of 17%. The local government has also provided companies with various incentives to encourage economic development in the region. Such incentives include reduced tax rates and other measures.
ITEM 4. Controls and Procedures.
Disclosure Controls and Procedures
As of March 31, 2014, under the supervision and with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation and because of the material weaknesses in our internal control over financial reporting described below, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2014.
Management identified the following control deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is mainly one person involved in processing of transactions. Therefore, it is difficult to effectively segregate accounting duties. We have hired an additional administrative person and retained an outside professional firm to assist in the separation of duties on an ongoing basis. The use of the outside firm has proven successful in assisting in the separation of duties. However, additional people are not needed to do the administrative work therefore segregation of duties will continue to be an ongoing weakness.
Similarly, the EZ Link operation also has a material weakness due to lack of segregation of duties. Its size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. We have retained an outside professional firm to assist in the separation of duties on an ongoing basis. The use of the outside firm has proven successful in assisting in the separation of duties. However, additional people are not needed to do the administrative work therefore segregation of duties will continue to be an ongoing weakness.
Limitations on the Effectiveness of Internal Controls
Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
| 25 |
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) | |
| 32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002) | |
| 32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002) |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Schema Document | |
| 101.CAL | XBRL Calculation Linkbase Document | |
| 101.DEF | XBRL Definition Linkbase Document | |
| 101.LAB | XBRL Label Linkbase Document | |
| 101.PRE | XBRL Presentation Linkbase Document |
| 26 |
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: May 20, 2014 | 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 | ||
| 27 |
Exhibit 31.1
CEO Certification
I, Owen Naccarato, certify that:
The undersigned certifies 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: May 20, 2014
/s/ Owen Naccarato
Owen Naccarato
Chief Executive Officer,
and Director
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: May 20, 2014
/s/ Owen Naccarato
Owen Naccarato
Chief Financial Officer
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 March 31, 2014 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
May 20, 2014
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 March 31, 2014 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
May 20, 2014