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Jpak Group Inc. (fka JPAK)

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Last Post: 3/21/2018 7:54:57 AM - Followers: 5 - Board type: Free - Posts Today: 0

JPAK GROUP, INC...

Overview

We are engaged primarily in the development, manufacture, and distribution of aseptic liquid food and beverage cartons for milk, fruit juices, soy milk, yogurt drinks, iced tea, wine, sauces and other liquid foods and beverages in China. Since 2004, we have focused on research and development and we believe we are the largest and leading domestic supplier of aseptic liquid food and beverage cartons in China. Our business is primarily in China, but we have recently begun contract manufacturing products for export to several other countries.

 


Company History

Qingdao Renmin commenced operations in China in 1958 as a state-owned, traditional printing and packaging company. Management completed the buyout of 88.23% of the state-owned equity interest in 2004, and in the same year started the development of aseptic liquid food and beverage cartons which was launched in the China market in 2005.

On June, 22, 2006, Jpak was incorporated in the Cayman Islands as Winner Dragon Limited. Winner Dragon Limited and was renamed Jpak Group Co., Ltd. on September 18, 2006. Additionally, during September 2006, Jpak completed the acquisition of 88.23% of the equity interest in Qingdao Renmin through Grand International, the 100% owned subsidiary of Jpak. Currently, substantially, all of our operations are conducted in China through Qingdao Renmin.

In July 2007, Grand International completed the acquisition of the remaining 11.77% of the state-owned equity interest and now owns 100% of the equity interest of Qingdao Renmin.

Competitive environment

The market for packaging products is competitive. Our operations may be affected by technological advances of competitors, industry consolidation, competitive combination products and new information of marketed products or post-marketing surveillance. In addition, the recent milk scandal has brought significant downward pressure on the industry.

As a result of Chinas new anti-monopoly laws, some of our larger competitors have decreased the amount of bundled products that they offer. Although this may cause such competitors to lower their price points, we believe it may actually allow us to be more competitive with them as we continue to offer bundled material and equipment which still maintains a large market share.

Milk scandal and its continuous effect on Jpak

In September 2008, the Chinese health ministry announced that over the previous months several babies had died and thousands were sickened by contaminated milk formula powder. The authorities later confirmed that the tainted powder was laced with melamine, an industrial chemical sometimes used to make plastics and fertiliser. Adding the chemical to the milk made the formula test at higher concentrations of protein.

The tainted milk powder was traced to the Sanlu Group, one of China's biggest dairy producers, which operates as a joint venture with a New Zealand-based dairy conglomerate, Fonterra. Further investigation revealed that milk formula powders produced by dozens of other dairy producers were also contaminated. After this scandal, the Chinese government began strengthening its supervision of both the milk and beverage industries. As a result, some smaller plants have been stopped their production and other larger companies within the industry are still working to recovery from the damage caused by the scandal.

In recent years and prior to the milk scandal, we began focusing more efforts in the dairy packaged segment as it typically had higher margins than the fruit juice market. Due to the scandal, our previously developed relationship with Sanlu has been terminated and all orders were cancelled. Additionally, orders from Taizinai, one of our other customers in the diary sector, have also fallen sharply.

Management continues to monitor both the short and long-term impact that the milk scandal will continue to have on our operations. Although Management believes that we are currently taking every possible action to minimize the impact, we may still experience some negative short term impact on our operating results. For example, our short term revenue has been adversely impacted by scandals negative impact on medium and small size companies that constitute most of our customers. Additionally, we have reduced our average sales price by nearly 10% as a result of more competitive environment brought by this scandal. However, management's efforts to realign our marketing focus on the post-scandal market place are beginning to show positive results. Our orders of the fiscal year 2009 increased by 27% compared to fiscal year 2008 in terms of volume. Currently packages for dairy and tea drink account for a largely percentage of our products and 50% and 30% of our revenue respectively.

 
 
Consolidated Balance Sheets
   
December 31,
   
June 30,
 
   
2009
   
2009
 
Assets
 
(Unaudited)
       
Current assets
           
Cash and cash equivalents
  $ 7,203,020     $ 2,969,699  
Restricted cash
    4,180,409       3,403,868  
Accounts receivable, net of allowance for doubtful accounts of $1,498,405
               
  and $1,496,723 at December 31, 2009 and June 30, 2009, respectively
    9,271,365       9,063,973  
Inventory
    7,160,336       5,353,193  
Trade notes receivable
    448,701       -  
Other receivables
    1,253,636       1,205,983  
Loan receivable
    132,030       175,800  
Advance payments
    5,103,265       503,143  
Prepaid expenses and other current assets
    139,109       70,544  
Prepaid other taxes
    -       266,664  
Total current assets
    34,891,871       23,012,867  
Property and equipment, net
    12,971,713       13,107,216  
Other assets
    112,697       -  
                 
Total assets
  $ 47,976,281     $ 36,120,083  
                 
Liabilities
               
Current liabilities
               
Accounts payable and accrued expenses
  $ 2,771,724     $ 3,277,973  
Trade notes payable
    4,362,115       3,212,704  
Advance payments from customers
    298,928       327,898  
Short-term bank loans
    2,347,200       2,344,000  
Current portion of long-term debt
    764,307       951,811  
Income tax payable
    324,607       167,429  
Other current liabilities
    192,894       97,827  
Total current liabilities
    11,061,775       10,379,642  
Long-term debt
    4,724,812       1,985,075  
Total liabilities
    15,786,587       12,364,717  
                 
Equity
               
Stockholders’ equity
               
Series A convertible preferred stock, $0.0001 par value, 5,608,564
               
  shares authorized, issued and outstanding
    561       561  
Series B convertible preferred stock, $0.0001 par value, 5,000,000
               
  shares authorized, issued and outstanding
    500       500  
Series C convertible preferred stock, $0.0001 par value, 12,000,000
               
  shares authorized, issued and outstanding
    1,200       -  
Common stock, $0.001 par value, 300,000,000 shares authorized,
               
  36,368,334 and 25,005,000 shares issued and outstanding at December
               
  31, 2009 and June 30, 2009, respectively
    36,368       25,005  
Series A preferred shares
    2,484,226       2,484,226  
Series B preferred shares
    1,390,853       1,390,853  
Warrants
    -       4,634,678  
Placement agent warrants
    1,172,487       1,172,487  
Additional paid-in capital
    22,011,719       11,473,104  
Retained earnings (deficit)
    1,386,164       (1,106,478 )
Statutory reserves
    1,010,026       1,010,026  
Accumulated other comprehensive income
    2,590,464       2,565,276  
Total stockholders’ equity
    32,084,568       23,650,238  
Noncontrolling interest
    105,126       105,128  
Total equity
    32,189,694       23,755,366  
                 
Total liabilities and equity
  $ 47,976,281     $ 36,120,083  
 
 
 
 
 
4

 

 

 
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)

 
   
For the Three Months Ended
   
For the Six Months Ended
 
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Sales
  $ 13,166,264     $ 6,108,787     $ 29,728,184     $ 15,539,117  
                                 
Cost of sales
    10,031,204       5,206,666       21,868,816       12,202,568  
                                 
Gross profit
    3,135,060       902,121       7,859,368       3,336,549  
                                 
Operating expenses
                               
    Selling, general and administrative
    1,805,476       1,517,427       4,693,819       3,625,088  
                                 
Income (loss) from operations
    1,329,584       (615,306 )     3,165,549       (288,539 )
                                 
Other income (expenses):
                               
Interest expense, net
    (95,005 )     (99,092 )     (192,056 )     (107,617 )
Non-operating income, net
    89,878       1,134       86,366       13,770  
                                 
Total other income (expenses)
    (5,127 )     (97,958 )     (105,690 )     (93,847 )
                                 
Income (loss) before provision for income taxes
    1,324,457       (713,264 )     3,059,859       (382,386 )
                                 
Provision for income taxes
    324,524       -       567,362       -  
                                 
Net income (loss)
    999,933       (713,264 )     2,492,497       (382,386 )
                                 
Less: net (loss) attributable to noncontrolling interest
    (89 )     (67 )     (145 )     (559 )
                                 
Net income (loss) attributable to Jpak
    1,000,022       (713,197 )     2,492,642       (381,827 )
                                 
Undistributed income attributable to preferred
                               
  stockholders
    491,161       -       1,165,971       -  
                                 
Net income (loss) applicable to common
                               
  stockholders
    508,861       (713,197 )     1,326,671       (381,827 )
                                 
Other comprehensive income (loss)
                               
Foreign currency translation adjustment
    (6,842 )     (375 )     25,188       (39,283 )
                                 
Comprehensive income (loss)
  $ 993,180     $ (713,572 )   $ 2,517,830     $ (421,110 )
                                 
Basic earnings (loss) per common share
  $ 0.02     $ (0.03 )   $ 0.05     $ (0.02 )
Diluted earnings (loss) per common share
  $ 0.02     $ (0.03 )   $ 0.05     $ (0.02 )
                                 
Weighted average number of common shares
                               
  outstanding
                               
     Basic
    28,092,863       24,805,000       26,548,931       24,805,000  
     Diluted
    56,295,779       24,805,000       49,882,001       24,805,000  
 
 
 
 
5

 
 

 

 
Consolidated Statements of Cash Flows
(Unaudited)

 
   
For the Six Months Ended
 
   
December 31,
 
   
2009
   
2008
 
             
Cash flows from operating activities:
           
Net income (loss)
  $ 2,492,642     $ (381,827 )
Adjustments to reconcile net income to net cash
               
  provided by (used in) operating activities:
               
Noncontrolling interest
    (145 )     (559 )
Depreciation
    770,427       598,024  
Share-based payment
    -       303,750  
Loss (gain) on disposal of fixed assets
    2,355       (332 )
Provision for bad debts
    (361 )     150,823  
Changes in assets and liabilities:
               
Accounts receivable
    (194,577 )     1,192,350  
Inventory
    (1,799,098 )     1,607,080  
Trade notes receivable
    (448,518 )     -  
Other receivables
    (45,987 )     (157,372 )
Advance payments
    (3,172,068 )     (1,666,470 )
Prepaid expenses and other current assets
    (68,477 )     36,782  
Other assets
    (112,651 )     -  
Accounts payable and accrued expenses
    (510,297 )     (1,592,945 )
Advance payments from customers
    (29,406 )     -  
Prepaid other taxes
    266,919       -  
Income tax payable
    156,885       -  
Other current liabilities
    94,896       83,046  
Total adjustments
    (5,090,103 )     554,177  
                 
Net cash provided by (used in) operating activities
    (2,597,461 )     172,350  
                 
Cash flows from investing activities:
               
Advance payments for fixed assets
    (1,425,485 )     -  
Additions to property and equipment
    (619,447 )     (763,260 )
Proceeds from disposal of fixed assets
    -       48,345  
Change in loan receivable
    43,992       -  
                 
Net cash used in investing activities
    (2,000,940 )     (714,915 )
                 
Cash flows from financing activities:
               
Issuance of trade notes payable
    1,144,557       (337,645 )
Proceeds from (repayment of) long-term debt
    2,547,183       (211,591 )
      Additional paid-in capital
    5,916,500       -  
                 
Net cash provided by (used in) financing activities
    9,608,240       (549,236 )
                 
Effect of foreign currency translation on cash
    23       (128,910 )
                 
Net increase (decrease) in cash and cash equivalents
    5,009,862       (1,220,711 )
                 
Cash and cash equivalents and restricted cash   beginning
    6,373,567       7,218,904  
                 
Cash and cash equivalents and restricted cash ending
  $ 11,383,429     $ 5,998,193  
 
 
 
 
6

 
 

 
Note 1 – Organization and Nature of Business

 
JPAK Group, Inc. (Formerly Rx Staffing Inc was established under the laws of Nevada on December 6, 2004. The accompanying consolidated financial statements include the financial statements of JPAK Group, Inc. and its subsidiaries (the “Company”). The Company’s primary business is to print and produce packaging products for sale to the beverage and other industries.

 
On August 9, 2007, Rx Staffing Inc. (“Rx Staffing”) completed a reverse acquisition of JPAK Group Co., Ltd., (“JPAK Co.”) which was incorporated in the Cayman Islands on June 22, 2006. To accomplish the exchange of shares Rx Staffing issued 23,005,000 shares of common stock on a one to one ratio for a 100% equity interest in JPAK Co., per the terms of the Share Exchange and Bill of Sale of assets of Rx Staffing and Shaun Jones. Rx Staffing was delivered with zero assets and zero liabilities at time of closing. Following the reverse acquisition, Rx Staffing changed the name to JPAK Group, Inc. (“JPAK”). The transaction was regarded as a reverse merger whereby JPAK Co. was considered to be the accounting acquirer as its shareholders retained control of RX Staffing after the exchange. Although the Company is the legal parent company, the share exchange was treated as a recapitalization of JPAK Co.. Thus, JPAK Co. is the continuing entity for financial reporting purposes. The financial statements have been prepared as if JPAK Co. had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock.

 
In September 2006, JPAK Co. acquired 100% interest in Grand International Industrial Ltd. which was incorporated on August 4, 2006, in the city of Hong Kong, the People’s Republic of China (“PRC”). In August 2006, Grand International acquired 88.23% interest in Qingdao Renmin, which was incorporated in May 2001 in the city of Qingdao, the People’s Republic of China. On July 3, 2007, Grand International acquired the remaining 11.77% interest in Qingdao Renmin. The consolidated financial statements reflect all predecessor statements of income and cash flows from the inception of Qingdao Renmin in August 2006. In October 2007, Qingdao Renmin invested in Qingdao Delikang Packing Machinery Co., Ltd., (“Qingdao Delikang”), a joint venture with Xi’an Heiniu Machinery, Co. Qingdao Renmin acquired 51% interest of Qingdao Delikang.

 
Substantially all of the Company’s business is conducted through Qingdao Renmin, an operating subsidiary established in the Peoples Republic of China, in which the Company indirectly holds a 100% interest.

 
Note 2 – Summary of Significant Accounting Policies

 
Basis Of Presentation

 
The Company’s consolidated financial statements include the accounts of its direct wholly-owned subsidiaries and of its indirect proportionate share of subsidiaries owned by the wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included.

 
Interim Financial Statements

 
These interim financial statements should be read in conjunction with the audited financial statements for the years ended June 30, 2009 and 2008, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the years ended June 30, 2009 and 2008.
 
 
 
 
7

 
 

 
Note 2 – Summary of Significant Accounting Policies (continued)

 
Recent Accounting Pronouncements

 
On July 1, 2009, the Financial Accounting Standards Board (“FASB”) officially launched the FASB Accounting Standards Codification (“ASC”), which has become the single official source of authoritative nongovernmental U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The ASC is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the ASC carries an equal level of authority. The ASC is effective for all interim and annual periods ending after September 15, 2009. The Company’s implementation of this guidance effective July 1, 2009 did not have a material effect on the Company’s condensed consolidated financial statements.

 
On July 1, 2009, the Company adopted the accounting and disclosure requirements of Statement of Financial Accounting Standard (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51, which is now included with ASC Topic 810 Consolidation.  This standard establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation.  On a prospective basis, any changes in ownership will be accounted for as equity transactions with no gain or loss recognized on the transactions unless there is a change in control.

 
Reclassification

 
Certain amounts of December 31, 2008 were reclassified for presentation purposes.

 
Note 3– Restricted Cash

 
As of December 31, 2009 and June 30, 2009, the Company had restricted cash of $4,180,409 and $3,403,868, respectively. These restricted cash balances are reserved for settlement of trade notes payable and open letter of credit in connection with inventory purchases.  The cash held in custody by bank issuing the trade notes payable and letter of credit is restricted as to withdrawal or use, and is currently earning interest.

 
Note 4– Accounts Receivable

 
Trade accounts receivable are stated at original invoice amount less allowance for doubtful receivables based on management’s periodic review of aging of outstanding balances and customer credit history. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

 
The balance of allowance for doubtful accounts amounted to $1,498,405 and $1,496,723 as of December 31, 2009 and June 30, 2009, respectively. The allowance was mainly because a major customer was near bankruptcy as of December 31, 2009.

 
Note 5 – Inventory

 
Inventory at December 31, 2009 and June 30, 2009 consists of the following:

 
   
December 31, 2009
   
June 30, 2009
 
             
Finished goods
  $ 2,326,472     $ 939,428  
Raw materials
    4,263,303       3,912,953  
Parts and supplies
    206,097       84,806  
Work in process
     364,464       416,006  
                 
    Total
  $ 7,160,336     $ 5,353,193  
 
 
 
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PostSubject
#63   Yep. Jpak is officially finished :-) love your neighbor 03/21/18 07:54:56 AM
#62   Cool. So now we can close this board, lol adijas 03/21/18 05:55:16 AM
#61   Got my $JPAK money $$$ love your neighbor 03/20/18 08:04:20 PM
#60   lol. nice $$$ love your neighbor 03/20/18 04:15:22 PM
#59   Me too. I've built a base to play adijas 03/20/18 04:01:29 PM
#58   not an issue for me. new cars and love your neighbor 03/20/18 03:55:03 PM
#57   The danger is you always reinvest and never adijas 03/20/18 03:52:36 PM
#56   very true. love your neighbor 03/20/18 03:49:07 PM
#55   for sure, although we can't have them all. adijas 03/20/18 03:47:48 PM
#54   thanks love your neighbor 03/20/18 03:47:38 PM
#53   weird. Good luck! adijas 03/20/18 03:46:16 PM
#52   hope so. lots of stocks out there still love your neighbor 03/20/18 03:45:57 PM
#51   i just checked my etrade in folder. after love your neighbor 03/20/18 03:45:23 PM
#50   Yeah, nice. But if I'm paid, I guess adijas 03/20/18 03:45:22 PM
#49   awesome. you are the winner. nothing for me love your neighbor 03/20/18 03:40:36 PM
#48   Just got the money in my account. adijas 03/20/18 03:38:28 PM
#47   Thanks. So now we know the tender is adijas 03/17/18 07:55:19 AM
#46   i emailed etrade yesterday asking if the had love your neighbor 03/16/18 05:17:23 PM
#45   TDA vs. Etrade $$$ love your neighbor 03/05/18 04:24:01 PM
#44   sounds good. $$$ love your neighbor 03/05/18 02:33:53 PM
#43   Likewise. Let's ee who get the money first. adijas 03/05/18 02:31:47 PM
#42   let's see how it goes. i'll let you love your neighbor 03/05/18 02:10:32 PM
#41   I asked for it too. Got this reply adijas 03/05/18 02:06:51 PM
#40   I should have looked into it earlier. The love your neighbor 03/05/18 09:21:55 AM
#39   Thanks for update. Maybe I'll go for it too. adijas 03/05/18 09:05:24 AM
#38   I called this morning and was able to love your neighbor 03/05/18 08:54:28 AM
#37   this was their response (below). so i will love your neighbor 03/02/18 06:31:55 PM
#36   I will love your neighbor 03/02/18 09:20:31 AM
#35   You are welcome. And let me know if adijas 03/02/18 09:19:25 AM
#34   I will call E*TRADE and see if I love your neighbor 03/02/18 09:17:42 AM
#33   For now I wait (at least a few adijas 03/02/18 09:11:38 AM
#32   Interesting. Thanks for the info. My shares are love your neighbor 03/02/18 08:31:04 AM
#31   Got this reply from TDA last week adijas 03/02/18 06:32:36 AM
#30   where's my money $$$ love your neighbor 03/01/18 04:35:45 PM
#29   never. they are paying out .20 per share love your neighbor 02/15/18 02:42:56 PM
#28   Seriously , when it will begin for trading colorfullife88200 02/15/18 02:38:57 PM
#27   i wonder when i gets my money? love your neighbor 02/12/18 03:38:19 PM
#26   FINRA DELETED SYMBOL: JPAK TenKay 02/09/18 05:37:56 PM
#25   Yeah, something went wrong overthere. adijas 02/09/18 03:25:14 PM
#24   yep. anything can happen in pinkland. CXKJ apparently love your neighbor 02/09/18 03:23:57 PM
#23   On OTC you just don't know what will adijas 02/09/18 03:17:27 PM
#22   lol love your neighbor 02/09/18 03:16:26 PM
#21   Hmm, maybe I should try that strategy too, lol adijas 02/09/18 03:14:55 PM
#20   lol. sometimes it pays not to know what love your neighbor 02/09/18 03:12:36 PM
#19   You were lucky then, because it wasn't reinstatement adijas 02/09/18 03:06:28 PM
#18   my mistake. not reinstatement. just active status: love your neighbor 02/09/18 03:05:51 PM
#17   it was back in sept. got this tweet: love your neighbor 02/09/18 03:02:10 PM
#16   Reinstatement? Was reinstated in 2015! http://nvsos.gov/sosentitysearch/corpActi adijas 02/09/18 03:01:57 PM
#15   smart move buying this morning. i got a love your neighbor 02/09/18 02:59:26 PM
#14   O wow, that's nice. I bought this morning adijas 02/09/18 02:56:43 PM
PostSubject