WEB NEWS Reverse Merger Activity
Item 1.01 Entry into a Material Definitive Agreement.
As more fully described in Item 2.01 below, on May 15, 2016, International Packaging and Logistics Group, Inc. (“IPLO” or “Company”), and Xiuhua Song (the “Purchaser”) entered into a Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which IPLO (the “Seller”) will sell to the Purchaser, and the Purchaser will purchase from the Seller, an aggregate of 3,915,000 newly issued shares of IPLO Common Stock (the “Shares”), which Shares represent 87% of the issued and outstanding shares of Common Stock. On July 1, 2016, we completed this transaction
On July 1, 2016, International Packaging and Logistics Group, Inc. (the “Registrant” or “IPLO”) executed a Share Exchange Agreement (“Exchange Agreement”) by and among Yibaoccyb Limited, a British Virgin Islands limited liability company (“Yibaoccyb”), and the stockholders of 51% of Yibaoccyb’s common stock (the “Yibaoccyb Shareholders”), on the one hand, and the Registrant, on the other hand. A copy of the Exchange Agreement is included as Exhibit 2.1 and filed with this current report on Form 8-K.
Yibaoccyb owns 100% of YibaoConfucian Co., Ltd. (“YibaoHK”), a Hong Kong company. YibaoHK owns or will own 100% of Shenzhen Confucian Biologics Co. Ltd. (“Yibao WOFE”), which is a wholly foreign-owned enterprise (“WFOE”) under the laws of the Peoples’ Republic of China (“PRC” or “China”). Yibao WOFE is expected to enter into a series of contractual arrangements with Shandong Confucian Biologics Co., Ltd. (“Shandong Confucian Biologics”) which is a limited liability company headquartered in, and organized under the laws of, the PRC. The contractual arrangements are discussed below in Item 2.01 under the section titled “Description of Business”. Throughout this Form 8-K, Yibaoccyb, Yibao WOFE and Shandong Confucian Biologics are sometimes collectively referred to as the “Yibao Group.”
At the closing of this transaction (the “Closing”), which is expected to occur upon the completion of the audit of Shandong Confucian Biologics (the “Closing Date”), the Registrant is expected to issue 2,040,000 shares of the Registrant’s common stock (the “IPLO Shares”) to the Yibaoccyb Shareholders in exchange for 51% of the common stock of Yibaoccyb (the “Exchange Agreement”).
On July 1, 2016, Standard Resources Ltd. (“Standard”) previously IPLO’s Majority Stockholder, and IPLO entered into a share purchase agreement (“H&H Vend Out”) whereby Standard will cancel 3,915,000 shares of IPLO common stock held by it in exchange for all of the outstanding shares of H&H Glass, Inc. (“H&H Glass”) The H&H Vend Out is expected to occur subsequent to the Closing Date. The description of other material terms and conditions of the Exchange Agreement and the Financing are set forth below under Item 2.01 and such description is incorporated herein by reference. A copy of the H&H Vend Out is included as Exhibit 10.2 and filed with this current report on Form 8-K.
Item 2.01 Acquisition or Disposition of Assets
On the Closing Date, we expect to consummate the Purchase Agreement, referenced in Item 1.01 of this Form 8-K. As a result, we will acquire 51% of the capital stock of Yibaoccyb and, consequently, control of the business and operations of the Yibao Group. Prior to the Share Exchange Transaction, through our subsidiary H&H Glass, we were 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.
From and after the Closing Date of the Exchange Agreement, our primary operations will consist of the business and operations of the Yibao Group, which are conducted by Shandong Confucian Biologics in China. Therefore, we are disclosing information about the Yibao Group’s business, financial condition, and management in this Form 8-K.
The parties’ completion of the transactions contemplated under the Exchange Agreement is subject to the satisfaction of certain contingencies, including the Purchase Agreement and the H&H Vend Out. Most importantly the completion of the audit of Shandong Confucian Biologics.
Our board of directors (the “Board”) and IPLO’s Majority Stockholder, as well as the directors and the shareholders of Yibaoccyb, have each approved the Purchase Agreement, Exchange Agreement and H&H Vend Out, including the transactions contemplated thereunder. Following the Closing Date, Yibaoccyb is expected to become a 51% owned subsidiary.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
March 31
March 31
2016
2015
Revenues
Packaging
$
8,065,362
$
8,871,824
Total Revenues
8,065,362
8,871,824
Cost of Goods Sold
Packaging
7,766,056
8,519,555
Total Cost of Goods Sold
7,766,056
8,519,555
Gross Profit
299,306
352,269
Operating Expenses
Administrative expenses
212,316
216,914
Rent
21,454
14,357
Salaries and wages
135,665
155,171
Total Operating Expenses
369,435
386,442
Loss from Operations
(70,129
)
(34,173
)
Other income
Interest income (expense), net
–
–
Other income
–
16,194
Total Other Income
–
16,194
Loss from Continuing Operations before Income Taxes
(70,129
)
(17,979
)
Income tax benefit (expense)
(12,110
)
–
Net Income (Loss) from Continuing Operations
(82,239
)
(17,979
)
Discontinued operations:
Gain (Loss) from operations, including portion attributable to non-controlling interest of discontinued Logistics component
–
15,924
Income (Loss) on discontinued operations
–
15,924
Net Income (Loss)
(82,239
)
(2,055
)
Comprehensive Income (Loss)
$
(82,239
)
$
(2,055
)
Earnings per weighted average share of common stock - basic
$
(0.02
)
$
(0.00
)
Earnings per weighted average share of common stock - diluted
$
(0.02
)
$
(0.00
)
Weighted average shares outstanding - basic
4,504,214
4,504,214
Weighted average shares outstanding - diluted
4,504,214
4,504,214
Comments & Business Outlook
INTERNATIONAL PACKAGING AND LOGISTICS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
December 31
December 31
2015
2014
Revenues
Packaging
$
38,499,995
$
35,728,361
Total Revenues
38,499,995
35,728,361
Cost of Goods Sold
Packaging
36,957,989
34,324,102
Total Cost of Goods Sold
36,957,989
34,324,102
Gross Profit
1,542,006
1,404,259
Operating Expenses
Administrative expenses
787,666
690,701
Rent
76,108
46,864
Salaries and wages
630,641
581,481
Total Operating Expenses
1,494,415
1,319,046
Income from Operations
47,591
85,213
Other income (loss)
Interest income (expense), net
–
(299
)
Other income (expense)
40,869
–
Total Other Income (Loss)
40,869
(299
)
Net Income from Continuing
Operations before Income Taxes
88,460
84,914
The accompanying notes are integral to these consolidated financial statements.
INTERNATIONAL PACKAGING AND LOGISTICS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
December 31
December 31
2015
2014
Income tax benefit (expense)
–
(41,137
)
Net Income from Continuing Operations
88,460
43,777
Discontinued operations:
Gain from operations, including portion attributable to non-controlling interest of discontinued Logistics component
15,924
18,855
Income tax benefit
–
(10,217
)
Income on discontinued operations
15,924
8,638
Net Income
104,384
52,415
Reclassification discontinued operations
–
(34,414
)
Comprehensive Income
$
104,384
$
18,001
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
4,578,120
4,961,357
Effect of dilutive securities
1,039,388
1,374,730
Weighted average shares outstanding - diluted
5,617,508
6,336,087
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three and Nine Months Ended September 30, 2015 and 2014
(Unaudited)
Nine Months Ended September 30,
Three Months Ended September 30,
2015
2014
2015
2014
Revenues
Packaging
$
28,498,152
$
25,085,447
$
9,717,432
$
8,997,294
Total Revenues
28,498,152
25,085,447
9,717,432
8,997,294
Cost of Goods Sold
Packaging
27,330,496
24,019,055
9,340,720
8,621,465
Total Cost of Goods Sold
27,330,496
24,019,055
9,340,720
8,621,465
Gross Profit
1,167,656
1,066,392
376,712
375,829
Operating Expenses
Administrative expenses
623,258
585,666
158,956
180,836
Rent
55,559
35,819
20,601
11,524
Salaries and wages
476,458
429,700
156,641
146,029
Total Operating Expenses
1,155,275
1,051,185
396,198
338,389
Income from Operations
12,381
15,207
40,514
37,440
Other income (loss)
Interest income (expense), net
–
(299
)
–
–
Other income (expense)
16,194
(90
)
–
(50
)
Total Other Income (Loss)
16,194
(389
)
–
(50
)
Net Income from Continuing Operations before Income Taxes
28,575
14,818
40,514
37,390
See accompanying notes to these unaudited condensed consolidated financial statements
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three and Nine Months Ended September 30, 2015 and 2014
(Unaudited)
Income tax benefit (expense)
–
(1,600
)
–
–
Net Income from Continuing Operations
28,575
13,218
40,514
37,390
Discontinued operations:
Gain (Loss) from operations, including portion attributable to non-controlling interest of discontinued Logistics component
15,924
(32,302
)
–
5,831
Income tax benefit
–
989
–
(1,671)
Income (Loss) on discontinued operations
15,924
(31,313
)
–
4,160
Net Income (Loss)
44,499
(18,095
)
40,514
41,550
Foreign currency translation
–
519
–
(9,558
)
Comprehensive Income (Loss)
$
44,499
$
(17,576
)
$
40,514
$
31,992
Earnings per weighted average share of common stock - basic
$
0.01
$
(0.00
)
$
0.01
$
0.01
Earnings per weighted average share of common stock - diluted
$
0.01
$
(0.00
)
$
0.01
$
0.01
Weighted average shares outstanding - basic
4,504,214
4,961,357
4,504,214
4,961,357
Weighted average shares outstanding - diluted
5,664,203
4,961,357
5,478,944
6,336,087
Comments & Business Outlook
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, 2015 and 2014
(Unaudited)
Six Months Ended June 30,
Three Months Ended June 30,
2015
2014
2015
2014
Revenues
Packaging
$
18,780,720
$
16,088,153
$
9,908,896
$
8,130,122
Total Revenues
18,780,720
16,088,153
9,908,896
8,130,122
Cost of Goods Sold
Packaging
17,989,776
15,397,590
9,470,221
7,716,754
Total Cost of Goods Sold
17,989,776
15,397,590
9,470,221
7,716,754
Gross Profit
790,944
690,563
438,675
413,368
Operating Expenses
Administrative expenses
464,302
404,830
247,388
175,173
Rent
34,958
24,295
20,601
15,366
Salaries and wages
319,817
283,671
164,646
151,452
Total Operating Expenses
819,077
712,796
432,635
341,991
(Loss) Income from Operations
(28,133
)
(22,233
)
6,040
71,377
Other income (loss)
Interest income (expense), net
—
(299
)
—
—
Other income (expense)
16,194
(40
)
—
(40
)
Total Other Income (Loss)
16,194
(339
)
—
(40
)
Net (Loss) Income from Continuing
Operations before Income Taxes
(11,939
)
(22,572
)
6,040
71,337
Income tax benefit (expense)
—
(1,600
)
—
—
Net Income (Loss) from Continuing Operations
(11,939
)
(24,172
)
6,040
71,337
Discontinued operations:
Gain (Loss) from operations, including portion attributable to non-controlling interest of discontinued Logistics component
15,924
(38,133
)
—
(1,534
)
Income tax benefit
—
2,660
—
(7,584
)
Income (Loss) on discontinued operations
15,924
(35,473
)
—
(9,118
)
Net Income (Loss)
3,985
(59,645
)
6,040
62,219
Foreign currency translation
—
10,077
—
2,048
Comprehensive Income (Loss)
$
3,985
$
(49,568
)
$
6,040
$
64,267
Earnings (Loss) per weighted average share of common stock - basic
$
(0.00
)
$
(0.01
)
$
0.00
$
0.02
Earnings (Loss) per weighted average share of common stock - diluted
$
(0.00
)
$
(0.01
)
$
0.00
$
0.02
Weighted average shares outstanding - basic
4,654,251
4,961,557
4,505,214
4,961,557
Weighted average shares outstanding - diluted
4,654,241
4,961,557
4,505,214
6,336,087
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2015 and 2014
(Unaudited)
March 31, 2015
March 31, 2014
Revenues
Packaging
$
8,871,824
$
7,958,031
Total Revenues
8,871,824
7,958,031
Cost of Goods Sold
Packaging
8,519,555
7,680,836
Total Cost of Goods Sold
8,519,555
7,680,836
Gross Profit
352,269
277,195
Operating Expenses
Administrative expenses
216,914
229,657
Rent
14,357
8,929
Salaries and wages
155,171
132,219
Total Operating Expenses
386,442
370,805
Loss from Operations
(34,173
)
(93,610
)
Other income (loss)
Other income (expense)
16,194
(299
)
Total Other Income (Loss)
16,194
(299
)
Net loss Continuing Operations before Income Taxes
(17,979
)
(93,909
)
Income tax benefit (expense)
–
(1,600
)
Net Loss from Continuing Operations
(17,979
)
(95,509
)
Discontinued operations:
Gain (Loss) from operations, including portion attributable to non-controlling interest of discontinued Logistics component
15,924
(36,599
)
Income tax benefit
–
10,244
Gain (Loss) on discontinued operations
15,924
(26,355
)
Net Loss
(2,055
)
(121,864
)
Foreign currency translation
–
8,029
Comprehensive Loss
$
(2,055
)
$
(113,835
)
Loss per weighted average share of common stock - basic
$
(0.00
)
$
(0.02
)
Loss per weighted average share of common stock -diluted
$
(0.00
)
$
(0.02
)
Weighted average shares outstanding - basic
4,504,214
4,961,357
Weighted average shares outstanding - diluted
4,504,214
4,961,357
Management Discussion and Analysis
Revenue:
For the three months ending March 31, 2015 and 2014, revenues were $8,871,824 and $7,958,031 respectively, for an increase of $913,793 or 11.5% over the same period in 2014. The increase in revenue is a mainly due to an improved US economy which resulted in increased volume.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31, 2014 and 2013
December 31
December 31
2014
2013
Revenues
Packaging
$
35,728,361
$
34,005,056
Total Revenues
35,728,361
34,005,056
Cost of Goods Sold
Packaging
34,324,102
32,744,166
Total Cost of Goods Sold
34,324,102
32,744,166
Gross Profit
1,404,259
1,260,890
Operating Expenses
Administrative expenses
690,701
634,936
Rent
46,864
47,329
Salaries and wages
581,481
584,748
Total Operating Expenses
1,319,046
1,267,013
Income (loss) from Operations
85,213
(6,123
)
Other income (expense)
Interest income (expense), net
(299
)
1,873
Other income (expense)
–
(567
)
Rent Income
–
1,245
Total Other Income (expense)
(299
)
2,551
Net Income (loss) from Continuing Operations before Income Taxes
84,914
(3,572
)
The accompanying notes are integral to these consolidated financial statements
International Packaging and Logistics Group, Inc., and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31, 2014 and 2013
Income tax benefit (expense)
(41,137
)
83,725
Net Income from Continuing Operations
43,777
80,153
Discontinued operations:
Gain from operations, including portion attributable to non-controlling interest of discontinued Logistics component
18,855
16,652
Income tax expense
(10,217
)
(12,150
)
Income from discontinued operations
8,638
4,502
Net Income
52,415
84,655
Foreign currency translation
0
(17,945
)
Reclassification discontinued operations
(34,414
)
0
Comprehensive Income
$
18,001
$
66,710
2014
2013
Weighted-average number of common shares outstanding—Basic
4,961,357
4,961,357
Effect of dilutive securities—
1,374,730
1,374,730
Weighted-average number of common shares outstanding—Diluted
6,336,087
6,336,087
AMOUNTS ATTRIBUTABLE TO THE COMMON STOCKHOLDERS:
2014
2013
Income from continuing operations, net of tax
$
43,777
$
80,153
Income from discontinued operations, net of tax
8,638
4,502
Net income (loss)
$
52,415
$
84,655
BASIC EARNINGS PER SHARE:
Income from continuing operations attributable to common stockholders, net of tax
$
0.01
$
0.02
Income from discontinued operations attributable common stockholders, net of tax
0.00
0.00
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMMON STOCKHOLDERS
$
0.01
$
0.02
DILUTED EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to common stockholders, net of tax
$
0.01
$
0.01
Income (loss) from discontinued operations attributable to common stockholders, net of tax
0.00
0.00
NET INCOME (LOSS) ATTRIBUTABLE COMMON STOCKHOLDERS
$
0.01
$
0.01
Comprehensive income
$
18,001
$
64,504
Disposal of Assets
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
International Packaging and Logistics Group, Inc. (“IPL Group Inc.”) (Seller), entered into an agreement with its majority owned subsidiary, EZ LINK Corporation (“EZ LINK”) (Buyer) which is a logistics company headquartered in Taiwan. EZ Link was established in July 2003 under the Company Law of Republic of China. Under this agreement EZ LINK is acquiring back IPL Group Inc.’s share position in EZ Link in exchange for their share position in IPL Group Inc. This transaction is effective as of February 28, 2015.
The terms are as follows:
IPL Group Inc. will assign its position in EZ LINK or 688,500 shares in the aggregate, to EZ LINK, such that, following such transaction, EZ KINK will no longer be a subsidiary of IPL Group Inc.
EZ LINK will assign the following:
(a) The 457,143 shares of common stock held by EZ LINK shareholders.
(b) The Series B Convertible preferred shares held by EZ LINK shareholders.
The EZ Link subsidiary accounts for less than 10% of the consolidated entity and therefore would not meet the significant criteria.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)
Nine Months Ended
Three Months Ended
September 30,
September 30
2014
2013
2014
2013
Revenues
Packaging
$
25,085,447
$
24,814,637
$
8,997,294
$
8,166,658
Logistics
5,326,002
5,545,734
2,107,246
1,728,910
Total Revenues
30,411,449
30,360,371
11,104,540
9,895,568
Cost of Goods Sold
Packaging
24,019,055
23,834,770
8,621,465
7,840,207
Logistics
4,522,023
4,661,720
1,822,232
1,458,851
Total Cost of Goods Sold
28,541,078
28,496,490
10,443,697
9,299,058
Gross Profit
1,870,371
1,863,881
660,843
596,510
Operating Expenses
Administrative expenses
842,578
732,916
270,005
207,894
Rent
92,197
96,427
28,608
30,073
Salaries and wages
988,091
1,004,040
315,320
302,756
Total Operating Expenses
1,922,866
1,833,383
613,933
540,723
(Loss) Income from Operations
(52,495
)
30,498
46,910
55,787
Other Income
Interest income (expense), net
102
619
(2,349
)
46
Other income (expense)
2,469
3,729
1,902
1,764
Rent Income
757
670
757
477
Total Other Income
3,328
5,018
310
2,287
Net (Loss) Income before Income Taxes
(49,167
)
35,516
47,220
58,074
Income tax benefit (expense)
989
(12,482
)
(1,671
)
48
Net (Loss) Income
(48,178
)
23,034
45,549
58,122
Net (gain) loss attributable to non-controlling interest
30,085
1,902
(3,999
)
72
Net (Loss) Income attributable to common stockholders
(18,093
)
24,936
41,550
58,194
Comprehensive Income
Currency translation adjustment
519
(10,036
)
(9,558
)
6,400
Comprehensive (Loss) Income
$
(17,574
)
$
14,900
$
31,992
$
64,594
Earnings per weighted average share of common stock - basic
$
(0.00
)
$
0.01
$
0.01
$
0.01
Earnings per weighted average share of common stock -diluted
$
(0.00
)
$
0.00
$
0.01
$
0.01
Weighted average shares outstanding - basic
4,961,357
4,961,357
4,961,357
4,961,357
Weighted average shares outstanding - diluted
4,961,357
6,336,087
6,336,087
6,336,087
Management Discussion and Analysis
For the three months ending September 30, 2014 and 2013, revenues were $11,104,540 and $9,895,568, respectively, for an increase of $1,208,972 (12.2%) over the same period in 2013. The increase in revenue is mainly due to two factors; 1) an increase in packaging revenue of $830,636 (10.2%) due to a decrease in sales deductions, 2) plus an increase in logistics revenues of $378,336 (21.9%), mainly due to an increase in overall shipping for the quarter.
Acquisition Activity
Item 2.01 Acquisition or Disposition of Assets
On October 1, 2014, International Packaging and Logistics Group, Inc. (“IPLO”) and it’s wholly owned subsidiary IPLO Holdings, Inc. (“IPII”) executed an Agreement and Plan of Merger whereby IPII will acquire all of the outstanding Stock of Idea Ventures, Inc, a Delaware corporation. The terms of the acquisition includes a payment on approximately $2.3 million in common stock.
Idea Ventures Inc., was formed in June 2013 and is a company focused on becoming a mid-market leader in technology company incubation. The Company intends to fund, acquire, and monetize various Internet and application development companies. Primarily focused on investing in business-to-consumer (B2C) Internet and application development companies, Idea Ventures is poised to provide a platform for early application developers and rollout ready software companies. Idea Ventures, Inc. will be operated as a wholly owned subsidiary of IPLO.
This transaction represents the start of a change in business direction to serve the business and financing needs of Internet and mobile application builders and their projects by providing a central facility, tools, technology, consulting and funding to allow these businesses to achieve the highest amount of success possible, while giving founders liquidity in their technological investment.
Auditor trail
Item 4.01 Changes in Registrants Certifying Accountant.
(a) On October 13, 2014, the Company informed PMB Helin Donovan, LLP that they were engaging another auditing firm concurrent with this notice. PMB Helin Donovan, LLP audited the financial statements of the Company for the fiscal years ended December 31, 2013 and 2012. The report of PMB Helin Donovan, LLP (“PMB”) on such financial statements, the most recent dated April 8, 2014, did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. Between February 22, 2006 (the date of engagement) and October 13, 2014 (the date ending their engagement) there were no disagreements with PMB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PMB, would have caused PMB to make reference to the subject matter of the disagreement in its review of the Company’s consolidated financial statements for the fiscal years ended December 31, 2013 and 2012. The Company has requested that PMB furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements. A copy of such letter, dated October 17, 2014 is filed herewith as Exhibit 16.
(b) On October 13, 2014, upon the authorization and approval of the board of directors, the Company engaged RBSM LLP, Accountants and Advisors (“RBSM”) as its independent registered public accounting firm. No consultations occurred between the Company and RBSM during the transitional period ended the fiscal years ended December 31, 2013 and 2013 and through October 13, 2014, regarding either (i) the application of accounting principles to a specific completed or contemplated transaction, the type of audit opinion that might be rendered on the Company’s financial statements, or other information provided that was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue, or (ii) any matter that was the subject of disagreement requiring disclosure under Item 304(a)(1)(iv) of Regulation S-K or reportable event requiring disclosure under Item 304(a)(1)(v) of Regulation S-K.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operating and Comprehensive Income (Loss)
For the Six Months Ended June 30, 2014 and 2013
(Unaudited)
Six Months Ended June 30,
Three Months Ended June 30
2014
2013
2014
2013
Revenues
Packaging
$
16,088,153
$
16,647,979
$
8,130,122
$
7,992,803
Logistics
3,218,756
3,816,824
1,836,831
2,104,191
Total Revenues
19,306,909
20,464,803
9,966,953
10,096,994
Cost of Goods Sold
Packaging
15,397,590
15,994,563
7,716,754
7,657,269
Logistics
2,699,792
3,202,870
1,539,921
1,752,994
Total Cost of Goods Sold
18,097,382
19,197,433
9,256,675
9,410,263
Gross Profit
1,209,527
1,267,370
710,278
686,731
Operating Expenses
Administrative expenses
572,573
525,022
255,923
293,385
Rent
63,589
66,354
34,560
30,344
Salaries and wages
672,771
701,284
360,863
347,814
Total Operating Expenses
1,308,933
1,292,660
651,346
671,543
(Loss) income from Operations
(99,406
)
(25,290
)
58,932
15,188
Other Income
Interest income net
102
573
353
343
Other income (expense)
2,349
1,965
(33
)
1,576
Rent Income
567
192
191
193
Total Other Income
3,018
2,730
511
2,112
Net Income (Loss) before Income Taxes
(96,388
)
(22,560
)
59,443
17,300
Management Discussion and Analysis
Revenue:
For the three months ending June 30, 2014 and 2013, revenues were $9,966,953 and $10,096,994, respectively, for a decrease of $130,041 (1.3%) over the same period in 2013. The decrease in revenue is mainly due to two factors; 1) a increase in packaging revenue of $137,319 (1.7%) due to a decrease in sales deductions, 2) offset by a decrease in logistics revenues of $267,360 (12.7%) , mainly due to a decrease in overall shipping.
Comments & Business Outlook
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
)
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
Management Discussion and Analysis
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.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Consolidated Statement of Operations And Comprehensive Income (Loss)
As of December 31, 2013 and 2012
Year Ended
December 31,
2013
2012
Revenues
Packaging
$
34,005,056
$
31,062,065
Logistics
7,007,784
9,180,081
Total Revenues
41,012,840
40,242,146
Cost of Goods Sold
Packaging
32,744,166
29,934,810
Logistics
5,781,379
7,898,823
Total Cost of Goods Sold
38,525,545
37,833,633
Gross Profit
2,487,295
2,408,513
Operating Expenses
Administrative expenses
960,822
846,941
Rent
126,992
195,170
Salaries and wages
1,393,499
1,266,019
Total Operating Expenses
2,481,313
2,308,130
Income from Operations
5,982
100,383
Other Income
Interest income (expense), net
2,210
(78
)
Other income
3,737
5,702
Rent Income
1,151
–
Total Other Income
7,098
5,624
Net Income before Income Taxes
13,080
106,007
Management Discussion and Analysis
Revenue:
For the years ending December 31, 2013 and 2012, revenues were $41,012,840 and $40,242,146 respectively, for an increase of $770,694 or 1.9% over the same period in 2012. The increase in revenue is a mainly due to an increase in Packaging revenue of $2,942,991 or 9.5% as result of an improved economy offset by a decrease in Logistics revenue of $2,172,297 or 23.7%.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations And Comprehensive Income
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
Three Months Ended
March 31,
2013
2012
Revenues
Packaging
$
8,655,176
$
6,858,048
Logistics
1,712,633
2,126,743
Total Revenues
10,367,809
8,984,791
Cost of Goods Sold
Packaging
8,337,294
6,386,341
Logistics
1,449,877
1,822,646
Total Cost of Goods Sold
9,787,171
8,208,987
Gross Profit
580,638
775,804
Operating Expenses
Administrative expenses
231,637
225,793
Rent
36,010
49,362
Salaries and wages
353,470
302,276
Total Operating Expenses
621,117
577,431
Income (Loss) from Operations
(40,479
)
198,373
Other Income
Interest income (expense), net
230
(350
)
Other income (expense)
389
1,822
Total Other Income
619
1,472
Net Income (Loss) before Income Taxes
(39,860
)
199,845
Comments & Business Outlook
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
)
Comments & Business Outlook
For the Years Ended December 31, 2011 and 2010
Year Ended
December 31,
2011
2010
Revenues
Packaging
$
26,422,926
$
24,765,867
Logistics
8,384,477
11,828,491
Total Revenues
34,807,403
36,594,358
Cost of Goods Sold
Packaging
25,470,000
23,711,526
Logistics
7,006,995
10,571,536
Total Cost of Goods Sold
32,476,995
34,283,062
Gross Profit
2,330,408
2,311,296
Operating Expenses
Administrative expenses
1,013,083
1,008,496
Rent
194,973
175,115
Salaries and wages
1,361,978
1,200,676
Total Operating Expenses
2,570,034
2,384,287
Loss from Operations
(239,626
)
(72,991
)
Other Income
Interest income (expense)
6,459
(405
)
Other income
19,406
(6,538
)
Rent Income
3,065
5,839
Realized gain on investment
-
130,529
Debt forgiveness
-
237,045
Total Other Income
28,930
366,470
Net Income (Loss) before Income Taxes
(210,696
)
293,479
Income tax benefit (expense)
55,729
(144,640
)
Net Income (Loss)
(154,967
)
148,839
Net (gain) loss attributable to non controlling interest
(18,959
)
(6,436
)
Net Income (Loss) attributable to IPLO
(173,926
)
142,403
Comprehensive Income
Unrealized loss on investments
-
(58,246
)
Gain (loss) on currency exchange
(3,161
)
50,333
Comprehensive Income (Loss)
$
(177,087
)
$
134,490
Earnings per weighted average share of common stock - basic
$
(0.04
)
$
0.03
Earnings per weighted average share of common stock - diluted
$
(0.04
)
$
0.02
Weighted average shares outstanding - basic
4,961,357
4,961,357
Weighted average shares outstanding - diluted
4,961,357
6,336,087
CFO Trail
The Company is sad to report that Steven Westlund, the Company’s Chairman, CEO and
Acting CFO recently passed away . The Company has appointed Owen Naccarato as a temporary director, CEO and Acting CFO until a permanent replacement is appointed.
Comments & Business Outlook
International Packaging and Logistics Group, Inc., and Subsidiaries
Condensed Consolidated Statements of Operations And Comprehensive Loss
For the Three and Nine Months Ended September 30, 2011 and 2010
(Unaudited)
Nine Months Ending
Three Months Ending
Sept 30,
Sept 30,
2011
2010
2011
2010
Revenues
Packaging
$
20,009,851
$
18,901,202
$
6,289,838
$
7,508,676
Logistics
7,023,229
9,073,323
2,031,030
3,349,723
Total Revenues
27,033,080
27,974,525
8,320,868
10,858,399
Cost of Goods Sold
Packaging
19,475,417
18,236,970
6,193,938
7,320,528
Logistics
6,026,002
8,207,408
1,712,438
3,036,557
Total Cost of Goods Sold
25,501,419
26,444,378
7,906,376
10,357,085
Gross Profit
1,531,661
1,530,147
414,492
501,314
Operating Expenses
Administrative expenses
662,705
711,593
248,106
234,944
Rent
145,430
129,149
50,193
44,644
Salaries and wages
999,470
856,414
339,178
295,051
Total Operating Expenses
1,807,605
1,697,156
637,477
574,639
Loss from Operations
(275,944
)
(167,009
)
(222,985
)
(73,325
)
Other Income
Interest income (expense)
(637
)
199
60
(335
)
Other income
23,637
6,294
23,120
2,332
Rent Income
3,075
4,331
126
1,642
Realized gain on investment
-
93,038
-
93,038
Total Other Income
26,075
103,862
23,306
96,677
Net Income (Loss) before Income Taxes
(249,869
)
(63,147
)
(199,679
)
23,352
Income tax benefit
43,200
2,246
48,697
26,638
Net Income (Loss)
(206,669
)
(60,901
)
(150,982
)
49,990
Net gain (loss) attributable to non controlling interest
(6,106
)
(2,525
)
7,500
(669
)
Net Income (Loss) attributable to IPLO
(212,775
)
(63,426
)
(143,482
)
49,321
Comprehensive Income
Unrealized loss on investments
-
(58,246
)
-
(76,961
)
Gain (loss) on currency exchange
(18,898
)
17,556
(15,735
)
5,704
Comprehensive Loss
$
(231,673
)
$
(104,116
)
$
(159,217
)
$
(21,936
)
Earnings per weighted average share of common stock - basic
$
(0.04
)
$
(0.01
)
$
(0.03
)
$
0.01
Earnings per weighted average share of common stock - diluted
$
(0.04
)
$
(0.01
)
$
(0.03
)
$
0.01
Weighted average shares outstanding - basic
4,961,357
4,961,357
4,961,357
4,961,357
Weighted average shares outstanding - diluted
4,961,357
4,961,357
4,961,357
6,336,087
Comments & Business Outlook
For the Three and Six Months Ended June 30, 2011 and 2010
(Unaudited)
Three Months Ended
June 30,
2011
2010
2011
2010
Revenues
Packaging
$
13,720,013
$
11,392,526
$
7,639,563
$
6,511,344
Logistics
4,992,199
5,723,600
2,487,040
3,168,555
Total Revenues
18,712,212
17,116,126
10,126,603
9,679,899
Cost of Goods Sold
Packaging
13,281,479
10,916,442
7,424,061
6,336,205
Logistics
4,313,564
5,170,851
2,152,643
2,869,301
Total Cost of Goods Sold
17,595,043
16,087,293
9,576,704
9,205,506
Gross Profit
1,117,169
1,028,833
549,899
474,393
Operating Expenses
Administrative expenses
414,599
484,838
219,282
297,353
Rent
95,237
84,505
48,695
42,539
Salaries and wages
660,292
561,363
346,255
283,444
Total Operating Expenses
1,170,128
1,130,706
614,232
623,336
Income (Loss) from Operations
(52,959
)
(101,873
)
(64,333
)
(148,943
)
Other Income
Interest income (expense)
(697
)
534
184
131
Other income
517
3,962
(166
)
916
Rent Income
2,949
2,689
1,488
1,794
Total Other Income
2,769
7,185
1,506
2,841
Net Income (Loss) before Income Taxes
(50,190
)
(94,688
)
(62,827
)
(146,102
)
Income tax benefit (expense)
(5,497
)
(24,392
)
(6,773
)
-
Net Income (Loss)
(55,687
)
(119,080
)
(69,600
)
(146,102
)
Net (gain) loss attributable to non controlling interest
(13,606
)
(1,856
)
(6,474
)
304
Net Loss attributable to IPLO
(69,293
)
(120,936
)
(76,074
)
(145,798
)
Comprehensive Income
Unrealized gain (loss) on investments
-
18,715
-
18,715
Gain (loss) on currency translation
(3,163
)
20,041
11,015
10,113
Comprehensive Income (Loss)
$
(72,456
)
$
(82,180
)
$
(65,059
)
$
(116,970
)
Loss per weighted average share of common stock - basic
$
(0.01
)
$
(0.02
)
$
(0.02
)
$
(0.03
)
Loss per weighted average share of common stock - diluted
$
(0.01
)
$
(0.02
)
$
(0.02
)
$
(0.03
)
Weighted average shares outstanding - basic
4,961,357
4,961,357
4,961,357
4,961,357
Weighted average shares outstanding - diluted
4,961,357
4,961,357
4,961,357
4,961,357
Comments & Business Outlook
For the Years Ended December 31, 2010 and 2009
Year Ended
December 31,
2010
2009
Revenues
Packaging
$
24,765,867
$
15,556,775
Logistics
11,828,491
-
Total Revenues
36,594,358
15,556,775
Cost of Goods Sold
Packaging
23,711,526
14,724,769
Logistics
10,571,536
-
Total Cost of Goods Sold
34,283,062
14,724,769
Gross Profit
2,311,296
832,006
Operating Expenses
Administrative expenses
1,008,496
580,857
Rent
175,115
76,016
Salaries and wages
1,200,676
475,215
Total Operating Expenses
2,384,287
1,132,088
Income (Loss) from Operations
(72,991
)
(300,082
)
Other Income (Expense)
Interest income (expense)
(405
)
924
Other income (Expense)
(6,538
)
-
Rent Income
5,839
-
Realized gain on investment
130,529
-
Debt forgiveness
237,045
-
Total Other Income
366,470
924
Net Income (Loss) before Income Taxes
293,479
(299,158
)
Income tax benefit (expense)
(144,640
)
80,109
Net Income (Loss) available to common
shareholder
148,839
(219,049
)
Net gain attributable to non controlling interest
(6,436
)
-
Net Income (Loss) attributable to IPLO
142,403
(219,049
)
Comprehensive Income
Unrealized gain (loss) on investments
(58,246
)
66,964
Gains on currency translation
50,333
-
Comprehensive Income(Loss)
$
134,490
$
(152,085
)
Earnings per weighted average share of common stock -
basic
$
0.03
$
(0.05
)
Earnings per weighted average share of common stock -
diluted
$
0.02
$
(0.05
)
Weighted average shares outstanding - basic
4,961,357
4,504,214
Weighted average shares outstanding - diluted
6,336,087
4,504,214
GeoTeam ® Note : 2010 vs. 2009 EPS
Fourth Quarter: $0.03 vs. $(0.03)
For the years ending December 31, 2010 and 2009, revenues were $36,594,358 and $15,556,775 respectively, for an increase of $21,037,583 (135.2%) over the same period in 2009. The increase in revenue is a mainly due to two factors; 1) an increase in packaging revenue of $9,209,092 (59.2%) due to an upturn in the worldwide economy and due to customers’ replenishing their inventory levels, which had been kept at low levels due to the global recession and 2) $11,808,491 of revenue from our logistics line of business acquired in January 2010 (no equivalent revenues in 2009).
Internal Controls
Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2010. Based on this assessment, management concluded that the Company
did not maintain effective internal controls over financial reporting as a resulted of identified material weakness in our financial reporting.